Rinnai Corporation Securities Code: 5947
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Rinnai Corporation Securities Code: 5947 Notice of Convocation of the 66th Ordinary General Shareholders’ Meeting to Be Held on June 28, 2016 DATE AND TIME Tuesday, June 28, 2016 at 10:00 a.m. PLACE 7F (“Tsubaki-no-ma” Room), Meitetsu New Grand Hotel 6-9, Tsubaki-cho, Nakamura-ku, Nagoya-shi Matters for Resolution First Item on the Agenda: Approval of the proposed appropriation of retained earnings Second Item on the Agenda: Election of eight (8) directors Third Item on the Agenda: Election of four (4) audit & supervisory board members Fourth Item on the Agenda: Election of one (1) substitute audit & supervisory board member Contents Notice of Convocation of the 66th Ordinary General Shareholders’ Meeting (Attachment) 02 Business Report 05 Consolidated Financial Statements 21 Nonconsolidated Financial Statements 33 Independent Auditors’ Report 40 Guide to Voting 44 This document has been prepared as a guide for non-Japanese investors and contains forward-looking statements that are based on management’s estimates, assumptions and projections at the time of publication. A number of factors could cause actual results to differ materially from expectations. This document is a translation of the Japanese-language original. 1 Securities Code: 5947 June 6, 2016 To the Shareholders of Rinnai Corporation Hiroyasu Naito President Rinnai Corporation 2-26, Fukuzumi-cho, Nakagawa-ku, Nagoya-shi, Aichi 454-0802, Japan Notice of Convocation of the 66th Ordinary General Shareholders’ Meeting to Be Held on June 28, 2016 You are cordially invited to attend the 66th Ordinary General Shareholders’ Meeting of Rinnai Corporation (the “Corporation”). Details of the meeting are given below. In the event that you are unable to attend the meeting, you can exercise your voting rights in written form or by electromagnetic method (the Internet and mobile phone), as stated on the page 3 - 4. The forms must arrive at the Corporation no later than 5:20 p.m. on Monday, June 27, 2016. 1. DATE AND TIME Tuesday, June 28, 2016 at 10:00 a.m. 2. PLACE 7F (“Tsubaki-no-ma” Room), Meitetsu New Grand Hotel 6-9, Tsubaki-cho, Nakamura-ku, Nagoya-shi 3. AGENDA Matters for Reporting: 1. The Business Report, report on the Consolidated Financial Statements, and the results of the audit of the Consolidated Financial Statements by the Independent Auditor and the Audit & Supervisory Board Member for the 66th Fiscal Year (from April 1, 2015, to March 31, 2016). 2. Report on the Nonconsolidated Financial Statements for the 66th Fiscal Year (from April 1, 2015, to March 31, 2016). Matters for Resolution: First Item on the Agenda: Approval of the proposed appropriation of retained earnings Second Item on the Agenda: Election of eight (8) directors Third Item on the Agenda: Election of four (4) Audit & Supervisory Board members Fourth Item on the Agenda: Election of one (1) substitute Audit & Supervisory Board member -END- -For those planning to attend the meeting in person, please submit the attached Exercise of Voting Rights form at the reception desk upon your arrival. -Any changes to attached Shareholder Reference Materials, Consolidated Financial Statements and other financial documents will be posted on the Corporation’s website (http://www.rinnai.co.jp). 2 Guide to Exercise of Voting Rights You can exercise your voting rights by the following three means. [Exercise of voting rights by attending the meeting in person] Please submit the enclosed Exercise of Voting Rights Form at the reception desk upon your arrival. 1. DATE AND TIME: Tuesday, June 28, 2016 at 10:00 a.m. 2. PLACE: 7F (“Tsubaki-no-ma” Room), Meitetsu New Grand Hotel 6-9, Tsubaki-cho, Nakamura-ku, Nagoya-shi [Exercise of voting rights by mail] Please indicate your approval or disapproval of the proposals on the enclosed Voting Rights Form, and mail the Form to the Corporation. The form does not need any stamps. Deadline: Arriving to the Corporation by 5:20 p.m. on Monday, June 27, 2016 [Exercise of voting rights by Internet and others ] Please access the Online Voting Website from your computer, smart phone or mobile phone. First use the “Code” and “Password” shown on the enclosed Voting Rights Form, then follow the instructions on the screen and enter your approval or disapproval of the proposal. Website URL to exercise voting rights: http://www.web54.net (Japanese only) Deadline: Received by the Corporation by 5:20 p.m. on Monday, June 27, 2016 1. Voting rights may be exercised via the Internet only by accessing the following Online Voting Website designated by the Corporation. 2. The deadline for exercising voting rights is 5:20pm on Monday, June 27, 2016. We recommend you exercise your voting rights earlier. 3. Any costs arising from access to the Online Voting Website for exercising voting rights (such as Internet connection fees) shall be borne by the shareholder. 3 Notice for exercising voting rights 1. If you have exercised your voting rights more than once, the last exercise of voting rights shall be deemed valid. If the voting form arrives at the Corporation on the same day that you vote by mail and internet, the online vote shall take precedence. 2. The Code on the Voting Form is valid for this Ordinary General Shareholders’ Meeting only. 3. If an incorrect password is used more than a specified number of times, it will become inoperative. Shareholders who wish to have a new password issued are asked to apply by following the instructions on the screen. 4. The ability to exercise voting rights via personal computer or smartphone is dependent upon network environment and access may be hindered if your environment features a firewall is set for the Internet connection, antivirus software has been installed or a proxy server is used. 5. Should you be unsure of how to operate your personal computer or mobile phone in relation to exercising your voting rights using electromagnetic means, please contact the support desk at the number indicated below. [For institutional investors] Institutional investors are also eligible to exercise voting rights via the “Electronic Voting Platform” run by ICJ, Inc. Transfer Agent Web Support, Sumitomo Mitsui Trust Bank, Limited Contact Direct dial in Japan: 0120-652-031 (Hours: 9:00 am–9:00 pm, Toll Free) 4 Business Report April 1, 2015, to March 31, 2016 1. Consolidated Business Overview (1) Consolidated Business Results In the fiscal year ended March 31, 2016, the world economy took on increasing downside risk due to various factors. These included economic stagnation in China stemming from slowdowns in domestic demand and exports, the impact of which reverberated across many other economies, including in North America, Europe, and Southeast Asia. Meanwhile, the outlook for the Japanese economy remained unclear amid lack of momentum in consumer sentiment, despite improvements in corporate earnings and worker income conditions. The domestic housing appliance industry performed well, buoyed by an upward trend in new housing starts stemming from various government measures to support residential purchases, while replacement demand for housing appliances firmed as consumers looked for improvements in convenience and environmental performance. Under these conditions, the Rinnai Group embarked on a new medium-term business plan, entitled Evolution and Succession 2017, which began in April 2015. Under the plan, we will ensure the “succession” of our corporate culture and spirit attained through our history, while emphasizing “evolution” of our business model so we can create new products and services that benefit society. With respect to revenue, we reported a year-on-year increase in net sales thanks to solid sales of water heaters in Japan, United States, and China, as well as good progress in expanding our business in Australia and favorable foreign exchange factors. On the earnings side, we posted increased profit due to higher overseas sales, as well as improved added value stemming from cost reduction efforts. As a result, consolidated net sales for the year amounted to ¥319,935 million, up 8.4% from the previous year. Operating income grew 12.4%, to ¥34,593 million, and ordinary income climbed 8.7%, to ¥35,807 million. Net income attributable to owners of the parent company rose 10.0%, to ¥22,710 million. Our results by geographical segment were as follows: Japan In Japan, sales of water heaters were solid overall, and our ECO ONE hybrid water heaters with heating systems saw increased take-up from our distributors. In kitchen appliances, new built-in hobs (stovetops) with upgraded grilling functions performed well. As a result, sales in Japan amounted to ¥178,781 million, up 1.5% from the previous year. Operating income rose 9.5%, to ¥23,007 million. South Korea In South Korea, we enjoyed increased sales of high-efficiency boilers in the water heater category. Meanwhile, our kitchen appliances performed well as demand for cookers bottomed out and started showing a gradual recovery trend. Accordingly, sales in South Korea rose 6.1%, to ¥33,888 million, and operating income grew 2.9%, to ¥1,499 million. United States In the United States, tankless water heaters, which offer superior convenience, continued to proliferate as the market for housing appliances expanded in the wake of economic recovery. 5 We also benefited from a rise in unit prices, stemming from an increase in the sales ratio for high-efficiency models, together with favorable foreign exchange factors. As a result, sales in the United States increased 27.3%, to ¥22,602 million, and operating income jumped 78.1%, to ¥1,817 million. Australia Buoyed by a healthy local economy, in Australia we enjoyed solid sales of mainstay tankless water heaters, as well as business growth for solar systems and commercial water heaters. During the year, Brivis Climate Systems Pty Ltd became a consolidated subsidiary.