SANSHIN ELECTRONICS : Summary of Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018

(This notice has been translated from the original notice in Japanese. In the event of any discrepancy, the original in Japanese shall prevail.)

August 4, 2017

Summary of Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2018 (Three Months Ended June 30, 2017) [Japan Standards] (Consolidated)

Name of Listed Company: Sanshin Electronics Co., Ltd. Stock Exchange Listed: 1st Section, Tokyo Code No.: 8150 URL: http://www.sanshin.co.jp Representative: Toshiro Suzuki (Representative Director & COO)

Enquiries to: Akio Misono, Director, Operating Officer and Senior General Manager

of Finance & Accounting Division Scheduled date of filing of Quarterly Report: August 8, 2017 Scheduled date of dividend payment: － Supplementary materials for the quarterly financial results: None Investor conference for the quarterly financial results: None

Tel.: [phone]

(Amounts are rounded down to the nearest million yen)

1. Consolidated Business Performance for the First Quarter of March 2018 Term (April 1, 2017 - June 30, 2017)

2. Consolidated business performance (cumulative)

   (% figures represent year-on-year changes)

   Net sales		Operating profit		Ordinary profit		Net profit attributable to shareholders of parent company
   1Q March 2018 Term 1Q March 2017 Term	Million yen	%	Million yen	%	Million yen	%	Million yen	%
   	35,192 39,061	(9.9) (16.2)	97 (470)	－ －	125 (1,494)	－ －	(150) (1,066)	－ －

   (Note) Comprehensive income 1Q March 2018 Term: -77 million yen (－%) 1Q March 2017 Term: -2,148 million yen (－%)

   Net profit per share	Diluted net profit per share
   1Q March 2018 Term 1Q March 2017 Term	Yen	Yen
   	(5.34) (37.86)	－ －

3. Consolidated financial position

4. Total assets	Net assets	Equity ratio
   1Q March 2018 Term March 2017 Term	Million yen	Million yen	%
   	93,477 94,144	61,037 61,537	65.3 65.4

   (Reference) Shareholders' equity 1Q March 2018 Term: 61,037 million yen March 2017 Term: 61,537 million yen

5. Dividends

   Dividend per share
   1Q-end	2Q-end	3Q-end	Year-end	Annual
   March 2017 Term March 2018 Term	Yen	Yen	Yen	Yen	Yen
   	－ －	10.00	－	15.00	25.00
   March 2018 Term (forecast)	10.00	－	15.00	25.00

   (Note) Revision of most recent forecast on dividends: None

6. Forecasts for Consolidated Business Performance for March 2018 Term (April 1, 2017 - March 31, 2018)

7. (% figures represent year-on-year changes)

   Net sales		Operating profit		Ordinary profit		Net profit attributable to shareholders of parent company		Net profit per share
   First half Full year	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
   	79,000 185,000	(7.4) 10.3	480 1,550	－ 92.7	450 1,380	－ －	100 700	－ －	3.55 24.84

   (Note) Revision of most recent forecast on earnings: Yes

   For further information, please refer to "1. Qualitative Information Concerning the Current Quarterly Settlement - (3) Explanation of Forecasts for Consolidated Business Performance and Other Future Prospects", on page 3 of [Appendix].

   * Annotations

8. Significant subsidiary change in the consolidated cumulative period of this quarter (changes in scope of consolidation): None Newly added: － Excluded: －

9. Application of unique accounting to the preparation of quarterly consolidated financial statements: None

10. Change of accounting principles, change of accounting estimate, and redisplay after revision:

11. Change of accounting principles caused by revision of accounting standards: None

12. Change of accounting principles other than 1): None

13. Change of accounting estimate: None

14. Redisplay after revision: None

15. Number of shares outstanding (ordinary shares)

16. Number of shares outstanding at the end of term (including treasury stock):

    1Q March 2018 Term: 29,281,373 shares March 2017 Term: 29,281,373 shares

17. Number of treasury stock at the end of term:

    1Q March 2018 Term: 1,102,633 shares March 2017 Term: 1,102,630 shares

18. Number of average stock during the term (quarterly total):

19. 1Q March 2018 Term: 28,178,740 shares 1Q March 2017 Term: 28,178,897 shares

    • This summary of quarterly financial results is not subject to quarterly review.

    • Cautionary statement regarding forward-looking statements

    The projected results and forward-looking statements included in this document reflect the Company's expectations based on information available at the time of release, and are not intended as a guarantee that the Company will achieve these targets.

    The actual performance may considerably differ from the forecast due to various factors.

    See the section "1. Qualitative Information Concerning the Current Quarterly Settlement - (3) Explanation of Forecasts for Consolidated Business Performance and Other Future Prospects" on page 3 of [Appendix], regarding the relevant matters for the above forecast for the business performance.

    Contents of Appendix

20. Qualitative Information Concerning the Current Quarterly Settlement 2

21. Explanation of Business Results 2

22. Explanation of Financial Position 3

23. Explanation of Forecasts for Consolidated Business Performance and Other Future Prospects 3

24. Quarterly Consolidated Financial Statements and Main Notes 4

26. Quarterly Consolidated Balance Sheets 4

27. Quarterly Consolidated Profit and Loss Statement, Consolidated Comprehensive Income Statement 6

28. Notes on Quarterly Consolidated Financial Statements 8

(Notes Regarding Going Concern) 8

(Notes Regarding Remarkable Change of Shareholders' Equity) 8

(Segment Information) 8

1. Qualitative Information Concerning the Current Quarterly Settlement (1) Explanation of Business Results

In the consolidated first three-month period under review, the global economy was beset by unabating future uncertainty due to the policy trends of the new US administration and heightened geopolitical risks despite steady recovery in the European and American economies and improved conditions in emerging countries. The Japanese economy also witnessed a modest recovery, but lacked the strength to eradicate the risks of economic downturn as uncertainty abounded on the global stage.

The electronics industry, which is the primary area of business of the Group, saw continued growth in markets relating to advanced vehicle operation support systems, IoT (Internet of Things), M2M (Machine to Machine) and other fields. Meanwhile, in the domestic IT industry, IT investments increased mostly in the cloud, big data and security fields.

Under these circumstances, in an earnest effort to achieve a return on equity (ROE) of 5% and ¥3,000 million in ordinary profit as stated in the V70 Medium-Term Management Plan (closing on March 31, 2021), the Group, in the device business segment, diligently worked to improve existing business profitability by devoting our operations in fields where future market growth is anticipated, while working to revise our business portfolio with an eye on elevating its proportion of high-profit businesses. In addition, we managed foreign exchange and inventory risks, solicited the retirement of employees to optimize our workforce, streamlined operations, and implemented other initiatives to that end. Meanwhile, in the solution business segment, the Group strove to execute contracts for actualized sales negotiations and build a revenue base geared towards mid- to long-term growth through synergies generated between BUs by broadening our lineup of cloud services and sharing customer assets, among other means.

As a result, consolidated operating results for the first three-month period under review revealed ¥35,192 million in net sales (down 9.9% year on year), ¥97 million in operating profit (compared with a ¥470 million operating loss posted for the same period in the previous fiscal year), and ¥125 million in ordinary profit (compared with ¥1,494 million in ordinary loss posted year on year). In addition, due to the posting of special retirement benefits stemming from retirement solicitation (¥229 million) as extraordinary loss, net loss attributable to shareholders of parent company amounted to ¥150 million (compared with that of ¥1,066 million posted for the same period in the previous fiscal year).

The operating results for each business segment are as follows:

Device segment

In the device business segment, our leading products are semiconductors (including system LSIs, microcomputers, LCD driver ICs, memories, etc.) and electronic components (including connectors, capacitors, circuit boards, etc.). These products are sold mainly to electronics manufacturers. We also provide technical support, such as software development and module development.

In the consolidated three-month period under review, social and industrial field sales declined compared with the same period in the previous fiscal year due to low materials sales, with TOY field sales also down as a result of changes in product strategies by major suppliers, leading to net sales of ¥32,993 million (a 10.7% year-on- year decrease). Please note that, in terms of profit and loss, segment profit amounted to ¥137 million (compared with a ¥1,473 million loss recorded for the same period in the previous fiscal year) due to an improved gross profit margin and sharp decreases in foreign exchange losses and loss on inventory valuation incurred in the same period of the previous fiscal year.

Solution segment

In the solution business segment, we are committed to planning and developing infrastructure with operation of information communication networks at the core, mainly for private companies, government offices and local municipalities, as well as to ensuring its operation and maintenance. Especially, as for our core system, we offer services deriving from provision of package software, such as customization according to individual development. Furthermore, we also provide broadcast stations and production companies with editing and transmission of video content, as well as with distribution systems, centered on products from suppliers abroad.