1
SpecialReport“Revitalize2020”
New Medium-Term
Management Plan

Toyo Denki Group today announced revisions to the “Next 100: Beyond 100 years, Ver.2” medium-term management plan announced onJuly 12, 2016 as described below, in the light of changing business conditions and hurdles that need to be addressed since the previous
announcement and the newly developed “Revitalize 2020”medium-term management plan that will come to an end in the fiscal year ending May 31, 2022.

Gist
Based on the fundamental policy under the “Next 100”medium-term management plan, while Toyo Denki Seizo K.K. (hereinafter “Toyo Denki”) has promoted reinforcements to its management foundations by taking actions such as commencing operation of the new Shiga Ryuo Plant in June 2018 to commemorate the100th anniversary of its founding, Toyo Denki still has hurdles that need to be addressed; i.e., improving profitability and accelerating product development. Starting from the results achieved and the hurdles that remain under the “Next 100”plan, as well as are view of its business resources at the 100th anniversary of its
founding, Toyo Denki has decided to develop the new “Revitalize 2020”four-year medium-term management plan, which targets 2020 foritsnearest goal.
Toyo Denki will improve its earning power based on the fundamental policy of this new plan and take a new step towards establishing a strong operating system that generates steady profits.

Long-term Vision

Numerical Management Targets (Consolidated)

We will contribute to realizing a social infrastructure system that is friendly to theglobal environment by providing high-quality products that combine the excellent
motor drive technologies we have cultivated since our founding and advanced
breakthrough technologies worldwide based on our solid business foundations.

In order to aggressively promote actions for the medium-term management plan listed above, we will add equity in profit of unconsolidated subsidiaries and affiliates, ROE (Return on Equity) and dividend
payout ratio to targets.

Fundamental Policy

CorporateToyo Denki Group will establish a strong operating system that generates steadyprofits by strengthening its organizational power and promptly providing high-quality products to our customers.
In the first two years (from the fiscal year ending May 31, 2019 to the fiscal
year ending May 31, 2020), which we regard as a period for strengthening ourbase, we will focus on the pressing issue of improving our profitability. In the latter
two years (from the fiscal year ending May 31, 2021 to the fiscal year ending May31, 2022), which we regard as a period for achieving growth to realize net sales ofmore than 47 billion yen, we will focus on strategically developing our businesses,
including new business alliances and M&As, inside and outside Japan.

(1)
Expandingoverseasbusiness(2)
Expanding our businessareas using our coretechnologies

(3)
(4)
(5)
Promoting development of Establishing a stable Developing foundations fortechnologies in advance of business earnings expanding our production
market needs
structure
capacity(6)
Developing humanresources to play
important roles inthe future

5(7)
PromotingESG

Surface plate area

(Unit: Billions of yen)

Fiscal year ended Fiscal year ending Fiscal year ending
May 31, 2018
May 31, 2020
May 31, 2022
(Results)(Plan)(Plan)Net sales

42.52743.0

Over 47.0

Operating income(Operating margin)

0.366
0.9%

0.9
2.1%

24.3%

Ordinary income

0.515

1.1

2.4

Net income

0.692

0.7

1.6

Equity in profit ofunconsolidated
subsidiaries andaffiliates

0.116

0.12

0.4

ROE(Return on Equity)

2.7%

3.3%

5.0%

68.2%

30.0%

30.0%

Transportation Systems

27.94929.0

31.0

Industrial Systems

11.76913.0

15.0

Information Equipment
Systems

2.801

1.0

1.0

Dividend payout ratio

Shiga Ryuo Plant: Main entrance(Note)

Segment net sales(Note) For the fiscal year ended May 31, 2018, we will pay a commemorative dividend of 20 yen per shareto mark the 100th anniversary of our founding in addition to the regular dividend of 30 yen per share.
Dividend payout ratio for the fiscal year ended May 31, 2017 was 24.2%.

Cafeteria

Shiga Ryuo Plant: Overview

Control panel assembly area

Rotary machine assembly area2

New factory “ShigaRyuo Plant” begins
operations

SpecialReport

The “Shiga Ryuo Plant,” the new factory constructed in the Shiga Ryuo Industrial Park vicinity, has been completed. The completion ceremony washeld on May 28, 2018 where many guests graced us with their presence,and operations began on June 1 of the same year.
Through the launch of the Shiga Ryuo Plant, we consolidated bases in theIndustrial Systems segment that were divided between a part of the Yokohama Plant and the former Shiga Factory (Moriyama, Shiga Prefecture), thereby
enabling efficient production. Furthermore, we will strengthen our researchand development efforts in the new R&D building. The Yokohama Plant will
be designated as the base for the Transportation Systems segment, and restructuring of production lines will be conducted with the aim of expanding
production capabilities.
Going forward, in the Industrial Systems segment, production capabilitieswill be raised through improving the operating rate of production lines at theShiga Ryuo Plant, and we will globally provide high-quality products that utilize our technological capabilities.

Toyo Denki Seizo Report 201863Celebration of the 100thSpecial
Anniversary of Foundation Report
Address by President Terashima

The Company celebrated the 100th anniversary of its founding on June 20, 2018. Thiswas wholly attributable to the support and patronage we have received from our customers, business partners, shareholders, and industry groups over the years, and wewould like to express our sincerest gratitude to them.
Going forward, keeping in mind the dignity of being a “100-year company,” the Company will continue contributing to the railway infrastructure and social infrastructure ofJapan and countries all over the world.
Name of ceremony

Celebration of the 100th Anniversary of Toyo
Denki Seizo K.K.’s Foundation

Date and time

May 16, 2018 (Wednesday), 6:00 -8:00 p.m.

Venue

Fuji Room, 3F, Imperial Hotel Tokyo

Number of participants Around 300
Celebration venue

Presentation of the Company’s 100-year history

A cigar case gift that came home toToyo Denki Seizo after a century—story delivered from the U.K. to Japan at the 100th-year turning point
One day in September 2016, out of the blue, theCompany received a letter from the U.K.
The contents of the letter were as follows: “At an auction, I bought a silver cigar
case with a carved seal that was a gift from the first president of Toyo Denki
Seizo, Mr. Kaichi Watanabe, to an executive of Dick Kerr & Co., Ltd. Is this a pieceof memorabilia of your company? I have plans to visit Japan, and I can bring it
along if you would like me to.”As we unraveled the history of the Company, we confirmed that the cigar casewas most likely a commemorative gift that our first president, President Watanabe,gave to our technical cooperation partner Dick Kerr & Co., Ltd. a hundred years
ago when the Company was founded.
The letter was sent by Mr. Charles and his family, who are fans of Japanese antiques and curios. Apparently, he was mesmerized by the cigar case when he firstsaw it at the auction and bought it. Subsequently, he noticed the company name andname carved on the back of the case, did some research, and found the Company.

Cigar case

Name of the firstpresident, President
Watanabe, is carved
on the back

There was a reason behind why he found the Company so quickly.

SAMPLE

7

Even today, President Watanabe, the first president of the Company, is known as a famous technician
in the U.K. As he was the designer of the cantilever structure of the Forth Bridge, which is renowned asa World Heritage Site and is also printed on the 20 pound note of Scotland, Mr. Charles recognized thename carved on the cigar case right away.
Although it is not known how President Watanabe presented the gift back in the day, or how the cigar case later ended up at the auction house, it has returned home to Toyo Denki Seizo after a century.