TAXAN V, a retreat facility owned by the Kaga Electronics Group

Kaga Electronics Group

Integrated Report

Contact: Investor Relations & Public Relations Office
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2022

INDEX
Focus of our Integrated Report 2022
Corporate Philosophy .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Our Origins

2

The Origins of the Kaga Electronics GroupThe Timeline of Our Growth Driven by the Kaga Spirit. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

3

The Kaga Electronics Group’s Value Creation Approach
Our Hard-Earned Business Strengths Coupled with a
Solid Operating Base Encompassing Regions around the Globe.  .  .  .  .  .  .  .
Value Creation Process.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

Our Value Creation Model

59Message from the CEO

11

Message from the COO

13Medium- to Long-Term Sustainability Management Plan.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 19

Our Medium-Term
Management Plan

21

Message from the CFO

Corporate Philosophy

Special Feature
The Kaga Electronics Group’s Growth Drivers
Accelerating the EMS Business.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 23
Utilization of Core Human Resources and Progress in PMI. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 27

Our Medium- to
Long-Term Sustainability
Management Plan

Roundtable Discussion of Outside Directors
How We Help the Kaga Electronics Group Realize
Sustainable Growth.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 30

33

Financial Highlights
Outline of Business Segments

Status of Development andUtilization of Core Human
Resources and PMIElectronic Components. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 34
Information Equipment. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 35
Software Business / Other Business .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 36

ESG Information
Directors and Auditors.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 37
Corporate Governance.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 39
Internal Control / Compliance .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 42
Together with Our Employees. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 43

Outline of
Our Financial Discipline

Together with Our Customers. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 45
Together with the Community. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Together with the Earth.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 47
Financial and Corporate Information
11-Year Financial Summary.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 49
Analysis of Financial Condition and Results of Operations. .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 51

Future Plans for the
EMS Business

Period covered
This report covers the fiscal period from April 1, 2021 toMarch 31, 2022, except certain parts that include
information prior and subsequent to these dates, as required.
Financial figures
Figures related to financial content in this report are
rounded to the nearest unit. Ratios are rounded to one
decimal place after calculation in yen.

1

KAGA ELECTRONICS CO.,LTD.

Everything we do
is forour customers
Founded about 50 years ago, Kaga Electronics Co., Ltd. hadvery humble beginnings, starting out in a very small office.
We have since grown into a general electronics trading
company with operations that now span the globe. Our
corporate philosophy, “Everything we do is for ourcustomers,” has remained unchanged since our earliest
days. Based on this philosophy, we will keep contributing to
the creation of an affluent society by continuing to support
the development of our customers.

Consolidated Balance Sheet .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 53
Consolidated Statement of Income and Comprehensive Income 	������������� 55
Consolidated Statement of Cash Flows.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 57
Corporate Information.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 59

Scope of report
Data calculation in this report covers Kaga Electronics
Co., Ltd. and its 63 consolidated subsidiaries (23 in Japanand 40 overseas).
All such companies are included in the scope of theCompany’s consolidated accounting, except where stated.
Notation and coverage of the Company: Kaga Electronics
Co., Ltd.
The Group: Kaga Electronics Co., Ltd. and its 63
consolidated subsidiaries
Domestic facilities: Kaga Electronics Co., Ltd. and its 23
domestic consolidated subsidiaries

Forward-looking statements
Certain statements in this document may constitute“forward-looking statements.” Such statements are basedon currently available information and certain premises
deemed rational at the time of writing. As such, actual
results may differ from those projected due to various
factors. Key factors that could cause actual results to differ
from those projected include, but are not limited to, general
economic conditions in Japan and overseas surrounding
the Company’s business domains, as well as trends indemand for the Company’s products and services, andtrends in foreign exchange rates and stock markets.

Integrated Report 2022

2

The Origins of the Kaga Electronics GroupThe Timeline of Our Growth Driven by the Kaga Spirit

Kaga Spirit(The Words of Isao Tsukamoto)

Personal connections areintangible assets
The Kaga Electronics Group is capable ofresponding quickly and accurately to changes inthe business environment and customer needs
to drive continuous growth. This ability stems
from the personal connections, or businessnetwork, we have built up over the years basedon relationships of trust with customers andsuppliers. These relationships form a vital partof our management foundations in conducting
business as a trading company. The idea that“personal connections are intangible assets”
has been passed down over the years as one ofthe pillars of what we call KAGA-ism, theessence of who we are.

Never say “no”
Based on the motto “Never say ‘no’,” the Kaga
Electronics Group has been expanding its
business domain from parts procurement tokit-parts sales and even contract production,planning and development, and maintenanceservices, while enhancing the lineup of products
to meet customer needs. The origins of ourglobal “one-stop service system,” an enduring
strength of the Company, lies in this customerfirst approach.

An organization driven
by communication
In order to ensure our ability to quickly seize
opportunities amid a changing businessenvironment full of future uncertainty, it isimportant to have a corporate culture thatmakes maximum use of the individual
capabilities of our personnel. Based on thisphilosophy, the Kaga Electronics Group is
working to build an open workplace thatencourages different ways of communicationto achieve common goals.

Inventory is a liability
In our earliest days, a lack of ample working
capital forced us to place each order for
products after receiving an order from acustomer. This gave birth to the idea that“inventory is a liability,” which has evolved into acurrently held principle for how we receive andplace orders, a critical feature of the Company.
Responding as quickly as possible to orderinformation has enabled us to build win-win
relationships with customers and suppliers.

People are a finite asset;
companies are perpetual entities
The Kaga Electronics Group continues to tackle
new challenges with a view that there is no end
goal to corporate activities based on thephilosophy that “people are a finite asset;
companies are perpetual entities.” Pursuing
aggressive M&A activities and developing new
products and services that resolve social issues
are some of the initiatives we are undertaking
to drive sustainable growth. We will remaincommitted to pushing the envelope as a Group
as we head toward a century in business.

3

KAGA ELECTRONICS CO.,LTD.

Pursuing Proactive
Global Expansion sincethe 1980s

Achieving Business
Expansion by Swiftly
Adapting to Changes
Having started out as a handyman businessbased in Akihabara, Tokyo, with an officespace of less than 7 m2, we achieved
business expansion thanks to surging
electronics parts demand in the wake of
rapidly growing popularity of CB transceivers
and the arcade game Space Invaders in the
1970s. In 1980, our net sales exceeded ¥10billion. Moreover, we became a supplier ofmask ROMs for use in Family Computer, amega-hit gaming unit, in 1983, thus making
an entry into the field of game software forhousehold gaming devices.

In 1981, our TAXAN brand monitors,
developed in-house for use with Apple
computers, achieved considerable sales athome and abroad. Building on this success,we launched our first overseas base in the
United States and, in 1985, establishedanother in the United Kingdom, significantly
accelerating the pace of our overseas
expansion. In 1986, KAGA ELECTRONICS
stock was listed on the Second Section of theTokyo Stock Exchange. In the 1990s, we began
proactively penetrating Asian markets outside
Japan, to this end securing our first regional
foothold in Hong Kong in 1992. In 1995, weentered the Taiwanese market, which, in turn,contributed to a major sales increase. In 1997,
our listing on the Tokyo Stock Exchange waspromoted to the First Section. In 1999, welaunched KAGA (SHENZHEN) ELECTRONICS
LTD., our first factory concurrently serving as
an overseas EMS base.

Net sales(Billions of yen)
4,500Entering the 2000s, we expanded our overseas network of EMS production bases,
which had previously been centered in China, by establishing facilities in Malaysia,
Thailand, the Czech Republic, Indonesia, Mexico, Vietnam, Turkey and India. In
Thailand, we eventually built two bases. At the same time, the number of our bases in
China grew to four. During the course of these endeavors, our net sales exceeded¥100 billion in 2001 and ¥250 billion in 2006. From 2019 onward, we executed a rapid
series of M&As, with KAGA FEI CO., Ltd. , KAGA EMS TOWADA CO., LTD. , EXCEL
CO., LTD. and Kyokuto Electric CO., Ltd. made into Group
companies. Having pursued M&As over the past
several years, we have now entered a
Aiming to achieve
second growth phase and are aiming for
Aiming to achieve net
target net sales ofnet sales of ¥750 billion in 2025 on thesales ofroad to net sales of ¥1 trillion in 2028,
the 60th anniversary of our founding.

¥750

Net sales exceed

3,500
3,000

Net sales exceed

2,500

billion

¥10

2,000

¥50

billionTransitioned to the Prime Market of the Tokyo Stock Exchange

¥1

¥100

¥250

¥400

Acts as a sales agency handling general electronicparts, semiconductors and other offerings forcustomers at home and abroad.

EMS businessbillionbillionbillion

Provides comprehensive solutions supporting thedesign, development and manufacture of products
ranging from semi-finished to finished products.

billionPromoted to the First
Section of the Tokyo
Stock Exchange

Stock listed on theSecond Section of theTokyo Stock Exchange

1,500Electronic components businesstrillion

Net sales exceed
Net sales exceed

Net sales exceed

4,000

The Kaga Electronics Group’s Business Fields

Proactively Securing Overseas EMS
Production Bases and Executing
M&A from the 2000s onward

Information equipment business

1,000
500
0

’68 ’69 ’70 ’71 ’72 ’73 ’74 ’75 ’76 ’77 ’78 ’79 ’80 ’81 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22

‘25

2028

Since 1968

From 2000 onward

Sep. 1968 	KAGA ELECTRONICS CO., LTD. founded at 3-8-3 Soto-Kanda, Chiyoda-ku, Tokyo, with paid-in
capital of ¥1 million
Mar. 1980 	Net sales exceed ¥10 billion
Jul. 1981 	TSK ELECTRONICS CORPORATION established in the United States
Dec. 1985 	Stock registered on the Japan Securities Dealers Association as an over-the-counter company
TAXAN (UK) LTD. established in the UK
Dec. 1986 	Stock listed on the Second Section of the Tokyo Stock Exchange

Jun. 2000 	KAGA COMPONENTS (MALAYSIA) SDN. BHD. established in Malaysia
Aug. 2000 	KAGA (SHANGHAI) ELECTRONICS CO., LTD. established in China
Mar. 2001 	Net sales exceed ¥100 billion
Apr. 2002 	KAGA ELECTRONICS (THAILAND) COMPANY LIMITED established in Thailand
Dec. 2003 	KAGA ELECTRONICS (USA) INC. established in the United States
Aug. 2006 	KAGA (DALIAN) ELECTRONICS CO., LTD. established in China
Apr. 2009 	KAGA (EUROPE) ELECTRONICS LTD. established in the UK
KD TEC s.r.o. established in the Czech Republic
Mar. 2014 	Transferred to current Head Office building (company-owned building)Jan. 2017 	TAXAN MEXICO, S.A. DE C.V. established in Mexico
Jul. 2017 	KAGA ELECTRONICS (VIETNAM) CO.,LTD. established in Vietnam
Sep. 2018 	KAGA ELECTRONICS (INDIA) PRIVATE LIMITED established in India
Jan. 2019 	Fujitsu Electronics Inc. (currently KAGA FEI Co., Ltd.) made into a Group company
Oct. 2019 	Towada Pioneer Corporation (currently KAGA EMS TOWADA CO., LTD.) made into aGroup company
Apr. 2020 	EXCEL CO., LTD. made into a Group company
Nov. 2020 	Kyokuto Electric Co., Ltd. made into a Group company
Apr. 2022 	Transitioned to the Prime Market of the Tokyo Stock Exchange

1990–
Mar. 1991 	Net sales exceed ¥50 billion
Jun. 1992 	KAGA (H.K.) ELECTRONICS LIMITED established in Hong Kong
Jul. 1994 	KAGA (SINGAPORE) ELECTRONICS PTE. LTD. established in Singapore
Feb. 1995 	KAGA (KOREA) ELECTRONICS CO., LTD. established in the Republic of Korea
Dec. 1995 	KAGA (TAIWAN) ELECTRONICS CO., LTD. established in Taiwan
Sep. 1997 	Promoted to the First Section of the Tokyo Stock ExchangeJul. 1999 	KAGA (SHENZHEN) ELECTRONICS LTD. established in China

Supplies PCs and PC peripherals to domestic andoverseas distribution channels while providing LED
lighting installation services and accommodatingproduct needs in the network solutions field.

Other business

Operates a PC recycling business in addition to handlingthe development, manufacture and marketing of
amusement-related hardware and software as well as
the sale of golf supplies and other operations.

Integrated Report 2022

4

The Kaga Electronics Group’s Value Creation Approach

Our Hard-Earned Business Strengths Coupled with a Solid
Operating Base Encompassing Regions around the Globe
Overview of Our Primary Business
Segments as Defined under the
Medium-Term Management Plan

Electronic components: EMS business
The Kaga Electronics Group utilizes
production facilities in China and other partsof Asia as well as in Europe and theAmericas in a production system that allows
us to manufacture in regions that best suit
our customers. In addition to the design anddevelopment of products, we have developed
a total support system that is geared toflexibly meet different demands from highmix, low-volume production and semifinished to finished products. Moreover, ourglobal supplier network enables us topropose optimal alternative parts andmaterials that best suit each customer.

Information equipment

The Kaga Electronics Group carries out thefunctions of a sales agency in providing such
establishments as domestic consumer
electronics mass retailers, camera stores,
general companies and educational institutes
with PCs and PC peripherals made by major
Japanese and overseas brands. In addition, weoffer a one-stop service for network solutions
from the proposal to the construction andmaintenance of local area network (LAN)systems, security systems and eco-friendly
energy systems for corporations andgovernment agencies.

OthersIn addition to the planning, manufactureand sale of amusement related equipment
such as arcade amusement machines, theKaga Electronics Group produces commercials,
movies and animated content as well as
original content using advanced computer
graphics technology. Our diverse businessalso includes environmentally friendly PC
reuse and recycling, and the retail andwholesale of golf supplies.

5

KAGA ELECTRONICS CO.,LTD.

Comprehensive capability in the electronics field

Connect vendors around the world with customers and deliver the best possible
products in an optimal way, to this end taking full advantage of our strengths as anindependent trading company free of restrictions on the products it can handle

Strengths Nurtured over the Course of More than 50 Years of Operations

Electronic components: electronicparts and semiconductor businessIn this business, we provide a wide rangeof electronics-related components andmaterials that include semiconductors,
general electronic parts, LEDs, sensors
and liquid crystal displays. We leverage
our network of more than 60 companies in
the United States, Europe, Asia and otherparts of the globe to deliver world-classparts and components to customers. Our
exceptional support system enables us tomeet the needs of customers globally.

Strength (1)Strength (1)Comprehensive capability
in the electronics field
The strength of the Kaga Electronics Group lies in the broad range of products and services
it handles. We meet a wide variety of needs by providing modules and finished products inaddition to electronics-related components and materials as well as hardware, software andsystems. Our business covers everything from large-lot consumer goods to small-lot
industrial devices. This comprehensive capability enables us to deliver one-stop services tomeet customer needs with exceptional precision.

Procurement capability that can be furnished only by anindependent trading company backed by hard-earned trust andknow-how accumulated over the course of more than 50 years
More than

2,000

More than

4,000

vendorsaround the world

Software

Others0.6%

3.9%¥2.7 billion¥19.5 billion

corporate

customers

More than 60
affiliated companies

vendorcustomerJapanese vendors
European and
U.S. vendors

Consolidated
net sales¥495.8Gathering oflatest information

Latest information

Consult

SelectSelection of parts and materials
that satisfy requirements

Order

Asian vendors

billion(Year ended March 31, 2022)

Informationequipment

Electronic
components

8.0%

87.5%

¥39.6 billion¥433.8 billion

Sales Composition by Segment

Strength (2)Global network capability
We provide peace of mind to customers
and instill confidence through our sales
and production network, which spans 16
countries and regions worldwide, as
well as our global procurement andinformation-gathering competencies that
we have built up over 50 years, which havebeen reinforced by the addition to theGroup of KAGA FEI Co., Ltd. and EXCEL
CO., LTD.

Strength (3)One-stop
solution capability
The Kaga Electronics Group, as anindependent general electronics trading
company, has been expanding its businessdomains in accordance with customer
needs. At present, Group companies
worldwide are working together to build a“one-stop service system” that transcends
the boundaries of a trading company andcovers everything from upstream
processes, including planning and designin addition to parts procurement, todownstream maintenance services. By
doing so, we are providing diverse added
value to customers.

ProcureProcure optimal parts

DeliverLong-nurtured capability as a trading company to realignoperations to reflect the changing times

Integrated Report 2022

6

The Kaga Electronics Group’s Value Creation Approach

Strength (2)Global network capability

Strength (3)One-stop solution capability

Supporting customers’ business development by securing a one-stop
support structure that rallies the resources of the entire Group

Aiming to Win Global Competition as a General Electronics Trading Company

A total of 63 companies,
40 companies in 16 countries
abroad and 23 companies in Japan,
comprise the Kaga Electronics Group

KAGA MICRO SOLUTION
Yamagata Site

KAGA EMS TOWADAKAGA MICRO SOLUTION
Niigata Site
Sendai Sales OfficeGunma Sales OfficeNiigata Sales Office
Suzaka Sales Office
Hokuriku Sales Office
Matsumoto Sales Office
Kyokuto Electric Yabase, Urayasu and Nakayama factories

KAGA MICRO SOLUTION
Fukushima Site
Mito Sales Office
Toride Sales Office
KAGA ELECTRONICS Head Office /Head Office Annex

Hiroshima Sales Office
Fukuoka Sales Office

Shin Yokohama Sales OfficeOsaka Sales Office omestic Sales BasesDGroup Sales Bases in Japan
Group Production Bases in Japan

In addition to contract production, the Kaga Electronics
Group’s strengths enable it to provide one-stop services
covering sales through after-sales support

Nagoya Sales Office

Kita Kanto Sales OfficeHamamatsu Sales OfficeNumazu Sales Office

Shizuoka Sales OfficeSince its founding in 1968 as an independent electronics trading company, the Kaga Electronics Group has provided optimal
solutions to issues that meet its customers’ requirements, which have evolved over time. Today, operating in the four primarybusiness segments of electronic parts and semiconductors, EMS business, information equipment and others, KAGAELECTRONICS has a structure for delivering products to its customers in the regions where they are needed through its
network of suppliers and production plants spanning North America, Europe and Asia. In order to respond to customer
requests more quickly and flexibly, KAGA ELECTRONICS supports its customers’ business development through a one-stop
support structure offering everything from planning consultation to engineering development, the contracting of high-mix,
low-volume production for both semi-finished and finished products, and from sales to after-sales services, leveraging thespecializations of Group companies while collaborating together.

Planning, development
and design
Germany

Chicago

The Czech Republic
DalianTurkeyIndia

SuzhouHubei
ShenzhenHong Kong

Thailand
Malaysia

Sales and distribution

Support andafter-sales services

BostonShanghaiTaiwanKAGA ELECTRONICS Co., Ltd.

MexicoKAGA TECHNO SERVICE CO., LTD.

KAGA DEVICES CO., LTD.

VietnamSingapore

KAGA MICRO SOLUTION CO., LTD.
KAGA SOLUTION NETWORK CO., LTD.

 roup Sales Bases Overseas
GGroup Production Bases Overseas

Meeting customer needs in a swift and flexible manner by taking full advantage of ourglobal EMS production system, which encompasses 21 bases in 10 countries
Europe

China

Japan

• Garner a growing volume of orders for
subcontracting associated with air
conditioner-related products on the back oftightening regulations on CO2 emissions• Newly establish a circuit board mounting
facility in Turkey, thereby shifting from ourconventional Asia-centered production
system and meeting demand in Europe• Initiate the introduction of solar panels toutilize renewable energy•P romote cost reductions via a shift toin-house production (automated facilities,
wire harness assemblies, etc.)•A growing number of customer production
bases are now shifting to Japan, ASEAN, theAmericas and Europe• Enhance the Towada Factory’s functions as a global motherplant• Accommodate demand arising from a shift to domestic
production in the face of the depreciation of the yen and thetrend toward the shortening of logistics distances• Garner a growing volume of orders associated with
automotive equipment, industrial machinery, airconditioners and medical devices

Americas

ASEAN• A growing number of customer production bases are now shifting from
China and ASEAN nations• Garner a growing number of orders for subcontracting from new customers
based in Europe and the United States• Robust demand associated with air conditioners, automotive equipment andoffice automation equipment• Focus on developing new customers in the Indian market, which boasts
potential for demand growth

KAGA ELECTRONICS CO.,LTD.

EMS andcontract production

San JoseSouth Korea

Indonesia

7

Parts procurement
and kitting

SANKOH ENGINEERING CO., LTD.

KAGA AMUSEMENT CO., LTD.

AD DEVICE CO., LTD.

KAGA AMUSEMENT CO., LTD.

DIGITAL MEDIA LAB., INC.

KAGA TECH CO., LTD.

KAGA SPORTS CO., LTD.

EXCEL CO., LTD.

EXCEL CO., LTD.

KAGA EMS TOWADA CO., LTD. / Kyokuto Electric Co., Ltd.
KAGA FEI Co., Ltd.
KAGA ELECTRONICS (USA) INC.
KAGA (DALIAN) ELECTRONICS CO., LTD.
KAGA (TAIWAN) ELECTRONICS CO., LTD.

TAXAN MEXICO, S.A. DE C.V.
KAGA COMPONENTS (MALAYSIA)
SDN.BHDKAGA (SHANGHAI) ELECTRONICS CO., LTD. / KAGA (H.K.) ELECTRONICS LIMITEDKAGA ELECTRONICS (THAILAND) COMPANY LIMITED / KAGA ELECTRONICS (VIETNAM) CO., LTD.
KAGA (SINGAPORE) ELECTRONICS PTE. LTD.

KAGA ELECTRONICS INDIA PRIVATE LIMITEDKD TEC s.r.o. / KD TEC TURKEY ELEKTRONIK

Integrated Report 2022

8

The Kaga Electronics Group’s Value Creation Approach

Value Creation Process

Guided by its corporate philosophy of “Everything we do is for our customers,” the Kaga Electronics Group has achieved
growth by exercising a venturesome spirit that leads it to seek opportunities emerging from changes in society. Under the
Medium-Term Management Plan 2024, the Group is currently pursuing quantitative growth via the electronics trading company
business while expanding its EMS business, which aims to contribute to qualitative growth in profit. Through these two
endeavors, the Group strives to raise its net sales to ¥1 trillion and become a competitive world-class company. This is how wedeliver greater environmental and social value via our business operations.

Medium- to Long-Term Sustainability

Management Plan

Medium-Term Management Plan 2024
Further enhance our earnings power

Everything we do isfor our customers
Materiality

Strengthen management foundations

Expand our economic value
Create new businesses

G: B uild sustainable management foundations
B: R ealize sustainable business growth

Net sales ofDistribute value tostakeholders¥750.0

Suppliers
Total value of products procured¥426.6 billion

E: H elp create a clean Earth environment
S: Offer an employee-friendly workplace while
contributing to a flourishing society

Basic strategy

Expand trading company business to drive
further growth in the EMS businessbillion

Employees

Risks and Opportunities¥18.5 billion

Risks

Opportunities

Reduced significance ofGeneration of new
existence as a trading
demand and market
company and loss offor EMS business
commercial rights
Shortage of humanresources andsoaring labor costs

Increased
environmental cost

Growing need forfurther automationand efficiency
Growth of energysaving and eco
markets

Total amount of dividends paid

Automotive

Growthfields¥3.1 billion

Creditors
Expansion

Enhancement of valueof trading company businessdelivered through the EMS business

Enhancement and expansion of the overseas business and the EMS businessTotal amount of interest paid

Human capitalIntellectual capital

Manufacturing capitalGroup employees

Technical staff

Our own manufacturing sites

companies

7,959

1,613

Growthinvestment

Utilize

Secure stable management foundations

Customers

7,500

Medicaland healthcare¥5.6 billion

M&As and other business activities,
are strengthening non financial capital andpropelling our basic strategy forward
Social capital

21

worldwide

Aim to become acompetitive
world-classcompany

Total amount of corporate taxes paid

Financial capital

Nonfinancial capital

Factory
automation (FA)¥0.3 billion

Government andadministrative agencies

in conjunction with the 60th
anniversary

Communications

Total amount of wages andbonuses paid

Increased
profitratio¥1trillion

Environmental

Shareholders
Increased
sales“Challenge 1.60”

Achieve net sales ofBecome “the Japanese industry’s
No. 1 corporate group”
Autonomous growth + Inorganic growth driven by new M&As, etc.

Promote SDG-oriented management

ROE

15.7

D/E ratio%

0.48

Net D/E ratio

0.1

Deliver greater
environmental andsocial value

Equity ratio

38.8

%

Strengthen
nonfinancial capital

9

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2022

10

Message from the CEO

Isao Tsukamoto
Representative Director,
Founder & CEO

An entrepreneurial spirit that seeks toleverage each first-mover advantage isembedded in the DNA of KAGA ELECTRONICS
The world changes and needs for products and services
can completely transform overnight. General trading
companies—like ourselves—capable of assessing the newissues their customers are confronting and swiftly
delivering solutions, are the best positioned to thrive in
evolving times like this moment. The success of theseendeavors typically hinges on employees who are unafraidof taking risks, quick to move and good at tackling newchallenges in a way that leverages a first-mover advantage.
Since its founding, KAGA ELECTRONICS has upheld amanagement approach focused on minimizing inventories
and maintaining a smooth flow of products. This has, inturn, made us quite resilient against changes. Thanks tothe strength afforded by this approach, we have always
been able to turn crisis into opportunity instead of being
swept away by the waves of history.
How is it that we manage to ride the waves of the time?
The secret lies in our focus on listening closely to ourcustomers. In line with our corporate philosophy,

11

KAGA ELECTRONICS CO.,LTD.

“Everything we do is for our customers,” we have always
carefully listened to customers and done our utmost to
help them resolve the issues they confront. Quite often, it
has been this very act of listening to our customers thathas enabled us to identify the needs and issues society as awhole is confronting. Thus, helping resolve these needs andissues has not only resulted in our customers’ success but
also led us to a growth path. I am convinced that now isexactly the time for us to achieve further growth by fully
taking advantage of this approach.
For us to remain capable of addressing the issues ourcustomers are confronting, we need to be apprised of theircircumstances. This means that everyone at the Kaga
Electronics Group must be ready to spontaneously takeaction to gather intelligence in the course of striving toraise sales, launch new businesses and improve products.
Being sensitive to customer circumstances on a daily basis
will, in turn, better position us to meet that person who will
provide us with a tip or enable us to catch it ourselves. Thisis how we obtain real-life market insight while expanding
our network.
An entrepreneurial spirit of this kind is embedded in the
DNA of KAGA ELECTRONICS. Although I currently fill the
position of Chairman, I am always mindful of where to seek

Getting back to the basics, we will takefull advantage of the strength afforded by
our DNA of trying new businesses with
open ideas

out seeds of exciting new businesses. As a matter of fact, I
would rather position myself as a KAGA ELECTRONICS
salesperson for the rest of my life. Also, our employees areequipped with a flexible mindset and the ability to act, bothof which are essential to developing business operations.
That is why I believe they have infinite possibilities.

We remain a company that cherishes
employees and considers them an
indispensable asset
At the Kaga Electronics Group, every employee isconsidered a most valuable asset. Human resources are
essential to any type of corporations. This also applies toour partners and the suppliers we engage with in thecourse of business.
In a time of change, we may meet new customers amongplayers from entirely different sectors or fields. This is why
we deem it necessary to cherish every new encounter.
Furthermore, we are always thinking about what we canoffer them, rather than being focused solely on what they
can offer us. These are the ways we seek out seeds of new

businesses and generate synergies.
KAGA ELECTRONICS maintains two sets of employee
action guidelines called “F. Y. T.” and “3G.”“F. Y. T.” consists of FLEXIBILITY (flexibility to align withchanges in the market), YOUNG (young mindset and ability
to act) and TRY (try courageously). Meanwhile, “3G” stands
for GENERAL (general trading encompassing all kinds ofproducts), GLOBAL (global operations) and GROUP (groupcapabilities).
Personally, I prefer to add “Giri Ninjo” to the above
guidelines, a phrase that communicates a sense of duty
and human empathy and has traditionally been embraced
by Japanese merchants. I strongly believe that, irrespectiveof the changes of the times, cherishing people should
remain at the heart of our business operations.
The DNA of trying new businesses with open ideas, which
we have long held in esteem, will serve as our “engine”
going forward and provide the Kaga Electronics Group withthe driving force needed to achieve significant growth.
Getting back to the basics, we will remain a company inwhich every employee can work enthusiastically and findtheir job rewarding.

Integrated Report 2022

12

Message from the COO

Review of the fiscal year ended March 31, 2022
During the fiscal year ended March 31, 2022, the businessenvironment remained harsh due mainly to global shortages ofsemiconductors and other electronic parts as well as the
disruption and stagnation of international logistics networks
along with the emergence of COVID-19 variants and resulting
resurgences of the pandemic. In the electronics industry, demand
for semiconductors and electronic parts for use in a broad rangeof fields, including automotive and industrial equipment, grew;
however, because production failed to keep up with the rise indemand in some areas, supply shortages and the progressionof price hikes were prolonged.
Against this backdrop, the Kaga Electronics Group adopted aforward-looking approach to accommodating requests from
customers in a variety of sectors while taking full advantage of
its unique strength as an independent trading company to securesales volumes via global marketing. Thanks to these efforts,
net sales hit an all-time best for the first time in two fiscal years.
Moreover, we achieved a third consecutive year of record highs

Launching the “Medium-Term
Management Plan 2024” and the“Medium- to Long-Term
Sustainability Management Plan”
Ryoichi Kado
Representative Director, President & COO

Overview of the new Medium-Term Management Plan

Aim to become a competitive world-class company
Become “the Japanese industry’s
No. 1 corporate group”
Autonomous
growth+Inorganic
growth driven
by new
M&As, etc.

¥750

Increased
profitratio

Increased
sales

Expansionof trading company business

Expand trading company
business to drive further
growth in the EMS business

Enhancement of value
delivered through the
EMS businessbillionGrowth fields
Mobility
Communications
Environmental
Industrial devices
MedicalHealthcare“Medium-Term Management Plan 2024”

Strengthen managementfoundations

13

KAGA ELECTRONICS CO.,LTD.

Create new businesses
Promote SDG-oriented
management(Net sales)

15.7

20.9

13.5

10.9

7.5

500.0

495.8

422.3

292.7

4.2

13.0

11.4

10.0

8.0

2.7

7.6
2.2

2.5
2019/3Results

2020/3Results

2021/3Results

2022/3Results

2022/3
Management targets

Net sales¥292.7 billion¥443.6 billion¥422.3 billion¥495.8 billion¥500.0 billion

Operatingincome¥7.5 billion¥ 10.0 billion¥ 11.4 billion¥ 20.9 billion¥ 13.0 billion

Operatingincome margin

2.5%

2.2%

2.7%

4.2%

—

ROE

10.9%

7.6%

13.5%

15.7%

8.0% or more

Basic policies

Priority themes

Enhancementof therevenue baseF
 ocus on markets and fields withhigh potential for growth andprofitability〇 Revenue growth attributable to M&As:〇G rowth in the EMS business:

Stabilizationof themanagementbaseStrive for the early improvement of
the Group’s management
efficiency and financial soundness,both of which have been weakened
as a result of M&As

〇 KAGA FEI: Gross profit margin:
6.3% (2019/3)→ 9.8% (2022/3)〇 KAGA ELECTRONICS: Consolidated SG&A expense ratio:
9.5% (2019/3)→ 8.0% (2022/3)〇 KAGA ELECTRONICS: Equity ratio:
35.8% (March 31, 2019) → 38.8% (March 31, 2022)

Creation of
new businessS ecure greater resilience againstchanges in the external
environment by proactively
leveraging both in-house resources
and M&As〇 Venture investment: 19 cases (invested in a total of 42 companies)
Businesses aimed at addressing social issues: Full-fledged entries into
disaster-prevention helicopter- and EV bus-related businesses and preparationfor entering the medical device business“Challenge 1.60”
Achieve net salesof ¥1 trillion in
conjunction with our60th anniversary

Having concluded the final year of the Medium-Term Management
Plan 2021, net sales stood at ¥495.8 billion, slightly falling short ofour annual target of ¥500.0 billion. Nevertheless, we were largely
able to offset a series of unanticipated negative factors thatemerged during the management plan period, including asignificant loss of commercial rights formerly possessed by
KAGA FEI, the outbreak of the COVID-19 pandemic, andsemiconductor shortages, thereby achieving an operating
income of ¥20.9 billion, far in excess of the operating incometarget of ¥13.0 billion. Furthermore, after meeting our ROE
target of 8% one year ahead of schedule, we recorded an ROEof 15.7% in the final year of the plan.
Now, I will detail the plan’s outcomes in line with its three

Review of the Medium-Term Management Plan 2021: Management Measures

Enhancement and expansion of the overseas businessand the EMS business

Further enhance ourearnings power

443.6

¥1

trillion

Review of the Medium-Term Management Plan 2021

Medium-Term Management Plan 2021 (April 2019 to March 2022)■Net sales■Operating income
ROE
Operating income margin

In this message, I intend to report on the review of operating results for the fiscal year ended March 31, 2022 as well as theoutcomes of the Medium-Term Management Plan 2021. At the same time, I will go over the details of two newly formulated plans:
The Medium-Term Management Plan 2024 and the Medium- to Long-Term Sustainability Management Plan.

for both operating income and ordinary income in addition tohitting a new high in profit attributable to owners of the parent
for the second year in a row.

Main achievements

Approximately ¥215.0 billion
Approximately ¥28.0 billion

Integrated Report 2022

14

Message from the COO

basic policies, namely, “Enhancement of the revenue base,”“Stabilization of the management base” and “Creation of new
business.”
In terms of “Enhancement of the revenue base,” we executed a
rapid series of M&As, with KAGA FEI, KAGA EMS TOWADA,
EXCEL, and Kyokuto Electric made into Group companies overthe course of three years. By expanding our customer base,this has grown our sources of sales approximately ¥215 billion.
In the EMS business, through which we offer high-valueadded products and services, our business growth in suchpriority markets as automotive and medical equipment contributed
to operating results, with net sales from this business amounting
to ¥117.8 billion, up approximately ¥28.0 billion from ¥89.4 billion
recorded in the fiscal year ended March 31, 2019, the first yearof the Medium-Term Management Plan.
In terms of “Stabilization of the management base,” KAGA
FEI’s gross profit margin has increased from 6.3% at the timeof acquisition to 9.8%, a rise of 3.5 percentage points in three
years. Meanwhile, KAGA ELECTRONICS saw an improvementof 1.5 percentage points in the SG&A expense ratio during thecourse of this period, with its equity ratio recovering to nearly
40%. In light of these and other achievements, we are confident
that our management efficiency and financial soundness havesteadily improved.
Lastly, our initiatives under the banner of “Creation of new
business” encompassed a number undertaken with the aim ofaddressing social issues, including those associated withhelicopters for disaster prevention applications and EV buses.
However, these initiatives have yet to yield notable results.

About the Medium-Term Management Plan 2024
The Medium-Term Management Plan 2024 builds on the basic
design of the previous management plan.
Specifically, the new plan has defined “autonomous growth +new M&As” as the driver of expansion. In line with this plan, we
aim to expand the overseas business and the EMS business while
focusing on the growth fields, namely, the mobility,communications, environmental, industrial device, and medical
and healthcare fields. Under the plan, we aim to become Japan’s
industry-leading company in these fields, capable of securing
annual net sales of ¥750 billion. Accordingly, we have positioned
the trading company business centered on electronic components
and the EMS business centered on circuit board mounting as
growth drivers.
Once we have realized the aims set out under this plan, we
will strive to achieve our vision of becoming a competitive worldclass company with net sales of ¥1 trillion.
Under the Medium-Term Management Plan 2024, ourmanagement goal for the fiscal year ending March 31, 2025
comprises two separate targets for autonomous growth andnew M&As. We aim to achieve a ¥600 billion increase in net sales
from the former endeavor while securing additional sales growththrough the latter, thereby raising consolidated net sales to¥750 billion.
With an eye to realizing the above vision, sales expansion
arising from autonomous growth will be supplemented by new
sources of sales obtained via M&As so that we will be able toachieve net sales of ¥750 billion during the period of the MediumTerm Management Plan.
On the other hand, our operating income target of ¥20 billion
is now subject to revision due to demand for electronic parts

New Medium-Term Management Plan 2024 (April 2022 to March 2025)(Billions of yen)

■Electronic components ■EMS ■CSI* ■Other
ROE* Consumer & System Integrator

New
M&As
15.7

12.0
40.0
9.7

110.0

510.0

495.8

470.0

12.5
39.6

12.0
39.0

117.8

125.0

20.9

13.0

12.0
39.0
125.0

21.2

14.0

24.0

15

12.0
54.0
150.0

Revisions based on
operational progressin the first half of
FY2023/3
Operatingincome380.0

8.5

2022/3 forecast
At the time of theformulation of the plan

2022/3Results

2023/3
Initial forecast

2023/3
Revised forecast

2025/3
Management targets

Net sales¥470.0 billion¥495.8 billion¥510.0 billion¥540.0 billion¥750.0 billion

Operatingincome¥15.0 billion¥20.9 billion¥21.2 billion¥24.0 billion¥20.0 billion

ROE

9.7%

15.7%

13.0%

14.0%

8.5% or more

29.6%

28.6%
25.5%

25.6%

■Ordinary dividends■Commemorative dividends■Extraordinary dividends

27.4%

25%
19.3%

* Including negative goodwill totaling
approximately ¥8 billion(Up ¥5 per share)

5

20.8%
¥120
per share¥35
per share¥55
per share¥60
per share¥40
per share(Up ¥15 per share)(Up ¥5 per share)

15

20
40
2017/3

10

30

30

40

2014/3

2015/3

2016/3(Up ¥5 per share)35%

27.2% (forecast)24.1%

Acquired treasury shares (¥1,499 million)¥35
per share

Acquired treasury shares (¥3,674 million)

32.8%

Total shareholder return ratio: 45.4%(Up ¥5 per share)

KAGA ELECTRONICS CO.,LTD.

The Company’s policy is to deliver two types of dividends: ordinary
dividends and extraordinary dividends. We have made it ourcustom to deliver extraordinary dividends when profit exceeds
the initial annual plan during the fiscal year or when profit at
the end of fiscal year has surpassed the latest forecast. At the
beginning of the fiscal year ended March 31, 2022, we had
initially set our interim and year-end dividend forecasts at ¥40
per share each, and full-year dividend forecast at ¥80 per share.
However, we have subsequently revised these forecasts upwardly
on three occasions. Eventually, we decided to pay a full-year
dividend of ¥120 per share, an increase of ¥40 per share from
our initial forecast. This also includes extraordinary dividends.
We will thus deliver extraordinary dividends for the eighthconsecutive year since the fiscal year ended March 31, 2015.
In September 2022, we celebrated the 55th anniversary of
our founding. With regard to the upcoming round of
dividends, plans call for additionally paying commemorative
dividends of ¥10 per share at the end of the fiscal year ending
March 31, 2023, with forecasts for full-year dividends for said
year amounting to ¥150 per share, up ¥30 per share year on
year (interim dividends: ¥70 per share; year-end dividends:¥80 per share).

Total shareholder return ratio: 44.3%

20.0

364.0

334.0

325.8

About shareholder returns

Dividends (yen) / Consolidated payout ratio

750.0

15.0
308.0

end, pursue cross-organizational initiatives encompassing theGroup to promote sustainability management, with the aim ofboth addressing social issues and securing sustainablecorporate growth.

Net sales

150.0

540.0

being higher than forecast in November 2021, when this plan
was formulated. The higher demand resulted in greater profit
and led to operating income for the fiscal year ended March 31,
2022—on which our new operating income target is based—toreach ¥20.9 billion, exceeding the previous plan’s target. In
addition, we have upwardly revised our operating income forecast
for the fiscal year ending March 31, 2023, the first year of the
new plan, from ¥21.2 billion to ¥24.0 billion. As we have now
gained greater momentum than before in terms of profit, we
intend to adjust our management targets upon the carefulassessment of the status of operating results in the first half ofthe fiscal year ending March 31, 2023.
As for ROE, we have set our target at “stable 8.5% or more,”with an eye to securing an ROE stably in excess of the cost ofshareholders’ equity (around 7% to 8%).
Moving on, I will discuss management measures set forth in
the Medium-Term Management Plan 2024, namely, “Further
enhance our earnings power,” “Strengthen managementfoundations,” “Create new businesses” and “Promote SDGoriented management.”
In order to further enhance our earnings power, we willcontinue focusing on promising markets with high potential for
growth and profitability.
To strengthen management foundations, we will strive toenhance corporate governance, promote efficient Groupmanagement, and invest in human capital as we consider securing
management foundations suitable to our goal of becoming“Japan’s industry-leading company,” an important issue.
To create new businesses, we will remain committed topromoting open innovation via venture investment while
proactively taking on the challenge of executing M&As aimed
at attaining disruptive growth.
We will also promote SDG-oriented management and, to this¥70
per share¥80
per share(Up ¥10 per share)

10

5
5

60
2018/3(Up ¥10 per share)¥150
per share(Up ¥30 per share)

10(Up ¥40 per share)¥70
per share(Down ¥10 per share)¥80
per share(Up ¥10 per share)

10

20

70

60

60

2019/32020/32021/340140802022/32023/3
Forecast

Integrated Report 2022

16

Message from the COO

Outlook for the fiscal year ending March 31, 2023
In the electronics industry, although it will likely be some time
before the tightness of the global supply-demand situation for
semiconductors and other products is resolved, our projections
premised on growth in electronic parts demand remainunchanged. Factors supporting this scenario include, in the
ICT field, the popularization of high-performance smartphones
compatible with high-speed communications offered via, forexample, 5G mobile communications systems, along withgrowing investment in DX. Among other positive factors are thewidespread use of EVs and the advancement of CASE (Connected,
Autonomous, Shared & Services, Electric) in the automobilerelated field. Taking advantage of this management environment,
the Group will continue to focus on markets with high potential
for growth and profitability, thereby securing even greater
earnings power.
In August 2022, we upwardly revised our initial forecasts forfull-year operating results for the fiscal year ending March 31,
2023. Specifically, forecasts for net sales were revised from
¥510.0 billion to ¥540.0 billion. Moreover, forecasts for operating
income and profit attributable to owners of the parent, which
had previously amounted to ¥21.2 billion and ¥14.5 billion,
respectively, were raised to ¥24.0 billion and ¥16.0 billion.

About the Medium- to Long-Term Sustainability
Management Plan
In line with its corporate philosophy, “Everything we do is forour customers,” the Kaga Electronics Group is striving for both
the realization of a sustainable society and its own sustainablegrowth. In the course of these pursuits, we honor input gleaned
via dialogue with customers, business partners, shareholders,investors, employees, and all other stakeholders. In this way,
we seek to proactively play our part in realizing a sustainable
society even as we endeavor to raise our corporate value.
As such, we consider the promotion of sustainability an
important management issue. Accordingly, we established theSDGs Committee, on which I serve as the chair, while maintaining
Environmental, Social, and Governance Issue Working Groups(WGs) under said committee. This is how we have secured arobust management structure supporting the promotion ofsustainability via cross-organizational initiatives encompassing
the Group. Under the leadership of a top management committed
to sustainability, these bodies act in collaboration with businessdivisions, with each WG engaged in the formulation of policies,
measures, and targets associated with ESG issues and the
management of progress in addressing such issues. In theseand other ways, we rally the Group’s entire strength to promotesustainability. The “Medium- to Long-Term Sustainability
Management Plan,” which was completed in conjunction withthe formulation of the Medium-Term Management Plan 2024,
is just one of the products of these WGs.
Identifying priority issues (materiality)
The Kaga Electronics Group is committed to seriously addressinga 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 identified
priority issues that are deemed to exert significant impact on
its business operations. These priority issues encompass four
categories—Environmental (E), Social (S), Governance (G) andBusiness (B).
Our definitions of materiality for each category are as follows:

Sustainability Promotion Structure

Board of Directors
SDGs Committee

MissionDiscuss and address medium- to long-term management matters associatedwith environmental (E), social (S) and governance (G) issues, with the threetheme-specific working groups playing a central role, to help enhance theCompany’s corporate value through the implementation of cross-organizational
initiatives encompassing the Group

Chair: President & COO KAGA ELECTRONICS
Members: Officers in charge of each business division KAGA ELECTRONICS

Environmental Issue WG

17

KAGA ELECTRONICS CO.,LTD.

Social Issue WG

Governance Issue WG

E: Create a clean global environment, S: Create an inclusivecompany as well as an affluent society, G: Create a sustainable
management base, and B: Realize sustainable business growth.
Addressing these priority issues, we will practice corporate
activities aimed at contributing to the realization of a sustainable
society and thereby push ahead with the further enhancementof our corporate value.
KPIs for the Medium- to Long-Term Sustainability
Management Plan and progress in main activities
For the Medium- to Long-Term Sustainability Management
Plan, we have set E, S, and G category themes and determined
medium-term and long-term targets based on KPIs.
In the E category, we will take on the 100% switchover torenewable energy in terms of energy consumption attributableto our business activities. Although the ratio of renewable energy
used at our domestic sales bases currently amounts to onlyaround 1%, we will strive to raise this ratio to 40% over the courseof three years leading up to 2024 and 100% in 2030. Moreover,
we have formulated long-term targets with regard to the ratioof renewable energy used by our own domestic and overseas
production bases in the EMS business, aiming to raise thisratio to between 30% and 50% in 2030 and 100% in 2050.
To achieve these targets, we began by conducting surveys todetermine energy consumption at our sales and manufacturingbases in Japan. We also launched discussions regarding thetiming of the introduction of renewable energy at sales bases.
Furthermore, deliberations are now under way with regard to
the introduction of solar panels and onsite/offsite Power Purchase
Agreements (PPA) at manufacturing bases. We intend to baseour policies for initiatives upon the results of information
gathering and analysis to be undertaken over the course of thenext three years. While we will promote the use of renewableenergy through these initiatives, we will also consider issuing a“Re100” declaration.

In the S category, we will tackle “diversity promotion &human resource management” and “work-life management &productivity improvement.”
In particular, we will focus on diversifying our portfolio ofcore human resources, including by raising the ratio of female
managers from around the current 13% level to 15% in 2024.
As part of these efforts, we have formulated an Action Plan inaccordance with the Act on Promotion of Women’s Participation
and Advancement in the Workplace, with the aim of raising theratio of women among new graduates hired as career-track
employees. We have also launched recruitment activities in linewith this plan.
Lastly, our initiatives in the G category include a number
designed to serve two purposes: (1) Restructuring the governancestructure in response to the revision of the Corporate Governance(CG) Code and the reorganization of Tokyo Stock Exchange and(2) Further strengthening the supervisory and oversight functionsof top management over business execution.
Regarding the first purpose, in June 2021 we increased therepresentation of independent outside directors on the Boardof Directors to more than one third of its membership andestablished the Nomination and Compensation Committee. To
diversify the composition of the Board of Directors, we areworking toward appointing a female director in June 2023.
Regarding the second purpose, we introduced a commissioned
executive officer system in April 2022. Currently, we are discussing
a transition to a “company with committees, etc.” system andintend to determine our policy on this matter by March 2023.
Based on its corporate philosophy “everything we do is forour customers,” KAGA ELECTRONICS will contribute to therealization of a sustainable society by striking a balance between
solving social issues and sustaining growth as a corporation
through its business activities.

Integrated Report 2022

18

Message from the COO

Medium- to Long-Term Sustainability Management Plan
Sustainability Policy

Identifying priority issues (materiality)

In line with its corporate philosophy “Everything we do is for our customers,” the Kaga Electronics Group will strive for the realization ofboth a sustainable society and its own sustainable growth as a corporate group.
To inform our sustainability initiatives, we will also cherish dialogue with customers, business partners, shareholders, investors,
employees, local communities, and all other stakeholders based on our Basic CSR Policy, Environmental Policy, and Code of Conduct.
In these ways, we will proactively play our part in the realization of a sustainable society while enhancing our corporate value.

Priority issues

Relevant SDGs

E

Create a clean global
environment

S

Create an inclusivecompany as well as
an affluent societyG

Create a sustainable
management base

❶ We tackle environmental issues through our business activities
In the course of our business activities, we will strive to reduce CO2 emissions as well as curb emissions of waste while promoting waste
recycling. At the same time, we will deliver products and services that give due consideration to the environment. By doing so, we willcontribute to the realization of a society that values the Earth’s environment.

❷ We respect human rights and nurture human resources
We respect the human rights of all stakeholders, irrespective of gender, age, nationality, social status, disability, or other personal attributes.
Furthermore, we will secure a workplace environment that enables diverse employees to work safely even as they stay mentally and physically
healthy. We will also develop personnel systems as well as education and training structures aimed at empowering employees to fully realize
their individual potential. In these ways, we will nurture human resources able to take on the challenge of achieving innovation.

❸ We aim to establish mutual trust with society
In compliance with laws, regulations, and other rules, we will practice a sincere approach to our corporate activities, such as engaging in faircompetition, delivering high-quality products and services, and maintaining the timely and appropriate disclosure of information. Simultaneously,
we will strive to strengthen our governance structure. We will thus remain a company deserving of society’s trust.

Main themes

Issues to be tackled or discussed• Introducing renewable energy at domestic sales bases

E

Aiming to raise the ratio of renewable energy
to total energy consumption to 100%

• Introducing renewable energy at overseas manufacturing bases

Switchover of company-owned vehicles to EVs

Diversity promotion andhuman resource management

An optimal balance between work-life
management and productivity improvement

Restructuring the governance structure in
response to the revision of the Corporate
Governance (CG) Code and the reorganizationof the Tokyo Stock Exchange
Further strengthening the supervisory andoversight functions of top management
over business execution

19•S witchover of vehicles used by domestic sales departments to EVs(including HVs, PHVs, and FCVs)•S ecuring diversity in core human resources(Women, foreign nationals, and mid-career hires)• Hiring elderly citizens and people with disabilities

SG• Introducing renewable energy at domestic manufacturing bases

KAGA ELECTRONICS CO.,LTD.

•E
 nhancing the content of various programs supporting
employees engaged in child rearing, nursing care, andteleworking, etc.
• Aim to be selected as an outstanding organization under the
Certified Health & Productivity Management Organization
Recognition Program• Increase the number of independent outside directors so thatthey account for one third or more of the Board membership•E stablish a Nominating and Compensation Committee• Diversify the composition of the Board of Directors• Thoroughly comply with the revised CG Code and otherrequirements accompanying the Company’s listing on thePrime Market

Medium-term targets*

B

Realize sustainablebusiness growth2024: Determine policies via information
gathering and analysis
In-house power generation/external procurement
Solar panel/biomass power generation/renewableenergy power generation businesses

2030: 50%
2050:100%

2024: 85% (78.5%)

2030:100%

Ratio of women among new graduates hired as
career-track employees
2023: 30% (5.8%)
Ratio of women among managers
2024: 15% (13.3%)

Ratio of women among new graduates
hired as career-track employees
2028: 40%
Ratio of women among managers
2029: 17%2022: Enhance various programs
2023: Be chosen as an outstanding organization
under the Certified Health & Productivity
Management Organization Recognition Program2024- Maintain our status as an
outstanding organization
2025: Obtain external certification

2030: 30%
2050:100%

Done in June 2021

• Transition to a company with committees, etc., system

March 2023: Determine policies• Provide products and services designed to help
resolve environmental and energy issues• Continue initiatives to reduce theenvironmental burden• Changes in social structure as we move toward
the popularization of the new normal• Promote workforce diversity and innovative
work styles to better adapt to the new normal• Human resource shortages attributable to a
low birthrate and an aging population• Develop human resources by passing down
and updating KAGA-ism• Public calls for more robust corporate
governance• Further strengthen corporate governance andcompliance• Growing need for business resilience againstchanges in the operating environment• Thoroughly practice a profit-focusedmanagement approach• Progress in digital transformation• Provide products and services that contributeto the transition to a digital-driven society• Coming of a “super-smart” society due to the
popularization of ICT, such as IoT and AI• Create new businesses aimed at helping
resolve issues society is confronting• Further promote global expansion

Main activities and progress in FY2022/3• Surveyed our energy consumption (approximately 4.42 million kWh)
Began considering the timing of renewable energy procurement• Surveyed our energy consumption (approximately 6.72 million kWh)
Discussions are now under way regarding the introduction of solar panels and onsite/offsite PPA, etc.

• Ratio of EVs stood at 80.8% (March 31, 2022)• Addressing the ratio of women among new graduates hired as career-track employees, we formulated an Action Plan in accordance with
Act on Promotion of Women's Participation and Advancement in the Workplace and initiated recruitment activities to achieve said plan.
• We have informed all Group members of our goal of raising the ratio of women among managers. In response, each Group company has
initiated target formulation with respect to the number of female managers.
• Fully achieved statutory employment ratio for people with disabilities (March 31, 2022)• Revisions to in-house regulations and rules are now under way, with an eye to utilizing teleworking as a permanent working system•C ompleted the updating of information disclosed via our website in preparation for obtaining certification•D one in June 2021

June 2022: Determine policies

April 2022: Enforced

Issues to be tackled• Urgent call for carbon neutrality

Long-term targets
2030:100%• Introduce a commissioned executive officer system• Growing seriousness of global warming andother environmental problems• Intensification of global competition

2024: 40% (1%)

Done in November 2021

Changes in the socio-economic environment• Initiatives are now under way to appoint a female director in June 2023
Set targets in conjunction with the next
round of revisions to the CG Code• Plans call for initiating information disclosure in accordance with the TCFD recommendations and other standards in June 2022
• Done in April 2022
• Determine policies by the end of FY2023/3

Integrated Report 2022

20

Message from the CFO

Hitting Yet Another Record High as
We Achieve Significant Growth inBoth Sales and Profit Thanks to theRobust Performance of the Mainstay
Electronic Components Business
Eiji Kawamura

Gross profit (millions of yen) / Gross profit margin

Net sales (millions of yen)

+37,177+17,523495,827+73,462

47,936422,365

EXCEL

2022/3Results

In the fiscal year ended March 31, 2022, net sales rose a significant
17.4% year on year to ¥ 495,827 million, hitting an all-time best for
the first time in two fiscal years due to the robust performance ofthe mainstay electronic components business. This was attributable
to ongoing and robust demand for semiconductors and electronicparts thanks to recovery in production activities undertaken by the
manufacturing sector at home and abroad. Operating income
grew 82.4% to ¥20,915 million, representing a substantial increasein profit. Furthermore, gross profit expanded due to the increased
sales and improved profitability. We have thus achieved a recordhigh profit for a third straight year. This is a testament to the successof our ongoing work style reform amid the COVID-19 pandemic
along with persistent cost reductions.
Profit attributable to owners of the parent increased 35.1% to¥15,401 million, similarly hitting a record high for the second consecutive year despite the absence of the extraordinary income posted
in the previous fiscal year due to a gain on negative goodwill (¥7,963
million), thanks to profit expansion achieved via our main business.
Moreover, ROE improved by 2.2 percentage points from 13.5%
at the end of the previous fiscal year to 15.7%. Factors contributing
to this improvement are as follows: the total asset turnover ratio,
which rose from 1.8 to 1.9; the financial leverage ratio, which
remained virtually unchanged at 2.6; and profit attributable toowners of the parent margin, which improved from 2.7 to 3.1 year
on year.
Earnings in the fiscal year ended March 31, 2022 are broken
down by company as follows. In the below, KAGA ELECTRONICS
includes all Group companies except for KAGA FEI Co., Ltd. and
EXCEL CO., LTD.
In terms of net sales, all three companies achieved significant
sales growth backed by the robust performance of the electronic
components business. Net sales at KAGA ELECTRONICS increased¥37,177 million to ¥281,075 million. Net sales at KAGA FEI Co.,
Ltd. and EXCEL CO., LTD. increased ¥17,523 million and ¥18,760
million, respectively, to ¥149,455 million, and ¥65,296 million.
The gross profit margin for the Group totaled 12.2%, a year-onyear improvement of 0.9 of a percentage point. Each company

21

KAGA ELECTRONICS CO.,LTD.

enjoyed a major rise in its gross profit margin, with the margin at
KAGA ELECTRONICS, KAGA FEI Co., Ltd., and EXCEL CO., LTD.
increasing from 14.5% to 14.9%, from 7.8% to 9.8%, and from
5.1% to 6.5%, respectively. The improvement achieved by KAGAFEI is attributable to its initiatives to raise profit awareness among
employees in the course of the post-merger integration (PMI) andthe resulting strengthening of its business structure, along withthe proactive implementation of spot sales, through which, in
response to customer requests, it delivered products that would
have otherwise been counted as inventories. EXCEL CO., LTD. has
similarly striven to raise employee awareness of profitability, succeeding in eliminating all its dead inventory after reviewing andeliminating multiple redundancies from its inventory management methods. These initiatives, in turn, got the two companies
on a profitable track earlier than expected.
Although SG&A expenses grew 8.7% year on year to ¥39,632
million as expenses rose along with the sales increase, the SG&A
expense ratio for the Group fell from 8.6% to 8.0%, with this metricat KAGA ELECTRONICS, KAGA FEI Co., Ltd., and EXCEL CO., LTD.
improving from 10.0% to 9.5%, from 7.5% to 7.2%, and from 4.8%
to 3.3%, respectively.
Turning to operating income, the entire Group’s operating
income margin rose significantly from 2.7% to 4.2%. This was dueto the increase in gross profit, which has outpaced growth in
expenses and thereby contributed to the rise in profit. The operating
income margin at KAGA ELECTRONICS, KAGA FEI Co., Ltd., andEXCEL CO., LTD. improved from 4.5% to 5.5%, from 0.3% to 2.4%,
and from virtually zero to 3.0%, respectively.
Looking at the financial condition of the Group, inventory
increased ¥24,658 million year on year to ¥62,607 million due tothe deliberate expansion of inventories for the EMS business inorder to secure our responsiveness to customer requests amid
ongoing semiconductor shortages. This has also resulted in theworsening of the inventory turnover period from 32.8 days to 46.1
days. On the other hand, the receivables turnover period and thepayables turnover period decreased from 93.7 days to 89.0 days
and from 79.8 days to 68.6 days, respectively. Although both ofthese turnover periods had been lengthened by the consolidationof EXCEL CO., LTD. in the previous fiscal year, these periods
are now being reinstated to the pre-acquisition levels.

36,46910.0%
7.5%+2,260

8.6%

+956

4.8%

KAGA
KAGA FEI
Results ELECTRONICS+12,610

12.2%
6.5%

7.8%
5.1%
2021/3KAGA
KAGA FEI
Results ELECTRONICS

2022/3

EXCEL

Results

Operating income (millions of yen) / Operating income margin▲54

39,632+3,1628.0%

2021/360,5472022/3

9.5%
7.2%+1,8819.8%

2022/3

SG&A expenses (millions of yen) / SG&A expense ratio

Review of the fiscal year ended March 31, 2022

14.9%

11.3%

KAGA
KAGA FEI
Results ELECTRONICS+4,382+6,49414.5%

2021/3

Director, Managing Executive Officer,
Head of Administration Headquarters+18,760

3.3%
EXCEL

2022/3Results

11,467+3,291+4,378+1,93020,915+9,448

4.2%

5.5%
4.5%
2.4%
0.3%
2.7%
0.0%
2021/3KAGA
KAGA FEI
Results ELECTRONICS

2022/33.0%
EXCEL

2022/3Results

2022/3

Note: Gross profit and operating income figures are shown before consolidated adjustments among the three companies. Consolidated adjustments are –¥157 million for gross profit
and +¥137 million for operating income.

Inventories

Receivables and payables

Inventories (millions of yen)
Inventories turnover period (days)

26.3

31,90832.8

46.1

62,607+24,658

37,948

Receivables (millions of yen)
Receivables turnover period (days)

75.2
64.6
91,37170,188

Payables (millions of yen)
Payables turnover period (days)

93.7

79.8
108,394
79,85489.0

68.6

120,948+12,553

86,493+6,6392020/32021/32022/3

Note: Inventory turnover period (days) = Inventories / Net Sales x 365 (days)

Results of the Medium-Term
Management Plan by segment
Lastly, I will discuss operating results in line with the businesssegmentation as defined at the announcement of the MediumTerm Management Plan. Net sales increased by 24.2% year on
year to ¥325,830 million in the electronic components business,with segment profit growing 274.6% to ¥11,094 million.

2020/32021/32022/3

Note: N otes and accounts receivable—trade include electronically recorded monetary claims.
Notes and accounts payable—trade include electronically recorded monetary obligations.
Payables turnover period (days) =Notes and accounts payable—trade / Total purchase of goods × 365 (days)
Receivables turnover period (days) =Notes and accounts receivable—trade / Net sales x 365 (days)

Net sales in the EMS business rose 18.3% year on year to¥117,828 million. Segment profit increased 32.8% from theprevious fiscal year to ¥7,356 million.
On the other hand, net sales in the CSI* business decreased
by 18.1% to ¥39,616 million, with segment profit falling 16.0%
year on year to ¥2,085 million. The Other segment saw net
sales grow by 4.1% year on year to ¥12,552 million, while segment
profit declined 34.0% to ¥255 million.
*Consumer & System Integrator

Integrated Report 2022

22

Special Feature

The Kaga Electronics Group’s Growth Drivers

Accelerating the EMS Business
The pace of technological innovation has an enormous influenceon the electronics in-dustry, and the Kaga Electronics Group has
maintained sustainable growth by leveraging its abilities toquickly identify changes in each era. In addition, the thoroughpractice of “Everything we do is for our customers” has resulted
in a business involving the “kitting” of multiple products fordelivery to customers, which is one step beyond transactions
involving individual products. In another business addressing
customer needs, we have evolved a value-added EMS*1 businessfor the mounting of electronic components onto printed circuitboards for customers.
The EMS business flexibly addresses needs for high-mix, lowvolume production, from the design and development of products
to the SMT*2 mounting of electronic components on printed
circuit boards and assembly of final products. Closely aligningits business approach with customer circumstances, theCompany has built a supply chain that is the opposite of megaEMS firms that maintain large-scale facilities for supplying highvolumes of undifferentiated products for exports.
Over the course of the more than 20 years since the launch ofits first factory in Shenzhen, China, in 1999, the Group has also
­developed a global EMS production structure.

Strengths of the EMS business ① “Convenience store-type” EMS
The Kaga Electronics Group’s EMS business approach is premisedon a smaller initial investment via the use of leased land and buildings
as well as the standardization of interiors. We have thus realized
high-mix, low-volume production, handling 3,000 models per monthwith a minimum order volume for a single model set at only 100 units.
Our production system also enables a local production, local
consumption business model supported by multiple bases tasked
with procurement, manufacturing, or logistics. This, in turn, lends
us distinctive uniqueness and strength. Our “convenience store-type”
EMS business model is underpinned by the “We act as a close
partner for our customers” concept and has proven effective despite
supply chain disruption and parts shortages amid the COVID-19
pandemic, thereby contributing to the Group’s operating results.
Furthermore, we take full advantage of the benefit of the“convenience store-type”
business model to quickly
launch supply lines forcustomers engaged in
manufacturing andconfronted by prolonged
transportation periods,
New factory in Turkey scheduled for completion insurges in logistics costs,
November 2022

looming financial burdens, decreasing flexibility, and growing risks
arising from supply ­disruption through the use of long-distanceexports. This is yet another strength of our EMS business.
Our new factory in Turkey (see the preceding page for a picture),
which is scheduled for completion in November 2022, is specificallydesigned to swiftly address issues customers are facing and is
expected to contribute to business expansion. Going forward, ourplans call for positioning this production base as the main factory
serving the European market.
Strengths of the EMS business ②
Circuit board mounting is the mainstay operation
While Taiwanese and other Asian mega-EMS firms are focused on theassembly of finished products, our mainstay operation in the EMS
business is circuit board mounting, which requires high reliability.
Our expertise positions us to meet stable demand over the long term.
Primary items we handle include electric compressor units and
AC invertor units as well as headlamps, taillamps, and other lighting
units in the automotive field. Also, auxiliary battery packs for
powering communications devices in emergencies, such as in theaftermath of a traffic accident, malfunction or theft, have seen
growing demand.
We also handle air conditioner-related units. In this field, we

undertake a range of processes from circuit board mounting forelectronic components used in exterior units to aluminum plating
and unit assembly. Moreover, we produce toilet-related products,
such as control and remote-control units, for use in sanitary
appliance units. We also manufacture control boards for power tools.
Aiming to achieve net sales of ¥150 billion
for FY2025/3 in the EMS businessDespite fallout from the COVID-19 pandemic, the Kaga
Electronics Group’s EMS business achieved net sales of ¥117.8
billion, up approximately ¥18.2 billion compared with theprevious fiscal year and surpassing the ¥100 billion milestone.
Now, we are planning to raise net sales to ¥150 billion,
approximately 1.3 times the current level. In particular, we will
focus on automotive, industrial, and medical equipment
applications while executing three priority strategies explainedon the next page, namely, “Strengthening and expanding ourcustomer base,” “Shifting our value chain to high-value-added
fields,” and “Enhancing our business foundations.”*1 Electronics Manufacturing Services
Provision of product development and manufacturing services on a contract basis*2 Surface Mount Technology

Rolling out “convenience store-type” EMS on a global basis to deliver convenience and value to customers
Convenience store-type EMS vs GMS* type-EMS
Quality KAGA ELECTRONICS
requirements• Small initial investment(Leased land and buildings,
standardized interiors)• High-mix, low-volume
production• Local production,
local consumption model(procurement, manufacturing
and logistics)

Global expansion

Major competitors(mega-EMS firms)

In line with the priority strategies of “Strengthening andexpanding our customer base,” “Shifting our value chain
to high-value-added fields,” and “Enhancing our businessfoundations,” we will raise net sales to 1.3 times of thelevel recorded in FY2022/3, achieving ­significant growth.

Securing a back-up system under whichbases swiftly supplement one another to avoid country risks

Procurement from the closest source,
production at the closest base, JIT supply
1999 Shenzhen
2009 Suzhou 12013 Suzhou 22015 Hubei

Long-term
stable demand• Large amount ofinvestment• Large volume of
production• Export-centered model

EMS business growth targets by industrial portfolio

Maintaining 21 production bases in 10 countries“We act as a close partner for our customers”

2009
Czech
Republic

Large lot, short-life
production

Main manufacturing items

Automotive
lighting units

1998 Niigata
2002 Yamagata
2005 Tokyo
2019 Fukushima
2019 Aomori2020 Tottori (3)Electric compressor units

1.3

times

AC invertor units¥117.8 billion
11%
7%
5%
9%
17%

2018
Turkey2018 India

Costrequirements

2016
Mexico2000 Malaysia
2004 Thailand 12014 Indonesia
2017 Vietnam
2019 Thailand 2

Air conditioner-related units

Sanitary
appliance-related units

Power tool-related units¥150 billion
5%
5%
5%
10%

Other
Consumer electronics
Office equipment

15%

Air conditioners

20%

Industrial machinery

40%

Automotive parts

Healthcare equipment

17%34%
FY2022/3 results

FY2025/3 targets* General Merchandise Store

23

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2022

24

Special Feature

The Kaga Electronics Group’s Growth Drivers : Accelerating the EMS BusinessPriority strategy ①
Strengthening and expanding our customer baseWith the aim of strengthening and expanding our customer
base, we will strive to secure manufacturing subcontracting orders
from a growing range of customers, including in Europe and theUnited States, while continuing to serve existing and new customers
in Japan. In doing so, we will remain focused on taking a qualitycentered approach and seizing long-term stable demand.
KAGA FEI, which joined the Group in 2020, is expected to playa central role in the above endeavors. As an electronic parts
trading company, KAGA FEI has developed a solid customer basein the Americas and Europe. With this in mind, we will take fulladvantage of, and combine our EMS business with, KAGA FEI’ssales channel. To further advance marketing in these regions,
we will also pass on our sales know-how accumulated throughthe EMS business to local staff at overseas sales companies.

Priority strategy ②
Shifting our value chain to high-value-added fields
To date, our EMS business has focused on procurement,
manufacturing and inspections. Employing KAGA FEI’s know-how,
we will expand the functions we offer via the EMS business toencompass such upstream processes as development, designand verification, as well as downstream processes, including
analysis and maintenance. In this way, we will expand our value
chain to cover a growing scope of fields. This will enable us to not
only be involved in mass-production but also engage in businessdevelopment from early stages of cost planning and cost
improvement, thereby enhancing value added in our EMS business.
Shifting our value chain to high-value-added fields also
involves the utilization of production facilities and IT systems thathave been developed in-house.
The Kaga Electronics Group has developed production facilities
bearing its own brand name, “HATTEN.” Among these, local solderingbaths, inspection machines, and vertical high-temperature

furnaces have already been commercialized. Currently, we havesurface mounting machines undergoing verification testing. We aim
to enhance the competitive edge of our production process by
establishing a product lineup comprising these four types of machine.
In addition, we are developing a smart factory. Specifically, we
have created a system that makes it easier to visualize the statusof production and inventories in a timely manner based on dataon quality and production management obtained directly fromthe manufacturing line. Going forward, while transitioning oursystem, which currently uses dedicated PCs, to cloud computing,
we will establish the coordination of business and manufacturingdata. Our plans thus entail seamlessly connecting customers
and suppliers with the system in addition to upgrading it so thatit can be used via smartphones and other mobile devices.
Priority strategy ③ Enhancing our business foundations
In terms of enhancing our business foundations, we consider
KAGA EMS TOWADA’s human resources, who specialize in production

and boast robust technical capabilities, to be our principal driving
force. Employing these human resources, we have establishedthe Production Center, tasking it with managing 21 production basesin 10 countries and standardizing their manufacturing practices via
the use of a cross-functional approach. In this way, we will horizontallyroll out the manufacturing know-how we have nurtured over thecourse of more than 20 years, with the aim of ensuring identicalstandards, quality levels, and customer service for customers in Japan,
China, ASEAN, the Americas, and Europe. To lay the groundworkfor the above endeavors, we have also established the KAGA
Production Method (KPM) and TAXAN Technical Standard (TTS).
To that end, our Towada Factory will serve as a mother plantand be tasked with primary roles in introducing automated andlabor-saving solutions and IT technologies as well as in assistingin the launch of overseas production bases. As a mother plant,
the facility will also roll out production technologies throughout
the Group while serving as a hub for human resource rotationencompassing overseas bases.

Priority strategies for the EMS business
Shifting our value chain to high-value-added fields: Development / design + EMS services

Strengthening and expanding our customer base in market segments involving stringent
quality requirements while aiming for a shift to high-value-added fields

Conventional value chain

Qualityrequirements

Strengthening andexpanding ourcustomer base

KAGA
ELECTRONICS• Expand our involvement in business fields

that require high quality and entail long-term
stable demand• Expand our customer base in Europe,

Large lot,
short-life
production

the United States, and Asia

Mega-EMS
firms

Long-term
stabledemandDevelopment

DesignVerificationHigh

Shifting our value
chain to high-valueadded fields• Development / design + EMS services• Assistance to software/hardware

Analysis of mass-production,
cost improvement(Software & hardware)
Mass-production

Development of inspection
machines and facilities

Facilities
ICT

Facilitate collaboration among our bases around the globe and establish a human resource development structure,with KAGA EMS TOWADA (Production Center) playing a central role

Towada FactoryServes as an
information hub forGroup production
bases and facilitates
their collaboration

Low
Upstream

Downstream• Facilitate collaboration among our bases around the globe and establish a human resource

Enhancing ourbusinessfoundations

development structure, with KAGA EMS TOWADA (Production Center) playing a central role• Launch new production bases in a swift and flexible manner requiring low initial investment(a “Convenience Store-type EMS” approach)• Promote smart factory development via automation and visualization• Enhance BCPs (via flexible intra-Group collaboration aimed at countering procurement,
production and logistics risks)

Maintenance

Expand the scope of business fields

Development

Manufacture

facilities and IT systems

Analysis* Our conventional positions

Low

development and design• In-house development of production

Inspection

Cost planning, prototype design(Software & hardware)
Design for
mass-production

Costrequirements

Manufacture

Our future value chain incorporating functions offered by KAGA FEI

Added value

Added value
High

Procurement

Production Center

Mother plant• Take a cross-functional approach to managing• Serves as the primary factory supporting domestic• Promote production and quality standards for the• Promotes and advances the introduction of automatedproduction bases across the Group
entire Group• Enhance intra-Group collaboration in terms of BCPs

production

Collaborationand labor-saving solutions and IT technologies• Assists in the launch of overseas production bases

Production bases across the Group• Know-how related to production, quality

management, factory automation, and other factors

25

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2022

26

Special Feature

Utilization of Core Human Resources andProgress in PMI
How do we best utilize our people, our greatest asset since our founding, to sustainably enhance our corporate value inthe future? Here, two of the people responsible for our human resource strategy discuss this issue.

skills. Although it is difficult to come to a judgment in the shorttime available, we put a lot of value on individual character. The
Company places a firm emphasis on KAGA-ism, our philosophy,
so it is important that their character is a good fit and that they
are able to embrace our corporate culture.
The switch to remote recruitment with the COVID-19
pandemic has made it possible to attract candidates from awide range of regions and areas. Until now, we have visited
major cities such as Tokyo, Osaka, and Nagoya to holdinformation sessions and meet candidates. It has been agreat change to be able to welcome participants fromanywhere in the country with ease. Even though our information
sessions are held remotely, the final decision will be made inperson, as the selection process is focused on assessing
personal character.

Smooth Adoption of Remote Work, Taking the Lead in
Reforming Work Styles

Executive Officer, Deputy Head of
Administration Headquarters

Yasuhiro Ishihara

Basic Approach and Vision for Human Resources
Ishihara Since its founding, the Kaga Electronics Group has
believed that people are its greatest asset, and we have trained
them with the goal of nurturing independent, autonomous, andself-motivated individuals with a strong spirit. Outside
perceptions of KAGA ELECTRONICS often cast it as a wild,
wandering samurai. We are recognized for our vital,
independent, and self-reliant spirit, the kind of spirit thatsurvives in the toughest of environments.
Mr. Tsukamoto, the Company’s Founder & CEO, often saysthat each one of us is a manager. Because from the moment of
its establishment KAGA ELECTRONICS has encouraged every
employee to develop an independent mindset and act as apurchaser and seller of its products, we have not only naturally
learned to stand on our own two feet but as a matter of course
have nurtured human resources who are self-reliant. To
paraphrase Mr. Tsukamoto, a company is more than a place
where employees come to earn wages, it is a place where they
can grow. I encourage our employees to be as active as
possible, as they are in charge of their own lives.
Human resource development is essentially on-the-job
training. The Company serves as a place where everyone canplay an active role, and it is the experience gained in doing so

27

KAGA ELECTRONICS CO.,LTD.

General Manager, Administration Headquarters
Personnel Department

Ken Ishizaki

that nurtures human resources. Instead of so-called“classroom learning,” early in their careers our employees
begin to amass a variety of experiences and enhance theircapabilities with the knowledge and know-how they gain fromthese experiences. At the same time, we acknowledge theimportance of praise and consequences. I praise and reward
those who perform well, and give proper instruction to those
who fail. The spirit of supporting the underdog is also deeply
rooted in the Company. Our greatest fear is that everyone will
be so afraid of failure that they will not challenge themselves,
will not do anything, and will fall into thinking that the status
quo is fine. An environment that allows employees to once
more take on challenges after failure is an environment that
fosters peace of mind.
Our human resource management is premised on a belief
that people are innately good, and, above all else, we want ouremployees to think and stretch themselves, rather than asking
their superiors for everything.
Ishizaki We emphasize character in the hiring process. Rather
than hearing a candidate recite well-thought out and preparedanswers, the interviewer wants to see if the candidate canconverse on the spot and engage in a dialogue that makes one
want to ask more questions. Candidates who are able toengage in conversation, rather than going through rounds ofasking and answering questions, have good communication

Ishihara Remote work has been part of our work style reform
since 2017, two years before the COVID-19 pandemic.
Compared with companies forced to hurriedly implement
remote work during the pandemic, the Company has been able
to adopt this work style quite smoothly and is currently
operating without problems.
Ishizaki The Finance & Accounting Department, which Ishihara
was the general manager of, introduced remote work on a
voluntary basis. Later, the enactment of the Work Style Reform
Bill prompted us to gear up work style reforms at the Company
and launch the Kaga Smart Project. In addition to introducing
remote work, we have been reforming various systems toprovide more flexibility in the way we work, such aslengthening the period in which employees are allowed toadopt shorter hours in order to provide childcare. The fact thatmanagement approved the launch of the project itself was alsoa major step forward.
The Finance & Accounting Department voluntarily started
remote work on a trial basis, and when it proved to be
successful, it was expanded to the Administration Department
as a whole. Finally, when the COVID-19 pandemic hit, we werealready about to expand it from business units in charge ofadministration to sales units.
Ishihara Employees returning from parental leave have shorter
office hours and often have to leave early to pick up theirchildren. We tried remote work in order to help balance workwith childcare so that employees could perform properly evenin this environment. After about six months, we realized that
we could do more than we had expected if we eliminatedbottlenecks due to paper-intensive work, and tackled them
one by one. We then began to spread the concept throughout
the Administration Headquarters. Perhaps it worked soquickly because we approached it proactively rather thanreactively. KAGA ELECTRONICS has few departmental
barriers strictly limiting what each business unit can or
cannot do, neither does it have sectionalism. The free andopen atmosphere of the Company also makes it easy for us totake on new challenges.
Ishizaki COVID-19 first became an important topic around theDecember 2019–February 2020 period. Prior to that, from
October to November, the sales department established a trial
procedure and held briefings in Nagoya and Osaka. Of course,
there was some negative feedback, but little by little trials
began, and as the year drew to a close while opinions werebeing heard, the COVID-19 pandemic began. Then, the sales
department started working from home, and it quickly spread.

Strengthening Sustainability Initiatives
Ishihara The Kaga Electronics Group has believed for over 50
years that human resources are its most important assets, so
the importance of respecting human rights and developing
human resources is already deeply rooted in the Company. In
the future, we intend to improve on current shortfalls andmatch them well with the times to ensure the sustainablegrowth of the Kaga Electronics Group.
For example, KAGA ELECTRONICS has long had a reputationin the industry for employing a great number of talented
women. In the future, we intend to encourage female
employees to earn success in an even wider scope of businessfields and expand their representation in a visible way, such as
by actively promoting them to management positions.
Ishizaki To further expand opportunities for women in sales
and engineering, we have set and are working to achieve atarget to increase the ratio of female new graduates hired to
30% by 2023 and to 40% by 2028. In terms of post-employment
training, we not only focus on gender, but also consider thekind of human resources KAGA ELECTRONICS as a wholeshould nurture.
To help women succeed, it is necessary to create rolemodels in each work category. Once role models are
established, recognition within the Company will increase andrecruitment will be more effective. We will thus visualize theflow of careers.
Ishihara The SDGs Committee, established in April 2021, has a
Social Issue Working Group working on diversity and humanresource management. At KAGA ELECTRONICS, mid-careerhires are promoted to management positions without
separating them from employees who entered the Company as
new graduates. Meanwhile, overseas Kaga Electronics Group
companies promote a number of local human resources tomanagement positions.
Our primary focus is on the ratio of female managers, andwe are working to raise the current ratio of 13.3% to 15% by2024, and to 17% by 2029.
In addition to this, we are considering system reforms thatwill create an environment in which employees can work
comfortably while spontaneously achieving work-life balanceIntegrated Report 2022

28

Special Feature

Roundtable Discussion of Outside Directors

How We Help the Kaga Electronics Group
Realize Sustainable Growth

as well as higher quality of life and greater productivity. To
this end, we are identifying systems that will be needed in
the future.

Post-Acquisition Management (PMI) Progressing Well

KAGA ELECTRONICS’s Board of Directors boasts four outside directors. Mr. Susumu Miyoshi, Mr. Akira Tamura, and Mr.
Noritomo Hashimoto are seasoned corporate managers. Moreover, the recent inclusion of Mr. Hirokazu Nishiyama, whobrings extensive knowledge of cutting-edge technologies to the table, further enriched the Board’s discussions. Here,
we present a summary of a roundtable talk among these outside directors regarding the Kaga Electronics Group’s
pursuit of sustainable growth.

Ishihara Companies that join the Kaga Electronics Group always

have their good points in terms of corporate culture, systems, orthe sales and technical capabilities of their human resources.
While respecting, maintaining, and passing on their good points,
we will combine and integrate the Kaga Electronics Group’s
strengths, corporate culture, and basic concepts to createsynergies under KAGA-ism. We are also working on PMI withthe hope that these companies will become even stronger as
members of the Kaga Electronics Group.
Ishizaki The first step of PMI is to launch personnel exchanges
and ensure that KAGA-ism and our “FYT” (FLEXIBILITY, YOUNG
and TRY) action guideline are well understood. We have a
corporate culture in which communication is frequent andopen among Group companies. Our commitment to a highlevel of communication skills is also demonstrated whenwelcoming outside companies into the Group.
Ishihara KAGA ELECTRONICS Board members always sit on
the boards of directors of companies that have joined theGroup, providing advice on various management issues at themeetings and deepening their understanding of its corporate
culture through discussions. We also send people who havemastered KAGA-ism to work together with new Group
members to help them directly experience the spirit of KAGAELECTRONICS in the field.
Ishizaki The incorporation of KAGA-ism into personnel
evaluations helps new Group companies build up theircorporate culture while reviewing all aspects of theirevaluation systems.

Outside Director

Ishihara The new companies in the Group bring with themspecial skills, expertise, or work experience in fields that are
new to KAGA ELECTRONICS, and I believe these additions will
be very beneficial in further expanding the diversity of the Kaga
Electronics Group. I believe that human resources whose
attributes differ from those of KAGA ELECTRONICS employees
in terms of culture, ways of thinking, personalities, andexperience, will definitely come in handy when we undertakenew projects in the future.
For the Kaga Electronics Group to become a company with
net sales of ¥1 trillion, it is essential to produce and nurture alarge number of core human resources who will one day
become its management. We therefore need human resources
with a proper understanding of the basic spirit of KAGA-ism
and the awareness and actions that accompany it. To achievethis, we believe it is first necessary to have a well-balanced
combination of three mindsets, namely, a management
mindset, a sales mindset, and the foundational mindset of one
who is a working member of an organization.

Outside Director

Akira Tamura

Outside Director

Susumu Miyoshi

Hirokazu Nishiyama

Outside Director

Noritomo HashimotocolumnPost Merger Integration (PMI) at Kaga FEI
In January 2019, the Kaga Electronics Group acquired Fujitsu Electronics (now KAGA FEI), a company of similar size in terms ofnet sales and number of employees at the time, forming an industry-leading electronic components trading company with net
sales of ¥500 billion. How this PMI was carried out is described by Executive Officer Ishihara, who was on secondment at KAGA
FEI at the time.
At the time, there was a strong sense of anxiety among KAGA
FEI employees as to what would happen to us if they left
Fujitsu Group and joined the Kaga Electronics Group.
Therefore, Founder &CEO, Mr. Tsukamoto joined KAGA FEI’s
Board of Directors as its representative director and also
attended Management Meetings once a week, where hecarefully explained what KAGA ELECTRONICS thinks andvalues. Not only did Tsukamoto address KAGA FEI’s
executives, he strove to directly engage with its employees on anumber of occasions.
The turning point was KAGA FEI’s loss of a principal
distributor right (a factor that resulted in the ¥68,651 million
revenue decline). With such a major crisis hitting, if thecompany were to stay alive, it had to earn revenue by handling
products new to it, as well as take on commercial rights and29

KAGA ELECTRONICS CO.,LTD.

commercial materials that KAGA ELECTRONICS owned. I
think that all of employees worked hard during this time toaddress these issues and this led to the rebirth of KAGA FEI.
As a result, it was able to bounce back from difficulties, earnrecord revenues that could contribute to the Group, and growinto an even stronger company.
Also, the largest contributor to the success of the PMI wasthat we did not try to completely assimilate everything fromthe get-go, but respected and maintained what was goodabout the company, while helping our peers at KAGA FEI
understand the good aspects of KAGA ELECTRONICS andcombining and integrating them. The management team at
the Kaga Electronics Group also gained confidence in theirability to complete a large M&A and subsequent PMI in a shortperiod of time.

Contributing Opinions as Outside Directors in the Courseof Formulating the Medium-Term Management Plan
Miyoshi In the course of discussing the Medium-Term
Management Plan, I have offered my opinions on several issues.
Specifically, I believe that R&D and human resource development,
the latter of which includes employee education, constitute two
key points supporting growth. And, although the Kaga Electronics
Group maintains a workforce of approximately 8,000 employees, I
still consider the number of engineers it has insufficient.
Currently, engineers capable of addressing future-oriented R&D
themes mainly serve in the Engineering Department. They
account for less than 5% of the consolidated headcount. Unlessthe Group strives to secure and develop its pool of such humanresources, it could possibly end up facing a major obstacle in thecourse of product commercialization and other undertakings.
Secondly, external circumstances surrounding the Group are
rapidly evolving at home and abroad. Nobody is sure about what
will happen going forward. Therefore, I have stated at Board
meetings that the Group needs to enhance its awareness of crisis

management and strengthen its crisis control structure.
Hashimoto To date, the Company has been able to expand the sizeof operations thanks to the dedication of individual sales units,with each striving to stand out in friendly competition. However,
the achievement of a net sales target of ¥750 billion requires anadditional ¥250 billion in business revenues. With this in mind, wemust discuss how to enable the Company to exert a comprehensive
lineup of capabilities backed by overall organizational strength.
In April 2022, the Sales Planning Unit was launched within the
Corporate Planning Department. I expect this move to help
KAGA ELECTRONICS, in one way or the other, embrace a newmode of operations.
Tamura It was Mr. Miyoshi and I who have urged the Company tolaunch the Sales Planning Unit. Although the Company has long
been on a steady growth track in terms of sales, its sales units
have often lacked the capability for horizontal collaboration due tothe silo structure. However, we believe that they could naturally
grow into more cost-effective, high-performance sales teams andbe able to achieve further growth in both sales and profit should
they promote the sharing of information and management
resources among themselves while eliminating overlaps in priority

Integrated Report 202230

Special Feature

Director Miyoshi

fields and employing multilateral strategies. I admire theCompany’s executive team for its great flexibility as our proposals
on establishing the new unit were immediately put into practice.
Miyoshi Additionally, I have striven to bring a Group governance
perspective into the Board’s discussions. Sales from subsidiaries
and affiliates now account for more than 80% of consolidated net
sales. If the Company is to build an even stronger corporate group,
it needs to robustly manage, instruct and support these Group
entities. That is why I advocated for the launch of a new unit
tasked with consolidating these matters.
Tamura I expect KAGA ELECTRONICS to rally the Group’s entire
workforce to serve as “one team” via the active rotation ofhuman resources.
Nishiyama As a first-time participant in the discussions regarding
the formulation of a Medium-Term Management Plan, since
taking office as an outside director at the Company, I havepersonally striven to draw Board members’ attention to “corporatetransformation.” Based on “Everything we do is for ourcustomers,” the unchanging corporate philosophy upheld by theCompany since its founding, the Board of Directors identified
digital transformation (DX) as the key term defining corporatetransformation. When it comes to DX, I spent a considerable
amount of time explaining the necessity of employing it as ameans to realizing structural reforms, including productivity
improvement, cost reductions and work style reform, rather thanmerely introducing IT and digital technologies or otherwise
effecting superficial changes in the mode of operations. Moreover,I personally believe that the Medium-Term Management Planshould include ambitious visions that get employees excited.

What Our Medium-to Long-Term Sustainability
Management Plan Should Look Like
Miyoshi I believe that before all else a corporation must cherish
its fundamental philosophy. In this light, the Company has
maintained KAGA-ism. However, like any philosophy, it could
lose its impact over the passage of time. Accordingly,
management should keep disseminating it, day in and day out,
just like a street preacher.
I would also like to emphasize the importance of the notion that
corporations exist for the public good. In other words, businesses
are being called upon to be conscious of how they contribute tosociety. Looking ahead, the Company is expected to strive torealize the satisfaction of customers, employees, shareholders

31

KAGA ELECTRONICS CO.,LTD.

and other members of society in a simultaneous and balancedmanner. This will be a major goal for KAGA ELECTRONICS.
So, what issues should we prioritize? I think we should
particularly focus on addressing the low birthrate, the aging
population and carbon neutrality. Unless the issues of the lowbirthrate and aging population are tackled, Japan will see both thebusiness sector and society as a whole eventually loose viability.
We should take a serious approach to utilizing older workers andhelping them realize their full potential with an eye to resolving
these issues through business operations. With regard to carbon
neutrality, KAGA ELECTRONICS can play its part through businessin the area of energy-saving technologies.
Tamura “Everything we do is for our customers,” the corporate
philosophy, represents the Company’s determination to contributeto society through its business. This necessitates the Company
serving as an instrument for the public good.
Nowadays, you often hear that unless corporations effectively
respond to public calls for the realization of the United Nations
Sustainable Development Goals (SDGs), the world’s largely
capitalist economy, not to mention the foundations supporting
businesses like KAGA ELECTRONICS, will one day become nolonger viable. To put it another way, the Company can benefit froma growing scope of business opportunities by responding to suchcalls. It is also important that the Board of Directors monitors theexecutive team via the use of its governance framework, which isessential to ensuring lasting business continuity, so that theCompany can pursue sustainable growth.

Director Tamura

Hashimoto In terms of formulating a medium-to long-termsustainability management plan, we have been engaged in
especially intensive discussion to determine the areas in society
we need to focus on in order to secure the continuity of ourbusiness operations into the future. Because sustainability is
positioned as our starting point, our initiatives going forward
might not be limited to the issues named earlier. Rather, theCompany may well identify a growing number of issues to be
tackled. On the other hand, some of the issues may one day beresolved and considered no longer requiring attention. As such,
our approach to sustainability will not stay unchanged. It will
evolve in many ways due to changes in prevailing ideas, viewpoints
and social trends. In this context, I suppose that one of the
expected roles of outside directors is offering insights regarding
how to change that approach.
Nishiyama Sustainability will never be achieved through a one-off

Director Hashimoto

campaign. It requires ongoing effort. Accordingly, a corporationmust assess what it should do for sustainability and steadfastly
play its part in the realization of a sustainable society. When
discussions regarding the formulation of the medium- to longterm sustainability plan came to the finalization stage, I statedthat we should not be too ambitious at the beginning as I believethat we should maintain the plan and cannot choose toirresponsibly revoke our commitment to it.
In addition, “purpose” is a keyword when promoting
sustainability. For businesses, purpose means the sharedawareness of a variety of issues and problems society is now
confronting. When a corporation has a clearly defined purpose, it
can be considered to possess a robust concept of shared value.
Furthermore, such a purpose will better position the corporation
to work together with external partners to build ecosystems andotherwise form alliances. This will, in turn, result in the updatingof its business model, enabling it to pursue sustainability in a form
outside conventional social contribution activities. I think thatbusinesses tackling SDGs are now expected to take an approachof this kind.
Tamura Indeed, private corporations are now being urged tocreate business solutions capable of proactively meeting the everchanging expectations of society. The creation of such solutions
must be at a center of management discussions.

Future Issues to Be Tackled in Terms ofCorporate GovernanceMiyoshi The foremost issue we must tackle going forward iscrisis management, which typically requires enabling top
management to assess the overall status of the businessorganization, detect problems and swiftly implement
countermeasures. Currently, initiatives are under way toestablish a management information system supporting theseendeavors. I think that developing an organization tasked withmanaging, instructing and supporting Group companies is amatter of the utmost importance. In the future, the Company
might have to consider adopting a holding company system
under which each Group company under the umbrella of KAGAELECTRONICS will focus on their respective operations.
Tamura The Kaga Electronics Group has long nurtured a spirit ofproactive and self-reliant salespersons. As society evolves rapidly,
salespersons are expected to take proactive action to collect avariety of intelligence and assess social needs. The Company, on

the other hand, is expected to delegate authority to the executives
and enable them to boldly make decisions based on input from thefront lines even as it ensures robust discipline. For the Company
to realize robust corporate governance in this manner, building
respectful and trusting relationships between individuals charged
with execution and supervision is extremely important. I will help
facilitate robust interactions between these individuals at Board
meetings so that executives share detailed information anddirectors in charge of supervision contribute various suggestions
by drawing on such information.
Hashimoto I suspect that it is about time that we start developing a
structure for consolidating the undertakings of individual units
and subsidiaries in order to empower the Group to do business as
one organization. This will require the Company to switch from its
conventional mindset. This is one issue that must be overcome.
However, this of course doesn’t mean abolishing the uniquemodes of business operation developed by each business unit.
Rather, this means that we should be working from a perspectiveof utilizing the Group’s overall resources and thereby achieving
greater organizational strength. I believe that, by doing so, theKaga Electronics Group will be able to upgrade itself into an evenbetter company and thus blaze a path into the next era.

Director Nishiyama

Nishiyama I believe that corporations must align their governancestructures with the times and prevailing social circumstances.
Specifically, the Company currently needs to assess and determine
what should be incorporated into and how to restructure its
governance systems.
To ensure robust governance in the digital era, I would suggest
applying the “Society 5.0” concept the Japanese government has
been advocating as our basis for discussions. For us to realize an
ideal society in 2030 as envisioned by the SDGs, we should develop
a variety of technologies and create new value.
That being said, adopting a new mode of corporate governancein the digital era doesn’t mean that what we have been doing forgovernance is no longer relevant. While we continue implementing
conventional governance practices, we need to additionallydevelop a structure for promoting digital-driven initiatives on
various fronts. In sum, we are now being called to develop amanagement foundation supporting ongoing innovation by taking
full advantage of the power of digital technologies, an area ofparticular focus for the Kaga Electronics Group.

Integrated Report 2022

32

Financial Highlights

Outline of Business Segments

Financial Highlights

Outline of Business Segments

Net sales (millions of yen)

Operating income (millions of yen)

Profit attributable to owners of theparent / Earnings per share

Proportion of
consolidated
net sales■ Profit attributable to owners of the parent (millions of yen)
■ Earnings per share (yen)495,827443,615422,365

15,401576.46

20,915

11,39987.5%

Electronic components

292,779
235,92110,014

8,119 7,570

8,014

11,4676,490

236.58
2018/3 2019/3 2020/3 2021/3 2022/3

2018/3 2019/3 2020/3 2021/3 2022/3

5,852
292.07415.07
Net sales

Business description

213.21

2018/3 2019/3 2020/3 2021/3 2022/3

Development, manufacture and sale of semiconductors, general electronic
components and other products, EMS, and other activities

Up

22.7%

Cash flows from operating activities /Free cash flow

Return on equity (ROE) (%)

13.5

15.7

■ Cash flows from operating activities (millions of yen)
■ Free cash flow (millions of yen)

54.8

22,40610.9
9.5

Equity ratio (%)

18,754
7.6

10,077
5,904-1,547-8,408
2018/3 2019/3 2020/3 2021/3 2022/3

37.7

9,999
7,545

North America

Others

0.6%

3.9%

6.9%

3.4%

¥34,101 million¥16,874 million

Net sales¥495,827

million2022/333

2021/32022/3• Increasingly high performance ofsmartphones with the full
introduction of 5G and the expansionof the data center market• Fears of inflation triggered bysoaring prices of crude oil andother resources

Electronic parts
business• Increase in the number of fablesscompanies and rising demand foroutsourcing

EMS business

The EMS business performed well,particularly in the automotive, medical,
and industrial equipment sectors. We
worked to minimize the impact of the
prolonged lockdown and parts shortages
caused by the ongoing COVID-19 pandemic
and, to this end, thoroughly managed
manufacturing process by working in close
collaboration with our customers.

millionInformation equipment

Electronic components

Asia

Japan

8.0%

87.5%

36.6%

53.1%

KAGA ELECTRONICS CO.,LTD.

2022/3In the parts sales business, strong sales
continued throughout the fiscal year as theCompany took a forward-looking approachto accommodate customer demand in awide range of industries. Amid shortages
in the supply of some parts and materials,
we were able to leverage our procurement
capabilities as an independent trading
company, utilizing multiple sources tosecure sufficient goods to maintain oursales volume, boosting our performance.
The successful PMI of acquired companies
such as KAGA FEI and EXCEL also
contributed to earnings growth.

2022/3¥433,852 million

2021/3Risks

Net sales¥495,827

8,151

Opportunities

Net sales by region and composition¥19,590 million

353,454

Business overview

2018/3 2019/3 2020/3 2021/3 2022/3

Others¥2,767 million

18,107433,852

Business overview and opportunities / risks-1,554-8,327

Software¥39,616 million

38.8

122.1%(millions of yen)

35.8

2018/3 2019/3 2020/3 2021/3 2022/3

Net sales by segment and composition

38.4

Up

(millions of yen)

Review of FY2022/3 performance
In the parts sales business, amid prolonged tight supply and demandconditions for semiconductors and electronic components, the Company
placed the highest priority on securing the inventories needed to meet strong
demand from a wide range of industries, and, as a result, earnings increased
considerably. In addition, the post-merger integration (PMI) of acquiredcompanies, including KAGA FEI and EXCEL, progressed smoothly, contributing
to earnings growth. In the EMS business, sales were strong, particularly for
products for automotive, industrial equipment, and medical applications.
As a result, net sales were ¥433,852 million (up 22.7% year on year) andsegment income was ¥18,107 million (up 122.1% year on year).

Segment income¥181,436 million¥263,415 million• Growth of new business combining
IoT and AI• Progress in the application ofelectronic components and AI incars in line with the trend toward
CASE (Connected,
Autonomous,Shared & Services,Electric)• Growing need for further automationand efficiency• Prolonged Russian invasion of
Ukraine• Loss of sales opportunities due
to parts shortages• Loss of commercial rights due tochanges in commercial
distribution by customers andsuppliers• Shortage of human resources
both in Japan and overseas• An earthquake, flooding or othernatural disaster, or the spread of
infectious diseases• Suspension of factory operations
due to other external politicaland economic factors

Integrated Report 2022

34

Outline of Business Segments

Proportion of
consolidated
net sales

Proportion of
consolidated
net sales

Information equipment

Net sales

Business description
Sale of PCs, PC peripherals, home electric appliances, photographic andimaging products, and finished products, such as original goods

Down

18.1%

48,389

Sales of PCs for educational institutions as well as PC peripherals, including
security software, remained strong, but sales of other PC products and the
LED installation business remained sluggish, affected by difficulties inprocuring materials and equipment and the extension of construction periods
due to delayed deliveries. As a result, net sales were ¥39,616 million (down
18.1% year on year) and segment income was ¥2,085 million (down 16.0%
year on year).

2021/3

Software business

Segment income

Business description

Net sales

Segment income

Production of computer graphics, planning and development of amusement
products, and other activities

Down

Down

Down

(millions of yen)

Review of FY2022/3 performance

8.0%

16.0%

(millions of yen)

39,6162022/32,482

2021/3

0.6%

Review of FY2022/3 performance

2,085

5.6%

(millions of yen)

2,932

Although demand for computer graphics (CG) content for smartphone games
was strong, backed by stay-home demand during the COVID-19 pandemic,
costs increased due to expenses incurred in meeting delivery deadlines andother factors. As a result, net sales were ¥2,767 million (down 5.6% year onyear) and segment loss was ¥26 million (compared with segment income of¥263 million in the previous fiscal year).

110%(millions of yen)

263

2,767

-26

2022/32022/32021/32021/32022/3Business overview and opportunities / risks

Informationequipment

Business overview

Opportunities

Risks

Sales of PCs for educational institutions andsuch PC peripherals as security softwareremained strong, but sales of PCs to corporate
customers were weak due to the fading of
remote work-related demand and productsupply difficulties. The LED equipment
installation business was also weak, affectedby difficulties in procuring materials andequipment and the extension of construction
periods due to delays in deliveries.

•R obust expansion of needs for
information-related devices on
the back of advances in ICT•L oss of sales opportunities due
to parts shortages•G rowing needs for securityrelated solutions among higher
education institutions•L oss of commercial rights andproduct procurement routes due
to changes in the distribution
policy of buyers and suppliers• Intensifying competition due tolower prices and more newentrants

Proportion of
consolidated
net sales

3.9%

Other business

TOPICS

LED Lighting with Disinfection and Deodorization Functions Based on
Photocatalytic Technology to Further Combat Infectious Diseases
We have developed “LED lighting with sterilization and deodorization functions,” lighting fixturescoated with a photocatalyst that is effective in absorbing and inactivating various organic substances
LED lighting with disinfection
and deodorization functions
such as fine particulate matter (PM2.5), viruses, and bacteria as well as at countering unpleasantairborne odors in enclosed spaces.
The apatite titanium dioxide used in the photocatalyst produces OH radicals, which exert a stronger oxidizing power than chlorine orozone. It can safely decompose and inactivate harmful organic substances, and in studies conducted in cooperation with the Japan Food
Research Laboratories and the Faculty of Agriculture at Kagoshima University, it has been confirmed that it is 99.99% effective in inactivating
bacteria and some envelope viruses. This lighting has been adopted for store lighting fixtures produced exclusively for the Yodobashi Camera
chain, and is being installed at 23 locations throughout Japan with preliminary installation at some stores beginning in December 2020.
We will continue our efforts to prevent the spread of infectious diseases through our photocatalyst-based disinfection anddeodorization equipment and application services.

35

KAGA ELECTRONICS CO.,LTD.

Business description
Repair and provision of support for electronic equipment, manufacture andsale of amusement equipment, sale of sports goods, and other activities

Net sales
Up

11.4%

(millions of yen)

Review of FY2022/3 performance
In the PC and PC peripheral recycling business, demand for reused andrecycled products was strong as the supply of new PCs and other products
remained tight due to a shortage of electronic components. As a result, net
sales were ¥19,590 million (up 11.4% year on year) and segment income was¥626 million (up 32.0% year on year).

Segment income

17,5892021/3Up

32.0%(millions of yen)

626

19,590474

2022/32021/32022/3Integrated Report 2022

36

ESG Information

Directors and Auditors
As of June 28, 2022

Outside Director

Outside Director

1963 	Joined Toyota Motor Co., Ltd.
(currently Toyota Motor Corporation)
2001 	Executive Vice President andRepresentative Director
2002 	President of Osaka Toyopet Co., Ltd.
(currently Osaka Toyota Motor Co., Ltd.)2005 	Advisor to Toyota Motor Corporation
Chairman of Osaka Toyopet Co., Ltd.
2009 	Executive Advisor to Maxell Holdings, Ltd.
2015 	Director of the Company

1970 	Joined the Bank of Japan
1978 	Deputy Director of the International
Finance Bureau, Ministry of Finance1998 	Director of Information Systems
Department, the Bank of Japan
2008 	Representative Director and Senior
Executive Officer, Sohgo Security Services
Co., Ltd. (ALSOK)2011 	Advisor to Okigin Economic ResearchInstitute (present position)2012 	Advisor to Niigata Sohgo Security Services
Co., Ltd. (ALSOK) (present position)2015 	Director of the Company
2019 	Outside Board Director of Solekia Limited(present position)

Outside Director

Outside Director

1977 	Joined Mitsubishi Electric Corporation2009 	Director, Chairman of the Nomination
Committee, Chairman of theCompensation Committee, Executive
Officer, in charge of General Affairs,
Human Resources and Public Relations
2012 	Director, Chairman of the Nomination
Committee, Chairman of theCompensation Committee, Senior Vice
President, in charge of Corporate
Strategic Planning and Operations of
Associated Companies
2012 	Director, Member of the Nomination
Committee, Senior Vice President, incharge of Corporate Strategic Planningand Operations of Associated Companies
2016 	Director
2016 	Advisor
2019 	Director of the Company
2021 	Outside Director of IBOKIN CORP.
(present position)

1973 	Joined Japan Broadcasting Corporation(Nippon Hoso Kyokai (NHK))1989 	General Broadcasting Administration,
NHK and Executive Vice President of NHK
Enterprises America, Inc.
2003 	Responsible for Engineering,
Programming Department, NHK
2004 	Head of Engineering Department, NHK2005 	Executive Board Member, NHK (Chief
Engineering Officer)
2009 	Representative Director and President of
NHK Media Technology, Inc.
2017 	Director and Head of 8K Ecosystem
Business Strategy Office, Sharp
Corporation
2021 	Director of the Company

Auditor (Full-time)

Auditor (Full-time)1985 	Joined The Tokai Bank, Ltd. (currently
MUFG Bank, Ltd.)2005 	Temporarily transferred to Mitsubishi UFJ
Securities Co., Ltd. (currently Mitsubishi
UFJ Morgan Stanley Securities Co., Ltd.),
Division Manager of Corporate Sales
Support Division2010 	Manager of Tsu Branch Office, The Bankof Tokyo-Mitsubishi UFJ, Ltd. (currently
MUFG Bank, Ltd.)2012 	Manager of Tsu Branch2015 	Joined KAGA ELECTRONICS CO., LTD. as
Advisor2015 	Auditor (Full-time)1978 	Joined The Fuji Bank, Limited (currently
Mizuho Bank, Ltd.)
1994 	Deputy Manager of Singapore Branch
2002 	Manager of Senzokucho-Higashi Branch2015 	Joined KAGA ELECTRONICS CO., LTD. as
Advisor2015 	Auditor (Full-time)

Director, Executive Officer

Outside Auditor

Outside Auditor

1982 	Joined KAGA ELECTRONICS CO., LTD.
1997 	General Manager of Domestic Sales
Department No. 1, Sales Headquarters
2003 	President of KAGA (SHANGHAI)
ELECTRONICS CO., LTD.
2004 	President of KAGA ELECTRONICS (USA)INC.
2011 	Division Director of Electronics Sales
Division, Components Business Unit2012 	Executive Officer
Division Director of Electronics Sales
Division, and Division Director of Special
Sales Department
2015 	Director, Division Manager of Electronics
Sales Division
2022 	Director, Executive Officer

1997 	Joined Tokyo Office of Tohmatsu & Co.
(currently Deloitte Touche Tohmatsu LLC)
2001 	Registered as Certified Public Accountant
2002 	Opened Kitsunai Certified Public
Accountant Office as Representative(present position)
2004 	Established Asia Alliance Partner Co.,
Ltd. as Representative Director (present
position)2018 	Auditor of KAGA ELECTRONICS CO., LTD.
2022 	Outside Director of Agent InsuranceGroup, Inc.

1977 	Assistant Judge at Tokyo District Court
1989 	Judge at Tokyo District Court
1996 	Judge at Tokyo High Court
2016 	Admitted to the bar, Joined Alpha
Partners Law Offices (present position)2018 	Auditor of KAGA ELECTRONICS CO., LTD.
2021 	Auditor of Bouygues Asia K.K.

Directors

Susumu Miyoshi
Representative Director,
Founder & CEO

Representative Director,
President & COO

1968 	Founded KAGA ELECTRONICS CO.,LTD. (private management)
1968 	Established KAGA ELECTRONICS
CO., LTD. President
2007 	Founder & CEO
2021 	Outside Director of ITbook Holdings
Co., Ltd. (present position)
2022 	Representative Director,
Founder & CEO

1980 	Joined KAGA ELECTRONICS CO.,LTD.
1991 	General Manager of Sales
Department, Sales Headquarters
1995 	Director, General Manager of East
Japan Sales Department, High TechBusiness Division
2002 	Managing Director
2005 	Senior Managing Director, Chief ofSpecific Industry Sales Headquarters
2012 	Vice President
2014 	President & COO
2022 	Representative Director,
President & COO

Isao Tsukamoto

Ryoichi Kado

Director, Senior Managing Executive
Officer

Director, Senior Managing Executive
Officer

1980 	Joined KAGA ELECTRONICS CO., LTD.
1991 	General Manager of Specific Industry
Sales Department
1995 	Director
2002 	Managing Director
2005 	Senior Managing Director
2022 	Director, Senior Managing Executive
Officer

1980 	Joined ITOMAN Co., Ltd.
1993 	Joined KAGA ELECTRONICS CO., LTD.
2000 	Division Director of Overseas Business
Division, Electronics Sales Headquarters
2000 	Director
2005 	Managing Director
2014 	Senior Managing Director
2022 	Director, Senior Managing Executive
Officer

Shinsuke Takahashi

Noritomo Hashimoto

Shintaro Kakei

Akira Tamura

Hirokazu Nishiyama

Auditors
Director, Managing Executive Officer
Head of Administration Headquarters

Director, Executive Officer
Division Manager of EMS Business Division

1979 	Joined KAGA ELECTRONICS CO., LTD.
1985 	President of TAXAN (UK) LTD.
1993 	General Manager of Overseas Sales
Department, Sales Headquarters No. 2
2005 	Executive Officer, General Manager of
Accounting Division and General Manager ofInformation Systems Department
2012 	Executive Officer Chief of Administration
Headquarters and General Manager of
Accounting Division2012 	Director, Chief of Administration
Headquarters and General Manager of
Accounting Division2015 	Managing Director, Head of
Administration Headquarters
2022 	Director, Managing Executive Officer
Head of Administration Headquarters

1982 	Joined KAGA ELECTRONICS CO., LTD.
1992 	President of KAGA (H.K.) ELECTRONICS
LIMITED1998 	President of TAXAN USA CORP.
2004 	General Manager of Overseas Sales
Division, Overseas Business Division,
Electronics Sales Headquarters
2010 	President of KAGA (H.K.) ELECTRONICS
LIMITED2012 	Executive Officer, Division Director of EMS
Business and President of KAGA (H.K.)
ELECTRONICS LIMITED2015 	Director, Division Manager of EMS
Business Division
2022 	Director, Executive Officer, Division
Manager of EMS Business Division

Eiji Kawamura

Mitsuhiro Nohara

37

KAGA ELECTRONICS CO.,LTD.

Motonori Toshinari

Kazunori Kameda

Susumu Kitsunai

Takahiro Ishii

Yoichi Sato

Integrated Report 2022

38

ESG Information

Corporate Governance
Basic approach and structure of corporate governance
KAGA ELECTRONICS recognizes that enhancing corporate
governance is a key management issue. The Company is therefore
building a corporate governance system with the fundamental
policies and aims of ensuring total compliance with corporate
ethics, laws, and regulations, reinforcing internal control systems,
and securing the soundness, efficiency, and transparency ofbusiness operations to improve its corporate value. Moreover, inlight of the importance of corporate governance, the Company
maintains the CSR Promotion Committee, the SDGs Committee
and the Nominating and Compensation Committee, thereby
strengthening its corporate governance structure.
KAGA ELECTRONICS is a company with a board of directors
and board of auditors. It has adopted a corporate governancesystem based on collaboration among its Board of Directors,
auditors and Board of Auditors, and with the accounting auditor.
In principle, the Board of Directors meets once a month andholds extraordinary meetings on a flexible basis. The Board of
Directors makes decisions on important matters related to items
stipulated by laws and regulations as well as to management,

and it supervises the execution of duties by directors. Consistingof 11 directors, including four outside directors, the Board of
Directors is capable of sufficiently discussing the aforementioned
matters and making accurate and swift decisions. In addition,although the Company has maintained an employment-based
executive officer system since April 1, 2005, it switched to acommissioned executive officer system on April 1, 2022 in orderto further enhance corporate governance. Based on this system,
the Company has even more clearly defined the roles ofindividuals tasked with management decision making andsupervision and those tasked with business execution, thereby
facilitating the separation of functions. Moreover, with this move
the Company secured a structure capable of responding swiftly
to changes in the external environment even as it strengthened
both Board of Directors functions and executive functions. The
Board of Auditors consists of four auditors, including two outside
auditors. Auditors regularly attend Board of Directors meetings
while proactively participating in other important internal
meetings as part of their duties.

General Meeting of Shareholders
Selection / dismissal

Board of Auditors (auditors)

Audit

Audit

Collaboration

President & COO
Representative
Executive Officer

Audit

SDGs Committee• Environmental Issue
Working Group• Social Issue
Working Group• Governance Issue
Working GroupCSR Promotion
Committee• Compliance Committee• Risk Management
Committee• Information Disclosure
Committee• Personal Information
Management
Committee

Group Management
Headquarters Council

Board of Auditors
Collaboration

Accounting auditor

Consult / Advise

Board of Directors (directors)

Collaboration

Founder & CEO
Chairman Executive Officer

Advice /consultation

Management Meeting
Audit

Divisions and Group companies

Nominating and Compensation Committee
The Company has established the Nominating and Compensation
Committee in an effort to secure the transparency and objectivityof its process for nominating candidates for directors and auditors,
evaluating their performance and determining remuneration forthese individuals. This body is thus tasked with strengthening
supervisory functions offered by the Board of Directors, with theaim of enhancing the Company’s corporate governance structure.

CSR Promotion Committee
The Company has established a CSR Promotion Committee
chaired by the President & COO that promotes corporate social
responsibility (CSR) alongside efforts to enhance corporate
value. The Compliance Committee, Risk Management
Committee, Information Disclosure Committee, and Personal
Information Management Committee have been establishedunder the CSR Promotion Committee. These committees areplaying their part in making decisions regarding business
operations undertaken by the Group as a whole and optimizing
their execution status.

Outside officers
The Company has appointed four outside directors and two outside
auditors. Based on the Tokyo Stock Exchange standards on
independence, we appoint outside officers who do not have any
special interests in the Company and who have extensive experienceand broad powers of judgment in corporate management. The
auditors are also required to have highly specialized knowledge
and maintain independence from management executives.
The Company has established a staff office of the Board of
Directors, that distributes materials related to matters ofdeliberation by the Board to all officers, including outside
officers, ahead of the meeting day. The staff office provides
supplementary explanations to the outside officers when needed
to ensure that adequate information is imparted in advance.
This helps support lively debate at Board of Directors meetings.
By the end of each fiscal year, the staff office sets the schedule
for the regular Board of Directors meetings for the following
fiscal year and notifies all officers, including outside officers, of
this schedule in order to improve attendance.

Selection / dismissal
Selection / dismissal

Nominating and Compensation
Committee

SDGs Committee
Chaired by the President & COO, the SDGs Committee is tasked
with upgrading CSR initiatives and other endeavors addressing ESG
issues. To this end, the committee is taking a cross-organizational
approach to the promotion of sustainability-oriented managementthat encompasses all Group companies. Under this body, threeworking groups (the Environmental Issue Working Group, Social
Issue Working Group, and Governance Issue Working Group) areengaged in such activities as the formulation of policies,
measures, and targets associated with ESG issues and themonitoring of the status of progress in addressing these issues.

Audit Office
The Company has established an Audit Office to handle internal
audits in conjunction with the auditors. The Audit Office discusses
audit plans with the auditors in advance and regularly reports audit
findings to the auditors. The Office also cooperates with theauditors as required, such as when reports are requested.
Moreover, pursuant to the Financial Instruments and Exchange Act,
the Audit Office conducts evaluations of internal control systems.

Attendance at Board of Directors Meetings
Status of attendance at Board of
Directors meetings held during
the year ended March 31, 2022
Position and assignment
at the Company

Name

Committee membership

Attendance(times)Attendance
rate (%)

Nominating andCompensation
Committee

CSR Promotion
Committee

SDGs Committee●●

Isao Tsukamoto

Representative Director,
Founder & CEO

19/19

100.0

●

Ryoichi Kado

Representative Director,
President & COO

19/19

100.0

●

Shinsuke Takahashi

Director, Senior Managing
Executive Officer

19/19

100.0

●

Shintaro Kakei

Director, Senior Managing
Executive Officer

19/19

100.0

●

Eiji Kawamura

Director,
Managing Executive Officer
Head of Administration
Headquarters

19/19

100.0

Motonori Toshinari

Director,
Executive Officer
Division Manager of
EMS Business Division

19/19

100.0

●

Mitsuhiro Nohara

Director,
Executive Officer

19/19

100.0

●

●

Susumu Miyoshi

Outside Independent

Outside Director

18/19

94.7

●

Akira Tamura

Outside Independent

Outside Director

19/19

100.0

●

Noritomo Hashimoto Outside Independent

Outside Director

19/19

100.0

●

Hirokazu Nishiyama

Outside Director

14/14*

100.0●

Outside Independent●●

Outside : Outside directors   Independent : Independent directors as defined by the rules of the Tokyo Stock Exchange  ● : Committee chair  ● : Committee member* Mr. Hirokazu Nishiyama assumed office on June 29, 2021. Accordingly, information on his attendance to Board of Directors meetings is based on the number of meetings held since that day.

39

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2022

40

ESG Information

Internal Control / Compliance
Areas of specialty of Directors and Auditors

Directors

Basic approach to internal control systems
Technology
andmanufacturing

Globalbusiness

Sales andmarketing

Isao Tsukamoto

●

●

●

Ryoichi Kado

●

●

●

Shinsuke Takahashi

●

●

●

Shintaro Kakei

●

●

●

Eiji Kawamura●

Motonori Toshinari

●

●

●

Mitsuhiro Nohara

●

●

●

●

●

Outside Independent

●

●

●

Akira Tamura

Outside Independent

●

●

●

Noritomo Hashimoto Outside Independent●

Hirokazu Nishiyama Outside Independent●

Yoichi Sato

Outside Independent

●
●

●

●
●

●

Takahiro Ishii

●

●

●

●

●

●

●

●

Note: Up to four skill categories are presented per individual in line with the Company’s expectations regarding their contributions in their respective areas of specialty. The above
matrix does not fully describe the expertise possessed by each individual.

Remuneration system for officers
executive directors comprises basic fixed remuneration,
performance-linked remuneration, and share-based
remuneration. Remuneration for outside directors, who aretasked solely with exercising supervisory functions, consists
only of basic remuneration due to the nature of their duties.
The Company has also made it a rule to ensure thatprocedures for determining remuneration for directors arerational, objective and transparent as is the content of such
remuneration itself.

Total amount of remuneration for the year ended March 31, 2022

41

Total remuneration, etc. (millions of yen)

Number of recipients

Directors (Of which, outside directors)

728(38)11(4)Auditors (Of which, outside auditors)

46(10)

4(2)KAGA ELECTRONICS CO.,LTD.

Authority, and Rules on Internal Approval to clarify the scope of
authority of each director. As a company adopting a system ofcorporate auditors, each auditor, including each outside auditor,
conducts detailed audits on the execution of duties by directors.
In addition, the Company has formulated the Basic Compliance
Rules, which serve as a code of conduct to ensure compliancewith laws and regulations and the Articles of Incorporation as ameans to enable the proper execution of duties by employeesof the Company and Group companies. The Company has also
set up the Compliance Committee under the umbrella of the
CSR Promotion Committee chaired by the President & COO.
In this way, the Company secured a structure to ensure theappropriate execution of business throughout the Group.

Potential risks that the Group faces include factors relating toeconomic conditions, exchange rates, country risks, pricecompetition, product procurement capabilities, internal brandrisks, legal regulation, market risks, major litigation,
severance pay obligations, personal information, accidents, theenvironment, and information management. As part of efforts
to create the needed appropriate systems to manage every risk
the Group may face, the Company has designated divisions
tasked with handling specific risks while appointing risk
control officers and managers tasked with spearheading risk

countermeasures undertaken by such division.
In the event that a risk materializes, the division responsiblefor dealing with said risk will immediately make the necessary,
appropriate response to minimize damage under the directionof the risk control officers and managers.
In addition, the Company maintains the Risk Management
Committee placed under the CSR Promotion Committee inorder to ensure that risks foreseen by the Group are responded
to promptly and appropriately.

●●

The Company’s basic policy regarding remuneration for its
directors is to structure a remuneration system that is linked
with shareholder interests and that robustly incentivizes these
individuals to strive for ongoing improvement in corporate
value, with the aim of securing and retaining excellent humanresources capable of practicing and realizing its corporate
philosophy. To this end, the Company strives to set
remuneration for each director at a level commensurate with
their assigned responsibilities. Specifically, remuneration for

The Kaga Electronics Group is aware that enhancing corporate
governance is an important management issue. Our fundamental
policy is ensuring compliance with corporate ethics and laws andregulations and reinforcing internal control systems while
maintaining the soundness, efficiency and transparency ofmanagement and raising corporate value.
To this end, the Company has defined its basic approach tointernal control systems. Moreover, the Company has
established Rules on Officers and Board of Directors Rules toensure the proper execution of duties by directors and the Boardof Directors. The directors monitor one another’s execution ofduties at regular and extraordinary meetings of the Board of
Directors. The Company has also established Organization
Rules, Rules on the Allocation of Work Duties, Rules on Work

Risk management system●●

Outside Independent

●

●

●

●

Kazunori Kameda

IT anddigitaltechnology●

Susumu Miyoshi

Susumu Kitsunai

Finance andaccounting

Personnel
management
and human
resource
development

Corporate
management

Name

Auditors

Law
and riskmanagement

Ensuring appropriate operations at Group companies
The Company has established Rules on the Management ofAffiliated Companies to ensure appropriate business operations
at affiliated companies and executes controls based on theserules. In addition, it is required that any coordination among
Group companies as well as any action on important matters
are first discussed by the Company’s Management Meeting
and Board of Directors before decisions are made.
The Company’s Audit Office conducts audits in collaboration
with the Administration Headquarters and other business units
to ensure that business activities undertaken by Group companies

meet unified standards and to confirm the appropriatenessand compliance of their operations with laws and regulations
as well as the Articles of Incorporation. The Office also
provides guidance for improvements in business activities.
Furthermore, Group companies submit the minutes from all
Board of Directors meetings to the Company and makemonthly reports on business activities, the status of budget
implementation, and important matters relating to ensuring theappropriateness of business activities.

Efforts toward the elimination of antisocial forces
The basic position of the Kaga Electronics Group is to maintainno relationships whatsoever with antisocial forces that threatensocial order and safety and to remain resolute in its refusal of all
improper demands from antisocial forces as set forth in its
Fundamental Compliance Rules and Employment Rules.
In cases where the Company is subject to improper demands
from antisocial forces, the General Affairs Department and CSR
Promotion Committee work together, acting in collaboration

with crisis management advisors and company attorneys on anas necessary basis in their efforts to ensure proper andorganized responses to such incidents. The Company also holds
regular discussions with company attorneys, meets with police
departments and other external specialized organizations, andparticipates in training and other activities to gather relevant
information on antisocial forces.

Integrated Report 2022

42

ESG Information

Together with Our Employees
The most important management resource for a trading company is undoubtedly its human resources. To drive sustainablegrowth, we promote the development of human resources and the creation of an environment that enables the execution of ouraction guideline FYT (pronounced “fight”). This guideline expresses our commitment to always be Flexible and to think and act
Young when Trying to take on challenges.
Implementing the idea that “everyone is a corporate manager”

Average length of service / Job turnover rate

Annual prescribed working hours / Monthly average overtime
work per employee■■ Average length of service (years) ● Job turnover rate (%)■■ Annual prescribed working hours (hours) ■■ Monthly average overtime work per employee (hours)

3.1

2.9

14.1

14.7

2018/3

2019/3

1.9

2.0

2.1

14.7

15.4

14.8
9.7

Human resource strategy / Diversity management
As our business activities become more global and the market
environment undergoes abrupt change, diversity and taking onchallenges are keys to driving sustainable growth. This isbecause diversity enables us to look at risk as an opportunity,
and when we take on challenges we can take full advantage ofthese opportunities. To make this a reality, the Kaga
Electronics Group promotes diversity management in terms ofmaking effective use of diversity in human resources and inwork style. At the same time, we respect our human resources
who continue to take on challenges and see each person as acorporate manager. With this in mind, we will keep protecting
our corporate culture of tolerating failure as a consequence of
tackling challenges.

Number of employees / Ratio of female employees (consolidated)

Average age of employees

Number of employees (persons) ■■ Male ■■ Female ● Ratio of female employees (%)■■ Male ■■ Female ● Overall(years old)

55.3

5,427

52.8
6,627

52.4
6,731

53.0
7,826

7,959

4,150

4,085

3,874

3,498

3,527

2,427

3,129

3,204

3,676

2018/3

2019/32020/32021/3

3,000

51.3

43.6
41.4
36.2

44.0
41.8
37.1

44.0
42.0
37.0

44.9
42.8
38.3

44.9

2022/3

2018/3

2019/32020/32021/32022/38,081

2018/3

11.3

11.9

12.7

2019/32020/32021/3

7,646

2019/37,504

2020/32021/32022/3

Note: The average annual wage for the fiscal year ending March 31, 2022 includes
special stock incentives.

Pursuing a comfortable working environment

Employee education, training and income compensation programs
At the Kaga Electronics Group, we support the careerdevelopment of employees through training for new recruits,annual training, rank-based training and other forms of education,
as well as by providing assistance with correspondence courses.
Every year, we grant a total of six days of paid “refresh
leave,” which is separate from annual paid leave, to all
employees. We also instituted a sick leave program for those
who develop one of three specified types of serious disease(cancer, cerebral stroke and myocardial infarction) to help
KAGA ELECTRONICS CO.,LTD.

10.0

2022/3

Number of annual paid leave granted / Utilization ratio of annual
paid leave

Number of employees who took childcare leave / Ratio of
employees reinstated following childcare leave■■ Number of annual paid leave granted (days) ● Utilization ratio of annual paid leave (%)

Number of employees who took childcare leave (persons)■■ Male ■■ Female ● Ratio of employees reinstated following childcare leave

56.8

57.9

18.7

18.4

63.1
18.7

53.2

54.3

18.7

18.7

100.0

86.6
19

92.9

2018/3

2019/32020/32021/32022/3

2018/3※

100.0

23

22

17

2019/3※

100.0

17
20

16
1

2020/31

2021/32

2022/3

Note: The above number represents the simple sum of employees who took childcare leave.

Utilization of welfare facilities

7,815

43

2022/3

Note: Average of all employees, excluding the number of annual paid leave days carriedover to the subsequent fiscal year

Average annual wage (including bonus)

2018/32021/3

1,807.5

1,800.0 1,815.0

22

Average annual wage (thousands of yen)

7,567

2020/3

1,822.5

Note: The job turnover rate represents figures for KAGA ELECTRONICS on a nonconsolidated basis and is calculated by dividing the number of permanent employees
who have resigned over the course of each fiscal year by the number of permanent
employees at the beginning of said year.

42.9

38.3

1,822.5

them secure their income during their hospitalization andabsence from work. Specifically, employee entitlement for paid
sick leave is accumulated in step with years of service, for a
maximum of 20 days. Employees are also allowed to take hourly
paid leave. Through such initiatives as these, we aim to strike a
good work-life balance for a safer work environment for employees.
Also, in the course of responding to the COVID-19 pandemic,
we placed the utmost priority on ensuring safety and security
for our employees at home and abroad.

With the aim of supporting the maintenance and improvement of
employee health as well as betterment of work-life balance,
the Kaga Electronics Group has established its own welfare
facilities. These include company villas in Hakone, Karuizawa,
Atami and Miyazu (Kyoto). Moreover, the Company owns two
cruiser boats (Yokohama and Kyoto). In addition, the Company
provides employees with access to resorts in Japan and abroad,contract golf courses and other facilities. The company villautilization rate is currently 56.7%,* suggesting that they areused by a broad range of employees. Going forward, we willcontinuously strive to create a comfortable working
environment by enhancing the content of Company-assisted
options for recreational destinations.
* Utilization rate reflecting frequency of facility occupancy on days preceding Sundays or
national holidays from April 2021 to March 2022.
A Company-owned cruiser boat

Integrated Report 2022

44

ESG Information

ESG Information

Together with Our Customers

Together with the Community

The Kaga Electronics Group proposes and provides value-added products and services that swiftly meet changes in the times
based on its corporate philosophy of “Everything we do is for our customers.” By doing so, we support the technologicalinnovation and production streamlining of our customers worldwide.

Cognizant of the importance of its social responsibilities as a company, the Kaga Electronics Group contributes to sports
promotion and to the local community through its business sites worldwide, and actively undertakes activities that help drive theadvancement of education, art and culture.

To deliver high-quality products and services

Quality control system
The Kaga Electronics Group established the Production
Center in its EMS Business Division, thus enabling a systemof quality control that centers on KAGA (SHENZHEN)ELECTRONICS CO., LTD., its flagship base for overseas
production, and KAGA EMS TOWADA CO., LTD., which boasts
a wealth of experience in the manufacture of in-vehicle
related products. At the Center, we manage the entire
Group’s resources as cross-functional capabilities in suchareas as production technology and quality control andpromote the optimal distribution of resources and thestrengthening of technological competencies on a global basis.
The Center also liaises with production sites in China andJapan as well as countries in the ASEAN region, Europe andNorth America to advance the standardization of production
facilities, IT systems and operational processes, and thesharing of information, for example, to prevent the recurrenceof issues. Through standardization, the aim is to ensure
identical standards, quality and customer service.

In addition, regular exchange meetings are held to reinforce
quality on a Groupwide basis.

The remote verification of inspection machines involving an active exchange of ideas
among attendees

Sports promotion
The Kaga Electronics Group contributes to the promotion of golf, primarily throughthe sponsorship of golf tournaments. This includes special sponsorship of The
Ladies Professional Golfers’ Association of Japan (JLPGA)’s “JLPGA ROOKIESCHAMPIONSHIP KAGA ELECTRONICS CUP” since 1996. This tournament has
proven a great gateway to success for young female professional golfers.
Six professional golfers, both male and female, are on the books at KAGAELECTRONICS, playing their part in its PR strategy in the course of participating
in tournaments around the world.
In addition, the Group company KAGA SPORTS CO., LTD. is engaged in suchbusinesses as the direct sale of golf supplies at its own stores and sellingwholesale to retailers while running golf driving ranges, golf schools, and batting
centers, thereby contributing to the development of the sports industry.

One of the Company’s golf schools

GOLF PLAZA ACTIVEJLPGA ROOKIES CHAMPIONSHIP KAGA ELECTRONICS CUP 2021

Akiba Golf Studio
Eric
SayakaHirokoSugimoto Tsuchida Azuma

Professional golfers sponsored by KAGA ELECTRONICS

Pursuing our philosophy of “Everything we do is for our customers”

Efforts to enhance quality

Contributing to the local community

The Company’s Engineering Department controls thetechnological resources of the entire Group, from planning anddevelopment to design, manufacturing and quality assurance,
and works to optimize these resources, strengthen technologicalcapabilities and expand business across the organization. The
Quality Assurance Department, one of the bodies of theEngineering Department, seeks to enhance development
quality and manages safety standards throughout the Group.
This department works with other departments responsible for
quality within the Group, depending on the circumstances, inorder to resolve issues.
Prototype evaluation using a measurement device

Kanazawa City in Ishikawa Prefecture is the place that the Founder and CEO of
KAGA ELECTRONICS Isao Tsukamoto was born and raised. As part of our efforts
to contribute to this community, we have been supporting the Kanazawa
Marathon, an open to the public event, since its inception in 2015, with employee
volunteers helping organize the race.
The Kaga Electronics Group, which conducts business activities around theworld, takes on a variety of social contribution activities at its sites in Japan andoverseas as well. Our production subsidiary in Mexico is engaged in “Dr. Smile”
activities, which involve donating toys to children who have been hospitalized forcancer treatment. Meanwhile, employees at production subsidiaries in Japan
take part in periodic cleanup campaigns encompassing neighboring sightseeing
spots and other areas around factories. In these and other ways, we take alocally rooted approach to contributing to communities in which we operate.

Status of ISO9001 certification
KAGA ELECTRONICS and the following Group companies have attained ISO9000 series certification, an international standard for quality
management.
The Company is striving to further enhance customer satisfaction through the continuous improvement of its quality management system.
Japan:	KAGA ELECTRONICS CO., LTD., KAGA TECH CO., LTD., AD DEVICE CO., LTD., KAGA MICRO SOLUTION CO., LTD., KAGA FEI Co.,
Ltd., NV DEVICES CO., LTD., KAGA EMS TOWADA CO., LTD., Kyokuto Electric Co., Ltd., KAGA TECHNO SERVICE CO., LTD.
Overseas:	KAGA (H.K.) ELECTRONICS LIMITED, KAGA (SHENZHEN) ELECTRONICS LTD., KAGA COMPONENTS (MALAYSIA) SDN.BHD.,
KAGA ELECTRONICS (THAILAND) COMPANY LIMITED, KD TEC s.r.o., SUZHOU TAXAN KAGA TRADING CO., LTD., KAGATECHNOLOGY (SUZHOU) ELECTRONICS CO., LTD., KAGA ELECTRONICS INDONESIA, PT, HUBEI KAGA ELECTRONICS
LIMITED, TAXAN MEXICO, S.A. DE C.V., KAGA ELECTRONICS (VIETNAM) CO., LTD., KD TEC TURKEY ELECTRONIK SANAYI VE
TICARET LIMITED SIRKETI, KAGA ELECTRONICS INDIA PRIVATE LIMITED, KAGA FEI AMERICA, Inc., KAGA FEI EUROPE GmbH45

KAGA ELECTRONICS CO.,LTD.

KotokoFumikaMiyuu
Kawagishi Yamashita Uchida

Supporting the Kanazawa Marathon“Dr. Smile” activities (TAXAN MEXICO), S.A. DE C.V.

Supporting education and welfare
At KAGA ELECTRONICS, the Founder & CEO Isao Tsukamoto gives lectures tostudents as a specially appointed professor for the Faculty of Service Innovation,
Chiba University of Commerce. (In 2020, these lectures were conducted remotely
or at the Company’s facilities with a limited number of attendees.) In addition,
Tsukamoto speaks at such events as study sessions for young corporate managers
who run SMEs.
We also contribute to society in a wide range of fields related to education andwelfare support, including cooperating with the Japan Cancer Society and offering
assistance to cancer patients and their families.

A lecture held at KAGA ELECTRONICS Head Office for a small
group of students

Integrated Report 2022

46

ESG Information

Together with the Earth
The Kaga Electronics Group views the 21st century as the century for protection of the global environment and, with this in mind,
conducts business activities based on an awareness of energy and resource conservation that includes reducing CO2 and othergreenhouse gases and verifying the environmental load of the products and services it handles.

Environmental Policy
The Kaga Electronics Group looks to the future of electronics at all times, striving to meet customer needs as well as topreserve and enhance the natural environment in order to protect our irreplaceable earth.
(1) The Kaga Electronics Group shall establish an environmental management system that involves all employees and promote
ongoing improvement of this system to preserve the global environment and prevent pollution in all of our business activities toprovide products and services.
(2) In executing our business activities, we shall strictly adhere to environmental laws, regulations and related requirements as wellas comply with all other requirements agreed upon by the Kaga Electronics Group.

Initiatives to reduce environmental burden

Reduction of CO2 emissions
The KAGA ELECTRONICS Head Office building employs an air
supply type double-skin* curtain wall on the exterior, allowing
air to flow into the office, thus reducing heat load and providing
natural ventilation. The energy efficient design also provides
enhanced sound insulation.
In addition, the building features a variety of environmental
technologies, with the use of solar panels on the roof enablingeco energy and the installation of LED lighting throughout.
These technologies serve to save energy and reduce CO2 emissions.

Power consumption and CO2 emissions at the Head Office building■■ Power consumption (kWh) ■■ CO2 emissions (kg CO2)

764,780 744,417* Double-skin technology refers to a method of construction in which part or all of abuilding exterior is covered by a two-layered double-glazed façade.

677,957

601,660

667,097

289,087 281,388 256,267
227,427

252,164(3) We shall strive to prevent pollution and enhance the environment through non-wasteful office and business activities based on aphilosophy of conserving energy and resources.
(4) We shall set targets for the following requirements to the extent possible for the products and services that the Kaga Electronics
Group handles and regularly review the progress of our activities.
• Must be composed of environmentally friendly substances• Must be able to cut waste through reuse and recycling• Must be designed with energy and resource conservation in mind using the latest electronics technology(5) We shall provide education to all employees to increase their awareness of the need for environmental protection and to ensure
their understanding of our Environmental Policy.
(6) Our Environmental Policy shall be disseminated widely throughout society through such means as the Kaga Electronics Groupwebsite and corporate profile.

Environmental management system
The Kaga Electronics Group established an environmental
management system based on its Environmental Policy. Under
the system, environmental officers, the ISO Secretariat, theEnvironmental Manager Meeting and internal environmental
auditors team up and, guided by the president, conduct
environmental management at KAGA ELECTRONICS and its
Environmental management system

Founder & CEO

President (COO)

ISO Secretariat

Group companies. In addition, we have attained ISO14001
certification, an international standard for environmental
management systems, at the Company and 20 sites at fourGroup companies in Japan. We are strengthening our systemthrough a PDCA cycle.

• KAGA DEVICES CO., LTD. • AD DEVICE CO., LTD.
• KAGA TECH CO., LTD.
• KAGA SOLUTION NETWORK CO., LTD. (SOLNET Company)• EMS Business Division• Engineering Department• Specific Industry Sales Division• Electronics Sales Division • Automotive Sales Division• Communication Network Sales Division• Sales Promotion Division

2018/3

2019/32020/32021/32022/3

PC product reuse and recycling business
The Kaga Electronics Group company KAGA MICRO SOLUTION
CO., LTD. has flexibly changed and expanded its businessdomain to meet a wide range of customer demands, from thedevelopment, production and sale of electronic products totheir repair, maintenance, reuse and recycling.
The company has leveraged know-how in the production ofelectronic equipment and an extensive procurement route forelectronic parts and materials—both of which were accumulated
in the EMS business, a strength of the Group—to focus on areuse and recycling business for PC products in recent years.
In addition to “reduce programs” that look especially at cutting
CO2 and rubbish levels, the Group will contribute to a reduction
in environmental burden from a reuse and recycling perspective
and to the realization of a recycling-oriented society.
Repair work at KAGA MICRO SOLUTION

Number of PC products reused(thousands)

102.0

109.0
86.6

76.0

60.0

Environmental officers
Environmental Manager
Meeting
Internal environmental
auditors
Note: KAGA FEI, KAGA EMS TOWADA and EXCEL have each acquired ISO 14000
certification for their respective environmental management systems.

47

KAGA ELECTRONICS CO.,LTD.

Administration Headquarters• Business Administration Department• Information Systems Department• Personnel Department• Finance & Accounting Department• General Affairs Department• Corporate Planning Department • Audit Office• Investor Relations & Public Relations Office• SDGs Promotion Office• Secretarial Office

2018/3

2019/32020/32021/32022/3Integrated Report 2022

48

Financial and Corporate Information

11-Year Financial Summary
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

2019/32020/32021/32022/3

Net sales (millions of yen)

229,856

216,405

257,852

255,143

245,387

227,209

235,921292,779

443,615422,365

495,827

Gross profit (millions of yen)

28,506

27,46232,522

32,73833,64831,22532,49835,54647,01647,93660,547

Selling, general and administrative (SG&A) expenses (millions of yen)

26,43826,202

27,416

26,37625,85924,346

24,37927,97637,001

36,46939,632

Operating income (millions of yen)

2,067

1,260

5,106

6,362

7,788

6,879

8,119

7,570

10,014

11,467

20,915

Ordinary income (millions of yen)

2,569

1,931

5,847

7,664

7,908

7,343

8,740

7,859

10,137

11,241

21,456

Fiscal year

Profit attributable to owners of the parent (millions of yen)

914

444

3,877

4,416

5,437

6,975

6,490

8,014

5,852

11,39915,401

Cash flows from operating activities (millions of yen)

958

7,041

3,334

9,127

9,546

10,746

10,077(1,547)22,406

9,999(1,554)

Cash flows from investing activities (millions of yen)

(2,645)(4,910)(3,339)(1,465)(1,263)(258)(4,173)(6,860)(3,651)(2,453)(6,772)

Free cash flow (millions of yen)

(1,686)

2,131

(5)

7,661

8,283

10,487

5,904(8,408)18,754

7,545(8,327)

(242)

(403)

1,024

(4,431)(3,067)(6,118)(2,811)

11,684(7,544)(6,851)

1,155

2,181

2,303

2,418

1,907

1,604

1,452

1,481

1,740

2,754

3,167

3,738

2,999

3,748

4,087

2,660

2,166

1,464

4,520

6,712

6,133

2,906

5,739

Total assets (millions of yen)

114,714

111,888

126,028

127,948

124,281

125,751

128,755

213,761

207,638

237,004

272,139

Net assets (millions of yen)

47,93648,80652,82559,60361,80865,932

70,631

84,25986,25095,062

105,800

Equity (millions of yen)

46,41048,65652,78659,564

61,76465,87270,55676,60478,28490,967

105,680

Interest bearing debt (millions of yen)

14,34915,08917,244

14,573

12,739

9,805

8,900

32,851

28,73638,261

51,171

Cash and deposits (millions of yen)

9,775

12,25814,192

18,13022,516

26,42330,80335,00343,38445,636

41,051Inventories (millions of yen)

21,554

18,77921,21922,703

19,17519,325

19,45540,02631,90837,94862,607

EPS (yen)

33.13

16.09

137.22

156.28192.43249.43236.58292.07213.21415.07576.46

Annual dividend (yen)

30.00

30.00

35.00

40.00

55.00

60.00

70.00

80.00

70.00

80.00

120.00Cash flows from financing activities (millions of yen)
Depreciation (millions of yen)
Capital expenditures/Investment and loans (millions of yen)*

1

Fiscal year end

Per share data

90.5

186.5

25.5

25.6

28.6

24.1

29.6

27.4

32.8

19.3

20.8

1,681.73

1,721.86

1,868.07

2,108.04

2,185.94

2,401.00

2,571.79

2,790.97

2,850.99

3,311.24

4,026.22

Gross profit margin (%)*2

12.4

12.7

12.6

12.8

13.7

13.7

13.8

12.1

10.6

11.3

12.2

Ratio of SG&A expenses to net sales (%)

11.5

12.1

10.6

10.3

10.5

10.7

10.3

9.6

8.3

8.6

8.0

Operating income margin (%)*

0.9

0.6

2.0

2.5

3.2

3.0

3.4

2.6

2.3

2.7

4.2

Ordinary income margin (%)*

1.1

0.9

2.3

3.0

3.2

3.2

3.7

2.7

2.3

2.7

4.3

Profit attributable to owners of the parent margin (%)

0.4

0.2

1.5

1.7

2.2

3.1

2.8

2.7

1.3

2.7

3.1

ROE (%)*

2.0

0.9

7.6

7.8

9.0

10.9

9.5

10.9

7.6

13.5

15.7

ROIC (%)

1.1

0.2

5.0

5.2

7.5

8.1

7.2

5.8

6.3

6.9

10.4

ROA (%)*6

0.8

0.4

3.3

3.5

4.3

5.6

5.1

4.7

2.8

5.1

6.1

40.5

43.5

41.9

46.6

49.7

52.4

54.8

35.8

37.7

38.4

38.8

Debt equity ratio (times)*

0.31

0.31

0.33

0.24

0.21

0.15

0.13

0.43

0.37

0.42

0.48

CCC (days)*8

52.6

51.4

49.7

49.8

45.9

44.7

40.0

47.1

34.4

46.7

66.6

Receivables turnover period (days)*9

88.9

92.1

85.9

83.2

81.5

83.6

77.1

77.0

75.2

93.7

89.0

10

Inventory turnover period (days)*

34.2

31.7

30.0

32.5

28.5

31.0

30.1

35.1

26.3

32.8

46.1

Payables turnover period (days)*11

70.5

72.4

66.2

65.9

64.2

69.9

67.3

65.0

67.0

79.8

68.6

Number of employees (persons)

5,239

5,048

4,752

5,092

5,243

5,216

5,427

6,627

6,731

7,826

7,959

Payout ratio (%)
BPS (yen)
Major indicators

3

4

5

Equity ratio (%)
7*1.	Including spending associated with the purchase of property, plant and equipment, intangible assets and investment securities as well as the purchase of shares of subsidiaries
resulting in change in scope of consolidation.
*2. Gross profit margin = Gross profit / Net sales × 100 (%)*3. Operating income margin = Operating income / Net sales × 100 (%)*4. Ordinary income margin = Ordinary income / Net sales × 100 (%)*5. ROE = Profit attributable to owners of the parent / Average equity × 100 (%)*6. ROA = Profit attributable to owners of the parent / Average total assets × 100 (%)

49

KAGA ELECTRONICS CO.,LTD.

*7. Debt equity ratio = Interest bearing debt / Equity (times)*8. Cash conversion cycle (CCC) = Receivables turnover period (days) + Inventory turnover period (days) – Payables turnover period (days)*9. Receivables turnover period (days) = Notes and accounts receivable—trade / Net sales x 365 (days)*10. Inventory turnover period (days) = Inventories / Net Sales x 365 (days)*11. Payables turnover period (days) = Notes and accounts payable—trade / Total purchase of goods × 365 (days)

Integrated Report 2022

50

Financial and Corporate Information

Analysis of Financial Condition and Results of Operations
Fiscal year ended March 31, 2022

Analysis of business performance
During the fiscal year ended March 31, 2022, the economic
environment remained harsh in Japan and overseas, reflecting
such factors as global shortages of semiconductors and otherelectronic parts as well as the disruption of international
logistics networks along with the emergence of new COVID-19
variants and resulting resurgence of the pandemic. However,on the back of progress in vaccinations, the relaxation of
movement restrictions got economies on a recovery track,
leading to signs of improvement in personal consumption as
well as in capital expenditure and production activities in the
manufacturing sector as a whole.
In the electronics industry, to which the Kaga Electronics
Group belongs, demand for semiconductors and otherelectronic parts grew stronger in a broad range of fields,
including automotive, medical, and industrial equipment. On
the other hand, production failed to keep up with the rise indemand in some areas, resulting in the prolongation of supply
shortages and the progression of price hikes.
Against this backdrop, the Kaga Electronics Group placed
the utmost priority on securing sales volumes for theelectronic components business—its core business. To thisend, the Group adopted a forward-looking approach toaccommodating requests from customers in a variety of
sectors while taking full advantage of its unique strength as anindependent trading company in marketing activities. As aresult, consolidated net sales for the fiscal year ended March
31, 2022, increased 17.4% year on year to ¥495,827 billion.
On the earnings front, gross profit expanded due to theincreased sales and the improved gross profit margins.
Moreover, we have continuously pushed ahead with work stylereform like teleworking amid the COVID-19 pandemic, even as
we pursued ongoing cost reductions. Thanks to these efforts,
operating income increased 82.4% year on year to ¥20,915
million while ordinary income grew 90.9% to ¥21,456 million.
Profit attributable to owners of parent rose 35.1% year on yearto ¥15,401 million. This is attributable to significant growth inordinary income, despite the absence of the extraordinary
income posted in the previous fiscal year due to a gain on
negative goodwill (¥7,963 million) in connection with businessacquisition.
Thus, net sales hit an all-time best for the first time in two
fiscal years since the fiscal year ended March 31, 2020.
Moreover, we achieved a third consecutive year of record highs
in both operating income and ordinary income in addition tohitting a new high in profit attributable to owners of the parent
for the second year in a row.

51

KAGA ELECTRONICS CO.,LTD.

Analysis of financial condition
Total assets as of March 31, 2022 were up ¥35,135 million fromthe previous fiscal year-end, amounting to ¥272,139 million.
The main items are as follows.
Current assets
Current assets increased ¥33,805 million to ¥233,984 million.
This is primarily due to an increase of ¥16,503 million inmerchandise and finished goods as well as an increase of¥7,072 million in raw materials and supplies.
Non-current assets
Non-current assets increased ¥1,329 million to ¥38,155
million. This was primarily because of an increase of ¥1,406
million in machinery, equipment and vehicles.
Total liabilities
Liabilities increased ¥24,397 million from March 31, 2021, to¥166,339 million. This was primarily due to a ¥13,028 million
increase in borrowings and a ¥6,639 million increase in notes
and accounts payable—trade.
Total net assets
Net assets increased ¥10,737 million from March 31, 2021, to¥105,800 million. This was primarily thanks to a ¥12,854 million
increase in retained earnings due to ¥15,401 million in profit
attributable to owners of the parent and other factors.

Cash flows
Cash and cash equivalents as of March 31, 2022 decreased¥5,092 million from March 31, 2021 to ¥39,240 million.
The status and factors thereof for each cash flow category in
the fiscal year ended March 31, 2022 are as follows.
Cash flow from operating activities
Net cash and cash equivalents used in operating activities
totaled ¥1,554 million, compared with ¥9,999 million provided
by operating activities in the previous fiscal year. This was
mainly due to an increase in inventories.
Cash flow from investing activities
Net cash and cash equivalents used in investing activities
totaled ¥6,772 million, compared with ¥2,453 million used in
the previous fiscal year. This was mainly due to purchases ofproperty, plant and equipment.
Cash flow from financing activities
Net cash and cash equivalents provided by financing activities
totaled ¥1,155 million, compared with ¥6,851 million used in
the previous fiscal year. This was due mainly to proceeds fromborrowings, despite the additional acquisition of shares in
KAGA FEI, the acquisition of treasury shares and the paymentof cash dividends.

Analysis of capital resources and cash liquidity
As for the financing of necessary working capital and funds forcapital expenditure, the Kaga Electronics Group utilizes such
sources as cash on hand and borrowings. Looking ahead, theGroup intends to procure the necessary working capital andfunds for capital expenditure to support its future operations
internally, with cash flows from operating activities positioned
as its financial base.
Funding requirements
The main elements of the Group’s working capital requirement
are funds for the purchase of products to be marketed by theGroup and for the purchase of raw materials and components
to produce its own products. It also requires funds to cover
manufacturing costs and selling, general and administrative
expenses. Funding needed for investment purposes is largely
in connection with capital expenditures and costs associatedwith new business M&As and securing commercial rights.
Financial policy
With respect to the procurement of short-term working capital,
the Group’s basic stance is to strive to achieve optimal capitalefficiency within the Group before resorting to borrowings fromfinancial institutions.
With respect to the procurement of funds for M&As, capital
expenditures and long-term working capital, the Group’s basic
stance is to conduct optimal procurement using the various
methods available to it, extending from direct to indirect
financing, with due consideration given to financial conditions
at the time of procurement as well as to the term and purposeof each funding requirement.

Integrated Report 2022

52

Financial and Corporate Information

Consolidated Balance Sheet
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
At March 31, 2021 and 2022

ASSETS
CURRENT ASSETS:
Cash and bank deposits
Notes and accounts receivable-trade
Notes receivable—trade
Electronically recorded monetary claims
Accounts receivable—trade
Short-term investment securities
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total CURRENT ASSETSNONCURRENT ASSETS:PROPERTY, PLANT AND EQUIPMENT
Buildings and structures
Accumulated depreciation
Buildings and structures, net¥

45,636
103,773
4,621
302
29,727
1,280
6,940
9,921
(2,024)200,179

Millions of Yen

2022

¥

41,051
—
1,449
9,258
110,240
264
46,2302,363
14,0139,388(275)
233,984

2022$

355,415—
11,84375,643
900,735
2,159
377,734
19,308114,496
76,712(2,252)
1,911,797

14,327(7,305)
7,021

15,033(8,108)
6,925

122,835(66,250)
56,584

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net

11,496(6,853)
4,642

14,181(8,132)
6,048

115,868(66,445)
49,423Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net

5,632(4,254)
1,378

5,697
(4,667)1,030

46,553(38,133)
8,420

Land
Construction in progress
Total PROPERTY, PLANT AND EQUIPMENT

5,074
107
18,2255,074
313
19,393

41,462
2,563
158,454

209
2,338
62
2,609

98
3,021
42
3,163

807
24,686349
25,843INTANGIBLE ASSETS
Goodwill
Software
OthersTotal INTANGIBLE ASSETSINVESTMENTS AND OTHER ASSETS:
Investment securities
Deferred tax assets
Guarantee deposits
Insurance funds
OthersAllowance for doubtful accounts
Total INVESTMENTS AND OTHER ASSETS
Total NONCURRENT ASSETS
Total ASSETS

53

2021

Thousands of
U.S. Dollars(Note)KAGA ELECTRONICS CO.,LTD.

10,771
2,252
931
910
1,629
(504)
15,990

10,313
2,189
1,068
915
3,466
(2,355)
15,59884,26817,8908,732
7,478
28,325(19,244)
127,450

36,825

38,155

311,749¥ 237,004¥ 272,139$ 2,223,547

LIABILITIESCURRENT LIABILITIES:
Notes and accounts payable—trade
Short-term loans payable
Accrued expenses
Income taxes payable
Provision for directors' bonuses
OthersTotal CURRENT LIABILITIESNONCURRENT LIABILITIES:Long-term loans payable
Deferred tax liabilities
Provision for directors' retirement benefits
Net defined benefit liabilities
Asset retirement obligations
OthersTotal NONCURRENT LIABILITIES

2021¥

79,854
10,800
5,957
2,136
126
9,642
108,517

Thousands of
U.S. Dollars(Note)

Millions of Yen

2022

¥

86,49323,858
7,138
2,834
301
12,291
132,918

2022$

706,707
194,939
58,324
23,162
2,464
100,425
1,086,023

25,166
1,685
106
2,272
343
3,850
33,42425,136
2,046
123
2,095
572
3,446
33,421

205,382
16,722
1,006
17,117
4,678
28,164
273,071

141,942

166,339

1,359,094

NET ASSETS:SHAREHOLDERS’ EQUITY
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total SHAREHOLDERS’ EQUITY

12,133
14,32764,568(1,984)89,045

12,133
14,81877,423(5,643)98,732

99,138121,072
632,597(46,107)806,700

ACCUMULATED OTHER COMPREHENSIVE INCOME
Changes in the fair value of available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit obligations
Total ACCUMULATED OTHER COMPREHENSIVE INCOME

1,378
50
470
21
1,921

1,299
(2)
5,439
210
6,948

10,618(20)
44,447
1,723
56,7694,095
95,062

120
105,800

981
864,452¥ 237,004¥ 272,139$ 2,223,547

Total LIABILITIES

Non-controlling interests
Total NET ASSETS
Total LIABILITIES AND NET ASSETS

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥122.39 to$1, the rate of exchange at March 31, 2022.

Integrated Report 2022

54

Financial and Corporate Information

Consolidated Statement of Income andComprehensive Income
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2021 and 2022

2021

Thousands of
U.S. Dollars(Note)

Millions of Yen

2022

2022

2021

Thousands of
U.S. Dollars(Note)

Millions of Yen

2022

2022

¥ 422,365¥ 495,827$ 4,051,210

Cost of sales

374,428435,280

3,556,500

Income taxes—current

3,207

5,071

41,438Gross profit

47,93660,547494,710

Income taxes—deferred

(51)

606

4,956

36,46939,632323,817

Total income taxes

3,156

5,678

46,395

11,467

20,915

170,893

Net income

11,315

15,669128,031

11,39915,401

125,841

(84)

268

2,190

1,376

(78)

(640)

22

(52)

(432)

1,218

4,922

40,220Net sales

Selling, general and administrative expenses
Operating income
NON-OPERATING INCOME

Income before income taxes¥

Profit attributable to owners of the parent

14,472¥

21,348$

174,427

Interest income

135

135

1,105

Profit attributable to non-controlling interests

Dividend income

197

195

1,594

OTHER COMPREHENSIVE INCOME

Commission fee

168

183

1,502

Changes in the fair value of available-for-sale securities

Foreign exchange gains

—

252

2,063

Deferred gains or losses on hedges

House rent income

116

104

851

Others

539

572

4,678

Remeasurements of defined benefit obligations, net of tax

138

188

1,541

1,158

1,443

11,795 Share of other comprehensive income of entities accounted forusing equity method

42

95

780

Interest expenses

317

315

2,580

2,799

5,075

41,470Share of loss of entities accounted for using equity method

627

472

3,864

Foreign exchange losses

359

—

—

Others

80

114

932

1,384

902

7,377

11,241

21,456

175,311

2

15

123

128

363

2,967

7,963

—

—

Total NON-OPERATING INCOME
NON-OPERATING EXPENSES

Total NON-OPERATING EXPENSES
Ordinary income

Foreign currency translation adjustment

Total OTHER COMPREHENSIVE INCOME
Comprehensive income¥

14,114¥

20,745$

169,502¥

14,101¥

20,428$

166,912Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

13

316

2,589

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥122.39 to$1, the rate of exchange at March 31, 2022.

EXTRAORDINARY INCOME
Gain on sales of property, plant and equipment
Gain on sales of investment securities
Gain on bargain purchase
Gain on transfer of business

7

7

57

Gain on reversal of estimated loss of funds from U.S. subsidiary

—

176

1,443

Others

20

34

285

8,122

596

4,877

1,893

93

761

Loss on disposal of property, plant and equipment

101

13

113

Loss on sales of investment securities

36

2

20

Loss on valuation of investment securities

525

260

2,130

Loss on liquidation of subsidiaries and associates

—

175

1,430

Special retirement expenses

24

—

—

Provision of allowance for doubtful accounts

1,750

129

1,060

Estimated loss of funds from U.S. subsidiary

480

—

—

Others

78

29

244

Total EXTRAORDINARY INCOMEEXTRAORDINARY LOSS
Impairment loss

Total EXTRAORDINARY LOSS

55

KAGA ELECTRONICS CO.,LTD.

¥

4,892

¥

705

$

5,761

Integrated Report 2022

56

Financial and Corporate Information

Consolidated Statement of Cash Flows
Kaga Electronics Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2021 and 2022

2021

Thousands of
U.S. Dollars(Note)

Millions of Yen

2022

2022

NET CASH PROVIDED BY OPERATING ACTIVITIESIncome before income taxes

2021

Millions of Yen

Thousands of
U.S. Dollars(Note)

¥

$

2022

2022

NET CASH USED IN INVESTING ACTIVITIES¥ 14,472¥

21,348$

174,427

Payments for time deposits

¥

(905)

(856)

(6,999)Depreciation and amortization

3,167

3,738

30,547

Proceeds from withdrawal of time deposits

753

474

3,873

Impairment loss

1,893

93

761

Purchase of property, plant and equipment(2,514)(3,276)(26,774)

114

110

901

Proceeds from sales of property, plant and equipment

28

32

265

(Decrease) Increase in net defined benefit liability

(5)

16

134

Purchase of intangible assets(1,059)(1,377)(11,253)(Decrease) Increase in provision for directors' retirement benefits

11

16

137

Purchase of investment securities(2,180)(1,085)(8,865)(Decrease) Increase in provision for directors' bonuses

25

175

1,432

Proceeds from sales of investment securities

723

834

6,814

Increase in allowance for doubtful accounts

1,607

92

756

Interest and dividend income

(413)

(403)

(3,299) Purchase of shares of subsidiaries resulting inchange in scope of consolidation

(351)

—

—

Interest expenses

317

315

2,580

 Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation

2,707

—

—

Share of profit of entities accounted for using equity method

627

472

3,864

Payments of short-term loans receivable

—

(388)

(3,175)

(0)

(14)

(117)

Collection of short-term loans receivable

(0)

—

—

Loss on retirement of property, plant and equipment

101

13

113

Payments of long-term loans receivable(166)(1,180)(9,642)Gain on sales of investment securities

(92)

(360)

(2,946)

Purchase of insurance funds

(11)

(4)

(36)

Loss on valuation of investment securities

525

260

2,130

Proceeds from cancellation of insurance funds

58

—

—

(7,963)——

Payments for guarantee deposits

(77)

(28)

(234)

Gain on reversal of estimated loss of funds from U.S. subsidiary

—

(187)

(1,534)

Proceeds from collection of guarantee deposits

63

65

531

Estimated loss of funds from U.S. subsidiary

480

—

—

Other payments

(100)

(174)

(1,425)(Increase) Decrease in notes and accounts receivable-trade(4,303)(7,889)(64,462)

Other proceeds

87

194

1,590

(Increase) Decrease in inventories

2,997(22,088)(180,479)

Net cash used in investing activities(2,453)(6,772)(55,332)

Decrease in notes and accounts payable-trade

1,495

2,451

20,033

Increase in accounts receivable-other

842

583

4,769

NET CASH USED IN FINANCING ACTIVITIES

Increase in accrued expenses

(162)

887

7,254

Increase in short-term loans payable(4,608)

7,636

62,393

Decrease (Increase) in advance payments

(349)

1,349

11,023

Proceeds from long-term loans payable

5,000

5,000

40,853(Increase) Decrease in consumption taxes refund receivable

(164)

(822)

(6,720)

Repayment of long-term loans payable(1,279)(668)(5,463)(Increase) Decrease in other current assets

(397)

(264)

(2,161)

Purchase of treasury stock(1)(3,681)(30,076)(1,206)2,030

16,592

Cash dividends paid

(1,922)(2,551)(20,850)

Others, net

130

797

6,515

Subtotal

13,754

2,723

22,252(3,441)(3,811)(31,145)

Interest and dividend income received

342

124

1,019

(597)

(767)

(6,269)Interest expenses paid

(322)

(315)

(2,578)(6,851)

1,155

9,440

(3,295)(4,263)(34,834)

945

2,079

16,989

(480)

—

—

Net increase in cash and cash equivalents

1,639(5,092)(41,608)

—

175

1,435

Cash and cash equivalents-beginning balance

42,69344,333362,228

Cash and cash equivalents-ending balance¥ 44,333¥ 39,240$ 320,620

Amortization of goodwill

Gain on sales of property, plant and equipment

Gain on negative goodwill

Increase in other current liabilities

Income taxes paid
Estimated loss of funds from U.S. subsidiary
Others, net
Net cash provided by (used in) operating activities

¥

9,999

¥

(1,554)$(12,705) Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Others, net
Net cash (used in) provided by financing activities
Effect of exchange rate change on cash and cash equivalents

Note: The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥122.39 to$1, the rate of exchange at March 31, 2022.

57

KAGA ELECTRONICS CO.,LTD.

Integrated Report 2022

58

Financial and Corporate Information

Corporate Information
As of March 31, 2022

Company overview

Major affiliates in JapanKAGA TECH CO., LTD.
Sale of electronic parts and electronic equipment, etc.
KAGA DEVICES CO., LTD.
Sale of electronic parts and electronic equipment, etc.
KAGA SOLUTION NETWORK CO., LTD. Development, design, construction and maintenance of computer network systems, etc.
AD DEVICE CO., LTD.
Sale of electronic parts and electronic equipment, etc.
KAGA MICRO SOLUTION CO., LTD.
Development, manufacture, sale and recycling of PCs and PC peripherals, etc.
DIGITAL MEDIA LAB., INC.
Planning, development and sale of computer graphics
KAGA SPORTS CO., LTD.
Manufacture, wholesale and sale of sporting goods, etc.
KAGA AMUSEMENT CO., LTD.
Sale of electronic parts and electronic equipment, etc.
KAGA TECHNO SERVICE CO., LTD.
Electrical and communication facilities installation, interior work, etc.
KAGA FEI Co., Ltd.
Sale of electronic parts and electronic equipment, etc.
KAGA EMS TOWADA CO., LTD.
Manufacture and sale of electronic parts and electronic equipment, etc.
EXCEL CO., LTD.
Sale of electronic parts and electronic equipment, etc.
Kyokuto Electric Co., Ltd.
Manufacture and sale of electronic parts and electronic equipment, etc.

Name
Address

KAGA ELECTRONICS CO., LTD.
20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629, Japan
TEL +81-3-5657-0111 FAX +81-3-3254-7131
Business description	Sale of electronic parts and semiconductors, provision of EMS,* and sale offinished products such as PCs and PC peripherals, etc.
* Electronics manufacturing services: Provision of product development
and manufacturing services on a contract basis
Founded
September 12, 1968
Capital¥12,133 million
Number of Group companies 63 (23 in Japan, 40 overseas and three accounted for by the equity method)
Number of employees
7,959(consolidated)
Stock Listing
Tokyo Stock Exchange (Prime Market)
Securities code
8154
Fiscal year-end
March 31KAGA ELECTRONICS Head Office

Board members / Executive Officers (As of June 28, 2022)
Representative Director, Founder & CEO

Isao Tsukamoto

Representative Director, President & COO

Ryoichi Kado

SeniorExecutive Officer
Executive Officer

Director, Senior Managing Executive Officer Shinsuke Takahashi

Executive Officer

Director, Senior Managing Executive Officer Shintaro Kakei

Executive Officer

Director, Managing Executive Officer,
Head of Administration Headquarters

Executive Officer

Eiji Kawamura

Director, Senior Executive Officer
Motonori Toshinari
Division Manager of EMS Business Division

Executive Officer
Executive Officer

Director, Senior Executive Officer

Mitsuhiro Nohara

Outside Director

Susumu Miyoshi

Outside Director

Akira Tamura

Executive Officer

Outside Director

Noritomo Hashimoto

Executive Officer

Outside Director

Hirokazu Nishiyama

Executive Officer

Auditor (Full-time)

Kazunori Kameda

Executive Officer

Auditor (Full-time)

Takahiro Ishii

Executive Officer

Outside Auditor

Susumu Kitsunai

Executive Officer

Outside Auditor

Yoichi Sato

Executive Officer

Stock information
Total number of sharesauthorized

80,000,000 shares

Total number of shares
outstanding

28,702,118 shares

Number of sharesconstituting one unit

100 shares

Executive Officer

Major affiliates overseas
Mitsuhito Ikeda
President of EXCEL CO., LTD.
Shoji Seki
President of KAGA SPORTS CO., LTD.
Hiroki Suzuki
President of DIGITAL MEDIA LAB., INC.
Takeshi Tsukamoto
Director and Senior Executive Officer of KAGA FEI Co., Ltd.
Takao Okabe
Deputy Division Manager of EMS Business Division,in Charge of China and ASEAN
Hiroaki Maruyama
Director and Managing Executive Officer of KAGA FEI Co., Ltd.
Kazuhira Watanabe
Division Director of Communication Network Sales Division
Hironaga Nagasaka
Deputy Division Manager of EMS Business Division
Takahiro Urazawa
Division Director of Specific Industry Sales Division
Yasuhiro Ishihara
Deputy Head of Administration Headquarters
Katsutoshi Suzuki
Division Director of Sales Promotion Division
Satoshi Eguchi
President of KAGA MICRO SOLUTION CO., LTD.
Mitsuhiro Kumabe
President of KAGA SOLUTION NETWORK CO., LTD.
Hitoshi Koujitani
General Manager of Corporate Strategy OfficeKenji Shimazaki
Managing Director of KAGA SOLUTION NETWORK CO., LTD.

Breakdown by type of shareholder
Individuals
8,093,245 shares (6,601)

Number of shareholders 6,970

Total number ofshareholders

Other Japanese corporations

6,970
28,702,118

Financial institutions

shares6,226,250 shares (107)8,734,379 shares (30)Foreign corporations
5,401,946 shares (200)Financial instruments
business operators
246,298 shares (32)59

KAGA ELECTRONICS CO.,LTD.

China

Asia

North America

EuropeKAGA (SHENZHEN)ELECTRONICS LTD.

KAGA TAXAN (SUZHOU)ELECTRONICS CO., LTD.

KAGA ELECTRONICS(THAILAND) COMPANY,
LIMITEDKAGA FEI AMERICA, Inc.

KD TEC s.r.o.

KAGA (SHANGHAI)
ELECTRONICS CO., LTD.

KAGA (H.K.) ELECTRONICS
LIMITEDKAGA COMPONENTS(MALAYSIA) SDN.BHD.

TAXAN MEXICO S.A. de C.V.

KAGA FEI EUROPE GmbH

Principal shareholders*1, 2
28.20%
21.69%
30.43%
18.82%
0.86%

Name

Number ofshares held
(thousandshares)Percentage of
total sharesissuedThe Master Trust Bank of Japan, Ltd.
(Trust Account)

3,144

11.98

SANKYO CO., LTD.

2,420

9.22

OKOZE CO., LTD.

1,840

7.01

Custody Bank of Japan, Ltd. (Trust
Account)

1,513

5.76

Kaga Electronics Employee
Shareowners Association

1,220

4.65

Name

Number ofshares held
(thousandshares)Percentage of
total sharesissuedMUFG Bank, Ltd.

1,137

4.33

Mizuho Bank, Ltd.

950

3.62

Isao Tsukamoto

730

2.78

Mitsubishi Electric Corporation

500

1.91

Nippon Life Insurance Company

459

1.75

*1. In addition to the above, there are 2,451 thousand shares of treasury stock.
*2. Percentage of total shares issued is calculated after excluding treasury stock.
Integrated Report 2022

60