チノー（6850） – [Delayed]Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Under Japanese GAAP)

May 13, 2022 Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Under Japanese GAAP) Name of the Listed Company: CHINO CORPORATION Securities Code: Representative: Contact: 6850 Mikio Toyoda, President and CEO Kazumasa Ohmori, Executive Officer, Executive Manager, Business Management Headquarters TEL: +81-3-3956-2115 Listed Stock Exchanges: Tokyo Stock Exchange URL: https://www.chino.co.jp/ Scheduled date of ordinary general meeting of shareholders: June 28, 2022 June 29, 2022 Scheduled data to commence dividend payments: Scheduled date to file Securities Report: June 29, 2022 Preparation of supplementary materials on financial results: Yes Holding of financial results presentation meeting: Yes (for institutional investors and analysts) (Millions of yen with fractional amounts rounded down) 1. Consolidated financial results for the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (1) Consolidated operating results (Percentages indicate year-on-year changes.) Fiscal year ended March 31, 2022 March 31, 2021 Millions of yen 21,908 21,080 Note: Comprehensive income Net sales Operating profit Ordinary profit Profit attributable to owners of parent % Millions of yen 1,499 1,136 3.9 2.4 % Millions of yen 1,744 1,283 32.0 10.7 % Millions of yen 1,050 1,289 35.9 -23.7 % -18.5 5.9 Fiscal year ended March 31, 2022: 1,302 million yen Fiscal year ended March 31, 2021: 1,800 million yen (-27.7%) (110.8%) Fiscal year ended March 31, 2022 March 31, 2021 Basic earnings per share Diluted earnings per share Return on equity Return on assets Operating margin % 6.8 5.4 Yen 124.07 152.24 % 5.6 4.5 % 6.1 8.1 Yen ‒ ‒ Reference: Share of profit (loss) of entities accounting for using equity method Fiscal year ended March 31, 2022: Fiscal year ended March 31, 2021: ‒ million yen ‒ million yen (2) Consolidated financial position As of Total assets March 31, 2022 March 31, 2021 Reference: Equity (3) Consolidated cash flows Net assets Equity ratio Net assets per share Millions of yen 31,545 30,398 Millions of yen 20,150 19,502 As of March 31, 2022: As of March 31, 2021: 17,564 million yen 16,639 million yen % 55.7 54.7 Yen 2,073.94 1,964.43 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period Millions of yen 1,880 2,341 Millions of yen -578 -748 Millions of yen -978 -968 Millions of yen 5,821 5,430 First quarter-end Second quarter-end Dividend per share Third quarter-end Fiscal year-end Yen ‒ ‒ ‒ Yen 0.00 0.00 0.00 Yen ‒ ‒ ‒ Annual Yen 45.00 46.00 Yen 45.00 46.00 Total dividend payments (Total) Millions of yen 381 389 Dividend payout ratio (Consolidated) Dividend on equity (Consolidated) % 29.6 37.1 36.2 % 2.4 2.3 47.00 47.00 Note: Revisions to the most recently announced forecast of the dividend: Yes 3. Consolidated financial forecasts for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023) Net sales Operating profit Ordinary profit (Percentages indicate year-on-year changes.) Basic earnings per share Profit attributable to owners of parent Fiscal year ending March 31, 2023 Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen 23,300 6.3 1,550 3.4 1,800 3.2 1,100 4.7 129.89 Fiscal year ended March 31, 2022 March 31, 2021 2. Cash dividends Fiscal year ended March 31, 2021 March 31, 2022 Fiscal year ending March 31, 2023 (Forecast) ‒ 1 ‒ (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of * Notes consolidation): None Newly included: None Excluded: None (2) Changes in accounting policies, changes in accounting estimates and retrospective restatement (i) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes (ii) Changes in accounting policies other than 1: (iii) Changes in accounting estimates: (iv) Restatement: Please refer to “Changes in accounting policies” on page 16. None None None (3) Number of shares issued (common shares) (i) Total number of shares issued at the end of the period (including treasury shares) As of March 31, 2022 9,260,116 shares As of March 31, 2021 9,260,116 shares (ii) Number of treasury shares at the end of the period (iii) Average number of shares during the period As of March 31, 2022 791,138 shares As of March 31, 2021 789,916 shares Fiscal year ended March 31, 2022 8,469,599 shares Fiscal year ended March 31, 2021 8,470,593 shares Reference: Summary of non-consolidated results 1. Non-consolidated financial results for the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) (1) Non-consolidated operating results Net sales Fiscal year ended Operating profit Ordinary profit Millions of yen 15,396 14,727 % Millions of yen 817 571 4.5 -5.8 % Millions of yen 1,139 857 43.1 -3.7 Profit % Millions of yen 825 622 33.0 24.7 % 32.7 38.6 (Percentages indicate year-on-year changes.) Basic earnings per share Diluted earnings per share Yen ‒ ‒ Yen 97.45 73.45 March 31, 2022 March 31, 2021 Fiscal year ended March 31, 2022 March 31, 2021 (2) Non-consolidated financial position Total assets As of March 31, 2022 March 31, 2021 Reference: Equity Net assets Equity ratio Net assets per share Millions of yen 23,461 22,967 Millions of yen 14,667 14,239 As of March 31, 2022: As of March 31, 2021: 14,667 million yen 14,239 million yen % 62.5 62.0 Yen 1,731.90 1,681.18 * Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation. * Proper use of earnings forecasts, and other special matters (Note regarding forward-looking statements) The forward-looking statements such as the forecasts of financial results stated in this document are based on the information currently available to the Company and certain assumptions that the Company judges as rational. These statements are not guarantees of future performance. Actual results may differ substantially from the forecasts due to various factors. Please refer to “(4) Outlook” under “1. Overview of Operating Results and Financial Position” on page 7 of the attached materials for the assumptions used in the forecasts and notes regarding the use of the forecasts. (Change in the unit for displaying monetary amounts) Amounts of accounts and other items presented in the Company’s consolidated financial statements were previously stated in thousands of yen, but are now stated in millions of yen, beginning with the consolidated fiscal year under review. The figures for the previous fiscal year have also been reclassified into millions of yen. ‒ 2 ‒ ○Supplementary Materials – Contents 1. Overview of Operating Results and Financial Position ………………………………………………………………………………………….. 4 (1) Overview of operating results for the fiscal year ended March 31, 2022 …………………………………………………………… 4 (2) Overview of financial position for the fiscal year ended March 31, 2022 ………………………………………………………….. 6 (3) Overview of cash flows for the fiscal year ended March 31, 2022 ……………………………………………………………………. 6 (4) Outlook ……………………………………………………………………………………………………………………………………………………. 7 2. Basic Policy Regarding Selection of Accounting Standards …………………………………………………………………………………… 7 3. Consolidated Financial Statements and Significant Notes Thereto ………………………………………………………………………….. 8 (1) Consolidated balance sheet…………………………………………………………………………………………………………………………. 8 (2) Consolidated statement of income and comprehensive income………………………………………………………………………. 10 Consolidated statement of income ………………………………………………………………………………………………………….. 10 Consolidated statement of comprehensive income ……………………………………………………………………………………. 11 (3) Consolidated statement of changes in equity ……………………………………………………………………………………………….. 12 (4) Consolidated statement of cash flows…………………………………………………………………………………………………………. 14 (5) Notes to consolidated financial statements ………………………………………………………………………………………………….. 16 (Notes on going concern assumptions) ……………………………………………………………………………………………………. 16 (Changes in accounting policies) ………………………………………………………………………………………………………….. 16 (Segment information) ………………………………………………………………………………………………………………………….. 17 (Per share information) …………………………………………………………………………………………………………………………. 22 (Subsequent events) ……………………………………………………………………………………………………………………………… 23 (Omission of disclosure) ……………………………………………………………………………………………………………………….. 24 4. Other ……………………………………………………………………………………………………………………………………………………………. 24 ‒ 3 ‒ 1. Overview of Operating Results and Financial Position (1) Overview of operating results for the fiscal year ended March 31, 2022 During the fiscal year under review, the world economy continued to be affected by the COVID-19 pandemic. With the rise in vaccinations, however, particularly in developed countries, economic activity resumed and signs of economic recovery were seen. Meanwhile, the economic recovery was adversely affected by the prolonged U.S.-China trade friction, rising resource prices, and shortages of components, particularly semiconductors. At present there is concern about an economic slowdown chiefly due to the situation in Ukraine, accelerating monetary tightening in the United States, lockdowns in China, and rising energy prices. The economic outlook therefore remains uncertain. Looking at the business environment for the Chino Group, despite the impact of the insufficient supply of components, particularly semiconductors, the production activities of the automotive and electronic component sectors, which are the Group’s main customers, recovered which enabled capital spending to continue its trend toward recovery. In this environment, the Group sought to provide solutions to issues in industry sectors where the restoration of demand was observed and to provide products and systems for temperature measurement, control and monitoring, which are essential at production sites. In addition, investment in the energy field increased both in Japan and overseas amid the trend towards decarbonization and the Company also stepped up sales activities in the area of temperature control systems for hydrogen generation, transportation and storage and for energy use to capture the growing demand in hydrogen-related fields. As a result, orders received in the fiscal year under review amounted to 25,557 million yen (up 24.3% year on year), and net sales were 21,908 million yen (up 3.9% year on year). Orders received rose to a record high, reflecting a recovery in capital spending at customers and the timing of purchase orders being moved up due to the continuing tight supply of semiconductors and other components. Net sales rose year on year as the Group sought to secure components by increasing the number of suppliers and using alternative components to minimize the effect of the tight supply of components on the manufacturing of the Company’s products. On the profit front, operating profit stood at 1,499 million yen (rising 32.0% year on year) and ordinary profit came to 1,744 million yen (increasing 35.9％ year on year), reflecting both the increase in sales and cost cutting. Profit attributable to owners of parent was 1,050 million yen (down 18.5% year on year) because of the impact of posting gain on bargain purchase of 557 million yen as extraordinary income as a result of making Meiyo Electric Co., Ltd. a consolidated subsidiary of the Company in the same period of the previous year. Results by segment are as follows. 1) Measurement & Control Instruments Net sales reached 7,965 million yen (increase of 15.1% year on year), and segment profit totaled 1,168 million yen (rising 31.6％ year on year). Demand for recorders, which were seriously impacted by the stagnation of customers’ production activities and postponed capital investment due to the COVID-19 pandemic in the previous fiscal year, grew primarily overseas, particularly in China among other Asian countries, and controllers and thyristor regulators sold well to major customers. Sales of body surface temperature checkers used for COVID-19 infection control, for which there was special demand in the previous fiscal year, declined significantly. Meanwhile, the Group worked to expand sales of wireless loggers for monitoring systems and thermo-hygrometers, among other products. Overall, net sales in this segment rose. 2) Instrumentation Systems Net sales totaled 6,302 million yen (decreasing 6.7% year on year), and segment profit amounted to 481 million yen (decline of 18.7% year on year). Sales of electronic component-related manufacturing systems, which picked up from the second half of the previous fiscal year, remained steady. Looking at decarbonization, demand increased for fuel cell testing systems particularly for automobiles and water electrolysis evaluation systems for the research and development of technology for the utilization of hydrogen energy. As a result, sales of those products increased, and sales are expected to be on an upward trend from the next fiscal year. However, net sales and profit in this segment declined from a year ago chiefly due to weak demand for compressor performance testing systems. 3) Sensor Net sales reached 6,804 million yen (increase of 3.7% year on year), and segment profit totaled 1,304 million yen (rising 14.6％ year on year). There is strong overseas demand for both infrared radiation thermometers and temperature sensors to be used for semiconductor-related manufacturing systems, and domestic demand for those products for exports are firm. In addition, demand for infrared radiation thermometers and temperature sensors was also firm for the renovation of steel-related equipment and for products that meet AMS (aerospace material specifications) and biomass-related issues, respectively. 4) Other Net sales were 836 million yen (down 1.0% year on year), and segment profit came to 194 million yen (rising 27.3％ year on year). ‒ 4 ‒ (Reference) Orders received, net sales and segment profit (operating profit) by segment Previous fiscal year Fiscal year under review (Millions of yen) Change % change Orders received (by segment) Name of segment Measurement & Control Instruments Instrumentation Systems Net sales (by segment) Name of segment Measurement & Control Instruments Instrumentation Systems Previous fiscal year Fiscal year under review (Millions of yen) Change % change Net sales (by geographical segment) Name of segment Previous fiscal year Fiscal year under review (Millions of yen) Change % change 8,669 9,156 7,077 654 25,557 7,965 6,302 6,804 836 21,908 17,831 3,651 229 165 30 1,168 481 1,304 194 -1,649 1,499 1,963 2,494 537 9 5,004 1,042 -449 243 -8 828 269 479 28 50 -0 828 280 -110 166 41 -14 363 29.3 37.4 8.2 1.4 24.3 15.1 -6.7 3.7 -1.0 3.9 1.5 15.1 14.2 43.4 -1.4 3.9 31.6 -18.7 14.6 27.3 ‒ 32.0 21,080 21,908 Previous fiscal year Fiscal year under review (Millions of yen) Change % change Sensor Other Total Sensor Other Total North America Japan Asia Europe Other Total Segment profit (Operating profit) Name of segment Measurement & Control Instruments Instrumentation Systems Sensor Other Total Corporate expenses (Note) Note: Corporate expenses are primarily general and administrative expenses that cannot be allocated to specific segments. 6,705 6,662 6,540 645 20,553 6,923 6,752 6,560 844 21,080 17,562 3,171 200 115 30 888 592 1,138 152 -1,635 1,136 ‒ 5 ‒ (2) Overview of financial position for the fiscal year ended March 31, 2022 1) Assets Total assets at the end of the fiscal year under review stood at 31,545 million yen, an increase of 1,146 million yen from the end of Current assets stood at 21,681 million yen, an increase of 1,382 million yen from the end of the previous fiscal year. This was mainly due to an increase of 340 million yen in cash and deposits, 47 million yen in trade receivables and 1,051 million yen in inventories. Non-current assets stood at 9,864 million yen, a decrease of 235 million yen from the end of the previous fiscal year. This was mainly due to a decrease of 155 million yen in investment securities. Total liabilities at the end of the fiscal year under review stood at 11,394 million yen, an increase of 497 million yen from the end of Current liabilities stood at 8,216 million yen, an increase of 941 million yen from the end of the previous fiscal year. Non-current liabilities stood at 3,177 million yen, a decrease of 443 million yen from the end of the previous fiscal year. Total net assets at the end of the fiscal year under review stood at 20,150 million yen, an increase of 648 million yen from the end of the previous fiscal year. 2) Liabilities the previous fiscal year. 3) Net assets the previous fiscal year. (3) Overview of cash flows for the fiscal year ended March 31, 2022 1) Cash flows from operating activities Net cash provided by operating activities in the fiscal year under review was a net inflow of 1,880 million yen (down 460 million yen year on year). The amount of cash inflow items including income taxes of 1,719 million yen, depreciation of 795 million yen and an increase of trade payable of 821 million yen exceeded the amount of cash outflow items including inventories of 987 million yen. 2) Cash flows from investing activities Net cash in investing activities in the fiscal year under review was a net outflow of 578 million yen (up 169 million yen year on year). The amount of cash outflow items including purchase of property, plant and equipment and intangible assets of 910 million yen exceeded the amount of cash inflow items including proceeds from maturity insurance funds of 302 million yen. 3) Cash flows from financing activities Net cash in financing activities in the fiscal year under review was a net outflow of 978 million yen (down 9 million yen year on year) due to cash outflow including dividend payment of 381 million yen, repayments of long-term borrowings of 272 million yen and purchase of shares of subsidiaries not resulting in change in scope of consolidation of 222 million yen. As a result, cash and cash equivalents at the end of the fiscal year under review increased 390 million yen from the end of the previous fiscal year, to 5,821 million yen. ‒ 6 ‒ [Trends in cash flow indices] Equity ratio (%) Equity ratio based on market value (%) Ratio of interest-bearing debt to cash flow (years) Interest coverage ratio (Notes) Equity ratio: Equity / Total assets FY 3/2018 FY 3/2019 FY 3/2020 FY 3/2021 FY 3/2022 54.7 47.4 0.82 263.18 54.7 39.6 1.58 161.64 57.6 38.9 2.47 124.00 54.7 40.5 1.11 225.73 55.7 43.5 1.20 231.61 Equity ratio based on market value: Market capitalization / Total assets Ratio of interest-bearing debt to cash flow: Interest-bearing debt/Operating cash flows Interest coverage ratio: Operating cash flows / Interest expenses paid * Each indicator is calculated using financial figures on a consolidated basis. * Market capitalization is calculated by multiplying closing price of the stock at the end of the fiscal year by number of shares issued and outstanding at the end of the fiscal year (after deduction of treasury shares). * Operating cash flows are derived from cash flows from operating activities on the consolidated statement of cash flows. Interest-bearing debt is all liabilities recorded on the consolidated balance sheet on which interest is paid. Interest expenses paid is derived from interest paid on the consolidated statement of cash flows. (4) Outlook The fiscal year ending March 31, 2023 is the second year of the Medium-term Management Plan (FY2021-FY2026). Anticipating major changes in society and business, such as a growing global emphasis on the environment and the further acceleration of digital transformation, the Group aims in the plan to realize its corporate philosophy: The Chino Group pushes the limits of measurement, control and monitoring technologies and contributes to industrial development and the realization of a brighter tomorrow. To achieve the goal, the plan consists of four basic strategies: (i) further development and expansion of growth areas, (ii) enhancement of core businesses and value creation, (iii) strengthening of foundations and expansion of business overseas, and (iv) establishment of resilient management base. Under the four basic strategies, the Group will energetically develop business activities which provide both economic and social value, focusing on areas such as hydrogen technologies, semiconductors and electronic components, next-generation batteries, new materials, ethical drug and food management and logistics, for the realization of “decarbonization” and a “safe and secure society” and will promote sustainability management. Looking at the business environment surrounding the Group, the global economy is expected to continue to recover overall. In the automotive and electronic component sectors, which are the Group’s main customers, strong demand is likely to continue. Demand is expected to increase in areas related to hydrogen against the backdrop of initiatives for decarbonization. Meanwhile, the global economy continues to be affected by supply shortages of semiconductors and other components, along with rising costs. Uncertainty is increasing chiefly due to the worsening situation in Ukraine, which appears prolonged, and lockdowns in China. In light of the situation, consolidated financial forecasts for the fiscal year ending March 31, 2023 are net sales of 23,300 million yen, operating profit of 1,550 million yen, ordinary profit of 1,800 million yen, and profit attributable to owners of parent of 1,100 million yen. 2. Basic Policy Regarding Selection of Accounting Standards The Group’s policy is to prepare consolidated financial statements in accordance with JGAAP to facilitate the comparison of consolidated financial statements between different reporting periods and different reporting entities. The Group will determine when or if to adopt International Financial Reporting Standards (IFRS) as appropriate based on consideration of circumstances in Japan and overseas. ‒ 7 ‒ 3. Consolidated Financial Statements and Significant Notes Thereto (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 Notes receivable – trade Electronically recorded monetary claims – operating 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 Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Construction in progress Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Software Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Retirement benefit asset Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 6,991 5,563 － 1,985 － 742 2,143 2,641 240 -8 20,299 8,559 -5,428 3,131 4,031 -3,195 836 1,277 5 3,842 -3,514 327 5,578 382 16 398 1,916 678 623 962 -58 4,122 10,099 30,398 7,331 － 441 1,943 5,210 631 2,860 3,086 274 -99 21,681 8,601 -5,576 3,025 4,182 -3,345 837 1,406 2 3,806 -3,511 294 5,566 392 16 408 1,761 740 663 780 -56 3,889 9,864 31,545 ‒ 8 ‒ As of March 31, 2021 As of March 31, 2022 (Millions of yen) Liabilities Current liabilities Notes and accounts payable – trade Electronically recorded obligations – operating Short-term borrowings Current portion of long-term borrowings Income taxes payable Provision for bonuses Provision for bonuses for directors (and other officers) Provision for shareholder benefit program Electronically recorded facilities Other Total current liabilities obligations-operating-Non-current liabilities Long-term borrowings Deferred tax liabilities Provision for retirement benefits for directors (and other officers) 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 Non-controlling interests Total net assets Total liabilities and net assets 1,840 1,770 1,322 272 299 576 27 － 29 1,135 7,274 995 91 462 1,819 252 3,621 10,896 4,292 4,017 9,245 -1,157 16,398 306 -24 -41 240 2,863 19,502 30,398 2,397 2,113 1,265 375 317 625 34 43 35 1,009 8,216 620 83 343 1,867 263 3,177 11,394 4,292 4,264 9,911 -1,159 17,308 289 67 -101 255 2,586 20,150 31,545 ‒ 9 ‒ (2) Consolidated statement of income and comprehensive income (Consolidated statement of income) (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Net sales Cost of sales Gross profit Selling, general and administrative expenses Salaries, allowances and bonuses Provision for bonuses Provision for bonuses for directors (and other officers) Retirement benefit expenses Provision for retirement benefits for directors (and other officers) Depreciation Research and development expenses Provision for shareholder benefit program Provision of allowance for doubtful accounts Other Total selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Electricity sale income Foreign exchange gains Subsidy income Surrender value of insurance policies Other Total non-operating income Non-operating expenses Interest expenses Finance related expenses Electricity sale expenses Contract business related costs Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of investment securities Gain on sale of non-current assets Gain on bargain purchase Total extraordinary income Extraordinary losses Loss on disposal of non-current assets Loss on valuation of investment securities Loss on step acquisitions 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 ‒ 10 ‒ 21,080 14,716 6,363 2,213 200 27 167 57 171 598 － 5 1,784 5,227 1,136 8 48 35 20 63 13 38 227 10 6 17 14 31 80 1,283 － 3 557 560 4 － 1 5 1,838 414 -4 409 1,428 139 1,289 21,908 14,832 7,076 2,242 213 34 117 64 149 798 43 91 1,822 5,576 1,499 7 50 35 94 20 66 26 301 8 4 15 11 16 55 1,744 1 0 － 1 3 23 － 27 1,719 504 -19 484 1,234 183 1,050 (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 1,428 208 2 160 371 1,800 1,653 146 1,234 -17 145 -60 67 1,302 1,065 236 ‒ 11 ‒ (3) Consolidated statement of changes in equity For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021) Shareholders’ equity Balance at beginning of period 4,292 4,053 8,312 -1,156 15,500 Share capital Capital surplus Retained earnings Treasury shares (Millions of yen) Total shareholders’ equity Changes during period Dividends of surplus Profit attributable to owners of parent Transfer Other Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Changes during period Dividends of surplus Profit attributable to owners of parent Transfer Other Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period Balance at end of period － 4,292 205 205 306 -35 -35 4,017 -381 1,289 33 -8 933 9,245 -0 -0 -1,157 -1 -1 -24 160 160 -41 364 364 240 1,921 1,921 2,863 -381 1,289 -1 -0 -8 897 16,398 -381 1,289 -1 -0 -8 2,285 3,183 19,502 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 101 -23 -201 -123 941 16,318 ‒ 12 ‒ For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares (Millions of yen) Total shareholders’ equity Balance at beginning of period 4,292 4,017 9,245 -1,157 16,398 Changes during period Dividends of surplus Profit attributable to owners of parent Change in ownership interest of parent due to transactions with non-controlling interests Purchase of treasury shares Other Net changes in items other than shareholders’ equity Total changes during period Balance at end of period Changes during period Dividends of surplus Profit attributable to owners of parent Change in ownership interest of parent due to transactions with non-controlling interests Purchase of treasury shares Other Net changes in items other than shareholders’ equity Total changes during period Balance at end of period － 4,292 -16 -16 289 246 246 4,264 -381 1,050 -4 665 9,911 -1 -1 -1,159 91 91 67 -60 -60 -101 14 14 255 192 -276 2,586 -468 -222 -381 1,050 246 -1 -4 910 17,308 -381 1,050 -1 -4 206 648 20,150 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 306 -24 -41 240 2,863 19,502 ‒ 13 ‒ (4) Consolidated statement of cash flows Cash flows from operating activities Profit before income taxes Depreciation Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in retirement benefit liability Decrease (increase) in retirement benefit asset Increase (decrease) in provision for retirement benefits for directors (and other officers) Increase (decrease) in provision for shareholder benefit program Interest and dividend income Interest expenses Subsidy income Loss (gain) on sale of investment securities Loss (gain) on valuation of investment securities Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Increase (decrease) in accrued consumption taxes Loss (gain) on step acquisitions Gain on bargain purchase Other, net Subtotal Interest and dividends received Interest paid Subsidies received Income taxes refund (paid) Net cash provided by (used in) operating activities Proceeds from withdrawal of time deposits Payments into time deposits Purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Purchase of intangible assets Proceeds from sale of investment securities Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation Loan advances Proceeds from collection of loans receivable Purchase of insurance funds Proceeds from maturity of insurance funds Other, net Net cash provided by (used in) investing activities Cash flows from investing activities (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 1,838 872 14 21 549 -623 26 － -56 10 -63 － － 686 181 -684 13 1 -557 194 2,425 56 -10 63 -193 2,341 255 -980 -754 4 -198 － 1,082 -27 11 -81 73 -133 -748 1,719 795 88 49 -38 -39 -119 43 -58 8 -20 -1 23 156 -987 821 -79 － － -60 2,301 58 -8 20 -491 1,880 1,449 -1,390 -774 0 -136 94 － -8 4 -73 302 -47 -578 ‒ 14 ‒ (Millions of yen) Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Cash flows from financing activities Net increase (decrease) in short-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 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 -122 -390 -0 -381 -73 － -968 6 629 4,800 5,430 -58 -272 -1 -381 -42 -222 -978 67 390 5,430 5,821 ‒ 15 ‒ (5) Notes to consolidated financial statements (Notes on going concern assumptions) There is no items to report. (Changes in accounting policies) (Application of Accounting Standard for Revenue Recognition, etc.) The Group decided to apply the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the consolidated fiscal year under review to recognize the revenue the Group expects to receive in exchange for the relevant good or service when the control over the promised good or service is transferred to the customer. The Group has applied the alternative treatment stipulated in Section 98 of the Implementation Guidance on Accounting Standard for Revenue Recognition to recognize revenue from the domestic sale of merchandise or products at the time of its shipment when an ordinary period of time is expected from shipment to the transfer of the control of the relevant merchandise or products being shipped to the customer. Regarding the application of the Accounting Standard for Revenue Recognition, etc., the Group complies with transitional treatment stipulated in the proviso of Section 84 of the Accounting Standard for Revenue Recognition, so that retained earnings at the beginning of the consolidated fiscal year under review was adjusted for the cumulative impact of the retroactive application of the new accounting policy from the beginning of the fiscal consolidated year under review, and the new accounting policy is applied in the new accounting period from the balance at the beginning of the period. However, by applying the method stipulated in Section 86 of the Accounting Standard for Revenue Recognition, the new accounting policy was not applied retroactively to contracts for which most of the revenue was recognized before the beginning of the consolidated fiscal year under review in accordance with the previous treatment. Also, by applying the method stipulated in additional provision (1) of Section 86 of the Accounting Standard for Revenue Recognition, when any contract was modified before the beginning of the consolidated fiscal year under review, the accounting processing was done based on contract conditions reflecting all of the contract modifications, and retained earnings at the beginning of the consolidated fiscal year under review were adjusted for the cumulative impact. This change has only a minor impact on the consolidated financial statements for the consolidated fiscal year under review. Because of the application of the Accounting Standard for Revenue Recognition, etc., notes and accounts receivable – trade indicated in the consolidated balance sheet of the previous consolidated fiscal year are included in “notes”, “accounts receivable – trade” and “contract assets” from the consolidated fiscal year under review. In compliance with the transitional treatment stipulated in Section 89-2 of the Accounting Standard for Revenue Recognition, the details of the previous consolidated fiscal year were not reclassified using the new presentation method. (Adoption of the Accounting Standard for Fair Value Measurement） The Companies have adopted “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30, July 4, 2019) and related implementation guidance from the beginning of the consolidated fiscal year under review. Based on the transitional treatment prescribed in 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 Companies have decided to apply the new accounting policies set forth by the Accounting Standard for Fair Value Measurement into the future. These changes had no impact on the consolidated financial statements. ‒ 16 ‒ (Segment information) Segment information 1. Overview of reportable segments The Group’s reportable segments are components of the Group for which separate financial information is available and which are subject to periodic review by the Board of Directors in order to decide how resources should be allocated and to evaluate financial results. For each business group which is comprised of the Company’s sales division and production sites as well as group companies, the Group formulates comprehensive domestic and overseas strategies for the finished goods, merchandise and services handled and conducts business activities accordingly. The Group is, therefore, made up of segments based on these business groups and classified according to the finished goods, merchandise and services handled. It has three reportable segments: the Measurement & Control Instruments segment, the Instrumentation Systems segment and the Sensor segment. The main finished goods, merchandise and services in each reportable segment are as follows. Details of finished goods, merchandise and services Name of segment Measurement & Control Instruments Segment Instrumentation Systems Segment Sensor Segment maintenance services. Recorders, controllers and consumer electronics Performance and evaluation test equipment, package systems for control and monitoring, device and semiconductor test equipment, clean rooms, temperature calibration equipment, and various instrumentation systems Infrared radiation equipment, thermal image measurement devices, temperature sensor, and applied sensor Note: The “Other” segment is a business segment not included in the reportable segments and it covers business such as repair and 2. Calculation method for net sales, profit/loss, assets, liabilities and other items by reportable segment The accounting methods used for reportable segments are the same as those applied for the consolidated financial statements. Profit of reportable segments is based on operating profit. Intersegment sales and transfers are based on actual transactions. ‒ 17 ‒ 3. Information concerning net sales, profit/loss, assets, liabilities and other items by reportable segment For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021) Reportable segments Measurement & Control Instruments Instrumentation Systems Sensor Total Other (Note) Total (Millions of yen) Net sales External Inter-segment sales and transfers Total Segment profit Segment assets Other items Depreciation and amortization Impairment losses Increase in property, plant and equipment and intangible assets maintenance services. Net sales External Inter-segment sales and transfers Total Segment profit Segment assets Other items Depreciation and amortization Impairment losses Increase in property, plant and equipment and intangible assets maintenance services. 6,923 ‒ 6,923 888 7,438 334 ‒ 268 7,965 ‒ 7,965 1,168 7,969 303 ‒ 335 6,560 ‒ 6,560 1,138 8,619 239 ‒ 275 6,804 ‒ 6,804 1,304 9,013 231 ‒ 267 20,236 ‒ 20,236 2,619 21,069 674 ‒ 790 21,072 ‒ 21,072 2,954 22,283 626 ‒ 633 844 ‒ 844 152 608 33 ‒ 10 836 ‒ 836 194 605 33 ‒ 4 21,080 ‒ 21,080 2,771 21,678 707 ‒ 800 21,908 ‒ 21,908 3,149 22,889 659 ‒ 637 Note: The “Other” segment is a business segment not included in the reportable segments and it covers business such as repair and For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) Reportable segments Measurement & Control Instruments Instrumentation Systems Sensor Total Other (Note) Total (Millions of yen) Note: The “Other” segment is a business segment not included in the reportable segments and it covers business such as repair and 6,752 ‒ 6,752 592 5,011 100 ‒ 246 6,302 ‒ 6,302 481 5,301 91 ‒ 30 ‒ 18 ‒ 4. Reconciliations of the totals of segment sales, reported segment profit or loss, segment assets, segment liabilities and other material segment items to consolidated financial statement amounts and breakdown by major item Net sales Previous fiscal year Fiscal year under review (Millions of yen) Reportable segment total Net sales of Other segment Net sales in consolidated financial statements Profit Previous fiscal year Fiscal year under review (Millions of yen) 20,236 844 21,080 2,619 152 -1,635 1,136 21,069 608 8,720 30,398 21,072 836 21,908 2,954 194 -1,649 1,499 22,283 605 8,656 31,545 Reportable segment total Profit of Other segment Corporate expenses (Note) Reportable segment total Assets of Other segment Corporate assets (Note) Operating profit in consolidated financial statements Note: Corporate expenses are primarily general and administrative expenses that cannot be allocated to specific segments. Assets Previous fiscal year Fiscal year under review (Millions of yen) Total assets in consolidated financial statements Note: Corporate assets are primarily head office building, etc. that cannot be allocated to specific segments. Reportable segment total Other Adjustments Previous fiscal year Fiscal year under review Previous fiscal year Fiscal year under review Previous fiscal year Fiscal year under review Previous fiscal year Fiscal year under review (Millions of yen) Amount on consolidated financial statements 626 ‒ 633 33 ‒ 10 33 ‒ 4 164 ‒ 191 135 ‒ 146 872 ‒ 991 795 ‒ 784 Other items Depreciation and amortization Impairment losses Increase in property, plant and equipment and intangible assets expenditures. 674 ‒ 790 Note: The adjustments to “Increase in property, plant and equipment and intangible assets” are head office-related capital ‒ 19 ‒ Relevant information For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021) 1. Information by product and service This information is omitted because such information is disclosed in “Segment information.” 2. Geographic information (1) Net sales Japan Asia Other 17,562 3,171 347 Notes: 1. Country and regional segmentation are based on geographic proximity. 2. Main countries or regions belonging to geographical segments besides Japan (1) Asia: Mainly China, South Korea and Taiwan (2) Other: Mainly the United States, Germany and Italy (2) Property, plant and equipment This information is omitted because the amount of property, plant and equipment located in Japan accounts for more than 90% of the amount of property, plant and equipment in the consolidated financial statements. 3. Information on major customers This information is omitted because there are no customers that account for 10% or more of net sales in the consolidated statements of income. For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) 1. Information by product and service This information is omitted because such information is disclosed in “Segment information.” 2. Geographic information (1) Net sales Japan Asia Other 17,831 3,651 425 Notes: 1. Country and regional segmentation are based on geographic proximity. 2. Main countries or regions belonging to geographical segments besides Japan (1) Asia: Mainly China, South Korea and Taiwan (2) Other: Mainly the United States, Germany and Italy (2) Property, plant and equipment This information is omitted because the amount of property, plant and equipment located in Japan accounts for more than 90% of the amount of property, plant and equipment in the consolidated financial statements. 3. Information on major customers This information is omitted because there are no customers that account for 10% or more of net sales in the consolidated statements of income. (Millions of yen) Total 21,080 (Millions of yen) Total 21,908 ‒ 20 ‒ Information concerning impairment loss on non-current assets by reportable segment For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021) For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) There is no items to report. There is no items to report. Information concerning amortization of goodwill and unamortized balance by reportable segment For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021) There is no items to report. There is no items to report. For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) Information concerning gain on bargain purchase by reportable segment For the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021) In the Sensor Segment, the Group additionally acquired shares in Meiyo Electric Co., Ltd., which was an affiliated company accounted for using the equity method, to make it into a consolidated subsidiary at the beginning of the fiscal year under review and, as a result, recorded a gain on bargain purchase of 557 million yen. At the time of additionally acquiring shares, the Group also recorded a loss on step acquisitions of 1 million yen. The gain on bargain purchase and loss on step acquisitions were not allocated to a specific reportable segment. For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022) There is no items to report. ‒ 21 ‒ (Per share information) Previous fiscal year (from April 1, 2020 to March 31, 2021) Fiscal year under review (from April 1, 2021 to March 31, 2022) Net assets per share Earnings per share Notes: 1. Diluted earnings per share is omitted because there are no potential shares with a dilutive effect. 1,964.43 yen Net assets per share 152.24 yen Earnings per share 2. The basis for calculating net assets per share is as follows: 2,073.94 yen 124.07 yen Previous fiscal year (as of March 31, 2021) Fiscal year under review (as of March 31, 2022) Total net assets (Millions of yen) Amount deducted from total net assets (Millions of yen) [Non-controlling interests (Millions of yen)] Total net assets related to common shares at the end of the year (Millions of yen) Number of common shares used in calculating net assets per share at the end of the year (Thousand) 3. The basis for calculating earnings per share is as follows: Profit attributable to owners of parent (Millions of yen) Amount not attributable to common shareholders (Millions of yen) Profit attributable to owners of parent related to common shares (Millions of yen) Average number of shares during the period (Thousand) 19,502 2,863 [2,863] 16,639 8,470 1,289 ‒ 1,289 8,470 20,150 2,586 [2,586] 17,564 8,468 1,050 ‒ 1,050 8,469 Previous fiscal year (from April 1, 2020 to March 31, 2021) Fiscal year under review (from April 1, 2021 to March 31, 2022) ‒ 22 ‒ (Subsequent events) (Abolition of officer retirement benefit system, revision of compensation, etc. for Directors, and introduction of a restricted stock-based compensation plan) At a meeting of the Board of Directors held on April 28, 2022, the Company resolved to review the officer compensation plan and abolish the officer retirement benefit system. It also resolved to refer the proposals to pay officer retirement benefits to officers still in office for the period they will have been in office, revise Director’s compensation, etc., and introduce a restricted stock-based compensation plan (“the Plan”) to the 86th annual shareholders’ meeting to be held on June 28, 2022 (“the Shareholders’ Meeting”). 1. Abolition of the officer retirement benefit system As part of a revision of the officer compensation plan, the Company has decided to abolish its officer retirement benefit system at the closing of the Shareholders’ Meeting. With the abolition of the officer retirement benefit system, the Company will pay officer retirement benefits to the officers in office for the period they will have been in office until the closing of the Shareholders’ Meeting within the range of reasonable amounts under certain standards. The proposal to pay the officer retirement benefits when they retire will be referred to the Shareholders’ Meeting. The effect of the payment of the officer retirement benefits is minor and insignificant because the Company posts a provision for retirement benefits for directors (and other officers) in preparation for payment of retirement benefits for directors (and other officers) under certain standards. 2. Revision of compensation, etc. for Directors Annual compensation for Directors of 168 million yen maximum (excluding salaries for Directors who are also employees as employees) has been approved at the 76th annual shareholders’ meeting held on June 28, 2012. The Company will refer a proposal to change the annual compensation for Directors to 250 million yen maximum to the Shareholders’ Meeting in consideration of the revision of the officer compensation plan to promote sustainable growth at the Company and changes in the business environment. The revised maximum annual compensation for Directors does not include salaries for Directors who are also employees as employees like the existing maximum annual remuneration for Directors. 3. Introduction of the Plan (1) Purpose of the introduction of the Plan, etc. 1) Purpose of introducing the Plan The Company will introduce the Plan as a compensation plan where restricted stock-based compensation will be allotted to the Company’s Directors (excluding Outside Directors; hereinafter “Eligible Directors”) for the purpose of giving them an incentive to sustainably enhance the Company’s corporate value and further promote the sharing of value with the shareholders. 2) Conditions for introduction of the Plan As monetary claims will be granted as compensation to Eligible Directors for the allotment of restricted stock under the Plan, the introduction of the Plan will be subject to shareholders’ approval at the Shareholders’ Meeting for the granting of said compensation. If the revision of the compensation, etc. for Directors is approved at the Shareholders’ Meeting, the maximum annual compensation for Directors will become 250 million yen (excluding salaries for Directors who are also employees as employees). At the Shareholders’ Meeting, the Company plans to request shareholder approval of the introduction of the Plan and set a maximum amount of restricted stock-based compensation for the Eligible Directors in addition to the aforementioned maximum compensation for Directors. (2) Overview of the Plan Under the Plan, Eligible Directors shall make in-kind contributions of all the monetary compensation receivables to be granted from the Company and in return receive the Company’s common stock that will be issued or disposed of by the Company. The total amount of monetary compensation claims to be granted to Eligible Directors under the Plan shall be no more than 40 million yen per year. The total number of the Company’s common stock that will be issued or disposed of by the Company under the Plan shall be no more than 26,000 shares per year (if unavoidable circumstances necessitate an adjustment to the number of shares to be issued or disposed of, however, such as a share split and consolidation of shares of the Company’s common stock, the number of shares to be issued or disposed of shall be adjusted to a reasonable extent). The amount paid per share for the restricted shares that will be issued or disposed of under the Plan shall be determined by the Board of Directors of the Company based on the closing price of the Company’s common shares at the Tokyo Stock Exchange on the business day immediately before the day on which resolutions are made at a meeting of the Board of Directors (or the closing price on the immediately preceding day if no trades are made on this day), to the extent that the amount is not particularly advantageous to the Eligible Directors who will subscribe for the restricted shares. To achieve an alignment with shareholders’ value, which is one of the purposes of the introduction of the Plan, over the medium and long term, the transfer restriction period shall be from the restricted share delivery date to the retirement from office as both a Director and an Executive Officer of the Company. The specific timing of payment and allotment to each Eligible Director shall be determined at the Board of Directors meetings. Regarding the issuance or disposal of its common stock under the Plan, the Company shall enter into a restricted stock allotment agreement (the “Allotment Agreement”) with Eligible Directors, the provisions of which shall contain the following items. i) The Eligible Directors may not, during a predefined period, transfer, attach a security interest on or otherwise dispose of the Company’s common stock allotted pursuant to the Allotment Agreement; and ii) The Company shall acquire said common stock without consideration if certain events occur. (3) Other If the proposal is approved at the Shareholders’ Meeting, the Company will allot restricted shares similar to those under the Plan also to the Executive Officers of the Company. ‒ 23 ‒ (Omission of disclosure) The non-consolidated financial statements and significant notes thereto are omitted, as we do not see any significant need to disclose them in the financial results. Change of Directors (expected effective date is June 28, 2022) – Retiring Director Koichi Yoshida (currently Director and Senior Executive Officer) (Scheduled to become advisor to the Company) – Candidate for Director to be newly appointed Yukinobu Miki (former Senior Vice-President of National Institute of Advanced Industrial Science and Technology) (Scheduled to become President of MEIYO ELECTRIC Co., Ltd. on June 22, 2022) 4. Other ‒ 24 ‒