東京精密（7729） – FY2022/3 Earnings and Mid-Term Business Plan for FY2023/3-FY2025/3 (with note)

Tokyo Seimitsu Co., Ltd. FY2022/3 Earnings andMid-Term Business Plan for FY2023/3 – FY2025/3May 10th, 2022Hitoshi YOSHIDA, Chairman and CEORyuichi KIMURA, President and COOKoichi KAWAMURA, Executive Vice President and CFOShuichi TSUKADA, Director, Head of Metrology CompanyMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 1 Cautionary Statement with respect to Forward-Looking Statements This presentation data and information verbally provided contain “forward-looking statements” that are based on current best available information and policies. There are various factors such as world economic conditions and semiconductor/automobile market conditions which will directly and indirectly impact the Company’s results in the future. As a result, future outcomes may differ from those projected in this presentation. Wordings and Data in presentation Unless otherwise noted, “SPE” denotes our Semiconductor Production Equipment Business Segment, “Metrology (or Metr.)” denotes our Metrology Business Segment, “Net profit” denotes Net profit attributable to owner of the parent, and “MTP” denotes “Mid-term Business Plan.” Information listed in this presentation is summarized in Billions of Yen (BJPY or B) or percentage except as otherwise noted. As a result, there may be a case where the total of individual amount and total amounts in each matter may differ. Audit procedure This presentation is not subject to audit procedures.May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 22Tokyo Seimitsu Co., Ltd.FY2022/3 Earnings and MTPAgenda Ⅰ. FY2022/3 Earnings, FY2023/3 ForecastⅡ. Mid-Term Business Plan for FY2023/3 –〜Q&A〜FY2025/3〜Q&A〜May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 3FY2022/3 Business ResultsFull YearResults (BJPY)OrdersSalesOperating profit(Margin)Recurring profitNet profitDividend per shareFY2021/3Full YearFY2022/3Full YearVs.fcstYoY117.197.115.6(16%)15.912.2104Yen191.1133.328.6(21%)29.421.4+63%＋5.3+37%＋2.1+84%＋2.9+85%+2.1+76%185Yen +17Yen +81YenQuarter(BJPY)1Q2Q3Q4Q1Q2Q3Q4QQoQYoYOrdersSales18.7 21.0 35.1 42.3 41.7 46.8 56.7 45.9-19%+8%21.1 24.0 21.6 30.4 28.9 32.5 32.0 39.8+25% +31%Operating profit(Margin)3.2(15%)3.1(13%)3.0(14%)6.2(20%)6.0(21%)6.9(21%)6.3(20%)9.3(23%)+47% +49%Recurring profit3.33.12.96.56.07.06.69.8+49% +51%Net profit5.2 Sales and profits increased YoY (achieved the mid-term target), Solid 7.12.32.52.24.84.45.3+48% +35%sales of SPE contributed to sales growthMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 4 Hello everyone, I am Kimura. Thank you very much for your continued support. I have just been appointed President and COO. I will now begin to explain our business performance in FY2022/3. It was a very strong year for SPE Segment. As you can see in the table, we exceeded our published forecasts and achieved our mid-term targets from FY2019/3. Based on these results, we have set our full-year dividend forecast at 185 yen per share. In light of the achievement of the mid-term targets, we have paid special bonuses to reward our employees for their hard work. SPE SegmentSegment Results(FY︓BJPY)FY2021/3Full YearOrdersSalesOperating profit(Margin)Full YearVs. fcstYoYFY2022/3157.4103.424.9(24%)+3.4+44%+69%+84%93.271.713.6(19%)Quarter (BJPY)1Q2Q3Q4Q1Q2Q3Q4QQoQYoYOrdersSales12.9 15.9 28.7 35.7 33.9 38.6 46.7 38.3-18%+7%15.4 18.0 15.1 23.2 22.8 24.9 24.7 31.0+25% +33%Operating profit(Margin)2.8(18%)2.9(16%)2.5(17%)5.4(23%)5.3(23%)6.0(24%)5.3(22%)8.3(27%)+55% +54% FY sales exceeded the announced forecast, and orders/sales/OP reached theirprevious peaks OP Margin remained above 20% throughout the fiscal year 4Q Sales/OP/OP Margin reached record highsMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 5 The SPE equipment segment’s FY and quarterly results are as shown in this page. Orders, sales, and OP all reached new peaks for the full year. Operating profit margin in the 4Q rose to 27%. Although there was an increase of several hundred million yen due to foreign exchange effects, even excluding this, we estimate the profit margin to be in the mid-20% range. SPE – Quarterly TrendSales and OPOrders and Backlog Manufacturing volume increased despite material shortage and logistic stagnation 4Q Orders decreased QoQ, but remained at a high level mainly in logic and electronic componentsMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 6 Here are the quarterly trends in SPE sales, operating profit and orders. The left graph shows trends in sales and profit. The sales level has been rising step by step in response to the rush of orders over the past year or two, which indicates that production is expanding amid materials shortage and logistic stagnation. Of note, 4Q sales fell about 2.0BJPY below the internal plan due to the lockdown in China and logistic stagnation, so we believe that actual shipments were a little higher than sales amount. On the right side, 4Q orders decreased QoQ, but overall demand for logic and image sensors remained strong.SPE – per ProductSales per ProductOrders per ProductHigh30%Low60%Mid30%Mid60%Low30%High60%Low40%High50%Low30%High60%Mid30%Mid60%May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 7 This chart shows sales and orders for SPE by product. The ratio of sales by product in FY2022/3 was as follows: Testing equipment, namely Probers, accounted Low-60% of total, and Assembly Machines, such as Dicers and Grinders, accounted High-30% of total. The ratio of orders by product during the same period was Mid 60% for Probers, and Mid-30% for Assembly Machines.Metrology SegmentSegment Results(FY︓BJPY)FY2021/3Full YearFY2022/3Full YearVs. fcstYoYOrdersSalesOperating profit(Margin)23.925.42.0(8%)33.729.937(12%)+1.9+18%+41%+85%Quarter (BJPY)4Q1Q2Q3Q4QQoQYoYOrdersSalesOperating profit(Margin)1Q5.85.60.3(6%)2Q5.06.10.3(4%)3Q6.46.50.5(8%)6.77.20.9(12%)7.96.18.2 10.17.67.37.68.90.7(11%)1.0(13%)1.0(14%)1.0(12%)-25% +13%+22% +24%+4% +17% FY sales exceeded the forecast, and both sales and income increased YoY Quarterly orders continued to recover after bottoming out in FY2021/3 2Q While recovery in demand for autos was moderate, we captured new machinery demand such as in the semiconductor sectorMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 8 Next, I will explain the performance of the Metrology segment. The FY and quarterly results are as shown in here. Business conditions returned to normal compared to FY2021/3 (Generally stagnant due to COVID-19 pandemic) , and both sales and income increased YoY and exceeded forecasts. The recovery in business performance was due to the ability to capture demand for a variety of machinery, including SPE players, as well as an increase in subsidy-related projects.Metrology – Quarterly TrendSales and OPOrders and Backlog Sales are on a recovery trend 4Q orders decreased due to a rebound from 3Q, Overall orders are in a recoveryMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 9 Here are the quarterly trends in sales, operating income, and orders received for Metrology. On the left, 4Q sales was on a gradual recovery trend. The reason of 4Q flattish OP compared to 3Q is due to the special bonus I mentioned earlier. On the right side, 4Q orders decreased QoQ although there is an overall recovery trend. We analyze this as a rebound from 3Q because of the timing of product price changes since the beginning of this year and the timing of subsidy related business.Metrology – per ProductSales per ProductOrders per Product40%40%60%60%High30%Low60%Low30%High60%40%60%40%60%May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 10 Next is a breakdown of sales and orders by product in Metrology segment. In FY2022/3 Measuring instruments, such as CMMs, accounted for low-60% while automatic measurement products, such as sensors and gauges, and charge-discharge test systems accounted for high-30%. In terms of orders, Measuring instruments was High-60% and Others such as sensors and gauges was Low 30%.Balance SheetAssets (BJPY)161.649.0+5.4146.5Cash34.6+9.043.7Accounts Receivable29.6+1.330.9Inventories30.2+2.732.9others 3.3+0.74.038.4+7.440.3+7.4+2.16.1Fixed Assets48.8+1.350.0+6.456.4190.2Liabilities / Net Assets (BJPY)161.6+6.823.116.25.5+9.5-1.9146.5Accounts Payable 16.9Others 12.1Fixed Liab.7.9+6.2+4.1-2.4190.229.925.83.6Includes Int. bearing debt of 55(7.6B as of Mar/E 2021)+14.2131.0+7.1116.8(71.4%)(68.1%)Net Assets109.7(Equity Ratio73.9%)Mar/E 2020Mar/E 2021May 10th, 2022Mar/E 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) Mar/E 2020Mar/E 2021Mar/E 202211 Here is an explanation of the balance sheet. Total assets as of March 31, 2022 were 190.2BJPY. In the assets section on the left, in addition to an increase in notes and accounts receivable and cash due to sales increase, inventories also increased in anticipation of future shipments. Fixed assets increased due to purchase of land for the Hanno Plant. On the right side, liabilities also increased, mainly due to increases in accounts payable for parts procurement and advances received. The equity ratio at the end of March came to 68.1%.FCF +15.0-9.0+24.1-10.4+0.7FCF+16.9-5.2+22.1-8.3+0.443.649.0Cash Flows(CF)(BJPY)Free Cash Flow(FCF)-0.2Operating+6.0Investing-6.1Cash41.3Adjustment-0.2Financing-6.434.6 Next, I will explain cash flow.Balance期首2017年度FY2020/3期末BalanceFY2021/3BalanceFY2022/3BalanceMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 12 On the right, in FY2022/3, cash earned from operating activities was 24.1BJPY, cash used by investing activities was 0.9BJPY, and free cash flow resulted to 15.0BJPY. Cash used by financing activities was 10.5BJPY, and consequently, Cash and cash equivalents at the end of FY2022/3 came to 49.0BJPY.R&D, Capex and Depreciation (results/plan)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 13 Here are the actual results for R&D, Capex, and Depreciation for FY2022/3 and Plans for FY2023/3. As for FY2022/3, R&D expenses was 8.1BJPY, Capex was 9.8BJPY, and depreciation was 3.6BJPY, which were generally in line with plans. The plan for FY2023/3 is 8.5BJPY for R&D, 13.0BJPY for Capex, and 4.0BJPY for depreciation.Premises of FY2023/3 Forecasts• Maintain high level production throughout the FY• Watch for material shortages, logistics stagnation,geopolitical risks, and COVID-19 pandemicOverallSPE• Maintain assumption that orders to adjust short-term• In addition to production expansion and R&D, work onactivities to strengthen the application centerMetrology• Recovery in the auto sector will continue to be moderate• Promote sales expansion in semiconductor, NEV, and automation fieldsMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 14 Premises of FY2022/3 Forecasts can be summarized as here. Overall production will continue at a high level. However, the shortages of parts and materials, logistics stagnation, Russia/Ukraine crisis, and China lockdown may affect out business in the future. We will closely monitor these possibilities and take flexible measures. In SPE, we anticipate that an adjustment in orders is likely. In Metrology, manufacturing industry is expected to continue recovering.FY2023/3 ForecastConsolidated Results and forecasts (BJPY)FY2022/3FY2023/31H2HFY1H(f)2H(f)FY(f)YoY71.8133.375.5150.0+13%SalesOperating Profit(OP Margin)Recurring ProfitNet ProfitDividend per SharePer Segment(SPE)OrdersSales(Metr.)OrdersSales61.512.9(21%)13.09.672.547.716.013.815.6(22%)16.411.885.055.717.716.128.6(21%)29.421.4157.4103.433.729.974.515.3(21%)15.310.815.8(21%)15.811.231.1(21%)31.122.0+9%+6%+3%185Yen218Yen +33Yen58.558.5117.0+13%16.017.033.0+10% Both SPE and Metrology sales and profits, dividends to increase YoY Forecasts reflect soaring material prices, impact of China lockdown etc.May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 15 Based on the premises, the forecast for FY2023/3 is as shown. OP margin is expected to remain at the same level as the previous year. This was due to a profit impact of over 2.0BJPY from higher materials prices, and assumed exchange rate of 115 yen to the 1 US dollar is expected to have a negative impact of several hundred million yen. The dividend is expected to be 218 yen per share, an increase of 33 yen per share. Our profit distribution policy will be explained later.SPE – Sales/Orders incl. ForecastsOrder will decrease HoH but maintain high levelMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 16 This page shows forecasts of SPE’s sales and orders per Fiscal Half. While a slight adjustment in Orders is likely, we anticipate FY2023/3 1H Order will maintain a high level. Outlook of product composition ratio both in Sales and Orders for FY2023/3 1H is 60% for Probers, and 40% for Assembly machines.Metrology – Sales/Orders incl. ForecastsOrder in FY2023 1H are expected to recover moderatelyMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 17 This page shows forecasts of Metrology’s sales and orders per Fiscal Half. Orders in the FY2023/3 1H are anticipated to show a gradual recovery. Outlook of product composition ratio for FY2023/3 1H is; (1) In Sales, High-60% for Measuring Instruments, and low-30% for SUM of Automatic Gauges and Battery Testing systems. (2) In Orders, 70% for Measuring Instruments, and 30% for SUM of Automatic Gauges and Battery Testing systems. So far, I have explained the FY2022/3 business results and FY2023/3 forecast. Thank you for your attention.Tokyo Seimitsu Co., Ltd.FY2022/3 Earnings and MTPAgenda Ⅰ. FY2022/3 Earnings, FY2023/3 ForecastⅡ. Mid-Term Business Plan for FY2023/3 –〜Q&A〜FY2025/3〜Q&A〜May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 18Tokyo Seimitsu Co., Ltd.FY2022/3 Earnings and MTPAgenda Ⅰ. FY2022/3 Earnings, FY2023/3 ForecastⅡ. Mid-Term Business Plan for FY2023/3 –〜Q&A〜FY2025/3〜Q&A〜May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 19FY2019/3-FY2022/3 Mid-term target summaryQuantitative Targets (May 2018)Long-term target : ROE of 10％ or moreMid-term target : Achieve OP of ¥22.0B （by FY2022/3）Achieve in both cyclesExpand sales(Aim for sales of ¥110 billion)Improve profit ratio(Aim for OP margin of 20% or more）FY2022/3 ROE 17.5%Sales ¥133.3B OP ¥28.6B (Margin 21.4%)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 20 Before I start explaining the medium-term management plan, We would like to begin by summarizing the previous medium-term target. The Company announced these quantitative targets in May, 2018.Once it was targeted by FY2021/3, however, the Company extended it oneyear due to COVID-19, and the plan was to continue until FY2022/3. As a result, all quantitative targets were achieved with the results listed in the lower row.20FY2019/3-FY2022/3 Mid-term target summaryGrowth Factors for Each BusinessSPE︓ New Growth Stage• Network-related︓ Memory, Electric components, Sensors• Automotive︓Sensors, Powers, SiC substrates• China demand︓Full-scale investment, plant construction rush (~2019) Network-related: Rapid growth with 5G as a core technology Automotive: Stable growth through automation, electrification, and EVs China: Expanded more than expected partly due to government policy Stay-home and/or Work-from-home boosted demand for devicesMetr.︓Sustainable Growth• Automotive: Platform innovation, ICE development to continue• Machine Tool: Demand towards gauges in line with demand increase for IoT• Aircraft: Demand for mid-size jets, especially in emerging countries Auto: largely in line, but transition to NEVs is proceeding rapidly COVID-19 pandemic changed biz environment after FY2021/3 Especially, demand for Machine tools and Aircraft declined Related business for manufacturing automation grew more than expectedMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 21 Here are the growth factors for each of our businesses that we considered when seting up our mid-term targets. The factors in frames are the ones originally anticipated, and those indicated by the arrows below are the review. In the upper section, the SPE Market expanded rapidly with 5G as the core technology, as expected. Furthermore, the China market and the demand for stay-at-home made the market size larger than expected. In the lower section, Metrology, we obtained a certain amount business opportunity for Auto’s platform innovation, but the transition to NEVs was more rapid than we had expected, and the spread of COVID-19 was a significant factor in changing the market, especially after FY2021/3.21FY2019/3-FY2022/3 Mid-term target summaryStrategies, Major ActionsStrategyMajor ActionsTechnology Strengthen product competitiveness Expansion of target markets New products for the next generation Biz Alliance in Metrology Products New or expanded Application centersProduction Expansion of production capacity Efficiency improvement (automation, labor saving) Capacity expansionMetr: New building (MI building) openedSPE: New plant（Hanno Plant) Utilization of Metrology Factories for SPEProductionProfit ratioimprovement Promoting Information Sharing Expansion of Service and Consumables sales Improving work-efficiency through ERPESG Promote ESG activities and enhance corporate value Sustainability Committee established. Reduction of CO2 emissionsMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 22 Here are the strategies that the entire company aims to work on to achieve the mid-term targets and the following is a summary of the results. The Company has taken the initiatives you see regarding technology, production, profitability improvement, and ESG.FY2019/3-FY2022/3 Mid-term target summaryCapex SummaryCapacity expansion (SPE) Miyama Plant: Full operation Hanno Plant: under construction Tsuchiura MI Plant: also used for SPECapacity expansion(Metrology: Tsuchiura MI plant) Opened in May 2020 Also used in SPE productionMI: Monozukuri InnovationEffectivenessImprovement Effectiveness Apps. Center(New in Taiwan) Opened in March Metrology Center(Renewal in Osaka) Opened in Jan improvement using 20212020ERP is in progressCapex was made as planned; Hanno Plant will be continued under the FY2023/3-FY2025/3 MTPMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 23 This page is a summary of Capex. We originally planned these five initiatives and executed them. The largest investment was in the Hanno Plant (Saitama, Japan). We had originally planned to build a plant in Hino City (Tokyo, Japan), but due to environmental assessments, we decided to give priority to the Hanno Plant, which is currently under construction. We also opened Tsuchiura MI Plant in 2020. Now it is also utilized for the production of SPE.FY2019/3-FY2022/3 Mid-term target summaryStrategies per SegmentSPE Keep responding to “ALL NEEDS” from Customers to expand the marketExpanded product lineup for memory testing, high throughput, square substrates based oncustomer demands Enhance Apps capability to increase service/support and consumable businessIncreased sales of consumables in response to customer demand for both dicers and grinders Proceed in-house MFG and utilize new plantsIn-house production ratio increased, and Capacity drastically increased2/3 from SPEMargin 20%1/3 from Metr.Margin 20%Mid-term OP: 22.0B(at 110.0B Sales)Metrology Enter Electrical testing area to expand our market with synergy effectObtained Battery in-house testing business , and continued equipment R&D Business building with competitive products to increase service/support businessStrengthening after-sales business for existing customers, Increase in business for automation and labor savings MFG innovation and automationApplied some automated processes in production line, and commenced in-house production of core partsMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 24 Strategies per segment and results are shown above. In SPE, we expanded Prober‘s lineup, provided Dicers/Grinders and consumable parts which met customer’s requirements. Also, we strengthened in-house production, and realized a dramatic expansion of our manufacturing capacity. In Metrology, we obtained a Battery in-house testing business, and simultaneously, developed new battery testing equipment. In addition, we worked to strengthen after-sales business with existing customers, developed business opportunities for automation and other products. In terms of production, we promoted automated production and in-house production. That is a summary of mid-term target we just executed. Next, I would like to explain about new mid-term business plan.FY2023/3-FY2025/3 Mid-term Business PlanKey PointsMarket Premises Stretching Society 5.0 Significant growth of Semis and Electronic components Changing measurement needsOur Opportunities Semis Production becomes more accurate, and Back-end SPE becomes more important Decarbonization and Automation Strengths in Measuring EquipmentQuantitative targetSustainability ROE 15% or more Sales 170.0B OP 37.5B(OP Margin 22%) Committed to be a building a “future full of dreams”May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 25 I summarize our next mid-term business plan on this page. Key points are; (1) The market premises are based on substantial growth of the semiconductor market and changing metrology needs, (2) diversification of business opportunities associated with this growth, (3) We have set some quantitative targets, and all over (4) Sustainability will be a key theme.FY2023/3-FY2025/3 Mid-term Business PlanCorporate Philosophy世界中の優れた技術・知恵・情報を融合して世界No.1の商品を創り出し、皆様と共に⼤きく成⻑していくGrowing together with partners and customers by collaborating technology, knowledge and information to create the world’s No.1 products.Motto that expresses our philosophy:「WIN-WINの仕事で世界No.1の商品を創ろう」WIN-WIN relationships create the World’s No. 1 ProductsCorporate brandCombined the words “Accrete ” and “Technology” May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 26 The corporate philosophy that forms the basis of the company’s operations remains unchanged. The management policy is “Growing together with partners and customers by collaborating technology, knowledge and information to create the world’s No.1 products.” A motto that simply expresses this philosophy is ; “WIN-WIN relationships create the World’s No. 1 Products. “ and this is reflected in our corporate brand ”ACCRETECH”. We will strive to disseminate this philosophy both internally and externally.FY2023/3-FY2025/3 Mid-term Business PlanFramework and Business PortfolioConceptual FrameworkBusiness PortfolioRealize a Sustainable Company andSocietyIncrease incorporate valueInvestments Manufacturing SpiritsStrong Financial andCapital positionSustainability InitiativesGovernance and ComplianceSPE High-accuracy In-house MFG CustomizationMetrology High-accuracy High reliability SensingStrengths having 2 different businesses Profitability stability with different business areas Synergy between businesses (SPE company with the only “Measuring technology”)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 27 The conceptual framework and business portfolio to realize our corporate philosophy is also remaining unchanged. The framework is, from bottom to top, sustainability, governance with compliance initiatives, strong financial and capital position, our employees’ spirits for manufacturing, Investments or growth are to increase corporate value, and on top, to realize a sustainable company and society. We have two distinct business segments: the SPE and the Metrology segment. We will realize stable earnings by having different business areas and enhance synergy as the only SPE company with measuring technology.FY2023/3-FY2025/3 Mid-term Business PlanMarket PremisesHealthcareLivelihoodSurgery Robot, TelehealthSmart appliances, Online studiesWorkplaceAutomotiveSmart FactoryFinanceAIIoTInfrastructureEV, Autonomous driving5GMetaverseBig DataRoboticsCloudOnline transaction, CryptocurrenciesE-government, empowered intranetLogisticsEnergy Generation Automated warehouse, Drone deliveryOptimized and eco-friendly power generationMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 28 This page shows premises of the Company’s mid term plan starting from FY2023/3. As we have indicated before, “Society 5.0 (integration of virtual and physical reality)”, is the key and it will be expanded. We believe that a “Metaverse”, arecent topic, is just a part of this Society 5.0. All new technologies shown in this page are correspondent with Semiconductors. FY2023/3-FY2025/3 Mid-term Business PlanSPE Market Premises Society 5.0 (A fusion of virtual and physical realities driven by 5G) will see Semiconductors and Electrical components overwhelming mass production and consumption Back-end SPE being more important in the entire manufacturing flowSociety5.0High-tech productsSemiconductor ManufacturesSPE ManufacturesFusion of Virtual and Physical Realities Semiconductors to be mass-consumption productsIncrease outputs with lower costsComplying to their demands will be a Mustand OthersMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 29 Therefore, there is no doubt that the semiconductor market will grow substantially in both value and volume terms in the future. The era of mass production and mass consumption of semiconductors and electronic components is upon us. In addition, the importance of back-end processes in the entire semiconductor manufacturing process is expected to increase further.FY2023/3-FY2025/3 Mid-term Business PlanMetrology Market Premises Markets will change dramatically with Carbon neutrality and digitization While demand for ICE is declining, measurement needs to change including NEVs, automation, semiconductors, medical, etc.AutomobileNon-automobileyrtsudnI elbatSyrtsudni ignworG新規開拓市場May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 30 In the area of measurement, amid demand for ICE (Internal Combustive Engine) declining, demand for carbon neutral, NEVs for digitization, and automation is increasing rapidly. In addition to semiconductor-related measurement demand, we assume that demand for measurement will expand in new fields such as medical care, etc.30FY2023/3-FY2025/3 Mid-term Business PlanOur Opportunities (SPE)PremisesOur Opportunities Increase in device functionality and complexity Increase in more reliable devices Increase test importance Testing-time expansion Testing conditions widening Evolution of 3D Packages Stable Semis unit growth (mass production and consumption) Increase in Assembly SPE demand Evolution of SiC/GaN Power devices for Carbon neutrality Market Expansion New assembly processing Reliability-first testing Increasing demand for device testing and processing accuracy Synergy with our Metrology ProductsWe anticipate growth outpacing market growth due to expanding business opportunitiesMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 31 In light of these factors, here is a summary of business opportunities for our SPE Segment. We expect increasing demand for Testing equipment to meet the growing functionality & complexity of Semis and reliability requirements, and the evolution of stacking technology. We also expect the growth of the number of semiconductors themselves which will lead to an increase in assembly machine demand. Also, the demand for power semiconductors and equipment related to it will grow as the industry moves towards carbon neutrality. Of note, the increasing demand for semiconductor processing accuracy will enhance synergies with our Metrology equipment business. Therefore, we believe that in addition to market growth, we will be able to grow even faster than the market expansion due to the expansion of business opportunities.FY2023/3-FY2025/3 Mid-term Business PlanOur Opportunities (Metrology)Premises Expansion of NEV and renewable energy market toward carbon neutralityOur Opportunities Change in materials or components toward NEVs Increase in demand for high precision measurement Battery testing for NEVs Manufacturing automation trend due to Combination of robot + measuring decrease in workforce Change in measurement technology (from Sampling at testing room to Full testing at production linesinstruments High precision parts measuring Change in needs for measuring machines themselves Expansion of non-automotive market (Semis, Aircraft, Medical, etc.) Semis (non-contact) Aero engine parts (high precision) Artificial joints/bones/medical devices (non-contact)Demand for Metrology to change due to changes in industryMarket volume likely to exceed previous peak (FY2019/3)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 32 The first business opportunity for the Metrology segment is Carbon Neutrality. In this trend, the expansion of the NEV and renewable energy related markets will generate demand for battery testing and dimensional measurement of parts dedicated to NEVs. Automation trend due to the decrease in the working population and DX (Digital transformation) will replace current “sample-testing” to “full testing”. It will lead to related changes also in measuring. We also believe that new business opportunities will be created by the expansion of the non-automotive manufacturing market. Consequently, we believe that by capturing these opportunities, the business environment could exceed the existing peak in FY2019/3.FY2023/3-FY2025/3 Mid-term Business PlanQuantitative Target Quantitative target for FY2025/3ROESalesOP15% or more¥170.0B(SPE ¥132.0B/Metrology ¥38.0B)¥37.5B(OP Margin︓22%) Company-wide actionsR&DExpand MFG capacityEnvironmentReinforce development of leading-edge technologies and customer needsHanno Plant (FY2024/3) will realize ¥140B+ annual SPE capacityAdditional plant to be consideredDecrease CO2 emissions by 50% at CY2030 from FY2019/3Investment also to be consideredKPIs for investmentApplication enhancementSustainabilityConsider adopting ROIC for assessment to investment opportunitiesStrengthen demonstration capacity world-wideStrengthen initiatives(refer to related pages)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 33 Based on the above market assumptions and business opportunities, we have established quantitative targets and company-wide initiatives as shown on this page. Specifically, we aim to maintain ROE of 15% or higher, net sales of 170BJPY and operating profit of 37.5BJPY. The company-wide initiatives are summarized in the lower part of this page. The key point is the expansion of Manufacturing capacity. The completion and operation of the Hanno Plant will be our priority at this point, and we expect that this will bring our annual SPE manufacturing capacity to 140B or more, which is a prerequisite for achieving this plan. In addition, we will also consider investments in a plant that will be the next step after the Hanno Plant.FY2023/3-FY2025/3 Mid-term Business PlanSegment Strategy (SPE)Sales Composition(per product)132.0BConsumables(CAGR︓Low 10%)Assembly Machines (CAGR︓10%)103.3BConsumables Develop and expand sales matching customer needs Strengthen sales of grinder consumablesAssembly Machines Ablation Dicer Market Entry Reinforced High Rigidity Grinder for SiC/GaN Reinforcement of grinders for wafersProber Expand applications by promoting more of “Respond to ALL needs” policy (HPC, packages, memory, power devices, etc)Prober(CAGR: Low SD%)FY2022/3FY2025/3 (plan)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 34 Here is a breakdown of our SPE sales composition plans and a summary of our strategy. In the Prober area, we will continue to promote our “Respond to ALL needs” policy. In addition to logic applications such as HPC, we will continue to develop products that meet customer requirements in package measurement, memory stack probers, power devices, and other areas. In Assembly machines, we will expand our business by entering the ablation dicer business, which we have not entered before, and continue to strengthen our grinder product line. In Consumables, we will continue to develop and sell dicing blade products that match customer needs and expand sales of consumables for grinders.FY2023/3-FY2025/3 Mid-term Business PlanSegment Strategy (Metrology)Sales Composition(per Application)29.9B38.0BSemis(CAGR︓30%+)Machinery(CAGR︓High SD%)Aircraft: (CAGR︓40%+)NEV: (CAGR︓70%)ICE: (CAGR︓- SD％)Semis Expand sales of high-precision, non-contact measuring machines Strengthen synergy w/ SPE SegmentMachinery and Aircraft Medical: Strengthening of non-contact measuring machines Aircraft: Specialized Measuring Machines for Engine Parts Automation SolutionsNEV Strengthen Battery in-house testing New measurement demand for EV gears, motors, etc. Automation SolutionsICE Obtain business opportunities related to industrial engines and hybrids Strengthen periodic maintenance biz Automation solutionsFY2022/3FY2025/3 (plan)May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 35 Here is a breakdown of our Metrology sales composition plans and a summary of our strategy. We anticipate internal combustion engines (ICE) related market likely to decline by several percent on average per year. However, since the customer base is large, we will continue to capture demand for industrial engines and hybrid engines, and aim to obtain business related to automation. We will continue to acquire high precision measurement and automation-related demand for new products such as EV motors and gears, in addition to our battery in-house testing business.FY2023/3-FY2025/3 Mid-term Business PlanFinance and Profit DistributionBasic approachMid-term Cash allocation planCF from operatingOperating Profit+ Depreciation－ Change in working capital－ Tax payment± OthersR&D CostCF from investing－ Purchases /sales of fixed assets± OthersCapexFree CFCF from financing－ Dividend payment－ Repurchase of treasury stock± Change in loans payableProfit distributionM&A etc.R&D expenditure Target R&D to Sales ratio : 10%Capex Usual︓25% or less of EBITDA Max︓ 50% of EBITDA(EBITDA = Operating profit + Depreciation)Profit distribution Target dividend payout ratio 40% Share buybacks in consideration of investment trends, etc.M&A etc. FCF Consideration not to be negativeMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 36 Here is a summary of our approach to finance and shareholder returns. In accordance with the basic approach on the left, we have set a medium-term cash allocation plan. The target for R&D expenses is 10% of net sales. Capital expenditures are estimated to be within 25% of the EBITDA (sum of operating profit and depreciation) but may be as high as 50% depending on the purpose and timing of the investment. Shareholder returns are targeted at a dividend payout ratio of 40%. Share repurchases will be determined based on comprehensive consideration of investment trends and other factors. M&A, etc. will be decided within the range where free cash flow does not become negative in principle.FY2023/3-FY2025/3 Mid-term Business PlanSustainability (FY2022/3 CSR activity summary)MaterialityFY2022/3 summaryCorrespondentSDGsProviding value thru products Promoted safe, high-quality products Eco-friendly productsEnvironment Eco-friendly factoryEnhance sustainable supply chainSocialCreating workplace among diversified employeesCreating rewarding workplaces Product LCA initiative SCIP initiative (EU WFD) PFOA/TSCA/RoHS3 Increase using low-carbon power (reduced 2kt/year CO2) Reduce water consumption and increase reuse of water Waste recycling rate: 98.5% Supplier CSR activities Communication w/supplier via Web system Expand employment of women based on the Women’s Activity Promotion Plan Career Support Activities Creating a Mental Care Mechanism for Employees Promoting the use of paid leave(100% of employees taking 5 days)GovernanceStrengthen the management base Enhance compliance system) Strengthening Compliance Strengthen information securitySCIP: Substances of Concern In articles as such or in complex objects (Products) by EUWFD︓Waste Framework DirectiveMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 37 Lastly, I would like to address sustainability. Our group has long been engaged in activities related to ESG, and here are the results of our activities for FY2022/3. Last year, we established the Sustainability Committee from the viewpoint of promoting a series of sustainability-related initiatives more strongly than ever before. The committee is chaired by Mr. Yoshida, Chairman and CEO, and the four members on the screen today are all members of the committee. The committee is committed to playing an active role in realizing a sustainable society and enhancing our corporate value.FY2023/3-FY2025/3 Mid-term Business PlanSustainabilityOur Sustainability mottoThe Tokyo Seimitsu Group is always committed to building a “future full of dreams”Respect for Human RightsParticipation in and contribution to Local CommunitiesEfforts to address Environmental IssuesHuman Resource DevelopmentEarning the Trust of SocietyBuilding and running Fair, transparent, and efficient Corporate Governance SystemMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 38 Our sustainability motto is “The Tokyo Seimitsu Group is always committed to building a “future full of dreams””. We are committed to playing an active role in the realization of a sustainable society through a variety of initiatives on key issues such as those shown here.38FY2023/3-FY2025/3 Mid-term Business PlanMateriality and TargetsFY2023/3 MaterialityMain InitiativesTargetsCorrespondentSDGsProducts, services and biz activities that solve Environmental issues Environmentally friendly products Prevention of global warming Waste reduction, resource reuse Compliance with EU/US laws 50% less of CO2 emission in CY2030 by FY2019/3 2% reduction per yearBuilding high-value-added products and supply chains that solve social issuesCreating a workplace where a diverse range of people can play an active role with healthy and rewarding mannerStrengthen management infrastructure, compliance, and risk management to support corporate activities Clean technology Quality improvement Remote support Supplier cooperative relationship BCP initiatives Release of web tool for suppliers, CSR guidelines Assessment and Improvement Activities Promotion of women’s activities Provide opportunities for proactive learning Health and Productivity Management Employees Ratio of female hires: 20%, Ratio of female employees: 10% (full-time employee basis) Strengthen compliance Strengthen information security Business continuity planning Management system for group companies Improvement of information asset value Improvement of business continuity probability Establishment of human rights policy Consideration of human rights due diligenceRespect for human rights Raise awareness of respect for human rightsMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 39 This page summarizes what we have set as materially substantial in our mid-term management plan, its initiatives, and targets to achieve these important goals. With regard to the environment at the top of the page, as disclosed on our sustainability website, we will carry out activities with the goal of reducing CO2 emissions by 50% by CY2030 compared to FY2019/3, among others. In addition, we will continue our activities such as supply chain-related initiatives, efforts to create a rewarding workplace, strengthening of compliance and risk management, and respect for human rights. This concludes my presentation. Thank you very much for your attention.Tokyo Seimitsu Co., Ltd.FY2022/3 Earnings and MTPAgenda Ⅰ. FY2022/3 Earnings, FY2023/3 ForecastⅡ. Mid-Term Business Plan for FY2023/3 –〜Q&A〜FY2025/3〜Q&A〜May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 40Sustainability Information:Investor Information:https://www.accretech.jp/english/sustainability/index.htmlhttps://ir.accretech.jp/en/index.htmlMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 41Supplementary DataMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 42Statements of IncomeFiscal YearQuarterMillion YenFY2019/3FY2020/3FY2021/3FY2022/3FY2021/3FY2022/31Q2Q3Q4Q1Q2Q3Q4QNet Sales101,52087,92797,105133,27721,07024,04121,59730,39528,93732,52631,98139,831Cost of goods sold60,43053,45260,19079,77212,86315,43313,50418,38917,48419,27319,82823,186Gross Profit on Sales41,09034,47436,91453,5048,2078,6088,09312,00511,45313,25312,15316,64520,86922,19221,35124,9545,0305,5025,0575,7605,4576,3205,8287,347Operating profit 20,22112,28215,56228,5503,1763,1053,0356,2455,9956,9326,3249,298Recurring Profit20,80512,36015,86729,3903,3453,0702,9366,5156,0196,9716,5779,82168810458419255177540235571,3541,7121,07499415439034194256-118153-293106205149108214-551,19867213511013-66272701720,44310,70516,14729,7463,3512,7762,9777,0416,0336,9716,57710,164Total Income tax and others 5,7193,5983,9788,2478865737121,8061,6641,7021,7803,09914,6657,15612,17521,4412,4702,2072,2645,2324,3525,2554,7767,057352.92171.89293.83525.3459.3052.9854.73127.55105.98128.42117.57173.65350.23170.72291.43520.30—–Selling, general and administrative expensesNon-operating incomeNon-operating expensesExtraordinary gainsExtraordinary lossesProfit before income taxes and minority interestsNet Profit attributable to Owners of the ParentNet Profit per Share（Yen)Net Profit per Share(diluted) (Yen)6169337734-43——May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) Segment Information Fiscal YearQuarterMillion YenFY2019/3FY2020/3FY2021/3FY2022/3FY2021/3FY2022/31Q2Q3Q4Q1Q2Q3Q4QOrdersBackoglSaeslOPOPMargniSPEMetr.TotalSPEMetr.TotalSPEMetr.TotalSPEMetr.TotalSPEMetr.Total65,33557,70993,181157,40712,90315,93228,68335,66233,85338,59646,66538,29233,57329,86623,87833,6675,7545,0226,4206,6817,8588,18410,0517,57398,90987,576117,060191,07418,65720,95535,10342,34441,71146,78156,71645,86527,67029,18250,619104,66626,65324,61038,18850,61961,67675,37597,334104,6669,1657,7826,30110,0517,8986,8556,7836,3018,0188,57311,35010,05136,83636,96556,920114,71734,55231,46544,97156,92069,69483,949108,684114,71769,11756,19871,745103,36015,43217,97515,10623,23122,79624,89724,70730,95932,40331,72825,35929,9175,6386,0666,4917,1636,1417,6297,2748,872101,52087,92797,105133,27721,07024,04121,59730,39528,93732,52631,98139,83113,1957,91513,56524,8932,8322,8502,5255,3585,3285,9675,3347,0254,3661,9963,65734425551088666696599120,22112,28215,56228,5503,1763,1053,0356,2455,9956,9326,3258,2641,0339,29819.1%14.1%18.9%24.1%18.4%15.9%16.7%23.1%23.4%24.0%21.6%26.7%21.7%13.8%7.9%12,2%6.1%4.2%7.9%12.4%10.9%12.7%13.6%11.7%19.9%14.0%16.0%21,4%15.1%12.9%14.1%20.5%20.7%21.3%19.8%23.3%May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 44(Million Yen)FY2019/3FY2020/3FY2021/3FY2022/3Balance SheetCash and cash equivalentsAccounts Receivable ※1CurrentAssetsInventoriesOthersTotalTotal Fixed AssetsTotal AssetsiLabilitiesCurrentOthersTotalAccounts Payable※2Total long-term liabilitiesTotal LiabilitiesTotal Net AssetsTotal Liabilities and Net AssetsTotal interest-bearing debtEquity Ratio(%)ROE(%)41,51836,14629,9952,434110,09447,478157,57326,32814,62040,9489,22050,169107,403157,57311,41567.3%14.4%34,64029,63330,1523,34597,77148,777146,54916,89512,12129,0177,85736,874109,674146,5499,64173.9%6.7%43,65730,94632,8864,025111,51650,039161,55623,06216,23339,2965,48244,778116,777161,5567,58171.4%10.9%49,03338,36740,2816,103133,78556,403190,18829,87625,76555,6413,56159,202130,986190,1885,49468.1%17.5%※1: Incl. Electronically recorded monetary claims ※2: Incl. Electronically recorded obligations-operating May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 45Expenses and Cash Flows(Million Yen)FY2019/3FY2020/3FY2021/3FY2022/3R&D expensesCapexDepreciation（excl. Amortization）Cash flows from operating activitiesCash flows from investing activitiesCash flows from financing activities Free cash flowsAdjustmentsCash and cash equivalents at the end of year7,46913,8722,65512,932-13,952-1,0205,443-22341,2908,2347,4773,4505,965-6,116-150-6,375-15934,6057,1935,9503,51622,062-5,19116,871-8,28242943,6248,1469,8163,57424,062-9,03615,026-10,35070649,006(Million Yen)FY2019/3FY2020/3FY2021/3FY2022/3May 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 46Sales per RegionSPE SegmentMetrology SegmentMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 4747Number of employeesMay 10th, 2022Copyright 2022 Tokyo Seimitsu Co., Ltd. (7729) 48