KAGA ELECTRONICS
CO., LTD.

For Institutional Investors/Analystss

Financial Results Briefing Material
for the Fiscal Year ended March 2022
KAGA
ELECTRONICS CO., LTD.
加賀電子株式会社
TSE Prime Market 8154

May 26, 2022

Management Topics
Representative Director,
President & COO

Ryoichi Kado

Response to the Spread of Novel Coronavirus Infection：
Sales bases in Japan
Office attendance rate and number of infections
FY2022/3 H1

FY2022/3 H2

FY2022/3 H1 plan

Number of
COVID-19 cases（FY2022/3）

KagaElectronics

41.5％

45.8％

40％

47

Group
companies

47.3％

51.6％

(Different foreach company)

104

Group overall

44.4%

48.7%

―

151

Infection prevention measures
Do not bring the virus towork or spread it

Thermometers
were set up

Partitions within offices

Thorough antiviral and antibacterial
measures were taken

Antiviral coating wasappliedPhotocatalytic sterilizing
deodorizers were set up

1Response to the Spread of Novel Coronavirus Infection：
Overseas Production Bases
Status of factory operation and number of infections：Operationsuspension
periodFY2022/3 H1

FY2022/3 H2

China

FY2022/3 H1
3/14～20:Shenzhen

Thai
Indonesia
Malaysia

7/15～26

Vietnam

7/22～9/27

India
Czech
TurkeyNumber of
COVID-19 cases（FY2022/3）
China

0

Asia

113

Europe2

America18

MexicoInfection prevention measures
Do not bring the virus towork or spread it

Temperature taken
when arriving at work

Goggles and masks worn

Social distancing wasstrictly enforced

Production lines

Partitions in thefactory cafeteria

2

Review of the Previous Medium-term Management Plan:
Results of management policiess
Basic policy
Enhancement of
Revenue BasePriority themes▶ Focus on markets andareas in which high growthand profitability are expected

Main results〇 Revenue increase effect throughacquisition of companies：about ¥215 bn〇 Growth of EMS business：about ¥28 bn〇 KAGA FEI: Gross profit margin

Stabilization ofManagement
Base▶ Swift recovery of theGroup’s management
efficiency and financial
soundness after weakness
caused by acquisition ofcompanies

6.3% (FY18 results) ➔ 9.8% (FY21 results)〇 Kaga Electronics: Consolidated SG&A ratio

9.5% (FY18 results) ➔ 8.0% (FY21 results)〇 Kaga Electronics: Equity ratio
35.8% (end/Mar 2019 results)➔ 38.8% (end/Mar 2022 results)〇 Venture investments：19 projects executed

Creation of New
Businesses▶ Enhancement of resiliency(investments in 42 companies)
to changes in the external△ Social issues solutions-oriented business：environment, actively
leveraging in-house
Entry into disaster-readiness helicopter andresources, and M&A
EV bus mobility business, preparation forentry into medical device business3

Review of the Previous Medium-term Management Plan:
Results of management figures（billion yen）

Net sales<Management Targets>▶ Fell slightly short▶ Largely absorbed
unexpected impacts such as
those from loss of major<Results>
commercial rights and
JPY495.8bn COVID-19
JPY500bn

Operatingincome<Management Targets>

JPY13.0bn<Results>

JPY20.9bn

8％ or higher<Results>

15.7％

500.0
400.0
200.0
0.0

292.8
FY2018

443.6

422.4

495.8

FY2019FY2020

FY2021（billion yen）
25.0

▶ Greatly exceeded▶ Achieved record profits
over 3 successive fiscal years

ROE<Management Targets>

600.0▶ Exceeded stable ROE of
8% from the second year of
the medium-term plan

20.0

20.9

15.0

13.0

10.0
5.0
0.0

7.6
FY201810.0

11.5

FY2019FY2020

20%
15%

10.9%

10%

13.5%

FY2021

15.7%

7.6%

8.0%

5%
0%

FY2018FY2019FY2020

FY20214

Outline of the new medium-term management plan
JPY 1 tn

Aim to become a competitive “World classcompany”
Aim to be “Japan’s No. 1
corporate group in the industry”

Organic
growth+Further M&A
Challenges

Expansion of
trading company business

Increased
Sales

JPY

750 bnGrowth fields

Increased
ProfitRatio

Mobility
Communications
Environment

will lead to
growth of the EMS business
Quantitative
expansion of trading
company businessIndustrial
equipment
MedicalQualitative improvement
through EMS business

Reinforcement and expansion of overseas business, EMS business

Health care

（Net Sales）

Medium-Term Management Plan 2024
Further reinforcement of
profitability

Reinforcement ofmanagement baseCreation of new businesses

Promotion of SDGs
management“CHALLENGE 1.60"
Sales of ¥1 tn in year of
60th anniversary offounding

5Management Policies of the new medium-term management plan
Basic policy

Priority themes▶ Focus on markets
Furtherwith potential for
Reinforcement ofhigh growth andProfitability
profitability▶ Transformation toa Group management
Reinforcement offoundation worthy ofManagement"Japan’s No. 1
Base
corporate group in
the industry"
Creation of New
Businesses▶ Active use of venture
investments andM&As

Promotion of
SDGs
Management▶ achieve solutions tosocial issues andsustainable growth as
a company

Major initiatives• Selection and concentration in growth fields:
Mobility, Communications, Environment,
Industrial equipment, Medical/Health care
• Reinforcement and expansion of EMS businessand overseas business• Reinforcement of corporate governance• Efficient Group management• Investments in human capital• Initiatives in new fields• Promotion of open innovation through venture
investments• M&A efforts aimed at discontinuous growth• Promotion of group-wide sustainability
management(See “Medium- to long-Term Sustainability
Management Plan” for details)
6Management Targets of the new medium-term management plan
There was pressure from special factors that were not predicted when formulating the plan, leading to profit levels
that exceeds the medium-term management target of 20 billion yen. We will conduct a revision as appropriate
given the actual state of affairs, focusing on the progress of performance as of the 1H of FY2022.
(Net Sales)

1,000Electronic Componens

EMS

CSI

50 (Operating

OthersIncome)

CSI: Consumer & System Integrator

45(Net Sales)

JPY750.0bn

800

600

JPY470.0bn

JPY495.9bn

12.0

400

200

0

Net sales
OperatingincomeROE

40
110

JPY15.0bn

12.0

12.5
40

JPY20.9bn

39

JPY21.2bn

125

118

New
M&As

35

150
54

12.0
(Operating Income)

150 JPY20.0bn

30
25
20
15
10

380

334

326

308

JPY510.0bn

40

5FY2021 Forecasts
At the time ofplan formulation

FY2021Results

FY2022
Forecasts

FY2024
Management
Targets

JPY470.0bn

JPY495.8bn

JPY510.0bn

JPY750.0bn

15.0bn20.9bn21.2bn20.0bn

9.7％

15.7％

13.0％

8.5％ or higher

07Sustainability Policy
Under our corporate philosophy of "Everything we do is for our customers," the Kaga Electronics
Group seeks to achieve both a sustainable society and sustainable growth of the Group.
Toward this purpose, we will respect dialogue with customers, business partners, shareholders,investors, employees, local communities, and all other stakeholders, based on our Basic CSR Policy,
Environmental Policy, and Action Guidelines. We will work to increase our corporate value as weplay an active role in achieving a sustainable society.

1 We will tackle environmental issues through our business activities
Through our business activities, we will take action to cut CO2 emissions, reduce waste, andpromote reuse. At the same time, by providing environmentally considerate products and services,
we will contribute to bringing about a society that values the global environment.

2 We will respect human rights and develop human resources
We will respect the human rights of all stakeholders, regardless of gender, age, nationality, social
status, disabilities, or other personal attributes. We will develop work environments in which
diverse employees can work in safety and health, both physically and mentally, and will develop
personnel systems and education and training systems that allow these employees to maximize
their individual abilities. We will further work to develop human resources who will take on thechallenge of innovation.

3 We will work to build mutual trust with society
We will work to be a company that earns the trust of society by observing laws and regulations,by strengthening our governance structure, and by sincerely engaging in fair competition, theprovision of high-quality products and services, timely and appropriate information disclosure,and other corporate activities.
8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 warming
and 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

9Medium- to long-term sustainability targets and major KPIs
Key themesE

Achievement of shift to100% renewable energy

Issues to address and issues to
examine• 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/external
procurement
・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 in
management positions
2024: 15% (13.3%)

Work–life management
and enhancement of
productivity• 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• Independent Outside Directors: atleast 1/3
• Establishment of Nomination andCompensation Committee

Performed in June 2021

Restructuring thegovernance structure in
response to the revision of
the CG Code and thereorganization of TSE

Further strengthening
the supervisory andoversight functions of
top management overbusiness execution• Diversification of the Board of
Directors• 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 disabilities

S

G

Medium-term targets

By June 2022: Determination ofpolicyPerformed in November 2021

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

Setting of targets inline with next CG Coderevision

April 2022: Enactment
By March 2023: Determination ofpolicy*Numbers in parentheses represent current values

10Medium- to long-term sustainability targets:
Main activities and progress
Key themesE

Achievement of shift to100% renewable energy

Issues to address and issues to
examine• Adoption of renewable energy atdomestic sales offices

 Measured the electricity usage (approx. 4.42 million KWh).
Started study of when to purchase renewable energy.

• Adoption of renewable energy atdomestic manufacturing sites

 Measured the electricity usage (approx. 6.72 million KWh).
Solar panels, onsite/offsite PPA, etc., are under consideration.

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

Diversity and humanresource management

S
Work–life management
and enhancement of
productivity
Restructuring thegovernance structure in
response to the revisionof the CG Code and thereorganization of TSE

G

Further strengthening
the supervisory andoversight functions of
top management overbusiness execution

Main activities and progress in FY2021

 80.8% complete (as of March 31, 2022).

• Ensuring diversity in core humanresources (Women, foreign
nationals, mid-career hires)

 Formulated an action plan based on the Act on Promotion of
Women’s Participation and Advancement in the Workplace.
Started hiring activities in accordance with the plan.
 Informed group companies to improve percentage of womenin management positions. Started setting targets for numberof women in management positions at each group company.

• Initiatives to employ elderly workers
and persons with disabilities

 Employment of persons with disabilities is 100% of the legally
mandated rate (as of March 31, 2022).

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

 Regulations and rules are being revised to make telework apermanent system.

• Acquisition of certification as a Healthand Productivity Management
Organization

 Prepared information to be disclosed on the website with aneye to acquisition of certification.

• Independent Outside Directors: atleast 1/3
• Establishment of Nomination andCompensation Committee Implemented from June 2021.

• Diversification of the Board of
Directors

 Activities underway to elect female directors in June 2023.

• Full compliance with Corporate
Governance Code for Prime Market

 TCFD-compliant information to be disclosed from June 2022.

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

• Transition to structure of company
with committees

 Policy to be determined in FY2022.
*Numbers in parentheses represent current values

11Shareholder ReturnBasic Policy on
Dividends ofSurplus

We shall perform stable dividends, while securing a consolidated dividend payout
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.

25.5%

25.6%

■ Ordinary dividend■ Commemorative
dividend■ Special dividend

JPY35
5

JPY40

30

30

FY2013Results

FY2014
Results

10

32.8%

29.6%

28.6%

Total return trend：44.3%
Acquisition of treasury shares(JPY 3,674 mil)

27.2%

(Forecast)

24.1%

27.4%

20.8%
19.3%
※Including negative goodwill
about JPY8 bn

Total return trend：45.4%

Acquisition of treasury shares(JPY 1,499 mil)

JPY55

JPY60

15

20

40

40

FY2015Results

FY2016
Results

35%

JPY70

JPY120
JPY80

10

5
5

60

70

FY2017
Results

FY2018Results

JPY70

JPY80

10

20

60

60

FY2019Results

FY2020Results

25%
JPY150
10

40
140
80

FY2021Results

FY2022
Forecasts

12

ReferenceFinancial Highlights by Business Segment <Net Sales>（million yen）

Net
売上高
Sales
143,143
128,099

129,675

5,969

104,729
84,1302,904
491
12,5374,600
783
10,654105,406
4,114
730
10,745927
14,451

117,059
105,949
4,120
568
10,636

4,530
669
8,077

4,478
603
7,587

6,460
926
13,315

Total
YoY
QoQ

88,69089,816

90,624

YoY

：

+490

QoQ ：

+1,981

Software103,782

117,005

122,440

68,196

：
：

-1
+322

Information equipment
YoY
QoQ

：
：

-1,135+5,728

Electronic equipment
YoY ：
QoQ ：

2021/3
1QResults+15,043+13,467

Other

YoY
QoQ

106,750：：2021/3
2QResults

2021/3
3QResults

2021/3
4QResults

2022/3
1QResults

2022/3
2QResults

2022/3
3QResults+15,690+5,4352022/3
4QResults

14

Financial Highlights by Business Segment < Segment Income >（million yen）

Segment Income
6,357

6,276

152

152
83

305

869

4,452
3,950
2,778
137

1,656

131
577

583
1,185
-44
-101

2021/3
1QResults

1,897

2021/3
2QResults

3,082
112
20
592

325

217

3,848

568

103

728

2,335

2021/3
3QResults

2,732

2021/3
4QResults

：
：

YoY
QoQ

：
：

+2,326
-81

Other

YoY
QoQ

5,878

3,699

YoY
QoQ

-172
+0

Software

342

156

Total

5,124

3,423

：
：

-73
+83

Information equipment
YoY
QoQ

：
：

+140
+563

Electronic equipment
YoY
QoQ

-67

-42

-0

2022/3
1QResults

2022/3
2QResults

2022/3
3QResults：：+2,372-772

2022/3
4QResults

Note: Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).

15

Net Sales by Region（million yen）

Net Sales
Total

143,143

105,949
72,14258,14353,334
3,827
4,687
7,419
1,894

6,175
3,573

38,07039,0382021/3
2QResults

2021/3
3QResults

61,266

68,56278,484

55,101

56,6195,276
3,467

47,212

YoY
QoQ

：
：

7,454
3,915

8,721
4,301

39,47742,7702022/3
1QResults

2022/3
2QResults

8,675
3,938

+15,043+13,467Japan

117,059

84,130：：129,675

128,099
104,729 105,406

YoY
QoQ

9,249
4,718

48,49850,6902022/3
3QResults

2022/3
4QResults+6,342+9,921

North America
YoY
QoQ

：
：

YoY
QoQ

：
：

YoY
QoQ

：
：

+3,972+573

Europe+1,251+779

Asia+3,477+2,192

21,4822021/3
1QResults

2021/3
4QResults

16

Exchange Rate/FOREX Sensitivity（Reference）

Effect of 1% change（Million Yen）

Net sales

OperatingincomeForex
Assumptionfor2023/3(yen)112.381,573

46116.00

15.48

17.03

242

9

18.00

THB

3.42

3.44

251

14

3.50

HKD

13.68

14.44

208

6

14.50

EUR

123.70130.50100130.00

FY2021/3
Results

FY2022/3
Results

USD

106.06

RMB

（Yen）

（Yen）

17

“Everything we do isfor our customers
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/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.