Transportation Systems Segment

BUSINESS

Support railway transportation that connects people andcities with safety and trust, through manufacturing thatmerges electronics technologies and mechanicaltechnologies in a highly advanced manner

Results for fiscal 2019
Net Sales (Unit: Million yen)Segment Income (Unit: Million yen)Orders Received

Orders Received (Unit: Million yen)

Net Sales (Unit: Million yen)

2019

2020

2018

2019

2020

2018

2019

2020

1,008 million yen (Up 55.1% year on year)

650

1,008

13,023

12,33913,023 million yen (Up 5.5% year on year)
Segment Income

2018

Segment Income (Unit: Million yen)276

Segment Income

Net Sales

11,769

2,474

2,578

2,427

24,269 million yen (Down 10.9% year on year)
2,474 million yen (Up 1.9% year on year)

33.3%

11,198 million yen (Down 12.7% year on year)
24,26927,23525,712

25,86625,712 million yen (Down 1.4% year on year)

26,080Orders Received (Unit: Million yen)

Net Sales

Percentage of
total net sales

Results for fiscal 201927,949Orders Received

BUSINESS

Deliver technologies and gratitude to customers withhighly precise, highly responding and highly efficient
power electronics, for realization of an environmentfriendly society

11,19862.1%

Industrial Systems Segment

12,833

Percentage of
total net sales

Business Report

11,309Business Report

2018

2019

2020

2018

2019

2020

2018

2019

2020

Orders received decreased 1.4% compared with the previous fiscal year to 25,712 million yen, due to a decrease in orders from private

Orders received decreased 12.7% compared with the previous fiscal year to 11,198 million yen, due to a negative rebound from the pre-railways and overseas customers excluding those in China. Net sales totaled 24,269 million yen, a 10.9% decrease from the previous fis-vious year, when we received large-scale orders for a new business (related to power supply), as well as the stagnation of sales activities

cal year, due to a decrease in sales for JR Group and private railways. Segment income was almost unchanged from the previous fiscal

caused by the spread of COVID-19. Net sales increased 5.5% compared with the previous fiscal year to 13,023 million yen on higher

year at 2,474 million yen, as a result of efforts to step up cost control and reduce expenses.

sales for testing equipment and power supply. Segment income totaled 1,008 million yen, a 55.1% increase compared with the previous
fiscal year, due to efforts to step up cost control and process control, as well as to reduce expenses.

VOICE

We will introduce new environmentally friendly products to the market and expand theoverseas maintenance business.

The Transportation Systems segment will naturally continue pursuing safety and reliability of electrical equipment for
railway vehicles, which have to meet strict usage conditions, and at the same time pour our efforts on reducing environmental impact in the form of energy saving, maintenance saving, and noise reduction to provide new environmentallyfriendly products and services.
In the domestic business, there has been a growing number of customers who have chosen our new products, including driving inverters and auxiliary power supply units that realized smaller size and lighter weight as well as
noise-reduced motor and driving gear units. Going forward, we anticipate more customers will choose our new products, together with pantographs and other highly reliable electrical equipment.
As for the overseas business, the maintenance business of electrical equipment for subway trains has alreadybeen launched in China, and we will strive to develop a structure and provide stable services to meet demand thatwill sharply increase. Particularly in North America, we are reorganizing our local subsidiaries in response to changes
in the business environment and preparing to build a new maintenance business with a plan to start operationssoon.
We will also work towards improving profitability of the production line at the Yokohama Plant, one of our production bases, by enhancing production capacity and efficiency.

9

Naoki Okuyama
General Manager ofTransportation Business Unit

VOICE

We will strengthen the domestic business foundation and push for overseas expansion,
while enhancing the Shiga Ryuo Plant.

In two years after the launch of the Shiga Ryuo Plant, the Industrial Systems segment has achieved a significant improvement in profitability while absorbing the increase in depreciation associated with the construction of the new plant.
This is because factory productivity has increased, and we have significantly boosted the profitability of manufacturing
through tighter cost control and process control, in addition to thorough cost management.
In our sales efforts, we expanded the user base with the introduction of super-high-speed rotating dynamo that can
support the development of electric vehicles (EV) in the field of testing equipment for automobile development, and alsooffered system development and detailed services to thoroughly satisfy customer needs in the processing equipment
field. With these efforts, we sought to expand sales to domestic and overseas machine manufacturers and users.
Meanwhile, 2020 has been hit by the coronavirus crisis, and we are now facing headwinds owing to customers pulling back from capital investments and restrictions on our sales activities and on-site actions. Despite the setbacks, weare steadily proceeding with steps to enhance the Shiga Ryuo Plant toward the future.
In addition to further improving product quality, we will expand the applications of in-wheel-well dynamo for testing
equipment and implement actions for their full-scale production, while accelerating the development of large-capacity
motor and inverter for overseas markets. Also, we will capitalize on SIAM TOYO DENKI, a Thai subsidiary established in
2019, and Chalco-Toyo Permanent Magnet Motor Co., Ltd., a Chinese motor production subsidiary that started operation this year, in order to strengthen the domestic business foundation and push for overseas expansion.

Yoshifumi Otsubo
General Manager of Industry
Business Unit

Toyo Denki Seizo Report 202010

Business Report

Information Equipment Systems Segment

BUSINESS

Provision of products that make the execution of operations
on station premises and trains smooth and convenient andM2M solutions based on mobile phone networks and cloudservers using remote monitoring system

Percentage of
total net sales

4.5%

Results for fiscal 2019
Orders Received (Unit: Million yen)

2019

2020

2018

2019

2020

2018

290

314

460

1,772

1,611

1,756
2018

BUSINESS

Order received for consigned research and development ofsuperconducting flywheel power storage system for railways
The Company received an order from East Japan Railway Company to conduct operations related to equipment manufacturing and the
preparation of test reports for verification tests of a superconducting flywheel power storage system for railways.
Based on the “Basic Agreement on Technology Development of Superconducting Flywheel Power Storage System for Railways” concluded on March 29, 2018 between Yamanashi Prefecture, the Railway Technical Research Institute, and East Japan Railway Company,
this system is being developed for the world’s first practical use in the railway field. The Company will conduct the design and manufacturing of the power conversion equipment, and will be responsible for the overall coordination of this power storage system’s construction, in
cooperation with MIRAPRO Co., Ltd. (Hokuto, Yamanashi Prefecture; President & CEO: Hiroyuki Tsugane).
Through this business, the Company will work on the construction of a new power storage system that contributes to the improvementof energy efficiency, the stable usage of renewable energy and technology development in the railway field.

Segment Income

460 million yen (Up 58.6% year on year)

Expansion of New Businesses

2019

2020

Orders received decreased 8.2% compared with the previous fiscal year to 1,611 million yen without any major projects in the second
half of the fiscal year, despite the boost from software improvement projects associated with the consumption tax hike and revisions in
train timetables in the spring as well as higher orders of composite ticket vending machine in the first half. Net sales increased 11.9%

compared with the previous fiscal year to 460 million yen for the same reason as net sales.

The flywheel power storage system is a systemthat, by rotating a large disk (flywheel) within thedevice, stores regenerative electric power as kinetic energy (charging), and converts kinetic energy
back to electric power (discharging) as necessary.
The bearing portion of the superconducting flywheel power storage system adopts the superconductivity technology designed by the Railway
Technical Research Institute, and establishedthrough verification tests conducted in Komekurayama, Yamanashi Prefecture. The technology allows the flywheel to float, reducing rotational loss
as there is no contact, and realizes a reduction in

When discharging
Power is supplied to the train, andflywheel decelerates

Charging

Discharging

Time

Superconducting Flywheel Power Storage System
Generator motor

FlywheelSuperconducting
magnetic bearing

Power conversion
equipment

Discharging

sions in train timetables in the spring as well as higher sales of composite ticket vending machine. Segment income increased 58.6%

Storage System for Railways

When charging
Regenerative electric power of the train
is absorbed, and flywheel accelerates

Charging

year on year to 1,772 million yen, helped by software improvement projects associated with the consumption tax hike and the revi-Superconducting Flywheel Power

Rotational speedof flywheel

1,772 million yen (Up 11.9% year on year)

2,416

Net Sales

Segment Income (Unit: Million yen)

2,801

1,611 million yen (Down 8.2% year on year)

Net Sales (Unit: Million yen)

1,583

Orders Received

Business Report

Strong magnetic repulsive force realized by thesuperconducting magnetic bearing allows the flywheel to float

maintenance efforts.

Overhead wires

VOICE

We will work towards expanding the Information Equipment Systems segment through product development
and solutions that meet customer needs, with a focus on railway station operating equipment.

To be prepared for the consumption tax hike scheduled for October 2019, the Information Equipment Systems segment updated all equipment already in use during the previous fiscal year. As part of the process, there were many
functional refurbishments, creating a lot of work for us, but everything was completed without any major problems.
In addition, we delivered renewal orders for commuter pass issuing machine to several customers. These machines
are currently working smoothly. Commuter pass issuing machines that one of those companies ordered are exclusively for IC cards and no longer compatible with magnetic tickets. This is the first product of its kind that the Company supplied. Additionally, we received an order for and delivered software for IC card charging machines, which isa new product. We will continue to provide products that satisfy our customers by leveraging our strengths in products related to fare calculation and IC card processing.
We face extremely difficult conditions in the current fiscal year as business operators have postponed or cut backon their plans for renewal and new projects as well as functional refurbishments in light of the spread of COVID-19.
We will press on with new product development with the keywords of non-contact, cashless, thin client, and competitive price in anticipation of coronavirus containment, while giving due consideration to the prevention of infection
spread.

11

When braking

When accelerating

When the train decelerates:
Regenerative electric power is generated

When the train accelerates:
Train consumes electric power

IORemoter II: New IoT terminal for Toyo IoT/M2M solutions/remote monitoring and control systems

Toshihiko Akihiro
General Manager of IT Business
Unit

The Company has been developing IORemoter II, which is a further evolution of “IORemoterLTE,” an IoT terminal for remote monitoring and control systems, for IoT/
M2M solutions. Shipment of the first lot will start in November 2020.
IORemoter II is a high-speed IoT terminal with a built-in 4G/LTE module. IoT remote monitoring and control ofvarious facilities, controllers, devices, and mobile entities can be conducted faster and at a larger capacity.
Furthermore, with multi-carrier and dual SIM operation enabled, we can now propose communication lines thatare more suitable for each customer’s applications.
The Company is considering collaboration with cloud service platforms in the future. We hope to contribute to operational efficiency by realizing the provision of faster, easier, lower-priced, and more secure IoT/M2M solutions forour customers.
Toyo Denki Seizo Report 202012

Business Report

Research and Development/Intellectual Property

BUSINESS

ESG/CSR Report

Environment

Initiatives to Protect the Environment

R&D to support the development of social infrastructureand supporting frameworks

With a view to realizing an environment-friendly society, the Company will further strive to promote the reduction ofenvironmental burden, while providing more efficient products that contribute to energy conservation.

Research and Development
The Group’s R&D activities are based on seeking to create products that fully satisfy our customers and challenging the creation andexpansion of these products, and we actively promote development of technologies of our existing businesses and basic technology
developments that support this development as well as development of new products that expand our businesses.

Environmental
Philosophy
Action Guidelines

The Toyo Denki Group sets initiatives to protect the global environment as its priority task
and contributes to the development of a sustainable society.
We will continue to provide products and services that are considerate of the burden on the global
environment by drawing on our “future-oriented technologies friendly to the Earth and mankind.”1.

We will comply with all environmental requirements including those under the relevant laws and regulations.

Description2.

Development ofhigh-frequency insulated
Transportation auxiliary power supply (SIV)

Applying SiC elements to high-frequency insulated auxiliary power supply and taking advantage of low switchinglosses enabled higher frequency of the voltage applied to the transformer and the suppression of the increase in element losses, making the whole auxiliary power supply smaller and lighter.

We will strive to minimize environmental burden through a reduction of energy consumption and other measuresat all stages of product lifecycle, namely planning, development, design, production, sales, use and disposal.

3.

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

4.

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

Development of VVVF inverters
for vehicles with wheel slip
stabilizing control

We introduced wheel slip stabilizing control using the slip acceleration feedforward control method. The method isaimed at keeping stable slipping and enabling self-re-adhesion without drastically reducing torque to restore adhesion during wheel spins.

Development of
in-wheel-well dynamo

The name “in-wheel-well dynamo” was adopted for “flat-type dynamo” that can fit inside the automobile’s wheel well and be analternative to the conventional roller type chassis dynamo. We installed the product on real vehicles and conducted evaluation tests
based on driving modes specified by the Ministry of Land, Infrastructure, Transport and Tourism and other organizations.

Development of slender-typehigh-speed motor for EV/HEV
system tests

We developed a slender-type high-speed motor with a maximum speed of 20,000 rpm for testing the drive systemsof electric and hybrid vehicles.

Results and topics from fiscal 2019
Segment

Systems

Industrial
Systems

Information
Equipment
Systems

Project

Development of standardized
data and programs for railway
station operating equipment

A sustainable society as envisaged by the Company is the combination of a “low-carbon society,” a “recycling-based society” anda “nature-symbiotic society.”
The environment technologies of the Company have produced
numerous products that contribute to energy conservation, including
high efficiency motors and inverters that capitalize on the amalgamation of our outstanding motor drive technology and other state-of-theart technologies. In the meantime, the Company has been striving toconserve resources through not only the efficient use of energy but
also the reduction of the size and weight of its products.
In addition, the Company is working on the development of
products with lower levels of noise involved in their use to makethem friendlier to the surrounding environment.
The Company will make further contribution to make society
more sustainable, fully utilizing on its environmental technologies
on a global scale, while carrying out various environmental
actions at each of its bases.

We developed standardized fare software (data/programs) used for station operating equipment. This is expected toreduce renewal costs associated with fare revision and to improve the quality of the fare calculation processing.
We developed and commercialized IORemoter II by evolving the remote monitoring terminal (IORemoter) currently onsale to expand and enhance functions. Its main enhanced function is support for SIM-free and dual SIM operation,
making it possible to employ multiple communication carriers including overseas ones to build a monitoring system.

Function expansion of
Expansion of remote monitoring units
New
Businesses Development of automotive
step up/down converter

We developed a step up/down converter consisting of automotive electronic components. Adopting the interleaving
method for power conversion circuit and controlling phase difference of switching achieved lower input and output
ripple current, reducing the capacity of reactor and capacitor.

Reduction of motor
manufacturing cost withsquare wire and laser welding

With the aim of reducing man-hours for the winding process by adopting square wires for ED motor coils and automating laser welding, we finished evaluation for the optimization of the number of motor poles and conductor size formedium- to large-size models.

Improved sealability of
lubrication for vehicle
driving gear units

We worked on the analysis of lubrication pumping in the gearbox and the fluid analysis of the labyrinth structure, as
well as the discovery of the mechanism of lubrication mist generation.

Research
Laboratory

Aiming for Realization of a Sustainable SocietyIntellectual Property

13

Energy conservation throughthe Company’s technologies
and products
Energy conservation in
production activities
Use of sustainable energy

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

Improvement of logistics
efficiency
Proper treatment of wastes
Reduction of amount of final
disposal of wastes

Nature-symbiotic society

Proper management ofchemical substances

Conservation of biodiversity

Cleanup around offices

Our Website

Environmental Management System
Our intellectual property is placed as a key corporate resource. Our intellectual property department is responsible
for the management of intellectual property and our researchlaboratory and the development divisions in each business
unit actively apply for patents and utility models.
In the overseas markets which we expect to further expand our businesses, we have started to actively engage inactivities concerning our intellectual property in order to protect our technologies and brand.

Low-carbon society
Implementation of measuresagainst global warming

Patent applications granted
Patent applications:
Granted cases:(Applications)

80
60

5

62

1
0

40

57
20
0

16 0
16
2015

4
65 27
14
14

2016

0

Overseas
Overseas

66

45

45

Japan
Japan

51
33

1

47

26

24

2017

2018

5

42

36

31

9

9
37

2

36

27

29 34

2019

2020

2

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

Yokohama Plant
2004

Shiga Ryuo Plant*
2001

Extended to all offices
2010

Information on the
Company’s environmental initiatives canbe found at our website.

https://www.toyodenki.co.jp/
esg_csr/*The Shiga Ryuo Plant was the Shiga Factory (Moriyama) when it obtained the certification.
Toyo Denki Seizo Report 202014