SanRex REPORT

01

Introduction

15

Our purpose

03

Our growth history

19

Core competence05

W ho we are25

Our vision

07

SanRex products

27

Material issues

09Message from the President

29

13Value creation story

 essage from the DirectorMin charge of financial affairs

2023

 G23 medium-termCmanagement plan43

S ustainability strategy

47

Human resource strategy

33

S trategy of each segment

53

Corporate governance37 ontribution toCdecarbonized society

63

Financial data65

Non-financial dataA rea-specific strategy

67

S tock and shareholder data

3141

& Company outline

Editorial policy
The SanRex Report is published as a tool for communicating with our stakeholders.
The SanRex Report includes the Sansha Electric Manufacturing Group’s business models, the growth strategy for achieving the Global Power Solution Partner vision andsustainability initiatives. It is edited to enable stakeholders to understand the Group’s medium- to long-term value creation story.
The point we would like to emphasize in particular is that while the value creation story in the preceding fiscal years was focused mainly on solutions to social issues, we
set corporate culture as its starting point this fiscal year.
It is believed that we are in an era of volatility, uncertainty, complexity and ambiguity (VUCA), that is, it is an uncertain time where it is difficult to predict the future. In thisenvironment, companies must be flexible and able to respond promptly to change.

01

Sansha Electric Manufacturing
has celebrated its

90th anniversary

Since we developed an arc power supply for a movie projector in 1933, we have been leading
the power electronics industry by consistently working on power conversion and control.
We will solve social issued by developing safe, secure, reliable products in accordance withour corporate philosophy which has remained unchanged since our founding:
Make a continuous effort to create products that are soughtby society and contribute to the development of society
by providing products of better quality.

In this report, we introduce the Sansha Electric Manufacturing Group’s stances and initiatives, which it uses to move forward with a clear purpose (aim) while confronting
unforeseen situations, with empathy for the purpose being the unifying force. We hope that readers will understand and accept our values and goals.
In compiling this report, we referred to the International Integrated Reporting Framework of the International Integrated Reporting Council (IIRC), the Guidance forIntegrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation from the Ministry of Economy, Trade and Industry of Japan, and the GRI
Sustainability Reporting Guidelines (Standards).
We would appreciate it if you give us your frank opinions, which will be helpful for us in responding to the voices of more stakeholders.

SanRex REPORT 2023

02

Our growth history

History of growth

We will continue growing by
operating businesses globally
Since its founding in 1933, the Sansha Electric Manufacturing Group has been contributing to thedevelopment of society through the creation of products that society needs.
Nearly four decades have passed since we launched our first overseas bases in the United Statesand in Hong Kong in 1983. The Group will continue to operate its business globally.

1983
SANREX LIMITED establishedHong Kong

SANREX CORPORATION established

USA

Changes in area portfolio and overseas sales ratio
Consolidated net sales

Business History

1933… 1948 1950

Product Development

1955

1960

1965

1970

1975

1980

Establishing the technological foundationthat continues from the foundation of theGroup to the present

Increasing bases and specialization in thedevelopment of power semiconductors

1933

1971

1970

1933

Sansha Denki Seisakusho founded

1948

Sansha Denki Seisakusho Co., Ltd.
established

1953

Tokyo District Office (currently Tokyo
Branch) established1960

Headquarters Plant completed in Osaka

1970

Fukuoka Representative Office (currently Kyushu
Sales Office) established

1933

Develops a choke coil auto transformer,
a predecessor to projector power supplies

1937

03

Ratio of overseas net sales

1982

Shiga Plant completed in Shiga
Prefecture for the production of
power supplies

1985

Okayama Plant completedin Okayama Prefecture forthe production of power
semiconductors

Yukio Shikata,founding president
Representative Director andPresident from the Group’s
foundation to 1972

Develops a tungar rectifier for light
projectors

1990
Masao Shikata,second president
Representative Director andPresident from 1972 to 1986

1971

Develops an insulated triac that is the first in Japan1980

Develops a thyristor module and a power transistor for highspeed switching

1982

Develops a power transistor module

1988

Develops a power MOSFET module

Tungar rectifiers for light projectors

1963

Develops and announces our first power semiconductor andthyristor

1964

Develops an inverter uninterruptible power supply and anelectric power regulator for electric furnaces

1968

Develops a diffusion type of triac and thyristor

1970

Develops a rectifier for plating

Insulated triac

Thyristor modules

1994(100 million yen)

1999

2009

2016

SANREX ASIA PACIFIC
PTE. LTD. established

Representative officein Slovenia opened(relocated to Helsinki in
FY2017)

DONGGUAN EASTERNELECTRONICS CO., LTD.
established

SANSHA ELECTRIC MFG.
(GUANGDONG) CO., LTD. establishedSingapore

2001

1994

SANSHA ELECTRIC
MFG. (SHANGHAI)
CO., LTD.
established

SANREX EUROPE GMBH
established (relocated to Slovenia
in FY2009)

China

Slovenia

China

400

2017
Helsinki Branch establishedFinlandSeoul Branch established300

South Korea

China

Taipei Branch established

Germany

Taiwan

200

1990

2000

2010

2022

Ratio ofoverseas sales

Ratio ofoverseas sales

Ratio ofoverseas sales

Ratio ofoverseas sales

9.4%

18.0%

32.8%

34.0%
2020

1999

1985

1990

Theme

2007

1995

Medium-term management plan

FY 20182020

Internet bubble

PolicyExtending market reach overseas,
contributing to hydrogen society,contributing to the miniaturizationof industrial equipment, etc.

Brisk capital investment andrecord-high net sales

2000

2008

Financial crisis

2019

CG23

2005

2010

2015

In the semiconductor business, sales of products with new applications
increased in China, but demand declined due to trade friction between the U.S.
and China In the power supply business, the Group obtained a foothold tocontribute to hydrogen society by providing fuel cell equipment.

Developing a system for increased globalization

Towards a new age

1991

1991

2010

1994

Shiga Plant obtains ISO 9001 certification

1996

Okayama Plant obtains ISO 9001 certification

1997

Achieves listing on the second section of the
Osaka Stock Exchange

2001Power Supply System Manufacturing Divisionobtains ISO 14001 certification

2002

Semiconductor Manufacturing Division obtains
ISO 14001 certification

1991

Develops a planner type transistor module

1993

Develops a solar power conditioner

2002

Develops a power supply for light source for projector of
digital cinema

2007

Develops an IGBT chip for inverter for industrial use

Solar power conditioner

Lamp power supply for
digital cinema projector

Russia’s invasion of Ukraine

U.S.-China trade dispute

2020

Developing new fields by providing solutions based on technology

Achievements

2022

COVID-19100

FY 20212023

New building completed at the Shiga
Plant

2016

SANSHA SOLUTION SERVICE CO.,LTD. established in Osaka

2016

SANSHA ELECTRIC EASTERN CO.,LTD. (currently SUWA SANSHAELECTRIC CO., LTD.) established in
Nagano Prefecture to commence small
power supply business

2014

Develops a photovoltaic power
generation evaluation system for the
National Institute of Advanced Industrial
Science and Technology’s Fukushima
Renewable Energy Institute2015

Jointly develops a compact SiC power
module with Panasonic Corporation

2016

Participates in the virtual power plant(VPP) construction demonstration
project

SiC power module

Medium-term
management
plan CG23

2010

2014

Kunio Shikata,
Honorary Chairman
Representative Director,
President and Chairman of
the Board from 1986 to 2021

0
(FY)

2022 2023

2021

OSAKA DENSO
INDUSTRY CO., LTD.
becomes a wholly owned
subsidiary2022

Listing moves to theStandard Market of theTokyo Stock Exchange

2023

Purpose established2017

Develops a fuel cell power
conditioner

2019

Develops a 1500 V string
compatible diode module
for photovoltaic power
generation

2020

Develops a power supply
for storage battery tests

2022

Develops 1200 V voltageresistant SiC MOSFET
discrete semiconductor

1200 V voltage-resistant SiC
MOSFET discrete semiconductor

Power supply for storage
battery tests

SanRex REPORT 2023

04

Who we are

Our Business
The Sansha Electric Manufacturing Group consists of Sansha Electric Manufacturing Co., Ltd. and ninesubsidiaries. Our business activities include the development, manufacturing and sale of semiconductor
devices and power supplies and also the provision of services related to each business.

Power semiconductorbusiness

Power supply businessResults for
FY2022

Power modules/power discrete
semiconductors/chips/otherNet sales

Composition
Net sales(outer arc)

29%

Operatingprofit(inner arc)

31%

Strengths and features

Independently developed
power semiconductors withhigh voltage resistance, highcurrent and low power loss
characteristics

technologies for
2 Packaging
high reliability

305

billion yen

Operating profit

The Sansha Electric Manufacturing Group does
not develop or manufacture integrated circuitsemiconductors such as memory or microcomputers.
Instead, it develops power semiconductors. These areused in many different kinds of power supplies for theconversion of high voltages or currents between direct
current and alternating current, for controlling current
and voltage and for other purposes. They are essential
devices for improving power conversion efficiency andsaving energy.

1

28.0
1.6

General industrial power supplies, power
supplies for surface treatment, light sourcesand dimming, inverters, small embedded
power supplies, and other power supplies

Synergy with the power
supply businessbillion yen

Composition
Net sales(outer arc)

71%

Operatingprofit(inner arc)

69%

We utilize technologies that freely transformand efficiently convert electricity to develop andmanufacture a wide variety of power supplies supporting
the environmental and energy sectors, the infrastructure andfacility equipment sectors and entertainment-related sectors.
Using power semiconductors, they efficiently supply stableelectric power for a wide variety of applications, including
everything from high to low electric power.

Strengths and featurespower
1 High-efficiency
conversion technology
Wide range of development

small custom-made to
2 fromlarge industrial power supplies
Integrated production

development,
3 including
design and manufacturing

Third largest share of
the global market

Largest share of
the domestic marketof thyristor and diode modulesof power supplies for surface treatment

Source:Omdia, Annual Power Semiconductor Reports - 2021

Note:
Estimated by Sansha Electric Manufacturing Co., Ltd. on thebasis of the Japan Surface Finishing Suppliers Association:
2021 Dynamic Statistics of Power Supply SalesOur Performance
Operating profit & ratio of
operating profit

Net sales

Profit attributable to owners of parent

Operating profit (Left axis)
Ratio of operating profit (Right axis)(million yen)(million yen)(%)

30,0002,000

1028,08824,36922,67521,875
19,43620,000

1,833

5.8
256

ROA

7.5

0
(FY)

8

8

6.5
5.1

4

Earnings per share
100

6.8

5.9

2018

2019

2020

2022

2019

2020

2021

2022

(million yen)

24,051 24,846

2019

80

76.9

65
0

72.4

623

0

69.9

88

-750

535

0

2018

2019

2020

2021

2022

(FY)

(FY)

1,374

750

73.0

70
10,000

2022

77.8

75

20,0002021

Free cash flow
1,500

29,0832020(million yen)(%)

27,146

48.22
8.22
2018

(FY)

Equity ratio

Total assets

30,000 28,532

35.42

-50

3.5
2018

(FY)

95.33

0

-4

2021

83.30

2.6

1.0
1.7

93.44

6.1
50

4

4.4

(FY)

(yen)

0

0

680

2018 2019 2020 2021 2022

ROE
(%)

2

0

-750

2.1

2018 2019 2020 2021 2022

(FY)

(%)

6

5.8

497

416

1.2

0

2018 2019 2020 2021 2022

750

7.5

10,00001,147 1,241

1,629
1,316

1,000

(million yen)
1,500
1,339

997
2018

2019

2020

2021

2022

2018

(FY)

2019

2020

2021

2022

(FY)

COLUMN
What does “transforming electricity flexibly and converting it
efficiently” mean?
The electricity generated by power plants and other facilities cannot be used as
it is. It must be transformed. There are roughly four different ways of transforming
electricity. There is always a loss of electricity every time a power conversion occurs
in the process from power generation at a power plant, through transmission lines
and power supply circuits to the final operation of electric appliances by consumers.
It is believed that improvements including the increase of conversion efficiency arenecessary to reduce this power loss.

1

Converting direct current
electricity to alternating current

2

Converting alternating current
electricity to direct current

3

Changing the frequency ofalternative current electricity

4

Changing the voltage of direct
current or alternating current
electricity

SanRex REPORT 2023

06

SanRex productProducts of the Sansha Electric MFG
That Support Society
The most significant social responsibility that the Sansha Electric Manufacturing Group has as amanufacturer is to conduct manufacturing that is valuable to society. We support society by providing
power semiconductors for many different power supplies and industrial power supplies for a wide range
of industries, from high to low power, in Japan and overseas under the concept of the integration oftechnologies for power semiconductors and for power supplies.

Information & communication
Smartphones
Power supplies for surface treatment
Used for plating, which is a process of placing a thin metal film over the surfacesof electronic components, printed circuit boards and other parts used incomputers and smartphones

Energy & the environment
Solar (PV) power generation
Power conditioners

Diode

Converting the direct current electric energy obtained
from sunlight into alternating current to connect to thePreventing the backflow of electric current from astorage battery or other device and the subsequentcommercial power network

damage of solar panels

New energy
Power conditioners for fuel cells and for storage batteries
Converting electric energy stored in fuel cells and storage batteries
and connecting to the commercial power network

HydrogenPower supplies for water electrolysis
Supplying a stable electric current to thewater electrolysis system necessary forthe production of hydrogen through theelectrolysis of water

Lithium ion batteries
Power supplies for copper foil
Performing an electrolytic process with a stable electric
current to generate copper foil to be used as an anodematerial for lithium-ion batteries

Fuel cells andstorage batteries
Power supplies for testing and evaluation andcharge-discharge productsHigh performance power supplies indispensable in
the testing and evaluation of a range of batteries andautomotive equipment

Power plants
Power supplies for seawater electrolysis
Large current power supplies that generate sodium
hypochlorite through the electrolysis of seawater toprevent marine life from depositing on the plant’s
water inlet

Waste disposal plants
and contaminatedsubstance disposal plants
Power supplies for plasma arc generation
Power supplies for plasma arc generators that quickly increase
the temperature of waste to be treated to a high temperature to
suppress the generation of dioxins

07

Power semiconductorbusiness

Power modules

Power discrete
semiconductors

Infrastructure
Expressways and electronic tollcollection (ETC)/Stations

Electric rolling stock

Uninterruptible power supplies (UPS)
and control power supplies
Maintaining the supply of electric power for acertain period of time during a power failure toprotect the operation of equipment and data

Diode modules

Power supply
business

Power supplies
for copper foil
manufacturing

Uninterruptible
power supplies

Mobile phone basestations

Supplementary power supplies that supply

Power supplies for aluminum foil processing

electric voltage and frequency to lighting,air conditioning and other machinery inPower supplies for electrochemical etching, which is therolling stock

process of expanding the surface area of the aluminum foil
used in electrolytic capacitors that are necessary for the
power supplies for base stations

Water supply and sewage facilities
Power supplies for ozone generation
Generating ozone to decompose organic substancesin water by applying a high voltage to induce anelectric discharge

General industries
Automobiles
Power supplies for surface treatment
Used in plating for increasing the abrasion
resistance and oxidation resistance of metaland other surfaces

Electric power regulators
Used for adjusting the temperature of electric
furnaces for melting metals and glass

Manufacturing robots and welders
Thyristor/Diode
Converting alternate current to direct current toprotect electric circuits from overvoltage

Power supplies for welding and cutting
Power supplies for welding and cutting steel sheets

Lifestyles, medical careand entertainment
Movie theaters
Power supplies for light sourcesHome electric appliancesand electric bidet toilet
seatsPower supplies for projecting images
clearly onto a screen

Inverters for industrial use andcommercial air conditioners
Diode modules
Stabilizing and controlling motors

Medical equipment/ATMs

Discrete semiconductors

Small embedded power supplies

Controlling heaters and motors

Power supplies providing stabilized
electric power

Induction heating/highfrequency power supplies
SiC MOSFET

Elevators

TV studios, halls and stadiums

Diode modules

Power supplies for dimmers

Stabilizing and controlling motors

Power supplies that enable thecontinuous dimming of lighting

Generating high-frequency power with highefficiency

SanRex REPORT 2023

08

Message from the President

Message from the President

We will proceed on the path tothe future that we should follow
with confidence.

Hajimu Yoshimura
Representative Director & President

09suppliers including overseas suppliers
and arranging for materials in advancein line with our production plans, aiming
to ensure a stable supply of materials.
We will also change designs to replacematerials with materials we are able toprocure, aiming for stable production.
The other issue is the delays in ourown investments in equipment.
In the fiscal year ended March 31,
2023, we planned to make capital
investments of 2.1 billion yen. However,
the equipment that was actually delivered
was approx. 1.0 billion yen. As materials
and parts are in short supply in ourbusiness activities, so is the equipment
for which we have placed orders.
We have remained in a state where
equipment has not been delivered, eventhough we have placed orders for it inaccordance with our investment plan.
We invest in equipment for two major
purposes. One is to increase our capacity
to manufacture power semiconductors.
The other is to automate our plants.
The goal of automating our plants is toimprove manufacturing efficiency andproductivity, which improves profitability,
while preparing for future labor shortages
is also an objective.

time and the sector is important from theviewpoint of sustainability and our role insociety (the meaning of our existence).
Therefore, want to use this opportunity tosteadily produce results.

Confident in the path tothe future that we should
follow in the second
year of the medium-term
management plan
Two of the three years of our CG23
medium-term management plan havealready passed. We started the planwith the slogan: Change to Growth. As
in the first year, we were able to exceed
the targets for all of the major financial
indicators, net sales, operating profit, andROE, in the second year.
In last year’s integrated report, I stated,“CG23 is the first phase of our actions
towards what we aspire to be like ten
years from now. Results in the second
year are significant in the sense ofbringing some clarity to the future.” Overthe course of the year, we were able tobecome confident about the path to the
future that we should follow. Specifically,
this path is in the new energy sector.
There is an ongoing global trend
toward the decarbonization of society,and both the power supply businessand the power semiconductor businesshave received many inquiries from the
new energy sector, and we have received
orders.
We expect this trend to continue for a

Issues andcountermeasures thathave been highlighted
On the other hand, issues were also
highlighted. This time, we exceeded
quantifiable targets such as net sales andoperating profit. However, we actuallyachieved them by biting off much morethan we could chew. While materials
and parts remained in short supply
throughout the year, we managed togather materials and parts from various
quarters and people working on-siteused their ingenuity and overcame thesituation. We are still facing difficult
conditions due to the COVID-19
pandemic and the Russian invasion of
Ukraine. Naturally, the prices of materials
and parts that are in short supply arerising. As one misfortune follows another,electricity expenses and other energy
costs have soared.
We will take measures to overcome
this situation, such as looking for new

CG23: Quantifiable targets and results

Actual and planned capital investment(in million yen)

1,900

2,000

FY2021

FY2022

FY2023Plan

Results

Plan

Results

Plan

Forecast

1,500

Net sales

21.8
billion yen

22.6
billion yen

24.0
billion yen

28.0
billion yen

26.0
billion yen

30.5
billion yen

1,000Operatingprofit800
million yen

1.3
billion yen

1.3
billion yen

1.6
billion yen

1.9
billion yen

2.0
billion yen

2.8%

5.9%

4.4%

6.1%

6.1%

6.5%

ROE

995
641

500

513
359

0

2019

2020

2021

2022

2023

FY

Plan

SanRex REPORT 2023

10

Message from the President

AC Cafe, a place for employees tocommunicate with the president

Taking on challenges tostandardize designs
Unfortunately, I do not think that the
problem of the delays in the deliveryof manufacturing equipment will besolved quickly. While we will continue
striving to improve the efficiency of ourmanufacturing processes, I think that
we can do more in the design phase. In
the power supply business in particular,
I think we can improve productivity bydevising creative measures in the design
stage. While many of the power supplies
we handle are large, we work to meetthe needs of customers in the designphase. This measure itself is one of ourstrengths. Actually, however, it eventuallyplaces burdens on the manufacturingsite, in the manufacturing processes.
While various approaches are possible
to improve this, I think that one of themis the standardization (formatting) ofdesigns. For example, power supplies
have many wires in them. While atpresent we do complex wiring for eachcustomer, I presume that wiring can be
standardized to a certain extent. While
improving productivity and manufacturing
efficiency through standardization will
generate a positive impact in terms of
quality improvement and profitability, it
can also have positive effects from theperspective of sustainability. Specifically,
it can help us tackle the climate change
problem and in giving consideration to
the environment. Because manufacturing
companies have no choice but to use
the earth’s resources in our businessactivities, we must keep environmental
considerations in mind in our activities.

11

We understand that we have this large
responsibility. Because I was an engineer,I understand that it is not easy to change
the manufacturing approaches andmethods of the company that have been
applied for more than 90 years. Although
it is not easy to make this a reality, we
would like to take on the challenge ofstandardizing our designs as a mediumto long-term target for our activities in thenext ten years.

Aiming to focus on
more overseas businessmarkets toward our 100th
anniversary
At the time that I am writing this for the
integrated report, we are already in the
final fiscal year of the CG23 mediumterm management plan. While we workto achieve the CG23 plan, we havebegun discussing the next medium-term
management plan. Our medium-term
management plan is a three-year action
plan. We formulate it based on our
long-term vision, applying a backcasting
approach. We have started by discussing
what we aspire to be like ten years fromnow, setting our eyes on 2033, when
we will celebrate our 100th anniversary.
At present, our overseas business isfocused mostly on China. We would liketo focus on more overseas markets in thenext ten years. The regions that we arepaying attention to are India and Europe.
At present, our business in India islimited to transactions with Japanesecompanies. Moving forward, we would

like to expand this to local companies.
This year, we will sow the seeds for the
next ten years.
In Europe, we still receive manyinquiries about our power semiconductorbusiness. With the high interest in
the green energy sector, Europe is a
big market in which we see massive
potential. We began to engage inactivities to increase our visibility inEurope last year, such as running a boothat a hydrogen energy trade show. I thinkthat area-specific strategies will be very
important in thinking about the next ten
years. We must make our strategies
more muscular. In the next ten years,
we aim to enhance our presence in the
sector of new energy in India and Europe
in addition to Japan and China as ourexisting markets.

Possibilities of SiC power
semiconductors
In addition, silicon carbide (SiC)
semiconductors are attracting
attention as next-generation power
semiconductors. SiC semiconductors,
which are made mainly from siliconcarbide, are high-performance power
semiconductors featuring smaller
dimensions and lower power loss thanconventional power semiconductors.
We would like to expand these
semiconductors strategically as one of
our themes in the next ten years.

A duty to create a corporate
culture and climate
While I have a wide range of duties as
the president, the one that I have beenstrongly aware of since I took office isthe creation of our corporate culture andorganizational climate. To date, we haverefined our technologies through solving
the challenges that customers present
to us. In other words, our company has
been developed by its customers.
This is by no means bad. However, I
would like to make this company a teamof people who think and run on their own,
partly to achieve our vision of being a
global power solution partner.
We hold the AC Cafe internal
community event which is aimed atenabling participants to talk with me.
It was named AC, alternating current,
because the Japanese word for AC iskoryu, which also means interaction.
The AC Cafe is a place for seven to eightpeople including myself to have a real,face-to-face discussion. The duration ofeach session is about one hour. While
the time spent talking is short, this event
allows me to identify on-site problems
that I had not been aware of. I also
receive e-mails directly from participants
after each session. Therefore, I feel the
AC Cafe has begun to produce results.
Through this project, I am planning totalk with all employees, including themembers working overseas.

leaders prepared a draft, and project
members who play leading roles in the
management of our brand considered
the draft. The Board of Directors further
refined the purpose through discussions.
As a result, we were able to create our
purpose, “Contributing to society in thedomain of power electronics.” Hereafter,
we will continue working to create a new
future with this purpose.

employees and their families. Please letme reiterate that in the past year, we havebecome confident in the direction that weshould move in. As a listed company, we
will continue to improve our management
efficiency in our efforts to be a company
that is deemed to be promising. I
appreciate your continued support.
Please have high hopes for the Sansha
Electric Manufacturing Group which willcontinue to evolve over the next ten years
toward the 100th anniversary.

Improving management
efficiency and striving tocreate corporate value
Thanks to all of you, Sansha Electric
Manufacturing celebrated our 90th
anniversary in April 2023.
I would like to express my gratitude
to all of our stakeholders, including
our customers, business partners,

Formulating our purpose
toward the next step
One of the major topics in 2023 is theformulation of our purpose. We alreadyhave our corporate philosophy. I thinkthat the corporate philosophy is the idea
positioned at the top, and this position
will not change. However, the corporate
philosophy states our frame of mind
for operating our businesses. We had
yet to define in which domains we willcontribute to society in what ways.
Therefore, we decided to determine
a purpose at this time to move to thenext stage. The process of formulation
was as follows. Members that weremainly young employees who are future

SanRex REPORT 2023

12

Value creation stor

Value creation story
STA R

T

1

2

Unifying thinking

Developing strengths (invisible assets)

Corporate culture is the starting
point of our value creation story.
It all starts from like-mindedpeople coming together andworking toward the same future.
Looking from thisperspective, we set our purposein 2023.

In April 2023, we celebrated the 90th anniversaryof our founding. We have experienced both
success and failure in the 90 years. Theseexperiences are some of the strengths that havebeen passed down to us. Creating history isdeveloping strengths. The strengths we have
now are what have been accumulated to date.
We believe that the future we will create will makeus even stronger.

New philosophy system

Corporate
Philosophy

PurposeBehavioral
Charter
VisionP15

Medium-term management plan

Manufacturing that we willcontinue to refine

P19

Solutions and quality that are
created because of theintegrated production structure

P21

5Developing strategies, acting and repeatedly evaluating and improving
Financial strategy

P29

Business strategy

Sustainability strategy

P43• Power semiconductor business
Seek greater current, voltage resistance,
efficiency and reliability to increase market share.

Human resource
strategy

P47• Power supply business
Enlarge the new energy sector includinghydrogen energy and deeply cultivate
fundamental sectors

P35

OUTPUTPower semiconductors

Power supplies

P07

13

P33

P07

Until last year, we took the perspective of what processes we should follow to create value,
based on the IIRC’s Octopus Model.* This year, we tried to organize the elements into a story
from a longer-term perspective. Although it will involve trial and error, we will work to enablepeople to connect with the value (of the Sansha Electric Manufacturing Group.
* A figure (value creation process) showing the overall picture of the integrated report advocated by theInternational Integrated Reporting Council (IIRC)

Invisible assets (FY2022)
Human capital
Number of employees
Ratio of overseas
employees

Organizational assets

1,465
37.7%

Number of plants J apan

Social capital

R&D expenses

7
8

Sales network Japan
Overseas322
4Overseas2
1.5billion yen

Number of patents owned

3

Financial assets
Total assets
Equity ratio
Return on equity (ROE)

429.0billion yen
72.4%
6.1%

Picturing thedesired future
We will share what we aspire to be(our vision) with our like-minded peers
who have strategies.
We will define and understandwhere we are going and discuss how
we can achieve the vision.
P25

GOAL

Evaluation analysis for achieving the vision
Before developing strategies for achieving the vision, we conduct
an evaluation analysis of our company, competitors and businessenvironment. This analysis is a very important task because it will
greatly influence the strategies to follow.

VisionIdentify material issues

Business environment
analysis

P27

Global Power
Solution Partner

OUTCOME

Value created
Economic value (FY2022)

Net
sales

Reduction inenvironmental impact
CO2 emissions

10,064t-CO

Ratio ofreduction from
FY2013 level

30.3%
P45

2

28.0
1.6
95.33

OperatingprofitEarnings
per share

billion yen

billion yen

yen

P06

SanRex REPORT 2023

14

Our purpos

12Developing strengths(invisible assets)

Unifying thinking

3
Picturing the desired future

Formulation of the purpose
The foundation that enhances our
corporate value is culture.

Why did we need a purpose?

When telling our corporate value creation story, we place
the greatest emphasis on our strong corporate culture.
Peers who share the same values come together and devise
creative measures and make efforts toward the desired
future, aiming to create a more prosperous future. This isa future in which the people who join our organization leadfulfilling lives and are happy.

Since our founding, we have been operating business based on
our corporate philosophy and mission, attaching importance tothe development of our corporate culture. With more employees
than before and overseas Group companies, we decided that
redefining the meaning of our existence and setting it as a goal
was essential for our achieving growth in the future. This is why
we set our new purpose.

Relationship between ourphilosophy system and strategies
The higher an element is positioned in our philosophy system,
the more unchangeable it is. The lower the element is, the more
likely it is to change with the times.

Valuable Products for Society
Profits and Prosperity for the Company
Happiness and Stability for Employees

Further, the higher it is, the more committed management
should be to it, while employees should be more committed to
the lower items on a daily basis.

Unchangeable

Corporate
Philosophy
Action policy that is
the foundation of thecompany

PurposeMoving society forward withpower electronics and creativity

Our purpose andour mission

Sansha Electric Manufacturing
Group Behavioral Charter

The things we value in our actions

Global Power Solution Partner

Behavioral Charter

VisionWhat we aspire to be in the long term

Medium-term management plan
Medium-term strategy for achieving the vision

15

Daily

4

5
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Unchangeable meaning of our existence
and our goal
Our purpose

Moving society forwardwith power electronics
and creativity
Since our founding, we have been engaged in transforming
and controlling electricity. This will remain unchanged.
Continuing to be an entity with one-of-a-kind technologies
and services that moves society forward to a bright future —this is our purpose and our mission.

Our thoughts reflected in words

Power electronics

This is our role in society and our business domain, which willremain unchanged. We are always engaged in power electronics.

Creativity

While we are an engineering company, it is not just our engineers
but all of our employees that act in accordance with our purpose.
All employees act creatively with a commitment to one-of-a-kind
technologies and services.

Moving society
forward

As a manufacturer of power supplies and power semiconductors,
we will be a driving force moving society in a better direction. Thisis our purpose and our mission.

SanRex REPORT 2023

16

Our purpos

1

2
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Process of formulating the purpose andthe roles of the Board of Directors
We formulated our purpose over the approx. four months from
December 2022 to March 2023. The members of the MIRAI
Project, 16 selected young and mid-career employees from thebases, departments and subsidiaries, interviewed the Honorary
Chairman and the President. Later, they created a draft following
discussions about the past and the future of our company. The
Brand Committee consisting of the President and the Operating
Officers who are the Executive General Managers of divisions
deliberated and refined the draft.
The Brand Committee narrowed down the list of proposed
purposes, selected the final proposal, and determined the
purpose following deliberation by the Board of Directors.
Because all of the internal Directors are members of the Brand
Committee, the final deliberation by the Board of Directors weremainly dialogue with the Outside Directors.

Creation of the draft

MIRAI ProjectA project involving 16 members
representing departments. Many of themwere young employees.

Creation of proposed purposes

Brand Committee

Determination of the purpose

Board of Directors

Consists of the President andthe Operating Officers who are
Executive General Managers ofdivisions

Future tasks and measures
to instill the purpose
Moving forward, we will promote many
initiatives so that every employee will
understand and accept the purpose
and voluntarily think and act with anawareness of the purpose in the future.

Main initiatives
CE
PR O SS

1

Recognition

PR O

C ES S

2Understanding

PR O

Recognizing the
purpose••••

Provision of information by the President
Provision of information on the website
Putting up posters
Provision of information via internal
newsletter

Understanding its
meaning for thecompany• Explaining using e-learning programs• Holding sessions to exchange opinionswith the President

Creating empathy• Using media

Taking a positive
stance, regarding the
purpose as somethingthat one implements
voluntarily• Taking workplace social gatherings as
an opportunity to consider one’s own
purpose• Using the Career Plan Sheet

C ES S

3

Empathy

PR O

C ES S

4

Commitments

PR O

C ES S

5

Actions taken
voluntarily with
an awareness ofthe purpose

17

Every employee voluntarily thinks and acts with
an awareness of the purpose.

45
Evaluation analysis for achieving the vision

MIRAI Project
Member’s Voices
Members of the MIRAI Project created a draft of the purpose. We requested
that the project members tell us what they felt during the project, aspirations
on what they want to be aware of hereafter, and others.

Developing strategies, acting andrepeatedly evaluating and improving

Production of a purpose movie

The members of the MIRAI Project, which played the leading role in the
project to determine the purpose, produced the purpose movie as ameasure for instilling the purpose. In the production of the video theyexchanged ideas about the scenes to be shot, composition, interview
content and other matters. Please take this opportunity to view the video.

Coordinator of Corporate Planning Department

Power Device Development Department

Yuriko Karitani

Yu Nishio

I will work to proactively act and engage indialogue as a member of the indirect department,
thus providing support to move society toward abright future.

Deputy General Manager ofEastern Japan Sales Department–1ST Section

https://www.youtube.com/watch?v=5RW5dBgyydM

I will contribute to creating one-of-a-kind
technologies by acquiring many patents andthe like.

Deputy Manager ofWestern Japan Sales Department–1ST Section

Takuya Hagita

Masatsugu Yamashita

I will contribute to creating one-of-a-kind services
through marketing thinking.

I will focus on how to leverage our creativity tomove forward.

Semiconductor Applied Technology Center

Coordinator of Information Systems Department

Ryota Takahara

Yuki Hashino

I will work on all tasks with sincerity and anawareness that I am a member of a company
which helps society move forward.

I will be conscious of not only economic efficiency
but also social value.

Senior Coordinator of Human Resources Department

Goro Ihara

Supervisor of Sales Department, Sansha Solution
Service Co., Ltd.

Tatsuya Nishii

To move society toward a bright future, I will try tocreate a bright workplace environment within thecompany.

All of us will move in the same direction andsupport the company with the same will.

Deputy Manager of General Department,
Suwa Sansha Electric Co., Ltd.

Senior Coordinator of Product Planning Department

Nobuo Yoshimoto

Hiromu Nishizawa

I will think about the roles of our products basedon how they can contribute to society.

I will help the company move society forward.

Supervisor of Development Department — 1ST Section

Coordinator of Engineering Department

Nobumasa Minohara

Tsubasa Kozako

I will work on the development of products which
will move society forward.

I will work on each immediate task and surely andsteadily lead it to better manufacturing.

Senior Coordinator of Manufacturing
Engineering Department

Vice President, SANSHA ELECTRIC MFG.
(GUANGDONG) CO., LTD.

Yusuke Nakai

Kiyohito Hayashi

I will value my intention to take on challenges and careful
work, believing that my work will move society and thecompany forward.

I will explain these thoughts to our staff in China in
my efforts to instill the purpose.

Supervisor of International Sales Department

Design Department

Yuna Sekine

Minako Yamamura

I will provide better services in an effort to increase
our visibility not only in Japan but also overseas.

I will strengthen people’s relationships and join
forces with them to take on new challenges.

SanRex REPORT 2023

18

Core competence

1

2
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Manufacturing that we willcontinue to refine
We were the first to use semiconductors in power supplies formovie projectors. This was the first product we manufactured
after our founding. We have been contributing to the movie
industry by using electronic control to provide stable lightsources. Further, we succeeded in the in-house production of asemiconductor with applications in plating rectifiers and welding
machines, thus contributing to the development of industry inJapan as well as Osaka. Currently, we continue to hone thetechnologies developed in those days and we are a leader inenvironmentally friendly power supply technologies.
The range of applications has expanded. We provide power
supplies for surface treatment, arc generators for welding
machines, power supplies for lighting equipment and otherequipment, various power conditioners and power supplies
for the evaluation of environmentally friendly equipment andequipment applying new energy and highly reliable andcustomized power supplies which continue to stably support
electronic equipment.

Core technologies
Core technologies and advantages
We have been engaged in the manufacturing of power
semiconductors for 60 years. We are able to boast to the worldabout the high reliability of our packaging technologies that areused for the servo drivers of machine tools, which must havehigh capacity to endure repeated charging, as well as welding
machines and PV junction boxes.
What constitute the design and manufacturing of power
supplies, which consist of devices and control technologies,
are exactly the power electronics technologies that have been
attracting attention in recent years as part of national strategies.
The power supplies manufactured by the Sansha Electric
Manufacturing Group incorporate high-speed digital control
technologies. Highly responsive and precise, they are praised by
the industry. In addition, their environmental durability, which was
fully developed on plating and welding work sites, enables them
to be utilized in many settings.

Competitive
advantages
Electric power and energy
conversion technologies> High-efficiency
conversion
technology> S table supply ofenergyCore technologies
Control technologies
Powersemiconductors

Competitive advantages> Stability of power supply

Competitive advantages> Improvement of energy
efficiency>P roprietary packaging
technologies>H igh voltage resistance andlow loss

Research and development
Development themes and investment policy
At the Sansha Electric Manufacturing Group, we pursue
research into technologies to further improve the reliability andheat resistance of power modules in high voltage and capacity
ranges, new bonding technologies, the expansion of applicationsfor SiC devices and next-generation semiconductors, to supportsocial infrastructure.
Further, we will realize electric power conversion technologies
that will enable high-speed, high-precision control in addition
to compact dimensions and high efficiency. By applying
communication and system technologies, we will enable
electric power converters to evolve so that they can connect toperipheral equipment.
As an initiative to remain our customers’ solution partner, we
will use AI in our R&D processes and work on DX and automationin our efforts to reduce development lead time.

19

Research and development expense(Million yen)

2,000

1,576
1,204

1,223

1,250

2019

2020

2021

1,700

1,000

0
2022

2023
Plan

(FY)

4

5

Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

Intellectual property
Concept behind the intellectual property strategy

Employee invention incentive program

We believe that the unique qualities of the Sansha Electric
Manufacturing Group lie in the support for the natural environmentand social environment that we provided leveraging ourtechnological strengths, with our intellectual property strategy
built on our sales strategies reflecting our understanding of“technology strategy, management strategy and partners’
strategies,” based on the Global Power Solution Partner concept.
Therefore, in our intellectual property strategy, we position
intellectual property as management resources for protecting
customers’ markets and achieving goals together with them,and our activities are focused mainly on creating and maintaining
competitiveness. In addition, we will strive to maintain and improve
our corporate value and brand through these high-quality initiatives.

We have an employee invention incentive program aimed at
encouraging engineers to develop inventions and at supporting
corporate development and the improvement of individuals’ skills
by protecting and utilizing their inventions.

Intellectual property activities
The Group implements initiatives to increase its competitiveness,starting from increasing intellectual property awareness andproactively obtaining intellectual property rights to achievements
made through various R&D efforts and analyses and protecting
and controlling intellectual property rights.
1

Actively obtain intellectual property rights for inventions such as
innovative new technologies and original designs.

2

File applications to secure international intellectual property rights
and maintain, manage and control them in accordance with theglobal strategy.

3

To expand business in emerging countries, continuously collectinformation on counterfeit products to take appropriate measures toaddress them.

Applications for and ownership ofintellectual property rights
Number of applications
30
20

12

10

17

19

2019

2020

24
13

14

2021

2022

0

2018

2023

(FY)

TargetData covers Sansha Electric Manufacturing Co., Ltd.

Number of patents owned(patents)

400
300
200

347

343

337

336

319

42
30
47
62

52
30
48
58

53
29
49
55

55
28
47
49

44
26
43
48

OthersSouth Korea
China
UnitedStates

156

155

161

157

158

Japan

100
0

2018

2019

2020

2021

2022

(FY)

Data covers Sansha Electric Manufacturing Co., Ltd.

Supply chain management
The Group carries out sustainable procurement activities
throughout its supply chain to operate its business, which
encompasses an extensive lineup of products all over the world.
For this purpose, we ask suppliers to understand and comply
with our Procurement Policy, which stipulates the observanceof laws, ordinances and social norms, consideration of humanrights and industrial safety, use of conflict-free minerals,consideration of the environment and the upholding of othersocial responsibilities.
In addition, we impartially evaluate and choose suppliers inaccordance with the criteria below.

Procurement
Policy1

We will observe laws, ordinances, social norms andequivalence and place importance on human rights
and the environment.

2

We will offer fair transaction opportunities tosuppliers.

3

We will carry out procurement activities based on
mutual understanding and relationships of trust with
suppliers.

1

Our suppliers must observe laws, ordinances, social norms and equivalence andplace importance on human rights and the environment.

Use of conflict-free minerals

2

Our suppliers must have a sound financial position and information management
systems.

3

Our suppliers must supply materials and services with an appropriate quality,
price and delivery lead time.

4

Our suppliers must have the ability to ensure stable supply and flexibly respondto changes in supply and demand.

5

Our suppliers must conduct value analysis (VA) and value engineering (VE)
activities* to achieve mutual prosperity.

The Group has drawn up the Sansha Electric Manufacturing
Group Conflict Minerals Response Policy. From a humanitarianpoint of view, we will not use any conflict minerals, such as tin,tantalum, tungsten or gold, that are produced using inhumane
practices in the Democratic Republic of the Congo and thesurrounding region.

6

Our suppliers must carry out risk management activities, such as business
continuity planning, under normal circumstances to hold a capacity to continue
supplying even in unexpected disaster or other extreme situations.

*V alue analysis (VA): Activities reducing the cost of mass-produced products throughout
the entire value chain
Value engineering (VE): Activities thinking about the maximization of value from theprocess of product development (consideration of design)

Sansha Electric Manufacturing
Group Conflict

https://www.sansha.co.jp/csr/purchase.html

SanRex REPORT 2023

20

Core competence

1

2
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Solutions and quality thatare created because of theintegrated production structure
Integrated production system
Our power semiconductors supporting high voltage and current
are manufactured in an integrated production system including
wafer processing and package assembly. Power supply devices,
circuit boards and other components are manufactured in an
integrated production system that includes development, design
and manufacturing. This enables us not only to provide standard
products but also to quickly deliver products which are speciallycustomized to cater to customer needs.
The Sansha Electric Manufacturing Group develops, designs
and manufactures both power semiconductors and power
supplies. This has made us very familiar with how power
semiconductors are used in power supplies. That allows us tocreate proposals that are highly efficient, safe, and best suited tothe specific environment the customer will use them in, including
peripheral circuits.
We believe that maintenance is a vital part of ensuring thesafety of power supplies. We are ready to provide one-stop
support including efficient installation, operation, maintenanceand replacement. Please watch the video, which mainly
introduces the manufacturing processes at the Okayama Plant(semiconductors) and the Shiga Plant (power supplies).

Our plants
https://www.sansha.co.jp/eng/company/factory/

Strengths of the integrated production system

Stable quality

Customization

Quick delivery

Quality checks are
conducted in all processes tomaintain stable quality.

To respond to diverse needs, we
propose solutions to customers fromthe perspectives of high efficiency,
safety and other perspectives.

The time from production to delivery
is shortened by streamlining the
production process.

Power semiconductor manufacturing processes
Front-end processes

Oxide film
formation

Lithography

Etching

Forming a film on
a semiconductormaterial wafer

Transferring thesemiconductor device
pattern to the wafer

Processing thinfilms using chemical
reactionsBack-end processes

Impurity
diffusion

Wafer
inspection

Solderingprocess

Molding
process

Examination
process

Creating an N-type or
P-type semiconductor
area by adding an
impurity (such as
boron or phosphorus)
to the wafer

Measuring film
thickness anddimensions, screening
and detecting foreign
substances anddefects, examining
appearance
and examining
characteristics

Melting the solderusing heat and joining
metallic parts together

Encapsulating thesemiconductor in resin
to prevent physicalcontact with external
objects, contaminationand other problems

Examining the
product’s appearance,
characteristics andother aspects of the
product

Power supply manufacturing processes

Process ofmounting parts
onto printed
circuit boards• Arranging electronicparts on the printed
circuit board andsoldiering them to the
board

21

Wire harness
manufacturing
processCasemanufacturing
process• Stamping wiringlocations on electric
wires using a fully
automated wire
processing system• Bundling wires by
converting a threedimensional productinto a planar form

• Cutting the plate,bending it at predetermined angles
and welding parts• Finishing the case bypolishing the weldedparts to prevent
distortion

Coating process• Coating the surfaceof the case with apowder and applying
heat to form a film

Transformer
manufacturing
process• Creating a copper
winding wire andwinding it around aniron core• Covering the winding
wire with an insulating
material after thewire has been woundaround an iron core

Assembly process
A cell production
system is used forlarge products. A line
production system isused for small products.

Examination
process
Examining appearance
and structure andconducting withstandvoltage tests, insulation
resistance measurement
tests, electriccharacteristic tests andother tests

4

5

Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

Quality management
The Group implements quality management attachingimportance to increasing customer satisfaction and social
value. We strive to create more value by appropriately managing
products’ safety, environmental performance, service life,
maintainability and other elements, in addition to achieving
product specifications, such as specifications for functionality
and operability. Quality management is implemented by allorganizations of the company and quality improvement activities
are carried out continuously via management circles.
An important feature is that information can be sharedseamlessly between the power semiconductor business andpower supply business that uses power semiconductors.
This has resulted in our skills for appropriately assuring quality

and our after-sales services, in addition to sales activities anddevelopment and design in both businesses.
In addition, we focus on quality in all phases, from productplanning to development, design, manufacturing and after-sales
services and we provide feedback using the quality informationcollected by each section to the departments that need suchinformation. This is how we improve product quality, with thegoal of achieving sustainable growth.
Further, we have internal plants making plates, transformers,
harnesses, printed circuit boards and other parts. This enables
us to demonstrate our comprehensive ability to ensure highquality, which is our strength. We internally manage the quality ofparts in our efforts to improve the quality of products as a whole.

Quality assurance system diagram
Customers and markets

Corporate Philosophy, Management Policy and Quality Policy
Customerneeds

Receipt ofan orderDevelopment
and design

Manufacturing
Process inspection

Design review

Marketresearch
Product planning

Prototyping

Raw material
procurement

Design verification

AcceptanceinspectionThe
customers’
voicesShipping
inspection

Shipping

Setup,
maintenance,
inspection andafter-sales
services

The customers’
voices

Sharing of information

Product Quality Assurance Department

Sansha Electric Manufacturing Group Quality Policy

1Compliance withlaws and regulations

Comply with related laws,
regulations and social norms.

2

Customersatisfaction

Make customer satisfaction
the top priority and respondto the demand generated bysociety leveraging the highlevel technological capabilities
we have accumulated andstrive to improve customer
satisfaction.

3

Qualitysystem4

Refine quality withan integrated system
including productplanning, development,
order acceptance, design,
manufacturing and aftersales services to deliver
reliability to customers.

Company-wide
activities for quality
improvement

Work together company-wide
to improve quality throughbusiness improvement
activities, the development of
human resources and S-PS
activities,* which are smallgroup activities unique to ourcompany.

5

Continuous improvementof the quality
management system

Establish a quality management
system adapted to social
environment and management
environment and continue toimprove it.

*SanRex Producer System activities

Proposing solutions to customer issues
The Group conducts the integrated production of highvoltage and large-current power semiconductors and power
supplies. This means that we internally conduct all processes
ranging from wafer processing to package assembly for power
semiconductors and every process from the development anddesign of circuit boards to their assembly for power supplies.
This allows us to provide customers with the proposals that are
best suited to their needs from the perspective of high efficiency,
safety and other features.

The medium-term management plan states that one of thepriority measures for the power supply business is to accelerate
the proposal of systems that combine power conditioners withstorage batteries and network functions, rather than proposals
related to power conditioners alone. A strength of the Group is
the flexibility of its development and manufacturing. We will help
customers solve their problems by proposing systems based on
this strength.

SanRex REPORT 2023

22

Core competence

1

2
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Test equipment that contributes to product quality
To deliver reliable, satisfactory products to customers, we have installed and use a variety of test equipment to maintain the safety ofour products and improve their quality.
Example test equipment

Electromagnetic anechoic chamber andsealed room
In accordance with IEC standards (international
standards for all electrical, electronic and related
technologies) and other standards, we measureelectromagnetic waves to see if our products affectother electric equipment and for other purposes.

Software testing system
Previously, it was necessary to assemble hardware when verifying software. The introduction of thissystem enables us to test software without assembling hardware. We use this system to improve theefficiency of software development and improve quality.

Environmental test room
We conduct environmental performance tests tocheck our products’ tolerance to low temperatures,
high temperatures and high humidity.

S-PS activities
Since 1970, we have been engaged in QC circle activities called
the SanRex Producer System (S-PS) activities. S-PS activities
are based on QC circle activities and incorporate the policiesof the company’s organizations. Through these activities, we
encourage employees to identify and solve problems andpractice and learn methods for improving, in our efforts toimprove their ability to execute business and further, to develop
next-generation leaders. Another goal of these activities is tocontribute to the establishment of rewarding workplaces withpositive atmospheres.
We hold a conference for presenting achievements twice ayear. During the conference, awards are granted for excellent
activities selected based on the recommendations of thechairperson of the S-PS Activity Promotion Committee.
S-PS activities presentation conference

23

4

5

Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

Total solution services deliver safe and secure power supplies
Sansha Solution Service Co., Ltd., a maintenance service
company of the Sansha Electric Manufacturing Group, caters
to customer needs with one-stop services including the
installation of power supply equipment as well as the operation,
maintenance and replacement of equipment under its policy ofproviding services which support the stable operation of power
supply equipment.
Sansha Solution Service is implementing four priority
measures in the medium-term management plan to enhance
the total solution services of the Sansha Electric Manufacturing
Group.
Power supply maintenance and inspection services

Four priority measures under the
medium-term management plan

1 I mprove quality of services

2 Accelerate construction of themaintenance structure

3 E nhance the construction work

implementation structure

4 Propose long-term service plans

FY2022 Initiatives

Achievements

Issues• Increase service staff and sign contracts
with new service partners to improve theservice structure• Signed consignment contract with a newpartner company• Develop service staff at the newpartner company• Train service staff to develop their skills• In FY2022, group training for service staff wasprovided three times• Provide training continuously toenable the establishment of thecontent of the training program• Build a system for preventing mistakes
in work• Released an electronic form system in
September 2022, aiming to standardize
inspection work

• Enhance the electronic form system• Carry out a demonstration trial of theremote maintenance system• Installed remote systems in already-delivered
uninterruptible power supplies and confirmedthat it is possible to check the condition of
local areas and receive abnormality alerts• Maintenance proposals need tobe submitted at the time of theinstallation and introduction.

• Increase staff qualified as construction
management engineers for construction
work• Increased the number of technicalsupervisors to 9 and the number of class-1
electrical supervising engineers to 12• Establish a structure for expanding
construction work

• Propose long-term maintenance services
for a recommended operation period fromthe start of operations• Long-term service plans were developed forinverters and other products delivered in thepast ten years.

• Propose long-term service plans• Improve services for large power
supplies

Sansha Electric Manufacturing Group’s comprehensive solution services
Operations of Sansha Solution Service Co., Ltd.
Construction
management

Sansha Electric
Manufacturing Co., Ltd.

Work tendered

Sales
department
Receipt oforder

Emergency private
power generation
Product sales

Customers
DeliveryTechnology andmanufacturing
department
Production

Trial
operation

Inspection andoverhaulReplacement
work
Battery
replacement

Equipment monitoring

Commissioned
work

SanRex REPORT 2023

24

Our vision

1

2

Developing strengths(invisible assets)

Unifying thinking

3
Picturing the desired future

Our desired future
Changes after the formulationof the long-term vision

Formulation of a long-term vision
In 2018, we formulated our long-term vision — the desired
future of the Group as a whole. Before that, the medium-term
management plan had been our longest-term goal, which meantthat our focus had been on achieving results that were better
than before. Amid major changes in the business environment,
we needed to transform and evolve from a longer-term
perspective. How should we change and evolve? Our direction
was defined in the long-term vision.

The thing that changed most greatly following the formulation of
the long-term vision is the awareness of employees involved indevelopment and services. Regarding newly developed products
and services, employees have started discussing issues andmaking decisions on site from the viewpoint of the future that lies
ahead of the products and services and whether the products
and services can contribute to the future we desire.
Of course, this does not apply to everything because we havea track record of successful experiences. However, we havesteadily come to think from a long-term perspective.

Evolving from a contractor to a partner —with the world being our stage
We have identified four specific elements of this vision. They aresolutions, globalization, technologies and trust. The first twoelements, solutions and globalization, represent the desired
direction of our business. This means that they are our ambitions
and potential as of 2018. We have been growing gradually bytaking on customers’ problems, fulfilling their requests andexceeding their expectations. In a way, these are our strengths.
However, if we do not change, we will reach our limits someday.

We would like to be more independently minded, build our own
brand, and become a reliable partner for global customers. This
is what we thought. To make this a reality, the remaining twoelements, technologies and trust, are necessary. We will hone
our proprietary technologies and compete on the world stage.
We will earn trust using our sincerity and quality to ensure that
customers continuously select us. These two elements arenecessary for us to be a true partner.

Continuing to be a partner that listens to customers and

Our Vision

4

25

Global Power

specific elements that we aim to obtain in the long term

Technology

Solution

We will have world-leading technologies related
to power electronics, which have been ourstrength since our founding.

Capitalizing on power electronics technologies,
we will thoroughly identify customers’ problems
and resolve them.

We are a company that has technology at its core. We willcontinue to hone our unique technologies, aiming to be a
corporate group with world-leading technologies in the fieldof power electronics.

We have been developing by solving the challenges
presented to us by customers using our technologies. Moving
forward, we will not only address the challenges given to us
by customers but also delve deeper into their problems to
evolve into their partner.

45
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

All of our strategies exist
for achieving the vision
We established some strategies in our medium-term
management plan, including business strategies, humanresource strategies and sustainability strategies. The purposesof all of the strategies are to achieve the long-term vision. While
the timelines of the strategies differ, all of them are aimed atachieving our vision, becoming a Global Power Solution
Partner. Although we are only halfway there, wewill make Group-wide efforts to achieve thelong-term vision.

meets their expectations in the provision of solutions

Solution Partner
GlobalTrust

Taking a global perspective, we will operate ourbusiness on a wholly global scale.

We will earn the unrivaled trust of society for ourquality and sincerity.

To date, we have operated businesses mainly in Japan. Moving
forward, we will turn our attention to the world and aim to
be a corporate group that solves social issues by providing
technologies and services from a global perspective on a
global scale.

We attach importance to sincerity and quality. Based onthese two elements, we aim to be a corporate group that istrusted by society as a whole, including our customers.

SanRex REPORT 2023

26

Material issues

1

2
Unifying thinking

Developing strengths(invisible assets)

3
Picturing the desired futureManagement
material issues
Material issues
At the Sansha Electric Manufacturing Group, we have beenproactively contributing to building a sustainable society
through business under one of the components of ourcorporate philosophy: Valuable Products for Society. Since
before the Sustainable Development Goals (SDGs) wereadopted, the Sansha Electric Manufacturing Group has beenaddressing social issues, attaching importance to environmental
consideration and responsibility for social impact.
In formulating the CG23 medium-term management plan, we
paid close attention to social issues and evaluated importantfactors that are directly related to the Group’s business, as wellas the interests of our stakeholders and the impact on them.
Through this evaluation process, we identified six material issues
that we should tackle on a priority basis at the Sansha Electric
Manufacturing Group.

Identify social issues
Social issues to which we pay close attention

Climate change

Rise of renewable energy and new energy

Shift of global economic power fromdeveloped countries to emerging countries

These material issues have been integrated into our businessstrategies in the medium-term management plan, and wewill address the issues by formulating and implementing
specific measures. In addition, these measures will be taken
not only to pursue the Group’s growth and profits but also tocontribute actively to achieving the SDGs. At the Sansha Electric
Manufacturing Group, we will address social issues leveraging
our technologies and innovations, thus contributing to theestablishment of a sustainable society.

Analyze risks and opportunities
Risks• Suspension of business activities due tonatural disaster• Tight electricity supply-demand balance• Instability of electricity supply• High cost of power generation• Fierce competition due to market expansion• Impact on global environmental problems• Delay in the utilization of digital technologies

Progress of technologies/innovation

Decline in the domestic population

27• Emergence of new competitors following
technological innovation• Decline in international competitiveness due
to a labor shortage• Decline in technological strengths caused bydifficulties in acquiring human resources

Responses and opportunities• Development of technologies and products for stable
power supply• Development of environmentally friendly products• Investment to replace aging equipment• Increase in business opportunities• Development of technologies and products
compatible with new and renewable energy• Expansion of the areas in which we operate• Response to infrastructure development associatedwith urbanization• Development of technologies and expansion ofservices using IoT• Innovation utilizing diverse human resources• Improvement of productivity by improving businessefficiency• Development of human resources that are experts intechnology

45
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Process of identifying
material issues

Identifysocial issues

We analyzed andassessed how significantly
the selected social issues
interested stakeholders,
the size of their impact
and how significant they
are to the Group to createa draft set of material
issues.

High
Perspective of society
and shareholders

We selected the social issues that the Sansha
Electric Manufacturing Group will focus on byreferencing the Sustainable Development
Goals (SDGs) and other international initiatives,the code of conduct in the industry the Groupis a part of (the Responsible Business Alliance(RBA) Code of Conduct*), major guidelines (theGlobal Reporting Initiative (GRI) and ISO
26000) and megatrends.

Identify andreview material
issuesAnalyze theselected issues* T he RBA Code of Conduct is guidance formulated forelectronics industry and electric equipment-relatedindustry supply chains.

Perspective of impact
on businessHigh

We determined the priority material issues tobe addressed after the management teamassessed the appropriateness of the draft. The
Board of Directors adopted a resolution
regarding them concurrently with the mediumterm management plan.
Going forward, each time a new medium-term
management plan is formulated, we will revise
them in consideration of changes in businesscircumstances and society.

Material issues that were identified and main initiatives
Material issues

Main initiatives

1

Contribution to acarbon-free society andenvironmental conservation2

Constructing a robust
infrastructure andcontributing to industrial
development

3

Providing safety, security
and new value to improve
services

4

Strengthening of
manufacturing• Investment in streamlining and automation

5

Reduction of theenvironmental impact of
production activities• Considering the replacement of aging equipment

6

Promotion of diversity andpersonnel in action

Related SDGs

• Development of high-efficiency products• Development of products related to new energy andrenewable energy• Development of uninterruptible power supplies (UPS)• Stable supply of power supplies for surface treatment• Creation of proposals for systems rather than sellingstandalone products• Reinforcement of the remote maintenance system• Implementation of IP strategy• Design standardization• Setting up projects to reduce CO 2 emissions• Procurement of power from renewable energy sources• Reviewing human resource development systems andincreasing education and training programs• Promoting diversity• Improving work environments

SanRex REPORT 2023

28

Message from the Director in charge of financial affairs

12
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Message from the Director in charge of financial affairs

Improving capital efficiency toenhance our corporate value

Masaki Fujiwara
Director and Executive Vice President
in charge of financial affairs

We celebrated the 90th anniversary of
our founding in April 2023. However,
we must improve our growth potential
and profitability by more efficiently using
the invested capital as we look toward
our 100th anniversary. Further, we must
be a company which fulfills its social
responsibilities. While it is necessary
for the Sansha Electric Manufacturing
Group to expand its business with thegoal of contributing in growth areas suchas the new energy sector to continue its
growth, we need to improve profitability
at the same time. Unfortunately, ouroperating profit ratio has been sluggish,

29

having remained below 10% for eight
consecutive years. To improve this, wemust take company-wide measures.
Against this background, we use returnon assets (ROA) based on consolidated
operating profit as a management
indicator and we are working to improve
the ratio of operating profit to net sales
and total asset turnover.
The improvement of the ratio of
operating profit to net sales is dependent
on our ability as a manufacturer topropose solutions that enable customers
to achieve value. While we havebeen operating business leveraging

our readiness to fulfill the needs ofcustomers, which is a strength of ours,
we will build relationships which enable
us to appropriately profit by exploring thetrue needs of customers to offer benefits,
and at the same time, standardizing andproviding products. These activities need
to be carried out by not just the sales,
product planning, and development
departments but by the entire company,
including the manufacturing andsupporting departments. We will
enhance our initiatives focused on the
improvement of added value.

45Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

We would like to improve total asset
turnover by increasing the efficiency
of investments, including capital andR&D investments, and at the same time,
controlling inventories and other current
assets to keep them at appropriate levels.
The Tokyo Stock Exchange hasrequested the “action to implement
management that is conscious of cost ofcapital and stock price.” While our costof capital is approx. 8% at present, ROE
is currently a low 6.1%. We are promoting
initiatives to achieve an ROE that exceeds
the cost of capital. The first step will be
increasing ROA based on operating profit
to 8% in the operational departments
within three years, and we will strive tocontinue to improve profitability, withthe goal of increasing it to 10%. For thispurpose, we will work to fully understandthe current situation to see if our existing
activities are sufficient, and we willpromptly take measures for the points
that need to be changed.
It must also be noted that sustainability
management is an essential constituentof corporate value. We will give our full
attention to the environmental sector
and make the necessary investments. At
the same time, investment in intangible
assets such as human capital andintellectual capital is also an essential
factor for sustainable growth.
We will appropriate retained earnings
from profit-oriented initiatives in operating
activities to invest for future growth(capital and human resource investments)
in a well-planned manner, and at thesame time, we will continue to deliver
returns to shareholders in a wellbalanced manner.
We have a basic policy of continuing
to pay dividends stably with a target
dividend payout ratio of around 30%

Ratio of operating profit to net sales
Net sales (Left axis)

Total asset turnover(Times)Operating profit/net sales (Right axis)(in million yen)
30,000(%)

24,36928,088

7.5
21,875

19,436of consolidated net profit. The forecast
annual dividend for FY2023 (fiscal
year ending March 31, 2024) is 40 yen
including 5 yen as a commemorative
dividend for the 90th anniversary. We
intend to use the rest as a strategic fundfor capital investment to accomplish theCG23 medium-term management plan,
the research and development of nextgeneration products and other purposes.

1.00

1.0

8

0.87

0.86

22,6755.8

5.8

15,000

0.83

0.75
4

0.79

1.2
2.1

0

2018

2019

2020

0

2021

2022

0

2018

(FY)

Return on assets (ROA)
(%)

2019

2020

2021

8

Dividend payout ratio (Right axis)

(yen)

5.1

30

5.8

(%)

30

28

42.3
30.0

4

13

15

1.0

15

50

25
30.0

31.5
25

1.7

0

0

2018

2019

(FY)

Annual dividends and dividend payout ratio
Annual dividends (Left axis)* Based on consolidated operating profit

6.5

2022

2020

2021

2022

(FY)

0

2018

2019

2020

2021

2022

(FY)

SanRex REPORT 2023

30

CG23 medium-term management plan

1

2

3

Developing strengths(invisible assets)

Unifying thinking

Picturing the desired future

Overview of the medium-term
management plan
Basic policy• Innovation for continuous growth• Contribution to the resolution ofsocial issues

Numerical targets
FY2021
Medium-term
management plan

Net sales

FY2022
Results

Medium-term
management plan

FY2023Results

Medium-term
management plan

Results
forecast*

21.8 billion yen

22.6 billion yen

24.0 billion yen

28.0 billion yen

26.0 billion yen

30.5 billion yen

Semiconductorbusiness

6.3 billion yen

7.7 billion yen

6.9 billion yen

8.1 billion yen

7.4 billion yen

8.5 billion yen

Power supply
business

15.5 billion yen

14.8 billion yen

17.1 billion yen

19.9 billion yen

18.6 billion yen

22.0 billion yen

800 million yen

1.3 billion yen

1.3 billion yen

1.6 billion yen

1.9 billion yen

2.0 billion yen

Semiconductorbusiness

200 million yen

700 million yen

300 million yen

500 million yen

400 million yen

300 million yen

Power supply
business

600 million yen

500 million yen

1.0 billion yen

1.1 billion yen

1.5 billion yen

1.7 billion yen

Ordinary profit

800 million yen

1.3 billion yen

1.3 billion yen

1.6 billion yen

1.9 billion yen

2.0 billion yen

Profit attributable to ownersof parent

500 million yen

1.1 billion yen

900 million yen

1.2 billion yen

1.3 billion yen

1.4 billion yen

39.15 yen

83.30 yen

64.07 yen95.33 yen

92.54 yen105.26 yen

2.8%

5.9%

4.4%

6.1%

6.1%

6.5%

Operating profit

Earnings per share
Return on equity (ROE)*Announced on May 10, 2023

Overview
Social issues• Expectations forhydrogen and new energy• Reduction ofenvironmental impact• Increase of natural disasters
due to climate change

Response to digital shift• Use of AI and IoT• Progress in communications
infrastructure• Robotization• Economic development andpopulation growth inemerging countries• Constructing robust
infrastructure

Changes in population
structure• Decrease in the working
population in Japan• Shift to new workstyles• Aging society

Strengthening business foundation

Rapid urbanization

Solutions through businessResponse toenvironmental issues

Material issues

Major strategies

Major risks and opportunities

Contributing to acarbon-free society
and environmental
conservation

 eveloping diverse products with highD
voltage resistance and efficiency

Constructing
infrastructure
and contributing
to industrial
development

 eveloping uninterruptible powerD
supplies
Increasing the efficiency of power
supplies for surface treatment

Offering safety
and security andimproving services

E xpanding service solutions

Strengthening
manufacturing

 romoting the standardization andPautomation of design

Reducing theenvironmental
impact of production
activities

 ursuing CO 2 reduction and energyP
conservation

Promoting diversity
and the active
participation ofhuman resources eveloping human resources,D
improving the environment, andpromoting diversity

Related SDGs

Increase in business opportunities in the renewableenergy and new energy sectors
Tighter environmental regulations
Economic growth in developing and emerging countries
Necessity to construct robust infrastructureLoss of capital investment opportunities due to large
disasterProgress in IoT technologies
Product incidents and failures

Use of our accumulated intellectual properties
Decrease of skilled engineersDifficulty in procuring raw materials

 ompetitiveness gained by reducing environmental
C
impactTighter environmental regulations

Innovation rooted in diversity
Intensifying competition for excellent human resources
attributed to Japan’s shrinking working population

Opportunities

We understand that social issues related to the businesses of theSansha Electric Manufacturing Group have remained unchanged
since May 2021 when we announced the medium-term
management plan.
We will implement initiatives to address material issues fully
leveraging the Group’s technologies to solve social issues, such

31

Risks

as the improvement of energy efficiency, renewable energy,
climate change, marine pollution and disaster response, thereby
contributing to the achievement of the SDGs. We aim to establish
a sustainable society and achieve the sustainable growth of theGroup.

4

5
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Overview of FY2022
In FY2022, COVID-19 restrictions were gradually eased. This has
led to moves to normalize economic activity. On the other hand,
the Russia-Ukraine situation caused the prices of crude oil andenergy to soar and the significant depreciation of the yen in theforeign exchange market. Due to these and other backgroundfactors, prices increased and there were concerns regarding thefuture of the economy.
In the environment surrounding the businesses of theSansha Electric Manufacturing Group, capital investment
remained strong overall, but the rise of the purchase prices ofraw materials, energy and transportation and other factors put
pressure on profit.
In these circumstances, orders received remained at a highlevel in both the semiconductor business and power supply
business, but they continued to be affected by the prolonged
lead time in the procurement of raw materials.

Future initiatives
FY2023 (fiscal year ending March 31, 2024) is the final year of theCG23 medium-term management plan. As of the beginning of
the fiscal year, orders received were strong in both businesses.
In the power supply business in particular, sales are planned
to take place in major projects, including power supplies forthe evaluation of power conditioners and power supplies forfine surface treatment. While we will continue to be impacted
mainly by rising costs, including the cost of electricity, materials
and logistics, investments for replacing and building production

systems and other systems and an increase in development
expenses, profits are expected to be improved due to anincrease in sales. We will make company-wide efforts to achieve
the target profits for the final fiscal year of the medium-term
management plan.
In the medium to long term, we plan to improve profitability
and invested capital turnover, targeting a return on assets (ROA)of 10% or higher.

Profitability improvement
To enable our engineering, production and sales teams to work
as one in the aspects of both offense and defense to makeour company highly profitable, we have set ROA (based on
consolidated operating profit) as a KPI, targeting an ROA of 10%
or higher.
It is anticipated that attaining the ROA target will result inPriority measures

Becoming a highly profitable company
Our KPIs(based on consolidated
operating profit)

DefenseFY2022

Target level

5.8%

10% or higher

Operating profit/
net sales

5.8%

10%

Total asset
turnover1 time1 time

ROA

Value creation

Investment
in humancapitalCapitalinvestment

Development
investment

Shareholder
returns

Enhancement of corporate value

OffenseDevelopment of high value-added
products
Cultivating new markets
Expansion of production capacity

Design standardization
Shortening lead time
Production process improvement
Optimum inventory

a higher level of return on equity (ratio of profit to equity) andachievement of ROE exceeding the capital cost.
We will reinvest the acquired profit to achieve the growthof the Group and improve its competitiveness, and as a result,enhance its corporate value.

Achieving ROE that exceeds the cost of capital

SanRex REPORT 2023

32

Strategy of each segment

1

2

3

Developing strengths(invisible assets)

Unifying thinking

Picturing the desired future

Growth strategy in the power
semiconductor business
The Sansha Electric Manufacturing Group does not develop or manufacture integrated
circuit semiconductors such as memory or microcomputers. Instead, it develops power
semiconductors. These are used in diverse power supplies for the conversion of highvoltages or currents between direct current and alternating current, for controllingthe current and voltage levels and for other purposes. They are adopted to customers’
different production systems and incorporated into a broad range of power supply
products to play significant roles in them.

Review of FY2022
In FY2022, sales of inverters for industrial use and power
modules for welders and various power supplies increased
steadily reflecting capital investment and infrastructure
investment. In addition, sales of chips remained strong.
In China, the Group’s mainstay market, sales of products
for air conditioners, elevators, and electric bidet toilet seats
decreased due to the lockdown and economic slowdown related
to real estate, which was a result of the COVID-19 pandemic.
However, sales in the business as a whole increased due to thesteady performance of products for the Japanese market. In
Europe and the United States, we will continue to ensure that our
SiC semiconductors appeal to universities, research institutions
and other entities and look for business opportunities in new
industries.

Semiconductor sales by region (by location of sales destination)
Millions of yen

408

670

Europe

1,085

1,030

Asia

2,202

China

679

North
America

3,562

Japan

295
773

277
744

2,461

1,811

1,993

671

601

518

2,208

2,177

3,165

0
2019

2020

2021

2022

(FY)

Business environment analysis
Some silicon carbide (SiC) power
semiconductors are being used atpresent in industry for welders andinduction heating, in addition to theiruse as inverters. It is expected, however,that SiC power semiconductors willsee further growth in demand in fields
such as automobiles and electricalcomponents for improving power
efficiency, reflecting the spread ofelectrified vehicles and charging
infrastructure, in addition to an increasein demand in the field of information
communication equipment, including
server power supplies, and the energy
field such as solar power generation.

Global market of
power semiconductors
SiliconGlobal market of SiC power
semiconductors(100 million yen)

Next generation*(100 million yen)

9,694

10,4698.4times
8.0times

1.9times
1,249

43,1181,206

22,1372022 forecast

2030 forecast

2022 forecast

2030 forecast*SiC, GaN, gallium oxide, diamond
Source: F uji Keizai Co., Ltd., 2023 Current State and Future Outlook of Next-Generation Power
Devices & Power Electronics-Related Markets

33

4

5

Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

Net sales (in million yen)Power modules

Discrete semiconductors and others

7,791
6,816
1,657

5,158

Segment profit (in million yen)

2,162

8,146

767

8,500
510

452

2,303

300

5,709

5,688
1,433

1,575

4,255

4,134

172

5,629

5,843

-368
2018

2019

2020

2021

2022

2023
Forecast

(FY)

2018

2019

2020

2021

2022

(FY)

2023

Forecast

FY2023 forecast
While orders remain strong as of the beginning of the fiscal
year, sales are expected to decline due to increases in capital
investment, including automation equipment for streamlining
and increasing production and the installation of solar power
generation equipment at the Okayama Plant, and in R&D
expenses, in addition to an increase in the costs of raw materials,
electricity, logistics and other expenses.

Overview of capital
investment

Objective

EstimatedamountUpsizing of wafers

Streamlining the wafer production
process and increasing production

240 millionyenLines for increasing
production

Increasing and automating the
production of redesigned products

530 million
yen

Solar (PV) power
generation

Streamlining and environmental
measures

150 millionyen
1 billion
yen

Total

Priority measures
In the semiconductor business, we plan to continue enhancing
the lineup of SiC semiconductors and strive to find newcustomers. Further, with the goal of it becoming a 10 billion yen
business through the development of new products under theconcept of low leakage current, low loss and low environmental
impact and the development and sale of thyristors, diodes andother highly reliable devices for use in infrastructure, which areareas that are expected to expand mainly in emerging countries,
our production, sales and engineering teams will work as one toachieve high profitability.
In addition, we are striving to make semiconductor
products completely lead-free as a part of initiatives to reduce
environmental impact. We are studying manufacturing process
not involving the use of high-temperature lead solder, which was
excluded from the application of the RoHS2 Directive (directive
on restrictions on use of hazardous substances). We haveintroduced equipment for testing lead-free solder that will enable
the full demonstration of the reliability performance of various
module products. We will continue to expand the lineup of
products using lead-free solder.
In the aspect of production, we will enhance productivity
by standardizing materials, increasing the operating rate ofequipment, and further improving work efficiency, addressing theincrease in the cost of materials, electricity, logistics and otherexpenses.

Technology• Enhancing the lineup of SiC semiconductors• Enhancing the lineup of products under the conceptof low leakage current, low loss and low environmental
impactProduction• Standardizing materials and improving design efficiency• Introducing automated equipment

Sales• Finding new SiC semiconductor customers• Accelerating the market penetration of new products

SanRex REPORT 2023

34

Strategy of each segment

12
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Growth strategy of power
supply business
Since we developed a power supply for projectors ensuring the projection of stable
images onto movie theater screens in 1933, we have been utilizing technologies that
freely transform and efficiently convert electricity to develop and manufacture awide variety of power supplies supporting the environmental and energy sectors, theinfrastructure and facility equipment sectors and entertainment-related sectors.
As we engage in integrated production including development, design andmanufacturing, we are able to provide standard products and also customized products
tailored to customers’ requests with short delivery lead times. After delivering products
to customers, we consistently provide maintenance and other support services.

Review of FY2022
In FY2022, we achieved steady performance in the areasof power supplies for general industries, including those forprocessing materials used for lithium ion batteries, printed circuitboards and other products, seawater electrolytic processes,
silicon pulling and other areas, as well as the high-precision
power supplies for surface treatment, an area in which we
excel, reflecting the growing demand for substrates that require
high-precision surface treatments that are used in PCs, data
centers and other places. Further, sales of small power supplies
increased significantly and contributed to the growth of thesales of the entire business, due to the remarkable recovery ofthe demand for small embedded power supplies for medical
equipment and other products. By region, overall performanceremained strong both in Japan and in other countries.
Meanwhile, on the production front, the procurement of raw
materials (semiconductors, electronic components, resin molded
products, etc.) has remained difficult. Further, soaring raw
material prices and the weak yen put pressure on profit.

Business environment analysis
In 2022, demand for power storage systems increased, mainlyreflecting the expansion and ubiquitization of renewable energy,
robust investments in data centers and 5G communications,and preparations for natural disasters. Demand for power
storage systems is expected to grow in the future as countries
set decarbonization and carbon neutrality targets and theintroduction of renewable energy accelerates.

The size of the power storage device market in the field of energy
storage systems (ESS) and stationary storage batteries
Lithium ion batteries

Other12,570100 million yen

11,6098,723

41,84836,267
4,373
26,142
9,782
2021
Inverter for storage battery

352025 forecast

2030 forecast

2035 forecast

Source: Fuji Keizai Co., Ltd.: Future Outlook of Energy, Large Secondary Batteries and Materials
2022 — ESS and Stationary Storage Batteries

45
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Net sales (in million yen)Segment profit (in million yen)

22,0001,700

19,941
17,553

1,381

For industries

16,186
13,727

14,884For surface treatment,
welding machines andcutting machines

1,118

For light sources anddimming
Inverters

624

Small power supplies

548
244

Other power supplies
and services

2018

2019

2020

2021

2022

2023 (FY)Forecast

2018

2019

2020

2021

2022

2023

(FY)

Forecast

FY2023 forecast
As of the beginning of the fiscal year, orders are strong andsales are expected to increase. In FY2023, sales are expectedfrom major projects, including power supplies for the evaluationof power conditioners and power supplies for fine surface
treatment. While we will continue to be impacted mainly byrising costs, including the costs of raw materials, electricity, andlogistics, capital investment for replacing and building production
systems and other systems, and an increase in development
expenses, profits are expected to improve due to an increase insales.

Overview of capital
investment

Objective

EstimatedamountEquipment for
streamlining processes

Process streamlining and increaseof production

310 million
yen

Equipment related toquality assurance andinspections

Quality improvement and legal
compliance

160 millionyen
470 million
yen

Total

Priority measures
In the power supply business, we will work on the developmentof products related to new energy and renewable energy which
are growth fields. We will also develop power conditioners forfuel cells, which use hydrogen, leveraging the technologies
for solar inverters that we have cultivated. In the fundamental
business, we will develop new products with higher power
conversion efficiency. Further, we plan to propose not only
standalone inverters but also systems that also include storage
batteries, network functions and other features. In addition,
we will enhance the maintenance services of Sansha Solution
Service Co., Ltd., our subsidiary, aiming to increase our market
share for uninterruptible power supplies and other products.
On the manufacturing front, we will introduce automatedequipment, increase the use of outsourced services, increase
efficiency through the improvement of business and implement
other initiatives to be ready to increase production.

Technology• Enlarging the hydrogen and new energy andenvironmental sectors• Collaborative projects with business alliance partners• Strengthening the fundamental business (new products,
improvement of existing products)

Production• Design standardization• Introducing automated equipment

Sales• Expansion from sales of standalone inverters to salesof systems• Proposing high value-added products• Accelerating price pass-through

Maintenance and inspections by Sansha Solution Service

SanRex REPORT 2023

36

Contribution to decarbonized societ

Initiative for the realization of a decarbonized society,to which we contribute with our proprietary powerelectronics technologies
The Government of Japan has set the FY2030 greenhouse gas
emissions reduction target at 46% (from the FY2013 level) and
expressed its determination to keep working to achieve thelofty goal of 50%. The significance of the efforts in the energy
conversion sector is increasing, as it is responsible for more than
40% of greenhouse gas emissions. It is particularly necessary
to increase the use of sunlight, wind power, biomass and otherrenewable sources of energy. Announced in April 2021, theGreen Growth Strategy set specific goals not only in the area ofnext-generation renewable energy but also in the storage battery,semiconductor and many other related sectors.
Since our foundation, we have nurtured power source
technologies to limit the loss involved in power storage orconsumption to a low level. Based on these technologies, wedevelop solar inverters for power storage systems and fuel cells
and other power supply devices. They play significant roles in
the creation of a carbon-free society. We also internally produce
high-voltage and large-current power semiconductors and highefficiency next-generation compound semiconductor modules.
They are core devices supporting the power supply devices
above. We are always able to deliver leading-edge technologies
to society.
At the Sansha Electric Manufacturing Group, we will continue
to provide new technologies and products further by applying
technologies that we have continued to cultivate since ourfoundation to contribute to realizing carbon neutrality by 2050.

Energy solution provided by fully leveraging power electronics technologies
Solar inverter (single function)

Power System

Generate

Hydrogen

H2
Inverter for storage battery

Water electrolysis
hydrogengeneration

Inverter for fuel cell

Combined systems(including energy management system)

Core technologies
Systeminterconnection

Smart inverter

Bidirectional power
conversion

37

Store

Power semiconductors supporting
power supply devices
Battery charge
and discharge

Combined power modules

Use smartly

Consuming

System interconnection

Silicon mesa structure

SiC

Transfer-molded structure

Packages with high voltage
resistance and high reliability

Specific initiatives
Development of a system combining storage batteries, fuel cells anda water electrolysis system
The power consumed in Iki City, Nagasaki (Iki Island) is
generated by diesel power generators on the island. Due tothe soaring cost of fuel (light oil), transportation and otherexpenses, it was urgently necessary to replace this method ofgenerating power. Against this background, in FY2021 the Iki
City Government began a demonstration experiment of a systemusing solar power and power from fuel cells with hydrogengenerated from sunlight. This project has been implemented at
an onshore puffer fish farm.
In this demonstration experiment, we delivered products

including solar inverters, DC/DC converters for fuel cells, DC/DC
converters for storage batteries, and DC power supplies for thewater electrolysis system.
The solar power and the power generated by converting thepower from storage batteries and fuel cells is used to drive thewater circulation pump used in puffer fish farming. Oxygen thatis electrolytically generated by the water electrolysis system
is used to maintain the oxygen level in the aquarium, and theheat generated as a by-product is used to maintain the watertemperature.

Configuration of our products

Power consumption
stabilization system(equipment we delivered)

SwitchAC system

DC/AC converter for
loadTransformer(20 kW)
Load (onshore
puffer fish farm)

DC/DC converter forsolar cells
Solar panels
Capacity: 165 kW

DC/DC converter forstorage batteries

Oxygen tank
DC/DC converter forwater electrolysis

DC/DC converter forfuel cells

OxygenWater electrolyzer

Lithium batteries(20 kWh)

Fuel cells(16 kW)

HydrogenHydrogen tank

We are working to develop a solar inverter that use hydrogenand build a fuel cell system leveraging the technologies for solar
inverters that we have cultivated. This fuel cell inverter has asilicon carbide (SiC) MOSFET power module that we developed
and contributes to improving energy efficiency in high-current,
high-voltage applications.

Areas related tohydrogen/fuel cells

Comparison of power loss of semiconductors
400Power loss due tosemiconductors

Contributing to saving energy with SiC
MOSFET modules

Heat

300

IGBT

Independently developed SiC MOSFET module

Loss reduced

200
100
0
5
15
25
Inverter output power supply (A)35451200V150A Vcc 500V fsw 7kHz

Techno Block series
The Techno Block series of semiconductor modules
or packages with compact dimensions and excellent
heat dissipation feature our proprietary method ofsoldering both sides and the use of transfer molding.

Virtual power plant* construction demonstration project
We are involved in a virtual power plant construction
demonstration project with the goal of achieving unprecedented
new energy management to build a foundation for energy
infrastructure that will contribute to efficient energy use bysociety as a whole.
We are considering ideas which will lead to solutions to various

issues in the popularization, expansion and commercializationof renewable energy. Expected achievements have been seenin the demonstration experiments using household storage
batteries, industrial storage batteries and electric vehicles asenergy sources. We will continue working to optimize energy
management for future commercialization.

*A virtual power plant is a system in which small power generation and storage facilities in many households, office and commercial buildings, factories and others are operated
together like a single power plant, instead of constructing a large power plant, by integrating and remotely controlling them using IoT and other information technologies.

SanRex REPORT 2023

38

Contribution to decarbonized societ

Initiatives for building a decarbonized society
advanced together with our partner companies
On November 8, 2022, we signed capital and business alliances with Mitsubishi Heavy Industries, Ltd. and Nitto Kogyo Corporation.
We collaborate with the companies to implement decarbonization initiatives, with the goal of enhancing our corporate value.

Comments from Mitsubishi Heavy Industries, Ltd.
At Mitsubishi Heavy Industries, Ltd. (“MHI”), we set our growthstrategy as “Energy Transition” on the energy supply side and“Smart Infrastructure” on the demand side. Our aim is to strongly
promote energy conservation, automation, and decarbonization
initiatives in these areas contributing to the establishment of acarbon-neutral society.
We have been actively looking for an alliance partner, believingthat collaboration with a partner will accelerate such initiativewith an eye to the medium-term growth of the business, rather
than pushing forward with it on our own. Sansha Electric
Manufacturing has world-leading power supply and power
semiconductor technologies and has proactively contributed
to the establishment of a decarbonized society through highly
efficient electric power transformation. This is an importantelement in the medium-term growth strategy that we haveestablished at MHI, and we believe that Sansha Electric
Manufacturing is an essential partner in our efforts to execute
this strategy.
We are certain that the power electronics technologies

provided by Sansha Electric Manufacturing will make a
substantial contribution to solving social issues as we movetoward decarbonization. By leveraging each other’s strengths,
we can achieve a sustainable, carbon-neutral society globallyproviding new solutions. With Sansha Electric Manufacturing ourmentor in the realm of power electronics, we hope for further
strategic collaboration.

Shinichiro Gomi

General Manager
Business Development Department
Growth Strategy Office
Mitsubishi Heavy Industries, Ltd.

Comments from Nitto Kogyo Corporation
At Nitto Kogyo, we have
set the expansion of ourbusiness in the energy
management market
as an initiative to be
pursued in anticipationof decarbonizationand the changes in theenvironment surrounding
energy, to achieve
Safa Link-One
continued growth under
our long-term vision:
Trust, Technology, and Contribution — A company that createsvalues and connects electrics and information to tomorrow. We
were looking for an alliance partner believing that, to achieve theabove, we need to have a partner that shares our orientation,
instead of working on our own. At Nitto Kogyo, we believe thatthe power electronics technologies possessed by Sansha
Electric Manufacturing are essential for executing the above
initiative. We are certain that the capital and business alliance will
enable the two companies, both of which are oriented toward
decarbonization, to leverage each other’s strengths.
We believe that the power electronics technologies
possessed by Sansha Electric Manufacturing are playing avery important role in the realization of a decarbonized society.
The Safa Link-ONE- industrial solar self-consumption storage

39

battery system that Nitto Kogyo has productized is the first
product that leverages the strengths of the two companies.
It is highly acclaimed by many people. We expect that thetwo companies will continue to create new products and new
solutions leveraging their technologies and strengths and thereby
contribute to a decarbonized society.
We hope that the two companies can open up the way to
a new era as strategic partners, aiming to achieve sustainablegrowth and the medium- to long-term improvement of theircorporate value.

Mr. Takashi Mizukoshi

EMS Business Department,
Business Planning Department,
Nitto Kogyo Corporation

Helping solve regional issues withwireless technologies
Chino City, Nagano, where Suwa Sansha Electric Co., Ltd.
is located, boasts the rich natural environment at the base of
Yatsugatake. This has created social issues unique to Chino City,
including the need to watch over mountain climbers and schoolcommuters, the prevention of damage caused by harmful fauna,disaster control, and the introduction of agricultural IoT. To help
solve these issues using unique technologies, Suwa Sansha
Electric participated in the industry-academia-government
collaborative project for the creation of the SUWARIKA Brand
during the three years from FY2018 to FY2020.
Among these issues, in mountainous areas, flood damage
is becoming more frequent every year with the rising risk of theflooding of small rivers. In Japan, a flood-prone country, there
is strong demand for the measurement of river and lake waterlevels. Water gauges have already been installed in governmentmanaged rivers and the data from them is transmitted wirelessly.
However, these gauges have yet to be installed in small rivers.
A compact, lightweight, high-precision, low-cost water
gauge was developed as a SUWARIKA Brand product. In thisproject, Suwa Sansha Electric developed a wireless transmission
board for the IoT device. The transmission board is equippedwith a GPS. It is capable of transmitting location informationand information from the sensors connected to it. It is used toaccurately predict river water levels and to monitor water levels,
such as the detection of abnormal phenomenon caused bymudslides. At present, the water gauges are operating in the
Chino and Suwa areas.
A demonstration experiment is under way for using thesetechnologies for weather observation and crime prevention in the
future.

Yatsugatake

GPS

Receiving station

Cloud

Tablet/smartphone/PC

Water level sensor

What is the industry-academiagovernment collaborative
project for the creation of the
SUWARIKA Brand?

The project was created by the government of Chino City, Nagano to address the population
decline, the low birthrate and the aging of the population. With Suwa University of Science
playing a central role, the goal of this initiative is to solve various administrative and regional
issues by integrating advanced manufacturing technologies with the Low Power Wide Area
(LPWA) wireless transmission technology for leading-edge IoT devices.

SanRex REPORT 2023

40

Area-specific strategy

12
Unifying thinking

Business-specific strategies in major areas

Area-specificstrategy
Global expansion of theSansha Electric ManufacturingGroup
In 1983, we established two subsidiaries:
SANREX CORPORATION in the US stateof New York and SANREX LIMITED in
Hong Kong. We then opened sales basesin Singapore in 1999 and in Shanghai,
China in 2001 to expand our overseas
sales operations. In 1994, we opened abase manufacturing power supplies in
Guangdong Province in China to pushahead with local production for local
consumption in China. To continue ouroverseas expansion, we set up branches in
Helsinki, Finland, Seoul, South Korea andTaipei, Taiwan in 2017. We are expanding
our business globally with the medium- tolong-term target of increasing the ratio ofoverseas sales to around 50%.

3Developing strengths(invisible assets)

Picturing the desired future

China
While its economy is slowing slightly at present, China remains
one of the world’s top economic powers. This market is
expected to continue growing sustainably. Above all, this is themarket leading the world in both the production and sale of
EV-related products, and the expansion of peripheral industries
is also remarkable. Therefore, we believe that our power
semiconductors and power supplies can contribute across awide area. At the Sansha Electric Manufacturing Group, we have
manufacturing and sales bases in China. We are leveraging thisadvantage to enhance local production for local consumption.

Power semiconductor businessIn addition to selling discrete semiconductors and otherproducts, we will focus our efforts on expanding the adoptionof SiC semiconductors in the induction heating industry and inwireless chargers and other products.
Regarding Made in China 2025, we will continue to strive tocollect information from dealers and industries.

Power supply businessWe will expand sales focusing mainly on power supplies forsurface treatment and welders. We believe that this requires
the expansion of sales channels. In FY2023, we will expand ourdealer network by using various methods to approach dealers
and push forward with the development of new applications andnew customers.
Net sales trend (in million yen)
4,199

3,307

2019

2020

Ratio of overseas sales

2018

35.5%

32.4%

4,402

3,598

2021

4,996

2022

Our bases around the world and sales ratios (FY2022)

30.7%
30.7%

30.5%

34.0%

China

North
America

4,996

897

million yen

17.8%

million yen

3.2%
Europeand others

674

million yen

2017

2018

2019

2020

2021

2022
(FY)

2.4%

Asia

(excl. China)

2,987

million yen

10.6%

41

(FY)

4

5
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

EuropeNorth America

In Europe, there are many major manufacturers in industries towhich our products can contribute, including the inverter, welder
and induction heating industries. We plan to expand sales by
proposing products to these manufacturers.
Further, interest in environmental issues is high in Europe
compared with other regions of the world, so we will consider
our potential to contribute in areas such as decarbonization,
renewable energy, and hydrogen.

Capital investment in the manufacturing industry has been
trending toward a slowdown at present. In addition, there
has been an impact from economic policy directed at China.
However, we believe that North America is the central market
that will lead the global economy. At the Sansha Electric
Manufacturing Group, we will take a niche strategy instead of
expanding sales in all directions, aiming to increase our shares of
specific markets.

Power semiconductor business

Power semiconductor businessTo expand sales of SiC semiconductors, we plan to expand
to new industries while also strengthening sales in existing
industries.

We will promote an industry-academia collaboration as a new
initiative. Working together with a university in the United States,
we will examine and horizontally expand example applications
for our semiconductors. We also plan to exhibit at US nationwide
trade shows to increase our visibility and acquire new customers.

Power supply businessWe will consider our products’
potential to cater to customer
needs in Europe, the main market
related to hydrogen, which is a
new energy source attracting
attention globally.

Power supply businessWe will enhance our lineup of weldingrelated products and work to expand
sales channels. We also plan to actively
exhibit at US nationwide trade shows toincrease our visibility and acquire newcustomers.

At an exhibition
World hydrogen 2023 (Netherlands)

Welder for
North America

Net sales trend (in million yen)

Net sales trend (in million yen)
674

905

830

295

277

2019

2020

2021

897

645

411

407

2018

857

2022

(FY)

2018

2019

2020

2021

2022

(FY)

Asia (excl. China)
While many Japanese companies have manufacturing bases inSoutheast Asia, we have established a certain market share of
the power supplies for surface treatment in Thailand in particular.
Moving forward, we will strengthen sales promotional activities
targeting local companies in our efforts increase our market
share.
While India is still a developing market for the Group, we
believe that the cultivation of the Indian market will be key forour overseas business because India is among the world’s top
economic powers, just like China. In FY2023, we will continue
to promote and accelerate our existing activities to cultivate theIndian market.

Net sales trend (in million yen)
2,987
2,407

1,979

1,911

1,745

2018

2019

2020

2021

2022

(FY)

Power semiconductor business

Power supply businessWe will work to expand sales of SiC semiconductors for electricbuses and the induction heating industry by positioning the
products as the second pillar following the Triac semiconductorsthat are our mainstay products.

It is expected that power supplies for surface treatment, mainly
power supplies related to automobiles, will continue to be indemand. We will promote measures to strengthen relationships
with existing customers and find new customers.

SanRex REPORT 2023

42

Sustainability strategy

12
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Sustainability strategy

Solving social issues through business activities

Basic policy
While international society is currently facing climate change and many other social and environmental
problems and it is necessary for companies to implement initiatives for building a sustainable society,
the Sansha Electric Manufacturing Group will help solve social issues through its businesses, such as
the development of products using power electronics and creativity, in its efforts to improve its corporate
value and establish a sustainable society. We will behave in a manner that fully considers the impact of
the Group’s business activities on society and the global environment. We will strive to earn the trust of
stakeholders.

Promotion structure
The Group understands that actions to address sustainability issues are a priority management issue
from the perspective of increasing corporate value over the medium and long term. The Board of
Directors determines the basic policy and the Corporate Planning Conference discusses specific actions
and studies measures. Related committees collaboratively implement individual measures with otherinternal committees.

Board of Directors

Environmental Management
Implementation Committee

Developing and making decisions
regarding basic policy

Environment
Personnel Development Committee

ReportHuman resource development andemployee engagement

Instruction

Corporate Planning Conference

Safety and Health Committee
Collaboration

Deliberating on matters including
information about material social andenvironmental risks

ReportOccupational safety
Internal Control Committee
Compliance and risk management

Instruction

Collaboration

Business departments and group companies
Implementation

43

4

5
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Tackling the climate change problem —Reducing environmental impact

At the Sansha Electric Manufacturing Group, we are accelerating activities to protect the global environment, believing that theconservation of the global environment is a duty that must be fulfilled for the good of future generations and the reduction of theenvironmental impact of business activities is one of the Group’s most important tasks.

Environmental management system
The Board of Directors determines the basic policy on
environmental initiatives and the Corporate Planning Conference,
which is attended by the President and Executive General
Managers, discusses specific actions and studies measures.
Specific initiatives related to environmental protection and energy
conservation are planned by the Environmental Management
Implementation Committee, which meets regularly. The plans are
discussed at the Corporate Planning Conference and decisions
on them are made by the Board of Directors.
The Environmental Management Implementation Committee
is composed of managers from individual departments andbases, and the Quality and Environment Planning Department
acts as the administrative office for this committee.

Board of Directors

Decision on policy

Corporate Planning
Conference

Discussing initiatives

Planning specificinitiatives

Environmental Management
Implementation Committee

Implementing
initiatives

Individual departments
and bases

Sansha Electric Manufacturing Group Environmental Policy
The Group is aware that conservation of the global environment is a corporate social responsibility. We will work to reduce
environmental impact and consider biodiversity to aid the realization of a sustainable society.

1

Observance ofenvironmental laws
and regulations

We will observe environmental
laws and regulations and meetequivalent requirements.

5

Considerationof biodiversity
conservation

All our personnel will be awareof importance of conserving
biodiversity and act in due
consideration of it.

2

Prevention of global
warming

We will work to reduce greenhousegas emissions from businessactivities.

6

Reduction of theenvironmental impact
of products

We will always strive to create
environmentally-friendly productdesigns to provide productswith little environmental impact
throughout their life cycle.

Observance of environmental laws and regulations
We understand the laws and regulations that apply to groupcompanies as well as those that we should observe, andevaluate compliance regularly to ensure laws and regulations areobserved.
At the Sansha Electric Manufacturing Group, there were no
violations of environmental laws or regulations in FY2022. We willcontinue to strive to ensure proper control.

3

Contribution to a
recycling-oriented
society

We will strive to minimize waste
and efficiently use resources to
aid the realization of a sustainable
recycling-oriented society.

74Reduction of hazardous
substances

We will work to reduce emissions of
substances that adversely impact theenvironment and to prevent pollution.

Continuous improvement of theenvironmental management system

We will be aware of impact our business activities
and products have on the environment andwork to continuously improve our environmental
management system.

ISO14001 certifications we have acquired
Certification
body

Japan Quality Assurance Organization

Registration
numberSemiconductor Manufacturing Division
Power Supply System Manufacturing Division

JQA-EM7548
JQA-EM7051

Date ofregistration

Semiconductor Manufacturing Division
Power Supply System Manufacturing Division

June 28, 2019
February 14, 2014

SanRex REPORT 2023

44

Sustainability strategy

1

2

3

Developing strengths(invisible assets)

Unifying thinking

Picturing the desired future

Towards carbon neutrality in 2050
At the Sansha Electric Manufacturing Group, we recognize theimportance of constantly lowering CO2 and waste emissions
from production activities. Based on this understanding, we set
the following goals in FY2021.

Reduce the CO 2
emissions of all groupcompanies 46% by 2030

Achieve carbon
neutrality by 2050

(Compared to FY2013)

Reduction of CO2 emissions — Achievements and goals (Scope 1 and 2)
Compared to FY2013(Unit: tons CO2)of solar (PV) power
30.3% Installation
generation system (Okayama Plant)
Replacement of the gas airconditioning system

14,428Compared to FY2013

Replacement of transformers
and the air-conditioning system(Okayama Plant)

10,064

46.0%
7,791

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030(FY)

In FY2022, the CO 2 emissions of the Group as a whole increased year on year to 10,064 t-CO 2 . Factors for theincrease were 1 an increase in energy consumption associated with the production volume and2 the worsening of the CO 2 emission factor of Chugoku Electric Power.

We are planning to make capital investments to accelerate thereduction of CO2 emissions.
I nstallation of solar (PV) power generation
system at the Okayama Plant
Replacement of the gas air-conditioning systemat the headquarters with an electric system
Replacement of the air-conditioning system at
the Okayama Plant

Further, we plan to reduce emissions by promoting initiatives
including process improvements in the manufacturing
department, the company-wide improvement of efficiency, andaddition and revision of reduction items based on the latest
environmental technologies.
In addition, to set a reduction target for Scope 3 CO2emissions, we are working to understand the current situation.

Achieving a departure from fossil fuels
The Okayama Plant accounts for approx. 80% of the entire
Group’s total power consumption. At the plant, we have replaced
the lighting system with an LED lighting system and introduced
an Energy Management System (EMS). In addition, of two
cleanroom buildings (Buildings A and B) that consume hugeamounts of electricity because of the strict air-conditioning
management that is required, we improved the efficiency of
Building B’s outside-air-processing air conditioners by renovating
the existing heat source equipment (cold water chiller and steam
boiler) to use a high-efficiency, air-cooled heat pump chiller and
we also introduced variableflow control. Further, wehave begun to use waste
heat from production
equipment to preheat andreheat outside air and weadopted a dry fog system
for humidity control, which
has led to the termination ofHigh-efficiency air-cooled modular chiller atsteam humidification, which
the Okayama Plant
was the greatest challenge.

45

We have expanded these initiatives to Building A. In FY2022,
we achieved a departure from fossil fuels by renovating the
air-conditioning heat source equipment for the cleanrooms of
Building A.
Heavy oil consumption at the Okayama Plant (liters)
90,00083,55880,05175,02871,21060,00030,000

9,676
0

2018

2019

2020

2021

2022

(FY)

4

5

Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

Environmental initiatives
Waste reduction achieved by ending the use of plastic
packing materials
Our plants have been using reusable shipping containers andtaking other actions in an effort to minimize waste emissions
from business activities and to reduce packing materials andcushioning materials. In the future, at the Okayama Plant, we will
successively replace plastic packing materials with cardboard for
new products in a bid to reduce plastic consumption.

Waste emissions and recycling ratio
Total emissions (left scale)

Recycling ratio (right scale)
(%)

(t)

98.2

1,000

98.5

99.0

626

610

98.7

98.7

704

668

100

794

500

50

0

0

2018

2019

2020

2021

2022

(FY)

The data covers Sansha Electric Manufacturing Co., Ltd. and its group companies basedin Japan.

Efforts to efficiently use water resources
In recent years, we have seen various problems related towater occur, including water shortages attributed to droughts
associated with climate change and flooding damage. The
semiconductor manufacturing process necessarily consumes
a vast amount of pure water for the removal of etching andcleaning chemicals and the cooling of equipment. At the
Okayama Plant, we are striving to reduce water consumption
by setting a reduction target for water consumption per wafer
production volume, with the goal of promoting the efficient use ofwater resources.
In FY2022, water consumption increased due to the increaseof production volume, but consumption per wafer decreased.

Water consumption
Industrial water(1,000 m )Clean water (Left scale)

Water usage intensity (Right scale)(m3/wafer)

3

25

200

25

23

21

21

3.5

3.9

9.7
3.6

20
3.8

100

12.5

151.0

138.5

129.3

137.1

135.7

0

0

2018

2019

2020

2021

2022

(FY)

Data is from the Okayama Plant of Sansha Electric Manufacturing Co., Ltd.

Initiatives for controlling water quality
Our Okayama Plant runs wastewater treatment facilities
to purify the wastewater from the manufacturing process anddischarge treated wastewater that fulfills our standards which
are more strict than specified in laws and regulations. To control
wastewater contamination, we are working to reduce anddetoxify hazardous substances and to collect non-detoxifiablehazardous substances. We also inspect water quality regularly
and monitor wastewater quality.

Wastewater volume and chemical oxygen demand(COD) load
Wastewater volume (left scale)

COD load (right scale)(1,000 m3)

(kg)

200

300

267.8

245.4

224.3

222.3
197.2

100

150

137.8

124.0

115.9

120.1

121.8

0

0

2018

2019

2020

2021

2022

(FY)

Data is from the Okayama Plant of Sansha Electric Manufacturing Co., Ltd.

Wastewater treatment facilities at the Okayama Plant

SanRex REPORT 2023

46

Human resource strateg

1

2
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Human resource strategy

Human resources supporting value creation
Happiness and Stability for Employees is part of the Sansha
Electric Manufacturing Group’s corporate philosophy. We believe that
our staff’s happiness is one of the most important parts of ourbusiness’s foundation for corporate growth and development.
Additionally, we are convinced that personnel who think and act
independently are essential for the Group’s continuous growth.
We are focused on increasing employee independence.

Under the basic policy that states the personal developmentof people is equal to the growth of the company, we are creating
an organizational climate in which employees help themselves
and each other develop and workplaces where they canwork vibrantly, aiming to simultaneously achieve the personal
development of employees and the growth of the company.

Personnel management for continuous growth
In 2021, the Sansha Electric Manufacturing Group began topush forward with medium- to long-term initiatives to achieve its
2030 vision, which consists of three pillars: the development of
the next generation of employees, employees that are experts
in technology and employees that are able to work actively inglobal markets, the promotion of diversity and the creation of anorganization and climate.

Vision for 2030
Personal
development ofpeopleAutonomy and diversity
Vibrancy

Required qualities••••

Independent thinking and acting
Have a can-do spirit
Communicate with a wide variety of people
Eager to learn and very curious

Growth of thecompany

Development ofsociety

Contributing tosociety throughpower electronics

Realization of asustainable society

Three pillars
Personnel development
PolicyIn an era where reform is required, we willcontinue working to develop personnel withbroad perspectives and diverse experiences,being capable of directing our businesses in
the future.

Priority measures
1 Cultivating next-generation executives andleaders
2 Rebuilding programs to develop skills andprofessional abilities
3 Building a foundation for human resources

to develop future global leaders

Promoting diversity
PolicyTo create an organization where diverse
human resources can work vibrantly, we will
push forward with initiatives to promote theactive participation of female employees,
achieve a diverse employee population andenable employees to achieve a healthy worklife balance.
Priority measures
1 Promotion of active participation of

female employees. Securing development
opportunities in view of promotion to
managerial positions and building a system
which will enable female employees tocontinue to actively participate over thelong term
2 Proactively promoting mid-career

employment

47

Creation of organization and climate
PolicyWe will push forward with the creation of asystem that leads to increased motivation as
well as personal development and a climate
which enables people to take on challenges
without fear of failure.

Priority measures
1 Promoting projects focused on young andmid-career employees
2 Creating opportunities to interact with othercompanies
3 Holding meetings to exchange opinionswith management

45Developing strategies, acting andrepeatedly evaluating and improving

Evaluation analysis for achieving the vision

Personnel development
In an era where reform is required, we will push forward withinitiatives including the implementation of educational andtraining programs to continue to develop personnel with broad
perspectives and diverse experience who are capable of leading
our businesses in the future. In addition, we will enhance thepersonnel development system, including job-class-specifictraining programs, in our efforts to reinforce our humanresources foundation. At the same time, we will implement

initiatives for the quick development of young human resources
and retaining those human resources in a well-planned manner
During the medium-term management plan, we willemphasize the continued development of technology, thedevelopment of the engineering personnel who innovate,
and further, the hiring of non-Japanese nationals and thedevelopment of global leaders who will take charge of overseasrelated duties to accelerate the global expansion of our business.

Training expenses per employee (Yen)Priority measures for
personnel development

30,00020,000Develop the next
generation of
employees

26,13518,454

17,023

16,923

15,866

10,000Think and act
independently
0

2018

2019

2020

2021

2022

(FY)

The data covers Sansha Electric Manufacturing Co., Ltd. andits group companies based in Japan.

Develop employees that areexperts in technology

Develop employees able
to work actively in global
markets

Education and training systems

Rank-specific training
and promotion training

Training
for allpersonnel

Ethics and complianceCorporate Philosophy

Distance learning

Basic technologies

Supporting
personal
development

Acquisition of public qualifications

Follow-up

Overseas businessexperience
program

Mentors for new employees

Associates

Personnel in their second
and third year of service

Overseas trainee
programProfessional training at individual factories

Increasing motivation ofyoung employees

Technical skills

Rank-specific training in factories

Initial-level leaders

Language skill acquisition support program

Leaders

Personnel eligible forpromotion

Activeparticipationof female
employees

Promotion of active participation of female employees

Technology management

Evaluation personnel

Newly appointed
Managers

Specific to
Personnel
factories ormanagement
skills

Personnel management

Newly appointed
Deputy General
Managers

Technological humanresources

Personnel assessment

Management

Training for senior
managers

Global humanresources

New employees

SanRex REPORT 2023

48

Human resource strateg

1

2

3

Developing strengths(invisible assets)

Unifying thinking

Picturing the desired future

Promoting diversity
Promotion of active participation of female employees
The group takes various steps to enable the women we employ
to develop. This includes skill development training for women
employees, encouraging a shift in the mindsets of personnel
including those supervising women, and job rotation to enable
women to work in broader fields. We are striving to construct
an environment that is friendly to our workers who are women
by interviewing people taking childcare leave before returning
to work, implementing a system of reduced working hours
measured by the minute, and making it possible to take nursing
care leave on an hourly basis. As a result of these actions, we
received three-star Eruboshi certification in 2021.
Under this certification program, the Minister of Health,Labour and Welfare certifies companies developing andsubmitting notification of their plans of action in accordancewith the Act on the Promotion of Female Participation andCareer Advancement in the Workplace and applying toprefectural labour bureaus that meet predetermined criteria
and are engaged in outstanding efforts for the advancement of
women. In addition to the above, we were certified as a Leading
Company with Actively Participating Women in Osaka-shi (twostars) and certified under the Shiga Prefectural Government’s
program certifying companies that enable women to advancetheir careers (two star).

Action plan based on the Act on the Promotion of Female Participation andCareer Advancement in the Workplace
PeriodFrom April 1, 2022
to March 31, 2025

Targets and initiatives
Target 1: Increase the percentage of new graduates
recruited that are women to 20% or higher

Target 2: C ontrol the average overtime working hours of
regular employees to 15 hours or less per month• Increase recruitment activities conducted by employeesthat are women• Check the actual overtime working hours every month basedon internal rules• Actively distribute information about the good
performance of employees that are women• Control overtime working hours properly by using theattendance management system• Promote the appeal of the environment that is friendly to
our workers who are women (including the percentageof people using the childcare leave system)• Provide labor management training to managers

To develop leaders that are women, we are reforming
awareness and providing training for acquiring skills
and expertise to exercise leadership. Regarding thepromotion of women to managerial positions, wewill set targets and create opportunities to interact
with external people to implement initiatives such asincreasing their career awareness and enabling themto develop their management skills.
To promote diversity, we will create teams wheremanagers leverage the diversity of their teams
and recognize personal qualities, while continuing
to provide training for the development of humanresources and provide opportunities to learn themindset.

Managers and leaders that are women
Women in managerial positions
Managers that are women (left scale)
Percentage of leaders that are women
Percentage of managers that are women (right scale)(persons)

(%)

50

25

10

40
30

10
0

3
3

3.9

13

2.8

2018

4
5.6
2.5

19
2019

10.0

4
6.7

6.6

3.4

3.4

22
2020

22
2021

The data covers Sansha Electric Manufacturing Co., Ltd.
and its group companies based in Japan.

49

15

4

20

20

10

3.5
28
2022

5

40
2030
(Target)

0
(FY)

4

5
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Appointment of foreign nationals to managerial positions
One non-Japanese officer was appointed at a subsidiary.
There are 46 non-Japanese managers in the Group as awhole, and one of them has been promoted to the positionof General Manager of a branch. No target has been set atpresent concerning the promotion of non-Japanese employees
to management positions. However, the Group is implementing
initiatives to secure and develop globally competitive humanresources with the goal of expanding business overseas.

Appointment of mid-career hires to managerial positions
The percentage of active employees that were hired mid-careeris 42.2%, with 37.4% of managers having been hired mid-career.
We believe that these percentages meet certain standards.
The Group will continue to proactively hire employees throughmid-career recruitment activities and maintain the percentage
of all employees hired mid-career at 40% or higher and thepercentage of managers hired mid-career at 35% or higher.

Employment of persons with disabilities
The Group proactively employs workers with disabilities. We
assign duties suited to their unique characteristics to ensurethat every one of them can work without worries and that they
are able to display their strengths as a valuable part of ourworkforce.
To move forward with the employment of workers withdisabilities, we are organizing plant tours for institutions providing
employment support for people with disabilities and hiring interns
from these institutions. In addition, we are working to help staff
acquire qualification as Working Life Counselors for Persons with
Disabilities.
In 2022, the Shiga Plant was commended by the prefectural
governor as an excellent place of business for the employment ofpeople with disabilities.

Percentage of employees with disabilities (%)
Statutory employment rate

Results

4

2.7

2.7

2.7

2.6

2.2

2.2

2.3

2.3

2.2
2

1.8

0

2018

2019

2020

2021

2022

(FY)

The data covers Sansha Electric Manufacturing Co., Ltd.
and its group companies based in Japan.

Developing an environment where diverse
employees can demonstrate their capabilities
Work-life balance
We continuously strive to ensure that working hours are properly
managed and to reduce the amount of overtime worked. We are
improving the working environment to provide a foundation for all
employees, irrespective of gender, to establish a healthy worklife balance. Programs we have introduced include an annual
Systems

leave saving program that allows employees to take expired
annual paid leave for medical treatment and nursing care and acommemorative event leave program that encourages workers
to take holidays for their preschool children’s birthdays and otherevents.
Details

Scheduled annual leave

Every year, employees plan to take three days of annual leave in the first half and three days in the second half to maintainand improve work-life balance.

Commemorative event leave

Employees with pre-school children are entitled to set their children’s birthdays as days for taking commemorative event
leave.

Hourly annual paid leave andhalf-day annual paid leave

With an upper limit of five days per year, employees are allowed to take annual paid leave on an hourly basis. Annual paid
leave may also be split into half days, the morning and the afternoon.

Accumulated annual leave

Employees are allowed to take expired annual paid leave for purposes related to medical treatment/nursing care, sick familycare, support for disaster-affected areas, social welfare activities, and others.

SanRex REPORT 2023

50

Human resource strateg

1

2
Unifying thinking

3

Developing strengths(invisible assets)

Picturing the desired future

Male employees’ use of childcare leave
At the Sansha Electric Manufacturing Group, the number of male
employees taking childcare leave has been gradually increasing.
To further increase their use of this leave, we inform employees
thoroughly of the childcare leave program, ask superiors toencourage their subordinates to take leave, individually explain
the program to eligible employees, and implement otherinitiatives, thus continuing efforts to build an environment whichfacilitates the use of childcare leave.
In recognition of the initiatives being implemented tocreate an environment that enables employees to establish
a healthy work-life balance, such as
promoting the use of annual paid leave
to encourage employees to use it toensure they are refreshed, in addition
to the measures above, the Group was
granted Kurumin certification by the
Ministry of Health, Labour and Welfare
on August 26, 2022.

Number of employees taking childcare leave (persons)Male

Female

15

12

12

4
9

4

2018

1

2019

4
2020

1

2021

2022

(FY)

The data covers Sansha Electric Manufacturing Co., Ltd.
and its group companies based in Japan.

Support for return from childcare leave
We ensure that employees wishing to resume working afterchildcare leave consult with their superiors to enable theirsmooth return to the workplace.
This is meant to remove anxiety about the return andfacilitate their superiors’ understanding of their worklife balance.
Through this, we strive to create a working environment thatenables employees to establish a healthy balance between
childcare and their career.

Occupational health and safety
Our top-priority task is to establish a safe, healthy and soundworkplace environment that enables employees to work happily.
At the Sansha Electric Manufacturing Group, Safety and HealthCommittees have been established with the goal of ensuring
occupational safety and health, maintaining the good health of
employees and maintaining and improving workplace environment
management. The Safety and Health Committees meet every
month at the headquarters and at each plant. The committees

Sansha Electric Manufacturing
Group Safety and Health Policy
The Sansha Electric Manufacturing Group positions
safety and health initiatives as one of its mostimportant tasks. Each one of its employees will work
proactively to create a safe, comfortable workplace
and achieve good physical and mental health basedon their understanding that safety and health form thefoundation of management, aiming for zero accidents
and zero disease.

51

study the prevention of the recurrence of occupational accidents
using a risk-based approach, perform safety patrols and implement
other initiatives to enhance occupational safety and health. In
addition, every year we hold a safe driving workshop taught by
local police officers to prevent traffic accidents. We also have
local firefighters teach a workshop on the use of automatedexternal defibrillators (AEDs) to save lives.

1 Comply with laws, regulations, and internal rules related to safety andhealth.
2 Work proactively on initiatives such as creating a safety-first workplaceenvironment, maintaining employee health and ensuring appropriate
working hours.
3 Strive to increase awareness of safety and health by ensuring goodcommunication and implementing employee training and internal PR
activities.
4 Proactively push forward with initiatives to prevent accidents andrespond to emergencies to ensure the security and safety of employees
and local communities.

4

5
Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Sound labor-management relationshipThe company and the Sansha Electric Manufacturing Labor
Union are implementing many measures to achieve thesound development of both the company and the union while
respecting each other’s position.
The management and the labor union discuss salary,
benefits package, and other labor conditions on an equal footing,confirming with each other that the company understands thatthe labor union has the right to act based on the labor agreement
and related laws and regulations to maintain and improve labor

conditions and improve the economic standings of the union’s
members which is their basic right, and the company respects
the rights of the union.
In addition, meetings of the company-wide management
council, the branch management council at each base, andother organizations are held regularly to share information andexchange opinions to enable the smooth operation of businesses
and maintain and improve the work environment based on
mutual understanding and relationships of trust and cooperation.

Creation of organization and climate
We believe that all employees should fulfill the corporate
philosophy, purpose, vision, and other statements and we are
implementing initiatives leveraging various opportunities thatstart when an employee joins the company to ensure they are
instilled and established.
The AC Cafe sessions for exchanging opinions with the
President started as a new initiative in FY2023, reflecting thePresident’s desire to listen directly to employees while sharing
his thoughts and purpose with them.
The AC Cafe sessions are not held only at the headquarters.
The President visits plants, branches, sales offices and groupcompanies to hold AC Cafe sessions in a relaxing atmosphere
over coffee. Each session is held with a group of seven or eight

employees and lasts for approx. one hour. Talking about hobbies
and sports in addition to work, the President exchanges opinionswith employees in a casual atmosphere. Thus, the sessions
serve as valuable opportunities for the President to build a senseof unity with the employees.
As of August 31, 2023, the President has talked with 27
groups (195 employees). According to the questionnaire survey
conducted after each session, many participants felt thatthey had enjoyable and meaningful time and reaffirmed theimportance of communication.
Moving forward, the President plans to talk directly with all
employees during FY2023 and FY2024.

AC Cafe
The Group’s strengths are in technologies for converting chokuryu (direct current, or DC) electricity into koryu (alternate current,or AC) electricity and vice versa. The name AC Cafe reflects the Group’s determination to be good at koryu (which can also means“interaction”) between people as well.

AC Cafe

SanRex REPORT 2023

52

Corporate governanceCorporate governanceDirectors, Audit & Supervisory Board Members (as of June 28, 2023)
Directors

Hajimu Yoshimura

Masaki Fujiwara

Hiroshi Zumoto

Representative Director & President

Director, Vice President and Operating Officer
Executive General Manager of Corporate Planning
Division

Director and Senior Managing Operating Officer
COO of Power Supply System
Executive General Manager of Power Supply
System Manufacturing Division

Has rich experience cultivated as the president ofa group company of a major Japanese electronics
manufacturer and vice president of an overseas
subsidiary in the same group, among otherpositions. Since assuming his position as ourcompany’s Representative Director & President in
2018, he has been using his rich experience, broad
knowledge, and strong leadership to drive thegrowth strategy and managerial reforms.

8 years

Serving as director for
Status of attendance atBoard of Directors’ meetings
Owning

14/14 meetings
24,600 shares of our stockHas rich experience and broad knowledge basedon his service in various positions mainly theareas of management and accounting in thegroup companies of a major Japanese electronics
manufacturer and as a director at an overseas
subsidiary of the same group. Since appointed asa Director in June 2014, he has been in charge ofthe administrative department and the corporate
planning department. In April 2023, he was appointed
as Director, Vice President and Operating Officer.
9 years

Serving as director for
Status of attendance atBoard of Directors’ meetings
Owning

14/14 meetings
16,000 shares of our stockHas been engaged in productivity improvement
and the strengthening of the production system formany years as a person responsible for production
technologies. He began to hold important positionsin the semiconductor business in 2012. He has
been controlling the semiconductor business since
his appointment as Director in June 2021 andcontrolling the power supply business since April
2023.
Serving as director for

2 years

Status of attendance atBoard of Directors’ meetings

14/14 meetings
9,100 shares of our stock

OwningStatus of important concurrent holding of positions
Chairman of the Board, SANREX LIMITED
Chairman of the Board, SANSHA ELECTRIC MFG.
(GUANGDONG) CO., LTD.

Hajime Katsushima

Akira Uno

Koichi Ina

Director and Managing Operating Officer
COO of Semiconductor
Executive General Manager of Engineering
Research and Development Division

Independent Outside Director

Independent Outside Director

Has advanced knowledge of financial affairs due
to his work experience at a financial institution. In
addition, at the meetings of our company’s Board of
Directors, he takes advantage of his rich experienceand advanced knowledge cultivated through hisservice in positions, including outside director ofa listed company, to fulfill the decision-making
and supervisory functions of the Board, such as
identifying issues and giving advice about theGroup’s growth strategy and managerial reforms.
Since November 2019, he has been the chairman of
the Nomination and Compensation Committee. The
Company has registered him as independent officer
with the Tokyo Stock Exchange.

Possesses advanced knowledge of production
technology and research and development since
he worked in the management team of a leading
automobile manufacturer in Japan and as anengineer in factory management. At the meetingsof our company’s Board of Directors, he takes
advantage of his knowledge to fulfill decision-making
and supervisory functions of the Board, such as
identifying issues and giving advice about theGroup’s growth strategy and managerial reforms.
Since November 2019, he has been a member of
the Nomination and Compensation Committee. The
Company has registered her as independent officer
with the Tokyo Stock Exchange.

Worked for many years in research anddevelopment to develop products in the new energy
sector. In November 2016, he was appointed
representative director and president of a subsidiaryto engage in corporate management. He has been
controlling the power supply business since April
2021 and controlling the semiconductor businessand serving as the Executive General Manager ofthe Engineering Research and Development Division
since April 2023.

Serving as director for
Status of attendance atBoard of Directors’ meetings
Owning

1 years
11/11 meetings
12,100 shares of our stock

Chairman of the Board, Sansha Electric Manufacturing(Shanghai) Co., Ltd.

9 years

Serving as director for
Status of attendance atBoard of Directors’ meetings
Owning

14/14 meetings
11,500 shares of our stock

4 years

Serving as director for
Status of attendance atBoard of Directors’ meetings
Owning

14/14 meetings
26,400 shares of our stock

Outside Director, Hashimoto Sogyo Holdings Ltd.
Fellow, School of Business at Graduate School of
Economics, Kyoto University (Doctor of Economics)
Senior Executive Fellow, DMG Mori Co., Ltd.

Outside Director, Kubota Corporation
Chairman, Central Japan Industries Association

Ichiro Kitano

Kazuhiro Egawa

Eriko Nashioka

Audit & Supervisory Board Member (Full-Time)

Independent Outside Audit & Supervisory Board
MemberIndependent Outside Audit & Supervisory Board Member

Audit & Supervisory Board Members

He has an abundance of working experienceand knowledge after long serving as a person
responsible for product design and the
manufacturing of power supplies. Since being
appointed an Audit & Supervisory Board Member
in June 2016, he has been making appropriate
suggestions based on his experience andknowledge and conducting on-site inspections
to help improve the effectiveness of the Audit &Supervisory Board’s auditing as a whole.
Serving as director for
Status of attendance at Boardof Directors’ meetings
Status of attendance at Audit &Supervisory Board meetings
Owning

7 years
14/14 meetings
14/14
5,200 shares of our stock

Audit & Supervisory Board Member, Sansha Solution
Service Co., Ltd.
Audit & Supervisory Board Member, Suwa Sansha ElectricCo., Ltd.

53

Leverages many years of experience as a lawyer
and advanced knowledge he has cultivated as alegal professional to appropriately advise the Boardof Directors from an expert viewpoint. He also visits
and inspects subsidiaries and business facilities
in his efforts to assess their situations. While Mr.
Egawa is a lawyer, he has not concluded an advisory
contract with our company. Therefore, our company
pays him no money other than the compensationfor officers. The Company has registered her as
independent officer with the Tokyo Stock Exchange.
Serving as director for

3 years

Status of attendance at Board of
Directors’ meetings

14/14 meetings

Status of attendance at Audit &Supervisory Board meetings

14/14

OwningHead of Eiwa Law Office

Has great experience and advanced knowledge
about finance and accounting as a certified public
accountant. She is also a licensed tax accountant.
She worked as a member of the Environmental
Accounting Technical Committee under theManagement Study and Research Committee of theJapanese Institute of Certified Public Accountants
and several committees of the Ministry of theEnvironment and the Ministry of Economy, Tradeand Industry. She appropriately advises the Boardof Directors from an expert viewpoint. She also visits
and inspects subsidiaries and business facilities inher efforts to assess their situations. The Company
has registered her as independent officer with theTokyo Stock Exchange.
Serving as director for

300 shares of our stock

Status of attendance at Audit &Supervisory Board meetings
Owning

3 years
13/14
1,000 shares of our stock

Outside Director (Audit and Supervisory Committee
Member), FUKUSHIMA GALILEI CO. LTD., Ltd.; Outside
Audit & Supervisory Board Member, OSAKA GAS CO.,Ltd., Representative Director, Institute for Environmental
Management Accounting, Head of Nashioka Accounting OfficeSkill matrix
Knowledge and experience particularly expected by the Company
Independence

Directors

Corporate
management
and management
strategyOverseasbusiness
experience

Business strategy

R&D andproduction

Finance andaccounting

Legal affairs andcomplianceHajimu Yoshimura
Masaki Fujiwara
Hiroshi Zumoto
Hajime Katsushima
Akira Uno
Koichi Ina

Audit & Supervisory
Board Members

Ichiro Kitano
Kazuhiro Egawa
Eriko Nashioka

Skills for ensuring the effectivenessof the Board of Directors

Overallbusinessmanagement
skillsReasons for selecting skills

Skill requirements

Corporate
management andmanagement
strategy

Requires management experience and achievements in corporate
management and the formulation and promotion of management strategies
to realize the Group’s growth strategy

Management experience as a representative director or officer in
a company

Overseas businessexperience

Requires overseas business management experience, and knowledge
and experience of an overseas business environment to respond to global
business development

Experience as a representative of overseas subsidiary, head ofoverseas business division, or executive officer

Business strategy

As the Company’s business area is a niche and highly specialized market
based on power electronics technology, this position requires a high levelof knowledge in such area as well as experience in executing businessstrategies

Executive in charge of business division, head of division andperson with equivalent experience as senior management

R&D andproduction

Requires knowledge and experience to develop safe, secure, and highquality products and realize integrated production from design to production

Executive in charge of R&D and production division, head of divisionand person with equivalent experience as senior management

Finance andaccounting

Requires accurate financial reporting, efficient management of invested
capital, and knowledge and experience to enhance shareholder returns

Executive in charge of accounting and finance division, headof division, person with equivalent experience and person withexperience in auditing firm, etc.

Legal affairs andcompliance

Requires knowledge and experience in legal affairs and compliance fields toensure effective corporate governance and improve the effectiveness of theBoard of Directors.

Experience as executive in charge of legal affairs and compliance,head of division, and person with experience in a law firm, etc.

Businesscore skills

Functionalcore skills

Hiroshi
ZumotoKoichi Ina

Ichiro Kitano

HajimuYoshimura

Eriko Nashioka

Kazuhiro
Egawa
Akira Uno

Masaki Fujiwara

HajimeKatsushima

Our criteria for appointment and dismissal of officers
and criteria for independence.
https://ssl4.eir-parts.net/doc/6882/ir_material1/207892/00.pdf

SanRex REPORT 2023

54

Corporate governanceInterview with
OutsideDirectors

What they expect of us
and our issues
We interviewed the two Outside Directors and asked them to talk about what they expect of
the Sansha Electric Manufacturing Group, what issues the Group is facing and other topics.
We also asked them about key points of Board of Directors discussions of the introductionof the performance-based stock compensation plan that was announced in May 2023.

What roles should Outside Directors play?
Uno: Directors are appointed by shareholders. To put it inextreme terms, Outside Directors exist to serve the interestsof shareholders. I believe that we Outside Directors play a rolein giving advice and recommendations from the viewpointof shareholders. Because I have long been involved in the
management of a financial institution, I am conscious of financial
perspectives in particular when making remarks at the Board of
Directors’ meetings.
Ina: Because you are a finance professional, your perspective isa little different from mine, isn’t it? I myself learn a lot from yourrecommendations and opinions, Mr. Uno.
Uno: Thank you very much. I also learn a lot from yourperspective as a production professional, Mr. Ina.
Ina: I make statements regarding the improvement of production
efficiency and manufacturing based on my own experience.
I also believe that shareholders entrust a company with capitaland employees entrust a company with their lives. In a company,
the Board of Directors is an extremely important decision-making
body. Of course, I carefully watch the flow of money, but I also try
to be conscious of employees’ viewpoints. I believe that we also
have a duty to think deeply about employees working on sitewhen we are making decisions, such as asking ourselves, “Howwill employees feel about the direction this company is going?”and “What impact will our decision have on the employees
working on site?” valuation of CG23, the medium-termEmanagement plan aimed at achieving thevisionIna: I want to praise the company for achieving its major financial
indicators, such as net sales. On the other hand, CG23 is amedium-term plan aimed at achieving the Global Power Solution
Partner long-term vision. To achieve the vision, we need tochange our existential value. It is a great change, involving theshift from the idea of selling products to being a partner who

Akira Uno
Outside Director and chairman of the Nomination
and Compensation Committee
After serving as a director of The Sumitomo Bank, Limited(currently Sumitomo Mitsui Banking Corporation) and
Chairman and Representative Director of SMBC Consulting
Co., Ltd., he was involved in the privatization of postal services
as an executive officer of Japan Post Co., Ltd. He became a
Director of our company in 2014. He is also a Senior Executive
Fellow of DMG Mori Co., Ltd., a fellow of Graduate School of
Economics, Kyoto University (Doctor of Economics), and an
Special Assistant to the President, Kyoto University

55

solves issues. We are still half way to achieving this point. I thinkthat we should devise more measures, even small ones, startingfrom planning (upstream).
Uno: You are right. At the meetings of the Board of Directors,
we receive many reports, but I sometimes feel that PDCA is
not implemented successfully. Some indicators were nearly
achieved, but in the end, they were not achieved. I want theorganization to steadily implement the PDCA cycle to be able toachieve plans consecutively. In particular, I think that productivity
and efficiency can be improved.
Ina: As you pointed out, I think that there is room for
improvement in inventory control and quality control, among
other aspects. Above all, reviewing (Check) is the mostimportant part of PDCA. ROA should be higher if reviewing is
uncompromisingly implemented. I feel that a good point of thecompany’s employees is that they are very earnest and work on
improvements with a sense of urgency. Things will definitely bebetter if they implement the PDCA cycle surely and repeatedly
improve.

 iscussion about the introduction of aD
performance-based stock compensation planfor officers
Uno: I also serve as the chairman of the Nomination andCompensation Committee. We discussed the introduction ofthis plan for about a year. After deciding the outline of the plan,we spent time checking for negative elements. We repeatedly
discussed the plan, asking ourselves, “Will profit be distributed
arbitrarily?” and, “Will only the officers be treated favorably?”
positioning fairness as a fundamental requirement. We led thediscussion because we, the Outside Directors, are not eligible forthis compensation plan.
Ina: I also participated in the discussion as a member of thecommittee. You were very strongly aware of fairness, weren’t

you, Mr. Uno? We tended to place sales and profit at the centerof the discussion. I hope that introduction of this plan will enable
management to evolve to have a greater awareness of the stock
price.

 xpectations of the Sansha ElectricE
Manufacturing Group
Uno: Society as a whole is facing the problem of climate change.
Next-generation energy is a subject that the entire world should
address to solve this problem. In Japan, the public and private
sectors are working together with the goal of achieving carbon
neutrality. Our company’s products have the potential to play acentral role in solving this problem. Whatever the energy source,
be it solar, wind or hydrogen, they all need to be transformed
into electricity. I feel that this is a great opportunity for us, who
are good at supplying power stably using power conversion
technologies. I think it is a promising opportunity.
Ina: I completely agree with you. I think that our contribution to
next-generation energy is also a very important subject in termsof our role in society. At present, it is not realistic to capture allof the opportunities. Therefore, I hope that the company will
establish a position which will make us say, “This is what Sansha
Electric Manufacturing is for!” I want them to create a category
where Sansha Electric Manufacturing is the best in the world.
It could be a niche category. I think that mobility and agility are
our company’s advantages. I want the company to take onchallenges bravely by combining power semiconductors andpower supplies and leveraging our unique strengths.
Uno: Our company celebrated the 90th anniversary of its
founding in April 2023. There is no easy way for a company tocontinue operating for nearly 100 years. I hope that the company
will continue to achieve growth by solving social issues based on
its history and the unique technologies it has accumulated andcultivated.

Koichi Ina
Outside Director and member of the Nomination
and Compensation Committee
He served as the Senior Managing Director and Chief
Officer of Strategic Production Planning Group at Toyota
Motor Corporation, Chief Officer of Manufacturing Groupat the same company, and President of DAIHATSU MOTOR
CO., LTD. before accepting his position as a Director of
our company in 2019. He is also an Outside Director of
KUBOTA Corporation and the Chairman of the Central Japan
Industries Association.

SanRex REPORT 2023

56

Corporate governance

Basic stance on corporate governanceAt the Sansha Electric Manufacturing Group, we practicemanagement based on our corporate philosophy to achieve our
purpose: Moving society forward through power electronics andcreativity. We will also enhance our corporate value sustainably
and contribute to the sustainable development of society byStrengthening
corporate
governanceachieving our vision: Global Power Solution Partner. To achievethis, we have set ensuring compliance and building a highly
transparent, efficient foundation of our business as our basic
policies on corporate governance.

1984

2006

2007

 orporate Planning ConferenceCestablished

Operating Officer system introduced

Officer retirement benefit system abolishedA whistleblowing contact established within
the internal audit department

2018

2019

2020

 tandards for assessment by outsideSaccounting auditors formulated

 omination and Compensation
N
Committee established utside officers elected to ensure that atOleast one third of officers are outside officers

Corporate governance system chart
Number of meetings
held in FY2022

Board of Directors
Chairman Hajimu Yoshimura, Representative Director

14

General Meetingof Shareholders

meetings

The Board of Directors holds a regular meeting each month in principle
and extraordinary meetings as needed. It makes decisions on basic
management policies and important strategies. It is also defined as
an organization that supervises business execution by Directors andOperating Officers.

Appointment
and dismissal

Appointment
and dismissal

Main matters considered> Important management issues
including matters related to the
management plan, financial planand investments> Important personnel affairs andorganizations> M atters concerning the internal
control> S ustainability policy and strategy

Regulation Committee
Chairman Masaki Fujiwara, Executive General Manager
of Corporate Planning Division

With 4 inside and2 outside members

Chairman Masaki Fujiwara, Executive General Manager
of Corporate Planning Division

ReportReportNumber of meetings
held in FY2022

3

Instruct/
provideguidance

meetings

It is attended by Operating Officers and presidents of subsidiaries based inJapan. It discusses the creation of regulations and detailed rules as needed
and delivers reports on important regulations to the Board of Directors.

Internal Control Committee

Board of Directors

Report andadviseAccounting
auditing

Accounting
AuditorRegulation
Committee

Representative Director

ReportInstruct/provide
guidance

Corporate Planning
Conference

Number of meetings
held in FY2022

12

meetings

It is chaired by the Director and the Executive General Manager of the
Corporate Planning Division and attended by Inside Directors, Operating
Officers, presidents of subsidiaries based in Japan and heads of relevant
departments. It holds at least one meeting each month in principle.
It provides overall control and supervision of matters related to risk
management and compliance in the whole Group.

Appointment,
dismissal andinstruction

ReportInternal
ControlCommittee

Instruct/provide
guidance

Business departments
and group companies

Main matters considered> Activities to promote compliance> Review of regulations> M easures to enhance information> D eliberations regarding projects
security
involving large payments> Response to the revision of laws
and regulations related to personnel
affairs

57

ReportAppointment anddismissal
Collaboration

Characteristics of the corporate
governance system

Outside Directors
make up at least one thirdof the Board

The Nomination andCompensation Committee
is established voluntarily

The maximum number of Directors
is eight, and the Directors’ term ofoffice is one year

2011

2014

2016

Directors’ term of office shortened to one year

Outside Directors introduced

Assessment of the effectiveness of the Board of Directors begun
Risk Management Committee (currently Internal Control Committee)
established emale Outside Audit & SupervisoryF
Board Member elected
Disclosure of skills matrix

2021

2023

Whistleblowing contact established at an outside law firm

Purpose establishedIntroduced a performance-based
stock compensation plan

Nomination and Compensation
Committee
Chairman Akira Uno, Outside Director

Appointment
and dismissal

ReportNomination andCompensation Committee

AdviseCorporate lawyer

It is chaired by an Outside Director, and a majority of its members must
be Outside Directors. The content of its deliberations are reported to theBoard of Directors. Deliberations on remuneration for officers are joined byan Outside Audit & Supervisory Board Member as an observer.
Main matters considered>B asic policy on determining
remuneration for officers>P erformance-based
remuneration for Directors andremuneration for individual
Directors> Consideration of the introductionof stock compensation

Audit & Supervisory Board

Number of meetings
held in FY2022

Chairman Ichiro Kitano, Full-Time Audit &Supervisory Board Member

ReportAuditing

Instruction

Audit Department

Collaboration

Collaboration

Audit &
Supervisory
Board

With 1
inside and2 outside
members7

meetings> Proposal regarding the election of
Directors to be submitted to theGeneral Meeting of Shareholders
for resolution> Proposal on prospective officers
to be submitted to the Board of
Directors for discussion> A pproach to succession planning

AdviseNumber of meetings
held in FY2022

14

meetings

It holds a regular meeting each month in principle and extraordinary
meetings as needed. In accordance with audit plans, Audit & Supervisory
Board Members attend Board of Directors’ meetings and other important
meetings, view significant documents and materials, visit and inspect
principal facilities, and receive reports from Directors and other personnel
on the execution of duties to audit the legality and appropriateness of the
Directors’ execution of their duties.
Main matters considered>A udit policies and plans>R eappointment of accounting
auditor and remuneration foraccounting auditor>P roposals for the General Meetingof Shareholders>P reparation of audit report

Corporate Planning Conference
Chairman Hajimu Yoshimura, Representative Director

Number of meetings
held in FY2022

12

meetings

It is attended by Inside Directors, Full-Time Audit & Supervisory Board
Members, Operating Officers, presidents of subsidiaries based in Japan andthe heads of relevant departments. It holds at least one meeting each monthin principle. It makes advance deliberations on important business execution
matters for which resolutions are set to be made at meetings of the Board of
Directors. It also monitors the overall state of progress in the management
plan and manages day-to-day actions such as solutions to problems.
Main matters considered> Report on operations of eachbusiness and subsidiary>R eport on the progress of eachproject

SanRex REPORT 2023

58

Corporate governanceNomination and Compensation Committee
We established the Nomination and Compensation Committee
in November 2019. Its objectives are to nominate Directors
and Audit & Supervisory Board Members and to increase theindependence, transparency and objectiveness of the Board of
Directors’ functions regarding Directors’ remuneration and othermatters. The committee will enhance our accountability andcorporate governance. To ensure the fairness and transparencyof the committee, an advisory body focused on decisions
regarding the nomination of prospective Directors and Audit &Supervisory Board Members and on Directors’ remuneration,
the committee deliberates about these matters and reports to
the Board of Directors. Since December 2021, an Independent
Outside Audit & Supervisory Board Member has been taking
part in deliberations on remuneration for officers as an observer.

Composition of the Committee

Current committee members

1

The committee consists of at least three Directors selected by the Boardof Directors.

2

Independent Outside Directors make up half of the committee or more.

3

The committee is chaired by a person selected from among theIndependent Outside Directors.
Meetings of the committee are attended by an Outside Audit &Supervisory Board Member as an observer.

4

Chair

Akira Uno Independent Outside Director

Members

Koichi Ina Independent Outside Director
Hajimu Yoshimura Representative Director& President
Masaki Fujiwara Director

Observer(for deliberations on
remuneration for officers only)

Kazuhiro Egawa Independent Outside Audit& Supervisory Board Member* Attendance in FY2022: 100% (all members)

Officer remuneration system
We have formulated a policy regarding the determination of remuneration for officers and the method for calculating it. It is as follows.
1

The officer remuneration system must be
intended to promote our continuous growthand medium- and long-term increase of ourcorporate value. It must encourage officers
to perform their duties to their utmost abilities
in accordance with our Group vision and tocontribute to the improvement of financial results.

2

On the basis of the data collected by outside
research bodies, remuneration for officers willconsist of base remuneration, which is a fixedamount for individual posts, and performancebased remuneration, to ensure that the soundincentives matched with the Directors’ duties willserve their intended functions.

3

Remuneration for Outside Directors andfor inside and outside Audit & Supervisory
Board Members will consist solely of baseremuneration, as they are independent from theexecution of business and variable performancebased remuneration is not appropriate for them.

Process of deliberation and determination of remuneration for officers

59

Matters regarding a
resolution of the General
Meeting of Shareholders
on remuneration for
officers and others

A resolution on monetary remuneration for Directors was passed
at the ordinary General Meeting of Shareholders for the 74th termthat took place on June 27, 2008, establishing an annual upper
limit of 300 million yen, excluding the employee wages of any
Director who is also an employee. Resolution on the monetarycompensation for Audit & Supervisory Board Members was
adopted by the ordinary
General Meeting of Shareholders for the 59th term that took placeon June 28, 1993 to set an annual upper limit of 40 million yen.

Stance on performancebased remuneration

The performance indicator for performance-based remunerationis consolidated operating profit ratio, chosen because it is themost important performance indicator related to the evaluation of
performance during the fiscal year under review. We calculated
performance-based remuneration by multiplying the standard
amount for the specific post by the coefficient appropriate to theconsolidated operating profit ratio. The amount of performance-

based remuneration for Directors is discussed by the Nomination
and Compensation Committee in accordance with theconsolidated operating profit ratio for the fiscal year under review
and reported to the Board of Directors. The Board of Directors
determines the amount of performance-based remuneration for
Directors in accordance with the report from the Nomination andCompensation Committee.

Matters regarding nonmonetary remuneration

The Company has introduced the performance-based stockcompensation plan (hereafter, the “Plan”) as non-monetary
remuneration. The purpose of the Plan is to increase Directors’
motivation to contribute to improved business results andenhanced corporate value in the medium and long term byfurther clarifying the link between Directors’ remunerationand the Company’s business performance and stock prices
and having Directors share the benefits and risks of stock
price fluctuations with shareholders. Points will be granted toeach Director according to their position and the degree ofachievement of performance targets, etc., based on the stock
issuance rules established by the Board of Directors. In principle,

the Company’s stock is granted to the Directors when they retire
from office. Regarding the upper limit in the amount of money tobe provided to the trust as a fund for the acquisition of stock, theinitial period of the trust will be approx. four years, and under thePlan and during the period covered, the Company will offer up to
320 million yen, which is the amount of funds for the acquisitionof stock necessary for granting the Company’s stock to Directors,
as compensation for the Directors who are in office during theperiod covered. Regarding the upper limit for the granting of
the Company’s stock to Directors, the total number of points
allocated to Directors shall not exceed 40,000 points per fiscal
year.

Matters regarding
determination of
remuneration for
individual officers
and others

Base remuneration for Directors for the fiscal year under review
is the fixed remuneration for specific posts under the Regulations
on Remuneration for Directors and has been discussed by the
Nomination and Compensation Committee on the basis of officer
remuneration data surveyed by an outside research body.
The determination of remuneration for individual Directors isdelegated to Hajimu Yoshimura as Representative Director& President, on the basis of the resolution of the Board of
Directors. The Representative Director & President will determine
remuneration in accordance the amounts of remuneration
for individual Directors reported after deliberations by the
Nomination and Compensation Committee within the limit on
total remuneration in accordance with other resolutions that havebeen adopted at the General Meeting of Shareholders. The
reason this duty has been delegated is that we believe theRepresentative Director & President can appropriately determine
the remuneration for individual Directors in consideration of ouroverall financial results and other facts. The Nomination andCompensation Committee reviews the appropriateness of thedetermination of remuneration under the delegated authority prior
to decisions coming into affect. Remuneration for Audit &Supervisory Board Members is determined through deliberation
among them within the limit for the total remuneration for Audit& Supervisory Board Members as determined by a resolution
passed at the General Meeting of Shareholders.

Evaluation of the effectivenessof the Board of Directors

Evaluation of effectivenessof the Audit & Supervisory Board

The Company evaluates the effectiveness of the Board of
Directors every year to maintain and increase its effectiveness.
The Directors and Audit & Supervisory Board Members are
subject to evaluation.

In FY2021, the Company’s Audit & Supervisory Board began to
conduct a self-evaluation on the effectiveness of its audits for the
purpose of assessing initiatives related to its functions and roles
and the effectiveness of audits attributed to these initiatives.

Date

From December 26, 2022 to February 27, 2023

Date

From November 29, 2022 to January 31, 2023

MethodQuestionnaire

MethodQuestionnaire

58 questions about the composition, roles, and operations of theBoard of Directors, their determination of strategies and orientation,
the effectiveness of the internal control system, and the Nomination
and Compensation Committee, and other matters
Subjects of theevaluation
Summary ofevaluation
results

Evaluation in a total of 18 items on a four-grade scale

6 Directors (including Outside Directors) and 6 Operating Officers

Subjects of theevaluation•

Summary ofevaluation results

The self-evaluation concluded that the auditing activities
continued to function effectively in the fiscal year ended March
31, 2023, with improvements made from the previous year interms of regular interviews with the Representative Director &President and Outside Directors and cooperation with the internal
audit department.

Measures forincreasing
effectivenessAs a result of the analysis of the responses to the questionnaire,
we identified the following tasks to be done in the future. We will
ensure that the audit plans for the next fiscal year reflect thesetasks and strive to improve the quality of audits and reinforce ourcorporate governance system.

•

Measures forincreasing
effectiveness

Composition and operation of the Audit & Supervisory Board,
improvement of the internal control system, response to theBoard of Directors, three-way auditing, and other matters igh marks were generally given to the roles and services
H
played by Board of Directors members, the leadership of thechairperson and the Nomination and Compensation CommitteeT here still remained some problems with monitoringof management resources, successor nomination anddevelopment plans although discussion about them wasdeepened by the Nomination and Compensation Committee

As a result of the evaluation of the effectiveness of the Board of
Directors, the following tasks were identified•

Deepening discussion about the revision of personnel policies,
including human resource development, ensuring diversity andthe development of successors•

Sharing an understanding of the changes in the external
environment, risks, and other matters and thoroughly
discussing medium- to long-term management policies
Striving to improve the provision of information to outside
officers, such as the creation of regular opportunities toexchange information with them•

3 Audit & Supervisory Board Members• Increasing the number of regular meetings with Outside
Directors and the President and enhancing the content of themeetings• E nhancing information about the status of the establishmentof the risk management system

Internal control
We have established our basic perspective on internal control as
the Basic Policy on the Internal Control System and are striving
to improve it.

The Basic Policy on the Internal
Control System
https://www.sansha.co.jp/ir/governance.html

Risk management
Basic stance

Risk management system

As the risks facing businesses are diversifying, the Groupidentifies the various risks involved in its businesses, constructs
a management system for risk prevention and takes actions tominimize the impact of risks. Our basic stance is to respondswiftly and appropriately to respond under the authority of the
management team when any risk becomes a reality.

The Group has established the Internal Control Committee chairedby the Director and Executive General Manager of the Corporate
Planning Division. To manage and prevent risk, we are working
to develop our emergency response capabilities to address
emergency situations when they occur. We have established asystem for reporting to the Board of Directors as appropriate.
The committee discusses policies and specific measures toaddress risks that are presumed to be involved in the Group’sbusiness activities and to instruct individual departments.

Major risks and response measures
Risks

Details

Response policy and measures

Changes in
economic
environment

Impacts of economic slowdown and decline in capital
investment demand on business performance• Sales strategy that does not depend on
any specific region or industry

Business risks
Strategic risk

Product defects, delays in product development, suspensionof OEM supply and collaboration, rising prices of raw
materials, delays in procurement, changes in financial
positions of contractors, country risks, competition risks,
information security risks and labor shortage• Improvement in technology development,
quality and maintenance services• Manufacturing cost cuts, enhancement inproductivity and expense reduction• Consideration of alternative procurement
for main parts and revision to production
contractors• Collection of information on country risks• Information security enhancement andmanagement of contractors• Enhancement of employment system as well as
education and training programs

Environmental
risks

RoHS Directive and other environmental regulations andspillage of chemical substances Impacts of fluctuations inforeign exchange rates and interest rates and a slide in shareprice on business performance• Quality management based on quality
management standards that comply withlaws and ordinances• Chemicals management in strict compliancewith standards and procedures

Financial risks

Impacts of fluctuations in foreign exchange rates and interest
rates and a slide in share price on business performance• Forward foreign exchange contracts• Reduction of cross-shareholding stocks

Treasury risks

Impacts of impairment in long-term assets, occurrence ofretirement benefit obligations, changes in accounting and/or
taxation systems on business performance• Regular reviews on possibility of collecting
the remaining value of assets• Regular monitoring of pension asset
management at the internal committee forpension asset management

Natural risks
and pandemics

Damage to manufacturing bases and others caused bynatural disasters and business suspension due to a pandemic• Drills for swift first response to large-scaledisasters• F ormulation of a business continuity plan (BCP)• Encouragement of commuting off rush hours
and working from home

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60

Corporate governanceCompliance
Basic stance
We are convinced that the Group’s corporate value will be
increased by developing a corporate culture that values
compliance and by building sound business foundations as acompany winning trust from society. We have also establishedthe Sansha Electric Manufacturing Group Behavioral Charterfor constantly reviewing our business activities with a view torealizing our corporate philosophy.
We have adopted a system under which the management
and supervision of activities to promote compliance arecontrolled by the Internal Control Committee chaired by the
Executive General Manager of the Corporate Planning Divisionand these matters are reported to the Board of Directors asnecessary.

Respect for human rights
In the Sansha Electric Manufacturing Group Behavioral
Charter, the Group has clarified that, in its global operationof businesses, it will respect the human rights and diversityof not only its employees but also every person with arelationship with the Group. In addition, the Group willconsider human rights of all suppliers, including the suppliers
in its supply chain, in accordance with its Procurement Policy
and Supplier Selection Policy.
In its business activities, the Sansha Electric Manufacturing
Group will not tolerate discrimination against anyone or the
infringement of anyone’s personal dignity on the ground of
their race, nationality, birth, religion, belief, gender, sexual
orientation, age, disability or other attributes. In contrast, theGroup will provide equal opportunities and strive to build aworker-friendly system.

Compliance awareness survey
We have conducted a compliance awareness survey in the formof a questionnaire since FY2021. Its findings are reported to all
employees. The Board of Directors reviews of whether or not
the Group has a corporate culture that respects the objectives
and the spirit behind the Sansha Electric Manufacturing Group
Behavioral Charter. The Internal Control Committee endeavors
to identify risks on the basis of the survey results and improves
educational and awareness-raising activities regarding
compliance.
Based on the results of the questionnaire conducted in
FY2021, we continued awareness-raising and educational
activities related to compliance. As a result, the percentageof respondents who answered “yes” or “probably yes” to thequestion, “Do you think that you act with morals and a highethical standard in business and personal matters?” increased 8
percentage points from FY2021, to 90%.

Number of employees who participated in compliancetraining in FY2022 (total number)

Whistleblowing system

Number of reports and inquiries received via our internal
helpdesks

The Group has set up compliance helpdesks (whistleblowing
contacts) to be contacted by employees regarding inquiries
about compliance and for the reporting of any dishonest
conduct. In October 2021, an external law firm helpdesk wasadded and the helpdesk services became available in English
and Chinese as well. Further, we have provided all employeesof the Group with information about these helpdesks via a card
which is distributed to the employees of the Group to carry withthem, as well as internal groupware, training sessions, and othermeans of communication. Through these and other initiatives,
we are striving to reinforce the helpdesk system and improve its
reliability.
Upon inquiry or notification of any dishonest conduct,
the Group will investigate the facts and take corrective andpreventive actions.
In accordance with the Whistleblower Protection Act and tothoroughly protect whistleblowers, the whistleblowing systemprohibits the dismissal or any other disadvantageous treatmentof a person for their whistleblowing.

Specialized training on laws and regulations, including
the Act on the Protection of Personal Information andthe Export Trade Control Order869

Training on specific themes including information
security

1,862
868

Harassment prevention training

Data covers Sansha Electric Manufacturing Co., Ltd.

FY2020

FY2021

FY2022

1

5

6* Including reports and inquiries for which investigations were not conducted and reports
and inquiries which were found to be not problematic

Whistleblowing process flow
Whistleblower
ReportPerson(s) and/or department(s)involved in thewhistleblowing
reportInvestigation

Sharing of
information

Internal helpdesks(in the Human Resources
Department and the Audit
Department)

ReportOrder for corrective
and preventive actions

61

11

New employee training

Instruction on
investigation

ReportSharing of
information

Outside helpdesk(in a law firm)

ReportPerson in charge of the administrative department (Executive
General Manager of the Corporate Planning Division)

Information security
At the Sansha Electric Manufacturing Group, we understand that
we have an important social responsibility to ensure information
security. To respond to the trust of society as a whole, we haveestablished rules on information security under our Information
Security Policy, developed a system for managing information
security, and are pushing forward with relevant measures.
In response to the latest information security threats, we
strive to implement information security measures which areappropriate for the business environment and provide officers
and employees with necessary training, such as giving them
relevant information, in our efforts to increase their awareness.
In addition, we check for security holes based on the
security diagnostics of external specialized institutions and takenecessary measures to improve our information security.

Information Security Policy
At the Sansha Electric Manufacturing Group, we understandthat we have an important social responsibility to ensure
the appropriate management of information, and we haveestablished our Information Security Policy as described
below to respond to trust of society as a whole, including ourcustomers.

1

Compliance with laws, regulations and internal rules
We will comply with laws, regulations and other norms related to information security, establish rules on the handling of
information assets and manage them appropriately.

2

Information security management system
We will appoint a person responsible for the overall management of the entire Group’s information security and build
an information security management system with a responsible person in place at each organization. Under thismanagement system, we will implement information security measures to maintain and improve information security.

3

Implementation of security measures
We will strive to implement information security measures which are appropriate for the changes in the businessenvironment and business category, mainly reflecting the latest threats to information security, examples of attacks andvulnerabilities. If an information security incident should occur, we will respond to it promptly to minimize the damage
and take measures to prevent its recurrence.

4

Information security education and training
We will provide education and training needed to raise officers’ and employees’ awareness of information security.

5

Continuous improvement
To check the effectiveness of our information security measures, we will conduct self-inspections or self-audits andstrive to improve the measures continuously.

Anti-bribery Initiatives
At the Sansha Electric Manufacturing Group, we believe that
we need to strengthen measures against bribery risks, in lightof recent situations including the progress in the globalization ofbusiness, the tightening of laws and regulations, and the stricter
enforcement. We have therefore developed a basic policy andare striving to enhance initiatives to prevent violations.

Sansha Electric Manufacturing Group
Basic Policy for Prevention of Bribery
and Corruption
https://www.sansha.co.jp/ir/governance.html

Statuses of internal audits, accounting audits andthe internal control department
We have established the Audit Department as an independent
organization under the direct control of the President. It conducts
internal audits of each department and group company’s
execution of business from the perspectives of compliancewith laws, regulations and internal rules, the effectiveness andefficiency of operations, the reliability of financial reporting andasset protection.
Results of internal audits are reported to the President and

Full-Time Audit & Supervisory Board Member. If there are any
points that require improvement, the department monitors thestatus of improvements in its efforts to ensure the appropriate
execution of business.
In addition, Audit & Supervisory Board Members, the Audit
Department and the Accounting Auditor hold reporting sessions
regularly or as needed to exchange information and cooperatewith each other.

SanRex REPORT 2023

62

Financial data

Trends in major
financial indicators

FY2012FY2013

FY201481th businessperiodFY2015FY201679th businessperiod80th businessperiod82th businessperiod83th businessperiodNet sales

20,547

23,279Japan

14,591

16,697

22,11322,191

20,06914,943

15,400Overseas

5,956

6,582

7,169

6,790

13,451
6,618

Cost of sales

15,46916,70815,726

16,421

15,652Gross profit

5,078

6,570

6,387

5,770

4,417

Selling, general andadministrative expenses

3,452

4,078

4,085

3,893

4,194

Operating profit

1,536

2,492

2,301

1,876

222

Ordinary profit

1,616

2,582

2,289

1,801

217

Profit before income taxes

1,231

2,542

2,281

1,710

281

Fiscal year (million yen)

Profit attributable to owners of parent

910

1,651

1,506

1,172

126

Capital investment

708

3,040

1,011

407

463

Depreciation

846

872

1,056

970

955

Research and development expenses

594

664

688

703

511

Cash flows from operating activities

1,675

621

2,886

1,401

1,844

Cash flows from investing activities

617

1,858

2,244

321

2,594

Cash flows from financing activities

960

334

20

1,484

94

5,341

6,372

7,039

6,103

5,751

177

352

859

180

77

15,205

16,906

15,07316,087

14,318

1,713

2,139

1,442

1,695

145

4,966

Segment information (million yen)
Semiconductor businessNet sales
Segment profit
Power supply businessNet sales
Segment profit

As of the end of fiscal year (million yen)
Cash and cash equivalents

5,879

5,212

6,204

5,654

Interest-bearing debt

1,936

1,560

1,832

1,001

1,150

Total assets

23,63327,60228,007

26,16925,725

Net assets

14,06916,756

18,665

18,421

18,248Per-share data (yen)Earnings per share

72.01

114.75100.80

79.29

8.71

Net assets per share

1,112.74

1,121.30

1,249.11

1,271.07

1,259.14

Dividends per share

15.0

15.0

17.0

23.0

10.0

Operating profit/net sales

7.5

10.7

10.4

8.5

1.1

Return On Assets (ROA)

3.8

6.4

5.4

4.3

0.5

Equity ratio

59.5

60.7

66.6

70.4

70.9

Return On Equity (ROE)

6.7

10.7

8.5

6.3

0.7

Financial indicators (%)

Dividend payout ratio

20.8

13.1

16.9

29.0

114.8

Total shareholder return

132.4

143.8

152.1

138.5

128.2

1.3

1.3

1.4

1.8

0.8

14,950,000

14,950,000

14,950,000

14,950,000

14,950,000

6,046

6,541

7,099

457,099

457,099

Share price at the end of period (yen)

590

627

648

563

506

Price earnings ratio (PER)

8.19

5.46

6.43

7.10

58.09

Price book-value ratio (PBR)

0.53

0.56

0.52

0.44

0.40

Ratio of dividends to net assets

Shares and share prices
Total number of issued shares
Total number of treasury shares

63

FY2017

FY2018FY2019FY2020

FY2021

FY202284th businessperiod85th businessperiod86th businessperiod87th businessperiod88th businessperiod89th businessperiodFY202290th business period(Results forecast)

23,71724,36921,875

19,436

22,67528,08816,026

16,927

15,165

13,462

14,626

18,53430,500
-

7,691

7,442

6,709

5,973

8,049

9,553

-

17,515

17,93017,281

15,027

17,227

21,600

-

6,202

6,438

4,594

4,408

5,447

6,488

-

4,727

4,605

4,337

3,992

4,131

4,858

1,474

1,833

256

416

1,316

1,629

2,000

1,480

1,804

243

441

1,313

1,651

2,000

-

1,471

1,793

290

612

1,320

1,651

-

1,065

1,339

∆ 680

497

1,147

1,241

1,400

734

720

641

359

513

995

1,900

977

955

1,030

948

920

885

1,150

904

1,305

1,204

1,223

1,250

1,576

1,700

3,560

746

36

1,729

940

198

-

499

658

571

355

317

799

-

1,135

961

659

249

1,666

189

-

7,016

6,816

5,688

5,709

7,791

8,146

8,500

657

452

368

172

767

510

300

16,70017,553

16,186

13,727

14,884

19,941

22,000

817

1,381

624

244

548

1,118

1,700

6,820

5,963

4,659

5,870

5,026

3,959

-

200

100

-

-

-

-

-

27,81728,532

24,051

24,84627,14629,083-

19,314

19,952

18,48919,336

19,81021,065-105.26

73.48

93.44

48.22

35.42

83.30

95.33

1,332.69

1,410.77

1,316.15

1,376.49

1,541.90

1,583.87

-

20.0

28.0

13.0

15.0

25.0

30.0

40.0

6.2

7.5

1.2

2.1

5.8

5.8

6.6

4.0

4.8

2.6

2.0

4.4

4.4

-

69.4

69.9

76.9

77.8

73.0

72.4

-

5.7

6.8

3.5

2.6

5.9

6.1

6.5

27.2

30.0

-

42.3

30.0

31.5

38.0

375.3

214.7

133.5

212.9

214.7

254.0

-

1.5

2.0

1.0

1.1

1.7

1.9

-

14,950,000

14,950,000

14,950,000

14,950,000

14,950,000

14,950,000-

457,099

807,120902,122902,122

2,102,122

1,650,022

-

1,615

853

469

817

800

950

-

21.98

9.13

-

23.07

9.60

9.97

-

1.21

0.60

0.36

0.59

0.52

0.60

-

SanRex REPORT 2023

64

Financial data/Non-financial data

Consolidated balance sheets
AssetsTotal current assets(million yen)(million yen)

FY202188th businessperiodFY202289th businessperiodLiabilities andnet assets

FY202188th businessperiodFY202289th businessperiod20,81922,510Current liabilities

6,905

7,519

431

498

Total liabilities

7,336

8,017

Non-current assets

Non-current liabilities

Property, plant and equipment

5,499

5,259

Intangible assets

143

123

Shareholders’ equity

18,795

19,965Investments and other assets

924

949

Accumulated othercomprehensive income

1,014

1,100

Total non-current assets

6,326

6,572

Total net assets

19,81021,065

Total assets

27,14629,083

Total liabilities and net assets

27,14629,083(million yen)

Consolidated statementsof comprehensive income

Consolidated statements of income

Net sales

FY202188th businessperiodFY202289th businessperiod22,67528,088

ProfitOther comprehensive income
Comprehensive income(million yen)
FY202188th businessperiodFY202289th businessperiod

1,147

1,241

557

85

1,704

1,327

1,704

1,327

Cost of sales

17,227

21,600Gross profit

5,447

6,488

Selling, general andadministrative expenses

4,131

4,858

Consolidated statements of cash flows

Operating profit

1,316

1,629

FY202188th businessperiodFY202289th businessperiodOrdinary profit

1,313

1,651

Net cash provided by (used in)operating activities

940

198

Net cash provided by (used in)investing activities

317

799

Net cash provided by (used in)financing activities(Comprehensive income attributable to)Profit before income taxes

1,651

1,320

Total income taxes

173

409

Profit

1,147

1,241

Comprehensive income
attributable to owners of parent(million yen)

1,666

189

Effect of exchange rate changes oncash and cash equivalents

198

120

Net increase (decrease) in cash andcash equivalents

844

1,066

Cash and cash equivalents at
beginning of period

5,870

5,026

1,241

Cash and cash equivalents at
end of period

5,026

3,959

Overseas
groupcompanies

FY20218
85th businessperiodFY2021986th businessperiodFY202087th businessperiodFY202188th businessperiodFY202289th businessperiodPower consumption (MWh)17,915

16,768

16,68917,62818,319

Utility gas consumption (m )207,332

184,658

178,412

216,795

205,361

83,55880,05175,02871,210

9,676

236

218

178

191

190

12,364

10,836

10,056

9,916

10,063

Industrial waste (tons)

794

626

610

704

668

Recycling rate (%)

98.2

98.5

99.0

98.7

98.7

The volume of PRTR substances
handled (tons)

53.3

42.1

43.7

54.0

49.8

The volume of VOCs which
require notification handled (tons)

70.0

44.0

56.6

53.7

43.3

Profit attributable toowners of parent

1,147

Non-financial data
Environmental data

Scope

Sansha Electric
ManufacturingCo., Ltd.

Domestic
group
companies

Energy consumption

3

Heavy oil consumption (liters)
Water consumption(thousand m3)
CO 2 emissions (tons CO 2)

65(Okayama Plant)ScopeFY20218
85th businessperiodFY2021986th businessperiodFY202087th businessperiodFY202188th businessperiodFY202289th businessperiod

1,414

1,402

1,381

1,405

1,465

Number of male employees (persons)

929

925

926

933

987

Number of female employees (persons)

485

477

455

472

478

Female employee ratio (%)

34.3

34.0

32.9

33.6

32.6

44.6

45.1

45.8

46.2

46.2

Average years of service (years)

17.8

18.2

18.8

18.7

18.9

Average years of serviceof male employees (years)
Average years of serviceof female employees (years)

18.6

19.1

19.6

19.6

19.8

14.2

14.6

15.2

15.1

15.0

Employee-related data

Sansha Electric Domestic
Manufacturinggroup
Co., Ltd.
companies

Overseas
groupcompanies

Basic data
Number of employees (persons)Average age

3.4

2.8

2.4

2.6

3.0

Average annual salary (yen)5,452,559

5,633,151

4,990,469

5,353,204

5,625,233

Wage gap between men
and women (%)*

66.9

66.0

69.6

72.5

73.5

330

338

330

334

279

13

19

22

22

28

Turnover ratio (%)

Diversity
Number of leaders (persons)
Number of leaders that are women(persons)
Percentage of leaders that are women (%)
Number of managers (persons)
Number of managers that are women(persons)

3.9

5.6

6.7

6.6

10.0

108

120

118

116

113

3

3

4

4

4

2.8

2.5

3.4

3.4

3.5

Number of employees with disabilities(persons)

16.0

23.5

23.5

24.5

24.0

Percentage of employees with disabilities (%)

1.8

2.7

2.7

2.7

2.6

Percentage of managers that are women (%)

Employment
11

18

18

17

11

Male new graduate hires (persons)

10

13

14

14

10

Female new graduate hires (persons)

1

5

4

3

1

New graduate hires (persons)

13

7

3

18

27

Number of male mid-career hires (persons)

5

3

3

13

21

Number of female mid-career hires(persons)

8

4

0

5

6

Average overtime hours(hours per month)

14.8

10.1

9.4

13.3

13.2

Paid leave acquisition rate (%)

71.7

74.8

72.3

74.2

81.5

12

5

19

13

13

0

1

4

1

9

Mid-career hires (persons)Work-life balance

Number of employees taking childcare leave(persons)
Number of male employees taking
childcare leave (persons)
Percentage of employees returning fromchildcare leave (%)
Percentage of male employees
returning from childcare leave (%)
Percentage of female employees
returning from childcare leave (%)
Percentage of employees with shortened
working hours to care for children (%)
Percentage of male employees withshortened working hours to care forchildren (%)
Percentage of female employees withshortened working hours to care forchildren (%)
Number of employees taking nursing careleave (persons)
Percentage of employees with shortened
working hours to provide nursing care (%)

88.9

91.7

100.0

100.0

100.0

0.0

100.0

100.0

100.0

100.0

88.9

90.9

100.0

100.0

100.0

31.3

33.3

30.0

16.6

21.1

0.0

0.0

0.0

0.0

0.0

62.5

90.0

75.0

66.6

80.0

0

0

0

0

2

0

0

0

0

1

18,454

17,023

16,923

26,135

15,866

7

13

16

20

18

0

0

0

1

1

Personnel development
Training costs per person (yen)Number of employees with public
qualifications (persons)Occupational safety
Number of occupational accidents with lost
worktime (cases)* Calculated based on the provisions of the Act on the Promotion of Female Participation and Career Advancement in the Workplace

SanRex REPORT 2023

66

Stock and shareholder data/Company outline

Stock and shareholder data (as of March 31, 2023)
Stock exchange listing

Tokyo Stock Exchange Standard Market (securities code 6882)

Administrator of shareholders’ register

Sumitomo Mitsui Trust Bank, Ltd

Number of shares issued

14,950,000

Number of shareholders

7,638

Major shareholders (ten largest shareholders)Number of shares held
(unit: thousands)

Name

Shareholding
ratio (%)

Mitsubishi Heavy Industries, Ltd.

1,335

10.04

Panasonic Holdings Corporation

1,213

9.12

Miyashiro Limited Liability Company

758

5.70

Nitto Kogyo Corporation

667

5.02

Employee Shareholding Association ofSansha Electric Manufacturing

378

2.85

Kunio Shikata

330

2.48

The Senshu Ikeda Bank, Ltd.

314

2.36

Sumitomo Mitsui Banking Corporation

280

2.11

Hideo Shikata

228

1.72

Yukiya Morita

220

1.65

(Notes)1. T he number of shares held is rounded
down to the nearest thousand.
2. S ansha Electric Manufacturing Co.,
Ltd. owns 1,650,022 treasury shares,
but excluded itself from the list of major
shareholders.
3. T he shareholding ratio is calculated
disregarding treasury shares and rounding
to three decimal places.

Distribution by type of shareholders
Financial institutions

Securities companies

695 thousand shares / 4.65%

390 thousand shares / 12.61%

Non-Japanese national
individuals

1,364 thousand shares / 19.12%
Individuals and Others

Number of shares

In own or company name1,650 thousand shares / 11.04%
Other corporations
based in Japan

14,9506,181 thousand shares / 41.35%

thousand shares(Notes)1. T he number of shares held is rounded down to the nearest thousand.
2. T he shareholding ratio is rounded to two decimal places.

4,668 thousand shares / 31.23%

Monthly trends in share price and trading volume(Yen)

Closing price(Yen)

TOPIX (Tokyo Stock Price Index)

1,500

2,500

1,200

2,000

900

1,500

600

1,000

300

500

0

0

(Shares)

Trading volume

6,000,000
4,000,000
2,000,000
0
4

5

6

7

8

9 10 11 12 1
2020

67

2

3

4

5

6

7

8

9 10 11 12 1
2021

2

3

4

5

6

7

8

9 10 11 12
2022

1

2

3

(Month)(Fiscalyear)

Company outline (as of March 31, 2023)
Company nameSansha Electric Manufacturing Co., Ltd.

Date of foundation

March 8, 1933

Data of incorporation

April 28, 1948

Headquarters
location

3-1-56, Nishiawaji, Higashiyodogawa-ku, Osaka 533-0031
Japan

Capital

2.7 billion yen

Number of employees(consolidated)

1,465 (912 in Japan, 553 overseas)

Branches, sales
offices and otherofficesTokyo, Aichi, Fukuoka, Ishikawa,
Finland, South Korea and Taiwan

Plants andlaboratories

Osaka, Shiga and Okayama

Consolidated
subsidiaries

Japan
SANSHA SOLUTION SERVICE CO., LTD. (Osaka)
SUWA SANSHA ELECTRIC CO., LTD. (Nagano Prefecture)
OSAKA DENSO INDUSTRY CO., LTD. (Osaka)
Overseas
SANREX CORPORATION (USA)SANREX ASIA PACIFIC PTE. LTD. (Singapore)
SANREX LIMITED (Hong Kong)
SANSHA ELECTRIC MFG. (SHANGHAI) CO., LTD. (China)
SANSHA ELECTRIC MFG. (GUANGDONG) CO., LTD. (China)
DONGGUAN EASTERN ELECTRONICS CO., LTD. (China)

Scope ofreporting

Sansha Electric Manufacturing Co., Ltd. and its nine consolidated subsidiaries.
However, the applicable scope of reporting is specified on a case-by-case basis if it differs from the above.

Period covered

Fiscal year 2022 (from April 1, 2022 to March 31, 2023)

Contact forinquiries

Public Relations Department
Phone: +81-6-6321-0321 (switchboard number)sanrex-ir@sansha.co.jp

Disclaimer

This report contains plans, strategies and forward looking statements such as financial outlooks. They are based on the information available atthe time of publication and on certain assumptions that are deemed reasonable. Please note that results may differ from these statements due toa variety of factors.

SanRex REPORT 2023

68

3-1-56 Nishiawaji, Higashiyodogawa-ku, Osaka, Osaka, Japan
Phone: +81-6-6321-0321 (main) Fax: +81-6-6321-8621

https://www.sansha.co.jp/

This report uses fonts designed
to be legible on the basis of theuniversal design (UD) principle.