I am Ishihara from Kaga Electronics.
Thank you very much for your continued support and thank you forwatching our financial results briefing today.
I would like to present an overview of our financial results for the
fiscal year ended March 31, 2024.

These are the results for the fiscal year ended March 31, 2024.
Net sales decreased by 65.3 billion yen from the previous year to542.6 billion yen.
Operating income decreased by 6.4 billion yen from the previous year
to 25.8 billion yen.
The primary cause of decreases in net sales and income is thedisappearance of spot demand in our mainstay electronic
components business and full-scale impact of inventory adjustment
by customers from 3Q.
Operating income decreased from the previous year, reflecting adecline in gross profit due to lower net sales, despite efforts tocontrol and reduce SG&A expenses.
Profit decreased by 2.7 billion yen from the previous year to 20.3
billion yen, reflecting in part posting of extraordinary income,including gain on sales of investment securities and gain on bargain
purchase associated with a corporate acquisition.
Compared with the internal plan announced in May last year, net
sales fell slightly short of the plan, but operating income, ordinary
income, and profit all exceeded the plan.
Next is the earnings forecast for the year ending March 31, 2025.
In the electronics-related market to which we belong, our medium-to long-term growth scenario, driven mainly by the automotive
market, will remain unchanged. However, we expect inventory
adjustment, which began in full swing in the second half of the year
ended March 31, 2024, to continue for some time, and a full-fledged
demand recovery is not expected until the second half of the year
ending March 31, 2025.
Factoring in the business conditions and increased costs partly fromrecent salary increases, our earnings forecast for the year ending
March 31, 2025, is net sales of 555.0 billion yen, operating income of
26.0 billion yen, and profit of 18.0 billion yen.
I explain our shareholder return policy.
As announced in May last year, the year-end dividend for the year
ended March 31, 2024, will be 110 yen per share.
The annual dividend including interim dividend will be 220 yen per
share, the same amount as the previous fiscal year.
For the year ending March 31, 2025, we intend to maintain thedividend of 220 yen per share, even though the final profit isexpected to decrease.

The financial highlights on the next page are as I have just explained.
Earnings per share (EPS) in the current year was 774.61 yen.
ROE was 14.5%, down 5.1 percentage points from the previous year.
While most of the profits earned are piled in net assets, increasing
financial stability, we find it necessary to further improve capitalefficiency in the future.
The average exchange rate during the current year was 144.62 yen
against the U.S. dollar, which represents a depreciation of about 9
yen from the previous year and from the assumed rate of 135 yen in
the full-year earnings forecasts.
The year-on-year impact of foreign exchange fluctuations was anincrease of approximately 12.5 billion yen in net sales and anincrease of approximately 420 million yen in operating income.

These are results by business segment.
In the mainstay electronic components business, net sales andincome in the component sales business both recorded decreases
from the previous fiscal year. This is due to disappearance of spot
demand, which had contributed to earnings until the previous fiscal
year, given easing of supply shortages of semiconductors andelectronic components and the diminution of transactions with acertain major client of Excel, as well as the impact of inventory
adjustment by customers, which began in earnest from 3Q. The EMS
business also recorded decreases in net sales and income year on
year, for although sales in the automotive sector increased due toimproved supply and demand balance of semiconductors andelectronic components, inventory adjustments by key customers had
an impact on sales in applications related to medical, industrial, andair-conditioning equipment.
In the information equipment business, both net sales and income
increased from the previous fiscal year due to robust sales of PCs to
educational institutions, security software, and PC peripheralproducts, combined with contribution from large-scale projects in the
LED installation business that we started pushing forward on a fullscale in the previous fiscal year. Segment income, in terms of bothincome amount and margin, came in above the previous year’sresults and the internal plan figures.
In the software business, net sales were lower than in the previous
fiscal year, while segment income increased and, as with theinformation equipment business, both the segment income amountand margin exceeded the previous year’s results and the internal
plan figures.
In the others business, net sales increased year on year, andsegment income was higher than the previous year’s results and theinternal plan figures.
Regarding segment income margin, all business segments exceeded
the internal plan figures. Overall, operating income margin stood at
4.8% against full-year target of 4.5%.
Please also refer to pages 7 and 8, which contain information bybusiness segment.

Next, I will explain our performance by company.
In the Kaga Electronics Group’s traditional business, net sales andincome decreased from the previous fiscal year, largely reflecting thedisappearance of spot demand. However, both the gross profit
margin and operating income margin remained at the same level asin the previous fiscal year, and we can see that its profit-generating
ability is maintained.
At a glance, Kaga FEI Group’s operating income appears to havedeclined significantly, partly stemming from the intra-group allocationof head office expenses which began in the year ended March 31,
2024, and the provision for doubtful accounts for certain customers.
But in fact, the disappearance of spot demand does not have much of
an impact on net sales and gross profit, and we can see that thecompany has steadily developed a highly profitable structure.
In the Excel Group, despite a decline in sales to large-lot customers,
profit-generating ability was enhanced with improved sales mix, andprofits showed no decline as much as net sales, with both grossprofit margin and operating income margin improving significantly.
Thus although in a year-on-year comparison, net sales and income
both recorded decreases overall, if we take into account one-off
factors, including spot demand associated with the tight supply anddemand balance of inventories in the context of a larger trend, thegross profit margin was slightly above the previous year’s figures,and I believe you can feel that the company continues to maintainthe “earning power.”
Please also refer to the graphs on page 6.
Please also refer to the quarterly information for the last threemonths of the year on pages 9 to 14.

I will now explain the causes of the year-on-year changes in net sales
and operating income.
A diminution in transactions with a certain major customer of Excel
caused sales to decrease by 22.8 billion yen and income to decreaseby 0.6 billion yen.
Another factor was the disappearance of spot demand in theelectronic components business, which led to a decrease in sales of
19.6 billion yen and a decrease in income of 4.6 billion yen.
In addition, a decrease in sales volume due to inventory adjustment
by customers and fluctuation in sales mix caused sales to decreaseby 22.8 billion yen and income to decrease by 2.8 billion yen.
These three factors above resulted in a year-on-year decrease in net
sales of 65.4 billion yen and a decrease in gross profit of 8.0 billion
yen.
In the business condition, we made efforts to reduce and control
SG&A expenses and cut costs by 1.6 billion yen, but operating
income stood at 6.4 billion yen less than the previous year’s level.
In comparison with the internal plan, net sales fell slightly short ofthe plan, but operating income exceeded the plan figures of 25.0
billion yen by 0.8 billion yen.
Please also refer to the quarterly information for the last threemonths of the year on page 16.

Let me move on to the balance sheet, starting with assets.
Current assets decreased by 0.9 billion yen from the end of theprevious fiscal year to 244.6 billion yen, due in part to a decrease inaccounts receivable and inventories. Non-current assets increased by
1.5 billion yen from the end of the previous fiscal year to 42.1 billion
yen, due notably to capital investment in the new Mexico plant. Total
assets increased by 0.5 billion yen from the end of the previous fiscal
year to 286.7 billion yen.
Liabilities decreased by 20.9 billion yen from the end of the previous
fiscal year to 135.5 billion yen, due primarily to a decrease inaccounts payable-trade and repayment of loans payable. Net assets
increased by 21.4 billion yen from the end of the previous fiscal year
to 151.2 billion, due partly to an increase in retained earnings.
As a result of the significant decrease in current liabilities, the current
ratio was 233.4%.
The equity ratio improved by 7.3 percentage points from 45.3% at
the end of the previous fiscal year to 52.6%, indicating improved
financial stability.

Inventories amounted to 54.7 billion yen, a decrease of 1.4 billion
yen from the end of the previous fiscal year, as a result of efforts,
including adjustments in purchasing and procurement, amid theimpact of inventory adjustment by key customers.
Inventory turnover, on the other hand, worsened by 3 days to 36.8
days, partly due to a decrease in net sales, and we are continuing tostrengthen efforts to reduce inventories.

Interest-bearing debt stood at 34.2 billion yen, a decrease of 7.6
billion yen from the end of the previous fiscal year due to debt
repayment, and the debt-to-equity ratio (D/E ratio) was kept low at
0.23 times due to an increase in equity through profit generation.
The balance of cash and deposits increased by 13.9 billion yen fromthe end of the previous fiscal year to 66.5 billion yen, reflecting cash
flow from operating activities of 29.3 billion yen, almost the samelevel as the previous fiscal year. As a result of the increase in cash
and deposits, the net D/E ratio stood at negative 0.21 times
remaining in the negative as it did at the end of the previous fiscal
year. Our financial foundation is becoming increasingly stable andstrong to invest in the next phase of growth.

While shareholders’ equity increased, bringing financial stability
higher at an equity ratio of 52.6%, ROE of 14.5% indicates a slightdecline in capital efficiency.
We intend to continue further enhancing the profit-generating ability
and use the funds generated to implement a multifaceted approachcovering investments in business expansion, including through M&A,
production facilities and other business infrastructure for growth, andhuman capital, as well as shareholder returns. As such, we aim tosustainably maintain and improve the management target ROE of a“stable 10% or higher.”I now explain our earnings forecast for the fiscal year ending March
31, 2025.
As mentioned earlier, we expect customers’ inventory adjustments,
which began in full swing in the second half of the year ended March
31, 2024, to continue for some time with a full-fledged recovery indemand expected in the second half of the year ending March 31,
2025.
Factoring in higher costs, including salary increases, in addition to thelingering inventory adjustment, we have revised our forecasts for theyear ending March 31, 2025, to net sales of 555 billion yen,operating income and ordinary income of 26 billion yen, and profit of
18 billion yen, which is almost unchanged from the previous fiscal
year.
Based on the above forecasts, we expect earnings per share (EPS)
for the year ending March 31, 2025, to be 685.26 yen, and ROE atthe end of the year to be 11.5%.
The annual dividend will be 220 yen per share, the same as theprevious year, even though profit is expected to be lower than theprevious year.

The earnings forecast for each business segment is expected toremain at the same level as in the previous fiscal year.

I will now explain the causes of the year-on-year changes inoperating income.
Starting from the fiscal year ending March 31, 2025, salary increasesof about 1.0 billion yen took effect for the Group as a whole.
At Kaga Electronics, the monthly increase is 25,000 yen across theboard. The average increase is 7.8%.
By adding this figure to a 0.5 billion yen increase in costs, including
new graduate salaries and regular salary increases, we have factored
in a 1.5 billion yen increase in personnel expenses in our forecast.
This increase in income was due to a 1.6 billion yen increase in grossprofit from higher sales volume and improved sales mix, a 0.1 billion
yen increase from curbing non-personnel expenses, and an
approximately 0.2 billion yen increase in operating income, all ofwhich are incorporated in our forecast.

I now explain about shareholder returns and dividends.
The following are our three basic principles for profit distribution.
We shall perform stable dividends, while securing a consolidated
dividend payout ratio of 25 to 35%.
We shall use funds for business investments, capital investments, andM&A, etc. in order to contribute to future growth.
Decisions on the acquisition of treasury shares shall be madeappropriately, in consideration of capital efficiency and share price,etc.
In the fiscal year ended March 31, 2024, we plan to pay an annual
dividend of 220 yen per share, the same as the previous year, despite
the year-on-year decline in net sales and income. This will bring thepayout ratio to 28.4%.
Looking toward the fiscal year ending March 31, 2025, the annual
dividend is also expected to be 220 yen per share, the same as theprevious year, even though final income is expected to decrease. As aresult, the payout ratio for the year ending March 31, 2025, is
expected to be 32.1%.
In January this year, we announced our policy on “Action to
Implement Management that is Conscious of Cost of Capital andStock Price.”Going forward, we will, in line with the policy, work to further
strengthen our earning power and management foundation, and willconsider and make efforts to distribute profits other than throughdividends as necessary, taking into account the environment andcircumstances.
Page 28 and onwards are reference materials containing voluntary
disclosure information by segment in line with the Medium-Term
Management Plan, as well as graphs showing quarterly net sales bysegment and by region, and such other information as exchange
rates and exchange rate sensitivity. Please have a look.

This concludes my presentation of our financial results for the fiscal
year ended March 31, 2024.
Thank you very much for listening.

I am Kado, President of KAGA ELECTRONICS.
Thank you for your continued support and cooperation in our IR
activities.
I would now like to present our management topics for the fiscal year
ended March 2024.
The main topics are; summary of the fiscal year ended March 31,
2024, progress of Medium-Term Management Plan, progress ofsustainability medium- to long-term management plan, etc.

The first topic is the summary of the financial results for the fiscal
year ended March 31, 2024.
Our forecast for the year ended March 31, 2024, was 'lower net sales
and operating income,' reflecting the two major factors in theelectronic components segment: 'impact of inventory adjustment bycustomers' due to the easing of supply and demand forsemiconductors and electronic components, and 'disappearance of
spot demand' that contributed to earnings growth in the past two
fiscal years.
Looking back at the previous year, the disappearance of spot demand
was as expected, but the impact of inventory adjustment bycustomers in the first half of the year turned out to be less than our
expectation at the beginning of the year, and therefore both net sales
and operating income exceeded the internal plan.
Meanwhile, as we entered in the second half, the impact of inventory
adjustment by customers eventually began in full swing. As a result,the upward swing in operating income gradually narrowed. In theend, we were able to exceed the target, albeit by 0.8 billion yen.
Looking ahead to the year ending March 2025, there will be nochange in the scenario in which we anticipate medium- to long-term
market growth, centered on the automotive market.
However, we need to be prepared that inventory adjustment bycustomers continues for the time being and a full-fledged recovery indemand is not expected until the second half of 2025.
In addition, we decided to increase salaries across the Group to
invest in human capital contributing to future growth. This will bringin a 1.5 billion yen increase in personnel expenses, but even afterfactoring in the impact of this increase, we hope to make the current
fiscal year a year of ‘returning to an upward trend of higher net sales
and operating income.’

The next topic is ‘changes in inventory’, which is one of our mostimportant management issues that we are paying constant attention.
This graph shows our consolidated inventory, broken down into the‘manufacturing’ business, mainly EMS, and the ‘trading company’business, mainly component sales.
In the year ended March 2024, inventories hovered around 70.0
billion yen during the period, but the year-end inventory stood at
54.7 billion yen, allowing us to reduce our inventory position from the
beginning of the period.
That said, we have yet to reach our target of ‘50.0 billion yen or less,’and recognize that further reduction is necessary.

Going forward, we will continue efforts to achieve the target of ’50.0
billion yen or less’ and ‘inventory turnover of 30 days.’

I now move on to the progress of the Medium-Term Management
Plan 2024.

In November 2021, the Company formulated and announced thethree-year Medium-Term Management Plan 2024.
In the year ended March 2023, the first year of the plan, we wereable to achieve all the KPIs of net sales, operating income, and ROE,
excluding the new M&A element, two years ahead of schedule.
Based on the first year’s results, we updated its earnings forecast for
the final year and presented it as the "Latest Outlook“ on May 11,2023.
The operating income forecast of 26 billion yen announced in theConsolidated Financial Results for the Fiscal Year ended March 31,
2024, on May 9 still leaves a gap from the ‘30 billion yen or more’ inthe Latest Outlook.
This is attributable to the lingering effects of inventory adjustment bycustomers and the effects of salary increases, both of which were notincorporated in the Latest Outlook a year ago. With this in mind, we
position these earnings forecast as "commitment" to our stakeholders,
and the Latest Outlook as "challenging targets" that I have set formyself and will work to accomplish the plan in the final year.

I move on to the progress of the management measures in themedium-term management plan.

Our basic measures are; further strengthening profitability,
strengthening our management foundation, creating new businesses,
and promoting SDGs management.
This chart summarizes the progress on each key issue. As shown
here, overall, we are making headway in line with our initial plan.
First, looking at further strengthening profitability, we were able tolaunch a new plant in Mexico on April 2024, in an effort to strengthen
and expand our EMS business and overseas business.
To strengthen our management foundation, we actively invested inhuman capital, such as encouraging male employees to takeparental leave and increasing salaries that I explained earlier.
However, in terms of creating new businesses, investment in start-up
companies through CVC is currently underway, but we have not beenable to bring any new M&A to fruition, so at this point we have rated
this as "ー"(unfavorable).
For details on "promoting SDGs management," I will discuss in thefollowing slide.

Let me touch on our new plant in Mexico, which I mentioned earlier.
Since its establishment in 2017, our subsidiary TAXAN MEXICO has
operated in an EMS business, primarily in the assembly of lighting
units for 4-wheeled vehicles for the U.S. market. To meet the
expected increase in production demand for the North and Latin
American markets, we constructed a new plant at a nearby industrial
area, which began operation as planned this April.
Further, we launched another plant "TAXAN-SWE MEXICO," a finishedproduct assembly plant adjacent to the new plant.
Going forward, we will establish an integrated production base in
Mexico that encompasses component molding, sheet metal
processing, in addition to circuit board assembly. We will achieve‘sales of 50 billion yen’ over the next five years.

Here I discuss the progress we made during the second year of oursustainability medium-term management plan.
This slide shows the mid- and long-term targets for each theme set
under the sustainability medium-term management plan.
I will brief on the progress in ESGs for each category in thefollowing pages.
Today, let me focus on the highlights in fiscal 2023, as we covered
the outcomes in fiscal 2022 at the briefing a year ago.

Let me begin with the “E” of Environment.
The Group are making headway to ‘achieve 100% renewableenergy.’Our major progress in fiscal 2023 is the installation of renewableenergy facilities with solar panels at our domestic manufacturing
sites, KAGA EMS TOWADA and KAGA MICRO SOLUTION Fukushima
Business Office.
Also, solar panels have been installed at our overseas
manufacturing bases, the new plant in Mexico, which I introduced
earlier, in addition to the Hubei Factory in China and the Vietnam
Factory.

Here are representative sites that use renewable energy.

Generation capacity and other details for each site are listed here.
Most of the factories cover several tens of percent of their annual
electricity consumption.
In particular, the Vietnam factory, the largest of all, is expected tocover more than 70% of its electricity needs.
We are committed to sustainable business growth while giving
consideration to the environment, as we continue to proactively
install power generation facilities.

Next is the “S” of Society.
Our ultimate goal is to develop and promote women to officers andboards from among our human resources, and we are working toincrease the ratio of female new graduates in general positions andthe ratio of female career-track employees.
In fiscal 2023, in comparison with the previous year results, theratio of female new graduates in general positions was up 3.6 points
to 21.7% and the ratio of female career-track employees rose 0.9
points to 17.4%.
The ratio of female new graduates in general positions has not yet
reached the target of 30% but has increased by 15.9 points in thelast two years.
In the area of work-life management, we were certified as a "Health& Productivity Management Outstanding Organization" for two
consecutive years.

Finally, the "G" of Governance.
First theme is ‘restructuring of the governance structure.’
To enhance management transparency and speedy execution ofbusiness operations, at last year's General Meeting of Shareholders,
we changed the number of directors to a total of 6 (3 internal and 3
external) and appointed a female outside auditor.
Second one is ‘further strengthening the supervisory and executivefunctions of management,’ we decided to expand the membership of
the Group management committee to a delegation-based executive
officer structure, which became effective in April 2024.
In terms of the appointment of female directors, we were unable tosubmit a female candidate for the Board of Directors at this year's
General Meeting of Shareholders, and we will consider this as an
ongoing issue for consideration in the coming year.
That concludes my presentation.
Thank you very much.