Slide 1: FY2018 Financial Results
FY2018 Financial Results May 13, 2019 1
Slide 2: Agenda
Agenda 1 FY2018 Actual 2 FY2019 Outlook 3 New Mid-term Management Plan 2
Slide 3: FY2018 Highlights
FY2018 Highlights FY2018 consolidated operating profit increased by 57.1% compared to FY2017. INNOTECH revenue decreased due to withdrawal from the electronic devices trading business; but profit increased substantially with strong tester and embedded system businesses. Gaio Technology and STAr Tech
Slide 4: FY2018 Actual
FY2018 Actual (mil. yen) Sanei IT GAIO STAr INNOTECH REGULUS Consolidated Hytechs Access TECHNOLOGY Technologies YoY Fiscal Year FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 FY2017 FY2018 Net Sales 15,373 14,630 3,361 3,449 2,278 2,831 2,937 3,314 4,574 5,131 5
Slide 5: FY2018 Design and Development Solution Business
FY2018 Design and Development Solution Business 〔Sales: mil. yen〕 〔売上：百万円〕 〔Gross Profit: mil. yen〕 〔売上総利益：百万円〕 20,000 5,231 5,500 4,926 5,000 17,500 3,444 4,500 15,000 3,347 629 4,000 444 三栄ハイテックス Sanei Hytechs 12,500 2,240 2,830 3,500 REGULUS レグラス 1,742 3,000 IT Access アイティアクセス 10,000 2,124 Embedd
Slide 6: Design and Development Solution Business
Design and Development Solution Business EDA Sales remained solid and stable with successful contract renewals with major customers. GAIO Revenue and profit increased with strong tool sales and verification service business. Embedded System Internally-developed box-type computers sell well for infra
Slide 7: FY2018 Product Solution Business
FY2018 Product Solution Business 〔Sales: mil. yen〕 〔Gross Profit: mil. yen〕 15,000 4,500 4,243 4,000 12,500 3,464 3,500 732 1,125 10,000 3,000 その他 Others 2,831 2,500 HDD HDD 7,500 5,073 STAr STAｒ 2,000 Technologies Technologies テスター Tester 5,000 4,537 1,500 Gross Profit 売上総利益 1,000 2,500 5,210 3,340
Slide 8: Product Solution Business
Product Solution Business Sales of the “Test Solution Business” which is INNOTECH tester business and the business of STAr Technologies combined together reached over 10 billion yen Testers Major growth mainly for testers; reaching near the record highest results STAr Increase in profit and sales wi
Slide 9: Major Expenses, Non-Operating Expenses and Income and Extraordinary Loss
Major Expenses, Non-Operating Expenses and Income and Extraordinary Loss 〔mil yen〕 FY2017 FY2018 Major Expenses Research & Development 950 1,079 Depreciation 600 768 Amortization of Goodwill 236 207 Major Items of Non-operating Expenses and Income Real Estate Rent 436 458 Rent Expenses on Real Estat
Slide 10: Cash Flow
Cash Flow 〔mil yen〕 FY2017 FY2018 Profit Before Income Taxes 1,209 2,256 Depreciation and Amortization of Goodwill 836 976 Working Capital and Others -36 -2,123 Cash Flows from Operating Activities 2,009 1,109 Purchase of Investment Securities -313 -391 Purchase of Tangible Assets -982 -1,047 Procee
Slide 11: Review of Mid-term Management Plan during FY2014～2018
Review of Mid-term Management Plan during FY2014～2018 Transformation of Business Portfolio Executed the business structural reform and transformed our business portfolio with measures such as withdrawal from the electronic devices trading business but failed to create new business which would replac
Slide 12: Numerical Targets
Numerical Targets （百万円) Sales(左軸) Operating Profit mil yen （百万円） mil yen 売上高 営業利益 (右軸) 40,000 (Left Axis) (Right Axis) 4000 ROE ROE 6.6% 30,000 3000 20,000 2000 2.3% 10,000 1000 0 0 2014年3月期 FY2013 2019年3月期 FY2018 中期経営計画目標 Target of Mid-term FY2018（実績） FY2018 Actual Management Plan Sales: Target was
Slide 13: Transformation of Business Portfolio
Transformation of Business Portfolio Successfully transformed ourselves from a trading company of electronic devices and components to a provider of internally-developed products during the mid-term management plan from FY2014 to FY2018. 事業戦略の変遷 Transformation of Business Strategy 1987 1990 1995 200
Slide 14: Active Pursuit of Overseas Market
Active Pursuit of Overseas Market Aiming to penetrate the Chinese market by the business alliance with V- Technology Co. Ltd for tester business and capital participation in Z-CSET of China. STAr established a manufacturing and service facility in the US and strengthens its probe card business. Sane
Slide 15: Measures and Achievements of INNOTECH Capital Management Policy
Measures and Achievements of INNOTECH Capital Management Policy Enhance the Corporate Value ROE Target was 5 % during the mid-term management plan from FY2014 to FY2018 and 8-10% for mid-term and long-term→5% was achieved. ROIC Target was 8-10% for mid-term and long-term → ROIC-WACC spread became po
Slide 16: Agenda
Agenda 1 FY2018 Actual 2 FY2019 Outlook 3 New Mid-term Management Plan 16
Slide 17: FY2019 Highlights
FY2019 Highlights Decrease in profit expected as the memory market slows down IT ACCESS will increase its revenue and profit substantially mainly for its new business STAr Technologies and GAIO TECHNOLOGY will remain highly profitable INNOTECH profit mainly for tester business will 17 decline due to
Slide 18: FY2019 Estimate
FY2019 Estimate [mil. yen] GAIO STAｒ INNOTEC Sanei IT Consolida TECHNOL Technolog REGULUS FY2015 YoY H Hytechs ACCESS ted OGY ies Net Sales 13,400 3,250 4,000 3,300 5,300 1,000 30,000 29,804 0.7% 3,630 850 920 1,420 2,480 300 9,600 9,475 Gross Profit 1.3% (27.1%) (26.2%) (23.0%) (43.0%) (46.8%) (30.
Slide 19: FY2019 Outlook: Design and Development Solution Business
FY2019 Outlook:Design and Development Solution Business mil. yen〕 〔売上：百万円〕 〔Sales: 〔Gross Profit: mil. yen〕 〔売上総利益：百万円〕 5,720 6,000 20,000 5,231 3,240 5,000 3,444 970 15,000 629 4,000 Sanei Hytechs 2,830 3,970 三栄ハイテックス REGULUS レグラス 1,742 1,800 3,000 IT Access アイティアクセス 10,000 組込システム Embedded System ガ
Slide 20: Design and Development Solution Business
Design and Development Solution Business EDA Aim to expand its business by launching new business focusing on HW/IP Core. GAIO Target for continuous growth in sales as it develops new tools. Embedded System Acquire demands for internally-developed embedded solutions for high-quality infrastructure a
Slide 21: FY2019 Outlook: Product Solution Business
FY2019 Outlook: Product Solution Business 〔Sales: mil. yen〕 〔Gross Profit: mil. yen〕 4,243 3,880 4,000 1,125 10,000 1,080 3,000 5,073 Others その他 5,220 STAr STAｒ Technologies 2,000 テスター 5,000 Tester Gross Profit 売上総利益 5,210 1,000 3,900 0 0 19年3月期 FY2018 20年3月期 FY2019 Total 11,408 10,200 21 （※） Rounde
Slide 22: Product Solution Business
Product Solution Business Testers ・Sales of testers will decline and thus revenue will substantially decrease due to the memory market slow down; expect that the demands for memory products will come back in the second half of FY2019. ・Start operations to fully participate in the Chinese market via
Slide 23: EBITDA Trends
EBITDA Trends [mil. yen] EBITDA EBITDA 3,000 Operating Profit 3,233 営業利益 2,500 2,760 2,000 1,955 1,978 1,994 2,046 1,600 1,500 1,244 1,000 1,012 999 500 0 FY2015 16年3月期 FY2016 17年3月期 FY2017 18年3月期 FY2018 19年3月期 FY2019 (Est) 20年3月期（予） Depreciation ： 800 mil yen Amortization of ： 207 mil yen Goodwill
Slide 24: Dividends
Dividends As of 1H- As of FY- Dividend Full Year end end Payout Ratio FY2018 20 yen 20 yen 40 yen 42.8% FY2019 (Estimate) 20 yen 20 yen 40 yen 53.4% We intend our consolidated divided payout ratio not to be less than 30%. Our goal is to maintain around 50% level as long as our business remains stabl
Slide 25: Agenda
Agenda 1 FY2018 Actual 2 FY2019 Outlook 3 New Mid-term Management Plan 25
Slide 26: New Mid-term Management Plan: Our Approach
New Mid-term Management Plan: Our Approach Environment The market outlook is still unclear but markets in China and newly- emerging countries are growing; As the population declines, securing human resources and enhancement of productivity will be the key; Automotive electronics area keeps evolving:
Slide 27: Environment: Business Opportunities and Risks
Environment: Business Opportunities and Risks Production capacities and demands for semiconductor products keep growing; uncertainty remains with their China, newly protective trade policies emerging countries Demands for less-energy, less-man power technologies such as technologies to streamline de
Slide 28: Our Business Model
Our Business Model Manufacturing Process Services Provided by INNOTECH EDA Software Model-based Design (MBD) Noise Analysis Design and Development LSI Design/Development on Consignment Embedded Software Verification Tools Reliability Test Equipment Analysis and Evaluation Software Prototype and Veri
Slide 29: New Mid-term Management Plan: Framework
New Mid-term Management Plan: Framework ~FY2018 FY2019~2023 FY2024~ Business Structural Growth – Enhancement of Corporate Next Reform Value - Stage Transformation of Business Portfolio Major Five Strategies Pursuit of Profitability Increase ROE Withdrawal from Electronic Over 8% Expansion of test so
Slide 30: New Mid-term Management Plan: Profit Planning
New Mid-term Management Plan: Profit Planning ROE New Mid-term Management Plan 8.0% 6.6% ROE Target: +8% 5.0% In order to achieve the target: FY2018 (actual) FY2019 (Estimate) ・Operating Profit：3-3.5 bil yen FY2018（実績） FY2019（見通し） ... FY2023（計画） level FY2023 (Plan) Mid-term Management 新中期経営計画 Plan A
Slide 31: Five Major Strategies
Five Major Strategies Expansion of test solution business Increase sales of internally-developed Business products; strengthen our manufacturing function Strategies Grow customer base/cultivate overseas market Active pursuit of new business areas. Financial Enhance capital efficiency based on our Ca
Slide 32: Expansion of Test Solution Business
Expansion of Test Solution Business Enrich our product portfolio Deployment at Overseas Market such as China 32 Strengthen our sales skills and technical expertise by cooperating among INNOTECH Group
Slide 33: Expansion of Test Solution Business
Expansion of Test Solution Business ●Semiconductor testers are used to detect defective products from good products and their importance is increasing as the semiconductor devices evolve and the semiconductor market grows. ●INNOTECH enriches the product portfolio adding testers for various sensors w
Slide 34: Expansion of Test Solution Business
Expansion of Test Solution Business ●Collaborating with our group company STAr Technologies (headquarter in Taiwan) to strengthen salesforce overseas and to provide turn-key solutions. ●STAr’s major product is reliability test equipment for evolving semiconductors and cutting-edge probe cards. Stren
Slide 35: Roadmap
Expansion of Test Solution Business Roadmap Handler testers for storage High-speed hander testers for MEMS sensors Testers for camera FT testers for CIS modules Reliability assessment equipment, cutting-edge Test Systems for RF probe cards Testers for 2D Testers for 3D Next generation non-volatile N
Slide 36: Increase sales of internally-developed products; strengthen manufacturing function
Increase sales of internally-developed products; strengthen our manufacturing function Based on INNOTECH Group competitiveness, internally develop and deploy cutting-edge, original solutions and products mil yen （百万円） Increasing internally-developed products 自社製品売上の増加 （百万円） 2,000 研究開発費の増加 Increasing
Slide 37: Increase sales of internally-developed products; strengthen manufacturing function
Increase sales of internally-developed products; strengthen our manufacturing function Provide INNOTECH-made embedded CPU boards, Regulus-made intelligent cameras, and IT ACCESS- made settlement system; based on Cloud Service such products, provide IoT/cloud services for various applications Data Pr
Slide 38: Increase sales of internally-developed products; strengthen manufacturing function
Increase sales of internally-developed products; strengthen our manufacturing function Design/ Quality Confirmation Embedded Quality品質埋込 Manufac Verification turing Define System Requirements Test From customer requirement External Consolidated analysis, consideration of Design Test specification to
Slide 39: Grow customer base/cultivate overseas market
Grow customer base/cultivate overseas market Expand our customer base Infrastructure Automotive from the electronics area to automotive, infrastructure, Home Semiconductors Electronics medical, and so on Medical FA Cultivate overseas market for test solutions, semiconductor 39 designs and others
Slide 40: Grow customer base/cultivate overseas market
Grow customer base/cultivate overseas market Grow customer base from electronics Makers of medical and area to automotive, infrastructure, automotive products medical areas and so on Infrastructure and machinery makers such as vending machines Home electronics makers Semiconductor makers 40
Slide 41: Grow customer base/cultivate overseas market
Grow customer base/cultivate overseas market 浙江芯晖設備技術有限公司 （Z-CSET） Capital participation in Z-CSET, execution of a joint venture agreement; market INNOTECH- made testers and other products to the Chinese market via Z-CSET Haining City 41
Slide 42: Active pursuit of new business areas
Active pursuit of new business areas Actively pursue the new business areas which are expected to grow, such as IoT, AI and robotics. Enhance productivity of INNOTECH Group and strength our solutions 42
Slide 43: Active pursuit of new business areas
Active pursuit of new business areas Example ① Start providing an automatic solution for industrial robots of OSARO INC, utilizing recognition and control AI Example ② Start providing Regulus- made AI camera system for the family robot 43 “LOVOT ” of GROOVE TM X, Inc.
Slide 44: Active pursuit of new business areas
Active pursuit of new business areas Example ③ Development, sales and provision of service for the cloud settlement system for vending machines Example ④ Big data analysis, generation of meta data for image and voice recognition, device implementation of AI algorithms 44
Slide 45: Enhance capital efficiency based on our Capital Management Policy
Enhance capital efficiency based on our Capital Management Policy ＜ Basic Policy for Capital Management＞※ Enhance Corporate Value ・Capital cost-aware management ・Enhancement of ROE and ROIC （Expansion of ROIC-WACC spread） ・Expansion of operating cash flow Optimize balance sheet ・Appropriate capital
Slide 46: Enhance capital efficiency based on our Capital Management Policy
Enhance capital efficiency based on our Capital Management Policy ＜Capital Management Policy and Investment Strategy in the New Mid-term Management Plan＞ Enhance Corporate Value ROE Target to achieve +8% ROIC Expand ROIC-WACC Spread (Target to achieve 8%) Optimize Balance Sheet D/E Ratio (Capital Ra
Slide 47: ESG-related Measures
ESG-related Measures Corporate Governance Our corporate governance-related measures up to now: ・Increase the number as well as the ratio of outside directors and nominate them ・Establish the corporate governance guidelines ・Establish an advisory committee (voluntary) ・Other measures, such as streaml
Slide 48: Note for Forward Looking Statements
Note for Forward Looking Statements The information provided in this presentation includes forward looking statements based on current expectations, forecasts or beliefs. Such forward looking statements include a number of preliminary assumptions about future events that are subject to factors and u