2021 - 2022

Financial Results Briefing Material
for the Fiscal Year ended March 2023

KAGA ELECTRONICS CO., LTD.
TSE Prime Market 8154

May 25, 2023

Management Topics
Representative Director,President & COO

Ryoichi Kado

Alternative Proposal / Alternative Sales
Revenue of alternative sales

7.5bn

JPY

companies

87

MOSFET
7%
Analog IC
9%companies

PowerSemiconductor
30%
FPGA
24%

Others24%

FY2023
Outlook

FY2023 Outlook
OthersPower
18% Semiconductor
24%
MOSFET
26%

FPGA
24%

Analog IC
8%

Composition by Industry
FY2022 Results

new customers : 17
Existing customers : 71FY2022Results

FY2022 Results

Others30%

JPY7.0bn

88

Composition by ProductInsustrial
32%

Telecommunucation
6%
In-vehicle
Consumer
12%
26%

FY2023 Outlook
Others17%
Telecommunication
7%
In-Vehicle
34%

Industrial
20%
Consumer22%

2

Inventory Reduction
Changes in Inventory Amount and Inventory Turnover
900

800

700

600

Inventory amount(trading company business)
Inventory turnover

JPY 37.9 bn

120

JPY 62.6 bn(manufacturing business)
500

JPY 71.2 bn(trading company business)
Inventory turnover(consolidated)
Inventory turnover

304
84.0

27180.1

303

200

53.4

14532.826.41000233
2021/346.1

34.3354

JPY 56.2 bn

76.7268
65.5days

400300140

JPY 78.8 bn(manufacturing business)
Inventory amount

43.7

32.6

408

1008060

47.9

38.9

485

33.7days
23.4days

40

20

293
2022/32022/92022/122023/303

Medium-Term Management Plan 2024 : Targets
Initial plan

Latest outlook(Announced on November 25, 2021)（Announced on May 11, 2023）

FY2022~FY2024
JPY 750 bn

Organic growth: JPY 600 bn

Including new M&As: JPY 150 bn

JPY 20 bnstable

8.5% or higher

Planned year

[No change]

Net Sales[No change]

OperatingIncome

JPYROE

stable30 bn or higher
10% or higher
4

Direction of Increase/Decrease Factors on Operating Income
In FY2023, there are risks of income decrease due to a decline attributable to suchfactors as the absence of spot demand and customers’ BCP inventory adjustment
Decreasefactors

Increasefactors

FY2021

FY2022

FY2023

FY2024FY2025~2027―――

Sales Volume /inventory adjustment
Spot Sales
Expansion of EMS business
Improved profitability ofacquired companies
Human capital investment(salaries, bonuses, etc.)

500450

JPY 209 bn

400

JPY 300 bnor higher

JPY 322 bn

Profit from
Spot Sales
JPY 4.6 bn

JPY 250 bn

Profit from
Spot Sales
JPY 4.2 bn

350
300

Latest outlook
JPY 200 bn

250

Initial targets

15020010050

FY2021Results

FY2022
Results

FY2023
Forecasts

FY2024
ManagementTargets

0

FY2027
Image5Concept of ROE
Maintain a stable ROE of 10% or higher
with cost of shareholders’ equity (7%–8%) in mind

13.5%
10.0%

15.7%

FY2024
Management Targets

19.6%

Total asset turnover

7.6%
1.9
2.1
2.6

1.9
2.6

2.7
1.3
FY2019Results10.0% or higher

Stable2.7

3.1

FY2020Results

FY2021Results

2.2
2.4

3.8

Approx.

2.0

Financial leverage

2.0 ～ 2.5

Net profit margin

3.0 ～ 3.5

FY2022
Results
6

Shareholder Return (Dividend Policy)
Dividends shall be a combination of “ordinary dividend +special dividend“ linked to business performance.
We shall maintain stable dividends with a target consolidated
dividend payout ratio of 25% to 35%.
Decisions on the acquisition of treasury shares shall bemade flexibly, in consideration of capital efficiency and shareprice, etc.

Concept ofshareholder
returnTotal return trend：44.3%

25.5%

25.6%

■ Ordinary dividend■ Commemorativedividend■ Special dividend

JPY35 JPY40

32.8%

29.6%

28.6%

35%

Acquisition of treasury shares(JPY 3,674 mil)

32.1%

24.1%

27.4%

25.0%
20.8%

19.3%

Total return trend：45.4%
Acquisition of treasury shares(JPY 1,499 mil)

25%

※Including negative goodwill
about JPY8 bn

JPY220 JPY220
70

JPY55

JPY60

530

1030

154020FY2013Results

FY2014
Results

FY2015Results

FY2016
Results

40

JPY70JPY80605570

FY2017
Results

FY2018Results

10JPY70JPY8010206060

FY2019Results

FY2020Results

JPY120104022014080
FY2021Results

FY2022
Results

FY2023
Forecasts

7Materiality
The Kaga Electronics Group is committed to seriously addressing a variety of issues relevant not
only to itself but also communities around the world and thereby living up to the expectations ofsociety. In line with this commitment, the Group has employed four perspectives— Environmental(E), Social (S), Governance (G) and Business (B)—to identify priority issues that are deemed toexert significant impact on its business operations, as listed below. Through its efforts to tackle themateriality of these issues, the Group will practice corporate activities aimed at contributing to therealization of a sustainable society, with the aim of further improving its corporate value.
Materiality

E

Create a clean
globalenvironment

S

Create aninclusive company
as well as anaffluent societyG

Createa sustainable
management base

B

Realizesustainablebusiness growth

Related SDGs

Changes in the socio-economic
environment• Growing seriousness of global warmingand other environmental problems• Urgent call for carbon neutrality• Changes in social structure as we movetoward the popularization of the newnormal• Human resource shortages attributable
to a low birthrate and an aging
population• Public calls for more robust corporate
governance• Growing need for business resilienceagainst changes in the operating
environment• Progress in digital transformation• Coming of a “super-smart” society due
to the popularization of ICT, such as
IoT and AI• Intensification of global competition

Our initiatives• Provide products and services designed tohelp resolve environmental and energy
issues• Continue initiatives to reduce theenvironmental burden• Promote workforce diversity andinnovative work styles to better adapt to
the new normal• Develop human resources by passing
down and updating KAGA-ism• Further strengthen corporate governanceand compliance• Thoroughly practice a profit-focusedmanagement approach• Provide products and services that
contribute to the transition to a digitaldriven society• Create new businesses aimed at helping

8Medium- to long-term sustainability targets
Key themesEAchievement of shift to100% renewable energy

Issues to address and issues toexamine• Adoption of renewable energy atdomestic sales offices• Adoption of renewable energy atdomestic manufacturing sites• Adoption of renewable energy atoverseas manufacturing sites

Shift to electricity for• Switch to electric vehicles for domestic
sales vehicles (EV, HV, PHV, FCV)
company-owned vehicles

2030: 100%

By 2024: Information
gathering/analysis and determinationof policy
・In-house power generation/externalprocurement
・Solar panel/biomass power
generation/renewable energy
businesses

2030: 50%
2050: 100%

2024: 85% (78.5%)

2030: 100%

Diversity and humanresource management

Percentage of female newgraduates in general positions
2023: 30% (5.8%)
Percentage of women inmanagement positions
2024: 15% (13.3%)

Work–life management
and enhancement ofproductivity• Enhancement of programs such as
childcare/family-care and telework• Acquisition of certification as a Healthand Productivity Management
Organization

2022: Implementation of review
2023: Certification

Restructuring the• Independent Outside Directors: atgovernance structure in
least 1/3
response to the revision of
the Corporate Governance • Establishment of Nomination andCode and the reorganization
Compensation Committeeof Tokyo Stock Exchange

Further strengthening
the supervisory andoversight functions oftop management overbusiness execution• Diversification of the Board ofDirectors• Full compliance with Corporate
Governance Code for Prime Market• Adoption of delegation-based
executive officer structure• Transition to structure of company
with committees

Long-term targets

2024: 40% (1%)• Ensuring diversity in core humanresources (Women, foreign
nationals, mid-career hires)• Initiatives to employ elderly workers
and persons with disabilitiesSG

Medium-term targets

2030: 30%
2050: 100%

Percentage of female
new graduates ingeneral positions
2028: 40%
Percentage of women in
management positions
2029: 17%2025: Certification byoutside party
2024 onward:
Continuation ofcertification

Performed in June 2021

By June 2022: Determination ofpolicy
Performed in November 2021

Setting of targets inline with next
Corporate Governance
Code revision

April 2022: Enactment
By March 2023: Determination ofpolicy*Numbers in parentheses represent values when the plan was formulated in November 2021.

9Progress of medium- to long-term sustainability targets：
Environmental
Key themes

EAchievement of shift
to 100% renewableenergyShift to electricity forcompany-ownedvehicles

Issues to address and issues to examine

Main activities and progress in FY2022• Adoption of renewable energy at domestic
sales offices

 Introduced 1.2% of total electricity from renewableenergy sources. Continue study to achieve 40% in
FY2024.

• Adoption of renewable energy at domestic
manufacturing sites

 Calculated power generation to install solar panels atsites in Aomori, Fukushima, and Tottori. Started thedetailed design.

• Adoption of renewable energy at overseas
manufacturing sites

 Started to introduce renewable energy-derived
electricity using solar panels at sites in China (Hubei)
and Vietnam. Expected to cover 30%-50% of annual
electricity usage at each site.

• Switch to electric vehicles for domestic sales
vehicles (EV, HV, PHV, FCV) The ratio of electric vehicles increased by 1.2% year
on year to 82.0% (as of March 31, 2023).

Solar panels installed on the roofof Head Office

Solar panels installedat Vietnam factory10

Progress of medium- to long-term sustainability targets：SocialKey themes

Diversity andhuman resource
management

SWork–lifemanagement
and enhancementof productivity

Issues to address and issues to examine

Main activities and progress in FY2022

 Ensuring diversity in core humanresources (Women, foreign nationals,mid-career hires) Percentage of female new graduates in general
positions increased by 12.3pt year on year to 18.1%
as a result of hiring activities based on the Action Plan.
 Discussions held within the group to improve
percentage of women in management positions andset targets for the number of women in management
positions at each group company. As of April 2023,
the percentage of women in management positions
has increased by 3.2pt year on year to 16.5%.

 Initiatives to employ elderly workers andpersons with disabilities

 Employment of persons with disabilities is 100% of
the legally mandated rate (as of March 31, 2023)

 Enhancement of programs such as
childcare/family-care and telework

 Revised regulations and rules to make telework apermanent system Acquisition of certification as a Healthand Productivity ManagementOrganization

 Certified in March 2023

11

Progress of medium- to long-term sustainability targets：
GovernanceGKey themes

Issues to address and issues to examine

Main activities and progress in FY2022

Restructuring thegovernance structure
in response to therevision of theCorporate
Governance Codeand thereorganization ofTokyo Stock
Exchange Independent Outside Directors: at least
1/3
 Establishment of Nomination andCompensation Committee Effective June 2023, 6 directors (including threeoutside directors), with a majority of directors beingoutside directors. Established the Nomination andCompensation Committee.

 Diversification of the Board of Directors

 Decided to nominate a female candidate as a newoutside auditor. Continued to work to appoint afemale director.

 Full compliance with Corporate
Governance Code for Prime Market

 TCFD-compliant information to be disclosed fromJune 2022.

 Adoption of delegation-based executive
officer structure Implemented from April 2022.

 Transition to structure of company withcommittees

 Continue the company-with-auditors system, but
shorten the term of directors from the current 2years to 1 year (planned in June 2023).

Furtherstrengthening thesupervisory andoversightfunctions of top
management overbusiness execution

Enhancement of the Board ofDirectors’ functions
InsideDirector

11
Outside Director

InsideDirector

6Outside Director

Adoption of Delegation-based
Executive Officer Structure
Outline: Management (conventionally, directors)
with roles (e.g., Founder & CEO, President & COO,senior managing executive officer, managing executiveofficer, and senior executive officer)
Inside directors concurrently serve as delegatedexecutive officers.
Term of office: 1 year
Nomination: Deliberated by the Nomination Committeeand resolved at the Board of Directors meeting.
12

“Everything we do isfor our customers
20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Department
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail： webmaster@taxan.co.jp
https://www.taxan.co.jp/en/

■ Forward-looking statements in these materials are based on information available to management
at the time this report was prepared and assumptions that management believes are reasonable.
Actual results may differ significantly from these statements for a number of reasons.
■ 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.