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Basic Management Policy

We have always strived to remain constantly at the cutting edge ever since the Yokowo Group was first established. Drawing on our core competencies in the rapidly evolving communications and electronic component industry, as a specialist in antennas, fine connectors, microwaves and advanced devices, we have continued to harness our uniquely advanced technical capabilities to offer revolutionary products in each of our core markets, in the automotive, semiconductor testing systems, mobile device and advanced medical device sectors.
We have set out the following Basic Management Policy in an effort to further improve the Group's corporate value.

<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, ceramic 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 take our business to new levels by pursuing innovation in three key areas: enhancing business and product structures (product innovation), enhancing management systems (process innovation) and enhancing human resources (personnel innovation).

Medium-term Management Targets

  • Business model reforms to achieve high quality, full-scale growth and the Minimum 8

    (The Minimum 8: Secure a sales growth rate, a minimum operating profit margin, and a return on equity of 8%)

Medium-term Management Strategy

The paradigm shift in the world economy continues, and shows no signs of slowing down. Likewise, we are seeing the ongoing advancement of commoditization and the transition to borderless markets. Commoditization refers to reduction or loss of first movers’ advantage following the rapid diffusion of new technologies and products. The transition to borderless markets indicates the integration of technologies and products from different areas to create new markets.
In the midst of these circumstances, we are working to implement the three forms of innovation specified in the Basic Management Policy in an effort to continually enhance our corporate value. These are innovation in products, innovation in processes, and innovation in personnel. For the fiscal year under review (ended March 31, 2017), consolidated net sales reached a record high for the third consecutive term, with operating income showing a year-on-year significantly increase. As a result, we have got one step closer to the target of securing a minimum operating profit margin of 8%, which is one of our Medium-Term Management Targets.
We believe that to build a structure capable of constantly achieving the Minimum 8, which is a basic target under the Medium-Term Business Plan, we must carry out a reform of the profit structure for the entire company. This reform will also involve business model reforms. Therefore, we will reconsider the structures of our mainstay businesses from various viewpoints, such as the creation of a highly profitable mix of businesses, drastic improvement in fixed cost efficiency, a global business management system, and creating extra value that is even more sophisticated, while consistently commercializing and mass producing new projects and new products. These projects and products represent the fruits of our labor in product innovation driven to realize a much further level of growth potential and profitability.
We currently follow a Medium-Term Management Plan that started in the fiscal year ended March 2016 and concludes in the fiscal year ending March 2020. The following is an overview of the main parts of the plan.

<Outline of Medium-term Management Plan>

1) Business model reforms aimed at establishing a firm profit structure
(i) Creation of a highly profitable mix of businesses
·Shift the focus of the vehicle communication equipment segment to higher value-added products
·Business model reforms, including full-scale expansion of the circuit testing connector and personal communication equipment segments into new areas
(ii) Drastic improvement in fixed cost efficiency
·Enhanced readiness for swift 24/7 response to customers around the world
·Construction of new tangible production lines that massively enhance investment efficiency

2) Deepening of business model reforms for high quality, full-scale growth
(i) Construction of a global business management system
·Establishment of management systems specific to major regions around the world and the assignment of management personnel
·Implementation of the strategic development of locally employed core human resources
(ii) Sophistication in the creation of extra value for business
·Acceleration of the cycle of development and introduction of strategic products
·Defining services that offer solutions to issues faced by customers’ shop floors, and using these services as a means for improving customer satisfaction and creating additional value
(iii) Structural reforms for pushing ahead with product innovation and new business development
·Establishment of a framework for the integrated operation of the technical sections in business divisions, the Technical Headquarters, and the research and development functions in an effort to quickly launch new strategic products
·Implementation of open innovations with Japanese and overseas research and development institutions
(iv) Establishment of a governance system appropriate for partners of customers with cutting-edge technologies
·Acquisition of certification for ISO 27001, a set of international standards for information security management, in Japan and then all other locations
·Construction of an environment for measurement and inspection, and the accumulation of human resources for providing solutions for customers with cutting-edge technologies

In accordance with the Medium-Term Management Plan mentioned above, we, the Yokowo Group, fully commit ourselves to achieving the medium-term management targets.

Issues to be Addressed

As mentioned previously, sales and operating profit increased in the consolidated fiscal year ended March 2017. However, we are yet unachieved a minimum operating profit margin of 8%, which is one of our Medium-Term Management Targets, and we still realize improving profitability is the most important issue. In the fiscal year ending March 2018, which is the third fiscal year of the aforementioned Medium-Term Management Plan, we will focus our efforts on the following areas.

(i) Vehicle communication equipment segment
Rebuilding the profit structure by enhancing cost competitiveness through measures such as transferring more processes from the Chinese plant to the Vietnamese plant, promoting the outsourcing of certain products depending on factors such as the added value and the size of the order, and replacing new production lines that offer a greatly improved investment efficiency.
(ii) Circuit testing connector segment
Continued improvement of sales and profitability through the replacing and enlarging a new production line with greatly improved investment efficiency, the outsourcing of the design and production of products with relatively low added value, and the full-scale entry into the semiconductor front-end testing market.
(iii) Personal communication equipment segment
Fine connector business: Sales and income expansion by entering new markets and starting new business deals.
Medical device business: Establishing a profitable business structure by ensuring launch of mass production of strategic products, considering and constructing overseas production systems, and implementing other measures.
(iv) New business domains
LTCC (Low temperature co-fired ceramics) business: Corporate profit contribution by ensuring launch of mass production of packaged substrates for LEDs.

In addition, we are aware of the need to fulfill our corporate social responsibility (CSR) at a higher level as a globally operating firm. We will therefore continue to take comprehensive CSR actions that address a wide range of issues, including the environment, compliance, corporate governance, the protection of human rights, and the protection of information assets.

May 12, 2017
President   Takayuki Tokuma