Slide 1: Results Briefings for Fiscal 2015 Ended March 2016
ESOEC Securities ID code:6859 ESPEC CORP. Results Briefings for Fiscal 2015 Ended March 2016 May 23, 2016 WWW.eSpec.co.jp ESPEC CORP.
Slide 2: Table of Contents
Table of Contents Company Profile Financial Result for the Fiscal 2015 Ended March 31, 2016 Analysis per Segment for the Fiscal 2015 Ended March 31, 2016 Management Plan for the Fiscal Ending March 31, 2017 Priority Strategies for the Fiscal Ending March 31, 2017 Reference ESPEC CORP. 1
Slide 3: Company Profile
Company Profile Industry-leading manufacturer of environmental test chambers: 69th year since company was founded in Osaka Name ESPEC CORP. *) Head Office 3-5-6, Tenjinbashi, Kita-ku, Osaka _ | Represented By Masaaki Ishida : Established July 25,1947 Incorporated January 13,1954 Paid-up Capital ¥6,8
Slide 4: Global Network
Global Network Global Network Ateoininics Business facilities in Japan:26 Domestic agencies in Japan:48 Consolidated Subsidiaries 13 companies 3 3companies w AAESPEC EUROPE GmbH a 2 @ESPEC NORTH AMERICA, ING «4, SESPEC IKLIM KABINLERI y aml ‘= §~ @QUALMARK CORPORATION t2 SATIS VE MUHENDISLIK ASIA 5
Slide 5: TOPICS: ESPEC North America Plant Expansion
TOPICS October 2015 ESPEC NORTH AMERICA Plant Expansion ESPEC CORP.
Slide 6: TOPICS: iF Design Award 2016
TOPICS January 2016 Received an iF DESIGN AWARD 2016 International Design Award a” 4 AVS V4 ESPEC’ s Bench-Top Type Temperature (& Humidity ) Chamber received an iF DESIGN AWARD 2016 in the product design category ESPEC CORP. 5
Slide 7: Summary of ESPEC Business (Per Market / Use)
Summary of ESPEC Business (Per Market / Use) Pain Products| Market | use fe vorres +Electronic component and equipment market -Automobile market +Temperature & humidity chamber *Thermal shock chamber -Bench-top type temperature & humidity chamber Ensironmentaltloct -Walk-in type temperature & humidi
Slide 8: Financial Result for the Fiscal 2015 Ended March 31, 2016
Financial Result for the Fiscal 2015 Ended March 31, 2016 ESPEC CORP. 7
Slide 9: Financial Highlights
Financial Highlights MOrders-received increased year on year in the Equipment Business and Service Business segments HiNet sales increased year on year in both domestic and overseas markets «In Japan, the trend was up for both standardized and customized environmental test chambers The trend was als
Slide 10: Summary of Profits and Losses
Summary of Profits and Losses FY 2014 FY 2015 (millions of yen) 36, 287 33, 661 21, 567 (64.1%) 12, 094 9, 450 2, 643 3, 044 2,118 ESPEC CORP. 39, 903 39, 035 25, 461 (65. 2%) (1. 1pt) 13, 573 12. 2% 10, 051 6. 4% 3, 521 3,570 17. 3%
Slide 11: Analysis of Operating Income
Analysis of Operating Income Increase and Decrease Factor (millions of yen) | 87 — A274 [J Equipment Business |] Service Business AT9= "SZ" 1K 139) [ll Other Business + Elimination aig , Boo ‘$532 3 £88 /3e@° 3 Bos : | Os a Z28G / (os 2. 230 (ss ° es= (so 5 Zea '3o cy Ba (Se ° 38 1 on oO XQ AN TaN S
Slide 12: Statement of Cash Flow
~ 2 Decrease in funds = ee fone ‘os Effect of exchange rate change @ on cash and cash equivalents t+ Fe ae 2. = Total financial cash flow o. < Other Purchase of treasury shares Cash dividends paid Total investment cash flow _ Purchase of shares of subsidiaries resulting in change in scope of consoli
Slide 13: Analysis per Segment for the Fiscal 2015
Analysis per Segment for the Fiscal 2015 Ended March 31, 2016 ESPEC CORP.
Slide 14: Performance by Segment
Performance by Segment millions of yen 29, 399 32,951 Equipment 26, 992 32, 030 18.7% Business [}------------ 2,178 2, 986 37.1% 5, 589 5, 874 5.1% Service 5,541 5, 786 4.4% Business }------------ 430 516 19.8% 1, 527 1, 340 A12. 2% Other [Co Business |.-_.Net Sales 1, 350 1,474 9. 2% 34 19 A44. 1%
Slide 15: FY 2015 Results and FY 2014 Applicable Products
FY 2015 Results and FY 2014 Applicable Products [J Equipment Business {] Service Business [ij Other Business Operating Income m™24m (millions of yen) 12440 ate Ed b 39,035 3,521 33,661 2,643 —— —— FY 2014 | ummml> FY 2015 FY 2014 utmm> FY 2015 © Operating income increased, driven substantially by th
Slide 16: Equipment Business
Equipment Business Environmental Test Chambers Bln the Japanese market, net sales increased The trend was brisk for highly versatile standardized products «Business conditions for customized products centered on the automobile market and research institutions remained strong as well Hiln the oversea
Slide 17: Equipment Business
Equipment Business (millions of yen) Rate of Change 12.1% FY 2014 Orders- Received 32, 030 18.7% Operating Income 2,986 [Profit ratio (%) ] (9. 3%] $7. 1% ESPEC CORP.
Slide 18: Service Business
Service Business (millions of yen) FY 2014 Rate of Change Orders- Received 5, 589 5, 874 5.1% 5, 541 5, 786 4.4% Operating Income 430 516 > [Profit ratio (%) ] [7. 8%] [8. 9%] Ueb Ehe Both orders-received and net sales were about the same as the previous year Conditions were up for the mainstay test
Slide 19: Other Business
Other Business (millions of yen) Operating Income [Profit ratio (%) ] Environmental Engineering and Plant Factory MBusiness performance remained strong for environmental engineering in reforestation (tree planting) and the plant factory business HiNet sales increased , even though orders-received fe
Slide 20: Breakdown of Sales by Market
Breakdown of Sales by Market Non-consolidated (Equipment business) 100% 80% 60% 40% 20% 0% 12 10 10 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 BOther markets GAutomobile market OFlat panel display market GElectronic device and equipment market OSemiconductor market ESPEC CORP. 19
Slide 21: Sales by Region
Sales by Region FY 2014 FY 2015 Overseas sales ratio:40. 4% Overseas sales ratio:-41. 2% 1. 8% 14. 1% @ Taiwan 2. 4% 15. 3% 3. 5% & China m™ Korea 3. 4% FY2014 MEurope & FY2015 15. 4% America @ South East 14, 2% Asia 59. 6% 3. 5% ™ Other 58. 8% 41% 2.1% Japan 1. 8% Total: 33, 661 million yen Total:
Slide 22: Management Plan for the Fiscal Ending March 31, 2017
Management Plan for the Fiscal Ending March 31, 2017 ESPEC CORP.
Slide 23: Targets for Consolidated Revenues and Earnings
Targets for Consolidated Revenues and Earnings for the Fiscal Ending March 31, 2017 (millions of yen) FY 2015 Results FY 2016 Target Net Sales 39,035 39,000 Operating Income 3,5 21 3,600 Operamng come 9.0% 9.2% ESPEC CORP.
Slide 24: Business Plan for the Fiscal Ending March 31, 2017
Business Plan for the Fiscal Ending March 31, 2017 (millions of yen) FY 2017 (Plan) Orders-received 39, 903 19, 000 21, 000 40, 000 0. 2% 39, 035 18,000 21,000 39, 000 AO. 1% Gross profit 13, 573 6, 350 7, 480 13, 830 1.9% [Profit ratio (%) ] (34. 8%) (35. 3%) (35. 6%) (35. 5%) ate Operating income
Slide 25: Equipment Business
Equipment Business (millions of yen) Re FY 2015 FY 2016 (Plan) Eo 14, 900 17,100 32,000 AO. 1% 1,150 1, 850 3, 000 (7. 7%] {10. 8%] [9. 4%] Operating income 0.5% [Profit ratio (%) ] ESPEC CORP.
Slide 26: FY 2015 Year on Year (%)
FY 2015 FY 2016 (Plan) Fiscal 2Q Second half Fiscal Year on Year (%) (Results) 25
Slide 27: FY 2015 Fiscal (Results)
FY 2015 Fiscal 2Q Second half Fiscal Year on Year(%) (Results) 26
Slide 28: Dividends
*Consolidated dividend payout ratio in parentheses. 27
Slide 29: Priority Strategies for the Fiscal Ending March 31, 2017
Priority Strategies for the Fiscal Ending March 31, 2017 ESPEC CORP.
Slide 30: Priority Strategies for the Fiscal Ending March 31, 2017
Priority Strategies for the Fiscal Ending March 31, 2017 Priority Strategy 1 Priority Strategy 2 Apply collaborative synergies of the ESPEC Group to Expand business domains targeting growing and strategic increa ales in oversea crease sales in overseas markets markets Investment of management resour
Slide 31: 1-1 Increase sales in overseas markets
1—1 Increase sales in overseas markets Apply ASEAN (Thai) technical support functions to differentiate yy oy + Strengthen technical support SAR E,6¢ © ra capabilities of ESPEC ENGINEERING : € : tin (THAILAND) CO., LTD. to deeply ae! : " Geane olin cultivate the ASEAN market ESPEC IEERING (TH; ND)* &
Slide 32: 1-2 Increase sales in overseas markets
1—2 Increase sales in overseas markets Apply the “One ESPEC Structure ” to increase sales in the Chinese market Customers ESPEC ENVIRONMENTAL EQUIPMENT (SHANGHAI) CO., LTD. < Sales > 100% subsidiary LO AICLELS MMe aciuai SPEC ENVIRONMENTA SieM IM 100% subsidiary Primary customized (GUANGDONG) CO., L
Slide 33: 2-1 Expand business domains in growth strategy markets
2-1 Expand business domains in growth strategy markets <Increase sales in the field of electrification and automated driving of automobiles> - Increase sales of customized products * Increase sales of commissioned testing services ESPEC CORP.
Slide 34: 2-2 Expand business domains in growth strategy markets
2—2 Expand business domains in growth strategy markets <Increase sales in the certification testing market for secondary batteries and fuel cells> * Increase sales of customized products * Increase sales of commissioned energy device testing services + Increase sales of battery safety verification t
Slide 35: 2-3 Expand business domains in growth strategy markets
2-3 Expand business domains in growth strategy markets <New> pharmaceuticals and food = * Increase sales of Stability Test Chambers and © Walk-In Stability Test Chambers Walk-in Stability Test Chamber ESPEC CORP.
Slide 36: 2-4 Expand business domains in growth strategy markets
2—4 Expand business domains in growth strategy markets <New> Biomedicine + Increase sales of training rooms Hypoxic Training ESPEC CORP.
Slide 37: 2-5 Expand business domains in growth strategy markets
2-5 Expand business domains in growth strategy markets <New> Accelerated testing Generate synergies with QUALMARK CORPORATION * New product development * Commissioned test services HALT & HASS testing equipment ESPEC CORP.
Slide 38: Plant factory near an airport (Ota-ku, Tokyo)
Plant factory near an airport (Ota-ku, Tokyo) Leafy lettuce 37
Slide 39: Increasing sales in the Japanese environmental testing market
3 Increasing sales in the Japanese environmental testing market Strengthen competitiveness with proprietary services + Industry’ s first 5-year product guarantee * Develop after-service products and a menu of commissioned tests "5-year Product Guarantee“ Applicable products a Temperature & Humidity
Slide 40: Management Structure in Fiscal 2016: Executive Officer System
Management Structure in Fiscal 2016—Introduction of an Executive Officer System Raise transparency of the supervisory and executive functions of consolidated management to strengthen corporate governance Supervisory functions Strategic functions (Unconsolidated ) Executive officers I—— Executive fun
Slide 41: Reference
Reference ESPEC CORP.
Slide 42: History of Environmental Test
History of Environmental Test What is Environmental Test Test to analyze and evaluate effects of environmental factors such as temperature, humidity, pressure, and light on various industrial products like electronic components in order to ensure product quality. <1950s> <1970s-1990s> <Today> The en
Slide 43: Business expansion timeline
1982 1986 1994 2011 Launching the FPD Launching the expansion Launching the Launching Business semiconductor Equipment business evaluation system equipment business business the energy device equipment business 42
Slide 44: Usage Case with Environmental Test Chambers
[Equipment Business] Usage Case with Environmental Test Chambers Secondary Batteries = LED Representat for En xamples ronmental Testing Car Navigation (GPS) ehicle ensor Compact Size Motor a econdary Cell Device Process/Test Condition Our Products [Power Device) MiThermal shock test: — 40°C + 125°C
Slide 45: Introduction of New Products
[Equipment Business] Introduction of New Products Release ame of product Date 2015/9 2015/2 2014/11 2014/11 2014/11 2014/7 2014/7 2014/5 Constant-Temperature Bath for Combined Testing Equipment Low Temperature (&Humidity) Chamber Thermal Shock Chamber TSA series Advanced Safety Tester Advanced Batte
Slide 46: Bench-Top Chamber receives iF Design Award 2016
[Equipment Business] TOPICS Bench-Top Type Temperature (& Humidity) Chamber receives an iF DESIGN AWARD 2016 international design award ESPEC’ s Bench-Top Type Temperature (& Humidity iF AWARD Chamber received an iF DESIGN AWARD 2016, the most aa prestigious design award in the world, in the product
Slide 47: Start the industry-first 5-year Product Guarantee
[Service Business] TOPICS Start the industry-first "5-year Product Guarantee” In January 2015, ESPEC started a free 5-year product guarantee service based on the two key concepts of fc “aT “making connections” and “reliability” to build even Si stronger relationships of trust with our customers @App
Slide 48: Usage Case with Energy Device Equipment
[Equipment Business] Usage Case with Energy Device Equipment Charge-discharge Cycle Evaluation Equipment Equipment for ensuring the reliability and safety of lithium-ion secondary batteries for next-generation vehicles (e.g., hybrid and electric vehicles) Secondary Batteries discharge cycle load Che
Slide 49: Usage Case with Semiconductor Equipment
[Equipment Business] Usage Case with Semiconductor Equipment Eliminate defective products to maintain initial-period quality at the final inspection stage of semiconductor device manufacturing Burn-in chamber Reliability Evaluation Used to evaluate basic failure patterns to ensure reliability in the
Slide 50: After-sales Service and Engineering
[Service Business] After-sales Service and Engineering Preventive maintenance of products, maintenance service, and the upgrading/improvement and installation/relocation of products ll Speedy response via one of the most extensive networks in Japan HB Launching new services by utilizing the network
Slide 51: Opened the world's first Battery Safety Certification Center
[Service Business] TOPICS Opened the world’ s first Battery Safety Certification Center The facility was opened within the Utsunomiya Technocomplex in September 2015. Applicationying for testing and certification compatible with the United Nations Economic Commission for Europe (UN ECE)’ s R110-2. P
Slide 52: Environmental Engineering Business
[Other Business] Environmental Engineering Business Environmental Engineering Business Reforestation (Tree planting) Recovery of local forest by selecting species and planting out seedlings using potential natural vegetation data. HWaterfront biotope restoration Reconstruction of natural environment
Slide 53: Establishment of a plant factory near Haneda Airport
[Service Business] TOPICS Establishment of a plant factory near Haneda Airport Sale of high-nutrition vegetables produced with the use of deep sea water vy} Interior of the plant factory near an airport ESPEC CORP.