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Management Information

President  Jun Kato/Chairman of the board Sakurai Satoshi

New Reforms to Accelerate Growth Through
Elematec "(Plus)"

I would like to express my sincerest thanks to all of our shareholders.

I would like to say a few words about our 71st interim report (April 1, 2016 to September 30, 2016).

The Japanese economy for the consolidated cumulative second quarter is continuing to recover gradually as the employment and income environment improves, but it is unclear how the economy will perform in the future due to effects of the continuing strong yen, the UK's exit from the EU, and economic slowdown of China and other Asian developing countries and resource-rich countries.

In the electronics industry, the production of electronic parts, etc. slowed down as the share of the global production of electronic parts occupied by Japanese manufacturers declined due to the rise of Chinese smartphone makers. Meanwhile, the sales performance of major appliances was generally steady although there was variability according to product.

Under these circumstances, the Group focused its sales activities on smartphone devices, display parts, and various parts for automobiles. As a result, consolidated sales decreased for the consolidated cumulative second quarter while profits generally declined in each area. As well, as announced on October 27, 2016, significant extraordinary losses were reported in the trade receivables of consolidated subsidiaries from Chinese domestic customers.

In view of our aforementioned earning position and the downward adjustment of our earnings forecast for the full business year, we determined our interim dividends at 10 yen per share. We would like to apologize to our shareholders for the concern we have caused due to the aforementioned financial results, performance estimates, and substantial reduction in the dividend amount. The Group takes seriously that it has posted extraordinary losses, and will take measures by further strengthening its risk management system, continue to act concertedly to pursue "Elematec (Plus)" (new customers, new businesses, new areas, new added value) and will aspire to secure growth, enhance profitability, and raise corporate value.

We sincerely ask shareholders for your continued understanding and support.

December 2016

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