Q2/FY2014 (55th)
Results Briefing

August 29, 2014

(Tokyo Stock Exchange‐8068)

http://www.ryoyo.co.jp

1Overview

Date ofestablishment: February 27, 1961

Domesticnetwork: Sendai, Koriyama, Matsumoto,Takasaki, Omiya, Hachioji,
Yokohama, Nagoya, Kyoto, Osaka,
Fukuoka

Capital: 13.672 million yen

Represented by : Kenhachiro Ogawa– Chairman & CEO
Takayoshi Oouchi– President & COO

Overseas
network: Dalian, Shanghai, Shenzhen, Hong
Kong, Taipei, Bangkok, Kuala
Lumpur, Singapore, Silicon Valley

Number ofemployees: (As at July 31, 2014)
Consolidated: 524
Non-consolidated: 469*Whole group: 614

Domestic: Ryoyo Semicon, Ryoyo Security
subsidiaries
ServiceBusiness areas: ◇Sales of semiconductors/devices◇Sales of ICT products (HW/SW)◇Sales of embedded devices◇Various engineering support◇Various services

Sales by product (H1/FY2014)41%
ISO 9001 / 14001 / 27001 :All offices and subsidiaries in Japan(excluding Takasaki Satellite Office)59%
Semiconductors/Devices
ICT/Solution

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Agenda H1/FY2014 Business results

・・・・・・・ P4-10

 FY2014 Business plan・・・・・・・ P11-15 Medium-term business plan・・・・・・・ P16-22

 Summary・・・・・・・ P233

H1/FY2014 Business results*The FY2013 data has been adjusted based on the current classification for disclosure.

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Environments surrounding the company
 Domestic economy: Limited effects of the higher consumption tax toprivate consumption

 Underlying support by the economic measures andthe stable exchange rate
All in all, modest recovery will continue
 Electronics industry:
 Special demand following the end of support toWindows XP
 Strong capital investment continues, mainly in theindustry area

Demand will become higher than last year

5P/L (H1): Strong sales but slightly lowered profit(Unit: 100 million yen, %)FY2014FY2013(Actual)(Initial plan)(Actual)

Sales

440

515

540

+22.7%+4.8% (For details, refer to the following sections)

Gross profit

40.2

45.5

41.8

+3.9%

(8.2%) Higher than the previous year in terms of the amount

YoY

Achievement

Comments
Higher than both the previous year and the initial plan

along with increase in sales, but the lowered profit
rate due to the increasing rate of low-profitable orders

(%)

9.1%

8.8%

7.7%

SG&A

32.2

35.5

33.2

+3.0%

(6.5%)

8.0

10.0

8.6

+7.3%

(14.0%) Higher than the previous year along with increase in

Operating income

sales, but lower than the initial plan due to the lower
gross profit rate

1.8%

1.9%

1.6%

Non-operating income

1.7

1.5

2.2

+35.8%+49.4% Increased gain from investment securities

Ordinary income

9.7

11.5

10.8

+12.1%(5.8%)

2.2%

2.2%

2.0%

Extraordinary income

0.2

0.0

1.1 +610.5%

Income before income taxes

9.8

11.5

12.0

+21.8%+4.0%

Income taxes

3.3

4.5

4.5+36.0%(0.3%)

Quarterly net profit

6.5

7.0

7.5+14.6%

+6.8%

(%)

(%)

Reimbursement due to termination of― insurance (Q1), etc.

Higher than the initial plan

(%)

1.5%

1.4%

1.4%

EPS (Yen)

25.26

27.75

29.63

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Sales by segment: Higher than the previous year in all segments(Unit: 100 million yen, %)FY2013(Actual)

FY2014(Actual)

Semiconductors/Devices

440
270

540
321

+100+50+22.7%+18.5%

Communications

30

44+14+46.6% increase in LCD for communication devices

Digital consumer electronics
and other home electronics

4041+1+2.7% products for game machines, despite ups and downs

Vehicle installations

3219(13)(40.3%) commercial right

PC and peripherals

77

114+37+47.3% demand

Industrials and others

91

103+11+12.5% Remains stable, mainly products for FA and heavy electric170

219+50+29.3%

PC/Server/LAN

62

69+7+12.0% been launched since the middle of FY2013

I/O equipment

3233+1+3.3% by increase in printer-related products which compensated

By application

Total

By product

ICT/solution

DiffYoY

CommentsSome orders affected by production adjustment, but

Higher than the previous year, mainly due to increase inaccording to applications
Higher than the previous year due to transfer of theSignificant increase in products for PC due to the special

Early contribution by business for enterprises which has

Ended with the same level as the previous year, supported
lower sales of monitor-related products

Software/Embedded devices

76117+41

Significant increase in products for PC due to the special+54.2% demand*The FY2013 data has been adjusted based on the current classification for disclosure.

7Quarterly change in sales: Remains highAchieved higher sales than the same period of theprevious year, despite of the end of the special demand for
PC in Q2
(Unit: 100 million yen)

301
277

223

235

224

224

238

205

201

263

172
159
146

161

Semiconductors/Devices

147

125

Q1

Q2

Q3
FY2012

Q480

90

91

Q1

Q2

Q3
FY2013129118

Q4

Q1

102

ICT/ Solution

Q2
FY2014*The FY2013 data has been adjusted based on the current classification for disclosure.

8Segment information (sales by region)(Unit: 100 million yen)

540

Higher sales than the previous yearin both Japan and Asia

440

454

86

FY2013

FY2014

H1H1

Japan:
Significant increase in both semiconductors
and ICT due to the special demand for PC, aswell as continuously stable sales insemiconductors for industrials.

Asia (Singapore, Hong Kong, Shanghai):
Increase in semiconductors for gamemachines and TV, stable sales of LC forcommunication devices, and contribution ofthe launch of new projects.

Japan370

70



Asia

9

B/S: Change from FY2013 (as at January 31, 2014)(Unit: 100 million yen)

799

117

Notes andaccounts payable trade36

Other liabilities

Cash in hand

112
Notes andaccounts
receivable trade

Continue to maintain the strong
financial position

789

130

161

38302



Cash in hand and at banks / Other current
assets:Securities are expiring and being repaidAccounts receivable – trade / Accountpayable – trade:
Fluctuating along with sales

Equity ratio:
80.6%

294

Inventories

133
Other current
assents

636

631

Net assets

135
96

41

Fixed assets

Liabilities
and netassetsLiabilities
and netassetsAssetsJan 2014

Assets159

155

Jul 2014

10

FY2014 Business plan

*The FY2013 data has been adjusted based on the current classification for disclosure.

11FY2014 Business plan (P/L)
Revised gross profit and SG&A based on the update situation
No change to sales, operating income, ordinary income and net
profit from the initial plan
(Unit: 100 million yen)

FY2013
Total(Actual)

H1(Actual)

FY2014
H2(Diff)

YoY
Total(Plan)

Whole year

Sales

979

540

510

1,050

+7.3%

Gross profit

82.8

41.8

47.2

89.0

+7.5%

(%)

8.5%

7.7%

9.3%

8.5%

SG&A

66.3

33.2

33.8

67.0

+1.1%

Operating income

16.5

8.6

13.4

22.0

+33.2%

(%)

1.7%

1.6%

2.6%

2.1%

Non-operating income

4.3

2.2

0.8

3.0(29.5%)

Ordinary income

20.8

10.8

14.2

25.0

+20.3%

(%)

2.1%

2.0%

2.8%

2.4%

Extraordinary income

0.2

1.1

Income before income taxes

21.0

12.0

Income taxes

7.6

4.5

Net profit

13.4

7.5

7.5

15.0(%)

1.4%

1.4%

1.5%

1.4%

EPS (Yen)

52.17

29.63

31.71

59.46

+11.7%

12Semiconductors/Devices (sales by application)(Unit: 100 million yen)630

+4,000 million yen(Increase in products forcommunications and industrials)

590
120

Communications

7781

Digital consumer
electronics and other
home electronics

64

44

Vehicle installations

175

PC and peripherals

80

176

192

210

FY2013

FY2014(Actual)(Plan)

Communications:
Slightly weak sales in H1 due to production
adjustment in some orders, but new ordersin H2 expectedVehicle installations:
Weakening due to transfer of the commercialrightPC and peripherals:
H1 sales greatly contributed by the special
demand for PC, the rebound effect of whichin H2 is reflected in the planIndustrials and others:Continuing to be stable, mainly in productsfor FA and heavy electricIndustrials and others*The FY2013 data has been adjusted based on the current classification for disclosure.

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ICT/Solution (sales by product)(Unit: 100 million yen)420

+3,100 million yen(Driven by business forenterprises)

389

168

PC/Server/LAN

141

67

67

181

185

FY2013

FY2014(Actual)(Plan)

I/O equipment

PC/Server/LAN:In business for enterprises, a focused area
since FY2013, targeting contribution for thewhole year as well as a further growth in sales

Software/Embedded devices:
The special demand for software is stronger
than expected, despite its downward reaction.

Sof tware/Embeddeddevices*The FY2013 data has been adjusted based on the current classification for disclosure.

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Return to shareholders

 Return to shareholders:
Dividend per share
InterimYear-end

Total

Payoutratio(Estimate)-

15 yen30 yen50.5%

Not yetdetermined(Actual)

15 yen----(Actual)

15 yen15 yen30 yen57.5%

600K
shares

FY2014FY2013Sharerepurchase Dividend policy:
Allocation of profit earning through our business activity is one of our mostimportant matters. While we seek to maintain the stable management base andexpand business, we also seek a return for shareholders based on our financial
condition and business performance.
We will maintain the current dividend level (30 yen per share per year) for a few
years ahead, which will be reviewed in accordance with the profit level on a
medium-term basis.

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Medium-term business plan16

Outline of medium-term business plan

Become the solution partner creating an impression
to the “all-connected smart society”
Basicstrategy I

Reinforce and expand the core businesses=> Increased salesBasicstrategy IIDevelop high-value added businesses=> Higher profitability

Basicstrategy III

Accelerate the global strategy=> Expanded overseas businesses

Set the way to achieve sustainable growth throughimplementation of the medium-term business plan17

Progress in each basic strategy
Basic strategy I: Reinforce and expand the core businesses The level of demand is being raised in both semiconductors and ICT.
 Committed to steady marketing activities (“seed-planting”) for new products suchas Tactus (touch panel), Philips (LCD) and Frontier Silicon (semiconductor)
 H2 sales is significantly higher than the previous year. Take actions to ensure thecontribution to future sales.

Basic strategy II: Develop high-value added businesses Launched the new approach integrating semiconductors and ICT, but its impact toprofitability is still limited due to the smaller order scale Accumulate experience and know-how to create the synergy and value added ofcore businesses.

Basic strategy III: Accelerate the global strategy
 New businesses related smart phones and home electronics which targets local
manufacturers in China have been steadily expanded.

 Considering the launch of ICT business outside Japan, including business-tie withlocal partners.
 Reviewing the global logistics system to improve the efficiency of operation
 The self-business is soundly building its base. Accelerate actions in H2.

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Conventional business model<Electronics manufacturers, etc.>

Semiconductors/Devices Business

ICT Business

Design / Purchasing
function

IT function<Corporate users, SIer, etc.>

19Basic strategy I: Reinforce and expand the core businesses<Electronics manufacturers, etc.>
Marketing / Planning
function
Semiconductors/半導体/デバイス
DevicesBusiness
ビジネス

ICT Business

Design / Purchasing
function

IT function

Marketing / Planning
function<Corporate users, SIer, etc.>20Basic strategy II: Develop high-value added businesses<Electronics manufacturers, etc.>
Marketing / Planning
function
Semiconductors/
Devices Business

Design / Purchasing
function

Integrated business(New approach)Play a role as “coordinator” who solves
problems and creates business
opportunities for customers

ICT BusinessIT function

Marketing / Planning
function<Corporate users, SIer, etc.>21Basic strategy III: Accelerate the global strategy

JapanCollaboration
Asia- Reinforce self-businesses -(Deepen local customers)(Explore local products)(Promote ICT business)(Expand contract business)

Take the growing
power of emerging
markets

USA- Research state-of-art
technology -- Collect industry information - Explore new products (Resumed operation inNovember 2013)22

Summary<H1/FY2014 Business results>
Growth in both semiconductors and ICT with higher sales than theprevious year and the initial plan
Profit is higher than the previous year but slightly lower than theinitial plan

<FY2014 Business plan>
Overall sales is currently doing well, but profitability needs to be
improved
No change from the initial plan (Sales: 105,000 million yen,
Operating income: 2,200 million yen)

<Medium-term business plan>
Promote the three basic strategies to set the way to achievesustainable growth, especially “Develop high-value addedbusinesses”
23About this report Notice
The business forecast and other forecasts contained in thisreport are based on certain assumptions, which we deemed
reasonable at the time of release, and the actual results may
differ due to the economic environment or various otherfactors.
 Contact
Saotome / Uno
Corporate Planning Dept.
Ryoyo Electro Corporation
Tel: +81-3-3546-5088
URL: http://www.ryoyo.co.jp
e-mail: irmanager@ryoyo.co.jp

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