Ryosan Company, Limited
FY2016 First Half Results Meeting
Results for the six months ended September 30, 2016
FY2016 : Year ending March 31, 2017

November 16, 2016
Naoto Mimatsu
President and Representative Director

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1Results for FY2016 First HalfBusiness Plan for Full Year FY2016

Implementation Status and Forecast of the 9th MediumTerm Business PlanNoticeBusiness forecasts and all statement related to the future contained in this presentation
are based on information currently possessed by the Company and on certain
assumptions which we judge to be rational. Actual business performance may differgreatly 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

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2Results for FY2016First Half

Consolidated Statements of Operation

 In the first half of FY2016, both net sales and operating income decreased in comparison with the same period of
the previous year, due to the appreciation of yen, conclusion of a large-scale project started in FY2015, and theimbalance between supply and demand. On the other hand, profit exceeded the plan announced at the beginning ofthe current term.
FY2015 1H
Amount

FY2016 1H%

AmountNet Sales

116.7

Gross Profit

9.7

8.3%

8.5

SG&A Expenses

6.8

5.9%

Operating Income

2.8

Ordinary Income
Profit%101.8(Unit: ¥ Billion)

ChangePlan-12.7%

110.0

8.4%

-11.6%

9.4

6.7

6.6%

-2.4%

7.1

2.4%

1.8

1.8%

-34.0%

2.3

2.6

2.3%

2.3

2.3%

-11.8%

2.3

1.8

1.6%

1.7

1.7%

-7.4%

1.5

-2.0%

50.91

Basic Earnings per
Share (¥)

59.30

Domestic Sales

68.3

58.5%

61.3

60.2%

-10.3%

Overseas Sales

48.4

41.5%

40.5

39.8%

-16.2%

58.13

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

Results for FY2016First Half Net Sales decreased for the reason of a fall in yen equivalent of foreign-currency-denominated sales, as well as adecline in domestic sales due to conclusion of a large-scale system equipment project for MFP started in 2015.
 Ordinary income also decreased, in spite of contribution by exchange gain following the revaluation of foreigncurrency-denominated liabilities. As the result, income decreased from the same period of the previous year.

Net Sales

Ordinary Income(Unit: ¥ Billion)(Unit: ¥ Billion)

Contribution
by exchange Others+0.1
gain and loss
+0.6

Decrease in yen
equivalent offoreign-currencydenominated sales

116.7

-7.4
Domestic sales
-7.0

2.6
Others-0.6

FY2016 1H

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2.3

Gross profit-1.1101.8

FY2015 1H

Decrease in
SG&A
expenses+0.1

FY2015 1H

FY2016 1H4

Results for FY2016First HalfSegment Information

 Both net sales and operating income in the Semiconductors business segment decreased, due to the impact by theappreciation of yen, conclusion of the project for information and communication equipment, and sluggish sales ofcar navigation systems, car audios and digital cameras.
 Electronic Components business segment was also affected by the appreciation of yen, but sales of in-vehicle
electrical equipment remained stable.
 Sluggish growth in the Electronic Equipment business segment resulted from conclusion of the MFP business.
FY2015 1H
ActualSemiconductors

ElectronicComponents

ElectronicEquipment%

Net Sales

67.7

Operating
Income

1.4

Net Sales

33.2

Operating
Income0.9

Net Sales

15.6

Operating
Income0.7

Actual%

58.8
2.1%

1.1

2.7%

0.8

0.3
-0.3

Net Sales

116.7

101.8

Operating
Income2.8

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1.8%

2.4%

1.8

Change-23.8%
-2.8%

2.5%

10.6
4.7%

(Unit: ¥ Billion)-13.2%

32.3-0.2

Adjustment

Total

FY2016 1H-9.2%-31.9%

3.0%-57.0%-12.7%
1.8%-34.0%
5Results for FY2016First Half

Trend in Net Sales and Operating Margins by Quarter Net sales had continued to fall from its peak in the 2Q of FY2015, because the Semiconductors business segment
had been in the wane due to deterioration in the market conditions of the emerging countries, as well as sluggish
growth of the Electronic Equipment business segment after conclusion of the MFP business.
 Net sales bottomed out in the 1Q of FY2016, because the Electronic Components business segment remained
stable, thanks to steady performance of the in-vehicle electrical equipment business, and the Electronic Equipment
business segment won contracts for projects to supply in-vehicle electrical equipment. As the result, overall
operating margin also bottomed out, because net sales grew as a whole.
Operating Margin

Net Sales (Unit: ¥Hundred Mil)
700

Semiconductors

570
70Electronic Components

597

591

8692

Electronic Equipment

350

169

158

2.3%

483
39

5.0%

4.0%

67
3.0%

157

2.7%

2.6%

535

522
51

162

Operating Margin

169

154

2.3%

2.0%

289

298

1.0%

1Q

2Q

2.1%
1.3%

337

340

340

313

00.0%1Q

2Q

3Q
FY15

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4Q

FY166

Results for FY2016First Half

Trend in Distribution Ratio by Product and Application in Each Quarter There was no significant change in the distribution ratio by product. In terms of application, thedistribution ratio of sales of information & communications equipment reduced, while the ratio ofthe sales of in-vehicle electrical equipment expanded.
By Product

By Application■ Semiconductors ■ Electronic Components■ Electronic Equipment
1%

2%

1%

11%

13%

15%

2%
5%

21%
4%
13%

2%
5%

2%
5%

2%

1%

8%

7%2%
5%

23%
21%

2%
5%

3%

2%

13%

14%

3%
14%

Facilities Equipment

11%

System Equipment

3%5%Power Supplies
Display Devices

24%

Electromechanical
Components

3%

Memories

13%

Discrete
Semiconductors

14%

41%

41%

43%

43%

1Q

2Q

3Q

4Q

1Q

40%

FY16

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6%

5%

5%

Others

12%

14%

14%

Industrial
Equipment

16%

16%

16%

Consumer

17%

15%

16% Communications

49%

50%

49%

4Q

1Q

2Q

10%

14%
17%
18%
13%

26%

Information &22%

43%

41%

1Q

2Q

System LSIs

2Q

2%
9%

14%

21%

3%

42%

FY152%

24%

20%

4%

44%

3Q
FY15In-Vehicle
ElectricalEquipment

FY167

Consolidated Balance Sheet / Consolidated Statements of Cash Flows

Results for FY2016First Half Cash and deposits, and securities decreased by 4 billion yen and net assets reduced, due to 2.7 billion
yen in cash dividends paid and 1.9 billion yen in purchase of treasury shares.
 An increase in cash flows from operating activities resulted from an increase in notes and accounts
payable-trade.
(Unit: ¥ Billion)■ Consolidated Balance Sheet

End of Mar.
2016

End of Sep.
2016

Increase andDecrease

Total Assets

157.0

152.9-4.0

Current Assets

139.1

135.5-3.6

Non-Current Assets

17.8

17.4

-0.3

Liabilities

41.6

43.0

+1.3

Net Assets

115.3

109.9

-5.4

Net Assets to Total Assets (%)

73.5%

71.9%

-1.6

■ Consolidated Statements ofCash Flows(Unit: ¥ Billion)

FY2015 1H

FY2016 1H

Increase andDecrease

Cash Flows from Operating Activities

-0.2

2.4

+2.6

Cash Flows from Investing Activities-0.1

0.0+0.2

Cash Flows from Financing Activities-2.1-5.4-3.3

Cash and Cash Equivalents at the End of the Period

52.9

46.6-6.2

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8Results for FY2016 First HalfBusiness Plan for Full Year FY2016

Implementation Status and Forecast of the 9th MediumTerm Business Plan

An Electronic Systems Coordinator9Business Plan for FullYear FY2016

Business Objectives

 It is expected that sales orders will increase in each segment toward the second half and that both net sales andoperating income will increase in comparison with the first half.
 The full-year forecast is revised mainly because the assumed exchange rate is amended from USD 1 = 121 yen to105 yen.
FY2015Full Year

FY2016%

1st Half2nd Half
Plan

Full-Year
Plan

101.8

113.1

215.0

(Unit: ¥ Billion)%

ChangeInitial Plan

-5.8%

230.0

Net Sales

228.1

Gross Profit

19.3

8.5%

8.5

9.3

17.9

8.3%

-7.3%

19.6

SG&A Expenses

13.7

6.0%

6.7

6.7

13.5

6.3%

-2.0%

14.0

Operating Income

5.5

2.4%

1.8

2.5

4.4

2.0%

-20.6%

5.6

Ordinary Income

5.5

2.5%

2.3

2.5

4.9

2.3%

-12.4%

5.6

Profit

3.6

1.6%

1.7

1.8

3.6

1.7%

-1.9%

3.7

58.13

65.65

123.78+3.3%

125.57

Basic Earnings per
Share (¥)

119.77

Domestic Sales

133.4

58.5%

61.3

66.6

128.0

59.5%

-4.1%

130.0

Overseas Sales

94.7

41.5%

40.5

46.4

87.0

40.5%

-8.2%

100.0

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10Business Plan for FullYear FY2016

Overview of Business Plan by Business Segment

 It is expected that both net sales and operating income will grow in the second half compared with the first half.
 In terms of the full-year forecast, business performance in the Semiconductors and Electronic Equipment businesssegments is forecasted not to reach the level of the first half, respectively due to great impact of the yen
appreciation and conclusion of the MFP business. On the other hand, it is expected that in Electronic Components
business segment, business of in-vehicle electrical equipment will remain stable and sales of electromechanicalcomponents for consumers will expand, and as the result, both net sales and operating income in this segment willincrease.
FY2015
1st Half

2nd Half
Plan

Full-Year
Plan

58.8

65.6

124.5

1.0

1.4

2.5

32.3

35.6

68.0

0.8

1.0

1.9

10.6

11.8

22.5

0.3

0.3

0.7

-0.4

-0.3

-0.3

-0.7Net Sales

228.1

101.8

113.1

215.0

Operating
Income

5.5

1.8

2.5

4.4

Full Year

Semiconductors

Electronic
Components
ElectronicEquipment

Net Sales

133.1

Operating
Income

2.9

Net Sales

64.9

Operating
Income

1.5

Net Sales

30.1

Operating
Income1.5

Adjustment
Total

FY2016
%

2.2%

2.4%

5.0%

2.4%

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%

2.0%

2.8%

3.1%

(Unit: ¥ Billion)

ChangeInitial
Plan

-6.5%

136.0

-15.4%

3.4

+4.7%

68.5

+23.4%

1.9-25.3%

25.5-53.6%

0.7
-0.5

2.0%

-5.8%

230.0

-20.6%

5.6
11Business Plan for FullYear FY2016

Plan for Return to Shareholders

 Dividend policy has not been changed. The company plans to pay 90 yen or more as ordinary dividends and 50 yen
or more as special dividends.
 The company is in the process of acquiring maximum 3 million treasury shares in the period from July 2016 to theend of March 2017.
Dividend per Share
Ord inary Dividend (yen)Acquisition of Treasury Shares

Spe cial Divid end (yen )150

Dividend Ratio

140
117%

10050140

Pe riod150%

No. of Acquire dShare s(10 thousand)Amount(100 million yen)Aug. thru. Nov. 2011100

17Feb. 2013

100

19May thru. June 2013

10018Feb. thru. Mar. 2015

4513Oct. 2015

236Nov. 2015 thru. Feb. 2016

132

40

July to end of Oct. 2016 (current)

86

26

113%

50

100%

79%
71%

71%
59%

50

50%

80
60

90

90

60

40
00%
FY111213

141516(Plan)

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12Results for FY2016 First HalfBusiness Plan for Full Year FY2016

Implementation Status and Forecast of the 9th MediumTerm Business Plan

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Basic Stance and Description of Initiatives of the 9th MediumTerm Business PlanImplementation Status andForecast of the 9th MediumTerm Business Plan

Basic Stance“Innovation” & “Growth”
Pursuing a “business model shift” which responds to changes in our businessstructure and a sustainable “independent growth”

Description of Initiatives Create New Business Models(Strengthen system solution capability）
Reestablish GrowthPath

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

Strengthen Global Support to Expand Global Business(Aim at being a global distributor）)

Improve Capital
Efficiency

Proactive Investment Toward Growth
Acquire Treasury Shares

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14Implementation Status andOverall Image of the 9th Medium-Term Business Plan

Forecast of the 9th MediumTerm Business Plan

Trend in Profit and Net Assets
1,300
121.8

1,100Net assets
1,000target
3.6

Profitmarginon sales■ Establish the second and third pillars of theSemiconductors business segment■ Acquire new suppliers and expand business
operation■ Increase local business with non-Japanesecustomers■ Strengthen resources for in-vehicle electricalequipment business

900

3.6

×800
700

FY2014Overall Strategies

Earnings
1,200target

115.3

3.2

ROE 5%(Unit: ¥ Billion)

FY2015FY2016 (Plan) FY2017 (Plan)

Total asset
turnoverratio■ Review strategic shareholdings■ Improve efficiency of assets utilization

×Financial
leverage

Trend in Net Sales by Business Segment■ Acquire treasury shares■ Special dividends(Unit: ¥ Billion)

233.5

228.1

215.0

Electronic
Equipment
ElectronicComponents

FY2014FY2015FY2016 (Plan) FY2017 (Plan)

Risk Factors

Business withoverseas
semiconductor
manufactures■ Drastic change in economic circumstances

Business withRenesas■ Reorganization of suppliers■ Fluctuation in exchange rates(*) PJ business is notincluded in the datafor FY2017.

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Implementation Status andMain Attainment in the 2Q of FY2016 and Next Actions (1)Core PolicyAttainment■ Establish Solution Business HQ
Assign Executive Officer

Create NewBusiness Models

Forecast of the 9th MediumTerm Business Plan

Next Actions■ Implement developed business model■ Promote new business models such as nursing
care, city and road analysis, and protection fromwild animals■ Participate in the 19th EMBEDDED SYSTEMSEXPO (ESEC 2016) Tokyo

Promote MultiVendor Support■ Introduce new supplier products- Overseas semiconductor manufacturers:
・ON Semiconductor
・Microchip Technology, etc.
- Solution business:
・VIA Technologies
・Fujipream, etc.

■ Expand market share and business operation
after reorganization of semiconductor
manufacturers■ Expand market share through M&A■ Facilitate organized sales promotional activities
targeting strategic products■ Reorganize market promotion HQStrengthen
Global Support
to Expand
Global Business■ Set up regional HQ in China and ASEAN
Assign Executive Officers to each HQ■ Plan the strategic investment in the South
China region■ Open a new business office targeting research anddevelopment centers of Japanese manufacturers
operating in Germany

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16Implementation Status andMain Attainment in the 2Q of FY2016 and Next Actions (2)Core PolicyAttainment■ Announce additional measures for improvementin capital efficiency in the 9th Medium-TermBusiness Plan in July 2016

Improve Capital
Efficiency

Forecast of the 9th MediumTerm Business Plan

Next Actions■ Continue effort for improvement in capitalefficiency■ Maintain the policy of high dividend payout ratio■ Continue acquisition of treasury shares startingfrom 1 million shares acquisition

Qualitative
Strengthening ofManagement■ Establish Nomination & Compensation Advisory
Committee■ Transition to a company with an audit andsupervisory committee■ Promote measures to meet the Corporate
Governance Code■ Appoint four outside directors

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