June 2nd, 2023

Year Ended March 31th 2023

Financial Results Explanatory Material

Table of Contents
Financial highlights for the year ended March 31th 2023
Financial highlights for the year ended March 31th 2023
(SUNCORPORATION Group excluding Cellebrite)

09

Operating profit Analysis of changes(SUNCORPORATION Group excluding Cellebrite)

10

External environment affecting our performance

11

12

New IT Business Initiatives

13

Entertainment Business initiatives

14

18

Consolidated Balance Sheet

19

Consolidated Statement of Cash Flows

20

Forecast for FY2024

21

Initiatives for sustainable growth

Global Data Intelligence Business Initiatives(Formerly Mobile Data Solutions business)

Segmental Overview (consolidated)

Initiatives for Growth23

Growth Strategy

24

Investment Initiatives

25

M&A Case Study:
Acquisition of shares in EK Tech Holdings Sdn. Bhd. (made a consolidated
subsidiary)
26

Summary of financial results for the year ended
March 31th 2023
Consolidated Financial Highlights

16

Consolidated Income Statement

172

Shareholder Returns (non-consolidated)

27

Market value of SUNCORPORATION Group28

Company Profile

3

Company Profile

Company NameSUNCORPORATION

Headquarters

Nagoya Headquarters
Nagoya Building Sakurakan, 2F
4-2-25 Meieki, Nakamura-ku, Nagoya, Aichi 450-0002 JAPAN

Establishment

April 16, 1971

Representative

Ryusuke Utsumi, CEOBusiness
Segments

Mobile Data Solutions, Entertainment Business
IT Business (M2M), Others (Game Content)

Features

Mobile Data Solutions, which provides a digital intelligence platform mainly in the
US and worldwide; Entertainment, which is involved in the planning, development
and sales of amusement machines and games; and New IT, which develops DX
solutions based on the "Rooster series" network equipment, which has the top
market share in Japan. Developing original products and services for a wide rangeof markets, including related businesses.

Capital2,086 million yen as of March 31, 2022

4

Management Philosophy

Dr e ams, C halle nges and C r e ati on s
SUNCORPORATION have been creating fresh and innovative products based on our
accumulated technological capabilities and the ideas of our outstanding engineers.
We will continue to shine a bright light on the future by meeting the diverse needs ofsociety with our ability to create "fun" and "convenience" that can only be realized throughour "desire to take on challenges" and our technological prowess.

DreamsChallenges

Creations

Living up to
expectations

Taking on
challenges
courageously

New value
creation

Basic Philosophy

Making people happy through telecommunication & entertainment
5©SUNCORPORATION All rights reserved.

History
SUNCORPORATION’s DNA

Dreams, Challenges,
Creations

2010

2020
The release of “AceReal for
docomo”, a remote operation
support solution using 5G and AR
SmartGlass

The development andrelease of the mobilerouter the “Rooster
Series”
M2M’s full scale entry
to the market

2007
The acquisition of
Cellebrite’s shares

1985
1985
1971
The establishmentof
SUNCORPORATION

The development of software
for Nintendo consoles
The release of the “SUNSOFT”
seriesFounded with an aim to
manufacture and market
electronics-related
equipment

Sales

The development andrelease of
SUNCORPORATION’s
brand modem “My
Looper 300”

Main office built in Konan City,
Aichi prefecture
Business structure wasestablished and moved on to
expansion

SUNCORPORATION’s brandwas established
The development and sales ofan industry-first system
Nation-wide sales locations

Listed on JASDAQ
Acquired 100% ownership ofCellebrite and accelerated its
global expansion

Marking the 50 th
anniversary of its founding
as a global corporation

6

M a n a g e m e n t Po l i c y「Challenging Spirit」
1

Concentration on telecommunications and entertainment
Provide society with the technology, enjoyment and enrichment that make it safe and secure2

3

Improving the value of the enterprise
Aim to grow into a world-class company by integrating the management resources we haveaccumulated through challenges in various fields

Acting on their own initiative with a venture spirit
Value the spirit of challenge, innovative thinking and the drive for growth of the next generation

7

Financial Highlights for the Year Ended March 31th 2023

Financial highlights for the year ended March 31th 2023 (SUNCORPORATION Group excluding Cellebrite)

Despite difficulties in procuring parts and materials and increased raw material costs, theCompany achieved most of its sales plan by improving procurement and selling prices.

POINT 1.

POINT 2.

Operating profit¥ -0.32 billion

Revenue from sales¥ 89.44 billion(vs. plan: 97.22 %)(vs. plan: -22.85 %)Entertainment-related business
Sales of control boards to pachinko andpachislot machine manufacturers in theSales of control boards increased aheadof schedule.

(In millions)

POINT 3.

Although the company promoted measures
such as cost reductions and price revisions,and generated profits in difficult market
conditions, it failed to achieve the plan due to
M&A expenses of JPY 105 million.

2023/3 Plan

2023/3 Actual

EK Tech Holdings becomesa consolidated subsidiary.
Acquisition value MYR 27 M
(844 million)
Synergies with new IT projects,
Bases for expansion into the
ASEAN region

2024/3 Plan

2025/3 Plan

9,200

8,944

10,80013,300Operating profit

140

-32

560

1,680

Operating profit
margin (%)

1.5%.

-0.36%.

5.2%.

12.6%

Sales

9

Operating profit Analysis of changes (SUNCORPORATION Group excluding Cellebrite)

Breakdown of impacts:

Profitability reduced as sales arepushed back due to deferred
production.

Unit: millions of yen

Factors contributing to theincrease:

Sales to pachinko andpachislot machine
manufacturers
Increased sales of control
boards ahead of schedule

Breakdown of
impacts:

Semiconductor
shortage
Impact due to
COVID-19

Increasein sales
+504

▲288

Cost increase due
to risingcomponent prices

Domestic IT
marketconditions
Impact due to

Breakdown of
impacts:

EK Tech acquisition
costs

▲54

140

Impact ofhigher costs

Mid-term
plan
Operatingprofit▲543

10

Subsidiaryacquisition
sundry expenses
▲105

△32

Cost
reduction

Other

+326

▲26

FY2023.
OperatingprofitExternal environment affecting the company's performanceMarket conditions in the domestic IT
marketAvailability of semiconductors
Shortfall in supply of general-purpose analogue
semiconductor products, rather than state-ofthe-art processes, continued from the previous
year in FY2022; expected to continue in 2023.

Affected by.
segment

Under-supply Balance Over-supply

Entertainment related(Amusement and gaming)

2022.
Oct-Dec. Jan-Mar.

The IT market has been affected by COVID-19, rapid inflation andthe shortage of semiconductors, and has changed to a businessstructure that is less susceptible to economic fluctuations, such as
cloud computing of enterprise systems, the penetration ofsubscription businesses, remote working, etc., while supply chain
and cybersecurity Investment in areas such as supply chain andcyber security is a high priority, and DX and AI are increasingly
being used to solve problems in IT development.

New ITrelated

Affected by.
segment(M2M/IoT)

Global data intelligence

New ITrelated(formerly Mobile Data Solutions).

(M2M/IoT)

2023.
Apr-Jun.

JulyOct-Dec.
September.

Used in our products
semiconductor to be

by usepersonal computer
smart phonedata centre

automobile

By Typememoryadvanced logic
power
analogue

The respondents were asked to rate supply and demand trends on a scale of 1 (oversupply) to 5
(undersupply) and the figures were drawn from the average. Respondents were Yuichi Koshiba, BCG;
Jun Okamoto, KPMG Japan; Tetsuo Omori, Techno Systems Research; Kaga Electronics; Yasuhiko
Takeno, Globalnet; Core Staff; Masahiko Ishino, Tokai Tokyo Research Centre; Macnica Holdings; Yoshio
Imanaka, Rakuten Securities; Leicester Holdings.

Source: domestic IT market by industry sector, expenditure forecast, 2021-2026 (Exhibit: IDC
Japan).

Source: Nihon Keizai Shimbun electronic edition 2023.1.4 Semiconductor oversupply to beresolved from autumn 2011 onwards, with continued tightness in the automotive sector.

*The Mobile Data Solutions business has changed its name to the Global Data Intelligence business from 1 April 2023.
11

Global data intelligence business initiatives(formerly Mobile Data Solutions Business)

Demand in the information security market is growing along with the
expansion of DX
Propose various solutions to create a safe and secure society

Sales in March 2023.

Future work: UFED Touch3

The importance of digital (data) evidence in criminal
investigations has increased in recent years.
Sales to law enforcement agencies have been strong against a
backdrop of the growing importance of digital (data) evidencein criminal investigations in recent years.

UFEDTouch3 launched as successor to UFED
Touch2.
The UFED Touch3 Tablet provides
comprehensive laboratory, remote and fielddata extraction and collection capabilities.
Eliminates the risk of cross-contamination ofdigital evidence
Dedicated collection hardware for fast andsafe data extraction

Mobilogy brand to domestic mobile retailers
Mobilogy Now has the top market share among mobile phone
shops in Europe and the US
Mobilogy Now service, a dedicated tool for retailers.
Mobilogy Now is a service for new mobile
phone buyers, with functions such asdata migration of phonebooks and photos,
data backup and re-writing, and collective
management of operation history at
headquarters, making it ideal for shop
management for retailer companies.

Future work: conduct own forensics training
Provide tailored forensic training to public sector sites to share
information and develop new clients*The Mobile Data Solutions business has changed its name to the Global Data Intelligence business from 1 April 2023.
12

New IT business initiatives

Overcoming a tough competitive environment and securing
the market Further business expansion

Sales in March 2023

Future approach: evolving platform business

The supply shortage of semiconductors, difficulties
in procurement of components, and a prolonged
rise in component prices have created a difficult
situation.
Despite difficult conditions due to prolonged highprices, sales were secured due to demand for
migration from 3G to LTE (4G).

Long-range Bluetooth® devices from different manufacturers with"BlueXtender".
More efficient device management is achieved by combining thecommunication and device measurement values with the "SunDMS Insight"
dashboard, which enables visualisation of device measurement values at a
glance, alert settings and a report output function.

Full-scale development of the platformbusiness
Developing a platform business based on the cloudservice SunDMS and the IoT gateway BlueXtenderfrom the existing Rooster series sales-centredbusiness.

13

Entertainment business initiatives

Drawing on long experience and extensive IP assets,
Generates stable cash flow

Sales in March 2023.

Future initiatives: amusement

Amusement

Follow the initiatives of pachinko and pachislot machine manufacturers,
whose sales volume is increasing, and continue to provide new value
based on know-how accumulated through long experience.
High quality in all aspects of hardware (design and mass production) andsoftware (planning, video production, programming) for any newly
introduced smart game machine.
Provide high quality products in all areas of hardware (design, mass
production) and software (planning, video production, programming)

Strong sales of amusement machines by our main customers,
amusement machine manufacturers, led toThis led to an increase in orders for control boards. Supply fulfilled amid
semiconductor shortages and rising costs, contributing to increased sales.

Game'SUNSOFT is back !' and declares its revival on its official channel inAugust 2022 as Release of information on new releases.
PC game Ikki Unity in February 2023.

Future work: Games

Released on Steam. Online co-operative play by up to 16 players.
online co-operative play by up to 16 players. On the first day of
release sales in Japan on the first day of release, and was a good
example of our retro
This was a good example of our retro game IP being accepted in
the market.

Trip World DX, a colourised port of the Game Boy software Trip World,
and a remake of Hebereke, which was released in 1991 and became apopular Famicom title.
(platform undecided), to be released by the end of FY2023.
Since then, a number of ports and remakes of past retro titles have beendeveloped.

14

Summary of financial results for the year ended 31 March 2023

C o n s o l i d a t e d financial highlights ( c o n s o l i d a t e d )•Orders were solid in the Global Data Intelligence (formerly Mobile Data Solutions) business and the Entertainment
Orders remained strong in the Global Data Intelligence (formerly Mobile Data Solutions) and Entertainment-related
businesses.

•

Gross profit decreased by 3.0% year-on-year due to global inflation and other factors.

•

Focus on research and development activities as upfront investment for future growth.

Consolidated turnover
37,44937,205(Millions of
Yen)

Changes in consolidated operating profit(Millions ofYen)

26,662687

2021/32021/32022/31,360

2022/32023/3▲ 1,7112023/316

Consolidated income statement (consolidated)

POINT.

Consolidated recurring profit is a foreign exchange gain of JPY 2,895 million,
Increase mainly due to a ¥12,107 million gain on valuation of derivatives.

2022/3(Unit: millions of yen)2023/3

Actual results

Actual results

Percentage change(%)

Turnover37,20537,449+0.7

Cost of goods sold10,868

11,912+9.6%

Gross profit

26,33725,537-0.3%.

Selling, general and administrative
expenses

24,977

27,248+9.1%

Operating profit

1,360▲1,711---

Ordinary profit

9,674

14,175+46.5%.

Net profit for the year attributable toshareholders of the parent company

2,819

6,878

+143.7%17

Segmental overview (consolidated)

Global Data Intelligence

Entertainment related

New IT-related(Formerly Mobile Data Solutions)(Amusement and gaming)(M2M/IoT)

Turnover29,152 million.

Turnover6,259 million.

TurnoverComposition ratio

77.8%.

Composition ratio

16.7%.

Composition ratio 5.5%.

2,064 million

OutlineOutlineOutlineDespite strong orders for mobile forensic
equipment and related services, sales andprofits declined due to the deconsolidationof Cellebrite from the fourth period underreview and the absence of sales from thefourth period, which had the highest sales.

Despite higher costs due to higher prices
for parts and materials due tosemiconductor shortages and otherfactors, higher contracted development
and new product orders resulted in higher
revenues and lower profits.

Shipment volumes fell due to difficulties inprocuring components.
Furthermore, the impact of rising raw
material prices has led to a decline in sales
andProfit decrease.

■Sales by segment ■Profit by segment■Sales by segment ■Profit by segment■Sales by segment ■Profit by segment(Millions of
Yen)(Millions ofYen)

29,323(Millions ofYen)

29,152(Millions of
Yen)

6,259

5,669

2021/32022/32023/32▲ 1,525

2,064

1,746

913
1,547

(Millions of
Yen)

2,239

4,523

20,413(Millions of
Yen)

542

916

706

2021/32022/32023/3*The Mobile Data Solutions business has changed its name to the Global Data Intelligence business from 1 April 2023.
18

98

183

138

2021/32022/32022/32

Consolidated balance sheet (consolidated)

POINT.

Decreased by 28 billion cash and 49 billion liability respectively, following the transfer of Cellebrite to theequity method, 4.3 billion market value of rights granted under price adjustment clauses, andapproximately 7 billion investment in investment trusts, Investments and other assets increased by JPY
13.5 billion.

2022/3

Actual results(In millions)

Cash on hand and in banks
Other current assets
property, plant and equipment
Intangible fixed assets
Investments and other assets

Total assets
Current liabilities
Fixed liabilities

Total liabilities
Capital stock
Accumulated other comprehensive income
Share warrant
Non-controlling interests

Total net assets
Total liabilities and net assets

19

31,67940,785
3,468
4,197
1,957
82,08838,961
16,08655,04723,865512
2,663
27,04082,0882023/3

Actual results
3,139
20,697
1,629
775
15,51841,758
4,025
2,720
6,744
33,3741,534
79
35,01441,758Year-on-year change
(%)
9.9%.
50.7%
47.0%.
18.5%.
792.9%
50.9%.
10.3%
16.9%.
12.3%
139.8%
299.6%
3.0%
129.5%.
50.9%.

Consolidated statement of cash flows (consolidated)
POINT.

13,960 million in net income and 11,513 million in acquisition of investment securities,
30,514 million in proceeds from the sale of shares in subsidiaries.

2022/3(In millions)

Tra c k re co rd

Operating activities
Cash flow

3,633

Investing activities
Cash flow

4,021

2023/3Tra c k re co rdComment.
Cash outflow of approx. 11.9 bn yen due to income tax payment and▲13,519 approx. 3.6 bn yen due to an increase in accounts receivable
3.6 billion due to an increase in accounts receivable.
18.5 billion acquisition of investment securities.

▲25,131 10,900 million from the acquisition of money held in trust
3,387 million in proceeds from redemption of securities.

30,514 million in proceeds from sale of shares in subsidiaries
3,339 million decrease in short-term borrowings
2,742 million from the acquisition of treasury shares

Financing activities
Cash flow▲3,03725,574

Cash and cash
equivalents.
balance at the beginningof the period

21,11327,438Cash and cash
equivalents.
Balance at end of year

27,4382,934 Electronics' income tax payment andFree cash flow

Decrease due to the deconsolidation of Cellebrtie, Sun
Decrease due to investments in financial instruments.

7,654▲38,65020

11.9 billion in income tax payments and ¥18.5 billion in
acquisition of investment securities,
Decrease due to acquisition of money held in trust of ¥10.9
billion, etc.

2024 Financial Forecast

For the forecast of results for the year ending 2024,
The uncertain impact of recent geopolitical risks and financial instability,
Also recognised in the company's equity-method affiliate Cellebrite DI.Ltd.

On price adjustment matters, certain restricted shares and, derivative warrant liabilities,
The impact of changes in fair value on the company's performance cannot be reasonably
calculated at this time.

As soon as it becomes possible to disclose consolidated forecasts due to thedifficulties involved.

The forecast will be made public as soon as it becomes possible todisclose the consolidated forecast.

21

Initiatives for sustainable growthInitiatives for growth

Strategic direction.

New products
and services
planning

Priority growthbusinesses
M&A
development

Current products
andServices.
review

Current products
andServices.
Improved sales
methods

New technology
Further study of underlying hardware and technology techniques
Development

Measures to be implemented
Inauguration of the
Research andDevelopment Department

Investment in related
businesses
23Growth strategy
Marketing and Technology Development Departments are merged to form the Research and Development
Department.

Responsible for developing the technology on which Sun Electronics' products are based and supporting
the expansion of related businesses.
POINT 1.

POINT 2.

Role of the Research and Development
Department

Cooperation with external companies
and universities

Supporting the business growth of Sun Electronics'
divisions with technological capabilities

Elemental technology development and advanced
technology development.

B u s i n e s s D e p a r t m e nt
Smart factory

Health care

Security

Data businessResearch and Development Department
24

Investment initiatives

Promote mergers and acquisitions into related businesses,
Actively invest in human resources
POINT 1.

POINT 2.

Investment in human resources

Promotion of mergers andacquisitions into related
businesses

Review of training and education system
Use of talent management systems.

Expansion of global markets
Acquisition of proprietary technologies
Improving business efficiency
FY2023 M&A acquisitions

Acquisition of shares in EK Tech Holdings Sdn. Bhd(made a consolidated subsidiary)
area

ASEAN
(Malaysia).

Obje
ctive.

with IoT/M2M
projects.
synergy effect25

M&A Acquisition: acquisition of shares in EK Tech Holdings Sdn. Bhd (made a consolidated subsidiary)

Synergies with IoT/M2M business expected
Providing new value and expanding the business base into the ASEAN region
EK Tech company profile.
Company
name

EKTech Holdings Sdn Bhd
Petaling Jaya, Selangor, Malaysia

Location.

Synergy Effect

New IT-related
Businesses(50-minute drive from Kuala Lumpur International Airport,
Approximately 30 minutes drive from central Kuala Lumpur).

Business
activities

Information and communication technology,
3G/4G/LTE (wireless communication) network monitoring services.

Consolidat
edsubsidiary

EKTech Communications Sdn Bhd (ECS)
Communication solutions and services.
EKTech Systems Engineering Sdn Bhd (ESE)
System integration & security system services
EKTech Eureka MSC Sdn Bhd (EEM)
Provides network monitoring services for the group.

EK Tech Features.
Since its establishment in March 2002, EEM has been in the business of providing secure enterprise
wireless communication systems using mobile phone technology to companies in Malaysia, as wellas helping them connect to peripheral devices connected to wireless routers, and EEM wasestablished in June 2016 to provide 24 hour monitoring services. This business accounts for 80%of the EKTech Group's sales and is highly trusted by customers. A director from Sun Electronics
will be stationed at the company to work on strengthening synergies.
26

Shareholder returns (non-consolidated)

Basic Policy
While taking into account the medium- and long-term business revenue base,
The company will actively and flexibly distribute profit according to performance.

2022/340.00

JPY 20.00(End of period)

JPY 20.00

JPY 20.00(End of Q2)

JPY 20.00

0 yen

33.9%.

6.8%.

(Annual)Dividend

2023/3

Dividend payout ratio (consolidated)*The dividend for the year ending 31 March 2024 has not yet been determined at this time.
27

M a r k e t v a l u e o f t h e S U N C O R P O R AT I O N G r o u p .

Cellebrite, which is a holding company of SUNCORPORATION listed on the NASDAQ market(95,597,718 shares held). The market capitalisation of Sun‘ shareholdings is approximately 77.4
billion yen, and Sun Electronics’ market capitalisation valuation is only about 42 billion yen.
The share price is undervalued .
Unit: 100 million YEN
RATE: CONVERTED TO 1USD 140 YEN
COMPARED WITH SUN ELECTRONICS SHARE PRICE OF
1,750 YEN AS OF 26 MAY 2023

Cellebrite.

Total sharesissued.

774

market value

Number ofCellebrite shares
held by Sun

420

market value

Cellebrite shares
Market value

Sun shares
Market value
28

disclamer

The purpose of this document is to provide information on the company‘s business, management strategy
and performance,
It is not intended to solicit investment in securities issued by the Company.
This document is also based on data as at 15 May 2023 for financial and company data.

The opinions and forecasts expressed in this material are based on the company's judgment at the timethe material was prepared,
It does not guarantee or promise the accuracy or completeness of the information and may change in the
future without notice.

IR contact: SUNCORPORATION IR contact
E-mail : ir@sun-denshi.co.jp