Kaga Electronics Co., Ltd.
Financial Results Briefing
for the Fiscal Year Ended March 2022
Main Questions and Answers
Date and time: 4:00-5:00 pm, Thursday, May 26, 2022
(Online Briefing)<Points to note>
The “Main Questions and Answers” has been posted as a reference for the convenience of those who were unable to attend the financial
results briefing. Please be aware that it is not a transcription of all matters discussed at the financial results briefing, but rather a brief summaryof those points that Kaga Electronics deems to be key.
Please also note that the statements contained in this document that relate to the future, such as results forecasts, are based on information
currently available to Kaga Electronics and certain assumptions that have been judged to be reasonable. Actual performance, etc. may differ
substantially due to a range of factors.

Results for the fiscal year ended March 2022 and earnings forecasts for the fiscalyear ending March 2023
Q: In the EMS business, earnings grew steadily despite tough conditions, such asdifficulties in procuring parts. How do you see the business environment? Are there anyrisks going forward in terms of distribution, parts procurement, or other areas?
A: We had a range of problems, including a spike in parts and distribution costs and lockdowns inShanghai, but earnings in the EMS business were strong. I think this was because our ability toprocure parts is excellent, but the main cause was the impressive efforts made by our local
subsidiaries.
We were able to continue operations despite lockdowns in Shanghai because our factory is inSuzhou. We were unable to get deliveries of some parts, but we took measures such as
avoiding Shanghai Port and instead unloading parts at a different port and using air freight, anddidnʼt have to stop operations. Our customers in Shanghai could not make sales calls due to thelockdown, and they were unable to receive deliveries from us from April, but we heard that thelockdown was lifted in June, so deliveries are expected to be resumed as a result.
Previously, we often produced and shipped products in China, but currently we are expanding
globally to countries and regions such as Mexico, Europe, ASEAN, and India. We have factories
in each of these areas, so we are trying to produce products near the customer as much as
possible, which not only lowers distribution costs, but will also serve as a hedge against therisks faced by our China hubs.
There are problems such as a shortage of semiconductors, but customers have devised
optimistic plans, and we are following suit with bullish plans of our own.

-1-Q In the segment forecasts for the fiscal year ending March 2023, net sales are expected
to increase 3% to 447 billion yen and operating income to total 18.5 billion yen in theelectronic components business. Wouldnʼt it be possible to increase income a littlemore? What do you think?
A: In electronic component sales, operating income from spot sales totaled 4.1 billion yen in thefiscal year ended March 2022, which was a significant contribution to income. However, wecannot predict how long spot sales will continue, so we are forecasting a 3.1 billion decrease
from the previous year to about 1.0 billion yen in the fiscal year ending March 2023. Operating
income matches the increase in sales, and there are no substantial changes in the operating
income margin.

Q: What are “spot sales”?
A: Spot sales are a short-term procurement from a supplier that is not part of the normal
commercial distribution, and such trades do not continue when market conditions normalize.
We also propose alternative products with these trades, and are making efforts so that thesetransactions continue as normal sales even after spot sales have wound down. If this switch
goes well, spot sales would decline, but normal sales would increase instead.

Q: Kaga Electronics has continued to meet customer requests since it was founded, whichbrought it to its current position, so I donʼt think that spot sales can be dismissed as aone off. Is it really a good idea to give the impression that 1.0 billion yen in spot sales
would remain in the fiscal year ending March 2023, but would result in a 1.0 billion yen
decrease in the next fiscal year?
A: We assume that the 4.1 billion yen in income earned through spot sales in the fiscal year ended
March 2022 would decrease to 1.0 billion yen in the fiscal year ending March 2023. As you pointout, of this 3.0 billion yen decrease, some would become regular sales.

Kaga FEI and Excel
Q: Kaga FEIʼs gross profit margin improved by about two points in the fiscal year ended
March 2022, and it has improved from about 6% when it was acquired to nearly 10%.
What factors were behind this improvement in the profit margin? Will it remain at thislevel?
A: The improvement in revenue for Kaga FEI can be attributed to ongoing efforts to improve theprofit margin, as well as to spot sales. Acting together as part of the Kaga Electronics Group hasled to the spread of a new awareness of the importance of profit, and they are also making
progress in improving their structure. Their efforts with spot sales, in which they procure frommarket inventory and supply customers, led to improvements in the profit margin. In the fiscal
year ending March 2023, the profit margin will fall slightly, but we think we can maintain it atlevels above 9%. We will continue our efforts to raise the profit margin.

-2-Q: Excelʼs profit margin did not improve when it was initially acquired, so why did itimprove so dramatically in the second year?
A: Excel had an extremely high amount of waste, so we took our time and eliminated this waste.
In addition, its inventory management methods were reformed and defective inventory wascleaned out. In addition, we worked on reforming Excelʼs approach to trade from the time that
we acquired the company. Through these initiatives, we were left with a company that was able
to generate profit sooner than expected.

Medium-Term Management Plan 2024
Q: The operating income target of 20 billion yen in Medium-Term Management Plan 2024was already surpassed in the previous fiscal year, and your forecast for this fiscal year isalso higher. You said that this would be reviewed in six months, but will changes belimited to the numbers, or will the basic approach be changed as well?
A: We are considering revisions in six months, but we do not expect to change policies andmanagement themes. In fact, we would like to revise figures after thoroughly assessing
conditions in Russia and Ukraine, lockdowns, future supply/demand forecasts for areas thathave seen rapid growth in sales, such as autos and industrial equipment, and the sustainabilityof spot sales, among other factors.
The figures we forecast could go in several directions, but we would like to take a morethorough look in six months.
Q: As part of Medium-Term Management Plan 2024, the Company plans to carry out M&As
equivalent to about 150 billion yen in net sales. Will the targets be general trading firms
or manufacturers?
A: Basically, we think that both are worth considering.

Medium- to Long-Term Sustainability Management Plan
Q: I was impressed by the way that the Medium- to Long-Term Sustainability Management
Plan really digs into ESG. Can you speak a little on what Kaga Electronics is doing interms of ESG initiatives and future issues?
A: Since before the Medium- to Long-Term Sustainability Management Plan was established, weworked on replacing our sales vehicles in Japan with hybrid vehicles, so that now 78.5% of oursales vehicles are hybrid vehicles. Our target for 2024 is 85%, and we are making good
progress toward that.
In the future, we need to continue to take measures to support the active role of women in theworkplace. At present, 14% of our managers are women, but this figure includes overseas
Group companies, and the figure is much lower if we just look at Japan. On this matter, weneed to increase the number of women we hire for career-track positions.

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Q: On the “environment,” an important KPI in the Medium- to Long-Term Sustainability
Management Plan, the Company notes that efforts to use 100% renewable energy will
be considered going forward. If this involves external procurement, how much do you
estimate costs would increase? If costs increase significantly to the point that theypressure profits, would you still try to reach this 100% goal?
A: We estimate that electricity costs would be about 50% higher than current levels. Whether itmeans solar power or wind power, we would like to do whatever we can to reach this goal of
100% renewable energy. That said, we do not expect to be able to fully make up the difference,so we want to use in-house power generation in addition to keeping the cost increase (which wecurrently estimate to be about 50%) down to 30%–40%.

Q: You speak of in-house power generation and solar panels, but specifically what do you
plan to install and at which factories?
A: Since the EMS factory is in a relatively remote location and land is available, we are considering
installing solar panels there.

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