Kaga Electronics : Other Items for Which Measures for Providing Information in Electronic Format Will Be Taken

Notice of the 55th Ordinary General Meeting of Shareholders Other Items for Which Measures for Providing Information in Electronic Format Will Be Taken

(Items Excluded From Delivered Paper-Based Documents)

Business Report Principal lines of business

Operating results by business segment Employees

Major Creditors

Other Significant Information Concerning the Current State of the Corporate Group

Accounting Auditor

Company Structure and Policies Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Statement of Changes in Equity

Notes to the Non-consolidated Financial Statements (From April 1, 2022 to March 31, 2023)

KAGA ELECTRONICS CO., LTD.

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Business Report

1. Principal lines of business (as of March 31, 2023)

The Company's principal business is the planning, development, manufacture, and purchase and sale of electronic components for electronic equipment, the purchase, sale, import and export of computers and peripheral equipment, related parts, accessories, software as well as other related business.

Our main products and business activities are as follows:

Business segment	Principal products and lines of business
	LCD modules, processed substrates, products for office automation equipment
	and communications equipment, integrated circuits such as custom LSIs and one-
Electronic Components	chip microcomputers, general-purpose integrated circuits such as memory ICs,
	semiconductor devices such as CMOS image sensors and light emitting diodes
	and others
Information Equipment	Personal computers, printers and other peripheral equipment, SD cards, digital
audio and video equipment, optical equipment and others
Software	Copyright business, production of computer graphics, image systems and
software, planning and development of amusement products and others
	Repair and support for electronics equipment, manufacture and sales of
Others	amusement equipment, event planning and operation, sales of sports goods, golf
	shop operations and others

2. Operating results by business segment

Net sales by business segment are as follows.

(Million yen)

Period and category	The 54th fiscal year
	(From April 1, 2021 to March 31, 2022)	The 55th fiscal year
			(From April 1, 2022 to March 31, 2023)
Business segment	Amount	Ratio	Amount	Ratio
Electronic Components	433,852	87.5%	539,342	88.7%
Information Equipment	39,616	8.0%	43,680	7.2%
Software	2,767	0.6%	2,998	0.5%
Others	19,590	3.9%	22,044	3.6%
Total	495,827	100.0%	608,064	100.0%

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3. Employees (as of March 31, 2023)

1. Employees of the Corporate Group

Business segment	Number of employees	Increase/Decrease from the end of the
previous fiscal year
Electronic Components	6,376	Increase of 105
Information Equipment	265	Increase of 5
Software	416	Increase of 19
Others	349	Increase of 20
Corporate (Common)	686	Decrease of 16
Total	8,092	Increase of 133

(Notes) 1. The number of employees indicates the number of persons employed (including workers loaned to the Group from outside the Group, contract workers, part-time employees, and non-regular employees).

1. 2. The number of employees listed as "Corporate (Common)" indicates those belonging to the management divisions that cannot be classified under a specific business.

2. Employees of the Company

	Increase/Decrease from
Number of employees	the end of the previous	Average age	Average service years
	fiscal year
546	Decrease of 9	43.3 years old	14.5 years

(Note) The number of employees indicates the number of persons employed (including workers loaned to the Company from outside the Company, contract workers, part-time employees, and non-regular employees).

4. Major Creditors (as of March 31, 2023)

	(Million yen)
Creditor	Balance of loans payable
MUFG Bank, Ltd.	10,399
Mizuho Bank, Ltd.	8,145
Sumitomo Mitsui Banking Corporation	1,951
The Hokuriku Bank, Ltd.	1,290
Nippon Life Insurance Company	2,600
Meiji Yasuda Life Insurance Company	400

5. Other Significant Information Concerning the Current State of the Corporate Group Not applicable

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6.	Accounting Auditor
(1)	Name	PricewaterhouseCoopers Aarata LLC
(2)	Audit Fees
			Amount (Million yen)
Audit fees for the current fiscal year		73
Total of amount of cash and other financial benefits payable by the Company	101
and its subsidiaries to the accounting auditor

(Notes) 1. The audit agreement between the Company and the accounting auditors does not explicitly distinguish between accounting remuneration, etc. for accounting under the Companies Act and accounting under the Financial Instruments and Exchange Act, and is substantially unable to do so; accordingly, the total amount of the two is given as the amount of accounting remuneration, etc. of the accounting auditors for the fiscal year under review.

1. 1. Of the significant subsidiaries of the Company, overseas subsidiaries are audited by accounting companies other than the Company's accounting auditors (including persons with equivalent qualifications in foreign countries).
   2. The Board of Auditors has decided to agree to the amount of remuneration, etc. for accounting auditors after carrying out necessary verification of the appropriateness of matters such as the contents of the accounting auditors' audit plans, the status of the execution of accounting audit duties, and the basis for calculation of remunerations estimates.
2. Description of Non-AuditServices Not applicable
3. Policy on Decisions of Dismissal or Non-reappointment of Accounting Auditor
   In the event of any obstacles to the execution of the accounting auditors' duties, etc., the Board of Auditors will determine the contents of a proposal regarding the dismissal or non-reappointment of the accounting auditors.
   In the event that any of the matters provided for by Article 340, paragraph (1) of the Companies Act are applicable to the accounting auditors, the Board of Auditors will dismiss the accounting auditors by unanimous agreement of the auditors. In the event that this occurs, an auditor selected by the Board of Auditors will report the fact of the accounting auditor's dismissal and the reasons for that dismissal to the first General Meeting of Shareholders held after the dismissal.
4. Overview of Limited Liability Agreement Not applicable

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7. Company Structure and Policies

(1) System to ensure the properness of operations

The following is an overview of decisions regarding the system for ensuring that the directors of the Company and the Group execute their duties in accordance with laws, regulations, and the Articles of Incorporation, and the system for otherwise ensuring the appropriateness of business operations by the Company.

1. Systems for ensuring compliance by Company and Group Company Directors with laws and regulations and the Articles of Incorporation in the performance of their duties
   The Company and the Group are cognizant that enhancing corporate governance is a key management issue and make it their fundamental policies to ensure total compliance with corporate ethics and laws and regulations, and to reinforce internal control systems while ensuring the soundness, efficiency and transparency of business operations and raising corporate value.
   To achieve such compliance, the Company has established Rules on Officers applicable to directors and the Board of Directors Rules applicable to the Board of Directors. To ensure appropriate management, the directors monitor each other's status of execution of duties at regularly-held Board of Directors meetings and at extraordinary meetings held on a dynamic basis as necessary. The Company has also established Organization Rules, Rules on the Allocation of Work Duties, Rules on Work Authority, and Rules on Internal Approval, clarifying the scope of authority of each director and ensuring that mutual supervision by directors is effective.
   In addition, the Company established an Audit Office under the direct authority of the Representative Director, President & COO. The Audit Office works in collaboration with the Business Administration Department-the Company's legal affairs division-to monitor the status of compliance with laws and regulations, the Articles of Incorporation, and other internal rules.
   The Company also has a board of auditors, and the auditors, including outside auditors conduct detailed audits regarding the execution of duties by the directors.
   The Company also established a CSR Promotion Committee (Corporate Social Responsibility Promotion Committee) chaired by the Representative Director, President and COO and established Information Disclosure Committee, Risk Management Committee, and Compliance Committee and Personal Information Management Committee as subordinate organizations. These organizations work to normalize decision-making and the execution of business operations throughout the Group.
2. The systems for the preservation and control of information relating to the execution of duties by directors
   Information relating to the execution of duties by directors is appropriately and accurately controlled and preserved according to the qualities of the recording media in accordance with the Document Control Rules, which set forth the standards on the preparation and retention of documents, and the Document Control in Handling Manual, which sets forth detailed provisions on document retention procedures and periods.
3. Rules and other systems relating to control of the risk of loss
   Potential risks that the Group faces include matters relating to economic conditions, exchange rates, country risks, price competition, product procurement capabilities, internal brand risks, legal regulation, market risks, major litigation, severance pay obligations, personal information, accidents, the environment, and information management. Responding divisions have been set for each risk and necessary and appropriate systems have been established to control risks under the authority of risk control officers and managers in each division.
   If any of the risks mentioned above should occur, the corresponding responding divisions will immediately take necessary and appropriate responsive measures to minimize the occurrence of damage under the direction of the risk control officers and managers.

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