Integrated Report
Tokyo Tatemono Yaesu Building, 1-4-16, Yaesu, Chuo-ku, Tokyo 103-0028 Tel: +81-3-5202-8121 (General Affairs Division)

https://www.toyodenki.co.jp/

Toyo Denki Seizo Report 2022
Our Heart and Technology for the Future

Our Long-Term Vision

Based on a firm management foundation, we help build social and industrial
through the global provision of high-quality products that integrate ourbreakthrough advanced technologies.
Business Principles

Industrial
Systems
Segment

The Toyo Denki Group will practice the following business principles to ensure thegrowth of its business, earn the confidence and understanding of shareholders andstakeholders, and foster the development of its employees:

ICT Solution
Business
Segment

Prioritize ethics and contribute to the prosperity of customers
and society as a whole
Encourage creativity and enterprising spirit to meetthe challenges of the future
Build trust by focusing on quality first

infrastructure systems that are considerate of the global environment
exceptional motor drive technologies since establishment with our
Industrial Systems Segment
The Company is extensively contributing to customers at home and abroad through general industrial
machinery and equipment, testing equipment for automobile development and social infrastructure
equipment that is indispensable to the daily lives of people. In addition, we address manufacturing that
contributes to the prevention of global warming, while providing products manufactured through highsystem-building technologies that make full use of energy-saving motors, inverters, FA controllers andnetworks.

Code of Conduct
1. Respond to customers in a timely and speedy manner

Automobile testing systems

2. Tackle all challenges with forethought and creativity
3. Continuous efforts toward self-development and skill improvement
4. Keep a broad perspective and influence each other toward growth
5. Act with awareness and pride of a good member of society andbusinessman

New
Business
Development

Company Slogan
Transportation
Systems
Segment

Our Heart and Technology for the FuturePower generation andsocial infrastructure system
Production and processing
equipment systems

Transportation Systems Segment

ICT Solution Business Segment

Electrical equipment for rail vehicles manufactured by theCompany using its technological capability developed over 100
years covers a wide range of fields, including propulsion systems (drive systems), auxiliary power supply and door-closing
units of trains, and we contribute to the maintenance and development of railway infrastructure overseas, not to mention in
Japan, by pursuing safety and comfort of trains.

In the ICT Solution Business segment, we operate in the two fields of railway station operating equipment
systems and IoT solutions, by merging advanced telecommunications technologies and mechatronics.
With regard to railway station operating equipment systems, we develop and manufacture commuter
pass issuing machines that quickly became IC card compliant and portable terminal devices for conductors, and provide systems for smooth fare collection and income management system to railway operators. Our IoT solutions greatly contribute to labor saving and maintenance saving of customers throughrealization of various equipment monitoring and position monitoring, by leveraging cloud computing.

Current collectors(pantographs)

Door operating equipment

Facilities management solutions

Driving gear units

Master controllers
Total train communication
system1

Twin disk couplings
Propulsion inverters (VVVF inverter)

Contents/Editorial Policy/Our Long-Term Vision … 1
Over 100-Year History of Toyo Denki Seizo K.K. … 3
Consolidated Financial Highlights ………… 4
Message from the President ……………… 5
Value Creation Process at Toyo Denki Seizo … 9
Special Report Medium-Term Management Plan … 11
Message from the Executive Responsible forManagement Planning …………………… 12
Business Report
Business of the Toyo Denki Group ……… 13
Transportation Business Segment ……… 14
Industry Business Segment …………… 15
ICT Solution Business Segment ………… 16
New Business Development/Intellectual
Property ……………………………… 17
Sustainability
Sustainability Policy …………………… 19
Sustainability Roadmap ………………… 20
Initiative in Products and Services ……… 21
Initiative in Production Activities ………… 23
Initiative in Valuing People and Communities … 26
With Our Employees ………………… 26
With Our Local Communities ………… 27
Governance
Governance …………………………… 28
Corporate Governance ……………… 28
Directors, Statutory Auditors, andOperating Officers ………………… 30
Messages from Outside Executives … 31
Internal Control and Compliance …… 32
Risk Management ………………… 32
Risk Factors ……………………… 32
Information Security ……………… 34
Financial Report
Financial Review ……………………… 35
Reference Data for Management Indices … 36
Consolidated Balance Sheets …………… 37
Consolidated Statements of Income
and Consolidated Statements ofComprehensive Income ………………… 39
Consolidated Statements of Changes in
Net Assets ……………………………… 40
Consolidated Statements of Cash Flows … 41
Information
Stock Related Information ……………… 42
Company Profile ……………………… 43
Organization Chart ……………………… 44

Editorial Policy
We have been publishing this report since 2013
with the goal of allowing a wide range of stakeholders to have a better understanding of the Company.
This report combines our management policy with
reports on our businesses, sustainability, governance, finances, and other matters. We are committed to describing our initiatives during the year andour future direction in a manner that is easy to understand.
Period Covered by This Report
This report focuses on our activities in fiscal 2021
(from June 2021 to May 2022), but also contains
some information from outside this period.

Main motors

Passenger information
display system

Railway station operating
equipment systems

C O N T E N T S

Organizations Covered by This Report
This report covers Toyo Denki Seizo K.K. and its
subsidiaries and affiliates listed on Page XX.
Auxiliary power supply (SIV)

Reference Guidelines
The GRI Sustainability Reporting Standards (GRI
Standards) / IIRC / Guidance for Value Creation /TCFD / Human Capital Guidelines

Toyo Denki Seizo Report 20222

Consolidated Financial Highlights

Over 100-Year History of Toyo Denki Seizo K.K.
1918 1949
1918
1919

Technical cooperation with British Dick Kerr and establishmentof the company with the capitalof 3 million yen
Operation started at Yokohama
Factory

1973
1977
1978
1983
1985
1985

Development of 150kVA 440Hz static CVCF, first in Japan
Completion of commutation ticket issuing system

Completion of large high-speed automatic drafting machine
Developed our proprietary AFE chopper device
Completion of in-train ticket issuing system
The current Yokohama Planmt was completed
Delivery of world-first superimposed field excitation control for
205 series electric train of Japanese National Railways

1988 Completion of world-first heat-pipe type 8-unit motor batch control VVVF inverter and delivery of it to Tokyu Electric Railway Co
GTO thyristor, first in Japan

Yokohama factory at the start of operations(Hodogaya-ku, Yokohama)

1920

Control equipments and traction motors
delivered directly to Keihan Electric
Railway Co.

1921 Development of pantograph, first in Japan
1926 Start of manufacturing of three-phasecommutator motor (AS motor)

1932 Development of electric equipment for

Early domestic pantographtrolleybus, first in Japan
Completion of controller with regeneration brake using compound motor, firstin Japan1935 Development of diesel electric railcar,

first in our country, and delivered to
AS motor
Sagami Railway

1949 Our stocks was listed on Tokyo Stock Exchange

1950 Development of ST type three-phase AC
Commutator motor (patented)

Cardan shaft driving device

1952 Development of Cardan shaft driving
device, first in Japan

1958 Completion of traction motor and con-troller for the Japan National Railways“Kodama”limited express

Japan National Railway 151 series

1959 Completion of automatic train stop
limited express train “Kodama”
1960 Completion of traction motor and drivefor Shinkansen testing car
Order received for electric towing locomotive for the Panama Canal
Development of constant-speed operation controller for vehicle, first in Japan
Electric towing locomotive for theDevelopment of hydraulic winch for Panama Canal
ship, first in Japan

1963 Delivery of pantograph for Shinkansen
to Japanese National Railways

1965 Development of thyristor static Leonard
equipment series, first in Japan

1969 Completion of automotive brake test Japan National Railway Series 0
equipment

3

Shinkansen

From postwar reconstruction

1950 1989

Global expansion and to the next 100 years

From foundation to postwar

1989 Development of small VVVF inverter using reverse conductive

Group photo of our employees withtechnical advisors from the partner
British Dick Kerr company.

1990 2022

to high economic growth

Our company was founded in 1918 with the intention of “domestic production of electrical machinery for railway vehicles”.
A spectacular feeling that we want to export products to domestic as well as to many Orient countries and contribute to thedevelopment of the country has come from the name of “TOYO DENKI SEIZO K.K.”. And this feeling has been handed
down to successive employees, and now our products are contributing to the development of social infrastructure systems
around the world.
1972 Development of brushless motor generator (BLMG), first in the world

Highlights of Toyo Denki Seizo K.K. and Consolidated Subsidiaries for the Consolidated Fiscal Year ended May 31 or as of May 31

158th fiscal term

159th fiscal term

160th fiscal term

161st fiscal term

FYE May 2018

FYE May 2019

FYE May 2020

FYE May 2021

FYE May 2022

Financial Data
Fiscal YearNet sales(million yen)

42,527

41,172

39,07133,14330,158Gross profit(million yen)

8,072

7,839

8,242

7,338

6,815

Operating income(million yen)

366

557

1,068

423

171

Net income attributableto owners of the parent (million yen)

692

690

1,081

977

(930)

Comprehensive income (million yen)

2,009

(251)

(351)

94

(1,727)

Capital investment(million yen)

4,772

1,090

545

632

315

Research and development costs (million yen)

840

731

792

819

712

Fiscal Year-End
Net assets(million yen)

26,32724,80424,18324,00822,012Development of intelligent door system, first in Japan

Total assets(million yen)

Development of light-weight VVVF inverter using 1,500V mass-production type reverse conductive GTO thyristor, first in our Japan

63,291 *1

58,001

55,16551,967

46,916Per Share Information

1990 Development of stroke switching type door closing machine, first in Japan
1991

157th fiscal term

1997 Completion of in-train ticket issuingmachine corresponding to automatic
ticket checker

Net assets(yen)

2,788.01

2,773.87

2,704.61

2,685.28

2,462.17

1998 Delivery of electric equipment for Bei-

Net income

(yen)

73.33

75.27

120.98109.38(104.02)

Dividend

(yen)

50 *2

30

30

30

30

jing subway east-west line train

2000 Completion of permanent-magnet motor (ED motor)

Beijing subway east-west line train2004 Development of electrical equipment for the world’s first micro gas
turbine hybrid vehicle
Joint development of the first full-flat, super-low floor light rail vehicle (LRV) produced in Japan
Succeeded in development and running of in-wheel motor for car

Major Management Indices
Shareholders’ equity ratio

(%)

41.6

42.8

43.8

46.2

46.9

Return on equity (ROE)

(%)

2.7

2.7

4.4

4.1

(4.0)

Operating income ratio

(%)

0.9

1.4

2.7

1.3

0.6

Overseas net sales ratio

(%)

24.5

22.9

20.7

15.9

14.5

Dividend payout ratio

(%)

68.2

39.9

24.8

27.4

—

2014 Delivery of electrical machinery for

Non-financial Data

2018 May, Shiga Ryuo Plant completed

Number of officers (non-consolidated)

12

11

10

10

11

1,267

1,226

1,227

1,217

1,193

2019 Establishment of SIAM TOYO DENKI Co., Ltd. in Thailand
2020 Establishment of TOYO DENKI RAILWAY SERVICE, LLC. in the U.S.

Number of employees on a consolidated basis
Number of employees at subsidiar（名）ies in Japan
CO2 emissions on(t)a non-consolidated basis
Electricity consumption on a
non-consolidated basis (10,000 kWh)*3

391

395

386

371

363

4,097

4,905

4,185

4,184

3,749

680.3

839.2

743.9

751.6

712.5

2007 The new public transport smart card Pasmo

goes into service (delivery of automatic commuter ticket vending
machine with support for smart card passes and smart card chargemachines to station facilities)
Start of sales of the VF66 inverter

20082012 Order receipt of handsets for conductor for JR West

Joetsu and Hokuriku Shinkansen E7

Angeles County Metropolitan
June, Toyo Denki Seizo K.K. 100th an- Los
Transportation Bureau P3010 LRVniversaryOrder received for consigned research and development of superconducting flywheel power storage system for railways

Delivery of electrical machinery for Tokaido and Sanyo Shinkansen N700S(mass-production model)

2022 Delivery of automobile testing systemusing in-wheel-well dynamo

Transitioned to Standard Market of the In-wheel-well dynamo
Tokyo Stock Exchange*1 The Company has adopted “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 2 8, February 1 6, 2 0 1 8) from the beginning of the158th fiscal term. Accordingly, total assets as of the end of the 157th fiscal term have been calculated by retroactively applying the accounting standard.
*2 The dividend for the 157th fiscal term includes a commemorative dividend of 20 yen for the 100th anniversary.
*3 Aggregate amount of production bases per fiscal year beginning in April and ending in March of the following year
Figures for the Shiga Ryuo Plant since fiscal 2018 include those for TD Drive Co., Ltd.
Toyo Denki Seizo Report 2022

4

Message from the President

By vigorously pressing ahead with
our efforts towards the “revitalizationand transformation of Toyo Denki,”
we will demonstrate an unwaveringcommitment to drastically strengthen our management foundations so
as to achieve our medium-term management plan that ends in the fiscal
year ending May 2026.
Akira Watanabe

However, in Japan, the business environment remained severe,with pandemic-related state of emergency declarations issued
intermittently, and having to deal with the gradual easing ofrestrictions on activities since those declarations were lifted in
October. Then, from January, we were struck by new adversity inthe form of a sudden spike in Omicron variant infections anddifficulties in procuring semiconductor chips and othercomponents. Overseas, although some economic recovery wasobserved in the United States and many other countries, in China,
where our Group has been doing business for over 20 years, thebusiness environment was similarly harsh to Japan, due to urban
lockdowns and tightened restrictions on activities imposed by thezero-COVID policy.
Among the railway operating companies that are the Group’s
major customers, delays and revisions of plans to build newrolling stock and investments in railway station operating
equipment since 2020 have resulted in declines in orders
received in the fiscal years ended May 2020 and May 2021. In
the Transportation Business segment, which is the main pillar of
the Group’s business earnings, because most of our products
have a long lead time from receipt of order to delivery andrecording of revenue, net sales were sluggish, resulting in
declines in both net sales and profit.

In the Industry Business segment, another of the Group’s profit
pillars, receipt of orders was sluggish due to the impact ofrestrictions on sales activities caused by requests to refrain fromface-to-face marketing and restrictions on overseas travel.
Further, with the progress in the shift to electric vehicles by theautomotive manufacturers and re-examination of investment intesting systems for automobile development, net sales and profit
both declined.
The Information Equipment Systems segment also suffered asimilar impact to the Transportation Business segment from therailway operators’ restraint in equipment renewal, resulting infalls in both net sales and profit.
As these results show, in the fiscal year ended May 2022, amajor challenge surfaced in our ability to secure the earning
capacity needed to withstand harsh changes in the businessenvironment, and performance fell far short of the plan’s
projected figures.
Reflecting on the above results, we will redefine the strengths
and sources of value creation that we have cultivated throughout
our long history, and, on that basis, all of our employees will band
together to promote the “revitalization and transformation of Toyo
Denki.”

President

Outlook for the fiscal year ending May 2023 and new medium-term management plan

In the fiscal year ending May 2023, we will drastically strengthen ourmanagement foundations for the “revitalization and transformation of Toyo Denki”
Future vision that returns to the starting point of Toyo Denki Seizo

A new Sustainability Policy established to propel us into our next 100 years
First established in 1918 with the intention of pursuing “domestic
production of electrical machinery for railway vehicles,” the Toyo
Denki Group marked the 100th anniversary of its establishment in2018. Throughout that 100-year history, to embody our businessprinciples that “prioritize ethics and contribute to the prosperity ofcustomers and society as a whole,” we have engaged in the
manufacture of various products that benefit the environment andsociety. In recent years, distortions in society, such as poverty andinequality, brought about by climate change, have become amajor social issue. In response, the Group formulated anenvironmental philosophy that views protection of the global
environment as a priority. In April 2021, we announced a new
Sustainability Policy based on the business principles we havecultivated since our establishment and the environmental
philosophy that is in response to those social issues of recent
years. With this, we have renewed our commitment to take a newpath that will propel us forward into our next 100 years.

Results for the fiscal year ended May 2022

A year in which challenges surfaced amid a harsh business environment
The Toyo Denki Group has three segments: the Transportation
Business segment, whose main products are electrical equipment
for railway vehicles, the Industry Business segment, whose main
products are production and processing equipment systems forindustry and automobile testing systems, and the Information

5

Equipment Systems segment (now the ICT Solution Businesssegment), whose main areas are railway station operating
equipment and IoT solutions.
The fiscal year ended May 2022 was the final year of themedium-term management plan (Revitalize 2020/2022).

Based on the results of the fiscal year ended May 2022, we havepositioned the fiscal year ending May 2023 as a year in which wewill thoroughly implement structural reforms to improve
profitability, and will vigorously press ahead with our efforts
towards the “revitalization and transformation of Toyo Denki.” Thesame harsh business environment of the fiscal year ended May
2022 continues into this fiscal year, making it impossible to takean optimistic view. Nevertheless, from a medium- to long-term
perspective, we have formulated three basic policies to secure
the earning capacity to withstand the challenges that surfaced
during REVITALIZE 2022 and the harsh changes in the businessenvironment and to drastically strengthen our managementfoundations. Then, based on the outcomes and progress as wellas the business environment in the fiscal year ending May 2023,
we plan to announce a complete plan that will include thenumerical targets of our new medium-term management plan,
which will end in the fiscal year ending May 2026.
The first of the three basic policies is the “expansion of new
businesses and products.” This will entail the reorganization of
the core technologies owned by the Group and the development
and expansion of new businesses and products. We have alreadyestablished a new development center in June 2022 andundertaken structural changes, including reorganizing theInformation Equipment Systems segment into the ICT Solution
Business segment. Another outcome is the development of
products that combine power electronics with ICT, including our
first delivery of a remote monitoring system for the VVVF inverter
equipment for the high-speed surface transport system (HSST)
that we delivered to Aichi Rapid Transit Co., Ltd.
The second basic policy is “thorough improvement of theearnings structures of existing businesses.” The production andsales divisions are working together to pursue improvements in
production efficiency and quality and to secure appropriate selling
prices through the provision of high value-added products andservices. They are also making efforts to increase the profitabilityof existing businesses.
The third basic policy is “improvement of asset efficiency with
an awareness of capital costs.” So far, we have reduced ourcross-shareholdings and taken moves to improve asset efficiency,
and we will continue those efforts.
In conjunction with these basic policies, we have begun thereform of our personnel systems to strengthen the manpower that
forms the core of our management resources and to reinvigorate
our organizational culture.

Toyo Denki Seizo Report 2022

6

Message from the President
Initiatives for our new path

Proceeding with initiatives based on the Sustainability Policy
In the medium-term management plan that will end in the fiscal
year ending May 2026, we are stepping up our initiatives basedon the Sustainability Policy. We have organized our businessactivities from three perspectives, namely “initiative in products
and services,” “initiative in production activities,” and “initiative invaluing people and communities,” and are giving consideration to
our material issues (materiality).
The greatest focus of our efforts is on initiative in products andservices, which are the very essence of the Group’s businessactivities. Since the Group was founded, we have contributed
widely to society through the manufacture of various productsthat benefit the environment and society. Railroads have always
been a more energy efficient transportation system thanautomobiles and aircraft, and they also have a smaller
environmental footprint. Nevertheless, over many years, the Grouphas continued to refine our technologies and pursue even further
energy savings and efficiency improvements. In the medium-term
management plan, we will promote the development andpopularization of energy efficient transportation, such as railroads
and electric vehicles, as well as production equipment withimproved efficiency and the power storage systems. In doing so,
we will contribute to the realization of social and industrial
infrastructure that is considerate of the global environment.
In the Transportation Business segment, we are implementing
initiatives that contribute to the further advancement of therailways such as by improving functionality, reliability, and energysaving performance of electrical equipment for railway vehicles.
We are also working on the design of environmentally friendly
products and the introduction of maintenance methods thatleverage data science. Other initiatives we are pursuing include
the effective use of regenerative power using storage batteries,
consideration of the introduction of solar power generation on
railway track facilities, and the development of new power
storage systems that use superconducting flywheels to realize
higher efficiency and low maintenance.
In the Industry Business segment, in the area of CASE* that isprogressing in the automotive industry, we have commercialized
an in-wheel-well dynamo to be used for testing advanced driverassistance systems (ADAS) and a high-speed slender dynamo for
testing electric vehicles. In November 2021, in recognition of ourachievements in small hydroelectric power generation, we
received an order for a full suite of electrical equipment forrecirculation pump-type wave-activated power generation.
Recirculation pump-type wave-activated power generation is aground-breaking method of distributed power generation with asmall environmental footprint. It is the result of research anddevelopment aimed at solving all at once the current challenges
facing wave power generation, namely, how to deal with marine life,
typhoons and other high waves, and the balance with the fishing industry.

7

Connected, Autonomous, Shared & services and Electric

The ICT Solution Business segment, which was re-organizedfrom the Information Equipment Systems segment, in cooperation
with the Transportation Business Unit, took the IORemoter II, a
Toyo Denki-developed IoT terminal for cloud-based remotemonitoring and control systems, and adapted it for use in a VVVF
inverter system for railway vehicles, commercializing it as an IoT
system for electrical equipment for railway vehicles. This productwill reduce downtime by monitoring in real time the condition ofelectrical equipment for railway vehicles and collect data for
future condition-based maintenance (CBM). CBM is a method of
maintenance in which the condition of machinery and otherproduction equipment is monitored in real time and serviced
based on that condition, to prevent equipment failures. We havebeen pursuing R&D in anticipation of the introduction of smart
maintenance in a wide range of fields, and we are now at a stage
where we can propose this product to many customers, including
the railway operators.
Along with the improvement in capital investment intentions
among railway operators, automotive manufacturers, and othercompanies, we will see progress in the introduction of thetechnologies developed by the Group. I am certain that this willthen be reflected in the Group’s business performance.
In our initiatives in production activities, as well as focusing
efforts on reducing energy consumed in production at individual
plants, we are pursuing initiatives to replace some of their energy
consumption with solar power and other renewable energies.
Already, part of the power used in production at the Yokohama
Plant is being supplied by a solar power system. We are also
pursuing reductions in energy and CO2 in the transport of raw
materials and finished products. In addition to improving the
products themselves, we have also begun making improvementsin packaging and other areas. Further, we will pursue resources
recycling initiatives at our production sites and offices.
As well as contributing to the reduction of burdens on theenvironment, including the greenhouse gases (GHG) that are thecause of climate change, we believe that these initiatives will help
to reduce costs and expenses, thus contributing to thestrengthening of the Group’s business foundations.
Finally, our initiative in valuing people and communities
includes support for education, such as participation inendowment courses at universities and factory tours for school
children, as well as activities to protect regional environments,
such as conducting cleanups near our plants. At our Shiga Ryuo
Plant, we have endorsed the Mother Lake Goals (MLGs), which
are the Lake Biwa version of the SDGs, and are actively
participating in related activities.
For our employees, in our efforts toward diversity andinclusion, we are actively recruiting more women and promoting
female employees to management positions, as well as

proactively making improvements to the working environment andengaging in health & productivity m anagem ent. Ourachievements include the elimination of excessive overtime,receipt of the “Kurumin” logo that certifies us as a company that

supports child-rearing, and our selection in the 2022 CertifiedHealth & Productivity Management Organizations Recognition
Program (Large Enterprise Category).

Governance structure

Governance structure that separates supervisory and executive functions
The starting point of the Toyo Denki Group is our business principles that “prioritize ethics and contribute to the prosperity of customers and society as a whole.” In the same way, in corporate
governance, as well as recognizing the importance of compliancebased on these business principles, our basic policy is to consider, when necessary, management monitoring structures that respond to changes in the social environment, legal systems, andother areas, with the aim of achieving sound management.
We have adopted an operating officer system, in which theBoard of Directors has a supervision function and is mainly incharge of governance, while the Operating Officers are primarily
in charge of business execution. Further, in addition to the Boardof Directors’ supervision function, we have built a structure for theeffective functioning of the auditing function of the Statutory Auditors
and the Board of Statutory Auditors. Regarding Outside Directors,
pursuant to our independence guidelines for Outside Executives,
which have been established in line with the standards set forth
by the Companies Act and the Tokyo Stock Exchange, we electpersons who are capable of providing frank and lively exchangesof opinions and who can be expected to contribute to constructive
deliberations in the Board of Directors. Also, where necessary, we
enable the Outside Executives to obtain the required knowledge
and skills through such means as briefings from the individual

segments on the nature of their business and medium-to-longterm initiatives.
In the evaluation of the effectiveness of the Board of Directors
in the fiscal year ended May 2022, the overall assessment wasthat effectiveness had been generally ensured. However, room for
improvement was acknowledged in the areas of management andbusiness strategies, performance monitoring and evaluation/remuneration of management, and dialogue with shareholders andother stakeholders. Based on this evaluation, we will strive to improve the effectiveness of the Board of Directors going forward.
We will also provide executive training in the form of workshops
for all executives by inviting outside lecturers.
Our challenge going forward will be the promotion of women tosenior management positions, including to the Board of Directors,
and their participation in management. The active participation of
women is one of the focal points of our personnel system reforms
included in the medium-term management plan, for which thefiscal year ending May 2026 will be the final year. Through the recruitment of female employees and human resources development, we will pursue efforts to ensure that we will eventually
emerge as a corporate group in which women can flourish by advancing to senior management and onto the Board of Directors.

Message to our stakeholders“Our Heart and Technology for the Future”
The Company’s basic policy is to conduct ongoing and stable dividends. To respond to the trust placed in us by shareholders, we
are working tostrengthen the earning capacity needed
to ensure the source
funds for dividends
and have declared atarget payout ratioof 30%. In the fiscal
year ended May
2022, under our basic policy for dividend returns toshareholders of“maintaining a stable

and continuous return of profits,” we paid a year-end dividend of
30 yen per share, the same as for the fiscal year ended May
2021. Retained earnings will be effectively injected into growthinvestments, including capital and R&D investments.
The Group has sent out into the world numerous electricalequipment for railway vehicles and general industry, with the motor drive technologies that we have cultivated since our establishment at its core. The company slogan of the Toyo Denki Group is“Our Heart and Technology for the Future.” We will continue topursue business management that values people and technology
into the future.
We hope that our stakeholders will look forward to the development and expansion of the Group’s business and would like to
ask for their continued support.

Toyo Denki Seizo Report 2022

8

Value Creation Process at Toyo Denki Seizo

Core Values and Strengths

Consolidated basis (FY2021)

Output and Outcomes[Group Business Principles]Intellectual capital
Number of patents, etc. held
(Japan and overseas)(Patents, utility models, designs)

Prioritize ethics and contribute to the prosperity of customers andsociety as a whole
Encourage creativity and an enterprising spirit to meet thechallenges of the future
Build trust by focusing on quality first290

R&D spending 710million yen

Planning/
development/design

Human capital

Number of employees 1,193(Men: 1,058; Women: 135)

Social and related capital(non-consolidated)

Number of customers
393companies

Needs
and
issuesidentification

Number of suppliers

668companies

Number of countries supplied

30

Manufacturing capital

After-sales
service[Products and Services][Sustainability]

Transportation Business Segment

Initiative in Products and Services

Electrical equipment for
railway vehicles
Railway power storage
systems
Bus door operating
equipment

Industry Business Segment

Achievements and reliability in
100 years of business
Tireless challenge to improve
technologies
Full commitment to facing ourcustomers squarely
Close networks with suppliers
Development of manufacturing
professionals

Number of manufacturing sites
Japan 5

Procurement

Automobile testing systems
Production and processing
equipment systems
Power generation and social
infrastructure systems
Car-mounted electricalequipment
ICT Solution Business Segment

Production

Railway station operating
equipment systems
IoT solutions

Overseas 5(affiliates)

Energy consumption 2,346kl

Financial capital
Total assets

46.9billion yen

Shareholders’ equity ratio

46.9%[ Fundamental Policies of the Medium-term Management Plan ](FYE May 2023 through FYE May 2026)

1. Expand new businesses and products
2. Thoroughly improve the earnings structures of existing businesses
3. Improve asset efficiency with an awareness of capital costs
Revitalization and transformation of Toyo Denki

External Environment
Changes in demographics
Living with COVID-19 now the norm

9

Initiative in Production Activitie

Reduction of environmental
footprint through energy saving,
decarbonization, andimprovement of recycling rates
Initiative in Valuing People and Communities

Realizing the happiness of
employees and their families
Development and production ofgood members of society andcorporate citizens
Contribution to local communities

Sales

Annual capital spending
310million yen
Natural capital

Development of the world’s
railway infrastructure
Development of manufacturing
and infrastructure around the world
Creation of new services throughadvanced telecommunication
technologies

Increase in geopolitical risks
Rising costs of resources and energy

Expand out into the whole world,
including the Chinese and Asianmarkets and the United States, as a
global brand
Human rights considerations, human capital management
Carbon-free business management, arrival of theclosed-loop economy
Acceleration of technical innovations

Our Heart andTechnology for the
FutureToyo Denki Seizo’s goal

Long-term
VisionHelp build social and industrial infrastructure that is considerate of the
global environment, with a focus on exceptional motor drive technologies

Input (corporate resource)

Toyo Denki Seizo Report 202210

Special Report Medium-Term Management Plan

Message from the Executive Responsible for Management Planning

Special Report

Medium-Term Management Plan
The Group has established the medium-term management plan (FYE May 2023 through FYE May 2026) as follows.

The Company was impacted greatly by the prolonged COVID-19
pandemic, with both net sales and profits on a consolidated basis
falling to their lowest level in 20 years in the fiscal year ended

About the fundamental policies
Because we were unable to obtain sufficient earning capacity to cope with the major changes in the business environment, including thedownturn in railway passenger numbers during the COVID-19 pandemic and the revision of testing equipment due to the electrification of
automobiles, the result of the previous medium-term management plan “Revitalize 2020/2022” was a major shortfall from the plan’s targets.
In light of the challenges faced by the Company that have been revealed by these results, for the next medium-term management plan (FYE
May 2023 through FYE May 2026), we will pursue initiatives to accomplish the “revitalization and transformation of Toyo Denki,” in our goal of
the “recovery and improvement of corporate value.”fundamental
policies

1. By expanding new businesses and products
2. and thoroughly improving the earnings structures of existing businesses
3. as well as improving asset efficiency with an awareness of capital costs,
we will drastically strengthen our management foundations with the aim ofachieving ROE of 8% or more as soon as possible.

About numerical target
Positioning this fiscal year, the first year of the plan, as a year in which we will thoroughly implement structural reforms to improve
profitability, we will pursue initiatives for the “revitalization and transformation of Toyo Denki.”
For the medium-term management period toward FYE May 2026, based on the business environment along with the progress andoutcomes of structural reform initiatives this year, we will formulate numerical targets for management that we can commit to our valued
stakeholders, which we intend to announce by July 2023.

About priority structural reform initiatives this fiscal year

1 Initiatives for the expansion of new businesses and products

Strengthen and expedite development of new business areas across the company centered on theDevelopment Center newly established this fiscal year

(Creation of technologies and products that contribute to a decarbonized and sustainable society and discovery of new business fields)

Expand the business domain from railway station operating equipment to ICT in general through the ICT
Solution Business segment reorganized this fiscal year

(Establishment of an ICT business area unique to the Company through the fusion of power electronics and ICT)

2 Thoroughly improving the earnings structures of existing businesses
3
11

Drastically strengthen profitability of both factories and sales from the viewpoint of improving production
efficiency and securing appropriate selling prices
Strengthen the operation of existing businesses with a greater focus on profitability, in order to increase
investment in R&D and human resources

Improving asset efficiency with an awareness of capital costs

May 2022.
As the President mentioned in his message on previous pages,
to solve the challenges facing the Company that were revealed bythese results and to recover and improve corporate value, in themedium-term management plan (covering FYE May 2023 to FYE
May 2026), which kicked off this fiscal year, we are pursuing initiatives under a basic policy founded on three pillars:(1) expansion of new businesses and products;(2) thorough improvement of the earnings structures of existing
businesses; and(3) improvement of asset efficiency with an awareness of capital costs.

Kenji Tanimoto

We are pursuing initiatives for the “revitalization and transformation of Toyo Denki” in this medium-term management plan aspart of our renewed focus on efforts toward sustainability. In the
production of this Toyo Denki Seizo Report 2022, our emphasis
has been on conveying the details of these initiatives to our many
stakeholders in a way that is as easy to understand as possible.
In particular, we aimed to convey more concrete goals and roadmaps of our sustainability initiatives, while re-affirming the direction in which the Company is heading, such as what we want tocapitalize on as our strengths and what kind of products, services,and value we want to provide to our customers and to society. I
hope that our stakeholders offer frank opinions and help us to

Directorpolicies stated in the medium-term management plan. Regarding
our financial strategy, while maintaining our sound financial foundations of shareholder’s equity ratio of 46.9% and DE ratio of0.53 in FYE May 2022, we will step up our investment, which had
been curtailed since the large-scale investment (approx. ¥7 billion) in the Shiga Ryuo Plant (operations commenced in June2018). Our particular focus will be on capital investments andR&D investments for the expansion of new products and businesses and investment in human resources.

further enhance and improve the content of these reports.
Finally, I would like to explain our shareholder returns and theDividend/payout ratio per share
Common dividend

financial strategy on which our sustainable management will bebased.

(yen)

50

With our basic policy on shareholder returns to pay continuous

40

and stable dividends, we are working to enhance returns with a30target payout ratio of 30%. However, our greatest challenge will

20

be to raise our ROE from its current low level of less than 5% to

10at least 5% and to the 8% level as soon as possible. To achieve

0

this, we will forcefully pursue initiatives based on the three basic

Commemorative dividend

Payout ratio
(%)

50
20
68.2
30

100

80

30
39.9

30

30

30

24.8

27.4

2020/52021/5

30

60

33.5

40
20
0

2018/5

2019/52022/52023/5(Forecast)Continue to reduce cross-shareholdings and idle assets
Review capital efficiency of each business and consider reallocation of corporate resource

Toyo Denki Seizo Report 2022

12

Business Report

Business Report

Transportation Systems Segment

Business of the Toyo Denki GroupThe Toyo Denki Group operates three businesses, namely, Transportation Business segment, Industry Business segment,
and ICT Solution Business segment. We also conduct new business development in our Development Center.
In the Transportation Business segment, we are a leader in electrical equipment for railway vehicles. The Industry
Business segment is centered on industrial electrical equipment such as motors and inverters for production equipment
and machinery. The ICT Solution Business segment develops and manufactures railway station operating equipment andIoT solutions. The Development Center pursues initiatives for the expansion of new businesses and products.
The Group is contributing to the prevention of global warming and the realization of a recycling-based society throughthe manufacture of highly energy-efficient products.

Transportation Business Segment
Main products

Fiscal 2021
Percentage of total consolidated
net sales

30,15864.5%

19,456 million yen

Electrical equipment for railway vehicles
Propulsion inverters / auxiliary power supplies / traction motors /driving gear units / pantographs / total train communication systems /passenger information display systems / twin disk couplings / door
operating equipment / high speed circuit breakers, etc.
Railway power storage systems
Bus door operating equipment

Support railway transportation that connects
people and cities with safety and trust, throughmanufacturing that merges electronics
technologies and mechanical technologies in ahighly advanced manner
Naoki Okuyama

General Manager of Transportation Business Unit

Business environment and strategy
While some recovery of economic activity can be seen with the easing of restrictions on activities as part of infection countermeasures,
there continue to be price rises of raw materials and supply shortages of semiconductor chips. Even further corporate efforts and activities to support the railway operators have become necessary.
In the domestic market, with the recovery in railway passenger

million yen

transport, there is a certain level of demand for rolling stock produc-*Net sales of 30,158 million yen
includes 9 million yen in otherbusiness revenue.

tion and equipment renewal, and receipt of orders remains firm. The
production and sales divisions are working together to avoid the impact of our most pressing issue of the protraction of delivery times
for parts and materials.
In overseas markets, recovery of demand can be seen in China,
but we are keeping a close watch on the impact of the resurgence of
infections after the easing of COVID-19 infection countermeasures.

Industry Business Segment
Main products

32.8%

9,902 million yen

Automobile testing systems
Various testing devices (durability, vibration, noise, etc.) for automobile
components (engine, transmission, differential gear, etc.) / testing
devices for automobiles (efficiency, driver-assistance systems, etc.)
Production and processing equipment systems
For printing machinery/ tire and rubber processing machinery /paper manufacturing machinery / films processing machinery, etc.
Power generation and social infrastructure systems
Emergency generators / continuous-use generators /generating equipment for distributed powersources / water supply and sewage equipment
systems, etc.
Car-mounted electrical equipment
For passenger vehicles / construction machinery
OthersElectrical equipment for lifts, etc.

13

ICT Solution Business Segment
Reorganized from the Information Equipment Systems
segment in June 2022

Main products

2.6%

790 million yen

Railway station operating equipment systems
Commuter pass vending machines / composite ticket vending
machines / mobile devices for conductors / compact vending
machines / judgement engines, etc.
IoT solutions(Cloud-based remote monitoring and control systems)

We continue to receive inquiries from Southeast Asian countries andthe North American region, and the sales, engineering, and production divisions are working together to respond to them.
We support initiatives by the railway operators to achieve theSDGs and carbon neutrality. Specifically, we will strive to roll out theE3 Solution System, our railway power storage equipment that will

Results for FYE May 2022
Orders Received

18,800 million yen (Down 0.1% year on year)
25,7122020
2021

18,8182022

18,800Net Sales

19,456 million yen (Down 9.6% year on year)
24,269

2020
2021
2022

21,52819,456

Segment Income

2,190 million yen (Down 1.0% year on year)
2,474

2020
2021

2,211

2022

2,190

realize energy saving and stable transport through the effective useof electric power.

Main actions
In addition to our ongoing pursuit of safety and reliability of electrical equipment for railway vehicles, which operate in harsh conditions, we will devote
efforts to reducing our environmental footprint, including energy saving, maintenance saving, and noise reduction, and work to provide environmentallyfriendly products and services.
In the promotion of digital transformation (DX) in product maintenance, we have started providing remote monitoring systems for condition-based
maintenance (CBM), which predicts product age-related deterioration and breakdown timing by monitoring conditions using AI and data science. We
are also placing efforts into smart maintenance that aims for efficiency improvement and preventive maintenance with appropriate inspection cycles.
We have launched maintenance businesses for delivered products in both North America and China. By steadily capturing the growing demand formaintenance and servicing, we will strive for the expansion of our business and the stable provision of services.

Toyo Denki Seizo Report 2022

14

Business Report

Business ReportIndustrial Systems Segment

ICT Solution Business Segment
Reorganized from the Information Equipment Systems segment in June 2022

Deliver technologies and gratitude tocustomers with highly precise, highly
responding and highly efficient powerelectronics, for realization of an environmentfriendly society
Business environment and strategy
With the recovery in the economy after the COVID-19 pandemic,
capital investment in the manufacturing industry is on a path torecovery. In fiscal 2021, although there was still visible impact ofrestrictions on sales activities, such as overseas travel restrictions andvoluntary restraint from meetings with customers, those restrictions areeasing, and we can expect new demand for capital investment. On theother hand, the effects of rising prices of raw materials and shortagesof semiconductor chips and other components continue to be felt, andthe production and sales divisions are keeping each other closely
informed to handle this situation.
In the area of automobile testing systems, with the rapid shift
toward electric vehicles, some automakers and parts
manufacturers are considering revising the content of theirconventional testing systems. Our unit is proceeding with proposals
in response to these kinds of revisions.
Further, amid the trend toward carbon neutrality, expectations
for power generation using natural energy are on the rise, and weare making proposals to meet those expectations.
Amid such changes in the environment, we will work together
with the new Development Center that was established in June
2022 to actively engage in new areas with the prospect ofcontributing to sustainability.

Toshihito Nakanishi
General Manager of Industry Business Unit

Results for FYE May 2022

Business environment and strategy

Orders Received

10,688 million yen (Up 0.9% year on year)
11,1982020
2021

10,5972022

10,688Net Sales

9,902 million yen (Down 6.1% year on year)
13,023

2020

10,541

2021

9,902

2022

Segment Income

477 million yen (Down 33.4% year on year)

Although railway passenger numbers in Japan are not expected toreturn to pre-pandemic levels, they are gradually recovering as
people learn to live with COVID-19, and capital investment related
to railway station operating systems is starting to recover.
In particular, the market is expected to expand for systems that
contribute to improved rail passenger services and for MaaSrelated services
Against the backdrop of dramatic advances in technologies suchas cloud computing, communications, data analysis, and AI, as well
as working population shortages and value creation using big data,
the IoT market is starting to expand into new areas. These include
countermeasures against the deterioration of infrastructure
equipment, particularly in the manufacturing, public, andtransportation sectors, upgrades in transportation infrastructure,and supply chains.
The ICT Solution Business segment, which was reorganized inJune 2022, will work toward the active expansion of businessfields in these areas.

Orders Received

949 million yen (Up 49.8% year on year)
1,611

2020

633

2021

949

2022

Net Sales

790 million yen (Down 26.0% year on year)
1,772

2020

1,067

2021

790

2022

Segment Income

142 million yen (Down 46.5% year on year)
460

2020

718

2021

Shingo Furuzawa
General Manager of ICT Solution Business Unit

Results for FYE May 2022

1,008

2020

2022

Support the improvement of customers’
operational efficiency, convenience, and added
value and the construction and operation of
DX-MaaS infrastructure with ICT solutions thatcombine advanced ICT and electronics.

267

2021

477

2022

142

Main actions

Main actions

We will expand into areas where we can contribute to sustainability, such as decarbonization.

The ICT Solution Business segment is a segment that integrates railway station operating systems and IoT solutions.

In the area of automobile testing systems, to respond to the shift toward electric vehicles, in addition to working on increasing the output of battery

In railway station operating systems, the combination of advanced ICT and mechatronics will simultaneously achieve improved convenience forsimulators, we made our first delivery to a customer of the in-wheel-well dynamo that we had been developing. With representatives of the automakers

railway patrons and labor saving for railway operators. We will develop platforms, devices, and applications for the MaaS era with the keywords of

who attended trade exhibitions and factory tours expressing an interest in this product as a tool for various testing of automobiles, we will makecontact-free, cashless, and thin client, and provide a seamless mobility environment.

modifications in line with their feedback and aim for its use in the testing of driver-assistance systems.
Overseas, our Thai subsidiary, SIAM TOYO DENKI, which was established in 2019, is achieving results in the expansion of its customer base. Pandemic
restrictions are easing, and we are proceeding with the commercialization of the 690V motor and inverter for overseas markets, with the aim of rolling them out in
the Asian region. In Japan as well, we will respond to the increase in inquiries for our products accompanying the recovery in capital investments in energy saving

In IoT solutions, we will provide solutions that monitor and control mobile entities and remote equipment to realize operational efficiency
improvements, maintenance optimization, preventive maintenance, and condition-based maintenance (CBM) with cloud services and systems services
for mobile communications.
We will strive to expand the ICT Solution Business segment by providing our customers with solutions that generate added value.

and other areas by stepping up our efforts toward small hydropower generation and wave power generation, in which the Company has a strength.

15

Toyo Denki Seizo Report 2022

16

Business Report

TOPICS

New Business Development/Intellectual Property
Development of new business fields across the entire company
The new Development Center established in June 2022 is playing a central role in our efforts to strengthen and expedite
development of new business fields across the entire company.

Industry Business×

ICT Solution Business×

Development Center

Power generation systems using recyclable energy
Amid the trend toward the realization of carbon neutrality worldwide, we will provide environmentally friendly distributed power generation systems(power generation + power conditioner panel) using natural energy generated by hydropower, wind power, ocean energy power, and such.

Transportation Business×

ICT Solution Business×

Development Center

Real-time condition monitoring system for railways
We built and delivered a system that can monitor railway
operational condition and behavior in real time over the public
cloud by retrofitting our IORemoter to the railway vehicle’s VVVF
device. This system has realized the conversion of the equipment
installed in railway vehicles to an IoT device with simple retrofitting.
Through assistance with energy consumption reductions
achieved by data collection and analysis for the improvement ofmaintenance performance in the railway sector, we will work torealize energy- and maintenance-saving railway systems.

Industry Business×

Development Center

Development and mass production of custom-made motors
Capitalizing on the power electronics technologies and production technologies wehave cultivated for railway vehicles and general industry, we are pursuing theexclusive development of electric motors and invertors for mobile entities, optimalWith our extensive track record of over 100 deliveries, we are able toprovide electrical equipment suites that include power transforming
equipment to meet new needs. Such needs include power supply for selfsustained operation during loss of grid power, such as in emergencies, andoutput control response to meet grid-side requirements, with optional
demand monitoring and control solutions.

Industry Business×

Development Center

Evaluation equipment compatible with advanced driver-assistance systems (ADAS)
Using the in-wheel-well dynamo that we developed in 2020, we are pursuingfurther development with the aim of providing next-generation vehicle testing
devices that are suitable for testing autonomous driving and advanced driverassistance systems.
Through the ongoing development of new functions that incorporate thewishes of users to whom we have already delivered our products and people
who have shown an interest at trade exhibitions and other events and that also
reflect future market trends, we will support the development of automobiles
and help to realize a decarbonized and sustainable society.

design of built-in electricals for motors, pumps, and production machinery, and otherdevelopments as motors tailored to customer needs.
By handling everything from customized prototyping to small-lot mass production for downsizing, weight reduction, inverter-converter control,
environment resistance, efficiency optimization, and advanced functions, we will realize the development of products with higher added value.

ICT Solution Business×

Transportation Business×

Development Center

Cashless payment terminal solutions
We will provide terminals that offer a wide variety of payment methods, including
touch payment, code payment, and e-money. Because these terminals have an inbuilt
printer and are portable, they can be used in any location and for any situation.
These terminals can be used for various applications other than as conventional
supplementary on-board ticket issuing devices, and we can provide logistical systems
using cloud services. We will also build commercial applications in line with customers’ preferences.

17

Intellectual Property
Our intellectual property is placed as a key
corporate resource. Our intellectual property
department is responsible for the management of intellectual property and the development divisions in each business unit andthe Development Center actively apply forpatents and utility models.

Patent applications granted
Patent applications:
Granted cases:

Japan
Japan

Overseas
Overseas(Applications)

60

51
4

42

40

5

33
20

9 2

9

47

36

36

37
24

27

2018/5

2019/5

31

29

34

2

0

15 16

0 3

17

21

15 16

14 18

2021/52022/530
2020/5

Toyo Denki Seizo Report 2022

18

Sustainability

Establishment of Sustainability Policy

Sustainability Roadmap

Considering efforts for the Sustainable Development Goals (SDGs) as anLong-Term Vision

important management issue, the Group has formulated theRealize social and industrial infrastructure that is
considerate of the global environment, with a focus on
exceptional motor drive technologies

Sustainability Policy as a guideline for specific actions.

Environment

Basic policy
The Toyo Denki Group states its commitment to contributing to society in the business principles and initiatives to protect the global
environment as its priority task in the environmental philosophy. The Group has formulated the Sustainability Policy as a guideline forits efforts to realize these principles and contribute to the sustainable development of society.

FYE May 2050 Targets
Scope1&2
CO2 emissions

Corporate principles
Business Principles
The Toyo Denki Group will practice thefollowing business principles to ensure thegrowth of its business, earn the confidence
and understanding of shareholders andstakeholders, and foster the development of
its employees:
Prioritize ethics and contribute to theprosperity of customers and society as a whole
Encourage creativity and an enterprisingspirit to meet the challenges of the future
Build trust by focusing on quality first<Action Guidelines>
We will continue to provide products and services that are considerate of the burden on the global
environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”
1. We will comply with all environmental requirements including those under the relevant laws and regulations.
2. We will strive to minimize environmental burden through a reduction of energy
consumption and other measures at all stages of product lifecycle, namely planning,development, design, production, sales, use and disposal.
3. We will establish and execute a system to continuously promote activities to protect the global environment.
4. We will raise environmental awareness among individuals through enlightenment activities within the Group.

Formulation of Sustainability
PolicyCompany Slogan of the Toyo Denki Group2021

Sustainability Policy
Threeperspectives

Initiative in Products and Services

Initiative in Production Activities

Initiative in Valuing People and Communities

PolicyWe will use the Group’s exceptional
technologies to provide products andservices that contribute to the realization ofa sustainable society.

We will strive to minimize environmental
burden in production activities and continue
to protect regional environments.

We will value our employees and the local
communities and carry our aspirations into
the future.

Supply of decarbonized energy, such as
small hydroelectric power generation
Popularization of energy-efficienttransportation, such as railroads andelectric vehicles
Efficiency improvement of electricalequipment and the spread of power
storage systems
Improvement of safety through a shift tobarrier-free transportation systems
etc.

Reduction of energy consumption in
production
Study of solar power generation anddecarbonization of energy currently used
Reduction of energy consumption duringtransportation of materials and products
Recycling activities at production sites
and officesetc.

Support for education through university
endowment courses and offering factory
tours for school students
Promotion of diversity and inclusion
Promotion of health and productivity
management and well-being
Protection of regional environments andcontributions to nature conservation, etc.

CO2 emissions

Scope1&2
CO2 emissions

Established the Sustainability
Committee and theSustainability Promotion Office2022

30%reduction

10%reduction(Compared with FYE May 2018)

Track emission volumes and promote reduction
Scope3CO2 emissions

2026

2050
2030
FYE May 2030 Targets

FYE May 2026 Targets

2.9% or more

Ratio of female employees(Administration divisions /Assistant manager level)

25% or more

Ratio of female employees(Administration divisions /Manager level)

8% or more

Ratio of male employees
taking childcare leave

50% or more
19

(Compared with FYE May 2018)(Compared with FYE May 2018)

Percentage of employeeswith disabilities
Certified as 2022 CertifiedHealth & Productivity
Management Organization(Large Enterprise Category)%
reduction

Scope1&2

FYE May 2026 Target

Environmental Philosophy
The Toyo Denki Group sets initiatives to protect the global environment as its priority
task and contributes to the development of a sustainable society.

Our Heart and Technology for the Future

Specificactions

100

FYE May 2030 Targets

Percentage of employeeswith disabilities

3.0% or more

Ratio of female employees(Administration divisions /Assistant manager level)

30% or more

Ratio of female employees(Administration divisions /Manager level)

15% or more

Ratio of male employees
taking childcare leave

70% or more

Human
CapitalToyo Denki Seizo Report 2022

20

Sustainability

Initiative in Products and Services
We will provide products and services that help build a sustainable society using the exceptional technologies of the Group.
Business Category

Transportation
Business
Segment

Business Description

ICT Solution
Business
Segment

21

Focus SDGs

ExamplesElectrical equipment
for railway vehicles

Contribute to the world’s railway infrastructure throughthe supply of high-quality electrical equipment for
railway vehicles[Ongoing actions]
Adoption of highly efficient semi-conductors and smaller, lighter propulsion systems (drive systems such as VVVF inverters and low-noise motors)
Establishment of condition-based maintenance (CBM) with real-time monitoring of product operation status and analysis of accumulated data to prevent product failureand save manpower and labor
Shift to barrier-free transportation with various electrical equipment optimally designed for light rail vehicles (LRV), and ramp and door-step devices for railway vehicles[Future actions]
Promote the development of autonomous driving technology for the realization of driverless driving
Establish a new maintenance model using digital twin technology
Improve recyclability and eliminate specified hazardous substances with promotion of environmentally conscious design

Railway power storage
systems

Contribute to energy-saving and stable railway
transportation with the effective use of regenerative
power[Ongoing actions]
Battery storage of regenerative power generated by train braking and supply of power to trains in emergencies[Future actions]
Further reduce energy usage by introducing systems that are combined with solar power in railway track facilities
Build new storage systems, such as a superconducting flywheel railway power storage system

Automobile testing
systems

Support the development of next-generation vehicles
with testing systems that use industry-leading
high-performance motors and inverters[Ongoing actions]
Popularization of next-generation automobile testing systems using in-wheel-well dynamo, which saves space and is quiet, suitable for various driving test evaluations
Development and supply of testing equipment in response to the shift to automobile electrification, such as ultra-high-speed dynamos and high-capacity battery simulators[Future actions]
Adapt in-wheel-well dynamo to advanced driver-assistance systems (ADAS) and popularize autonomous driving systems

Contribute to manufacturing around the world by
providing customers with optimal control systems using
a wealth of technologies and products[Ongoing actions]
Construction of advanced systems that capitalize on high-efficiency motors and invertors
Improvement of energy-saving performance and maintainability of production facilities with economical and eco-friendly Eco-Drive Motor (ED motor)[Future actions]
Design products with better recyclability and develop rare-earths-free motors and control systems for them
Expand RoHS compliant products and promote responses to REACH regulations

Power generation andsocial infrastructure
systems

Supply power generation systems for continuous/
emergency use and generators using natural energy tosupport public infrastructure[Ongoing actions]
Establishment of power generation infrastructure by providing continuous-use generators to developing countries
Popularization of small hydroelectric power generation systems and biomass generators
Contribution to BCP preparation by supplying emergency generators for government offices, financial institutions, etc.
[Future actions]
Realize small and highly efficient pumps using Eco-Drive Motor (ED motor)
Develop emergency generators using hydrogen and biofuels
Popularize distributed power supply systems (mechanism in which power is supplied by small-scale generators distributed near consumption areas) for local production
and local consumption of energy
Participate in the demonstration of wave power generation and consider its commercialization

Car-mounted electricalequipment

Contribute to the development of electric vehicles (EVs)and hybrid electric vehicles (HEVs) with power electronics technologies[Ongoing actions]
Supply of on-board electrical equipment in response to the shift to electrification, such as for construction machinery[Future actions]
Promote recycling of used invertors, motors, and batteries of EVs

Railway station
operating equipment
systems

Achieve greater convenience for railway patrons andlabor-saving for railway operators by combining
advanced ICT and mechatronics[Ongoing actions]Improvement in convenience of railways by popularizing railway station operating equipment (commuter pass issuing machines and portable terminal devices for conductors)[Future actions]
Provide low-price ticketless systems to areas where IC has not yet been introduced, using QR codes, touch payment credit cards, and facial recognition technology
Provide QR code payment systems shared by private railway companies and online booking services for commuter passes

Realize monitoring and control of mobile entities andremote facilities with a variety of simple, inexpensive
IoT/M2M solutions[Ongoing and future actions]
Provide train operation information systems and bus location systems to improve the convenience of transportation systems
Status monitoring, alarm notification, and remote control of generators using IoT remote monitoring systems
Prediction and early detection of natural disasters (heavy rains, flooding and inundation, landslides) using IoT remote monitoring systems
Conduct remote monitoring and control of agricultural greenhouses, poultry farms, pig farms, and onshore aquaculture facilities to support stable agricultural production
Conduct remote monitoring and control of frozen food trucks and refrigerated containers to support safe and stable distribution of foods

Production andprocessing equipment
systems

Industry
Business
Segment

Value We Offer

IoT solutions

Toyo Denki Seizo Report 2022

22

Sustainability

Initiative in Production Activities

Installation of a solar power generation system at the Yokohama Plant

We will strive to minimize environmental burden in production activities and continue to protect regional environments.

Environmental
Philosophy

The Toyo Denki Group sets initiatives to protect the global environment as its priority task
and contributes to the development of a sustainable society.
We will continue to provide products and services that are considerate of the burden on the global
environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”

ActionGuidelines

1. We will comply with all environmental requirements including those under the relevant laws and regulations.
2. We will strive to minimize environmental burden through a reduction of energy consumption and other measures at allstages of product lifecycle, namely planning, development, design, production, sales, use and disposal.

We installed a solar power generation system (500 kW) on the roofof the Yokohama Plant in 2012. In recent years, the system has generated 600,000 to 650,000 kWh of electricity annually, all of whichis consumed internally. This contributes to reducing greenhousegas emissions (equivalent to approximately 300 tons of CO2 peryear) and curbing global warming.
The Company was awarded by
Yokohama City in recognition of Solar power generation system atthis accomplishment.
the Yokohama Plant

4. We will raise environmental awareness among individuals through enlightenment activities within the Group

800
600

839.2
680.3
176.5
647.2
36.0
31.6

400

A sustainable society as envisaged by the Company is the combination of a “low-carbon society,” a “recycling-based society” anda “nature-symbiotic society.”
The environment technologies of the Company have produced
numerous products that contribute to energy conservation, including
high efficiency motors and inverters that capitalize on the amalgamation of our outstanding motor drive technology and other state-of-theart technologies. In the meantime, the Company has been striving toconserve resources through not only the efficient use of energy but
also the reduction of the size and weight of its products.
Decarbonized society
Implementation of measuresagainst global warming

Recycling-based society
Promotion of 3Rs(reduce, reuse, recycle)

Nature-symbiotic society
Conservation of biodiversity

Energy conservation throughthe Company’s technologies
and products
Energy conservation in
production activities
Use of sustainable energy
Improvement of logistics
efﬁciency
Proper treatment of wastes
Reduction of amount of ﬁnal
disposal of wastes
Proper management ofchemical substances
Cleanup around ofﬁces

Environmental Management System
In order to tackle environmental issues on an independent and continuous basis, the Company has developed and operates an environmental management system and thereby obtained ISO 14001
certification. This certification has been acquired for all offices andthe production bases Yokohama Plant and Shiga Ryuo Plant.

Years of ISO 14001 certification

Shiga Ryuo Plant*
2001

Yokohama Plant(Unit: 10,000 kWh)

1,000

Yokohama Plant
2004

200

Extended to all offices
2010

615.6

644.3

662.7

2016

2017

2018

751.6
171.4

712.5
179.3

565.6

580.2

533.2

2019

2020

2021

Yokohama Plant

500

400

Initiatives to reduce greenhouse gas (CO2) emissions

300

The Company is promoting energy conservation at each of its
production bases and offices to reduce its CO2 emissions. At the
production bases in particular, we are promoting power-savingand streamlining at production facilities. In addition, the Yokohama
Plant uses solar power generation for peak shaving of power demands.

200

294.1

350.0

443.4
74.3

369.1

100

Total amount of shift

5,750
6,990
6,490 7,200
7,000
6,800
6,700
4,520
6,600
6,150
6,000
5,800
5,300
8,000

4,000
2,000
0
2016

2017

2018

2019

2020

2021

(year*)

Initiatives for Reducing Disposed Waste as Well as Recycling
Main actions(year*)

Shiga Ryuo Plant (formerly Shiga Factory)

408.2
80.2

424.7
86.1

413.4
89.9

328.0

338.6

323.5

The Company has been thoroughly implementing waste processing rules, sorting metal waste, and recycling paper resources. As
a result, its landfill waste rate was 1.7% in fiscal 2021. The volume of landfill waste at the Yokohama Plant has been reduced tothe previous level due to the completion of large-scale maintenance.
Output of general and valuable waste
General waste output
Valuable waste output

(t)

600

351.6

0
2016

2017

2018

2019

2020

2021

(year*)

Total CO2 emissions
5,000

4,000
3,000

4,905
4,097
3,895
183
161

2,000
1,000

0
Yokohama Plant

3,734

3,914

933

4,185
806

4,184
774

3,410

2017

2018

(t)

15

4.1
2017

2018

2019

2020

2020

2021

Yokohama Plant

Shiga Ryuo Plant(year*)

2021

5

5.0

5.0

(year*)

Volatile organic compounds (VOCs) emitted as a result of ourbusiness activities are adequately controlled and the amount ofemission is monitored under the Pollutant Release and Transfer
Register (PRTR).
We will further engage in the reduction of waste through suchmeasures including using non-VOC materials and implementing
recovery and reuse of solvents. PCB waste is also subject to adequate control, storage and disposal in accordance with Japan’s

2016

2017

7.2
3.2

6.3
0

Initiatives for Control over Chemical Substances

12.4
1.1

10.4

10

2,899

0
2016

2019

Volume of landfill waste
3,749
850

3,972
3,379

2016

Shiga Ryuo Plant (formerly Shiga Factory)

Shiga Ryuo Plant
Shiga Ryuo Plant

368.3

186.2

150

Yokohama Plant
Yokohama Plant

450.6
408.2
48.8
55.1 324.8
301.4
36.9
36.4
401.8
353.1
287.9
265.0
142.3
135.4
118.8
112.4
99.2
19.8
16.6
17.6
10.9
122.5
95.8
107.9
117.8

450
300

(t)

As described in the sustainability roadmap (page 20), the Company has set a target of reducing CO2 emissions at the Company’s
production bases, the Yokohama Plant and the Shiga Ryuo Plant,by 10% in fiscal 2026. CO2 emissions per unit of production output in fiscal 2021 increased by 3.6% at the Yokohama Plant and9.5% at the Shiga Ryuo Plant due to lower production output
caused by COVID-19, against the target of 1% reduction year on
year. The Company will continue to make efforts to reduce CO2
emissions per unit of production output by 1% year on year in thenext fiscal year.

743.9
178.3

Total energy input (gas)(Unit: 1,000 m3)

Targeted reduction of CO2 emissions and progress status

Total amount of air emissions

10,000

Shiga Ryuo Plant (formerly Shiga Factory)

0*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Initiatives to Prevent Global Warming

Notification volume for Pollutant Release and Transfer Register (PRTR) substances(kg)

Total energy input (electricity)

3. We will establish and execute a system to continuously promote activities to protect the global environment.

Aiming for Realization of a Sustainable Society

Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes.

2018

11.3

6.8

4.0
2019

7.1
0.3

2020

2021

(year*)

Quality Control – Providing Safe and High-Quality Products
Basic policy on quality control
The Company’s electrical equipment for rail vehicles is installed inmany rail vehicles. These extremely important products play a
direct role in ensuring the safety of human life and property*The fiscal year is from April to March of the following year *Figures for the Shiga Ryuo Plant include those of TD Drive Co., Ltd. from fiscal 2018.
*Prior to fiscal 2017, total energy input (gas) data is available only for the Yokohama Plant due to zero input of the Shiga Plant.
*Prior to fiscal 2017, data on output of general and valuable waste and volume of landfill waste is presented only for the Yokohama Plant.

23

Toyo Denki Seizo Report 202224

Sustainability

during rail transportation. In the Industrial Systems and Information Equipment Systems segments as well, the Company’s products and services are used in customers’ production facilities,
development sites and in the field of social infrastructure, andthey form the foundation supporting the sustainable developmentof a society that is safe and comfortable to live in.
In order to ensure the high quality of our products and services, the Company has established a quality policy, which is deployed at all production bases as we strive to maintain andimprove our human resources education, compliance with rules,
and our facilities.

Towards Just and Fair Procurement

Quality Policy
Quality assurance to satisfy our customers.
Challenge to achieve “zero” complaints.

Communication with suppliers

Promotion framework
With regard to quality control, each fiscal year the Company develops policies and the promotion framework aimed at further
maintaining and improving quality in each business unit, alongwith specific policies pertaining to the reduction of flaws and other issues.
The Company’s Corporate Quality Control Division works together with the quality control department or the quality assurance department in each business unit to put together a report on
the status of quality control and results in each unit. The report isdelivered to top management at the monthly Operating Officer Liaison Meeting where measures are debated and decided.
Furthermore, in the event that a flaw is discovered after a
product has been shipped, the necessary steps are swiftly taken,
mainly by the quality assurance department in each business unit,
while at the same time the causes that led to the flaw and its
mechanism are investigated, and this information is put into a database so that the information can be shared in-house in an effort
to prevent recurrence.

Quality Management System
The Company has created and operates a quality management
system at its production bases, the Yokohama Plant and the Shiga
Ryuo Plant, and has obtained ISO 9001 certification.
Year ISO 9001 certification obtained

Yokohama Plant
1997

Shiga Ryuo Plant*
2000

Extended to all offices
2005*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.

Acquisition of International Standards
High level of safety is essential for rail vehicles. UNIFE, the Association of European Rail Industry, established the International Railway Industry Standard (IRIS) in 2007 to ensure the quality of rail
vehicles.
In 2013, we became the first company in Japan to obtain an
IRIS certification for auxiliary power supply (SIV).

25

In 2014, we were also accredited to the China Railway Certification Center’s (CRCC) certification for driving gear units. CRCC, astate-owned enterprise set up in April 2003 after obtaining approval of the Certification and Accreditation Administration of thePeople’s Republic of China, is an organization that mainly manages the quality of railway products. It is necessary to obtain thiscertification to sell high-speed rail products in China.
We will continue to acquire international standards and further
expand our business globally.

The Company’s products possess various distinctive characteristics such as being individually built-to-order, manufactured in
multi-product small lots, and demanding high reliability. Therefore,
the Company can be affected by the performance of our suppliers
as a result of issues such as delays in supply due to fluctuationsin production quantity or delays in processing due to the quality of
products received.
In order to reduce these risks as much as possible, the Company carries out instruction and support related to quality, technology, and skills for our suppliers, as well as guidance for
improvement of manufacturing sites, in order to ensure stableprocurement of even better quality products. In addition, we actively promote information sharing through the “Toyo Denki Seizo
Cooperation Association” to which our leading suppliers belong.

Initiative in Valuing People and Communities
We will value our employees and the local communities and carry our aspirations into the future.

With Our Employees
Promotion of “health andproductivity management”
Striving to be a company where
employees can play active roles
in good physical and mental health, the Company promotes “healthand productivity management” together with the health insurance
association and labor union. With the “Health and Productivity
Management Declaration” in place, our efforts focus on the following six priority items.

Health and Productivity Management Declaration
The Toyo Denki Group expresses in its business principles its
commitment to “ensure the growth of its business, earn the confidence and understanding of shareholders and stakeholders,and foster the development of its employees.” Recognizing thatthe realization of the commitment involves each employee to bephysically and mentally healthy and able to play an active rolewith enthusiasm, the Company will support its employees toachieve good health.

Disease prevention, prevention of illness aggravation

Formulation of “Procurement Action Guidelines”(formulated in February 2016)

Procurement Action Guidelines
These guidelines indicate the codes of conduct that the Toyo
Denki Group’s executives and employees should observe in the
procurement of purchased parts and outsourced parts as required for the manufacturing of products ordered by customers(“procurement transactions”).
1. Procurement transactions shall be carried out in observanceof the laws of the relevant countries.
2. Information concerning suppliers in procurement transactions
shall only be obtained within the scope necessary for conducting procurement activities in accordance with contracts.
Furthermore, efforts shall be made to carefully manage andobserve the confidentiality of information gained through procurement transactions.
3. Personal interests with suppliers shall be prohibited in procurement transactions, including the lending and borrowingof money.
4. Receiving of support beyond the socially accepted practices
or receiving of money or inappropriate gifts or any other formsof personal rewards from suppliers shall be prohibited in personal transactions. In addition, forceful requests for any of theabove from suppliers shall be prohibited in procurementtransactions.

We will maintain a 100% participation rate for regular healthcheckups, improve the take up rate for specific health guidance
aimed to prevent adult diseases, and support the attendance offollow-up examinations.

Work-life balance
We are expanding systems that support flexible working styles toachieve a balance between work and home. In addition to aflextime system and annual leave on an hourly basis, we have arehiring system for employees who have to leave their jobs due tochildbirth, childcare, family care, spouse’s transfer, and other life
events. In addition, efforts are underway to establish staggered
commuting and remote work that are currently in place to prevent
COVID-19 infection as part of a permanent system.
In 2014, we were certified as a “company that supports child-rearing” and received the “Kurumin” certification logo
from the Tokyo Labor Bureau, in recognition of our efforts including an extensive
childcare-related scheme, educational activities related to work-life balance support, the creation of an environment inwhich it is easy to obtain childcare leave,
and the track record of male employees taking childcare leave.
We will continue to improve the child-rearing support program.

Promotion of health and safety activities andrealization of a comfortable working environment
To secure a safe working environment and achieve zero occupational accidents, we have in place the “Company-Wide Safety andHygiene Management Policy,” and the Safety and Hygiene Committee at each office addresses any issues at workplace. Information on the committees’ actions is shared at the Company-Wide
Safety and Hygiene Committee, which convenes quarterly, in order to raise the level of health and safety activities at each office.

Improvement of employee health, communication
promotion and support
We support employees’ voluntary health maintenance and improvement efforts, internal club activities, and social events ateach workplace. We also hold health events together with thehealth insurance association and labor union to improve thehealth of employees and promote communication.

Data concerning personnel and labor (at Toyo Denki Seizo K.K.)
Item

Unit
Total
Number of employees
Men Persons
Women
Ratio of female employees%
Total
Number of administrative professionals
Men Persons
Women
Ratio of female administrative professionals%
Overall
Average age
Men
Age
Women
Overall
Average years of employment
Men
Years
Women
Average annual salary
Yen
Turnover rate (within 3 years of joining the Company)%
Number of employees taking childcare leave
Persons
Number of employees taking family care leave
Persons
Number of temporary staff (including part-timers)
Persons

FYE May 2018
843
771
72
8.5
140
136
4
2.9
40.2
40.3
39.5
14.9
15.1
12.7
6,049,512
2.7
4
0
130

FYE May 2019
831
762
69
8.3
143
139
4
2.8
40.8
40.8
40.9
15.4
15.5
14.1
5,756,046
6.5
6
0
119

FYE May 2020
841
773
68
8.1
136
133
3
2.2
41.0
40.9
41.7
15.4
15.5
14.1
5,634,571
4.7
2
0
106

FYE May 2021
847
766
81
9.6
139
136
3
2.2
41.7
41.6
42.8
16.0
16.2
13.9
5,518,761
2.4
8
0
86

FYE May 2022
830
746
84
10.1
134
132
2
1.5
42.3
42.2
43.0
16.5
16.7
14.0
5,422,507
7.6
4
1
81

Notes

*Number of regular employees including Operating Officers, and number of special employees, temporary employees, contract
employees and staff on loan from other companies, etc.

Toyo Denki Seizo Report 2022

26

Sustainability

Prevention of mental health problems and support
for returning to work
We annually carry out stress checks on our employees to preventand detect mental health problems at an early stage. In addition,
we provide line care training for managers so that they recognize
the importance of communication and promptly coordinate withoccupational health staff at each office.

Health management of employees at overseas posts
In addition to properly conducting health checkups before overseas postings, we aim to regularly check the health conditions of
employees and follow up on the results of health checkups after
their postings.

Initiatives for employment of the disabled
Aiming to be a company where both the disabled and nondisabledwork together lively, the Company makes improvements to theworkplace environment and carries out workplace training. We
also offer work experience in collaboration with local support organizations and special-needs schools. The percentage of employees with disabilities at the Company is 2.84% (as of June 2022).

GovernanceContributions to Locai Communities

Governance

To Convey the Mission and Appeal of Toyo Denki

In an effort to continuously enhance its corporate value, the Company is striving to ensure transparency of management and compliance, along with the maintenance and operation of an adequate governance framework while reinforcing its risk management framework.

Receiving interns
We are committed to activities that raise awareness and appreciation of our manufacturing expertise by accepting interns from local technical high schools and providing them with hands-on
experience at manufacturing sites. This internship system serves
as an effective means of recruiting outstanding technical staff on
a consistent basis as some students from these schools apply for
positions at the Company.

Participation in university endowment courses andhands-on courses
We participated in endowment courses sponsored by the Yokohama Green Purchasing Network so that participants can deepen
their knowledge on history of railway and the environment throughour business activities.
We conduct lectures leveraging the know-how fostered throughoperations and our business activities in on-site training courses
held by educational institutions including universities.

Training and skill development of employees

Cooperation with Yokohama Kyodo no Mori FundWe aim to grow the capabilities of our employees and be a company where each and every one works as a professional.

The Company cooperates in small woodlands conservation activities led mainly by the city of Yokohama by donating part of theproceeds from vending machines installed at the Engineering
Center of the Yokohama Plant to the fund.

Education and training system
The Company’s education and training system is divided into level-specific training, individual training according to job types androles, a support program aimed at helping employees to obtainacademic degrees and official qualifications, and division education conducted by each division. Furthermore, new employees intechnical positions receive lectures and practical training at theTechnical Training Center for one year. They are assigned to each
workplace after receiving basic and specialized training for technical staff.

Factory tours
We normally conduct “factory tours” to provide opportunities formembers of local communities to actually see our manufacturing
facilities and products in order to develop deeper understanding
about the business operations of the Company. During these
tours, we inform the participants of our products as well as ouractions for environmental protection and factory facilities, in an effort to build up relationships built on trust with local communities.

of) Statutory Auditors work effectively and believes that the current system is sufficiently running.
Specifically, each of the following bodies and meeting bodies isin place to function effectively.

Corporate GovernanceOur basic policy on corporate governance
The Group’s business activities are based on the business principles that “prioritize ethics and contribute to the prosperity of customers and society as a whole.” We therefore strive to attainsound corporate management through strengthening and reinforcing corporate governance, fully appreciating the significanceof compliance based on corporate ethics. At the same time, we
review as appropriate our management monitoring system to ensure its conformity to the changes in the business environment
including social environment and relevant legislation.

We have corporate bodies established in accordance with laws
and regulations as well as the Articles of Incorporation, including
the General Meeting of Shareholders, Directors and the Board of
Directors, Statutory Auditors and the Board of Statutory Auditors,
and Accounting Auditors. To strengthen corporate governance, thesupervision and execution functions of the Board of Directors are
separated, through the adoption of a structure where the Board of
Directors is mainly in charge of governance, and Operating Officers are primarily in charge of business execution.
The Company strives to ensure that both the supervision function of the Board of Directors and the audit function of (the Board

As part of our “initiative in valuing people and communities,” employees at the Yokohama Plant and the Shiga Ryuo Plant regularly
conduct cleanup activities around theplants.
The Shiga Ryuo Plant also expressed its endorsement of the Shiga
Prefecture’s Mother Lake Goals(MLGs) and participates in river cleanup operations near Lake Biwa in cooperation with local communities.

Corporate governance framework
General meeting of shareholders

Accounting Auditors

Reporting
ReportingAppointments/dismissals
Legal audit

Board of Directors
Directors

Business audit

Instruction/reporting

Internal Control Committee(Secretariat)
Human Resources andGeneral Affairs Division(Contact for whistle-blowers)(Contact for legal consulting)

Reporting on
business execution

Appointments/dismissals

Reporting/decisions

Internal audit

Appointments/dismissals

Statutory Auditors
Reporting

Audit Division

ReportingBoard of Statutory Auditors

Accounting audit

Legal counsel(Contact for whistle-blowers)

27

The Company has meeting bodies including the Management
Strategy Meeting and Operating Officer Report Meeting. Throughthese bodies, specific matters related to their execution of duties
and critical management matters including those subject to thedeliberation of the Board of Directors are reported to the President
by Operating Officers and the general managers of business execution departments, deliberated and discussed preliminarily. In
addition, Outside Directors and Statutory Auditors attend thesemeeting bodies, as necessary. As for the matters discussed atmeetings, matters subject to the deliberation of the Board of Directors are decided by the Board of Directors and other matters
are decided by employees with business execution authority
through means such as circulars based on the Management Authority Rules.

Appointments/
reporting/recommendations
Whistle-blowings
Oversight
Whistle-blowings

President
Management Strategy Meeting
Operating Officer Report Meeting
National and Global Group Company Meetings
Instruction/reporting

Appointments/dismissals

Employees with exceptional manufacturing skills or expertise arerecognized as “Technical My Star” and assigned to instruct andtrain younger employees. Three employees of the Company haveaccepted Contemporary Master Craftsman awards from the Minister of Health, Labour and Welfare, and two have been awarded
to the Medal with Yellow Ribbon by the Japanese government.
Moreover, a large number of employees have become certified as
special-grade skilled workers.

Cleaning activities around the plants

At its regular monthly meetings as well as extraordinary meetings
held when appropriate, the Board of Directors, which is composedof seven Directors including three Outside Directors, discusses
and decides on important management matters such as reports
on Operating Officers’ business execution and matters to be decided solely at the discretion of the Board of Directors, while supervising the execution of duties by Operating Officers.
Management Strategy Meeting and Operating Officer
Report Meeting, etc.

Overview of corporate governance structure andreasons for its adoption

Appointments/dismissals

Skill transfer

Directors and the Board of Directors

Operating Officers
Instruction/reporting

Each business department
Instruction/reporting

Instruction/
reporting

Each Group company

Toyo Denki Seizo Report 2022

28

GovernanceStatutory Auditors and the Board of Statutory Auditors
The Board of Statutory Auditors is made up of four members including three External Statutory Auditors. Statutory Auditors oversee management by attending the Board of Directors’ meetings,
etc. and expressing appropriate opinions in the process of deliberating business execution reports from Operating Officers andmatters to be decided solely at the discretion of the Board of Directors. In addition, Statutory Auditors audit the business activities
and assets of the Company and Group companies in accordancewith audit policies and division of duties set by the Board of Statutory Auditors.
Voluntary committees
a. Nomination and Compensation Advisory Committee
Under the Board of Directors, the Company has in place theNomination and Compensation Advisory Committee, whose
members include Outside Directors. Its purpose is to list candidates for Directors and Statutory Auditors and nominate Operating Officers, and to ensure transparency and objectivity
regarding decisions on compensation for Directors and Operating Officers.
b. Internal Control Committee
The Internal Control Committee is in place under the Board of
Directors to develop a system stipulated in the basic policy ofinternal control systems, check the operation status, and conduct constant reviews. The Committee meets quarterly, andthe contents of deliberation are reported to the Board of Directors each time.
c. Sustainability Committee
The Company has a Sustainability Committee in place underthe Board of Directors for the identification of key issues basedon the Sustainability Policy, goal setting and progress management. In principle, the Committee meets quarterly, and thecontents of its deliberations are reported to the Board of Directors each time.

Internal audit and Statutory Auditor’s audit
Internal audit
Internal audits of the Company are carried out by the Audit Division based on internal audit plans decided by the Board of Directors. The Audit Division has staff with qualifications such as theCertified Information Systems Auditor (CISA). It reports its actionplans and internal audit results to the Board of Directors and theBoard of Statutory Auditors.
Statutory Auditors’ audit
Statutory Auditors work with the Audit Division and Accounting
Auditors and exchange information on audit plans and contents ofaccounting audits to perform appropriate auditing tasks. Statutory

Auditors receive the results of quarterly reviews from Accounting
Auditors both verbally and in writing, and confirm their actionplans to be taken at a fiscal year-end audit. Statutory Auditors
also receive the results of fiscal year-end audits from Accounting
Auditors in statutory documents along with verbal reviews. Furthermore, Statutory Auditors are in principle required to be present at inventory taking or on-site inspection at subsidiaries by
Accounting Auditors.

Outside Directors and External Statutory Auditors
The Company’s Outside Executives currently include three Outside
Directors and three External Statutory Auditors as shown below.
Each Outside Executive has excellent insight in each expertiseand satisfies the independence guidelines for Outside Executives
defined by the Company.

Executive Remuneration
Directors
Remuneration for the Company’s Directors is determined within
the maximum remuneration amount resolved at the Annual General Meeting of Shareholders held in August 2006, with reference
to the policy for determining remuneration for Directors resolvedby the Board of Directors. To ensure the independence of Outside
Directors, the Company provides no bonuses to them. Decisions
on remuneration for Directors are made at the Nomination andCompensation Advisory Committee set up under the Board of

Directors, with the participation of Outside Directors, in order toenhance objectivity and transparency of the decision process for
executive remuneration.
Statutory Auditors
Remuneration for the Company’s Statutory Auditors is determinedthrough discussion among Statutory Auditors within the maximum
total remuneration, which was fixed at the Ordinary General Meeting of Shareholders held in August 2006. It takes form of fixed remuneration for each standing and part-time position. There are nobonuses for Statutory Auditors.

Executive Profiles (as of August 25, 2022)
Directors

Mr. Hirokazu Chinone, Director (Outside Executive)
Mr. Hirokazu Chinone is qualified as a lawyer and provides usefuladvice regarding management in general, drawing on his specialized knowledge regarding corporate law and his wealth of experience developed throughout his career.
Mr. Koji Mizumoto, Director (Outside Executive)
Mr. Koji Mizumoto provides useful advice on management ingeneral, drawing on his wealth of corporate management experience at a predecessor firm to NIPPON STEEL CORPORATION andhis knowledge of financial accounting as CFO.

President,
Representative Director

Akira Watanabe

Chairman, Director

Director

Director

Director (Outside)

Director (Outside)

Kenzo Terashima Yoshifumi Otsubo Kenji Tanimoto Hirokazu Chinone Koji Mizumoto

Taizo Makari

Statutory Auditors

Operating Officers

Mr. Taizo Makari, Director (Outside Executive)
Mr. Taizo Makari provides useful advice on the Company’s management in general, drawing on his extensive insight and global
perspectives developed throughout his career at Teijin Group.
Mr. Hitoshi Kobayashi, Statutory Auditor
Mr. Hitoshi Kobayashi was newly appointed as Statutory Auditor atthe 161st Annual General Meeting of Shareholders on August 25,
2022. He provides useful advice, drawing on his wealth of experience and knowledge as a statutory auditor for auditing activities.
Mr. Yoshinori Kawamura, Statutory Auditor (Outside Executive)
Mr. Yoshinori Kawamura serves as Professor of Faculty of Commerce, Waseda University, and is engaged in auditing activities,
drawing on his expertise regarding corporate finance and accounting developed thus far. He also has experiences as Secretary and Special Member of the Business Accounting Council of
the Financial Services Agency, and an examiner of the Certified
Public Accountant Examination, etc.
Mr. Koichi Abe, Statutory Auditor
Mr. Koichi Abe was newly appointed as Statutory Auditor at the
161st Annual General Meeting of Shareholders on August 25,
2022. He provides useful advice, drawing on his wealth of experience at financial institutions and extensive knowledge regarding
corporate management for auditing activities.

Director (Outside)

Senior Executive Officers

Executive Officers

Operating Officers

Yoshifumi Otsubo

Shuji Horie

Takuya Hatakeyama

Kenji Tanimoto

Naoki Okuyama

Toshiharu Takaki

Toshihito Nakanishi

Chiaki Nakano
Hiroyuki Imaizumi

Standing Statutory
Auditor (Outside)Standing Statutory
Auditors

Statutory Auditor(Outside)

Statutory Auditor(Outside)

Hitoshi Kobayashi

Kenji Ueda

Yoshinori Kawamura

Koichi Abe

Jun Nukina
Takatoshi Otsuka
Toshinori Yamai

Director Skill Matrix

Areas of expertise and experience
Name

OutsideDirectors

Corporate
management

Sales/
MarketingResearch andManufacturing/
Accounting/Global businessdevelopment/
Quality control
FinanceTechnology

Legal affairs

Akira Watanabe
Kenzo Terashima
Yoshifumi Otsubo
Kenji Tanimoto
Hirokazu Chinone
Koji Mizumoto
Taizo Makari

29

Toyo Denki Seizo Report 202230

Governance

Messages from Outside Executives

Internal Control and ComplianceInternal Control

Koji Mizumoto, Director (Outside)
The Company has embarked on structural reforms to set andachieve the numerical targets of the medium-term management
plan for the fiscal year ending May 2026. Based on my experience, I would propose that it is important to integrate the systems
for managing the goals of individual employees with the medium-term management plan, so that, with all employees taking
part, the achievement of those individual goals will be linked tothe achievement of Medium-Term Management Plan goals.
Specifically, I propose setting “ratio of profits to sales x capitalturnover ratio (productivity),” which is the formula for ROA, as thetarget for the individual business units, including the administration division, setting the increase in the profit margin as the period
target for the individual salespeople in each business unit andraising productivity as the target for individuals working in engineering and production. The medium-term management plan’stargets would be broken down at each level into specific numerical and qualitative targets, and superiors and subordinates would
mutually commit to these targets in interviews. Beginning, interim,and period-end evaluations would also be agreed in interviews.
The accumulation of individual employees’ outcomes would become the outcomes for the individual business units, and thesewould be integrated to provide the entire company’s achievementof the medium-term management plan’s numerical targets. The

evaluation of those results would be reflected in the allocation ofsource funds for bonuses. There are many possible methods ofthat allocation.
Of even greater importance than setting these targets is thatinterviews take place at each level. Such dialogue will serve as
both manager education and human resources development,
forming part of the Company’s HRD and leader development(manager education). The medium-term management plan will beseen as a company-wide undertaking, its targets will be managed
by the entire company in the medium to long term, and systems
will be operated openly and transparently.
Medium-term management plans tend to be seen as top-down
matters for executive management and as not being the concernof general employees. To make them something in which everyone participates will require the creation and careful implementation of mechanisms. It is important that all employees have asense that their own work and outcomes are directly linked to themedium-term management plan and that its outcomes are directly distributed to the individuals. It is also vital that it becomes partof the cycle of education and development in each position. The
implementation of these systems will not happen overnight, but it
is important to engage in it from a long-term perspective.

Hitoshi Kobayashi, Standing Statutory Auditor (Outside)
Management controlled by the executive entails a wide range ofrisks. Accidents and scandals aside, in addition to the risk-taking
that accompanies challenges for growth, if we consider the risk oflosing opportunities by not taking risks, and the risk of not recognizing risk, risk management is management itself. It is the samefor governance that controls the executive, and the Statutory Auditors play a role as a beacon that shines a light on the future
where risks lie in wait.
In my view, the mission of the Statutory Auditors is, firstly, toraise the quality of management decisions. In decision-making, it
is essential to go through the process of adequate information
gathering and reasonable judgment based on that information.
The value criteria for reasonableness also requires a medium- tolong-term perspective for sustainable growth with the global environment and social mission in mind.
One other important mission of the Statutory Auditors is to instill sincerity and good faith into the attitudes of the executive

31

management team and into the organization’s culture, including
the Statutory Auditors themselves. Even at times when the organization and work mechanisms, which are meant to compensate
for human weakness, have unfortunately not functioned properly,or they have strayed off track even in light of laws and regulations, rules, and social norms, as long as there is sincerity andgood faith deep in our hearts, we should be able to avoid falling
into grave errors. There have been many occasions in which I
have gained a real sense of the seriousness of Toyo Denki.
Many issues lie ahead for the Company as it seeks to capitalizeon the strengths of its 100-year-plus corporate history, its attitudeof thoroughly engaging with its customers, and its challenge toimprove its technologies and connect those strengths to results.
As Statutory Auditor, not only will I strive to forge that inner workings of management, I will also place importance on dialogue with
the Company’s diverse stakeholders.

The Company views the development and operation of an internal
control system to be an important management issue, and it hasdeveloped an efficient, legal and appropriate business execution
system pursuant to Article 362 of the Companies Act and Article
100 of the Ordinance for Enforcement of the Companies Act. The
Internal Control Committee established under the Board of Directors reviews the operational status of the internal control system
and will revise it as necessary.

Principles of compliance
The Company has set “1. adherence to rules,” “2. observance ofconfidentiality,” “3. distinction between private and public matters,” “4. strictness with money,” “5. prohibition of side jobs,” and“6. prohibition of discriminatory and sexually suggestive statements or behavior” as principles of compliance.

Compliance promotion framework
To focus on business principles and fulfill its social responsibility,
the Company has provided all officers and employees with a copyof the Compliance Manual (Toyo Denki Seizo Ethical Standards)
that stipulates its code of conduct. The move is part of an effort tohave the code and the basic rules of work fully known.
The Company has also introduced a whistle-blowing systemthat allows employees to provide information directly to the management. The system is aimed at ensuring that any illegal orinappropriate conduct within the Company is detected at theearliest possible stage and that adequate measures are taken
promptly and as needed so that such conduct is rectified.

Compliance education
We conduct compliance training every year for all employees of
the Group in order to enhance knowledge of compliance and foster awareness to respect corporate ethics.

the countries and regions where we engage in business activities
as well as to avoid involvement in transactions that could hinder
the maintenance of international peace and safety.
The Export Control Department handles cargo and technology
parameters used in determining whether or not export permits are
required, as well as investigation of transactions. In addition, theDepartment carries out employee education and guidance andsupport for Group companies.

Whistle-blowing system
The Group has established a whistle-blowing system that aims toensure that any illegal, inappropriate, or unethical conduct by anindividual or an organization is detected at the earliest possible
stage and that risks are minimized, and to promote ethical and legal compliance. The Group has also established the necessary
structures in response to the revision of the Whistleblower Protection Act in June 2022.

Risk Management
Basic policy
The Company is engaged in developing rules and a framework forrisk management according to the Basic Rules for Risk Management established in August 2006.

Promotion framework
The Company has established the Internal Control Committee under the Board of Directors, chaired by the President. It analyzes
and assesses all the risks that exist in the Group and develops aneffective risk management framework capable of dealing precisely with the risks of the types and degrees that the Group is exposed to. The committee specifically reviews risk verifications andcountermeasures, and periodically reports details of its deliberations to the Board of Directors.

Risk Factors
Proper export controls
The Export Control Department at Human Resources and General
Affairs Division is responsible for export management as the export
management control department. We have created a system forthe proper management of exports in order to ensure compliancewith the laws and regulations concerning export management in

From the perspective of proactive information disclosure, theGroup intends to disclose a wide range of recognizable risks. Majorrisks that may affect its earnings and financial position are set out
below. The Group aims for thorough understanding of these risks
in order to establish a necessary risk management framework

Toyo Denki Seizo Report 2022

32

Governancedesigned to prevent the risks from materializing or minimize theimpact of risks if they do materialize.
Forward-looking statements below are based on the judgmentof the Group as of the end of the fiscal year ended May 2020.
(1) Changes in domestic and international economic trends
The Group’s sales heavily rely on the Transportation Systems
and Industrial Systems segments. Its customers conduct business operations at home and overseas. As such, business climates and individual spending conditions in different countries
may affect the Group’s business performance.
(2) Large-scale disasters and outbreak of infectious diseases
The great majority of the Group’s production bases for theTransportation Systems segment are located in the Kanto area
and those for the Industrial Systems segment are in the Kansai area. Production capacity may be severely affected bylarge-scale disasters and the outbreak of infectious diseases
in either of these areas. Furthermore, large-scale disasters
and the outbreak of infectious diseases may hinder the entire
supply chain and impact order trends, thus affecting the Company’s production and earnings.
Since January 2020, COVID-19 has been spreading in Japanand overseas. The Group is taking actions to help prevent the
spread of infections, while prioritizing the safety and health of
employees through measures such as staggered commuting
and working from home and minimizing hindrance to production. Although the impact on our business operations has been
limited as a whole, orders and sales have been somewhat affected due to restrictions on movement and overseas travel.
The Company’s earnings forecast announced already takesthese effects into account. However, if infections spread morethan expected in the future, the Company’s business may befurther affected.
(3) Intensifying competition
The Japanese market for the Transportation Systems segment
has matured and thus faces intensifying competition. The Industrial Systems segment is also under pressure from intensifying competition for product development. The Group’sbusiness performance may be affected by such intensifying
competition.
(4) Effects caused by characteristics of the Company products
Although the Group has made every effort to ensure the quality, safety, and reliability of its products, product defects may
occur due to the parts used or other factors that cannot be
detected during the inspection stage. If large-scale damages
are incurred due to product defects and other causes and33

cannot be covered by insurance, it may affect the Group’sbusiness performance.
(5) Delays in product development
With a view to providing attractive products to customers, theGroup applies itself to gathering information about customer
needs and leverages it in the development of new products to
support its future growth. However, delays in the developmentof new products to respond to rapid technological or environmental changes may affect the Group’s performance.
(6) Risks related to new business
As an initiative to expand its business domains, the Groupaims to develop technologies and products that contribute toa decarbonized and sustainable society, generate new business fields, and create technological innovation using ICT thatis unique to the Company. However, the withdrawal from new
business for reasons such as a shrinking target market anddelays in technological development may affect the Group’sbusiness performance.
(7) Delays and other problems in the supply of materials
Owing to the fact that the Group’s business has various distinctive characteristics, some of the materials it procures are
not easily available due to factors such as a limited number ofsuppliers. Delays in supply or discontinuation in production ofsuch materials may affect the Group’s production. Moreover,the Group’s business performance may be affected by thefluctuation in prices of raw materials, notably steel products
and copper.
(8) Changes in overseas situations
The Group proactively pursues the expansion of overseas operations including the Chinese market. Its business performance may be affected by major changes in situations
overseas.
(9) Litigations and other legal proceedings
If the Group becomes the subject of any litigation or other legal proceeding, its business operations and performance may
be affected. Although the Group particularly attends to theprotection of intellectual property rights, amid drastically advancing technical innovations and accelerating globalization ofbusiness, the Group is inevitably exposed to potential disputes
with third parties over intellectual property rights.
(10) Relationships with business alliance partners
With the aim of business expansion and enhancing competitiveness, the Group proactively pursues various alliances withthird parties. However, if these alliances do not deliver expected
results due to a failure in forging favorable relationships withpartners, the Group may face an impact on its performance.

(11) Exchange rate fluctuations
As the Group is aggressively expanding into overseas markets,an increase in foreign currency denominated transactions willheighten the impact of exchange rate fluctuations on theGroup’s performance.
(12) Fluctuations in the value of holding assets
Fluctuations in the fair value of assets held by the Group may
affect its performance.
(13) Changes in financial conditions
The Group’s financing programs may be affected by unexpected changes in financial conditions.
(14) Breach of confidential information
The Group retains customer information related to its business executions. Also, it possesses various types of confidential information concerning the Group’s proprietary
technologies and operations. If these information assets
leak outside the Group for unforeseeable reasons, it may
impact its business operations and performance.
(15) Domestic and foreign laws and regulations
The Group proactively pursues expansion in overseas operations, particularly the Chinese market, and as such, its operations are subject to not only Japanese laws but also the laws
and regulations of each country. Although the Group has established and operates a robust compliance system, its business operations and performance are still at risk from theeffects of unforeseeable events.

Information Security
Basic policy
The Company holds a vast amount of information assets including
information presented by customers related to its businessexecution and confidential information concerning the Group’s
proprietary technologies and its trade. Each Group company istaking various measures in this respect based on an awarenessof shared security under the Group’s Information Security Guidelines, which have been established to adequately manage anduse these information assets.

Information security training
The Company is conducting educational activities to develop
information security awareness among all employees including
various training sessions, some involving the use of educationalDVDs.

Toyo Denki Seizo Report 2022

34

Financial Report

Financial Review

Reference Data for Management Indices

Consolidated Operating Results, Consolidated Financial Position, and Consolidated Cash Flow for FYE May
2022 (from June 1, 2021 to May 31, 2022) are as follows:

Capital investment(Unit: Million yen)(For the Years Ended May 31 or As of May 31)

Depreciation and amortization

Research and development costs

2,504 million yen

Net cash provided by operating activities
amounted to 2,504 million yen (net cash of
1,776 million yen provided in the previous
fiscal year), principally due to a decrease intrade notes and accounts receivable and adecrease in inventories.

35

712

819

792

840

315

Cash flows from investing activitiesFYE May 2018 2019

289 million yen

Net cash provided by investing activities
totaled 289 million yen (net cash of 155
million yen used in the previous fiscal year),principally due to proceeds from sales ofinvestment securities.

-155

2,504

41

289

4,140

(Unit: Million yen)

2020

2021

2022

FYE May 2018 2019

2020

2021

FYE May 2018 2019

2022

2020

2021

Net sales by region

2,356 million yen

Net cash used in financing activities was
2,356 million yen (net cash of 971 million
yen used in the previous fiscal year),primarily owing to repayment of debt.

2018

2019

2020

2021

2022

Japan

32,124

31,74530,997

27,87625,779

China

4,085

3,663

4,282

3,628

3,015

Others

6,317

5,763

3,791

1,638

1,363

42,527

41,172

39,07133,14330,158

25.3%

22.9%

20.7%

15.9%

14.5%

Total
Overseas net sales ratio
2020

2022

(Unit: Million yen)

Cash flow from financing activities
Net cash used in financing activitiesFYE May 2018 2019

2022

Cash flows from financing activities(Unit: Million yen)Japan China
OthersOverseas net sales ratio

Cash flow from investing activities
Net cash provided by investing activities

2021-2,356

Net assets as of May 31, 2022 stood at
22,012 million yen, a decrease of 1,996
million yen compared with the end of
the previous fiscal year. This decrease
was largely attributable to a decreaseof 1,198 million yen in retained earnings
and a decrease of 889 million yen in
unrealized holding gain on available-forsale securities.

2020

-971

22,012 million yen

FYE May 2018 2019

-1,126

Total net assets

2022-2,012

Total liabilities as of May 31, 2022 stoodat 24,903 million yen, a decrease of 3,055
million yen compared with the end of theprevious fiscal year. This decrease waslargely attributable to a decrease of 2,085
million yen in debt and a decrease of 557
million yen in trade notes and accounts
payable.

Net assets

Cash Flows
Cash flow from operating activities
Net cash provided by operating activities

2021-1,01924,903 million yen

FYE May 2018 2019-3,087

Total assets as of May 31, 2022 stood at
46,916 million yen, a decrease of 5,051
million yen compared with the end of theprevious fiscal year. The decrease in total
assets was largely attributable to a decreaseof 3,002 million yen in property, plant andequipment, a decrease of 1,360 million yen
in investment securities, and a decrease of
891 million yen in trade notes and accounts
receivable, partially offset by an increase of
485 million yen in cash on hand and in banks.

Total liabilities

2022(Unit: Million yen)

2,148

46,916 million yen

2021-1,572

Total assets

2020

Cash flows from operating activities

Financial Position
Liabilities

632

FYE May 2018 2019

1,776

* Reorganized to the ICT Solution Business segment in June 2022

From a profit perspective, operating income decreased 59.4%
compared with the previous fiscal year to 171 million yen. Ordinary
income increased 1.2% compared with the previous fiscal year to766 million yen mainly due to investment gain on equity method andforeign exchange gain. Net loss attributable to owners of the parent was
930 million yen (compared with an income of 977 million yen in theprevious fiscal year), mainly due to the impact of a 2,256-millionyen impairment loss on business assets related to the Industry
Business segment, despite gain on sales of investment securities.

545

N e t s ale s d e cre a s e d 9.0%
compared with the previous
fiscal year to 30,158 million yen
due to a decrease in net sales
in the Transportation Businesssegment, the Industry Businesssegment, and the Information
Equipment Systems segment*.

Assets2020(Income of 977 million yen in the previous fiscal year)

1,090

Orders received increased 1.3%
compared with the previous fiscal
year to 30,447 million yen, with theTransportation Business segment,
the Industry Business segment,
and the Information Equipment
Systems segment* all nearly onlevel with the previous fiscal year.

930 million yen(YoY -0.9%)

3,720(YoY +1.3%)

731

30,158 million yen

1,257

30,447 million yen

Profit/Loss
Net loss attributable to owners of the parent

1,413

Net sales

1,237

Orders received

1,487

Results of Operation(Unit: Million yen)

1,774

4,772

(Unit: Million yen)

2021

2022

Toyo Denki Seizo Report 2022

36

Financial Report
TOYO DENKI SEIZO K.K.
Consolidated Balance Sheets

As of

May 31,
2022

May 31,
2021(Millions of yen)

May 31,
2022(Thousands of
U.S. dollars)(Note 1)

LIABILITIES AND NET ASSETS

Current assets:

Current liabilities:
Trade notes and accounts payable (Note 16)
Electronically recorded payables
Short-term borrowings and current portion of long-term debt
(Notes 6 and 16)
Income taxes payable (Note 11)
Contract liabilities (Note 20)
Accrued expenses
Accrued directors’ bonuses
Accrued employees’ bonuses
Reserve for losses on order acknowledgements (Note 3)
Other
Total current liabilities

Cash on hand and in banks (Notes 16 and 18)¥ 4,449¥ 3,964$ 34,705

Trade notes, accounts receivable and contract assets (Notes 2, 16 and 20)

12,091—

94,310Trade notes and accounts receivable (Note 16)—

13,218—

Electronically recorded receivables (Note 16)

1,136

901

8,863

Inventories (Note 3)

6,267

6,901

48,885

Other current assets

246

318

1,919

Allowance for doubtful accounts

(1)

(2)

(13)

24,18925,300188,671

Property, plant and equipment (Notes 4 and 6):
Buildings and structures

3,985

6,410

31,086

Machinery and vehicles

579

966

4,520

Land

1,270

1,301

9,907

7

24

60

479

622

3,742

6,322

9,325

49,316

12,471

13,832

97,272

Deferred tax assets (Note 11)

883

223

6,894

Intangible assets

101

303

789

Other (Note 5)

2,953

2,988

23,039Allowance for doubtful accounts

(6)

(6)

(53)

Total investments and other assets

16,403

17,341

127,943

Total assets (Note 21)¥46,916¥51,967$365,932

Construction in progress
Other
Total property, plant and equipment

Investments and other assets :Investment securities (Notes 16 and 17)

May 31,
2022

May 31,
2021(Millions of yen)

AssetsTotal current assets

37

As of

May 31,
2022(Thousands of
U.S. dollars)(Note 1)

¥ 1,610
4,205¥ 1,668
4,705$ 12,559
32,803

585

2,085

4,565

306
47
688
6
699
970
449
9,569

161
—
611
36
827
871
660
11,628

2,390
373
5,368
50
5,455
7,571
3,504
74,642

11,173—4,113
38
615,333

11,759
427
4,124
17
1
16,33087,152—32,086304
53
119,597

Net assets (Notes 8 and 15):
Shareholders’ equity:
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity¥ 4,998
3,177
11,122(1,282)18,016¥ 4,998
3,177
12,320(1,281)
19,214$ 38,985
24,78386,751(10,001)
140,519

Accumulated other comprehensive income:Unrealized holding gain on securities
Translation adjustments
Retirement benefits liability adjustments (Note 7)
Total accumulated other comprehensive income
Total net assets

3,913
144
(61)
3,996
22,012

4,803
88
(97)
4,793
24,00830,5261,126(480)
31,172
171,692

Total liabilities and net assets¥46,916¥51,967$365,932

Long-term liabilities:
Long-term debt (Notes 6 and 16)
Deferred tax liabilities (Note 11)
Liability for retirement benefits (Note 7)Long-term payables
Other
Total long-term liabilities
Commitments and contingencies (Note 14)

See notes to consolidated financial statements.

Toyo Denki Seizo Report 2022

38

Financial Report
TOYO DENKI SEIZO K.K.
Consolidated Statements of Income

For the Years Ended

Net sales (Notes 20 and 21)
Cost of sales (Note 3)
Gross profit
Selling, general and administrative expenses (Note 9)
Operating income (Note 21)
Non-operating income (expenses):
Interest and dividend income
Interest expense
Equity in earnings (losses) of affiliates accounted for by the equity method
Foreign exchange gain
Insurance claim income related to disaster
Subsidy income
Other income (expenses), net
Ordinary income
Special (losses) gains, net (Note 10)(Loss) income before income taxes
Income taxes (Note 11):
Current
Deferred
Net (loss) income
Net (loss) income attributable to owners of the parent

TOYO DENKI SEIZO K.K.
Consolidated Statements of Changes in Net Assets
May 31,
2022

May 31,
2021(Millions of yen)

May 31,
2022(Thousands of
U.S. dollars)(Note 1)¥30,158
23,343
6,815¥33,143
25,805
7,338$235,229
182,073
53,155

6,643
171

6,914
423

51,814
1,340

154
(58)
242
227
—
20
8
594
766
(1,996)(1,230)

202
(67)
(4)
133
34
40
(5)
333
757
407
1,164

1,201
(458)
1,892
1,775
—
155
68
4,635
5,976
(15,570)(9,593)

403
(703)
(299)
(930)
¥ (930)(Millions of yen)
Shareholders’ equity

352
(165)
186
977
¥ 977

3,146
(5,485)(2,339)(7,254)$ (7,254)

See notes to consolidated financial statements.

Commonstock

Capitalsurplus

Accumulated other comprehensive income

Retainedearnings

Treasury
stock

Total
shareholders’equityUnrealized
holding
gain onsecurities

Translation
adjustments

Total
Retirement
accumulated
benefitsotherliability
comprehensive
adjustments
incomeTotal net
assets¥4,998¥3,177¥11,610¥(1,280)¥18,505¥5,727¥ 79¥(129)¥5,677¥24,183

—

—

(268)

—

(268)

—

—

—

—

(268)

—
—

—
—

(0)

—
—

—
—

—
—

—
—

Balance as of May 31, 2021——
¥4,998

Balance as of June 1, 2021

Balance as of June 1, 2020
Changes during the year
Cash dividends paid
Net income attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders’ equity
Total changes during the year

977

977

977

—

—
(0)

—
—
¥3,177—709¥12,320—(0)¥(1,281)—708¥19,214

(924)
(924)
¥4,803

8
8
¥ 88

32
32
¥ (97)(883)(883)¥4,793(883)(174)¥24,008¥4,998¥3,177¥12,320¥(1,281)¥19,214¥4,803¥ 88¥ (97)¥4,793¥24,008

—

—

(268)

—

(268)

—

—

—

—

(268)

—
—

—
—

(930)

(930)
(0)

—
—

—
—

—
—

—
—

(930)

—

—
(0)

—
—
¥4,998——¥3,177—(1,198)¥11,122—(0)¥(1,282)—(1,198)¥18,016

(889)
(889)
¥3,913

56
56
¥144

35
35
¥ (61)(797)(797)¥3,996(797)(1,996)¥22,012(0)Changes during the year
Cash dividends paid
Net loss attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders’ equity
Total changes during the year
Balance as of May 31, 2022

(0)(Thousands of U.S. dollars) (Note 1)
Shareholders’ equity

TOYO DENKI SEIZO K.K.
Consolidated Statements of Comprehensive Income

Balance as of June 1, 2021

Accumulated other comprehensive income
Total
Retirement
accumulated
benefitsotherliability
comprehensive
adjustments
incomeCommonstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equityUnrealized
holding
gain onsecurities$38,985$24,783$96,097$(9,997) $149,870$37,463$ 687$(759)$37,390$187,261——(2,092)—(2,092)

—

—

—

—

(2,092)————(7,254)——(4)(7,254)
(4)

—
—

—
—

—
—

—
—

(7,254)——$38,985——$24,783—(9,346)$86,751——(4)(9,350)$(10,001) $140,519(6,936)(6,936)$30,526

439
439$1,126278
278$(480)

Translation
adjustments

Total net
assetsChanges during the year

For the Years Ended

Net (loss) income
Other comprehensive loss (Note 12):
Unrealized holding loss on securities
Translation adjustments
Retirement benefits liability adjustments
Share of other comprehensive income of affiliates accounted for by the equity method
Total other comprehensive loss

May 31,
2022

May 31,
2021(Millions of yen)

¥ (930)

May 31,
2022(Thousands of
U.S. dollars)(Note 1)

¥ 977

$ (7,254)

(889)
2
35
53
(797)

(924)
(6)
32
14
(883)

(6,936)22
278
417(6,218)Comprehensive (loss) income¥(1,727)¥ 94$(13,472)

Comprehensive (loss) income attributable to:
Owners of the parent
Non-controlling interests¥(1,727)—¥ 94—$(13,472)—

Cash dividends paid
Net loss attributable toowners of the parent
Purchases of treasury stock
Net changes in items
other than those inshareholders’ equity
Total changes during the year
Balance as of May 31, 2022

(4)

(6,218)(6,218)(6,218)(15,568)$31,172 $171,692

See notes to consolidated financial statements.

See notes to consolidated financial statements.

39

Toyo Denki Seizo Report 2022

40

Financial Report
TOYO DENKI SEIZO K.K.
Consolidated Statements of Cash Flows
For the Years Ended

TOYO DENKI SEIZO K.K.
Notes to Consolidated Financial Statements
May 31,
2022

May 31,
2021(Millions of yen)

Operating activities(Loss) income before income taxes
Depreciation and amortization
Impairment loss
Reversal of allowance for doubtful accounts
Provision for accrued employees’ bonuses
Increase in liability for retirement benefits
Interest and dividend income
Interest expense
Insurance claim income related to disaster
Equity in (earnings) losses of affiliates accounted for by the equity method
Subsidy income
Gain on sales of investment securities
Loss on valuation of investment securities
Gain on reversal of foreign translation adjustment
Loss on valuation of investments in capital of subsidiaries and affiliates
Changes in operating assets and liabilities:
Trade notes and accounts receivable
Inventories
Trade notes and accounts payable
Reserve for losses on order acknowledgements
Advances received
Contract liabilities
Accrued expenses
Other, net
SubtotalInterest and dividend income received
Interest expense paid
Proceeds from insurance income related to disaster
Subsidies received
Income taxes paid
Net cash provided by operating activities
Investing activities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Proceeds from liquidation of an affiliate
Payments of loans receivableCollection of loans receivable
Payments for investments in capital of subsidiaries and affiliates
Other, net
Net cash provided by (used in) investing activities
Financing activities
Decrease in short-term loans payable
Repayment of long-term debt
Purchases of treasury stock
Cash dividends paid
Other, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period (Note 18)
See notes to consolidated financial statements.

41

May 31,
2022(Thousands of
U.S. dollars)(Note 1)¥(1,230)
1,257
2,256
(0)
(128)
5
(154)
58
—
(242)
(20)
(366)
45
(94)
155

¥ 1,164
1,413
—
2
(49)
97
(202)
67
(34)
4
(40)
(407)
—
—
—

$ (9,593)
9,804
17,596(7)(999)
40(1,201)458—(1,892)(155)(2,857)
353
(733)
1,211

891
633
(557)
99
—
13
97
(156)
2,562
162
(60)
—
20
(180)
2,504

1,567
274
(1,743)
142
(11)
—
(14)
(90)
2,138
210
(68)
34
40
(580)
1,776

6,951
4,943
(4,348)
772
—
101
763
(1,220)19,986
1,270
(470)
—
155
(1,404)
19,537

(351)
14
(18)
(73)
466
283
—
15
—
(45)
289

(548)
—
(43)
(14)
693
—
(111)
11
(88)
(53)
(155)

(2,742)
113
(146)
(575)
3,638
2,207
—
116
—
(355)
2,255

(1,500)
(585)
(0)
(269)
(1)
(2,356)
48
485
3,964
¥ 4,449

(83)
(617)
(0)
(268)
(1)
(971)
21
670
3,293
¥ 3,964(11,699)(4,565)(4)(2,099)(14)(18,382)374
3,784
30,920$ 34,705

1. Summary of Significant Accounting Policies(a) Basis of presentation
The accompanying consolidated financial statements of TOYO DENKI SEIZO K.K. (the “Company”) and consolidated subsidiaries(collectively the “Group”) are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain
respects as to the application and disclosure requirements of International Financial Reporting Standards (IFRS), and are compiled
from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act ofJapan.
Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year’s presentation.
Amounts of less than one million yen and one thousand U.S. dollars have been rounded down to the nearest million yen andthousand U.S. dollars, respectively, in the presentation of the accompanying consolidated financial statements. As a result, the totals
in yen and U.S. dollars do not necessarily agree with the sum of the individual amounts.
(b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements included the accounts of the Company and any significant companies controlled
directly or indirectly by the Company.
Companies over which the Company exercises significant influence in terms of their operating and financial policies have beenaccounted for by the equity method. The Company applies the “Practical Solution of Unification of Accounting Policies Applied toForeign Subsidiaries for Consolidated Financial Statements” (Accounting Standards Board of Japan (ASBJ) Practical Issues Task
Force (PITF) No. 18) and “Practical Solution on Unification of Accounting Policies Applied to Associates Accounted for using Equity
Method” (PITF No. 24). In accordance with these PITF, the accompanying consolidated financial statements have been prepared byusing the accounts of foreign consolidated subsidiaries and affiliates prepared in accordance with either IFRS or accounting principles
generally accepted in the United States as adjusted for certain items including goodwill, actuarial differences and capitalized
development costs.
As of May 31, 2022, the numbers of consolidated subsidiaries and affiliates accounted for by the equity method were 5 and 2 (6and 3 in 2021). TOYO DENKI USA, INC., which was a consolidated subsidiary in the year ended May 31, 2021, was liquidated in theyear ended May 31, 2022 and excluded from the scope of consolidation. TOYO DENKI USA, INC., for which the fiscal year end was
December 31, was consolidated by using its pro forma financial statements as of March 31 which are prepared solely for consolidation
purposes and necessary adjustments were made to its financial statements to reflect any significant transactions from April 1 to May
31. All significant intercompany balances and transactions have been eliminated in consolidation.
Investments in subsidiaries and affiliates which are neither consolidated nor accounted for by the equity method are carried at costor less. Where there has been a permanent decline in the value of such investments, the Company has written down the investments.
(c) Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included in the consolidated statements of income.
The balance sheet accounts of the foreign consolidated subsidiaries are translated into yen at the rates of exchange in effect at thebalance sheet date, except for the components of net assets excluding non-controlling interests which are translated at their historicalexchange rates. Revenue and expense accounts are translated at the average rate of exchange in effect during the year. Differences
arising from the translation are presented as translation adjustments in the consolidated financial statements.
(d) Cash and Cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can be withdrawn at any time and short-term investmentswith a maturity of three months or less from the date of purchase, which can easily be converted to cash and are subject to little riskof change in value.
(e) Inventories
Inventories are stated principally at the lower of cost or net realizable value, cost being determined principally by the specificidentification method for finished products and work in process and by the moving average cost method for raw material andsupplies.
Toyo Denki Seizo Report 2022

42

Financial Report(f) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into three categories: trading, held-tomaturity or other securities (available-for-sale securities). Trading securities are carried at fair value and held-to-maturity securities
are carried at amortized cost. Available-for-sale securities with market quotation are carried at fair value with changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly in net assets. Available-for-sale securities without market
quotation are carried at cost. Cost of securities sold is determined by the moving average method.
(g) Property, plant and equipment (except for leased assets) and depreciation
Depreciation of property, plant and equipment of the Company and its consolidated subsidiaries is calculated principally by the
declining-balance method based on the estimated useful lives and the residual value, while buildings except for facilities attached tobuildings acquired on or after April 1, 1998 and facilities attached to buildings and structures acquired on or after June 1, 2016 aredepreciated by the straight-line method. The estimated useful lives of these assets are as follows:
Buildings and structures:
8 to 60 years
Machinery and vehicles:
3 to 12 years
Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income.
(h) Intangible assets (except for leased assets)
Intangible assets are amortized using the straight-line method. Software for internal use is amortized over the internal available period(5 years) using the straight-line method.
(i) Leases
Leased assets capitalized under the finance lease arrangements which do not transfer ownership to the lessee are depreciated overthe lease period without any residual value using the straight-line method.
All other lease transactions are accounted for as operating leases and related payments are charged to income as incurred.
(j) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal receivables and on an estimate of the collectabilityof receivables from companies in financial difficulty.
(k) Accrued directors’ bonuses
Accrued directors’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future for the
performance incentive bonuses.
(l) Accrued employees’ bonuses
Accrued employees’ bonuses are provided to cover the current fiscal year’s portion of the estimated amounts to be paid in future.
(m) Reserve for losses on order acknowledgements
Reserve for losses on order acknowledgements is provided based on the amounts expected to be incurred during the current fiscal
year and which are able to estimate the losses reasonably to cover the future losses on order acknowledgements. Provision of reserve
for losses on order acknowledgements in the amounts of ¥99 million ($772 thousand) and ¥142 million is included in cost of sales
for the years ended May 31, 2022 and 2021, respectively.
(n) Retirement benefits
Retirement benefit obligation is attributed to each period by the benefit formula method over the estimated years of service of theeligible employees.
Prior service cost is amortized as incurred by the straight-line method over a fixed period (10 years) within the average remaining
years of service of the employees.
Actuarial differences are amortized by the straight-line method over a fixed period (10 years) within the average remaining years ofservice of the employees from the following year when incurred.

43(o) Income taxes
Deferred tax assets and liabilities have been recognized in the consolidated financial statements with respect to the temporary
differences between the financial reporting and tax bases of the assets and liabilities, and were measured using the enacted tax rates
and laws which will be in effect when the differences are expected to reverse.

(p) Accounting for significant revenue and costs
The Group engages primarily in manufacturing and sale of electronic equipment and installation works.
Revenue from sales of products is recognized when the product is accepted by a customer as control of the products is transferred tothe customer and performance obligations are satisfied upon the customer’s acceptance of the products.
However, in the case of domestic sales of products, revenue is recognized upon shipment if the period between the shipment of the
product and the transfer of control of the product to the customer is a normal time period.
In addition, with respect to construction contracts for which performance obligations are satisfied over time, revenue is recognizedbased on progress toward complete satisfaction of a performance obligation.
The percentage of completion is based on the costs incurred to the estimated total cost (input method).
(q) Research and development expenses
Research and development expenses are charged to income when incurred.
(r) Derivative financial instruments
The Company and certain consolidated subsidiaries conduct various derivative transactions in order to manage certain risks arisingfrom adverse fluctuations in interest rates. Derivative financial instruments are carried at fair value with changes in unrealized gain orloss charged or credited to operations, except for these which meet the criteria for deferred hedge accounting under which unrealized
gain or loss is deferred as a component of net assets.
Deferred hedge accounting is adopted for derivatives which qualify as hedges, under which unrealized gain or loss is deferred.
Hedging instruments are derivative transactions and hedged items are primarily interest on debts. Hedge effectiveness is notassessed if the substantial terms and conditions of the hedging instruments and the hedged items are the same.
(s) Significant accounting estimates(Impairment of certain assets or groups of assets in the Industrial Systems segment)(1) The amount recorded in the consolidated financial statements for the years ended May 31, 2022 and 2021
Property, plant and equipment, intangible assets and long-term prepaid expenses belonging to certain groups of assets in the
Industrial Systems segment:
As of

May 31,
2022

May 31,
2021(Millions of yen)

May 31,
2022(Thousands of
U.S. dollars)

Impairment loss

¥2,256¥ —$17,596

Property, plant and equipment, intangible assets and long-term prepaid
expenses

3,325

5,928

25,934(2) Other information that is useful for the reader of the consolidated financial statements to understand the contents of accounting
estimates
a. Calculation method for the amount recorded in the consolidated financial statements for the year ended May 31, 2022
In preparing the consolidated financial statements, the Group groups its assets so that the estimates on impairment of fixed
assets appropriately reflect the Group’s actual management condition, and assesses indication of impairment. Assessment of
indication of impairment is carried out based on the information available to the Group on the status of profit or loss generated
from operating activities using the assets, etc. and whether the business environment has deteriorated significantly inconnection with the business using the assets or groups of assets. If there is an indication of impairment, the Group will
determine whether an impairment loss should be recognized. If the aggregated amount of undiscounted future cash flows is
lower than the carrying amount, the carrying amount will be reduced to the recoverable value and an impairment loss will berecognized.
The future cash flows are estimated based on the business plan approved by the management and the growth rate for theperiod that exceeds the business plan period.
b. Main assumptions used for computing the amount recorded in the consolidated financial statements for the year ended May
31, 2022
In the computation of undiscounted future cash flows, the main assumption is net sales based on the projection of future orderacknowledgements. Net sales based on the projection of future order acknowledgements are computed based on the
management’s evaluation of future trends of the industry, historical performances and internal and external information.
Toyo Denki Seizo Report 2022

44

Financial Reportc. Effects on the consolidated financial statements for the following fiscal year
Estimates on undiscounted future cash flows involve uncertainties, since they are subject to changes in demand trends ofsome customers and unforeseeable events such as natural disasters. Accordingly, when the undiscounted future cash flows
significantly differ from the assumption by the Group, the consolidated financial statements for the following year may besignificantly affected.
(t) Changes in Accounting Policies(Adoption of Accounting Standard for Revenue Recognition, etc.)
The Company has adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter“Revenue Recognition Standard”) and other standards from the beginning of the current fiscal year. The Company recognizes revenue
when control of a promised good or service is transferred to a customer in an amount that reflects the consideration to which theCompany expects to be entitled in exchange for those goods and services.
In applying this standard, the Company applied the alternative treatment defined in paragraph 98 of the Implementation Guidanceon Accounting Standard for Revenue Recognition, and recognizes revenue from domestic sales of products upon shipment if theperiod between the shipment of the product and the transfer of control of the product to the customer is a normal time period.
The Company previously applied the percentage-of-completion method for construction contracts whose percentage of completioncan be reliably estimated, and the completed-contract method for other construction contracts. However, from the beginning of theyear ended May 31, 2022, regarding contracts whose performance obligation is satisfied over time, the Company has changed themethod of recognizing revenue to one where revenue is recognized over time as it satisfies its performance obligation. For contracts
whose performance obligation is satisfied at a point in time, the Company has changed the method of recognizing revenue to one
where revenue is recognized when the construction work has been completed. The progress toward complete satisfaction of theperformance obligation is based on the costs incurred to the estimated total cost (input method).
The Company applies the Revenue Recognition Standard, etc. in accordance with the transitional treatment provided for in theproviso to paragraph 84 of the Revenue Recognition Standard. The cumulative impact of retrospectively applying the new accounting
policies to prior periods is adjusted to retained earnings at the beginning of the current fiscal year, with the new accounting policies
applied from the beginning balance.
As a result of the above, there was no impact on profit or loss for the year ended May 31, 2022. In addition, there was no impact
on the beginning balance of retained earnings nor on per share information.
With the application of the Revenue Recognition Standard, “Trade notes and accounts receivable,” which was previously presented
under “Current assets,” has been included in “Trade notes, accounts receivable and contract assets” from the year ended May 31,
2022, and “Advances received,” which was previously included in “Other,” has been presented as “Contract liabilities” from the year
ended May 31, 2022. Furthermore, “Advances received” under “Changes in operating assets and liabilities” in the consolidated
statements of cash flows, has been included in “Contract liabilities” under “Changes in operating assets and liabilities” from the year
ended May 31, 2022. In accordance with the transitional treatment set forth in paragraph 89-2 of the Revenue Recognition Standard,
figures for the previous period have not been reclassified based on the new presentation method.
In accordance with the transitional treatment set forth in paragraph 89-3 of the Revenue Recognition Standard, notes on revenue
recognition for the previous period have not been presented.
(Adoption of Accounting Standard for Fair Value Measurement, etc.)
The Company has adopted the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter“Fair Value Measurement Standard”) and other standards from the beginning of the current fiscal year, and will prospectively apply
the new accounting policies stipulated in the Fair Value Measurement Standard, etc. in accordance with the transitional treatment
provided in paragraph 19 of the Fair Value Measurement Standard and paragraph 44-2 of the “Accounting Standard for Financial
Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no impact on consolidated financial statements.
In addition, the Company will include notes on fair value information by level within the fair value hierarchy in the notes on
financial instruments. However, in accordance with the transitional treatment provided in paragraph 7-4 of the “Implementation
Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, July 4, 2019), notes pertaining to theprevious period are not presented.

45(u) Change in presentation(Consolidated Statements of Cash Flows)“Equity in (earnings) losses of affiliates accounted for by the equity method” which was included in “Other, net” under “Operating
activities” for the year ended May 31, 2021 has been separately presented from the year ended May 31, 2022 due to an increase in its
monetary materiality. In order to reflect this change in presentation, the consolidated financial statements for the year ended May 31,
2021 have been reclassified.
As a result, ¥(86) million presented as “Other, net” under “Operating activities” was reclassified to ¥4 million in “Equity in(earnings) losses of affiliates accounted for by the equity method” and ¥(90) million in “Other, net.”

2. Other Explanatory Information
Note 1. U.S. Dollar Amounts
The accompanying consolidated financial statements are expressed in yen, and solely for the convenience of the reader, have beentranslated into U.S. dollars at the rate of ¥128.21=U.S.$1, the approximate rate of exchange prevailing at May 31, 2022. Thistranslation should not be construed as a representation that all amounts shown could be converted into U.S. dollars at such rate.
Note 2. Receivables and Contract Assets Arising from Contracts with Customers
Trade notes, accounts receivable and contract assets from contracts with customers as of May 31, 2022 were as follows:

May 31, 2022

As of(Millions of yen)(Thousands of
U.S. dollars)

Notes receivable¥ 586$ 4,577

Accounts receivable

7,088

55,289Contract assets

4,415

34,442

May 31,
2021

May 31,
2022

Note 3. Inventories
Inventories as of May 31, 2022 and 2021 were as follows:
As of

May 31,
2022(Millions of yen)(Thousands of
U.S. dollars)

Goods and finished products

¥ 501

¥ 514

$ 3,910Work in process

3,077

3,565

24,004

Raw materials and supplies

2,688

2,821

20,971¥6,267¥6,901$48,885

Inventories were stated at the lower of cost or net realizable value and the Company recognized losses on write-down of
inventories held for the ordinary sales purpose due to a decline in profitability in the amount of ¥134 million ($1,048 thousand) and¥190 million for the years ended May 31, 2022 and 2021, respectively. These amounts were included in “Cost of sales.”Inventories related to construction contracts which are estimated to make losses were stated after deducting the corresponding
reserve for losses on order acknowledgements in the following amounts:
As of

May 31,
2022

May 31,
2021(Millions of yen)

May 31,
2022(Thousands of
U.S. dollars)

Goods and finished products

¥ 0

¥ 28

$

5

Work in process

153

144

1,200

¥154

¥173

$1,205

Toyo Denki Seizo Report 2022

46

Financial Report

Note 4. Property, Plant and Equipment
The following table sets forth the acquisition costs and related accumulated depreciation:

As of
Buildings and structures
Machinery and vehicles
Other
Accumulated depreciation

The maturities of long-term debt are summarized as follows:

May 31,
2022

May 31,
2021(Millions of yen)

¥ 10,326
8,185
4,977
23,488(18,444)¥ 5,044

May 31,
2022(Thousands of
U.S. dollars)¥ 12,338
8,397
4,857
25,593(17,593)¥ 7,999$ 80,544
63,841
38,821
183,206(143,857)$ 39,348

May 31,
2022

May 31,
2021(Millions of yen)

¥1,257

2023
2024
2025
2026
2027 and thereafter

May 31,
2022(Thousands of
U.S. dollars)¥1,413$9,804

Buildings and structures
Machinery and vehicles
Other property, plant and equipment
Land

Accumulated depreciation of property, plant and equipment amounted to ¥18,444 million ($143,857 thousand) and ¥17,593
million as of May 31, 2022 and 2021, respectively.
Note 5. Investments and Other Assets
Investments in unconsolidated subsidiaries and affiliates included in “Other” under “Investments and other assets” as of May 31,
2022 and 2021 were as follows:

As ofInvestments in capital

May 31,
2022

May 31,
2021(Millions of yen)

¥2,184

May 31,
2022(Thousands of
U.S. dollars)¥2,249$17,038

Note 6. Short-Term Borrowings and Long-Term Debt
As of May 31, 2022 and 2021, short-term borrowings and the current portion of long-term debt consisted of the following:

As ofLoans, principally from banks
Current portion of long-term debt

May 31,
2022

May 31,
2021(Millions of yen)

¥ —
585
¥585

May 31,
2022(Thousands of
U.S. dollars)¥1,500585¥2,085$ —
4,565$4,565The annual weighted average interest rates applicable to current-portion of long-term debt as of May 31, 2022 were 0.601%.

As of

May 31,
2022

May 31,
2021(Millions of yen)

Long-term debt, excluding current portion, serially due from 2023 through 2032

¥11,173¥11,759

The annual weighted average interest rate applicable to long-term debt as of May 31, 2022 was 0.405%.

47

May 31,
2022(Thousands of
U.S. dollars)$87,152(Thousands of
U.S. dollars)

¥

585
885
4,525
4,525
1,237
¥11,759$ 4,565
6,905
35,29535,295
9,655$91,717

May 31,
2022

May 31,
2021(Millions of yen)

¥3,170
368
146
1,201
¥4,886

May 31,
2022(Thousands of
U.S. dollars)¥5,485
596
376
1,232
¥7,691$24,729
2,870
1,140
9,371
$38,111

The following assets included in the above are set by factory foundation fixed collateral security for short-term borrowings as of
May 31, 2022 and 2021:

As of
Buildings and structures
Machinery and vehicles
Other property, plant and equipment

May 31,
2022

May 31,
2021(Millions of yen)

¥1,380368
146¥1,894

May 31,
2022(Thousands of
U.S. dollars)¥1,474596
376¥2,447$10,764
2,870
1,140$14,774

Note 7. Retirement Benefit Plans
The Company and its consolidated subsidiaries have retirement benefit plans combined by defined contribution plans and lump-sum
payment plans.
The Company and its consolidated subsidiaries introduced the point system in the lump-sum payment plans, under which
retirement benefit amounts are computed based on the accumulated points granted according to the job ranking and performances.
Under the lump-sum payment plans held by certain consolidated subsidiaries, the liability for retirement benefits and retirement
benefit expenses are calculated using a simplified method.
The changes in the retirement benefit obligation during the years ended May 31, 2022 and 2021 were as follows:

For the Years Ended

As of May 31, 2022 and 2021, long-term debts were as follows:(Millions of yen)

As of May 31, 2022 and 2021, the assets pledged as collateral for short-term borrowings and long-term debt were as follows:

As ofDepreciation of property, plant and equipment for the years ended May 31, 2022 and 2021 were as follows:

For the Years Ended

Years ended May 31

Retirement benefit obligation as of June 1
Service cost
Interest cost
Actuarial (gain) loss
Retirement benefits paid
Other
Retirement benefit obligation as of May 31

May 31,
2022

May 31,
2021(Millions of yen)

¥4,124
297
15
(16)
(287)
(19)
¥4,113

May 31,
2022(Thousands of
U.S. dollars)¥4,010
284
15
16
(202)
—
¥4,124$32,171
2,316
119
(125)
(2,242)(154)$32,086

Toyo Denki Seizo Report 2022

48

Financial Report

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of
May 31, 2022 and 2021 for the Company’s and the consolidated subsidiaries’ defined benefit plans:

As of

May 31,
2022

May 31,
2021(Millions of yen)

May 31,
2022(Thousands of
U.S. dollars)

Unfunded retirement benefit obligation
Net liability (asset) for retirement benefits on the consolidated balance sheets¥4,113
4,113¥4,124
4,124$32,086
32,086

Liability for retirement benefits
Net liability (asset) for retirement benefits on the consolidated balance sheets¥4,113
4,113¥4,124
4,124$32,086
32,086

Note: The plan adopting the simplified method is included.

The components of retirement benefit expenses for the years ended May 31, 2022 and 2021 were as follows:

For the Years Ended
Service cost
Interest cost
Amortization of actuarial loss
Other
Retirement benefit expenses

May 31,
2022

May 31,
2021(Millions of yen)

¥297
15
35
11
¥359

May 31,
2022(Thousands of
U.S. dollars)

¥284
15
63
—
¥363

$2,316119
276
93$2,806Retirement benefits liability adjustments included in other comprehensive income (before tax effect) as of May 31, 2022 and 2021
were as follows:

As ofActuarial gain
Total

May 31,
2022

May 31,
2021(Millions of yen)

¥51
¥51

May 31,
2022(Thousands of
U.S. dollars)

¥46
¥46

$402
$402

Retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) as of May 31,
2022 and 2021 were as follows:

As ofUnrecognized actuarial gain
Total

May 31,
2022

May 31,
2021(Millions of yen)

¥88
¥88

May 31,
2022(Thousands of
U.S. dollars)

¥140
¥140

$692
$692

Major actuarial assumptions (weighted average) used in accounting for the above plans as of May 31, 2022 and 2021 were as
follows:

For the Years Ended
Discount rate

May 31,
2022
0.4%

May 31,2021
0.4%

Note: The Company does not use the expected rate of salary increase in computing retirement benefit obligation since the Company adopts the point system.

Note 8. Net Assets
Information regarding changes in net assets for the years ended May 31, 2022 and 2021 was as follows:a. Shares issued and outstanding/ Treasury stock
For the year ended May 31, 2022

Number ofshares as ofJune 1, 2021

Type of shares

Increase

Decrease

Number ofshares as of
May 31, 2022

(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock

9,735,000——

9,735,000

794,128480—

794,608

Decrease

Number ofshares as of
May 31, 2021

Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit

480 shares

For the year ended May 31, 2021

Number ofshares as ofJune 1, 2020

Type of shares

Increase(Shares)

Shares issued:
Common stock
Treasury stock:
Common stock

9,735,000——

9,735,000

793,403

725—

794,128

Cut-off date

Effective date

Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit

725 sharesb. Dividends
1) Dividends paid
For the year ended May 31, 2022
Resolution
Annual general meetingof the shareholders on
August 27, 2021

Type of shares
Common stock

Total dividends Total dividends
Dividends per(Millions of (Thousands of Dividends per share (U.S.
yen)
U.S. dollars)
share (Yen)dollars)¥268$2,092¥30.00$0.23

Total dividends(Millions of Dividends per
yen)share (Yen)

Cut-off date

Effective date

May 31, 2021 August 30, 2021

For the year ended May 31, 2021
Resolution
Annual general meetingof the shareholders on
August 26, 2020

Type of shares
Common stock¥268¥30.00 May 31, 2020 August 27, 2020

The amounts of the required contribution to the defined contribution plans of the Company and its consolidated subsidiaries were¥116 million ($911 thousand) and ¥118 million for the years ended May 31, 2022 and 2021, respectively.

49

Toyo Denki Seizo Report 2022

50

Financial Report2) Dividends with the cut-off date in the year ended May 31, 2022 and the effective date in the year ending May 31, 2023
Total
dividends Total dividends
Dividends per(Millions of (Thousands of Source of Dividends per share (U.S.
Type of shares
yen)
U.S. dollars) dividends
share (Yen)dollars)Cut-off date Effective date
Resolution
Annual general meetingof the shareholders on
CommonRetained
May 31,
August 26,
August 25, 2022
stock
2022
¥268
$2,091 earnings¥30.00$0.23 2022

Note 9. Selling, General and Administrative Expenses
The main components of “Selling, general and administrative expenses” for the years ended May 31, 2022 and 2021 were as follows:

May 31,2022

For the Years Ended

May 31,
2021(Millions of yen)

¥1,868
6
315
202
(0)
712

Salaries and allowances
Provision for accrued directors’ bonuses
Provision for accrued employees’ bonuses
Retirement benefit expenses
Provision for allowance for doubtful accounts
Research and development expenses

May 31,
2022(Thousands of
U.S. dollars)¥1,895
36
322
205
2
819

$14,574
50
2,463
1,579
(7)
5,553

Note 10. Special (Losses) Gains, Net
The components of “Special (losses) gains, net” for the years ended May 31, 2022 and 2021 were as follows:

May 31,2022

For the Years Ended

May 31,
2021(Millions of yen)

Special gains:
Gain on sales of investment securities
Gain on reversal of foreign translation adjustment
Special losses:
Impairment loss
Loss on valuation of investment securities
Loss on valuation of investments in subsidiaries and affiliates
Total

May 31,
2022(Thousands of
U.S. dollars)

¥ 366
94

¥407
—

$ 2,857733(2,256)(45)(155)¥(1,996)

—
—
—
¥407

(17,596)(353)(1,211)$(15,570)

Impairment loss
The Group recognized an impairment loss on the following group of assets for the year ended May 31, 2022:
Loss on impairment
Use
Manufacturing equipment ofIndustrial Systems

Location

Type of assets(Millions of yen)

Toyo Denki Seizo K.K. Shiga Ryuo plant(Ryuo-cho, Shiga Pref.)Buildings, etc.

¥2,256(Thousands of
U.S. dollars)$17,596

In assessing impairment losses, the Group groups its business assets based on business classification for management
accounting purposes under which income and expenditure are managed on an ongoing basis.
Since the future cash flows were lower than the carrying value of the asset group due to a deterioration in the earnings
environment, the value of various fixed assets was reduced to their recoverable amount and the reduced amount was recorded as an
impairment loss under special losses. The recoverable amount is measured using the value in use and calculated by discounting thefuture cash flows at 4.8%.
The above assets consist of buildings and structures in the amount of ¥2,046 million ($15,962 thousand), machinery, equipment
and vehicles in the amount of ¥178 million ($1,392 thousand) and land in the amount of ¥30 million ($241 thousand).

51

Note 11. Income Taxes
Income taxes in Japan applicable to the Company and its domestic consolidated subsidiaries consist of corporation tax, inhabitants’taxes and enterprise tax, which, in the aggregate, resulted in a statutory rate of approximately 30.6% for the years ended May 31,
2022 and 2021. Income taxes of a foreign consolidated subsidiary are based generally on the tax rates applicable in the country ofincorporation.
The reconciliation between the effective tax rates reflected in the consolidated statements of income and the effective statutory tax
rate for the year ended May 31, 2022 is omitted since loss before income taxes was recorded for the year ended May 31, 2022.
The reconciliation between the effective tax rates reflected in the consolidated statements of income and the effective statutory tax
rate for the year ended May 31, 2021 was as follows:

For the Year Ended
Effective statutory tax rate
Effect of:
Non-deductible expenses for income tax purpose
Non-taxable income such as dividends income, etc.
Per capita inhabitant tax
Valuation allowance
Income from affiliates accounted for by the equity method
Liquidation of an affiliate
Difference arising from the rates used by subsidiaries
Retained profit of affiliates
Research and development tax credit
Other
Effective tax rate

May 31,
2021
30.6%
1.2
(1.9)
2.5
4.9
(0.1)
(21.0)
1.1
0.3
(1.2)
(0.4)
16.0%

The significant components of deferred tax assets and liabilities as of May 31, 2022 and 2021 were as follows:

As ofDeferred tax assets:
Write-down of inventories
Impairment loss
Liability for retirement benefits
Accrued employees’ bonuses
Reserve for losses on order acknowledgements
The carryforward of unused tax losses (Note 1)
Other
Total gross deferred tax assets
Valuation allowance for the carryforward of unused tax losses (Note 1)
Valuation allowance for deductible temporary differences
Total valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Unrealized holding gain on securities
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

May 31,
2022

May 31,
2021(Millions of yen)¥

May 31,
2022(Thousands of
U.S. dollars)

307
691
1,266
252
131
129
498
3,278
(129)
(462)
(592)
2,686

¥ 270
—
1,269
258
157
549
361
2,867
(536)
(346)
(883)
1,983

$ 2,398
5,396
9,877
1,967
1,028
1,011
3,889
25,569(1,008)(3,609)(4,617)
20,951(1,736)(65)(1,802)¥ 883(2,136)(50)(2,187)¥ (203)(13,544)(511)(14,056)$ 6,894(Note 1) Valuation allowance decreased by ¥291 million ($2,269 thousand) due primarily to a decrease in valuation allowance on tax
loss carryforwards by ¥406 million ($3,172 thousand).

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52

Financial Report

Note 12. Other Comprehensive Loss
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive loss forthe years ended May 31, 2022 and 2021:(Note 2) The breakdown of the carryforward of unused tax losses and valuation allowance by expiry date is as follows:Year ended May 31, 2022

(Millions of yen)
The carryforward of unused
tax losses (a)Valuation allowance
Deferred tax assets(Thousands of U.S.
dollars)
The carryforward of unused
tax losses (a)Valuation allowance
Deferred tax assets

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years

¥ 5

¥—

¥—

¥—

¥ 12

¥ 111

¥ 129

(5)
—

—
—

—
—

—
—

(12)
—

(111)
0

(129)
0(b)

Due inOne Year or Less

Total

Due after
One Yearthrough
Two Years

Due after
Two Years
throughThree Years

Due afterThree Years
through
Four Years

Due after
Four Years
throughFive Years

Due after
Five Years

$ 39

$—

$—

$—

$ 98

$ 873

$ 1,011

(39)
—

—
—

—
—

—
—

(98)
—

(870)
3

(1,008)3(b)Due inOne Year or Less

Total(a) The amount is determined by multiplying the corresponding carryforward of unused tax losses by the effective statutory tax rate.
(b) Deferred tax assets of ¥0 million ($3 thousand) is recognized on the carryforward of unused tax losses of ¥129 million ($1,011
thousand) (amount multiplied by the effective statutory tax rate). The said deferred tax assets of ¥0 million ($3 thousand) is
recognized on the carryforward of unused tax losses of ¥20 million ($163 thousand) (amount multiplied by the effective statutory
tax rate) of Toyo Shoji Co., Ltd., which is a consolidated subsidiary of the Company.
Year ended May 31, 2021

(Millions of yen)
The carryforward of unused
tax losses (a)Valuation allowance
Deferred tax assets

Due after
Due after
Due after
Due after
One Year
Two Years
Three Years Four Years
Due inthrough Two through Three through Four through FiveOne Year or Less
Years
Years
Years
Years

Due after
Five Years

Total

¥ 435

¥ 5

¥—

¥—

¥—

¥ 109

¥ 549

(435)
—

(5)
—

—
—

—
—

—
—

(96)
13

(536)
13(b)

(a) The amount is determined by multiplying the corresponding carryforward of unused tax losses by the effective statutory tax rate.
(b) Deferred tax assets of ¥13 million is recognized on the carryforward of unused tax losses of ¥549 million (amount multiplied by
the effective statutory tax rate). The said deferred tax assets of ¥13 million is recognized on the carryforward of unused tax lossesof ¥13 million (amount multiplied by the effective statutory tax rate) of Toyo Shoji Co., Ltd., which is a consolidated subsidiary of
the Company.

For the Years Ended

May 31,
2022

Unrealized holding loss on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectUnrealized holding loss on securities¥(1,655)366(1,289)399(889)¥(1,737)407(1,330)405(924)$(12,912)
2,857(10,055)
3,118(6,936)

Translation adjustments
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTranslation adjustments

—
2
2
2

(6)
—
(6)
(6)

—
22
22
22

Retirement benefits liability adjustments
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effect
Retirement benefits liability adjustments

24
26
51
(15)
35

(16)
63
46
(14)
32

194
207
402
(123)
278

53

14

417

53
¥ (797)14¥ (883)417$ (6,218)

Share of other comprehensive income of affiliates accounted for by the equity
methodAmount arising during the year
Share of other comprehensive income of affiliates accounted for by theequity method
Total other comprehensive loss

May 31,
2021(Millions of yen)

May 31,
2022(Thousands of
U.S. dollars)Note 13. Lease Transactions
Information on finance leases that do not transfer ownership of the leased property to the lessee is omitted since there is nomateriality in terms of value.
Note 14. Contingent Liabilities
As of May 31, 2022 and 2021, the Company was committed to provide guarantees on bank borrowings of the following affiliates:

As of
Changzhou Ruiyang Transmission Technology Co., Ltd.
Beijing Jingche Shuangyang Traction System Co., Ltd.

53

May 31,
2022

May 31,
2021(Millions of yen)

¥316
224

May 31,
2022(Thousands of
U.S. dollars)

¥374
222

$2,4691,754

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54

Financial Report

Note 15. Amounts Per Share

For the Years Ended

May 31,
2022

May 31,2021

Net (loss) income:Basic¥(104.02)¥109.38

As of

May 31,
2022

May 31,2021

Net assets¥2,462.17(Yen)

May 31,
2022(U.S. dollars)(Yen)$(0.81)
May 31,
2022(U.S. dollars)¥2,685.28$19.20Note: Diluted net income per share is omitted for the year ended May 31, 2022 since there is no dilution of equity and the Company recorded net loss per share for the period.
Diluted net income per share is omitted for the year ended May 31, 2021 since there is no dilution of equity.

The bases for calculation are as follows:
Basic net (loss) income per share

For the Years Ended
Net (loss) income attributable to owners of the parent
Net (loss) income not attributable to common shareholders
Net (loss) income attributable to owners of the parent related to common stock

May 31,
2022

May 31,
2021(Millions of yen)¥(930)—(930)

May 31,
2022(Thousands of
U.S. dollars)

¥977
—
977

$(7,254)—(7,254)(Thousand shares)

Average number of shares of common stock during the year

8,940

8,941

Note 16. Financial Instruments
Overview(1) Policy for financial instruments
The Group raises its necessary funds for capital investments to reinforce and renew production facilities and working capital
principally through bank borrowings. The Group manages temporary cash surpluses through low risk financial assets. The Group
uses derivatives in order to avoid the following risks and does not enter into derivatives for speculative or trading purposes.
(2) Types of financial instruments and related risk
Trade receivables—trade notes and accounts receivable and electronically recorded receivables—are exposed to credit risk in relation
to customers. Trade receivables denominated in foreign currencies arising from international business are exposed to foreignexchange fluctuation risk, but the Group utilizes forward foreign exchange contracts to reduce such risk as a hedging instrument.
Investment securities are composed of mainly the shares of common stock of other companies with which the Group has business
relationships and exposed to market risk.
Certain long-term debt raised for the purpose of making capital investments with variable interest rates is exposed to interest rate
fluctuation risk. However, to reduce such risk and fix interest expense for long-term debt bearing interest at variable rates, the Grouputilizes interest rate swap transactions as a hedging instrument.
Regarding hedging instruments and hedged items in hedge accounting, hedging policy, and assessment of the effectiveness ofhedging activities, etc., please see “1. Summary of Significant Accounting Policies (r) Derivative financial instruments.”(3) Risk management for financial instruments(a) Monitoring of credit risk (the risk that customers or counterparties may default)
In accordance with the internal policies of the Group for managing credit risk arising from receivables, each related division monitors
credit worthiness of their main customers periodically, and monitors due dates and outstanding balances by individual customer. In
addition, the Group is making efforts to identify and mitigate risks of bad debts from customers who are having financial difficulties.

55

Investment securities are composed of mainly the shares of common stock of highly rated companies with which the Group hasbusiness relationships. Accordingly, the Group believes that the credit risk deriving from such investment securities is insignificant.
The Group also believes that the credit risk of derivatives is insignificant as it enters into derivative transactions only with financial
institutions which have a sound credit profile.
(b) Monitoring of market risks (the risk arising from fluctuations in foreign exchange rates, interest rates and others)
The Group utilizes interest rate swap transactions to reduce interest rate fluctuation risk on long-term debt.
For investment securities, the Group periodically reviews the fair values of such financial instruments and the financial position of
the issuers.
In conducting derivative transactions, the division in charge of each derivative transaction follows the internal policies, which set
forth delegation of authority and maximum upper limit on positions. Monthly reports including actual transactions data are submitted
to the Board of Directors for their review.
(c) Monitoring of liquidation risk (the risk that the Group may not be able to meet its obligations on scheduled due dates)
Based on the report from each division, the Group prepares and updates its cash flow plans on a timely basis to manage liquidationrisk.
(4) Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result indifferent fair value. In addition, the notional amounts of derivatives in Note 19, Derivative Transactions are not necessarily indicativeof the actual market risk involved in derivative transactions.
Fair value of financial instruments
Carrying value and fair value of financial instruments on the consolidated balance sheets as of May 31, 2022 and 2021 and difference
between the two are shown in the following table.

As of May 31, 2022

Carrying value

Fair value

Difference(Millions of yen)

AssetsInvestment securities*1
Total assets
Liabilities
Long-term debt*2
Total liabilities

As of May 31, 2022

¥11,408¥11,408¥11,408¥11,408¥—¥—¥11,759¥11,759¥11,770¥11,770¥ 10¥ 10

Fair value

Difference

Carrying value(Thousands of U.S. dollars)

AssetsInvestment securities*1
Total assets
Liabilities
Long-term debt*2
Total liabilities$88,984$88,984$88,984$88,984$—$—$91,717$91,717$91,802$91,802$ 85$ 85*1 Investment securities
The fair value of investment securities is determined based on quoted prices on the stock exchange.
Securities are held as available-for-sale securities. For notes on these securities, see Note 17 “Securities.”*2 Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings
were entered into. The fair value of long-term debt with variable interest rates, which is hedged by the interest rate swaps and to which hedge accounting is applied, isbased on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings were entered into. Current portionof long-term debt is included in the above table.

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56

Financial Report

Notes:
1. Cash on hand and in banks, trade notes and accounts receivable, electronically recorded receivables, trade notes and accounts
payable, electronically recorded payables, short-term borrowings, income taxes payable, etc. are omitted since these items aresettled in a short period of time and their carrying value approximates their fair value.
2. Equity securities without market quotation, etc. are not included in the above investment securities. Carrying value of such financial
instruments is as follows:

May 31, 2022

As ofUnlisted equity securities

As of May 31, 2021

Carrying value(Millions of yen)(Thousands of
U.S. dollars)¥1,062$8,288Fair value

Difference

As of May 31, 2021

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables¥ 3,962
13,189901¥18,052

¥—
29
—
¥ 29

¥—
—
—
¥—

¥—
—
—
¥—

4. The redemption schedule for long-term debt is disclosed in Note 6.
Fair value information by level within the fair value hierarchy(Millions of yen)

AssetsInvestment securities*1
Total assets
Liabilities
Long-term debt*2
Total liabilities¥12,767¥12,767¥12,767¥12,767¥—¥—¥12,344¥12,344¥12,373¥12,373¥ 29¥ 29*1 Investment securities
The fair value of investment securities is determined based on quoted prices on the stock exchange.
Securities are held as available-for-sale securities. For notes on these securities, see Note 17 “Securities.”*2 Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings
were entered into. The fair value of long-term debt with variable interest rates, which is hedged by the interest rate swaps and to which hedge accounting is applied, isbased on the present value of the total of principal and interest discounted by the interest rate to be applied if similar new borrowings were entered into. Current portionof long-term debt is included in the above table.

Notes:
1. Cash on hand and in banks, trade notes and accounts receivable, electronically recorded receivables, trade notes and accounts
payable, electronically recorded payables, short-term borrowings, income taxes payable, etc. are omitted since these items aresettled in a short period of time and their carrying value approximates their fair value.
2. Carrying value of financial instruments for which it is extremely difficult to determine the fair value is as follows:

May 31, 2021

As of(Millions of yen)

¥1,064

Unlisted equity securities
3. Redemption schedule for receivables and securities with maturities on May 31, 2022 and 2021 were as follows:

As of May 31, 2022

Due in One Yearor Less

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

As of May 31, 2022

¥ 4,449
7,643
1,136¥13,229
Due in One Yearor Less

Due after
Ten Years

¥—
32
—
¥ 32

¥—
—
—
¥—

¥—
—
—
¥—

Due after One
Year throughFive Years

Due after Five
Years throughTen Years

Due after
Ten Years(Thousands of U.S. dollars)

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables

57$ 34,705
59,615
8,863$103,184

$—
252
—
$252

$—
—
—
$—

Level 1 fair value: Fair value measured using (unadjusted) quoted prices in active markets for assets or liabilities that are thesubject of the measurement.
Level 2 fair value: Fair value measured using directly or indirectly observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using significant unobservable inputs.
If multiple inputs that are significant to the fair value measurement are used, the fair value measurement is categorized in its entirety
in the level of the lowest level input that is significant to the entire measurement.
(1) Financial assets and liabilities measured at fair value

As of May 31, 2022

$—
—
—
$—

Fair value
Level 1

Level 2

Level 3

Total

(Millions of yen)

Investment securities:
Available-for-sale securities:
Equity securities
Total financial assets
Not applicable for financial liabilities

As of May 31, 2022

(Millions of yen)

Cash on hand and in banks
Trade notes and accounts receivable
Electronically recorded receivables

The fair value of financial instruments is classified into the following three levels according to the observability and materiality of
inputs used to measure fair value.

¥11,408¥11,408

¥—
¥—

¥—
¥—

¥11,408¥11,408

Fair value
Level 1

Level 2

Level 3

Total

(Thousands of U.S. dollars)

Investment securities:
Available-for-sale securities:
Equity securities
Total financial assets
Not applicable for financial liabilities$88,984$88,984

$—
$—

$—
$—

$88,984$88,984(2) Financial assets and liabilities other than those measured at fair value

As of May 31, 2022

Fair value
Level 1

Level 2

Level 3

Total

(Millions of yen)

Not applicable for financial assets
Long-term debt
Total financial liabilities¥—¥—¥11,770¥11,770¥—¥—¥11,770¥11,770

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58

Financial Report

As of May 31, 2022

Fair value
Level 1

Level 2

Level 3

Total

(Thousands of U.S. dollars)

Not applicable for financial assets
Long-term debt
Total financial liabilities$—$—$91,802$91,802$—$—$91,802$91,802

Note: A description of the valuation techniques and inputs used in the fair value measurements
Investment securities
The fair value of listed equity securities is based on quoted market prices. As listed equity securities are traded in active markets, theirfair value is classified as Level 1.

The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be
applied if similar new borrowings were entered into. The fair value of long-term debt with variable interest rates, which is hedged by
the interest rate swaps and to which hedge accounting is applied, is based on the present value of the total of principal and interest
discounted by the interest rate to be applied if similar new borrowings were entered into. The fair value of long-term debt is classified
as Level 2.
The fair value of long-term debt includes current portion of long-term debt.
Note 17. Securities

Available-for-sale securities

Carrying value Acquisition cost

Unrealized
gain (loss)(Millions of yen)

As of May 31, 2022

¥11,205¥11,205¥5,539¥5,539¥5,666¥5,666¥ 202¥ 202¥11,408

¥ 218
¥ 218
¥5,758¥ (15)¥ (15)¥5,650Carrying value Acquisition cost

Unrealized
gain (loss)(Thousands of U.S. dollars)

Securities for which carrying value exceeds acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds carrying value:
Stock
Subtotal
Total

Unrealized
gain (loss)(Millions of yen)

Securities for which carrying value exceeds their acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds their carrying value:
Stock
Subtotal
Total¥12,514¥12,514¥5,511¥5,511¥7,003¥7,003¥ 253¥ 253¥12,767

¥ 317
¥ 317
¥5,828¥ (63)¥ (63)¥6,939Note: Acquisition cost in the above table represents carrying value reflecting impairment losses.
If the market value of the securities declines by 50% or more from the acquisition cost as of the end of the fiscal year, the Group recognizes the difference between themarket value and the acquisition cost as an impairment loss. If the decline ranges between about 30% and 50%, the Group recognizes an impairment loss for thenecessary amount considering its recoverability.

For the Years Ended
Stock:
Sales proceeds
Gain on sales
Loss on sales

May 31,
2022

May 31,
2021(Millions of yen)

¥466
366
—

May 31,
2022(Thousands of
U.S. dollars)

¥693
407
—

$3,6372,857—

Note 18. Supplementary Cash Flow Information
Cash and cash equivalents in the consolidated statements of cash flows for the years ended May 31, 2022 and 2021 were reconciled
to cash on hand and in banks in the consolidated balance sheets as follows:

Information regarding securities classified as available-for-sale securities

Securities for which carrying value exceeds acquisition cost:
Stock
Subtotal
Securities for which acquisition cost exceeds carrying value:
Stock
Subtotal
Total

Carrying value Acquisition cost

Information regarding available-for-sale securities soldLong-term debt

As of May 31, 2022

As of May 31, 2021

$87,402$87,402$43,207$43,207$44,195$44,195$ 1,582$ 1,582$88,984$ 1,706$ 1,706$44,913$ (123)$ (123)$44,071

As ofCash on hand and in banks
Cash and cash equivalents

May 31,
2022

May 31,
2021(Millions of yen)

¥4,449¥4,449¥3,964¥3,964

May 31,
2022(Thousands of
U.S. dollars)$34,705$34,705

Note 19. Derivative Transactions
Hedging policies
The Company utilizes forward foreign exchange contracts and interest rate swaps for the purpose of hedging its exposure tofluctuations in foreign exchange rates and interest rates, respectively. However, based on internal management rules on financial
market risk approved by the Company’s Board of Directors, Group companies do not enter into transactions involving derivatives for
speculative or trading purposes.

Note: Acquisition cost in the above table represents carrying value reflecting impairment losses. In the year ended May 31, 2022, the Company recognized loss on valuationof investment securities in the amount of ¥45 million ($353 thousand).
If the market value of the securities declines by 50% or more from the acquisition cost as of the end of the fiscal year, the Group recognizes the difference between themarket value and the acquisition cost as an impairment loss. If the decline ranges between about 30% and 50%, the Group recognizes an impairment loss for thenecessary amount considering its recoverability.

59

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Types and purpose of derivative transactions
The Company primarily uses forward foreign exchange contracts to hedge against the fluctuations in foreign currency exchange rates
on trade receivables denominated in foreign currencies and interest rate swaps to hedge against the adverse impact of fluctuations ininterest rates on interest-bearing debt.
Derivative transactions to which hedge accounting is not applied:
As of May 31, 2022 and 2021, there were no currency-related derivatives.

Contract assets relate to the right of the Group to consideration for contracts with customers which have been completed but an
invoice has not yet been issued as of the end of the fiscal period. Once the Group has an unconditional right to consideration, it
reclassifies contract assets to receivables from contracts with customers.
Contract liabilities primarily relate to advances received from customers based on the contracts with customers before theperformance obligation is satisfied. Contract liabilities are reversed as revenue is recognized.
Revenue recognized in the year ended May 31, 2022 that was included in the contract liability balance at the beginning of the year
was ¥27 million ($212 thousand).
(2) Transaction price allocated to the remaining performance obligations
The total transaction price allocated to the remaining performance obligations as of May 31, 2022 was ¥27,275 million ($212,739
thousand) and the Group expects to recognize revenue mainly within a period of one to three years as performance obligations forsuch remaining performance obligations are satisfied.

Derivative transactions to which hedge accounting is applied:
As of May 31, 2022 and 2021, there were no interest-related derivatives.
Note 20. Revenue Recognition
1. Disaggregation of revenue from contracts with customers
Information about disaggregation of revenue arising from contracts with customers is as follows:Year ended May 31, 2022
Reportable segment:
Transportation Systems

Industrial Systems

Information Equipment Systems

Domestic railway
Overseas railway
Other
Subtotal
Processing machine
Testing machinePower generator/power source
Other
Subtotal
Information equipment
Subtotal

Other (Note)
Total
Revenue arising from contracts with customers
Sales to third parties(Millions of yen)(Thousands of
U.S. dollars)¥14,705
2,831
1,919¥19,456¥ 2,719
2,173
2,187
2,822
¥ 9,902
¥ 790
¥ 790
¥
9
¥30,158¥30,158¥30,158$114,698
22,088
14,971$151,757$ 21,210
16,95017,05922,016$ 77,236$ 6,163$ 6,163$71$235,229$235,229$235,229(Note) “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

2. Useful information in understanding revenue from contracts with customers
This information is as stated in (p) Accounting for significant revenue and costs under 1. Summary of Significant Accounting Policies.
Consideration for performance obligation is usually received within one year from the satisfaction of performance obligations anddoes not include any significant financing component.
3. Balance of contract assets and liabilities and the transaction price allocated to the remaining performance obligations(1) Balance of contract assets and liabilities

As of
Receivables from contracts with customers (beginning balance)
Receivables from contracts with customers (ending balance)
Contract assets (beginning balance)
Contract assets (ending balance)
Contract liabilities (beginning balance)
Contract liabilities (ending balance)

61

Note 21. Segment Information
The reportable segments of the Group are components for which discrete financial information is available and operating results are
regularly reviewed by the Board of Directors to make decisions about resource allocation and to assess performance.
The Group establishes business units by product and each business unit designs domestic and overseas comprehensive strategies
for its products and is developing business activities. Accordingly, the Group consists of the three reportable segments by productbased on the business units, which are Transportation Systems, Industrial Systems and Information Equipment Systems.
The accounting policies of the segments are substantially the same as those described in the significant accounting policies in “1.
Summary of Significant Accounting Policies.” Segment profit is evaluated based on operating income.
Inter-segment sales are recorded at the same prices used in transactions with third parties.

For the year ended May 31, 2022
Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Millions of yen)

Sales, profits orlosses and asset byreportable segment
Net sales:
Sales to third parties
Inter-segment sales
and transfers¥19,456¥ 9,902¥790¥ 9¥30,158¥—¥30,158

Segment profit
Segment assets

10
19,467¥ 2,190¥16,276

0
9,903
¥ 477
¥10,068

—
790
¥142
691

329
338
¥ (19)¥434

340
30,499¥ 2,791¥27,471

(340)
(340)
¥ (2,619)¥19,444—
30,158¥ 171¥46,916

Other items:
Depreciation
Capital expenditures

¥
¥

¥
¥

¥ 21
¥ 4

¥ 3
¥—

¥ 1,008¥ 284¥¥¥ 1,257
¥ 315

513
164

470
115

248
31

May 31, 2022
(Millions of yen)(Thousands of
U.S. dollars)¥10,280
8,812
3,838
4,415
34
47

$80,183
68,731
29,941
34,442271
373
Toyo Denki Seizo Report 2022

62

Financial Report

Geographical information

For the year ended May 31, 2022
Reportable segments
Transportation
Systems

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Thousands of U.S. dollars)

Sales, profits orlosses and asset byreportable segment
Net sales:
Sales to third parties
Inter-segment sales
and transfers$151,755$77,238$6,163$71$235,229$—$235,229

Segment profit
Segment assets

82
151,838$ 17,081$126,955

6
77,244$ 3,727$78,532—
6,163$1,114$5,3932,568
2,639$ (149)$3,391

2,656
237,886$ 21,774$214,272(2,656)(2,656)$ (20,433)$151,659—
235,229$ 1,340$365,932

Other items:
Depreciation
Capital expenditures$ 4,003$ 1,282$ 3,667
$ 900

$ 170
$ 37

$ 26
$ —

$ 7,869$ 2,220$ 1,935$243$ 9,804$ 2,463

Note: “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

Net sales to third parties by countries or areas grouped according to geographical classification for the years ended May 31, 2022
and 2021 were summarized as follows:

For the Years Ended

May 31,
2022

Japan
China
Other
Consolidated¥25,779
3,015
1,363¥30,158

Industrial
Systems

Other(Note)

Segment profit
Segment assets
Other items:
Depreciation
Capital expenditures$201,072
23,521
10,635$235,229

Major customer information for the years ended May 31, 2022 and 2021 was omitted since there was no customer to which sales
exceeds 10% of net sales recorded in the accompanying consolidated statements of income.
Information about impairment loss on property, plant and equipment

For the year ended May 31, 2022
Reportable segments

Adjustments

Industrial
Systems

Information
Equipment
Systems

Consolidated

Other(Note)

Total

Adjustments

Consolidated(Millions of yen)

Impairment loss

(Millions of yen)

Sales, profits orlosses and asset byreportable segment
Net sales:
Sales to third parties
Inter-segment sales
and transfers¥27,876
3,628
1,638¥33,143

Major customer information

Transportation
Systems
Total(Thousands of
U.S. dollars)Note: Net sales information above is based on customers’ location.

Reportable segments
Transportation
Systems

May 31,
2022(Millions of yen)

For the year ended May 31, 2021
Information
Equipment
Systems

May 31,2021¥—¥2,256¥—¥—¥2,256¥—¥2,256

For the year ended May 31, 2022
Reportable segments¥21,52850
21,579¥ 2,211¥17,151¥10,541
0
10,542¥ 718¥13,838¥1,067
—
1,067
¥ 267
¥ 674

¥ 5
346
352
¥ (39)¥479¥33,143
397
33,541¥ 3,157¥32,144

¥

—

(397)
(397)
¥ (2,734)¥19,822

Transportation
Systems¥33,143—
33,143¥ 423¥51,967

Industrial
Systems

Information
Equipment
Systems

Other(Note)

Total

Adjustments

Consolidated(Thousands of U.S. dollars)

Impairment loss$—

$17,596$—$—$17,596$—$17,596

There was no applicable information for the year ended May 31, 2021.
Note 22. Significant Subsequent Events

¥
¥

607
454

¥
¥

527
113

¥
¥

25
10

¥ 4
¥ 2

¥ 1,165
¥ 580

¥
¥

247
51

¥ 1,413¥ 632

There were no significant subsequent events to be noted.

Note: “Other” represents business units which are not included in reportable segments and consists of worker dispatching services related activities, etc.

63

Toyo Denki Seizo Report 2022

64

Information

Stock Related Information

Company Profile

Number of shares (As of May 31, 2022)

Company Profile

Number of shares authorized

36,000,000

Number of shares issued

9,735,000

Number of shareholders

5,891

Distribution of shares by type of shareholder
Financial instruments
business operators
0.69%

Major shareholders
Number of shares held
% of
Shareholders(Thousands)
total shares held
The Master Trust Bank of Japan, Ltd. (Trust account)
978
10.94
East Japan Railway Company
480
5.36
Employees Stock Ownership Plan475
5.31
NIPPON LIFE INSURANCE COMPANY
337
3.77
Toyo Denki Subcontractor Factories
302
3.38
Shareholding Association
MUFG Bank, Ltd.
270
3.02
Sanshin Co., Ltd.
270
3.02
BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/JANUS HENDERSON
212
2.37
HORIZON FUND
The Bank of Yokohama, Ltd.
207
2.32
Ohkuraya jutaku Inc.
206
2.30

Treasury stock
8.16%

Foreigncorporations, etc.
6.01%
Other
corporations
17.49%

Individuals
and others
42.99%

Financial
institutions
24.66%(as of May 31, 2022)
Hokkaido Branch

Company NameTOYO DENKI SEIZO K.K.
(TOYO ELECTRIC MFG. CO., LTD.)

Established

June 20, 1918

Capital4,998,390,000 yen

Number of Employees

1,193 (Consolidated)
830 (TOYO DENKI SEIZO K.K.)

Head Office

1-4-16, Yaesu, Chuo-ku, Tokyo, 103-0028, Japan
TEL +81-3-5202-8121 (General Affairs Division)
https://www.toyodenki.co.jp/

Stock Exchange
Listing

The Tokyo Stock Exchange,
Standard Market

Code Number

6505

Number of Shares Authorized

36,000,000 shares

Number of Shares Issued

9,735,000 shares

Number of Shareholders

5,891

Shiga Ryuo
Plant

Sendai Branch

Yokohama
BranchHiroshima Branch
Kyushu Branch

Head office

NagoyaOsaka Branch
BranchOkinawa
BranchYokohama plant

Subsidiaries and Affiliates
Consolidated subsidiaries(Note) The percentages of total shares held are calculated excluding 794 treasury stocks.

Affiliates accounted for by the equity method

Non-consolidated subsidiaries

Transportation Systems

Transition of share price
Share price
(Yen)

2,000

Industrial Systems

Japan

TOYOKOUKI Co., Ltd.
Taihei Electric Co., Ltd.

Overseas

Toyo Denki (Beijing) Co., Ltd. (China)
Changzhou Yangdian Zhanyun Transport Equipment Co., Ltd. (China)

2,000
1,500
1,500
1,000
1,000
500

Information Equipment Systems

Toyosangyo K.K.
TD Drive Co., Ltd.

Changzhou Ruiyang Transmission Technology Co., Ltd. (China)
Beijing Jingche Shuangyang Traction System Co., Ltd.
(China)Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd.
(China)TOYO DENKI RAILWAY SERVICE, LLC. (U.S.)(Yen)

Affiliates not accounted for by the equity method

OthersToyo Shoji
Co., Ltd.

SIAM TOYO DENKI Co., Ltd.
(Thailand)
Chalco-Toyo Permanent Magnet
Motor Co., Ltd. (China)

5000(Thousands) 2019.6

Trading volume

2020.12021.12022.1(Thousands) 2019.6

2020.12021.12022.12,5000

2,000
2,500

Jingche Shuangyang

Toyo Denki (Beijing)

1,500
2,000

Changzhou Ruiyang

1,000
1,500

Yonggui Toyo

500
1,000

Yangdian Zhanyun
Chalco-Toyo

TOYO DENKI RAILWAY SERVICE

SIAM TOYO

5000
0

Disclaimer on the forward-looking statements
Information in this corporate report contains forward-looking statements. Such statements were developed based on the information available at the time
when this report was prepared. These forward-looking statements may be largely revised in the future, and the actual outcome could significantly varyfrom the stated or implied contents of such statements subject to various factors. This report is not intended to solicit investment. Investors are kindly
asked to make your investment decision at your own judgment and responsibility. Numbers presented in 100 million yen or million yen are rounded down
to the nearest respective unit.

65* See the table above for the full names of subsidiaries and affiliates.

Contact
Please use the inquiries form on the Company website for any questions regarding this Integrated Report.
Inquiry form URL: https://www.toyodenki.co.jp/en/inquiry/

Toyo Denki Seizo Report 2022

66

Information

Organization Chart(Revised on Sep 1, 2022)

Management Planning Department

Management Planning Division
Group Administration Office

PR, IR, and CSR Department
Information Systems Department

Sustainability Promotion Office
Human Resources and General Affairs Division

General Affairs Department
Human Resources Department
Legal Compliance Department
Education and Development Department
Export Management Department

Financial Affairs Division

Finance Department
Accounting Department

Corporate Quality Management Division

Planning and Research Department

General Meeting of Shareholders

Executive Officer Liaison
MeetingNational and Global Group
Company Meetings

President

Board of Directors

Management Strategy
Meeting

Quality Management Department 1
Quality Management Department 2
Corporate Production Engineering Division

Production Engineering Department

Purchasing Division

Production Planning Department
Planning and Research Department

Development Center

Business Development Division
Product Development Division
Fundamental Technology Division
Technical Management Division

Transportation Business Unit
Audit Division

Transportation Business Planning Division
JR Group Sales Division
Commuter Rail and Subway Sales Division
Osaka Sales Division
Nagoya Sales Division
China Sales Division
Overseas Project DivisionInternational Engineering Division
Engineering Division

Nomination and Compensation
Advisory Committee
Internal Control Committee

Audit Officer

Auditors

Board ofAuditors

Sustaunability Committee

Industry Business Unit

Overseas Engineering Division
Development Division
Transportation Systems Works
Production Management Division
Design Division
Quality Assurance Division
Manufacturing Division
Procurement Division
Industrial Systems Planning Division
Sales Division 1
Sales Division 2
Sales Division 3
Sales Division 4
Engineering Division
Industrial Systems Works
Production Management Division

Subsidiaries and Affiliates
TOYOKOUKI Co., Ltd.
Taihei Electric Co., Ltd.
Toyosangyo K.K.
TD Drive Co., Ltd.
Toyo Shoji Co., Ltd.
Toyo Denki (Beijing) Co., Ltd.

ICT Solution Business Unit

Changzhou Yangdian Zhanyun Transport Equipment Co., Ltd.

Quality Assurance Division

SIAM TOYO DENKI Co.,Ltd.
Changzhou Ruiyang Transmission Technology Co., Ltd.
Chengdu Yonggui Toyo Rolling Stock Equipment Co., Ltd.
Beijing Jingche Shuangyang Traction System Co., Ltd.
Chalco-Toyo Permanent Magnet Motor Co., Ltd.
TOYO DENKI RAILWAY SERVICE, LLC.

67

Development Division
Design Division
Quality Assurance Division
Manufacturing Division
Procurement Division
ICT Business Planning Division
Sales Division
ICT Works
Design Division

Yokohama Plant
ShigaRyuo Plant
Osaka Branch
Nagoya Branch

Administration Division
Administration Division

Kyushu Branch
Hokkaido Branch