This document has been translated from the original document in Japanese. In the event ofany discrepancy between this English translation and the original document in Japanese, theoriginal document in Japanese shall prevail.

Other Matters Subject to Electronic Provision Measures inConnection with the Notice of the 73rd Ordinary General
Meeting of Shareholders

Notes to Consolidated Financial Statements
Notes to Non-consolidated Financial Statements(From April 1, 2023 to March 31, 2024)

Sanshin Electronics Co., Ltd.

The items above are omitted from the document provided to shareholders who requested documented delivery inaccordance with the applicable laws and regulations, and the provision of the Company's Articles of Incorporation.
In addition, regardless of whether shareholders requested document delivery, the same document listing matterssubject to electronic provision measures with the items above omitted will be provided to all shareholders at thegeneral meeting of shareholders.

Notes to Consolidated Financial Statements(Notes on the Basic Important Points for Preparing the Consolidated Financial Statements of This Term)
1. Scope of consolidation
Number of consolidated subsidiaries: 9
Names of companies:
SANSHIN ELECTRONICS (HONG KONG) CO., LTD.
SANSHIN ELECTRONICS SINGAPORE (PTE) LTD.
TAIWAN SANSHIN ELECTRONICS CO., LTD.
SANSHIN ELECTRONICS CORPORATIONSANSHIN ELECTRONICS KOREA CO., LTD.
SANSHIN ELECTRONICS (THAILAND) CO., LTD.
SANSHIN ELECTRONICS (SHANGHAI) CO., LTD.
TAKUMI CORPORATIONSANSHIN NETWORK SERVICE CO., LTD.
On April 1, 2024, Sanshin Electronics merged with Sanshin Network Service Co., Ltd.,in an absorption merger, in which the Company became the surviving company andSanshin Network Service became the absorbed company.
Number of non-consolidated subsidiaries: 5
Names of companies:
SANSHIN MEDIA SOLUTIONS CO., LTD.
AXIS DEVICE TECHNOLOGY CO., LTD.
SANSHIN SYSTEM DESIGN CO., LTD.
SANSHIN ELECTRONICS (SHENZHEN) CO., LTD.
SAN SHIN ELECTRONICS (MALAYSIA) SDN. BHD.
Rationale for exclusion of non-consolidated subsidiaries from the scope of consolidation:
The size of each of the non-consolidated subsidiaries is small, and each company’s total
assets, net sales and net profit or loss (amount corresponding to equity) and retained
earnings (amount corresponding to equity) are small in size and neither does significantly
affect the consolidated financial statements.
The standards for judging whether or not the subsidiary has materiality are based on thepast five-year average net profit or loss on the part of both the Company and thesubsidiaries.
On April 1, 2024, Sanshin Electronics merged with SANSHIN MEDIA SOLUTIONS CO.,LTD. in an absorption merger, in which the Company became the surviving company andSanshin Network Service became the absorbed company.
2. Application of equity method
Non-consolidated subsidiaries and affiliated companies to which the equity method is not applied
Names of companies:
SANSHIN MEDIA SOLUTIONS CO., LTD.
AXIS DEVICE TECHNOLOGY CO., LTD.
SANSHIN SYSTEM DESIGN CO., LTD.
SANSHIN ELECTRONICS (SHENZHEN) CO., LTD.
SAN SHIN ELECTRONICS (MALAYSIA) SDN. BHD.
SHINEI COMMUNICATION SYSTEMS CO., LTD.
Rationale for non-application of the equity method:
Based on each company’s net profit or loss (amount corresponding to equity) and retained
earnings (amount corresponding to equity) etc., neither does significantly affect theCompany’s consolidated financial statements, nor have importance as a whole, even if
excluded from the subject of equity method.
The standards for judging whether or not the company has materiality are based on the past
five-year average net profit or loss on the part of the Company, its subsidiaries andaffiliated companies.
On April 1, 2024, Sanshin Electronics merged with SANSHIN MEDIA SOLUTIONS
CO., LTD. in an absorption merger, in which the Company became the surviving
company and Sanshin Network Service became the absorbed company.
13. Matters concerning accounting principles
A. Valuation standards and methods for major assets
a. Securities
Other securities
Securities other than stocks, etc., without fair market values:
At market value. (Appraisal differences are dealt with by means of the direct capital
influx method, with cost of securities sold calculated by means of the moving
average method.) Furthermore, among the other securities other than stocks, etc.,
without fair market values, for which the difference between the "acquisition cost"
and the "debenture amount" is judged to be the result of interest rate adjustments,
are calculated by amortized cost method.
Stocks, etc., without fair market values:
At cost, using the moving average method.
b. Derivatives
At market value.
c. Inventories
Merchandise: Primarily at cost, using the moving average method. (Figures stated on balance sheets arecalculated by means of the write-down method based on a decline in profitability.)
Partly-finished work: At cost, using the specific identification method. (Figures stated on balance sheets
are calculated by means of the write-down method based on a decline inprofitability.)
B. Depreciation method for major depreciable assets
a. Property and equipment: Primarily the declining-balance method(Excluding leased
However, buildings (excluding equipment and installations), and the equipment
assets)and installations of buildings and structures acquired on or after April 1, 2016
are depreciated by the straight-line method.
The useful life of buildings and structures is 15 to 45 years; for other property
and equipment, it is 3 to 20 years.
b. Intangible assets:
Straight-line method(Excluding leased
The estimated useful life of software for internal use is 3 to 5 years.
assets)c. Leased assets:
Straight-line method using the lease period as the useful life and zero residual
value.
C. Accounting standards for major allowancesa. Allowance for doubtful accounts:
Provided at an amount sufficient to cover probable losses on collection. It consists of the estimateduncollectible amount with respect to certain identified doubtful receivables and an amount calculatedusing the rate of actual collection losses with respect to the remaining receivables.
b. Allowance for bonuses to employees:
Allowance for employees’ bonuses is provided at an amount applicable to this consolidated fiscal year
based on the estimated amount to be paid in the next year.
c. Allowance for bonuses to Directors and Audit & Supervisory Board members:
Allowance for Directors’ bonuses is provided at an amount applicable to this consolidated fiscal year
based on the estimated amount to be paid in the next year.
d. Allowance for stock compensation:
Allowance for stock compensation is an allowance established to provide shares of the Company to the
Directors (excluding the External Directors) based on the Performance-Based Stock Compensation Plan
for Directors. The allowance is calculated based on the estimated amount of payment of Sanshin Shares
to be delivered to the Directors according to the points granted to each of them in accordance with theSanshin Share delivery rules.

2

D. Accounting standards for revenue and expenses
The Group applies the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31,2020), etc. We recognize revenue in the amount expected to be received in exchange for a good or service
when a promised good or service is transferred to the customer.
The Group operates two businesses: the device business, which mainly sells semiconductors and electronic
components in Japan and overseas, and the solution business, which mainly develops ICT solutions.
In the device business, we mainly identify the delivery to customers of products purchased from suppliers
as obligation of performance. In principle, we judge the obligation of performance as satisfied when controlof the products is transferred to the customer, and we recognize revenue at that time. For domestic sales, if
the period from the time of shipment to the time of delivery is the normal period, we recognize revenue atthe time of shipment. For export sales, we recognize revenue when the burden of risk is transferred to thecustomer based on trade conditions stipulated by Incoterms (international commercial terms), etc.
In the solution business, we mainly combine network equipment, security products, and Line-of-Businesssystems, etc., to provide the optimum ICT infrastructure for each customer. For these products, providing
the functions required by the customer is recognized as the obligation of performance. In principle, we judge
the obligation of performance as satisfied when the customer accepts the product, and we recognize revenue
at that time. For construction work performed per a contract agreement, etc., and for made-to-order software,
we judge obligation of performance to be satisfied over a certain period of time, and we recognize revenue
based on the extent of progress in satisfying obligation of performance. For contracts that provide services
such as maintenance services during the contract period, we judge obligation of performance to be satisfied
over a certain period of time in conjunction with the passage of the period of time, and we recognize revenue
uniformly during the contract period.
For the sale of merchandise and services, if the Group is trading as the principal party, we display revenue
as the total amount of compensation. If the transaction is being conducted as an agent, we display revenue
as the net amount after deducting the purchasing cost from the total amount of compensation. When
determining the status as principal party or agent, we make a comprehensive judgment based on thefollowing three indicators.
・Does the Group possess the main responsibility for executing the promise of providing the specified
merchandise or services?
・Does the Group possess the inventory risk before transferring the specified merchandise or services tothe customer, or after transferring control to the customer?
・Does the Group have discretion in setting the price of the specified merchandise or services?
Furthermore, in accordance with the separately specified terms of payment, compensation for transactions
is received within approximately 6 months after obligation of performance has been satisfied, and does notinclude important financial elements.
E. Major foreign currency transactions
Receivables and payables denominated in foreign currencies are translated into Japanese yen at theconsolidated-fiscal-year-end spot market exchange rates; any foreign exchange gains and losses fromtransactions are specified in the profit and loss statement. Assets and liabilities of overseas subsidiaries aretranslated into yen at the exchange rates in effect as of the fiscal year end, and revenues and expenses aretranslated into yen at the average exchange rates for the fiscal year. The resulting translation adjustments areincluded in the foreign currency translation adjustment in net assets.
F. Significant hedge accounting
a. Hedge accounting methods:
Primarily the deferred hedge accounting method
Hedge accounting is adopted for foreign currency receivables and payables, etc. on exchange forward
contracts.
b. Hedging instruments and hedged items:
Hedging instrument:
Foreign currency forward contracts
Hedged items:
Both payables and receivables, and forecasted transactions denominated inforeign currencies
c. Hedge policy:
The Company uses foreign currency derivatives as a means of hedging exposure to foreign currency
risk. Such transactions are all carried out with the finance department of the Company as the leaddepartment, according to Company regulations. The Company does not enter into derivatives for trading3

or speculative purposes not stated in its regulations.
d. Hedge effectiveness assessment:
Hedge effectiveness is evaluated at least every six months by evaluating whether the cash flow changes
in the hedged item and cash flow changes in the hedge instrument cancel each other out at a high level.
G. Accounting standards for net defined benefit liability and remeasurements of defined benefit plans
Net defined benefit liability and remeasurements of defined benefit plans are provided in the amount equal
to the benefit obligations minus the pension assets based on the projected amount at the end of thisconsolidated fiscal year, in order to prepare for the allowance for employees’ severance and retirement
benefits. The retirement benefit obligations are calculated using a payment calculation standard which is amethod of attributing projected retirement benefits for the service period up to the current consolidated fiscal
year.
The prior service expenses are amortized by the straight-line method for a given number of years (10 years)
within employees’ average remaining years of service, at the time of occurrence. The actuarial gains andlosses are amortized in the year subsequent to their occurrence, by the straight-line method or a given numberof years (10 years) within employees’average remaining period of service.
Unrecognized actuarial gains and losses and unrecognized past service expenses are reflected inremeasurements of defined benefit plans in the accumulated other comprehensive income of net assets, after
adjusting for tax effects.

4

(Notes to Changes in Accounting Principles)

None(Notes to Changes in Presentation Methods)
None(Notes to Accounting Estimates)(Valuation of Inventories)
Merchandise inventories¥22,927 million
The Company holds a certain amount of merchandise inventories for the purpose of achieving stable supply ofmerchandise to customers and shortening lead time. As described in “3. Matters concerning accounting
principles” in the “Notes to Consolidated Financial Statements (Notes on the Basic Important Points for
Preparing the Consolidated Financial Statements of This Term),” figures of merchandise inventories stated on thebalance sheets are calculated using the write-down method based on the decline in profitability. Valuation ofmerchandise inventories is estimated using the ordering forecast based on the customer's production plan. If thecustomer's production plan is changed, canceled, etc., a valuation loss on merchandise will be recorded and thereis the possibility of a significant impact on the consolidated financial statements. Furthermore, the Company has
established an Inventory Committee and strives to evaluate inventory appropriately.

(Notes to the Consolidated Balance Sheets)

1. Accumulated depreciation of property and equipment¥4,157 million
2. Liabilities for guarantees
Liabilities for bank borrowings
Employees*¥15 million* Of loan guarantees to financial institutions concerning employee’s borrowings to acquire housing, theportion to which home loan insurance applies has almost no risk attached and thus is excluded fromliabilities for guarantees.
3. Commitment line contracts
The Company has entered into commitment line contracts with three correspondent financial institutions withthe aim of securing a flexible and stable funding framework. The balance of unexecuted borrowings related
to the commitment line contracts at the end of the consolidated fiscal year under review is as follows.
Total amount of commitment line contracts¥6,000 million
Balance of borrowing¥－ million
Balance after deduction¥6,000 million

5

(Notes to the Consolidated Statement of Changes in Shareholders' Equity)
1. Matters concerning types and numbers of outstanding shares and treasury shares(share)No. of shares at the
Increase in no. of shares Decrease in no. of shares No. of shares at the end
beginning of Fiscal 2022
during Fiscal 2022
during Fiscal 2022
of Fiscal 2022
(consolidated)(consolidated)(consolidated)(consolidated)
Outstanding shares
Common shares

16,281,373－－

16,281,373

Total

16,281,373－－

16,281,373

4,089,037

149

11,2004,077,986

4,089,037

149

11,2004,077,986(Note 1)

Treasury shares
Common shares(Notes 2, 3)

Total

Notes: 1. The number of treasury shares at the beginning and end of this consolidated fiscal year includes shares of
the Company held by a trust established in connection with the Performance-Based Stock Compensation
Plan for Directors (excluding the External Directors).
(Beginning of this consolidated fiscal year: 162,400 shares; End of this consolidated fiscal year: 151,200
shares)2. The breakdown of the numbers listed in the fields of increase/decrease of the common treasury shares is asfollows.
Increase due to acquisition of shares in amounts of less than one investment unit: 149 shares
Decrease due to issuance of shares caused by resignation of directors related to the Performance-Based
Stock Compensation Plan: 11,200 shares

2. Matters concerning dividends
A. Payment of dividends
Resolution

Type of shares

Total amount ofdividends(¥million)

Dividends per
share (¥)

Record date

Effective date

The Ordinary
General Meeting of
Shareholders
on June 22, 2023

Common shares

1,297

105

March 31, 2023

June 23, 2023

The Board of
Directors Meetingon November 6,
2023

Common shares

432

35

September 30, 2023 December 1, 2023

Notes: 1. Dividends of ¥17 million against the Company's shares held by a trust established in connection with the
Performance-Based Stock Compensation Plan for Directors (excluding the External Directors) are included in
the total amount of dividends resolved by the Ordinary General Meeting of Shareholders held on June 22,2023.
2. Dividends of ¥5 million against the Company's shares held by a trust established in connection with the
Performance-Based Stock Compensation Plan for Directors (excluding the External Directors) are included in
the total amount of dividends resolved by the Board of Directors meeting held on November 6, 2023.

6

B. Out of dividends whose record date is within this consolidated fiscal year, those for which the effective date
will come after the end of this fiscal year
Resolution

Type of shares

Total amount ofdividends(¥million)

Sources ofdividends

Dividends per
share (¥)

Record date

Effective date

864

Retainedearnings

70

March 31, 2024

June 24, 2024

The Ordinary
General Meeting ofCommon shares
Shareholders
on June 21, 2024
(scheduled)

Note: Dividends of ¥10 million against the Company's shares held by a trust established in connection with the
Performance-Based Stock Compensation Plan for Directors (excluding the External Directors) are included in
the total amount of dividends by a resolution of the Ordinary General Meeting of Shareholders scheduled to beheld on June 21, 2024

(Financial Instruments)
1. Matters Concerning the State of Financial Instruments
A. Policy Initiatives for Financial Instruments
The Group manages funds with safe and secure financial instruments, and primarily performs fundprocurement through bank loans. Derivatives are used to avoid the risk of exchange rate fluctuations, and we
do not perform speculative trading.
B. Financial Instruments, Risks Involved and Risk Management Systems
Notes receivable–trade, accounts receivable–trade and electronically recorded monetary claims, which areoperating receivables, are exposed to customer credit risks. Operating receivables in foreign currency, whicharise from our efforts to globally expand business, are also exposed to the risk of exchange rate fluctuations.
Regarding customer credit risk, in accordance with company regulations, we have established systems for
performing term administration and balance management, as well as regularly evaluating major clients’ credit
statuses. As for exchange rate fluctuation risks, we use forward exchange contracts to offset any risks relating
to business in foreign currency within the scope of actual demand required to conduct such business.
Investment securities are mainly debentures and shares in companies that we have business relations with, andalthough they are exposed to the risk of fluctuations in market values, these market values are periodicallyevaluated and reported to the Board of Directors.
Notes payable–trade, accounts payable–trade and electronically recorded obligations, which are business debts,
all have a payment deadline of within one year. Although some of these are exposed to exchange rate
fluctuation risks, as a result of being derived from imports from overseas and therefore being in foreign
currency, we use forward exchange contracts to offset any risks relating mainly to the relevant business inforeign currency within the scope of actual demand required to conduct such business.
Loans are mainly funds procured for business transactions. Although floating-rate borrowings are exposed tointerest rate fluctuation risks, the Group manages these by distributing repayment dates so that short termloans may be repaid flexibly when there is a financing surplus.
Regarding execution and management of derivatives transactions, the Group complies with company
regulations specifying authority to perform transactions, and when using derivatives, in order to reduce credit

7risk, we only deal with high-rating financial institutions.
Business debts and loans are also exposed to liquidity risks. However, the Group manages this throughmethods such as having each company produce monthly financing plans.
In preparation for unforeseen circumstances, we have entered into commitment line contracts with threecorrespondent financial institutions with the aim of securing a flexible and stable method of procuring funds.
C. Further Notes on Matters Concerning Market Values of Financial Instruments
Market values of financial instruments include values based on market prices, or, where no market price exists,
reasonably calculated values. Because variable factors are incorporated in the calculation of these values, thevalues may change when different assumptions are used.
2. Items Concerning Market Values of Financial Instruments
Consolidated balances sheet amounts, market values and their differences, as of March 31, 2023 are as outlined
below.
Millions of yen
Amount stated on Consolidated
Balance Sheets (*2)

Market value (*2)

Difference(1) Investment securities

3,107

3,107

－

(2) Derivative transactions (*2)

(75)

(75)

－

*1: Descriptions are omitted for “Cash and deposits,” “Notes and accounts receivable–trade,” “Electronically recordedmonetary claims,” “Accrued income,” “Consumption taxes receivable,” “Notes and accounts payable–trade,” and“Short-term loans payable” because these items consist of cash and items which are settled in a short period of time
and therefore have market values that are close to the book value.
*2: Items appropriated as liabilities are listed in parentheses ( ).
*3: Net credits and debts arising from derivatives transactions are displayed as net values.
*4: Unlisted stocks (amount listed on consolidated balance sheet: ¥181 million) are not included in “(1) Investment
securities” because they do not have market prices.

3. Items related to appropriate breakdown for each classification of market values for financial instruments
The market values of financial instruments are classified into the following three levels according to theobservability and importance of the inputs used to calculate the market values.
Level 1 market values: From among the inputs related to the calculation of the observable market values, themarket values calculated from the market prices of the asset or liability subject to thecalculation of market values formed in the active market
Level 2 market values: From among the inputs related to the calculation of the observable market values, themarket values calculated using the inputs related to the calculation of the market values,
other than the inputs in Level 1
Level 3 market values: The market values calculated using inputs related to the calculation of unobservable
market values
If multiple inputs that have a significant impact on the calculation of market values are used, from among thelevels to which those inputs belong, the market values are classified as the level with the lowest priority level inthe market values calculation.

8

Financial assets and financial liabilities for which market values are the amount recorded on the consolidatedbalance sheet
Millions of yen

Classification

Market Values
Level 2
Level 3

Level 1

Total

Investment securities
Other securities
Stocks
2,121
－
－
2,121
Corporate bonds
－
985
－
985
Derivative transactions
Currency related
－
(75)
－
(75)
Note: Explanation of valuation methods and inputs used to calculate market values
Investment securities
Listed stocks and corporate bonds are valued using quoted market prices. The market values of listed stocks areclassified as Level 1 market values because listed stocks are traded in active markets. On the other hand, the market
values of corporate bonds held by the Company are classified as Level 2 market values because the frequency oftransactions in the market is low and corporate bonds held by the Company are not recognized as having quoted
market prices in active markets.
Derivative transactions
The market values of forward exchange contracts are calculated by the discounted cash flow method using observable
inputs such as exchange rates, and are classified as Level 2 market values. Furthermore, forward exchange contracts
and other transactions accounted for using deferral hedge accounting are processed together with the accounts
receivable–trade and accounts payable–trade that are hedged, and their fair market value is included in the accounts
receivable–trade and accounts payable–trade concerned.

9(Notes on Revenue Recognition)
1. Information used to breakdown revenue generated from contracts with customers
Millions of yen

Report segment

Fiscal 2022
(Apr. 1, 2023 – Mar. 31, 2024)

Device segment
By supplier
Mechanical parts manufacturers

57,656

Overseas semiconductor
manufacturers
Other manufacturers
Subtotal
Solution segment
By Business Unit (BU)
Network System BU
Firefighting and Disaster
Preparedness BU

52,897
14,350124,905

6,236
1,279

Platform BU

2,589

Application System BU

3,152

Imaging System BU
Subtotal
Total

2,034
15,291
140,197

Beginning in the current consolidated fiscal year, the categories used to break down the information on earnings
arising from contracts with customers will change. Whereas the Solution segment was previously divided into thecategories of network sector, public-sector, application systems sector, embedded system sector and imagining
systems sector, in the new breakdown the Solution segment consists of the Network System Business Unit (BU),
Firefighting and Disaster Preparedness BU, Platform BU, Application System BU and Imaging System BU.
Products handled by the Sanshin Electric Group are used across a wide range of fields. To present the content of
the Company’s operations as accurately as possible, the Group is switching from categories based on markets tocategories based on products.
2. Information that is the basis for understanding revenue generated from contracts with customers
The information that is the basis for understanding revenue generated from contracts with customers is listed in“Notes on the Basic Important Points for Preparing the Consolidated Financial Statements of This Term” – “3.
Matters concerning accounting principles” – “Accounting standards for revenue and expenses.”10

3. Information that is the basis for understanding the amount of revenue in the consolidated fiscal year under review
and after the next consolidated fiscal year
Balance of contract assets and contract liabilities, etc.
Millions of yen

Fiscal 2023
(Apr. 1, 2023 – Mar. 31, 2024)
Receivables generated from contracts with customers(balance at beginning of fiscal year)
Receivables generated from contracts with customers(balance at end of fiscal year)

37,247
34,463Contract assets (balance at beginning of fiscal year)

17

Contract assets (balance at end of fiscal year)

20

Contract liabilities (balance at beginning of fiscal year)
Contract liabilities (balance at end of fiscal year)

567
677

Contract assets are unbilled accounts receivable–trade for revenue recognized based on progress, mainly inconstruction work performed per a contract agreement and made-to-order software, and are transferred to tradereceivables upon receipt and inspection by the customer.
Contract liabilities are mainly advances received from customers and are transferred to revenue when they are fulfilled
under the contract.
Furthermore, on the consolidated balance sheet, receivables and contract assets generated from contracts withcustomers are included in “Notes and accounts receivable–trade, and contract assets” and “Electronically recordedmonetary claims.” Contract liabilities are included in “Others” under “Current liabilities.”(Notes on Per-Share Information)
Net assets per share
Net profit per share¥3,138.10¥224.66

Note: Shares of the Company which are owned by a trust in connection with the Performance-Based Stock
Compensation Plan for Directors (excluding the External Directors) and which are recorded as treasury stockin shareholders' equity are included in the shares of treasury stock that are excluded from the total number ofshares outstanding at the end of term for calculation of net assets per share (current consolidated fiscal year:
151,000 shares), and also are included in treasury stock excluded in the calculation of amount of average stockduring the term for calculation of net profit per share (current consolidated fiscal year: 155,000 shares).

(Notes on Significant Subsequent Events)
None(Additional Information)(Performance-Based Stock Compensation Plan for Directors)
The Company has introduced a Performance-Based Stock Compensation Plan for Directors, for the purpose offurther clarifying the link between the compensation to the Company’s Directors (excluding External
Directors) and the value of its shares. With the introduction of the Performance-Based Stock Compensation
Plan, Directors will not only enjoy the advantages when the Company’s share price rises but also bear therisks when the share price declines, sharing with shareholders the benefits and risks of fluctuations in shareprices. This move is intended ultimately to incentivize Directors to increase medium-to-long-term businessresults and increase enterprise value.
A. Overview of Transactions
In the Performance-Based Stock Compensation Plan, a trust that is funded by Company expendituresacquires shares in the Company. The Board of Directors establishes regulations for the granting of11

shares, according to which each Director is awarded points for his or her degree of accomplishment of
numerical targets based on management indices. Each Director is then awarded the Company’s shares inproportion to the points awarded, through the trust. In principle, the shares are awarded to Directors at
the time of their resignation or retirement.
B. Accounting treatment of Company shares remaining in the trust
The book value of the trust (net of ancillary expenses) for shares held by the trust was ¥257 million in the
consolidated fiscal year under review, and is recorded as treasury stock in the shareholders’ equity.
The number of said shares as of the end of the consolidated fiscal year under review was 151,000 and theaverage number of shares during the fiscal year under review was 155,000. These shares are included in
the shares of treasury stock excluded for calculation of per share information.

12

Notes to Non-consolidated Financial Statements
1. Notes to Matters Concerning Significant Accounting Principles
A. Valuation standards and methods for assets
a. Valuation standards and methods for securities
Shares of subsidiaries and affiliates:
At cost, using the moving average method.
Other securities:
Securities other than stocks, etc., without fair market values:
At market value. (Appraisal differences are dealt with by means of the direct
capital influx method, with cost of securities sold calculated by means of themoving average method.) Furthermore, among the other securities withoutmarket value, those, for which the difference between the "acquisition cost" andthe "debenture amount" is judged to be the result of interest rate adjustments,
are calculated by amortized cost method.
Stocks, etc., without fair market values:
At cost, using the moving average method.
b. Valuation standards and methods for derivatives
At market value.
c. Valuation standards and methods for inventories
Merchandise: At cost, using the moving average method. (Figures stated on balance sheets are calculated
by means of the write-down method based on a decline in profitability.)
Partly-finished work: At cost, using the specific identification method (figures stated on balance sheets
are calculated by means of the write-down method based on a decline inprofitability.)
B. Depreciation method for non-current assets
a. Property and
Declining-balance method
equipment:
However, buildings (excluding equipment and installations), and the(Excluding leased assets) equipment and installations of buildings and structures acquired on or after
April 1, 2016 are depreciated by the straight-line method.
Estimated useful lives are generally as follows:
Buildings:
15-45 years
Structures:
15-40 years
Equipment: 4-20 years
b. Intangible assets:
Straight-line method(Excluding leased assets) The estimated useful life of software for internal use is five years.
c. Leased assets:
Straight-line method using the lease period as the useful life and zero residual
value
C. Accounting standards for allowancesa. Allowance for doubtful accounts:
Provided at an amount sufficient to cover probable losses on collection. It consists of the estimateduncollectible amount with respect to certain identified doubtful receivables and an amount calculatedusing the rate of actual collection losses with respect to the remaining receivables.
b. Allowance for bonuses to employees:
Allowance for employees’ bonuses is provided at an amount applicable to this term based on the estimatedamount to be paid in the next term.

13

c. Allowance for bonuses to Directors and Audit & Supervisory Board members:
Allowance for Directors’ bonuses is provided at an amount applicable to this term based on the estimatedamount to be paid in the next term.
d. Allowance for stock compensation:
Allowance for stock compensation is an allowance established to provide shares of the Company to the
Directors (excluding the External Directors) based on the Performance-Based Stock Compensation Plan
for Directors. The allowance is calculated based on the estimated amount of payment of Sanshin Shares
to be delivered to the Directors according to the points granted to each of them in accordance with theSanshin Share delivery rules.
e. Employees’ severance and retirement benefits:
The Company makes provision for the necessary amount of allowance for employees’ severance andretirement benefits deemed to accrue during the term, based on projected retirement benefit obligations
and pension assets at the term-end. The retirement benefit obligations are calculated using a payment
calculation standard which is a method of attributing projected retirement benefits for the service period
up to the current business year. However, the projected pension assets for the end of this term exceed the
projected retirement benefit obligations moderated by unrecognized actuarial gain and loss, and thisdifference is recorded as prepaid pension costs.
The prior service obligation is amortized by the straight-line method for a given number of years (10years) within employees’ average remaining years of service.
The actual gain or loss is amortized, from the year following the year in which the gain or loss isrecognized, by the straight-line method or a given number of years (10 years) within employees’ averageremaining period of service.
D. Accounting standards for revenue and expenses
The Company applies the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March
31, 2020), etc. We recognize revenue in the amount expected to be received in exchange for a good or service
when a promised good or service is transferred to the customer.
The Company operates two businesses: the device business, which mainly sells semiconductors andelectronic components in Japan and overseas, and the solution business, which mainly develops ICT
solutions.
In the device business, we mainly identify the delivery to customers of products purchased from suppliers
as obligation of performance. In principle, we judge the obligation of performance as satisfied when controlof the products is transferred to the customer, and we recognize revenue at that time. For domestic sales, if
the period from the time of shipment to the time of delivery is the normal period, we recognize revenue atthe time of shipment. For export sales, we recognize revenue when the burden of risk is transferred to thecustomer based on trade conditions stipulated by Incoterms (international commercial terms), etc.
In the solution business, we mainly combine network equipment, security products, and Line-of-Businesssystems, etc., to provide the optimum ICT infrastructure for each customer. For these products, providing
the functions required by the customer is recognized as the obligation of performance. In principle, we judge
the obligation of performance as satisfied when the customer accepts the product, and we recognize revenue
at that time. For construction work performed per a contract agreement, etc., and for made-to-order software,
we judge obligation of performance to be satisfied over a certain period of time, and we recognize revenue
based on the extent of progress in satisfying obligation of performance. For contracts that provide services
such as maintenance services during the contract period, we judge obligation of performance to be satisfied
over a certain period of time in conjunction with the passage of the period of time, and we recognize revenue
uniformly during the contract period.
For the sale of merchandise and services, if the Company is trading as the principal party, we display revenue
as the total amount of compensation. If the transaction is being conducted as an agent, we display revenue
as the net amount after deducting the purchasing cost from the total amount of compensation. When
determining the status as principal party or agent, we make a comprehensive judgment based on thefollowing three indicators.
・Does the Company possess the main responsibility for executing the promise of providing the specified
merchandise or services?
・Does the Company possess the inventory risk before transferring the specified merchandise or services
to the customer, or after transferring control to the customer?
・Does the Company have discretion in setting the price of the specified merchandise or services?
Furthermore, in accordance with the separately specified terms of payment, compensation for transactions
14

is received within approximately 6 months after obligation of performance has been satisfied, and does notinclude important financial elements.
E. Foreign currency transactions
All foreign-currency-denominated receivables and payables are converted into Japanese yen at the term-end
spot market exchange rate; any foreign exchange gains and losses from transactions are specified in the profit
and loss statement.
F. Hedge accounting
a. Hedge accounting method
Deferred hedge accounting method
Hedge accounting is adopted for foreign currency receivables and payables etc. on exchange forward
contractb. Hedging instruments and hedged items:
Hedging instrument:
Foreign currency forward contracts
Hedged items:
Both payables and receivables, and forecasted transactions denominated inforeign currencies
c. Hedge policy:
The Company uses foreign currency derivatives as a means of hedging exposure to foreign currency
risk. Such transactions are all carried out with the finance department of the Company as the leaddepartment, according to Company regulations. The Company does not enter into derivatives for tradingor speculative purposes not stated in its regulations.
d. Hedge effectiveness assessment:
Hedge effectiveness is evaluated at least every six months by evaluating whether the cash flow changes
in the hedged item and cash flow changes in the hedge instrument cancel each other out at a high level.
2. Notes to Changes in Accounting Principles
None
3. Notes to Changes in Presentation Methods
None
4. Notes to Accounting Estimates(Valuation of Inventories)
Merchandise inventories¥13,329million
The content of the accounting estimate for the valuation of inventories is the same as the items stated in the Notes
to Consolidated Financial Statements.
5. Notes to the Non-Consolidated Balance Sheets
A. Accumulated depreciation of property and equipment
B. Liabilities for guarantees
Liabilities for bank borrowings
Employees*
TAIWAN SANSHIN ELECTRONICS CO., LTD.

¥3,919 million

Total
Notes and accounts payable-trade
SANSHIN ELECTRONICS (HONG KONG) CO., LTD.

¥15 million¥3,895 million(US$ 25,739 thousand)¥3,910 million¥7 million(US$ 52 thousand)
TAIWAN SANSHIN ELECTRONICS CO., LTD.
¥1,145 million(US$ 7,568 thousand)Total¥1,153 million* Of loan guarantees to financial institutions concerning employee’s borrowings to acquire housing, the portion
to which home loan insurance applies has almost no risk attached and thus is excluded from liabilities forguarantees.

15

C. Monetary assets and liabilities due from or to subsidiaries and affiliates
a. Short-term assets due from subsidiaries and affiliates¥7,817 million
b. Short-term liabilities due to subsidiaries and affiliates¥727 million
D. Commitment Line Contracts
The Company has entered into commitment line contracts with three correspondent financial institutions
with the aim of securing a flexible and stable funding framework. The balance of unexecuted borrowings
related to the commitment line contracts at the end of the fiscal year under review is as follows.
Total amount of commitment line contracts¥6,000 million
Balance of borrowing¥－ million
Balance after deduction¥6,000 million
6. Notes to the Non-Consolidated Profit and Loss Statement
Transactions with subsidiaries and affiliates
a. Salesb. Purchasesc. Transactions other than operating activities¥59,337 million¥7,869 million¥2,291 million

7. Notes to the Non-Consolidated Statement of Changes in Shareholders' Equity
Matters concerning type and number of treasury shares
Type of shares
Common shares(Notes 1, 2)(share)No. of sharesat the beginning of
Fiscal 2023

Increase in
No. of shares during
Fiscal 2023

Decrease in
No. of shares during
Fiscal 2023

No. of sharesat the end of
Fiscal 2023

4,089,037

149

11,2004,077,986

Notes: 1. The number of treasury shares at the beginning and end of this fiscal year includes shares of the Company
held by a trust established in connection with the Performance-Based Stock Compensation Plan for Directors(excluding the External Directors).
(Beginning of this fiscal year: 162,400 shares; End of this fiscal year: 151,200 shares)
2. The breakdown of the numbers listed in the fields of increase/decrease of the common treasury shares is asfollows.
Increase due to acquisition of shares in amounts of less than one investment unit: 149 shares
Decrease due to issuance of shares caused by resignation of directors related to the Performance-Based Stock
Compensation Plan: 11,200 shares

8. Notes on Tax Effect Accounting
A. Breakdown by cause of deferred tax assets and liabilities:
Deferred tax assets
Excess of allowance for bonuses over the deductible limit
Non-deductible valuation loss on merchandise
Deferred hedge gains (losses)
Non-deductible reserve for Directors’ and Audit & Supervisory Board
members’ retirement allowances
Non-deductible loss on valuation of investment securities
Non-deductible loss on expenses for development of internal company
systems
Other
Subtotal
Valuation reserve for total of deductible temporary difference, etc.
Total deferred tax assets
Deferred tax liabilities
Valuation difference on available-for-sale securities
16¥158 million¥46 million¥27 million¥25 million¥294 million¥22 million¥85 million¥660 million(¥326 million)¥333 million(¥445 million)

Prepaid pension costs(¥25 million)
Total deferred tax liabilities(¥470million)
Net deferred tax liabilities(¥136 million)
B. Reconciliation between the statutory income tax rate and the effective income tax rate after the
adoption of tax-effect accounting
Statutory effective rate
30.6%
(Reconciliation items)
Entertainment expenses and others that are permanently non-deductible
1.3%
Dividends and others that are permanently excluded(17.5%)
Foreign withholding tax
2.4%
Per capita inhabitant’s tax
0.5%
Tax credit for salary increase(1.0%)
Increase/decrease in valuation reserve
0.1%
Other
(0.2%)
Effective income tax rate after the adoption of tax-effect accounting
16.6%

17

9. Notes on Transactions with Related Parties
Type

Company Name

Subsidiary

SANSHIN
ELECTRONICS(HONG KONG)
CO., LTD.

Subsidiary

Subsidiary

Notes:SANSHIN
ELECTRONICS
SINGAPORE(PTE) LTD.

TAIWANSANSHIN
ELECTRONICS
CO., LTD.

Percentage ofOwnership ofVoting Rights,
etc. (%)

Relationship withRelated Parties

Transaction
Details

Transaction
Amounts(Million
yen)

Item

Balance as ofthe end of
fiscal year
(Million yen)

100% directly
owned

Mutual supply ofsome products of
the Company andthe relevalent
companies

Sales ofproducts

23,848

Accounts
receivable–trade2,112

Sales ofproducts

3,178

100% directly
owned

100% directly
owned

Mutual supply ofsome products of
the Company andthe relevalent
companies

Mutual supply ofsome products of
the Company andthe relevalent
companies

Loan of funds(Note 2)

Sales ofproducts
Loan guarantees(Note 3)

1,861

29,106

5,040

Accounts
receivable–tradeShort-term
loans
receivable
fromsubsidiaries andassociates
Accounts
receivable–trade

1,861

－

－

554

4,238

1. Prices and other terms and conditions are determined through price negotiations, with consideration given toprevailing market conditions.
2. For loans of funds, interest is determined in a reasonable manner based on market interest rates.
3. The Company provides loan guarantees for bank borrowings of TAIWAN SANSHIN ELECTRONICS CO.,LTD.

10. Notes on Per Share Information
A. Net assets per share
B. Net profit per share¥1,622.52¥238.02

Note: Shares of the Company which are owned by a trust in connection with the Performance-Based Stock
Compensation Plan for Directors (excluding the External Directors) and which are recorded as treasury stock inshareholders' equity are included in the shares of treasury stock that are excluded from the total number ofshares outstanding at the end of term for calculation of net assets per share (current fiscal year: 151,000 shares),and also are included in treasury stock excluded in the calculation of amount of average stock during the term
for calculation of net profit per share (current fiscal year: 155,000 shares).

11. Notes Related to Revenue Recognition(Information that is the basis for understanding revenue generated from contracts with customers)
The information that is the basis for understanding revenue generated from contracts with customers is omitted
because the same content is listed in “Notes to Consolidated Financial Statements – Notes on Revenue
Recognition.”
12. Notes on Significant Subsequent EventsNone
13. Additional Information(Performance-Based Stock Compensation Plan for Directors)
The Company has implemented a Performance-Based Stock Compensation Plan for Directors (excluding theExternal Directors). Details are listed in “Notes to Consolidated Financial Statements – Additional
Information.”18