Ryosan Company, Limited
FY2016 Results Meeting
Fiscal year ended March 31, 2017

May 25, 2017
Naoto Mimatsu
President and Representative Director
An Electronic Systems Coordinator

1Results for FY2016

Business Plan for Full Year FY2017

Implementation Status and Forecast of the 9th
Medium-Term Business Plan
NoticeBusiness forecasts and all statements related to the future contained in this presentation
are based on information currently possessed by the Company and on certain
assumptions which are judged 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 Electronic Systems Coordinator

2Results for
FY2016

Consolidated Statements of Operation

 In FY2016, both net sales and operating income decreased in comparison with FY2015,
due to the appreciation of yen and conclusion of a large-scale project started in FY2015,
even though there were signs of market recovery in the in-vehicle electrical equipment andconsumer segments.
 All of KPIs (except for net profit) have exceeded the revised initial plan.
a

b

c

d

e

f

FY2015hiChange(e‐a)

RevisedInitial
Plan

Gap
(h‐e)

△4.4%

215.0

+1.4%

FY2016(Unit: ¥Bil)

Amountg%

1st Half

2nd Half

Amount

101.8

116.1

218.0

%

Net Sales

228.1

Gross Profit

19.3

8.5%

8.5

9.7

18.3

8.4%

△5.1%

17.9

+2.4%

13.7

6.0%

6.7

6.9

13.6

6.3%

△0.8%

13.5

+1.2%

5.5

2.4%

1.8

2.7

4.6

2.1% △15.9%

4.4

+5.9%

3.6

1.6%

1.7

1.6

3.3

1.5%

△8.3%

3.6

△6.5%

58.13

58.41

116.54△2.7%

123.78△5.8%

SG&A
Expenses
Operating
IncomeNet Profit
EPS (¥)

119.77An Electronic Systems Coordinator

3Factors for Increase and Decrease in Net Sales and Ordinary
Income (Year-to-Year Comparison)

Results for
FY2016

 Even though there were sales increases in the in-vehicle electrical equipment andconsumer related businesses, net sales decreased by ¥10 bil due to a fall in yen equivalent,in addition to the conclusion of MFP business started in FY2015.
 Although gross profit increased, ordinary income reduced by ¥0.8 bil year-on-year mainly
because of Forex fluctuation and increases in HR costs, etc..

Net Sales

Ordinary Income(Unit: ¥Bil)(Unit: ¥Bil)

Consumer
+2.0

228.1

In-vehicle
electricalequipment

+9.2

SG&A
+0.2
GM
+0.3

Forex
▲10.0

Others
▲0.5

Forex
▲0.4
HR etc.

Others
▲1.3
MFP
▲10.0

FY15

▲0.3
5.6

FY16

An Electronic Systems Coordinator

4.8

218.0
FY15

FY16

4

Results for
FY2016

Segment Information

 Both net sales and operating income in Semiconductors decreased, due to the impact by
the appreciation of yen, conclusion of the project for information and communicationequipment, and sluggish sales of car navigation systems, car-audios and digital cameras.
 Electronic Components were affected by the appreciation of yen, but sales of the in-vehicle
electrical equipment and consumer businesses remained stable.
 Sluggish sales in the Electronic Equipment resulted from conclusion of the MFP business.
FY2015(Unit: ¥Bil)

Amount2nd Half

Amount

58.8

66.4

125.3

1.0

1.4

2.4

32.3

36.8

69.1

0.8

1.1

1.9

10.6

12.8

23.5

0.3

0.3

0.6

△0.4

△0.3

△0.1

△0.4

Net Sales

228.1

101.8

116.1

218.0

Operating
Income

5.5

1.8

2.7

4.6

133.1

Semiconductors Operating
Income

2.9

Net Sales

64.9

Operating
Income

1.5

Net Sales

30.1

Operating
Income1.5Electronic
Equipment
Adjustment
Total

%

1st Half

Net Sales

Electronic
Components

FY2016An Electronic Systems Coordinator

2.2%

2.4%

5.0%

2.4%

%

Change△5.9%

2.0%△15.8%+6.5%

2.8%+26.4%△21.9%

3.0%△53.9%△4.4%
2.1%△15.9%
5

Results for
FY2016

Trend in Net Sales and Operating Margins by Quarter Net sales have rebounded after bottoming out in the 1Q of FY2016, because Electronic
Components remained stable, thanks to steady performance of the in-vehicle electricalequipment business, and Electronic Equipment won contracts for projects to supply invehicle electrical equipment.
 Operating margins have decreased in the 4Q of FY2016, because of the end-of-term pricereductions.
Net Sales (Unit: ¥Bil)
70

Operating Margin (%)

Semiconduscors

57
7

Electronic Comonents

59

59

8

9

52
5

16
35

16

15

15

2.7%

2.6%
2.3%

2.1%

33

34

34

1Q

2Q

3Q

Electronic Equipment

31

53
48
3

6

15

16

Operating Margin (%)

57

58

6

6

5.0%

4.0%

18
18

3.0%

1.8%

2.0%

3.0%

2.3%
1.3%
28

29

1Q

2Q

33

33

3Q

4Q

1.0%

0.0%

0
4Q

FY2015An Electronic Systems Coordinator

FY2016

6

Results for
FY2016

Segment Trend Information

 There was no significant change in the distribution ratio by product. In terms of application,
the distribution ratio of sales for the information & communication equipment reduced, while
the ratio of the sales for the in-vehicle electrical equipment expanded.
By Application

By Product4%
14%

Others

14%

5%
13%

16%

16%

17%

Consumer

22%

14%

Information &Communication

6%

24%

40%

FY14

44%

FY15

51%

Industrial Equipment■ Semiconductors ■ Electronic Components■ Electronic Equipment
Facilities Equipment
1%
1%
2%

6%

In-Vehicle
Electrical
Equipment

FY16

12%

10%

3%
5%

3%
5%

21%

24%

Electromechanical
Components

3%

3%

Memories

15%

14%

14%

Discrete
Semiconductors

42%

41%

40%

System LSIs

FY14

FY15

FY16

2%
5%

3%

4%

Others

42%

38%

37%

Asia

54%

59%

FY14

FY15

59%

Japan

Display Devices

20%

8%

By Region
4%

System Equipment
Power Supplies

FY16

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7

Consolidated Balance Sheet / Consolidated Statements of Cash Flows

Results for
FY2016

 Cash and Cash Equivalents decreased by ¥12 bil due to cash dividends paid (¥4.8 bil) &purchase of treasury shares (¥4.4 bil). Net assets decreased by ¥5.8 bil accordingly.
 Operating cash flows have come to be negative because of an expansion of the overseas
semiconductor business.
(Unit: ¥Bil)■Consolidated Balance Sheet

End of Mar.
2015

End of Mar.
2016

End of Mar.
2017

Gap (17-16)

Total Assets

168.8

157.0

161.6

+4.6

Current Assets

149.2

139.1

142.8

+3.6

Non-Current Assets

19.5

17.8

18.7

+0.9

Liabilities

47.0

41.6

52.1

+10.4

Net Assets

121.8

115.3

109.5

△5.8

Net Assets to Total Assets (%)

72.2%

73.5%

67.8%

△5.7%

■Consolidated Statements ofCash FlowsFY2014FY2015FY2016Gap(FY16-FY15)

Cash Flows from Operating Activities

11.6

4.7

△1.8

△6.5

Cash Flows from Investing Activities

0.9

0.5

△0.8

△1.3

Cash Flows from Financing Activities

△7.5

△9.5

△9.2

+0.3

Cash and Cash Equivalents at the Endof the Period

55.9

50.7

38.6

△12.0

An Electronic Systems Coordinator

8Results for FY2016

Business Plan for Full Year FY2017

Implementation Status and Forecast of the 9th
Medium-Term Business Plan

An Electronic Systems Coordinator9Business Plan for
Full Year FY2017

Business Objectives

 In-vehicle electrical equipment, FA equipment and consumer businesses are expected toremain stable. Both net sales and operating income are projected to increase compared to
FY2016 (assumed exchange rate: 1 USD = 105 yen).
 Operating income is likely to improve due to an increase of sales on the one hand andmeasures to manage SG&A expenses on the other hand, resulting in an increase ofprofitability. Also, there will be some progress made with repurchase of treasury shares,
which is why EPS is expected to increase.
(Unit: ¥Bil)

FY2016
Full Year

FY2017%

1st Half

2nd Half

Full Year

112.0

118.0

230.0

%

Change(FY17-16)

MediumTerm
Target

+5.5%

270.0

Net Sales

218.0

Gross Profit

18.3

8.4%

9.4

9.8

19.2

8.3%

+4.8%

23.5

SG&A Expenses

13.6

6.3%

6.9

6.7

13.6

5.9%

△0.5%

14.0

Operating Income

4.6

2.1%

2.5

3.1

5.6

2.4%

+20.2%

9.5

Net Profit

3.3

1.5%

1.8

2.2

4.0

1.7%

+18.8%

6.0

64.06

78.30

142.36

EPS (¥)

116.54

An Electronic Systems Coordinator+22.2%

10

Business Plan for
Full Year FY2017

Overview of Business Plan by Business Segment

 Net sales and operating income of almost all of the segments are expected to grow,compared with FY2016.
 Semiconductors are forecasted to increase because of stable sales in the in-vehicle
electrical equipment and industrial equipment segments. Electronic Components will be ledby the in-vehicle equipment and consumer businesses. Electronic Equipment is projected
to improve as business expansion for the in-vehicle electronic equipment and large-scale
capital investments are expected.
FY2016FY2017(Unit: ¥Bil)

2nd Half

Full-Year
Plan

Semiconductors

64.5

66.5

131.0

1.5

1.8

3.3 2.6% +34.6%

5.1

Electronic
Components

34.0

35.0

69.0

△0.2%

70.0

0.9

1.0

2.0 2.9%

+2.8%

2.0

Electronic
Equipment

13.5

16.5

30.0

+27.5%

30.0

0.3

0.4

0.7 2.5%

+8.0%

1.4

△0.4

△0.2

△0.2

△0.5

Net Sales

218.0

112.0

118.0

230.0

Operating
Income

4.6

2.5

3.1

Net Sales

125.3

Operating
Income

2.4

Net Sales

69.1

Operating
Income

1.9

Net Sales

23.5

Operating
Income0.6

Adjustment

Total

%

2.0%

2.8%

3.0%

2.1%

An Electronic Systems Coordinator%

Change(FY17-16)

MediumTerm
Target

1st Half

Full Year

+4.5% 150.0+5.5% 270.0

5.6 2.4% +20.2%

9.5
11

Additional Measures to Improve Capital Efficiency Includedin the 9th Medium-Term Business Plan (2nd Round)
Current

Afterwards

FY2017FY2017 to FY2018¥150 (annual total)¥150 (annual total)(Ordinary Dividend ¥100)(Ordinary Dividend ¥100)(Special Dividend ¥50)

(Special Dividend ¥50)

Acquisition of

FY2017FY2017 to FY2018

Treasury Shares

300 mil shares per year

450 mil shares per year

Dividend p.s.

Cancelation ofTreasury Shares

No PlanBusiness Plan for
Full Year FY2017

FY2017300 mil shares[Background] In the 9th Medium-Term Business Plan, the Company decided to proceed with measures
to improve capital efficiency and to reestablish growth path, as its most importantbusiness issues. Total return ratio for the last two years was 245% on average.
 In last July, the Company announced additional measures for improvement in capitalefficiency to increase dividend (FY2016: ¥140, FY2017: ¥150) and to purchase 3 miltreasury shares per year, for the next two years.
 The acquisition of treasury shares made in FY2016 was less than the initial plan (1.3
million shares), and although current business performance is improving, this time it was
decided that there is a need for additional measures to achieve the target of ROE of
5%. The Company thus implements the (second round of) measures to improve capitalefficiency and aim at achievement of its target.
 Even after these additional measures, the basic view to improve profitability throughreestablishing growth path and to improve capital efficiency still remains.
An Electronic Systems Coordinator

12Business Plan for
Full Year FY2017

Plan for Return to Shareholders

 The Company plans to raise the dividends and to pay 100 yen or more as ordinary
dividends and 50 yen or more as special dividends.
 The Company is in the process of acquiring maximum 4.5 mil treasury shares in the period
from May 2017 to May 2018.
Dividend per Share
Ordinary Dividend (yen)Acquisition of Treasury Shares

Special Dividend (yen)Dividend Ratio

Period

150
150

140

150
150%

140
50

50

117% 120%
105%
100

50

No. of Acquired Shares(10 thousand)

100%

50

Amount(¥Bil)

Aug. thru. Nov. 2011

100

1.7

Feb. 2013

100

1.9

May thru. June 2013

100

1.8

Feb. thru. Mar. 2015

45

1.3

Oct. 2015

23

0.6

Nov. 2015 thru. Feb. 2016

132

4.0

July 2016 thru. Mar. 2017

137

4.4

May. 2017 thru. May 2018
(Plan)

450

20.0

May 2018 thru. May 2019
（Plan）

450

-

79%
71%
59%
50

80
60

90

90

100

100

50%

60

0

0%
FY12

13

14

15

16

17
(Plan)

18(Plan)An Electronic Systems Coordinator

13

Results for FY2016

Business Plan for Full Year FY2017

Implementation Status and Forecast of the 9th
Medium-Term Business Plan

An Electronic Systems Coordinator

14Description of Initiatives of the 9th Medium-Term Business Plan•••

Implementation Statusand Forecast of the 9th
Medium-TermBusiness Plan

The Company has decided to delay one year (FY2018) to attain ROE target of 5%,
considering the latest business performances.
To realize this new goal, the Company will issue new measures as well as acceleratecurrent measures (FY17/18).
The Company will release the 10th Medium-Term Business Plan as originally expected(3 years from FY18) and aspire to attain ROE of 8%.

Basic StancePursuing a “business model shift” which responds to changes
in our business structure and a sustainable “independent growth”

Description of
Initiatives

Continue

Create New Business Models(Strengthen system solution capability）
１

Reestablish
Growth Path

Improve Capital
Efficiency

Continue

Promote Multi-Vendor Support(Expand new suppliers and products in current business)

Continue

Strengthen Global Support to Expand Global BusinessStep-Up

Proactive Investment Toward Growth

Step-Up

Acquire Treasury Shares(Aim at being a global distributor）

New

Streamline SG&A Expenses

New

Increase Leverage

An Electronic Systems Coordinator

15

Current Summary of the 9th Medium-Term Business Plan

Implementation Statusand Forecast of the 9th
Medium-TermBusiness Plan The Company will not achieve the target level due to sluggish sales growth of overseas
semiconductors and the termination of large scale investment opportunities.
 Accomplishments are made such as acquiring new HK subsidiary and/or introducing new
business promotion methodology using its system solution expertise.
FY2014FY2017(MediumTerm Target)

Electronic
Components

Electronic
Equipment

Project Business

Total

Status Update●Overseas semiconductor fell short ofestimates●Drop in figures results from strong yen
rates and the earthquake○Strategic base acquired in South China

151.2

150.0

130.1

Operating
Income

3.4

5.1

3.3

Net Sales

61.9

70.0

68.4

Operating
Income

1.6

2.0

2.0

Net Sales

19.3

30.0

30.0

Operating
Income

1.0

1.4

0.7

Net Sales

0.0

20.0

1.5

Operating
Income

0.0

0.9

-

Net Sales

233.5

270.0

230.0

Operating
Income

5.9

9.5

5.6

Net Sales
Semiconductors

FY2017(Forecast)

An Electronic Systems Coordinator○Stable sales mainly for in-vehicle
electric equipment and consumers●Contribution made by big transactions
with low margins●Disappearance of large scale
investment opportunities○Reinforcement of sales competitiveness16

Overall Image of the 9th Medium-Term Business Plan

Implementation Statusand Forecast of the 9th
Medium-TermBusiness Plan

Trend in Net Profit and Net Assets
6.0

115.3
109.5

ProfitTarget Revise down the net asset target toattain ROE of 5%, due to slow sales
increase

Net Asset
Target Extend share buy-back period (Till
FY18), increase shares (4.5 mil
shares) and dividend (annual total of
¥150)

101.1

3.6

4.0

3.4

FY15

FY16

FY17
(Plan)

 Set target period at FY18 to attain
ROE 5%, considering the pace ofprofit improvement and net asset
reduction

FY18(Plan)

Trend in Net Sales by Business Segment
234

228

Electronic
Equipment

218

Electronic
Components
Overseas
Semiconductor

 Overseas semiconductor businessstill leads business growth Improve profitability through sales
growth as well as cost reductions

Renesas

FY14

FY15

FY16

FY17
(Plan)

FY18(Plan)An Electronic Systems Coordinator17

Implementation Statusand Forecast of the 9th
Medium-TermBusiness Plan

Initiatives and Key Milestones
Initiatives

Actions

FY18 Target(against FY16)

Cont.

New business model

Alliance with partner companies

Cont.

Multi-vendor support

Overseas semiconductors and new suppliersCont.

Global business

China local business. Synergies with Edal

New

Streamline SG&A
Expenses
Step-up Proactive investment

Reduce SG&A expenses

Step-up Acquire treasury
sharesAcquisition of 4.5 mil shares. Annual total
dividend of ¥150 (2 years)
Cancelation of treasury shares (3 mil)New

Introduce securitization or bank loan facilities

Increase leverage

Budgeted ¥5.0 bil for 3 years

FY16
Net profit
margin1.5%

Profit margin(Profit/Net Sales)
+0.4%

KPI

FY16

Total asset
turnover ratio+0.2 times
Financial leverage+0.2 times

FY17

FY18

Operating margin

2.1%

2.4%

2.8%

SG&A ratio

6.3%

5.9%

5.5%

24.0%

18.0%

13.0%

3.8

3.6

3.3

FY18
2.0%

１

Total asset
turnover ratio

1.4
times

Cash and deposits/Total assets

Financialleverage

1.4
times

Net assets to total assets

67.8%

65.0%

63.0%

Total return ratio

248.3%

280.0%

230.0%

ROE

3.0%

Account receivable turnover period

An Electronic Systems Coordinator

1.6
times
1.6
times
5.0%
18

Implementation Statusand Forecast of the 9th
Medium-TermBusiness Plan

Main Attainment in FY2016 and Next Actions (1)Core Initiatives

Attainment

Next Actions■Make use of budgeted ¥5.0 bil(3 years) for strategic investment

Create New
Business
Models■Prepared to start a developed business model■Review feasibility to take part in acommissioned project in collaboration with the
New Energy and Industrial Technology
Development Organization (NEDO) in Japan■Developed battery-less non-contact radio
sensors module■Concentrate business resources
on promising suppliers

Promote MultiVendor Support■Expanded overseas semiconductor businessafter reorganization of semiconductor
manufacturers■Contribution from new suppliers’ business■Timely resource control■Acquired Edal Electronics, HK.
■Promoted join-marketing with the design housein China■Realize business synergies with
Edal

Strengthen
Global Support
to Expand
Global Business

An Electronic Systems Coordinator■Promote alliance with outside
partners■Non-organic business expansion■Rigid ALM■Expand business in Europe &the U.S.
■Strengthen business linkage
with local partners in China

19

Main Attainment in FY2016 and Next Actions (2)Core Initiatives

Proactive
Investment Toward
GrowthImplementation Statusand Forecast of the 9th
Medium-TermBusiness Plan

Attainment

Next Actions■Anticipatory HR investment made to key initiatives(Solution business, overseas semiconductor business)(¥700 mil annually)■Continue anticipatory HR
investment■Make use of budgeted ¥5.0 bil(3 years) for strategic investment■Investment to venture fund (Up to ¥300 mil)
■3.5 mil treasury shares acquired■¥140 p.s. dividend paid-out■Reduced strategic shareholdings■Extend 1 year (Till FY18)■Increase shares (4.5 mil)■¥150 dividend or more
■Cancel treasury shares (3 mil)■Continue reduction of strategic
shareholdings■Key operation such as distributions outsourced■Business process & operation system being enhanced■Continuous cost reduction■Further reduce SG&A expenses

Increase Leverage■Continuous dividend payout and share buy-backs using
cash equivalent■Reduce equity using debt
■Improve asset efficiency throughfactoring, etc.

Qualitative
Strengthening ofManagement■Full compliance to Corporate Governance Code in Japan
including directors compensation system and selection
criteria■Shift to Chairman/President
structure■CI review

Improve Capital
Efficiency

Streamline SG&A
Expenses

An Electronic Systems Coordinator

20

Attachments＊Edal Electronics Co., Ltd＊ESEC2017

An Electronic Systems Coordinator

21

Investment in Edal Electronics Co., Ltd.
Established 1987

Employees

82(End of Apr.2016)

Ownership100%

Suppliers

Monolithic Power Systems, Inc.(MPS) WeEn
Semiconductors Co., Ltd,
Nexperia, Power Integration, Inc.

100
80

MUSD

⇒15% AGR (FY2016)

60
40

Customers

Office20

LCD TV manufactures, auto manufactures atsouth China region, with world wide market
shares (approximately 200 companies)

0
2009

2010

2011

2012

2013

2014

2015

2016

Hong Kong, Shenzhen, Shanghai

Shanghai

ShenzhenHK

An Electronic Systems Coordinator

22

Exhibit at Embedded System Expo(ESEC) 2017
• Demonstrated initiatives aspiring to shift from the current business model• Expanded the exhibition space by 1.5 times from last year

◇ Period：

May 10 to 12, 2017
◇ Demonstrations：IoT Solution

Temperature Logger with NFC
Function

Battery-less Wireless Module

Vermin Control System

AI Solution for Automotive
Application

Multi Color Solution

Network Solution for
Automotive Application

Environmental Cleanup
Solution

Telematics Solution

Aerial Imaging

Non-Contact Vital Sensor

High-Speed, High-Quality
CameraUltra-Compact Optical Module

External view of the exhibition booth
An Electronic Systems Coordinator23