+

Annual Report 2023
For the year ended March 31, 2023

Meiko Electronics Co., Ltd.

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), thirteen
consolidated subsidiaries, ten non-consolidated subsidiaries, and one affiliated company(the “Group”). As the Group’s businesses are primarily in PCB design, manufacturing,sales, and ancillary operations, the descriptions of other businesses are omitted as they areof little significance.

Forward-looking Statements:
This annual report contains forward-looking statements that are based on the information
currently available to management, and estimates involving uncertain factors thought likely
to have an effect on future results. As such, they include various risks and uncertainties.
Actual results may differ materially from these projections for a variety of reasons, includingchanges in business environments, market trends and exchange rate fluctuations relevantto the business of Meiko Electronics Co., Ltd.

1

Contents
Five-year Financial Summary ............................................................................................ 3
Financial Review: Management’s Discussion and Analysis ........................................... 5
Business Risks ................................................................................................................... 9
Consolidated Financial Statements ................................................................................ 14
Principal Subsidiaries and Affiliates ............................................................................... 44
Principal Shareholders ..................................................................................................... 45
Corporate History ............................................................................................................. 46
Corporate Data (As of March 31, 2023) ........................................................................... 48
Meiko Share Performance in FY2023 Compared with Indices ...................................... 49

2

Five-year Financial Summary(For the years ended/as of March 31)
2019

2020

2021

2022

2023

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥118,911¥115,479¥119,257¥151,275¥167,277

Ordinary income

8,611

4,790

5,698

14,295

11,213

Profit attributable to owners of parent

6,744

2,586

4,641

11,451

8,848

Comprehensive income

6,482

(419)

8,629

20,31913,119Net assets

33,58832,482

40,611

58,68684,475

Total assets

120,656

129,238

142,040

168,329

202,395

Net assets per share (yen)1,283.24

1,233.61

1,551.93

2,281.09

2,736.07

Net income per share (yen)257.6598.81

177.33444.23338.94Equity ratio

27.8%

25.0%

28.5%

34.7%

38.2%

Return on equity (ROE)

20.2%

7.9%

12.8%

23.2%

13.0%

6.7

13.5

15.2

9.1

8.6

Cash flows from operating activities

11,467

11,2407,853

13,975

15,714

Cash flows from investing activities(17,293)(14,937)(9,490)(11,786)(29,043)

Cash flows from financing activities

1,957

6,249

(619)

(4,730)19,962

Cash and cash equivalents
at the end of the period

11,41913,646

12,122

10,451

17,335

Number of employees

11,89912,232

13,721

13,637

11,889[Average number of temporary staff][1,351][1,450][1,117]

[575]

[423]

Price earnings ratio (PER) (times)

3

Net sales

Net income, basic per share¥150,000(yen)(millions of yen)

¥180,000¥120,000¥90,000¥60,000¥30,000
¥0

2019

2020

2021

2022

2023

(millions of yen)(millions of yen)

¥10,000¥8,000¥6,000¥4,000¥2,000

2020

2021

2022

¥20,000¥15,000¥10,000¥5,000¥0(¥5,000)(¥10,000)(¥15,000)(¥20,000)(¥25,000)(¥30,000)(percentage)(millions of yen)

2020

2021

2022

2023

Cash flows from investing activities

25.0%
20.0%
15.0%

5.0%
2019

2020

2021

2022

0.0%

2023

2019

2020

2021

2022

2023

Price earnings ratio (PER)
25.0 times(times)(millions of yen)

2023

10.0%

¥180,000¥150,000

20.0 times¥120,000

15.0 times¥90,000

10.0 times¥60,000

5.0 times¥30,000
2019

2020

2021

2022

0.0 times

2023

Net assets per share¥3,000.00
(yen)

2022

30.0%

¥210,000¥2,500.00¥2,000.00¥1,500.00¥1,000.00¥500.00
¥0.00

2021

Return on equity (ROE)

Total assets

¥0

2019

Cash flows from operating activities
Cash flows from financing activities

2023

Net assets¥90,000¥80,000¥70,000¥60,000¥50,000¥40,000¥30,000¥20,000¥10,000¥0

2020

Cash flows¥12,000

2019

2019

Net income (loss), basic per share (yen)Profit attributable to owners ofparent¥0¥450.00¥400.00¥350.00¥300.00¥250.00¥200.00¥150.00¥100.00¥50.00
¥0.00

2019

2020

2021

2022

2023

4

2019

2020

2021

2022

2023

Financial Review: Management’s Discussion and Analysis
The forward-looking statements in this section are based on the Group’s assumptions
as of the end of the current consolidated fiscal year.
(1) Significant accounting policies and estimates
The consolidated financial statements of the Group have been prepared in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”). The
presentation of these consolidated financial statements requires estimates that affectthe selection and application of accounting policies, the reporting amounts of assets,
liabilities, profits and expenses and the disclosure thereof. The management has
assessed those estimates in view of past results and reasonable assumptions,however, actual results may differ from the estimates presented due to uncertainties
that are intrinsic to estimates.
(2) Analysis of the Group’s financial position
AssetsAssets as of March 31, 2023 were ¥202,395 million, up ¥34,066 million from the end of
the previous fiscal year. This change mainly comprised an increase of ¥6,884 million in
cash and cash equivalents, an increase of ¥1,929 million in electronically recordedmonetary claims - operating, and an increase of ¥2,862 million in inventories in current
assets, in addition to an increase of ¥12,976 million in property, plant and equipment,
and an increase of ¥6,000 million in goodwill in non-current assets.
Liabilities
Liabilities as of March 31, 2023 were ¥117,920 million, up ¥8,277 million from the endof the previous fiscal year. This change mainly comprised a decrease of ¥1,525 million
in trade notes and accounts payable, an increase of ¥1,496 million in short-termborrowings, an increase of ¥1,238 million in the current portion of long-termborrowings, and a decrease of ¥714 million in other in current liabilities, in addition to
an increase of ¥6,200 million in long-term borrowings, and an increase of ¥1,409
million in retirement benefit liability in non-current liabilities.
Net assets
Net assets as of March 31, 2023 were ¥84,475 million, up ¥25,789 million from the endof the previous fiscal year. This mainly reflected a ¥7,000 million increase in capitalsurplus, a ¥7,506 million increase in retained earnings, a ¥4,252 million increase inforeign currency translation adjustment, and a ¥6,956 million increase in noncontrolling interests.

5(3) Analysis of business results
1) Net sales
The electronic components industry, where the Group operates, was affected by theslowdown in economic and production activities in China due to the COVID-19
pandemic and soaring energy prices on the back of the state of affairs concerning
Ukraine. Sales of PCBs (printed circuit boards) for automotive products were robust as
the yen depreciated, despite orders for the products failing to see a full-scale recovery
due to the continued decrease in automobile production owing to semiconductor
shortages and other factors. Consequently, net sales for the fiscal year under review
increased ¥16,002 million, or 10.6%, from the previous fiscal year to ¥167,277 million.
2) Gross profit
Cost of sales increased ¥17,381 million, or 14.0%, from the previous fiscal year to¥141,261 million due to the steep rise in raw materials and energy prices and anincrease in depreciation and amortization associated with capital investments.
Consequently, gross profit for the fiscal year under review decreased ¥1,379 million, or
5.0%, from the previous fiscal year to ¥26,016 million. The gross margin fell 2.5
percentage points from the previous fiscal year to 15.6%.
3) Operating income
Selling, general and administrative expenses increased ¥2,300 million, or 16.3%, fromthe previous fiscal year to ¥16,440 million, due to an increase in research anddevelopment costs, the recording of costs related to the acquisition of a subsidiary, andan increase in amortization of goodwill. As a result, operating income for the fiscal year
under review decreased ¥3,679 million, or 27.8%, from the previous fiscal year to¥9,576 million. The operating margin fell 3.1 percentage points from the previous fiscal
year to 5.7%.
4) Ordinary income
Non-operating income increased ¥1,178 million to ¥3,269 million, mainly due toincreases in foreign exchange gains and compensation income. Non-operating
expenses increased ¥581 million to ¥1,631 million, mainly due to an increase ininterest expenses and the recording of share issuance costs. As a result, ordinary
income for the fiscal year under review decreased ¥3,082 million, or 21.6%, from theprevious fiscal year to ¥11,213 million.
5) Profit attributable to owners of parent
In the fiscal year under review, extraordinary income amounted to ¥43 million, mainly
due to the recording of gain on liquidation of subsidiaries and associates, net of ¥42
million. Extraordinary losses totaled ¥584 million, mainly due to the recording of loss
on sale and retirement of non-current assets of ¥218 million, and businessrestructuring expenses of ¥301 million. The total amount of income taxes–current andincome taxes–deferred increased ¥711 million to ¥1,887 million. The loss attributable
to non-controlling interests was ¥63 million. As a result of the above, the net income
attributable to owners of the Company was ¥8,848 million, down 22.7% compared withthe previous fiscal year.

6(4) Analysis of source of funds and liquidity
1) Cash flows
Cash and cash equivalents (hereafter, “net cash”) as of March 31, 2023 increased¥6,884 million from the previous fiscal year, to ¥17,335 million.
Cash flows of each category and their causes during the consolidated fiscal year
ended March 31, 2023 were as follows.
Net cash provided by operating activities for the fiscal year under review was ¥15,714
million, up ¥1,739 million from the previous fiscal year. Increases were mainly fromincome before income taxes of ¥10,672 million, depreciation and amortization of¥9,795 million, a decrease in trade notes and accounts receivable of ¥1,054 million,
and a decrease in inventories of ¥2,213 million. The major decreases consisted offoreign exchange gains of ¥1,143 million, a decrease in trade notes and accounts
payable of ¥5,182 million, and income taxes paid of ¥1,820 million.
Net cash used in investing activities was ¥29,043 million, up ¥17,257 million from theprevious fiscal year. The major outflows were ¥18,856 million for the purchase ofproperty, plant and equipment, ¥9,312 million for the purchase of shares ofsubsidiaries resulting in change in scope of consolidation, and ¥1,109 million for longterm loan advances.
Net cash provided by financing activities was ¥19,962 million (compared to ¥4,730
million net cash used in the previous fiscal year). The major inflows were proceedsfrom long-term borrowings of ¥13,910 million, proceeds from issuance of shares of¥6,686 million, and proceeds from share issuance to non-controlling shareholders of¥6,973 million. The major outflows comprised payments for long-term borrowings of¥6,565 million and cash dividends paid of ¥1,340 million.
Trends in cash flow indicators of the Group are as follows:Year ended
March 31, 2021

Year ended
March 31, 2022

Year ended
March 31, 2023

Equity ratio (%)

28.5

34.7

38.2

Market value equity ratio (%)

49.3

61.8

37.0

Cash flows versus interest-bearing debt ratio(years)

8.9

4.9

4.9

Interest coverage ratio (times)

12.4

22.0

14.5

Equity ratio = Equity capital / Total assets
Market value equity ratio = Stock market capitalization / Total assets
Cash flow versus interest-bearing debt ratio = Interest-bearing debt / Operating cash flow
Interest coverage ratio = Operating cash flow / Interest payment
Notes:
1. Each indicator is calculated based on consolidated financial values.
2. The stock market capitalization is calculated as follows: term-end closing stock price x term-end
number of shares issued (after deducting shares of treasury stock). Common stocks are subject tothe calculation.
3. The operating cash flow represents the cash flow provided by (used in) operating activities as
indicated in the consolidated statements of cash flows. Of the liabilities posted on the consolidatedbalance sheets, the interest-bearing debt covers all the liabilities for which interest was paid. Theinterest payment represents the payment of interest indicated in the consolidated statements ofcash flows.

72) Financial policy
The Group procures funds for its operations from funds on hand or borrowings fromfinancial institutions. The Group has a policy of procuring funds for investment andloans as well as funds to acquire manufacturing equipment inside and outside Japan
via long-term borrowings from financial institutions. With regard to procuring suchfunds and the conditions of procurement, the Group strives to select the mostfavorable timing and conditions.

8Business Risks
Below are some of the major risks from among those described in the securities report(provided/filed in Japanese only) which may significantly affect any decisions made byinvestors.
Forward-looking statements are based on the Group’s best judgment during theconsolidated fiscal year under review.
(1) Risks related to the business environment
1) Risk related to the Group’s major customers and their industries’ trends
The Group’s major customers are manufacturers of automotive products, smartphones
and tablets, SSD and IoT modules, AI household appliances, amusement equipment,
and industrial equipment, among others. The Group’s major business is the manufactureand sale of PCBs, which are parts that constitute a core function of finished products.
Furthermore, the Group endeavors to strengthen and expand the semiconductor
package board and EMS businesses as new mainstay businesses with the aim ofminimizing influence from overdependence on PCBs. However, should economic trends
or a natural disaster adversely impact the Group’s major customers or their industry
markets, such factors could affect the business performance and financial position. The
monitoring of customers and trends in their industries and measures to minimize
influence implemented by the Group cannot eliminate said risk completely. Therefore,
the Group realizes that such risk could emerge in the event of a sudden change inmarket conditions, with the influence depending on the timing and size of the incident.
2) Raw materials market fluctuation risk
The Group strives to minimize risk using commodity derivatives. However, if an
unexpected surge in the procurement prices of crude oil, copper, gold, or any othermaterials is not able to be passed on to our selling prices to customers, or if we may
miss business opportunities due to difficulty in procuring materials, the businessperformance and financial position could thus be adversely affected. As said risk cannot
be lessened or eliminated completely by the above mentioned measures to minimize
risk alone, the Group realizes that it is inevitable that it will suffer some degree of impact
if such risk actually emerges.
3) Risk related to technological development and price competition
The time will come when all things are connected, due to the increase in the use ofelectronics in vehicles, the dissemination of electric vehicles, the emergence ofconnected cars based on high-speed communication, and the worldwide spread of IoT.
Although the Group expects expansion of demand for PCBs, to address intensifying
global competition stemming from downward pressure on prices from China andSoutheast Asia, the Group needs to differentiate its products with technology. To thisend, the Group is developing technologies such as element technologies to make wires
thinner, dissipate heat, and make hole diameters smaller, as well as cost-reduction
technologies. However, should such technologies diverge from market needs and not be
accepted, the Group may become embroiled in a price war, or the yield rate may
decline, which could affect its business performance and financial position. The Group
closely monitors customers’ needs, competitors’ technology, and price movements, etc.
However, as this type of risk is inherent in business management and is difficult toeliminate completely, such risk might ordinarily emerge in the process of business
management. The Group realizes that it is difficult to make a definite estimate of theinfluence when such risk actually emerges, since the influence may depend on the9timing and conditions of the incident.
4) Risks related to the timing of capital investments
The Group conducts appropriate capital investment to enhance productivity andmaintain product competitiveness in accordance with demand trends. Although capital
investments are carefully determined considering market trends and brandmanufacturers’ business performance, should the Group’s capital investments become
excessive upon a downturn in the economy or manufacturers change strategies, or theoperation of new facilities be delayed, factors such as the burden of depreciation costs
could adversely affect the business results and financial position. In addition, should theasset value or business profitability decline, it could result in the occurrence ofimpairment loss, adversely affecting the business performance and financial position.
The Group believes that there is not a high possibility that any individual capital
investment will lead to the occurrence of impairment loss. However, risk caused byexternal factors, such as a sudden change in market conditions, natural disasters, andinfectious diseases, cannot be lessened or eliminated by the Group’s risk management
alone. There is a possibility that the Group will suffer impact in the event of theoccurrence of such risk, with the influence depending on the timing and size of theincident.
5) Risk related to equipment failures and accidents
Although the Group conducts regular inspections and maintenance work on its
production equipment as well as plant monitoring using IoT technology in its
manufacturing bases and strives to minimize the occurrence of equipment failures, fire,or other accidents, which may result in the suspension of line operations, there is no
guarantee that these will be prevented or reduced completely. Should production orshipping be suspended for a long period of time due to these factors, the businessperformance and financial position could be adversely affected. Said risk cannot be
lessened or eliminated by the Group’s own risk management alone. There is apossibility that the Group will suffer impact in the event of the occurrence of such risk,
with the influence depending on the frequency and size of the incident. However, theGroup realizes that it is difficult to make a definite estimate of the influence in light of theconditions of such risk.
6) Risk related to product defects
PCBs are mounted with electronic components and then embedded in finished products.
The Group manufactures PCBs in compliance with globally accepted quality control
standards. In addition, brand manufacturers conduct inspections upon receipt of thefinished product checking for product defects. However, should a large-scale recall or a
product liability claim occur, such an incident would incur significant costs that cannot becovered by insurance amounts and harm the value of our corporate brand, which could
adversely affect the business performance and financial position. The Group believes
that there is not a high possibility that said risk will emerge. However, as such risk
cannot be lessened or eliminated by the Group’s own risk management alone, theGroup realizes that it is inevitable that it will suffer some degree of impact if such risk
emerges.
(2) Risk related to natural disasters, etc.
1) Risk related to natural disasters
If natural disasters, such as earthquakes, tsunami, floods, storms, or torrential
downpours occur, operation of the Group’s facilities may be partially or totally

10suspended, resulting in delays in production and shipments. Having learned from pastexperiences, the Group reviews its risk management system appropriately andendeavors to secure the safety of its employees and protect its facilities against natural
disasters. However, should a disaster of an enormous scale occur in the future, we may
consume expenses required to restore damaged production facilities and experience asales decline, resulting in an adverse effect on the business performance and financial
position. Said risk cannot be lessened or eliminated by the Group’s own risk
management alone. There is a possibility that the Group will suffer impact in the event of
the occurrence of such risk, with the influence depending on the frequency and size ofthe incident. However, the Group realizes that it is difficult to make a definite estimate of
the influence in light of the conditions of such risk.
2) Risk related to infectious diseases
During the COVID-19 pandemic, the Group has continued thorough implementation of
preventive measures to secure the safety of customers, business partners, andemployees and prevent the further spread of infection in accordance with the guidanceof health authorities in each country where we operate. However, situations such as thehealth crisis becoming prolonged, pandemic conditions continuing, or new types ofinfections occurring might result in suspension of the Group’s factories, worsening of theJapanese and global economy, and contraction of economic activities, which could
adversely affect the business performance and financial position. Said risk cannot be
lessened or eliminated by the Group’s own risk management alone. There is apossibility that the Group will suffer impact in the event of the occurrence of such risk,
with the influence depending on the frequency and size of the incident. However, theGroup realizes that it is difficult to make a definite estimate of the influence in light of theconditions of such risk.
(3) Risk related to compliance
As the Group operates its business in bases inside and outside Japan, it needs tocomply with a wide range of laws and regulations and restrictions. In Japan, the Groupis required to obey the Companies Act, Financial Instruments and Exchange Act, AntiMonopoly Act, tax laws, labor laws, and environmental laws, etc. while it must observe
laws and regulations and restrictions in each country and region it operates in overseas.
The Group not only established the Risk and Compliance Committee to supervise
compliance with laws and regulations and restrictions but also strives to raise its
employees’ awareness of compliance issues by formulating and implementing its own
compliance measures. However, there is a possibility that risk related to compliance will
not be dodged completely by implementing these measures. Should the Group fail toperform obligations required by laws and regulations and restrictions, it could adversely
affect the business performance and financial position. The Group believes that there is
not a high possibility that risk related to compliance will emerge. However, as the type
and timing of the occurrence, etc. of such incident cannot be controlled by the Group, it
realizes that it is difficult to make an estimate of the influence beforehand.
(4) Risk related to finance, etc.
1) Financial risks
The Group has made aggressive capital investments to prepare for the anticipatedincrease in demand for PCBs for automotive products and smartphones, as well as inresponse to new products in line with technological innovation. As a result, the ratio ofborrowings to total assets as of March 31, 2023 was 37.2%. Should new borrowings orrefinancing of outstanding borrowings for capital investments necessary from the11perspective of its business strategy become difficult in the future due to a change inmonetary conditions or banks’ situations, it could affect the Group’s fund raising plans. In
addition, a rise in interest rates on borrowings could adversely affect the businessperformance and financial position. As risk related to monetary conditions or eachbank’s situation is hard to reduce or eliminate by the Group’s own measures, the Group
believes that it will suffer impact in the event of the occurrence of such risk, with the
influence depending on the timing, size, and conditions of the incident. However, theGroup realizes that it is difficult to make a definite estimate of the influence.
2) Credit risk
As the Group extends credit to its business partners in the form of trade credit, including
accounts receivables and advance payments, it is therefore exposed to credit risk in theform of losses arising from deterioration in the credit of or bankruptcy of business
partners. To manage such risk, the Group responds depending on the credit profile ofthe counterparty based on internal rules that determine the credit limit for each business
partner. However, failure to collect receivables and other credit could affect the businessperformance and financial position. The Group believes that it will suffer only limited
impact, even if said risk emerges, since it monitors obligors’ credit conditions anddiversifies risk, which maintains the frequency and influence within the range of normal
fluctuation of business results. Although the possibility of the abrupt emergence of
unexpected credit risk from a large obligor is not completely eliminated, the Grouprealizes that the probability is quite low.
3) Risk related to foreign currency rate fluctuation
To operate plants in China and Vietnam, we need to hold U.S. dollars and other foreign
currency-denominated assets. Therefore, the Group is exposed to yen-to-yuan, yen-toU.S. dollar and other currencies exchange rate fluctuations. These fluctuations could
result in losses. The Group strives to minimize risks to some extent by conducting
exchange marry or currency exchange hedge, etc. However, should an unexpected
foreign currency rate fluctuation occur, it could adversely affect the businessperformance and financial position. As said risk depends on the fluctuation of foreignexchange rates and cannot be lessened or eliminated by the Group’s own effort alone,
the Group realizes that it is difficult to make a definite estimate on the timing of theoccurrence and influence.
4) Risk related to M&A, joint venture, and alliance
The Group forms capital alliances with and conducts joint ventures with other companies
that have the technology, products, sales network, customer base, and personnel
necessary for business growth. However, there is a possibility that the Group may notreceive the anticipated effects or will need to spend additional expenses or incur
impairment loss when the market and competition environments significantly change or
the business does not develop as planned. Should such incident occur, the Group may
fail to earn the forecast profits, adversely affecting its business performance andfinancial position. As such risk cannot be lessened or eliminated by the Group’s own risk
management alone, the Group realizes that it is inevitable that it would suffer somedegree of impact if such risk actually emerges.
(5) Other risk
1) Risk inherent in plant operations in China and Vietnam
To expand productivity and reduce production costs, the Group has established local
corporations in Hong Kong, Guangzhou and Wuhan in China, and in Vietnam,

12

conducting manufacturing and sales activities. In these countries, the Group may face
the following difficulties—hygiene-related issues such as infectious diseases; change or
introduction of environmental regulations, legal restrictions and the tax system; failure of
infrastructure such as electricity, water and transportation; political uncertainty andpublic security-related issues; anti-Japanese demonstrations and/or labor disputes;
expropriation of assets, destruction of facilities by wars and conflicts, and limitation on
the transfer of funds (transfer restriction), etc. Should unexpected events such aschanges in the political or legal environment, economic situation or environmental
regulations occur, the business performance and financial position could be adversely
affected as a result of the issues which might arise in the management of production
facilities and equipment and in the execution of other operations, or a large amount ofliabilities or obligations associated with the compliance of environmental conservationand other regulations. Said risk cannot be lessened or eliminated by the Group’s own
risk management alone. There is a possibility that the Group will suffer impact in theevent of the occurrence of such risk, with the influence depending on the frequency andsize of the incident. However, the Group realizes that it is difficult to make a definite
estimate of the influence in light of the conditions of such risk.
2) Risk related to information security
The Group obtains customer information, etc. through its business activities from time totime and also owns confidential information on technology, sales, individual persons,and overall business. To prevent unauthorized information access, falsification,
corruption, leakage, loss, and any other damages caused by cyberattacks, humanerrors, and any other incidents, the Group established its information management
system and conducts appropriate safety procedures, including rational technologicalmeasures and drills to prepare for cybersecurity risk. However, should the leakage orloss of information occur, it could adversely affect the business performance andfinancial position. As the Group strives to appropriately operate its confidential
information management system, it realizes that the probability of emergence of suchrisk is quite low.
3) Risk related to intellectual property rights
The Group recognizes intellectual properties as its significant management resources
and seeks to acquire intellectual property rights by applying for patents, etc. forproprietary technologies, etc. developed by the Group with the aim of protecting
intellectual properties. However, not all applications may be approved and it is also
possible that obtained rights may be rendered void due to objections by third parties.
Although the responsible department manages obtained intellectual properties and pays
attention to violation of rights by external parties, anticipated profits could be lost in theevent of illegal use, etc. Meanwhile, should a lawsuit be filed against the Group withregard to a violation of intellectual property rights of third parties, the businessperformance and financial position could be adversely affected as a result of thecompensation or damages paid to customers due to the suspension of production andpayment of license fees, etc., related to patent use in order to resume production.
Although the possibility of abrupt emergence of the risk is not completely eliminated, theGroup realizes that the probability is quite low.

13

Consolidated Financial Statements

Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2023 and 2022
Thousands ofMillions of yen

ASSETS

2023

Current Assets:
Cash and cash equivalents (Note 17) ...............................................................................
Receivables －Trade notes (Note 17) .................................................................................................
Accounts receivable (Note 17) .....................................................................................
Electronically recorded monetary claims (Note 17) .......................................................
Other receivables ........................................................................................................
Less: Allowance for doubtful accounts ........................................................................
Inventories －Merchandise and finished goods ..................................................................................
Work in process .........................................................................................................
Raw materials and supplies ..........................................................................................
Other (Note 17) .............................................................................................................
Total current assets .................................................................................................

\

17,335

U.S. dollars (Note 1)

2023

2022

\

10,451$

129,810

1,482
34,508
2,920
1,100
(171)

1,102
33,656
991
1,117
(165)

11,095
258,407
21,8658,238(1,282)

9,929
7,044
15,6582,100
91,905

10,238
8,074
11,457
1,447
78,36874,351
52,747
117,254
15,739688,224

Less: Accumulated depreciation .....................................................................................
Net property, plant and equipment ...........................................................................

2,553
58,512
125,218
2,714
18,3159,718
217,030(121,492)
95,5382,445
53,491
114,369
2,844
9,926
6,834
189,909(107,347)
82,562

19,120438,163937,678
20,322
137,149
72,776
1,625,208(909,784)
715,424

Intangible Assets:
Goodwill .......................................................................................................................
Other ............................................................................................................................
Total intangible assets .............................................................................................

6,304
696
7,000

304
651
955

47,205
5,213
52,418Investments and Other Assets:
Investment securities (Notes 3 and 17) ............................................................................
Long-term loans receivable .............................................................................................
Deferred tax assets (Note 16) .........................................................................................
Other .............................................................................................................................
Less: Allowance for doubtful accounts ...........................................................................
Total investments and other assets ...........................................................................
Total ...............................................................................................................

3,038
1,188
1,873
1,884
(31)
7,952
202,395

2,555
553
1,841
1,518
(23)
6,444
168,329

22,751
8,899
14,02914,101(235)
59,545
1,515,611

Property, Plant and Equipment, at Cost:
Land .............................................................................................................................
Buildings and structures (Note 4).....................................................................................
Machinery and vehicles (Note 4)......................................................................................
Leased assets.................................................................................................................
Construction in progress ................................................................................................
Other (Note 4)................................................................................................................

See notes to consolidated financial statements.

14

\

\

$

Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2023

Current Liabilities:
Trade notes and accounts payable ................................................................................
Short-term borrowings (Note 5) ......................................................................................
Current portion of long-term borrowings (Note 5) ...........................................................
Income taxes payable (Note 16) ......................................................................................
Accrued bonuses ...........................................................................................................
Accrued bonuses to directors .........................................................................................
Lease obligations (Notes 5 and 17)..................................................................................
Other (Notes 5, 12, 17 and 20) .......................................................................................
Total current liabilities .............................................................................................

\

Long-term Liabilities:
Long-term borrowings (Notes 5 and 17) .........................................................................
Lease obligations (Notes 5 and 17) .................................................................................
Provision for directors' retirement benefits ......................................................................
Provision for share awards..............................................................................................
Provision for share awards for directors .........................................................................
Net defined benefit liability (Note 6) ................................................................................
Other (Note 17)..............................................................................................................
Total long-term liabilities .........................................................................................

22,79429,663
7,200
1,020
1,201
55
196
11,54473,673

U.S. dollars (Note 1)

2023

2022

\

24,31928,167
5,962
985
1,064
59
214
12,25873,028$

170,693
222,130
53,916
7,639
8,992
408
1,469
86,443551,690

38,467
268
216
173
36
4,126
961
44,24732,267
392
216
115
25
2,717
883
36,615

288,053
2,009
1,617
1,295
270
30,894
7,199
331,337

12,88913,70035,56812,8896,700
28,06296,514
102,596266,351(2,176)59,981(2,186)45,465(16,298)
449,16313
55
17,426(154)
17,3407,154
84,475
202,395

4(42)
13,174(113)
13,023
198
58,686
168,329101411
130,490(1,155)
129,847
53,574
632,584
1,515,611

Commitments and Contingent Liabilities (Note 11) :Net Assets (Note 7):
Shareholders' Equity:
Common stock:
Authorized:
70,000,000 shares in 2023 and 2022
Issued:26,803,320 shares in 2023 and 2022
Preferred stock:
Authorized:
100 shares in 2023 and no share in 2022
Issued:70 shares in 2023 and no share in 2022.............................................................................

Capital surplus ...............................................................................................................
Retained earnings ...........................................................................................................
Less: Treasury stock, at cost; common stock
1,159,051 shares in 2023, 1,162,643 shares in 2022 ........................................................
Total shareholders' equity.........................................................................................
Accumulated Other Comprehensive Income:Unrealized gains on available-for-sale securities ...............................................................
Deferred gains on hedges ...............................................................................................
Foreign currency translation adjustments .........................................................................
Remeasurements of defined benefit plans (Note 6) ..........................................................
Total accumulated other comprehensive income........................................................
Non-controlling interests.................................................................................................
Total net assets .......................................................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

15

\

\

$

Consolidated Statements of Operations
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2023 and 2022
Thousands ofMillions of yen

2023
Net Sales (Note 20) ......................................................................................................
Cost of Sales (Note 13) ................................................................................................
Gross profit .................................................................................................................
Selling, General and Administrative Expenses (Note 13) ...........................................
Operating income .........................................................................................................

\

167,277
141,261
26,016
16,4409,576

U.S. dollars (Note 1)

2023

2022
\

151,275
123,880
27,39514,14013,255$

1,252,633
1,057,816
194,817
123,11271,705

Other Income (Expenses):
Interest expense, net .......................................................................................................
Dividend income ............................................................................................................
Foreign exchange gain .............................................................................…...................
Share issuance costs.......................................................................................................
Net loss on sales and disposal of property, plant and equipment (Note 15)........................
Compensation income.....................................................................................................
Gain on sales of investment securities, net (Note 3)..........................................................
Gain on liquidation of subsidiaries and affiliates...........................................................
Expenses for business structure improvement (Note 9).....................................................
Loss related to COVID-19 pandemic (Note 10)................................................................
Loss on disaster (Note 8) .............................................................................................
Other, net ......................................................................................................................
Total ......................................................................................................................

(812)
94
2,003
(342)
(217)
380
(5)
42
(301)
(60)
314
1,096

(594)
16
1,498
(521)
62
10
(226)
(647)
(116)
(124)
(642)

(6,079)705
14,997(2,561)(1,625)
2,847
(37)
313
(2,251)
(452)
2,355
8,212

Income before Income Taxes ......................................................................................

10,672

12,613

79,917

Income Taxes (Note 16):
Current ........................................................................................................................
Deferred ......................................................................................................................
Total income taxes ..................................................................................................
Net Income...................................................................................................................
Net Loss attributable to non-controlling interests.......................................................
Net Income attributable to owners of the Company ...................................................

1,867
20
1,887
8,785
(63)
8,848

1,348
(172)
1,176
11,437(14)
11,451

13,980153
14,13365,784(470)
66,254

\

\

$

Yen

Per Share of Common Stock:
Net income per share....................................................................................................
Basic .......................................................................................................................
Cash dividends applicable to the year ...........................................................................
Common stock.........................................................................................................
Series 1 Non-convertible preferred stock...................................................................
See notes to consolidated financial statements.

16\338.9455.00
2,233,660.00

U.S. dollars (Note 1)\

444.23
45.00
-

$

2.54
0.41
16,726.52

Consolidated Statements of Comprehensive Income
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2023 and 2022
Thousands ofMillions of yen

2023
Net Income ................................................................................................................
Other Comprehensive Income (Note 19):
Unrealized gains (losses) on available-for-sale securities ...................................................
Deferred gains (losses) on hedges ...................................................................................
Foreign currency translation adjustments .........................................................................
Remeasurements of defined benefit plans .......................................................................
Total other comprehensive income ..........................................................................
Comprehensive Income................................................................................................

Comprehensive Income Attributable to:
Owners of the Company ..............................................................................................
Non-controlling interests ..............................................................................................

See notes to consolidated financial statements.

17

\

8,785

\

9
97
4,270
(42)
4,334
13,119\13,162(43)

U.S. dollars (Note 1)

2023

2022
\

11,437

\

(35)
(292)
9,066
143
8,882
20,319\20,314
5$

65,784$65
725
31,986(316)
32,46098,244$98,568(324)

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2023 and 2022

Millions of yen
Shareholders' Equity
Common Stock

Balance as at March 31, 2021..........................................................................
Net income attributable to owners of the Company...............................................
Issuance of new shares .......................................................................................
Transfer from common stock to capital surplus ...................................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Retirement of treasury stock................................................................................
Net increase (decrease)........................................................................................
Balance as at March 31, 2022..........................................................................
Net income attributable to owners of the Company...............................................
Issuance of new shares ........................................................................................
Transfer from common stock to capital surplus ...................................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Retirement of treasury stock................................................................................
Net increase (decrease)........................................................................................
Balance as at March 31, 2023..........................................................................

Number of
Shares26,803,320
26,803,320
26,803,320

\

\

\

Amount12,88912,88912,889

Accumulated Other Comprehensive Income

Preferred Stock

Number of
SharesAmount
-

\

70
70

-

\

\

3,500
(3,500)-\\\CapitalSurplus
6,464
236
6,700
3,500
3,500
13,700\\\Retained
Earnings
17,64911,451(1,038)28,062
8,848(1,342)35,568Treasury
Stock at Cost;
Common
Stock
(745)
\
(1,596)155(2,186)\(1)
11(2,176)\

Total
Shareholders'Equity36,257\
11,451(1,038)(1,596)391
45,465
\
8,848
7,000
(1,342)(1)
1159,981\

Unrealized Gains(Losses) on
Available-for-sale
Securities

39
(35)
4
9
13

\

\

\

Deferred
Gains(Losses) on
Hedges
250
\
(292)
(42)
\
97
55
\

Foreign Currency
Translation
Adjustments

\

\

\

4,128
9,046
13,174
4,252
17,426

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

(256)
143
(113)
(41)
(154)

\

\

\

\

\

\

4,161 \
8,862
13,023 \4,317
17,340 \Non-controlling
Interests
193 \
5
198 \
6,956
7,154 \

Total Net
Assets40,611
11,451(1,038)(1,596)391
8,867
58,6868,848
7,000(1,342)(1)
11
11,27384,475

Non-controlling
Interests
1,478 $
52,09653,574 $Total Net
Assets439,466
66,25452,418(10,039)(5)
80
84,410632,584

Thousands of U.S. dollars (Note 1)
Shareholders' Equity

Balance as at March 31, 2022..........................................................................
Net income attributable to owners of the Company...............................................
Issuance of new shares .......................................................................................
Transfer from common stock to capital surplus ...................................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Retirement of treasury stock................................................................................
Net increase (decrease)........................................................................................
Balance as at March 31, 2023..........................................................................

$$

CommonStock96,51496,514Preferred
Stock
$

$

26,209(26,209)-$$

CapitalSurplus50,17826,20926,209102,596

Accumulated Other Comprehensive Income$$

Retained
Earnings
210,136
66,254(10,039)
266,351

See notes to consolidated financial statements.

18

Treasury
Stock at Cost;
CommonStock$(16,373)(5)
80$(16,298)

Total
Shareholders'Equity$340,455
66,25452,418(10,039)(5)
80$
449,163

Unrealized Gains(Losses) on
Available-for-sale
Securities

$

$

36
65
101

Deferred
Gains(Losses) on
Hedges
$
(314)
725
$
411

Foreign Currency
Translation
Adjustments$$

98,65031,840130,490

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

$

$

(839)
(316)
(1,155)$$97,533 $32,314
129,847 $Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2023 and 2022
Thousands ofMillions of yen

2023
Operating Activities:
Income before income taxes ..................................................................................................................................

\

10,672

U.S. dollars (Note 1)

2023

2022
\

12,613$

79,917

Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization ................................................................................................................................
Amortization of goodwill .......................................................................................................................................
Decrease in allowance for doubtful accounts ..........................................................................................................
Increase (decrease) in net defined benefit liability ...................................................................................................
Increase (decrease) in accrued bonuses ................................................................................................................
Increase (decrease) in accrued bonuses to directors ...............................................................................................
Increase in provision for share awards....................................................................................................................
Increase in provision for share awards for directors.................................................................................................
Interest income and dividend income .....................................................................................................................
Interest expenses ..................................................................................................................................................
Foreign exchange gain ...........................................................................................................................................
Net loss on sales and disposal of property, plant and equipment..............................................................................
Loss (gain) on sales of investment securities, net.....................................................................................................
Gain on liquidation of subsidiaries and affiliates ......................................................................................................
Insurance income ..................................................................................................................................................
Share issuance costs .............................................................................................................................................
Expenses for business structure improvement.........................................................................................................
Loss related to COVID-19 pandemic......................................................................................................................
Loss on disaster....................................................................................................................................................
Decrease (increase) in trade notes and accounts receivable .....................................................................................
Decrease (increase) in inventories ..........................................................................................................................
Increase (decrease) in trade notes and accounts payable .........................................................................................
Decrease (increase) in other assets .........................................................................................................................
Increase (decrease) in other liabilities .....................................................................................................................
Other ....................................................................................................................................................................
SubtotalInterest and dividend received ...............................................................................................................................
Interest paid ..........................................................................................................................................................
Proceeds from insurance income ...........................................................................................................................
Payments for business structure improvement ........................................................................................................
Payments for loss related to COVID-19 pandemic .................................................................................................
Income taxes paid .................................................................................................................................................
Net cash provided by operating activities ...............................................................................................................

9,795
358
(7)
(95)
(109)
(7)
58
11
(284)
1,002
(1,143)
217
5
(42)
(64)
342
301
60
1,054
2,213
(5,182)
124
(766)
83
18,596258(1,083)64(301)(1,820)15,714

7,995
41
(101)
44
321
16
115
25
(65)
643
(654)
521
(10)
(80)
226
647
116
(3,618)(5,385)
1,567
(265)
933
15
15,660
64
(634)
80
(38)
(529)
(628)
13,97573,351
2,684
(54)
(712)
(817)
(53)
436
84
(2,132)
7,506(8,558)
1,625
37
(313)
(477)
2,561
2,251
452
7,889
16,572(38,808)927(5,734)623
139,257
1,930(8,108)477(2,251)(13,629)
117,676

Investing Activities:
Payments for purchases of property, plant and equipment ........................................................................................
Proceeds from sales of property, plant and equipment ..............................................................................................
Payments for purchases of intangible assets ............................................................................................................
Proceeds from liquidation of subsidiaries and affiliates .............................................................................................
Payments for purchases of investment securities ......................................................................................................
Proceeds from sales of investment securities ............................................................................................................
Purchase of shares of subsidiaries resulting in change in scope of consolidation (Note 14)..........................................
Net decrease (increase) in short-term loans receivable ...............................................................................................
Long-term loan advances ........................................................................................................................................
Proceeds from collection of long-term loans receivable ............................................................................................
Other, net ...............................................................................................................................................................
Net cash used in investing activities ..........................................................................................................................

(18,856)
4
(250)
451
(277)
5
(9,312)75(1,109)191
35(29,043)(11,835)
5
(138)
0
(105)
98
30
159
(11,786)(141,202)26(1,871)
3,375(2,078)
38(69,734)
559(8,307)1,430
279(217,485)

Financing Activities:
Increase in short-term borrowings ............................................................................................................................
Proceeds from long-term borrowings .......................................................................................................................
Payments for long-term borrowings .........................................................................................................................
Proceeds from issuance of shares.............................................................................................................................
Proceeds from share issuance to non-controlling shareholders ..................................................................................
Repayments of lease obligations...............................................................................................................................
Payments for purchase of treasury stock ..................................................................................................................
Proceeds from retirement of treasury stock ..............................................................................................................
Cash dividends paid ................................................................................................................................................
Net cash provided by (used in) financing activities ....................................................................................................

552
13,910(6,565)
6,686
6,973
(255)
(1)
2
(1,340)19,962

6,195(8,305)(360)(1,222)0(1,038)(4,730)4,134
104,163(49,161)
50,06752,210(1,906)(5)
17(10,037)
149,482

See notes to consolidated financial statements.

19

Thousands ofMillions of yen

U.S. dollars (Note 1)

2023

2022

2023

Effect of Exchange Rate Changes
on Cash and Cash Equivalents ...........................................................................................................................

251

870

1,879

Net Increase (Decrease) in Cash and Cash Equivalents .....................................................................................

6,884(1,671)

51,552

Cash and Cash Equivalents at the Beginning of the Year ...................................................................................
Cash and Cash Equivalents at the End of the Year ............................................................................................

See notes to consolidated financial statements.

20\

10,451
17,335\

12,122
10,451$

78,258129,810

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2023 and 2022(f) Leased Assets
Leased property under finance lease arrangements that transfer ownershipof the leased property to the lessee is depreciated using the same method as
the one applied to property, plant and equipment owned by the Company.
Leased property under finance lease arrangements that do not transfer
ownership of the leased property to the lessee is capitalized to recognize
leased assets and lease obligations in the balance sheets and depreciatedover the lease term of the respective assets with zero residual value.

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meiko Electronics
Co., Ltd. (the “Company”) have been prepared in accordance withthe provisions set forth in the Financial Instruments and Exchange Law of Japanand its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to present
them in a form that is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements include
information that is not required under Japanese GAAP, but ispresented herein as additional information.
The consolidated financial statements are denominated in Japanese yen,
the currency of the country in which the Company is incorporated
and operated. The conversion of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside Japanand has been done at the approximate exchange rate as at March 31, 2023($1 = ￥133.54). Such translation should not be construed
as representation that the Japanese yen amounts could be converted
into U.S. dollars at that or any other rate of exchange.

(g) Allowance for Doubtful Accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historical bad debt
ratio during a certain reference period plus an estimated uncollectible amountbased on the analysis of certain individual accounts including claims inbankruptcy.
(h) Accrued Bonuses
Accrued bonuses to employees are provided for the estimated amounts,
which the Company and its consolidated subsidiaries are obligated to
pay to employees after the fiscal year end based on services rendered during
the current fiscal year.
(i) Accrued Bonuses to Directors
The Company provides allowance for directors' accrued bonuses
based on the estimated amounts as at the balance sheet date.

2. Significant Accounting Policies
The following is a summary of the significant accounting policies
adopted by the Company and its consolidated subsidiaries
in the preparation of the consolidated financial statements.

(j) Provision for share awards
The Company accounts for the provision for share awards for employees
based on the estimated amounts as at the balance sheet date in accordancewith internal regulations.

(a) Consolidation
The consolidated financial statements include the accounts of
the Company and its significant 13 subsidiaries (together, the “Group”).
All significant inter-company accounts and transactions have been eliminated.
In the elimination of investments in subsidiaries, the assets and liabilities ofthe subsidiaries, including the portion attributable to minority shareholders,
are recorded based on the fair value at the time the Company acquired
control of the respective subsidiaries. Investments in certain unconsolidated
subsidiaries are accounted for by the cost method due to immateriality
in view of consolidation.

(k) Provision for share awards for directors
The Company accounts for the provision for share awards for directors
based on the estimated amounts as at the balance sheet date in accordancewith internal regulations.
(l) Impairment Losses on Fixed Assets
The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstances indicate the carrying amount of an asset or
asset group may not be recoverable. An impairment loss would berecognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result fromthe continued use and eventual disposition of the asset or asset group.
The impairment loss would be measured as the amount by which
the carrying amount of the asset exceeds its recoverable amount,which is the higher of the asset's or cash-generating unit's fair valueless costs to sell and its value in use.

(b) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and exposed to insignificant risk of changes in value.
Cash equivalents include time deposits that mature or become due
within three months of the date of acquisition.
(c) Translation of Foreign Currency Accounts
Current and non-current receivables and payables in foreign currencies
are translated at current rates prevailing at the balance sheet date andthe resulting exchange gains or losses are recognized in the consolidated
statements of operations.
Financial statements of consolidated overseas subsidiaries are translated
into Japanese yen at the exchange rate as at the balance sheet date, exceptthat shareholders' equity accounts are translated at historical rates andstatement of income items resulting from transactions with the Company
at the rates used by the Company.
Foreign currency translation adjustments resulting from translation offoreign currency financial statements prepared by consolidated overseas
subsidiaries are presented in net assets in the consolidated balance sheets.

(m) Investment Securities
The Company has classified all the equity securities as available-forsale securities based on management’s intention. Available-for-salesecurities other than equity securities without market price are reported
at fair value with unrealized gains or losses, net of applicable taxes,
reported in a separate component of net assets.
Equity securities without market prices are stated at cost determinedby the moving-average method.
The net amount of equity included in the Company's financial statementsfrom limited liability investment partnerships and similar investments,
regarded as marketable securities under Article 2-2 of the Financial
Investment and Exchange Law of Japan, is calculated based on the relevant
financial statements for the partnerships most recently available stipulated
in the partnership agreement.

(d) Inventories
Inventories are stated at cost, determined by the first-in-first-out method.
However, they are written down based on decreased profitability,
where appropriate.

(n) Revenue Recognition
The Group mainly engages in electronic business such as designing,
manufacturing and sales of electronic circuit boards (“PCB”), and the related
businesses.
The Group recognizes revenue, determining its performance obligation to besatisfied, at the time of the transfer of control of promised goods andproducts to customers, or at the time of acceptance inspection by customers.
However, for domestic sales of goods and products, the Group recognizes
revenue at the time of shipment when the periods between the shipment andthe transfer of control of promised goods and products to customers are
considered normal.
Consideration for goods and products is received within one year from thetime when performance obligation is determined to be satisfied and there isno significant financing component.

(e) Depreciation and Amortization (excluding leased assets)
Depreciation of property, plant and equipment for the Company and its
domestic subsidiaries is computed by the straight-line method.
The ranges of useful lives are summarized as follows:
Buildings and structures: 2–47 years
Machinery and vehicles: 2–10 years
Software for company use is carried at cost less accumulated amortization,
which is calculated by the straight-line method over its estimated usefullife of five years.

21

(o) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations. The asset
and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred tax assets are measured by applying
the currently enacted tax laws to the temporary differences.
(p) Derivative Financial Instruments
The Group uses interest rate swaps, currency swaps andcopper price swaps as a means of hedging exposure to foreign
currencies, interest risks and market fluctuation. The Group
does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as
follows: a) all derivatives are recognized as either assets or liabilities andmeasured at fair value, and gains or losses on transactions arising fromderivatives except for hedging purposes are recognized in the consolidated
statements of operations and b) for derivatives used for hedging purposes,
if derivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of the hedgedtransactions.
If interest rate swap contracts are used as a hedge and meet certain
criteria, the net amount to be paid or received under the swap
contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.
For currency swaps that qualify for hedge accounting, gain or loss
is translated at the exchange rate stipulated in the contract under
the allocation method.
(q) Retirement Benefits for Employees
The benefit formula method is used as a method of attributing
expected benefits to the periods through the end of the fiscal year
in calculating projected benefit obligation.
Actuarial gain or loss is amortized using the declining balance method(straight-line method for certain consolidated subsidiaries) over 9 to 10 years,
which is less than the average remaining years of service of the employees,
and the amortization will be started in the following year in which the gainor loss is recognized.
Past service cost is amortized using the straight-line method over 10
years, which is less than the average remaining years of service of theemployees.
Certain consolidated subsidiaries apply the simplified method in which
the retirement benefit amount required for voluntary termination at year end
is deemed a projected benefit obligation for a lump-sum retirement plan andthe latest actuarial liability is deemed a projected benefit obligation forthe corporate pension plan, for the calculation of liability associated withretirement and retirement benefit expenses.
(r) Provision for Directors' Retirement Benefits
The Company and its domestic consolidated subsidiaries account for theprovision for directors' retirement benefits as at the balance sheet datein accordance with internal regulations.
(s) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.
(t) Per Share Information
Dividends per share shown in the consolidated statements of operations havebeen presented on an accrual basis and include, in each fiscal period,
dividends approved after each balance sheet date, but applicable to the fiscal
period then ended.
Net income per share is computed by dividing net income attributable
to common shareholders of the Company by the weighted-average
number of common shares outstanding for the period.
The diluted net income per share is omitted as the Company has no dilutive
shares for the years ended March 31, 2023 and 2022.
(u) Significant Accounting Estimates(Valuation of goodwill)(1) Amount recorded in the consolidated financial statements as ofMarch 31, 2023 and 2022
Thousands ofMillions of yen

Goodwill....................

\

2023
6,304 \

U.S. dollars

2022
304 $

2023
47,205(2) Information on identified items regarding significant accounting estimates① Method to calculate the amountThe Company acquired all of the outstanding shares of Meiko Embedded
Products, Ltd. (hereinafter “Meiko EP”) and made Meiko EP a consolidated
subsidiary during the year ended March 31, 2023.

The amount of goodwill recognized by the acquisition was due to the estimatedexcess earnings power expected from future business development andcalculated by subtracting the net amount of assets acquired and liabilities
assumed at the acquisition date from the acquisition cost.
The acquisition cost was determined based on the share value calculatedusing the discounted future cash flows with the consideration of the businessplan developed by Meiko EP.
The estimation of the future cash flows is based on the business plandeveloped with the forecast and the consideration of the potential of the market.
For goodwill, the Company reviews the achievement of the business plan to
identify impairment indicators.
When the carrying amount of goodwill exceeds the sum of the undiscounted
future cash flows, the carrying amount is reduced to the recoverable amountand the difference between the carrying amount and recoverable amount isrecorded as an impairment loss.
② Assumptions used in significant accounting estimates
The future cash flows were estimated based on the business plan, taking into
consideration the sales growth rate reflecting estimation of the size of the market
for Meiko EP as key assumptions.
③ Impact on the consolidated financial statements for the next consolidated
accounting period
The Company determined there was no indication of impairment of goodwill
as of the year end, however changes in assumptions and conditions used forthe estimation due to changes in the business plan and market environment may
have a material impact on the valuation of goodwill on the consolidated
financial statements in the next fiscal year and thereafter.
(Recoverability of deferred tax assets)(1) Amount recorded in the consolidated financial statements as ofMarch 31, 2023 and 2022
Thousands ofMillions of yen

2023
Deferred tax assets................... \1,873 \

U.S. dollars

2022
1,841 $

2023
14,029(2) Information on identified items regarding significant accounting estimates① Method to calculate the amount
As of March 31, 2023 and 2022, the Company recorded deferred tax assets
worth \1,873 million ($14,029 thousand) and \1,841 million, respectively,
to the extent that it is expected to reduce future taxable income.
In the calculation, the Company scheduled the period when the deductible
temporary differences and tax loss carryforward would reverse, based on the
future taxable income estimated according to the business plan.
Deferred tax assets before offset by the deferred tax liabilities were\2,244 million ($16,807 thousand) and \2,063 million, respectively,
as of March 31, 2023 and 2022.
As of March 31, 2023 and 2022, deferred tax assets of \733 million($5,490 thousand) and \741 million, respectively, were recognized for tax loss
carryforwards of \2,032 million ($15,214 thousand) and \2,126 million,
respectively, for the years ended March 31, 2023 and 2022, calculatedusing the enacted statutory tax rates.
This is recognized as tax loss carryforwards of the Company's consolidated
subsidiaries in the amount of \1,052 million ($7,880 thousand) and\2,126 million, respectively, for the years ended March 31, 2023 and 2022,
calculated using the enacted statutory tax rates.
② Assumptions used in significant accounting estimates
Future taxable income used in assessment of recoverability of deferred tax
assets was estimated based on the business plan, taking into consideration
estimated sales reflecting order backlogs and estimated future orders
as key assumptions.
③ Impact on the consolidated financial statements for the next consolidated
accounting period
Deferred tax assets were calculated based on the estimated future taxable
income in the expected period according to the business plan.
Estimates are potentially affected by uncertain changes in economic conditions.
When the actual taxable income is different from the estimates in the amountand the period of accrual, significant impact may occur on deferred tax assets
on the consolidated financial statements for the next consolidated accounting
period.
(v) Changes in Accounting Policy(Adoption of “Implementation Guidance on Accounting Standard for
Fair Value Measurement”)
From the beginning of the fiscal year ended March 31, 2023, the Group
adopted “Implementation Guidance on Accounting Standard for Fair Value
Measurement” (Accounting Standards Board of Japan (“ASBJ”) Guidance
No. 31, June 17, 2021).
The new accounting policies as stipulated in this guidance are applied
prospectively in accordance with the transitional treatment as stipulated
in paragraph 27-2 of the guidance.
There is no effect of adopting the guidance on the consolidated financial
statements for the fiscal year ended March 31, 2023.

22

(w) Change in Accounting Policy difficult to distinguish from change in
Significant Accounting Estimates
The Company and its domestic consolidated subsidiaries changed the method ofdepreciation of property, plant and equipment (excluding leased assets) from thedeclining-balance method used in the past to the straight-line method for the current
consolidated fiscal year.
Along with major customers' overseas expansion of production bases, the Groupestablished mass production bases in China and Vietnam in order to accommodate
demands for printed circuit boards for mobile phones and cars.
However, stable supply of products is the challenge due to factory shutdown
and supply chain disruption under the COVID-19 pandemic.
In addition, the Group made large investment in domestic factories to accommodate
the increasing demands expected with the electric cars and 5G and 6G connectivity
in communication fields.
Driven by these investments, the Group reassessed the depreciation methodand determined that adopting straight-line method is rational for the depreciationof property, plant and equipment held by the Company and its domestic
consolidated subsidiaries to reflect the business condition, as these assets
are expected to be used stably and generate investment effects averagely.
As a result of this change, Operating income and Income before Income Taxes
increased by \251 million ($1,881 thousand).

(2) The Company's shares in the trust fund
The Company recorded book values of the Company's shares in the trust fund,except for related expenses, as treasury stock in net assets.
The book values of the treasury stock is \90 million ($677 thousand)and \96 million, and number of treasury stock is 30,900 shares and 32,800
shares, respectively, as of March 31, 2023 and 2022.
(Employee Stock Delivery Trust (the “J-ESOP”))
At a meeting of the Board of Directors held on February 22, 2021, the Company
resolved to introduce an incentive plan referred to as the Employee Stock
Delivery Trust (the “J-ESOP”) under which the Company’s shares will bedelivered to employees of the Company, subsidiaries and affiliates.
With the plan, the Company expects to increase employees' interest in
improvement of business performance and share price of the Company
by strengthening the linkage of employees' benefits with those factors andby sharing economic benefits with shareholders.
(1) Outline of transactions
Under the plan, the Company's stock or a payment equivalent to fair valuesof the Company's stock are distributed to employees of the Company,
subsidiaries and affiliates, who meet certain requirements based on the stockcompensation policy set by the Company, subsidiaries and affiliates.
The Company, subsidiaries and affiliates grant points to employees according
to the degree of their contribution.
If employees meet certain conditions to receive the compensation
under the plan, the shares or payments corresponding to the number of points
are distributed to employees.
The shares to be distributed to employees are acquired by the trust fundset in advance and separately managed as trust assets.

(x) Additional Information(Stock Delivery Trust for directors)
At the 46th Ordinary General Meeting of Shareholders held on June 24, 2021,
the Company resolved to introduce a stock compensation plan through trust to
directors (excluding outside directors).
With the plan, the Company expects to increase directors' interest in
improvement of medium- to long-term business performance and share priceof the Company by strengthening the linkage of directors' benefits withthose factors and by sharing economic benefits with shareholders.

(2) The Company's shares in the trust fund
The Company recorded book values of the Company's shares in the trust fund,except for related expenses, as treasury stock in net assets.
The book values of the treasury stock is \283 million ($2,119 thousand)and \288 million, and number of treasury stock is 104,900 shares and
106,800 shares, respectively, as of March 31, 2023 and 2022.

(1) Outline of transactions
With the plan, the Company set up the trust fund by disbursing money
and the trust fund acquires the Company's shares.
The shares are distributed to directors through the trust fund corresponding
to the number of points directors received from the Company.
The Company's shares are distributed to directors incumbent for three years
from the next day of the 46th Ordinary General Meeting of Shareholders heldon June 24, 2021 to the end of the Ordinary General Meeting of Shareholders
to be held in June 2024.
The directors incumbent as of March 31, 2021 and reappointed at the 46th
Ordinary General Meeting of Shareholders are eligible to receive
the compensation based on the plan for the period from the next dayof the 45th Ordinary General Meeting of Shareholders to the end of the
day of 46th Ordinary General Meeting of Shareholders.
Basically, the Company's shares are distributed to directors at the timeof their resignation as directors.
3. Investment Securities

All the equity securities, classified as available-for-sale securities, are included in non-current investment securities.
The carrying amounts and aggregate fair values of the available-for-sale securities as of March 31, 2023 and 2022 are as follows:
2023
Millions of yen

Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

Securities whose carrying values
exceed their acquisition cost:
Equity securities .............................................................. \Securities whose carrying values do not
exceed their acquisition cost:
Equity securities ..............................................................
Total .............................................................................. \

68 \

22 \

46 $

509 $

165 $

344

160
228 \

201
223 \

(41)
5 $

1,198
1,707 $

1,503
1,668 $

(305)
39

2022
Millions of yen

Securities whose carrying values
exceed their acquisition cost:
Equity securities .............................................................. \Securities whose carrying values do not
exceed their acquisition cost:
Equity securities ..............................................................
Total .............................................................................. \Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

58 \

22 \

36

164
222 \

201
223 \

(37)
(1)

23

Information on available-for-sale securities whose fair values are not readily determinable as of March 31, 2023 and 2022 is described in Note 17.
Information regarding the sale of securities classified as available-for-sale securities for the years ended March 31, 2023 and 2022 is summarized as follows:
2023
Millions of yen

Thousands of U.S. dollars

Proceeds

Aggregate

Aggregate

Proceeds

Aggregate

Aggregatefrom Sales

Gains onLosses on

from Sales

Gains onLosses on

Sales

Sales

5\
5\

Equity securities .............................................................. \Total .............................................................................. \

0\
0\

Sales

5 $
5 $

38 $
38 $

Sales

0 $
0 $

37
37

2022
Millions of yen
Proceeds

Aggregate

Aggregatefrom Sales

Gains onLosses on

Sales

Equity securities .............................................................. \Total .............................................................................. \

98 \
98 \

Sales

10 \
10 \

0
0

The Company recorded no impairment loss of investment securities for the years ended March 31, 2023 and 2022.

4. Reduction Entry for Property, Plant and Equipment
The amount deducted from the acquisition costs of property, plant and equipment due to government subsidies received and others as of March 31, 2023 and 2022
is as follows:
Thousands of

Buildings and structures .......................................................................................................................................................... \Machinery and vehicles ...........................................................................................................................................................
Other .....................................................................................................................................................................................
Total ...................................................................................................................................................................................... \Millions of yen
2023
2022
270 \
270 $
162
162
7
7
439 \
439 $

U.S. dollars

2023
2,023
1,214
48
3,285

5. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2023 and 2022 consist of the following:Thousands ofMillions of yen
2023
2022

U.S. dollars

2023

Short-term borrowings with average interest rate of 1.95% for 2023 and 1.02% for 2022.................................................................... \Current portion of long-term borrowings with average interest rate of 0.85% for 2023 and 0.97% for 2022..........................................
Current portion of lease obligations .................................................................................................................................................
Current portion of other liabilities with average interest rate of 0.57% for 2023 and 2022.....................................................................
Total short-term borrowings .................................................................................................................................................. \29,663 \
7,200
196
1,300
38,359 \28,167 $
5,962
214
1,299
35,642 $222,130
53,9161,469
9,735
287,250

Long-term borrowings with average interest rate of 0.89% for 2023 and 0.98% for 2022, less current portion ..................................... \Lease obligations, less current portion .............................................................................................................................................
Total long-term borrowings.................................................................................................................................................... \Total ................................................................................................................................................................................... \38,467 \268
38,735 \77,094 \32,267 $392
32,659 $68,301 $288,053
2,009
290,062
577,312* Average interest rate of borrowings represents the weighted average rate for the outstanding balances as at March 31, 2023 and 2022.
Average interest rate of lease obligations is not disclosed since the amount equivalent to interest expenses included in total lease payments is allocated over the lease termusing the straight-line method.
Average interest rate of other liabilities represents the weighted average rate for the average of the outstanding balances as at April 1, 2022 and March 31, 2023.
The aggregate annual maturities of long-term debt as of March 31, 2023 are as follows:Year ending March 312024................................................................................................................................................................................................ \2025................................................................................................................................................................................................
2026................................................................................................................................................................................................
2027................................................................................................................................................................................................
Total .............................................................................................................................................................................................. \Millionsof yen7,667 $
25,4003,000
2,400
38,467 $Thousands ofMillionsof yen
126 $
95
47
268 $

Thousands of

U.S. dollars

57,411
190,205
22,465
17,972
288,053

The aggregate annual maturities of lease obligations as of March 31, 2023 are as follows:Year ending March 312024................................................................................................................................................................................................ \2025................................................................................................................................................................................................
2026................................................................................................................................................................................................
2027................................................................................................................................................................................................
Total .............................................................................................................................................................................................. \24

U.S. dollars

945
713
351
2,009

Financial covenants
Short-term borrowings and long-term borrowings, including the current portion amounting to \56,600 million ($423,843 thousand) and \49,392 million
for the years ended March 31, 2023 and 2022, respectively, include certain financial covenants that forfeit the benefit of term with regard to the debts on certain loan
agreement in the event the Company is in breach of either of the following covenants (stricter covenants are described if there are several covenants).
(1) For each fiscal year, ordinary losses shall not be recorded on the consolidated statement of operations under Japanese GAAP for two consecutive years.
(2) Total net assets on the consolidated balance sheet at each fiscal year end shall be maintained at least higher of either (i) \20,589 million ($154,179 thousand),or (ii) 75% of the total net assets recorded on the consolidated balance sheet as of the end of the previous fiscal year.
(3) The total amount of interest-bearing debts on the consolidated balance sheet at each fiscal year end shall be lower than the amount equivalent to the net sales
on the consolidated statement of operations for that fiscal year divided by 12 and multiplied by 8.
(4) The ratio of interest-bearing debts divided by the amount equal to the total net assets minus foreign currency translation adjustments, using the amount on the
consolidated balance sheet at each fiscal year end, shall be maintained on or below the level specified as follows:Year ending March 31, 2023
Year ending March 31, 2022
2.5
2023..................................
2.1
2021...................
2.3
2024..................................
1.9
2022...................
2.1
2025..................................
1.7
2023...................
1.9
2026..................................
1.6
2024...................
1.7
2027..................................
1.5
2025...................
(5) EBITDA modified interest-bearing debt multiplier calculated by the following formula shall be maintained below 5 at March 31, 2025 and each fiscal year end thereafter
Formula: Total modified interest-bearing debt at fiscal year end (March 31, 2025, for the first determination) divided by EBITDA average of the latest 3 periods.
EBITDA is calculated by adding depreciation expenses to operating income/loss on the consolidated statements of operations.

6. Retirement Benefits
The Company and some of its consolidated subsidiaries provide a funded and unfunded defined benefit plan and a defined contribution plan as a defined benefit pension
plan for employees' retirement benefits.
A defined benefit plan, which are all funded, provides a lump-sum or pension payment based on salary and service period of the employees.
A lump-sum retirement plan, which are all unfunded, provides a lump-sum payment based on salary and service period of the employees.
Certain consolidated subsidiaries apply the simplified method in computing net defined benefit liability and benefit costs for their lump-sum retirement plans.
Defined benefit pension plans, except the plan applying the simplified method(1) Movement in projected benefit obligations
Thousands ofBalance at the beginning of the year ................................................................................................................................................. \Service cost ...................................................................................................................................................................................
Interest cost ...................................................................................................................................................................................
Actuarial loss...................................................................................................................................................................................
Benefits paid ..................................................................................................................................................................................
Increase resulting from newly consolidated subsidiaries.....................................................................................................................
Balance at the end of the year........................................................................................................................................................... \Millions of yen
2023
2022
2,341 \
2,389 $
155
137
32
10
(12)
(42)
(426)
(153)
3,879
5,969 \
2,341 $

U.S. dollars

2023
17,529
1,162
237
(92)
(3,185)29,05044,701(2) Movement in plan assets
Thousands ofBalance at the beginning of the year ................................................................................................................................................. \Expected return on plan assets ........................................................................................................................................................
Actuarial gain (loss).........................................................................................................................................................................
Contributions from the employer .....................................................................................................................................................
Benefits paid ..................................................................................................................................................................................
Increase resulting from newly consolidated subsidiaries.....................................................................................................................
Balance at the end of the year........................................................................................................................................................... \Millions of yen
2023
2022
- \
31
(59)
19
(160)
2,390
2,221 \

U.S. dollars

2023
- $
- $

234
(438)
139
(1,198)17,895
16,632(3) Reconciliation from projected benefit obligations and plan assets to net defined benefit liability
Thousands ofFunded projected benefit obligations ............................................................................................................................................... \Plan assets .....................................................................................................................................................................................
Unfunded projected benefit obligations ................................................................................................................................................
Total liability at the end of the year .................................................................................................................................................. \Net defined benefit liability .............................................................................................................................................................. \Total liability at the end of the year .................................................................................................................................................. \Millions of yen
2023
2022
2,622
- $
(2,221)
401
3,348
2,341
3,749 \
2,341 $
3,749 \
3,749 \

2,341 $
2,341 $

U.S. dollars

2023
19,633(16,632)
3,001
25,06828,06928,06928,069(4) Retirement benefit costs
Thousands ofService cost ................................................................................................................................................................................... \Interest cost ...................................................................................................................................................................................
Expected return on plan assets ........................................................................................................................................................
Amortization of actuarial loss ..........................................................................................................................................................
Amortization of past service cost ....................................................................................................................................................
Total benefit costs .......................................................................................................................................................................... \Millions of yen
2023
2022
155 \
137 $
32
10
(31)
2
13
30
39
188 \
199 $

U.S. dollars

2023
1,163
237
(234)
12
230
1,408

(5) Remeasurements of defined benefit plans
Thousands of

Past service cost ............................................................................................................................................................................. \Actuarial loss ..................................................................................................................................................................................
Total .............................................................................................................................................................................................. \25

Millions of yen
2023
2022
31 \
39 $
(45)
55
(14) \
94 $U.S. dollars

2023
230
(334)
(104)

(6) Accumulated remeasurements of defined benefit plans
Thousands ofUnrecognized past service cost ....................................................................................................................................................... \Unrecognized actuarial loss (gain).....................................................................................................................................................
Total .............................................................................................................................................................................................. \Millions of yen
2023
2022
123 \
154 $
52
8
175 \
162 $

U.S. dollars

2023
920
394
1,314

(7) Plan assets
a. Components of plan assets
Ratio of each major category of total plan assets is as follows:
Debt investments ................................................................................................................................................................................
Equity investments...............................................................................................................................................................................
Other..................................................................................................................................................................................................
Total ..................................................................................................................................................................................................

2023
49.8%
26.4%
23.8%
100.0%

2022-

b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates of return, which are expected currently and in the future fromthe various components of the plan assets.
(8) Actuarial assumptions

Discount rate ..................................................................................................................................................................................
Expected rate of return on plan assets ..............................................................................................................................................

2023
0.8 - 1.0%
2.5%

2022
0.5%
-

Defined benefit pension plan applying the simplified method(1) Movement in net defined benefit liability
Thousands ofBalance at the beginning of the year ................................................................................................................................................. \Benefit costs ..................................................................................................................................................................................
Benefits paid ..................................................................................................................................................................................
Increase resulting from newly consolidated subsidiaries.....................................................................................................................
Other .............................................................................................................................................................................................
Balance at the end of the year .......................................................................................................................................................... \Millions of yen
2023
2022
376 \
378 $
46
25
(30)
(27)
(45)
(1)
346 \
376 $

U.S. dollars

2023
2,819
343
(221)
(336)
(13)
2,592

(2) Reconciliation from projected benefit obligations and plan assets to net defined benefit liability
Thousands ofFunded projected benefit obligations ............................................................................................................................................... \Plan assets .....................................................................................................................................................................................
Unfunded projected benefit obligations ............................................................................................................................................
Total liability at the end of the year .................................................................................................................................................. \Net defined benefit liability .............................................................................................................................................................. \Net defined benefit asset .................................................................................................................................................................
Total liability at the end of the year .................................................................................................................................................. \Millions of yen
2023
2022
278 \
- $
(309)
(31)
377
376
346 \
376 $
377 \
(31)
346 \

376 $
376 $

U.S. dollars

2023
2,082
(2,315)
(233)
2,825
2,592
2,825
(233)
2,592

(3) Retirement benefit costThousands ofRetirement benefit costs calculated using the simplified method ........................................................................................................ \Total costs at the end of the year ..................................................................................................................................................... \Millions of yen
2023
2022
46 \
25 $
46 \
25 $

Defined contribution plan
The amount required to contribute to the defined contribution plans is \196 million ($1,468 thousand) and \166 million for the years ended March 31, 2023 and 2022,
respectively.

26

U.S. dollars

2023
343
343

7. Net Assets
Under the Japanese Corporation Law (“the Law”) and regulations, the entire amount paid for new shares is required to be designated as capital stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the new sharesas additional paid-in capital, which is included in capital surplus.
In cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% ofcapital stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve.
Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital and all legal earnings
reserves may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with the Law.

8. Loss on disasterFor the year ended March 31, 2023
The Group recorded loss on disaster for the restoration cost of damage by the earthquake in Fukushima in March 2022.
For the year ended March 31, 2022
The Group recorded loss on disaster for the disposal cost and restoration cost of damage by the earthquake in Fukushima in March 2022.

9. Expenses for Business Structure Improvement
For the year ended March 31, 2023
The Group recorded expenses for business structure improvement for the payment of financial compensation, equivalent to severance payment, with the aim of
improving business structure of overseas subsidiaries.
For the year ended March 31, 2022
The Group recorded expenses for business structure improvement for the payment of financial compensation, equivalent to severance payment, with the aim of
improving business structure of overseas subsidiaries and for the valuation loss on inventories in domestic subsidiaries followed by withdrawal from the business.

10. Loss related to COVID-19 pandemic
For the year ended March 31, 2023
There were no applicable matters for the year ended March 31, 2023.
For the year ended March 31, 2022
The Company recorded \479 million for the equivalent amount to salaries, depreciations and other fixed costs accrued in overseas subsidiaries
during the period of low operation which was requested by the governments in China and Vietnam, and \168 million for the COVID-19 infection prevention.

11. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2023 and 2022 are as follows:
Thousands ofMillions of yen
2023

U.S. dollars

- \
15 \

Trade notes discounted............................................................................... \Electronically recorded monetary claims discounted .................................... \

2023

2022
6$
17 $

116

12. Contract Liabilities
Contract liabilities of the Company as of March 31, 2023 and 2022, which are included in “Other” in “Current Liabilities”, are as follows:
Thousands ofMillions of yen
2023
Contract liabilities....................................................................................... \U.S. dollars

2023

2022
182 \

30 $

1,363

13. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \4,466 million ($33,447 thousand) and\3,074 million for the years ended March 31, 2023 and 2022, respectively.

14. Supplemental Cash Flow Information(Details of assets and liabilities of the company which became a newly consolidated subsidiary of the Company due to share acquisition)
Details of assets and liabilities at the time of consolidation commencement as well as the relationship between share acquisition cost of
Meiko EP and expenditures (net) for acquisition as a result of making Meiko EP as a consolidated subsidiary by acquiring its sharesare as follows:

Current assets ...................................................................................................................................................... \Non-current assets ...............................................................................................................................................
Goodwill .............................................................................................................................................................
Current liabilities ..................................................................................................................................................
Long-term liabilities ..............................................................................................................................................
Share acquisition cost.........................................................................................................................................
Cash and cash equivalents ....................................................................................................................................
Expenditures (net) for acquisition ....................................................................................................................... \27

Millions of yen
2023
2022
8,567 \
1,838
6,358
(3,983)(1,780)11,000(1,688)9,312 \

Thousands of
U.S. dollars

-$
-$

2023
64,151
13,76747,610(29,827)(13,328)
82,373(12,639)
69,734

15. Net Gain and Net Loss on Sales and Disposal of Property, Plant and Equipment
Significant components of net gain and net loss on sales and disposal of property, plant and equipment for the years ended March 31, 2023 and 2022 are as follows:
Thousands ofGain:
Machinery and vehicles......................................................................................................................................... \Others .................................................................................................................................................................
Total gain .................................................................................................................................................... \Loss:
Buildings and structures ....................................................................................................................................... \Machinery and vehicles ........................................................................................................................................
Construction in progress ......................................................................................................................................
Others .................................................................................................................................................................
Intangible assets ..................................................................................................................................................
Total loss .................................................................................................................................................... \Net loss ...................................................................................................................................................... \Millions of yen
2023
2022
1 \
1 \
(11) \
(137)
(1)
(8)
(61)
(218) \
(217) \

U.S. dollars

2023
0 $
3
3 $

8
8

(223) $
(272)(29)(524) $
(521) $

(85)
(1,029)
(5)
(57)
(457)
(1,633)(1,625)

16. Income Taxes
Income taxes applicable to the Company consist of corporate tax, inhabitant tax and enterprise tax, which in the aggregate resulted in the normal statutory
tax rates of approximately 30.6% for the years ended March 31, 2023 and 2022.
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities as of March 31, 2023 and 2022 are as follows:
Thousands ofMillions of yen
2023
2022
Deferred Tax Assets:
Elimination of unrealized profits ............................................................................................................................ \Accrued bonuses .................................................................................................................................................
Net defined benefit liability ...................................................................................................................................
Provision for directors' retirement benefits ............................................................................................................
Provision for share awards ...................................................................................................................................
Provision for share awards for directors ...............................................................................................................
Accrued enterprise tax .........................................................................................................................................
Allowance for doubtful accounts...........................................................................................................................
Valuation loss of inventories..................................................................................................................................
Difference on depreciation period..........................................................................................................................
Impairment loss ...................................................................................................................................................
Loss on valuation of investment securities..............................................................................................................
Loss on revaluation of golf club memberships .....................................................................................................
Tax loss carryforwards (*2)..................................................................................................................................
Deferred gains on hedges......................................................................................................................................
Deduction of foreign corporation tax carried forward ............................................................................................
Other ..................................................................................................................................................................
Gross deferred tax assets......................................................................................................................................
Valuation allowance for tax loss carryforwards (*2)...............................................................................................
Valuation allowance for deductible temporary differences.......................................................................................
Less: Valuation allowance (*1)..............................................................................................................................
Total ..................................................................................................................................................................... \

148 \
356
1,295
66
53
11
78
52
197
285
720
23
10
2,032
6
191
5,523
(1,299)(1,980)(3,279)2,244 \

164 $
308
845
66
35
8
67
48
202
292
811
5
15
2,126
44
245
173
5,454
(1,385)(2,006)(3,391)
2,063 $

U.S. dollars

2023
1,109
2,667
9,699
494
396
83
587
388
1,473
2,131
5,390
172
75
15,21442
1,440
41,360(9,724)(14,829)(24,553)
16,807
Thousands ofMillions of yen
2023
2022

U.S. dollars

2023

Deferred Tax Liabilities:
Retained earnings of foreign subsidiaries................................................................................................................ \Fair value adjustments on consolidated subsidiaries................................................................................................
Unrealized gains on available-for-sale securities......................................................................................................
Deferred gains on hedges......................................................................................................................................
Other...................................................................................................................................................................
Total ..................................................................................................................................................................... \(600) \
(80)
(6)
(30)
(12)
(728) \

(519) $
(2)(26)(547) $

(4,493)
(600)
(44)
(224)
(94)
(5,455)

Deferred Tax Assets, Net: ...................................................................................................................................... \1,516 \

1,516 $

11,35228

(*1) The valuation allowance decreased by \112 million ($841 thousand), mainly due to the decrease of \87 million ($650 thousand) invaluation allowance for tax loss carryforwards at the consolidated subsidiaries for the year ended March 31, 2023.
The valuation allowance decreased by \1,114 million, mainly due to the decrease of \597 million in valuation allowance for tax loss carryforwards
and the decrease of \199 million in valuation allowance for deferred foreign tax credits at the Company for the year ended March 31, 2022.
(*2) Gross deferred tax assets, valuation allowances and total deferred tax assets recognized for tax loss carryforwards, broken down by expiration dates are as follows:
Millions of yen
March 31, 2023
Gross deferred tax assets for tax loss carryforwards (*a) ............................................................. \Valuation allowance ....................................................................................................................
Total deferred tax assets recognized ............................................................................................

Within one
year

One to two
years

18 \
(18)
-

14 \
(14)
-

Over two to
three years

Over three
to four years

423 \
423

Over four
to five years

187 \
(41)
146

243 \
(122)
121

Over fiveyears
1,147 \
(1,104)
43

Total

(*b)

2,032
(1,299)733

Millions of yen
March 31, 2022

Within one
year

Gross deferred tax assets for tax loss carryforwards (*a) ............................................................. \Valuation allowance ....................................................................................................................
Total deferred tax assets recognized ............................................................................................

One to two
years
- \
-

Over two to
three years

18 \
(18)
-

Over three tofour years

13 \
(13)
-

Over four tofive years

609 \
(9)
600

185 \
(44)
141

Over five years
1,301 \
(1,301)
-

Total
2,126
(1,385)(*b) 741

Thousands of U.S. dollars
March 31, 2023
Gross deferred tax assets for tax loss carryforwards (*a) ............................................................. $Valuation allowance ....................................................................................................................
Total deferred tax assets recognized ............................................................................................

Within one
year
133 $
(133)
-

One to two
years
106 $
(106)
-

Over two to
three years

Over three
to four years

3,171 $-

1,398 $
(307)
1,091

3,171

(*a) Gross deferred tax assets for tax loss carryforwards are calculated using the enacted statutory tax rates.
(*b) Deferred tax assets of \733 million ($5,490 thousand) are recognized for tax loss carryforwards of \2,032 million ($15,214 thousand)(calculated using the enacted statutory tax rates), which the Company's consolidated subsidiaries recognized for tax loss carryforwards of \1,052 million($7,880 thousand) for the year ended March 31, 2023. These tax loss carryforwards are expected to be recoverable judging from the estimated taxable incomein the future. Accordingly, the Company does not recognize the valuation allowance for this for the year ended March 31, 2023.
Deferred tax assets of \741 million are recognized for tax loss carryforwards of \2,126 million (calculated using the enacted statutory tax rates),
which the Company's consolidated subsidiaries recognized for tax loss carryforwards of \741 million for the year ended March 31, 2022.
These tax loss carryforwards resulted from loss before income taxes for the years ended March 31, 2021 and 2022, which are expected to be recoverable judging
from the estimated taxable income in the future. Accordingly, the Company does not recognize the valuation allowance for this for the year ended March 31, 2022.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements
of income for the years ended March 31, 2023 and 2022 is as follows:
2023
Statutory tax rate ............................................................................................................................................................................
Expenses not deductible for tax purposes ........................................................................................................................................
Per capita inhabitant tax ..................................................................................................................................................................
Directors' bonuses ..........................................................................................................................................................................
Tax deduction ................................................................................................................................................................................
Tax rate difference in foreign subsidiaries ........................................................................................................................................
Retained earnings of foreign subsidiaries ..........................................................................................................................................
Foreign tax credit ............................................................................................................................................................................
Valuation allowance ........................................................................................................................................................................
Other, net .......................................................................................................................................................................................
Actual effective tax rate ...................................................................................................................................................................

2022

30.6%
0.1%
0.2%
0.2%
(5.0)%(1.3)%
0.8%(1.0)%(4.4)%(2.5)%
17.7%

30.6%
0.1%
0.1%
0.1%
(3.1)%(11.0)%
0.8%(0.0)%(6.9)%(1.4)%
9.3%

17. Financial Instruments(a) Qualitative information on financial instruments(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans according to the capital investment plan for the production and sales of PCB.
Temporary and excessive funds are operated by highly stable financial instruments and the Group finances short-term operating capital by bank loans.
Derivative transactions are only utilized to hedge the risks mentioned in (2) below.
(2) Details of financial instruments used and exposures to risk and how they arise
Operating receivables such as trade notes, accounts receivable and electronically recorded monetary claims are exposed to the credit risk. Some operating receivables,
which are denominated in foreign currencies due to global operations, are exposed to foreign currency fluctuation risk. The Group might utilize foreign exchange
forward contracts, if necessary, except for those within the range of the operating payables denominated in the same foreign currency. Investment securities
mainly consist of securities of companies in which a business relationship has been established and they are exposed to market fluctuation risk.
Operating payables such as trade notes and accounts payable are due within one year.
Some of the operating payables relating to imports of raw materials are denominated in foreign currencies and exposed to foreign currency fluctuation risk.
The Group might utilize foreign exchange forward contracts, if necessary, except for those within the range of the operating receivables denominated in the same foreign
currency. Loans and lease obligations for finance lease transactions are mainly used for the purpose of financing capital investments.
Some of them are variable interest loans and exposed to interest and foreign currency fluctuation risk.
The Group utilizes interest rate swaps and currency swaps to hedge the risk. Regarding derivative transactions, the Group utilizes foreign exchange forward contracts tohedge the foreign currency fluctuation risk of receivables and payables denominated in foreign currencies. The Group utilizes interest rate swaps and currency swaps
to hedge interest fluctuation risk. The Group utilizes commodity forward contracts to hedge copper price fluctuation risk.
(3) Policies and processes for managing the risk(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management rules, monitors the customers’ credit conditions periodically and manages the due dateand balance per customer. The Company keeps track of the adverse financial conditions of its customers in the early stages to mitigate the uncollectible risk.
The Company enters into derivative transactions only with the credit-worthy financial institutions to mitigate the credit risk.
(ii) Market risk management (risk of foreign currency fluctuations and interests)
Regarding the trade receivables and trade payables denominated in foreign currencies, the Company utilizes foreign exchange forward contracts, if necessary, to hedge
the foreign currency fluctuation risk, which is controlled by each currency and on a monthly basis. For investment securities, the Company regularly reviews the fair value
and issuers' financial condition and readjusts its portfolio on an ongoing basis considering the business relationship with counterparties. Derivative transactions
are based on the internal rules and executed after getting the approval from the approver and managed by the finance department. Details of the derivative transactions
are reported to the Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at due dates)
The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values
As the calculation of fair values of financial instruments adopts certain assumptions, those values may vary in case different assumptions are applied.
Also, for the contract amount regarding derivative transactions described in Note 18, the contract amount itself does not indicate market risk related to derivativetransactions.
(b) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheets and their fair values as at March 31, 2023 and 2022 are as follows:

29

Over four
to five years
1,820 $
(916)
904

Over fiveyears
8,586 $
(8,262)
324

Total

(*b)

15,214(9,724)
5,490

2023
Millions of yen
Book

Fair

Value

Value

Thousands of U.S. dollars
Difference

Book

Fair

Value

Value

Difference

Investment securities
Available-for-sale securities ........................................... \Total assets..................................................................... \

228 \
228 \

228 \
228 \

0 $
0 $

1,707 $
1,707 $

1,707 $
1,707 $-

Long-term borrowings (*4) ..............................................\
Lease obligations (*4) .....................................................
Total Liabilities................................................................ \45,667 \464
46,131 \45,673 \467
46,140 \

(6) $
(3)
(9) $

341,969 $3,478
345,447 $342,017 $
3,495
345,512 $

(48)
(17)
(65)

Derivative financial instruments (*5).................................. \

79 \

79 \

- $

593 $

593 $

-

2022
Millions of yen
Book

Fair

Value

Value

Difference

Investment securities
Available-for-sale securities ........................................... \Total assets..................................................................... \

222 \
222 \

222 \
222 \

-

Long-term borrowings (*4) .............................................. \Lease obligations (*4) .....................................................
Total Liabilities................................................................ \38,229 \606
38,835 \38,123 \609
38,732 \

106
(3)
103

Derivative financial instruments (*5).................................. \(60) \(60) \-(*1) Disclosure of cash and cash equivalents, trade notes and accounts receivable and electronically recorded monetary claims, trade notes and accounts payable andshort-term borrowings is omitted since their book value approximate their fair value because of their short maturities.
(*2) Investments in partnership and similar instruments for which net interest amounts are recorded on the consolidated balance sheet are not includedin the above table as of March 31, 2022. The book value of these financial instruments as of March 31, 2022 was \273 million.
(*3) Among investment securities, unlisted securities of \2,553 million ($19,121 thousand) and contribution to investment partnership of \257 million($1,923 thousand) as of March 31, 2023 are not included in the above table because these are recorded as net interest amounts on the consolidated balance sheet andomitted in accordance with the transitional treatment in paragraph 24-16 of the Implementation Guidance on Accounting Standard for Fair Value Measurement.
(ASBJ Guidance No. 31, June 17, 2021). Unlisted securities of \2,060 million as of March 31, 2022 are not included in the above tablebecause the securities do not have fair market values and it is extremely difficult to estimate fair values.
(*4) Current portion is included.
(*5) Derivative financial instruments are stated in net of assets and liabilities. The figures in parenthesis indicate net liabilities.

30

(c) The redemption schedule for financial instruments as of March 31, 2023 and 2022 is as follows:
2023
Millions of yen

Cash and cash equivalents ............................................... \Time deposits .................................................................
Trade notes ....................................................................
Accounts receivable ........................................................
Electronically recorded monetary claims ...........................

Due in one

Due after one

Due after fiveDue after ten

year

year throughyears throughyears

or less

five years

ten years

17,335 \249
1,482
34,508
2,920

- \
-

- \
-

-

2023
Thousands of U.S. dollars

Cash and cash equivalents ............................................... $Time deposits ...............................................................
Trade notes ....................................................................
Accounts receivable ........................................................
Electronically recorded monetary claims ...........................

Due in one

Due after one

Due after fiveDue after ten

year

year throughyears throughyears

or less

five years

ten years

129,810 $1,864
11,095
258,407
21,865

- $
-

- $
-

-

2022
Millions of yen

Cash and cash equivalents ............................................... \Time deposits .................................................................
Trade notes ....................................................................
Accounts receivable ........................................................
Electronically recorded monetary claims ...........................

Due in one
year

Due after one
year throughDue after five
years throughor less

five years

ten years

10,451 \249
1,102
33,656
991

31

- \
-

Due after ten
years

- \
-

-

(d) Fair value information of financial instruments by level of inputs
Based on the observability and the significance of the inputs used to determine fair values, fair value information of financial instruments is presented by categorizing
measurements into the following three levels:
Level 1 fair value: the fair value measured by quoted prices of identical assets or liabilities in active markets.
Level 2 fair value: the fair value measured using observable inputs other than Level 1.
Level 3 fair value: the fair value measured using unobservable inputs.
When multiple inputs of different categories are used in measuring the fair value, the Company and its subsidiaries classify fair values into a category to which the lowest
priority is assigned.
(1) Financial instruments measured at fair values in the consolidated balance sheets as of March 31, 2023 and 2022 are as follows:
2023
Millions of yen
Level 1

Level 2Thousands of U.S. dollars

Level 3

Total

Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities .................................. \

228 \

- \

- \

228 $

1,707 $

- $

- $

1,707

Derivative financial instruments
Interest rate related................................
Commodity related ...............................
Total Assets............................................. \

228 \

98
98 \

- \

98
326 $

1,707 $

731
731 $

- $

731
2,438

Derivative financial instruments
Interest rate related................................ \Total Liabilities......................................... \

- \
- \

19 \
19 \

- \
- \

19 $
19 $

- $
- $

139 $
139 $

- $
- $

139
139

2022
Millions of yen
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities .................................. \

222 \

- \

- \

222

Derivative financial instruments
Interest rate related................................
Commodity related ...............................
Total Assets............................................. \

222 \

2
84
86 \

- \

2
84
308

Derivative financial instruments
Interest rate related................................ \Total Liabilities......................................... \

- \
- \

146 \
146 \

- \
- \

146
146

(2) Financial instruments other than those measured at fair values in the consolidated balance sheets as of March 31, 2023 and 2022 are as follows:
2023
Millions of yen
Level 1

Level 2- \- \Long-term borrowings.............................. \Lease obligations .....................................
Total Liabilities......................................... \Thousands of U.S. dollars

Level 345,673 \467
46,140 \

Total

- \
- \

45,673 $467
46,140 $Level 1

Level 2- $- $Level 3342,017 $
3,495
345,512 $

Total

- $
- $

2022
Millions of yen
Level 1Long-term borrowings.............................. \Lease obligations .....................................
Total Liabilities......................................... \Level 2

- \- \38,123 \609
38,732 \Level 3

Total

- \
- \

38,123609
38,732

Valuation techniques and inputs used in measuring fair values
Investment securities
Listed equity securities are measured using quoted prices. Fair values of listed equity securities are classified as Level 1, because they are exchanged in active markets.
Please refer to Note 3 regarding the information of the fair value for the investment securities by classification.
Derivative transactions
The fair value of interest rate swap, currency swap and copper swap are determined by the discounted present value method using observable inputs such as interest rates
and exchange rates and categorized in Level 2. Please refer to Note 18.
Long-term borrowings and lease obligations
The fair value of long-term borrowings and lease obligations are determined by discounted present value method using sum of principal and interest, and interest rates
which are determined with consideration of credit risk and remaining periods, and categorized in Level 2.
If the variable interest rate loans meet certain criteria for the short-cut method for interest rate swaps (if interest rate swap
contracts are used as a hedge and meet certain hedging criteria, the interest rate swaps are not remeasured at market price and the amount to be received under theinterest rate swap contract is added to or deducted from the interest on the liabilities for which the swap contract was executed) and for the allocation method for
currency swaps, the sum of principal and the interest processed as interest rate swaps and currency swaps are discounted by using the reasonably estimated loaninterest rate applied to the same kind of loans.

32

342,017
3,495
345,512

18. Derivatives
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2023 and 2022.
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2023 and 2022 are as follows:
2023

Contract
amountHedged item

Millions of yen
Contract
amountdue after
one yearThousands of U.S. dollars
Contract
amountContract
due after
amountone year
Fair value

Fair value

Interest rate related:
Benchmark Method
Currency swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

25,800 \22,360 \(19) $

193,201 $

167,440 $(139)

Special Method*
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings

\

200 \

-\

(0) $

1,498 $

- $(2)

Commodity related:
Benchmark Method
Copper swap
contractsRawmaterials

\

400 \

- \

98 $

2,994 $

- $731

Contract
amountHedged item

2022
Millions of yen
Contract
amountdue after
one year

Fair value

Interest rate related:
Benchmark Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings

\

24 \

- \

(0)

Currency swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

29,607 \25,800 \(144)

Special Method*
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings

\

600 \

200 \

(2)

Long-term
borrowings

\

367 \

- \

34

Raw
materials\

1,443 \

- \84

Currency related:
Allocation Method
Foreign currency
forward contracts
Currency swap
contracts
Payable in yen/
Receive in U.S.
dollars
Commodity related:
Benchmark Method
Copper swap
contracts

Fair value is principally based on the quoted price obtained from financial institutions signing the contract.
* Special Method
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at the market value but the differential
paid or received under the swap agreements is recognized and included in interest expense or income.

33

19. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2023 and 2022 are as follows:
Thousands ofMillions of yen
2023
2022
Unrealized gains (losses) on available-for-sale securities:
Gains (losses) arising during the year ........................................................................................................................................... \Reclassifications and adjustments ................................................................................................................................................
Before income tax effects ..............................................................................................................................................................
Income tax effects .....................................................................................................................................................................…
\
Total ......................................................................................................................................................................................
Deferred gains (losses) on hedges:
Gains (losses) arising during the year ........................................................................................................................................... \Reclassifications and adjustments ................................................................................................................................................
Before income tax effects ..............................................................................................................................................................
Income tax effects .....................................................................................................................................................................…
\
Total ......................................................................................................................................................................................
Foreign currency translation adjustments:
Adjustments arising during the year .............................................................................................................................................. \Reclassifications and adjustments ................................................................................................................................................
\
Total ......................................................................................................................................................................................
Remeasurements of defined benefit plans:
Adjustments arising during the year ............................................................................................................................................... \Reclassifications and adjustments ................................................................................................................................................
Before income tax effects ..............................................................................................................................................................
Income tax effects .....................................................................................................................................................................…
\
Total ......................................................................................................................................................................................
Total other comprehensive income ................................................................................................................................................ \U.S. dollars

2023

12 \
12
(3)
9 \

(40) $(10)(50)
15(35) $

93
93
(28)
65

(11) \
150
139
(42)
97 \

77 $
(498)
(421)
129
(292) $

(80)
1,124
1,044
(319)
725

4,270 \
4,270 \

9,066 $
9,066 $

31,98631,986(46) \
32(14)(28)(42) \
4,334 \

42 $
52
94
49
143 $
8,882 $

(346)
242
(104)
(212)
(316)
32,46020. Revenue Recognition
Breakdown of revenue arising from contracts with customers by geographical areas for the years ended March 31, 2023 and 2022 is as follows:
Thousands ofJapan.............................................................................................................................................................................................. \China..............................................................................................................................................................................................
Vietnam...........................................................................................................................................................................................
Asia................................................................................................................................................................................................
North America.................................................................................................................................................................................
Europe............................................................................................................................................................................................
Other..............................................................................................................................................................................................
Revenue arising from contracts with customers ................................................................................................................................
Other revenues
Sales to external customers ............................................................................................................................................................. \Millions of yen
2023
2022
63,186 \50,314 $36,72736,79020,034
20,101
24,442
24,637
18,147
14,639
4,739
4,776
2
18
167,277
151,275
167,277 \
151,275 $U.S. dollars

2023
473,166
275,028150,021183,028
135,890
35,48416
1,252,633
1,252,633

Basic information to understand the revenue arising from contracts with customers are disclosed in Note 2 (n).
Receivables from contracts with customers and contract liabilities as of March 31, 2023 and 2022 are as follows:
Thousands ofReceivables from contracts with customers (balance at the beginning of the year)............................................................................... \Receivables from contracts with customers (balance at the end of the year)........................................................................................
Contract liabilities (balance at the beginning of the year).....................................................................................................................
Contract liabilities (balance at the end of the year).............................................................................................................................

Millions of yen
2023
2022
35,749 \29,504 $38,91035,749
30
97
182
30

Contract liabilities are advance received from customers before delivery of products and included in “Other” in “Current Liabilities” in the consolidated balance sheet.
Contract liabilities will be reversed as related revenues are recognized.
The amount of contract liabilities as of March 31, 2022 for which revenue is recognized during the year ended March 31, 2023 was \30 million ($224 thousand).
The amount of contract liabilities as of March 31, 2021 for which revenue is recognized during the year ended March 31, 2022 was \97 million.
Revenue recognized for the years ended March 31, 2023 and 2022 for which contract liabilities were satisfied during previous periods are immaterial.
Disclosures about total amount allocated to the remaining performance obligations and the period in which related revenue recognition is expected are omitted, as there areno material contracts for which the initially scheduled contract period exceeds one year.

34

U.S. dollars

2023
267,702291,367
224
1,363

21. Segment Information
Information about reported segment sales, segment profit, segment assets and other items under the new accounting standards is not disclosed as the Group's
reportable segment is mainly printed circuit boards (“PCB”) and the related business, and other business is immaterial.
(Supplementary information)(1) Information about products and services
Information about products and services is not disclosed since the sales amount of a single unit of product or service to external customers accounted for more than
90% of consolidated net sales.
(2) Information about geographical areas(a) Net sales

2023
Millions of yen
Japan

Net sales .....................................................................................................

63,186\

China

Vietnam

36,727\

20,034\

Asia\

North America

24,442

18,147\

Europe

\

4,739

Other

\

Total

2

\

167,277

16$

1,252,633

18

\

2023
Thousands of U.S. dollars
Japan

Net sales .....................................................................................................

$

473,166

China$

Vietnam275,028$150,021

Asia$

North America

183,028$

135,890

Europe$35,484

Other

$

Total

2022
Millions of yen
Japan

Net sales .....................................................................................................

\

50,314

China\

Vietnam\

36,79020,101

Asia\

North America

24,637\

14,639Net sales by destination were recognized based on the location of customers and classified by country or region.
(b) Property, plant and equipment

2023
Millions of yen
Japan

Property, plant and equipment ......................................................................

23,570

\

China

\

Vietnam

28,753

43,211

\

Other

\

Total

4

\

28

$

2

\

95,5382023
Thousands of U.S. dollars
Japan

Property, plant and equipment ......................................................................

$

176,498

China$

215,314

Vietnam$

323,584

Other

$

Total

715,424

2022
Millions of yen
Japan

Property, plant and equipment ......................................................................

\

11,494(3) Information about major customers

China

\

30,088Vietnam\

40,978

Sales
2023

Name of the major customer
KURODA ELECTRIC CO., LTD. ..............................................................

Millions of yen

17,034\

Thousands of U.S. dollars$

127,560

Sales
2022

Name of the major customer
Samsung Electronics Co., Ltd. .....................................................................

Millions of yen\

15,564

The above sales amount includes the sales from the major customer and its business group.
Information about reportable segments is not disclosed as the Group has one segment.
(4) Information about impairment loss
Information about impairment loss by reportable segment for the year ended March 31, 2023 is not disclosed as the Group's reportable segment issolely printed circuit boards (“PCB”) and the related business, and other business is immaterial.
Information about impairment loss by reportable segment for the year ended March 31, 2022 is not disclosed as the Group's reportable segment issolely printed circuit boards (“PCB”) and the related business, and other business is immaterial.

35

Other

\

Total

82,562Europe

\

4,776

Other

\

Total

151,275

22. Related-party Transactions
For the year ended March 31, 2023
Transactions with related parties(1) Unconsolidated subsidiary
There were no applicable matters for the year ended March 31, 2023.
(2) Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※1

Dapara Tech Co., Ltd.
※2

Location
Atsugi City,
Kanagawa

Seoul City,
South Korea

Capital\15 million₩50 million

Details of the business
Board design

Sales ofboards andrelatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

Details of thetransaction ※3
Purchase of
products

Transaction
amount\202 million($1,512 thousand)

Balance as at
March 31, 2023
\22 million($165 thousand)in accounts
payableSales of products\20 million($147 thousand)\3 million($20 thousand)in accounts
receivable

Purchase of
equipment\61 million($456 thousand)-Notes: ※1 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 50.7% (including indirect ownership)of voting rights in M. D. Systems Co., Ltd.
※2 Yoon Ho Shin, director of the Company, directly owns 70.0% of voting rights in Dapara Tech Co., Ltd.
※3 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.
The terms and conditions of the transactions for purchase of equipment are determined through negotiations considering the market price.
Transactions between consolidated subsidiaries and related parties
Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※1

Dapara Tech Co., Ltd.
※2

Location
Atsugi City,
Kanagawa

Seoul City,
South Korea

Capital\15 million₩50 million

Details of the business
Board design

Sales ofboards andrelatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

Details of thetransaction ※3
Purchase of
products

Transaction
amount\6 million($46 thousand)

Balance as at
March 31, 2023
\0 million($4 thousand)in accounts
payableSales of products\1 million($9 thousand)\0 million($1 thousand)in accounts
receivable

Sales commission\529 million($3,959 thousand)\84 million($630 thousand)in otherpayablePurchase of
products\27 million($205 thousand)\2 million($13 thousand)in accounts
payableSales of products\61 million($456 thousand)\5 million($41 thousand)in accounts
receivable

Notes: ※1 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 50.7% (including indirect ownership) of voting rights in M. D. Systems Co., Ltd.
※2 Yoon Ho Shin, director of the Company, directly owns 70.0% of voting rights in Dapara Tech Co., Ltd.
※3 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.

36

For the year ended March 31, 2022
Transactions with related parties(1) Unconsolidated subsidiary
There were no applicable matters for the year ended March 31, 2022.
(2) Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※1

Location
Atsugi City,
Kanagawa

Capital\15 million

Details of the business
Board design

Percentage forpossession of voting rights
Directly own (%)
14.7

Relationship
Businessrelationship

Details of thetransaction ※2
Purchase of
products

Transaction
amount\179 million

Balance as at
March 31, 2022
\18 million
in accounts
payableSales of products\19 million\2 million
in accounts
receivable

Details of thetransaction ※3
Purchase of
products

Transaction
amount\2 million

Balance as at
March 31, 2022-

Sales of products\2 million-

Sales commission\483 million\97 million
in otherpayablePurchase of
products\78 million\4 million
in accounts
payableSales of products\69 million\4 million
in accounts
receivable

Notes: ※1 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※2 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.

Transactions between consolidated subsidiaries and related parties
Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※1

Dapara Tech Co., Ltd.
※2

Location
Atsugi City,
Kanagawa

Seoul City,
South Korea

Capital\15 million₩50 million

Details of the business
Board design

Sales ofboards andrelatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

Notes: ※1 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※2 Yoon Ho Shin, director of the Company, directly owns 60.0% of voting rights in Dapara Tech Co., Ltd.
※3 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.

37

23. Business Combination(Business Combination by Acquisition)(a) Outline of the business combination(1) Name and description of business of the company acquired:
Name
NEC Embedded Products, Ltd. (hereinafter “NECEP”)
Description of business
Development, design, manufacture of electronic application equipment, machinery and instruments, all kinds of equipment, machinery,
instruments and systems related to electricity, equipment, machinery, instruments and system, and entrusted work, sale and maintenance thereof.
(2) Major reasons for the business combination
The Company has embraced "Providing the best products and services to customers, and happiness for employees and society through manufacturing” as its management philosophy.
To that end, we are taking on the challenge in the field of advanced electronics in terms of electronic PCBs, expanding and strengthening our EMS business, thereby aiming tocontribute to our customers. In its medium-term management plan released on May 19, 2022, the Company has set forth a strategy to position and strengthen electronic PCBs andsemiconductor package boards for automotive and smartphone applications, and the EMS business as new pillars in its business domain.
NECEP is capable to handle orders for a wide variety of electrical and electronic equipment utilizing its embedded product development capabilities and cutting-edge technologies.
It has a unique competitive advantage in consistent entrusted operations from development and design to mass production, as well as in high-quality and high-reliability
manufacturing capabilities. We believe that NECEP is the best strategic partner for our businesses, based on the fact that the addition of NECEP to the Group will enable it toestablish an ODM-type EMS business structure with development and design functions, and to realize a proposal-based business structure targeting electronic PCBs tohigh-value-added electronic products.
In order to expand the EMS business, going forward, the Company will promote collaboration between the electronic PCBs business and the EMS plants in Vietnam conducting
development, design and mass production. Furthermore, the Company will work on building a system that can respond promptly to all needs, including for mass production andsmall- to medium-lot orders, by managing EMS factories in Japan and implementing inhouse evaluation and prototype development. We strive to provide our customers withthe maximum level of services to further enhance the corporate value of the Group.
(3) Date of the business combination
September 30, 2022
(4) Legal form of the business combination
Acquisition of shares in consideration for cash(5) Name of company after the business combination
Meiko Embedded Products, Ltd.
(6) Ratio of voting rights to be acquired
100%(7) Basis for determining the acquiree
It is based on the fact that the Company acquires shares in consideration for cash.
(b) Period for which the business results of the acquired company are included in the Company’s consolidated financial statements
October 1, 2022 to March 31, 2023(c) Acquisition cost of the acquired company and details of each class of consideration
Cash
Consideration paid for acquisition
Acquisition cost

\11,000 million ($82,372 thousand)\11,000 million ($82,372 thousand)(d) Details and amount of major acquisition-related expenses
Advisory fees

\199 million ($1,487 thousand)(e) Amount, reasons, amortization method and amortization period of goodwill recognized(1) Amount of goodwill\6,358 million ($47,610 thousand)
The amount of goodwill was a tentative estimate as of the end of the second quarter of the fiscal year ended March 31, 2023.
The allocation of the acquisition cost has been completed and the amount of goodwill was determined as of March 31, 2023.
(2) Reason for the goodwill incurred
The future excess earning power expected as a result of business development going forward(3) Method and period of amortization
Straight-line method over 10 years(f) Amount and details of assets acquired and liabilities assumed at the date of the business combination

Current assets................................................................................................
Non-current assets..........................................................................................
Total assets....................................................................................................
Current liabilities.............................................................................................
Long-term liabilities .......................................................................................
Total liabilities................................................................................................

\
\
\
\

Millionsof yen8,567
1,838
10,405
3,983
1,780
5,763

Thousands of
U.S. dollars

$
$
$
$

64,151
13,767
77,91829,82813,32843,156(g) Estimated impact and its calculation method on the consolidated statements of operations for the year ended March 31, 2023, assuming the business combination
was completed at the beginning of the current fiscal year
The information is not disclosed because it is difficult to determine the estimated impact for the year ended March 31, 2023.

38

39

40

41

42

43

Principal Subsidiaries and Affiliates

Principal
Business

Paid-in Capital

Investment
Ratio (%)

Name or Trade Name

Address

Meiko Tech Co., Ltd.

Ayase City,
Kanagawa Prefecture

95

PCBs forelectronics

100.0

Yamagata Meiko
Electronics Co., Ltd.

Kahoku-cho,Nishimurayama-gun,
Yamagata Prefecture

75

PCBs forelectronics

100.0

Meiko Techno Co.,Ltd.

Yamato City,
Kanagawa Prefecture

100

PCBs forelectronics

100.0

Meiko Embedded
Products, Ltd.

Yonezawa City,
Yamagata Prefecture

400

PCBs forelectronics

100.0

Meiko Embedded
Technology, Ltd.

Nanyo City,
Yamagata Prefecture

20

PCBs forelectronics

Meiko Elec. HongKong. Co., Ltd.

Hong Kong

US$391,179
thousand

PCBs forelectronics

100.0

Meiko Electronics(Guangzhou Nansha)
Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$120,800
thousand

PCBs forelectronics

100.0

Meiko Electronics(Wuhan) Co., Ltd.

Wuhan,
Hubei Province,
P.R.C.

US$173,800
thousand

PCBs forelectronics

100.0

Guangzhou Speed
Trading Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$785100.0

thousand

PCBs forelectronics

Meiko Electronics
America, Inc.

CA, U.S.A.

US$1,500
thousand

PCBs forelectronics

100.0

Meiko Electronics
Vietnam Co., Ltd.

Hanoi, Vietnam

US$90,000
thousand

PCBs forelectronics

100.0

Meiko Electronics
Thang Long Co., Ltd.

Hanoi, Vietnam

US$15,000
thousand

PCBs forelectronics

100.0

Meiko Towada
Vietnam Co., Ltd.

Hai Duong Province,

US$21,000
thousand

PCBs forelectronics

60.0(Millions of yen)

Vietnam44

100.0(100.0)(66.3)(40.7)(100.0)(100.0)Principal Shareholders

Number of
Shares Held

Name of Shareholder(Thousands of shares)

Percentage ofTotal Number of
Shares Issued(excluding treasury
stock) (%)

Yuichiro Naya

4,704

18.25

The Master Trust Bank of Japan, Ltd.

3,804

14.76

2,229

8.65

1,216

4.72

1,012

3.93

820

3.18

Meiko Kosan Co., Ltd.

608

2.36

Yuho, Ltd.

521

2.02

Seiichi Naya

405

1.57

Sumitomo Mitsui Banking Corporation

377

1.46

15,69860.89(trust account)
Custody Bank of Japan, Ltd.
(trust account)
THE HONGKONG AND SHANGHAI BANKINGCORPORATION LTD - HONG KONG PRIVATEBANKING DIVISION-CLIENT ACCOUNT(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
CLEARSTREAM BANKING S.A.
(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
BNP PARIBAS LUXEMBOURG/2S/JASDEC/
FIM/LUXEMBOURG FUNDS/UCITS ASSETS(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)

Total

45

Corporate History

November 1975

Established Meiko Denshi Kogyo Co., Ltd. to manufacture and sell PCBs.
Started selling double-sided PCBs.

April 1978

Established the System Development Department (currently Meiko TechnoCo., Ltd./ Meiko Tech Co., Ltd.) to develop electronics application products.

October 1978

Developed in-house use PCB Testers for the PCB final inspection process.

September 1980

Constructed a new headquarters and factory, establishing an integrated
production system for the entire process from design to finished product.

December 1980

Introduced a multi-layer press machine and started manufacturing multilayer PCBs.

December 1981

Developed the world’s first multi-video processor.

March 1982

Established Multitech Co., Ltd. (currently Meiko Tech Co., Ltd.) to
manufacture single-sided PCBs (currently a consolidated subsidiary of theCompany).

September 1982

Established Yamagata Meiko Electronics Co., Ltd. (currently a consolidated
subsidiary of the Company) to manufacture PCBs.

August 1984

Completed construction to expand the headquarters/factory in Ayase,
Kanagawa Prefecture, and started operations.

June 1990

Constructed the Fukushima Factory.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

Constructed a new manufacturing building on the premises of the Yamagata
Factory (currently, Kahoku Factory) (Yamagata Meiko Electronics Co., Ltd.)to manufacture PCBs using the new PCB Build-Up technology.

August 1998

Established Meiko Elec. Hong Kong. Co., Ltd. in Hong Kong, China(currently a consolidated subsidiary of the Company), mainly to expand
transactions with overseas manufacturers and purchase materials locally.

December 1998

Established Meiko Electronics (Panyu Nansha) Co., Ltd. in Guangzhou,
Guangdong, China [currently Meiko Electronics (Guangzhou Nansha) Co.,
Ltd., a consolidated subsidiary of the Company], to manufacture PCBs.

June 1999

Changed the name of the PCB manufacturing department of headquarters
to Kanagawa Factory (currently, Advanced PCB Center).

December 2000

Stock listed on the Japan Securities Dealers Association.

January 2001

Started operations at the Guangzhou Plant [Meiko Electronics (Guangzhou
Nansha) Co., Ltd.].

December 2004

Stock listed on JASDAQ Securities Exchange, Inc.

July 2005

Established Meiko Electronics (Wuhan) Co., Ltd. in Wuhan, Hubei, China(currently a consolidated subsidiary of the Company) to manufacture PCBs.

November 2005

Constructed a new factory building at Miyagi Factory (currently the
Ishinomaki Factory).

April 2006

Established Meiko Electronics America, Inc. in the United States (currently aconsolidated subsidiary of the Company) to sell PCBs.

July 2006

Started operations at the WUHAN Plant [Meiko Electronics (Wuhan) Co.,Ltd.].

January 2007

Established Meiko Electronics Vietnam Co., Ltd. (currently a consolidated
subsidiary of the Company) in Hanoi, Vietnam, to manufacture PCBs.

46

November 2007

Constructed a new headquarters building on the premises of the Kanagawa
Factory (currently, Advanced PCB Center).

March 2008

Purchased the Circuit Business from Victor Company of Japan, Limited.

April 2009

Started operation of the EMS Plant in Vietnam.

May 2009

Established the Meiko R&D Center.

July 2009

Started operation of second plant in WUHAN.

April 2010

Upon the merger of JASDAQ Securities Exchange, Inc. and Osaka Securities
Exchange Co., Ltd., the Company’s stock is listed on the Osaka Securities
Exchange, JASDAQ market.

October 2010

Subsequent to the integration of the Hercules, JASDAQ and NEO markets of
the Osaka Securities Exchange, Meiko Electronics Co., Ltd. had its stock
listed on the JASDAQ Standard market of the exchange.

July 2011

Transferred the imaging equipment and industrial equipment businesses
to Multitech Co., Ltd., and changed the trade name to Meiko Tech Co., Ltd.

November 2011

Started operation of the PCB Plant in Vietnam.

May 2013

Started operation of the Ishinomaki Factory.

July 2013

Subsequent to the integration of cash equity markets of the Osaka Securities
Exchange Co., Ltd. and Tokyo Stock Exchange Group, Inc., Meiko
Electronics Co., Ltd. had its stock listed on the JASDAQ Standard market of
the Tokyo Stock Exchange.

August 2014

Established Meiko Electronics Thang Long Co., Ltd. (currently a consolidated
subsidiary of the Company) in Hanoi, Vietnam, to manufacture and sell
PCBs.

June 2015

Established Meiko Solar Park Fukushima, a solar power generation plant on
the premises of the Fukushima Factory.

August 2015

Established Meiko Techno Co., Ltd. (currently a consolidated subsidiary of
the Company) in Yamato, Kanagawa Prefecture, to mount PCBs andmanufacture and sell imaging equipment and industrial equipment.

November 2019

Acquired equity interests in EMS (Electronic Manufacturing Services) in
Vietnam and turned it into a subsidiary (currently consolidated subsidiary),
Meiko Towada Vietnam Co., Ltd.

June 2021

Transferred the stock market from the JASDAQ (Standard) to the First
Section of the Tokyo Stock Exchange.

April 2022

Moved from the First Section of the Tokyo Stock Exchange to the Prime
Market due to the restructuring of the stock market.

September 2022

Acquired shares of NEC Embedded Products, Ltd., making it a subsidiary
as Meiko Embedded Products, Ltd. and its subsidiary Meiko Embedded
Technology, Ltd. (currently consolidated subsidiaries).

47

Corporate Data (As of March 31, 2023)

Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥12,888 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
70,000,000
Number of Shares Issued:
26,803,390
Number of Shareholders:
5,332
Securities Code:
6787
Stock Exchange Listing:Tokyo Stock Exchange, Prime Market
Number of Employees:
11,889 (Consolidated)
Number of Subsidiaries and Affiliates:
24
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
Accounting Auditor:
KPMG AZSA LLC
Headquarters:
5-14-15, Ogami, Ayase, Kanagawa Prefecture, Japan 252-1104
Investor Relations Contact:- Tel:+81-(0)467-76-6001- E-mail: Meiko_Eng@meiko-elec.com- URL:
https://www.meiko-elec.com/

48

Meiko Share Performance in FY2023 Compared with Indices120.0
Meiko Electronics (6787)
110.0

TOPIX

100.0
90.0
80.0
70.0
60.0
50.0
40.0

Fiscal year ended March 31, 2023
Index
In %

49

50