The 49th Shareholders Meeting

1. DateJune 28th 2017

2. Location

Tamagawa Electronics 3rd floor conference room

AM 10:00

3-11-23 Kamitsuchidananaka Ayase-city,
Kanagawa prefecture Japan

3. Purpose matter
Report matter(1) The 49th Consolidated financial statement and business report(2) The 49th financial and business report
Resolution matter(1) The election of 6 directors(2) The election of 1 substitute auditor

(Provided document)

Business Report(

From April 1st, 2016
to March 31st, 2017

1. Current situation of corporate group(1) Business condition of the current business year
① Progress and achievement of business
During the current fiscal year, the Japan’s economy was on a moderate recovery, with corporate earnings andemployment showing signs of a turnaround.

The outlook, however, remained uncertain, reflecting fears of downturn

driven by international factors such as anticipated slowdown of Chinese economy and the UK’s decision to leave theEuropean Union.
In such economic environment, we have made the following efforts.

In the Electronics and Telecoms Equipment

segment, we focused on increasing sales of facilities relating to the fourth-generation of mobile telecommunications
technology (4G) and sales in public sector, as well as capturing orders in new business areas through entering newmarkets and acquiring new customers.

In addition, we focused on sale of internally developed products, together with

our ongoing efforts of “delivering higher value-added products,” “expanding and developing business areas,” and“engaging in joint development with business partners.”
As a result, we have seen gradual increase in the number of enquiries from new customers and in new markets,
including enquiries regarding optical equipment for business-use wireless devices, as well as high-speed digital signal
processors, in addition to our previous high-frequency analog products.
In the mobile telecommunications sector, capex spending by telecom companies showed a moderate increase fromthe second half of the fiscal year, in line with their efforts to avoid signal interference and improve connection quality.
Additionally, there has been gradual increase in the number of enquiries we received from new customers regarding
mobile telecommunications facilities for foreign markets.
In the public sector, we have seen higher demand for optical transmission equipment and digital signal processors,etc., for use in disaster preparation, business-use wireless devices, and surveillance systems. We are aiming to further
expand such demand, and also to engage in activities which take into account the prospect of market for 5G technology.
As a whole, the number of orders we received has increased.

For creating a stable business foundation, we willcontinue our efforts for increasing profits through expansion of business areas and sale of internally developed products.
In the Renewable Energy Systems Sales segment, we focused on solar power plants.

As environment surrounding

solar power plants has been increasingly challenging due to various regulations, including those impose by the Ministryof Economy, Trade and Industry regarding operation of power plants and certification under the feed-in tariff program,our group has actively started looking into the prospect of next renewable energy and environment business in general,
which will become a mainstay of our group, with an aim of expanding the segment.
As a result, orders and net sales for the current fiscal year were 4,361 million yen (a decline of 38.5% YoY) and 4,443
million yen (a decline of 38.8% YoY), respectively, and operating income, ordinary income, and net income attributableto owners of parent were 189 million yen (a decline of 32.3% YoY), 106 million yen (a decline of 49.6% YoY), and 44
million yen (a decline of 73.0% YoY), respectively.
In the Electronics and Telecoms Equipment segment, we have been focused on increasing sales in public sector andacquiring new customers.

Especially as demand in public sector has been growing, and is expected to maintain steady

growth in the future, we will remain focused on increasing profit through expansion of business areas and sale ofinternally developed products.
In the Renewable Energy System Sales segment, we have been planning and developing products and services
relating to renewable energy, with an aim of future expansion of the segment. We will continue our efforts to further
expand our sales network and improve our operating systems, for the purpose of maximizing profit.
In the Solar Power and Geothermal Power Plant Operation segments, we are actively working on development of

new business, with an aim of securing long-term stable profit, and are planning to continue increasing the number ofour company-owned clean-energy plants that use solar power and other renewable energy.
In addition to such renewable energy business, we are also eyeing opportunities in hydrogen energy business, as a
new clean energy capable of generating and storing electricity without emitting CO2, and have established the“Preparatory office for hydrogen energy business” to investigate and consider the opportunities.

Financial report
Consolidated balance sheet（As of March,31 2017 ）Current assets(Thousands JPY)
4,087,780

Current liabilities

2,040,922

Cash and deposits

2,155,286

Notes and accounts payable - trade523,660

Notes and accounts receivable-trade

1,456,254

Short-term loans payable

404,800

Merchandise and finished goods

77,731

Current portion of bonds

20,000Work in process

156,735

Current portion of long-term loans payable561,353

Raw materials and supplies

108,609

Lease obligations

74,220

Deferred tax assets

30,489Accounts payable-other164,730

Other

102,582

Income taxes payable

57,787

Non-current assets

3,338,752

Advance received

30,0752,584,111

Reserve for bonuses

59,986

Provision for product warranties

14,295

Other

130,012

Property, plant and equipment
Buildings
Machinery, equipment and other143,750
1,321,418

Tools, furniture and fixtures

74,136

Land

405,987

Long-term loans payable

Construction in progress

638,817

Lease obligations

278,644

Deferred tax liabilities

Goodwill

212,124

Net defined benefit liability

163,664

Software66,519Asset retirement obligations

26,225

Other

91,795Intangible assets

Other
Investments and other assets0

Non-current liabilities

2,144,115
614,329
1,245,516
2,584

475,996

Total liabilities

4,185,037

Investment securities

22,772

Shareholders' equity

3,264,965

Deferred tax assets

72,660Capital stock

1,677,088

Long-term loans receivable

103,614

Capital surplus

994,039

Other

285,649

Retained earnings

655,150

Allowance for doubtful accounts△8,700Treasury stock△61,312Deferred assets

19,725

Accumulated other comprehensive income

Stock issuance expenses

1,742

Valuation difference on available-for-sale securities

Development expenses

6,313

Foreign currency translation adjustment

Business commencement expenses

11,666

Subscription rights to shares

Total assets

7,446,258△5,276329△5,606
1,532

Total Net Assets

3,261,220

Total liabilities and net assets

7,446,258

Consolidated income statement（Fiscal year ended March 31,2017）(Thousands JPY)

Net sales

4,443,227

Cost of sales

3,151,189
Gross profit

1,292,038

Selling, general and administrative expenses

1,102,811

Operating income

189,226

Non-operating income
Interest income

6,715

Dividend income

224

Other

9,436

16,376

Non-operating expenses
Interest expenses

79,525

Foreign exchange losses

5,092

Share of loss of entities accounted for using equity method

11,236

Other

3,248

Ordinary income

99,102
106,500

Extraordinary income
Gain on sales of non-current assets

1,652

Gain on reversal of subscription rights to shares

16,326Other

312

18,291

Extraordinary loss
Loss on valuation of investment securities

5,415

Impairment loss

8,820

Other

225

Profit before income taxes

110,329

Income taxes-current

68,872

Income taxes - deferred△3,180

ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

14,461

65,691
44,637―
44,637

Balance sheet（As of March,31 2017）
Current assets
Cash and deposits(Thousands JPY)
930,246
761,324

Current liabilities
Current portion of long-term loans payable

407,789
331,168

Current portion of long-term loans payable to
Accounts receivable-trade

4,258

32,040subsidiaries and associates

Merchandise and finished goods

1,203

Accounts payable - other

9,075

16,000Accrued expenses

2,227

4,827

Income taxes payable

9,467

129,106

Advances received

3,666

Deferred tax assets

1,086

Deposits received

1,400

Other

12,440

Provision for bonuses

2,952

Non-current assets

2,645,405

Other

15,791

Non-current liabilities

482,432

Short-term loans receivable fromsubsidiaries and associates
Prepaid expenses
Accounts receivable - other

Property, plant and equipment

385,954

Buildings

1,113

Machinery, equipment and other

12,704Long-term loans payable

321,597

Tools, furniture and fixtures

3,388

Long-term loans payable to subsidiaries and associates

159,459Land

307,857

Provision for retirement benefits

Construction in progress

60,889Deferred tax liabilities

Intangible assets
Software146

307
890,222

Shareholders' equity

2,685,346

Capital stock

1,677,088

Capital surplus

994,039

20,303

Legal capital surplus

898,431

1,602,900

Other capital surplus

95,60753,079Retained earnings

75,5311,000

Other retained earnings

75,531

390,426

Retained earnings brought forward

75,531Long-term prepaid expenses

125,022

Treasury shares

Other

75,252

Valuation and translation adjustments

292

Allowance for doubtful accounts△8,700

Valuation difference on available-for-sale securities

292

Investments and other assets
Investment securities
Shares of subsidiaries and associates

146

Total liabilities

1,068

2,259,304

Investments in other securities ofsubsidiaries and associates
Investments in capital
Long-term loans receivable fromsubsidiaries and associates

Subscription rights to shares
Deferred assets

Stock issuance expenses
Total assets△61,312

1,532

1,742

1,742
3,577,393

Net assets

2,687,171

Total liabilities and net assets

3,577,393

Income statement（Fiscal year ended March 31,2017）(Thousands JPY)

Net sales

325,127

Cost of sales

6,021

Gross profit

319,105

Selling, general and administrative expenses

292,987

Operating income

26,118Non-operating income
Interest income
Settlement received
Other

11,527224
1,009

12,761Non-operating expenses
Interest expenses

15,134

Amortization of share issuance cost

1,928

Other

232

Ordinary income

17,294
21,584Extraordinary income
Gain on sales of non-current assets
Gain on reversal of subscription rights to shares

437
16,326

16,763Extraordinary loss
Loss on valuation of investment securities
Other

3,269
225

Income before income taxes

34,853

Income taxes-current△74,746

Income taxes-deferred

26,633

Profit3,495△48,11282,966

Results by segment are as follows
1) Electronics and Telecoms Equipment
Orders and net sales were 2,735 million yen (an increase of 26.9% YoY) and 2,605 million yen (an increase of 23.6%
YoY), respectively, and the segment profit was 245 million yen (compared to segment loss of 11 million yen in the previous
fiscal year). The increase was due to the moderate upturn in telecom companies’ capex spending from the second half ofthe fiscal year, associated with measures against signal interference, growth in orders in the government and public
sectors, and reduction of costs through streamlining operations.
2) Renewable Energy System Sales
Orders and net sales were 1,626 million yen (a decline of 67.1% YoY) and 1,659 million yen (a decline of 66.6% YoY)
respectively, and the segment profit was 110 million yen (a decline of 61.3% YoY). The decline was due to our decision,
with an aim of establishing a base for generating long-term stable profits, to own (rather than sell) some of the solar power
plants which we originally planned to sell to other companies as a result of sales activities focusing on selling solar power
plants in lots, as well as due to the fact that we were unable to engage in sales activities for purchasing solar power plants
on behalf of customers, as we originally planned.
3) Solar Power Plant Operation
Net sales and segment profit were 227 million yen (a decline of 1.0% YoY) and 72 million yen (an increase of 28.7% YoY),
respectively, supported by steady electricity sale by large-scale solar power plants in Shimonoseki, Tateyama, andSodegaura, and as a result of improvements in profitability by reduction of sales and administrative expenses.
4) Geothermal Power Plant Operation
No sale is recorded for the segment. Due to expenditures, segment profit/loss was 0 million yen (compared to the segment
loss of 20 million yen for the previous fiscal year).

Referential Materials for General Meeting of Shareholders
Agenda No. 1 Election of 6 Directors.
The term of office of the current directors (7 people) will expire after this general meeting. Therefore, pleasenominate 6 directors.
The candidates for Director are as follows.
Mr. Toru Masuzawa
Date of Birth：May 11,1961
April,1985

Wako Securities (Mizuho Securities Co.,Ltd. of current)

June,1994

Commerz Bank South East Asia (Manager)

June,1998

Hongkong and Shanghai Banking Corporation Limited (Vice president)

December,1999

Private Bank of Barclays (Director)

January,2003

Times Square Pte,Ltd. (Managing Director)

July,2003

J.bridge Co.,Ltd. (Asia Development Capital Co. Ltd. of current/Executive
officer)July,2004

J.bridge Co.,Ltd. (CEO)April,2012

Tamagawa Holdings Co.,Ltd (Executive officer)

June,2012

Tamagawa Holdings Co.,Ltd (CEO/present post)

Mr. Akihiro Ushiroda
Date of Birth：September 24,1981

July,2005

U-EN Corporation

February,2007

KDA Audit Corporation

January,2012

Tamagawa Holdings Co., Ltd (Manager of Administration Dept.)

June,2014

Tamagawa Holdings Co.,Ltd (General Manager ofCorporate Planning Dept. and Financial Control Dept.)

June,2015

Tamagawa Holdings Co., Ltd (Director)

Mr. Masanori Kobayashi
Date of Birth：December 10,1956
April,1977

Fuji Keiki Co.,Ltd.

December,1981

Tamagawa Electronics Co.,Ltd.

April,1999

Tamagawa Electronics Co., Ltd.
(Manager of Measurement hardware Dept.)

June,2005

Tamagawa Electronics Co., Ltd. (Director and Procurement Dept.)

June,2006

Tamagawa Electronics Co.,Ltd. (Auditor)

June,2011

Tamagawa Electronics Co.,Ltd.(Director)

April,2012

Tamagawa Electronics Co.,Ltd. (CEO/present post)

June,2014

Tamagawa Holdings Co.,Ltd (CEO/present post)

Mr. Naruhito Kusaka
Date of Birth：January 15,1962
April,1989

Kusaka Co.,Ltd.

July,1999

Kusaka Co.,Ltd. (President/present post)

June,2009

Tamagawa Holdings Co.,Ltd. (Director/present post)

Mr. Kozaburo Miyauchi
Date of Birth：February 16,1949
April,1973

New Japan Securities Co.,Ltd.(Mizuho Securities Co.,Ltd. of current)

November,1984

New Japan securities. Co.,Ltd. (Hong Kong)(Sales Manager)

April,1989

New Japan Merchant Bank. (Singapore)(President)

May,1997

New Japan Securities Europe. (President)

May,2003

Started own Business

December,2011

Maruman Co.,Ltd. (Auditor/present post)

June,2014

Tamagawa Holdings Co.,Ltd.(Director)

Mr. Keita Masuyama
Date of Birth：October 3, 1975
April,2001

Angel Securities Co., Ltd.

October,2004

Phoenix Partners Co., Ltd.

December,2005

J-Bridge Corp. (Asia Development Capital Co. Ltd. of current)

June,2014

Top Accounting Firm & co.(Director/present post)

June,2015

Tamagawa Holdings Co.,Ltd. and Tamagawa Electronics Co.,Ltd.
( Director/present post)

November,2015

Registry of Certified Public Tax Accountant

December,2015

Top Accounting Firm & co.( Firm member/Present post)(Note)
There is no relationship of special interests between each candidate and our company.
Naruhito Kusaka, Kozaburo Miyauchi are candidates of outside Directors.
The reasons why outside Directors are selected①The reason why Naruhito Kusaka is selected as a candidate for the outside director is because he has engaged in the management of Kusaka Co., Ltd.
for many years and has an excellent experience and discernment in corporate management. Thus, it was judged that he will be able to executeresponsibilities appropriately as an outside Director.
②The reasons why Kozaburo Miyauchi is selected as a candidate for the outside Director was because he has engaged in the management of MARUMAN
Co., Ltd. as a standing statutory Auditor and has an excellent experience and discernment in corporate management. Thus, it was judged that he will
be able to execute responsibilities appropriately as an outside Director.
4.
Naruhito Kusaka is a current outside Director, and his tenure as an outside Director will be 8 years from the end of thisgeneral meeting. Kozaburo Miyauchi is a current outside Director, and his tenure as an outside Director will be 3 years fromthe end of this general meeting.
5.
In the case where Naruhito Kusaka and Kozaburo Miyauchi are re-elected to be outside Directors, our company will contract a liability limitationagreement with each of them for either of the higher amount of the limit of the liability of 10 million yen or the minimum liability amount prescribed in
Item 1 of the Article 425. Further, our company does not have any liability limitation agreement with the current outside Directors, Naruhito Kusaka
and Kozaburo Miyauchi.
1.
2.
3.

Agenda No. 2 The election of 1 substitute auditor
Preparing for the case where the number of Auditors is less than the number provided in laws andordinances, the nomination of 1 substitute auditor are requested. In the above mentioned substitute Auditor
candidates, please nominate Kozo Narazaki as a substitute outside Auditor.
Further, this Agenda item was approved by the Board of Auditors.
The candidates of the substitute Auditor are as follows.
Mr. Kozo Narazaki
Date of Birth：July 19, 1948
April,1967

Ando Electric Co., Ltd.

April,1998

Division head for the Network business division at Telecommunications division
HQ
Sales manager of Telecommunications division HQ, Telecommunications marketing
division, Telecommunications solutions division
President and representative director of Kyushu Ando Electric Co., Ltd.

July,2000
April,2005
September,2007

Division head of Telecommunications division HQ, Marketing planning division at
Yokogawa Electric Corporation.
(Note)
1. There is no relationship of special interests between each candidate and our company
2. Kozo Narazaki is the candidate for substitute outside Auditor
3. The reasons why the candidates of the outside Auditor was selected
We believe that Kozo Narazaki could use his rich knowledge in manufacturing industry and excellent discernment in various fields etc. for our Auditor
system. Thus, the nomination of him to be the substitute outside Auditor is requested.
4. The reasons why the candidate is judged to be able to execute the responsibilities as an outside Auditor
It is judged that Kozo Narazaki will be able to execute the responsibilities as an outside Auditor appropriately because he has rich knowledge inmanufacturing industry and excellent discernment in various fields.
5. In the case where Kozo Narazaki is selected as a substitute Auditor and then becomes an outside Auditor, our company will contract a liability
limitation agreement with each of them for either of the higher amount of the limit of the liability of 10 million yen or the minimum liability amountprescribed in Item 1 of the Article 425.