ONO's Voice vol.1

Closing the fiscal year ended March 31, 2016

We achieved record highs in net sales, operating income and ordinary income for the financial results in the fiscal year ended March 31, 2016.

The successful results were primarily due to the contribution in terms of financial performance by Power Supply Technology Co., Ltd., a company that was included in the Group last year. With its inclusion, our business features the in-house development and design of switching power supplies for business machines, such as multi-functional printer(MFP) and projectors, in which Japanese companies enjoy high market shares. This is very important to us because we can make our company very profitable by building on fairly competitive technologies and addressing customers’ needs satisfactorily.

To ensure that the PS business continues to grow going forward, we took measures such as the transfer of engineers from the EMS segment and the placement of orders for trial and mass productions by the PS business unit with the Group’s EMS.

In addition, given the healthy financial position of the Group as a whole thanks to the favorable results, we implemented internal structural reform programs, posting an extraordinary loss attributable to the structural reform in the EMS business last year.

Consequently, the net income reflected our determination to establish a robust company structure, even though it ultimately fell short of the original plan. Your understanding is appreciated.

Looking to the fiscal year ending March 31, 2017

The structural reform of the EMS business that we implemented last year will be continued this year. As the global economy shows signs of a slowdown, we are focusing on low-cost manufacturing while maintaining quality in the EMS business. In this situation, we need to improve the performance of the business and build a structure that can adapt to significant changes in business environments.

Moving into 2016, we began to witness the barriers between manufacturers and EMS gradually dissolving as reflected notably in the purchase of a Japanese general consumer electronics manufacturer by a major Taiwanese EMS. Considering this move in advance, our company gained the function of power supply manufacturing in the Group one and a half years ago.

Assuming that unexpected changes in external environments will possibly continue to occur down the road, we have decided to work on the transition to a holding company structure to ensure that structural reform and business transformation programs are implemented effectively. We may be causing concern among our shareholders and clients because there will be a temporary level-off in financial results for this year as a result of these reform programs. We would appreciate it if you would see it positively as a necessary first step for further growth.

In terms of positive news, investments that we have been making proactively in the overseas staffing business have finally started to bear fruit.

Going forward, we will continue to engage in business activities based on the outsourcing of production with a focus on the staffing service and EMS, as well as the manufacturing of power sources, thereby supporting manufacturing operations in Japan.