FY2019 Financial Announcement

FY2019

Financial Announcement（Financial supplement material）

May 14, 2019V-Technology Co.,Ltd.President: Shigeto Sugimoto

Copyright(C) 2019 V Technology Co., Ltd. All Right reserved.1

Forward-Looking Statements

This material contains forward-looking statements regarding V Technology Co., Ltd.’s corporate plans, strategies, forecasts, and other statements that are not historical facts. They are based on current expectations, estimates, forecasts and projections about the industries in which V Technology Co., Ltd. operates.

As the expectations, estimates, forecasts and projections are subject to a number of risks, uncertainties and assumptions, including without limitation, changes in economic conditions; fluctuations in currency exchange rates; changes in the competitive environment; the outcome of pending and future litigation; and the continued availability of financing and financial instruments and financial resources, they may cause actual results to differ materially from those presented in such forward-looking statements.

V Technology Co., Ltd., therefore, wishes to caution that readers should not place undue reliance on forward-looking statements, and, further that V Technology Co., Ltd. undertakes no obligation to update any forward-looking statements as a result of new information, future events or other developments.

Copyright(C) 2019 V Technology Co., Ltd. All Right reserved. 2

Financial Result


Highlight of FY2019 Q4 Both sales and profits have reached record highs for four consecutive terms. Although sales decreased due to delivery delays for some reasons attributable to

customers, and cost reduction also the unaccrued expenses such as R & D and M & A resulted in the expected profit.

Orders dropped 56.6% to 47.4 billion yen due to a break in large FPD related investment.

The order backlog recovered in Q4, but fell 21.4% to 90.9 billion yen.

Copyright(C) 2019 V Technology Co., Ltd. All Right reserved.

FY18Year ended

FY19Year ended Y/Y

changeAmount(Millions of JPY) Margin Amount

(Millions of JPY) Margin

Net sales 66,067 100.0％ 72,132 100.0％ 9.2％

Gross profit 21,321 32.3％ 25,144 34.9％ 17.9％

Operating profit 12,545 19.0％ 16,628 23.1％ 32.5％

Ordinary profit 12,370 18.7％ 16,767 23.2％ 35.5％Net profitattributable to owners of parent

7,837 11.9％ 10,901 15.1％ 39.1％

Orders received 109,323 ー 47,430 ー -56.6％

Backlog 115,637 ー 90,935 ー -21.4％

4

*Reference: Sales by Products


24,456

30,852

0

10,000

20,000

30,000

40,000

FY18 FY19

Inspection equipment

(Millions of JPY）

Manufacturing equipment Sales of large-size FPD equipment remained steady. CF exposure equipment continues to secure close to 100% market share.

Inspection equipment Sales of inspection equipment for large FPDs and OLEDs is solid. Sales of TP measuring

machines and OS testers continue to grow steadily and it secures 80 to 90% market share. Sales of correction equipment increased by about 70% from last year. In particular, we

reached 80% market share in the correction device for TFT.

37,412 36,488

0

10,000

20,000

30,000

40,000

FY18 FY19

Manufacturing equipment

*marketing share is according to our own research

(Millions of JPY）

Transition of Orders Received and Backlog

Orders received for FY19 Q4 (3 months) recovered as expected. Orders received for the full-year decreased 56.6% YoY to 47.4 billion yen due to

the reaction to the concentration of orders for long delivery products in the previous year and the suspension of investment related to large FPDs. The order backlog decreased 21.4% YoY to 90.9 billion yen.


9,447 15,065

15,824

12,788

23,486

31,290 34,630

42,671

50,377

58,047

72,260 72,381

89,546

97,723 103,477

115,637 114,997

100,800

87,030 90,935

5,698

6,940

3,053 6,988

15,820

15,279

15,852

22,085 17,807 16,372

22,672 18,235

25,219 23,366 23,742

36,996

14,861

8,406

3,855

20,308

0

30,000

60,000

90,000

120,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Backlog Orders received

FY15 FY16 FY17 FY18 FY19（Millions of JPY）

52,753 62,210

4,954

4,532 3,086

2,220 5,274

3,170

0

20,000

40,000

60,000

80,000

FY18 FY19

China Taiwan Japan Korea & others

（Millions of JPY）

Sales by Countries（YoY basis）


72,13266,067

2015

年3月

期

2016

年3月

期

2017

年3月

期

2018

年3月

期

2019

年3月

期

Sales 2,817 1,322 2,294 10,023 5,121 7,475 12,512 14,045 10,101 8,703 8,426 18,146 8,055 15,189 17,988 24,835 15,501 22,603 17,624 16,404

GP 271 346 576 2,857 1,310 1,768 2,143 3,738 3,130 2,830 2,814 4,278 2,426 4,855 5,798 8,242 4,846 7,677 7,125 5,496

OP (426) (193) (186) 1,667 338 269 462 1,509 1,276 1,163 1,045 1,930 652 2,896 3,473 5,524 2,733 5,632 5,169 3,094

GPM 9.6% 26.2% 25.1% 28.5% 25.6% 23.7% 17.1% 26.6% 31.0% 32.5% 33.4% 23.6% 30.1% 32.0% 32.2% 33.2% 31.3% 34.0% 40.4% 33.5%

OPM -15.1%-14.6% -8.1% 16.6% 6.6% 3.6% 3.7% 10.7% 12.6% 13.4% 12.4% 10.6% 8.1% 19.1% 19.3% 22.2% 17.6% 24.9% 29.3% 18.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0

5,000

10,000

15,000

20,000

25,000

Transition of Quarterly Sales and Profit


（Margin of profit）

FY15

Q1 Q2 Q3 Q4

FY16

Q1 Q2 Q3 Q4

FY17

Q1 Q2 Q3 Q4

FY18

Q1 Q2 Q3 Q4


FY19

Q1 Q2 Q3 Q4

Quarterly profit margin changes due to differences in customers and product mix.

Analysis of Operating Profit Deference

Operating income increased 32.5% YoY to 16.6 billion yen, partly due to cost reductions, improved product mix and lower SG & A expenses as a factor in rising gross margin.


By Net sales up1,957

By GrossMargin up

1,866

By SGAdown260

OP16,628

FY18 FY19 （Millions of JPY）

OP12,545

Year ended

3,001 2,734

821 371

1,431 1,842

2,095 2,119

1,428 1,450

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

FY18 FY19

Other Provision for… Shipping Labor R&D

SGA(Selling, general and administrative) Expenses


８,516


8,776

SGA expenses decreased slightly year on year due to an increase in provision for product warranty related to new products in FY 18 and a return of allowance for loan losses at group companies, despite an increase in shipping costs due to increased shipment volume.

FY18 FY19

Year ended

Transition of Consolidated Balance Sheets

22,281 32,506

19,836

21,019

25,063

25,518

14,071

21,174

24,028 4,839

2,984

5,317

2,576

3,064 5,605

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

FY18 Q4 FY19 Q2 FY19 Q4

Total assets

Non-current assets Other current assetsReceivable trade inventory Notes and accounts receivable - tradeCash and deposits

21,114 26,371 27,985

38,152

53,171 47,747

5,068

4,854 4,103

452

395 469

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

FY18 Q4 FY19 Q2 FY19 Q4

Liabilities/net assets

Other non-current liabilities Loans payable（short term/long term）Other current liabilities Net assets


64,786

80,304

（Millions of JPY）（Millions of JPY）

84,791

64,786

84,79180,304

Transition of Cash Flows

た

Copyright(C) 2019 V Technology Co., Ltd. All Right reserved. 12（Millions of JPY）

Main income and expenses (YoY) Operating activities(＋):Profit(JPY16.8BLN), Advances received(7.4BLN),Inventories(9.9BLN) etc. Investing activities(－):Purchase of fixed assets(*related to VET Co.,Ltd.）(2.1BLN), Purchase of shares of an affiliated company(0.5BLN) Financing activities(－):Purchase of treasury shares(1.99BLN), Cash dividends paid(1.6BLN),

Repayments of long-term loans payable (0.9BLN)

FY18 FY19

Cash flows from operatingactivities

Profit before income taxes 12,256 16,892Notes and accounts receivable - trade（increase▲）

▲3,780 ▲4,681

Inventories（increase▲） ▲5,665 ▲9,951Notes and accounts payable - trade（decrease▲） 7,203 2,044

Other ▲1,488 2,227

Total 8,526 6,531Cash flows from investing activities: Total ▲434 ▲2,617

Cash flows from financing activities

Proceeds from loans payable 8,224 10,670

Repayments of loans payable ▲8,876 ▲11,635

Other ▲1,498 ▲5,420

Total ▲2,150 ▲6,385Effect of exchange rate change on cash andcash equivalents ▲71 25

Net increase (decrease) in cash and cash equivalents（decrease▲） 5,870 ▲2,445

Cash and cash equivalents at beginning of period 16,291 22,161Cash and cash equivalents at end of period 22,161 19,716

Business Forecast


Forecast of 2020 Profits are expected to decrease by about 21% due to the decrease in gross

margin rate due to the change in sales composition of manufacturing equipment and the increase in SGA expenses such as R & D expenses and depreciation expenses (VET Co.,Ltd. related).

The dividend is expected to be the same as the previous year. Stock split (Split into two, record date: June 1, 2019)


FY19(Actual) FY20(Forecast) compared with the previous

forecastAmount(Millions of JPY) Margin Amount

(Millions of JPY) Margin

Net sales 72,132 ー 73,000 ー 1.2％

Gross profit 16,628 23.1％ 13,000 17.8% -21.8％

Ordinary profit 16,767 23.2％ 12,850 17.6% -23.4％Net profit attributable to owners of parent 10,901 15.1％ 7,800 10.7% -28.5％

EPS JPY 2,217.48 JPY 1,613.30(before split)JPY 806.65(after split)

Split into two fromJune 1,2019

Dividend

FY20(after stock split) 1st half：80円（Forecast） 2nd half：JPY 80（forecast）

（Reference）FY19 1st half：JPY 160（Actual） 2nd half：JPY 160（Actual）

365

309

47

400

276

54

FY19 FY20

30.927.6

4.7

5.4

Other

*Reference: Break Down of Net sales in FY2020 Forecast Among manufacturing equipment, the proportion of photo alignment

exposure equipment increased, and the gross profit rate of manufacturing equipment decreased YoY.

New developments includes TFT exposure equipment (JPY 2.6 Billion) in “Manufacturing equipment”, and deposition mask and salvage service (JPY 1 Billion) in “Other”.


(Billions of JPY)

Photo alignment exposure

2.5

CFexposure

34

Photo alignment exposure

11

CFexposure

26.5

New developments

2.6

New developments

1

4036.5

FPD manufacturingequipment

FPD inspectionequipment

Our Medium and Long TermGrowth Strategy


Growing Field in the New Era


5G Enables the New Era of IoT

Growing Field in the New Era

5G Enables the New Era of IoT


Semiconductor device market2025: 51 trillion yen2018: 27 trillion yen (According to Fuji Chimera Research Institute)

We aim to develop FPD as a new HMI(Human Interface) with 5G.

Semiconductors and next-generation human interface (HMI) have endless possibilities.

SEMI FPD

Aiming for the World's Leading Manufacturing Solution Provider

Accelerate entry into growing fields 1. Endeavor to explore the market of FPD

(OLED: Foldable/Rollable/Wearable/８K,LCD:8K）2. Entry into different fields (semiconductors)3. Shift the center of business from equipment to parts,

materials and services


0

20

40

60

80

CY16 CY17 CY18 CY19 CY20 CY21

China Other

0

4

8

12

CY16 CY17 CY18 CY19 CY20 CY21

OLED

0

60

120

180

240

300

CY17 CY18 CY19 CY20 CY21FPD Manufacturing Equipment Market Forecast

(According to IHS Markit data. CY21 is our forecast)

Market of Semi：China grows

→Specific local demand

Market of FPD：OLED is firm→Large / medium / small OLED

demand

Market of FPD(area)：steady

→Material demand is constant

Semicnductor Manufacturing Equipment Market Forecast(According to SEMI data. CY21 is our forecast)

FPD Manufacturing Equipment Market Forecast(Area standard)(According to IHS Markit data. CY21 is our forecast)

(Billions of USD) (Billions of USD) (Millions of ㎡)

1. Endeavor to Explore the Market of FPD (1/6)

Rollable TV, Foldable Phone, Wearable device are expected to evolve as next-generation display device, however, it has challenges in spreading.


種類Large Medium / Small

TV Smartphone WearableNext-

generation technologies

WOLED OLED μLED (UV light conversion type)

Application

Important Process and Related Technologies / Materials

TFTOxidePLAS

DepositionHorizontal deposition,Organic material

TFT

LTPS

DepositionVertical deposition,Organic material,Deposition mask

LED lift offLift offtechnology

LED transfer Highefficiency transfer

Rollable TV Foldable Phone Wearable device

Module

１．Endeavor to Explore the Market of FPD (2/6)Large FPD for TV

＜Front-runner of large FPD is WOLED＞Challenges Characteristic improvement of TFT（electron mobility）Approach１：OxideTFT（issues of yield）Approach２：LTPS-TFT（cost and crystal homogeneity)

✔Next-generation laser annealing technology (LTPS-Like technology development)

Deposition equipment（Page 22） WOLED material cost (made Flask as a subsidiary)


Laser annealingequipment

Market size of 0.5 Billion USD

【Key items】1. Material development for WOLED.2. Commercialization of low cost, high luminous efficiency organic EL

lighting materials.

Materials for OLED (FLASK)

0

5000

10000

15000

20000

2019 2020 2021

EML Common

Unit：Kg

Strengths Growing market

Forecast of WOLEDmaterial market

(According to IHS Markit data）

• Technology development ability to synthesize materials according to customer requirements

• state-of-the-art material technologies

• Experts of organic material synthesis (Website of FLASK）

＜ Small and medium OLEDs are evolving by deposition ＞Challenges Process of deposition

Size reduction of deposition equipment, G6 full size compatible Deposition mask OLED material cost

Process of TFT Crystal shape of LTPS → Large impact on flexible substrate

（ LTPS-Like technology development ） Process of module

Salvage service

１．Endeavor to Explore the Market of FPD (3/6)Medium/Small FPD for Smartphone


Deposition equipment

Small and medium FPD Vertical deposition G6 full size compatible Our demonstration equipment is scheduled to be

completed in the current fiscal year

Large FPD Development of a deposition equipment that can be also

used as a deposition equipment for organic EL lighting Technologies from Lumiotec and Flask

Market size of 0.5 Billion USD

Laser annealingequipment

Market size of 1.6 billion USD

23



Process of TFT Crystal shape of LTPS → Large impact on flexible substrate

（Technology development of LTPS-Like） Process of module

Salvage service


Copyright(C) 2019 V Technology Co., Ltd. All Right reserved.

Fine Hybrid MaskExcellent performance Growing market

(Table) FHM structure and specifications


0

100

200

300

400

500

2019 2020 2021

G6H Other

Million USD

(Graph) Deposition mask market forecast for OLED

FHM(Sheet structure/

No assembly required)

・Established a production line in Yonezawa, one of the base of OLED industry area in Japan.

・Scheduled to start shipping in November



Process of TFTCrystal shape of LTPS → Large impact on flexible substrate

（Technology development of LTPS-Like） Process of module

Salvage service



Salvage serviceImmediate improvement of yield in

module process Stable market (CAGR9%)

0

200

400

600

800

2019 2020 2021

Shipping quantities

Millions

・Scheduled to start within current fiscal year

・Fix panel mura defective with “Demura” technologies while maintaining the brightness and γ characteristics

Image of OLED unevenness defect

• Doubling yield improvement in module process

• Pay per-use services according to the number of non-defective panels

• MAX60 K / month processing possible with 6 inch panel with 1 salvage line (Graph) OLED panel market

forecast


LED laser is locally irradiated by 1/3 each of the chip to prevent misalignment.(Fig4.1/4.2)

Our proprietary technologies (AEGIS technology using micro lens array technology and image processing) made it possible of local LLO "PS-LLO"

１．Endeavor to explore the market of FPD (6/6)Medium/Small FPD for Wearable device

＜Front-runner of small and medium FPD is μLED(UV light conversion type)＞Challenges Pick&Place

Misalignment during picking up the LED chipLED chip Misalignment during LLO (Fig4.1)

Misalignment during LED chip crimping


μLED

*Reference:Presentation of IDW2018

Structure of μLED(UV light conversion type)

Current(Ph1)

Ph3

Ph2

２．Entry into different fields (semiconductors)＜Current activities and future outlook＞

We will expand into peripheral areas starting from the Z-CSET business.(Highlighted in pink boxes) Main constituents of the deployment are VT alone, Z-CSET, and collaboration with other

companies. We aim to provide a total solution in the semiconductor manufacturing field in the medium to

long term. Make full use of the resources we cultivated by developing FPD, and shorten the time by own company and M & A


Entering the semiconductor industry with product β

製品αで参入

Achievements Adding new productTester related process

Post-inspection related process

Entering the semiconductor industry with product Y

Polishing related processWafer related process

Entering the semiconductor industry with product X

Achievements Adding new product

Wafer polisher Achievements Adding new product

Semiconductor tester (INNOTECH)

Product type increaseTotal solutionExpand share

Expand into peripheral areas

Achievements Adding new product

Sales

Time

Current status of Z-CSETOpening ceremony : September 2019Sales launch：December 2019




Entering the semiconductor industry with product α

Product type increaseTotal solutionExpand share

３．Shift the center of business from equipment to parts, materials and services1. Materials

A. FPD：Made FLASK corporation as a subsidiary (Page21)B. SEMI：Our subsidiary and Chinese sales company “VETON” is in charge of material agent sales activities.

2. PartsFine Hybrid Mask（FHM）

3. ServicesA.Service related equipment（A/S, remodeling, consumable parts）

B. Temporary staffing serviceC. Salvage service


Providing high-tech staffing business in China(Expert engineers can be dispatched also in Japan)

We are considering of new business based on knowledge and network cultivated by FPD device development

微鉄克（上海）人力資源管理有限公司（V-Technology（Shanghai）Human Resource Management Co.,Ltd．）

Labor dispatch, human resource consultant, human resource introduction, technical consulting, technical service, corporate management consulting, interpreting service, marketing sales planning, etc.

Aiming for the World's Leading Manufacturing Solution Provider (Summary)

Accelerate entry into growing fields and aim to achieve business diversification and stable growth.

1. Endeavor to explore the market of FPD 2. Entry into different fields (semiconductors)3. Shift the center of business from equipment to parts, materials and services


91 93

6955

29

920

17

11 16

41

9 7 11 9 13

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FY19 FY20 FY21 FY22 FY2XExisting FPD equipment New FPD equipment

Equipment other than FPD Parts/materials/AS

Application(%)

Target business portfolio of medium-and long-term

669

FY20 FY2X

JPY 73 Billion

*Reference: Overview of FLASK corporation


Main business activitiesResearch and development and manufacturing and sales in the fields of organic semiconductor materials such as organic EL materials, inorganic semiconductor materials for organic EL, and organic / inorganic hybrid materials, etc.

Strengths-Technology development ability to synthesize materials according to customer requirements-state-of-the-art material technologies-Experts of organic material synthesis

Head office Frontier Center for Organic Materials 6F,4-3-16 Jonan, Yonezawa, Yamagata 992-8510 Japan

Capital JPY 45 Million

Shareholders V Technology Co.,Ltd.(80%)Other(20%）

President and CEO Takuya Komoda

Director Yukihiro Kanzawa

FY2019 Financial Announcement

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