Business Report on the 74th Term

This document has been translated from the original document in Japanese. In the event of any discrepancy between this English translation and the original document in Japanese, the original document in Japanese shall prevail.

[Delivery Document]

Sanshin Electronics Co., Ltd.

Stock Code: 8150

Business Report on the 74th Term

From April 1, 2024 to March 31, 2025

Contents

Business Report 2

Consolidated Financial Statements 29

Non-Consolidated Financial Statements 33

Audit Report 37

We explore new possibilities of technology and contribute to the enrichment of people's lives and the development of society.

The Sanshin Electronics Group is committed to "honing its people, technology, and wisdom to become the best partner for solving customers' problems." To achieve this goal, we are engaged in two main businesses: the device business, which handles a broad range of electronic devices such as semiconductors and electronic components from both domestic and international manufacturers, and the solution business, which centers primarily on ICT-based solutions. Through these two core businesses, the Group strives to support comfortable and enriched lifestyles by protecting people's safety and security and to fulfill our responsibility of connecting a sustainable global environment to the future by promoting environmentally conscious initiatives.

The Group is also committed to a company where all employees can work with pride and satisfaction and experience growth and happiness. Through such measures, we will deepen mutual understanding with a wide range of stakeholders and develop together with them, thereby leading to sustainable enhancement of corporate value.

At the same time, we continue to uphold and share within the Group the corporate code that has guided us since our founding-Trust, Principles, and Sincerity-as we strive to be a company that earns the trust of society.

Business cannot succeed without

trust.

It begins and ends with trust.

Do not just pursue profit. But act based

on principles, which can be realized through self-discipline.

Always act sincerely.

Rise to the challenge head-on.

1. Business Progress and Results

   In the consolidated fiscal year under review, when looking at the global economy, the future outlook remained uncertain due to strong concern for an economic slowdown. Factors included continued geopolitical risk and prolonged stagnation of the Chinese economy, as well as reciprocal tariff policies following the start of the Trump administration in the second half of the fiscal year under review. In the electronics industry, which is the Group's domain of operations, demand for next-generation technologies such as AI continued to drive growth in the semiconductor market. The ICT industry in Japan enjoyed favorable conditions in the IT services market, supported by trends such as updating of existing systems, cloud migration, and the promotion of digital transformation (DX) within companies.

   Against this background, the Group is fully committed to tackling the key challenges outlined in the long-term vision announced on May 10, 2024. As the first phase of implementing this vision, we have formulated the V76 Medium-Term Management Plan, whose final year is the fiscal year ending March 31, 2027 (the 76th term). Under this plan, to build an operating structure that can consistently achieve ROE of 8% or better, the Group is targeting ordinary profit of ¥5,000 million and net profit of ¥3,500 million or more by the final year of V76. We are focusing on initiatives to drive sustainable business growth, improve capital efficiency, and promote sustainability efforts.

   As a result of these efforts, business performance in the consolidated fiscal year under review was as follows: Net sales were ¥157,342 million (up 12.2% year-on-year), operating profit was ¥5,791 million (up 0.7% year-on-year), and ordinary profit was ¥4,934 million (up 26.2% year-on-year). Net profit attributable to shareholders of parent company was ¥3,522 million (up 28.5% year-on-year) and ROE was 8.9% (up from 7.6% in the previous fiscal year).

   In regard to internal transactions of revenues and expenses between consolidated companies, the parent company's transactions are converted at the exchange rate at the time of the transaction or at the forward exchange rate, and the overseas subsidiary's transactions are converted at the average rate during the period and offset. During the consolidated fiscal year under review, due to the weaker yen, operating profit increased because the offsetting expenses greatly exceeded the corresponding revenues. However, the same amount has been adjusted as a foreign exchange loss in non-operating expenses. Hence, there is no impact on the ordinary profit.

   Device Segment

   In the device business segment, our leading products are semiconductors (including system LSIs, microcomputers, power semiconductors, LCD driver ICs and memory) and electronic components (including connectors, capacitors, LCD panels and modules). These products are sold mainly to electronics manufacturers. We also provide technical support such as software development and module development.

   In the current consolidated fiscal year, net sales were ¥139,269 million (up 11.5% year-on-year) due to the launch of new businesses that boosted sales of vehicle systems, and to continued depreciation of the yen compared to the previous fiscal year. Segment profit was ¥2,773 (up 31.9% year-on-year) due to increased revenue and a decrease in interest and other non-operating expenses, despite an increase in SG&A expenses compared to the previous fiscal year.

   Note: Segment profit is based on ordinary profit.

   Solution Segment

   In the solution business segment, we provide one-stop services spanning from design and construction to operation and maintenance of network devices and security products that utilize ICT in accordance with our customers' environments. In addition, we provide Line-of-Business systems such as sales and production management, and applications such as personnel, payroll, and accounting in various formats ranging from on premise to the cloud.

   In the current consolidated fiscal year, net sales were ¥18,072 million (up 18.2% year-on-year) due to continued ongoing strong demand for DX implementation, which led to strong business performance, particularly in business related to corporate network systems and to fire and disaster prevention. Segment profit was ¥2,161 (up 19.6% year-on-year) due to increased revenue, despite an increase in SG&A expenses compared to the previous fiscal year.

   Note: Segment profit is based on ordinary profit.

2. Capital Investment Activities

   For the consolidated fiscal year under review, a total of ¥3,759 million in investments was conducted for purposes such as purchase of land adjacent to the headquarters building.

3. Financing Activities

   For the consolidated fiscal year under review, outside financing was mainly ordinary borrowing from financial institutions. Furthermore, the Company has entered into commitment line contracts totaling ¥6,000 million with four correspondent financial institutions with the aim of securing a flexible and stable funding framework. There is no balance of borrowing based on these contracts at the end of the consolidated fiscal year under review.

4. Future Challenges

(Basic management policies)

The Group believes that mutual understanding among a wide range of stakeholders and growing together will lead to sustainable growth in corporate value. For this reason, the Group has formulated a long-term corporate vision and identified key issues to tackle in order to achieve that vision. We are grappling with each of these issues with great determination.

1. Long-term corporate vision Mission

   We contribute to fulfilling lives for people and the development of society by exploring new possibilities in technology. Vision

   Be a corporate Group that constantly improves its people, technology and wisdom so customers will choose us as their best solution partner

   Be a corporate Group that protects people's safety and security and supports comfortable and affluent modern living Be a corporate Group that is working toward a future with a sustainable global environment

   Be a corporate Group that all employees can work with pride, a sense of purpose a real feeling of growth and happiness Values

   Corporate code (trust, principles, sincerity), Code of Conduct

2. Key issues for fulfilling the long-term corporate vision

1. Issues for improving sustainable business growth and capital efficiency

   1. Shifting resources and upgrading organizations and systems to optimize business structure long-term

   2. Streamlining of clerical and administrative work in existing businesses and expanding sales and revenues through sales-force automation

   3. Entering growth businesses by applying solutions using digital technology

   4. Continuous improvement of capital efficiency

2. Issues related to sustainability

   1. Advancement of management of human capital