TOYO Corporation

TOYO CorporationMedium-term Management Plan

Masaru GomiPresident & CEO

Oct 2018 – Sep 2021

TOYO Corporation

Corporate philosophyBusiness characteristics of TOYO CorporationBusiness performance trendRecent issuesOverview of the medium-term management planManagement policy

Focusing on the automotive industryFurther expanding overseas operations and establishing a new business model

SummarySummary of the medium-term management planManagement target figuresCapital policy

Reference informationGlossary

2

Table of contents

The words marked by “*” are explained in the glossary.

TOYO Corporation 3

Corporate philosophy

Creating the future with Measurement TechnologiesAs a leading company in measurement technologies, we contribute to creating a flourishing society, as well as an earth- and human-friendly environment.

Technology InterfaceAccelerate and support technology innovation by providing the most advanced measurement solutionsto the global industrial arena.

Corporate Value EnhancementEnsure the success and well-being of employees and stakeholders by continuously creatingmeasurement systems, products and services.

Action guidelinesBe a professional: Take on tasks with integrity and maintain a high degree of dignity and capabilities.Be an innovator: Venture into new businesses and technologies with flexible mindset.

TOYO Corporation 4

Business characteristics of TOYO Corporation

Business Model-Specialization in R&D market-Ample after-sales support-Added-value through customization

Business description: Bringing cutting-edge measurement solutionsfrom overseas to the R&D market in Japan.

Main R&D markets: Automotive, Information and Communication, Physical Property and Energy, Ocean Measurements, etc.

Date of establishment: September 4, 1953Capital: JPY 4,158 millionNumber of employees: 521 (consolidated) as of September 30, 2018Stock exchange listing: Tokyo Stock Exchange 1st Division

Niche market

High profit margin

Logic Analyzer by Biomation(Released in 1976)

Packet Capture System by TOYO Corporation(Released in 2015)

TOYO Corporation

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

15,000

16,000

17,000

18,000

19,000

20,000

21,000

22,000

23,000

24,000

25,000

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Revenue Operating profit SGA

5

Million yen

Business performance trend

Investment period to boost Revenue

Due to large supplementary budget for earthquake disaster reconstruction etc.

Million yen

Reve

nue

Operating profit, S

GA

TOYO Corporation 6

Recent challenges

Business expansion through investments in growth markets

Establishment of a new business model which is immune to

changes in business environment

・Part of R&D market has been moving out of Japan. ・Business with public organizations is heavily affected by the government policy (supplementary budget etc).

Risk of management policy change by overseas partners:・Loss of distributorship due to M&A or establishment of Japanese subsidiaries・Loss of sales opportunities through transition from exclusive to non-exclusive distribution

Stagnant domestic market

Import-reliant business model

TOYO Corporation 7

Overview of the medium-term management plan

Medium-termmanagement plan

Consolidated Revenue

26 billion yenConsolidated

Operating profit

2 billion yen

Turning the investmentsin the past 3 years into profit

Major investments in the past 3 years

2017 Established “One Technologies Company.”Set up “Technical Research Laboratory.” Implemented a new Enterprise Resource Planning System.

2016 Established “Technical Research Center.”Set up “Security & Lab Company.”

2015 Established “TOYOTech LLC” in California, USA.Started developing the fast packet* capture system “SYNESIS” (acquired PolyVirtual in the USA)

FY ending Sep 2021

ROE

5.0%

TOYO Corporation

Management strategy 1Focusing on the automotive industry

8

TOYO Corporation

Network & Security

9

Focusing on the technology areas drawing the largest R&D investment

TOYO’s operations in the automotive industry

Electrification

Product line expansion✔ Explore products with a focus on important areas through the domestic and overseas networks. ✔ Launch self-developed solutions into the market.

Sales force reinforcement ✔ Concentrate on 4 key areas to strengthen the sales force addressing them. ✔ Implement interdivisional collaboration to propose optimal solutions comprising our technological prowess.

Connected Cars

Autonomous Driving

Technologies

TOYO Corporation 10

Electrification Connected Cars Network & Security Autonomous Driving Technologies

Secondary battery evaluation

・Higher battery performance for a longer cruising range・Development and evaluation of ultra fast charge system

V2X* evaluation

・Improvement of vehicle communication quality・Evaluation of malfunction of communication equipment under electromagnetic stress environment・Simulation of traffic scenario

In-vehicle network* evaluation

・Securing real-time and fail-safe communication・Security measures aligned with the cloud

Vehicle behavior evaluation

・Evaluation of vehicle behavior・Evaluation of various sensors such as cameras

Quality evaluation of battery chargers

Network evaluation, Security checkEvaluation of car antenna

”Measurement” technologies for the trending technology areasB

ackg

rou

nd

Ou

r S

olu

tion

Sensors for autonomous driving (LIDAR*)

TOYO Corporation 11

Example of self-developed solutions

DMTS is an ideal solution which performs laboratory tests in almost the same environment as actual driving tests.

✔ To be released early in 2019✔ We will continue investing in the DMTS development

to help boost the sales in the automotive industry.

Issues for ADAS* and autonomous driving vehicles development:・complicated development work requires more test time and personnel・Actual driving tests on test courses and public roads are mandatory.

DMTS is a registered trademark of TOYO Corporation.

Driving & Motion Test SystemDMTSⓇ

TOYO Corporation

Management strategy 2Expanding overseas operations and establishing a new business model

12

TOYO Corporation 13

Overseas businesses policy

Expanding business in large markets“China: R&D investments are increasing.”“USA: Research on autonomous driving is active.”

Overseas revenue +1 billion yen

(compared to FY ending Sep 2018)

✔ Expansion of sales networkNetwork of distributors is expanding around Chinese and US subsidiaries.

✔ Overseas distribution of self-developed productsProducts and services are being planned and developed with a view to sales not only in Japan but also overseas.

✔ More products and services to be offered overseasWe are seeking to secure overseas distribution rights for the products we now distribute only in Japan.

0

500

1,000

1,500

2,000

2,500

FY2017 FY2018 FY2021

Million yen

Revenue of overseas businesses

TOYO Corporation

Overseas distributorship

14

We have secured a distribution right in the USA for a vehicle running performance evaluation system(distribution started in October 2018)

Current status of overseas businesses and future expansion

SYNESIS and LT1000 have been developed by One Technologies Company of TOYO Corporation.

LT1000

SYNESIS

・Impurity ions measurement system ”LT1000”(to be released early in 2019)Distribution areas:USA, Germany, China, Korea, Taiwan

・Fast packet capture system “SYNESIS”Distribution areas:USA, UK, Germany, Israel, Australia, China, HK, Korea, Taiwan, Singapore, Indonesia

Self-developed products

We are aiming to expand into other new distribution areas.

TOYO Corporation

Summary

15

TOYO Corporation 16

Summary of medium-term management plan

Launch new businesses into profit

Revenue by area:- Domestic Revenue

+1.5 billion yen- Overseas Revenue

+1 billion yen

Revenue by segment:- Automotive

+1.5 billion yen- Existing + New

+1 billion yen

Expanding sales

Revenue in FY ending Sep 2021 (compared to FY 2018)✔ Focusing on automotive industry

・Concentrate products and resources on the trend technology areas.・Provide original and unique solutions combining the results of R&D efforts.

✔ Expanding overseas operations・Expand the distribution networks and distribution rights.・Reinforce the sales force for the R&D markets in China and North America for EV and autonomous driving vehicles.

✔ New business model・Plan and develop our own products.・Make a development investment of about 2 billion over the next 3 years.

TOYO Corporation

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

FY2015 FY2016 FY2017 FY2018 FY2021

Revenue Operating profit

17

Management target figures

Unit: Million Yen

✔ Consolidated revenue 26 billion yen✔ Consolidated operating profit 2 billion yen✔ ROE 5.0%

Consolidated revenue and operating profit

Million yen Million yen

Reve

nue

Operating profit

Consolidated FY2018 FY2021 Comparison

Revenue 23,590 26,000 110.2%Operating profit 1,427 2,000 140.1%

Return on equity 4.1% 5.0%

TOYO Corporation

Dividend payout ratio to remain 60%While maintaining the financial strength and considering the business environment, TOYO will actively distribute dividends that are equivalent to at least about 60% (payout ratio) of the consolidated net profit.

18

Capital policyDividend per share, past record

¥0¥5

¥10¥15¥20¥25¥30¥35¥40¥45¥50

FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018Acquisition of treasury sharesTOYO will consider purchasing treasury shares in order to improve the capital efficiency, as appropriate.

The repurchased treasury shares will be used for flexible capital policy and shareholder value improvement (e.g. M&A) corresponding to changes in the business environment.

Treasury shares acquisition recordNumber of Amount ofshares repurchase

FY 2009 1,688,000 1,999 FY 2013 1,632,000 1,999FY 2015 1,695,000 1,800FY 2016 1,104,000 1,173

(million yen)

TOYO Corporation 19

Reference

Automotive measurement portal site https://www.toyo.co.jp/solution/car/

Security & Lab Company https://www.toyo.co.jp/slc/

One Technologies Company https://www.toyo.co.jp/onetech/

Packet capture system “SYNESIS” https://www.synesis.tech/

TOYO Corporation China https://www.toyochina.com.cn/

TOYOTech LLC https://www.toyotechus.com/

TOYO Corporation 20

Glossary

ADAS：Advanced Driver Assistant Systems

ADAS assists the drivers’ operations and improves safety and comfort.

(e.g. automatic brakes using sensors and cameras, cruise control)

V2X: Vehicle to Everything

This includes everything which is connected with a vehicle by communication, such as vehicle to vehicle,

vehicle to road, and vehicle to Internet.

LIDAR：Light Detection and Ranging

Laser light is used to detect obstacles and pedestrians and to measure their distance from the vehicle.

In-vehicle network

This is a network among the in-vehicle instruments for electronic control.

Packets

This is a unit of data divided for communication. Information such as the destination

and source of communication is added to packets.

Chassis dynamo

This is a large system that measures fuel efficiency and horsepower of a vehicle indoors

without the need of actually running a vehicle on the road.

TOYO Corporation

The data disclosed in this material and the forecast concerning the future are based onjudgment and available information as of the publication date of this material and maychange for various reasons such as changes in economic situation and market trends.Therefore, this document does not guarantee any achievement of the stated targets,forecasts, or future business results.