This notice has been translated from the original notice in Japanese. In the event of any discrepancy,
the original notice in Japanese shall prevail.

(Attachment of Notice of the 70th Ordinary General Meeting of Shareholders)

Sanshin Electronics Co., Ltd.
Stock Code: 8150

Business Report on the 70th Term
From April 1, 2020 to March 31, 2021

Contents
Corporate Message................................................................................ 1
Business Report .................................................................................... 2
Consolidated Financial Statements ..................................................... 24
Non-Consolidated Financial Statements ............................................. 28
Audit Report........................................................................................ 32

The Sanshin Spirit
Sanshin Electronics contributes to the development of today’s electronics-driven society
by embracing the challenge of the new and passing on the Sanshin Spirit to new
generations.
Electronics products play a formative role in today’s society. Electrical appliances connect with each other to provide
unprecedented services to consumers, while drivers enjoy greater safety thanks to the spread of operation support
systems such as collision avoidance. In the future as well, electronics will contribute to society by delivering greater
safety, comfort and convenience.
As a general electronics trading company, Sanshin Electronics has continued to pursue new possibilities in electronics
products in liaison with our customers, suppliers and business partners. We always bear in mind that we need to test thelimits, unconstrained by prevailing orthodoxies.
Since its establishment, the Company has always cherished Trust (Shin-yo in Japanese), Principles (Shinnen) and
Sincerity (Shinjitsu). Each of these components of our corporate code contains the Japanese character 信(Shin),testifying to the origin of the Company name. We believe that we must embrace these three words whenever we conduct
our business. Guided by the above corporate code, we at Sanshin Electronics will explore the future of electronics
products with the drive to tackle new challenges.

Trust

Principles

Sincerity

Business cannot succeed without
trust.
It begins and ends with trust.

Do not just pursue profit. But act basedon principles, which can be realized
through self-discipline.

Always act sincerely.
Rise to the challenge headon.

1

Business Report (From April 1, 2020 to March 31, 2021)
I. Matters Concerning the Current Status of the Corporate Group(1) Business Progress and Results
During the consolidated fiscal year under review, the global economy overall faced tough conditions due to theprolonged impact caused by the spread of COVID-19. Although vaccinations have started in some regions, countries
are forced to engage in economic activities while implementing continued measures to prevent infection, and it isuncertain when the COVID-19 pandemic will end. In the electronics industry, which is one of the Group’s fields ofbusiness, the pandemic caused stagnation in the production of semiconductors. Conversely, there were strong sales of
televisions, home appliances, and home video game consoles due to stay-at-home demand. Furthermore, there was asudden recovery in the Chinese automotive market from the second half of the fiscal year. Overall, there was tight supply
and demand for semiconductors. In the domestic ICT industry, the COVID-19 pandemic caused a decrease in corporate
IT investment. However, investment for digitalization increased due to factors such as the development of environments
for remote work.
Against this background, in the device business, the Group promoted a shift of human resources for expanding sales ofoverseas semiconductor manufacturer products. This was done in conjunction with the cancellation (as of June 30, 2020)of the dealership agreement with Renesas Electronics Corporation, which was previously a main supplier. The Groupalso strove to make drastic transitions to our profit structure through efforts such as developing new products andbusiness models based on items related to in-vehicle systems, artificial intelligence (AI), and the internet of things (IoT).
In the solution business, aiming to establish a robust platform for future growth, the Group committed resources toreinforcing its cloud business, centered on Sanshin Data Center, while bolstering initiatives to expand its number ofcustomer platforms.
As a result of these efforts, business performance in the consolidated fiscal year under review was as follows: Net sales
were ¥112,791 million (down 8.4% year-on-year); however, operating profit was ¥2,167 million (up 10.7% year-onyear) due to the Group’s efforts to improve the gross profit margin and reduce selling, general and administrative
expenses, and ordinary profit was ¥1,878 million (up 1.1% year-on-year). As a result, net profit attributable toshareholders of parent company was ¥1,646 million (up 13.4% year-on-year) and ROE was 3.9% (up from 3.4% in theprevious year).

2

Device Segment
In the device business segment, our leading products are semiconductors (including system LSIs, microcomputers, LCD
driver ICs and memory) and electronic components (including connectors, capacitors and circuit boards). These
products are sold mainly to electronics manufacturers. We also provide technical support such as software development
and module development.
In the consolidated fiscal year under review, there were increases compared to the previous fiscal year in our strategic
device business, which mainly handles IoT products and new overseas products. However, the core device grew only
slightly due to the spread of the COVID-19 pandemic and changes in the commercial distribution of suppliers. Moreover,the volume business decreased significantly due to factors such as optimization for the scale of sales as part of businessportfolio reform. This resulted in net sales of ¥98,987 million (down 9.2% year-on-year). In terms of profit and loss,
although the Group made efforts to reduce selling, general and administrative expenses, there was a decrease in grossprofit on sales, and segment profit was ¥172 million (down 58.4% year-on-year).
Note: Segment profit is based on ordinary profit.

Solution Segment
In the solution business segment, we provide the optimal ICT infrastructure to each customer by combining network
devices, security products, Line-of-Business systems, clouds, and data centers. Furthermore, we provide integrated
services in all phases of design, construction, operation, and maintenance while supporting technology that continually
evolves through revolutionary technology such as AI and IoT, and through cloud native.
For the consolidated fiscal year under review, although overall sales were down compared to the previous fiscal year,
the impact caused by the spread of COVID-19 in the solution business was minimal compared to the device segment,
and large-scale and highly-profitable bidding projects were strong. As a result, net sales were nearly the same as theprevious fiscal year at ¥13,804 million (down 1.5% year-on-year). Furthermore, in terms of profit and loss, segment
profit was ¥1,706 million (up 18.2% year-on-year) due to an improved gross profit margin and a decrease in selling,
general and administrative expenses caused by reduced activities during the COVID-19 pandemic.
Note: Segment profit is based on ordinary profit.

3

(2) Capital Investment Activities
For the consolidated fiscal year under review, a total of ¥314 million in investments was conducted for purposes suchas updating facilities in the headquarters building and the Osaka Branch building.
(3) Financing Activities
For the consolidated fiscal year under review, outside financing was mainly ordinary borrowing from financial
institutions, and there are no special matters to note.
(4) Future Challenges(Basic management policies)
The Company’s basic policy is to adhere to the corporate philosophy of “Trust, Principles and Sincerity” in order toearn reputation as “the Chosen” among general electronics trading companies to prove its value based on a wide rangeof solutions it provides to its customers and suppliers.
In the device business, in order to assist all client companies active in home appliances, automobiles and industrial
devices operations in their efforts for globalization, the Company has been striving to establish overseas subsidiaries
and provide goods and services, as well as it has been serving as a coordinator for its customers and suppliers throughextensive product range and enhanced technological strength for suppliers’ product development. Furthermore, in thesolution business, the Company has been actively acting as a system integrator with information and communication
network at the core of its contributions to clients’ business development. Sanshin Electronics will continue to increase
the Group’s present value proving why customers and suppliers choose us.
In managing its businesses, the Company will continue to fulfill its mission as a good corporate citizen by developinga system that enables diverse personnel to play an active role in the Company, as well as by continuing to reduce theenvironmental impact of its operations, just to mention a few actions.
(Target business indicators)
By establishing the return on equity (ROE) and ordinary profit as the Company’s important business indicators, we will
endeavor to improve earnings.
(Basic policies for profit distribution)
The Company considers profit returns to its shareholders as one of the most important management issues. The
Company’s basic policy is to determine dividends by comprehensively considering the need to maintain a balance
between rewarding of shareholders, investment to gain opportunities for growth, attainment of sufficient retained
earnings to enable sustainable growth, and improvement in capital efficiency. Under this policy, the Company has set atarget for its dividend payout ratio of around 50% on a consolidated basis.

4

(Medium-term business strategy and future challenges)
The Group has formulated the V73 Medium-Term Management Plan to be concluded in the Company’s 73rd Term (fiscal
year ending March 31, 2024). In the Plan, the Group states the quantitative target of achieving an ROE of 5% at an earlystage. As measures for achieving this target, we will diligently implement the following measures.
1) Improve profitability through business structure reform and expand business in growth markets
We now face a situation in which the conventional business structure cannot respond to drastic environmental changes.
Specifically, in the device business, the scale of business has shrunk due to the cancellation of the dealership agreementwith Renesas Electronics Corporation, which had been a major supplier for many years. In the solution business, there
are heightened needs for the construction of new network infrastructure (including the cloud) and security measures in
conjunction with the rapid increase in remote work caused by COVID-19. In response to these changes, we will promotebusiness structural reforms by implementing the following measures in each business, and strive to expand our businessin growth markets with a view to sustainable growth over the medium- to long-term.
Device business
1) We will focus on improving profitability by increasing sales through expansion of lineups for products from overseas
manufacturers and by reducing costs through revision of sales operations.
2) We will promote portfolio reform by developing highly-profitable new businesses such as selling AI/IoT solutions
mainly for the manufacturing/infrastructure markets and by expanding to provide related services through thefoothold of sales for parts/modules and finished products in the robotics market.
Solution business
1) We will strive to construct a subscription-type business model by expanding application services that utilize thecloud platform.
2) We will focus on improving and accumulating in-house technological capability in areas such as AI/IoT, 5G, andvirtualization so that we can reliably seize the business opportunities that accompany the progress of DX.
3) We will strive to increase the number of customers through solution proposals based on consulting-type sales thatare familiar with customer practices and integrated ICT technology from system design/construction tooperation/maintenance, as well as co-creation in collaboration with partners.
2) Improvement of capital efficiency
In the device business, where the demand for funds was particularly large, we expect that our promotion of businessstructure reform toward highly-profitable businesses will suppress the increased demand for funds. Compared to unit
sales of semiconductors and electronic components, the purchase amount relative to net sales will decrease and there
will be an increased ratio of service-type businesses with terms for early collection of accounts receivables. The Groupwill endeavor to improve ROE by optimizing capital in conjunction with improving profitability through such businessstructural reforms while maintaining financial soundness.
1) We will continue to pay dividends with a consolidated payout ratio of approximately 50% and implement a flexible
capital policy including the acquisition of treasury stock. Regarding the acquisition of treasury stock, the tender
offer for treasury stock is scheduled to begin from June 22, 2021, with the total number of shares to be acquired of5

up to 7,000 thousand shares and the total acquisition price of up to ¥15,743 million. (For details, please refer to the“Notice Regarding the Scheduled Acquisition of Treasury Stock and Tender Offer of Treasury Stock, and theReduction of General Reserve, Capital Reserve, and Retained Surplus” dated May 12, 2021.)
2) We will strive to maintain financial soundness by securing cash on hand through measures such as improving
transaction conditions, liquidating receivables, and selling strategically held shares, by reducing inventories throughcareful management of orders, and by reducing total assets. We will also consider commitment line contracts with
our financial institutions to ensure the agility and stability of financing.
3) Strengthening corporate governance
We will continue to strengthen corporate governance so that the Board of Directors can fulfill a central role in improving
corporate value. In particular, as important management issues that will lead to an increase in corporate value, we will
strengthen our efforts to address issues related to sustainability; for example, consideration for global environmental
issues such as climate change and ensuring diversity.
1) We will review our policies on addressing issues related to sustainability.
2) We will strengthen our systems and management to effectively supervise the execution of strategy for the MediumTerm Management Plan.

6(5) Trends in Assets and Operating Results of the Company
67th Term(From April 1, 2017
to March 31, 2018)

68th Term(From April 1, 2018
to March 31, 2019)

Net Sales(million yen)

157,257

147,879

123,085

112,791

Operating Profit(million yen)

1,763

1,965

1,958

2,167

Ordinary Profit(million yen)

1,787

1,737

1,858

1,878

Net Profit Attributable
to Shareholders of
Parent Company(million yen)

947

1,449

1,451

1,646

Net Profit Per Share
(yen)

33.62

67.48

69th Term(From April 1, 2019
to March 31, 2020)

75.66

70th Term(From April 1, 2020
to March 31, 2021)

85.82

Total Assets(million yen)

93,62488,26173,65984,602

Net Assets(million yen)

61,78742,71142,02943,210Net Assets Per Share(yen)

2,191.19

2,224.47

2,188.84

2,249.40

1.5

2.8

3.4

3.9

Return on Equity
(ROE)
(%)

Note: Partial Amendments to Accounting Standard for Tax Effect Accounting, etc. (Corporate Accounting Standard No. 28;
February 16, 2018) were applied from the beginning of the 68th term. The amount for total assets is the amount after
retroactive application of said Accounting Standard, etc.

7

(6) Status of Parent Company and Principal Subsidiaries
1) Parent company
Not applicable.
2) Principal subsidiaries
Company NameSANSHIN
ELECTRONICS(HONG KONG)
CO., LTD.
SANSHIN
ELECTRONICS
SINGAPORE(PTE) LTD.
TAIWANSANSHIN
ELECTRONICS
CO., LTD.
SANSHIN
ELECTRONICSCORPORATIONSANSHIN
ELECTRONICS
KOREA
CO., LTD.
SANSHIN
ELECTRONICS(THAILAND)
CO., LTD.
SANSHIN
ELECTRONICS(SHANGHAI)
CO., LTD.

Address

Main Business

CapitalEquity Position

Hong Kong

Sales and import/export ofsemiconductors, electronic
components and equipment

12,820,000
US Dollar

100.00%Singapore

Sales and import/export ofsemiconductors, electronic
components and equipment

1,939,000
US Dollar

100.00%

Taipei, Taiwan

Sales and import/export ofsemiconductors, electronic
components and equipment

160,000,000
Taiwan New Dollar

100.00%Michigan, U.S.A.

Sales and import/export ofsemiconductors, electronic
components and equipment

3,000,000
US Dollar

100.00%Seoul, South
Korea

Sales and import/export ofsemiconductors, electronic
components and equipment

5,000,000,000
Korean Won

100.00%

Bangkok,Thailand

Sales and import/export ofsemiconductors, electronic
components and equipment

100,000,000
Thai Baht*100.00%

Shanghai, China

Sales and import/export ofsemiconductors, electronic
components and equipment

31,000,000
Chinese Yuan

*100.00%

45,000,000
Japanese Yen

74.07%

30,000,000
Japanese Yen

100.00%

TAKUMICORPORATIONTokyo, JapanSANSHIN
NETWORKSERVICE
CO., LTD.

Tokyo, Japan

1. Development and sales ofelectronic equipment
2. Development of computer
software
3. Acquisition, transfer, assistancein license acquisition, andmanagement of intellectual
property rights
1. Design, construction,
installation, maintenance,
operation, and management oftelecommunications systems
2. Design and installation of
circuits and telephone equipment
in telecommunications systems
3. Sales of equipment and devices
related to telecommunications
systems

Notes: 1. The percentages marked with an asterisk (*) include indirect holdings.
2. The Group has no specified wholly-owned subsidiary.

8(7) Principal Businesses (as of March 31, 2021)
The Group is developing the device business and solution business. A description of each segment is provided in theoverview of results per business segment in “(1) Business Progress and Results.”(8) Principal Offices (as of March 31, 2021)
Domestic

・SANSHIN ELECTRONICS CO., LTD.

Headquarters: 4-12, Shiba 4-chome, Minato-ku, Tokyo
Branches: Osaka Branch, Shizuoka Branch, Nagoya
Branch, Takamatsu Branch, Utsunomiya Branch, Nagano
Branch, Nagaoka Branch, Kochi Liaison Office
Other Business Place: Distribution Center

・AXIS DEVICE TECHNOLOGY CO., LTD.

Headquarters: Tokyo

・SANSHIN NETWORK SERVICE CO., LTD.

Headquarters: Tokyo

・SANSHIN MEDIA SOLUTIONS CO., LTD.

Headquarters: Tokyo

・SANSHIN SYSTEM DESIGN CO., LTD.

Headquarters: Tokyo

・TAKUMI CORPORATION

Headquarters: Tokyo

Overseas・SANSHIN ELECTRONICS (HONG KONG) CO.,LTD.

Headquarters: Hong Kong

・SANSHIN ELECTRONICS (SHANGHAI) CO.,LTD.

Headquarters: Shanghai, China

・SANSHIN ELECTRONICS (SHENZHEN) CO.,LTD.

Headquarters: Shenzhen, China

・SANSHIN ELECTRONICS KOREA CO., LTD.

Headquarters: Seoul, South Korea

・SANSHIN ELECTRONICS SINGAPORE (PTE)LTD.

Headquarters: Singapore

・SAN SHIN ELECTRONICS (MALAYSIA) SDN.
BHD.

Headquarters: Kuala Lumpur, Malaysia

・SANSHIN ELECTRONICS (THAILAND) CO.,LTD.

Headquarters: Bangkok, Thailand

・TAIWAN SANSHIN ELECTRONICS CO., LTD.

Headquarters: Taipei, Taiwan

・SANSHIN ELECTRONICS CORPORATION

Headquarters: Michigan, U.S.A.

9

(9) Employees (as of March 31, 2021)
Business Segment

Number of Employees

Change from the End of the Previous Term

Device business

309 (21)

down 55 (up 10)

Solution business

197 (15)

up 8 (up 2)

Corporate (common)

63 (16)up 2 (up 1)

Total

569 (52)

down 45 (up 13)

Notes: 1. The number of employees represents the number of those actually at work.
2. The number of employees in the “Corporate (common)” row includes personnel in administrative departments,
such as General Affairs Department, Accounting Department, distribution centers, etc.
3. The annual average number of temporary employees (part-time and entrusted workers) is enclosed in ( ).
4. The decrease in the number of employees in the device business is mainly due to transfer of the Company’s
employees to other business channels in conjunction with the termination of the dealership agreement withRenesas Electronics Corporation. The increase in the number of temporary employees is due to factors such as
an increase in the number of entrusted workers.

(10) Principal Lenders (as of March 31, 2021)
Outstanding
Loan Amount

Lender(Million yen)

Sumitomo Mitsui Banking Corporation

15,835MUFJ Bank, Ltd.

3,183

Mizuho Bank, Ltd.

3,000

Sumitomo Mitsui Trust Bank, Limited.

1,332

Note: The outstanding loan amount from banks listed above includes the outstanding loan amount from overseas subsidiaries
of each bank.

(11) Other Significant Matters Concerning the Current Status of Corporate GroupNot applicable.

10II. Shares of the Company (as of March 31, 2021)(1) Number of Shares Authorized to Be Issued: 76,171,000 shares(2) Number of Shares Issued: 24,281,373 shares(3) Number of Shareholders: 2,034(4) Major Shareholders (Top ten shareholders)Number of
Shares Held(Thousands of shares)
6,590
1,600
1,049
965
680
469
455
266
265
251

Name of Shareholder
City Index Eleventh Co., Ltd.
Matsunaga Eiichi, Ltd.
NEC Corporation
Sumitomo Mitsui Banking Corporation
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
MUFG Bank, Ltd.
Meiji Yasuda Life Insurance Company
Sumitomo Life Insurance Company
Sumitomo Mitsui Trust Bank, Limited

Shareholding Ratio
(%)
34.12
8.28
5.43
5.00
3.52
2.43
2.36
1.38
1.37
1.30

Notes: 1. The number of shares held by Custody Bank of Japan, Ltd. (trust account) includes 132,800 shares of the Company
which are trust property of the trust in relation to the performance-based stock compensation plan for Directors(including External Directors).
2. The Company has 4,964,665 shares of treasury stock, but is excluded from the major shareholders above.
3. Shareholding ratio is calculated with treasury shares excluded.

(5) Shares Issued As Compensation for Execution of Duties in the Consolidated Fiscal Year Under Review
Number of Shares
Directors (excluding External Directors)

3,900 shares

III. Stock Acquisition Rights, etc.
Not applicable.

11

Number of Recipients1

IV. Directors and Audit & Supervisory Board Members(1) Status of Directors and Audit & Supervisory Board Members (as of March 31, 2021)
Position

Name

Representative
Director, CEO
Representative
Director, COO
Director, Senior
Operating Officer

Mitsumasa
Matsunaga
Toshiro Suzuki

Director, Senior
Operating Officer
Director, Senior
Operating Officer
Director, Operating
Officer
Director, Operating
Officer

Akio Misono

Director, Operating
Officer
Director

Hiroshi Harada

Director

Minoru Nishino

Director

Tatsuo Takeuchi

Director

Akihiro Fujioka

Fumihide Kitamura

Yuji Mori
Koji Sakamoto
Mitsuhiro Ogawa

Responsibility Within the Company

Important Concurrent Roles, etc.

In charge of Auditing Office
Supervisor of Device BusinessGroup/In charge of Business
Administration Department and IoTBusiness Unit/General Manager ofBusiness Administration Department
Senior General Manager of Finance &Accounting Division
Senior General Manager of Solution
Marketing & Sales Division
Senior General Manager of
Administration Division
In charge of CE Unit and Sales
Technology Unit in Device BusinessGroup/Director of CE Unit
Deputy Senior General Manager of
Solution Marketing & Sales Division

Takeshi Uchimura
External Director of Mori-Gumi
Co., Ltd.

Audit & Supervisory Keiji Nishio
Board member (Fulltime)
Audit & Supervisory Shin-ichi Miura
Board member (Fulltime)
Audit & Supervisory Shohei Yamamoto
Board member

Lawyer of Marunouchi-Chuo
Law Office, External Director ofNarasaki Sangyo Co., Ltd., Audit& Supervisory Board member of
MegaHouse
Corporation,
External Audit & Supervisory
Board member of Bandai Co.,Ltd.,
External
Audit&
Supervisory Board member ofToin Corporation
Certified public accountant andtax accountant of Kezuka
Accounting Office

Audit & Supervisory Kuniharu Kezuka
Board member

Notes: 1. Takeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi and Akihiro Fujioka serve as External Directors, while Shohei
Yamamoto and Kuniharu Kezuka serve as External Audit & Supervisory Board members. Also, the Company has
designated all six of them as Independent Directors and Audit & Supervisory Board members as per the provisionsof the Tokyo Stock Exchange, and has given notice to this effect to the Stock Exchange. The Company has engaged
in sales transactions with Pioneer Corporation, the former place of employment for Tatsuo Takeuchi. However, the12transaction amount was an insignificant amount that was less than 1% of the Group’s consolidated net sales.
Therefore, we have judged that independence from management of the Company has been secured.
2. Kuniharu Kezuka is qualified as a certified public accountant and certified tax accountant, and has a considerable
degree of knowledge about financial and accounting matters.
3. The Company has no special relationships with the entities listed above in which the External Directors and External
Audit & Supervisory Board members hold important concurrent positions.
4. During this consolidated fiscal year, Directors’ position and responsibility within the Company were changed asfollows:
Name

Before change

After change

Director, Senior Operating

Director, Senior Operating

Officer, Supervisor of Device

Officer, Supervisor of Device

Business Group/In charge ofBusiness Group/In charge ofBusiness Administration
Fumihide Kitamura

Business Administration

Department, IoT Business

Department and IoT Business

Unit, and Sales Technology

October 1, 2020

Unit/General Manager of

Unit/General Manager ofBusiness Administration

Business Administration

Department

Department
Director, Operating Officer, in
Mitsuhiro Ogawa

Date of change

charge of CE Unit and 3rd
Sales Unit in Device BusinessGroup/Director of CE Unit

Director, Operating Officer, incharge of CE Unit and Sales
Technology Unit in Device

October 1, 2020

Business Group/Director of
CE Unit

5. The table below lists the Directors and Audit & Supervisory Board members who have retired during this consolidated
fiscal year.
Name

Date of retirement

Reasons for retirement

Title, duties and important concurrent roles,
etc., at the time of retirement
Director, Operating Officer, in charge of 1st

Tomoyuki Nagase

June 26, 2020

Expiration of the termof officeSales Unit, 2nd Sales Unit, and Overseas
Sales Unit in Device Business Group,Managing Director of SANSHINELECTRONICS KOREA CO., LTD.

13

(2) Overview of Limited Liability Contract
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company entered into an agreement respectively withTakeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi, Akihiro Fujioka, Keiji Nishio, Shin-ichi Miura, Shohei Yamamoto
and Kuniharu Kezuka, which limits their liability for damages prescribed in Article 423, Paragraph 1 of the same Act.
The limit on their liability for damages under the agreement coincides with the legally stipulated amounts.
(3) Overview of Liability Insurance Contract for Officers, etc.
Pursuant to Article 430, Paragraph 3, Item 1 of the Companies Act, the Company has entered into a liability insurance
contract for Directors, Audit & Supervisory Board members, Operating Officers, employees in management positions,and persons dispatched to another company as officers. The Company pays the full amount of the insurance premiums.
The overview of the insurance contract is that the insurance company will pay compensation for damages that may
occur when an insured individual is held responsible for the execution of his/her duties or is subject to a charge ofliability for pursuing those responsibilities. The contract will be renewed every year.
Damages caused when an insured individual violates laws or regulations are exempt from the insurance contract.
Furthermore, we are taking measures to ensure that insured persons can execute their duties properly; for example,
setting a limit on the amount to be covered.
We plan to renew the insurance contract with the same contents at the next renewal period.
(4) Compensation to Be Paid to Directors and Audit & Supervisory Board Members
1) Total compensation for this fiscal year
Total amount of compensation, etc., by type
Post

Total amount ofcompensation,
etc.

Basic
compensation

Performancebased allowancefor bonuses to
employees

Performancebased allowance
for stockcompensation

Number ofapplicableofficers

Directors¥177 million¥124 million¥29 million¥23 million

13(External Directors)(¥22 million)(¥22 million)

(―)

(―)

(4)

Audit
&
Supervisory Board
members¥42 million¥42 million

―

―

4

(External Audit &Supervisory Board
members)(¥10 million)(¥10 million)

(―)

(―)

(2)

Total

¥219 million¥167 million¥29 million¥23 million

17

Notes: 1. The above includes one Director who retired at the conclusion of the 69th Ordinary General Meeting of Shareholders
held on June 26, 2020.
2. The amount of compensation for Directors does not include the salaries of Directors who concurrently serve as
employees.
3. The upper limit on the total amount of compensation to be paid to Directors was set at ¥420 million per year
(excluding the employee salaries) at the 56th Ordinary General Meeting of Shareholders held on June 22, 2007.

14

The number of Directors at the conclusion of this General Meeting of Shareholders was 12 (including 0 External
Directors).
In addition to monetary compensation, the upper limit on the amount of stock compensation was resolved to be ¥40
million per year at the 66th Ordinary General Meeting of Shareholders held on June 23, 2017. Stock compensation
is paid to Directors (excluding External Directors) and the number of Directors at the conclusion of this General
Meeting of Shareholders was 9 (excluding 3 External Directors who are not eligible for stock compensation).
4. The upper limit on the total amount of compensation to be paid to Audit & Supervisory Board members was set at¥50 million per year at the 42nd Ordinary General Meeting of Shareholders held on December 21, 1993. The
number of Audit & Supervisory Board members at the conclusion of this General Meeting of Shareholders was 2.
The Company abolished the bonus system for Audit & Supervisory Board members in the 54th term.

2) Retirement benefits paid to retired Directors and Audit & Supervisory Board members for this fiscal year
At the 55th Ordinary General Meeting of Shareholders, which was held on June 23, 2006, approval was given for
discontinuing payments in line with abolishing the retirement benefit system for directors. Following the resolution,
there has been no retirement benefit paid to the retired Directors and Audit & Supervisory Board members who resigned
at the conclusion of the 69th Ordinary General Meeting of Shareholders held on June 26, 2020.
(5) Policies, etc., Related to the Determination of Contents for Compensation, etc., of Officers
At the Board of Directors meeting held on June 24, 2016, the Company resolved policies for determining the content ofcompensation, etc., for individual Directors. When making a resolution to the Board of Directors, we consult in advancewith the Nomination and Remuneration Advisory Committee, for which half of members are Independent Directors andAudit & Supervisory Board members, and receive reports on the contents of said consultation. Furthermore, the systemin the Director Compensation Rules is designed so that the contents of individual compensation, etc., for Directors arecalculated based on those policies, so the Board of Directors judges that the contents of compensation, etc., for individual
Directors in the consolidated fiscal year under review are in accordance with those policies. The Board of Directors
shall consult with the Nomination and Remuneration Advisory Committee every year regarding the validity of the
Director Compensation Rules, and shall deliberate and decide on necessary measures based on reports from theCommittee.
The contents of policies for determining the contents of compensation for individual Directors are as follows.
1) Basic policy Compensation for Directors shall be appropriate, and shall be sufficient for attracting and retaining diverse, talented
personnel.
 Compensation for Directors shall enable Directors to continuously improve corporate value and share interests with
the Company’s shareholders.
 Measures shall be taken to ensure that the process of determining compensation for Directors is fair and transparent.
 Compensation for Directors shall consist of basic compensation, which is fixed compensation as payment for roleand execution of duties, and performance-based compensation, which is linked to business performance. However,15

performance-based compensation is not appropriate for non-executive Directors, including External Directors whoare independent of business execution; therefore, only basic compensation is used for non-executive Directors.
2) Policy regarding basic compensation
Basic compensation for Directors of the Company shall be a fixed monthly compensation. The amount of compensation
shall be set within the range for each position stipulated in the Director Compensation Rules, taking into consideration
the appropriate level.
3) Policy regarding performance-based compensation, etc., and non-monetary compensation, etc.
 The Company establishes the return on equity (ROE) and ordinary profit as the Company’s important businessindicators, and strives to improve these indicators. Therefore, the Company also uses these indicators for
performance-based compensation, etc., and non-monetary compensation, etc., for executive Directors.
 Business indicators related to bonuses as short-term incentives shall be the consolidated ordinary profit and businessprofit (loss) by business segment for the applicable fiscal year. The amount of individual bonuses is calculated bymultiplying the basic compensation amount of each Director by the factor stipulated in the Director Compensation
Rules according to the results of each business index and the individual contribution evaluation. After being
determined, the amount is paid after the Ordinary General Meeting of Shareholders for that fiscal year.
 The business indicator for stock-based compensation as a medium- to long-term incentive shall be the return on
equity (ROE) for the fiscal year in which the compensation is issued. The number of shares to be individually issued
is assigned after converting the basic compensation amount for each Director and the ROE performance in eachfiscal year into points by using the methods specified in the Share Issuance Regulations, and the number of sharesof the Company are issued at the time of leaving the position based on the cumulative number of points earned
during time spent serving in that position.
 For these two indicators, a lower limit (no payment) and an upper limit are set. Director compensation is paid
according to performance, within the upper and lower limits.
4) Policy for ratio of compensation, etc.
The ratio of performance-based compensation, etc., and non-monetary compensation, etc., is designed to be about 30%of the total compensation for Directors at the upper limit of the current system.
5) Items related to determination of compensation, etc.
Pursuant to the Director Compensation Rules, the Board of Directors delegates the determination of the compensation
amount, etc., for each Director to the Representative Directors.
(6) Items Related to Delegating the Determination of Compensation, etc., for Officers
Pursuant to the Director Compensation Rules, the Board of Directors delegates the determination of the individualcompensation amount for each director to Representative Director Mitsumasa Matsunaga and Representative Director
Toshiro Suzuki. When deciding the contents of delegation, the Nomination and Remuneration Advisory Committee
16

confirms that the contents comply with the Director Compensation Rules.
(7) Matters Concerning External Directors and Audit & Supervisory Board Members
1) State of significant posts held concurrently at other corporations, and relations between the Company and thelocation of the other posting
Please see the above “(1) Status of Directors and Audit & Supervisory Board Members” section.
2) Major activities in the fiscal year under review• Status of attendance at meetings of the Board of Directors and the Audit & Supervisory Board
Board of Directors Meetings(a total of 18 meetings)
Number of
Meetings Attended

DirectorTakeshi Uchimura

Director
Minoru Nishino

Director
Tatsuo Takeuchi

Director
Akihiro Fujioka
Audit & Supervisory
Board member
Shohei Yamamoto
Audit & Supervisory
Board member
Kuniharu Kezuka

Audit & Supervisory Board Meetings(a total of 20 meetings)

Attendance Rate

Number of Meetings
Attended

Attendance Rate

18

100%

―

―

18

100%

―

―

18

100%

―

―

14

100%

―

―

18

100%

20

100%

18

100%

20

100%

Note: Director Akihiro Fujioka was newly nominated at the 69th Ordinary General Meeting of Shareholders held on June 26,
2020. Meetings of the Board of Directors have been held 14 times after he assumed the position of Director.

 Statements made by Directors at the Board of Directors and summary of duties performed in relation to their
expected roles
Takeshi Uchimura, Minoru Nishino, Tatsuo Takeuchi and Akihiro Fujioka provided a wide range of valuablecomments and advice in terms of corporate governance, risk analysis and evaluation in the course of business
operation, compensation system for the Directors, election of any Directors, and overall management based on theirabundant experience and achievements in corporate management at another listing companies.
Furthermore, as members of the Nomination and Remuneration Advisory Committee, the four Directors fulfill an
important role in strengthening the independence, objectivity, and accountability of functions of the Board of
Directors as expected by the Company; for example, they are involved in reporting to the Board of Directors inregards to the nomination of candidates for Directors and Audit & Supervisory Board members and in regards to thedetermination of Director compensation.
17

 Statements made by Audit & Supervisory Board members at the Board of Directors and at Audit & Supervisory
Board meetings
Shohei Yamamoto and Kuniharu Kezuka provided comments effective and necessary for securing legal complianceof the Company’s management from the viewpoints of their positions as a lawyer and as a certified public accountant
and certified tax accountant, respectively.

18

V. Status of Accounting Auditor(1) Name of Accounting Auditor
Deloitte Touche Tohmatsu LLC.
(2) Amount of Compensation
Amount to Be Paid
Compensation to be paid to Accounting Auditors for the fiscal year under review¥47 million

Total of cash and other assets to be paid by the Company and subsidiaries to
Accounting Auditors¥51 million

Notes: 1. Among principal subsidiaries of the Company, overseas subsidiaries were subject to audits by a person other thanthe Accounting Auditor who audits the Company (overseas certified public accountant or person equivalent to thequalification of auditing firm) (limited to an audit subject to a foreign law equivalent to the Companies Act or the
Financial Instruments and Exchange Act of Japan).
2. The auditing contract between the Company and the Accounting Auditors makes no distinction between auditing
services based on the Corporate Law and auditing services based on the Financial Instruments and Exchange Law.
Since no real distinction can be made in practice, the amount paid represents the total amount.
3. As prescribed in “Practical Guidelines Concerning Cooperation with Accounting Auditors” released by the Japan
Audit & Supervisory Board Members Association, the Audit & Supervisory Board has evaluated the status ofexecution of duties by Accounting Auditors and their audit plan, and after considering the Company’s businessresults in the previous fiscal year, has agreed with the provisions of Article 399, Paragraph 1 of the Companies
Act on matters such as the compensation to be paid to Accounting Auditors.

(3) Non-Audit Work
The Company entrusts the Accounting Auditor with “an advisory service for introduction of revenue recognition
accounting standards,” which is services other than service as provided in Article 2, Paragraph 1 of the Certified Public
Accountants Law (non-audit work), and paid compensation for such services to the Accounting Auditor.
(4) Policy Concerning Decisions to Dismiss or Not to Reappoint Accounting Auditors
When there is any difficulty in execution of duties by the Accounting Auditor and their fulfillment is deemed necessary,
the Audit & Supervisory Board shall determine the content of the proposal regarding whether to dismiss or not reappoint
the Accounting Auditor to be submitted to the General Meeting of Shareholders. Furthermore, if the Accounting Auditor
is deemed to fall under any of the items prescribed in Article 340, Paragraph 1 of the Companies Act, the Audit &Supervisory Board shall dismiss the Accounting Auditor based on consent of all Audit & Supervisory Board members.
In this case, the Audit & Supervisory Board member designated by the Audit & Supervisory Board shall report on thedismissal of the Accounting Auditor and the reason thereof at the first General Meeting of Shareholders following thedismissal.

19

VI. System for Securing Appropriateness of Business Operations and the Status of Its Operation(1) System for Securing Appropriateness of Business Operations
At the Meeting of the Board of Directors, the Company resolved the following system for securing compliance of
directors’ execution of duties in line with laws and regulations as well as with the Articles of Incorporation, but also for
securing the appropriateness of the business operations of the Company.
1) System for Securing Compliance of Execution of Duties by Directors and Employees with Laws andRegulations and Articles of Incorporation
 The Company shall set the code of conduct in line with the company creed and philosophy where its directors andemployees are required to comply with, and ensure that each and every director and employee is thoroughly informedof this code.
 The Company shall set compliance rules and establish a framework for compliance, including an internal reporting(whistle-blower) system.
 When detecting serious legal violation or other important matters concerning compliance, Directors shallimmediately notify Audit & Supervisory Board members and report it at a meeting of the Board of Directors or a
corporate management meeting without any delay.
 The Company shall set up an internal audit department that is independent from operational divisions and responsible
for auditing the operational processes thereof in order to prevent and detect illegal acts and improve the processes.
 Audit & Supervisory Board members shall be allowed not only to attend meetings of the Board of Directors on apermanent basis but also to participate in other important meetings and committee meetings as necessary. In addition,
Audit & Supervisory Board members shall regularly hold meetings to seek the opinions of Accounting Auditors.
 The Company shall stipulate explicitly the obligation to break off relations with antisocial forces in the code of
conduct. Furthermore, it shall establish a department to handle such antisocial forces and take all necessary measures
such as formulating a communication framework to contact the police and lawyers in the case of emergency,
collecting and managing information, preparing regulations and manuals, and so on.
2) System for Storage and Management of Information Concerning Directors’ Execution of Duties
 Directors shall store and manage documents and other information materials concerning their execution of duties
appropriately in accordance with the rules set by the Company.
 Directors, Audit & Supervisory Board members and employees at the internal audit department may access suchinformation at any times.
3) Rules Concerning Risk Management
 The Company has established risk management regulations, and clearly states the risks that it faces.
 Under the directions of its General Risk Committee, which is headed by the company president, the Company
manages risk for the entire Group.
 As well as clarifying the supervisory department for each risk, the General Risk Committee sets up individualcommittees as required, and prepares systems for enabling swift and effective responses to be made when risks arise.
Also, the Company formulates a Business Continuity Plan (BCP) that assumes the occurrence of a large-scale20

earthquake related disaster.
 The General Risk Committee makes reports to the Board of Directors, as necessary, on the state of responses being
made for risks that have arisen.
 Regarding potential risks requiring response, after assessing these, the General Risk Committee reviews theeffectives of the risk policies and associated management systems, and then reports on their findings to the Board of
Directors.
4) System for Securing Efficiency of Execution of Duties by the Group’s Directors
 The Company shall hold a regular meeting of the Board of Directors every month and hold an extraordinary meetingof the Board of Directors as necessary.
 In addition, the Company shall regularly hold a corporate management meeting with the participation of Executive
Directors, Full-time Audit & Supervisory Board members and others, for which sufficient deliberations shall be
conducted in advance on particularly important matters to be determined by the Board of Directors.
 With regard to the execution of operations based on decisions made at a meeting of the Board of Directors, thedivisions and officials in charge thereof as well as the execution procedures shall be determined based on the rules
concerning the allocation of operational responsibilities and authorities. Furthermore, by similarly maintaining
necessary regulations and providing execution proceedings for each subsidiary, the Company aims to streamline
execution of duties by each subsidiary's corresponding director.
5) System for Securing Appropriateness of Operations of the Group All companies belonging to the Sanshin Electronics Group shall be required to comply with the Group creed andphilosophy, the code of conduct and the compliance rules, and the Company shall ensure that directors and all
employees of its subsidiaries are thoroughly informed. Each subsidiary shall maintain necessary regulations for itself
based on the above rules.
 The Sanshin Electronics Group as a whole, including subsidiaries, shall implement measures to cope with the serious
risks. Each subsidiary shall maintain necessary regulations for itself based on the above rules.
 Subsidiaries are required to obtain prior approval from and submit reports to the Company with regard to importantmatters as specified in the rules concerning the supervision of subsidiaries and affiliated companies.
 The Company shall regularly provide directors and employees of subsidiaries with opportunities to have theCompany’s Directors and Audit & Supervisory Board members reporting on the execution of their respective duties.
 Audit & Supervisory Board members shall conduct necessary audits with regard to subsidiaries, too.
6) Systems for Ensuring the Reliability of Financial Reporting To ensure the reliability of the Group’s financial reporting and the effective and appropriate submission of theinternal control reports, the Company shall set the Internal Control Management Regulations and introduce theframework to evaluate the effectiveness of the internal control system on a regular basis and to correct inadequacies,
if any.

217) System for Accommodating Audit & Supervisory Board Members’ Requests for Assistant Employees andIndependence of Said Employees from Directors
 Audit & Supervisory Board members shall be given the authority to issue instructions to the internal audit division
with regard to matters necessary for their auditing activities.
 Concerning instructions received from Audit & Supervisory Board members with regard to matters necessary for
their auditing activities, employees at the internal audit department shall not be bound by the chain of command
leading down from Directors.
 The Company shall respect the Audit & Supervisory Board members’ opinions with regard to matters related to theappointment, transfer, evaluation, disciplinary actions and so forth, of the employees at the internal audit department.
8) Systems for Reporting by Directors and Employees to Audit & Supervisory Board Members and for Securing
Effective Audits by Audit & Supervisory Board Members
 Audit & Supervisory Board members shall be given the authority to request necessary reports from directors andemployees at any time.
 The Representative Directors shall provide the Audit & Supervisory Board members with opportunities to exchange
opinions with them regularly.
 The internal audit department shall make sure to submit reports to Audit & Supervisory Board members after
conducting audits of operations, etc.
The Company shall establish an appropriate system for the reporting of matters concerning compliance, such as legal
violation, to Audit & Supervisory Board members by setting compliance rules.
 Any disadvantageous treatment given to Directors and Employees who contribute through reports to audits by Audit& Supervisory Board members, or to Directors, Audit & Supervisory Board members and Employees of subsidiaries
is prohibited.
 When Audit & Supervisory Board members request to the Company the payment in advance for the expenses related
to the execution of their auditing duties, the Company shall pay such costs or amortize the liability immediately.
Moreover, in order to pay the expenses incurred in the execution of duties by Audit & Supervisory Board members,
the Company shall allocate a certain amount of budget each year.
(2) Outline of the Status of Operation of the System for Securing Appropriateness of Business Operations
The status of operation of the system for securing appropriateness of business operations is shown as below.
 The Company has set a code of conduct its directors and employees are required to comply with, and is currently
taking thorough measures to make this code known by everyone at the training for new employees, as well as throughperiodic publications in the Company’s newsletter, postings within offices, or by distributing cards internally.
Furthermore, in order to assess the implementation status of this code of conduct, the Company regularly conducts
an employee questionnaire. The results of the questionnaire are reported to the Board of Directors and the degree ofawareness toward the code of conduct is confirmed.
 The Company has established internal reporting regulations which define items including confidentiality of whistleblowers, prohibition of disadvantageous treatment of whistle-blowers, and prohibition of handling of reported
incidents by individuals who are personally involved in said incidents. The Company operates an internal control
22system. Furthermore, in order to strengthen independence from management, the Company includes all Audit &Supervisory Board members in the reporting contact point.
 The Company has established an Auditing Office as its internal auditing department. Currently, three dedicated staffs
are stationed at the Auditing Office as of the date of creation for this business report. After conducting an operational
audit, the Auditing Office submits an auditing report to the Representative Directors and to Audit & Supervisory
Board members. Furthermore, the Audit & Supervisory Board members and Auditing Office hold meetings asnecessary. Audit & Supervisory Board members gather information from the Auditing Office; for example,
requesting reports on the status of the internal control system and related auditing results. Audit & Supervisory Board
members also provide instruction and recommendations to the Auditing Office.
 Audit & Supervisory Board members shall attend the meetings of the Board of Directors. Furthermore, Full-time
Audit & Supervisory Board members shall attend management and executive committee meetings, management
strategy meetings and other important gatherings on a permanent basis. In addition to holding deliberation withAccounting Auditors at the beginning of the fiscal year under review in order to formulate an audit plan, Audit &Supervisory Board members meet periodically and as necessary, and are present during the performance ofaccounting audits as necessary.
 The General Risk Committee makes reports to the Board of Directors, as necessary, on the state of responses being
made for risks that have arisen. Also, regarding new risks requiring response, after assessing these, the General Risk
Committee reports on the effectiveness of the risk policies and associated management systems to the Board of
Directors.
 During the period, ordinary meetings of the Board of Directors were held 13 times and special meetings of the Boardof Directors were held 5 times.
 The scope of matters to be resolved by the Board of Directors was limited to legal matters and fundamental mattersof the Company (disposal of important assets such as investments, corporate code of conduct, corporate philosophy,
code of conduct, establishment/revision of basic management policies and management plans, items related tocorporate governance, etc.). Other matters shall be delegated to corporate management meetings and executive
directors, and action shall be taken in accordance with rules. In regards to the executions of said actions, executive
directors shall report to the Board of Directors as necessary. Through these reports, the Board of Directors shallsupervise the decision-making and business operation of executive directors.
 Audit & Supervisory Board members perform accounting audits in important subsidiaries in Japan, and visit
important overseas subsidiaries for periodic audits.
 In accordance with the Internal Control Management Regulations, the Internal Control Committee meets once every
quarter. In order to evaluate the effectiveness of internal controls at the Company, the Internal Control Committee
considers the self-assessment results of self-inspection and the results of independent evaluation by the Auditing
Office. Results are reported to the COO.
 Representative Directors meet periodically with Audit & Supervisory Board members and Independent External
Directors in order to exchange opinions. Furthermore, separate meetings are held between Audit & Supervisory
Board members and Independent External Directors in order to exchange opinions.

23

Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETSanshin Electronics Co., Ltd.
As of March 31, 2021
Millions of yen
ASSETS
Current assets:
Cash and deposits
Notes and accounts receivable-trade25,54432,696

Electronically recorded monetary claims

841

Merchandise inventories

14,333

Partly-finished work

9

Accrued income

60

Consumption taxes receivable

3,815

Others644

Allowance for doubtful accounts
Total current assets(9)77,934Non-current assets:
Property and equipment
Buildings and structures

1,278

Land

1,135
205

Leased assets
Others80
2,701

Total property and equipment
Intangible assets:

482

Investments and other assets:
Investment securities
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
TOTAL

3,067
309
143
(35)
3,484
6,668
84,602

Note: Figures are rounded down to the nearest million yen.

24

CONSOLIDATED BALANCE SHEETSanshin Electronics Co., Ltd.
As of March 31, 2021
Millions of yen
LIABILITIES AND NET ASSETS:
LIABILITIES:Current liabilities:
Notes and accounts payable-trade
Short-term loans payable
Lease obligations
Accrued corporate tax, etc.
Allowance for bonuses to employees
Allowance for bonuses to Directors and Audit &Supervisory Board members
OthersTotal current liabilities

13,10425,351
71
288
472
29
1,659
40,975

Non-current liabilities:
Lease obligations
Deferred tax liabilities
Allowance for stock compensation
Net defined benefit liabilities
OthersTotal non-current liabilities
Total liabilities

135
3
74
100
102
416
41,392NET ASSETS:
Shareholders’ equity:
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity

14,811
5,329
33,106(10,348)
42,899

Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred hedge gains (losses)
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
TOTAL

583
(133)
(244)
47
253
58
43,21084,602

Note: Figures are rounded down to the nearest million yen.

25

CONSOLIDATED PROFIT AND LOSS STATEMENTSanshin Electronics Co., Ltd.
For the year ended March 31, 2021
Millions of yen
112,791
101,740
11,051
8,883
2,167

Net sales
Cost of sales:
Gross profit on sales
Selling, general and administrative expenses:
Operating profit
Non-operating profit:
Interest income
Dividend income
OthersNon-operating expenses:
Interest expenses
Sales discounts
Foreign exchange losses
OthersOrdinary profit
Extraordinary profits:
Gain on sales of investment securities
Extraordinary losses:
Loss on retirement of non-current assets
Loss on sales of non-current assets
Loss on valuation of investment securities
Net profit before tax and other adjustments

18
36
83
83
9
282
52

141
0
0
0

Corporate, resident and enterprise taxes
Adjustment for corporate tax, etc.
Net profit
Net profit attributable to non-controlling interests
Net profit attributable to shareholders of parent company
Note: Figures are rounded down to the nearest million yen.

26

452
(91)

138

427
1,878
141

0
2,019
361
1,658
12
1,646

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITYSanshin Electronics Co., Ltd.
For the year ended March 31, 2021

Millions of yen

Shareholders’ equity
CapitalsurplusCapital stock
Balance as of April 1, 2020

14,811

5,329

Retainedearnings

Treasury stock

32,676(10,353)

Total
shareholders’equity42,464

Changes during the term
Dividends of surplus
Net profit attributable to shareholdersof parent company(1,216)(1,216)

1,646

1,646

Purchase of treasury stock

(0)

(0)

Disposal of treasury stock
Net changes of items other thanshareholders’ equity

5

5

Total changes during the term

－

－

429

5

434

Balance as of March 31, 2021

14,811

5,329

33,106(10,348)

42,899

Accumulated other comprehensive income

Balance as of April 1, 2020

Valuationdifferenceonavailablefor-salesecurities
338

DeferredForeignhedge
currency
gains
translation(losses) adjustments
1

(701)

NonRemeasureTotal
ments ofaccumulated controllingdefinedotherbenefitcomprehensive interests
plans
income
(120)

(482)

46

Total net
assets42,029Changes during the term
Dividends of surplus(1,216)

Net profit attributable to1,646

shareholders of parent company
Purchase of treasury stock(0)

Disposal of treasury stock
Net changes of items other thanshareholders’ equity
Total changes during the term

5
245

(134)

456

167

735

11

746

245

(134)

456

167

735

11

1,181

Balance as of March 31, 2021

583

(133)

(244)

47

253

58

43,210Note: Figures are rounded down to the nearest million yen.

27

Non-Consolidated Financial Statements
NON-CONSOLIDATED BALANCE SHEETSanshin Electronics Co., Ltd.
As of March 31, 2021
Millions of yen
ASSETS
Current assets:
Cash and deposits
Trade notes
Electronically recorded monetary claims
Trade accounts
Merchandise inventories
Partly-finished work
Advance payment
Prepaid expenses
Short-term loans receivable fromsubsidiaries and associates
Accrued income
Consumption taxes receivable
OthersAllowance for doubtful accounts
Total current assets

20,95883841
18,135
10,667
9
226
132
77
147
3,815
16
(0)
55,110Non-current assets:
Property and equipment:
Buildings
Structures
Tools and fixtures
Land
Leased assets
Total property and equipment

1,265
4
40
1,135
158
2,604

Intangible assets:
Software
OthersTotal intangible assets

236
94
330

Investments and other assets:
Investment securities
Stocks of subsidiaries and affiliates
Guarantee money deposit
Deferred tax assets
OthersAllowance for doubtful accounts
Total investments and other assets
Total non-current assets
TOTAL

2,931
3,557
18
310
36
(2)
6,852
9,788
64,898

Note: Figures are rounded down to the nearest million yen.
28

NON-CONSOLIDATED BALANCE SHEETSanshin Electronics Co., Ltd.
As of March 31, 2021
Millions of yen
LIABILITIES AND NET ASSETS:
LIABILITIES:Current liabilities:
Trade notes
Trade accounts
Short-term loans payable
Lease obligations
Accounts payable
Accrued expenses
Accrued corporate tax, etc.
Advance received
Allowance for bonuses to employees
Allowance for bonuses to Directors and Audit &Supervisory Board members
OthersTotal current liabilities

820
9,897
19,546
47
275
195
110
638
472
29
248
32,281

Non-current liabilities:
Lease obligations
Allowance for stock compensation
Employees’ severance and retirement benefits
OthersTotal non-current liabilities
Total liabilities

111
74
94
102
382
32,664

NET ASSETS:
Shareholders’ equity:
Capital stock
Capital surplus
Capital reserve
Retained earnings
Retained surplus
Other retained earnings
Reserve for dividend payments
General reserve
Retained earnings brought forward
Treasury stock
Total shareholders’ equity

14,811
5,329
5,329
21,990670
21,319600
18,6802,039(10,348)
31,783

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Deferred hedge gains (losses)
Total valuation and translation adjustments
Total net assets
TOTAL

583
(133)
450
32,23464,898

Note: Figures are rounded down to the nearest million yen.
29

NON-CONSOLIDATED PROFIT AND LOSS STATEMENTSanshin Electronics Co., Ltd.
For the year ended March 31, 2021
Millions of yen
84,181
77,152
7,029
6,593
436

Net sales
Cost of sales:
Gross profit on sales
Selling, general and administrative expenses:
Operating profit
Non-operating profit:
Interest and dividend income
Management consulting fees
OthersNon-operating expenses:
Interest expenses
Foreign exchange losses
OthersOrdinary profit
Extraordinary profits:
Gain on sales of non-current asstes
Gain on sales of investment securities
Extraordinary losses:
Loss on sales of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Net profit before tax and other adjustments
Corporate, resident and enterprise taxes
Adjustment for corporate tax, etc.
Net profit

1,295
201
42
52
33
10

0
141
0
0
0
199
(100)

1,539

96
1,879

141

0
2,021
99
1,921

Note: Figures are rounded down to the nearest million yen.

30

NON-CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYSanshin Electronics Co., Ltd.
For the year ended March 31, 2021
Millions of yen
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance as of April
1, 2020
Changes during theterm
Dividends ofsurplusCapitalreserve

14,811

5,329

Total capitalsurplusRetained
surplusReserve fordividend
payments

5,329

670

600

Generalreserve
18,680Net profit
Purchase oftreasury stock
Disposal oftreasury stock
Net changes of
items other thanshareholders’equityTotal changes
during the term
Balance as ofMarch 31, 2021

Total
retainedearnings

Treasury
stock

Total
shareholders’equity1,335

21,286(10,353)

31,073(1,216)(1,216)(1,216)

1,921

1,921

1,921

Retainedearnings
brought
forward

(0)

(0)

5

5

－

－

－

－

－

－

704

704

5

709

14,811

5,329

5,329

670

600

18,6802,039

21,990(10,348)

31,783

Valuation and translation adjustments
Valuation difference
on available-for-salesecurities
Balance as of April 1, 2020
Changes during the term
Dividends of surplus

Deferred hedge gains(losses)

338

Total valuation andtranslation adjustments
1

339

31,413(1,216)

Net profit

1,921

Purchase of treasury stock
Disposal of treasury stock
Net changes of items otherthan shareholders’ equity

Total net assets

(0)
5
245

(134)

110

Total changes during the term

245

(134)

110

820

Balance as of March 31, 2021

583

(133)

450

32,234

Note: Figures are rounded down to the nearest million yen.

31

110

Audit Report
Report of the audit of the consolidated accounts by Accounting Auditors

Independent Auditor’s Report
May 12, 2021
To the Board of Directors of Sanshin Electronics Co., Ltd.:

Deloitte Touche Tohmatsu LLC, Tokyo Office
Hirotsugu Mizuno
Designated and Engagement Limited Partner
Certified Public Accountant
Akiko Fujiharu
Designated and Engagement Limited Partner
Certified Public Accountant

Auditors' opinions
Pursuant to Article 444, Paragraph 4 of the Companies Act, we have audited the consolidated financial statements, which
consist of the consolidated balance sheet, consolidated profit and loss statement, consolidated statement of changes inshareholders’ equity and notes to consolidated financial statements, of Sanshin Electronics Co., Ltd., (the “Company”)
for the consolidated fiscal year from April 1, 2020 to March 31, 2021.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position and results of operations of the Company and its consolidated subsidiaries for the related consolidated fiscal
year, and the consolidated results of their operations and their cash flows for the years then ended in conformity withcorporate accounting standards generally accepted in Japan.
Basis for Auditors’ opinions
We have carried out the audit in compliance with auditing standards generally recognized as fair and appropriate inJapan. Our responsibilities under these standards are stated in the “Responsibilities of Auditors in the auditing of
consolidated financial statements.” In accordance with applicable regulations related to occupational ethics in Japan,
we are independent from the Company and its consolidated subsidiaries and fulfill all other ethical responsibilities as
Auditors. We believe that the audit evidence we have obtained is sufficient and appropriate, and provides a reasonablebasis for our opinions.
Matters of emphasis
As stated in the Notes on Significant Subsequent Events, the Company resolved at the Board of Directors meeting heldon May 12, 2021 to acquire treasury stock and to make a tender offer for the treasury stock as a specific acquisition
method. This matter does not affect the opinion of our auditing firm.
32Responsibilities of the Company’s management, Audit & Supervisory Board members, and the Audit & Supervisory
Board for preparation of consolidated financial statements
The Company's management is responsible for preparing and fairly presenting these consolidated financial statementsin accordance with corporate accounting standards generally accepted in Japan. This includes designing and operatinginternal controls judged by management as necessary to prepare and fairly present consolidated financial statements thatare free from material misstatements due to fraud or error.
In the course of drafting consolidated financial statements, management is responsible for assessing whether it isappropriate to prepare the consolidated financial statements based on the premise of a going concern and disclosing theapplicable information for matters related to said going concern when necessary based on corporate accounting
standards which are generally accepted in Japan.
The Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for monitoring the
Directors’ execution of their work operations concerning financial reporting process preparation and implementation.
Responsibilities of Auditors in the auditing of consolidated financial statements
For the audits they perform, Auditors are responsible for acquiring a reasonable guarantee based on the audits they
performed that there is no fraud or error within the consolidated financial statements as a whole which results in material
misstatements and expressing an opinion on the applicable consolidated financial statements from their independent
perspective within their audit report. Misstatements can occur as a result of fraud or error, and when these misstatements
can reasonably be considered to affect the decision-making of consolidated financial statement users either individuallyor in total, they are determined to be material.
Auditors carry out the following auditing process in compliance with auditing standards generally recognized as fair
and appropriate in Japan, using their professional and specialist judgment and maintaining a sense of professional
skepticism in their work.
・Auditors identify and evaluate the risk of material misstatements resulting from fraud or error. Auditors also propose
and implement auditing procedures for handling risks of these material misstatements. Selection and application ofauditing procedures are carried out at the discretion of the Auditor. In addition, Auditors acquire audit evidence thatis both sufficient and appropriate as a basis for stating their opinions.
・Expressing an opinion on the effectiveness of internal controls is not the purpose of auditing consolidated financial
statements. However, Auditors consider internal controls related to the audit as part of their risk evaluations in orderto formulate appropriate auditing procedures to fit the circumstances.
・Auditors evaluate the appropriateness of the accounting policy chosen by the management and the methods for its
application, as well as the reasonableness of accounting estimates carried out by management and the validity ofrelated explanatory notes.
・Auditors evaluate whether it is appropriate for the management to draft consolidated financial statements on thepremise of a going concern. They also come to a conclusion regarding whether major uncertainties can be recognized
related to matters or circumstances giving rise to serious doubts concerning the premise of a going concern based onevidence acquired through the auditing process. If major uncertainties concerning the premise of a going concern canbe recognized, Auditors caution consolidated financial statement users on this point in their audit reports, calling forattention to the explanatory notes. In addition, if the explanatory notes in the consolidated financial statements related
to the applicable major uncertainty are not appropriate, Auditors are expected to indicate an exception in their opinion
statements on the consolidated financial statements. Although the conclusions of Auditors are based on the auditing
evidence they acquire up until the date of their audit report, there is still a possibility that a company will be unable
to continue its business as a going concern due to future events and circumstances.
・In addition to determining whether the indications and explanatory notes of the consolidated financial statements are33

in compliance with corporate accounting standards generally accepted in Japan, Auditors also evaluate whether theindications, structure, and content of consolidated financial statements and their related explanatory notes, as well as
the transactions and accounting matters on which these statements are based, are presented fairly.
・In order to express an opinion on consolidated financial statements, Auditors must acquire sufficient and appropriate
auditing evidence related to financial affairs of the Company and its consolidated subsidiaries. Auditors are
responsible for instructions, supervision, and implementation operations related to the auditing of consolidated
financial statements. Auditors are solely responsible for their audit opinions.
Auditors will report the planned auditing scope, implementation period, important findings from the auditing process(including major deficiencies identified related to the internal controls), and other matters required by the auditing
standards to the Company’s Audit & Supervisory Board members and Audit & Supervisory Board.
Auditors will report on their adherence to independence as required by Japan’s occupational ethics regulations, matterswhich could reasonably be considered to affect this independence, and the content of any safeguards measures
implemented for the removal or mitigation of obstructing factors to the Company’s Audit & Supervisory Board members
and Audit & Supervisory Board.
Interest relationships
There are no interest relationships between the Company or consolidated subsidiaries and the auditing firm or between
the Company or consolidated subsidiaries and the Designated and Engagement Limited Partners that are required to bereported according to the Certified Public Accountants Act.

34

Report of the audit of the accounts by Accounting Auditors

Independent Auditor’s Report
May 12, 2021
To the Board of Directors of Sanshin Electronics Co., Ltd.:

Deloitte Touche Tohmatsu LLC, Tokyo Office
Hirotsugu Mizuno
Designated and Engagement Limited Partner
Certified Public Accountant
Akiko Fujiharu
Designated and Engagement Limited Partner
Certified Public Accountant

Auditors' opinions
Pursuant to Article 436, Paragraph 2, Item 1 of the Companies Act, we have audited the financial statements, which
consist of the balance sheet, profit and loss statement, statement of changes in shareholders’ equity, notes to nonconsolidated financial statements, and detailed statements thereof (“financial statements”), of Sanshin Electronics Co.,
Ltd., (the “Company”) for the 70th fiscal year from April 1, 2020 to March 31, 2021.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
and results of operations for the related fiscal year in conformity with corporate accounting standards generally acceptedin Japan.
Basis for Auditors’ opinions
We have carried out the audit in compliance with auditing standards generally recognized as fair and appropriate inJapan. Our responsibilities under these standards are stated in the “Responsibilities of Auditors in the auditing offinancial statements.” In accordance with applicable regulations related to occupational ethics in Japan, we are
independent from the Company and fulfill all other ethical responsibilities as Auditors. We believe that the audit
evidence we have obtained is sufficient and appropriate, and provides a reasonable basis for our opinions.
Matters of emphasis
As stated in the Notes on Significant Subsequent Events, the Company resolved at the Board of Directors meeting heldon May 12, 2021 to acquire treasury stock and to make a tender offer for the treasury stock as a specific acquisition
method. This matter does not affect the opinion of our auditing firm.
Responsibilities of the Company’s management, Audit & Supervisory Board members, and the Audit & Supervisory
Board for preparation of financial statements
The Company's management is responsible for preparing and fairly presenting these financial statements in accordancewith corporate accounting standards generally accepted in Japan. This includes designing and operating internal controls
35judged by management as necessary to prepare and fairly present financial statements that are free from material
misstatements due to fraud or error.
In the course of drafting financial statements, management is responsible for assessing whether it is appropriate toprepare the financial statements based on the premise of a going concern and disclosing the applicable information formatters related to said going concern when necessary based on corporate accounting standards which are generally
accepted in Japan.
The Audit & Supervisory Board members and the Audit & Supervisory Board are responsible for monitoring the
Directors’ execution of their work operations concerning financial reporting process preparation and implementation.
Responsibilities of Auditors in the auditing of financial statements
For the audits they perform, Auditors are responsible for acquiring a reasonable guarantee based on the audits they
performed that there is no fraud or error within the financial statements as a whole which results in material
misstatements and expressing an opinion on the applicable financial statements from their independent perspective
within their audit report. Misstatements can occur as a result of fraud or error, and when these misstatements canreasonably be considered to affect the decision-making of financial statement users either individually or in total, they
are determined to be material.
Auditors carry out the following auditing process in compliance with auditing standards generally recognized as fair
and appropriate in Japan, using their professional and specialist judgment and maintaining a sense of professional
skepticism in their work.
・Auditors identify and evaluate the risk of material misstatements resulting from fraud or error. Auditors also propose
and implement auditing procedures for handling risks of these material misstatements. Selection and application ofauditing procedures are carried out at the discretion of the Auditor. In addition, Auditors acquire audit evidence thatis both sufficient and appropriate as a basis for stating their opinions.
・Expressing an opinion on the effectiveness of internal controls is not the purpose of auditing financial statements.
However, Auditors consider internal controls related to the audit as part of their risk evaluations in order to formulate
appropriate auditing procedures to fit the circumstances.
・Auditors evaluate the appropriateness of the accounting policy chosen by the management and the methods for its
application, as well as the reasonableness of accounting estimates carried out by management and the validity ofrelated explanatory notes.
・Auditors evaluate whether it is appropriate for the management to draft financial statements on the premise of a going
concern. They also come to a conclusion regarding whether major uncertainties can be recognized related to mattersor circumstances giving rise to serious doubts concerning the premise of a going concern based on evidence acquired
through the auditing process. If major uncertainties concerning the premise of a going concern can be recognized,
Auditors caution financial statement users on this point in their audit reports, calling for attention to the explanatory
notes. In addition, if the explanatory notes in the financial statements related to the applicable major uncertainty are
not appropriate, Auditors are expected to indicate an exception in their opinion statements on the financial statements.
Although the conclusions of Auditors are based on the auditing evidence they acquire up until the date of their audit
report, there is still a possibility that a company will be unable to continue its business as a going concern due tofuture events and circumstances.
・In addition to determining whether the indications and explanatory notes of the financial statements are in compliancewith corporate accounting standards generally accepted in Japan, Auditors also evaluate whether the indications,structure, and content of financial statements and their related explanatory notes, as well as the transactions andaccounting matters on which these statements are based, are presented fairly.
Auditors will report the planned auditing scope, implementation period, important findings from the auditing process(including major deficiencies identified related to the internal controls), and other matters required by the auditing
36

standards to the Company’s Audit & Supervisory Board members and Audit & Supervisory Board.
Auditors will report on their adherence to independence as required by Japan’s occupational ethics regulations, matterswhich could reasonably be considered to affect this independence, and the content of any safeguards measures
implemented for the removal or mitigation of obstructing factors to the Company’s Audit & Supervisory Board members
and Audit & Supervisory Board.
Interest relationships
There are no interest relationships between the Company and the auditing firm or between the Company and the
Designated and Engagement Limited Partners that are required to be reported according to the Certified Public
Accountants Act.

37

Report of the Audit & Supervisory Board

Audit & Supervisory Board Members’ Report
The Audit & Supervisory Board (the “Board”), having deliberated on the audit reports prepared by the Audit &Supervisory Board members on the performance of the duties of Directors for the 70th fiscal year from April 1, 2020 toMarch 31, 2021 hereby reports on its audit findings as follows:
1. Method and Content of the Audit by Audit & Supervisory Board Members and the Board(1) The Board established the audit policy and allocation of duties, etc., received reports from Audit & Supervisory
Board members on the status of the execution and results of their audits, received reports from Directors and the
Accounting Auditors on the status of execution of their duties and requested explanations as needed.
(2) In compliance with the auditing standards set by the Audit & Supervisory Board and based on the audit policy,
assigned duties, etc., each Audit & Supervisory Board member maintained proper communication with Directors,
internal audit staff and other employees, and strove to create an environment that supports the collection and audit
of information, as well as they conducted audit by the following methods.
1) Attended meetings of the Board of Directors and other important gatherings, received reports from Directors
and employees on the status of the execution of their duties, requested explanations as necessary, and examined
the situation of the operations and assets of the head office and principal offices. In addition, the Audit &Supervisory Board members also maintained appropriate communication and exchanged information with
Directors and Audit & Supervisory Board members of subsidiaries, and received reports about operations fromsubsidiaries when necessary.
2) In order to ensure the system guaranteeing that the performance of the work of the Directors stipulated in thebusiness reporting is in accordance with laws and ordinances and the Articles of Incorporation, and also to ensure
appropriateness of all the other business processes that are required in a group comprising a joint stock company
and its subsidiaries, regarding the corporate resolutions on the creation of a system in accordance with Article 100,
Paragraphs 1 and 3 of the Enforcement of the Companies Act, as well as regarding the system (internal control
system) currently maintained based on the contents of the corporate resolutions concerned, the Audit & Supervisory
Board members regularly received reports from Directors, employees, etc., on the current situation of theestablishment and the implementation of such system, requested explanations as necessary, and expressed theiropinions.
3) In addition, the Audit & Supervisory Board members monitored and verified whether the Accounting Auditors
maintained their independence and implemented appropriate audits and received reports from the Accounting
Auditors on the status of execution of their duties, and requested explanations as needed. In addition, Audit &Supervisory Board members were informed by the Accounting Auditors that they were developing the “structureand system to ensure that their duties would be executed in a proper manner” (items prescribed in Article 131 of
the Corporate Calculation Regulations) in accordance with “Quality Control Standards for Auditing” (BusinessAccounting Council dated October 28, 2005), and requested explanations as needed.
Based on the aforementioned methods, the Audit & Supervisory Board members examined the Company’s business
report and its detailed statements, financial statements (non-consolidated balance sheets, non-consolidated profit
and loss statement, non-consolidated statement of changes in shareholders’ equity and notes to the nonconsolidated financial statements), their detailed statements, and consolidated financial statements (consolidatedbalance sheets, consolidated profit and loss statement, consolidated statement of changes in shareholders’ equity
and notes to consolidated financial statements) for the fiscal year under review.

382. Results of the Audit(1) Results of the audit of the business report and its detailed statements(a) The business report and its detailed statements present fairly the status of the Company in conformity withthe relevant laws and Articles of Incorporation.
(b) No misconduct or material fact running counter to the relevant laws or Articles of Incorporationhas
been found with respect to the execution of Directors’ duties.
(c) The content of the resolutions of the Board of Directors on the internal control system are fair andreasonable. No item worthy of special mention has been found with respect to the contents of the business
report and the execution of Directors’ duties concerning the relevant internal control system.
(2) Results of the audit of financial statements and their detailed statements
The audit methods adopted and the results of the audit conducted by Deloitte Touche Tohmatsu, Accounting
Auditors, are appropriate.
(3) Results of the audit of consolidated financial statements
The audit methods adopted and the results of the audit conducted by Deloitte Touche Tohmatsu, Accounting
Auditors, are appropriate.
May 12, 2021
Audit & Supervisory Board
Sanshin Electronics Co., Ltd.
Keiji Nishio, Full-time Audit & Supervisory Board member
Shin-ichi Miura, Full-time Audit & Supervisory Board member
Shohei Yamamoto, External Audit & Supervisory Board member
Kuniharu Kezuka, External Audit & Supervisory Board member

39