May 31st, 2024

Year Ended March 31st, 2024

Financial Results and Medium-Term
Management Plan Explanatory Material

Securities code: 6736

Table of Contents
SUNCORPORATION’s Business

SUNCORPORATION’s Growth Strategy (Vision)

Management Philosophy

04

SUNCORPORATION’s Approach to Business

20

Business Overview

05

Changes in Business Portfolio

21

History

06

SUNCORPORATION’s Global Business

07

Relationship with Cellebrite (Performance)

08

Relationship with Cellebrite (Business)

09

Year Ended March 2024 Results/
Year Ending March 2025 Forecast
Year Ended March 2024 – Financial Results Summary

11

Sales and Operating Profit by Segment

12

Factors Impacting Changes in Sales (Excluding Cellebrite)

13

SUNCORPORATION’s Growth Strategy(New Medium-Term Management Plan)(Entertainment Business)

Revising the Medium-Term Management Plan

23

Recognition of External Environment

31

Factors in Revising Medium-Term Management Plan

24

Business Segment Strategies and Measures

32

Positioning of New Medium-Term Management Plan

25

Quantitative Targets and Intended Orientation of
New Medium-Term Management Plan

26

Technology Strategy

33

Investment in Growth Fields

34

M&A Policy

35

Strengthening Group Management Basethrough Strengthening Personnel

36

Strengthening Group Management Basethrough Organizational Improvements

37(Global Data Intelligence Business)
Recognition of External Environment

27

Business Segment Strategies and Measures

28

Factors Impacting Changes in Operating Profit(Excluding Cellebrite)

14

Consolidated Balance Sheet

15(New IT-Related Business)

Consolidated Cash Flow Statement

16

Recognition of External Environment

29

Results Forecast for Year Ending March 2025

17

Business Segment Strategies and Measures

30

Shareholder Returns

18
2(Reference Materials)
Overview of Products and Services by Segment

38

SUNCORPORATION’s Business©SUNCORPORATION All rights reserved.

Management Philosophy

MISSION

VALUESMISSION

Resolving social issues withSUNCORPORATION’s technologies

Management
philosophy

Making people happy through telecommunication& entertainment

Corporate philosophy“Maintaining the spirit of a company
that takes on challenges”

 Materializing
Company slogan  Challenging
 Accomplishing View success as the starting point for new success

Guidelines for Action

 Treat improvement and elimination of waste as permanent issues
 Progress stops the moment you say “this is fine”
 Don’t be satisfied with yesterday’s success The moment you succeed is exactly when you should reflect on
your actions

VISIONVISION
4

Aiming for sales of 50 billion and an operating
profit margin of 15% or more
©SUNCORPORATION©SUNCORPORATION
AllAllrightsrightsreserved.
reserved.

Business Overview

Developing the Business in Three Segments
Revolving around Technology
Global Data Intelligence(digital intelligence)● Developing and selling mobile forensic
equipment● Adding sales of threat intelligencesolutions specialized in the deep web
and dark web

Entertainment(amusement machines and games)
Amusement machines● Planning, developing, and manufacturing
amusement machines● Developing video content for amusement
machines

New IT-Related(M2M/IoT)● Developing, manufacturing, and sellingindustrial communications equipment
and IoT solutions● Developing and selling B2B operational
support solutions using SmartGlassGames● Developing and selling game content©KK/AMW/P-I ©KK/AMW/P-I II©KK/AMW/P-I M ©KK/K/P-I III©JFJ CO., LTD. ALL RIGHTS RESERVED.

Currently selling Hebereke 2 for Nintendo
Switch™/Playstation®5/Steam, etc.
(C)SUNSOFT

5©SUNCORPORATION All rights reserved.

History

Domestic Business Growth along with Accelerated
Global Expansion Since the Early 1990s
2020
Launch of AceReal for docomo, aremote operation support solution
using 5G and AR SmartGlass

2010
2007

Acquisition of Cellebrite’sshares1985

1971

Establishment of
SUNCORPORATION

Development of family-oriented
softwareLaunch of SUNSOFT series

Development and release of
SUNCORPORATION brandmodem, My Looper 300

Sales diagram

1985

Development and release of
Rooster series mobile routers
Full-scale entry into M2M
marketAcceleration of global expansion
1971

1980

1990

2000

2020

Founded with the aim of
manufacturing and sellingelectronics-related equipment

Completed head office building in
Konan City, Aichi Prefecture,established business structure, andpursued expansion

Established SUNCORPORATION brand,developed and sold industry’s firstsystem, and expanded sales offices
across Japan

Listed on JASDAQ, acquired 100%
ownership of Cellebrite, andaccelerated global expansion

Celebrated 50th anniversary offounding and shifted toward global
company

6©SUNCORPORATION All rights reserved.

SUNCORPORATION’s Global Business

Growing through businesses that are not limited to specific areas by combining
technologies and expertise developed in domestic businesses with newtechnologies and talent exchange acquired globally

Domestic
Technologies
Wireless/IoT/security

Globally
Development of newtechnologies and talentexchange

Quality & safety

Sales channel
expansion not limited
to specific areas

Sales and distribution
system

7©SUNCORPORATION©SUNCORPORATION
AllAllrightsrightsreserved.
reserved.

Relationship with Cellebrite (Performance)

Profit or loss on valuation occurring due to the Cellebrite shares we own has
an impact on SUNCORPORATION’s performance (ordinary profit, net income)Maintaining uniqueness withrespect to various operations


Broad sales network based onsales to domestic law
enforcement agencies andsales of communicationequipment is a strength

Supporting continuous growth
as a stable shareholder

Listed on TSE Standard Market

Term of derivate liabilities
is until August 2028

8

Affiliate specializing in digital
intelligence with site in Israel
Listed on U.S. NASDAQ
market©SUNCORPORATION All rights reserved.

Relationship with Cellebrite (Business)

Driving domestic forensic products and digital intelligence market
Supplying related products, training, and services

Developing and selling our own related products,
such as F-Note, for the Japanese market
Providing original training for forensic productusers to the market

Strengths acquired from selling
forensic products on theJapanese market
Experience and expertise in rapid,
targeted development of cutting-edge
forensic products and technologies for
the Japanese market

Inseyets

System that facilitates digital investigation
agencies’ legal access to mobile phones ofall kinds and collection of digital evidence

Granting right to sell products
such as UFED in Japan

Cellebrite Guardian

SaaS-based system that integrates
management of saving evidence data,
administrative sharing, etc.

9

©SUNCORPORATION All rights reserved.

Year Ended March 2024 Results/
Year Ending March 2025 Forecast©SUNCORPORATION All rights reserved.

Year Ended March 2024 – Financial Results Summary
POINT 1• Cellebrite changed to an equity-method affiliate in Q3 of the year ended March 2023
• Since Cellebrite’s share price rose from $6.09 to $11.08, we recorded an equity method loss due to a loss on valuation of derivatives• Net profit attributable to owners of parent was −3,777 million yen
POINT 2

• Excluding the impact of Cellebrite, sales increased by 795 million yen due to factors such as higher sales resulting from the resolution of
the semiconductor shortage• Net profit decreased by 2,372 million yen to 420 million yen due to factors such as reversal of the gain on foreign exchange recorded in
the year ended March 2023
Figures for SUNCORPORATION Group Excluding Cellebrite, Which Is Emphasized
by SUNCORPORATIONFY Ended March 2023

Reference: Disclosed Figures Including Cellebrite

FY Ended
March 2023

FY Ended March 2024

Actual Results(SUNCORPORATIONGroup excluding
Cellebrite)

Actual Results(SUNCORPORATIONGroup excluding
Cellebrite)

Change(SUNCORPORATIONGroup)

9,250

10,045795

Operating profit

(46)

312

Ordinary profit

3,313

Net profit
attributable toowners of parent

2,792(Unit: million yen)
Sales

FY Ended
March 2024

Figures in
Disclosed
Materials
Actual Results

Figures in
Disclosed
Materials
Actual Results

Sales

37,44910,045(27,403)358

Operatingprofit(1,711)

312

2,023

446

(2,867)

Ordinary
profit14,174(4,114)(18,289)420(2,372)

Net profit
attributable toowners of parent

6,878(3,777)(10,656)

11(Unit: million yen)

Change©SUNCORPORATION All rights reserved.

Sales and Operating Profit by Segment
FY Ended
March 2023
ActualResults

FY Ended
March 2024
ActualResults

Year-on Year
Change
(%)

Sales

954

994

4.2%

Operating profit

140

131

(5.7%)

Operating profit margin

14.7%

13.3%

(9.5%)

Sales

6,259

6,051

(3.3%)

706

802

13.5%

Operating profit margin

11.3%

13.3%

17.6%

Sales

2,064

3,022

46.3%

Operating profit

138

230

66.5%

Operating profit margin

6.7%

7.6%

13.4%

Segment

Global DataIntelligence

Entertainment

New IT-Related

Operating profit* Actual results for the fiscal year ended March 2023 exclude Cellebrite’s sales* Operating profit is the operating profit before allocating the head office’s management expenses

12

Topics• Providing cutting-edge digital intelligence tools, associated training, etc. to address the
explosive increase in the amount of digital evidence and criminals (organizations) withtechnological expertise• The next-generation digital forensic solution Inseyets (successor to the former UFED) aims to
improve productivity for legal access to mobile phones of all kinds and collection of digital
evidence• In the current fiscal year, we devoted effort to the subscription business and both sales andgross profit increased year-on-year, but due to removal of spot projects from the previous
year, operating profit decreased. We will continue aiming for increased sales and profits bymaking subscription revenue the basis of the business• The game machine-related business achieves content development with strong productappeal and high-quality control boards for specific industries and clients• The game content business provides full in-house services, from development to operation,
for mobile games using the “Shanghai” brand, an IP with high visibility
Maintaining cost-effective revenue over the long term

• Making effective use of our many IPs in the retro game genre, which is regaining popularity,especially in Western markets• Pursuing product development with 5G as a key concept• The industrial network device Rooster is dual SIM compatible, making it possible to duplicate
various communication carrier lines. It enables response when faults occur with
communication carrier networks.
• SunDMS enables alive monitoring and Rooster enables integrated management, making it
possible to greatly reduce the operation and management burden and maintenance costs ofmultiple IoT devices installed in remote locations©SUNCORPORATION All rights reserved.

Factors Impacting Changes in Sales (excluding Cellebrite)●Increase factor
New IT
Received orders for new
solutions and resolution ofsemiconductor shortage●Increase factor
Global DI
Sales increased due
to new product sales
and price revisions

Unit: million yen●Increase factor
Other●Breakdown of impact
Entertainment
Decreased shipment of
amusement machineparts, etc.

FY Ended March 2024
sales

FY Ended March 2023
sales
(reference value)* Sales exclude Cellebrite’s sales

13©SUNCORPORATION All rights reserved.

Factors Impacting Changes in Operating Profit (Excluding Cellebrite)

Unit: million yen● Breakdown of impact
Global DI
Small profits from spot
projects in previous year,
etc.

●Increase factor
New IT
Resolution ofsemiconductor
shortage●Increase factor
Entertainment
Resolution ofsemiconductor
shortage anddecreased expenses

FY Ended March 2023
operating profit(reference value)●Increase factor
SG&A expenses
Improved expenses
due to revising SG&A
expenses, etc.

FY Ended March 2024
operating profit* Operating profit excludes Cellebrite’s operating profit

14©SUNCORPORATION All rights reserved.

Consolidated Balance Sheet
POINT

While shares in subsidiaries and affiliated companies decreased by 3,500 million yen due
to the loss of Cellebrite, which is an equity-method affiliate, we recorded a market value of
8,600 million yen for granted rights based on the price adjustment clause. As a result, net
assets increased by 5,000 million yen.

(Unit: million yen)

FY Ended March 2023
Actual Results

3,138
20,697
1,628
784
15,51841,767
4,024
2,728
6,753
33,3741,533
27
78
35,013
41,767

Cash and deposits
Other current assets
Property, plant, and equipment
Intangible fixed assets
Investments and other assets

Total assets

Current liabilities
Non-current liabilities

Total liabilities

Shareholder equity
Accumulated other comprehensive income
Stock subscription rights
Stock acquisition rights

Total net assets
Total liabilities and net assets
15

FY Ended March 2024
Actual Results

1,732
21,717
1,580
687
21,121
46,838
4,905
4,674
9,579
28,3148,843
24
78
37,25946,838Year-on-Year Change (%)(44.8%)
4.9%(2.9%)(12.3%)
36.1%
12.1%
21.8%
71.2%
41.8%
(15.1%)
476.5%
3.0%(0.8%)
6.4%
12.1%©SUNCORPORATION All rights reserved.

Consolidated Cash Flow Statement
Free cash flows decreased by 1,000 million yen due to the return of 3,800 million yen incorporate tax interim payments that were paid in advance in the previous year, a 3,300
million decrease in cash in trust, a −2,100 million yen increase in inventory, etc.

POINT

FY Ended March 2023
(Unit: million yen)

Actual Results

FY Ended March 2024
Actual Results

Comments

Cash flows from operating
activities(13,518)

2,509 Cash out of 2,100 million yen due to increased inventory, etc.

Cash flows frominvestment activities(25,131)(3,562) Cash in due to 700 million yen of churn for cash in trust, etc.

Cash flows from financing
activities
Cash and cash equivalents
at the beginning of the
fiscal year
Cash and cash equivalents
at the end of the fiscal year
Free cash flows

Cash in of 3,800 million yen due to corporate tax refund

Cash out of 4,000 million yen due to acquisition of cash in trust

25,574(385)

27,438

2,934

2,934

1,519

Cash out of 900 million yen due to acquisition of treasury shares
Cash out of 400 million yen due to payment of dividends
Cash in of 1,000 million yen due to increase in borrowings

3,800 million yen corporate tax refund, −3,300 million yen cash

(38,649)(1,052) in trust, −2,100 million yen increase in inventory, etc.
16

©SUNCORPORATION All rights reserved.

Results Forecast for Year Ending March 2025
POINT

While aiming for a cost-efficient revenue structure in the Entertainment business, wewill aim to introduce new products and services and expand revenue in the New ITRelated business and Global Data Intelligence business
FY Ended March 2024

(Unit: million yen)

Actual Results

FY Ending March 2025
Forecast

Year-on-Year Change (%)

Change10,045

12,285

22.3%

2,240

Operating profit

312

709

127.2%

397

Ordinary profit(4,114)---

Net profit (loss) attributable toowners of parent(3,777)

-

-

-

Sales

Ordinary profit and net profit attributable to owners of parent in the year ending March 2025 have not been determined because it is difficult to estimate the impact that Cellebrite, which is anequity-method affiliate of SUNCORPORATION, will have on our consolidated results due to fluctuations in the fair value of recognized price adjustment clauses, specific restricted right shares,
and derivatives.
17©SUNCORPORATION All rights reserved.

Shareholder Returns

Basic Policy
To strengthen our future business development and management base, we will
distribute profit while taking into account medium- and long-term changes in free
cash flows and the capital efficiency of growth investments and also consideringbalancing it with stability and internal reserves
FY Ended March 2023

Dividend

FY Ended March 2024

FY Ending March 2025
(Forecast)(Annual)

20.00 yen

40.00 yen

Undetermined(End of period)

20.00 yen

40.00 yen

Undetermined

0 yen

0 yen

Undetermined

6.8%

—

—

(End of Q2)
Dividend payout ratio(consolidated)

18©SUNCORPORATION All rights reserved.

SUNCORPORATION’s Growth Strategy (Vision)©SUNCORPORATION All rights reserved.

SUNCORPORATION’s Approach to BusinessCurrently Established Business Areas

Exploring needs

Technology exploration/development

Providing happiness and peaceof mind that fulfill people’s needs
in keeping with the times

Always exploring and goingfurther in order to address needs

Entertainment(Amusement machines & games)
Providing high-quality, comfortableentertainment in high economic growth-era
Japan

MISSION
Global Data Intelligence

Resolving social
issues withSUNCORPORATION’S
technology

Protecting people from unforeseen threats
occurring due to IT and the development of theinformation society and providing peace ofmind in their daily lives

Providing solutions

Establishing optimalbusiness model

Delivering services on a global
scale, rather than just focusing
on Japan

Designing an optimal,
reproducible business model

20

New IT-Related(M2M/IoT)
Refining the ability to connect things andpeople and offering new lifestyles byenriching people’s daily lives©SUNCORPORATION©SUNCORPORATION
AllAllrightsrightsreserved.
reserved.

Changes in Business Portfolio

Year Ended March 2019
Sales Mix

Year Ended March 2024
Sales Mix

9%10%Year Ending March 2027
Target Sales Mix

10%

20%

17%
26%

30%

74%

60%

44%

Former Mobile Data Solutions

Global Data Intelligence

Global Data Intelligence

New IT

New IT

New ITEntertainment

Entertainment

Entertainment
New areas* Excluding Cellebrite
21©SUNCORPORATION All rights reserved.

SUNCORPORATION’s Growth Strategy (New Medium-Term
Management Plan)©SUNCORPORATION All rights reserved.

Revising the Medium-Term Management Plan

Difference in Operating Profit in Initial Plan
and Latest Forecast

Since the environment changed markedly
compared to the assumptions of the previous
mid-term plan, we formulated a new MediumTerm Management Plan with the year ending
March 2025 as the first year

13,30012,285
10,8009,200

10,0459,250

560

Sales (mid-term plan)

709

Sales (actual results & latest forecast)
Operating profit (mid-term plan)

140

1,680

312

Operating profit (actual results & latest forecast)(46)(Unit: million yen)

Year ended March 2023

Year ended March 2024

Year ending March 2025 forecast

Sales (previous mid-term plan)

9,200

10,80013,300

Sales (actual results & latest forecast)

9,250

10,045

12,285

Operating profit (previous mid-term plan)

140

560

1,680

Operating profit (actual results & latest forecast)

(46)

312

709

23

©SUNCORPORATION All rights reserved.

Factors in Revising Medium-Term Management Plan

As a result of analyzing the factors that caused
revision of the figures, we identified following
Internal factors

External factors●

Global semiconductor shortage●

Marked increase in raw material,
transportation, and personnel costs
due to unstable global situation(conflicts, etc.)●

Significant changes in the competitiveenvironment which is the basis of the plan,such as technological advances in thecommunications industry●

Continued tendency for the amusement
machine industry to shrink●

Intensifying price competition withcompetitors

Business changes●

Lag in business advancement due
to communication gap between
business divisions●

Diversification of provided services
due to business partnerships withoutside companies●

While new growth drivers exist,
there are changes in the work
environment related to monetization●

Acquisition of consolidated
subsidiary via M&A●

Addition of human resources

24©SUNCORPORATION All rights reserved.

Positioning of New Medium-Term Management Plan

We have revised the previous mid-term management plan and formulated a
new Medium-Term Management Plan.
We revised our existing business strategy and are aiming to develop a basefor establishing a future growth base.
Year ended
March 2023

Year ended
March 2024

Year ending
March 2025

Year ending
March 2026

Year ending
March 2027

New Medium-Term Management Plan

Next year onward(year ended March 2025 – year ending March 2027)

Previous Medium-Term Management Plan
(year ended March 2023 – year ended March 2025)

Revised plan due to marked
environmental changes

Year ending
March 2028 onward

Aiming to develop a base forestablishing a future growth baseQuantitative Targets: Year Ending March 2027

Medium- to Long-Term
Management Plan

Aiming for sustainable growth andto enhance corporate valueSales

50,000
million yen

Operatingprofit margin

15.0%

OperatingprofitSales

19,2002,100

million yen

million yen

25©SUNCORPORATION All rights reserved.

Quantitative Targets and Intended Orientation of New Medium-Term Management Plan

Theme of New Medium-Term
Management Plan

Aiming to enhance existing business strategy
and establish a future growth base Quantitative targets (company-wide)(Unit: million yen)

Sales

Operating profit
Operating profit
margin (%)

 Individual strategic themes in mid-term plan

Year ended
March 2024
Actual results

Year ending
March 2025
Forecast

Year ending
March 2027
Plan

10,045

12,285

19,200

312

709

2,100

3.1%

5.8%

10.9%

26

1

Improving earning power of existing business(implementing price revisions and cost pricereductions)2Creating new growth drivers(developing new businesses, new products, newservices)

3

Establishing management base to support business(organizational operation based on digitaltransformation of information)©SUNCORPORATION All rights reserved.

Recognition of External Environment (Global Data Intelligence Business)

Global Data Intelligence Business・DX of criminal investigations is accelerating in response to cyber threats, which are increasing and growing
more sophisticated・Demand for digital tools supporting the DX of criminal investigations is also robust

Competitive environment

Assumed business environment
during mid-term plan

Digital forensics market

Market size:
Digital forensics market

 DX of criminal investigations is accelerating in response
to cyber threats, which are increasing and growing moresophisticated, and adapting to this is required Demand for digital tools supporting the DX of criminal
investigations is also robust Supply of new digital tools/solutions which are not limited todigital forensics is accelerating In 2023, the digital forensics market boasted a size of around$10,000 million (approx. 1.5 trillion yen) worldwide
 The market size in 2028 is forecast to be around $18,200
million, with the CAGR over the 5 years from 2023 to 2028
expected to be 12.9%

Threat intelligence market

Threat intelligence market

 Due to the growth, complexity, and increasing sophisticationof cyber threats, the need for more strategic threat
management approaches is growing Due to robust increase in demand, there is fierce
competition between vendors, regardless of their size,
to develop more advanced technology

 In 2023, the threat intelligence market boasted a size ofaround $13,000 million (approx. 2 trillion yen) worldwide
 The CAGR over the 5 years from 2019 to 2025 is expected to
grow by around 14.0%

27©SUNCORPORATION All rights reserved.

Strategies and Measures by Business Segment

Global Data Intelligence
Business

Sales

Segment profit

Year ended March 2024
Actual results

994 million yen

Year ending March 2027
Plan

1,879 million yen

Strategic Theme

We aim to be a onestop provider trusted
by customers as thecompany they call
first

Law
enforcement
agencies

Privatecompanies

312 million yen

Issues/Opportunities

Resolution Orientation/Measures

Improving earning
power of existing
business

Acquiring stable profit opportunities

Increased stock business• Enhancing sales activities based on upsellingand cross-selling• Reducing churn rate

Creating new
growth drivers

Providing new digital tools/solutions
not limited to digital forensics

Searching for high-added value products byleveraging networks developed to date, suchas Israel

Current sales mix

 Sales mix(stocks vs. flows) Target customers

131 million yen

Year ending March 2027
Plan

Key strategies

 Global Data Intelligence vision
With the aim ofcontributing to safety andpeace of mind for people
globally, we provide
products, services, andsolutions needed toachieve them

Year ended March 2024
Actual results

Financial services
industry security
service providers

8%

Flows
Stocks28

Year ending March 2027
Target sales mix
15%

92%

85%

©SUNCORPORATION All rights reserved.

Recognition of External Environment (New IT-Related Business)

New IT-Related Business

Adapting to increased data capacity in preparation for the arrival of 5G and enhancing security measures
Intensifying price competition with competitors in mind••

Assumed business environment
during mid-term plan

Competitive environment Business environment analysis

 Market size: size of domestic IoT market
User Spending in Domestic IoT Market
2022● Discontinuation of 3G (AU: March 2022,
Docomo: March 2026, SoftBank: April 2024)

2027– Replacement of LTE is also becoming● Competitive changes in recent● Arrival of 5G– At present, NSA (shared use with 4G)– Shift from civilian off-the-shelfmore active

30.7%

41.1%

17.6%

34.2%

20.5%
10.7%

Hardware36.5%

Connectivity

8.9%
SoftwareServices

Domestic IoT market growing 8.5% per year
Market size forecast to be 8.7461 trillion yen
in FY2027

Competitive environment

and SA (dedicated for 5G) are forecast
for 2027 onward– Issues are price, straightness of radio
waves, increased volume of data
● Image recognition and analysis of
accumulated data using AI● Security measures

29

Domestic IoT Router Share(FY2022)years
to industrial products gathering
momentum● Price reductions– Low-price routers– Move toward built-in modules

SUN
CORPORATION

Other

31.4%

68.6%
In the domestic
IoT/M2M router sector,
SUNCORPORATION
has the top share©SUNCORPORATION All rights reserved.

Business Segment Strategies and MeasuresSales

New IT-Related Business Features of New IT

Our strength is being able to provide hardware andsoftware on an end-to-end basis
Positioning of SUNCORPORATION
1 Collecting data from various devices

1. Transmitting data with Rooster is the original source of our business
2. Data collection for legacy devices

2 Location for processing data into
usable forms
1. Edge processing with LBX*, etc. is possible
2. Processing with SunDMS is possible

 Target customers

Segment profit

Year ended March 2024
Actual results

3,022 million yen

5,059 million yen

Year ended March 2024
Actual results

230 million yen

Year ending March 2027
Plan

911 million yen

Year ending March 2025

Year ending March 2026

Year ending March 2027

Hardware focus

Developing solutions
business

Edge AI and device network
intelligence• Further expanding sales ofexisting Rooster products →reaping 3G -> 4G transition
projects• Adapting to 5G→Exploring new markets• IoT solutions and video
solutions• Rooster and network datacollection and control,
visualization, and data analysis(AI/BI*)• Advanced data processing of
sensor data, etc. using edge
computing• Overseas development of
EKTeck, etc.

Expanding the data business with SunDMS as the core
Aiming to establish growth drivers* LBX: In-houseproduct equippedwith edge AI

IoT

Drink vending machine
manufacturers

Medical equipment
manufacturers

Network
cameraLogistics manufacturers

Infrastructure, building, and parking
lot management companies

Sensor(trucks, trains, buses, etc.)

Year ending March 2027
Plan

Network

Intelligence
Device/network management
Collection/
accumulation
Visualization/detection/
notification

Securitysuch as dataencryption

Analyzing/processing* BI (Business Intelligence)

Analyzing data accumulated by companies and using the findings in decision-making by management

30©SUNCORPORATION All rights reserved.

Recognition of External Environment (Entertainment Business)

Entertainment Business• The number of pachinko parlors and the pachinko-playing population decreased due to factors such as restrictions on activities
during the COVID-19 pandemic, but performance has been favorable for smart pachislot machines, which were introduced starting inNovember 2022, so temporary recovery in market size is expected. The overall market size is trending gradually downward.
• In the game market, there is margin to use the many IPs we own in the retro game genre, which is regaining popularity in Westernmarkets.

Assumed business environment
during mid-term plan
 Market size: domestic amusement market
Forecast number of pachinko parlors(Parlors)

 Actual result

 Upper-range forecast Mid-range forecast

Competitive environment Market size: market size and number of units sold in pachinko and pachislot machine market
Market Size and Number of Units Sold in
Pachinko Machine Market

 Lower-range forecast

Market size

Units soldMarket Size and Number of Units Sold in
Pachislot Machine Market
Year-on-year (market size)(market size: million yen)(market size: million yen)

1,400,000

120%

700,000

140%

1,200,000

100%

600,000

120%

500,000

100%

400,000

80%

300,000

60%

200,000

40%

200,000

20%

100,000

20%

0

0%

0

1,000,000

80%

800,000

60%

600,000

40%

400,000

2019

2020

201

2022

2023
2024
2025
2026
2027
2028
forecast forecast forecast forecast forecast forecast

Note: Figures for 2019 to 2022 are taken from National Policy Agency documents, and forecasts for 2023 onward
are estimates by Yano Research Institute (number of parlors as of December 31 each year). We forecast the
number of parlours for three scenarios based on the Yano Pachinko Database.

Yano Research Institute: https://www.yano.co.jp/press-release/show/press_id/3480

Year-on-year (units sold)

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

0%

* Both SUNCORPORATION estimates * Figures created by using the accounting period for each fiscal year (from July to June) as reference
Yano Research Institute: “2023 Pachinko-Related Manufacturer Trends and Market Share”

31©SUNCORPORATION All rights reserved.

Business Segment Strategies and Measures

Entertainment Business(Amusement/Games)

Sales

Segment profit

Year ended March 2024
Actual results

6,051 million yen

 Features of Entertainment
Amusement machine
business
Able to provide turnkey
services for amusement
machines, including
planning, video
development, softwaredevelopment, circuit design,board installation, plastic
molding, and assemblyGame business
Aiming to improve the visibilityof the SUNSOFT brand withremakes of old games andexpanding into the West andAsia by developing new IPs.
Also targeting expansion
aimed at anime fans, not justpachinko users, withamusement machine apps.

Game users
Pachinko users
Anime users

8,520 million yen

Year ended March 2024
Actual results

802 million yen

Year ending March 2027
Plan

1,536 million yen

Key strategies
Strategic theme

Improvingearning
power ofexisting
business Target customers
Amusementmachinemanufacturers

Year ending March 2027
Plan

New development

Creating new
growthdrivers32

Issues/Opportunities
Amusement machine
business• Increasing number ofdeveloped titles

Resolution Orientation/Measures• Hiring new/mid-career talent needed fordevelopment• Developing, co-operating, andcollaborating with new partnercompanies (in game business as well)• Training personnel in a short timethrough in-house OJTGame business• New IP development• Overseas marketing• Development by in-house teammembers + outsourced partners• Collaborating with publishers

New business• Partner development

Purchasing/collaborating with partners
who excel in the target industry©SUNCORPORATION All rights reserved.

Technology Strategy

Supporting business expansion by handling development of technologies that willserve as a basis for SUNCORPORATION’s cutting-edge technology products
POINT 1

POINT 2

Role of R&D Division

Collaboration with outside companies
and universities

Supporting growth of each
SUNCORPORATION business division with
cutting-edge technological capabilities

Developing constituent technologies andcutting-edge technologies

Business divisions
Smart factories

Healthcare

Security

Data business

R&D Division
33©SUNCORPORATION All rights reserved.

Investment in Growth Fields

Establishing cash allocation to maximize corporate value
Term of New Medium-Term Management Plan (3 Years)

Cash on hand
Retainedearnings/
Interest-bearing
liabilities

Growthinvestment

12,500Operatingcash flow

million yen

Expected breakdown:

Details

Enhancing– 7,500 million yen

Reinvestment

Strategic
investment• Capital investment– 5,000 million yen

Anticipated
R&D fields
Smartfactories

Databusiness

Healthcare

New areas

Shareholder
returns

Strengthening
business
growth baseNewbusiness

Enhancingcapabilities

Venture investment
Investment in new
equipment
Equipment upgrading
Large-scale
improvements

Strengthening
management
base

Acquisition oftreasurysharesDividends

Security

Maintaining
capabilities

M&A• M&A and capital alliances

Sustained
growthExisting business

HR/training
M&A
DX investment

Agile acquisition of treasury shares
Optimal allocation to growthinvestment and shareholder
dividends* The total of all the items does not match the total operating cash flow, but the total investment amount is within the range of operating cash flow

34

©SUNCORPORATION All rights reserved.

M&A Policy

We are increasing earnings power by shifting from M&A focused on existing
business to an M&A policy that seeks a wide range of new growth possibilities,
which will lead to increased growth and enhanced corporate value
Basic M&A policy Acquisition based on appropriate price Emphasizing PMI (80% of M&A-process related resources are assigned to this)Business Segment

Theme

Expansion of products/services

Entertainment

Global DataIntelligence

New IT-Related(M2M/IoT)

Business development/other

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Acquiring more of the market
Pursuing advantages of scale〇

Acquiring new business〇

Expanding into adjacent fields
35〇©SUNCORPORATION All rights reserved.

Strengthening Group Management Base through Strengthening Personnel

Enhancing recruitment anddevelopment of technical talent,

Establishing talent as amanagement priority

enabling advanced technologies to belinked to improved corporate value
Personnel strategy orientation
Establishing a work
environment that facilitates
work

Developing humancapital

Enhancing and revising training andeducation system



Using talent management system

Sharing internal expertise

Practical experience based on OJTOrganization that creates

Talent acquisitionImproving employee satisfactionUsing overseas internships

Enhancing benefits packageDiversity measures

Strengthening collaboration witheducational institutions

Global recruitment from overseas
and abroad

36

innovation






Corporate climate that encourages
people to take on challenges
Implementing merit point-based
assessment system
Fostering culture that creates
connections between people
Establishing personal network andinformation chain©SUNCORPORATION All rights reserved.

Strengthening Group Management Base through Organizational Improvements

Revamping our organizational structure to enhance business
management functions and enable matrix management with the aimof further improving corporate value
Role Fulfilled by Each
Organization

Business
Business Promotion Division
Purpose is risk-taking

Governance DivisionCorporate Head
Office Division

New IT-Related(M2M/IoT)

Global DataIntelligence

Entertainment

Business management

Corporate Division/Management Strategy
Department (DX)At the same time as pursuing and managing top-line growth andhigher profits in each business, plays a role in pursuing andmanaging inter-segment business and commercialization of new
products(combines functions of chief product officer, chief technology officer, and chief
revenue officer)

Manages corporate (head office) functions other thangovernance/focuses on systems strategy (e.g., DX)
Oversees governance- and risk-related management functions inorder to enhance corporate governance functions

37©SUNCORPORATION All rights reserved.

(Reference Materials) Overview of Products and Services by Segment
Segment

Topics• Launched Inseyets as a next-generation digital forensics solution in place of UFED which accelerates processes such as automation of collection,

extraction, reporting, and triage and eliminates the previous need for manual human intervention between various processes, leading to substantiallyreduced workload for investigative personnel

Global Data Intelligence• Launched Pathfinder, which enables investigative teams to efficiently process digital data based on advanced filtering, categorization, tagging, and analysis
using AI and machine learning• Started handling Cybersixgill as an intelligence solution specialized in information collection, review, and analysis on the deep web and dark web• The amusement machine-related business is being commissioned to provide a full range of services from total content development (from pachinko andpachislot planning to design, video production, and programming) and control board design to manufacturing• To support operation and improve content visibility in the actual machine market, we are developing pachinko and pachislot machine simulation apps forEntertainment

smartphones, and in April 2024, we released P Hi Ammo no Aria – Hihigami Descend – Lucky Trigger Ver.

• The game content business is proceeding with planning that leverages retro game IPs, and in February 2024, Hebereke 2 was launched globally on
multiple platforms (game consoles)• Launched Switch version of Ikki Unite in April 2024
• Planning to launch Ark of Charon as an all-new product for Steam• We are planning to transfer the original Clock Tower game, which was released in Japan only in 1995, to current game consoles and globally launch ClockTower Rewind, featuring added content, in FY2024 as a joint project with the U.S. companies Limited Run and Wayforward• To reduce management costs and make operations such as product restocking more efficient, we are progressing with the launch of A330 and A900, which
are strategic products for drink vending machines

New IT-Related• Aiming to differentiate Rooster industrial network equipment from other companies through collaboration with the SunDMS device management service• We released LBX8110 in September 2023 as an edge computer that can be equipped with AI image analysis• OKUDAKE Sensor, a sensor device for predictive maintenance through temperature management and acceleration (vibration) sensors in food sanitation
management (HACCP), has moved to the full-scale rollout phase• We are progressing with development of SunDMS-Insight, which enables collection, control, and visualization of device and network data
38

©SUNCORPORATION All rights reserved.

Disclaimer

The purpose of this document is to provide information about the company’s business, management strategy andperformance. It is not intended to solicit investment in securities issued by SUNCORPORATION.
Furthermore, this document was created based on financial results and corporate data available as of May 14, 2024.
The opinions and forecasts included in this document are based on the company’s judgment at the time the material was
prepared. SUNCORPORATION makes no guarantees or promises regarding the accuracy or completeness of theinformation, which is subject to change without notice in the future.
IR inquiries: SUNCORPORATION IR OfficeE-mail: ir@sun-denshi.co.jp