42nd Report to Shareholders(From April 1, 2016 to March 31, 2017)
Securities code: 6787

C

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P.01

Interview with the President

P.05

Meiko news

P.07

Consolidated financial data

P.09

Global network

P.10

Corporate data

Back CoverIntroduction to Shareholders’ memos/
Introduction of Meiko website

Interview with the President

We will continue to meetprovides the best value
I 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 42nd fiscal
term (year ended March 31, 2017) to explain thebusiness conditions of this period and our futurebusiness strategy.

President & CEO

Yuichiro Naya

Summary of consolidated
operating results for FY2016
Results of
FY201601(in 100 million yen)

Results of
FY2015

Key points of the financial results of FY2016

Summary

1. Net sales stood at 95,910 million yen, an increase of 620
million yen from the same period of the previous fiscal year.
2. Operating income marked 5,790 million yen, an increase of
2,460 million yen from the same period of the previous fiscal
year.
3. Net income attributable to owners of parent amounted to
1,770 million yen, an increase of 13,020 million yen from thesame period of the previous fiscal year.

Key points for
improving
operatingincome1. An increase of 2,610 million yen in profits due attributed tosales growth
2. An increase of 990 million yen in profits resulted from improvement in yield
3. A surge of 1,140 million yen due to sales growth and exchange rate impacts

Year-on-yearchangeNet sales

959.1

952.9

+6.2

Operating income

57.9

33.3

+24.6

Ordinary income

29.8

(4.9)

+34.7

Net income (loss)
attributable toowners of parent

17.7(112.5)+130.2

needs as the PCB manufacturer thatand services.
you describe the business environment andQ 1 Could
operating results for the fiscal year under review ?

In the automobile industry, one of the MeikoGroup’s main business partners, the market remained firm on the back of globally strong demand

In the consolidated fiscal year under review, thefor automobiles. In particular, increasing use of

global economy has been on an upward trend witha stable increase in U.S. consumption and growing

electronics, technologies for advanced driver assis-

exports, mainly to Asia. The economy in Europe
has also been on a recovery track, due to factors
such as a boost in exports and countries’ financial
policies. The economy in China has also shown
signs of a recovery, backed by the government’s
economic measures. Hence, the global economy islikely to stay on a recovery course. In Japan’s
economy, corporate earnings are expected to continue upward against the backdrop of an increasein employment and a boost in consumer spending.

tance systems (ADAS), and automatic driving in the
future are strongly expected to contribute to future
market growth. In the smartphone industry, growthslowed in the global market, while markets centered on emerging countries maintained strong momentum. In China, the market is seeing signs ofchange in moderate growth amidst the move frommanufacturing overcapacity to market domination.
Under such a market environment, the MeikoGroup seized firm demand primarily for substrates

Sales composition by PCB sales
By product application

By product specification

Non-PCB 7.9%

Non-PCB 7.9%

Others 7.2%

PCB for otherapplications
1.1%

Digital home appliances
2.4%
Office equipment
5.5%
Storage 5.0%

FY201695.9 billion yen

Automobiles
45.6%

Double-sided PCB
8.1%

FY201695.9 billion yen

Four-layer PCB
29.9%

HDI PCB 36.5%

Smartphones 26.4%
Six layers or more
16.5%

02

Interview with the President

for automobiles, mainly due to growth in ADAS re-automobiles, we anticipate firm growth in sales, inlated businesses, and maintained the highest volume of orders. In international operations, inaddition to a firm trend of orders for in-vehicle substrates, the Group achieved a robust increase inparticular, in the supply of substrates which are
currently developed to respond to the need forsales on the back of considerable growth in ordersof smartphones. In the production field, the Group
worked on initiatives to improve quality, cost reduction, and delivery as critical measures for FY2016,
strengthening its profitability base further. Such improvement and sales growth contributed to posting
operating results far greater than the plan both insales and earnings.

tailored for ADAS. In the smartphones market, we
also anticipate a boost in sales by seizing moremarket share. In terms of earnings, although there
is some uncertainty related to risks such as a decline in unit prices of finished goods, fluctuations of
exchange rates, and a surge of resource prices, theGroup expects growth in profitability, attributable toIn the forecast of the Group’s operating performance for the next fiscal year, in addition to the expectation for an increase in sales volume ofthe effects of the structural reform which has been
continuously undertaken as a corporate task, aswell as the productivity reform which was implemented as the most critical initiative. Given the
aforementioned, we will focus on building an evenstronger management base as a critical policy forthe next fiscal term by expanding operations at thefactories in Vietnam as well as reinforcing the EMS
and FPC businesses.

Consolidated financial
prospect for FY2017

Key business initiatives planned for FY2017

is your forward-looking view for
Q 2 What
the next fiscal year?

(in 100 million yen)

Full-year
prospect

Results for
FY2016

1,030.0

959.1

Operating income

62.0

57.9

Ordinary income

46.0

29.8

Net income (loss) attributableto owners of parent

36.0

17.7

Net sales

03

highly reliable high-speed communication products

1

Improve production capacity of existing plants

2

Make capital investment to boost manufacturing volume of products targeting the automobile and smartphone industries

3

Bolster the EMS and FPC businessesBased on the above prospect, the Group fore-

will also invest 6,900 million yen (an increase ofcasts to post net sales of 103,000 million yen (or a7.4% increase year on year), operating income of
6,200 million yen (or a 7.1% increase year on year),

3,800 million yen from the previous year) for automation and replacement of aged equipment in thefactories at home and abroad, and other purposes.

ordinary income of 4,600 million yen (or a 54.4%
increase year on year) and net income attributableto owners of parent of 3,600 million yen (or a103.4% increase year on year) for the fiscal year

We at Meiko regard returning profits to shareholders as one of our top management priorities, andending March 31, 2018.

Q

3

What is your investment plan?

For investments in FY2017, in the smartphonebusiness, the Group will make new capital investment in next generation smartphones as well as investment to boost manufacturing capacity atfactories overseas. In the automobile business, we
also plan investments for raising manufacturing
volume and substrates targeting ADAS. The Group
Breakdown of FY2017 Investments
Infrastructure/
Environment 7%
New products/
Process improvement
7%
Renovationand other 16%

give a message to the shareQ 4 Pleaseholders.

Investment for
production
increase 70%

take business results and other matters comprehensively into consideration for profit sharing as wework to maintain stable dividends. In order to secure profits for shareholders in the future, we aremaking it a basic policy to allocate internal reserves
to investments to further strengthen and improve
our business base, and to use them to further expand our business.
Regarding the distribution of surplus for the fiscal
year under review, with comprehensive viewpoints
on operating results on a consolidated basis, future
prospects, etc., the Group decided to pay year-end
dividends of 10 yen per share. In response to the
support and expectations from shareholders and allother stakeholders, the Meiko Group is committed
to doing its utmost to carry out measures to improve corporate value and attain sustainablegrowth.
We look forward to your continued support andencouragement in the future.
04

Introduction of Plants in Vietnam
The Socialist Republic of Vietnam is a nation composed of 54 ethnic groups with a land area of 329,241
km² equivalent to 87% of the size of Japan. The country has a population of 93,450,000 (as of 2015) withan average age of 28 (compared with 45 in Japan), driven by young people.
The Meiko Group made an advance into Hanoi, Vietnam in 2006. It launched operations at EMS Factory in
Teijin2008, which was followedby the start of operations
Noi Bai International Airport
at PCB Factory in 2010.
Having acquired thesubstrate business from Wuhan
Shanghai
Panasonic Corporation
Meiko ElectronicsThang Longin 2014, the Group comThang Long Industrial Park
menced manufacturing at
Thang Long Factory.
Guangzhou

Hanoi City

Hanoi
Meiko Electronics Vietnam
Thach That-Quoc Oai

Hochiminh05

Vietnam Factory

Thang Long Factory

Company name

Meiko Electronics Vietnam Co.,Ltd

Meiko Electronics ThangLong Co.,Ltd

Established/
Business commenced

Dec. 2006 / Dec. 2008- (EMS)

Aug. 2014 / Aug. 2014-

Capital90,000,000 USD

15,000,000 USD

Address

Lot LD4, Thach That -Quoc Oai IZ, Phung Xa
Commune, Thach That Dist Hanoi, Vietnam

Lot J1-J2, Thang Long Industrial Park, Vong La
Commune, Dong Anh district, Hanoi, Vietnam

Areas

170,000m² (Factory:75,000m²)

28,590m² (Factory:31,000m²)

Strategy on Manufacturing Bases in Vietnam
The factories in Vietnam undertake the following
Production capacity
roles:
Communication terminals
VehiclesOthers(thousand m2 per month)R esponding to orders to be increased in the
150
coming months
25
Being in charge of the BCP business for the entire Group20100
Serving as manufacturing hubs to supply prod56
1035
ucts to the U.S and countries in Asia and Eu20
4
rope.
50
19
The Vietnam Factory is operated as a strategic base64
62
for the mass manufacture of products for smart56
38
phones and automobiles.
0
Thang Long Factory serves as a mass-production
2016
2017
2018
2019
Results
Plan
Plan
Plan
base for high-end HDI and module substrates tailored for smartphones.
Both factories have achieved significant growthsince the recovery from deficit in FY2014. In addition, the Group has operated EMS Factory and FPC Factory in a co-location, and these factories have grown with a potential to contribute to the Group’s performancein the future.

Future Strategy
The Meiko Group has been making capital investments to boost production capacity for smartphones
in the first half of FY2017, and will carry out investment
in automobiles in the latter half. The Group’s two main
pillars, substrates for smartphones and automobiles,
have been highly anticipated by customers, and theGroup has been making investments to meet their expectations, but we assume that existing manufacturingbases would have no room to expand facilities further.
Anticipating its future course, the Group has alreadysecured spaces for a new factory in Vietnam and willconsider construction of the second manufacturingbase at the appropriate time.

06

Consolidated financial data
Net sales

Consolidated balance sheet

95,911

million yen(in million yen)

50,00055,32954,40054,27549,17750,73345,755Investments and other assets
Total assets0
2016/32017/3

5,788

Operating income
Operating margin

million yen

8.0

3,000

4.0

0

0

-3,000-4.0-6,000-8.0
2018/3

2014/3

2015/3

2016/32017/3

Net income*/Net margin
Net income*Net margin

million yen(in million yen)(forecast)

5
0

0

-5

-6,000-10
2014/3

2015/3

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

07

103,578

41,99045,00438,85130,033

Total liabilities

80,84175,038

Net assets

24,57826,170Capital12,88812,888

Capital surplus

19,745

11,745Retained earnings(7,659)

1,932

Treasury stocks

(396)

(396)

3,925

2,112

Valuation difference on available-for-sale securities

32

85

Deferred gains or losses on hedges

(337)

58

Foreign currency translation adjustment

4,475

2,437

Remeasurements of defined benefit plans

(246)

(469)

Cumulative other comprehensive income

260

257

Total net assets

28,76428,540Total liabilities and net assets

109,605

103,578

(%)

6,000

-12,000

109,605

Current liabilities

Non-controlling interests

1,767

219
3,202

Noncurrent liabilities

Shareholders’ equity(forecast) (%)

6,000

212
3,329

Liabilities

2018/3Operating income/Operating margin(in million yen)

(As of March 31, 2017)

Current assets

Intangible assets

2015/3At the end of this period(As of March 31, 2016)

Noncurrent assets
Property, plant and equipment

2014/3End of FY2015
Assets(forecast)

100,000(in million yen)

2018/3-15

Key points of the financial results• Consolidated balance sheet
Total assets were 103,578 million yen, a decline of 6,026 million yen fromthe end of the previous fiscal year. The primary causes include a decline of
2,110 million yen in cash and deposits, an increase of 912 million yen in inventories, a decline of 526 million yen in accounts receivable-other in current assets, and a decline of 4,978 million yen in property, plant andequipment of noncurrent assets.
Total liabilities stood at 75,038 million yen, a decline of 5,803 million yen
from the end of the previous fiscal year. The primary causes include an increase of 1,589 million yen in notes and accounts payable-trade, an increase of 577 million yen in the current portion of long-term loans payable,

Consolidated statement of income(in million yen)Previous period

Current period(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)

Net sales

95,287

95,911

Cost of sales

82,101

79,825Gross profit

13,18516,085

Selling, generaland administrative expenses

9,860

10,297

Operating income

3,325

5,788

Non-operating income

300

376

Non-operating expenses

4,117

3,183

Ordinary income (loss)

(491)

2,981

Extraordinary income

32—

Extraordinary losses

9,074

255

Net income (loss) before income
taxes(9,532)

2,725

Income taxes

1,717

939

(11,250)

1,785

(0)

18

(11,250)

1,767

Net income (loss)
Net income (loss) attributable
to non-controlling interests
Net income (loss) attributable toowners of parent

an increase of 710 million yen in lease obligations in current liabilities, and a
decline of 8,361 million yen in long-term loans payable of noncurrent liabilities.
Net assets were 28,540 million yen, a decline of 223 million yen from the endof the previous fiscal year. The major causes include a decline of 8,000 million
yen in capital surplus, an increase of 9,592 million yen in retained earnings,
and a decline of 2,038 million yen in foreign currency translation adjustment.
• Consolidated statement of income
Net sales amounted to 95,911 million yen, an increase of 624 million yen (or a
0.7% increase) year on year, attributable to strong sales in products for smartphones. In profits and losses, operating income was 5,788 million yen (or a
74.1% increase year on year) and ordinary income was 2,981 million yen

Consolidated statement of cash flows(in million yen)Previous period

Current period(April 1, 2015 toMarch 31, 2016)(April 1, 2016 to
March 31, 2017)

Net cash generated
from operating activities

9,932

11,612

Net cash expended
in investment activities(1,736)(4,321)

Net cash generated
from financing activities

1,966(9,030)The effect of changes
in the exchange rate on cash
and cash equivalents

(703)

(377)

Net increase (decrease)in cash and cash equivalents

9,458(2,116)

Cash and cash equivalents
at the beginning of the period

9,490

19,312363—

19,312

17,196

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

Cash and cash equivalents
at the end of the period(ordinary loss of 491 million yen in the same period of the previous fiscal year),mainly attributed to improvement in production capacity.
• Consolidated statement of cash flows
Net cash generated from operating activities was 11,612 million yen, an increase of 1,680 million yen from the previous fiscal year. Net cash expended ininvestment activities was 4,321 million yen. This was mainly due to the acquisition of property, plant and equipment. Net cash used in financing activities
was 9,030 million yen (compared to net cash received of 1,966 million yen in
the previous fiscal year). The major causes include the outflow due to the repayment of 11,567 million yen in long-term loans payable, and the inflow
brought by long-term loans payable of 3,723 million yen.

08

Global Network

Meiko’s production and sales systems
that meet global customer needs
Meiko Electronics Europe GmbH

Production Base
Sales Bases

Shanghai Sales Office

Tianjin Sales Office

Meiko Electronics America, Inc.

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

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

Ishinomaki Branch Factory(Yamagata Meiko Electronics Co., Ltd.)

■
●

■ ▲

Overseas Sales Department
Bangkok●
Representative
OfficeVietnam Factory(Meiko Electronics Vietnam Co., Ltd.)▲Thang Long Factory(Meiko Electronics Thang Long Co., Ltd.)
Meiko Elec. Hong Kong. Co., Ltd■

Omiya Sales Office
Meiko Tech Yokohama Branch Office
Nagoya Sales Office●▲●Osaka Sales Office

■

■

▲●
■●
●
▲
◆

Fukushima
Factory

M.D. Systems Co., Ltd.

Meiko Tech Osaka
Head Office
Meiko Techno Co., Ltd.

MDS Circuit Technology, Inc.

VOL.

2

Director and Senior Managing
Executive Officer

Masakuni Shinozaki
09

R&D Base
Affiliated Companies

The Meiko Group established a new Sales Headquarters in 2014, and has steered the business activities of “Development, Technology, Manufacture, and Sales” in an integrated fashion. The Group has
marked sales over 90 billion yen for the past three consecutive years, achieving a slight upward trend.
In the automobile-related business which accounts for half of the Group sales, we have driven technology proposal-based sales activities to respond to rapid needs for the application of technologies for
digitalization and automation, which has contributed to delivering expected operating results since thelatter half of 2017. The Group’s other pillar, the smartphone business, has been operated with stableorders received through transactions targeting leading manufacturers worldwide. The aforementioned
day-to-day business activities made it possible for the Group to draw up the FY2017 sales plan with agoal of over 100 billion yen, a first since the foundation of the Group.
The Group will continue its sales activities while anticipating market needs. We appreciate your continuous support.

Kanagawa Factory
Headquarters
1st Sales Dept.
2nd Sales Dept.
High-Performance
PCB Sales Dept.
FPC Sales Dept.
EMS Sales Dept.
Research andDevelopment Dept.

Corporate Data (as of March 31, 2017)
Corporate Profile

Stock Information

Name

MEIKO ELECTRONICS CO., LTD.

Established

November 25, 1975

Capital12,888 million yen

No. of Employees 10,677 (consolidated)(Japan: 790) (overseas: 9,887)
Outline of Business Design and manufacturing and sales of
PCBs and auxiliary electronics business

Number of Shares Authorized (Ordinary share) 70,000,000 shares(Class-A preferred share)
50 shares
Number of Shares Issued (Ordinary share) 26,174,076 shares(excluding treasury stock of 629,244 shares)(Class-A preferred share)
50 shares
Number of Shareholders (Ordinary share)(Class-A preferred share)

5,765
1

Principal Shareholders(Ordinary shares)

Executives

President & CEO
Director

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

Name of Shareholder

Yuichiro NayaYuichiro Naya

4,702

18.0

Seiichi NayaJapan Trustee Service Bank, Ltd. (Trust Account)

1,848

7.1

The Master Trust Bank of Japan, Ltd. (Trust Account)

757

2.9

Director and Senior Managing Executive Officer Takahide Hirayama
Director and Senior Managing Executive Officer Masakuni Shinozaki

GOLDMAN SACHS INTERNATIONAL

628

2.4

Meiko Kosan Co., Ltd.

608

2.3

Yuho, Ltd.

521

2.0

514

2.0

Director

Maren Schweizer

Director

Yoon Ho, Shin

Director

Hajime Nakano

BNY GCM CLIENT ACCOUNTJPRD AC ISG (FE–AC)

Senior Corporate Auditor

Hitoshi Iyomoto

Haruyuki Naya

468

1.8

SBI Securities Co., Ltd.

446

1.7

Audit & Supervisory Board Member Takashi Harada

Seiichi Naya

445

1.7

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

Audit & Supervisory Board Member Arifumi Sunada(Class-A preferred shares)

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

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

持株数（株） % of shares held

Name of Shareholder

Chiiki Chukakukigyo Kasseika Fund

50

100.0

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

57.4%

Financial institutions
Foreign institutions
and others
Other institutions
Financial instruments
business operators
Treasury stock

18.3%
12.2%
5.6%
4.2%
2.3%

10

Shareholders’ Information
Fiscal Year

April 1 to March 31 of the following year

Annual Shareholders’ June
Meeting
Record dateYear-end dividends: March 31
Interim dividends: September 30
Administrator ofshareholders registerand special accountmanagement institution
Handling office ofAdministrator ofshareholders register

Method ofpublic notice

1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
Sumitomo Mitsui Trust Bank, Limited

1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan
Stock Transfer Agency Business Planning
Dept., Sumitomo Mitsui Trust Bank, Limited(Mailing Address) 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

The Company’s
website has beenredesigned.

検索

h t t p : / / w w w. m e i k o - e l e c . c o m /URL:Enquiries concerning shareholdings:• Shareholders who need to update information on shareholdings, including change of address and method of receiving 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
are advised to contact Stock Transfer Agency Business
Planning Dept., Sumitomo Mitsui Trust Bank, Limited, as
stated to the left.

The national identification number, Individual Number, which was notified bymunicipal authorities, is required for tax reporting on stock. Accordingly, shareholders are requested to submit their Individual Numbers to their securities
companies.

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 the Company website to find other useful information as well.

Headquarters

Electronic public notice in our official page
Official Page: http:www.meiko-elec.com/ir/pa.shtml
In the event of an accident or other unforeseen
events that prevent publication of the electronic
public notice, it will be published in The Nikkei.

Procedures Required on Individual Number System

TOP page

Meiko

Stock exchange JASDAQ (Standard), Tokyo Stock Exchange[Individual Number Required for Stock-related Operations]Contacts on submission
The Company will submit payment records
of Individual Number
with the description of a shareholder’s Individual Number to a tax office in accordance with • Shareholders whose shares are held withsecurities companies are advised to conlaws and ordinances.
tact their securities companies.
Major Payment Records• Shareholders who do not have accounts• Payment records of dividends
with securities companies are advised tocontact the Stock Transfer Agency Busi•P ayment records of transactions on the transfer ofness Planning Dept., Sumitomo Mitsui
stock such as the Company’s purchases of fractional
Trust Bank, Limited.
shares based on shareholders’ requests

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.