KAGA ELECTRONICS CO.,LTD.

1. Current Situation
Based on the results and issues in the Medium-Term Management Plan 2024, the Company announced on November 6, 2024, the “Medium-Term Management Plan 2027 (2025 - 2027),” a three-year management plan running from fiscal 2025 (year ending March 31, 2026) to fiscal 2027 (year ending March 31, 2028) as a guideline for sustained growth of the Group toward the next generation. The new medium-term plan continues the management vision of being a “world class company” and “Japan’s No. 1 corporate group in the industry” that were presented in the previous plan, based on a long-term concept focused on achieving net sales of 1 trillion yen in fiscal 2028 (year ending March 31, 2029), the 60th anniversary of the Company’s founding Medium-Term Management Plan 2027 has set out the basic policy of “enhancing corporate value through management that emphasizes profitability and capital efficiency,” along with priority measures for “further improvements to profitability,” “reinforcement of management base,” and “promotion of SDGs management.” The plan has established management targets for the fiscal year ending March 2028, the final fiscal year of the plan, as follows.

●Management Targets for FY2027

Note1 : Stock price and PBR are calculated based on the closing value on the final day of each fiscal year.
　　2 ：1:2 stock split was implemented in the fiscal year ended March 2025. Figures prior to the period were restated to reflect the split.

2. Views on ROE
In terms of the most recent performance, ROE has remained stable at 10% or more, maintaining a level above the cost of capital.
Medium-Term Management Plan 2027 outlines a basic plan of “emphasizing capital efficiency,” setting an ROE target significantly above the current cost of shareholders' equity of around 10% at “12.0% or more” for the final year of the plan. ROE can be divided into three components: net income margin, financial leverage, and total asset turnover. The outlook for each component is designed as follows.

3. Future Initiatives
To improve our PBR, it is important to maintain and enhance ROE above the cost of shareholders’ equity, while also receiving proper valuation from the stock market for our business initiatives and growth strategies. To this end, we will steadily implement the measures outlined in Medium-Term Management Plan 2027. Its main measures are the following four points.

Measure (1): Steadily implement Medium-Term Management Plan 2027
The Company will engage in maintaining and improving business growth and profitability through the steady implementation of the various measures established in the Medium-Term Management Plan, aiming to achieve the management targets in the final fiscal year of the plan.

Measure (2): Enhance shareholder satisfaction
The Company will engage in enhancing shareholder satisfaction through the steady implementation of the shareholder return policy established under the Medium-Term Management Plan (1. increase the consolidated dividend payout ratio as a guideline for dividend growth from 25–35% to 30–40% through medium- to long-term profit growth, 2. set a new ordinary dividend target of “DOE of 4.0%” for stable and continuous ordinary dividend payments, and 3. flexibly implement shareholder return measures through special dividends and acquisition of treasury shares).

Measure (3): Promote SDGs management
The Company has engaged in CSR and ESG activities for some time. The Sustainability Committee, chaired by the President & COO, will play a central part in deepening these activities and promoting sustainability management goals (SDGs) across the entire Group company. For the fiscal year ending March 2026, we will continue to calculate greenhouse gas (GHG) emissions by Scope 1, 2, and 3, while working toward achieving our reduction targets based on fiscal 2023 emissions: 42% reduction for Scopes 1 and 2 and 25% reduction for Scope 3 by fiscal 2030. Additionally, we will continue efforts to enhance ESG evaluation through external institutions such as the CDP and TCFD.

Measure (4): Maintain and further strengthen proactive IR activities
Moving forward, the Company will continue to further increase confidence in the Company’s management and reduce the cost of capital through broader disclosure to capital markets and active dialogue that it has undertaken for some time, centered on the Investor Relations & Public Relations Department, which is a section specializing IR.
Specifically, these activities include company briefing sessions, financial results briefings, and other IR events for investors, as well as communication through the Company’s IR site, Integrated Report, and media (economics journals and specialist magazines). In addition, the President & COO will play a central role in energetically undertaking constructive dialogue with shareholders and investors, including those overseas.
The opinions and other comments received through these IR activities will be shared in meetings of the Board of Directors and utilized, including in the review of management strategy.