2023 - 2024
2021 - 2024

Management Briefing Material

KAGA ELECTRONICS
TSE Prime Market 8154

September, 2024

INDEX Introduction

P- 3 ~ 8

 Corporate Profile

P-10 ~ 17

 Medium Term Management Plan 2024

P-19 ~ 25 Electronic components Business

P-27 ~ 29

 EMS Business

P-31 ~ 39

 Medium- to Long-Term

P-41 ~ 47

Sustainability Management Plan References

P-49

Introduction

Sustainable profit growth
KAGA Electronics will realize “sustainable profit growth”
with “organic growth + strategic M&As + PMI” as growth drivers,
anticipating further industry consolidation.
Net sales (by Company)

Gross profit / Gross profit margin(million yen)

■KAGA ELECTRONICS

608,064
60,481495,827443,615422,365 65,296

542,696
36,608

199,548
190,684

46,535

13.6

12.1
6.0

10.6
6.8

14.5

11.3
7.8

15.3

12.2

12.9 13.0

9.8
6.5

131,932

348,034
243,8972021/3

281,075

2022/32023/3

315,4042024/335,546
3,411

13,7082,365
10,30732,13533,29835,273

2019/32020/32021/3

4,247

15.0

10.5

10.5

7.3

10.1

78,51460,54747,016 47,945

2020/3

14.9

5.1

57,0902019/3

13.7

149,455

200,584

243,031(%, million yen)

■EXCEL■EXCEL235,689■Total■KAGA FEI■KAGA FEI

292,779■KAGA ELECTRONICS

4,443
20,91370,425
3,834
19,218

14,69041,7672022/353,1232023/347,3732024/3

3

Profit-focused management
KAGA Electronics is not just an electronic components trading company.
It is a general electronics trading company engaged in high value-added businesses,
including EMS, based on “profit-focused management.”
Net sales（by Segment）■Electronic Component
■EMS
■CSI
■Others(million yen)

608,064

495,827443,615
12,552
39,616
13,902 422,365
43,466

292,779

93,34013,912
44,344

12,057
48,389Operating income / Operating income margin

15,73943,680542,696
17,170149,86244,305

4.3
3.0

2.6
120,478

117,828

1.6

4.5
4.3
3.9

2.3
1.2

5.1

■Total
6.2
5.3

4.2

(%, million yen)
7.0

5.6

5.3

4.9

2.7

2.0

292,905

325,830

1.1

387
2,482

4,015

5,539

2,278

3,553

3,056

2019/32020/32021/3

554
1,906
2,667

145,042

2020/32021/32022/32023/32024/3

11,467

623
1,707

7,570

262,318

10,014

3.9

32,249
663
2,449
9,563

255
2,085

360,743

4.8

3.4

20,915

398,783

6.6
6.1

6.4

4.2

3.2

99,59989,481

2019/3■Electronic Component
■EMS
■CSI
■Others
5.6

25,735
1,208
2,924
7,375

7,356
19,475
14,228

11,2162022/32023/32024/3

4

Management focusing on capital efficiency
KAGA Electronics practices business management
focusing on the cost of equity and capital efficiency.
※ROE：14.5% ＞ Cost of Equity：10.6%
ROIC：9.7% ＞ WACC：9.1%

ROE

ROIC・ROA■ROE(%)

19.6
13.5

10.9

15.7

■ROIC (%)

14.5

■ROA (%)■Total asset turnover

7.6■Financial leverage■Net profit margin

1.9

1.4
2.1
2.8

2.6

1.9
2.6

2.7

2.7
2019/3

1.3
2020/32.7

3.1

2021/32022/3

2.2

2.4

3.8

13.0

1.9
2

3.7

10.4

5.8

6.3

6.9
8.3
5.1

4.7

9.7

9.1

6.1

2.8
2023/32023/4

2019/32020/32021/32022/32023/32024/35

Proactive return to stakeholders
Inheriting the founder’s spirit that “profits are to be shared,”
KAGA Electronics implements profit distribution and return to stakeholders proactively.

Labor share
120,000

66.6

66.6

Dividend per share & Total dividends

65.2

70.0

(%)

57.1

■ Tax and dues

100,000

51.4■ Rent expense■ Depreciation

55.2

60.0

40.0

60,51760,00033,595
29,13522,37730,487

34,57140,050

20.0

Payroll

20,0000

10.0

2019/32020/32021/32022/32023/3

5,777

Total amount of dividends

5,779

7000

2024/3

2,195

1,921

0.0

5000

3,149

2,197

¥220

¥80

(Up ¥10 per share)¥70(Up ¥40 per share)(Up ¥10 per share)

5 （Down ¥10 per share）
20
5
10
70

60

60

2019/32020/32021/3

-1000

10
220

40

3000

1000

70

¥120
¥80

¥220

(Up ¥100 per share)

30.0

Added
Value

43,742

Operating
Income46,787(million yen)

■ Ordinary dividend(million yen)

■ PayrollLabor share

9000■ Commemorative dividend

77,91650.0

80,000■ Operating Income

40,000■ Extraordinary dividend

140

-3000

-5000

80

-7000
2022/32023/32023/36

Form fair value and enhance corporate value
KAGA Electronics actively engages in IR activities, aiming at formation of fair value andfurther enhancement of corporate value.

Changes in stock price/trading volume
5,000,000

8,000
Volume4,500,000

Changes in PER
30.0
25.0

Price

TOPIX

Wholesales trade(times)

KAGA

20.0

6,000

4,000,000

15.0
10.0

3,500,000(stock)4,000

3,000,000
2,500,000

5.0
0.0
Jan-19Jan-20

2,000
(yen)

1,500,000

Jan-22

Jan-23Jan-24

Changes in PBR

2,000,000
0Jan-21

2.00(times)TOPIX

Wholesale trade

KAGA

1.50

1,000,000-2,000500,000
0

1.00
0.50

Apr-18Apr-19Apr-20

Apr-21

Apr-22-4,000

Apr-23

0.00
Jan-19Jan-20Jan-21

Jan-22

Jan-23Jan-24

7

Shareholders Information
Number of individual shareholders

Shareholder Composition（％）
treasury stock
Foreign Corporations
Other Japanese Corporations
Financial Instruments Business Operators
Financial Institutions
Individuals

4.36

4.33

4.28

18.60

19.09

16.06

29.18

27.38

0.53

1.07

26.59

20.74

27.27

8.54

8.49
22.88

24.24

21.70

14.28

14.26

0.86

26.62

30.89

30.43

21.51

20.38

19.65

2.02

9,227

8816

6,600

8.47

18.82

1.12

（Persons）

5,795

5,961

5,857

2.23

29.39

28.90

22.94

21.90

2019/3 2020/3 2021/3 2022/3 2023/3 2024/3

2019/3 2020/3 2021/3 2022/3 2023/3 2024/3
8

Corporate Profile

Corporate Outline
An independent trading company for general electronics with
one-stop services
Company Name:KAGA ELECTORONICS CO., LTD.

Representatives:

Founder & CEO: Isao TSUKAMOTO
President & COO: Ryoichi KADO

Head Office:20 Kanda matsunagacho,
Chiyoda-ku Tokyo 101-8629, Japan

Established:

September 12, 1968

Paid-in Capital:

JPY12,133 million

Stock listing:Prime Market, Tokyo Stock Exchange（securities code: 8154)

Number of
66 Companies（as of April 1, 2024）
Group Companies:
Number of
Employees:

Founder & CEO
Isao TSUKAMOTO

President & COO
Ryoichi KADO

8,021 （FY ended March 2024 ）10

Corporate Philosophy“Everything we do is for our customers” – Since Kaga Electronics was founded,by intently listening to the voices of our customers and earnestly catering totheir needs, we have expanded our business domain to include our EMS
business, which includes everything from kitting to processing andmanufacturing electronic components and semiconductors, and our
information equipment business, which conducts sales of finished products.
Going forward, we will continue to aim to be Japan’s No. 1 corporate group in
the industry and become a competitive World-Class company.

Corporate
Philosophy

VisionEverything we do is for our customers
Aim to be “Japan’s No.1 corporate group in the industry”
Aim to become a competitive “World Class Company”“F.Y.T.” : Flexibility, Young at heart, Try

Action Guidelines“3G” : General, Global, Group“KAGA-ism”: Management mindset,
Sales mindset,
Readiness as a member of society
11

KAGA-ism（Behavior Guideline）
There have been many sayings supported by the experiences of the founder and our forebears
since the company’s foundation, and these should be treated as treasures. They are our DNA
that we will carry into the future as a foundation for our actions to overcome daily competition.

Three Pillars

Basic Principle

1. Mindsets as a manager

1-1. Be a manager with a grand dream and a strong will

Behavior with the awarenessof “being one of the
managers”

2. Mindsets as a salesperson

Awareness and behavior asa “trading company employee
or businessman”

3. Mindsets as a memberof society

Awareness and behavior inproceeding with business asa member of society

1-2. Cultivate a hungry spirit to continue
challenging yourself in everything that you do
1-3. Act first with high ambition
2-1. Make TAXAN (much) effort to gain TAXAN (a large)
profit, and become TAXAN (very) happy
2-2. Personal connections are intangible assets
2-3. Always be curious
3-1. Self-improvement
3-2. Reward good work and punish bad work
3-3. Be fair and upright12

HISTORY
New technologies. New products.
Always listening to the voice of the times.
We grew together with the electronics industry.
Kaga Electronics has continued to grow, driven by our keen ability to rapidly sense changes in the times. This ability has ensured
our consistent growth in an era of accelerating technological innovation. In more recent years, we have been proactive in efforts
to create new businesses. With the information-gathering ability and sales network that we have cultivated over our long history
as our foundation, we will continue to evolve towards unlimited possibilities, pushed ahead by unique ideas and unrestricted byour existing businesses.
Aiming for sales exceeding（billion yen）

1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0

¥1 trillion
Aiming for sales exceeding¥750 billion

Net sales exceed¥250 billion

Net sales exceed

Net sales exceed¥10 billion

Transitioned to the Prime Market of the TSE.

Net sales exceed¥50 billion ¥100 billion

Stock listed on the TSE 2nd Section

Promoted to the TSE 1st Section

1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2028

Arrival of Space
Established at Soto-Kanda,
Chiyoda-ku, Tokyo, with Invaders games boom
capital of ¥1 million

Launch of KG-12,
an own brand monitor
for Apple

Commencement ofhome video gamebusiness

Establishment of the firstown factory
KAGA (SHENZHEN)

Establishment of
KAGA (THAILAND)

Establishment of
TAXAN MEXICO

Completion of KAGA MICROSOLUTION’s
Fukushima Factory

１９６８

１９７８

１９８１

１９８３

１９９９

２００２

２０１７

２０１９

１９７３

１９８１

１９８３

１９９２

２０００

２００９

２０１９

２０２８

Arrival of
CB transceiver boom

Establishment of
TAXAN USA

Launch of TAXAN RGB
VISION,an own brand monitor

Establishment of
KAGA (H.K.)

Establishment of
KAGA COMPONENTS(MALAYSIA)

Establishment of
KD TEC in the
Czech Republic

KAGA FEI(former FujitsuElectronics) becomesconsolidated subsidiary

Aiming for sales
exceeding ¥1 trillion

13

Earnings Trends Over Past 10 Years
Management with an emphasis on profit has taken root in the Group since 2014, resulting in
an improvement in both operating income and the operating income margin.
The Company has aggressively carried out M&A since 2016, shifting to a growth trajectory.
We aim for an ongoing increase in revenue.

10,0009,000

1,000.0

Net Sales

5.3 %Operating income

4.2%

Operating income marjin

2.6%

8,000
7,000
6,000

2.5%

2.0%

3.2%

3,000

(billion yen)
255.1

245.3

1,000
0

5.1

2014

6.3

2015

6.8

8.1

2
542.6

495.8

555.0

-1
25.0

260

10.0

-2
-3

20.9

7.5

1
0

422.3
32.2

2,000
7.7

4

608.0

443.6

5

3

292.7

235.9

227.2

4.7

3.4%

Acquisition of
Fujitsu Electronics(currently Kaga FEI)

257.8

6

2.7%

Acquisition of
EXCEL

5,000
4,000

3.0%

2.3%

4.8

(%)

-4

11.4

-5
-6

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025
2028
(Forecasts) (Target)-7

14

The Group’s Strength‐①：Business Domain
Electronic part and Semiconductors

EMS

Sales agent activities for general electronic
components and semiconductors for customers
in Japan and worldwide

Providing total support for design, development,
and manufacture of products ranging from semifinished to finished products

Information Equipment

New Businesses

Supplying PCs and peripherals to domestic andinternational distribution channels, and serving
the network solutions field

Development, manufacture, and sale ofamusement-related products and software

Sales composition ratio

3.2%
66.5%

22.2%

8.2%
15

The Group’s Strength‐②：Global Network
Global EMS production system with 21 bases in 10 countries to respond swiftly andflexibly to customer needs.
∎ Production base：Shengzhen, Shanghai, Suzhou, Hubei∎ Sales base：Hong Kong, Shanghai, Dalian∎ Production： Czech, Turkey

China∎ Sales： Germany

Europe∎ Production base：Towada, Yamagata, Fukushima,
Niigata, Tokyo, Tottori∎ Sales base
：Tokyo, Nagoya, Osaka, etc

GermanySuzhouDalian
Korea
Dongguan
Shengzhen
ShanghaiHong Kong
TaiwanIndia Thailand Vietnam
Philippines
Malaysia
Hubei

TurkeySan Jose

ASEAN
Production base

ChicagoBostonMexicoIndonesia

Sales base

∎ Sales base
：San Jose, Chicago,
Boston, Los Angeles

The Americas

Japan

Czech

∎ Production base：Mexico∎ Production base：Thailand, Malaysia,
Indonesia, Vietnam, India∎ Sales base
：Korea, Taiwan, Hong Kong,
Singapore, Thailand, India
16

The Group’s Strength‐③：One-Stop Service
Not just contract manufacturing but offer one-stop service from sales toafter-sales support
Planning/Design/
Development

Components
Procurement/Kitting

EMS/Contract
manufacturing

Sales/Distribution

KAGA ELECTRONICS

Support/After-sales service

KAGA TECHNO SERVICE

KAGA DEVICES

KAGA MICRO SOLUTION
KAGA SOLUTION NETWORKKAGA AMUSEMENTAD DEVICE

DIGITAL MEDIA LAB

KAGA TECHKAGA SPORTS

EXCEL

EXCEL

KAGA AMUSEMENTKAGA EMS TOWADA/Kyokuto Electric

KAGA AEROSYSTEMSKAGA FEIKAGA FEI AMERICAKAGA (TAIWAN)
KAGA FEI (DALIAN)

TAXAN MEXICOKAGA COMP(MALAYSIA)KAGA (Shanghai) / KAGA (H.K.)
KAGA (THAILAND)/KAGA(VIETNAM)
KAGA (SINGAPORE)

KAGA（INDIA)KDTEC（Czech）/ KDTEC（Turkey）
17

KAGA’s Growth Scenario

Medium Term Management Plan 2024
(Extract from materials published on November 25, 2021)

Medium-Term Management Plan 2024：Summary
JPY 1 tn

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

Organic
growth+Further M&A
Challenges

Expansion of
trading company business

Increased
Sales

JPY

750 bnGrowth fields

Increased
ProfitRatio

Mobility
Communications
Environment

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

Qualitative improvement
through EMS business

Reinforcement and expansion of overseas business, EMS business

MedicalHealth care

（Net Sales）

Medium-Term Management Plan 2024
Further reinforcementof profitability

Reinforcement ofmanagement basePromotion of new
businesses

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

19

Medium-Term Management Plan 2024: Basic Policy
Basic policy and key issues/actions

Further
Reinforcementof Profitability

Predicting the era to focus on markets
with potential for high growth andprofitability

Reinforcementof Management
Base

Pursuit of further efficiency andsoundness, and transformation toa Group management foundation
worthy of "Japan’s No. 1 corporategroup in the industry"

Creation of New
Businesses

Active use of venture investments andM&As to create new businesses andstrengthen resistance to change inthe external environment

Promotion of
SDGs
Management

Promotion of management that seeks toachieve solutions to social issues andsustainable growth as a company• Selection and concentration in growth fields:
Mobility, Communications, Environment,
Industrial equipment, Medical/Health care
• Reinforcement and expansion of EMS
business and overseas business• Reinforcement of corporate governance• Efficient Group management• Investments in human capital• Initiatives in new fields• Promotion of open innovation throughventure investments• M&A efforts aimed at discontinuous growth(See “Medium-Term Sustainability Management
Plan” for details)

20Medium-Term Management Plan 2024：Business Portfolio*CSI: Consumer & System Integrator

Electronic Componens

EMS

CSI

Others（Excluding new M&A）
Net sales：7%

1,000

CAGR

Initial plan

CAGR

Net sales：20％
Net Sales：19％

JPY443.6bn
13.9
400

200

60

JPY750bn

800

600

Net Sales: 15％
Operating Income: 13％

70

JPY292.7bn
13.9

43.5

; Operating income：20％

Operating income：41％
JPY422.3bn
12.1

JPY495.8bn
12.5

48.4

93.3

99.6

44.3
JPY10.0bn
JPY7.5bn 292.9

89.5
145.0

JPY11.4bn
262.3

39.6
117.8
JPY20.9bn

325.8

New M&As
150.0

50

16.0
54.0

40

150.0
JPY30bnor higher

30
20

380.0
10

0

0
FY2018Results

FY2019Results

FY2020Results

FY2021Results

Medium-Term Management Plan 2021

FY2024
Management Targets
Medium-Term Management
Plan 2024

21

『Medium-Term Management Plan 2024』
Progress of Management targets


The Company formulated the three-year Medium-Term Management Plan 2024 in November 2021. Excluding the
new M&A element, management targets for all the three KPIs of net sales, operating income, and ROE set
for the final year of the Plan were achieved in the fiscal year ended March 31, 2023, the first year of thePlan. Based on the results of the first year, the Company updated its earnings forecast for the final year, andpresented them as the “latest outlook.”The earnings forecast for the fiscal year ending March 31, 2025, announced at this time deviates from the “latest
outlook” partly due to unexpectedly prolonged inventory adjustment and impact of salary increases.
Accordingly, the Company has positioned earnings forecast as “commitment” and the latest outlook as“challenging targets,” and will work toward accomplishment of the Plan in the final year.
First-year
results

Initial plan
(Announcedon November 25, 2021)

JPY

Net Sales

FY2023/3

Latest outlook(Announced on May 11, 2023)

Second-year
results

Final-year
earnings forecast

FY2024/3

FY2025/3

750.0 bn

Organic growth :JPY 600.0 bn
Including new M&As:

JPY

608.0 bn

542.6 bn

JPY

25.8 bn

JPY[No change]

JPY

30.0 bn or higher

JPY

555.0 bn

JPY 150.0 bn

Operating
IncomeROE

JPY

20.0 bn
Stable8.5% or higher

JPY

32.2 bn

19.6％

JPY

stable10.0% or higher

14.5％

26.0 bn

11.5％
22

Medium-Term Management Plan 2024 - Progress ofManagement Measures Overall, we expect to achieve initial targets through efforts on key issues as per our basic
policy.

Further
Reinforcement ofProfitability

key issues• Selection and concentration in
growth fields• Reinforcement and expansionof EMS business and overseas
business

Major outcome• Started operation of a new plant in
Mexico (April 2024)

Evaluation○• Established a special leave system for
Reinforcement ofManagement Base

• Reinforcement of corporate
governance• Efficient Group management• Investments in human capitalmale employees to take parental leave
Utilization rate of 73.7% (FY2024/3)• Group-wide salary increase decided○(March 2024)

Creation of New
Businesses• Initiatives in new fields• Promotion of open innovation
through venture investments• M&A efforts aimed at
discontinuous growth

Promotion of SDGs
Management*See the Progress of the Sustainability Medium- to Long-term Management Plan in thefollowing page.

• Investment in start-up companies
through CVC (5 cases in FY2023/3, 1
case in FY2024/3)△

23

A Sound Financial Foundation to Support Growth Strategies
Borrowing capacity▲ Net D/E ratio:▲ Cash position:- 0.21 times

JPY 66.5 bn▲ Commitment line: JPY

15.0 bn*End of March 2024

Capital efficiency▲ ROE: 14.5% ＞ Cost of shareholders’equity 10.6%

Cash generation ability▲ Total 3-year operating cash flow: JPY 58.4 bn*FY2021–FY2023▲ Use of cash: ① Growth investments② Shareholder returns③ Repayment of borrowing

Stability and credit rating▲ Equity ratio :*End of March 2024

Assumptions for calculations①Risk-free interest rate ：0.9%/10-year Japanese
government bond
②Market risk premium ：6.0%/TOPIX yield③β (beta)：1.6%/Five-year, monthly

52.6%▲ Bond rating :A (Stable)*Japan Credit Rating Agency, Ltd. (JCR)*FY2023 results

24Shareholder ReturnBasic Policy on
Dividends ofSurplus

We shall perform stable dividends, while securing a consolidated dividend payout
ratio of 25 to 35%.
We shall use funds for business investments, capital investments, and M&A, etc.
in order to contribute to future growth.
Decisions on the acquisition of treasury shares shall be made appropriately,in consideration of capital efficiency and share price, etc.
Total return trend：44.3%

25.6%

24.1%

■ Ordinary dividend■ Commemorative
dividend■ Special dividend

32.1%

35%

28.4%
25.0%

27.4%
19.3%

Total return trend：45.4%

Acquisition of treasury shares(JPY 1,499 mil)

25%

20.8%

※Including negative goodwill
JPY220
about JPY8 bn(Before share split)

JPY220 JPY220

70

JPY55

JPY60

10
30

15
40

20

FY2014
Results

FY2015Results

FY2016
Results

JPY40

32.8%

29.6%

28.6%

Acquisition of treasury shares(JPY 3,674 mil)

40

JPY70

JPY80

10

5
5

60
FY2017
Results

JPY70

JPY80

10

20

70

60

60

FY2018Results

FY2019Results

FY2020Results

JPY120

10

40

220

220

140
80
FY2021Results

FY2022
Results

FY2023Results

FY2024
Forecasts

25

KAGA ELECTRONICS’
Electronic Components Business

The Strengths of Kaga’s Electronic Components Business
Our strengths are our independence, meaning that we are not affiliated with any othermanufacturer, our global reach, which extends around the world, and the professional skillsof our technical teams.
As an independent
comprehensive trading
company, we have access to avast range of parts. We haveearned our customers’ trustand developed vast expertisein our 50 years of business.

• Kaga Electronics trades directly with more than
8,900 suppliers in Japan and abroad and morethan 10,700 customer businesses.
• As an independent trading company, we are notlimited in the goods that we carry. We use thisadvantage and our worldwide network to connect
large numbers of suppliers and customers andensure that customers get the optimal product in
the ideal form.

The power of a
global network

We utilize our ability to gather
information to foresee thefuture, as well as the power ofa Group working in a wide
range of fields.

• Kaga Electronics boasts a global network of morethan 60 companies around the world, including
North America, Europe, and Asia. Our Grouppower enables us to rapidly gather and deliver
the latest knowledge and unpublished informationthat is unavailable to our competitors.
• We also offer full support through our local
subsidiaries. We provide the solutions you need,
wherever you need them.

Technical
support system

Our experienced technicalteams can be counted on.
Our dependable system today
is the product of years ofearning trust.

• Our technical teams include field applicationengineers (FAEs) who are experts in the latest
technologies. We offer not only optimal products,
but also a sense of trust backed up by our trackrecord.
• This gives our customers peace of mind evenwhen using products developed by cutting-edge
venture companies that are not yet well known.

The advantage
of an
independent
trading company

27

Business Flow of the Electronic Components BusinessWe provide optimal solutions to customers through our cutting-edge
information network and our component procurement system, which leverage
the Group’s network.

Over 8,900

Over 10,700

Worldwide suppliersWith over 60 affiliatedcompanies
In the world

Japanese venders
Western venders

Customers

Collect the latest
information

The latest Information

RequestSelection

Parts selection to satisfy
customer’s needs

Order

ProcureProcure the best parts

Delivery

Asian venders

28

Portfolio by Industry in Electronic Component Business

Net Sales：JPY360.7bn
Medical3%

Other

Consumer

11%

5%

Information
26%

Telecommunication
5%
Industrial
10%

In-vehicle
Amusement

24%

16%

FY2024/3
29

EMS Business

The Strengths of Kaga’s EMS：Convenience Store EMS
Kaga Electronics globally deploys a “Convenience Store EMS” that is convenienceand valuable for its customers.
Japanese EMS vs Taiwanese / Asian EMS

Focus on High
Reliability

Focus is on Substrate
Installation
Strong areas ofJapanese EMS
SIIX
UMC
Kaga Electronics, etc

High Volume

Foxconn、
Pegatron、
Flextronics, etc.

Focus on Cost
Competitiveness

Strong areas of Taiwanese/ Asian mega EMS

Low Volume

Convenience Store EMS vs GMS EMS＜KAGA ELECTRONICS＞
・ Low initial investment(Land and buildings rented,
Standardized interior construction)
・ Capable high mix, low volume
production
・ Local production for local
consumption modelVS＜Japanese Major Competitors ＞
・ Large scale investment
・ Mass production type
Export model

Focus is on the
Assembly ofFinished Products
31

Introduction to Main Production Centers
With global production plants located in China, ASEAN, Europe, and the Americas, wehave the capacity for local production that meets the needs of customers. We provide
comprehensive support, including product design and development as well as highmix low-volume production, so that we can flexibly accommodate everything fromsemi-finished to finished products.
CHINA：KAGA(SHENZHEN)ELECTRONICS
OutlineEstablished：1999
Number of
employees：998

ASEAN：KAGA ELECTRONICS (THAILAND)
OutlineEstablished：2002
Number of
Employees：979

Production Items

Production Items

Automotive, Industrial,
OA, Amusement andcommunicationequipment

Automotive, OA, Air
conditioning andIndustrial equipment

AMERICA：TAXAN MEXICO
OutlineEstablished：2017
Number of
employees：478

EURO：KD TEC TURKEY
OutlineEstablished：2023
Number of
employees：163

Production Items

Production Items

Automotive, OA andIndustrial equipment

Electrical units for air
conditioners andSubstrates for electric
tools, Automotive
equipment substrates

32

Started a New Factory in Mexico to expand EMS Business In April 2024, the new Mexico plant began operation as initially planned.
 Aiming for ‘sales of 50 billion yen’ over the next 5 years to meet the growing production
demand that is expected for North and Latin American markets
 Launched "TAXAN-SWE MEXICO," a finished product assembly plant adjacent to the new plantin Mexico
We will establish an integrated production base that encompasses component molding, andsheet metal processing, in addition to circuit board assembly.

TAXAN MEXICO S.A. DE C.V.
Outline of the New Factory
Location：Parque Industrial
Millenium, Arroyos,
San Luis Potosí

Nomber of
Employees ：700（at start）
Land area ：80,000㎡
Floor area ：20,000㎡
Expected Investment Amount：total around 5 billion yen
over the next five years.
（includes the landpurchase and buildings）
Items produced
Assembly of automotive lighting
units and circuit boards for airconditioning equipment, etc.
Start of operation
Scheduled for April 2024

33

Major Products: In-vehicle Products
AC Inverter UnitsLighting Units for Automotive

Electrical Compressor Units

Automotive Navigation System34

Major Products: HVAC, Industrial, Medical related and Office Equipment
Air Conditioner Unit

Products for Electrical Tools

Medical Equipment

Substrate for Office Equipment＜Automated Medication Dispensing Cabinet＞
35

Portfolio by Industry in EMS Business
Net Sales: JPY120.4bn
Amusement

Telecommunication

3%

6%
Medical6%

Office Equipment

In-Vehicle

9%

37%

Consumer11%

Industrial
12%

Air-conditioner
16%

FY2024/3
36

Measures to Increase Competitiveness ‐①：
Increasing of Production Capacity
We will respond flexibly and nimbly to the movement to shift production out of China
due to the prolonged trade tensions between the US and China and the movement torestore domestic production to avoid exchange rate fluctuations and increasing labor
expenses.
Fukushima Factory

Amata Nakhon 2 nd Factory
Business Content

Business Content

Manufacture, repair,reuse, and recycling ofcommunications
equipment, PCs, andPC peripherals

Installation of substrates
for multifunction devices,
printers and automotive
related units

Operation start date

Operation start date

October 2019

December 2019

Malaysia Factory（Relocation）
Business Content
Various power supply
products and sanitaryequipment, industrial
equipment, andelectrical equipment
substrates for
consumer electronics

Turkey Factory（Relocation）
Business Content
Electrical units for air
conditioners andSubstrates for electric
tools, Automotive
equipment substrates

Operation start date

Operation start date

October 2022

June 2023

37

Measures to Increase Competitiveness ‐②：Strengthening Manufacturing Capabilities
Through the acquisition of Towada Pioneer Corporation (currently KAGA EMS TOWADA
CO., LTD.), we will further improve the quality level of the EMS business and improve
our competitive advantage compared to other competitors, by sharing the tangible
and intangible assets developed through many years as a specialist electronics
manufacturer, such as manufacturing know-how, exceptional production personnel
and equipment, jig design, and quality assurance systems.
We will also designate KAGA EMS TOWADA as the “mother factory” of the EMS
business, connect with overseas sites, promote overall
optimization, strengthen the
ものづくり力の強化
management framework, and improve business efficiency.
KAGA EMS TOWADA
Factory Outline
Address：15-1, MOTOMACHI HIGASHI 1-CYOME,TOWADA-SHI, AOMORI, JAPAN
Number of employees： 195【1st Factory】【2nd Factory】
7,201m2
Site area
22,363m2 Site area
Building area 10,719m2 Building area 2,545m2

Main production items
Circuit board mounting and electronic equipment
assembly and inspection◆Automotive related◆Medical device related◆Consumer product and industrial equipment
related, food processing equipment related, etc.

Acquisition date
October 201938

Measures to Increase Competitiveness ‐③：In-house Development of Manufacturing Equipment
We will provide customers with total substrate mounting solutions with overwhelming
cost competitiveness, high quality, and high reliability, by merging with major Chineseequipment manufacturers and developing, designing, and producing manufacturing
equipment.

Introduction of HATTEN Equipment
Modularsoldering baths
Product lineup①1-head unit ISF-300②2-head unit ISF-450-II③4-head unit ISF-450D④4-head unit ISF-4504H
Modular high-speed
soldering bath
⑤Modular flux applicator

SurfaceMounting
Equipment

Product lineup①CPM H2
Chip component mounting②CPM F2
Non-standard component
mounting③CPM/FH
Miniature chip component
mounting④HATTEN line
*Mass production
underway by Kaga in
Jiangsu

Testing
Equipment
Product lineup①3D SPI
Cream solder testing②Post-SMT AOI equipment
Visual inspection ofmounted components③Pre-soldering bath S-AOI
Inspection of handinserted components④Post-soldering bath AOISolder-lifting inspection
Component float inspection

Vertical Hightemperature
Furnaces

Product lineup①Coating hardening
furnace
After coating final
hardening②Potting hardening furnace
After potting final hardening③High temperature
deterioration testing
furnace
Product deterioration
testing39

Medium- to Long-Term Sustainability
Management Plan
(Extract from materials published on November 25, 2021)

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

1 We will tackle environmental issues through our business activities

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

2 We will respect human rights and develop human resources

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

3 We will work to build mutual trust with society

We will work to be a company that earns the trust of society by observing laws and regulations,by strengthening our governance structure, and by sincerely engaging in fair competition, theprovision of high-quality products and services, timely and appropriate information disclosure,and other corporate activities.
41

Materiality
The Kaga Electronics Group is committed to seriously addressing a variety of issues relevant not
only to itself but also communities around the world and thereby living up to the expectations ofsociety. In line with this commitment, the Group has employed four perspectives— Environmental(E), Social (S), Governance (G) and Business (B)—to identify priority issues that are deemed toexert significant impact on its business operations, as listed below. Through its efforts to tackle themateriality of these issues, the Group will practice corporate activities aimed at contributing to therealization of a sustainable society, with the aim of further improving its corporate value.
Materiality

E

Create a clean
globalenvironment

S

Create aninclusive company
as well as anaffluent societyG

Createa sustainable
management base

B

Realizesustainablebusiness growth

Related SDGs

Changes in the socio-economic
environment• Growing seriousness of global warming
and other environmental problems• Urgent call for carbon neutrality• Changes in social structure as we movetoward the popularization of the newnormal• Human resource shortages attributable
to a low birthrate and an aging
population• Public calls for more robust corporate
governance• Growing need for business resilienceagainst changes in the operating
environment• Progress in digital transformation• Coming of a “super-smart” society due
to the popularization of ICT, such as
IoT and AI• Intensification of global competition

Our initiatives• Provide products and services designed tohelp resolve environmental and energy
issues• Continue initiatives to reduce theenvironmental burden• Promote workforce diversity andinnovative work styles to better adapt to
the new normal• Develop human resources by passing
down and updating KAGA-ism• Further strengthen corporate governanceand compliance• Thoroughly practice a profit-focusedmanagement approach• Provide products and services that
contribute to the transition to a digitaldriven society• Create new businesses aimed at helping

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

Achievement of shift to100% renewable energy

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

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

2030: 100%

By 2024: Information
gathering/analysis and determinationof policy
・In-house power generation/external
procurement
・Solar panel/biomass power
generation/renewable energy
businesses

2030: 50%
2050: 100%

2024: 85% (78.5%)

2030: 100%

Diversity and humanresource management

Percentage of female newgraduates in general positions
2023: 30% (5.8%)
Percentage of women in
management positions
2024: 15% (13.3%)

Work–life management
and enhancement of
productivity• Enhancement of programs such as
childcare/family-care and telework• Acquisition of certification as a Healthand Productivity Management
Organization

2022: Implementation of review
2023: Certification

Restructuring the• Independent Outside Directors: atgovernance structure in
least 1/3
response to the revision of
the Corporate Governance • Establishment of Nomination and
Code and the reorganization
Compensation Committeeof Tokyo Stock Exchange

Further strengthening
the supervisory andoversight functions of
top management overbusiness execution• Diversification of the Board of
Directors• Full compliance with Corporate
Governance Code for Prime Market• Adoption of delegation-based
executive officer structure• Transition to structure of company
with committees

Long-term targets

2024: 40% (1%)• Ensuring diversity in core humanresources (Women, foreign
nationals, mid-career hires)• Initiatives to employ elderly workers
and persons with disabilities

S

G

Medium-term targets

2030: 30%
2050: 100%

Percentage of female
new graduates ingeneral positions
2028: 40%
Percentage of women in
management positions
2029: 17%2025: Certification byoutside party
2024 onward:
Continuation ofcertification

Performed in June 2021

By June 2022: Determination ofpolicyPerformed in November 2021

Setting of targets inline with next
Corporate Governance
Code revision

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

43Progress of medium- to long-term sustainability targets：
Environmental
Key themes

Issues to address and issues to examine

Main activities and progress in FY2022 / FY2023
FY2022: (1) Introduced 1.2% of total electricity
from renewable sources (2) Study on measures to‘achieve 40% in FY2024’• Adoption of renewable energy at domestic
sales offices

Achievement of shift
to 100% renewableenergyE• Adoption of renewable energy at domestic
manufacturing sites• Adoption of renewable energy at overseas
manufacturing sites

Shift to electricity forcompany-owned
vehicles• Switch to electric vehicles for domestic sales
vehicles (EV, HV, PHV, FCV)FY2023: (1) Introduced 5.1% of total electricity
from renewable sources (2) Decided to purchasenon-fossil certificates to achieve target of ‘40%
renewable energy in 2024’, and to quantify
greenhouse gas emissions and set a reduction
target in FY2024
FY2022：Calculated power generation to installsolar panels at sites in Aomori, Fukushima, andTottori. Started the detailed design.
FY2023:Installed solar power generation system in
Towada factory (December 2023) and Fukushima
factory (February 2024)
FY2022: Started to introduce renewable energyderived electricity using solar panels at sites in
China (Hubei) and Vietnam. Expected to cover
30%-50% of annual electricity usage at each site.
FY2023: Installed solar panels in Mexico newfactory (April 2024)
FY2022: The ratio of electric vehicles increased by
1.2pt year on year to 82.0% (as of March 31,2023).
FY2023: The ratio of electric vehicles increased by
3.0pt year on year (as of March 31, 2024)

44

Introduction of Renewable Energy Solar power generation facilities will be installed step by step to achieve 100% renewable energy.
 We continue to proactively install facilities for environmentally sustainable business growth.

KAGA EMS TOWADA CO.,LTD.

写真

Fukushima Factory

Generating capacity

Generating capacity

Annual energy
production

Annual energy
production

289,444kWh

Renewable energy
ratio

10～20％

写真

158,761kWh

Renewable energy
ratio

20～30％

Instruction period

Instruction period

December, 2023

February, 2024

Hubei Factory

Vietnam factory

写真

KAGA MICRO SOLUTION CO., LTD.

Generating capacity

Generating capacity

Annual energy
production

Annual energy
production

747,934kWh

Renewable energy
ratio

70～80％

写真

1,086,118kWh

Renewable energy
ratio

30～40％

Instruction period

Instruction period

November, 2022

April, 2022

Note: Renewable energy ratio indicates the projected percentage of renewable energy
in total consumption at each site.

45

Progress of medium- to long-term sustainability targets：Social
Key themes

Diversity andhuman resource
management

Issues to address and issues to examine

 Ensuring diversity in core humanresources (Women, foreign nationals,
mid-career hires) Percentage of female new graduates in general
positions based on hiring activities as per the
Action Plan
FY2022: 4 females out of 22 new graduates ingeneral positions, up 12.3pt year on year to 18.1%
FY2023: 5 females out of 23 new graduates ingeneral positions, up 3.6pt year on year to 21.7%.
Fell below the target of 30%, despite a 3.6-pt
year-on-year increase to 21.7%
 Discussions held within the group to improve
percentage of women in management positions
and set targets for the number of women in
management positions at each group company.
FY2022: 16.5%, up 3.2pt year on year
FY2023: 17.4%, up 0.9pt year on year

 Initiatives to employ elderly workers andpersons with disabilities

FY2022: Employment of persons with disabilities is100% of the legally mandated rate (as of March 31,2023)
FY2023: Employment of persons with disabilities is100% of the legally mandated rate (as of March 31,2024) Enhancement of programs such as
childcare/family-care and telework

FY2022: Revised regulations and rules to maketelework a permanent system
FY2023: The new rules took effect in April 2023.

 Acquisition of certification as a Healthand Productivity Management
Organization

FY2022: Certified in March 2023
FY2023: Certified for two consecutive years in
March 2024

S

Work–life
management
and enhancementof productivity

Main activities and progress in FY2022 / FY2023

46

Progress of medium- to long-term sustainability targets：
GovernanceKey themes

Restructuring thegovernance structure
in response to therevision of the
Corporate
Governance Codeand thereorganization ofTokyo Stock
Exchange

G

Issues to address and issues to examine Independent Outside Directors: at least
1/3
 Establishment of Nomination andCompensation Committee Diversification of the Board of Directors

 Full compliance with Corporate
Governance Code for Prime Market

Main activities and progress in FY2022 / FY2023
FY2022: Effective June 2023, 6 directors(including three outside directors), with a majorityof directors being outside directors. Establishedthe Nomination and Compensation Committee.
FY2023: Adopted a 6-director structure (including
3 outside directors) at the June 2023 generalshareholders' meeting
FY2022: Decided to nominate a female candidate
as a new outside auditor. Continued to work to
appoint a female director.
FY2023: Appointed a female outside director at
the June 2023 meeting. Deferred a proposal toappoint a female director at the June 2024
meeting
FY2022: TCFD-compliant information to bedisclosed from June 2022.
FY2023: CG Code not revised
FY2022: Implemented from April 2022.

Furtherstrengthening thesupervisory andoversight
functions of top
management overbusiness execution

 Adoption of delegation-based executive
officer structure Transition to structure of company withcommittees

FY2023: Decided to expand the membership of
the Group management committee to adelegation-based executive officer structure
effective in April 2024
FY2022: Continue the company-with-auditors
system, but shorten the term of directors from thecurrent 2 years to 1 year (in June 2023).
FY2023: Continued the company-with-auditors
system. Discussed to move to a company-withaudit and supervisory committee structure, given
the need for speedy management andappointment of female directors

47

References

Latest 5 years Financial Trends
Operating Income

Net Sales （billion yen）
1H

443.6
230.6

1H

Full-year

422.3

495.8

223.0

188.8

2020/3608.0

2021/32022/3

298.7

Cash Flow
CF from Operating activities
Free Cash Flow

30.5
25.7

22.4
18.7

10.0

2024/326.4

576.4618.3

415.0713.8
8.3

213.21Equity ratio

ROE（％, billion yen）

Equity ratio■ Equity

78.2

38.4

90.9

38.8
105.6

45.3
129.6

52.6

■Financial leverage■Total asset turnover■Net profit margin

7.6
150.8
6.6
2.1
2.7

2020/3 2021/3 2022/3 2023/3 2024/3
-1.5
-8.3

774.61

2020/3 2021/3 2022/3 2023/3 2024/3

37.7
9.9
7.5

4.4

878.652020/3 2021/3 2022/3 2023/3 2024/3（billion yen）

29.3

11.4

（yen）

25.8
20.9

5.2

2023/332.2

Full-year

542.6
275.0

EPS

（billion yen）

1.3

2020/3 2021/3 2022/3 2023/3 2024/3（％, times, turns）
ROE
Cost of Equity

13.5

15.7

19.6

14.5

8.1

7.5

8.1

10.6

1.9

1.9

2.2

2.6

2.6

2.4

1.9
2.0

2.7

3.1

3.8

3.7

2020/3 2021/3 2022/3 2023/3 2024/3

49

Other IR Information●Investor Relations Website
https://www.taxan.co.jp/en/ir/●Integrated Report 2023
https://www.taxan.co.jp/en/ir/ir_librar
y/library_05.html● IR Information Services

https://www.taxan.co.jp/en/ir/irmail/index.html

“Everything we do isfor our customers
20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Office
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail： webmaster@taxan.co.jp
https://www.taxan.co.jp■ Forward-looking statements in these materials are based on information available to management
at the time this report was prepared and assumptions that management believes are reasonable.
Actual results may differ significantly from these statements for a number of reasons.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.