KAGA ELECTRONICS
CO., LTD.

For Institutional Investors/Analystss

KAGA ELECTRONICS
Management Briefing Material
March 24, 2022
加賀電⼦株式会社
TSE 1st section 8154

INDEX Corporate ProfileP- 3 ~ 9

 Medium Term Management Plan 2024 P-11 ~ 18
 Electronic components Business

P-20 ~ 21

 EMS Business

P-23 ~ 34

 Medium- to Long-Term
Sustainability Management Plan

P-36 ~ 39

 Consolidated Financial Results
for the 3Q of FY2022/3・Forecasts

P-41 ~ 50 References

P-52

Corporate Profile

Corporate Outline
An independent trading company for general electronics with
one-stop services
Company Name:KAGA ELECTORONICS CO., LTD.

Representatives:

Founder & CEO: Isao TSUKAMOTO
President & COO: Ryoichi KADO

Head Office:20 Kanda matsunagacho,
Chiyoda-ku Tokyo 101-8629, Japan

Established:

September 12, 1968

Paid-in Capital:

JPY12,133 million

Stock listing:First Section, Tokyo Stock Exchange（securities code: 8154)*Will transition to the “Prime Market” in April 2022
& CEO
Number of
65 Companies（FY ended December 2021） Founder
Isao TSUKAMOTOGroup Companies:

Number of
Employees:

President & COO
Ryoichi KADO

7,669 （FY ended December 2021 ）3

Corporate Philosophy“Everything we do is for our customers” – Since Kaga Electronics was founded,by intently listening to the voices of our customers and earnestly catering totheir needs, we have expanded our business domain to include our EMS
business, which includes everything from kitting to processing andmanufacturing electronic components and semiconductors, and our
information equipment business, which conducts sales of finished products.
Going forward, we will continue to aim to be Japanʼs No. 1 corporate group in
the industry and become a competitive World-Class company.

Corporate
Philosophy

Everything we do is for our customers
Aim to be “Japanʼs No.1 corporate group in the industry”

VisionAim to become a competitive “World Class Company”“F.Y.T.” : Flexibility, Young at heart, Try

Action Guidelines“3G” : General, Global, Group“KAGA-ism”: Management mindset,
Sales mindset,
Readiness as a member of society
4

KAGA-ism（Behavior Guideline）
There have been many sayings supported by the experiences of the founder and our forebears
since the companyʼs foundation, and these should be treated as treasures. They are our DNA
that we will carry into the future as a foundation for our actions to overcome daily competition.

Three Pillars

1. Mindsets as a manager

Behavior with the awarenessof “being one of the
managers”

2. Mindsets as a salesperson

Awareness and behavior asa “trading company employee
or businessman”

3. Mindsets as a memberof society

Awareness and behavior inproceeding with business asa member of society

Basic Principle
1-1. Be a manager with a grand dream and astrong will
1-2. Cultivate a hungry spirit to continue
challenging yourself in everything that you do
1-3. Act first with high ambition
2-1. Make TAXAN (much) effort to gain TAXAN (alarge) profit, and become TAXAN (very) happy
2-2. Personal connections are intangible assets
2-3. Always be curious
3-1. Self-improvement
3-2. Reward good work and punish bad work
3-3. Be fair and upright5

History
Head office

Founded at 3-8-3 Soto-Kanda,
Chiyoda-ku, Tokyo with capitalof JPY1 million in 1968.

≪Starts EMS business≫

in Akihabara, Tokyo
2014

KAGA（H.K.）is establishedin Hong Kong in 1992.

≪Expands overseas operation≫
TAXAN（USA）is establishedin the US in 1981.

BillionJPY

A home game
console businessis launched.

Domestic sales
business of Apple
products begins.

Exclusive distributor rights fordomestic sales of Kodak
products are acquired.
Net Sales Target:
JPY500 billion
by Medium-Term Plan

Apple-compatible
Own brand monitor“KG-12” is launched.
The invader gameboom arrives.
The CBtransceiverboom arrives.

Shares are listed in
the second section
Net sales exceed of the Tokyo Stock
Exchange
JPY10 billion

Net sales exceed
JPY250 billion

Shares are moved
up to thefirst section of
the Tokyo Stock
Exchange

Acquired KAGA FEI(former:FujitsuElectronics)

Net sales exceed
JPY100 billion

Net sales exceed
JPY50 billion

6

The Groupʼs Strength-①︓Business Domain
Electronic part and Semiconductors

EMS

Sales agent activities for general electronic

Providing total support for design, development,

components and semiconductors for customers

and manufacture of products ranging from semi-in Japan and worldwide

finished to finished products

Information Equipment

New Businesses

Supplying PCs and peripherals to domestic andDevelopment, manufacture, and sale ofinternational distribution channels, and serving

amusement-related products and software

the network solutions field
7

The Groupʼs Strength-②︓Global Network
Global EMS production system with 21 bases in 10 countries to respond swiftly andflexibly to customer needs.
∎ Production base︓Shengzhen, Shanghai, Suzhou, Hubei∎ Sales base︓Hong Kong, Shanghai, Dalian∎ Production
︓ Czech, Turkey

China∎ Sales︓ Germany, Italy∎ Production base︓Towada, Yamagata, Hukushima,
Niigata, Tokyo, Tottori∎ Sales base︓Tokyo, Nagoya, Osaka, etc

EuropeGermanySuzhouDalian
Korea
Dongguan
Shengzhen
ShanghaiHong Kong
TaiwanIndia Thailand Vietnam
Philippines
Malaysia
Hubei

TurkeySan Jose

ASEAN
Production base

ChicagoBostonMexicoIndonesia

Sales base

∎ Sales base︓San Jose, Chicago,
BostonThe Americas

Japan
Czech

∎ Production base︓Mexico∎ Production base︓Thailand, Malaysia,
Indonesia, Vietnam, India∎ Sales base︓Korea, Taiwan, Hong Kong,
Singapore, Thailand, India
8

The Groupʼs Strength-③︓One-Stop Service
Not just contract manufacturing but offer one-stop service from sales toafter-sales support
Planning/Design/
Development

Components
Procurement/Kitting

EMS/Contract
manufacturing

Sales/Distribution

KAGA ELECTRONICS

Support/After-sales service

KAGA TECHNO SERVICE

KAGA DEVICES

KAGA MICRO SOLUTIONSANKOH Engineering

KAGA SOLUTION NETWORKKAGA AMUSEMENTAD DEVICE

DIGITAL MEDIA LAB

KAGA TECHKAGA SPORTS

EXCEL

EXCEL

KAGA AMUSEMENTKAGA EMS TOWADA/Kyokuto Electric
KAGA FEI(former:Fujitsu Electronics)
KAGA FEI AMERICAKAGA (DAILIAN)
KAGA (TAIWAN)

TAXAN MEXICOKAGA COMP(MALAYSIA)KAGA (Shanghai) / KAGA (H.K.)
KAGA (THAILAND)/KAGA(VIETNAM)
KAGA (SINGAPORE)

KAGA（INDIA)KDTEC（Czech）/ KDTEC（Turkey）
9

KAGAʼs Growth Scenario

Medium Term Management Plan 2024
(Extract from materials published on November 25, 2021)

10

Review of Medium-Term Management Plan 2021︓
Management Targets
Predict for exceeding operating income and ROE targets by executing “profit-focused management”,
despite unmet net sales target due to losses of major commercial rights
Net sales
Operating income

Opareting income margin

ROE

JPY443.6bn
10.9%

JPY292.7bn

JPY475bn
JPY422.3bn
13.5%

7.6%

JPY10.0bn

JPY500bn

JPY17.5bn
12.3%

JPY13bn

JPY11.4bn

8%

JPY7.5bn

3.7%
2.5%

2.2%

2.7%

FY2018Results

FY2019Results

FY2020Results

FY2021
Forecasts

FY2021
Management
Targets

Net sales

JPY292.7bn

JPY443.6bn

JPY422.3bn

JPY475bn

JPY500bn

OperatingincomeJPY7.5bn

JPY10.0bn

JPY11.4bn

JPY17.5bn

JPY13bn

10.9％

7.6％

13.5％

12.3％

８％ or higher

ROE

Medium-Term Management Plan 2021
11

Medium-Term Management Plan 2024︓ Management
Targets
Realize sustainable growth by organic growth and further M&A challenges

FY2021 Forecasts

FY2024 Management Targets
Organic growth

Net Sales

JPY

475 bnOperating
IncomeJPY

17.5 bn

JPY

Including new M&As

600 bnJPY

JPY

750 bn

20 bn

With cost of shareholdersʼ equity (7–8%) in mind,
ROE

12.3 %

stable8.5 % or higher

12Medium-Term Management Plan 2024: Basic Policy
Basic policy and key issues/actions

Further
Reinforcementof Profitability

Predicting the era to focus on markets
with potential for high growth andprofitability

Reinforcementof Management
Base

Pursuit of further efficiency andsoundness, and transformation toa Group management foundation
worthy of "Japanʼs No. 1 corporategroup in the industry"

Creation of New
Businesses

Active use of venture investments andM&As to create new businesses andstrengthen resistance to change inthe external environment

Promotion of
SDGs
Management

Promotion of management that seeks toachieve solutions to social issues andsustainable growth as a company• Selection and concentration in growth fields:
Mobility, Communications, Environment,
Industrial equipment, Medical/Health care
• Reinforcement and expansion of EMS
business and overseas business• Reinforcement of corporate governance• Efficient Group management• Investments in human capital• Initiatives in new fields• Promotion of open innovation throughventure investments• M&A efforts aimed at discontinuous growth(See “Medium-Term Sustainability Management
Plan” for details)

13Medium-Term Management Plan 2024︓Business
Portfolio*CSI: Consumer & System Integrator

Electronic Componens

EMS

CSI

Others（Excluding new M&A）
Net sales︓8.1%

1,000

CAGR

Net Sales︓16％
Operating Income︓ 5％45

JPY750bn

40

New M&As
150.0

35

800

Initial plan
600

CAGR

Net sales︓20％
Net Sales︓18％

JPY443.6bn
13.9
400

JPY292.7bn
13.9
44.3

200

43.5

; Operating income︓20％

Operating income︓32％
JPY422.3bn
12.1

93.3

99.6

JPY10.0bn

89.5 JPY7.5bn
292.9

16.0
54.0

JPY475bn
12.0

48.4

50

150.0
JPY20bn40.0
110.0
JPY17.5bn

30
25
20
15

JPY11.4bn
380.0

10

313.0
262.3

145.0

5

0

0

FY2018Results

FY2019Results

FY2020Results

FY2021
Forecasts

Medium-Term Management Plan 2021

FY2024
Management Targets
Medium-Term Management
Plan 2024

14

Basic Strategy for Four Major Businesses
FY2024 sales targets

Electronic
Components
Business

EMS
Business

CSI
Business

Other
Business

Priority measures• Expansion of industrial equipment business

JPY

JPY

380 bn150 bn

JPY

JPY

54 bn
16 bn

• Rollout of new products in vehicular markets• Enhancement of products in communications
field• Reinforcement and expansion of customer base• Shift in value chain to high value-added areas• Reinforcement of business base• Acquisition of new products/suppliers and newsales channels• Promotion of collaboration within Group andintegration of overlapping organizations• Review of unprofitable businesses• Creation of new businesses through venture
investments and M&As
15

Medium-Term Management Plan 2024︓Summary
JPY 1 tn

Aim to become a competitive “World classcompany”
Aim to be “Japanʼs No. 1
corporate group in the industry”

Organic
growth+Further M&A
Challenges

Expansion of
trading company business

Increased
Sales

JPY

750 bnGrowth fields

Increased
ProfitRatio

Mobility
Communications
Environment

will lead to
growth of the EMS businessIndustrial
equipment

Quantitative
expansion of trading
company business

Qualitative improvement
through EMS business

Reinforcement and expansion of overseas business, EMS business

MedicalHealth care

（Net Sales）

Medium-Term Management Plan 2024
Further reinforcementof profitability

Reinforcement ofmanagement basePromotion of new
businesses

Promotion of SDGs
management“CHALLENGE 1.60"
Sales of ¥1 tn inyear of 60th
anniversary offounding

16

A Sound Financial Foundation to Support Growth
Strategies
Borrowing capacity▲ Net D/E ratio: 0.04 times▲ Cash position: JPY 40.1 bn▲ Commitment line: JPY 15 bn

Cash generation ability▲ Total 3-year operating cash flow: JPY 30.8 bn*FY2018–FY2020▲ Use of cash: ① Growth investments② Shareholder returns③ Repayment of borrowing*End of September 2021

Capital efficiency▲ ROE: 13.5% ＞ Cost of shareholdersʼ
equity 7.6%

Stability and credit rating▲ Equity ratio: 39.6%*End of September 2021

Assumptions for calculations①Risk-free interest rate ︓0.02%/10-year Japanese
government bond, five-year average②Market risk premium︓6.3%/TOPIX yield③β (beta)
︓1.2%/Five-year, weekly▲ Bond rating: A- (Stable)*Japan Credit Rating Agency, Ltd. (JCR)*FY2020 results

17

Shareholder ReturnBasic Policy on
Dividends ofSurplus

We shall perform stable dividends, while securing a consolidated dividend payout
ratio of 25 to 35%.
We shall use funds for business investments, capital investments, and M&A, etc.
in order to contribute to future growth.
Decisions on the acquisition of treasury shares shall be made appropriately,in consideration of capital efficiency and share price, etc.
35%
28.6%

25.5%

25.6%

■ Ordinary dividend■ Commemorative
dividend■ Special dividend

JPY35
5

JPY40
10

30

30

FY2013Results

FY2014
Results

Total return trend︓54.7%
Acquisition of treasury shares(JPY 3,674 mil)

32.8%

29.6%

24.5%

24.1%

（Forecast）

27.4%

25%

19.3%
※Including negative goodwill
about JPY8 bn

Total return trend︓45.4%

Acquisition of treasury shares(JPY 1,499 mil)

JPY55

JPY60

15

20

40

40

FY2015Results

FY2016
Results

JPY110

JPY70
10

JPY80
5
5

JPY70
10

60

70

60

60

FY2019Results

FY2020Results

FY2017
Results

FY2018Results

JPY80

30

20
80

FY2021
Forecasts

18

KAGA ELECTRONICSʼ
Electronic Components Business

The Strengths of Kagaʼs Electronic Components
Business
Our strengths are our independence, meaning that we are not affiliated with any othermanufacturer, our global reach, which extends around the world, and the professional skillsof our technical teams.
As an independent
comprehensive trading
company, we have access to avast range of parts. We haveearned our customersʼ trustand developed vast expertisein our 50 years of business.

• Kaga Electronics trades directly with more than
2,000 suppliers in Japan and abroad and morethan 4,000 customer businesses (7,000
accounts).
• As an independent trading company, we are notlimited in the goods that we carry. We use thisadvantage and our worldwide network to connect
large numbers of suppliers and customers andensure that customers get the optimal product in
the ideal form.

The power of a
global network

We utilize our ability to gather
information to foresee thefuture, as well as the power ofa Group working in a wide
range of fields.

• Kaga Electronics boasts a global network of morethan 60 companies around the world, including
North America, Europe, and Asia. Our Grouppower enables us to rapidly gather and deliver
the latest knowledge and unpublished informationthat is unavailable to our competitors.
• We also offer full support through our local
subsidiaries. We provide the solutions you need,
wherever you need them.

Technical
support systemount on our experienced
technical teams.
Our dependable system today
is the product of years ofearning trust.

• Our technical teams include field applicationengineers (FAEs) who are experts in the latest
technologies. We offer not only optimal products,
but also a sense of trust backed up by our trackrecord.
• This gives our customers peace of mind evenwhen using products developed by cutting-edge
venture companies that are not yet well known.

The advantage
of an
independent
trading company

20

Business Flow of the Electronic Components BusinessWe provide optimal solutions to customers through our cutting-edge
information network and our component procurement system, which leverage
the Groupʼs network.

Over 2,000

Over 4,000

Worldwide suppliers
Japanese venders
Western venders
Asian venders

Customers

With over 60
affiliated companies
In the world

The latest
Information

RequestSelection

Parts selection to satisfy
customerʼs needs

Order

ProcureProcure the best parts

DeliveryCollect thelatestinformation

21

KAGA ELECTRONICSʼ EMS Business

The Strengths of Kagaʼs EMS︓Convenience Store EMS
Kaga Electronics globally deploys a “Convenience Store EMS” that is convenienceand valuable for its customers.
Japanese EMS vs Taiwanese / Asian EMS

Focus on High
Reliability

Focus is on Substrate
Installation
Strong areas ofJapanese EMS
SIIX
UMC
Kaga Electronics, etc

High Volume
Strong areas of Taiwanese/ Asian mega EMS
Focus on Cost
Competitiveness

Foxconn、
Pegatron、
Flextronics, etc.

Low Volume

Convenience Store EMS vs GMS EMS＜KAGA ELECTRONICS＞
・ Low initial investment(Land and buildings rented,
Standardized interior construction)
・ Capable high mix, low volume
production
・ Local production for local
consumption modelVS＜Japanese Major Competitors ＞
・ Large scale investment
・ Mass production type
Export model

Focus is on the
Assembly ofFinished Products23

Major Production Bases: China
Kaga Electronics (Shenzhen)

Kaga Technology (Suzhou) Electronics

Established

１９９９

Established

２００９

Number of
Employees

９５０

Number of
Employees

３６０

Products

Automotive-related units, industrial
equipment, OA equipment,
amusement equipment,
communications equipment.

Products

Automotive-related units, medical
equipment, industrial equipment,
residential equipment, electronic
musical instruments,
communications equipment＜ Shenzhen Factory＞＜Suzhou First Factory (For Export)＞24

Major Production Bases: ASEAN
KAGA ELECTRONICS (THAILAND)KAGA ELECTRONICS (VIETNAM)

Established

２００２

Established

２０１７

Number of
Employees

９１４

Number of
Employees

１２０

Products

Automotive-related units, OA
equipment, air conditioning
equipment, industrial equipment

Products

Automotive-related units, airconditioning equipment, businessequipment, medical equipment<Thailand Factory>＜ Vietnam Factory＞
25

Major Production Bases: Europe and the Americas
KD TECTAXAN MEXICO

Established

２００９

Established

２０１７

Number of
Employees

１１２

Number of
Employees

３２４

Products

Air conditioning equipment.

Products

Automotive-related units,business equipment, industrial
equipment.

＜ Czechia Factory＞＜Mexico Factory＞
26

Major Products: In-vehicle ProductsElectrical
Compressor UnitsLighting Units for
Automotive

AC Inverter Units

Automotive Navigation
SystemIn-vehicle Auxiliary
Battery Packs
27

Major Products: HVAC and Industrial Equipment

Air Conditioner Unit

Products for Electrical Tools

28

Major Products: Medical related Equipments

Medical Equipment

Medical Examination
Equipment<Reagent Testing Equipment>＜Automated Medication Dispensing Cabinet＞<Blood Flow Testing Equipment>29

Major Products: Consumer Electrical Equipment andOffice Equipment
Washing Toilet

Substrate for Office
Equipment

30

Sales Composition by Application
FY2022/3 Net Sales Forecast︓JPY110bn

1%
In-vehicle
⾞載7%

Air conditioning
空調

7%
8%

39%
空調

19%

⾞載

19%

産機
Industrial
医療MedicalConsumer⺠⽣
Office/Communication
事務機・通信Equipment
Othersその他

31

Measures to Increase Competitiveness -①︓
Increasing of Production Capacity
We will respond flexibly and nimbly to the movement to shift production out of China
due to the prolonged trade tensions between the US and China and the movement torestore domestic production to avoid exchange rate fluctuations and increasing labor
expenses.
Fukushima Factory

Amata Nakhon 2 nd Factory
Business Content

Business Content

Manufacture, repair,reuse, and recycling ofcommunications
equipment, PCs, and PC
peripherals

Installation ofsubstrates for
multifunction devices,
printers andautomotive relatedunits

Operation start date
October 2019

Operation start date
December 201932

Measures to Increase Competitiveness -②︓
Strengthening Manufacturing Capabilities
Through the acquisition of Towada Pioneer Corporation (currently KAGA EMS TOWADA
CO., LTD.), we will further improve the quality level of the EMS business and improve
our competitive advantage compared to other competitors, by sharing the tangible
and intangible assets developed through many years as a specialist electronics
manufacturer, such as manufacturing know-how, exceptional production personnel
and equipment, jig design, and quality assurance systems.
We will also designate KAGA EMS TOWADA as the “mother factory” of the EMS
ものづくり⼒の強化
business, connect with overseas sites, promote overall
optimization, strengthen the
management framework, and improve business efficiency.
KAGA EMS TOWADABusiness Content
Automotive electronicequipment, installationof substrates inmedical equipment,
assembly of finished
Products
Acquisition date
October 201933

Measures to Increase Competitiveness -③︓
In-house Development of Manufacturing Equipment
We will provide customers with total substrate mounting solutions with overwhelming
cost competitiveness, high quality, and high reliability, by merging with major Chineseequipment manufacturers and developing, designing, and producing manufacturing
equipment.

Introduction of HATTEN Equipment
Modularsoldering baths
Product lineup①1-head unit ISF-300②2-head unit ISF-450-II③4-head unit ISF-450D④4-head unit ISF-4504H
Modular high-speed
soldering bath
⑤Modular flux applicator

SurfaceMounting
Equipment

Product lineup①CPM H2
Chip component mounting②CPM F2
Non-standard component
mounting③CPM/FH
Miniature chip component
mounting④HATTEN line
*Mass production
underway by Kaga in
Jiangsu

Testing
Equipment
Product lineup①3D SPI
Cream solder testing②Post-SMT AOI equipment
Visual inspection ofmounted components③Pre-soldering bath S-AOI
Inspection of handinserted components④Post-soldering bath AOISolder-lifting inspection
Component float inspection

Vertical Hightemperature
Furnaces
Product lineup①Coating hardening
furnace
After coating final
hardening②Potting hardening furnace
After potting final hardening③High temperature
deterioration testing
furnace
Product deterioration
testing34

Medium- to Long-Term Sustainability
Management Plan
(Extract from materials published on November 25, 2021)

Sustainability Policy
Under our corporate philosophy of "Everything we do is for our customers," the Kaga Electronics
Group seeks to achieve both a sustainable society and sustainable growth of the Group.
Toward this purpose, we will respect dialogue with customers, business partners, shareholders,investors, employees, local communities, and all other stakeholders, based on our Basic CSR Policy,
Environmental Policy, and Action Guidelines. We will work to increase our corporate value as weplay an active role in achieving a sustainable society.

1 We will tackle environmental issues through our business activities
Through our business activities, we will take action to cut CO2 emissions, reduce waste, andpromote reuse. At the same time, by providing environmentally considerate products and services,
we will contribute to bringing about a society that values the global environment.

2 We will respect human rights and develop human resources
We will respect the human rights of all stakeholders, regardless of gender, age, nationality, social
status, disabilities, or other personal attributes. We will develop work environments in which
diverse employees can work in safety and health, both physically and mentally, and will develop
personnel systems and education and training systems that allow these employees to maximize
their individual abilities. We will further work to develop human resources who will take on thechallenge of innovation.

3 We will work to build mutual trust with society
We will work to be a company that earns the trust of society by observing laws and regulations,by strengthening our governance structure, and by sincerely engaging in fair competition, theprovision of high-quality products and services, timely and appropriate information disclosure,and other corporate activities.
36

Materiality
The Kaga Electronics Group is committed to seriously addressing a variety of issues relevant not
only to itself but also communities around the world and thereby living up to the expectations ofsociety. In line with this commitment, the Group has employed four perspectives̶ Environmental(E), Social (S), Governance (G) and Business (B)̶to identify priority issues that are deemed toexert significant impact on its business operations, as listed below. Through its efforts to tackle themateriality of these issues, the Group will practice corporate activities aimed at contributing to therealization of a sustainable society, with the aim of further improving its corporate value.
Changes in the socio-economic
environment

Our initiatives

E

Create a clean
globalenvironment• Growing seriousness of global warming
and other environmental problems• Urgent call for carbon neutrality• Provide products and services designed tohelp resolve environmental and energy
issues• Continue initiatives to reduce theenvironmental burden

S

Create aninclusive company
as well as anaffluent society• Changes in social structure as we movetoward the popularization of the newnormal• Human resource shortages attributable
to a low birthrate and an aging
population• Promote workforce diversity andinnovative work styles to better adapt to
the new normal• Develop human resources by passing
down and updating KAGA-ism

G

Createa sustainable
management base

• Public calls for more robust corporate
governance• Growing need for business resilienceagainst changes in the operating
environment• Further strengthen corporate governanceand compliance• Thoroughly practice a profit-focusedmanagement approach

Realizesustainablebusiness growth• Progress in digital transformation• Coming of a “super-smart” society due
to the popularization of ICT, such as
IoT and AI• Intensification of global competition• Provide products and services that
contribute to the transition to a digitaldriven society• Create new businesses aimed at helping

Materiality

B

Related SDGs

37

Medium- to long-term sustainability targets andmajor KPIs
Key themesE

Achievement of shift to100% renewable energy

Issues to address and issues to
examine• Adoption of renewable energy atdomestic sales offices• Adoption of renewable energy atdomestic manufacturing sites• Adoption of renewable energy atoverseas manufacturing sites

Shift to electricity for• Switch to electric vehicles for domestic
sales vehicles (EV, HV, PHV, FCV)
company-owned vehicles

2030: 100%
2030: 50%
2050: 100%

2024: 85% (78.5%)

2030: 100%

Diversity and humanresource management

Percentage of female newgraduates in general positions
2023: 30% (5.8%)
Percentage of women in
management positions
2024: 15% (13.3%)

Work–life management
and enhancement of
productivity• Enhancement of programs such as
childcare/family-care and telework• Acquisition of certification as a Healthand Productivity Management
Organization

2022: Implementation of review
2023: Certification

Restructuring the• Independent Outside Directors: atgovernance structure in
least 1/3
response to the revision of
the Corporate Governance • Establishment of Nomination and
Code and the reorganization
Compensation Committeeof Tokyo Stock Exchange

Further strengthening
the supervisory andoversight functions of
top management overbusiness execution• Diversification of the Board of
Directors• Full compliance with Corporate
Governance Code for Prime Market• Adoption of delegation-based
executive officer structure• Transition to structure of company
with committees

Long-term targets

2024: 40% (1%)
By 2024: Information
gathering/analysis and determinationof policy
・In-house power generation/external
procurement
・Solar panel/biomass power
generation/renewable energy
businesses• Ensuring diversity in core humanresources (Women, foreign
nationals, mid-career hires)• Initiatives to employ elderly workers
and persons with disabilities

S

G

Medium-term targets

2030: 30%
2050: 100%

Percentage of female
new graduates ingeneral positions
2028: 40%
Percentage of women in
management positions
2029: 17%2025: Certification byoutside party
2024 onward:
Continuation ofcertification

Performed in June 2021

By June 2022: Determination ofpolicyPerformed in November 2021

Setting of targets inline with next
Corporate Governance
Code revision

April 2022: Enactment
By March 2023: Determination ofpolicy*Numbers in parentheses represent current values

38

New Initiatives: Sustainability
Medical equipment × QOL

Wearable Device and Support ofPeople with Disabilities

Breast cancer CT
scanner

Mobile CT scanner

Care Support System“Watch-Over” System in an Aging
Society

ONTENNA

Green Capacitor

Breakthrough × Next-generation
battery storage devices
39

Consolidated Financial Results
for the Third Quarter of the
Fiscal Year ending March 2022
(Extract from materials published on February 3, 2022)

Summary of Financial Results
for the Third Quarter Ended December 31, 2021

FY2022/3Q
Results

Overviewof the main
segments

 Driven by the core electronic components business, net sales achieved
significant growth by capturing robust part demand with the recovery of production
activities in manufacturing industries both in Japan and overseas.
 Operating income increased significantly, achieving record highs for the period,
as a result of higher gross profit reflecting higher sales, as well as continued efforts
in facilitation of teleworking and in reduction and control of expenses.
 Net income for the quarter decreased due to the absence of the 7.96 billion
yen "gain on bargain purchase" resulting from the acquisition of EXCEL, which
was posted as extraordinary income.
・The components sales business placed top priority on securing volume in
the face of prolonged supply constraints regarding electronic components,
Electronic
and maintained strong performance by leveraging the Company's
procurement capabilities as an independent trading company.
Components
・ In the EMS business, sales in the automotive, industrial equipment,
and medical product areas were solid.
・While PC peripherals including security software remained strong,sales of PCs were subdued given the abatement of demand
Information
associated with the shift to remote working and the impact ofEquipment
product supply difficulties due to a shortage of parts.
・The LED installation business was sluggish due to extensions ofconstruction periods caused by difficulties in materials procurement.

Revised
Forecast for
FY2022/3

 Sales and income are both expected to exceed forecasts announced in 2Q and arerevised upward for the second time this fiscal year.
 Operating income will achieve three consecutive fiscal years of record highs.
Net income for the fiscal year has also turned to a positive growth forecast
and will achieve two consecutive fiscal years of record highs.
 Operating income will exceed the target of 13 billion yen set out in “MediumTerm Management Plan 2021.”

Shareholder
Return The year-end dividend has been revised to 65 yen per share, an increase of 20
yen in light of upward revision to the earnings forecast.
 For the full-year dividend, including interim dividend, a 30 yen increase from theprevious fiscal year is planned, to 110 yen per share.
41

Financial Highlights（million yen）

FY2021/3
3Q Results

FY2022/3
3Q Results

YoY

Progress
rate

FY2022/3
Forecasrt(announced on November 4, 2021)

294,266

352,68419.9%

470,000

Gross Profit

33,646 11.4%

42,761 12.1%

27.1%

ー

ー

ー

SG&A

26,1298.9%28,102

8.0%

7.6%

ー

ー

ー

Operating income

7,517

2.6%

14,658

4.2%

95.0%

15,000

3.2%

97.7%

Ordinary income

7,230

2.5%

14,8864.2%

105.9%

14,5003.1%

102.7%

Profit attibutable toowners of parent

12,728

4.3%

10,4143.0%-18.2%

9,000

1.9%

115.7%EPS（yen）

463.49387.76336.84106.11111.10－Net Sales

Exchange Rate

USD

75.0%

42

Reference

Financial Highlights by Business Segment of
the Medium-Term Management Plan（million yen）

Net sales
Electronic
Componens
Segment income
EMS

CSI

OthersTotal

FY2021/3

FY2022/3

3Q Results

3Q Results

181,913
1,657

232,869
0.9%

70,216

Net sales
Segment income

3,890

Segment income

1,753

Net sales

8,199

Segment income

126

5.5%

Segment income

7,517

3.3%

5,463

5.2%

1,216

6.5%

129

4.6%

14,658-30.6%
8.8%

1.5%

352,684
2.6%

40.4%-22.5%

8,918
1.5%

369.1%
20.5%

26,301

294,266

Net sales

7,772

28.0%

84,59533,937

Net sales

YoY

2.0%
19.9%

4.2%

95.0%

Note : Figures of each segment income are not inter-segment adjusted.
Total amount is inter-segment adjusted (operating income).

43Effect of M&As (FY2022/3 3Q Results)（million yen）

＊ EXCEL's actual results for FY2021/3 2Q do not include results of overseas subsidiariesʼ FY2021/Jan-Mar period.

Net Sales

Gross profit / Gross profit margin

Sales decline at Kaga Electronics due to COVID-19. Kaga
FEI records heavy drop in sales due to loss of largecommercial rights. EXCEL consolidated from 1Q.

Income decreased at Kaga FEI, but gross profit margin
improved at both Kaga Electronics and Kaga FEI

294,266+27,546+13,696 ＋17,174

352,684

33,646+4,904

14.5%

14.9%

7.8%

+3,026

9.7%

11.4%

5.4%
2021/3
3Q

Kaga
Electronics

KagaFEI

Excel

2022/3 Results

2021/33Q

2022/3
3Q

SG&A / SG&A ratio

10.0%+1,713

+341

12.1%
6.2%

Excel

2022/3 Results

2022/33Q

also improved significantlyDespite of sales declining
during the pandemic, Kaga Electronics increased
operating income, income margin
14,658+2,563+1,395
7,517+3,322

28,102

9.5%

8.9%
8.0%
5.5%
2021/3
3Q-82

KagaFEI

42,761

Operating income / Operating income marjin

Although expenses increased with growth in sales,
the SG&A ratio fell for all three companies.
26,129Kaga
Electronics+1,321

7.3%
KagaElectronics

KagaFEI

8.0%

3.3%
Excel

2022/3 Results

2022/3
3Q

4.5%
2.6%
2021/3
3Q

5.6%
Kaga
Electronics

2.3%

KagaFEI

2.7%
Excel

2022/3 Results

4.2%
2022/3
3Q

note :With respect to gross profit and operating income, figures presented above are before consolidation
adjustments between the two companies. For reference, after consolidation adjustments,
44
gross profit stood at -152million yen, and operating income came to -136million yen.

FY2022/3 3Q results by company（million yen）

Kaga
Electronics

Net sales
Gross Profit
operating income
Net sales

Kaga FEI

Gross Profit
operating income
Net sales

Excel

Gross Profit
operating income
Net sales

Total

Gross Profit
operating income

FY2021/3

FY2022/3

3Q Results

3Q Results

171,474
24,784
7,778
92,4207,243-14330,371
1,632-121
294,266
33,646
7,517

14.5%
4.5%
7.8%
-0.2%
5.4%
-0.4%
11.4%
2.6%

199,021
29,689
11,100106,117
10,2702,419
47,5462,953
1,274
352,684
42,761
14,658

YoY
16.1%
14.9%

19.8%

5.6%

42.7%
14.8%

9.7%

41.8%

2.3%

－
56.5%

6.2%

81.0%

2.7%

－
19.9%

12.1%

27.1%

4.2%

95.0%

(note) With respect to gross profit and operating income, figures presented above are before consolidation adjustments.

between the three companies.

45

Balance Sheet Main Items（million Yen）

Total assets

Total liabilities and net assets
261,202（+24,197）

261,202（+24,197）
237,004

237,004

207,638

207,638
Total liabilities

159,483
223,575
200,179

Current assets

141,942（+17,540）

121,388（+23,396）

174,331

33,30636,8252020/32021/337,626

Non-current assets

101,719

86,25095,062（6,656）2020/32021/32021/12

Total net assets（+801）
2021/1246

Balance Sheet Main Items（million yen, day）

Inventories

Accounts receivable/Accounts payable
93.7

47.9

80,000180,000

84.6

50.0

26.3

32.8
Inventory turnover

70,00061,39675.2

A/R turnover

160,000

79.8（+23,448）
60,00064.6

0.0

108,394

120,000

50,00037,948100,000

91,371

31,90880,000A/P turnover

108,53150.0（+136）

Notes and A/R
30.0

79,854

-50.0

70.0

68.4

140,000

40,00090.0

83,311（+3,456）

70,18810.0

30,000Inventories

60,000-10.0

Notes and A/P

20,000-100.040,000-30.0

10,00020,00000-50.0-150.02020/32021/32021/12

note︓Inventory turnover ＝ Inventories ÷ Net Sales ×365(2021/12:275)（day）

2020/32021/32021/12

notes︓・Notes and A/R are amounts including Electronically recorded monetaryclaims-operating
・Notes and A/P are amounts including Electronically recorded obligations operating
・A/R turnover ＝ Notes and A/R ÷ Net sales × 365(2021/12:275)（day）
47
・A/P turnover ＝ Notes and A/P ÷ Total purchase of goods ×365(2021/12:275) （day）

Balance Sheet Main Items

Cash and Deposits/Interest Bearing Debt
0.37

0.42

（times）

0.54
0.50

0.12

D/E ratio

70,000

-0.19

-0.08
0.00

Net D/E ratio

52,33760,000（+14,076）-0.50

50,00043,384

Cash and deposits

40,91438,261 （-4,722）

40,00030,00045,63628,736

-1.00

-1.50

-2.00

20,000Interest bearing debts-2.50

10,0000-3.00

2020/32021/32021/12

note︓D/E ratio＝ Interest bearing debts ÷ Shareholderʼs equity
Net D/E ratio ＝（Interest bearing debts - Cash and deposits） ÷

Shareholderʼs equity

48

Forecast for FY2022/3（million yen）

FY2021/3
Results

FY2021/3
Previous Forecast

FY2022/3
Current Forecast

Management
YoY

Targets FY2022/3

1.1%

12.5%

500,000

Changes（announced on November ４, 2021）

Net sales

422,365

470,000

475,000

Operating income

11,4672.7%

15,0003.2%

17,500

3.7%

16.7%

52.6%

13,0002.6%

Ordinary income

11,241

2.7%

14,5003.1%

18,000

3.8%

24.1%

60.1%

―

―

Profit attributable toowners of parent

11,399

2.7%

9,000

1.9%

12,000

2.5%

33.3%

5.3%

―

―

EPS

415.07336.84449.13

―

―

8.2%

―

―

ROE

13.5%

9.7%

12.3%

―

2.6pt

-1.2pt8.0%
or higher―

Note: The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. isapplied from the beginning of FY2022/3 1Q, and thus the above consolidated earnings forecasts are
figures after this accounting standard, etc. has been applied.

49

Forecast for FY2022/3 Upward Revision of
Operating Income/Profit attibutable to owners of parent
・ This is the second upward revision in the current fiscal year. Operating income and net income for the fiscal
year are forecasted to achieve record highs for the third and second consecutive fiscal year, respectively.
・ Operating income incorporates cumulative upswing from 3Q. Neutral upside/downside risks are assumed in 4Q.
・ Net income for the fiscal year will turn from a negative growth forecast to positive growth as a result of the
upswing in operating income.
Kaga Electronics +1,800
KagaFEI
+700
+500
Excel

First-half
upside

8,000

2021/3Results

15,000-1,000

Incorporation of
second-half risk

11,467 11,399

2022/3
Initial forecast

17,500+2,500+3,00013,000（million yen）

Kaga Electronics +1,000+1,100
KagaFEI+400 Third quarter
Excel
upside9,000

Risk factors inearnings
fluctuations<Upside risks>- Robust demandenvironment- Upward momentum<Downside risks>- Impact of spreadof variant infections- Opportunity loss due
to tight components
supply- Helicopter-related
loss risk

12,000Previous forecast

Current forecast(announced on Nov 4, 2021)(announced on Feb 3, 2022)

50

References

5-Year Financial Summary（billion yen）

（billion yen）

（yen）

Operating Income
Ordinary Income

Net Sales

EPS

443.6 422.3

227.2 235.9

292.7

7.3
6.9

2017/3 2018/3 2019/3 2020/3 2021/3

8.7
8.1

10.1
7.8

10.0

2017/3 2018/3 2019/3 2020/3 2021/3（％）

Net Assets

213.7 207.6

65.9

70.6

ROE

292.07213.21

2017/3 2018/3 2019/3 2020/3 2021/3（billion yen）

CF from Operating activities
Free Cash Flow
22.4

10.9
86.2

249.43 236.58

237.0

125.8 128.7
84.2

11.4

415.07

7.5（billion yen）

Total Assets

11.2

95.0

9.5

10.9

13.5
7.6

18.7
10.7
10.1
10.5

9.9
5.9

7.5

(1.5)

2017/3 2018/3 2019/3 2020/3 2021/3
2017/3 2018/3 2019/3 2020/3 2021/3

2017/3 2018/3 2019/3 2020/3 2021/3

(8.4)

52

Other IR Information●Investor Relations Website
https://www.taxan.co.jp/en/ir/●Integrated Report 2021
https://www.taxan.co.jp/en/ir/ir_library/library_05.html

53

“Everything we do isfor our customers

20 Kandamatsunagacho, Chiyoda-ku, Tokyo 101-8629
Contact: Investor Relations & Public Relations Office
TEL:+81-3-5657-0106
FAX:+81-3-3254-7133
E-mail︓ webmaster@taxan.co.jp
https://www.taxan.co.jp

■ Forward-looking statements in these materials are based on information available to management
at the time this report was prepared and assumptions that management believes are reasonable.
Actual results may differ significantly from these statements for a number of reasons.
■ Display method in this material
Number : Truncated less than the display unit.
Ratio: After calculation in yen units, Round down one digit of Display unit.