Basic Management Policy

1. We are dedicated to quality and aim to establish Yokowo as a quality brand by offering the highest quality and eliminating environmentally harmful substances.
2. As a technology-based enterprise, we aim to continually upgrade and refine our antenna, microwave, surface modification material and micro precision processing technologies and actively introduce new technologies to enable us to offer products with improved added value and provide customers with the wide-ranging product capabilities and applied technologies they need.
3. We aim to accelerate taking our business to new levels by pursuing innovation strongly in three key areas: product innovation (to enhance business and product structures), process innovation (to enhance business processes and systems) and personnel innovation (to enhance human resources), and by promoting management innovation (to enhance management and business operation) with a view to future growth in addition.
4. We aim to establish a business framework that is able to respond to the global paradigm shift, the severe business environment and rapid changes in the competitive environment by creating a multi-layered business structure in industry segments, customers, technologies and supply chains.

Medium-term Management Targets

The Yokowo Group has formulated a new medium-term management plan (running from the fiscal year ending March 2024 to the fiscal year ending March 2026), and set out the following indicators as basic medium-term management targets.

Business model reforms to achieve high quality, full-scale growth and the Minimum 10 Minimum 10：Secure a sales growth rate, an operating profit margin, a return on invested capital, and a return on equity of 10% or above.

Medium-term Management Strategy

In the fiscal year under review (ended March 31, 2023), the Yokowo Group worked to pursue innovation strongly in four key areas (product/process/personnel/management) as set out in the Basic Management Policy, to sustainably enhance the Group's corporate value and making an even greater social contribution.
The Group's target markets, namely vehicles, semiconductor testing systems, mobile communication terminals and advanced medical devices, are growing. They are expected to expand over the medium to long term through the development and spread of 5G, automatic driving and other technologies and For securing and solidifying a more advantageous position in these major markets, the Group will carry out intensive measures for evolution management and multi-layered management in the Basic Management Policy to seek to attain stable Group-wide growth and a robust, highly profitable structure through business model changes.

Based on this think, we have prepared a medium-term management plan. Its priority measures are as follows.

Priority measures in the new medium-term management plan

1. Evolution to Multi-layered Management 2.0

   1. Switch to capital efficiency-oriented management with the setting of new medium-term management targets – The Minimum 10
   2. Promotion of business portfolio optimization through the introduction and operation of an in-house company system
   3. Promotion of business development based on new commercialization themes under the Incubation Center
   4. Establishment and operation of a human resource development center as the keystone of human capital-oriented management

2. Developing process innovation by incubation

   1. Incubation in system business, including MaaS and IoT
   2. Incubation in advanced device
   3. Incubation in circuit testing connector
   4. Incubation in medical device

3. The advance of process innovation

   1. Promotion of digital transformation (DX) based on an IT grand design
   2. Ongoing implementation of engineering chain management (ECM) reforms
   3. Development of new next-generation 5S production lines utilizing AI and IoT
   4. Supply chain structural reforms
   5. Ecosystem development and promotion of alliances

4. The advance of personal innovation

   1. Solidification of the job-type personnel system
   2. Proactive acquisition of strategic human resources
   3. Human resource development and recurrent training
   4. Incorporation of the training of junior staff and collaboration with other divisions into the evaluation system and development of a cafeteria-style fringe benefits system

5. The advance of management innovation

   1. Implementing capital cost-oriented management
   2. Driving business operations that are directly linked to the needs of our customers
   3. Strengthening the risk management structure

The Group will carry out the priority measures mentioned above with the aim of consistently fulfilling its medium-term management targets, or the Minimum 10, within the period of the medium-term management plan.

Issues to be Addressed

The global economy is in the process of recovering from the COVID-19 pandemic that swept the world, but some areas are still experiencing lingering effects such as stagnant supply and procurement difficulties, and the business environment in which the Company operates is also highly uncertain, with energy prices remaining high, semiconductor shortages, and worsening economic conditions due to rapid inflation. In the fiscal year ending March 31, 2024, the Company will face more challenging business operations than in recent years. Under these conditions, the Yokowo Group will focus its efforts on the following points.

1. Vehicle communication equipment segment:
   Rebuild the earnings structure

   -Regard major changes in the business and market environment (rapid growth of the Indian market, CASE, rapid emergence of electric vehicles, reductions to CO2 emissions, etc.) as opportunities, and transition to a business generating stable earnings through comprehensive and thorough reform of all factors from the cost of products to the business structure

2. Circuit testing connector segment:
   Evolve into a solution provider business

   -Further expand and evolve into a turnkey business in the area of semiconductor front-end testing, fundamentally strengthen the production systems in anticipation of rebounding demand in the semiconductor testing market, and enhance the BCP structure

3. Personal communications equipment segment

   Fine connector business:
   -Build up core competence to establish a competitive advantage, and create new customer value by leveraging Yokowo's unique qualities to evolve into a connector solution provider
   Medical device business:
   - Switch to a global quality system that spans the entire product lifecycle, and achieve a dramatic business expansion in the advanced medical field by developing into a planned product development supplier / development-oriented OEM supplier, and by building a venture ecosystem

4. Incubation Center

   -Make efforts to create new businesses and innovate business models, targeting MaaS, IoT and other new growth markets, as well as the optical communication market for higher-speed and larger-capacity communication

As long-term measures beyond the period of the new medium-term management plan, the Group will take action described below.

Basic research

With a focus on the MP Center, a new technology building completed in March 2023 using funds raised from a capital increase, we will further enhance micro precision processing technology and microwave (high frequency) technology, the core technologies of the Yokowo Group, and drive basic research that will lay the foundations for long-term growth.

DX（Digital Transformation）

By improving productivity and efficiency at each site for development, procurement, production and marketing, we will promptly provide value to customers. Moreover, we aim to continue to improve the speed of management decision-making and our responsiveness to change by reinforcing real-time cooperation between these sites and the headquarters.

SDGs

We will address the three material issues (materiality) set in 2020, namely the environment, local communities and diversity and inclusion, aiming to achieve the KPIs set to correspond with individual measures.