CG23 medium-term management plan

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Developing strengths(invisible assets)

Unifying thinking

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Picturing the desired future

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Evaluation analysis for achieving the vision

Developing strategies, acting andrepeatedly evaluating and improving

Overview of the medium-term
management plan
Basic policy

Overview of FY2022• Innovation for continuous growth• Contribution to the resolution ofsocial issues

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 the

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 yenSemiconductorbusiness

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 yen1.0 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

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

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

Major strategies

Major risks and opportunities

Contributing to acarbon-free society
and environmental
conservation

 eveloping diverse products with highDvoltage resistance and efficiency

Constructing
infrastructure
and contributingto industrial
development

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

Offering safety
and security andimproving services

E xpanding service solutions

Strengthening
manufacturing

 romoting the standardization andP
automation of design

Related SDGs

Increase in business opportunities in the renewableenergy and new energy sectors
Tighter environmental regulations

Profitability improvement
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.

Economic growth in developing and emerging countries
Necessity to construct robust infrastructureLoss of capital investment opportunities due to large
disasterPriority measures

Product incidents and failures ursuing CO 2 reduction and energyP
conservation

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

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

 ompetitiveness gained by reducing environmental
C
impactBecoming a highly profitable company

OffenseOur KPIs

Developmentof high value-added
products
Cultivating new markets
Expansion of production capacity(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

Tighter environmental regulations

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

Opportunities

31systems 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.

Progress in IoT technologies

Reducing theenvironmental
impact of productionactivities

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

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

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.

Design standardization
Shortening lead time
Production process improvement
Optimum inventory

Development
investment

Shareholder
returns

Enhancement of corporate value• Economic development andpopulation growth inemerging countries• Constructing robust
infrastructure

Strengthening business foundation

Rapid urbanization

Solutions through businessResponse toenvironmental issues

Material issues

Future initiatives

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 inOverview

Sansha 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.

Achieving ROE that exceeds the cost of capital

SanRex REPORT 2023

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