FY2018 Highlights

Financial
Sales Revenue+11.8% (535.6 billion yen)
The HOYA Group’s consolidated sales revenue reached a record high in

Sales Breakdown

ﬁscal 2018, increasing 11.8% year on year, to ¥535,612 million. Sales rosein both the Life Care segment, which HOYA considers its growth driver, as
well as the Information Technology segment.

Pretax Proﬁts+12.1% (124.2 billion yen)
Pretax proﬁts rose 12.1% year on year, to ¥124,248 million. Earnings also

Pretax Proﬁt Breakdown

reached record highs, boosted by increased revenue and expanded salesof high-value-added products.

Copyright ©2018 HOYA GROUP

Product Sales / Proﬁt Margins / Sales Growth Rate

Copyright ©2018 HOYA GROUP

Life Care Segment
Sales Revenue+12.2% (352.8 billion yen)
Sales revenue in the Life Care segment rose 12.2% from the previous ﬁscal year, to ¥352,872 million. Sales increased for main
products on the whole, with double-digit growth in eyeglass lenses following the acquisition of U.S. lens manufacturer
Performance Optics, LLC.

Life Care Sales Breakdown

Percentage Increase (Decrease) in Sales by
Product in the Life Care Segment

Pretax Proﬁts+3.2% (56.4 billion yen)
Earnings from ordinary business activities expanded steadily, offsetting the recording of an impairment loss at HOYA’s Brazilian
subsidiary for eyeglass lenses. Pretax proﬁts rose 3.2% year on year, to ¥56,448 million.

Copyright ©2018 HOYA GROUP

Information Technology Segment
Sales Revenue+11.1% (178.4 billion yen)
Sales revenue in the Information Technology segment rose 11.1% from the previous ﬁscal year, to ¥178,480 million. Sales ofimaging products increased considerably for new applications such as lenses for surveillance cameras, along with signiﬁcant
growth in semiconductor mask blanks on development demand for products compatible with next-generation EUV lithography
technology.

Sales Breakdown of the IT Business

Percentage Increase (Decrease) in Sales by
Product in the Information Technology
Segment

Pretax Proﬁts+28.4% (69.9 billion yen)
Pretax proﬁts increased signiﬁcantly, rising 28.4% from the previous ﬁscal year, to ¥69,982 million. This was due mainly to
expanded sales of high-value-added products such as semiconductor mask blanks for EUV lithography and recovery from theeffects of the 2016 Kumamoto earthquake.

Copyright ©2018 HOYA GROUP

ESG
Proportion of Outside Directors

85.7% (6 of 7)
HOYA appointed its ﬁrst outside director in 1995, when corporate gover‐nance was barely discussed in Japan. In 2003, the Articles of Incorpora‐tion were amended to stipulate that more than half of directors be out‐side directors. Currently, 86% of HOYA’s directors are outside directors, anextremely high level even by global standards.

Corporate Management Experience of Outside Directors

100% (6 of 6)
While many companies appoint lawyers, accountants, or academics as
outside directors, all of HOYA’s outside directors are persons with exten‐
sive experience in corporate management. The diverse ﬁelds of experi‐ence among HOYA’s six outside directors includes automobiles, electron‐
ics, IT services, education, and the food-related industry. This diversity
makes for lively discussion at meetings of the Board of Directors.

Number of Employees by Region
More than 90% of HOYA’s employees work in locations outside Japan. Ma‐
jor manufacturing centers in Asia producing eyeglass lenses and HDD
substrates account for the greatest proportion, with around 70% of em‐
ployees in this region.

Copyright ©2018 HOYA GROUP

Proportion of Female Employees*/Proportion of Female Managers*

23%

Up 2.2ppt YoY/ 8.1%

Up 1.3ppt YoY – Higher than the manufacturing industry average (3.8%)

HOYA is increasing the proportion of female employees and managers aspart of its “Minkatsu” diversity project to create a friendly work environ‐ment for everyone. In addition to expanded recruitment and occupation‐
al ﬁelds for women, HOYA holds career advancement seminars for fe‐
male employees, and promotes cross-divisional exchange.
* Cumulative total of all Group companies in Japan.

Proportion of Local Employees in Top Management Positions at
Overseas Subsidiaries

97.3%
HOYA actively recruits diverse personnel of different races, ethnic groups,
nationalities, and religions, in order to gain access to exceptional global
talent, and generate new ideas and value. Local employees are regularly
appointed to top management positions at overseas subsidiaries.

Copyright ©2018 HOYA GROUP

Milestones in Our Growth

1941~1973
Net Income by Fiscal YearBusiness Portfolio
1941

1960

Products and Technologies
1941

1945

1962

1972

HOYA founded

Production of crystal
stemwareProduction ofeyeglass lenses

Production ofcontact lenses

Production of optical glass

History
1941
The brothers Shoichi and
Shigeru Yamanaka establishedan optical glass production
plant in the city of Hoya, Tokyo(a part of today’s Nishi-tokyo).

1960
Showa Factory (currently,
the Akishima Factory)
establishedCompany name changed to
Hoya Lens Corporation

1961

1973

Listed on the Second
Section of the Tokyo
Stock Exchange

Listed on theFirst Section of
the Tokyo Stock
Exchange

Copyright ©2018 HOYA GROUP

Milestones in Our Growth

1974~1996
Net Income by Fiscal YearBusiness Portfolio
1979

Products and Technologies
1974

1983

Production of photomask
substrates forsemiconductors

Production ofsemiconductor
photomasks

1987

1991

Production of
intraocular lens forcataracts

Launch of HDD glass disks

Production ofmolded glass lenses

History
1984
Company name changed
to Hoya Corporation

1986
R&D Center building
established

1995
Introduction ofoutside director
systemCopyright ©2018 HOYA GROUP

Milestones in Our Growth

1997~2018
Net Income by Fiscal YearBusiness Portfolio
1998

2017

Products and Technologies
2009

2010

2011

2017

Withdrawal fromthe crystal business

Sale of PENTAX
digital camera
business
Sale of HDD glass
Acquisition of
disk media business
Performance Optics,
LLC (manufacture andsales of eyeglass lenses)

History
1997
Introduction of
the Company System

2003

2008

Shift to Company with
Merger with Pentax
Committees structure (currently Corporation2010
Voluntary adoption of IFRS

Company with Nominating
Committee, etc.)

Majority of Board of Directors
members outside directors

Copyright ©2018 HOYA GROUP

Interview with the CEO

Looking back at ﬁscal 2018, what are your views of HOYA’s performance?
In ﬁscal 2018, we expected the IT business to be steady. Strategically, we invested the cash ﬂow generated by these businesses
into our Life Care businesses to boost growth prospects. While this was my overall outlook of our performance in ﬁscal 2018,
looking at the actual results, our Information Technology businesses grew more than had been forecast. At the same time, ourLife Care businesses fell somewhat short of our expectations for expansion. Fortunately, on balance sales of HOYA as a wholegrew more than had been forecast.
In Information Technology, the performances of HDD substrates and camera lenses were solid, although we had expected thosebusinesses to come under pressure. This turned out to be a positive if unexpected outcome. The factors inﬂuencing theperformance of HDD substrates included a shortage of NAND-type ﬂash memories, which resulted in ﬁrm demand for HDDs. In
addition, because sales of HDD substrates for use in so-called near-line servers, which is a rapidly expanding application area,
performed favorably.
One of the main factors accounting for the growth in camera lenses was expansion in sales of mirrorless cameras. In addition tothis, mask blanks for use in semiconductor manufacturing were favorably inﬂuenced by expansion in smartphone sales, growthin cryptocurrency mining, and other factors.
On the other hand, in the Life Care segment, we had aimed to take share from major companies in the eyeglass lens andmedical endoscope ﬁelds, and, yet in some regions, performance was uneven. In the eyeglass lens business, price competition
emerged in Europe, and, as we avoided resorting to price competition, the outcome was in a decline in sales. In addition, inJapan, where we have a relatively high market share, our performance was adversely inﬂuenced by a contracting factor in theoverall market. In contrast, sales were favorable in the Americas and Asia.
In the medical endoscope business, while performance in Asia was strong, in the Americas, we were behind schedule in building
our organizational systems and internal factors. At this point, we are making notable progress in addressing these issues.
Even if sales growth in our Life Care business was below expectations in ﬁscal 2018, we are committed to demonstrating clear
improvements in eﬃciency and proﬁtability of this strategic business segment in ﬁscal 2019.

Review of Performance in FY2018(Millions of yen)

FY2017FY2018Growth rate

Net sales

478,927535,612

11.8%

Pretax proﬁt

110,795

124,248

12.1%

Net proﬁt

86,852

99,222

14.2%

Copyright ©2018 HOYA GROUP-

What is the outlook for the operating environment in the Life Care and Information Technology-

businesses?
In the eyeglass lens business, which accounts for a major share of the Life Care segment, on the one hand, large chain retailers
have shown more expansion in scale, while, on the other hand, independent retailers maintain a ﬁrm position in the market. As
a result, retailers in the middle range have been squeezed out, creating polarized sales channels. To be sure, growth in bothtypes of retailers is necessary for our expansion. Relationships with the independent retailers are important for regional
coverage. The chain retailers, which focus on eﬃciency, are key to distribution scale. Accordingly, our approaches tomanufacturing, marketing, and distribution for these two types of sales channels must be different. We are moving forward
tailoring operating strategies and tactics that are most responsive to each type of retailer.
From a proﬁtability perspective, we successfully moved forward with the operational integration of global ophthalmic lensmanufacturer Performance Optics, LLC and its group company, which we acquired in August 2017. Operational integration will
enable us to realize synergies in costs and sales and will be key to expanding sales.
In the Information Technology businesses, growth will be driven by a range of innovative new usage applications.
In the mask blanks for semiconductors business, contributions to expansion in proﬁtability are expected from the developmentof next-generation EUV (Extreme Ultra Violet) technology, which will enable manufacturing of even ﬁner circuit patterns. Work
toward the commercialization of this technology is continuing. Also, in the HDD glass substrate business, we are beneﬁting fromrobust investments by cloud service providers in data centers and believe there are signiﬁcant opportunities for us to play on
this ﬁeld. In the camera lens business as well, we are beginning to see opportunities for growth in the surveillance camera andautonomous driving technology ﬁelds.

What are your thoughts on future capital investments and possible merger and acquisition deals?

-

For about the last four years, we have positioned the Information Technology business as a cash cow, and have generally beenconservative in terms of capital investments. Going forward, given our assessment of technology innovations and market trends,
we expect to become more proactive in making investments to further boost the performance of our Information Technology
business.
With regards to M&A, we are, of course, continuing to give consideration to potential deals in the Life Care business. At the sametime, it must be said that valuations of companies that we would consider acquiring are currently rising to rather high levels.
Accordingly, unless acquisition candidates can demonstrate clear and compelling synergies going well beyond our existing
capabilities, such stiff acquisition prices may be diﬃcult to justify. At any rate, it is always prudent to avoid rushing into suchmatters, so that we will remain ever alert to the most-promising opportunities, valuations, and timings.

We note that Japan’s Government Pension Investment Fund (GPIF) is investing some of its assets
in index funds. Concurrently, there is rising interest in companies that are sensitive toEnvironmental, Social, and Governance (ESG) and related considerations. What are your views?
When I am asked “How can HOYA best contribute to society?,” I point out that the HOYA Group worldwide proactively
encourages the implementation of the HOYA Business Conduct Guidelines. These set forth both our values and principles for
conducting our businesses responsibly by creating shared value with society in terms of better vision and the beneﬁts oftechnology; adhering to robust Environment, Health, and Safety (EHS) standards; and implementing best practices in line withHOYA Corporate Governance Guidelines. Since legal systems and culture differ from one region to another, we believe being
sensitive to local areas and regularly updating our policies is clearly the smart way to go. One example is our support ofinclusivity and diversity, including the promotion of women to more and more executive positions.

Copyright ©2018 HOYA GROUP-

What performance indicators are you targeting for the medium-to-long term? For example, do-

you focus on ROE or another indicator?
Of course, I stress ROE, but I put most emphasis on ROI. I do not mean ROI in
the narrow sense of the word, but ROI deﬁned in terms pursuing eﬃciency ina very broad sense, including the time, effort, and opportunity cost spent on
the speciﬁc project in question. Among the various kinds of eﬃciencies
management looks at, the eﬃciency of human resources is by and large themost critical, so we look to what value added each individual employee canbe encouraged to deliver.

What would you say are the main features of HOYA’s corporate culture and corporate philosophy?
Overall, we put the most emphasis on making rational judgments based on clear ﬁnancial indicators. You cannot makejudgments without hard numbers. Without question, a deﬁning character of the HOYA Group as a whole is that thisquantitatively driven approach is ﬁrmly rooted in our DNA.
Regarding our key management philosophies, in addition to our core commitments to ESG and EHS, perhaps “Always
responsibly make a fair proﬁt” succinctly summarizes the matter. That is, the fundamental purpose of a company is to operate
sustainably, which is to say, logically, in perpetuity. To do this, among other factors, healthy cash ﬂow is a fundamental necessity.
To be sure, for growth over the long term, we might occasionally sacriﬁce short-term proﬁts in a speciﬁc area, but too much ofthat makes long-term growth impossible. Accordingly, our unwavering commitment to always and responsibly generate a fair
proﬁt is the cornerstone of our ongoing success.

President and CEO

Hiroshi Suzuki

Copyright ©2018 HOYA GROUP-

Review of Operations

Life Care Segment
Health Care
(Information on HOYA’s products may be found in the “Business Domains” section of its website. Please refer to this section for further information.)+

Eyeglass Lenses
Business Overview
Hoya conducts research and development, manufacturing, and sales of
eyeglass lenses.
Our product lineup includes single vision lenses that possess a single cor‐
rective function for each lens, as well as progressive lenses (varifocal lens‐es) that offer wide visual ﬁelds and a seamless transition between near,intermediate, and far distances in a single lens.
By geographical region, a signiﬁcant amount of sales, approximately 85%,takes place in markets outside of Japan.

Supply Chain

Market Conditions
Eyeglass lens demand is increasing globally on account of a worldwide aging population, enhanced purchasing pow‐
er owing to burgeoning economies in emerging markets, increased awareness of health-related issues, and longhours of PC and smartphone use that leads to vision impairment.
Globally, the rate of growth is around 3%, although expansion varies according to region, such as is seen with themature markets of Japan and Europe, and growth markets in the Americas as well as Asia and Oceania.
Within this, there are the emerging markets of Asia and South America, which are expanding notably beyond the
middle-income range, and are driving the growth of emerging markets.

Copyright ©2018 HOYA GROUP

Regions around the world have differing and respective characteristics, although overall global trends, namely the
consolidation and emergence of giant retail-type store chains, and falling unit prices are continuing. Given this, thekey to growth will be to reduce production costs and to increase sales of value-added products, such as those withdifferent varieties of surface coatings (anti-glare coatings and anti-smudge coatings) and progressive lenses.

HOYA Position and Market ShareHOYA stands at the No. 2 position in the industry, and, in addition to or‐Market Share (FY2018)

ganic growth, has expanded its share of the market through M&A initia‐
tives, including the 2013 acquisition of SEIKO’s eyeglass lens unit, andU.S.-based Performance Optics, LLC in 2017.

HOYA Outlook
Eyeglass lens products account for over 50% of Life Care Business sales, and are a growth driver for businessexpansion.
In the Americas as well as Asia and Oceania, primarily, there is still room for growth as our retail approach is not yet
fully developed, and, together with aiming for organic growth of 4% to 5% per year through such measures as
strengthening sales capabilities, we are also working to boost growth by conducting M&A activities.
As far as acquisitions are concerned, Performance Optics is currently working to promote the consolidation andelimination of plants and putting in place a structure that is capable of generating sales synergies while the safety
eyewear business acquired from 3M is endeavoring to integrate its products and production with the Company in abid to realize synergies.

+

Contact Lenses
Business Overview
In Japan, we are expanding Eyecity outlets, HOYA’s contact lens specialty
retail store chain.
At Eyecity, we offer consulting and sales, making product recommenda‐
tions ideally suited to the needs of individual customers, and, leveraging
our strength, we provide a wide lineup sourced from major manufactur‐
ers throughout the world.
Stores are established in convenient locations, in close proximity to train
stations, inside shopping centers, and other areas.

Copyright ©2018 HOYA GROUP

Market Conditions
The contact lens market in Japan is valued at approximately ¥350 billion.
Although currently at a mature stage, a growing level of nearsightedness

Sales Composition Ratio bySales Channel (FY2018)

among the younger generation, the rising age of those wearing contactlenses due to the growing prevalence of multifocal contact lenses, andpeople wearing disposable contact lenses, sales of which ﬁrst began in
the 1990s, are now at an average age of being in their 40s and 50s. On ac‐
count of such factors, we presume an ongoing expansion, although slight.
By sales channel, the largest is the contact lens specialty store channel,
and we project growth driven by ongoing share expansion.

HOYA Position and Market ShareHOYA holds an overwhelming share, the largest, of the retail

Number of Eyecity Stores in Japan

channel for sales made through brick and mortar stores.
On top of sales growth from existing stores, we are working
to expand sales through new stores.

HOYA Outlook
Looking forward, HOYA is seeking to achieve a sustained sales growth rate at the 5% level by boosting sales at exist‐
ing stores together with aggressively establishing new stores.
In addition, for new stores, HOYA will conduct detailed analyses of an area’s contact lens wearing population, market
growth rate, and competitive situation, and will establish stores mainly in city centers, regional cities, and large shop‐
ping centers.

Copyright ©2018 HOYA GROUP

Medical(Information on HOYA’s products may be found in the “Business Domains” section of its website. Please refer to this section for further information.)+

Medical Endscopes
Business Overview
In this ﬁeld, HOYA conducts research and development, manufacturing,and sales of medical endoscopes used in diagnosis and treatments of dis‐orders associated with the ear, nose, and throat, the respiratory tract,and digestive system.
The endscope ﬁeld comprises scopes and processors.

Supply Chain

Sales by Region
By geographical region, a large volume of sales takes place outside ofSales by Region (FY2018)

Japan; in fact, this accounts for almost all of our sales.

Market Conditions
Medical expenses are increasing worldwide in line with the aging of society. To keep medical expenses in check, gov‐
ernments in countries across the globe are promoting the early detection of disease and minimally invasive medical
procedures. To this end, there are ever-greater needs for procedures that can as much as possible minimize the bur‐den on a patient’s body, without resorting to a surgical operation. Given this, endoscopes are increasingly in demand
as a way that can address such needs.
The rate of growth is steady in the markets of developed countries and regions—Japan, the U.S., Europe, and others.
However, in Asia, which is at a stage where endoscopes are becoming more prevalent, the growth rate continues tobe high. Globally, we estimate that growth will continue at a rate in the lower half of the single-digit range.

Copyright ©2018 HOYA GROUPIn North America, customer transactions are increasing through a joint purchasing organization achieved with multi‐
ple business acquisitions, and building a sales system that responds to this kind of change can lead to sales growth.
With regard to products, overseas manufacturers of disposable endoscopes have been working to establish them‐selves, and it appears that in the long term they will become the standard for low-end products. At the present time,
however, they are still some way away from replacing conventional endoscopes.

HOYA Position and Market ShareWith its strengths lying in high image quality, ultrasonic endoscopes andMarket Share (FY2018)

small-diameter endoscopes that strike a balance between image quality,
exterior diameter, and channel size, HOYA holds the second position in
the industry.

HOYA Outlook
HOYA continues to secure stable earnings in Europe and the U.S., and is striving to achieve growth by boosting sales
activities in emerging regions such as China, India, Russia, and Brazil.
While steadily engaging in products for gastrointestinal devices, the main battleﬁeld in the ﬂexible endoscope mar‐ket, we will work on product enhancements for application sites other than gastrointestinal devices and on productdifferentiation by deploying unique functions and treatment instruments.

+

Intraocular Lenses for Cataract Treatment
Business Overview
In this ﬁeld, we perform research and development, manufacturing, andsales of intraocular lenses (IOLs) for cataract treatments.
Cataracts are very likely to occur in people of advanced years, and are thelargest cause of vision loss in people around the world. IOLs are man‐made medical devices implanted inside the eye to replace the eye’s natur‐al lens when it is removed during cataract surgery. This surgery makes it
possible to recover clear eyesight that has been lost due to cataracts.
At HOYA, together with a foldable intraocular lens that can be insertedwith a small incision of around 2.0mm, we conduct R&D, manufacturing,and sales of injector systems that make for safe cataract surgeries thatcan be performed smoothly.

Supply Chain

Copyright ©2018 HOYA GROUP

Sales by Region
By region, sales in Japan are close to 50%.

Sales by Region (FY2018)

Market Conditions
In line with the aging of society in locations throughout the world, rising needs for minimally invasive medical treat‐ments and other factors, the market is, on a volume basis, maintaining a growth rate at the lower half of the singledigit range.
On a monetary basis, growth in high-end products—such as for corrective lenses for astigmatism and progressive
lenses to correct presbyopia—are driving overall expansion in the market. HOYA projects growth that exceeds the
expansion of volume-based growth.

HOYA Position and Market Share
In 2015, we introduced to the market Vivinex™, a product with few side

Market Share (FY2018)

effects that is easily implanted into the eye and has received high postsurgery evaluations. Being well received, this product experienced surg‐ing demand, and continues to see growth at a pace that is signiﬁcantly
above the market.
To address this rising demand, we launched a new factory in Thailand
from August 2017.
HOYA is steadily increasing its market share and currently holds third
place in global terms.

HOYA Outlook
We are striving to expand sales and earnings by bolstering sales capabilities, increasing sales area, and launching
new products.
In addition, we are conducting sales activities by further fortifying our presence with increased numbers of sales
personnel in areas where we maintain a presence, and we are steadily entering into areas where we have no market
share, with the goal of expanding sales.
We are also actively introducing new products, both popular products and high-value-added products. Moreover, bysteadily raising the utilization rate of our new factory in Thailand that went into operation in 2017, we are working tomeet rising demand and to lower unit costs.
Through these activities, we are striving to expand business scale in terms of both sales and earnings.

Copyright ©2018 HOYA GROUP

Information Technology Segment
Electronics(Information on HOYA’s products may be found in the “Business Domains” section of its website. Please refer to this section for further information.)+

Mask Blanks for Semiconductors
Business Overview
In this business, we perform research and development, manufacturing,and sales of mask blanks for semiconductors.
Critical in the semiconductor fabrication process, photomasks are themaster plates used to transfer a semiconductor’s intricate and complex
circuit pattern onto a semiconductor wafer, and mask blanks are the raw
material used for photomask manufacturing.
Because master blanks are created for each individual circuit pattern,
photomasks are essential to new products developed by semiconductor
manufacturers, foundries, and other HOYA customers, and in the R&D
stage of new manufacturing technologies such as those of extreme ultra‐
violet (EUV) lithography.

Supply Chain

Market Conditions
The semiconductor market is experiencing robust and sustained demand for semiconductors intended for smart‐phones, servers, and other devices, and predictions are for growth to continue in the future.
In addition, due to the advance of increasingly miniaturized circuits, a number of semiconductor manufacturers andfoundries are starting to prepare for mass production based on EUV lithography, a next-generation manufacturing
technology, from around 2019.
Being used in the prior-stage R&D process for that, demand for blanks is rising.

Copyright ©2018 HOYA GROUPHOYA Position and Market Share
Putting to use our core technologies of glass polishing and thin ﬁlm tech‐Market Share (FY2018)

nology has enabled us to capture a large share of the market over thelong term.
Moreover, we have continued to conduct EUV blanks research for nearly
20 years, and have demonstrated a ﬁrm presence in this ﬁeld which has
exceptionally high hurdles to clear for entry.
For HOYA, opportunities will continue to rise as we advance EUV lithogra‐
phy technology and expand market share.

HOYA Outlook
Along with the advance of miniaturization in semiconduc‐
tors, it appears that demand for high-precision mask blanks

The global semiconductor market andsales growth in mask blanks

will be strong after ﬁscal 2019 as well.
Mask blank sales are diﬃcult to accurately predict due to thedramatic ﬂuctuations that occur in line with customers’ de‐velopment speeds, and also because they are not consum‐
ables used in production, and are not necessarily linked to
movements in the semiconductor industry. However, on amonetary basis, sales for EUV applications are expected to
double from ﬁscal 2017 levels in two years.

+

Photomasks for LCD/OLED Display Manufacturing
Business Overview
HOYA conducts research and development, manufacturing, and sales ofphotomasks for LCD*1/OLED*2 display manufacturing.
When manufacturing panels for TVs, smartphones, laptop computers,
and other devices, LCD/OLED display photomasks are used as the master
plates to transfer the circuit pattern onto the substrate.
*1 LCD: Liquid Crystal Display*2 OLED: Organic Light-Emitting Diode

Copyright ©2018 HOYA GROUP

Supply Chain

HOYA sources the substrate from raw materials manufacturers, and on that substrate performs polishing, deposi‐tion, and resist applications (blanks manufacturing). When the manufacture of the blanks is completed, HOYA con‐ducts circuit pattern drawing, developing, etching, and resist stripping and cleaning, and delivers it to panel manu‐
facturers (photomask manufacturing).

Sales Composition by Application
The ratio of sales by application is stated as follows. The end-productmarket for smartphone applications continues to grow, and this seems toSales Composition by
Application (FY2018)

have come to account for the largest proportion.

Market Conditions
The ﬁscal 2018 LCD/OLED display photomask market expanded signiﬁcantly over the previous ﬁscal year. This wason account of a large increase in tenth generation products owing to a new panel factory established in China, and,in the latter half of the year, a return to a growth trajectory in the 8.5 generation mainly for TVs, and sixth genera‐tion, primarily for smartphones.
It appears that the tenth generation will continue to be a driver for growth in the market, but expansion is also ex‐pected with photomasks for high-resolution panels, (resolution over 300 ppi) mainly for smartphones.
With regard to regions, it appears that continued expansion will occur in the Chinese market where new factory con‐struction is ongoing.

HOYA Position and Market ShareHOYA possesses expertise in high-precision products, and holds the top-

Market Share (FY2018)class market share.

Copyright ©2018 HOYA GROUPHOYA Outlook
In-house production of FPD photomasks is anticipated at Korean manufacturers; however, we are striving for growthin sales and earnings by making concerted efforts in the Chinese market and with high-precision products below
eighth generation products where there are future prospects for growth.
We will continue to keep a close eye on demand trends with regard to entering the FPD photomask market for tenthgeneration products.

Panel Generations
LCD/OLED panel manufacturing lines are categorized by generation, which corresponds to mother glass size. Every year,
the size of mother glass becomes progressively larger due to the upsizing of panels in line with increasingly big screens,mainly for TVs, and, in order to enhance productivity, because it is effective to increase the number of panel conﬁgura‐tions per one sheet of mother glass.

Copyright ©2018 HOYA GROUP+

Glass Substrates for HDDs
Business Overview
In this area, HOYA conducts research and development, manufacturing,and sales of glass substrates for hard disk drives (HDDs). HDDs are used
as recording media in laptop computers and servers.
The size of substrates that HOYA normally manufactures is 2.5 inches,
and these are primarily used in portable products such as laptop
computers.
In addition, since HOYA’s full-scale entry into the 3.5-inch market for nearline servers in ﬁscal 2018, production numbers have rapidly grown.

Supply Chain

From raw materials manufacturers, HOYA sources substrate raw materials, which we process in ways such as mak‐ing it into a disc shape, enhancing its shock resistance, and polishing. After processing, we deliver this substrate to
the media manufacturer where magnetic ﬁlm is applied, among other ﬁlm-forming processes, and it undergoes bur‐nishing (ﬁnal polishing) and other treatments before being shipped. In hard disk manufacturing, the HDD manufac‐
turer assembles the hard disk, head, and other components, tests the completed product, and then ships.
* Hard disks may also be manufactured by the HDD manufacturer.

2.5-Inch Substrates Sales Composition by Application
The sales composition ratio of our 2.5-inch substrates, by application, is
as follows.
From ﬁscal 2018, we commenced mass production of 3.5-inch glass sub‐2.5-Inch Substrates
Sales Composition by
Application (FY2018)

strates, as these are expected to see an expansion of demand in the fu‐ture. The 3.5-inch substrates we produce are used in HDDs for near line
(NL) servers that perform such functions as backup in data centers.
Sales are steadily growing, and by the fourth quarter had expanded to
13% of business overall.

Market Conditions
With laptop computers, mission critical servers and other end products, the 2.5-inch HDD market is being replacedby solid state drives (SSDs), which have faster data read/write speeds. SSDs were used in about 50% of the notebook
PCs shipped in ﬁscal 2018.
Although demand for HDDs grew on account of the impact of inadequate supplies of NAND, which is used for SSDs,
from 2018 there will be suﬃcient NAND supplies, and it is expected that the trend toward contraction in the HDD
market will return.

Copyright ©2018 HOYA GROUPOn the other hand, in the 3.5-inch HDD market, NL servers, having a comparatively low access frequency with back‐up applications, predominantly use HDDs due to their recording capacity unit cost advantages over SSDs.
Data generation volumes are expanding throughout the world, and, in line with this, Amazon, Google, and otherlarge-scale cloud service vendors are making aggressive investments into facilities associated with data centers, andsurging growth is expected for this market.

HOYA Position and Market ShareHOYA maintains a high share of the 2.5-inch substrate market owing to
the stable and high-eﬃcient production of the best quality products.

2.5-inch Substrates for HDDs
Market Share (FY2018)

Speaking only of glass substrates, we hold a 100% share of the market.

HOYA Outlook
Given the elimination of NAND supply shortages, sales of 2.5-inch substrate products, primarily for laptop comput‐
ers and mission critical servers, are expected to decline.
For 3.5-inch substrate products, an increase in the adoption of HDDs equipped with HOYA products by end-user cus‐
tomers (cloud service providers) is expected to lead to sales growth.
Throughout the business, it becomes a matter of balance between the decline of 2.5-inch products and an increasefor 3.5-inch products. Given this, our aim is to achieve growth in the business overall, and we will 1) take ﬁrm action
to leverage market growth over the medium term and 2) work to increase sales of 3.5-inch products so as to offset
the decline of 2.5-inch products.

Potential for glass substrates in the 3.5-inch market
Due to the expansion of data volume and the storage volume generated worldwide, data capacity per HDD continues toincrease. The increase in data capacity per HDD has been realized by increasing the recording density or area of thedisk, but, at present, the development of technologies designed to improve recording density is stagnating, and the ex‐pansion of the recording area remains key.
In the 3.5-inch market, the disk material is now mainly aluminum.
However, since a further increase in area can be realized by increasing the number of mounting disks by thinning thedisks, it is becoming necessary to have rigid glass instead of aluminum.
Even in the event that HAMR (Heat-Assisted Memory Recording) or MAMR (Microwave-Assisted Memory Recording) is
realized, from the viewpoint of the ﬁlm formation process of the next-generation magnetic ﬁlm, glass is considered su‐
perior to aluminum.

Copyright ©2018 HOYA GROUP

Imaging-related Products(Information on HOYA’s products may be found in the “Business Domains” section of its website. Please refer to this section for further information.)

Imaging-related Products (Including optical glass, optical lenses, camera lens units, and lasers)+

Business Overview
In this area, we conduct research and development, manufacturing, andsales of optical lenses for a variety of cameras, as well as for optical glassmaterials and lens units.

Supply Chain

HOYA sources materials from optical glass material manufacturers, conducts compound and solution treatments,
manufactures lens materials and lens products, and delivers to lens and camera manufacturers.

Sales Composition by Application
The ratio of sales by application is as follows. Digital camera-related items
for compact digital cameras and for lens modules that had previously

Sales Composition by
Application (FY2018)

made up the majority of sales are trending toward a decline, and now ac‐
count for less than 50% of the sales composition ratio.
However, sales of products for security cameras are increasing, and thesecond-largest application in the composition ratio has become opticalglass materials and optical lenses.

Market Conditions
Compact digital cameras are increasingly being replaced by smartphones, and their decline is ongoing.
Modular camera lenses are undergoing a gradual decline together with a shrinking market for single-lens reﬂex
cameras, but the market for mirrorless cameras is growing at a solid pace.
The market for security cameras is surging, mainly on demand from the Chinese market.

Copyright ©2018 HOYA GROUPHOYA Position and Market Share
From research and development of optical glass composition to manufac‐
turing of lenses, lens units, and other ﬁnished products, HOYA takes aconsistent approach to its activities while building a structure that makes

Share of
Aspherical GMO lenses (FY2018)(Digital Camera-Related)possible the mass production of an array of products.
HOYA maintains a high market share with its exceptional skills in aspheri‐cal glass molded (GMO) lenses.
GMOs are formed by directly pressing optical glass that has been subject‐
ed to high temperatures to make it malleable. These are optical lens
products that require no polishing, and possess an excellent ability to cor‐
rect distortions. Enabling a high angle design, the number of lenses usedin optical systems can be reduced, and this contributes to compact, light‐
weight, and highly functional end-product cameras.

HOYA Outlook
HOYA projects that the market for digital cameras will contract gradually, but, moving forward, we are working toleverage our GMO and other strengths for adoption into high-end products.
The market of optical lens for security cameras is growing rapidly, and, at the end of ﬁscal 2018, it had reached sales
proportionate to that of its products for compact digital cameras. However, although dependent on the political situ‐
ation in China, a main market for security cameras, growth is expected to be at a constant level.
We also project growth in the market for car-mounted camera used for image recognition in Advanced Driver As‐
sistance Systems (ADASs), although it will be several more years before this offers a signiﬁcant contribution to busi‐
ness results. Given this, we project that over the short and medium terms, results in the imaging business will re‐main essentially unchanged.

Copyright ©2018 HOYA GROUP

Sustainability

Environment
Basic Policy
The HOYA Group believes that ensuring a healthy global environment for the next generation is one of the social responsibilities
of a corporation, and actively engages in environmental conservation.
The HOYA Group, to support employee-led environmental conservation activities and protect the health and safety of
employees, has established a global management structure based on ISO 14001 and OHSAS 18001 standards. In February 2013,
we acquired a Global Multi-site Certiﬁcation, with 52 sites in 17 countries certiﬁed as of September 30, 2017.
HOYA Group’s environmental measures: http://www.hoya.co.jp/english/csr/environment.html

Society
Basic Policy
HOYA’s life care and information communication is a global business, and we endeavor each day to realize our management
philosophy of helping to create a truly rich and prosperous society. We respect fundamental human rights, and, in all our
corporate activities, work to eliminate discrimination and harassment for any reason, including race, nationality, gender, religion,
faith, birthplace, age, and mental or physical disability. HOYA also pursues global social engagement activities closely related toour business domains in order to leave a better world for the next generation, focusing mainly on contributing to advancements
in medicine, as well as improving health outcomes and enhancing the quality of life for all people.
HOYA Group’s social action program: http://www.hoya.co.jp/english/csr/citizenship.html

Corporate Governance
Basic Policy
HOYA considers corporate governance to be one of its highest management priorities, and strives to maximize enterprise value.
In accordance with our basis stance of ensuring fairness toward stakeholders, in June 2003 HOYA amended its Articles ofIncorporation to require that a majority of Board of Directors members be outside directors. These outside directors oversee theconduct of management by executive oﬃcers and offer advice from the standpoint of enhancing corporate value from an
objective, broad-based perspective. Executive oﬃcers are given authority and responsibilities for business execution, in order toenhance the speed of decision making and streamline management.
Of note, HOYA’s Board of Directors has formulated guidelines for corporate governance, and regularly revises the content toensure the best corporate governance structure and system.
HOYA Group’s corporate governance: http://www.hoya.co.jp/english/csr/governance.html

Copyright ©2018 HOYA GROUP

Main ESG Measures
Environment
HOYA Group environmental
principles
Global management structure forenvironmental protection andoccupational health and safety
CO2 reduction measures
Examples of measures to reduce
environmental burdens

Society

GovernanceSocial contribution activities

Corporate governance structure

Respect for human rights

HOYA Corporate Governance
Guidelines

Cultivating and developing humanassetsSupply chain measures

Corporate Governance Report
Enhancement of disclosure andinvestor relations activities

Copyright ©2018 HOYA GROUP

ESG Feature:
Discussion Meeting
among Outside
Directors
The Effectiveness of HOYA’s Governance and Issues for
Increasing Enterprise Value over the Longer Term
HOYA considers corporate governance to be a management priority, and conducts management with theaim of maximizing enterprise value. The Board of Directors comprises six outside directors and one
internal director, and works to ensure effective and highly transparent corporate governance. We asked
the ﬁve outside directors to participate in a discussion meeting on the nature of discussions among Board
members, and how they provide appropriate advice and recommendations.
Outside Directors: Itaru Koeda, Yukako Uchinaga, Mitsudo Urano, Takeo Takasu, Shuzo Kaihori

The Background of Outside Directors, Their Views on Oversight, andAssessment of HOYA
Koeda: I joined Nissan Motor Co., Ltd. in 1965, serving in several positions including director
and executive vice president, as well as co-chairman together with Carlos Ghosn.
HOYA’s Board of Directors is composed entirely of outside directors, except for President
and CEO Hiroshi Suzuki. Despite everyone’s business schedules, the attendance rate is
100%. I also think that the extremely active exchange of opinions and debate during
meetings is exceptional from the standpoint of the Board’s effectiveness. Decision making
is extremely fast, and the matters decided by the Board are implemented quickly, with
progress reports at the next meeting.
Uchinaga: I joined IBM Japan, Ltd. in 1971, handling mainly global operation-based work intechnical areas such as development, manufacturing, and basic research laboratories. After some experience in management, I
served as CEO for Berlitz.
I think the contribution I bring to HOYA is my experience in global operations. I am able to offer advice on the points that need
to be considered in terms of global operations. For example, when there were quality issues in the Life Care business, I offeredcandid advice on the response by the division in charge. I hope that the quality and process management that has beenthoroughly hammered into me over the course of my career will be of some use.
Takasu: I used to be in banking, but, when I was 50, I went to work for Bandai Co., Ltd. I fulﬁll my role by drawing on myexperiences with the merger between Bandai and Namco, and served 12-13 years as company president, as well as myinvolvement as an outside director for other companies.

Copyright ©2018 HOYA GROUP

Urano: I have around 20 years of management experience at Nichirei Corporation. Over thelast decade, I have served as outside director at companies in eight different industries,
including real estate and banking. I try to utilize my experience as an outside director indifferent industries.
HOYA developed a business strategy to be a “big ﬁsh in a small pond,” developing its
business to be highly proﬁtable in niche markets. At the same time, it has commodity-stylebusinesses such as eyeglass and contact lenses. Directing that strategy may seem diﬃcult,but I feel that HOYA is managed extremely tightly, laser-focused on asset eﬃciency, andthere is little to criticize.
Kaihori: I served as Chairman of the Board of Yokogawa Electric Corporation until June
2018. Along with work in sales and business divisions, I also directed the company’s
globalization efforts, so I feel that the area where I can contribute is in global expansion.
In terms of overall governance, the Board of Directors is extremely active, and will issue
contrary opinions to internal proposals without being regardful of them. In the sense thatthings are decided by having everyone express opinions, I feel that governance functions
extremely well.

Current Management Issues for HOYA
Takasu: HOYA’s Board of Directors is composed entirely of outside directors, except for
President and CEO Hiroshi Suzuki. However, having only one director from inside theCompany is an issue in terms of cultivating a successor. I think it would be best to have one
or two more internal Board members.
Kaihori: I basically agree. In addition, in the current situation of holding a lot of cash, how to
use these funds, and what growth investments to make, are extremely diﬃcult issues.
Particularly in the Life Care business, which HOYA is trying to expand, ﬁnding the rightbalance between investments for growth and increasing proﬁtability is a huge challenge.
Uchinaga: I think that the basis of all the issues
everyone has cited is visualization. I feel that, in HOYA’s global business, there is a lack ofsuﬃcient visualization of business structures, the way operations are conducted, andmethods of evaluation. We need to clarify how to link businesses with different
characteristics, and determine common priorities (KGI, KPI), and then build a global
information infrastructure. We also need a structure to raise alerts regarding risk.
Urano: Also from an auditing and ﬁnance standpoint, I feel there is room for system
improvements. There is a tendency for the control of internal information to be dependent
on individual expertise, so, for information systems going forward, I think we need torethink the approach of a single, massive framework.
Koeda: HOYA’s business operations cover a broad range, so building a system that matches all businesses will be diﬃcult in apractical sense. I think the key will be determining the common points in the businesses, and focusing on them.
Uchinaga: On the topic of diversity, globally, HOYA is utilizing diverse human resources in its business activities, but, in Japan, I’dlike to see a greater push for the active participation of women, and greater diversity in values.

Copyright ©2018 HOYA GROUP

Financial Review-

Scope of Consolidation
As of March 31, 2018, the HOYA Group consisted of HOYA CORPORATION, 148 consolidated subsidiaries (11 of which are domes‐
tic and 137 overseas), and 9 aﬃliates (4 of which are domestic and the other 5 overseas).
The HOYA Group has adopted a business management structure where the Life Care and Information Technology business seg‐ments control subsidiaries around the world based on their respective responsibilities. Regional headquarters in the Americas,
Europe, and Asia support business operations by strengthening relationships with countries and areas in the respective regions,such as by providing legal support and conducting internal audits. The HOYA Group has its Financial Head Quarters (FHQ) at its
Europe Regional Headquarters (Netherlands).

-

Adoption of the International Financial Reporting Standards
Beginning with the ﬁscal year ended March 31, 2011, the HOYA Group prepares its consolidated ﬁnancial statements and otherdocuments in compliance with the International Financial Reporting Standards (IFRS) pursuant to paragraph (1), Article 120 of
the Ordinance on Company Accounting. With respect to reportable segments presented in the overview of operations by busi‐
ness category, the HOYA Group divides its business into three reportable segments, based on IFRS. These segments are Life
Care, Information Technology, and Other Businesses.
The Life Care segment deals in health care related products such as eyeglass lenses and contact lenses, as well as medical-relat‐
ed products such as intraocular lenses and medical endoscopes. The Information Technology segment handles electronics relat‐
ed products used for the production of semiconductors, liquid crystals, and hard disk drives (HDDs), and imaging-related prod‐
ucts such as digital camera lenses. The Other Businesses segment offers mainly information system services.

-

Review of Performance in FY2018
Sales of continuing operations for the consolidated ﬁscal year ended March2018 amounted to ¥535,612 million, an 11.8% increase year on year.
Despite impairment losses of ¥5,798 million, proﬁt increased due to increases in
net sales, so proﬁt before income tax and proﬁt for the year increased com‐pared to the preceding consolidated ﬁscal year by 12.1%, to ¥124,248 million,and 14.2%, to ¥99,222 million, respectively. The proﬁt before tax ratio was
23.2%, on par with the preceding consolidated ﬁscal year.
Sales of the Life Care segment increased by 12.2% compared to the preceding
consolidated ﬁscal year, to ¥352,872 million. Segment proﬁt increased by 3.2%,
to ¥56,448 million, despite amortization of intangible assets obtained throughacquisitions, impairment of non-current assets, and other factors.

Copyright ©2018 HOYA GROUP

The retail market for eyeglass lenses in Japan continued its shrinking trend, but
sales remained on par with the preceding consolidated ﬁscal year due to an in‐crease in market share. Overall sales in overseas markets increased comparedto the preceding consolidated ﬁscal year due to the ﬁrm capture of market
growth in Asia, as well as signiﬁcant growth in the Americas as a result of the
ﬁrm growth of existing businesses and the acquisition of 3M’s prescription safe‐ty eyewear business and Performance Optics, LLC.
Sales of contact lenses increased compared to the preceding consolidated ﬁscal
year due to an increase in new customers caused by opening new “Eyecity” re‐tail stores and enhancing existing stores.
Overall sales of medical endoscopes increased compared to the preceding con‐solidated ﬁscal year due to strengthening sales capabilities in overseas markets,
especially in Asia.
Sales of intraocular lenses for cataracts increased compared to the preceding
consolidated ﬁscal year due to continued strong sales of new products launchedin the Japanese market in 2015 and ﬁrm growth of both direct sales and sales todealers overseas.
Sales of the Information Technology segment increased by 11.1% compared tothe preceding consolidated ﬁscal year, to ¥178,480 million, and segment proﬁt
increased by 28.4%, to ¥69,982 million.
The saturation of the market for ﬁnished products such as personal computers
and tablets continues, and the smartphone market is beginning to slow down.
However, sales of the Company’s mask blanks for semiconductors increased
compared to the preceding consolidated ﬁscal year due to the capture of an ac‐tive research and development demand related to leading-edge products.
Despite decreased production capacity of the Company in the ﬁrst half of theyear due to the Kumamoto earthquakes, sales of photomasks for liquid crystal
displays increased compared to the preceding consolidated ﬁscal year due toprogress in the restoration of production capacity of the Company in the second
half of the year and recovery in research and development demand from over‐seas panel manufacturers. Sales of glass substrates for hard disk drives in‐creased compared to the preceding consolidated ﬁscal year due to an increasein the Company’s market share in addition to an improvement in overall de‐mand for hard disk drives caused by a NAND (Not AND) ﬂash memories supply
shortage.
Looking at imaging-related products, in addition to the further easing of shrink‐
age in the digital camera market, which mainly covers ﬁnished products, an ex‐
pansion in sales of products for new applications such as for security cameras
and car-mounted cameras contributed to an overall increase in sales.
(For further information on performance by product, please refer to the Review
of Operations section.)

Copyright ©2018 HOYA GROUP

-Financial Position
Total assets at March 31, 2018 decreased by ¥8,939 million from the end of thepreceding consolidated ﬁscal year, to ¥650,645 million.
Non-current assets increased by ¥40,192 million, to ¥204,455 million. This is pri‐marily due to increases of ¥17,302 million in goodwill, ¥10,451 million in intangi‐
ble assets, and ¥8,238 million in long-term ﬁnancial assets. The increase in longterm ﬁnancial assets is primarily due to the extension of loan terms.
Current assets decreased by ¥49,131 million, to reach ¥446,190 million. This is
primarily due to decreases in cash and cash equivalents by ¥51,016 million andother short-term ﬁnancial assets by ¥12,833 million.
Total equity increased by ¥15,272 million, to ¥530,677 million. This is primarily
due to an increase in retained earnings by ¥23,451 million.
Equity attributable to owners of the Company increased by ¥15,306 million, to¥526,193 million.
Liabilities decreased by ¥24,211 million, to ¥119,967 million. This is primarily
due to a decrease in interest-bearing short-term debt by ¥35,012 million.
The ratio of equity attributable to owners of the Company to total assets at
March 31, 2018 increased by 3.4 percentage points from the end of the preced‐
ing consolidated ﬁscal year and reached 80.9%, which was 77.5% in the preced‐
ing consolidated ﬁscal year.

Copyright ©2018 HOYA GROUP-Cash Flow
Cash and cash equivalents at the end of ﬁscal 2018, inclusive of a ¥649 million
decrease due to ﬂuctuations in foreign currency rates, amounted to ¥245,835
million, a decrease of ¥51,016 million compared with the end of the previous ﬁs‐cal year.
Net cash generated from operating activities amounted to ¥135,499 million (anincrease of ¥27,837 million compared with the previous ﬁscal year). The main
factors for the increase were ¥124,248 million from proﬁt before tax (an in‐crease of ¥13,453 million from the previous ﬁscal year); ¥28,711 million from de‐preciation and amortization (a decline of ¥1,065 million); ¥1,763 million from adecrease in inventories (an increase of ¥1,034 million); ¥6,562 million from anincrease in trade and other receivables (a decrease of ¥1,035 million); ¥4,052
million from an increase in trade and other payables (a decrease of ¥4,912 mil‐lion); and ¥26,425 million from income taxes paid (a decrease of ¥189 million).
Net cash used in investing activities amounted to ¥68,533 million (an increase of¥41,026 million compared with the previous ﬁscal year). The main factors forthe decrease were ¥17,974 million from payments for acquisition of property, plant and equipment (a decrease of ¥3,554 mil‐lion) and ¥54,018 million from payments for acquisition of subsidiaries (an increase of ¥47,658 million).
Net cash used in ﬁnancing activities amounted to ¥117,333 million (an increase of ¥53,044 million compared with the previous
ﬁscal year). The main factors were ¥29,042 million from dividends paid to owners of the Company (a decrease of ¥406 million);¥35,021 million from payments for redemption of bonds (an increase of ¥35,000 million); and ¥55,034 million from payments forpurchase of treasury shares (an increase of ¥20,027 million).

-

Capital Expenditures/Depreciation and Amortization
The total capital expenditures of all operations of the HOYA Group amounted to ¥19,289 million during the consolidated ﬁscal
year ended March 2018, a decrease of ¥3,574 million over the preceding consolidated ﬁscal year.
In the consolidated ﬁscal year ended March 2018, investment in the Life Care business amounted to ¥10,727 million, and invest‐
ment in the Information Technology business amounted to ¥8,413 million, which account for 55.6% and 43.6%, respectively, ofthe total capital expenditures by the Group.
The investment was covered by internally generated funds.
During the consolidated ﬁscal year ended March 2018, in the Life Care business,
the HOYA Group invested in production facilities, primarily for eyeglass lenses,
with the aim of increasing capacity of production plants and optimization. For
intraocular lenses for cataracts, the HOYA Group invested in production facilities
with the aim of increasing production capacity to meet growing demand for its
products.
In the Information Technology business, the HOYA Group invested in production
facilities, primarily for high-value-added products of semiconductor and liquid
crystal display related products and optimization of production facilities ofimaging-related products.
Depreciation and amortization (including impairment losses) for the ﬁscal year
under review were ¥34,510 million, 14.6% higher than in the previous ﬁscal year.

Copyright ©2018 HOYA GROUP-

Policy Concerning Decisions on Appropriation of Retained Earnings, etc.
The Company aims to maximize the HOYA Group’s corporate value by developing businesses globally and changing the businessportfolio to conform to the changing times and environments.
With respect to capital policy, the Company’s basic policy is to adopt decisions that strike the optimum balance between ensur‐
ing internal reserves for the future growth of the HOYA Group and returning proﬁts to shareholders, while pursuing the opti‐
mum capital structure for the Company that includes ﬁnancial soundness and capital eﬃciency.
In addition, by promoting management that gives priority to capital eﬃciency by realizing maximum proﬁtability from the assets
entrusted to the Company by the shareholders, and taking further steps toward management that gives priority to SVA (Share‐
holder Value Added), which is measured as the proﬁt generated by the Company’s operating activities minus the cost of capital,i.e., the proﬁt expected by shareholders, the Company aims for “Maximization of Corporate Value.”
With respect to internal reserves for future growth, resources will be preferentially appropriated to investment in the growing
businesses for market share expansion, entry into untapped markets, and nurturing and obtaining new technologies. In addition
to growth of existing businesses, the Company will also proactively pursue possibilities including mergers and acquisitions tofurther enrich our business portfolio. As for the Information Technology segment, which has been positioned as a steady earn‐ings business, we will continue to make capital investment that further reinforces the technological abilities that become thesource of competitiveness, and development investment that will contribute to developing next-generation technologies andnew products.
With respect to returning proﬁt to shareholders, the Company’s policy is toproactively return proﬁt to shareholders through using excess cash for divi‐
dends and the share buybacks while giving comprehensive consideration to theoperating performance of the current term, level of internal reserves, and the
medium-to-long term capital demands and capital structure, among otherfactors.
Coupled with the interim dividend of ¥30 per share, the annual dividend was¥75 per share. The consolidated dividend payout ratio was 29.0%.
Based on the aforementioned policy, the Company resolved to repurchase its
shares at the price equal to ¥55,000 million in this consolidated ﬁscal year.

Copyright ©2018 HOYA GROUP