May 12, 2023

05/12/2023 | 04:13am EDT Message : *Required fields Note: This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail. Consolidated Financial Results [Japanese GAAP] Stock exchange listing: Tokyo Scheduled date of commencing dividend payments: June 30, 2023 Scheduled date of filing annual securities report: June 30, 2023 Availability of supplementary briefing material on annual financial results: Yes Schedule of annual financial results briefing session: Yes (For analysts and institutional investors) (Amounts of less than one millions of yen are rounded down.) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 to March 31, 2023) (1) Consolidated Operating Results Net sales ¥ ¥ ¥ ¥ ¥ ¥ Ordinary dividend Ordinary dividend 10.00 yen 3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2024 (April 1, 2023 to March 31, 2024) (% indicates changes from the previous corresponding period.) Net sales * Notes: Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): No New Changes in accounting policies due to the revision of accounting standards: Yes Changes in accounting policies other than 1) above: No Changes in accounting estimates: No Retrospective restatement: No Total number of issued shares at the end of the period (including treasury shares): March 31, 2023: 30,072,643 shares March 31, 2022: 30,072,643 shares Number of treasury shares at the end of the period: March 31, 2023: 4,568 shares March 31, 2022: 4,317 shares Average number of shares outstanding during the period: Fiscal Year ended March 31, 2023: 30,068,248 shares Fiscal Year ended March 31, 2022: 30,068,405 shares ―2― (1) Overview of Operating Results for the Fiscal Year under Review During the consolidated fiscal year under review, the Japanese economy experienced a gradual recovery in economic activities that were suppressed by COVID-19. On the other hand, the economy has been affected by various factors, such as soaring electricity prices and rising prices of commodities due to high resource prices resulting from the Russia-Ukraine issue, sharp fluctuations in exchange rates, and changes in monetary ease policy. In the business environment surrounding our company, the future remains uncertain, as the production adjustment phase due to the shortage of semiconductor components at the beginning of the period has turned into an inventory glut in the second half of the period due to the easing of the supply-demand crunch. Under these circumstances, in order to promote new business creation, we are pursuing initiatives such as business matching services, seeking business opportunities and strengthening collaboration with various partners. We are also focusing on one of our materialities, "Creating an environmentally friendly society," and are undertaking initiatives such as expanding the installation of solar power plants through green financing. Furthermore, we are focusing on providing IoT solutions for social issues faced by local governments, such as crime prevention, disaster prevention, and business continuity planning (BCP), by utilizing communication and image analysis technology. In order to achieve sustainable growth in the future, we will promote various initiatives and strive to expand our business operations. (Overview of Consolidated Operating Results) (Million yen) ・Performance Highlights Consolidated net sales for the fiscal year increased. This was due to the strong performance in the Semiconductor and Electronic Components Business and the Procurement business mainly owing to firm demand for industrial equipment and in-vehicle equipment despite continued unsteady demand-supply conditions for semiconductors. Operating profit increased mainly owing to an increase in gross profit due to the depreciation of the yen and sales growth. Ordinary profit grew despite interest expenses of ¥1,795 million due to rising interest rates and a foreign exchange loss of ¥1,129 million due to the strong yen in the latter half of the period. Net profit attributable to shareholders of the parent company increased despite the following factors. Recording of ¥1,936 million in extraordinary income as gain on bargain purchase relating to the consolidation of PALTEK CORPORATION and its affiliates in the same period of the previous fiscal year did not exist. Recording of ¥1,876 million in extraordinary losses, such as ¥423 million in special survey costs, etc., and ¥370 million in loss on valuation of investment securities, and ¥892 million in extraordinary losses from impairment losses in the vegetable factory business for the fiscal year. As a result, net sales for the fiscal year were ¥487,129 million, up 21.9% year-on-year, operating profit was ¥14,423 million, up 90.1% year-on-year, ordinary profit was ¥12,043 million, up 79.4% year-on-year, and profit attributable to owners of parent was ¥7,085 million, up 18.9% year-on-year, all of which are the best results ever achieved since the business integration in fiscal 2019. ―3― (Operating Results by Reportable Segment) The Group has four reportable segments for the allocation of management resources and evaluation of business performance. These four segments are the Semiconductor and Electronic Components Business, the Procurement business, the Electronic Equipment Business, and the Environmental Energy Business. 1) Semiconductor and Electronic Components Business Reportable Segment ・Performance Overview In the devices business, although consumer products and other products entered an adjustment phase, sales for industrial equipment and in-vehicle equipment remained firm. Sales also increased due to sales growth at PALTEK CORPORATION and progress in the development of new products and customers. In the EMS business, despite the expandability of the new business for in-vehicle related products, sales declined due to the sluggishness in the mainstay smartphone business. Segment profit increased mainly due to sales growth in the depreciation of the yen and the device business, despite a decrease in profit in the EMS business. As a result, the Semiconductor and Electronic Components Business recorded net sales of ¥339,544 million, up 17.9% year-on- year, and segment profit of ¥12,657 million, up 60.6% year-on-year. 2) Procurement business