東京応化工業（4186） – [Delayed]Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2022 [J-GAAP]

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending December 31, 2022 [J-GAAP] May 11, 2022 Tokyo Ohka Kogyo Co., Ltd. Tokyo Stock Exchange (Prime Market) 4186 Company name: Listing: Securities Code: Representative: Noriaki Taneichi, President and Chief Executive Officer Inquiries: Daisuke Matsuyama, General Manager, Accounting Division TEL: +81-44-435-3000 Scheduled date to file quarterly securities report: Scheduled date to commence dividend payments: Preparation of supplementary material on financial results: Yes Holding of financial results briefing: URL: https://www.tok.co.jp/eng May 12, 2022 None – (Yen amounts are rounded down to millions, unless otherwise noted.) 1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 2022 (January 1, 2022 to March 31, 2022) (1) Consolidated Operating Results (% indicates the rate of increase/decrease year-on-year.) Net sales Operating income Ordinary income March 31, 2022 March 31, 2021 First three months ended Millions of yen % Millions of yen 7,230 39,599 4,953 30,971 First three months ended March 31, 2022 ¥7,465 million [ 6.6%] First three months ended March 31, 2021 ¥7,004 million [ – %] % Millions of yen 6,944 4,808 (Note) Comprehensive income: 44.4 47.5 27.9 11.5 Profit attributable to owners of parent % Millions of yen 4,970 3,435 46.0 53.6 % 44.7 53.3 Basic earnings per share Diluted earnings per share First three months ended March 31, 2022 March 31, 2021 Yen 123.75 82.75 Yen 123.53 82.55 (2) Consolidated Financial Position As of March 31, 2022 December 31, 2021 Total assets Net assets Equity ratio Net assets per share Millions of yen 220,772 217,264 Millions of yen 167,803 165,190 % 71.8 71.7 Yen 3,947.16 3,880.18 (Reference) Equity: As of March 31, 2022: ¥158,542 million As of December 31, 2021: ¥155,829 million 2. Cash Dividends First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total Annual dividends per share Fiscal year ended December 31, 2021 Fiscal year ending December 31, 2022 Fiscal year ending December 31, 2022 (Forecast) (Note) Revisions to the most recently disclosed dividend forecasts: None – – Yen Yen 62.00 78.00 Yen – – Yen 94.00 80.00 Yen 156.00 158.00 3. Consolidated Financial Results Forecast for Fiscal Year Ending December 31, 2022 (January 1, 2022 to December 31, 2022) Net sales Operating income (% indicates the rate of increase/decrease against the same period of the previous year) Basic earnings per share Profit attributable to owners of parent Ordinary income First half Full year Millions of yen 78,500 162,100 % Millions of yen 12,000 24,600 21.1 15.7 % Millions of yen 12,300 25,100 25.3 18.8 % Millions of yen 8,000 16,700 22.4 15.9 % 25.0 (5.9) Yen 199.14 415.58 (Note) Revisions to the most recently disclosed earnings forecasts: None * Notes scope of consolidation): None (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in (2) Application of special accounting treatment in preparing the quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement (i) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes (ii) Changes in accounting policies due to other reasons: None (iii) Changes in accounting estimates: None (iv) Restatement: None (Note): Please refer to “2. Quarterly Consolidated Financial Statements and Major Notes, (3) Notes to the Quarterly Consolidated Financial Statements (Changes in Accounting Policies)” on page 10. (4) Number of issued shares (common shares) (i) Total number of issued shares at the end of the period (including treasury shares) (ii) Number of treasury shares at the end of the period As of March 31, 2022 As of December 31, 2021 As of March 31, 2022 As of December 31, 2021 (iii) Average number of shares outstanding during the period First three months ended March 31, 2022 First three months ended March 31, 2021 42,600,000 shares 42,600,000 shares 2,433,761 shares 2,439,651 shares 40,162,516 shares 41,512,737 shares * The Financial Results report is outside the scope of a quarterly review by certified public accountants or an audit firm. * Explanation of the proper use of earnings forecasts and other special notes The earnings forecasts stated in this report are based on the information available as of the date of the release of this report, and actual results may differ from these forecasts due to a variety of factors. ○Table of contents of the attached document 1. Qualitative Information on Consolidated Financial Results for the First Three Months of the Fiscal Year Ending December 2022 ··················································································································· 4 (1) Explanation about Operating Results ···················································································· 4 (2) Explanation about Financial Position ···················································································· 5 (3) Explanation about Future Forecast Information including Consolidated Earnings Forecasts ·················· 5 2. Quarterly Consolidated Financial Statements and Major Notes ························································· 6 (1) Quarterly Consolidated Balance Sheet ·················································································· 6 (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income ····· 8 Quarterly Consolidated Statements of Income Quarterly Consolidated Statement of Income for the First Three Months ······································· 8 Quarterly Consolidated Statement of Comprehensive Income Quarterly Consolidated Statement of Comprehensive Income for the First Three Months ················· 9 (3) Notes to the Quarterly Consolidated Financial Statements ··························································· 10 (Notes Concerning Going Concern Assumption) ······································································ 10 (Significant Changes in Shareholders’ Equity) ······································································· 10 (Changes in Accounting Policies) ························································································ 10 (Additional Information) ·································································································· 11 (Segment Information) ··································································································· 12 – 1 – 1. Qualitative Information on Consolidated Financial Results for the First Three Months of the Fiscal Year Ending December 2022 (1) Explanation about Operating Results During the three months ended March 31, 2022, the global economy continued to show signs of recovery in many regions while the effect of COVID-19 weighed on certain Asian economies. Amid such circumstances, the Group launched “TOK Medium-Term Plan 2024,” a three-year medium-term plan ending in FY2024, under the management vision to become “The e-Material Global Company” contributing to a sustainable future through chemistry. With the slogan of “Boost up TOK!!,” the Plan aims to attain the long-term vision TOK Vision 2030 by developing and promoting the following five company-wide strategies: (1) Increase global market share of cutting-edge photoresist, (2) Acquire and create core technologies in electronic materials and new fields, (3) Secure stable supply of high-quality products and establish an optimal production system for the Group, (4) Improve employee engagement and promote people-oriented management, and (5) Build sound and efficient management foundation. In the Material Business, net sales significantly increased year on year due to a growth in the semiconductor market driven by the spread of 5G and IoT and the growing data server market, etc. In the Equipment Business, net sales increased year on year against a backdrop of growing demand for high performance semiconductors. As a result, for the three months ended March 31, 2022, the Group recorded net sales of ¥39,599 million (up 27.9% year-on-year), operating income of ¥6,944 million (up 44.4% year-on-year), ordinary income of ¥7,230 million (up 46.0% year-on-year), and profit attributable to owners of parent of ¥4,970 million (up 44.7% year-on-year). Effective January 1, 2022, the Group applied the “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 29, March 31, 2020), etc., and its impact was insignificant. Please see “2. Quarterly Consolidated Financial Statements and Major Notes (3) Notes to Quarterly Consolidated Financial Statements (Changes in Accounting Policies)” for details. Operating results by segment are as follows: 1) Material Business Net sales in the Material Business segment, excluding internal transactions were ¥39,162 million (up 27.8% year-on-year), and operating income was ¥8,216 million (up 33.6% year-on-year), mainly due to strong sales of electronic functional materials and high-purity chemicals. Three months ended March 31, 2021 Three months ended March 31, 2022 Change % 30,637 6,151 39,162 8,216 8,525 2,065 27.8% 33.6% (Millions of yen) Net sales Operating income Overview by division is as follows. In the Electronic Functional Materials Division, net sales increased to ¥21,093 million (up 16.3% year-on-year). This was mainly due to increased net sales because sales of semiconductor photoresists, etc. remained steady, supported by spread of 5G and IoT, etc. and strong semiconductor demand for data servers although sales of photoresists for Micro Electro Mechanical Systems (MEMS), high-density integration materials, decreased as a result of changes in users’ demand. Net sales in the High-Purity Chemicals Division increased significantly to ¥17,870 million (up 43.1% year-on-year) mainly due to increased net sales because sales of chemicals attached to semiconductor photoresists used in the semiconductor production process remained steady. 2) Equipment Business Net sales in the Equipment Business segment, excluding internal transactions were ¥436 million (up 30.7% year-on-year), and operating loss decreased by ¥122 million from a year earlier to ¥1 million mainly because sales of materials related to wafer handling system Zero Newton® increased year on year. Three months ended March 31, 2021 Three months ended March 31, 2022 (Millions of yen) Change % Net sales Operating loss 334 (124) 436 (1) 102 122 30.7% － – 2 – (2) Explanation about Financial Position (Assets) Total assets as of March 31, 2022 increased by ¥3,508 million from December 31, 2021 to ¥220,772 million. Total current assets increased by ¥1,699 million mainly due to an increase in merchandise and finished goods of ¥1,173 million. Total non-current assets increased by ¥1,808 million mainly because other in property, plant and equipment increased by ¥1,875 million due to capital investments. (Liabilities) Total liabilities as of March 31, 2022 increased by ¥895 million from December 31, 2021 to ¥52,968 million mainly because current liabilities increased by ¥1,068 million due to an increase in notes and accounts payable – trade. (Net assets) Total net assets as of March 31, 2022 increased by ¥2,613 million from December 31, 2021 to ¥167,803 million mainly because retained earnings increased by ¥1,175 million due to recording profit and foreign currency translation adjustment increased by ¥1,841 million due to weak yen. As a result, the equity ratio as of March 31, 2022 stood at 71.8%. (3) Explanation about Future Forecast Information Including Consolidated Earnings Forecasts There has been no change in the earnings forecasts announced on February 14, 2022. In the event that we need to revise them due to COVID-19, we will disclose promptly. – 3 – 2. Quarterly Consolidated Financial Statements and Major Notes (1) Quarterly Consolidated Balance Sheet (Millions of yen) FY12/21 (As of December 31, 2021) First quarter of FY12/22 (As of March 31, 2022) Assets Current assets Cash and deposits Notes and accounts receivable – trade Securities 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 Other, net Total property, plant and equipment Intangible assets Investments and other assets Retirement benefit asset Long-term time deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 56,835 33,895 3,999 9,451 4,606 7,292 2,921 (120) 118,883 31,251 25,680 56,932 837 4,658 18,000 17,957 (6) 40,610 98,380 217,264 56,897 33,751 3,999 10,625 5,420 7,609 2,368 (89) 120,583 31,449 27,556 59,005 1,096 4,695 18,000 17,397 (6) 40,087 100,189 220,772 – 4 – (Millions of yen) FY12/21 (As of December 31, 2021) First quarter of FY12/22 (As of March 31, 2022) Liabilities Current liabilities Notes and accounts payable – trade Short-term borrowings Income taxes payable Provision for bonuses Other Total current liabilities Non-current liabilities long-term borrowings Retirement benefit liability 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 Share acquisition rights Non-controlling interests Total net assets Total liabilities and net assets 19,250 3,900 4,278 2,488 9,739 39,656 6,711 609 5,095 12,416 52,073 14,640 15,207 124,806 (11,818) 142,836 6,851 5,618 522 12,993 215 9,146 165,190 217,264 20,280 3,900 2,042 3,531 10,970 40,725 6,711 639 4,892 12,243 52,968 14,640 15,207 125,982 (11,793) 144,036 6,568 7,460 477 14,505 215 9,045 167,803 220,772 – 5 – (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income (Quarterly Consolidated Statement of Income) (Quarterly Consolidated Statement of Income for the First Three Months) (Millions of yen) First three months of FY 12/21 (January 1, 2021 – March 31, 2021) First three months of FY 12/22 (January 1, 2022 – March 31, 2022) Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Non-operating income Interest income Dividend income Foreign exchange gains Other Total non-operating income Non-operating expenses Interest expenses Loss on valuation of derivatives Other Total non-operating expenses Ordinary income Extraordinary income Other Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Other Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit attributable to Profit attributable to non-controlling interests Profit attributable to owners of parent 30,971 19,722 11,249 6,440 4,808 29 28 310 62 431 16 249 20 286 4,953 1 1 25 0 25 4,929 1,170 (123) 1,047 3,881 446 3,435 39,599 25,212 14,387 7,442 6,944 32 52 426 83 594 19 242 47 309 7,230 － － 4 － 4 7,226 1,597 54 1,651 5,574 603 4,970 – 6 – (Quarterly Consolidated Statement of Comprehensive Income) (Quarterly Consolidated Statement of Comprehensive Income for the First Three Months) (Millions of yen) First three months of FY 12/21 (January 1, 2021 – March 31, 2021) First three months of FY 12/22 (January 1, 2022 – March 31, 2022) Profit attributable to owners of parent Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 3,881 1,115 2,016 (8) 3,122 7,004 6,151 852 5,574 (283) 2,219 (45) 1,891 7,465 6,483 982 – 7 – (3) Notes to Quarterly Consolidated Financial Statements (Notes Concerning Going Concern Assumption) Not applicable. (Significant Changes in Shareholders’ Equity) Not applicable. (Changes in Accounting Policies) (Application of the accounting standard for revenue recognition) The Company applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29, March 31, 2020, “Accounting Standard for Revenue Recognition”), etc. from January 1, 2022, and recognizes revenue at an amount that it expects to receive in exchange for the promised goods or services when the control of the goods or services is transferred to a customer. The Group’s performance obligation is sales of goods, and we recognize revenue from domestic sales of merchandise and finished goods when the shipment is completed if control of the merchandise or finished goods is transferred to customers within a normal period after the shipment in accordance with the alternative treatment provided for in Paragraph 98 of the Implementation Guidance on Accounting Standard for Revenue Recognition. We applied the Accounting Standard for Revenue Recognition, etc. from January 1, 2022 pursuant to the transitional treatment provided for in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition, with the cumulative effect of the retrospective application, assuming the new accounting policy had been applied to periods prior to January 1, 2022, adjusted to the beginning balance of retained earnings as of January 1, 2022, but there was no impact on the beginning balance. The impact on the quarterly financial statements is insignificant. Pursuant to the transitional treatment provided for in Paragraph 28-15 of the “Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12, March 31, 2020), information on the breakdown of revenue arising from contracts with customers for the three months ended March 31, 2021 is not presented. (Application of the accounting standard for fair value measurement) The Company applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30, July 4, 2019, “Accounting Standard for Fair Value Measurement”), etc. from January 1, 2022, and the new accounting policies stipulated in the Accounting Standard for Fair Value Measurement, etc. are applied prospectively pursuant to the transitional treatment stipulated by Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). The application has no impact on the quarterly consolidated financial statements.- 8 – (Additional Information) (Transaction to grant the Company’s shares to employees, etc. through a trust) Based on the resolution at the Board of Directors meeting held on August 7, 2019, the Company introduced “Trust-Type Employee Stock Ownership Plan” (“Plan”) with an aim to enhance the Company’s welfare program as well as to improve its medium- to long-term corporate value by providing employees with incentives for an increase in stock prices. (1) Overview of the transaction The Plan is an incentive plan for all employees in the “Tokyo Ohka Employees Stockholding Association” (“Stockholding Association”). Under the Plan, the Company sets up the “Tokyo Ohka Employee Stockholding Association Trust” (“Stockholding Trust”) at a trust bank, and the Stockholding Trust purchases in advance the number of the Company’s shares expected to be purchased by the Stockholding Association over five years from the date the trust is set up and sells the shares to the Stockholding Association every month on a certain date. Any gains on sale of shares accumulated in the trust upon expiry of the Stockholding Trust will be distributed as residual assets to those satisfying the beneficiary eligibility requirements. As the Company provides guarantee for the loans payable made by the Stockholding Trust to purchase the Company’s shares, the Company is liable to pay the outstanding balance of the loans payable, equivalent to loss on sale of shares accumulated in the Stockholding Trust due to a decline in stock prices, upon expiry of the Stockholding Trust. The Plan aims to improve our medium- to long-term corporate value by providing employees with incentives for an increase in stock prices and also to support employees’ asset building as a measures to enhance our welfare program by promoting purchase and holding of shares through enhancement of the Stockholding Association. (2) The Company’s shares remaining in the Trust The Company’s shares remaining in the Trust are recorded as Treasury shares in Net assets at the carrying amount at the Trust (excluding ancillary expenses). The carrying amount and number of treasury stock as of December 31, 2021 and March 31, 2022 were ¥862 million and 206 thousand shares and ¥837 million and 201 thousand shares, respectively. (3) The carrying amount of the loans payable recorded under the gross method FY12/21 First three months of FY12/22 ¥611 million ¥611 million – 9 – (Segment Information) Ⅰ First three months of the fiscal year ended December 2021 (January 1, 2021 – March 31, 2021) 1. Information about net sales, income/loss for each reportable segment (Millions of yen) Reportable segment Material Business Equipment Business Total Reconciliations (Note) 1 Consolidated (Note) 2 Net sales Net sales to customers 30,637 Inter-segment sales or transfers Total Segment income (loss) － 30,637 6,151 334 8 342 (124) 30,971 8 30,980 6,026 － (8) (8) (1,218) 30,971 － 30,971 4,808 (Note) 1. Segment income (loss) amounting to ¥(1,218) million includes common costs of ¥(1,218) million, which are not allocated to 2. Segment income (loss) has been adjusted for the operating income appearing in the quarterly consolidated statements of reportable segments. income. 2. Information on impairment losses on non-current assets or goodwill by reportable segment Not applicable. – 10 – Ⅱ First three months of the fiscal year ending December 2022 (January 1, 2022 – March 31, 2022) 1. Information about net sales, income/loss and breakdown of revenue by reportable segment Reportable segment Material Business Equipment Business Total (Millions of yen) Reconciliations (Note) 1 Consolidated (Note) 2 21,093 17,870 － 199 39,162 － － Net sales Electronic functional materials High-purity chemicals Process equipment Other Revenue from contracts with customers Other revenue Net sales to customers 39,162 Inter-segment sales or transfers Total Segment income (loss) 39,162 8,216 21,093 17,870 436 199 39,599 39,599 － 27 39,626 8,214 － － 436 － 436 － 436 27 463 (1) － － － － － － － (27) (27) (1,270) 21,093 17,870 436 199 39,599 39,599 － － 39,599 6,944 (Note) 1. Segment income (loss) amounting to ¥(1,270) million includes common costs of ¥(1,270) million, which are not allocated to 2. Segment income (loss) has been adjusted for the operating income appearing in the quarterly consolidated statements of reportable segments. income. 2. Information on impairment losses on non-current assets or goodwill by reportable segment Not applicable. 3. Changes, etc. in reportable segments As described in Changes in Accounting policies, the Company applied the Accounting Standard for Revenue Recognition on January 1, 2022 and changed the accounting treatment of revenue recognition, and accordingly, the method to calculate profit or loss of business segment was also changed. The impact of this change on net sales and segment income (loss) for the three months ended March 31, 2022 was insignificant. – 11 –