Ryosan Company, Limited

FY2013 Results Meeting
Fiscal year ended March 31, 2014

May 27, 2014
Naoto Mimatsu,
President
An Electronics Systems Coordinator

1Results for FY2013
9th Medium-Term Management Plan
FY2014 Business Plan
(Supplementary) Technology Strategy
NoticeBusiness 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 Coordinator

2Overview of Consolidated Results
FY2011Results

FY2012
Of total

Results

FY2013
Of total

Of total

2,383% Chg.
YoY

Net sales

2,178

Gross margin

167

7.7%

166

8.1%

186

7.8%

+11.6%

SG & A expenses

132

6.1%

129

6.3%

134

5.6%

+3.6%

Operating income

35

1.6%

36

1.8%

51

2.2%

+40.0%

Ordinary income

44

2.1%

41

2.0%

50

2.1%

+22.9%Net income

18

0.9%

28

1.4%

32

1.4%

+14.5%

Earnings per share¥55.90Results

2,065

Results¥84.40Of total

Results+15.4%¥101.86
Of total

Results

Of total% Chg.
YoY

Domestic sales

1,492

69%

1,312

64%

1,246

52%

(5.0)%

Overseas sales

686

31%

752

36%

1,137

48%

+51.1%

3

An Electronics Systems Coordinator(Unit: 100 millions of yen)3

Overview of Results by Business Segment
FY2011Results
Net Sales

1,323

Operating income

24.0

Net Sales

554

Operating income

18.0

Net Sales

246

Operating income

8.7

Net Sales

54

Operating income

2.2

Of total

FY2012
Results

Of total

1,311

FY2013Results

Of total

1,615% Chg.
YoY+23.1%

Semiconductors

Electronic
Components

Electronic
Equipment

Ryosan Products(Heat sinks)

1.8%

19.3

1.5%

510
3.3%

12.0

8.5

2.4%

0.1

14.6

4.4%

7.0

(0.5)

(17.9)

(3.3)

(1.8)

Net Sales

2,178

2,065

2,383

Operating income

35.1

Adjustments

2.7%+21.9%(10.4)%

4.1%

50
0.3%

+65.6%
+6.5%

174

48
4.1%

2.0%

543

195
3.6%

32.0

(16.8)%
+4.6%

‐

‐

+15.4%

Total

1.6%

36.7

1.8%

51.4

2.2%

+40.0%*Numbers for FY2012 and later have been calculated using the revised allocation method for company-wide expenses, etc.
(Unit: 100 millions of yen)
4
An Electronics Systems Coordinator4

Main Suppliers
ORTUS
Technologies
1.8%
COSEL
1.9%

Other
suppliers
16.7%

NEC TOKIN
2.0%
NXP
Semiconductors
2.1%
NLT
Technologies
2.5%

Renesas Electronics
49.9%

NEC
5.7%

Japan
Aviation
Electronics
Industry
2.8%

ALPS
Electric
5.9%[Percentage of net
sales by businesssegment]
Ryosanproducts
Electronic (2.1%)
Equipment(7.3%)

ElpidaMemory8.7%

Electronic
Components(22.8%) Semiconductors(67.8%)* Honorifics omitted* Percentage (%) is based on actual sales of products purchased from suppliers for the FY2013.
5

An Electronics Systems Coordinator5

Main Clients<<Top 40 companies by net sales>>Clients(alphabetical order)

Top 1-10

Top 11-20

Top 21-30

Top 31-40

ALPINEALPS Electric

Canon

ADVANTESTHITACHIBrother Industries

Fuji Film

BLUEWAY (C)Mitsubishi Electric

CASIO COMPUTER

Fuji Xerox

ClarionNEC

Calsonic Kansei

JVC KENWOOD

Furuno Electric

NIKON

DENSO

NINTENDO

KONICA MINOLTA

OMRONFujitsu

Stanley Electric

K-PRO (K)

PIONEER

Hyundai Motor (K)TOSHIBA TEC

Sharp

SAMSUNG (K)JABIL (U)Wuhan Fiberhome (C)TCL (C)

Sumitomo Wiring Systems

Mamiya-OP

YAMAHA

TOPRO (C)Wacom

Panasonic

Yazaki Corporation

Yokowo(Top 10)Percentage
Sales of allclients

52%(Top 20)

68%(Top 30)75%(Top 40)79%* Honorifics omitted* Ranking and percentage (%) are based on actual sales for the FY2013.
* (K), (U) and (C) represent clients in Korea, US and China, respectively.
6

An Electronics Systems Coordinator6Consolidated Balance Sheet

000

74.0%

◆ Assets

800

1,602

1,692

73.0%

600

2,000

◆ Liabilities/net assets
1,800
1,692
1,602

120.0%

100.0%

1,600

72.0%

400

1,400
71.0%

200

000

1,396

1,489

800

Liabilities

505

434

80.0%

1,200

70.0%

1,000
Current
assets 800

72.9%

70.2%

Net
assets to
60.0%
total assets

1,187

Net assets

69.0%

600

600
68.0%

400

1,167

40.0%

400
20.0%
67.0%

200

205

Fixed
66.0%
assets2030

2012年度末End
of Mar. 20132013年度末End of Mar. 2014

Major increases/decreases
Results

Trade notes and accounts
receivable
7

751

200

0

0.0%

2012年度末End
of Mar. 20132013年度末End of Mar. 2014

Increase/decrease+70

Merchandise and finished214+26
products
An Electronics Systems Coordinator

Results

Increase/decrease

Trade accounts payable

303

+50

Short-term loans in foreign currency

156

+27

(Unit: 100 millions of yen)7

Consolidated Statement of Cash Flow

8

FY2012FY2013Results

Results

Main factors

Cash flows from operating
activities

176

15

- Income before income taxes andminority interests- Increase in notes and accounts payable- Increase in notes and accounts
receivable-trade- Increase in inventories

Cash flows from investing
activities

24

(4)

- Purchase of property, plant andequipment(2)

Free cash flow

201

10
- Cash dividends paid
- Purchase of treasury stock- Increase in short-term loans payable

(19)
(18)
15

Cash flows from financing
activities

(44)

(22)

Balance of cash and cash
equivalents

504

499

An Electronics Systems Coordinator

50
37
(49)
(15)

(Unit: 100 millions of yen)8

Results for FY2013
9th Medium-Term Management Plan
FY2014 Business Plan
(Supplementary) Technology Strategy

An Electronics Systems Coordinator9Corporate Philosophy (RS21)

Fundamental
Belief● Strong belief that “the corporation is a public

Basic
Philosophy● Enhance electronics system coordination(Business &Mission)Management
Philosophy(Management
Principles)10

institution.”● Facilitate the harmonious fusion ofhuman and technological progress● Grow as a mission-based corporation● Create corporate value● Increase value convertibility

An Electronics Systems Coordinator

10Three functions (essential functions of an electronics systems coordinator)“The Information Function”

Provide customers with accurate information
by gathering data on the needs of the times
and the trends in technology“The Solutions Function”

Integrate expertise and knowledge withadvanced technology to contribute to client
solutions“The Distribution Function”

Deliver what the client needs at the required

time and in optimum condition

Constantly evolving these three functions enhances
the level of customer satisfaction and our value
11

An Electronics Systems Coordinator

11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 and
OEM/ODM)◆ Issues to be Addressed・ Reconstructing our business portfolio

・ Expanding our corporate activities on a global scale
・ Revising our profit/financial structure
12

An Electronics Systems Coordinator

12Basic Stance[Basic stance of the 9th Medium-Term Management Plan]“Innovation” and “growth”

Pursuing a business model shift which responds to changes inour business structure and 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.
13

An Electronics Systems Coordinator13

Growth Strategies◆ Further promotion of multi-vendor support to respond to customers’
diversifying needs◆ Strengthening global support to expand overseas business◆ Strengthening system solution capabilities (capabilities in system engineering
plus embedded systems) to create new business models

14

An Electronics Systems Coordinator

14

Further promotion of multi-vendor support to respond to customers’ diversifying
needs

Customer needs for which response is possible

・Renesas Electronics Corporation

FuturePast

GYRONICS
Present

Consider M&A

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

・ON Semiconductor
・Yamaha Corporation

No. of supplier
15

・NXP Semiconductors N.V.
・Macronix International Co., Ltd.
・Entropic Communications, Inc.
・Everspin Technologies, Inc.
・THine Electronics, Inc.

An Electronics Systems Coordinator

・
・
・
・
・
・

15

Strengthening global support to expand overseas business

GermanySouth 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
・Design-in and sales for Taiwanese
corporations

・Design-in and sales for Indian
corporations

Shared Theme in All
Countries
・Develop unique semiconductor andelectronic component manufacturers

Singapore/Malaysia/Thailand
・ Follow-up overseas shift of Japanese andAmerican clients

16

An Electronics Systems Coordinator16Strengthening system solution capabilities to create new business models

Ryosan’s System Solution
Systems Technological Capability (Realization)

Embedded Systems Capability (Coordination)

・Enhance system technological capability ingrowth 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.)

Modulemanufacturers

Material
manufacturers

Components
manufacturers

System consignment manufacturers(design, manufacturing)

Clients
17

An Electronics Systems Coordinator

17Segment Strategies

Semiconductors
segment
strategyElectronic
components
segment
strategy18◆ Seeks to expand our business by strengthening design-in activities
for products of the major manufacturer Renesas Electronics andforeign semiconductor manufacturers.

◆ Seeks to expand our business in fields such as car electronics andindustry by augmenting sales promotion activities which are alignedwith supplier strategy.

An Electronics Systems Coordinator18

Segment Strategies◆ Seeks to expand our business by strengthening our embedded system
Electronic

capability as a base for focusing on our system solution business which

equipment

promotes module and component business through new resources, as well as

segment

by strengthening our facilities equipment business through advancement of
the 3 business elements of hardware, materials and service.

Ryosan◆ Although transfer of the heat sink production business to Sankyo Tateyama,

products

Inc. scheduled for September 1, 2014, Ryosan will continue to focus on sales

segment

activities for heat sinks as an agent.

◆ With a focus on semiconductor technology that we have accumulated over a
Technology
strategy

period of many years as a technological trading company, the Ryosan Groupwill expand the field of technical support for electronic components andembedded products, and shall strengthen system technological capability
which supports system solution capability.

19

An Electronics Systems Coordinator

19

Infrastructure Strategies◆ Reinforcing management in terms of quality
・ Strengthen governance through outside directors and outside auditors.
・ 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 groupcompanies.
・ Increase efficiency of headquarters functions (Headquarters Management
Division).
・ Utilize human resources through diversity management.
20

An Electronics Systems Coordinator

20Basic Policy Regarding Redistribution of Profits to the Shareholders◆ Basic policy
・ Sustain stable and high dividends; seek resumption of 80 yen
dividends by FY2016.
・ Continue to consider share repurchases based on trends inconsolidated business performance, etc.

◆ Consolidated dividend payout ratio
・ 50% or higher each year.

21

An Electronics Systems Coordinator21

Results for FY2013
9th Medium-Term Management Plan
FY2014 Business Plan
(Supplementary) Technology Strategy

An Electronics Systems Coordinator

22Overview of Consolidated Business Plan
FY2013Results

Of totalPlan

Of total

2,270% Chg. YoY

Net sales

2,383

Gross margin

186

7.8%

186

8.2%

(0.0)%

SG & A expenses

134

5.6%

135

5.9%

+0.3%

Operating income

51

2.2%

51

2.2%

(0.9)%

Ordinary income

50

2.1%

53

2.3%

+4.9%

Net income

32

1.4%

34

1.4%

+5.5%

Earnings per share¥101.86
Results

23

FY2014(4.8)%¥108.06
Of totalPlan

Of total% Chg. YoY

Domestic sales

1,246

52%

1,250

55%

+0.3%

Overseas sales

1,137

48%

1,020

45%

(10.3)%An Electronics Systems Coordinator(Unit: 100 millions of yen)23

Overview of Business Plan by Segment
FY2013Results

FY2014

Of total

Net Sales

1,615Operating income

32.0

Net Sales

543

Operating income

14.6

Net Sales

174

Operating income

7.0

Net Sales

50

Plan

Of total

1,470% Chg. YoY(9.0)%

Semiconductors

2.0%

31.5

2.1%

560

(1.7)%+3.1%

Electronic Components

2.7%

15.5

2.8%

195

+5.7%
+11.4%

Electronic Equipment

Ryosan Products (Heatsinks)

Operating income

(0.5)

4.1%

5.5
45

‐

1.0

(1.8)

(2.5)

Net Sales

2,383

2,270

Operating income

51.4

Adjustments

2.8%(22.4)%(11.0)%

2.2%‐(4.8)%Total

24

An Electronics Systems Coordinator

2.2%

51.0

2.2%

(0.9)%(Unit: 100 millions of yen)

24

Plan for Redistribution of Profit to Shareholders
Current term net income
Total amount of dividends (figures inparenthesis are dividend payout ratio)(Unit: 100 millions of yen)

Purchase of treasury stock
Total payout ratio

50

67%

141%
39

40

114%
36

162%

65%

30
30

19

17

41
17

20

27
(66%)

18

10

13
(71%)

@¥80

32

28

@¥40

19
(71%)

@¥60

34
22
18

(65%)

(59%)

@¥60

@¥70

0
FY201025

FY2011An Electronics Systems Coordinator

FY2012FY2013

FY2014 (Plan)

25

Results for FY2013
9th Medium-Term Management Plan
FY2014 Business Plan
(Supplementary) Technology Strategy

An Electronics Systems Coordinator

26

Basic Policy & Technology Strategy[Basic Policy]
Create added value by providing practical technology
and contribute to sales (design-in) expansion
and profit maximization in Ryosan’s main businesses.

[Technology Strategy]
・Expansion of specialty systems and deep cultivation oftechnological capability
・Advance expansion of technology for growth fields &global expansion of in-house technology
・Expansion of activity from semiconductor base to
Ryosan’s main businesses
An Electronics Systems Coordinator27

Position of technology
Technology for selling out devices
Device technology＜

Supplier

RS technology

ClientSystem technology(Client set)＜

Position of RS technology

Provision/pursuit of practical technology which matches conditions
at each client■Development technical capabilities and device applied technical capabilities gained
through many years of experience
I. Deep knowledge of characteristics/problems related to device application; technicalcapabilities which maximize the performance of devices.
II. Proposal/realization capabilities with in-depth understanding of the client’s uniquedevelopment style and set specifications (system)
An Electronics Systems Coordinator

28

Realization Measures～Strengthening technology that sells out～
■Strengthening system technical capabilities (including
elemental technology) and proposal capabilities■Strengthening development capabilities throughcommissioned development (ASIC/software development)■Strengthening technical support capabilities (device applied
technical capabilities) for complementing overseas suppliers■Making kit proposals which include all products handled by
RS and expand technological activities into module business■Promoting reference and customization of in-house
technology for overseas client acquisition strategy
An Electronics Systems Coordinator

29

■ Strengthening system technical abilities (including elemental
technology) and proposal capabilities

・Expand by focusing on growth fields, high-consumption fields,
and fields which are consistent with our growth strategy
In-vehicle electrical components (AV, ADAS, EV/HEV, automatic driving),
Home equipment (Smart grids, LED/organic EL lighting),
Mobile devices (wearable devices, LTE, DSC）, medical/health devices

・Accumulate element technology in above fields
Image/audio processing, communication I/F(Ethernet AVB, CAN FD, DALI/DMX, PLC)
Wireless communication (Wi-Fi, BT, Sub-Giga), sensor technology
Energy-saving technology, analog technology(Mixed-Signal, power source, etc.)

・Construction and supply of platforms (middleware, software)
Smartphone collaboration (Miracast), in-vehicle BSW (Autosar), etc.

An Electronics Systems Coordinator

30

■Strengthening system technical capabilities (including elemental
technology) and proposal capabilities
Strengthening value-added areas by improving and enhancing supported systems
Level in FY2011

Level reached in FY2013

Improving and enhancing
Turn-key
development
System technicalcapcapabilities(Value-added areas)①

supported systems

Set handling
Reference development

Elemental technology
development

System proposal
Commissioned development(Software development, ASIC development)
Technical support (handling questions regarding
detailed product information at the time of acquiring clients),
development of reference corresponding to devices

Device proposal, technical contact, questions handling①: Fields covered by Technical Division
An Electronics Systems CoordinatorCar
multimedia

In-vehicle
Electricalcomponents

Householdlighting

LTE

Smart
meters31

■Technical support capabilities (device applied technical capabilities) forcomplementing overseas suppliers
Item for strengthening
technical capabilities

System and productSupplier

Details

Large household
appliances, lighting, carmultimedia

Company A
Company B

Company A: ・NFC chip+ARM microcomputer (Corex-M4/M0)
・Touch-panel+ARM microcomputer (Cortex-M4), 7 others
Company B: PHY attached to in-vehicle camera assessment board

Creation of RS original
materials

All productsCompany C
Company B

Company C: Leaflets: 5, Production introduction material: 5Company B: MEMS CLK: 1

Reference board andsoftware design

Power supply
LED lighting
Speech recognition
Near fieldcommunication

Companies A, B

Power Supply: Company A business record: 16 projects
Company B business record: 2 projects
LED: Company A business record: 3 projects
Company D business record: 0 projects
Audio recognition: Not able to acquire audio recognition M/W;
finished creating demonstration software using audio synthesis IC
control
Short-range communication: Finished demonstration software using
energy harvest function

Kit solution proposal

Companies A, D
Company A

Company A

Device application
evaluation

Gigabit Ethernet PHY
Ripple Blocker
MEMS
Power supply IC

Company B
Company B
Company D
Company D

Error analysis andisolation of problems,
proposal of solutions

All handled products

An Electronics Systems Coordinator

Company A
Company B
Company D
Company E・Finished accumulation of know-how through actual business・Created and measured assessment board. Reported results to
suppliers.
・Not able to acquire samples (software/hardware) due to supplier
circumstances
・Currently creating an assessment board for power supply systemusing STLux
11 projects：10 closed, 1 pending
3 projects：2 closed, 1 continued
2 projects：Closed
2 projects：All closed

32

■ Making kit proposals which include all products handled by RS andexpand technological activities into module business
Kit proposals【Continue company-wide projects】
Continue to implement kit business meetings by sharing businessinformation in related divisions
Creation/implementation of kit proposal materials

Kit proposals using RS original board

Business meetings
with major clients

Block diagram

List of devices

Navigation system, in-vehicle air conditioning, LED ceiling,
washing machine, toilet seat, etc.

Construct a speedy demonstration environment

Business performance in more than 20 fields→ Expand while targeting growth fields
An Electronics Systems Coordinator

33

■Making kit proposals which include all products handled by RS andexpand technological activities into module business
Module business
Smart module
Microcomputer

SoC(ASIC)

Power circuit

Analogwireless IF
sensor

Set manufacturers

・Collaboration with related businessheadquarters within Ryosan・Cooperate with module manufacturers tofind new products, conduct technicalcollaboration and support development

Propose as smart module
・Technical support for module
・Modification for each customer

RyosanSupport modularization through inhouse development technology, systemtechnology and element technology

・Establish a specialized team within technicalheadquarters (Enhance sequentially in
relation to sales volume)
・Expand globally (China, Korea, etc.)

Module manufacturers
Red: Newly provided technology activity fields Black: Existing activity fields

An Electronics Systems Coordinator

34

■Promoting reference and customization of in-house
technology for overseas client strategy

・Reference development and expansion for in-vehicle electronic components- Construct basic software (BSW)→ Expand to China and Korea- Refine EPS motor control software
・Expand solutions for local China- Cooperate with exclusive Chinese distributors to set targets
Construct and expand technical system for strategic clients and fields
・Increase kit sales; expand module business into China and Korea

An Electronics Systems Coordinator

35

Example of Expanded Support System) Car-to-Car Communication
Device support is possible for C2X (base band, RF) and control microcomputers(RZ/A1H).
Also, we are constructing a total support system for devices and software including carto-car communication M/W for Europe and North America.
Example of car-to-car communication system
SDRAM

SecureWireless technology
C2X(WAVE 5.9G)

Company A

Company
A

PHY

SPI

Ether

SDIO

SDIO

MAC

Position, speed
information, etc.

OFDM

There is a vehicle
driving in front on theright. Be careful.

RFCommunication
systemRZ/A1H (car-tocar communication
M/W mounting)Car-to-car
communication
control

Host

Boot
S-FLASH

Communication system

An Electronics Systems Coordinator

36

Example of Expanded Support System) Miracast
Total support for a solution consisting of a new standard which uses Wi-Fi (wireless) toconnect smartphones and in-vehicle equipment.
Providing one-stop service for Wi-Fi modules, Miracast soft porting, and SoC technology.
【Miracast application example】
Navigation application of a smartphone is used
on in-vehicle equipment
Information of in-vehicle equipment is displayedon a smartphone◆Exhibiting booth at ESEC 2013 REL
May 12 to 14, 2013 at Tokyo Big Sight◆ Exhibiting booth at Embedded Technology 2013 REL
November 20 to 22, 2013 at Pacifico Yokohama◆Exhibiting booth at Car-Ele Japan
January 15 to 17, Tokyo Big Sight

Miracast
Company A
Collaboration

Solution construction
Technical support
Consigned development

SoC
Wi-Fi, BT
modulesCompany B
Company C

M/W (Miracast)

An Electronics Systems Coordinator

37

Example of Expanded Support System) EPS Motor Control
Through cooperation with design houses who possess technical know-how in motor
control, acquire motor control technology and develop modify programs
which meet client specifications
Cooperation with partner
Understanding motor
control technology

In-vehicle
clients

RyosanAcquiring tuning methods[Details of technical support]①Operation verification and modification which matches client motor units②Design of MCAL sample programs, boot programs*MCAL: Driver program in compliance with AUTOSAR

Microcontroller
EPS application program

Boot Loader

Complex Drivers

MCAL sample program

Motor
control
programSENTAn Electronics Systems Coordinator

SSC
communication: Designed by Ryosan

Data
Flash

CAN

PLL

UART

CSI

TIMER

PORT

ADC

・・・

：Designed by Ryosan + partner38