帝人（3401） – Consolidated Financial Statements Summary (For the nine months ended December 31, 2021)

Consolidated Financial Statements Summary(For the nine months ended December 31, 2021)English translation from the original Japanese-language document(All financial information has been prepared in accordance with accounting principles generally accepted in Japan)February 7, 2022Company name: TEIJIN LIMITED (Stock code 3401)Contact person: Tomoko Torii General Manager, Investor Relations Departmenthttps://www.teijin.com TEL: +81-(0)3-3506-43951. Highlight of the Third quarter of FY2021 (April 1, 2021 through December 31, 2021)(1) Consolidated financial results(Amounts rounded to the nearest million yen)(Percentages are year-on-year changes)Net salesOperating incomeOrdinary incomeMillion yen687,005609,741 %12.7-5.8Million yen38,17045,243 %-15.6-6.2Million yen41,32142,857 %-3.6-9.7Profit attributable toowners of parentMillion yen25,83826,822 %-3.7-11.1cf. Comprehensive income for the nine months ended December 31, 2021 : 35,953 million yen (For the nine months ended December 31, 2020 : 46,200 million yen)For the nine months ended December 31, 2021For the nine months ended December 31, 2020 For the nine months ended December 31, 2021For the nine months ended December 31, 2020* E.P.S.: Earnings per share(2) Consolidated financial position E.P.S. *Yen134.55139.73Diluted E.P.S.Yen127.53132.05As of December 31, 2021As of March 31, 2021Total assetsMillion yen1,175,7481,041,131Net assetsMillion yen454,806430,364Shareholders’equity ratio%36.6%39.0%cf. Shareholders’ equity as of December 31, 2021 : 430,164 million yen (As of March 31, 2021 : 406,150 million yen)Note: In the nine months ended December 31, 2021, the Company confirmed the provisional accounting treatment it had applied concerningbusiness combination during the previous consolidated fiscal year. Therefore, the figures for the previous consolidated fiscal year reflect theconfirmed accounting treatment.2. DividendsDividends per sharePeriod FY2020FY2021FY2021 (Outlook)1QYen――2QYen25.0027.503QYen――4QYen25.0027.50AnnualYen50.0055.00Note: Revision of outlook for dividends in the Third quarter: No3. Forecast for operating results in the year ending March 31, 2022 (FY2021)　Net salesOperating incomeOrdinary incomeFY2021 annualMillion yen930,000 %11.2Million yen50,000 %-9.0Million yen53,000 %-1.2(Percentages are year-on-year changes)Profit attributable toowners of parentMillion yen %32,000―E.P.S.Yen166.62Note: Revision of outlook for FY2021 consolidated operating results in the Third quarter: Yes* For the forecast for operating results in the year ending March 31, 2022 (FY2021), please refer to the “Flash Report – Results of FY2021 3Q &Outlook for FY2021 -” announced today.　 4. Appropriate Use of Forecasts and Other Information and Other Matters(1) Cautionary statement on forward-looking statements All forecasts in this document are based on management’s assumptions in light of information currently available and involvecertain risks and uncertainties. Actual results could differ materially from these forecasts.1. Financial Statements(For the nine months ended December 31, 2021)( 1 ) Consolidated Balance Sheets< Assets >Current assetsCash and depositsNotes and accounts receivable – trade, and contract assetsMerchandise and finished goodsWork in processRaw materials and suppliesOther current assetsAllowance for doubtful accountsNoncurrent assetsTangible assetsBuildings and structures, netMachinery and equipment, netOther, netIntangible assetsGoodwillOtherInvestments and other assetsInvestment securitiesOtherAllowance for doubtful accountsTotal noncurrent assetsTotalTotalTotalTotalAs of March 31, 2021(Millions of yen) As of December 31, 2021170,185181,02089,69310,44240,90942,665(334)534,58065,103101,020116,737282,86033,90344,57678,47984,79761,618(1,202)145,212506,551130,393193,849102,59512,58943,95670,680(352)553,71171,524106,807121,956300,28731,545165,128196,67386,35839,900(1,181)125,078622,037Total assets1,041,1311,175,7481(For the nine months ended December 31, 2021)< Liabilities >Current liabilitiesNotes and accounts payable-tradeShort-term loans payableCurrent portion of long-term loans payableCurrent portion of bondsIncome taxes payableProvision for business structure improvementOtherTotalNoncurrent liabilitiesBonds payableLong-term loans payableNet defined benefit liabilityAsset retirement obligationsOtherTotalTotal liabilities Shareholders’ equityCapital stockCapital surplusRetained earningsTreasury stock Accumulated other comprehensive incomeValuation difference on available-for-sale securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentRemeasurements of defined benefit plansTotalTotal Subscription rights to shares Non-controlling interestsTotal net assetsTotal liabilities and net assetsAs of March 31, 2021(Millions of yen) As of December 31, 202192,54495,38718,06520,0105,5772,33076,141310,05415,000218,85737,5001,07728,279300,713610,76771,833103,756229,805(13,047)392,34621,840607(7,087)(1,557)13,804103,229127,0565,986―3,820―80,261320,352105,000220,82737,5371,26535,962400,590720,94271,833103,755245,027(12,790)407,82522,738(281)1,137(1,255)22,33989923,316430,3641,041,13185723,785454,8061,175,7482(For the nine months ended December 31, 2021)( 2 ) Consolidated Statements of IncomeNet salesCost of salesGross profitSelling, general and administrative expensesOperating incomeNon-operating incomeInterest incomeDividends incomeEquity in earnings of affiliatesGain on investments in partnershipsGain on valuation of derivativesMiscellaneous incomeNon-operating expensesInterest expensesLoss on investments in partnershipsForeign exchange lossesLoss on valuation of derivativesMiscellaneous lossOrdinary incomeExtraordinary incomeGain on sales of noncurrent assetsGain on sales of investment securitiesGain on step acquisitionsOtherExtraordinary lossLoss on sales and retirement of noncurrent assetsLoss on valuation of investment securitiesImpairment lossBusiness structure improvement expensesLoss related to COVID-19OtherIncome before income taxesIncome taxesProfitProfit attributable to non-controlling interestsProfit attributable to owners of parentTotalTotalTotalTotal(Millions of yen) For the nine monthsended December 31,2020For the nine monthsended December 31,2021609,741420,072189,669144,42645,2435221,0241,8561153089514,7782,138－1,4631,7751,7887,16442,8571,7874562,00904,2527401,4654491242673943,43843,67214,90028,7721,95026,822687,005483,622203,383165,21338,1703459864,340－2,5378429,0502,369161,3714131,7305,89941,321515,332－1975,5801,269－1,886108－1323,39543,50615,66627,8402,00225,8383(For the nine months ended December 31, 2021)( 3 )(Consolidated Statements of Comprehensive Income)ProfitOther comprehensive incomeValuation difference on available-for-sale securitiesDeferred gains or losses on hedgesForeign currency translation adjustmentRemeasurements of defined benefit plans, net of taxShare of other comprehensive income of associates accounted for usingequity methodTotalComprehensive incomeComprehensive income attributable to :Owners of parentNon-controlling interestsFor the nine monthsended December 31,2020(Millions of yen) For the nine monthsended December 31,202128,77227,8409,8252,4834,862299(42)17,42846,20043,6002,600488(888)7,4782717658,11335,95334,3731,5794 2. Segment and Other Information Notes Pertaining to Going Concern Assumption: Notes on Significant Changes in Shareholders’ Equity: None None Adoption of special quarterly accounting methods: Certain of the consolidated subsidiaries of the Company have adopted a method for estimating in practical terms the effective tax rate for the fiscal year, including for the nine months ended December 31, 2021, following the application of tax effect accounting to income before income taxes, and multiplying this by quarterly income before income taxes to estimate quarterly tax expense. Changes in Accounting Policies: (Application of the Accounting Standard for Revenue Recognition and Related Guidance) The Accounting Standard for Revenue Recognition (Statement No. 29 of the Accounting Standards Board of Japan [ASBJ], issued on March 31, 2020) and related ASBJ guidance have been applied to the consolidated financial results of the Company and its consolidated subsidiaries in Japan since the beginning of the first quarter of FY2021. Accordingly, revenue is recognized through an approach that comprises the following five steps: Step 1: Specify each contract with a customer Step 2: Identify the responsibilities to be fulfilled under the contract Step 3: Calculate the trading price of the contract Step 4: Allocate the trading price among the respective responsibilities under the contract Step 5: Recognize revenue at the time of or through the process of fulfilling the responsibilities In the wake of the application of the Accounting Standard for Revenue Recognition, the Company has added to or subtracted from its retained earnings the total amount of effects of the retroactive application of the new accounting policy to consolidated financial results prior to the current fiscal year , following the procedure defined in the proviso in Section 84 of the Accounting Standard for Revenue Recognition. The Company has adopted the new policy beginning with the amount of retained earnings as of the start of the current fiscal year. As a result, net sales for the nine months ended December 31, 2021 decreased by 11,687 million yen. This change in the accounting policy will have only a minor impact on the amount of retained earnings as of the start of the current fiscal year and per share data. Due to the application of the Accounting Standard for Revenue Recognition, the item “Notes and accounts receivable-trade” in the “Current assets” category in the consolidated balance sheets has been included in the item “Notes and accounts receivable-trade, and contract assets” since the first quarter of FY2021. (Application of the Accounting Standard for Fair Value Measurement and Related Standards and Guidance) The Accounting Standard for Fair Value Measurement (Statement No. 30 of the Accounting Standards Board of Japan [ASBJ], issued on July 4, 2019 ) and related ASBJ standards and guidance have applied to the Company’s consolidated financial results since the beginning of the first quarter of FY2021. The Company will continue to carry out a new accounting policy that is provided for by the Accounting Standard for Fair Value Measurement and related standards and guidance, following the transitional procedure defined in Section 19 of the Accounting Standard for Fair Value Measurement and Section 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, revised on July 4, 2019). This change in the accounting policy will have no impact on the Company’s consolidated financial statements. 5Segment information( 1 ) Results of the Third quarter of FY2020 (April 1, 2020 through December 31, 2020)1 ) Segment sales and operating income Materials HealthcareITSubtotalOthers*TotalReportable operating segmentsFibers &ProductsConverting(Millions of yen) Sales 1) External customers 2) Intersegment transactions or transfersNet salesSegment income (loss)* “Others,” which includes the Engineering business, does not qualify as a reportable operating segment. 205,9616,797212,758(335)111,87311111,88325,834237,0802,438239,51816,27742,2734,36246,6356,909597,18713,608610,79448,68412,5542,25814,812(152)609,74115,866625,60748,5322 ) Difference between operating income and sum of operating income (loss) in reportable operating segments (Adjustment)(Millions of yen) AmountOperating income (loss)Total reportable operating segmentsOthers segmentElimination of intersegment transactionsCorporate expenses*Operating income* Corporate expenses are expenses that cannot be allocated to individual reportable operating segments and are primarily related to head office administration.48,684(152)520(3,810)45,2433 ) Loss on impairment and goodwill by reportable segmentsSignificant impairment of noncurrent assetsThis item has been omitted because it is of low significance.Significant changes in goodwillIn the Materials segment, the Company recorded goodwill of 1,914 million yen in the nine months ended December 31, 2020due to the acquisition of additional equity interest of CSP Victall (Tangshan) Structural Composites Co., Ltd. and making it a consolidated subsidiary.The amount of goodwill has been determined after reflecting the revision following the confirmation of the provisionalaccounting treatment concerning the business combination.6( 2 ) Results of the Third quarter of FY2021 (April 1, 2021 through December 31, 2021)1 ) Segment sales and operating income Materials HealthcareITSubtotalOthers*TotalReportable operating segmentsFibers &ProductsConverting(Millions of yen) Sales 1) External customers 2) Intersegment transactions or transfersNet salesSegment income (loss)* “Others,” which includes the regenerative medicine business and the Engineering business, does not qualify as a reportable operating segment.284,5469,990294,537(4,798)139,55815139,57337,439670,85117,215688,06544,006687,00519,992706,99742,736206,8782,321209,1994,52316,1542,77718,931(1,270)39,8694,88844,7566,8432) Assets of each reportable segmentThe asset value of the Healthcare segment increased by 151,086 million yen from the end of the previousconsolidated fiscal year. This increase is explained mainly by the completion of sales right transfer during the firstquarter of FY2021 based on the contract that Teijin Pharma Limited, one of the Company’s subsidiaries, andTakeda Pharmaceutical Co., Ltd. concluded for asset transfer concerning type-2 diabetes treatments on February3 ) Difference between operating income and sum of operating income (loss) in reportable operating segments (Adjustment)(Millions of yen) AmountOperating income (loss)Total reportable operating segmentsOthers segmentElimination of intersegment transactionsCorporate expenses*Operating income* Corporate expenses are expenses that cannot be allocated to individual reportable operating segments and are primarily related to head office administration.44,006(1,270)(408)(4,158)38,1704) Loss on impairment and goodwill by reportable segmentsSignificant impairment of noncurrent assetsIn the Materials segment, the Company recorded an impairment loss of 1,348 million yen in the nine months ended December31, 2021.Significant changes in goodwillDuring the previous consolidated fiscal year, the Company applied a provisional accounting treatment concerning its acquisitionof an additional equity interest in CSP Victall (Tangshan) Structural Composites Co., Ltd. (currently named Teijin AutomotiveTechnologies (Tangshan) Co., Ltd.) and its inclusion of the latter company as a subsidiary. The provisional accountingtreatment was confirmed in the first quarter of FY2021. Consequently, the amount of goodwill in the Materials segmentdecreased.During the previous consolidated fiscal year, the Company applied a provisional accounting treatment concerning its acquisitionof shares in Japan Tissue Engineering Co., Ltd. and its inclusion of the latter company as a subsidiary. The provisionalaccounting treatment was confirmed in the second quarter of FY2021. Consequently, the amount of goodwill in the Otherssegment decreased.Details are given in “Financial Statements: 2 Segment and Other Information (Business Combinations).”7 Business Combinations: (Confirmation of Provisional Accounting Treatment concerning Business Combination) During the previous consolidated fiscal year, the Company applied a provisional accounting treatment concerning business combination through the acquisition of an additional equity interest in CSP Victall (Tangshan) Structural Composites Co., Ltd.(currently, Teijin Automotive Technologies (Tangshan) Co., Ltd.) on December 29, 2020. The Company has confirmed the provisional accounting treatment during the first quarter of FY2021. Due to the confirmation of the provisional accounting treatment, comparison data in the quarterly consolidated financial statements for the third quarter of the current fiscal year reflects a major revision of the initial allocation of the acquisition cost. As a result of the confirmation of the provisional accounting treatment, the amount of goodwill has changed from a provisional 4,379 million yen to 1,914 million yen, a decrease of 2,464 million yen. The decrease in goodwill resulted from an increase of 556 million yen in tangible noncurrent assets, including machinery and equipment, an increase of 2,344 million yen in technology-related assets as intangible noncurrent assets, and an increase of 435 million yen in deferred tax liabilities. The amortization period for goodwill is 10 years, while the amortization period for technology-related assets allocated to intangible noncurrent assets excluding goodwill is 15 years. During the previous consolidated fiscal year, the Company applied a provisional accounting treatment concerning business combination through its acquisition of shares of stock in Japan Tissue Engineering Co., Ltd. on March 9, 2021. The Company has confirmed the provisional accounting treatment during the second quarter of FY2021. Due to the confirmation of the provisional accounting treatment, comparison data in the quarterly consolidated financial statements for the third quarter of the current fiscal year reflects a major revision of the initial allocation of the acquisition cost. As a result of the confirmation of the provisional accounting treatment, the amount of goodwill has changed from a provisional 15,085 million yen to 12,209 million yen, a decrease of 2,876 million yen. The decrease in goodwill resulted from an increase of 7,126 million yen in technology-related and other assets as intangible noncurrent assets, an increase of 2,143 million yen in deferred tax liabilities, and an increase of 2,107 million yen in non-controlling interests. The amortization period for goodwill is 15 years, while technology-related and other assets allocated to intangible noncurrent assets excluding goodwill are amortized over the period during which they continue to affect the calculation (mainly over the period of 16 years). As a result, at the end of the previous consolidated fiscal year, goodwill decreased by 5,452 million yen, while tangible noncurrent assets, other intangible noncurrent assets, deferred tax liabilities, and non-controlling interests increased by 569 million yen, 9,588 million yen, 2,597 million yen, and 2,107 million yen, respectively. 8