Anritsu : Integrated Report 2021

Contents

• 1 Corporate Philosophy

Section 1

Value Creation to Support Global Safety and Security

• 2 Group CEO Message
• 8 Anritsu Value History

1. Anritsu Value Creation Model

1. Sources of Value Creation

1. Risks and Opportunities

1. Materiality

1. Strengths for Achieving Value Creation
2. Business Summary
3. Financial & Non-Financial Highlights

1. CFO Message

1. Mid-TermBusiness Plan

Section 2

Future of Testing that Anritsu Envisions

28 CTO Message

1. Test and Measurement Business

1. PQA Business

Section 3

Editorial Policy

Since FY2015, the Anritsu Group has released integrated reports that provide comprehensive information about financial and non-financial factors. We do this to give stakeholders such as customers, shareholders, investors, suppliers, and employees a better understanding of our efforts to realize the safe, secure, and prosperous global community that Anritsu Group aspires. In this seventh report, entitled Anritsu Integrated Report 2021, we tried to make efforts to clearly communicate to these stakeholders about our new company vision that looks to 2030, Anritsu's business itself, the Mid-Term Business Plan GLP2023, and our efforts concerning ESG, the foundation for value creation within the Anritsu Group.

• The IIRC*¹ and other international frameworks, as well as the GRI*² stan- dards, were used as the references in the production of this report.

*1 IIRC: International Integrated Reporting Council reformed into the Value Reporting Foundation (VRF) in June, 2021

*2 GRI: Global Reporting Initiative

A supporter of the UN Global Compact

In March 2006, Anritsu declared its support of the 10 principles of the UN Global Compact (UNGC), which are grouped into four categories: Human Rights, Labor, Environment, and Anti-Corruption. The Anritsu Group as a whole promotes these principles alongside its sustainability-related activities.

Communication Tools

Mechanisms Supporting Anritsu's Future

40 Human Resources

1. Climate Change Initiatives

1. Corporate Governance

1. Directors' Interview

1. Directors and Executive Officers

Data

54 11-Year Summary of Selected Financial

1. ESG Data
2. Management's Discussion and Analysis

Integrated Report

The Integrated Report issued every year includes corporate philoso- phy, top message, corporate value creation, business review, ESG etc.

Sustainability Report Environmental, economic, and social efforts included in the CSR report since 2005 is being incorporated into the Sustainability Report from 2018.

Securities Report/Quarterly Financial Report

These reports provide information on financial performance for the fiscal year at Anritsu on a quarterly and annual basis.

Business Report

The Business Report provides a basic summary of business activities, highlights, and other information for the fiscal year on an interim and full-year basis.

Financial Information

Financial information available on the WEB includes financial results, presentation materials, and presentation of Q&A summaries.

Information for the General Meeting of Shareholders

This information available on the WEB includes notices of the general meeting of sharehold- ers, reports of resolutions adopted, and presentation materials for shareholders.

1. Consolidated Statement of Financial Position
2. Consolidated Statement of Profit or Loss and Other Comprehensive Income
3. Consolidated Statement of Changes in Equity
4. Consolidated Statement of Cash Flows
5. Glossary
6. Statement of Responsibility
7. Investor Information

Notes regarding use of forecasts and other forward-looking information

The business forecasts mentioned above are based on recent information and reasonable judgments made with available information. The reader should be aware that these projections are not promises, and actual results may be materially different from these projections due to known or unknown risks, changes related to uncertainties, and other factors.

Communication tools are provided on Anritsu's website at Home >

About Anritsu > Investor Relations > IR Library.

https://www.anritsu.com/ir

Inclusion in Indices, External Evaluations

FTSE Blossom Japan Index	S&P/JPX Carbon Efficient	FTSE4Good Index Series	STOXX Global ESG
	Index		Leaders Index
SNAM Sustainability Index	CDP	Climate Change Report	2021 Certified Health &
		Award in the Environmen-	Productivity Management
		tal Communication	Outstanding Organiza-
		Awards	tions Recognition Program
"Kurumin" certification	Kanagawa Support Care
	Company

Corporate Philosophy

Anritsu has created a new company vision under our company philosophy of continuing to grow with the same positive attitude since our establishment. Please look forward to the new Anritsu.

View Anritsu's brand introduction video here

Company Philosophy

Contribute to the development of a safe, secure, and prosperous global society by offering

"Original & High Level" products and services with "Sincerity, Harmony, and Enthusiasm"

Company Vision

Beyond testing, beyond limits, for a sustainable future together

Company Policy

1. Growing day-by-day both as people and as a company based on self-development and sincere effort

2. Solving challenges through internal and external cooperative collaborations and harmonious relations

3. Making breakthroughs with enthusiastic and progressive spirit

4. Devoting the company and stakeholders to building a people- and planet-friendly sustainable future

Brand Statement

While renewing the company vision, we have also created our new brand statement of "Advancing beyond".

We will strive to perfect our core competence of "testing" and grow the pillars of our next businesses by seeking new value beyond conventional "testing" as well as new business fields, combining both internal and external ideas and technologies. This brand statement contains our strong desire for the company vision to exceed Anritsu's previous limits to create a sustainable and attractive future for the next generation, working together with all who are involved.

Sustainability Policy

The Anritsu Group aims to increase our long-term corporate value through contributing to building a sustainable future of the global society with "Sincerity, Harmony, and Enthusi- asm."

1. We will contribute to building a safe, secure, and prosperous global society through our business activities, based on our long-term vision.
2. We will take the initiative in solving environ- mental issues, such as climate change, to contrib- ute to building a people- and planet- friendly future.
3. We will respect the human rights of all people and strive to create a workplace offering healthy lives and decent work for all where diverse individuals can grow together.
4. We will operate as a business with high corpo- rate responsibility, peaceful, just, and ethics while maintaining business transparency to meet our social obligations.
5. We will promote communications with stake- holders to develop strong partnerships and meet the challenges of solving social issues.

Anritsu Integrated Report 2021

1

Value Creation to Support Global Safety and Security

Group CEO Message

Hirokazu Hamada

Representative Director,

President of Anritsu

Group CEO

COVID-19 Measures

All of us in the Anritsu Group extend our deepest condolences and sympathies for the many lives that have been lost and the many families and others who have been affected by the COVID-19 pandemic.

• The Anritsu Group has taken thorough and various infection control measures with regard to COVID-19, including ventilating workplaces, installing acrylic panels to prevent the spread of infection, encouraging commuting by car, operating a company bus service between Hon-Atsugi Station and our office, distributing masks to all employees, and conducting workplace vaccinations. Through remote work, we have achieved a maximum reduction of 80% in the number of workers physically commuting. We have also worked to contribute to the local community through such means as providing masks made by Anritsu itself to area hospitals and clinics.
• Institutionally, as well, we have engaged in the creation of an environment to enable employees to work in safety and security. Relevant measures include the establishment of a special COVID-19 paid leave system so that employees may take leaves without hesitation in case the symptoms of suspected infection is seen, a remote work allowance, and the creation of a counseling service to assist employees with mental and physical care.
• The future remains uncertain, but the Anritsu Group will continue striving to keep the effects of COVID-19 on our business to a minimum. Future measures to this end include

optimizing the scope of remote work in accordance with risk levels; and servicing, expanding, and diversifying the sources of our IT infrastructure.

Market Conditions and Company Initiatives

In the field of information and communication, operators are progressing 5G commercialization schedules are proceeding smoothly so that 5G services have been launched in various countries. In Japan, as well, 5G services began being launched from March 2020 in certain, primarily urban areas. In July 2020, 3GPP completed the standardization of Release 16, establishing standards for ultra-low latencies and large numbers of simultaneous connections, items for which use cases are expected to expand. In turn, research and development into the utilization of 5G in the automotive field, as well as investigations and demonstration experiments with regard to the building of private 5G networks à la local 5G, have begun. Continuing on from this, 3GPP is considering Release 17, a new standard whose aim is to further improve the efficiency and performance of 5G in areas such as the expansion of high frequency bands, increased signal areas, low power consump- tion, and low-cost communications. Work is moving forward to complete the standardization of Release 17 in 2022.

• In addition, due to the increases in data traffic resulting from the advancement of cloud services and the deploy- ment of 5G services, more and more pressure is being

2 ANRITSU CORPORATION

Taking Measurement to New Heights, and Building a Sustainable Future Together

The Anritsu Group was established in 1895, when radio communication experiments were being successfully carried out for the first time in the world. Since then, our history has been a story of challenges, as we have always been pioneers in the information and communications field. Regarding "testing" technology as a core competence, Anritsu has been supporting the information and communication field, as well as the food and pharmaceutical field.

• Now we have renewed our company vision to step forward into a new field beyond conventional "testing". We will proactively advance beyond Anritsu's previous limits to create a sustainable and attractive future for the next generation, working in synergy with all of our stakeholders. The new brand statement "Advancing beyond" represents this dynamic concept in two words. Under this brand statement, we will grow the pillars of our next-generation business with a proactive stance to transcend Anritsu's current boundaries. We will contribute to the development of a safe, secure, and prosperous global society together with our customers.

placed on network infrastructure. Service providers, working to make networks even faster, are fully moving forward with the introduction of 100 Gbps services, and network device manufacturers are also proceeding with the development of 400 Gbps network equipment. Within this context, the Test and Measurement Business Group has captured demand for development related to the commercialization of 5G as well as for research and development aimed at accelerating network speeds.

• With regard to our Products Quality Assurance (PQA) business field, influenced by the COVID-19 pandemic, a portion of our customers remained cautious about capital expenditures. Against this backdrop, aiming to capture demand for automation in quality assurance processes, we worked to strengthen the competitiveness of solutions focusing on X-rays, and also enhanced our sales promotion strategies that alternate face-to-face sales.

Looking Back on GLP2020

The previous fiscal year marks the final fiscal year of the previous Mid-Term Business Plan GLP2020.

• Targets for GLP2020 were revenue of ¥105.0 billion, operating profit of ¥14.5 billion, an operating profit margin of 14%, and ROE of 12%. In contrast to these, actual revenue was ¥105.9 billion, operating profit was ¥19.7 billion, operating profit margin was 19%, and ROE was 16%, meaning we achieved all of our targets.

• Many companies were impacted by the COVID-19 pandemic, and Anritsu was no exception. It was necessary for us to discern customer needs during a time when face-to-face meetings were not possible. And we were forced to develop complex products amid the communica- tion difficulties posed by unfamiliar remote work systems.
• Further, we were required to respond to sudden produc- tion demands when market movements were indiscernible. Working together with our customers, vendors, and numer- ous other stakeholders, our employees banded together to overcome these many difficulties. Thank you all.

Looking Back on GLP2020 Mid-Term Business Plan

			GLP2020
Indicators	FY2018	FY2019	FY2020	FY2020*
Revenue		¥99.7 billion	¥107.0 billion	¥105.9 billion	¥105.0 billion
Operating profit	¥11.2 billion	¥17.4 billion	¥19.7 billion	¥14.5 billion
Operating margin	11%	16%	19%	14%
Profit		¥9.0 billion	¥13.4 billion	¥16.1 billion	¥11.0 billion
ROE		11%	15%	16%	12%
T&M	Revenue	¥68.2 billion	¥75.2 billion	¥74.8 billion	¥70.0 billion
Operating profit	¥9.4 billion	¥15.1 billion	¥17.7 billion	¥10.0 billion
Business
	Operating margin	14%	20%	24%	14%
PQA	Revenue	¥23.1 billion	¥22.6 billion	¥21.4 billion	¥26.0 billion
Operating profit	¥1.6 billion	¥1.2 billion	¥1.3 billion	3.0 billion
Business
	Operating margin	7%	6%	6%	12%

* Planned in April 2018

(Reference) Expected exchange rates for GLP2020: 1 USD=105 yen, 1 euro=125 yen

Anritsu Integrated Report 2021

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