For Institutional Investors/Analystssts

November 29, 2018
KAGA ELECTRONICS CO., LTD.

・ Review of the Medium Term Management Plan 2018

P-3〜5

・ Next Medium Term Business Plan 2021 Outline

P-6〜11・ Business Portfolio/EMS Growth Scenario

P-12〜14・ Acquisition of Shares in Fujitsu Electronics

P-15〜19

KAGA ELECTRONICS CO., LTD.
President & Representative Director23

(2015 - 2018) :Main Results
Expansion of overseas EMS bases towards an increase in business scale

Expansion ofEMS
Business・Sept. 2016
・Jul. 2017
・Dec. 2017
・Sep. 2018

Establishment of Mexico base (Opened Jan. 2018)
Establishment of Vietnam base (Opened Mar. 2018)
Establishment of Turkey base (Opened Oct. 2018)
Establishment of India base (Scheduled to open spring 2019)

Execution of group company reorganization and consolidation towards
improving management efficiency

Structural
Reform・Jan. 2016
・Oct. 2017
・Jan. 2018

VentureInvestment

Integration of three domestic subsidiaries engaged in the information
devices business into a single company
Transfer of a part of shares in SiC substrate development subsidiary to
external company, migrate to a joint venture
Integration of two domestic manufacturing subsidiaries into a singlecompany

With the objective of building a new revenue base in the future,commencing investment activities in venture companies and start ups with abudget of 5.0 billion yen over three years
・FY2017・FY2018© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

Invested 930 million yen in 17 companies
Invested 160 million yen in four companies (as of October 2018)4

(2015-2018)

Incorporating the conversion of Fujitsu Electronics to subsidiary*, themanagement targets for sales and ROE are generally expected to beachieved.
＊ Note: Consolidation scheduled from FY2018 Q4Current Mid-termManagement Plan
Targets (FY2018)

Net Sales

290 billion yen

FY2018
Forecast

290 billion yen

Factors
Incorporating the FujitsuElectronics Q4 sales, the target is
expected to be achieved

・The contribution to sales through conversion
to subsidiary shall be 58 billion yen

There is a risk of the target not
being achieved

Ordinary
IncomeROE

10 billion yen

8.0% or higher© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

8.0 billion yen

9.9％・Delay of contribution from newly establishedoverseas EMS factories
・The contribution to income throughconversion to subsidiary shall be limited・Reserve provision for bankruptcy of a majorclient in JapanThe target of above 8% in themedium term plan has constantly
been achieved

・10.9%/FY16➞9.5%/FY17➞10.0%/Forecastfor FY18
・Contribution of “negative goodwill” inconjunction with the conversion to subsidiary56© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

7

(2019 - 2021)

Key Issues
Utilizing the Group’s DNA to see things ahead of time, we shall focus on markets andcustomers forecast to have high growth potential and profitability, and will aim toEnhancement ofRevenue Basestrengthen the revenue base・ Strengthening initiatives for growth sectors: In-vehicle, communications, environment, industrial
equipment, medical and healthcare
・ Enhancement and expansion of EMS business and overseas business

Aiming to stabilize the management base towards early improvement of efficiency andStabilization ofManagement
Basefinancial soundness after conversion of Fujitsu Electronics to subsidiary・ Continuation of group-wide cost reduction measures
・ Promotion of improve group management efficiency through the preparation of an organizational structure
・ Enhancement of corporate governance, cultivating human resources to lead the next generation

In order to enhance resistance to changes in the external environment, we shallendeavor to create new business through the proactive use of our own resources and M&A

Creation ofNew Business・ Launching of social issues (childcare, welfare, nursing care, etc.) business and materials business・ Promotion of open innovation through venture investment
・Proactive use of M&A activities© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

8

(2019-2021)

FY2018
ForecastManagement
Targets FY2021

Growth RateCompared toFY2018

Net Salesbillion yen○billion yen○Up%○

Operating
Incomebillion yen○billion yen○

Up%○

%○

% or higher○

ROE

FOREX

・ Assumed Exchange Rate： US$1.00＝￥110© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

9(2019 - 2021)
1 trillion yen

Organic
GrowthAim to become a “company that spans the globe”+
that will be victorious in global competition
Further M&A
Further
Challenges
expansion of
500 billion yen
Towards the realization ofthe EMS“Japan’s No. 1 corporate group inbusinessthe industry”
Kaga
ElectronicGroup+
FujitsuElectronics

IncreasedSales

Expansion oftrading company business

Increased
ProfitRatio

Enhancement
and expansion ofoverseas
businesswill lead to
growth of the EMS business
Quantitative
expansion of tradingcompany business

Qualitative improvement
through EMS businessMedium Term Management Plan 2021 (2019-2021)(Net Sales)

Medium to Long TermVision© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

10

We shall perform stable dividends, while securing a consolidated dividend ratio of
25 to 35%.
 We shall use funds for business investments, capital investments, and M&A, etc.
in order to contribute to future growth.
 Decisions on the acquisition of treasury shares shall be made appropriately,in consideration of capital efficiency and share price, etc.
35%Basic Policy on
Dividends ofSurplus

29.6%

28.6%
25.5%

28.2%
28.0%

25.6%
24.1%

25%
Total return trend：45.4%■ Ordinary dividend■ Commemorative
dividend■ Special dividend

Acquisition of treasury shares (JPY 1,499million)

70 yen75 yen(5 yen dividend
60 yen(10 yen dividend increase)
55 yen (5 yen dividendincrease)(15 yen dividend increase)
540yen35 yen
10increase)(5 yen dividend(5 yen dividendincrease)
20increase)
15

530

10

PeriodEnding
2014/3期
March2014実績
Results

PeriodEnding
2015/3期
March2015実績
Results

304040PeriodEnding
2016/3期
March2016実績
Results

PeriodEnding2017/3期
March2017実績
Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

60
PeriodEnding
2018/3期
March2018実績
Results

70

PeriodEnding
2019/3期
March2019
予想
Forecast

PeriodEnding2020/3期
March2020
イメージ
Image

PeriodEnding2021/3期
March2021
イメージ
Image

PeriodEnding2022/3期
March2022
イメージ
Image

1112

In the new medium term plan, we plan to review future disclosure
segments, and to perform a reclassification into the following four categories.

ElectricalParts・Semiconductor (general purpose,custom) sales
・General parts (capacitors, connectors,cables, switches, etc.) sales
・LCD, LED, storage device sales

EMS

・Manufacture contracting (installationof electric circuit board - assembly offinished product) services for various
electronic devices, design anddevelopment associated with thisCSI＊・PC and PC peripheral product sales
・Various household appliances, lighting
fixtures, photography and videorelated product sales, etc.

Sales Composition Ratio
Electrical
電子部品
ElectricalEMSPartsParts

Other2%290 billion yen© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

10%
28%

235.9 billion yen

3%
3%
20%

41%
FY2017 Results＊Note: CSI is an abbreviation of Consumer Solution Information

Other
その他
500 billion yen

16%
29%
60%

36%
・Various CG imaging and software
production・Sports product sales, etc.

CSI

52%
FY2018
Forecast

Final FY
Management Targets(FY2021)

13Driven by the growth of in-vehicle, air conditioning, industrial
machinery, and medical and healthcare, we shall aim for drastic growthof business size of 1.7x that of FY2017
140 billion yenx
83.8 billion yen
13％
9％
13％
18％
27%

FujitsuElectronics,
M&A％

Consumer, etc.

％

Healthcare％

OfficeEquipment％

Industrial
Machinery％

Air Conditioning%

In-vehicle%

20％
FY2017
Results© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

FY2021 Image

PointsOrganic
GrowthFujitsuElectronics

EMS Shift

FurtherM&A

 In addition to our existing production capacity in China,
ASEAN, and Europe, we shall aim to expand businessin growth areas such as in-vehicle, air conditioning,
and industrial machinery, through full scale investment
in new bases in Vietnam, Mexico, Turkey, and India.
 We shall develop a “Key Device + EMS” approach forthe major customers of Fujitsu Electronics.
 We shall aim to further expand the size of the EMS
business, and search for new M&A opportunities insideand outside of Japan.
14

15

Scheme・ Acquire 70% of shares in Fujitsu Electronics from Fujitsu Semiconductor,
forming a subsidiary. Acquire gradually until becoming a wholly owned
subsidiary in January 2022AcquisitionPrice・ Total 20.5 billion yen (forecast total)

Financing・ Plan to finance with self-funding and new bridging loan
・ Consider switching to the procurement of various long-term funding for thisbridging loan

Financial
Impact・ Amortization schedule of goodwill and intangible fixed assets to be released
after acquisition
・ However, Acquisition Price ≒ Net Assets, so the impact is expected to beslight

Schedule ofStock
Transfer

・ First Phase : January 2019 (70％)
・ Second Phase: December 2020 (15%)
・ Third Phase : December 2021 (15%)

・ The acquisition price at each phase will be adjusted based on fluctuations in the value of the consolidated net assets of FujitsuElectronics,
and the above acquisition price is the estimated amount at current prices.
・ This share acquisition is subject to approval by relevant authorities in accordance with domestic and international competition laws.
・ The impact on consolidated results for the current fiscal year (ending March 2019) will be released after confirmation.

© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

16 Drastic expansion of business scale for core electronic components
business becoming the “Industry No. 1”
Fujitsu Semiconductor

Kaga Electronics Group

Fujitsu Electronics

Electronic Components
Trading Business

EMS BusinessInformation Equipment

Software
OtherSubsidiary
Short-term Goal ＝ Trading BusinessMedium-term Goal ＝ EMS Business

Sales UP

Profitability
UPExpansion of the Trading BusinessLeading to Growth in EMS BusinessTrading Business

Expanded Quantities© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

EMS Business

Improved Quality

17（FY Ended March 2018 Results Base）

 The birth of an industry-leading class 500 billion yen Group.
Lead the further reorganization of the industry

Note: Simple sum base for “Kaga Electronics + Fujitsu Electronics” and Rester
SIIX figures for FY ended December 2017
© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.※Data Source: Internal study18 The Fujitsu Electronics Group aims to develop our business based on
the following strengths.

Own Engineers
peopleFujitsu Group
Fujitsu Electronics

Sales channel
Domestic：
companies

Overseas：companies

Global Support
Network
Domestic：

placesOverseas：

placespeople19Electronic
components• Sale of semiconductors (general-purpose products and customizedproducts)• Sale of electronic components (transformers, condensers, cables,
connectors, and switches, etc.), LED, and storage devices• Development, manufacture and sales related to EMS (airconditioning, office equipment, automotive devices, industrial
equipment, amusement machines, communication equipment,
medical equipment, etc.)

Informationequipment• Sales of PCs and PC peripherals, home electric appliances/lighting
fixtures, photograph and imaging products, original brand products,etc.)

Software• Production of computer graphics, planning and development ofamusement products, and other activities

Others• Repair and supports for electronics equipment, manufacture andsales of amusement equipment, and wholesale/retail of sports goods,etc.)© 2017 KAGA ELECTRONICS CO.,LTD All Rights Reserved.

20

20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Office
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail： webmaster@taxan.co.jp
https://www.taxan.co.jp

■ Caution on forward-looking statements
Forwarding look statements included in this document, such as performance forecasts, arebased on information that has been obtained at the current time and certain assumptions
deemed as reasonable by the company; actual performance, etc. may be significantly different
due to various factors.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.