太陽ホールディングス（4626） – Consolidated Financial Results for the Fiscal Year Ended March 31, 2022

ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 April 28, 2022 Company name: TAIYO HOLDINGS CO., LTD. Prime Market of Tokyo Stock Exchange Listing: 4626 Stock code: https://www.taiyo-hd.co.jp/en URL: Eiji Sato, President and CEO Representative: Sayaka Tomioka, Executive Officer, General Manager of Corporate Planning Department Inquiries: Tel: +81-3-5953-5200 Scheduled date of ordinary general meeting of shareholders: Scheduled date to commence dividend payments: Scheduled date to file annual securities report: Preparation of supplementary results briefing material on financial results: Yes Holding of financial results presentation meeting: June 18, 2022 June 20, 2022 June 20, 2022 Yes (for institutional investors and analysts) (Millions of yen with fractional amounts discarded, unless otherwise noted) 1. Consolidated financial results for the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (1) Operating results Net sales Operating income Ordinary income % % % % 97,966 80,991 21.0 14.7 17,958 13,943 28.8 52.6 18,062 13,819 30.7 55.3 11,803 23.9 9,529 154.1 (Millions of yen, % year on year) Profit attributable to owners of parent Fiscal year ended March 31, 2022 March 31, 2021 Note: Comprehensive income For the fiscal year ended March 31, 2022: For the fiscal year ended March 31, 2021: 15,611 millions of yen 12,012 millions of yen 30.0 % 380.6 % Basic earnings per share Diluted earnings per share Return on equity Ordinary income/total assets Operating income/net sales Fiscal year ended March 31, 2022 March 31, 2021 Yen 209.13 167.49 Yen － － % 14.6 13.1 % 9.8 8.6 Reference: Share of (profit) loss of entities accounted for using equity method For the fiscal year ended March 31, 2022: For the fiscal year ended March 31, 2021: – millions of yen – millions of yen Note: We performed a stock split with effect from October 1, 2021 whereby each common stock of Taiyo Holdings was divided into two sha res. We calculated the basic earnings per share under the assumption that this stock split was performed at the beginning of the previous consolidated fiscal year. % 18.3 17.2 ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (2) Financial position Total assets Net assets Equity ratio Net assets per share As of Millions of yen Millions of yen March 31, 2022 March 31, 2021 189,273 179,001 85,466 76,497 Reference: Equity (Net assets excluding non-controlling interests) As of March 31, 2022: 85,465 millions of yen As of March 31, 2021: 76,139 millions of yen % 45.2 42.5 Yen 1,522.11 1,348.42 Note: We performed a stock split with effect from October 1, 2021 whereby each common stock of Taiyo Holdings was divided into two shares. We calculated the net assets per share under the assumption that this stock split was performed at the beginning of the previous consolidated fiscal year. Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Cash and cash equivalents at the end of period 18,308 16,312 (11,258) (11,603) (11,279) 19,755 51,152 54,309 (Millions of yen) (3) Cash flows March 31, 2022 March 31, 2021 2. Cash dividends Annual cash dividends First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total Total cash dividends (Total) Dividend payout ratio (Consolidated) Ratio of dividends to net assets (Consolidated) Yen Yen Yen Yen Yen Millions of yen % % Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Fiscal year ending March 31, 2023 (Forecast) － － 65.10 65.10 95.10 160.20 4,561 (Note) 37.00 (Note) － 3,934 47.8 33.3 － 37.00 37.00 74.00 35.4 － － － 6.2 4.8 Note: We performed a stock split with effect from October 1, 2021 whereby each common stock of Taiyo Holdings was divided into two shares. Year-end cash dividends per share for fiscal year ended March 31, 2022 are indicated in an amount that took the impact of the stock split into account while total annual cash dividends are indicated as “−”. If the stock split is not taken into account, year-end cash dividends and annual cash dividends for fiscal year ended March 31, 2022 are 74.00 yen and 139.10 yen, respectively. 3. Consolidated earnings forecasts for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023) (Millions of yen, % year on year) Profit attributable to owners of parent Basic earnings per share Net sales Operating income Ordinary income % % % % Yen 55,600 15.0 10,400 11.8 10,400 9.4 7,200 7.2 128.23 109,400 11.7 19,000 5.8 18,800 4.1 12,800 8.4 227.96 Six months ending September 30, 2022 Fiscal year ending March 31, 2023 ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. * Notes (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None (2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements after error corrections Yes a. Changes in accounting policies due to revisions to accounting standards and other regulations: None b. Changes in accounting policies due to other reasons: None c. Changes in accounting estimates: None d. Restatement of prior period financial statements after error corrections: Note: See “3. Consolidated Financial Statements and Explanatory Notes (5) Notes to consolidated financial statements (Changes in accounting policies)” on page 15 in the Supplementary Schedules and Notes for further details. a. Total number of issued shares at the end of the period (including treasury shares) (3) Number of issued shares As of March 31, 2022 As of March 31, 2021 As of March 31, 2022 As of March 31, 2021 b. Number of treasury shares at the end of the period c. Average number of outstanding shares during the period Fiscal year ended March 31, 2022 Fiscal year ended March 31, 2021 58,083,128 shares 57,997,004 shares 1,933,885 shares 1,531,438 shares 56,442,900 shares 56,898,209 shares Notes: 1. The number of treasury shares includes the Company’s shares held by The Master Trust Bank of Japan, Ltd. (trust account for shares granted under the Employee Stock Ownership Plan (ESOP)). 2. We performed a stock split with effect from October 1, 2021 whereby each common stock of Taiyo Holdings was divided into two shares. We calculated the total number of issued shares at the end of the period, the number of treasury shares at the end of the period and the average number of outstanding shares during the period under the assumption that this stock split was performed at the beginning of the previous consolidated fiscal year. * Summary financial statements are not subject to review by a certified public accountant or audit firm. * Proper use of earnings forecasts, and other special matters (Disclaimer concerning forward-looking statements) The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. The Company makes no promise regarding achievement of any content in the forward-looking statements. Actual business and other results may differ substantially due to various factors. See “1. Overview of Operating Results (4) Future Forecasts” on page 4 of the attached materials for precautions on the use of earnings forecasts and the assumptions underlying earnings forecasts. ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Index of Supplementary Schedules and Notes 1. Overview of Operating Results………………………………………………………………………………………………………………. 2 (1) Overview of operating results for fiscal year ended March 31, 2022 ……………………………………………………….. 2 (2) Overview of financial position as of March 31, 2022 …………………………………………………………………………… 3 (3) Consolidated statements of cash flows ………………………………………………………………………………………………. 3 (4) Future forecasts ……………………………………………………………………………………………………………………………. 4 2. Basic Policy Concerning the Selection of Accounting Standards ………………………………………………………………….. 6 3. Consolidated Financial Statements and Explanatory Notes …………………………………………………………………………. 7 (1) Consolidated balance sheet……………………………………………………………………………………………………………… 7 (2) Consolidated statement of income and consolidated statement of comprehensive income …………………………… 9 (Consolidated statement of income) ………………………………………………………………………………………………… 9 (Consolidated statement of comprehensive income) ………………………………………………………………………….. 10 (3) Consolidated statement of changes in equity …………………………………………………………………………………….. 11 (4) Consolidated statement of cash flows ……………………………………………………………………………………………… 13 (5) Notes to consolidated financial statements ……………………………………………………………………………………….. 15 (Notes on premise of going concern) ……………………………………………………………………………………………… 15 (Changes in accounting policies) …………………………………………………………………………………………………… 15 (Segment information and related information)………………………………………………………………………………… 16 (Per share information) ……………………………………………………………………………………………………………….. 21 (Significant subsequent events) …………………………………………………………………………………………………….. 22 4. Other ………………………………………………………………………………………………………………………………………………. 23 (1) Changes in Directors and Audit & Supervisory Board Members………………………………………………………. 23 – 1 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. 1. Overview of Operating Results (1) Overview of operating results for fiscal year ended March 31, 2022 Net sales for the consolidated fiscal year ended March 31, 2022 were 97,966 million yen (up 21.0% year on year). Operating income was 17,958million yen (up 28.8% year on year), ordinary income was 18,062 million yen (up 30.7% year on year), and profit attributable to owners of parent was 11,803 million yen (up 23.9 % year on year). Results by segment were as follows. The Group divides its business into two segments, Electronic Materials business and Medical and Pharmaceutical business, based on operating subsidiaries. Electronic Materials business In rigid board materials, many products showed strong performance compared to last fiscal year, including display-related materials, automotive related products, materials for consumer electronics, and materials for smartphones. The use of high reflective white dry film-type solder resist, a new product for mini LED displays, contributed to substantial growth in sales volume for display related materials, in particular. Automotive related products also performed well, recording gradual growth despite vehicle production cuts necessitated by the shortage of semiconductors and other vehicle parts from the third quarter onward. The growth was supported by a recovery in demand compared to last fiscal year, when vehicle sales slumped worldwide due to the stagnant economy and decrease in demand caused by COVID-19. Sales volume rose year on year as a result. Sales of semiconductor package board materials remained at a high level due to global growth in demand for semiconductors continuing from last fiscal year. The spread of COVID-19 triggered a worldwide trend towards work from home, whitch has resulted in a dramatic expansion in data volume. Growth in capital investment in 5th-generation mobile communication systems (5G) and other data centers and infrastructure, and continuing evolution in the performance of electronic devices, addition of functions, and other factors drove high-level growth of the semiconductor market. Therefore sales volume consequently outperformed the previous fiscal year. The average exchange rate for fiscal year ended March 31, 2022 was JPY 112.9/USD. The yen weakened by 6.7 yen compared to the average exchange rate of JPY 106.2/USD last fiscal year, improving profitability. As a result, net sales amounted to 71,093 million yen (up 33.9% year on year), and segment profit came to 17,082 million yen (up 52.4% year on year.) Medical and Pharmaceutical business Net sales of Taiyo Pharma Co., Ltd. outperformed year on year in its pharmaceutical manufacturing and marketing business. Sales were strong despite the negative impact of drug price revisions, owing to the completion of succession of approval to manufacture and sell four long-listed products transferred from AstraZeneca K.K., a subsidiary of AstraZeneca plc. Other companies also ceased supplying some generics and this also affected the performance. The pharmaceutical contract manufacturing business of Taiyo Pharma Tech Co., Ltd. saw a continued decline in volume consigned for some products related to infectious disease due to behavioral changes accompanying the control the spread of COVID-19. Production cuts by customers accompanying a change in production plans also contributed to sluggish sales. As a result, net sales amounted to 23,467 million yen (down 4.4% year on year), and segment profit came to 2,400 million yen (down 37.4 % year on year.) – 2 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (2) Overview of financial position as of March 31, 2022 The following shows the status of assets, liabilities and net assets as of March 31, 2022. As of March 31, 2021 (Millions of yen) As of March 31, 2022 (Millions of yen) Change (Millions of yen) Main factors (Comparison with the end of the previous fiscal year) Current assets 92,937 98,766 5,828 Non-current assets 86,063 90,507 4,443 Total assets 179,001 189,273 10,271 Total liabilities 102,504 103,806 1,301 Increases of 5,030 million yen in notes and accounts receivable – trade, 1,474 million yen in merchandise and finished goods, and 1,416 million yen in raw materials and supplies Decrease of 3,147 million yen in cash and deposits Increases of 4,109 million yen in buildings and structures, and 2,142 million yen in land Decrease of 2,024 million yen in sales rights Increases of 1,348 million yen in notes and accounts payable – trade, 2,738 million yen in short-term borrowings, 1,168 million yen in accounts payable – other, 1,106 million yen in income taxes payable, and 640 million yen in deferred tax liabilities Decrease of 5,804 million yen in long-term borrowings (including current portion of long-term borrowings) Positive factors: Recorded 11,803 million yen in profit attributable to owners of parent, and 3,436 million yen increase in the foreign currency translation adjustment account Negative factors: 4,547 million yen decrease in dividends of surplus and 1,500 million yen in treasury share purchases Total net assets 76,497 85,466 8,969 Total liabilities and net assets 179,001 189,273 10,271 (3) Consolidated statements of cash flows The following is the status of cash flows for the fiscal year ended March 31, 2022. Main factors Fiscal year ended March 31, 2022 (Millions of yen) 18,308 Cash inflows included 16,959 million yen in profit before income taxes, depreciation of 7,497 million yen; Cash outflows included an increase in inventories of (2,407) million yen and an increase in trade receivables of (2,504) million yen. (11,258) Cash outflows included (9,134) million yen for purchase of property, plant and equipment and (1,211) million yen for purchase of intangible assets. (11,279) The cash inflow resulted from 5,600 million yen in long-term borrowings. Cash outflows included (11,469) million yen in repayment of long-term borrowings and (4,543) million yen in dividends paid. Net cash provided by (used in) operating activities Net cash provided by (used in) investing activities Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at end of period (3,157) 51,152 – 3 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (4) Future forecasts In the future, the global economy will see a slowdown of end demand for PCs, smartphones, and other electronic devices as the proliferation in demand runs full course compared to the current fiscal year when telecommuting took root globally due to the COVID-19 pandemic. A resurgence in infections from a new COVID-19 variant and the situation in the Russian Federation and Ukraine are expected to result in continued steep increases in raw materials prices and shipping costs, and yen weakness. Meanwhile, expectations are rising for convergence of COVID-19 through vaccination and fiscal stimulus policies in various countries, and continued strong demand for semiconductors is anticipated. We therefore project growth in net sales and profit next fiscal year, despite such opaque conditions. Electronic Materials business In rigid board materials, we expect sales of many products to trend at a high level as they did in fiscal year ended March 31, 2022, including automotive related products, materials for consumer electronics, materials for smartphones, and display-related materials. We also foresee an increase in demand in automotive related products in particular, as production activities of automotive manufacturers rebound gradually despite the continued shortage of semiconductors for vehicles, and due to evolution of electrification, connectedness, and Advanced Driver-Assistance Systems (ADAS). In semiconductor package board materials, continued investment in servers, datacenters, and other infrastructure is expected as IoT, AI, virtual space, and other technologies penetrate society. We also expect continuing evolution in electronic device performance, addition of functions, and other factors to contribute to a high level of sales. The ratio of overseas sales exceeds 90% in the Electronic Materials business. We expect the average exchange rate during next fiscal year to weaken by 7.1 yen to JPY 120.0/USD, compared to the average exchange rate of JPY 112.9/USD in fiscal year ended March 31, 2022 and expect this to increase profitability. We therefore forecast an increase in both net sales and segment profit in fiscal year ending March 31, 2023. Medical and Pharmaceutical business In the pharmaceutical manufacturing and marketing business of Taiyo Pharma Co., Ltd., we predict continuing substitute demand for some generics that other companies have ceased supplying for a certain period of time. The completion of succession of approval to manufacture and sell four long-listed products transferred from AstraZeneca K.K., a subsidiary of AstraZeneca plc, will increase sales and contribute to performance for the full year. However, we forecast an increase in net sales and a decline in profit due to the decline in sales prices from drug price revisions in April 2022 and to an increase in selling, general and administrative expenses. While we predict an increase customer consignment volume in the pharmaceutical contract manufacturing business of Taiyo Pharma Tech Co., Ltd., we forecast an increase in sales and a decrease in profit due to an increase in the cost of sales and in selling, general and administrative expenses. We therefore forecast growth in net sales and a decline in segment profit in fiscal year ending March 31, 2023. The forecasts in these materials are based on information available at the time results were announced. Actual results may differ from the forecasts due to various future factors. – 4 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Fiscal year ending March 31, 2023 (Forecast) Fiscal year ended March 31, 2022 (Actual results) Net sales (Millions of yen) Operating income (Millions of yen) Ordinary income (Millions of yen) Profit attributable to owners of parent (Millions of yen) Basic earnings per share (Yen) 109,400 19,000 18,800 12,800 227.96 97,966 17,958 18,062 11,803 209.13 Rate of change (%) 11.7 5.8 4.1 8.4 9.0 Note: The outlook for the fiscal year ending March 31, 2023 is based on an average exchange rate of 120.0 yen against the US dollar. The average exchange rate for the fiscal year ended March 31, 2022 is 112.9 yen against the US dollar. – 5 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. 2. Basic Policy Concerning the Selection of Accounting Standards The Group adopts the Japanese GAAP as the accounting standards in order to ensure comparability among other domestic companies in the same industry. – 6 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. 3. Consolidated Financial Statements and Explanatory Notes (1) Consolidated balance sheet As of March 31, 2021 As of March 31, 2022 (Millions of yen) Assets Current assets Cash and deposits Notes and accounts receivable – trade Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Tools, furniture and fixtures, net Land Other Construction in progress Total property, plant and equipment Intangible assets Goodwill Sales rights Customer-related assets Other Total intangible assets Investments and other assets Investment securities Shares of subsidiaries and associates Deferred tax assets Retirement benefit asset Other Allowance for doubtful accounts Total investments and other assets 54,705 22,527 6,621 1,530 5,297 2,332 (77) 92,937 16,458 11,131 1,332 11,827 4,464 1,134 46,348 6,404 19,508 6,428 2,608 34,949 2,766 166 272 305 1,427 (171) 4,765 51,557 27,558 8,096 1,573 6,714 3,397 (131) 98,766 20,567 10,450 1,906 13,969 4,031 1,329 52,255 5,972 17,483 5,952 2,650 32,058 3,183 830 460 410 1,482 (174) 6,192 Total non-current assets Total assets 86,063 179,001 90,507 189,273 – 7 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. As of March 31, 2021 As of March 31, 2022 (Millions of yen) Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Current portion of long-term borrowings Accounts payable – other Income taxes payable Provision for bonuses Other provisions Other Total current liabilities Non-current liabilities Deferred tax liabilities Long-term borrowings Retirement benefit liability Other provisions Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets – 8 – 7,907 10,494 11,391 3,936 1,434 907 139 1,894 38,107 2,862 59,333 150 87 853 1,110 64,397 102,504 9,499 14,985 53,065 (3,365) 74,184 203 1,751 (0) 1,954 357 76,497 179,001 9,255 13,232 16,537 5,105 2,541 1,308 82 1,338 49,403 3,502 48,383 116 87 1,025 1,287 54,403 103,806 9,612 14,734 60,321 (4,752) 79,916 321 5,187 40 5,549 1 85,466 189,273 ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (2) Consolidated statement of income and consolidated statement of comprehensive income (Consolidated statement of income) (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Gain on investments in investment partnerships Selling, general and administrative expenses Net sales Cost of sales Gross profit Operating income Non-operating income Interest income Dividend income Compensation income Subsidy income Outsourcing service income Other Total non-operating income Non-operating expenses Interest expenses Commission expenses Loss on retirement of non-current assets Foreign exchange losses Loss on valuation of investment securities Other Total non-operating expenses Ordinary income Extraordinary losses Impairment losses Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent – 9 – 80,991 46,125 34,865 20,922 13,943 47 25 － 74 41 43 160 393 228 10 90 118 － 70 517 246 199 445 13,374 3,031 745 3,777 9,597 67 9,529 97,966 55,099 42,866 24,908 17,958 48 26 286 136 188 14 189 890 261 11 109 158 199 46 786 － 1,102 1,102 16,959 4,564 396 4,960 11,998 194 11,803 Loss on valuation of shares of subsidiaries and associates 13,819 18,062 ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (Consolidated statement of comprehensive income) Profit Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 9,597 195 2,227 (7) 2,414 12,012 11,913 98 11,998 117 3,454 40 3,612 15,611 15,398 213 – 10 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (3) Consolidated statement of changes in equity Fiscal year ended March 31, 2021 Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Millions of yen) Total shareholders’ equity Balance at beginning of period 9,428 14,913 47,260 (1,950) 69,651 Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of shares of consolidated subsidiaries Purchase of treasury shares Disposal of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period (3,724) 9,529 71 9,499 71 14,985 5,804 53,065 85 (1,415) (3,365) Issuance of new shares 71 71 (1,500) (1,500) Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Balance at beginning of period 8 (444) 7 (429) 301 69,523 Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of shares of consolidated subsidiaries Issuance of new shares Purchase of treasury shares Disposal of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 195 195 203 (7) (7) (0) 2,384 2,384 1,954 56 56 357 2,196 2,196 1,751 – 11 – (3,724) 9,529 － 143 85 4,533 74,184 (3,724) 9,529 － 143 (1,500) 85 2,440 6,973 76,497 ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Fiscal year ended March 31, 2022 Share capital Capital surplus Retained earnings Treasury shares Shareholders’ equity (Millions of yen) Total shareholders’ equity Balance at beginning of period 9,499 14,985 53,065 (3,365) 74,184 Issuance of new shares 113 Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of shares of consolidated subsidiaries Purchase of treasury shares Disposal of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period (363) 113 (4,547) 11,803 (1,500) (1,500) 113 113 113 9,612 (250) 14,734 7,256 60,321 (1,387) (4,752) 5,731 79,916 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Balance at beginning of period 203 1,751 (0) 1,954 357 76,497 Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of shares of consolidated subsidiaries Issuance of new shares Purchase of treasury shares Disposal of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 117 117 321 3,436 3,436 5,187 40 40 40 3,594 3,594 5,549 (356) (356) 1 85,466 (4,547) 11,803 (363) 226 (4,547) 11,803 (363) 226 (1,500) 113 3,237 8,969 – 12 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (4) Consolidated statement of cash flows (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 13,374 6,994 199 483 10 － 246 (43) 90 － (45) (45) 1 0 100 (72) 228 (764) (1,650) (1,679) (67) 856 18,211 72 (229) － (1,742) 16,312 (673) 372 (4,080) (6,994) (304) － 77 16,959 7,497 1,102 487 11 199 － (14) 109 (286) (103) (64) (35) 27 378 (75) 261 (555) (2,504) (2,407) (75) 868 21,781 75 (259) 286 (3,575) 18,308 (500) 516 (9,134) (1,211) (464) (650) 186 Cash flows from operating activities Profit before income taxes Depreciation Impairment losses Amortization of goodwill Commission expenses Loss (gain) on valuation of investment securities Loss on valuation of shares of subsidiaries and associates Loss (gain) on investments in investment partnerships Loss on retirement of non-current assets Compensation income Subsidy income Decrease (increase) in retirement benefit asset Increase (decrease) in retirement benefit liability Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Interest and dividend income Interest expenses Decrease (increase) in consumption taxes refund receivable Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Other, net Subtotal Interest and dividends received Interest paid Proceeds from compensation Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Purchase of intangible assets Purchase of investment securities Purchase of shares of subsidiaries and associates Other, net – 13 – Net cash provided by (used in) investing activities (11,603) (11,258) ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 (Millions of yen) Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Purchase of treasury shares Dividends paid Dividends paid to non-controlling interests Proceeds from issuance of shares Purchase of shares of subsidiaries not resulting in change in scope of consolidation Other, net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 5,030 28,795 (8,658) (1,510) (3,724) (41) 60 － (195) 19,755 730 25,194 29,115 54,309 1,616 5,600 (11,469) (1,512) (4,543) (68) 142 (865) (178) (11,279) 1,072 (3,157) 54,309 51,152 – 14 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (5) Notes to consolidated financial statements (Notes on premise of going concern) Not applicable (Changes in accounting policies) (Implementation of the Accounting Standard for Revenue Recognition) The revised Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020; hereafter, “Revenue Recognition Accounting Standard”) and related guidance were implemented from the beginning of fiscal year ended March 31, 2022. Under this standard, the anticipated amount to be received in return for goods or services promised to a customer is recognized as revenue upon transfer of control over the goods or services to the customer. We have applied the alternative treatment specified in Paragraph 98 of the Implementation Guidance on Revenue Recognition Accounting Standard for merchandise and products sold in Japan. Under this alternative treatment, revenue is recognized upon shipment when there is a normal period of time from shipment until control of merchandise or products is transferred to the customer. The implementation of the Revenue Recognition Accounting Standards and related guidance follows the transitional treatment in the exception clause of Paragraph 84 of the Revenue Recognition Accounting Standard. The new accounting standard was applied to the balance of retained earnings from the beginning of the period and retained earnings were adjusted for the cumulative impact assuming application of the new accounting standard retroactively before the beginning of the fiscal year ended March 31, 2022. This change had no impact on profit/loss and the opening balance of retained earnings for fiscal year ended March 31, 2022. (Implementation of the Accounting Standard for Fair Value Measurement) The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019; hereafter, “Fair Value Accounting Standard”) and related guidance were implemented from the beginning of fiscal year ended March 31, 2022. In accordance with the transitional treatment specified in Paragraph 19 of the Fair Value Accounting Standard and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new accounting policy specified in the Fair Value Accounting Standard and related standards will be applied in the future. This change had no impact on the consolidated financial statements for fiscal year ended March 31, 2022. – 15 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (Segment information and related information) [Segment information] 1. Overview of reportable segments The reportable segments of the Group are components of the Group whose separate financial information is available. These segments are periodically evaluated by the Board of Directors in deciding how to allocate management resources and in assessing the performance. The Group has operating subsidiaries for different products and services. Each operating subsidiary formulates comprehensive domestic and overseas strategies and conducts business activities for the products and services it handles. Group business segments are therefore based on these operating subsidiaries, and are divided into two reportable segments: The Electronic Materials business and the Medical and Pharmaceutical business. The Electronic Materials business develops, manufactures, sells, and procures and sells Printed Wiring Board materials and chemical products for use in electronic components. The Medical and Pharmaceutical business engages in manufacturing and marketing of ethical pharmaceuticals, and provides contract development and manufacturing organization (CDMO) services of ethical pharmaceuticals. 2. Information on the calculation of net sales, profit or loss, assets and other items by reportable segment The accounting method applied for the reportable segments is complied with the accounting policies adopted for preparation of consolidated financial statements. Profit by reportable segment represents operating income. Inter-segment revenue and transactions are based on the market prices. 3. Information regarding net sales, profit or loss, assets and other items by reportable segment Fiscal year ended March 31, 2021 Reportable segments Electronic Materials Medical and Pharmaceutical Total sales Other (Note 1) Total Inter-segment sales or transfers Total sales Net sales External sales Segment profit Segment assets Other items Depreciation (Note 2) Increase in property, plant and equipment and intangible assets 53,096 24,553 77,650 － 53,096 11,208 62,180 1,718 3,415 － 24,553 3,837 62,058 4,402 8,122 － 77,650 15,046 124,239 6,120 11,537 Notes: 1. The “Other” category represents operating segments not included in reportable segments, and includes energy business, food business, fine chemicals business, and ICT business. 2. Depreciation does not include amortization of goodwill. (Millions of yen) 3,340 147 3,487 32 7,788 380 417 80,991 147 81,138 15,079 132,027 6,501 11,955 – 16 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Fiscal year ended March 31, 2022 Reportable segments Electronic Materials Medical and Pharmaceutical Total sales Other (Note 1) Total (Millions of yen) Net sales External sales Inter-segment sales or transfers Total sales Segment profit Segment assets Other items Depreciation (Note 2) Increase in property, plant and equipment and intangible assets 71,093 23,467 94,560 － 71,093 17,082 78,238 2,263 3,222 － 23,467 2,400 65,147 4,248 6,279 － 94,560 19,482 6,512 9,501 3,405 154 3,560 28 382 332 143,385 8,027 151,412 Notes: 1. The “Other” category represents operating segments not included in reportable segments, and includes energy business, food business, fine chemicals business, and ICT business. 2. Depreciation does not include amortization of goodwill. 4. Differences between total amounts in reportable segments and the amount recorded on consolidated financial statements, and details of thereof (reconciliation) (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Net sales Reportable segments total “Other” segment sales Inter-segment eliminations Net sales in the consolidated statement of income Reportable segments total “Other” segment profit Inter-segment eliminations Profit/loss not allocated to business segments (Note) Operating income in the consolidated statement of income Profit 77,650 3,487 (147) 80,991 15,046 32 (5) (1,130) 13,943 Note: Profit/loss primarily related to the holding company (company filing the consolidated financial statements). (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 97,966 154 98,121 19,511 6,895 9,834 94,560 3,560 (154) 97,966 19,482 28 (8) (1,543) 17,958 – 17 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. Assets Reportable segments total “Other” segment assets Inter-segment eliminations Assets not allocated to business segments (Note) Reclassification by tax effect accounting Total assets in the consolidated balance sheet (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 124,239 7,788 (121) 47,206 (111) 179,001 143,385 8,027 (36) 38,041 (143) 189,273 Note: Assets primarily related to the holding company (company filing the consolidated financial statements). Reportable segments total Other Adjustments (Note) (Millions of yen) Amount on the consolidated financial statements FY ended March 31, 2021 FY ended March 31, 2022 FY ended March 31, 2021 FY ended March 31, 2022 FY ended March 31, 2021 FY ended March 31, 2022 FY ended March 31, 2021 FY ended March 31, 2022 Depreciation 6,120 6,512 380 382 492 601 6,994 7,497 11,537 9,501 417 332 1,168 1,678 13,124 11,513 Note: Primarily related to the holding company (company filing the consolidated financial statements). Other items Increase in property, plant and equipment and intangible assets [Related information] Ⅰ Fiscal year ended March 31, 2021 1. Information by product and service 2. Information by region (1) Net sales Electronic Materials Medical and Pharmaceutical Other Total External sales 53,096 24,553 3,340 80,991 Japan China Taiwan Korea Other Total 32,877 26,259 6,863 10,443 4,546 80,991 Note: Net sales are classified by country or region based on the location of customers. (2) Property, plant and equipment Japan China Taiwan Korea Other Total 36,852 2,519 3,801 1,667 1,508 46,348 (Millions of yen) (Millions of yen) (Millions of yen) – 18 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. 3. Information by main customer Customer Name Net sales Name of Related Segment Daiichi Sankyo Co., Ltd. (Note) 13,985 Medical and Pharmaceutical Business Note: Shows aggregated net sales posted to Daiichi Sankyo Espha Co., Ltd., which is affiliated with the Daiichi Sankyo Co., Ltd. corporate group. Ⅱ Fiscal year ended March 31, 2022 1. Information by product and service 2. Information by region (1) Net sales Electronic Materials Medical and Pharmaceutical Other Total External sales 71,093 23,467 3,405 97,966 Japan China Taiwan Korea Other Total 32,472 37,019 8,162 15,294 5,018 97,966 Note: Net sales are classified by country or region based on the location of customers. (2) Property, plant and equipment Japan China Taiwan Korea Other Total 40,743 3,348 4,198 1,773 2,191 52,255 3. Information by main customer Customer Name Net sales Name of Related Segment Daiichi Sankyo Co., Ltd. (Note) 12,059 Medical and Pharmaceutical Business Note: Shows aggregated net sales posted to Daiichi Sankyo Espha Co., Ltd., which is affiliated with the Daiichi Sankyo Co., Ltd. corporate group. [Information regarding impairment loss on non-current assets by reportable segment] Fiscal year ended March 31, 2021 Reportable segments Electronic Materials Medical and Pharmaceutical Total Other Corporate and Elimination Total Impairment loss － 199 199 － － 199 Fiscal year ended March 31, 2022 Reportable segments Electronic Materials Medical and Pharmaceutical Total Other Corporate and Elimination Total Impairment loss 893 333 1,227 － (124) 1,102 Note: The figure for “Corporate and Elimination” is the amount for the elimination of unrealized profits for intangible assets. – 19 – (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) (Millions of yen) ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. [Information on amortization of goodwill and the unamortized balance by reportable segment] Fiscal year ended March 31, 2021 (Millions of yen) Reportable segments Electronic Materials Medical and Pharmaceutical Total Other Corporate and Elimination Total Amortization for fiscal year ended March 31, 2021 Remaining balance as of March 31, 2021 42 429 472 556 5,803 6,359 Note: The figure for “Other” is the amount for the software development business. Fiscal year ended March 31, 2022 Reportable segments Electronic Materials Medical and Pharmaceutical Total Other Corporate and Elimination Total (Millions of yen) 10 45 10 34 － － － － 483 6,404 487 5,972 Amortization for fiscal year ended March 31, 2022 Remaining balance as of March 31, 2022 47 429 477 564 5,373 5,937 Note: The figure for “Other” is the amount for the software development business. [Information on negative goodwill by reportable segment] Fiscal year ended March 31, 2021 Not applicable Fiscal year ended March 31, 2022 Not applicable – 20 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (Per share information) Net assets per share Basic earnings per share Notes: Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 1,348.42 yen 1,522.11 yen 167.49 yen 209.13 yen Diluted earnings per share is not presented because there are no dilutive shares. 1. 2. In calculating net assets per share, treasury shares are deducted, and shares held in the trust account for shares granted under the Employee Stock Ownership Plan (ESOP) are included in the treasury shares (previous consolidated fiscal year: 267,660 shares (after stock split); current consolidated fiscal year: 205,420 shares). 3. We performed a stock split effective from October 1, 2021 whereby each common stock of Taiyo Holdings was divided into two shares. We calculated the net assets per share and basic earnings per share under the assumption that this stock split was performed at the beginning of the previous consolidated fiscal year. 4. The basis for calculating basic earnings per share is shown below. Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Profit attributable to owners of parent (Millions of yen) Amount not attributable to common shareholders (Millions of yen) Profit attributable to owners of parent for common shares (Millions of yen) 9,529 － 9,529 11,803 － 11,803 Average number of outstanding common shares during the period (Shares) 56,898,209 56,442,900 Note: In calculating the average number of outstanding common shares during the period, treasury shares are deducted and shares held in the trust account for shares granted under the Employee Stock Ownership Plan are included in the treasury shares (previous consolidated fiscal year: 282,269 shares (after stock split); current consolidated fiscal year: 225,177 shares). – 21 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. (Significant subsequent events) Not applicable – 22 – ENGLISH TRANSLATION OF JAPANESE-LANGUAGE DOCUMENT This is a translation of the original Japanese-language document and is provided for convenience only. In the event of any discrepancy between this translated document and Japanese original, the original shall prevail. 4. Other (1) Changes in Directors and Audit & Supervisory Board Members 1. Director candidates Eiji Sato (Reappointment) Eiji Takehara (Reappointment) Hitoshi Saito (Reappointment) Masao Arima (New nomination) Tomoyuki Tanaka (New nomination) Masayuki Hizume (Reappointment) Keiko Tsuchiya (Reappointment) Asako Aoyama (Reappointment) Yumiko Kamada (Reappointment) 2. Directors planning to retire Toshifumi Tamaki 3. Audit & Supervisory Board Member candidates Hidenori Sugiura (Reappointment) Kaori Terunuma (New nomination) Ikumi Sato (New nomination) 4. Audit & Supervisory Board Members planning to retire Masaru Oki 5. Scheduled effective date of assumption June 18, 2022 * Notification will be promptly provided concerning the details of representative, full-time, outside, independent, and other positions as soon as they are determined. – 23 –