Securities code: 6787

41st Report to Shareholders(From April 1, 2015 to March 31, 2016)

C

O

N

T

E

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P.01

Interview with the President

P.05

TopicsP.06

Meiko news

P.07

Consolidated financial data

P.09

Global network

P.10

Corporate data

Back CoverIntroduction to Shareholders’memos / Introduction of
Meiko website

SInterview with the President

We will continue to meet needs
manufacturer that provides theQ1

Please describe the business environmentand operating results for this period.

Operating income will be significantly improved
thanks to improved production yields and reduced
expenses in addition to increased sales.

Within the business environment surrounding the
Meiko Group, the U.S. economy experienced a trendof continuous expansion particularly in consumer
spending backed by improved employment, while
Europe is recovering gradually due to steadyconsumer spending regardless of geographical risks.
On the other hand, in the Asian markets, the Chinese
economy has clearly showed a slowdown, and its
growth has slowed partly due to local currency
depreciation and a decline in resource prices. When it
comes to the Japanese economy, the recovery of
consumer spending was at a standstill while corporate
business results and employment improved, andI would like to express my sincere gratitude to allshareholders and investors for their outstanding support
for our business.
I am pleased to take the opportunity of presenting our
MEIKO REPORT for the 41st fiscal term (year ended
March 31, 2016) to explain the business conditions of
this period and our future business strategy.
President & CEO

Yuichiro Naya

Summary of consolidated
operating results for FY2015( in 100 million yen )Results of
FY2015Results of
FY2014Year-on-yearchangeNet sales

952.9

909.0

+ 43.9Operating income

33.3(28.7)+ 61.9Ordinary income

(4.9)

10.8

(15.7)

Key points of thefinancial results of FY2015

Summary

1. Strong momentum from sales of products for vehicles andsmartphones

Key points
Loss attributable toowners of parent

01 MEIKO REPORT(112.5)(95.7)(16.8)

1. Sales increased by 104% year on year to 95.3 billion yen
2. Operating income improved by 6.2 billion yen year on year to
3.3 billion yen
3. Recorded a deficit of 11.3 billion yen due to the booking of
impairment losses

2. Significant improvement in operating income resulting from improved
production yields and implementation of structural reforms
3. Improved financial strength due to capital increase throughpreferred shares issued by allocation to third parties

as the PCB
best value and services.
business conditions remained almost unchanged.
In the automobile industry, which is one of the MeikoGroup’s main business partners, the market remained
firm on the back of active global automobile demand.
In the smartphone market, the global markets
including India and other emerging markets enjoyedsteady growth, while China saw a slower growth rate.
Under such market circumstances, in order to expand
our businesses, the Group continued actively offeringsophisticated and high value-added products such as
high-heat dissipation substrates and high-frequency
substrates supporting extended usage in theautomobile substrate business including Advanced
Driver Assistance Systems (ADAS), in the second half
as well as the first half. The Company achieved stablesales growth as a result. The smartphone substratebusiness also boosted sales due to strong sales toChinese manufacturers in addition to favorable orders
received from major customers operating globally.
In terms of profits, the Company improved its

operating income significantly due to improved
marginal profit ratio and reduced fixed costs andselling, general and administrative expenses, because
the problem of production yields has been resolved
and structural reforms, which have thus far beenpromoted, made progress as scheduled. With thosemeasures, we worked to improve our performance bydrastically streamlining business management andpromoting measures to become a supplier trusted byour customers based on our product quality and costs.
As a result, sales for the current period were 95,287
million yen, an increase of 4,391 million yen (+4.8%)
from the previous period. Regarding profit and loss,
operating income was 3,325 million yen (comparedwith the operating loss of 2,865 million yen in theprevious period) and ordinary loss was 491 million yen(compared with ordinary income of 1,075 million yen
for the previous period). Impairment loss for fixed
assets, 7,978 million yen, was recorded as
extraordinary loss, and a corporate tax adjustment of
1,265 million yen was booked due to disposal ofdiffered tax assets. As a result, loss attributable toowners of parent amounted to 11,250 million yen(compared with the loss attributable to owners ofparent of 9,573 million yen for the previous period).

Sales composition
by PCB sales
By product :By application :Non-PCB
Others12％

Digital AV 3％
Storage

Non-PCB

7％

6％

FY2015
95.3
billion yen

Smartphones 25％

Automobiles
48％

7％

PCB for otherapplications
2％
HDI PCB 34％
Six layers or more
16％

Double-sided PCB
8％FY2015
95.3
billion yen

Four-layer PCB
33％

MEIKO REPORT

02

Interview with the President

Q2

Please tell us about the prospects for the
next period.

We will continue providing offers to meet customer needs
and aim to expand our profitability,
keeping an eye on the market trends.

Regarding the business environment for the next
period, we expect that the automobile substrate
market for the automobile industry will expand strongly
due to an increased sales volume and steady growthin new areas including automatic driving and ADAS. In
the smartphone market, the markets are expected to
expand particularly for low-end and mid-range models
primarily in emerging economies. On the other hand,concerns include risks of declining product unit prices,foreign exchange fluctuation and surging resource
prices.
In response to such an environment, the Group will
promote cultivating new customers and increasingorders received from existing customers through newtechnology development and active offering of new
products while keeping an eye on market trends.
In terms of profitability, we solved the problem of
production yields, which we have addressed as aConsolidated financial prospectfor FY2016( in 100 million yen )Full-year
prospect

Results for
FY2015Net sales

912.0

952.9

Operating income

38.0

33.3

Ordinary income

20.0

(4.9)

Net income (loss) attributable toowners of parent

13.0(112.5)03 MEIKO REPORT

priority issue, and have had some successes in
reducing fixed costs and selling, general andadministrative expenses. We will further ourcommitment to strengthening the management basefurther by continuing to reduce fixed costs and selling,
general and administrative expenses, with productivity
reforms defined as our top priority issue.
In so doing, bearing in mind the Group’s basic
management philosophy, “To contribute to society byproviding customers with the highest value andsuperior service,” we will aim to achieve our plan by
ensuring we implement the following key businessinitiatives.
Based on the above, for FY2016 we expect sales of
91.2 billion yen (-4.3% from this period), operating
income of 3.8 billion yen (+14.3% from this period),
ordinary income of 2 billion yen (+2,491 million yen
from this period) and profit attributable to owners ofparent of 1.3 billion yen (+12.555 billion yen from thisperiod).

Key business initiatives planned
for FY2016

1

Setting target of becoming the No. 1 plant in terms of quality, costs,
and delivery -Offering the best value suitable to each customer

2

Further strengthening the business in Vietnam- Production
increase at Vietnam Factory and strengthening of the EMS business3

Continuing structural reforms -Continuing improvement oflabor productivity and reduction of process change expenses

4

Improving financial strength-Cash flow consolidation

Q3

Please tell us about the investment plan.

Q4

Please give a message to the shareholders.

We will make appropriate capital investments
by ensuring we implement the ongoing medium-term
investment plan.

The Group as a whole will strive to maintain stabledividends to shareholders and focus on sustainableenhancement of our corporate value.

As we promote structural reforms, we are also
currently expanding capital investment under the
medium-term investment strategies. As a capital
investment measure whose final year is FY2017, weplan capital investment of 9.2 billion yen in three years.
With the focus on investment in overseas, we will
ensure automation and process improvement for more
efficient production, and investment in the Vietnam
Factory for greater production, in addition toenvironmental measures and response to equipment
aging.

We at Meiko regard returning profits to shareholders
as one of our top management priorities, and takebusiness results and other matters comprehensively
into consideration for profit sharing as we work tomaintain stable dividends. In order to secure profits forshareholders in the future, we are making it a basic
policy to allocate internal reserves to investments tofurther strengthen and improve our business base, andto use them to further expand our business.
Regarding the year-end dividend payment for thecurrent fiscal period, we regret to say that it will be
postponed in consideration of the financial results forthe fiscal year.
For the next period, the Group as a whole willcontinue focusing on expanding profitability. We will
make a decision on the dividends of the surplus bytaking our performance and financial position
comprehensively into consideration. We will let theshareholders know the amount as soon as possible
once it has been fixed.
We are committed to doing our utmost to carry out
measures that reward the support we receive from all
stakeholders and meet their expectations, as well as
improve operating performance and raise ourcorporate value.
We look forward to your continued support andencouragement in the future.

Non-PCB

7％

PCB for otherapplications
2％
HDI PCB 34％
Six layers or more

Breakdown of themedium-term
16％
investment plan
Environmental measures
Response to aging ofequipment, etc.
20％
Process
improvement
20％

Investment for
production
increase(Vietnam)
30％
Investment for
automation
30％*On the basis of acceptance

MEIKO REPORT

04

TOPICS

Our plants overseas and in Japan are working on improving quality of
products and services to meet customer needs.
In addition, our R&D division offers unique technologies and products byrealizing innovative ideas through industry-academia cooperation.
2015
April

Fuji Xerox selected us as a
Premier Partner

In the Fuji Xerox Procurement
Partners’ Forum 2015, we wereselected asa PremierPartner. We
are the only
PCB manufacturer
selected.

2015
December

The Best Partner In 2015
Award from Samsung
Electronics Vietnam

2015
July

The Excellent PerformanceAward from DENSO
Manufacturing Tennessee

Our Guangzhou Plant won the
Excellent Performance Award fromthe electronics
division andthe information
communication
division for its
performance in
QCD (quality,
costs anddelivery).

2016
January

Lecture on the latest development
trend in the technology of builtin electronics component at the17th Printed Wiring Board Expo2015
November

The METI Minister’s Prizeof the 6th Monodzukuri
Nippon Grand Award

The Research and Development
Department won the METI Minister’sPrize of the 6th Monodzukuri Nippon
Grand Award for “The Development andMass Production of Innovative Flexible
Printed Circuit Boards Jointed at the
Molecular Level” together with the cowinners from Toshiba Semiconductor &Storage and Sulfur Chemical Laboratory.

2016
March

Panasonic AIS selected
us as the Best Suppliers

Our Vietnam Factory was ranked

In the seminar titled “Technology of

Our Guangzhou

first in the environment & safety

Built-in Electronics Component: Market

and Wuhan Plants

section among Samsung Electronics

Needs and its Latest Technology” in thewere selected by

Vietnam’s 60 partners and won the

17th Printed Wiring Expo, the Research

Panasonic AIS as

Best Partner Award.

and Development Department provided

the Best Suppliersa lecture titled “The Introduction of Massfor their quality

Production and the Latest Development

improvement

Trend of Circuit Boards with Built-in

measures in

Components Using Plating Connection.”

FY2015.

05 MEIKO REPORTMEIKO N E W S

Automatic Driving and Meiko-Meiko has a wide range of technologies to support
evolving future vehicles

1 Various moves toward the realization of
automatic driving

Since 2016, automakers have conducted research anddevelopment toward automatic driving and are currently working
on the development of safety technologies assisting drivers. These
technologies can also eliminate concerns of drivers by not only
realizing safe driving but also assisting driving on complicatedroads including junctions of the Metropolitan Expressway.
In addition, the Japanese government started legislation to realize
pick-up services using unmanned driving (completely automatic
driving)during the 2020 Tokyo Olympics.

2 Providing various substrates for vehicles
We occupy a superior position in the global on-vehicle
substrate market. About half of our sales comes from vehiclerelated PCBs, and we are primarily producing products
related to engines/ECU, car navigation systems and in-car
audio. Moreover, as we are at a turning point where vehicles’
head lamps are shifting from traditional electric lamps toLEDs, we are preparing for mass production of high-heatdissipation metal-based substrates for head lamps.

3 Meiko’s substrates required forautomatic driving

Because the realization of automatic driving requires theinstallation of various communication devices, the demand
for so-called build-up substrates, those with high-density
extra-thin wiring used for motherboards of smartphones andother small communication devices, is expected to increase.
Because our second most important products are substrates
for smartphones, we can take advantage of the technologies
we have cultivated for them.
In addition, we have a diversified product portfolio
including thick copper substrates supporting large current
for electric vehicles, metal-based substrates adapted tohigh-heat dissipation and flexible substrates that achievea connectorless connection. This portfolio enables us toprovide offers that meet each automaker’s needs.
We are also developing low-cost high-frequency hybrid
substrates with the high frequency property, which will be
used for the rear-end collision avoidance assistance system
of Advanced Driver Assistance Systems (ADAS).
MEIKO REPORT

06

Consolidated financial data
Net sales

Consolidated balance sheet

95,287( in million yen )End of FY2014

million yen( As of March 31, 2015 )100,000( forecast )Current assets

51,54755,329Noncurrent assets

71,41654,27564,91450,733

Property, plant and equipment

50,000

293

212

6,208

3,329

122,963

109,605

Intangible assets
Investments and other assets
Total assets0
2014/3

2015/3

2016/3Liabilities

2017/3Operating income/Operating margin

3,325■■ Operating income● ● Operating margin

million yen

4,000
2,000

2.5

0

0

-2,000-2.5-4,000-5.0
2017/3

2014/3

2015/3

2016/3

Net income*/Net margin-11,250

47,11941,99037,22238,851

Total liabilities

84,34180,841

Net assets

31,354

24,578

Capital12,88812,888

Capital surplus

14,80919,745Retained earnings

4,052(7,659)Treasury stocks

(396)

(396)

7,267

3,925

million yen

Cumulative other comprehensive income
Valuation difference on available-for-sale securities

131

32

Deferred gains or losses on hedges

(161)

(337)

Foreign currency translation adjustment

7,453

4,475

Remeasurements of defined benefit plans

(155)

(246)

0

260

Total net assets

38,622

28,764

Total liabilities and net assets

122,963

109,605

Non-controlling interests■■ Net income*● ● Net margin（％）( in million yen )6,000( forecast )5

Key points in the financial results

0

0

-5

-6,000-12,000

Current liabilities
Noncurrent liabilities

Shareholders’ equity（％）( forecast ) 5.0( in million yen )2013/3(As of March 31, 2016)

Assets( in million yen )2013/3At the end of
this period-10
2013/3

2014/3

2015/3

2016/32017/3*Net income represents profit attributable to owners of parent.

07 MEIKO REPORT-15• Consolidated balance sheet
Total assets were 109,605 million yen, a decline of 13,358 million yen from the end of theprevious period. The primary causes include reduction in property, plant and equipment
due to impairment.
Liabilities were 80,841 million yen, a decline of 3.5 billion yen from the end of the previous
period. The major causes include reduction in accounts payable and loans payable.
Net assets were 28,764 million yen, a decline of 9,858 million yen from the end of theConsolidated statement of income( in million yen )( in million yen )Current period

Previous period

Current period( April 1, 2014 to March 31, 2015 )( April 1, 2015 to March 31, 2016 )( April 1, 2014 to March 31, 2015 )( April 1, 2015 to March 31, 2016 )Net sales

90,895

95,287

Cost of sales

83,063

82,101Gross profit

7,832

13,185

Selling, generaland administrative expenses

10,697

9,860

Operating income / loss

(2,865)

3,325

Non-operating income

5,347

300

Non-operating expenses

1,406

4,117

Ordinary income / loss

1,075

(491)

Extraordinary income

260

32

Extraordinary losses

9,695

9,074

Loss before income taxes(8,360)(9,532)

Income taxes

1,213

1,717

Net income (loss)(9,573)(11,250)0(0)(9,573)(11,250)

Profit (loss) attributable
to non-controlling interests
Loss attributable toowners of parent

Consolidated statement of cash flows

Previous period

Net cash generated
from operating activities

2,238

9,932

Net cash expended
in investment activities(6,986)(1,736)

Net cash generated
from financing activities

4,860

1,966

The effect of changes
in the exchange rate on cash
and cash equivalents

619

(703)

Net increase (decrease)in cash and cash equivalents

731

9,458

Cash and cash equivalents
at the beginning of the period

8,759

9,490

0

363

9,490

19,312

Net increase (decrease)in cash or cash equivalents due
to change in scope of consolidation

Cash and cash equivalents
at the end of the periodprevious period. The primary causes include reduction in retained earnings due to loss
attributable to owners of parent, regardless of increase in capital surplus due to class-A
preferred shares issued by allocation to third parties.

Ordinary loss was 490 million yen due mainly to foreign exchange loss caused by the strong yen.
Loss attributable to owners of parent was 11,250 million yen due to impairment of fixed
assets at Vietnam and Ishinomaki Factories, and disposal of deferred tax assets.

• Consolidated statement of income• Consolidated statement of cash flows

In the consolidated statement of income, net sales amounted to 95.3 billion yen, an increaseof 4.4 billion yen from the end of the previous period, due to steady increase in the sales
volume of products for vehicles and smartphones.
In terms of profit and loss, operating income improved by 6.2 billion yen to 3.3 billion yen fromthe loss of 2.9 billion yen in the previous fiscal year due to improved production yields andstructural reforms.

Net cash generated from operating activities for this period amounted to 9,932 million yen,
an increase of 7,693 million yen from the previous period, while net cash expended ininvestment activities was -1,736 million yen, a successful decrease of 5,249 million yen fromthe previous period. Net cash generated from financing activities was 1,966 million yen.
As a result, cash and cash equivalents at the end of the current period were 19,312 million
yen, an increase of 9,822 million yen from the previous period.

MEIKO REPORT

08

Global Network

Meiko’s production and sales systems
that meet global customer needs
Production Base
Sales Bases

Meiko Electronics Europe GmbH

R&D Base
Affiliated Companies

Shanghai Sales Office

Tianjin Sales Office

Meiko Electronics America, Inc.

Wuhan Plant( Meiko Electronics (Wuhan) Co., Ltd.)Guangzhou Plant

Yamagata Factory( Meiko Electronics (Guangzhou Nansha) Co., Ltd.)( Yamagata Meiko Electronics Co., Ltd.)

Ishinomaki Branch Factory

Guangzhou Sales Headquarters( Yamagata Meiko Electronics Co., Ltd.)

Overseas Sales Department

Vietnam Factory( Meiko Electronics Vietnam Co., Ltd.)

Omiya Sales Office
Meiko Tech Yokohama Branch Office

Fukushima
Factory

Nagoya Sales Office
Headquarters

Thang Long Factory( Meiko Electronics Thang Long Co., Ltd.)

Meiko Elec. Hong Kong. Co., Ltd

Osaka Sales Office

M.D. Systems Co., Ltd.

1st Sales Dept.

Meiko Tech
Osaka Head Office

2nd Sales Dept.

Meiko Techno Co., Ltd.
MDS Circuit Technology, Inc.

09 MEIKO REPORT

Kanagawa FactoryHigh-Performance
PCB Sales Dept.
Research andDevelopment Dept.

Corporate Data ( as of March 31, 2016 )Stock Information

Corporate Profile
Name

MEIKO ELECTRONICS CO., LTD.

Established

November 25, 1975

Headquarters

5-14-15 Ogami, Ayase, Kanagawa

Capital12,888 million yen

No. of Employees
Outline of Business

Number of Shares Authorized ( Common Stock )( Class-A preferred Stock )70,000,000 shares

50 shares

Number of Shares Issued ( Common Stock ) 26,174,076 shares( excluding treasury stock of 629,244 shares )9,491 (consolidated)(Japan: 786) (overseas: 8,705)( Class-A preferred Stock )50 shares

Number of Shareholders ( Common Stock )( Class-A preferred Stock )

5,749
1

Design and manufacturing and sales of
PCBs and auxiliary electronics business

Principal Shareholders

President & CEO

Yuichiro Naya

Director and Senior Managing Executive Officer

Seiichi Naya

Director and Senior Managing Executive Officer

Takahide Hirayama

Director and Senior Managing Executive Officer

Masakuni Shinozaki

Director

Kunihiko Sato

Director

Maren Schweizer
Yoon Ho, ShinHajime Nakano
Hitoshi Iyomoto
Hiroshi Tsukii
Yasunobu Koshimura
Arifumi Sunada

Director
Senior Corporate Auditor
Audit & Supervisory Board Member
Audit & Supervisory Board Member
Audit & Supervisory Board Member

Yuichiro NayaGOLDMAN SACHS INTERNATIONAL
PLEASANT VALLEY
Meiko Kosan Co., Ltd.
Yuho, Ltd.
BNY GCM CLIENT ACCOUNTJPRD AC ISG(FE–AC)
Haruyuki Naya
DEUTSCHE BANK AG LONDON-PB
NON-TREATY CLIENTS 613
BARCLAYS BANK PLC A/C CLIENT
SEGREGATED A/C PB CAYMAN CLIENTS
Seiichi Naya

4,701
667
631
608
521

18.0
2.5
2.4
2.3
2.0

515

2.0

488

1.9

454

1.7

452

1.7

443

1.7

*The Company owns treasury stock of 629,244 shares and is excluded from theabove principal shareholders.
The percentages for the total number of issued shares have been calculated after
excluding treasury stock.

( Class-A preferred Stock )Affiliated Companies
Yamagata Meiko Electronics Co., Ltd.
M.D. Systems Co., Ltd.
Meiko Tech Co., Ltd.
Meiko Techno Co., Ltd.
Meiko Electronics (Guangzhou Nansha) Co., Ltd.
Meiko Electronics (Wuhan) Co., Ltd.
Meiko Elec. Hong Kong. Co., Ltd.
Meiko Electronics Vietnam Co., Ltd.
Meiko Electronics Thang Long Co., Ltd.
MDS Circuit Technology, Inc.
Meiko Electronics America, Inc.
Meiko Electronics Europe GmbH

Number of Shares held
( thousands of shares ) % of shares held

Name of Shareholder

Executives ( as of March 30, 2016 )Director(Ordinary shares)

Manufacturing of PCBs
Design of PCBs
Sales of PCBs
Auxiliary electronics business
Manufacturing and sales of PCBs
Manufacturing and sales of PCBs
Sales of PCBs
Manufacturing and sales of PCBs
Manufacturing of PCBs
Design of PCBs
Sales of PCBs
Sales of PCBs

Number of Shares held
( thousands of shares ) % of shares held

Name of Shareholder

Chiiki Chukakukigyo Kasseika Fund

50

100.0

Distribution of Ownership among Shareholders (Ordinary shares)
Individuals and others

61.7%

Foreign institutions and others

17.4%

Financial institutions

8.0%

Other institutions

6.0%

Financial instruments business operators

4.6%

Treasury stock

2.3%
MEIKO REPORT

10

Shareholders’ Information
April 1 to March 31 of the following year

Fiscal Year

Annual Shareholders’ June
Meeting
Record dateYear-end dividends: March 31
Interim dividends: September 30
Administrator of
1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
shareholders register Sumitomo Mitsui Trust Bank, Limited
and special accountmanagement
institution
Handling office of
1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
Administrator of
Stock Transfer Agency Business Planningshareholders register Dept., Sumitomo Mitsui Trust Bank, Limited
168-0063
2-8-4, Izumi, Suginami-ku, Tokyo
Stock Transfer Agency Business Planning
Dept., Sumitomo Mitsui Trust Bank, Limited( Inquiries by telephone )0120-782-031( Mailing Address )Stock exchange

JASDAQ (Standard), Tokyo Stock Exchange

Method of public
noticeElectronic public notice in our official page In theevent of an accident or other unforeseen events thatprevent publication of the electronic public notice, itwill be published in The Nikkei.
Official Page: http: www.meiko-elec.com/ir/pa.shtml

Enquiries concerning shareholdings:• Shareholders who need to update information onshareholdings, including change of address and method ofreceiving dividends, are advised to contact the securities
companies where securities accounts are held.
• Shareholders who do not have accounts with securities
companies and need to process payments of dividends areadvised to contact Sumitomo Mitsui Trust Bank, Limited, as
stated to the left.

Introduction to
Meiko Website

TOP page

Introduction of our products ( A Lot of MEIKO around You )For our latest IR information, news releases, and other information including details on our
products and CSR activities, please visit the Company website. You can visit theCompany website to find other useful information as well.

Headquarters
URL:

5-14-15, Ogami, Ayase, Kanagawa 252-1104, Japan
Tel: 0467 (76) 6001 (switchboard)
http: //w w w. me iko-e le c.c om/

Notes on Forecasts
The information in this report contains future forecasts, such as the plans and business results of theCompany. These forecasts are based on information available at the time when these forecasts weremade and certain preconditions that the Company believes to be reasonable. Please note that actual
business results may differ from the forecasts herein due to a variety of factors.

Meiko

CSR Report

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