Integrated Report 2020

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Strategy22LINTEC Integrated Report 2020A Message from the CFOFinancial Condition and Investment StrategyAs of the end of March 2020, the Company had about ¥13.0 billion in loans payable and approximately ¥57.0 billion in cash, and therefore I believe we have a sound financial position. We sometimes receive comments from share-holders and investors that we have too much on-hand liquidity. About half of our cash is held by the parent com-pany, but this is only about two months’ worth of non-consolidated sales. The other half is held as working capital and funds for facilitities for 38 consolidated subsid-iaries overseas. Accordingly, we do not think that we are holding too much cash. Note that in addition to our high level of financial soundness, we have concluded a commit-ment line of approximately ¥9.0 billion with financial insti-tutions, and we can raise funds smoothly if necessary.Also, in regard to investment, our policy is to aggres-sively invest funds in projects from which we can expect growth, including R&D investment. In the fiscal year ending March 31, 2021, we are planning about ¥10.0 billion in capital expenditure. This includes release film coating equipment at the Agatsuma Plant (Gunma Prefecture), which is a production base for electronics-related prod-ucts. Also, at the Kumagaya Plant (Saitama Prefecture) and the Mishima Plant (Ehime Prefecture), which are produc-tion bases for specialty papers, release papers, and release films, we plan to implement capital expenditure with the objectives of reducing costs, enhancing quality, and reduc-ing greenhouse gases.Important Indicators for the Long TermI believe that LINTEC’s issue is not that we are cash rich, but rather the low level of our capital efficiency. Until now, our medium-term business plan specified operating income margin and ROE as quantitative targets. However, in the medium-term business plan that will start from the fiscal year ending March 31, 2022, we are considering also emphasizing ROA, which shows profitability relative to total assets. To increase ROA, we must increase profitability for each business operation. I think that, for each business operation, we will need to take a more-thorough approach to the management of KPIs that are linked to the Companywide numerical targets. In regard to profitability, Companies that have stable management but are not fully utilizing their capitalCurrent statusCompanies that have a solid financial base and can continuously increase corporate valueVisionCompanies that are not suitable for investmentCompanies that are high risk and high returnLowHighCapital efficiencyHighLowOn-hand liquidityFY2020 Consolidated Results and FY2021 ForecastsFiscal year ended March 31, 2020 (year on year) Fiscal year ending March 31, 2021 (year on year)Net Sales¥240.7 billion(-4.1%)¥240.0 billion(-0.3%)Operating Income¥15.4 billion(-14.1%)¥15.0 billion(-2.9%)Profit Attributable to Owners of Parent¥9.6 billion(-25.6%)¥11.0 billion(+14.3%)