日本特殊塗料（4619） – [Delayed]Consolidated Financial Results for the Fiscal Year Ended March 31,2022[Japanese GAAP]

Disclaimer: This document is an English translation of the original document in Japanese and has been prepared solely for reference purposes. In the event of any discrepancy between this English translation and the original in Japanese, the original shall prevail in all respects. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 [Japanese GAAP] May 11, 2022 Company name: NIHON TOKUSHU TORYO CO., LTD. Stock exchange listing: Tokyo Stock Exchange Code number: 4619 URL: https://www.nttoryo.co.jp Representative: Hiroshi Onda, President, COO Contact: Yosuke Rikitake, Corporate Officer, General Manager of Financial & Accounting Division and General Manager of General Administration Division, Operation Planning & Coordination Group Phone: +81-3-3913-6134 Scheduled date of ordinary general shareholders meeting: June 22, 2022 June 23, 2022 Scheduled date of commencing dividend payments: Scheduled date of filing annual securities report: June 22, 2022 Availability of supplementary explanatory materials on annual financial results: No Schedule of annual financial results briefing session: Yes (for analysts and institutional investors) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.) (Amounts of less than one million yen are rounded down.) Net sales Operating profit Ordinary profit Fiscal year ended 9.2 March 31, 2022 March 31, 2021 (44.1) Note: Comprehensive income Fiscal year ended March 31, 2022: ¥3,614 million [6.4%] % Million yen 1,482 858 % Million yen 2,625 2,403 Million yen 54,779 48,004 72.6 (69.6) 14.1 (16.1)Basic earnings per share Diluted earnings per share Fiscal year ended March 31, 2021: ¥3,396 million [49.7%] Ratio of ordinary profit to total assets %3.43.3Return on equity Yen––Fiscal year ended March 31, 2022 March 31, 2021 Reference: Share of profit (loss) of entities accounted for using equity method Yen59.90 59.27 %3.03.1Fiscal year ended March 31, 2022: ¥369 million Fiscal year ended March 31, 2021: ¥923 million Profit attributable to owners of parent % Million yen 1,300 1,301 % (0.1) (43.9) Ratio of operating profit to net sales %2.71.8(2) Consolidated Financial PositionTotal assets Net assets Equity ratio As of March 31, 2022 As of March 31, 2021 Reference: Equity As of March 31, 2022: ¥44,266 million As of March 31, 2021: ¥42,566 million Million yen 79,792 75,502 Million yen 49,72547,154Net assets per share Yen 2,038.071,961.12% 55.5 56.4 (3) Consolidated Cash Flows Fiscal year ended March 31, 2022 March 31, 2021 2. Dividends Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Million yen 5,019 3,085 Million yen (1,266) (5,636) Million yen (1,699) 1,059 Cash and cash equivalents at end of period Million yen 8,931 6,518 1st quarter-end Annual dividends per share 2nd 3rd quarter-quarter-end end Year-end Total dividends (annual) Payout ratio (consolidated) Total Ratio of dividends to net assets (consolidated) % – – Yen Yen Yen Yen 17.00 Yen Million yen Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Fiscal year ending March 31, 2023 (forecast) 3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 – 22.00 42.00 20.00 21.00 22.00 18.00 38.00 40.00 28.5 64.1 66.8 833 872 % – – – – 2.0 2.0 March 31, 2023) (% indicates changes from the previous corresponding period.) Profit attributable to owners of parent Million yen % 1,000 746.8 3,200 146.0 Basic earnings per share Yen 46.05 147.36 Net sales Operating profit Ordinary profit Million yen % 28,600 14.0 61,000 11.4 Million yen % 850 499.3 3,000 102.4 First half Full year * Notes: (1) Changes in significant subsidiaries during the period under review: No Million yen % 1,800 131.1 82.8 4,800 (Changes in specified subsidiaries resulting in changes in scope of consolidation) Newly included: – (Company name: – ) Excluded: – (Company name: – ) (2) Changes in accounting policies, changes in accounting estimates and retrospective restatement 1) Changes in accounting policies due to the revision of accounting standards: Yes 2) Changes in accounting policies other than 1) above: No 3) Changes in accounting estimates: No 4) Retrospective restatement: No (3) Total number of issued and outstanding shares (common shares) 1) Total number of issued and outstanding shares at the end of the period (including treasury shares): March 31, 2022: March 31, 2021: March 31, 2022: March 31, 2021: 23,611,200 shares 23,611,200 shares 1,891,100 shares 1,905,857 shares 2) Total number of treasury shares at the end of the period: 3) Average number of shares during the period: Year ended March 31, 2022: Year ended March 31, 2021: 21,714,840 shares 21,960,512 shares (Reference) Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) (1) Non-consolidated Operating Results Fiscal year ended March 31, 2022 March 31, 2021 Million yen 38,217 36,832 Net sales % 3.8 (17.0) (% indicates changes from the previous corresponding period.) Operating profit Million yen (481) (614) % Million yen 1,720 1,369 % Million yen – – 1,759 32.4 1,329 (37.1) % 25.6 (16.3) Ordinary profit Profit Basic earnings per share Diluted earnings per share Yen 78.89 62.10 Fiscal year ended March 31, 2022 March 31, 2021 (2) Non-consolidated Financial Position As of March 31, 2022 As of March 31, 2021 (Reference) Equity: As of March 31, 2022: ¥32,373 million As of March 31, 2021: ¥31,674 million Million yen 55,642 54,345 Total assets Yen – – Million yen 32,373 31,674 Net assets Equity ratio Net assets per share Yen 1,484.15 1,453.25 % 58.2 58.3 * These consolidated financial results are outside the scope of audit by certified public accountants or an audit firm. * Explanation of the proper use of financial results forecast and other notes (Cautionary statement regarding forward-looking statements, etc.) The forward-looking statements in this document, including the financial results forecast, are based on information currently available to the Company and certain assumptions that the Company considers reasonable, and the Company does not promise that it will achieve such results. Actual results may differ significantly due to various factors. Please refer to “1. Overview of Operating Results, etc. (4) Future Outlook” on page 3 of the attached materials for the assumptions used in forecasting financial results and precautionary statements regarding the use of financial results forecasts. Table of Contents of the Attachments 1. Overview of Operating Results, etc. ………………………………………………………………………………………………. 2 (1) Overview of Operating Results for the Fiscal Year under Review …………………………………………………. 2 (2) Overview of Financial Position for the Fiscal Year under Review …………………………………………………. 3 (3) Overview of Cash Flows for the Fiscal Year under Review ………………………………………………………….. 3 (4) Future Outlook ……………………………………………………………………………………………………………………….. 3 (5) Basic Policy on Profit Allocation and Dividends for the Current and Following Fiscal Years ……………. 4 2. Basic Policy on Selection of Accounting Standards …………………………………………………………………………. 4 3. Consolidated Financial Statements and Principal Notes ……………………………………………………………………. 5 (1) Consolidated Balance Sheet ……………………………………………………………………………………………………… 5 (2) Consolidated Statements of Income and Comprehensive Income ………………………………………………….. 7 (3) Consolidated Statement of Changes in Net Assets ………………………………………………………………………… 9 (4) Consolidated Statement of Cash Flows ……………………………………………………………………………………. 11 (5) Notes to Consolidated Financial Statements ……………………………………………………………………………… 12 (Notes on going concern assumption) ………………………………………………………………………………………. 12 (Changes in accounting policies) ……………………………………………………………………………………………… 12 (Segment information) ……………………………………………………………………………………………………………. 13 (Per share information) …………………………………………………………………………………………………………… 16 (Significant subsequent events) ……………………………………………………………………………………………….. 16 – 1 – 1. Overview of Operating Results, etc. (1) Overview of Operating Results for the Fiscal Year under Review In the fiscal year ended March 31, 2022 (the “fiscal year under review”), the Japanese economy showed signs of a gradual recovery as the normalization of economic activities gradually developed due to progress in vaccination against COVID-19. However, there are strong concerns about the re-spread of infectious diseases caused by new variants of COVID-19, and the outlook for the economy remained even more uncertain due to soaring raw material prices, global semiconductor shortages, and supply chain stagnation, in addition to the impact of the situation in Ukraine on the economy. Under these circumstances, NIHON TOKUSHU TORYO CO., LTD. (the “Company”) and its subsidiaries (collectively, the “Group”) have been striving to enhance its corporate value by focusing on strengthening its revenue base, developing new technologies and products, and promoting sustainability management, as set forth in the basic strategies of the new medium-term management plan, while taking thorough measures to prevent the spread of COVID-19. As a result, in the fiscal year under review, net sales totaled 54,779 million yen (up 14.1% year on year), a significant recovery from the previous year. On the profit front, operating profit was 1,482 million yen (up 72.6% year on year) due to the recovery in net sales and the promotion of cost reduction activities and expense reduction measures, despite the impact of soaring raw material prices and other factors. Ordinary profit totaled 2,625 million yen (up 9.2% year on year) due to the impact of share of profit of entities accounted for using equity method and foreign exchange fluctuations, and profit attributable to owners of the parent totaled 1,300 million yen (down 0.1% year on year). Performance by reportable segment is as follows (sales for each segment exclude inter-segment net sales). Paints & coatings-related business With domestic demand on the road to recovery, sales of paints for buildings and structures, especially waterproofing materials, our main product line, remained steady. In particular, construction-related sales, such as large-scale renovation work for condominiums, increased by 81.5% year on year, contributing significantly to the increase in both sales and profit. In addition, amid the impact of soaring raw material prices, the Company thoroughly implemented cost reduction activities and cost-cutting measures, and reviewed the selling prices of some products. As a result, net sales for the paints & coatings-related segment totaled 19,351 million yen (up 30.3% year on year), while segment profit totaled 373 million yen (up 87.0% year on year). Automotive products-related business Although the outlook remained uncertain due to the global shortage of semiconductors and supply chain disruptions, including the impact of COVID-19, among automobile manufacturers, which are the Company’s major customers, sales increased mainly in sound-absorbing, sound-insulation materials due to a certain level of demand recovery. In this segment, the Company has also promoted multifaceted cost reduction activities and expense reduction measures in order to build an efficient production system amid the impact of soaring raw material prices. As a result, net sales for the automotive products-related segment totaled 35,412 million yen (up 6.8% year on year), while segment profit totaled 1,100 million yen (up 69.2% year on year). Other business Net sales of the insurance agency business totaled 15 million yen (down 0.3% year on year). – 2 – (2) Overview of Financial Position for the Fiscal Year under Review Total assets The Company’s total assets as of the end of the fiscal year under review increased by 4,289 million yen year on year to 79,792million yen. This was primarily due to an increase in cash and deposits of 2,412 million yen, a decrease in notes and accounts receivable – trade of 11,093 million yen, an increase in accounts receivable – trade of 10,272 million yen, an increase in contract assets of 2,737 million yen, an increase in work in process of 992 million yen, and a decrease in property, plant and equipment of 1,947 million yen. As described in “3. Consolidated Financial Statements and Principal Notes (5) Notes to Consolidated Financial Statements (Changes in accounting policies),” due to the adoption of the Revenue Recognition Accounting Standard, etc. “notes and accounts receivable – trade,” which were presented under “current assets” in the consolidated balance sheets for the previous fiscal year, are separately presented in “notes receivable – trade,” “accounts receivable – trade,” and “contract assets” in the consolidated balance sheets from the fiscal year under review. Liabilities Total liabilities increased by 1,719 million yen year on year to 30,066 million yen. This was primarily due to an increase in notes and accounts payable – trade of 1,485 million yen. Net assets Net assets increased by 2,570 million yen year on year to 49,725 million yen. This was primarily due to an increase in retained earnings of 482 million yen, an increase in foreign currency translation adjustment of 1,339 million yen, and an increase in non-controlling interests of 870 million yen. The equity ratio decreased by 0.9% to 55.5%. (3) Overview of Cash Flows for the Fiscal Year under Review Cash and cash equivalents (hereafter referred to as “funds”) at the end of the fiscal year under review increased by 2,412 million yen to 8,931 million yen. Funds from operating activities resulted in an inflow of 5,019 million yen (up 1,934 million yen year on year). This was primarily due to the recording of profit before income taxes of 3,074 million yen, an increase in trade receivables of 1,505 million yen, an increase in trade payables of 1,296 million yen, interest and dividends received of 1,426 million yen, and income taxes paid of 800 million yen. Funds from investing activities resulted in an outflow of 1,266 million yen (down 4,369 million yen year on year). This was primarily due to purchase of property, plant and equipment and intangible assets of 2,240 million yen and proceeds from sale of investment securities of 533 million yen. Funds from financing activities resulted in an outflow of 1,699 million yen (up 2,758 million yen year on year). This was primarily due to proceeds from long-term borrowings of 1,000 million yen, repayments of long-term borrowings of 1,552 million yen, and dividends paid of 847 million yen. (4) Future Outlook With regard to the outlook for the future, while there are expectations for normalization of economic activities and a self-sustaining recovery of the economy amid the ongoing global outbreak of COVID-19, the timing when COVID-19 will be contained is still uncertain. Economic trends are also expected to remain uncertain, as there is an increasing risk of further rises in raw material prices affected by the situation in Ukraine, stagnation in supply chains, and the global shortage of semiconductors, which will put downward pressure on corporate earnings. In the Company’s paints & coatings-related business, the business environment is expected to remain challenging due to further intensifying market competition amid a certain degree of ongoing weakness in corporate earnings and personal consumption as well as the impact of COVID-19, combined with cost increases due to soaring raw material prices and other factors. In the automotive products-related business, although the future outlook remains uncertain, a steady recovery in customer demand is expected through the second half of the fiscal year ending March 31, 2023 due to an increase in automobile production volume. On the other hand, there is an urgent need to address cost-increasing factors, such as soaring raw material prices, and to strengthen and stabilize the supply chain. In addition, in recent years, there has been a strong demand in both businesses to place greater emphasis on sustainable growth, including addressing environmental challenges to become carbon neutral. In view of this business environment, based on the basic strategies set forth in the new medium-term management plan, the Group will strive to build a stable revenue base that can withstand changes in the – 3 – external environment and establish an efficient business structure that can respond appropriately to changes. In addition, the Company will further enhance the management foundation for sustainable growth by promoting sustainability management focusing on “sustainability,” including strengthening the development of new technologies and new products focusing on functionality, weight reduction, and environmental responsiveness, which are the Company’s strengths. The Company’s performance forecasts for the fiscal year ending March 31, 2023 estimate that net sales will reach 61,000 million yen (up 11.4% year on year) based on demand forecasts for each business segment. On the profit front, the Company takes into account developments in raw material prices and foreign exchange trends and progress of various initiatives designed to improve productivity, and currently forecasts operating profit of 3,000 million yen (up 102.4% year on year), ordinary profit of 4,800 million yen (up 82.8% year on year), and profit attributable to owners of the parent of 3,200 million yen (up 146.0% year on year). The outlook for business performance by reportable segment is as follows. (Million yen) Paints & coatings-related business Automotive products-related business Net sales Segment profit YoY change YoY change 17,500 43,500 (9.6)% 22.8% 200 2,800 (46.5)% 154.3% With respect to the revision of market classification on Tokyo Stock Exchange, Inc. in April 2022, the Company has chosen to list its shares on the Prime Market. As of the transition reference date (June 30, 2021), the Company did not meet the criteria for “tradable shares market capitalization” on the Prime Market, so the Company has set the period through the fiscal year ending March 31, 2025 as the planning period, and is promoting various efforts to improve market capitalization and the ratio of tradable shares. The Company will focus on achieving the goals of the medium-term management plan, which ends in the fiscal year ending March 31, 2025, while striving to sustainably enhance the Company’s corporate value and comply with the criteria for maintaining the Company’s listing. (5) Basic Policy on Profit Allocation and Dividends for the Current and Following Fiscal Years We pursue the substantial return of profit to our shareholders by strengthening profitability and maintaining a sound financial condition focused on cash flow, which has been positioned as an important management task of the Company. On the other hand, the management environment surrounding the business of the Group is experiencing major changes such as price competition as well as intensifying competition in development of high value-added paints with environmental and other measures, automobile technological innovation including electrification, and advancement of globalization in automobile production. To maintain competitiveness and improve profitability in the future, we must aggressively and continually make R&D and capital investment for new products and technologies, investment in overseas businesses for globally enhancing technical and productive abilities, and furthermore, investment in human resources who will serve as the foundation of the above. Accordingly, based on the medium- to long-term management plan, with a focus placed on maintaining stable dividends and increasing internal funds for strategic investment described above, the distribution of profits is decided in comprehensive consideration of factors such as financial condition, profit levels, and the payout ratio as the Company’s basic policy. Based on the above policy, we plan to pay a year-end dividend of 22 yen per share for the fiscal year under review. As a result, the annual dividend per share, including an interim dividend of 18 yen, will be 40 yen per share. For the fiscal year ending March 31, 2023, we expect to pay an annual dividend of 42 yen per share, including an interim dividend of 20 yen per share and a year-end dividend of 22 yen. 2. Basic Policy on Selection of Accounting Standards The Group intends to prepare consolidated financial statements based on Japanese accounting standards for the time being to facilitate comparability between periods and with other companies. However, going forward, the Company will consider applying international accounting standards depending on various circumstances inside and outside Japan. – 4 – 3. Consolidated Financial Statements and Principal Notes (1) Consolidated Balance Sheets As of March 31, 2021 As of March 31, 2022 Assets Current assets Cash and deposits Notes and accounts receivable – trade Notes receivable – trade Electronically recorded monetary claims -operating Accounts receivable – trade Contract assets Merchandise and finished goods Work in process Raw materials and supplies Income taxes refund receivable Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Machinery, equipment and vehicles, net Land Construction in progress Other, net Total property, plant and equipment Intangible assets Other Total intangible assets Investments and other assets Investment securities Long-term loans receivable Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 6,535 11,093 － 3,102 － － 1,392 417 1,179 167 1,529 (4) (50) 25,414 8,855 8,751 4,710 2,509 2,192 27,018 1,244 1,244 18,762 1,410 129 1,571 21,824 50,087 75,502 (Million yen) 8,948 － 792 2,987 10,662 2,347 1,824 1,409 1,431 － 1,456 (3) 31,857 10,028 8,481 4,703 483 1,374 25,071 1,265 1,265 18,255 1,504 99 1,793 (55) 21,597 47,934 79,792 – 5 – Liabilities Current liabilities Notes and accounts payable – trade Electronically recorded obligations – operating Short-term borrowings Lease liabilities Income taxes payable Provision for bonuses for directors (and other officers) Other Total current liabilities Non-current liabilities Long-term borrowings Lease liabilities Retirement benefit liability Deferred tax liabilities 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 As of March 31, 2021 As of March 31, 2022 (Million yen) 7,164 3,250 5,608 6 238 102 3,405 19,775 3,667 12 3,520 1,260 111 8,571 28,347 4,753 4,190 30,064 (1,119) 37,888 5,149 (636) 165 4,677 4,588 47,154 75,502 8,649 3,376 5,617 6 601 72 3,949 22,273 3,209 17 3,313 1,147 105 7,792 30,066 4,753 4,194 30,547 (1,112) 38,383 4,989 702 191 5,883 5,458 49,725 79,792 – 6 – (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income For the fiscal year ended March 31, 2021 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Subsidies for employment adjustment Foreign exchange gains Rental income from real estate Share of profit of entities accounted for using equity method Other Total non-operating income Non-operating expenses Interest expenses Loss on cancellation of leasehold contracts Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Insurance claim income Gain on sale of investment securities Total extraordinary income Extraordinary losses Loss on disposal of non-current assets Loss on sale of investment securities 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 (Million yen) For the fiscal year ended March 31, 2022 54,779 44,298 10,480 8,998 1,482 88 206 72 285 53 369 146 1,222 56 － 23 79 2,625 294 14 239 547 98 － 98 3,074 1,133 (45) 1,088 1,986 685 1,300 48,004 38,263 9,741 8,882 858 88 200 140 － 51 923 247 1,651 72 12 21 106 2,403 7 3 378 388 71 0 71 2,720 724 143 868 1,852 551 1,301 – 7 – Consolidated Statements 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 Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests For the fiscal year ended March 31, 2021 1,852 1,798 (41) 207 (421) 1,543 3,396 2,874 521 (Million yen) For the fiscal year ended March 31, 2022 1,986 (159) 849 22 915 1,627 3,614 2,506 1,107 – 8 – (3) Consolidated Statements of Changes in Net Assets For the fiscal year ended March 31, 2021 Share capital Capital surplus Treasury shares Shareholders’ equity Retained earnings (Million yen) Total shareholders’ equity Balance at beginning of period 4,753 4,237 29,602 (748) 37,845 Restated balance 4,753 4,237 29,602 (748) 37,845 (46) (839) 1,301 (371) (371) (1,119) － (839) (46) 1,301 (371) － － 43 37,888 Total changes during period Balance at end of period － 4,753 (46) 4,190 461 30,064 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 3,333 (185) (43) 3,104 4,112 45,062 Restated balance 3,333 (185) (43) 3,104 4,112 45,062 Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Change in ownership interest of parent due to transactions with non-controlling interests Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Net changes in items other than shareholders’ equity Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Change in ownership interest of parent due to transactions with non-controlling interests Profit attributable to owners of parent Purchase of treasury Disposal of treasury shares shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period 1,816 1,816 5,149 － － － － － 1,573 1,573 4,677 475 475 － (839) (46) 1,301 (371) － 2,048 2,091 4,588 47,154 (451) (451) (636) 208 208 165 – 9 – For the fiscal year ended March 31, 2022 Share capital Capital surplus Treasury shares Shareholders’ equity Retained earnings (Million yen) Total shareholders’ equity Balance at beginning of period 4,753 4,190 30,064 (1,119) 37,888 Restated balance 4,753 4,190 30,097 (1,119) 37,921 3 3 32 (850) 1,300 450 (2) 10 7 32 (850) － 1,300 (2) 14 － 461 Total changes during period Balance at end of period － 4,753 4,194 30,547 (1,112) 38,383 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 period 5,149 (636) 165 4,677 4,588 47,154 Restated balance 5,149 (636) 165 4,677 4,588 47,186 Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Change in ownership interest of parent due to transactions with non-controlling interests Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Net changes in items other than shareholders’ equity Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Change in ownership interest of parent due to transactions with non-controlling interests Profit attributable to owners of parent 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 26 26 191 － － － － － 1,206 1,206 5,883 870 870 32 (850) － 1,300 (2) 14 2,076 2,538 5,458 49,725 (160) (160) 4,989 1,339 1,339 702 – 10 – (Million yen) For the fiscal year ended March 31, 2022 For the fiscal year ended March 31, 2021 2,720 3,654 (96) 4 (288) 72 (4) Consolidated Statements of Cash Flows Cash flows from operating activities Profit before income taxes Depreciation Increase (decrease) in retirement benefit liability Increase (decrease) in allowance for doubtful accounts Interest and dividend income Interest expenses Share of loss (profit) of entities accounted for using equity method Loss (gain) on sale of non-current assets Loss (gain) on disposal of non-current assets Loss (gain) on sale of investment securities Insurance claim income 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 insurance income Income taxes paid Income taxes refund Net cash provided by (used in) operating activities Cash flows from investing activities Purchase of property, plant and equipment and Proceeds from sale of property, plant and equipment and intangible assets intangible assets Purchase of investment securities Proceeds from sale of investment securities Loan advances Proceeds from collection of loans receivable Other, net Net cash provided by (used in) investing activities 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 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 – 11 – (923) (7) 71 (378) (3) (670) 60 (168) (1,031) 3,015 1,135 (101) 3 (976) 8 3,085 (5,155) 13 (8) 482 (1,058) 154 (63) (5,636) 3,899 100 (1,603) (369) (839) (18) (62) (47) 1,059 45 (1,446) 7,964 6,518 3,074 3,198 (166) 4 (294) 56 (369) (293) 97 (239) (14) (1,505) (615) 1,296 35 4,265 1,426 (54) 14 (800) 168 5,019 (2,240) 311 (9) 533 (5) 43 100 (1,266) 29 1,000 (1,552) (0) (847) (325) － (2) (1,699) 358 2,412 6,518 8,931 (5) Notes to Consolidated Financial Statements (Notes on going concern assumption) Not applicable. (Changes in accounting policies) (Application of Revenue Recognition Accounting Standard) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter “Revenue Recognition Accounting Standard”) and other standards from the beginning of the fiscal year under review. The Company recognizes revenue when control of a promised good or service is transferred to a customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. The major effects of the adoption of this accounting standard on the consolidated financial statements for the fiscal year under review are as follows. Mold transactions For mold-related costs that are recovered from customers over a certain period of time, the Company previously recorded net sales and cost of sales according to the relevant period, but has changed to recording net sales and cost of sales at a single point in time when specific requirements are met. Consideration paid to customers Sales rebates, which are consideration paid to customers, were previously treated as selling, general and administrative expenses, but are now reduced from the transaction price. Repurchase agreement For the paid-in transactions in which the Group is the supplier, we used to recognize the extinguishment of the paid-in supplies, but we have changed the method to not recognize the extinguishment of such supplies when we are obligated to repurchase the supplied goods. In addition, we previously recognized the consideration received from the suppliers as revenue, but have changed to a method whereby such revenue is not recognized. Furthermore, for transactions in which the Group receives payment from a supplier, we previously recognized net sales and cost of sales upon selling back to the supplier, but have changed to recognizing only the amount equivalent to the processing fee as revenue on a net amount basis. Agency transactions For transactions in which the Group’s role in the sale to a customer is that of an agent, we previously recognized as revenue the gross consideration received from the customer, but have changed to recognizing revenue as the net amount of such gross consideration minus the amount paid to the third party. The Company applies the Revenue Recognition Accounting Standard, etc., in accordance with the transitional treatment provided for in the proviso to Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative impact of retrospectively applying the new accounting policies to prior periods is adjusted to retained earnings at the beginning of the fiscal year under review, with the new accounting policies applied from the beginning balance. The cumulative impact of this change has been reflected on net assets at the beginning of the fiscal year under review. As a result, the beginning balance of retained earnings increased by 32 million yen. In addition, compared with the figures before the application of the Revenue Recognition Accounting Standard, etc., net sales increased by 371 million yen, cost of sales decreased by 95 million yen, selling, general and administrative expenses decreased by 65 million yen, and operating profit, ordinary profit, and profit before income taxes increased by 533 million yen. Due to the adoption of the Revenue Recognition Accounting Standard, “notes and accounts receivable – trade,” which were presented under “current assets” in the consolidated balance sheets for the previous fiscal year, are presented in “notes receivable – trade,” “accounts receivable – trade,” and “contract assets” in the consolidated balance sheets from the fiscal year under review. In accordance with the transitional treatment set forth in Paragraph 89-2 of the Revenue Recognition Accounting Standard, figures for the previous fiscal year have not been reclassified based on the new presentation method. (Application of Fair Value Measurement Standard) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter “Fair Value Measurement Standard”) and other standards from the beginning of the fiscal year under review, and will prospectively apply the new accounting policies stipulated by the Fair – 12 – Value Measurement Standard, etc., in accordance with the transitional treatment provided in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). This does not affect the consolidated financial statements. (Segment information) 1. Overview of reportable segments The Company’s reportable segments are components of the Company for which segregated financial information is available, and are subject to regular review by the Board of Directors to determine how to allocate management resources and evaluate performance. The Company has established the Paints & Coatings Group and the Automotive Products Group at its head office, and formulates comprehensive domestic and overseas strategies for the products and services it handles with the two groups operating business activities in cooperation with subsidiaries and affiliates in their respective business domains. As such, the Company comprises individual product and service segments based on each group, and has two reportable segments, the paints & coatings-related business and the automotive products-related business. The paints & coatings-related business covers primarily the manufacture and sale of paints and coatings, as well as contract construction work. The automotive products-related business focuses largely on the manufacture and sales of automotive parts, such as soundproofing materials and anti-corrosive coatings for automobiles. 2. Method for calculating the monetary totals for net sales, profit or loss, assets or liabilities, and other items by reportable segment The accounting method used for reportable business segments are generally the same as those used in the preparation of the consolidated financial statements. Segment profit is based on operating profit. Inter-segment net sales and transfers are based on prevailing market prices. – 13 – Net sales to outside customers Inter-segment net sales or transfers Total Segment profit Segment assets Other items Depreciation Share of profit of entities accounted for using equity method Investment in entities accounted for using equity method Increase in property, plant and equipment and intangible assets 3. Information on net sales, profit or loss, assets or liabilities and other items by reportable segment Fiscal year ended March 31, 2021 (Million yen) Reportable segment Paints & coatings-related Automotive products-related Total Other (Note 1) Total Adjustment (Note 2) Consolidation (Note 3) Net sales 14,846 33,143 47,989 48,004 – 48,004 3 14,849 199 10,674 254 – 33,143 650 48,804 3,398 3 47,993 850 59,479 3,653 3 (3) 48,008 858 59,537 3,653 (3) – 15,964 – 26 897 923 923 – 48,004 858 75,502 3,653 923 – – 265 9,590 9,856 9,856 9,856 15 – 15 8 57 – – – – 368 3,872 4,240 4,240 115 4,356 Notes: 1. “Other” represents businesses not included in reportable segments, namely, the insurance agency business. 2. “Adjustment” consists of the following. Adjustment of segment assets of 15,964 million yen and the increase in property, plant and equipment and intangible assets of 115 million yen comprise company-wide assets not allocated to individual reportable segments. Company-wide assets consist mainly of the Company’s surplus funds (cash and cash equivalents, etc.), funds for longer-term investments and loans (investment securities, etc.) and assets relating to the Company’s management departments. 3. Segment profit is adjusted with operating profit on the consolidated statements of income. – 14 – Fiscal year ended March 31, 2022 (Million yen) Reportable segment Paints & coatings-related Automotive products-related Total Others (Note 1) Total Adjustment (Note 2) Consolidation (Note 3) Net sales 19,351 35,412 54,763 15 54,779 – 54,779 3 19,355 373 12,713 272 – 35,412 1,100 50,836 2,923 3 54,767 1,474 63,550 3,196 – 15 7 61 – 3 (3) 54,782 1,482 63,611 3,196 (3) – 16,180 – 57 312 369 – 369 – 54,779 1,482 79,792 3,196 369 – – 318 9,783 10,101 – 10,101 10,101 Net sales to outside customers Inter-segment net sales or transfers Total Segment profit Segment assets Other items Depreciation Share of profit of entities accounted for using equity method Investment in entities accounted for using equity method Increase in property, plant and equipment and intangible assets 473 1,811 2,284 – 2,284 16 2,301 Notes: 1. “Other” represents businesses not included in reportable segments, namely, the insurance agency business. 2. “Adjustment” consists of the following. Adjustment of segment assets of 16,180 million yen and the increase in property, plant and equipment and intangible assets of 16 million yen comprise company-wide assets not allocated to individual reportable segments. Company-wide assets consist mainly of the Company’s surplus funds (cash and cash equivalents, etc.), funds for longer-term investments and loans (investment securities, etc.) and assets relating to the Company’s management departments. 3. Segment profit is adjusted with operating profit on the consolidated statements of income. – 15 – (Per share information) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Net assets per share (Yen) Basic earnings per share Diluted earnings per share is not presented because there were no potential shares. 1,961.12 59.27 Net assets per share (Yen) Basic earnings per share Diluted earnings per share is not presented because there were no potential shares. 2,038.07 59.90 Note: Basis of calculation 1. The basis for calculating net assets per share is as follows. As of March 31, 2021 As of March 31, 2022 2. The basis for calculating earnings per share is as follows. Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Total of net assets section (Million yen) Amount deducted from the total of net assets (Million yen) [of which, share acquisition rights] [of which, amount attributable to non-controlling shareholders] Net assets pertaining to common shares (Million yen) Number of common shares used to calculate net assets per share (Thousand shares) Basic earnings per share (Yen) Profit attributable to owners of parent (Million yen) Amount not attributable to common shareholders (Million yen) Profit attributable to owners of parent relating to common shares (Million yen) Average number of common shares during the period (Thousand shares) Diluted earnings per share (Yen) (Significant subsequent events) Not applicable. 47,154 4,588 – [4,588] 42,566 21,705 1,301 1,301 21,960 – – – 16 – 49,725 5,458 – [5,458] 44,266 21,720 1,300 1,300 21,714 – –