日本板硝子（5202） – FY2022 3rd Quarter Consolidated Financial Results (IFRS)

Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results FY 2022 3rd Quarter Consolidated Financial Results 3 February 2022 (English translation of the Japanese original) Listed Company Name: Code Number: Nippon Sheet Glass Company, Limited 5202 Stock Exchange Listing: (URL: http://www.nsg.com) Tokyo Representative: Inquiries to: Representative Executive Officer, President and CEO General Manager, Investor Relations Name: Shigeki Mori Name: Hiroyuki Genkai Tel: +81 3 5443 0100 Submission of quarterly report to MOF: Quarterly result presentation papers: Quarterly result presentation meeting: 7 February 2022 Yes Yes (Teleconference for institutional investors) Payment of dividends start from: N/A 1. Consolidated business results for FY 2022 3rd Quarter (From 1 April to 31 December 2021) (1) Consolidated business results Revenue Operating profit Profit/(loss) before taxation Profit/(loss) for the period Profit/(loss) attributable to owners of the parent ¥ millions % Total comprehensive income ¥ millions % 3Q FY 2022 ¥ millions % 442,961 24.0 ¥ millions % ¥ millions % ¥ millions % 14,524 81.0 15,440 3Q FY 2021 357,350 (16.1) 8,024 (55.5) (12,479) – – 10,522 (13,504) – – 8,633 (13,938) – – 32,643 (15,651) – – Earnings per share – basic 3Q FY 2022 3Q FY 2021 ¥ ¥ 78.98 (170.01) FY 2022 3rd Quarter FY 2021 Full year 2. Dividends FY 2021 (Actual) FY 2022 (Actual) FY 2022 (Forecast) Note: Operating profit in the above table is defined as being operating profit stated before exceptional items. (2) Changes in financial position Total assets Total equity Total shareholders’ equity Total shareholders’ equity ratio ¥ millions 858,843 824,963 ¥ millions 118,129 79,762 ¥ millions 97,190 62,937 % 11.3 7.6 1st Quarter 2nd Quarter ¥ 0.00 Dividends per share 3rd Quarter － 4th Quarter ¥ 0.00 ¥ 0.00 － － Annual ¥ 0.00 ¥ 0.00 ¥ 0.00 Note: • There have been no changes to the forecast dividends this quarter. • The above table shows dividends on common shares. Please refer to “(Reference) Dividends for Class A Shares” for information regarding dividends on Class A shares, which are unlisted and have different rights from common shares. － － 1 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results 3. Forecast for FY 2022 (From 1 April 2021 to 31 March 2022) Full year Note: Revenue Operating profit Profit before taxation Profit for the period ¥ millions % ¥ millions % ¥ millions % ¥ millions % ¥ millions 590,000 18.2 20,000 53.1 18,000 – 12,000 – 10,000 Profit attributable to owners of the parent Earnings per share – basic % – ¥ 88.71 • • • There have been changes to the forecast results this quarter. Forecast of basic earnings per share for FY2022 is calculated by dividing the profit attributable to owners of the parent after deducting preferred dividends for Class A shares (a rate of 6.5% per annum applied to the outstanding balance at 31 March 2022), by 90,742,143 shares which is the number of ordinary shares issued at 31 December 2021, reduced by the number of treasury stock and restricted shares (166,600 shares). For details, please refer to the “Revision to Forecast for Financial Year ending on 31 March 2022” and the slides on 2022/3 forecast in 2022/3 Third Quarter Results presentation. 4. Other items (1) Changes in status of principle subsidiaries — No (2) Changes implemented to the accounting policies, practice and presentations related to the preparation of quarterly consolidated financial statements (i) Changes due to revisions in accounting standards under IFRS — No (ii) Changes due to other reasons —No (iii) Changes in accounting estimates — No (3) Numbers of shares outstanding (common stock) (i) Number of shares issued at the end of the period, including shares held as treasury stock: 90,933,999 shares as of 31 December 2021 and 90,810,899 shares as at 31 March 2021 (ii) Number of shares held as treasury stock at the end of the period: 25,256 shares as at 31 December 2021 and 23,785 shares as at 31 March 2021 (iii) Average number of shares in issue during the period, after deducting shares held as treasury stock: 90,708,658 shares for the period ending 31 December 2021 and 90,624,195 shares for the period ending 31 December 2020 Status of quarterly review procedures taken by external auditors for the quarterly results This document (Tanshin) is out of scope for quarterly review by the external auditors. Explanation for the appropriate usage of performance projections and other special items The projections contained in this document are based on information currently available to us and certain assumptions that we consider to be reasonable. Hence the actual results may differ. The major factors that may affect the results include but are not limited to the economic and competitive environment in major markets, product supply and demand shifts, currency exchange and interest rate fluctuations, changes in supply of raw materials and fuel and changes and laws and regulations. (For Reference) Dividends for Class A Shares Dividends per share related to Class A Shares with different rights from those of common shares are as follows. Class A Shares FY2021 (Actual) FY2022 (Actual) FY2022 (Forecast) Dividends per share 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total – – ¥ 0.00 ¥ 0.00 – – – ¥ 65,000.00 ¥ 65,000.00 ¥ 65,000.00 ¥ 65,000.00 Note: Number of Class A Shares in issue are 30,000 shares. 40,000 Class A Shares were originally issued on 31 March 2017. On 7 December 2018, the Company acquired and then retired a total of 5,000 Class A shares. On 6 June 2019, the Company acquired and then retired a total of 5,000 Class A shares. The forecast of dividends, for Class A shares that have dividend record dates belonging to FY2022, is ¥ 1,950 million. 2 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results [Attachments] Table of contents in the attachments (including mandatory disclosure items) 1. Narratives about financial results (1) Business Performance (2) Financial Condition (3) Prospects 2. Consolidated financial statements and their notes (1) (a) Condensed quarterly consolidated income statement (b) Condensed quarterly consolidated statement of comprehensive income (2) Condensed quarterly consolidated balance sheet (3) Condensed quarterly consolidated statement of changes in equity (4) Condensed quarterly consolidated statement of cash flow (5) Notes to the condensed quarterly consolidated financial statements 3 1. Narratives about financial results Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (1) Business Performance (a) Background to Results The Group’s markets continued to experience contrasting conditions during the third quarter of the year. Architectural Glass markets were generally strong with buoyant levels of construction and refurbishment activity across many regions. Demand for Solar energy glass was also positive. In addition, Technical Glass markets also benefitted from high levels of consumer demand in a variety of areas. Automotive markets however were weak, with a shortage of computer chip components causing the Group’s large automotive customers to restrict production. Cumulative Group revenues increased by 24 percent to ¥ 442,961 million (3Q FY2021 ¥ 357,350 million), with COVID-19-related lockdowns having a particularly significant impact on revenues during the first quarter of the previous year. At constant exchange rates, cumulative revenues would have increased by 18 percent. Operating profits were ¥ 14,524 million (3Q FY2021 ¥ 8,024 million). Net exceptional gains were ¥ 4,352 million due to a gain recorded on the disposal of the Group’s Battery Separator business during the second quarter. The previous year included net exceptional losses of ¥ 13,839 million due largely to costs arising from the COVID-19 pandemic. As a consequence of the improved operating profit and the net exceptional gain, the Group recorded a positive profit attributable to owners of the parent of ¥ 8,633 million (3Q FY2021 loss of ¥ 13,938 million). (b) Review by Business Segment The Group’s business lines cover three core product sectors: Architectural, Automotive, and Technical Glass. Architectural, representing 47 percent of cumulative revenues, includes the manufacture and sale of flat glass and various interior and exterior glazing products within the commercial and residential markets. It also includes glass for the Solar Energy sector. Automotive, with 46 percent of cumulative revenues, supplies a wide range of automotive glazing for new vehicles and for replacement markets. Technical Glass, representing 7 percent of cumulative revenues, comprises several discrete businesses, including the manufacture and sale of very thin glass used as cover glass for displays, lenses and light guides for printers, and glass fiber components for engine timing belts. Other operations include corporate costs, consolidation adjustments, certain small businesses not included in the segments covered above and the amortization of other intangible assets related to the acquisition of Pilkington. The table below shows a summary of cumulative results by business segment. ¥ millions Architectural Automotive Technical Glass Other Operations Total Revenue Operating profit/(loss) 3rd Quarter FY 2022 3rd Quarter FY 2021 3rd Quarter FY 2022 3rd Quarter FY 2021 206,863 156,084 20,406 11,521 203,295 173,596 (5,925) (1,071) 30,773 26,593 7,782 4,508 2,030 1,077 (7,739) (6,934) 442,961 357,350 14,524 8,024 4 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results Architectural Business The Architectural business recorded cumulative revenues of ¥ 206,863 million (3Q FY2021: ¥ 156,084 million) and an operating profit of ¥ 20,406 million (3Q FY2021: ¥ 11,521 million). Architectural revenues and profits increased from the previous year which had been significantly impacted by the COVID-19 pandemic during the first quarter. Revenues were robust, although profits continue to be severely impacted by input costs, especially with respect to energy. In Europe, representing 41 percent of the Group’s architectural sales, revenues improved with buoyant demand exceeding capacity, which resulted in positive volumes and rising price levels. Profits were also improved as a strong operational performance and tight cost control continued to partly mitigate the impact of high input costs, particularly for energy, and also increasing logistics and raw material costs. In Asia, representing 31 percent of the Group’s architectural sales, revenues and profits were above the previous year. Revenues in Japan continued to improve during the third quarter, and other South East Asia markets were also positive, helped by an easing of lockdown restrictions. Demand for glass for Solar Energy was robust. In the Americas, representing 28 percent of the Group’s architectural sales, revenues and profits were ahead of the previous year. Volumes rebounded from the previous year although they were constrained to by low levels of inventory due to a planned cold repair, and also shortages of transportation capacity. Sales of glass for Solar Energy continued to be positive. Automotive Business The Automotive business recorded cumulative revenues of ¥ 203,295 million (3Q FY2021: ¥ 173,596 million) and an operating loss of ¥ 5,925 million (3Q FY2021: loss of ¥ 1,071 million). In the Automotive business, cumulative revenues were significantly ahead of the previous year which had been badly affected by the COVID-19 pandemic during the first quarter. Despite strong underlying consumer demand, volumes were badly affected by the Group’s customers restricting production in response to a shortage of computer chip components. As a consequence of the restricted demand and also increasing input costs, operating losses increased from the previous year. Europe represents 42 percent of the Group’s automotive sales. Cumulative revenues improved from the previous year, due to a collapse in demand during the first quarter of FY2021 as a result of the COVID-19 pandemic. Revenues were, however, badly affected by restrictions in volumes caused by computer chip component shortages at the Group’s customers. Profitability was negatively impacted by increasing input costs and a low level of asset utilization. In Asia, representing 22 percent of the Group’s automotive sales, cumulative revenues were similar to the previous year. In Japan, vehicle sales weakened during the third quarter with vehicle build rates being impacted by shortages of computer chips restricting vehicle production. Demand in Malaysia was hit by lockdowns earlier in the year, leading to a suspension of production at the Group’s automotive customers. In the Americas, representing 36 percent of the Group’s automotive sales, cumulative revenues increased strongly from the previous year. The positive impact of removing COVID-19 restrictions was partly offset by the impact on vehicle production of computer-chip component shortages. Technical Glass Business The Technical Glass business recorded cumulative revenues of ¥ 30,773 million (3Q FY2021: ¥ 26,593 million) and an operating profit of ¥ 7,782 million (3Q FY2021: ¥ 4,508 million). Revenues and profits continued to be robust in the Technical Glass business with improving market conditions in the current year contrasting with the impact of COVID-19 in the previous year. 5 Financial Condition Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results In the fine glass business, continued cost reduction efforts and a better sales mix provided a strong foundation for a further improvement in results. In the information devices business, volumes of printer lenses continued to be boosted by work from home and school from home demand. Demand for glass cord used in engine timing belts was also strong. Metashine sales continued to recover, after a long period of difficult market conditions for automotive and cosmetic applications. The Group disposed of its Battery Separator business during the second quarter of the year. For further details, please refer to the press release “Transfer of Battery Separator Business to Wholly-owned Subsidiary through Company Split (Simple Absorption-type Split) and Sale of Shares in Such Subsidiary” issued on 1 September 2021. The gain arising on this transaction has been classified as an exceptional item. Please refer to the summary of exceptional items within section 2. Consolidated financial statements and their notes (5) Notes to the condensed quarterly consolidated financial statements (d) Exceptional items. Joint Ventures and Associates The Group’s share of joint ventures and associates’ profits after tax was ¥ 5,588 million (3Q FY2021: ¥ 845 million). The Group’s share of joint ventures and associate’s results was above the previous year, largely due to an improving performance at Cebrace, the Group’s architectural joint venture in Brazil. (2) Total assets at the end of December 2021 were ¥ 858,843 million, representing an increase of ¥ 33,880 million from the end of March 2021. Total equity was ¥ 118,129 million, representing an increase of ¥ 38,367 million from the March 2021 figure of ¥ 79,762 million. The increase in total equity was due to a combination of the profit recorded for the period, positive movements on derivative balances, and the translational impact of a weakened Japanese yen. Derivative assets increased in value due mainly to the positive revaluation of the Group’s energy-hedging contracts reflecting the increasing price of natural gas. Net financial indebtedness decreased by ¥ 4,201 million from 31 March 2021 to ¥ 407,570 million at the period end. The decrease in indebtedness arose largely from the increasing value of financial derivative assets. Gross debt was ¥ 475,836 million at the period end. As of 31 December 2021, the Group had un-drawn, committed revolving credit facilities of ¥ 80,494 million and, in addition, the Group had an undrawn committed term loan of ¥ 42,900 million. Cash inflows from operating activities were ¥ 21,140 million. Cash outflows from investing activities were ¥ 20,086 million, including capital expenditure on property, plant, and equipment of ¥ 25,987 million and proceeds on the disposal of the Battery Separator business of 6,201 million. As a result, free cash flow was an inflow of ¥ 1,054 million (3Q FY2021 free cash outflow of ¥28,557 million). (3) For details, please refer to the “Revision to Forecast for Financial Year ending on 31 March 2022” and the slides on 2022/3 forecast in 2022/3 Third Quarter Results presentation. Prospects 6 2. Consolidated financial statements and their notes (1) (a) Condensed quarterly consolidated income statement Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results ¥ millions Cumulative 3rd Quarter FY21 For the period 1 April 2020 to 31 December 2020 Cumulative 3rd Quarter FY22 For the period 1 April 2021 to 31 December 2021 Note (5)-(c) 442,961 Revenue Cost of sales Gross profit Other income Distribution costs Administrative expenses Other expenses Operating profit Exceptional items – gains Exceptional items – losses Operating profit/(loss) after exceptional items Finance income Finance expenses Share of post-tax profit of joint ventures and associates accounted for using the equity method Profit/(loss) before taxation Taxation Profit/(loss) for the period Profit attributable to non-controlling interests Profit/(loss) attributable to owners of the parent Earnings per share attributable to owners of the parent Basic Diluted (5)-(c) (5)-(d) (5)-(d) (5)-(e) (5)-(e) (5)-(f) (342,516) 100,445 1,392 (39,108) (44,549) (3,656) 14,524 5,037 (685) 18,876 1,419 (10,443) 5,588 15,440 (4,918) 10,522 1,889 8,633 10,522 (5)-(g) (5)-(g) 78.98 60.78 7 357,350 (272,576) 84,774 1,038 (31,782) (42,220) (3,786) 8,024 7,244 (21,083) (5,815) 1,583 (9,092) 845 (12,479) (1,025) (13,504) 434 (13,938) (13,504) (170.01) (170.01) (1) (b) Condensed quarterly consolidated statement of comprehensive income Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results Profit/(loss) for the period Other comprehensive income: Items that will not be reclassified to profit or loss: Re-measurement of retirement benefit obligations (net of taxation) Revaluation of Assets held at Fair Value through Other Comprehensive Income – equity investments (net of taxation) Sub total Items that may be reclassified subsequently to profit or loss: Foreign currency translation adjustments Revaluation of Assets held at Fair Value through Other Comprehensive Income – other investments (net of taxation) Cash flow hedges: – fair value gains (net of taxation) (5)-(h) Sub total Total other comprehensive income for the period (net of taxation) Total comprehensive income for the period Attributable to non-controlling interests Attributable to owners of the parent Cumulative 3rd Quarter FY22 For the period 1 April 2021 to 31 December 2021 Note ¥ millions Cumulative 3rd Quarter FY21 For the period 1 April 2020 to 31 December 2020 10,522 (13,504) 3,019 1,265 4,284 7,290 237 10,310 17,837 22,121 32,643 1,028 31,615 32,643 (8,116) 1,719 (6,397) (413) (89) 4,752 4,250 (2,147) (15,651) (2,190) (13,461) (15,651) 8 (2) Condensed quarterly consolidated balance sheet Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results Investments accounted for using the equity method – Assets held at Fair Value through Other Comprehensive Income ASSETS Non-current assets Goodwill Intangible assets Property, plant, and equipment Investment property Retirement benefit asset Contract assets Trade and other receivables Financial assets: – Derivative financial instruments Deferred tax assets Current assets Inventories Contract assets Trade and other receivables Financial assets: – Derivative financial instruments Cash and cash equivalents Assets held for sale Total assets 3rd Quarter as at 31 December 2021 ¥ millions FY 2021 as at 31 March 2021 100,788 48,333 320,556 143 24,932 23,999 728 16,460 22,634 3,768 34,998 597,339 124,959 1,878 61,658 10,814 53,684 252,993 8,511 261,504 858,843 99,016 48,761 316,788 214 18,870 23,335 988 14,389 18,439 362 33,816 574,978 111,910 1,322 65,810 904 58,673 238,619 11,366 249,985 824,963 9 (2) Condensed quarterly consolidated balance sheet continued Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results 3rd Quarter as at 31 December 2021 ¥ millions FY 2021 as at 31 March 2021 LIABILITIES AND EQUITY Current liabilities Financial liabilities: – Borrowings – Derivative financial instruments Trade and other payables Contract liabilities Provisions Deferred income Liabilities related to assets held for sale Non-current liabilities Financial liabilities: – Borrowings – Derivative financial instruments Trade and other payables Contract liabilities Deferred tax liabilities Retirement benefit obligations Provisions Deferred income Total liabilities Equity Called up share capital Capital surplus Retained earnings Other reserves Total shareholders’ equity Non-controlling interests Total equity Total liabilities and equity Capital and reserves attributable to the Company’s equity shareholders Retained earnings (Translation adjustment at the IFRS transition date) 10 146,753 1,409 130,052 6,809 12,715 440 298,178 2,427 300,605 327,160 514 3,597 5,717 22,181 56,699 21,142 3,099 440,109 740,714 116,685 155,275 (67,439) (68,048) (39,283) 97,190 20,939 118,129 858,843 120,994 729 138,527 5,749 17,860 504 284,363 3,450 287,813 349,146 841 3,710 6,037 16,176 61,002 17,391 3,085 457,388 745,201 116,643 155,245 (81,692) (68,048) (59,211) 62,937 16,825 79,762 824,963 Retained earnings (Translation on adjustment at the IFRS translation date) Retained earnings (Translation on adjustment at the IFRS translation date) (3) Condensed quarterly consolidated statement of changes in equity Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results 3rd Quarter FY 2022 Called up share capital Capital surplus Retained earnings Other reserves ¥ millions Total equity Total share holders’ equity Non- controlling interests At 1 April 2021 Total Comprehensive Income Hyperinflation adjustment Dividends paid Share-based compensation with restricted shares Stock options Purchase of treasury stock At 31 December 2021 116,643 – – – 155,245 – – – (81,692) 11,652 4,551 (1,950) (68,048) – – – (59,211) 19,963 – – 62,937 31,615 4,551 (1,950) 16,825 1,028 3,881 (795) 79,762 32,643 8,432 (2,745) 25 13 – – – 38 – 38 17 – 17 – 116,685 155,275 – – (67,439) – – (68,048) (34) (1) (39,283) – (1) 97,190 – – – (1) 20,939 118,129 3rd Quarter FY 2021 Called up share capital Capital surplus Retained earnings Other reserves ¥ millions Total equity Total share holders’ equity Non- controlling interests At 1 April 2020 Total Comprehensive Income Hyperinflation adjustment Dividends paid Share-based compensation with restricted shares Stock options Purchase of treasury stock Equity transaction with non-controlling interests At 31 December 2020 116,607 – – – 155,222 – – – (54,276) (22,054) 2,786 (1,650) (68,048) – – – (75,893) 8,593 – – 73,612 (13,461) 2,786 (1,650) 14,582 (2,190) 2,218 (383) 88,194 (15,651) 5,004 (2,033) – 3 – – – – – (51) – – – – – (6) (1) – 26 – (1) – – – 26 – (1) (51) 1,062 1,011 116,636 155,225 (75,245) (68,048) (67,307) 61,261 15,289 76,550 26 3 – – 11 (4) Condensed quarterly consolidated statement of cash flow Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results 3rd Quarter For the period 1 April to 31 December 2021 ¥ millions 3rd Quarter For the period 1 April to 31 December 2020 Note (5)-(k) (25,987) (30,500) 30,061 (8,390) 2,763 (3,294) 21,140 98 – 1 – 6,201 354 (848) (1,783) (1,930) 3,806 (20,086) – 2 (1,959) (795) (46,262) 37,058 (1) – (11,959) (10,905) 1,169 804 44,568 12,525 (7,245) 2,285 (2,826) 4,739 1,818 (3,335) 384 (71) (376) 552 (907) 5 (1,232) 629 (653) 390 (33,296) (1,652) (383) (23,831) 53,117 (1) 1,011 28,261 (296) 40,512 351 752 41,319 Cash flows from operating activities Cash flows generated from operations Interest paid Interest received Tax paid Net cash in/(out)flows from operating activities Cash flows from investing activities Dividends received from joint ventures and associates Purchase of joint ventures and associates Proceeds on disposal of joint ventures and associates Purchase of subsidiaries, net of cash balances held by subsidiaries upon acquisition Proceeds on disposal of subsidiaries, net of cash balances held by subsidiaries on disposal Purchases of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchases of intangible assets Proceeds on disposal of intangible assets Purchase of assets held at FVOCI Proceeds on disposal of assets held at FVOCI Loans advanced to joint ventures, associates and third parties Loans repaid from joint ventures, associates and third parties Net cash outflows from investing activities Cash flows from financing activities Dividends paid to owners of the parent Dividends paid to non-controlling interests Repayment of borrowings Proceeds from borrowings Increase in treasury stock Capital contribution from non-controlling interests Net cash (out)/inflows from financing activities Decrease in cash and cash equivalents (net of bank overdrafts) Cash and cash equivalents (net of bank overdrafts) at beginning of period Effect of foreign exchange rate changes Hyperinflation adjustment Cash and cash equivalents (net of bank overdrafts) at end of period (5)-(l) 53,500 (5)-(m) (5)-(l) 12 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (5) Notes to the condensed quarterly consolidated financial statements (a) Notes regarding going concern There were no issues or events arising during the period, which negatively affect the ability of the Group to continue as a going concern. (b) Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will not usually be equal to the related actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group regularly considers indicators of impairment with respect to goodwill and other intangible assets that are not routinely amortized through the income statement, and noted in the full-year financial statements to 31 March 2021 that the Cash Generating Unit with the least amount of headroom was Automotive Europe. Whilst the Group faced challenges from increasing input costs and low levels of automotive manufacturers demand owing to supply chain issues during the third quarter, underlying consumer confidence affecting the Group’s markets remained strong. When assessing the impairment of goodwill and intangible assets, the Group has made assumptions that this strong underlying demand will continue. In Architectural, the Group expects to maintain selling prices that will continue to mitigate the impact of increasing input costs. In Automotive, the Group expects that the component shortages, that have curtailed current-year demand, will be gradually resolved. The Group will continue to observe the recovering situation. (c) Segmental information The Group is organized on a worldwide basis into the following principal primary operating segments. The Architectural segment engages in the manufacturing and sale of flat glass and various interior and exterior glazing products within commercial and residential markets. It also includes glass for the solar energy sector. The Automotive segment supplies a wide range of automotive glazing for new vehicles and for replacement markets. The Technical Glass segment comprises a number of discrete businesses, including the manufacture and sale of very thin glass used as cover glass for displays, lenses and light guides for printers, and glass fiber components for engine timing belts. The Other segment covers corporate costs, certain small businesses not included in the segments covered above, and consolidation adjustments including amortization and impairment costs recorded with respect to goodwill and intangible assets related to the acquisition of Pilkington plc. External revenue is disaggregated into three categories; Europe, Asia which includes Japan, and Americas which comprises of North and South Americas. The Group’s revenues comprise sales of glass recognized at a point in time and sales of services recognized over time. Sales of services recognized over time are immaterial and are therefore not disclosed separately at interim periods. The amortization arising from the acquisition of Pilkington plc was ¥ 841 million in FY2022 Q3 (Q3 FY2021: ¥1,242 million). 13 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (c) Segmental information continued The segmental results for the third quarter to 31 December 2021 were as follows: ¥ millions Architectural Automotive Technical Glass Other Operations Total 3rd Quarter FY 2022 For the period 1 April 2021 to 31 December 2021 Total revenue Inter-segmental revenue External revenue Disaggregation of external revenue by geographical regions: Europe Asia Americas Operating profit/(loss) Exceptional items – gains Exceptional items – losses Operating profit after exceptional items Finance costs – net Share of post-tax profit from joint ventures and associates Profit before taxation Taxation Profit for the period from continuing operations 214,513 205,099 (7,650) (1,804) 206,863 203,295 32,192 (1,419) 30,773 4,051 455,855 (2,021) (12,894) 2,030 442,961 84,236 64,717 57,910 20,406 106 (52) 86,382 44,397 72,516 (5,925) 460 (161) 5,872 23,969 932 7,782 4,410 (67) 1,301 177,791 729 133,812 131,358 (7,739) 14,524 61 (405) – 5,037 (685) 18,876 (9,024) 5,588 15,440 (4,918) 10,522 14 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (c) Segmental information continued The segmental results for the third quarter to 31 December 2020 were as follows: ¥ millions Architectural Automotive Technical Glass Other Operations Total 3rd Quarter FY 2021 For the period 1 April 2020 to 30 December 2020 Total revenue Inter-segmental revenue External revenue Disaggregation of external revenue by geographical regions: Europe Asia Americas Operating profit/(loss) Exceptional items – gains Exceptional items – losses Operating loss after exceptional items Finance costs – net Share of post-tax loss from joint ventures and associates Loss before taxation Taxation Loss for the period from continuing operations 163,470 174,474 (7,386) (878) 156,084 173,596 60,639 58,295 37,150 11,521 1,255 (7,349) 72,113 43,382 58,101 (1,071) 4,377 (11,154) 28,267 (1,674) 26,593 4,550 21,247 796 4,508 935 (723) 3,206 (2,129) 1,077 617 460 – (6,934) 677 369,417 (12,067) 357,350 137,919 123,384 96,047 8,024 7,244 (5,815) (7,509) 845 (12,479) (1,025) (13,504) (1,857) (21,083) The segmental assets at 31 December 2021 and capital expenditure for the period ended 31 December 2021 were as follows: ¥ millions Architectural Automotive Technical Glass Other Operations Total 161,301 170,649 28,020 4,260 364,230 6,432 7,710 646 469 15,257 The segmental assets at 31 December 2020 and capital expenditure for the period ended 31 December 2020 were as follows: ¥ millions Architectural Automotive Technical Glass Other Operations Total 160,788 154,795 33,643 4,586 353,812 19,952 4,660 570 427 25,609 Net trading assets Capital expenditure (including intangibles) Net trading assets Capital expenditure (including intangibles) Net trading assets consist of property, plant and equipment, investment property, intangible assets excluding those arising from a business combination, inventories, trade and other receivables and trade and other payables, contract assets and liabilities. Capital expenditure comprises additions to property, plant, and equipment (owned) and intangible assets. 15 (d) Exceptional items Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results ¥ millions Exceptional items – gains: Gain on disposal of Battery Separator business (a) Gain on disposal of subsidiaries and joint ventures (f) COVID-19 government support (b) Reversal of surplus provisions (c) Reversal of previous impairments (d) Settlement of litigation matters (e) Others Exceptional items – losses: Settlement of litigation matters (e) Restructuring costs, including employee termination payments (c) Suspension and other costs caused by COVID-19 (b) Retirement benefit obligations – past service cost (g) Suspension of facilities (h) Others Cumulative 3rd Quarter FY 2022 For the period 1 April to 31 December 2021 Cumulative 3rd Quarter FY 2021 For the period 1 April to 31 December 2020 4,407 404 194 5 – – 27 5,037 (320) (118) – – – (247) (685) 4,352 – – 2,335 755 3,423 697 34 7,244 (324) (3,997) (16,340) (217) (201) (4) (21,083) (13,839) (a) The Group has recognized an exceptional gain as a consequence of the disposal of its Battery Separator business during the second quarter of the year. On 10 May 2021, the Group and ENTEK Technology Holdings LLC (Head Office in Lebanon, Oregon, USA; “ENTEK”) concluded a share transfer contract with the Group agreeing to sell its Battery Separator business to a new wholly-owned subsidiary of ENTEK that was to be established in Japan. Subsequently, the Group has completed the transfer of this business on 1 September 2021. (b) In both the current and previous year, the Group has received financial support from various governments to assist with the costs of maintaining its facilities and workforce during the COVID-19 pandemic. Such support has been recognized as an exceptional gain. In the previous year, the Group has recorded the direct costs and also unrecovered operating costs arising from the COVID-19 pandemic as exceptional items. Such costs include payments to employees not engaged in productive activities due to the COVID-19 pandemic, costs of maintaining idle facilities, and direct costs such as the deep cleaning of facilities to promote a safe operating environment. Any remaining costs related to COVID-19 during the current year are less significant than during the previous year, and have not been classified as exceptional costs. (c) Restructuring costs principally include the cost of compensating redundant employees for the termination of their contracts of employment. Reversal of the surplus provisions in the current year is related to the restructuring provisions established in the previous year. In the prior year, restructuring costs related to restructuring programs in Architectural South East Asia and Automotive Europe. 16 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (d) Reversal of previous impairments are related to property, plant and equipment assets in Architectural Europe and Asia. In the prior year, the reversal of impairment of non-current assets related to assets in the Architectural business in Asia. (e) In both the current and prior year, the settlement of litigation matters relates to legal claims arising as a result of transactions that were previously recorded as exceptional items. (f) The prior year gain on disposal of a joint venture relates to the recycling into the income statement of foreign exchange gains and losses recognized during previous years within the Statement of Comprehensive Income, following the disposal of the Group’s shares in Jiangsu Pilkington SYP Glass Co., Ltd a float glass manufacturing entity in China. (g) The prior year past service cost on retirement benefit obligations related to a court ruling in the U.K. regarding Guaranteed Minimum Pensions (GMP’s) as applied to former members of the Group’s UK pension scheme who had transferred their pension entitlement out of the scheme. (h) The suspension of facilities in the previous year were related to the repair of facilities in Architectural Japan following a Typhoon during FY2020. (e) Finance income and expenses ¥ millions Cumulative 3rd Quarter For the period 1 April to 31 December 2021 Cumulative 3rd Quarter For the period 1 April to 31 December 2020 Finance income Interest income Foreign exchange transaction gains Gain on net monetary position Finance expenses Interest expense: – bank and other borrowings Dividend on non-equity preference shares due to minority shareholders Foreign exchange transaction losses Other interest and similar charges Unwinding discounts on provisions Retirement benefit obligations – net finance charge 1,030 64 325 1,419 (9,277) (197) (109) (574) (10,157) (135) (151) (10,443) (9,024) 1,197 36 350 1,583 (8,422) (184) (33) (338) (8,977) (132) 17 (9,092) (7,509) 17 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (f) Taxation The tax charge on the profit before taxation, excluding the Group’s share of net results of joint ventures and associates, is a rate of 49.9 percent in the third quarter to 31 December 2021 (31 December 2020 – a rate of (7.7) percent). The tax charge for the quarter is based on the estimated effective rate for the year to 31 March 2022. On 24 May 2021 the U.K government substantially enacted an increase in the headline rate of U.K. corporation tax from 19 percent to 25 percent with effect from 1 April 2023. The effect of this tax rate change is to increase deferred tax assets by ¥ 954 million and to increase deferred tax liabilities by ¥ 2,382 million. The net effect of this change is an increase in the Group’s tax charge of ¥ 1,428 million, recognized during the first quarter of FY2022. Excluding the change in the rate of U.K. corporation tax, the Group’s tax charge on the profit before taxation, excluding the Group’s share of net results of joint ventures and associates, would be a rate of 35.4 percent. (g) Earnings per share (i) Basic Basic earnings per share is calculated by dividing the profit attributable to owners of the parent, after deducting dividends paid to holders of Class A shares, by the weighted average number of ordinary shares in issue during the year. The dividends related to Class A shares are calculated by the dividend rate defined in the terms and conditions of the shares. The weighted average number of ordinary shares excludes ordinary shares purchased by the company and held as treasury shares, and restricted shares which have not been satisfied the conditions to lift the restriction. Profit/(loss) attributable to owners of the parent Adjustment for; – Dividends on Class A shares Profit/(loss) used to determine basic earnings per share Weighted average number to ordinary shares in issue Basic earnings per share Cumulative Quarter ended 31 December 2021 Cumulative Quarter ended 31 December 2020 ¥ millions 8,633 (1,469) 7,164 Thousands 90,708 ¥ 78.98 ¥ millions (13,938) (1,469) (15,407) Thousands 90,624 ¥ (170.01) 18 (ii) Diluted Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, following the exercise of share options and exercise of put options, attached to Class A shares, for which the consideration is common shares. Also Restricted shares which have not met the condition to lift the restriction are treated as dilutive potential ordinary shares. As for share options, a calculation is performed to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is deducted from the number of shares that would have been issued assuming the exercise of the share options. Restricted shares are treated as dilutive potential ordinary shares until the conditions for lifting the restrictions are met. As for Class A shares, a calculation is performed to determine the number of shares that would have been issued, assuming a conversion to common shares that is most advantageous for holders of the class shares. Conversion of Class A shares to common shares is reflected in the diluted earnings per share, using the factor applied to the case where the put options are exercised from 1 July 2022 onward, if the conversion has dilutive effect. Profit/(loss) attributable to owners of the parent Adjustment for; – Dividends on Class A shares Profit/(loss) used to determine diluted earnings per share Weighted average number to ordinary shares in issue Adjustment for: – Share options – Restricted shares – Class A shares Weighted average number of ordinary shares for diluted earnings per share Diluted earnings per share Cumulative Quarter ended 31 December 2021 Cumulative Quarter ended 31 December 2020 ¥ millions 8,633 – 8,633 Thousands 90,708 607 30 50,679 142,024 ¥ 60.78 ¥ millions (13,938) (1,469) (15,407) Thousands 90,624 – – – 90,624 ¥ (170.01) Diluted earnings per share for the prior period do not include stock options, Class A shares and restricted shares due to the anti-dilutive effect caused by the profits and the loss during the period. (h) Cash Flow Hedges – fair value gains Revaluation gains on cash flow hedges comprise unrealized gains on derivative contracts that have not matured at the balance sheet date. The unrealized gain recognized during the period relates mainly to forward contracts for the purchase of energy. Unrealized gains posted in the Statement of Comprehensive Income totaled ¥ 10,310 million, comprising a gross movement of ¥ 12,966 million and deferred taxation of ¥ 2,656 million. 19 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (i) Dividends (i) Dividends on ordinary shares Declared and paid during the period: Final dividend for the previous year Dividend total (¥ millions) Dividend per share (¥) (ii) Dividends on Class A shares Declared and paid during the period: Final dividend for the previous year Dividend total (¥ millions) Dividend per share (¥) Quarter ended 31 December 2021 Quarter ended 31 December 2020 – – – – Quarter ended 31 December 2021 Quarter ended 31 December 2020 1,950 65,000 1,650 55,000 (j) Exchange rates The principal exchange rates used for the translation of foreign currencies were as follows: GBP US dollar Euro Argentine peso Quarter ended 31 December 2021 Year ended 31 March 2021 Quarter ended 31 December 2020 Average Closing Average Average Closing Average 156 116 131 1.12 139 106 124 – 152 111 130 1.20 136 106 123 – 141 103 127 1.22 153 112 131 – 20 (k) Cash flows generated from operations Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results ¥ millions 3rd Quarter for the period 1 April 2021 to 31 December 2021 3rd Quarter for the period 1 April 2020 to 31 December 2020 10,522 4,918 25,536 2,180 342 (26) 7 (4,407) (126) (1,419) 10,443 (5,588) (140) 42,242 (3,483) (11,772) (2,688) 5,549 213 (8,698) 30,061 58,673 (5,173) 53,500 53,684 (9,116) 44,568 (13,504) 1,025 23,778 2,501 80 (964) (282) (505) (774) (1,583) 9,092 (845) (505) 17,514 (401) 7,301 (6,261) (5,566) (62) (4,588) 12,525 43,608 (3,096) 40,512 46,477 (5,158) 41,319 ¥ millions As at 31 March 2021 As at 31 March 2020 ¥ millions As at 31 December 2021 As at 31 December 2020 Profit/(loss) for the period from continuing operations Adjustments for: Taxation Depreciation Amortization Impairment Reversal of impairments Loss/(gain) on sale of property, plant, and equipment Gain on sale of subsidiaries and joint ventures Grants and deferred income Finance income Finance expenses Share of (profit)/loss from joint ventures and associates Other items Operating cash flows before movement in provisions and working capital Decrease in provisions and retirement benefit obligations Changes in working capital: – inventories – trade and other receivables – trade and other payables – contract balances Net change in working capital Cash flows generated from operations (l) Cash and cash equivalents Cash and cash equivalents Bank overdrafts Cash and cash equivalents Bank overdrafts 21 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (m) Hyperinflationary accounting adjustments As from the second quarter of FY 2019, the wholesale price index in Argentina indicated that cumulative 3-year inflation had exceeded 100 percent. Consequently, the Group has concluded that its subsidiaries in Argentina, each of which has the Argentine Peso as a functional currency, are currently operating in a hyperinflationary environment. The Group has therefore applied accounting adjustments to the underlying financial results and position of its subsidiaries in Argentina as required by IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. As required by IAS 29, the Group’s consolidated financial statements will include the results and financial position of its Argentinian subsidiaries, restated in terms of the measuring unit current at the period end date. For the restatement of results and financial positions of its Argentinian subsidiaries, the Group will apply the conversion coefficient derived from the Internal Wholesales Price Index (IPIM) published by Instituto Nacional de Estadística y Censos de la República Argentina (INDEC). IPIM and corresponding conversion coefficients from June 2006 are presented below. Internal Wholesales Price Index (IPIM) (30 June 2006 = 100) Conversion coefficient Balance sheet date 30 June 2006 31 March 2007 31 March 2008 31 March 2009 31 March 2010 31 March 2011 31 March 2012 31 March 2013 31 March 2014 31 March 2015 31 March 2016 31 March 2017 31 March 2018 31 March 2019 31 March 2020 31 March 2021 30 April 2021 31 May 2021 30 June 2021 31 July 2021 31 August 2021 30 September 2021 31 October 2021 30 November 2021 31 December 2021 100.0 103.9 120.2 128.7 146.5 165.5 186.7 211.1 265.6 305.7 390.6 467.2 596.1 970.9 1,440.8 2,046.4 2,156.8 2,228.4 2,299.2 2,368.1 2,426.5 2,512.6 2,600.9 2,666.7 2,746.7 27.467 26.445 22.850 21.342 18.750 16.598 14.710 13.009 10.343 8.984 7.032 5.879 4.608 2.829 1.906 1.342 1.274 1.233 1.195 1.160 1.132 1.093 1.056 1.030 1.000 The Group’s subsidiaries in Argentina will restate their non-monetary items held at historical cost, namely property, plant, and equipment, by applying the conversion coefficient based on when the items were initially recognized. Monetary items and non-monetary items held at current cost will not be restated, as they are expressed in terms of the measuring unit current at the period end date. The effect of inflation on the net monetary position of the Group’s Argentinian subsidiaries is presented in the finance expenses section of the income statement. The Argentinian subsidiaries’ income statement and cash flow statement will also be restated, applying the conversion coefficient for the current financial year as shown in the above table. For the purpose of consolidation, the results and financial position of the Group’s Argentinian subsidiaries are translated using the closing exchange rates at the period end date. Comparative financial statements are not restated based on IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’ para 42(b). 22 Nippon Sheet Glass Company, Limited [5202] FY 2022 3rd Quarter Consolidated Financial Results (n) Significant subsequent events There were no significant subsequent events. 23