Ryosan Company, Limited

FY2014 Results Meeting
Fiscal year ended March 31, 2015

May 20, 2015
Naoto Mimatsu,President
An Electronics Systems Coordinator

1Results for FY2014
9th Medium-Term Management Plan (Revision)
FY2015 Business PlanNoticeBusiness forecasts and all statement related to the future contained in this presentation
are based on information currently possessed by the Company and on certain
assumptions which we judge to be rational. Actual business performance may differ
greatly depending on a variety of factors. The following is a list of major factors:・Economic conditions in key markets (Japan and the rest of Asia), rapid changes
in consumption trends and supply-demand balance for products
・Sharp fluctuations in the dollar-yen exchange rate
・Substantial fluctuation in prices in capital markets

An Electronics Systems Coordinator2Overview of Consolidated Results for FY2014◆ Operating income exceeded the amount of the previous fiscal year and the previous plan
made the operating income to net sales improved up to 2.5%
(Unit: 100 millions of yen)
FY2013

FY2014

Results

Net sales

Of
total

2,383

ResultsOf
total

2,335% Chg.
YoY

Previousplan(2.0)%

2,290Of
total

Comparison
with previous
plan+2.0%

Gross margin

186

7.8%

195

8.4%

+4.9%

187

8.2%

+4.4%

SG & A expenses

134

5.6%

135

5.8%

+1.0%

133

5.8%

+2.2%

Operating income

51

2.2%

59

2.5%

+15.2%

54

2.4%

+9.7%

Ordinary income

50

2.1%

54

2.3%

+8.3%

53

2.3%

+3.2%

Net income

32

1.4%

32

1.4%

(0.7)%

34

1.5%(5.9)%(0.1)%

108.06

Earnings per share (yen)101.86101.80(5.8)%

Domestic sales

1,246

52%

1,258

54%

+1.0%

1,240

54%

+1.5%

Overseas sales

1,13748%

1,076

46%

(5.3)%

1,05046%+2.5%* The previous plan was disclosed on October 29, 2014.
An Electronics Systems Coordinator

3Overview of Results for FY2014 by Business Segment◆ Operating income increased in all the business segment even though net sales decreased
from the previous year in Semiconductors segment(Unit: 100 millions of yen)
FY2013Results
Semiconductors

Electronic
Components

Electronic
Equipment

Net sales

1,615Operatingincome32.0

Net sales

593

Operatingincome14.1

Net sales

174

Operatingincome7.0

OftotalResults

Of
total

1,512
2.0%34.8

2.3%

629
2.4%

16.1

2.6%

193
4.1%

10.5

(1.8)

(2.2)

Net sales

2,383

2,335

Operatingincome51.4

Adjustments
Total

FY2014

2.2%

59.2

5.4%

% Chg.
YoY

Previousplan(6.4)%

1,495

+8.7%

33.0

+5.9%

610

+14.4%

15.5+10.8%

185+48.4%

8.0

Of
total

Comparison
with previous
plan

+1.2%
2.2%

+5.5%
+3.1%

2.5%

+4.3%
+4.8%

4.3%

+31.6%

(2.5)

2.5%

(2.0)%

2,290+15.2%

54.0

+2.0%
2.4%

+9.7%

* With the transfer of the heat sink production business, the business is split into three segments: Semiconductors, Electronic Components and Electronic Equipment.

An Electronics Systems Coordinator

4Percentage of Net Sales by Product◆ Memories shrank while electromechanical components expanded with no other significant
changes in composition

FY2013

FY2014

Systemequipment
6%

Systems
equipment
6%

Facilities
equipment
1%
Memories
11%

Electromechanic
al components
18%Power supplies
2%
Display devices
5%

Discretesemiconductors
16%

Memories
8%

Facilities
equipment
2%Electromechanicalcomponents
20%

System LSIs
41%

An Electronics Systems Coordinator

System LSIs
42%

Power supplies
2%
Display devices
5%

Discretesemiconductors
15%5Percentage of Net Sales by Field◆ Car electronics field expanded

FY2013

FY2014

Other6%Other
6%Industrial
equipment
12%

Digital consumer
16%

Industrial
equipment
14%
Car electronics
37%

Information andcommunications
29%

An Electronics Systems Coordinator

Digital consumer
16%

Car electronics
40%

Information andcommunications
24%

6

Consolidated Balance Sheet◆ No significant change in structure(Unit: 100 millions of yen)

End of Mar.
2014

Currentassets
Fixed assets
Total assets
Liabilities

Net assets

End of Mar.
2015

Difference

1,489

1,492+3

203195(7)1,692

1,688(3)505470(35)1,187

1,218+31

Total liabilities
and net assets

1,692

1,688(3)Net assets tototal assets

70.2%

72.2%

+2.0

An Electronics Systems Coordinator

Main factors

・Cash and deposits+59

・Trade notes and accounts receivable(60)

・Trade accounts payable(27)

・Short-term loans in foreign currency(19)

・Net income+32

・Foreign currency translation
adjustments+27

・Cash dividends paid

(20)

・Purchase of treasury stock(13)7Consolidated Statement of Cash Flow
◆ Free cash flow increased due to a decrease in notes and accounts receivable-trade, etc.
(Unit: 100 millions of yen)

FY2013

FY2014

Difference

Cash flows from operating
activities

15

Cash flows from investing
activities

(4)

9+14

Free cash flow

10126+116

116+101

Cash flows from financing
activities

(22)

(75)

(52)

Balance of cash and cash
equivalents

499

559+59An Electronics Systems Coordinator

Main factors

・Income before income taxes
・Decrease in notes and accounts
receivable-trade・Decrease in notes and accounts
payable-trade+54+86(39)

・Proceeds from transfer ofbusiness+12・Short-term loans payable
・Cash dividends paid
・Purchase of treasury stock

(40)
(20)
(13)

8

Results for FY2014
9th Medium-Term Management Plan (Revision)
FY2015 Business Plan

An Electronics Systems Coordinator

9

Ryosan Company, Limited
9th Medium-Term Management Plan (Revision)(FY2014 - FY2017)

An Electronics Systems Coordinator10Management Environment and Issues to be Addressed◆ Management Environment (Electronics Industry)・ Expansion of horizontal specialization alliances & reduction of entry barriers
・ Slow growth of Japanese market & growing number of Japanese
corporations shifting production overseas/engaging in overseas procurement
・ Diversifying customer needs (from individual components to modules andOEM/ODM)◆ Issues to be Addressed・ Reconstructing our business portfolio
・ Expanding our corporate activities on a global scale
・ Revising our profit/financial structure

An Electronics Systems Coordinator11Basic Stance

Basic stance of the 9th Medium-Term Management Plan

“Innovation” and“growth”
Pursuing a business model shift which responds to changes in our business structureand sustainable independent growth
Universal Management Policy
Pursuing management essence, advancing management innovation, and yielding
management results are the keys to conducting open and transparent corporate
management and business activities with abundant creativity

An Electronics Systems Coordinator

12Concrete Initiatives

Addition

1. Ideal state for Ryosan

Realizing electronics system coordination
・ Commercialization of system solution business・ Global distributor
2. Description ofinitiatives
Reestablishment ofgrowth pathCreating new business models(Strengthening system solution capability)

Further promotion of multi-vendor support(Expanding new supplier and product in existing business)

Strengthening global support to expand overseas business(Aiming at being global distributor)

Improvement ofcapital efficiency

Projectbusiness
Expandingexisting
business

Proactive investment toward growth
Acquiring treasury stock

An Electronics Systems Coordinator

13

Strengthening System Solution Capabilities to Create New Business Models

Projectbusiness

Revision

Customer needs

Systems Technological Capability (Realization)

Embedded Systems Capability (Coordination)

・Enhance system technological capability
in growth fields and high-consumption
fields・Accumulate element technology in theabove fields

・Implement value-added proposals
based on our core in-house
technology (modules, boards, etc.)

System consignment manufacturers (design, manufacturing)

Material
manufacturers

Modulemanufacturers

Components
manufacturers■ System consignment business independent from commercial right■ Accumulation of system technological capability focusing on each field such as in-vehicle electricalcomponents, home equipment, IoT equipment, medical and healthcare device■ Acquisition of outside human resources with experience in system development
An Electronics Systems Coordinator

14

Further Promotion of Multi-vendor Support to Respond toCustomers’ Diversifying Needs

Projectbusiness

Expandingexisting
business

Revision・Renesas Electronics CorporationFuture・NXP Semiconductors N.V.

GYRONICS・Winbond Electronics Corp.
・Micrel Inc.
・STMicroelectronics N.V.
・Applied Micro Circuits Corporation
・Atmel Corporation
・Faraday Technology Corporation

PresentConsider M&A

・ON Semiconductor
・Yamaha Corporation
・Macronix International Co., Ltd.
・Entropic Communications, Inc.
・Everspin Technologies, Inc.
・THine Electronics, Inc.

・・Response capabilities of Ryosan to customer’s needse.g.) Main suppliers of semiconductor

Product line-up■ Expansion of new suppliers and new products by business acquisition, alliance and etc.
An Electronics Systems Coordinator

15

Strengthening Global Support to Expand Overseas Business

Germany

Expandingexistingbusiness

Revision

South Korea

・Follow-up overseas shift of Japaneseclients

・Design-in and sales for Korean
corporations

United States・Follow-up overseas shift of Japaneseclients

China/Hong Kong
・Design-in and sales for Chinese
corporations
・Follow-up overseas shift of Japanese andAmerican clients

Japan・Design-in and global expansion support
for Japanese clients

TaiwanIndia

Shared Theme in AllCountries

・Design-in and sales for Taiwanese
corporations

・Design-in and sales for Indian
corporations

・Develop unique semiconductor andelectronic component manufacturers

Singapore/Malaysia/Thailand
・Follow-up overseas shift of Japanese andAmerican clients■ Considering business acquisition from and alliance with local companies
An Electronics Systems Coordinator16

Existing Business Strategy

Semiconductors

ElectronicComponents

Revision・ Aim at business expansion by proactive design-in initiative and effective
allocation of resources in our main business with Renesas Electronics
and foreign semiconductor companies.

・ Aim at business expansion by proposals of kit and system that consist ofsemiconductors and multiple electronic components under market
expansion strategy integrated with suppliers.
・ Continue to deal with sales of heat sink as an agent.

An Electronics Systems Coordinator

17Existing Business Strategy

Revision

We will aim at expansion of business through the following strategies:

ElectronicEquipment

・ Expansion of OEM and ODM business, further cultivation of existing
ICT clients, and exploring of new clients by core resources in systems
equipment business.
・ Promotion of 3 business elements of hardware, material, and service infacilities equipment business.

Technology・ Enhancement of global sales promotion capability of devices byestablishment of system solution, while expanding technical support
capability of mainly semiconductor technology, which accumulated longtime as a technology trading company, into the fields of electronic
components and embedded products.

An Electronics Systems Coordinator18

Project Business Strategy

System Solution
ProjectAnalog Sensor
MarketingProjectAddition

・ Aim at braking away from existing business model by developing
system consignment business based on clients and market needs
independent from trademark right and solution business in growth field.

・ Propose a kit consisted of competent I/O device (sensor / light / wireless,etc.) and analog IC.

An Electronics Systems Coordinator

19

Infrastructure Strategies

Revision◆ Reinforcing management in terms of quality
・ Implement and promotion of Ryosan spirits (reestablishment of vision, humanresources development).
・ Strengthen corporate governance.
(3 outside directors, establishment of the Remuneration Advisory Committee andthe Nomination Advisory Committee, etc.)
・ Enhance global internal controls.
・ Strengthen CSR at group companies.
・ Enhance global risk response capability (legal and tax aspects).

◆ Strengthening of our management structure(Strengthening of consolidated management)

・ Develop global information system (sales, logistics, accounting).
・ Develop system to strengthen the profit/financial structure of group companies.
・ Increase efficiency of headquarters functions (Headquarters ManagementDivision).
・ Appropriate use of human resources regardless sex, ages, or nationality.
An Electronics Systems Coordinator

20Basic Policy Regarding Redistribution of Profits to the Shareholders

Revision◆ Dividends
・ Aim at increasing payout ratio over 50%
FY2014

Target of FY2017

80 yenOver 100 yen◆ Acquiring of treasury stock・ Plan to implement continuous acquiring of treasury stock basically
1 million share per year

An Electronics Systems Coordinator21

Business Objectives

Addition◆ Achieve 5% of ROE in FY2017 aiming at 8% of ROE(Unit: 100 millions of yen)

FY2014FY2017Results

Of total

2,335

Net sales

TargetOf total

2,700

Gross margin

195

8.4%

2358.7%

SG & A expenses

135

5.8%

1405.2%

Operating income

592.5%

95

3.5%

Net income

32

1.4%

60

2.2%

2.7%

ROE

An Electronics Systems Coordinator

5.0%
22

FY2017 Target by Business Segment

Addition(Unit: 100 millions of yen)

FY2014FY2017 target
Operatingincome

Net sales

Of total

Operatingincome

Net sales

Of total

2,335

61.5

2.6%

2,500

86.0

3.4%

1,512

34.8

2.3%

1,500

51.0

3.4%

Electronic Components

629

16.1

2.6%

700

20.3

2.9%

Electronic Equipment

193

10.5

5.4%

300

14.7

4.9%

200

9.0

4.5%

2,700

95.0

3.5%

Existing businessSemiconductors

Project business

Total

0
2,3350
*1

59.2

―2.5%

*2

*1. The total amount of operating income in FY2014 indicates the figure after deduction of -220 million yen of operating income adjustment.
*2. Net sales of project business in FY2017 include 13 billion yen for system solution business and 7 billion yen for new products, etc.
An Electronics Systems Coordinator

23Results for FY20149th Medium-Term Management Plan (Revision)
FY2015 Business Plan

An Electronics Systems Coordinator

24

Overview of Consolidated Plan for FY2015◆ Both net sales and operating income are projected to be flat
(Unit: 100 millions of yen)

FY2014FY2015Results

Of total

2,335

Net salesPlan

Of total% Chg. YoY

+0.6%

2,350

Gross margin

195

8.4%

190

8.1%

(2.7)%

SG & A expenses

135

5.8%

133

5.7%

(2.2)%

Operating income

59

2.5%

57

2.4%

(3.8)%

Ordinary income

54

2.3%

57

2.4%

+4.2%

Net income

32

1.4%

38

1.6%

+18.7%

Earnings per share (yen)101.80+20.3%

122.51

Domestic sales

1,258

54%

1,350

57%

+7.2%

Overseas sales

1,076

46%

1,00043%(7.1)%

An Electronics Systems Coordinator25

Overview of Business Plan for FY2015 by Business Segment◆ Income and profit will increase in Electronic Components business and Electronic
Equipment business(Unit: 100 millions of yen)
FY2014FY2015Results

Semiconductors

Electronic
Components

ElectronicEquipment

Net sales

1,512

Operatingincome34.8

Net sales

629

Operatingincome16.1

Net sales

193

Operatingincome10.5

PlanOf total

2.3%

31.0

17.05.4%

13.0

Net sales

2,335

2,350

Operatingincome59.2

2.5%

57.0(11.0)%
+4.9%

2.6%

+5.1%
+49.5%

290(4.0)

An Electronics Systems Coordinator

2.2%

660
2.6%

% Chg. YoY(7.4)%

1,400(2.2)

Adjustments

Total

Of total

4.5%+23.5%+0.6%
2.4%(3.8)%
26

Percentage of Net Sales by Product (Plan)◆ Net sales of memories will shrink and systems equipment will expand

FY2014

Systems
equipment
6%

FY2015 Plan

Memories
8%

Facilities
equipment
2%Electromechanicalcomponents
20%

System LSIs
42%

Power supplies2%
Display devices
5%

Discretesemiconductors
15%

An Electronics Systems Coordinator

Facilities
equipment
1%
Systems
equipment
11%

Electromechanicalcomponents
21%Power supplies
2%
Display devices
5%

Memories
4%

System LSIs
42%

Discretesemiconductors
14%27

Percentage of Net Sales by Field (Plan)◆ Net sales of car electronics will continue to expand in FY2015

FY2014FY2015 Plan

Other
6%
Industrial
equipment
12%

Other
6%
Industrial
equipment
14%
Digital consumer
16%

Car electronics
40%

Information andcommunications
24%

An Electronics Systems Coordinator

Digital consumer
16%

Car electronics
42%

Information andcommunications
24%

28

Plan for Redistribution of Profit to Shareholders(Unit: 100 millions of yen)

◆ Dividends for FY2015 is planned to be 90 yen

Current term net income
Total amount of dividends (figures inparenthesis are dividend payout ratio)

Purchase of treasury stock
Total payout ratio

50141%
39
40

114%

120%

36

38

162%
30

18

1720

32

28
10

13

19

30

74%

18

13（71%）@¥40

19（71%）

@¥60

32
24
18（78%）

38
27（74%）

（59%）

@¥60

@¥80

@¥900FY2011

FY2012An Electronics Systems Coordinator

FY2013

FY2014FY2015 Plan29