November 8, 2017

Summary of Consolidated Financial Results
for the First Half Ended September 30, 2017 [Japan GAAP]
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KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Ryoichi Kado
Managing Director, Administration Headquarters
Eiji Kawamura+81-(0)3-5657-0111
November 14, 2017
December 1, 2017
Yes
Yes (For institutional investors and analysts)(Yen in millions, rounded down)
1. Financial results for the first half of the fiscal year ending March 2018 (April 1, 2017 – September 30, 2017)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Profit attributable
Net sales
Operating income
Ordinary income
to owners of parent
Million yen%

Million yen%

Million yen%

Million yen

First half ended September 2017

116,582

6.3

4,394

36.8

4,703

54.4

First half ended September 2016

109,659(10.8)

3,212(23.4)

3,045(31.2)

3,516

13.0

3,111
5.7
First half of FY3/2017: 656 million yen (-67.5%)

Note: Comprehensive income: First half of FY3/2018: 4,095 million yen (524.0%)

Earnings per share%

Earnings per share(diluted)

Yen

Yen

First half ended September 2017

128.16-First half ended September 2016110.11-(2) Financial Position (Consolidated)
Total assets

Net assets

Equity ratio

Million yen

Million yen%

As of September 30, 2017

127,204

69,00654.2

As of March 31, 2017

125,751

65,932

52.4

Reference: Shareholders’ equity
As of September 30, 2017: 68,935 million yen

As of March 31, 2017: 65,872 million yen

2. Dividends
Dividend per share

1Q

2Q

3Q

Year-end

Full year

Yen

Yen

Yen

Yen

Yen

Fiscal year ended March 2017
Fiscal year ending March 2018
Fiscal year ending March 2018 (Forecast)

-

25.00
30.00

-

35.00

60.00

-

35.00

65.00

Notes: Change in the dividend forecast from the latest announcement: Yes
Breakdown of interim dividend for FY3/17: Ordinary dividend: 20.00 yen; Extraordinary dividend: 5.00 yen
Breakdown of year-end dividend for FY3/17: Ordinary dividend: 20.00 yen; Extraordinary dividend: 15.00 yen
Breakdown of interim dividend for FY3/18: Ordinary dividend: 25.00 yen; Extraordinary dividend: 5.00 yen
With regard to the revision of dividend forecast, please refer to “KAGA ELECTRONICS Announces Interim Dividend Payout from
Retained Earnings” announced on November 8, 2017.

3. Forecast for the fiscal year ending March 2018 (Consolidated, April 1, 2017 – March 31, 2018)(Percentage figures represent year on year changes)
Profit attributable toEarnings per
Net sales
Operating income
Ordinary income
owners of parent
share
Full year

Million yen%

Million yen%

Million yen%

Million yen%

Yen

232,000

2.1

7,500

9.0

8,200

11.7

6,300

(9.7)

229.63

Note: Change in the forecast from the latest announcement: None

* Notes(1) Changes in significant subsidiaries (Changes in specified subsidiaries accompanied by changes in the scope of consolidation ):None(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting policies, estimates, and retrospective restatement(a) Changes due to revision of accounting standards: None(b) Changes other than (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury shares)
As of September 30, 2017:(b) Treasury shares
As of September 30, 2017:

28,702,118

As of March 31, 2017:

28,702,118

1,267,060

As of March 31, 2017:

1,266,468

Period ended September 30, 2016:

28,255,145(c) Average number of shares (quarterly consolidated during the period)
Period ended September 30, 2017:27,435,430* The quarterly review procedures are not applicable to this Financial Results report.
* Cautionary statement regarding forecasts of operating results and special notes(Remarks on forward-looking statements)
Forward-looking statements in these materials are based on information currently available to the Company and certain
assumptions deemed reasonable. Actual results may vary from the forecast for a variety of reasons.
(Supplementary materials for financial results and the details of the financial results meeting)A financial results meeting for institutional investors and analysts will be held on Thursday, November 30, 2017. The details
about the meeting and its audio, along with the presentation materials will be made available on our website shortly after the
meeting.

Index for Supplementary Information
1. Results of Operations .................................................................................................................................................................... 2(1) Overview of consolidated business performance .................................................................................................................. 2(2) Overview of financial condition............................................................................................................................................ 2(3) Qualitative information on consolidated earnings forecast ................................................................................................... 3
2. Quarterly Consolidated Financial Statements and Major Notes ................................................................................................... 4(1) Quarterly consolidated balance sheet .................................................................................................................................... 4(2) Quarterly consolidated statements of income and comprehensive income ........................................................................... 6
For the first half (April 1, 2017 - September 30, 2017) .................................................................................................... 6(3) Consolidated statement of cash flows ................................................................................................................................... 7(4) Notes to quarterly consolidated financial statements ............................................................................................................ 8(Notes to going concern assumptions).............................................................................................................................. 8(Significant change in shareholders’ equity) .................................................................................................................... 8(Additional information) .................................................................................................................................................. 8(Segment information, etc.) .............................................................................................................................................. 8

1

1. Results of Operations(1) Overview of consolidated business performance
In the first half of the fiscal year, the Japanese economy witnessed a gradual recovery as capital expenditures and consumer
spending showed a sign of recovery, supported by an improvement in corporate earnings as well as employment andincome environment.
In the electronics industry, the principal sector of operations of the KAGA ELECTRONICS Group (“the Group”), while
markets for PCs and amusement machines remained stagnant, markets for smartphones and automotive devices showed asteady growth with an increasing use of electronics in automobiles, and innovative technology-related markets including
IoT (Note 1), big data, and artificial intelligence also showed favorable growth.
Under such environment, based on our corporate philosophy of “Everything we do is for our customers,” the Groupfocused on increasing sales to existing major customers in Japan and expanding EMS (Note 2) businesses overseas.
Consolidated net sales increased 6.3% year on year to 116,582 million yen, operating income increased 36.8% to 4,394
million yen, and ordinary income rose 54.4% to 4,703 million yen. Profit attributable to owners of parent increased 13.0%
to 3,516 million yen.
(Note 1) Internet of Things: New services and business models, or technologies that connect all things through the Internet(Note 2) Electronics Manufacturing Service: Provision of product development and manufacturing services on an outsourcing basis

Business segment performance was as follows:(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, the electronics manufacturing service (EMS), and other activities)
EMS business for electronic equipment and sales of semiconductors showed a favorable growth. As a result, net sales
increased 3.8% to 85,918 million yen, and segment income rose 22.2% to 2,893 million yen.
(b) Information equipment (Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products,
original brand products, and other products)
Sales of housing-related and commercial facilities-related products saw favorable growth, and PC sales also recovered.
As a result, net sales increased 14.2% to 23,446 million yen, and segment income rose 107.0% to 1,116 million yen.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
The segment focused on development of new areas including VR (Note 3) and AR (Note 4). However, orders for productionof computer graphics animation and development of game software were sluggish. As a result, net sales decreased
20.8% to 1,142 million yen, and segment income decreased 63.6% to 111 million yen.
(Note 3) Virtual Reality(Note 4) Augmented Reality(d) Others (Repair and supports for electronics equipment, and sales of amusement equipment and sports goods, and others)
Sales of arcade amusement machines and golf products in Japan showed solid growth. As a result, net sales increased
23.8% to 6,075 million yen, and segment income was 198 million yen (segment loss of 57 million yen one year earlier).
(2) Overview of financial condition(a) Assets, liabilities and net assets
Total assets as of September 30, 2017 increased 1,452 million yen from March 31, 2017 to 127,204 million yen mainly
due to increase in cash and deposits.
Liabilities as of September 30, 2017 decreased 1,622 million yen from March 31, 2017 to 58,197 million yen mainly
due to a decrease in notes and accounts payable - trade.
Net assets as of September 30, 2017 increased 3,074 million yen from March 31, 2017 to 69,006 million yen as a resultof recording profit attributable to owners of parent.

2(b) Cash flows
Cash and cash equivalents as of September 30, 2017 increased 3,365 million yen from March 31, 2017 to 29,387
million yen.
(Operating activities)
Net cash provided by operating activities was 5,875 million yen (7,723 million yen provided one year earlier) mainly
due to recording profit before income taxes.
(Investing activities)
Net cash used in investing activities was 1,345 million yen (246 million yen used one year earlier) mainly due topurchase of property, plant and equipment.
(Financing activities)
Net cash used by financing activities was 1,265 million yen (2,253 million yen used one year earlier) mainly due tocash dividends paid and repayments of long-term loans payable.
(3) Qualitative information on consolidated earnings forecast
There are no revisions to the forecast for the fiscal year ending March 31, 2018 that was announced on October 25, 2017 in“KAGA ELECTRONICS Revises Consolidated Performance Forecast.”3

2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet(Million yen)First half ended
September 2017
(As of September 30, 2017)

Fiscal year ended March 2017
(As of March 31, 2017)
ASSETS
Current assets
Cash and deposits

26,42330,393

Notes and accounts receivable - trade

46,77445,860Electronically recorded monetary claims - operating

5,234

4,164

188

175

14,675

14,253365644

Raw materials and supplies

4,284

4,238

Deferred tax assets

1,340

1,059

Other

4,562

3,612

Securities
Merchandise and finished goods
Work in process

(166)

(164)

103,684

104,238

Buildings and structures, net

4,859

4,849

Machinery, equipment and vehicles, net

2,014

2,168

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

742

751

4,126

4,036

3

194

11,745

11,999Goodwill

406

361

Software363

328

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets

Other

71

64

Total intangible assets

841

754

Investment securities

6,761

7,563

Deferred tax assets

240

223

Guarantee deposits

735

681

Insurance funds

936

944

Other

1,529

1,385

Allowance for doubtful accounts

(723)

(586)

Investments and other assets

Total investments and other assets

9,479

10,211

Total non-current assets

22,06722,966

125,751

127,204

Total assets

4

(Million yen)First half ended
September 2017
(As of September 30, 2017)

Fiscal year ended March 2017
(As of March 31, 2017)
LIABILITIESCurrent liabilities
Notes and accounts payable - trade37,55335,512

Short-term loans payable

4,883

5,455

Accrued expenses

3,387

3,402

Income taxes payable

888

911

Provision for directors’ bonuses

204

139

Other

3,325

3,551

Total current liabilities

50,242

48,972Long-term loans payable

4,603

3,804

Deferred tax liabilities

1,213

1,697

Provision for directors’ retirement benefits

1,222

1,241

Net defined benefit liability

1,669

1,634

Asset retirement obligations

144

168

Other

723

678

9,576

9,224

59,81958,197

Capital stock

12,133

12,133

Capital surplus

13,912

13,853Retained earnings

40,47643,032

Treasury shares(2,040)(2,041)

Total shareholders’ equity

64,481

66,977

1,159

1,466

Non-current liabilities

Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

0(0)Foreign currency translation adjustment

421

642

Remeasurements of defined benefit plans

(190)

(150)

Total accumulated other comprehensive income

1,391

1,958

59

71

65,93269,006

125,751

127,204

Deferred gains or losses on hedges

Non-controlling interests
Total net assets
Total liabilities and net assets5(2) Quarterly consolidated statements of income and comprehensive income
For the first half (April 1, 2017 – September 30, 2017)
First half ended
September 2016
(April 1, 2016 –September 30, 2016)
109,659
94,48615,172
11,9593,212(Million yen)First half ended
September 2017
(April 1, 2017 –September 30, 2017)
116,582
100,363
16,218
11,824
4,394

24
71
114
－
124
335

49
82
100
21
146
401

66
415
20
502
3,045

60
－
32
92
4,703

13
2
89
105

21
518
12
552

6
31
－
11
11
－
0
60
3,090
688
(717)
(29)
3,119
3,111
7

8
－
111
－
3
219
0
343
4,913
756
628
1,385
3,527
3,516
11

Valuation difference on available-for-sale securities

(134)

307

Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax(11)(2,360)43(2,462)
656
649

(0)
220
40
568
4,095
4,083

6

12

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Commission fee
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on transfer of businessTotal extraordinary income
Extraordinary loss
Loss on retirement of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Business structure improvement expenses
Loss on valuation of golf club membership
Impairment loss
Other
Total extraordinary loss
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to owners of parent
Profit attributable to non-controlling interests
Other comprehensive income

Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests6(3) Consolidated statement of cash flows(Million yen)First half ended
September 2016
(April 1, 2016 –September 30, 2016)
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in provision for directors’
retirement benefits
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable trade
Decrease (increase) in inventories
Decrease (increase) in accounts receivable - other
Decrease (increase) in advance payments
Increase (decrease) in notes and accounts payable trade
Increase (decrease) in accrued expenses
Decrease (increase) in consumption taxes refund
receivable
Decrease (increase) in other current assets
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Payments of short-term loans receivable
Proceeds from cancellation of insurance funds
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

7First half ended
September 2017
(April 1, 2017 –September 30, 2017)
3,090
743
－
44

4,913
694
219
44

(13)

19

(0)
(96)
66
28
－

(61)
(132)
60
(518)
111

5,320

2,061

(1,108)
(33)
115

289
1,105
(300)

759

(2,205)

(44)

(20)

173

171

67
(442)
(117)
8,552
96
(65)
(852)
(6)
7,723

(26)
107
(39)
6,493
130
(59)
(688)
(0)
5,875

(301)
503
(535)
93
(71)
(149)
175
(1)
2
(5)
15
(42)
67
(246)

(1,057)
463
(835)
86
(76)
(1,000)
1,058
－
－
(41)
95
(42)
2
(1,345)

(476)
(714)
(987)
(74)
(2,253)

665
(896)
(958)
(76)
(1,265)(1,419)101

3,804
21,87925,6833,365
26,021
29,387

(4) Notes to quarterly consolidated financial statements(Notes to going concern assumptions)Not applicable(Significant change in shareholders’ equity)
Not applicable(Additional information)(Adoption of consolidated taxation system)
From the first quarter of the fiscal year ending March 31, 2018, the Company and its certain domestic subsidiaries haveadopted the consolidated taxation system.

(Segment information, etc.)
Segment information
I. For the first half ended September 2016 (April 1, 2016 – September 30, 2016)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

Electronic
components

Informationequipment

Software82,784

20,524

1,442

4,909

109,659－

109,659

511

261

1,041

1,584

3,399

(3,399)－

Total

83,29520,786

2,483

6,493

113,059(3,399)109,659

Segment income(loss)

2,366

539

307

(57)

3,156

56

3,212

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers

Notes:

1.
2.

Adjustment in segment income of 56 million yen includes 56 million yen for elimination of inter-segment trade.
Segment income (loss) is adjusted for operating income on the quarterly consolidated statements of income and comprehensive
income.

II. For the first half ended September 2017 (April 1, 2017 – September 30, 2017)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

116,582－

116,582

336

1,896

(1,896)

－

1,605

6,412

118,479(1,896)

116,582

111

198

4,319

74

4,394

Electronic
components

Informationequipment

Software85,91823,446

1,142

6,075

593

503

463

Total

86,511

23,949Segment income

2,893

1,116

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers

Notes:

1.
2.

Adjustment in segment income of 74 million yen includes 74 million yen for elimination of inter-segment trade.
Segment income is adjusted for operating income on the quarterly consolidated statements of income and comprehensive income.

8