天馬（7958） – [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 12, 2022 Company name: TENMA CORPORATION Stock exchange listing: Tokyo Stock Exchange Code number: 7958 URL: https://www.tenmacorp.co.jp Representative: Hirohiko Hirono, President and Representative Director Contact: Masaru Noritake, Director and in charge of General Affairs and Financial and Accounting Affairs and General Manager, General Affairs Department Phone: +81-3-3598-5515 Scheduled date of Annual General Meeting of Shareholders: June 23, 2022 Scheduled date of filing annual securities report: June 23, 2022 Scheduled date of commencing dividend payments: June 24, 2022 Availability of supplementary briefing material on annual financial results: No Schedule of annual financial results briefing session: Scheduled (for securities analysts and institutional investors) (Amounts of less than one million yen are rounded off.) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Consolidated Operating Results (% indicates changes from the previous corresponding period.) Net sales Operating income Ordinary income Profit attributable to owners of parent Fiscal year ended (16.7) March 31, 2022 (18.9) March 31, 2021 (Note) Comprehensive income: Fiscal year ended March 31, 2022: ¥4,547 million [76.8 %] Fiscal year ended March 31, 2021: ¥ 2,572 million [37.2 %] % Million yen 1,970 2,892 % Million yen 2,430 2,919 Million yen 82,697 73,639 (31.9) (5.7) 12.3 (14.1) % Million yen 1,058 3,006 % (64.8) 20.0 Basic earnings per share Diluted earnings per share Rate of return on equity Ordinary income to total assets Operating income to net sales % Yen 46.61 127.08 Fiscal year ended Yen – March 31, 2022 – March 31, 2021 (Reference) Equity in earnings (losses) of affiliated companies: Fiscal year ended March 31, 2022: ¥ 31 million Fiscal year ended March 31, 2021: ¥(4) million * The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 March 31, 2020), etc. from the beginning of the fiscal year under review. Regarding consolidated operating results, etc. of the previous consolidated fiscal year, the percent changes from the previous corresponding period are reference values due to non-application of retrospective calculation of said Accounting Standard, etc. 2.6 3.1 1.4 4.1 2.4 3.9 % % (2) Consolidated Financial Position As of March 31, 2022 As of March 31, 2021 Total assets Net assets Equity ratio Million yen 93,984 92,387 Million yen 73,197 72,895 Net assets per share Yen 3,299.10 3,153.43 % 77.9 78.9 Million yen 15,281 16,106 Dividends to net assets (consolidated) % 2.6 2.5 (Reference) Equity: As of March 31, 2022: ¥ 73,197 million As of March 31, 2021: ¥ 72,895 million * We have decided to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020), etc., effective from the beginning of the consolidated fiscal year under review. Each value for the year ended March 31, 2022 is after application of said Accounting Standard, etc. (3) Consolidated Cash Flows Net cash provided by (used in) operating activities Net cash provided by (used in) investment activities abstract Net cash provided by (used in) financing activities Cash and cash equivalents at end of period Million yen 2,995 5,799 Million yen (229) 2,320 Million yen (4,724) (4,241) Fiscal year ended March 31, 2022 March 31, 2021 2. Dividends Fiscal year ended March 31, 2021 March 31, 2022 Fiscal year ending March 31, 2023 (Forecast) 31, 2023) Six months ended September 30, 2022 Full year Annual dividends 1st quarter-end Yen – – 2nd quarter-end Yen 40.00 40.00 3rd quarter-end Yen – – Year-end Total Total dividends Payout ratio (consolidated) Yen 40.00 80.00 42.00 82.00 Yen Million yen 1,873 1,848 % 63.0 175.9 – 40.00 – 40.00 80.00 93.4 3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 to March (% indicates changes from the previous corresponding period.) Net sales Operating income Ordinary income Profit Million yen % Million yen % Million yen % Million yen % Yen 46,000 18.3 400 (54.4) 400 (65.0) 300 (47.3) Basic earnings per share 13.52 85.64 100,000 20.9 2,500 26.9 2,500 2.9 1,900 79.5 * Notes: (1) Changes in significant subsidiaries during the fiscal year ended March 31, 2022 (changes in specified subsidiaries resulting in changes in scope of consolidation): No (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 Further details are described on page 15 of the Attachments, “3. Consolidated Financial Statements and Primary Notes, (5) Notes to Consolidated Financial Statements, (Changes in accounting policies).” (3) Total number of issued shares (common shares) 1) Total number of issued shares at the end of the period (including treasury shares): March 31, 2022: 25,313,026 shares March 31, 2021: 26,813,026 shares 2) Total number of treasury shares at the end of the period: March 31, 2022: 3,126,076 shares March 31, 2021: 3,696,769 shares 3) Average number of shares during the period: Fiscal year ended March 31, 2022: 22,703,658 shares Fiscal year ended March 31, 2021: 23,652,134 shares * The Company’s shares owned by the stock granting trust for Officers are included in the treasury shares to be deducted in the calculation of total number of treasury shares at the end of the period. (Reference) Summary of Non-consolidated Financial Results Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 to March 31, 2022) (1) Non-consolidated Operating Results (% indicates changes from the previous corresponding period.) Operating income Ordinary income Net sales Profit Million yen 20,561 22,852 % Million yen (578) 519 (10.0) 0.6 % Million yen 964 – 1,996 – % Million yen 456 1,766 (51.7) 209.1 % (74.2) 569.5 Fiscal year ended March 31, 2022 March 31, 2021 Basic earnings per share Diluted earnings per share Yen – – Yen 20.08 74.66 Fiscal year ended March 31, 2022 March 31, 2021 (2) Non-consolidated Financial Position Total assets As of March 31, 2022 As of March 31, 2021 (Reference) Equity: As of March 31, 2022: ¥50,050 million As of March 31, 2021: ¥53,894 million * These consolidated financial results are outside the scope of audit by certified public accountants or audit firms. * Explanation of the proper use of financial results forecast and other notes Net assets per share Yen 2,255.84 2,331.42 Million yen 50,050 53,894 Million yen 54,265 58,581 % 92.2 92.0 Equity ratio Net assets The earnings forecasts and other forward-looking statements herein are based on information currently available to the Company and certain assumptions that the Company deems reasonable. Actual results may differ significantly from these forecasts due to a wide range of factors. Please refer to “1. Overview of Business Results, etc., (4) Future Outlook” on page 5 of the Attachments for the assumptions underlying the forecasts and precautions when using the forecasts. Table of Contents – Attachments 1. Overview of Business Results, etc. …………………………………………………………………………………………………. 2 (1) Overview of Business Results for the Period Under Review …………………………………………………………… 2 (2) Overview of Financial Position for the Period Under Review …………………………………………………………. 3 (3) Overview of Cash Flows for the Period Under Review ………………………………………………………………….. 4 (4) Future Outlook …………………………………………………………………………………………………………………………. 5 (5) Dividend Policy and Payments for This Period and Next Period ……………………………………………………… 5 2. Basic Stance Concerning Choice of Accounting Standards ………………………………………………………………… 6 3. Consolidated Financial Statements and Primary Notes ………………………………………………………………………. 7 (1) Consolidated Balance Sheets ……………………………………………………………………………………………………… 7 (2) Consolidated Statements of Income and Comprehensive Income ……………………………………………………. 9 Consolidated Statements of Income …………………………………………………………………………………………….. 9 Consolidated Statements of Comprehensive Income ……………………………………………………………………. 10 (3) Consolidated Statements of Changes in Net Assets ……………………………………………………………………… 11 (4) Consolidated Statements of Cash Flows …………………………………………………………………………………….. 13 (5) Notes to Consolidated Financial Statements ……………………………………………………………………………….. 15 (Notes on Going Concern Assumption) …………………………………………………………………………………………… 15 (Notes to Consolidated Balance Sheets) ………………………………………………………………………………………….. 15 (Changes in accounting policies) ……………………………………………………………………………………………………. 15 (Additional information) ……………………………………………………………………………………………………………….. 16 (Segment information, etc.) …………………………………………………………………………………………………………… 17 (Revenue Recognition related) ………………………………………………………………………………………………………. 20 (Per share information) …………………………………………………………………………………………………………………… 21 (Significant subsequent events) ……………………………………………………………………………………………………… 22 1 1. Overview of Business Results, etc. (1) Overview of Business Results for the Period Under Review The world economy during the fiscal year (from April 1, 2021 to March 31, 2022) faced acceleration of rising prices partly due to the recent situation in Ukraine and the turmoil in demand and logistics. Even though the impact varies in accordance with area, the impact of the novel coronavirus (COVID-19) still persisted, and uncertainty about the future still remained. Meanwhile, the Japanese economy saw rises in raw material prices and the continued depreciation of the yen that have led to higher import prices. Also, uncertainty about corporate performance increased due to shortages of semiconductors, electronics parts, etc., and stagnant automotive exports, etc. Furthermore, the high cost of living strangled household budgets, therefore, it is difficult to assume improvement in personal consumption. In these circumstances, the Group developed building a foundation for achievement of the mid- to long-term growth strategy based on the “Third Medium-term Management Plan” released in May 2021. Meanwhile, even during COVID-19 pandemic, the Company maintained production systems in order to accommodate changes in production plans of business partners. As a result, net sales amounted to 82,697 million yen (112.3 % year on-year), and exceeded 81,000 million yen, the goal of the first year of the Third Medium-term Management Plan. Regarding profit, rises in raw material prices have led to the worsening of profitability in the field of household synthetic resin products and related products. Also, production efficiency deteriorated due to shortages of semiconductors, etc., and declining factory operating ratios in the field of industrial and synthetic resin products caused by the spread of COVID-19. Therefore, operating income amounted to 1,970 million yen (68.1% year on-year), falling significantly below the 3,400 million yen goal for the first year of the Third Medium-term Management Plan. Ordinary income amounted to 2,430 million yen (83.3% year on-year) partly due to improvement of exchange gains and losses, etc., and profit loss attributable to owners of parent amounted to 1,058 million yen (35.2% year on-year) partly due to non-occurrence of gain on sales of non-current assets and compensation income for expropriation which were recorded in the previous consolidated fiscal year, and partly due to the increase of income taxes – deferred. Operating results by segment are as follows. (Japan) In the field of industrial synthetic resin products, sales related to vehicles decreased due to the production adjustment of business partners caused by shortages of semiconductors, etc., on the other hand, sales related to electrical and electronics increased due to the increase in demand of printers, etc., caused by the increase in remote working. In the business activities in the fields of new businesses such as energy related to telecommunications and digital, sales of this field slightly increased. In the mainstay household synthetic resin products and related products, the Company expanded the sales of Covid-19 related products such as acrylic boards for prevention of airborne droplets and household related products such as “gravels, bricks, and towels,” in addition to original products. However, the slowdown in spending lingered after the decrease as a reaction to demand due to staying at home, and sales significantly decreased. Regarding profit, even though the Company worked on cost reduction by improvement of logistics efficiency, product assembly automation, etc., profit decreased due to the significant impact of a drop in sales in the field of household synthetic resin products and related products, and rises in raw material prices. As a result, net sales for this segment amounted to 20,735 million yen (89.9% year on-year), and segment income (operating income) amounted to 669 million yen (37.2% year on-year.) 2 (China) In the field of industrial synthetic resin products, production operation came back to normal due to a lesser impact of the novel coronavirus as a whole. Also, orders of molds, in addition to products, increased due to some business partners’ production transfer from Southeast Asia. Furthermore, the yen conversion value increased due to the remaining depreciation trend of the yen against the U.S. dollar and the Chinese yuan. For these reasons listed above, etc., sales significantly increased in TENMA PRECISION (SHENZHEN) CO., LTD. and TENMA PRECISION (ZHONGSHAN) CO., LTD. In the field of household synthetic resin products and related products, sales in brick-and-mortar stores decreased due to competitors’ similar products with lower prices. However, the Company worked on improvement and expansion of e-commerce, sales in the field of household synthetic resin products, and related products, resulting in a minor decrease. Regarding profit, rises in personnel expenses, etc., and the appreciation of the Chinese yuan against the U.S. dollar, the major transaction currency, remained, in addition to rises in raw material prices in the field of household synthetic resin products and related products. However, profit increased thanks to the increase in sales. As a result, net sales for this segment amounted to 21,396 million yen (122.1% year on-year), and segment income (operating income) amounted to 1,046 million yen (108.0% year on-year.) (Southeast Asia) In the field of industrial synthetic resin products, some factories operations had to be suspended for approximately one month due to the resurgence of the novel coronavirus. However, sales significantly increased due to recovery in production related to parts for household electrical appliances in Thailand, the increase of orders related to vehicles as a reaction to the decline in the previous term, and furthermore, sales prices reflected rises in raw material prices. Regarding profit, even though profitability decreased due to inefficient production systems such as declining factory operating ratios of the Company due to frequent changes in production plans of business partners caused by shortages of semiconductors, electronics parts, etc., profit increased as it was absorbed by the increase in sales. As a result, net sales for this segment amounted to 40,566 million yen (122.8% year on-year), and segment income (operating income) amounted to 1,449 million yen (106.4% year on-year.) (2) Overview of Financial Position for the Period Under Review (Assets) The total assets at the end of the consolidated fiscal year under review increased by 1,598 million yen compared to the end of the previous consolidated fiscal year, reaching 93,984 million yen at the end of the fiscal year ended March 31, 2022. This was due to the increase of raw materials and supplies by 1,713 million yen, notes and accounts receivable – trade by 991 million yen, merchandise and finished goods by 780 million yen, and construction in progress by 594 million yen, etc., even though cash and deposits decreased by 2,885 million yen. (Liabilities) The total liabilities at the end of the consolidated fiscal year under review increased by 1,296 million yen compared to the end of the previous consolidated fiscal year, reaching 20,787 million yen at the end of the fiscal year ended March 31, 2022. This was due to the increase of notes and accounts payable – trade by 837 million yen, deferred tax liabilities by 402 million yen, etc. (Net assets) The total net assets at the end of the consolidated fiscal year under review increased by 302 million yen compared to the end of the previous consolidated fiscal year, reaching 73,197 million yen at the end of the fiscal year ended March 31, 2022. This was due to the increase of foreign currency translation adjustment by 3,526 million yen, treasury stock, 3 a deduction item, by 280 million yen, etc., even though capital surplus decreased by 2,675 million yen, and retained earnings by 792 million yen. (3) Overview of Cash Flows for the Period Under Review Cash and cash equivalents for the consolidated fiscal year under review decreased by 825 million yen compared to the end of the previous consolidated fiscal year, reaching 15,281 million yen at the end of the fiscal year ended March 31, 2022. The following is a summary of cash flows for each activity and related causes. Cash flows from operating activities Cash flows from operating activities increased by 3,054 million yen (decreased by 2,746 million yen year on-year.) This was mainly due to 4,096 million yen in depreciation and amortization, 2,303 million yen in income before income taxes, in spite of the increase of 2,237 million yen in inventories, payment of 759 million yen of income taxes, etc. Cash flows from investing activities Cash flows from investing activities decreased by 288 million yen (decreased by 2,608 million yen year on-year.) This was mainly due to 28,605 million yen in payments into time deposits, 2,948 million yen in purchase of property, in spite of 31,330 million yen in proceeds from withdrawal of time deposits, etc. Cash flows from financing activities Cash flows from financing activities decreased by 4,724 million yen (decreased by 483 million yen year on-year.) This was mainly due to increase in treasury stock by 2,395 million yen, and cash dividends paid by 1,841 million yen. Equity ratio (%) Equity ratio based on fair value (%) Years of debt redemption (years) Interest coverage ratio (Notes) Equity ratio: Fiscal year ended March 31, 2018 Fiscal year ended March 31, 2019 Fiscal year ended March 31, 2020 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 82.0 53.3 – – 81.3 54.2 – – 78.4 41.1 – – 78.9 55.7 – – 77.9 57.1 – – Shareholders’ equity / Total assets Equity ratio based on fair value: Total market value of shares / Total assets Years of debt redemption: Interest coverage ratio: Interest-bearing debts / Operating cash flow Operating cash flow / Interest paid 1. The indicators were calculated using consolidated financial figures. 2. The total market value of shares was calculated by multiplying the closing price of the closing date by the total number of shares outstanding (less the treasury shares). 3. Operating cash flow is the figure of net cash provided by (used in) operating activities recorded in the Consolidated Statements of Cash Flows. Interest-bearing debts include all debts recorded on the Consolidated Balance Sheets for which interest is paid. Interest paid is the interest expenses paid shown in the Consolidated Statements of Cash Flows. 4. Years of debt redemption and interest coverage ratio are deducted due to no interest-bearing debts or interest paid. 4 (4) Future Outlook Regarding future of global economy, during the chaotic situation in Ukraine, there is no indication that rising resource prices and turmoil of logistics will settle down. Due to the growing risk of geopolitics, there is the potential for putting a lot of extra drag on the economic growth. Also, the novel coronavirus is mutating repeatedly, and this may include the prolongation risk of negative impact to economic activities caused by the resurgence of the novel coronavirus. Regarding the Japanese economy, while shifting to an increase in consumer spending, the unclear situation may continue due to the price fluctuation, etc., triggered by sudden changes in the exchange rate, rising resource prices, etc. In the context of this situation, the Group has established the Third Medium-term Management Plan (released on May 13, 2021), with the 76th fiscal year (fiscal year ended March 31, 2024) as the target year for its fulfillment. Under the theme of “Progress toward 100-Year-Old Company”, the Company set a goal of realizing an “Affluent society which harmonizes well with people and plastic products” as a long-term vision, and is operating with the basic policy of “Implementation of sustainable management” and “Building a foundation for growth.” Regarding numerical targets, the Company targets 87 billion yen in consolidated net sales for the final year, 4.2 billion yen in consolidated operating income, and 4.6% or higher in ROE. The Company positioned these three years as the transition period for the realization of the long-term vision and achievement of long-term numerical targets (fiscal year ended March 31, 2031), 110 billion yen in net sales, 9 billion yen in consolidated operating income, 9% or higher in ROE, and 9% or higher in ROIC. To achieve the goal, the company will drive the management strategies, “1. human resource efforts,” “2. environmental issue efforts,” “3. enhancement of governance,” “4. implementation of DX (digital transformation) and automation,” “5. implementation of technology development,” “6. Expansion of business areas,” bolster sustainable growth and our corporate value, and seek to continued development of the Group. For the consolidated full-year results for fiscal year 2023, factoring in the recent depreciation trend of the yen and rises in raw material prices, in addition to the recovery in production in the field of industrial and synthetic resin products, the Company expects 100 billion yen in net sales, 2.5 billion yen in operating income, 2.5 billion yen in ordinary income, and 1.9 billion yen in profit. (5) Profit Distribution Policy and Payments for This Period and Next Period The Company regards striving ongoingly to enhance the distribution of profits as one of the important management issues while investing for the achievement of the mid- to long-term growth strategy, achieving sustainable growth of the corporate value, and maintaining the financial soundness to cope with changes in the business environment. Our Company’s basic policies are to aim to achieve 2.5% or higher in consolidated dividends to net assets (DOE) based on a continued stable dividend, to aim to further improvement of distribution of profits, and to deliberate on dividend increases in response to enhancement of business performance and achievement of business goals. Regarding purchase of own shares, while considering changes in free cash flow and situations, the Company deliberates expeditiously and proactively on the option of distribution to the shareholders. In the end of the consolidated fiscal year under review, net assets per share increased due to the purchase of 929 thousand shares (purchase cost of the shares 2,395 million yen) of treasury shares, which is equivalent to the percentage of the total number, 3.47%, of issued shares before retirement of treasury shares, improvement of capital efficiency, and change in foreign currency translation adjustment caused by exchange rate fluctuations. To make the annual dividend at the end of the consolidated fiscal year under review amount to 82 yen per share, which is 2.5% or higher in consolidated dividends to net assets (DOE.), the year-end dividend has been revised to 42 yen per share. This is an increase of 2 yen per share from the initial dividend forecast. As we have already paid an interim dividend of 40 yen, the annual dividend will amount to 82 yen per share. In regard to per share dividends for the next consolidated fiscal year, we forecast an interim dividend of 40 5 yen and a year-end dividend of 40 yen respectively, and an annual dividend of 80 yen. Regarding year-end dividends, we will deliberate flexibly with due consideration of the external environment based on dividend policies. 2. Basic Stance Concerning Choice of Accounting Standards Taking into consideration the comparability of consolidated financial statements across periods and among companies, the Group applies Japanese GAAP. Regarding application of IFRS (International Financial Reporting Standards), the Group will deliberate in consideration of the application trends of other companies in Japan. 6 3. Consolidated Financial Statements and Primary Notes (1) Consolidated Balance Sheets As of March 31, 2021 As of March 31, 2022 (Thousand yen) Assets abstract Current assets abstract Cash and deposits Notes and accounts receivable – trade Merchandise and finished goods Work in process Raw materials and supplies Other Allowance for doubtful accounts Current assets Non-current assets abstract Property, plant and equipment abstract Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Right of use assets Accumulated depreciation Right of use assets net Construction in progress Other Accumulated depreciation Other, net Property, plant and equipment Intangible assets abstract Other Intangible assets Investments and other assets abstract Investment securities Net defined benefit asset Deferred tax assets Other Allowance for doubtful accounts Investments and other assets Non-current assets Assets 30,249,244 16,114,081 2,694,082 590,893 3,089,375 1,775,395 (1,866) 54,511,203 25,437,066 (12,050,168) 13,386,898 33,829,631 (25,092,313) 8,737,318 2,461,045 4,093,109 (894,167) 3,198,943 250,613 8,858,627 (8,078,440) 780,187 28,815,004 2,450,333 2,450,333 4,054,680 1,977,255 181,652 403,091 (6,482) 6,610,196 37,875,533 92,386,737 27,364,663 17,104,604 3,474,046 711,353 4,802,790 1,700,291 (1,979) 55,155,769 26,908,693 (13,540,306) 13,368,387 36,181,579 (27,596,310) 8,585,269 2,480,578 4,638,934 (1,485,171) 3,153,764 844,693 9,102,089 (8,333,456) 768,633 29,201,324 2,595,040 2,595,040 4,032,851 2,214,175 141,179 650,950 (6,903) 7,032,253 38,828,616 93,984,385 7 Liabilities abstract Current liabilities abstract Income taxes payable Provision for bonuses Provision for taves related expenses Provision for loss on liquidation of subsidiaries and affiliates Other Current liabilities Non-current liabilities abstract Long-term accounts payable other Provision for share based remuneration for directors (and other officers) Net defined benefit liability Lease obligations Asset retirement obligations Deferred tax liabilities Provision for business structure improvement Non-current liabilities Total non-current liabilities Liabilities Net assets abstract Shareholders’ equity abstract Capital stock Capital surplus Retained earnings Treasury shares Shareholders’ equity Valuation and translation adjustments abstract Valuation difference on available for sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Valuation and translation adjustments Non-controlling interests Net assets Liabilities and net assets As of March 31, 2021 As of March 31, 2022 (Thousand yen) 9,478,595 372,621 826,783 128,895 6,844 4,022,871 14,836,609 22,531 62,118 318,787 3,146,876 522,367 1,812,871 65,254 5,950,804 20,787,413 19,225,350 14,856,522 39,596,800 (5,591,856) 68,086,815 996,970 3,328,466 784,648 5,110,083 74 73,196,972 93,984,385 8,641,580 306,580 820,938 133,968 35,358 4,358,253 14,296,677 22,531 40,647 331,793 3,101,198 219,389 1,410,662 68,374 5,194,593 19,491,270 19,225,350 17,531,538 40,388,885 (5,871,390) 71,274,383 1,050,488 (197,145) 767,677 1,621,020 64 72,895,467 92,386,737 8 (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 abstract Freightage and packing expenses Salaries and allowances Other Selling, general and administrative expenses Operating income Non-operating income abstract Interest income Dividends income Equity in earnings of affiliates Foreign exchange gains Other Non-operating income Non-operating expenses abstract Sales discounts Interest expenses Foreign exchange losses Other Non-operating expenses Ordinary income Extraordinary income abstract Gain on sales of non-current assets Compensation income for expropriation Reversal of provision for business structure improvement Other Extraordinary income Extraordinary loss abstract Loss on sales of non-current assets Loss on retirement of non-current assets Impairment loss Provision for business structure improvement Loss related to COVID-19 Loss on valuation of stocks of subsidiaries and affiliates Extraordinary loss Income before income taxes Income taxes – current Income taxes – deferred Income taxes Profit loss Profit loss attributable to non-controlling interests Profit loss attributable to owners of parent 9 (Thousand yen) For the fiscal year ended March 31, 2022 82,696,820 69,607,791 13,089,029 3,709,714 2,643,798 4,765,220 11,118,731 1,970,297 131,018 127,853 31,168 167,100 148,769 605,908 － 115,658 － 30,257 145,916 2,430,289 30,627 － 918 － 31,546 2,572 26,141 － － 92,424 37,566 158,703 2,303,132 789,471 455,452 1,244,923 1,058,209 3 1,058,206 73,638,812 59,321,310 14,317,502 4,247,310 2,563,085 4,615,133 11,425,528 2,891,974 137,873 126,493 － － 167,247 431,612 84,177 100,320 193,138 27,183 404,818 2,918,768 850,720 216,131 － 40,366 1,107,217 14,212 28,643 141,550 71,451 185,673 － 441,529 3,584,456 763,522 (184,736) 578,786 3,005,670 (5) 3,005,675 Consolidated Statements of Comprehensive Income Profit Other comprehensive income abstract Valuation difference on available-for-sale securities, net of tax Foreign currency translation adjustment, net of tax Remeasurements of defined benefit plans, net of tax Share of other comprehensive income of associates accounted for using equity method Other comprehensive income Comprehensive income (Comprehensive income attributable to abstract) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 (Thousand yen) 1,058,209 (53,519) 3,481,153 16,971 44,465 3,489,071 4,547,279 4,547,269 10 3,005,670 821,396 (1,829,655) 606,764 (32,447) (433,942) 2,571,729 2,571,739 (11) 10 Balance at beginning of current period Cumulative effects of changes in accounting policies Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury Disposal of treasury shares shares shares Cancellation of treasury Net changes of items other than shareholders’ equity Total changes of items during Balance at end of current period period Balance at beginning of current period Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury Disposal of treasury shares shares shares Cancellation of treasury Net changes of items other than shareholders’ equity Total changes of items during Balance at end of current period period (3) Consolidated Statements of Changes in Net Assets For the fiscal year ended March 31, 2021 Capital stock Capital surplus Retained earnings Treasury shares Shareholders’ equity (Thousand yen) Total shareholders’ equity 19,225,350 17,531,538 39,298,419 (3,954,500) 72,100,807 Restated balance 19,225,350 17,531,538 39,298,419 (3,954,500) 72,100,807 (1,915,209) 3,005,675 (1,915,209) 3,005,675 (1,999,085) (1,999,085) 82,195 82,195 － － － － (1,915,209) 3,005,675 (1,999,085) 82,195 － － － 1,090,466 (1,916,890) (826,424) 19,225,350 17,531,538 40,388,885 (5,871,390) 71,274,383 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 229,092 1,664,951 160,913 2,054,956 74 74,155,837 229,092 1,664,951 160,913 2,054,956 74 74,155,837 821,396 (1,862,096) 606,764 (433,936) (11) (433,947) 821,396 (1,862,096) 606,764 (433,936) (11) (1,260,370) 1,050,488 (197,145) 767,677 1,621,020 64 72,895,467 11 For the fiscal year ended March 31, 2022 Capital stock Capital surplus Retained earnings Treasury shares Shareholders’ equity (Thousand yen) Total shareholders’ equity 19,225,350 17,531,538 40,388,885 (5,871,390) 71,274,383 (9,490) (9,490) Restated balance 19,225,350 17,531,538 40,379,395 (5,871,390) 71,264,893 (1,840,801) 1,058,206 (2,395,483) (2,395,483) (1,840,801) 1,058,206 － － － (2,675,016) 2,675,016 － (2,675,016) (782,596) 279,533 (3,178,078) 19,225,350 14,856,522 39,596,800 (5,591,856) 68,086,815 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 1,050,488 (197,145) 767,677 1,621,020 64 72,895,467 Balance at beginning of current period Cumulative effects of changes in accounting policies Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury Disposal of treasury shares shares shares Cancellation of treasury Net changes of items other than shareholders’ equity Total changes of items during Balance at end of current period period Balance at beginning of current period Cumulative effects of changes in accounting policies Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury Disposal of treasury shares shares shares Cancellation of treasury Net changes of items other than shareholders’ equity Total changes of items during Balance at end of current period period (53,519) 3,525,611 16,971 3,489,063 10 3,489,074 (53,519) 3,525,611 16,971 3,489,063 10 310,995 996,970 3,328,466 784,648 5,110,083 74 73,196,972 (9,490) (1,840,801) 1,058,206 (2,395,483) － － Restated balance 1,050,488 (197,145) 767,677 1,621,020 64 72,885,977 12 (4) Consolidated Statements of Cash Flows Net cash provided by (used in) operating activities abstract Income before income taxes Depreciation and amortization Impairment loss Increase (decrease) in provision for bonuses Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for share based remuneration for directors and other officers Increase (decrease) in provision for taxes related expenses Increase (decrease) in provision for business structure improvement Increase (decrease) in provision for loss on liquidation of subsidiaries and affiliates Increase (decrease) in net defined benefit asset Increase (decrease) in net defined benefit liability Interest and dividend income Interest expenses Compensation income for expropriation Foreign exchange losses (gains) Loss on retirement of non-current assets Loss (gain) on sales of non-current assets Loss (gain) on valuation of stocks of subsidiaries and affiliates Loss (gain) on valuation of investments in capital Decrease/increase in notes and accounts receivable – trade Decrease/increase in inventories Increase (decrease) in notes and accounts payable – trade Equity in earnings losses of affiliates Other, net Subtotal Interest and dividends income received Income taxes paid Net cash provided by (used in) operating activities For the fiscal year ended March 31, 2021 (Thousand yen) For the fiscal year ended March 31, 2022 3,584,456 3,913,073 141,550 (75,629) (75) (58,678) (8,297) 68,374 35,358 (85,894) 21,182 (264,366) 100,320 (216,131) 19,208 28,643 (836,507) － － 316,759 428,538 (47,690) 3,808 (864,446) 6,203,554 292,568 (696,902) 5,799,220 2,303,132 4,096,205 － (42,657) 113 21,472 (17,922) (3,119) (28,514) (212,466) (30,517) (258,871) 115,658 － (210,680) 26,141 (28,055) 37,566 8,938 (225,321) (2,237,328) (47,649) (31,168) 352,339 3,587,297 225,136 (758,903) 3,053,529 13 Net cash provided by (used in) investment activities abstract Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property plant and equipment Proceeds from sales of property plant and equipment Payments for Retirement of property plant and equipment Purchase of intangible assets Proceeds from sales of intangible assets Purchase of investment securities Payments for investments in capital to investment partnerships Collection of loans receivable Payments of loans receivable Proceeds from compensation income for expropriation Net cash provided by (used in) operating activities Net cash provided by (used in) financing activities abstract Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents Cash and cash equivalents Net decrease/increase in treasury stock Cash dividends paid Payments for lease obligations Net cash provided by (used in) financing activities For the fiscal year ended March 31, 2021 (Thousand yen) For the fiscal year ended March 31, 2022 (43,249,276) 47,165,068 (3,309,085) 1,329,759 (49,068) (48,371) 268,031 (2,176) － 1,286 (2,112) 216,131 2,320,187 (1,941,546) (1,913,176) (386,769) (4,241,491) (492,854) 3,385,062 12,720,772 16,105,834 (28,605,038) 31,329,961 (2,948,125) 45,210 3,139 (53,293) － (1,794) (58,887) 1,295 (116) － (287,648) (2,395,483) (1,841,205) (487,344) (4,724,032) 1,133,193 (824,957) 16,105,834 15,280,877 14 (5) Notes to Consolidated Financial Statements (Notes on Going Concern Assumption) Not applicable. (Notes to Consolidated Balance Sheets) Contingent liabilities The Company received from the third-party committee its investigation report on March 13, 2020. The report stated that offering bribes or suspected actions related to tax inspections, etc., to foreign public officials were carried out by an overseas subsidiary of the Company (in regard to the investigation report (the published version), the Company had released on April 2, 2020.) We aim to restore the trust of our stakeholders and society by addressing the measures to prevent the issue disclosed on May 1, 2020 from recurring as urgent management issues. Regarding this issue, there is a possibility of a financial penalty being imposed. However, it is difficult to estimate the amount of financial impact as related legal procedures include uncertainty and complicated elements at this time, therefore, it is not reflected in the consolidated financial statements. Also, because similar financial penalties may be imposed in the countries where overseas subsidiaries of the Company are located, it is difficult to estimate the amount of financial impact at this time, therefore, it is not reflected in the non-consolidated financial statements. (Changes in accounting policies) (Changes in accounting policies) (Application of Accounting Standard for Revenue Recognition, etc.) For the fiscal year ended March 31, 2022 We have decided to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafter the “Revenue Recognition Accounting Standard”), etc., effective from the beginning of the consolidated fiscal year under review and recognize revenue at the amount expected to be received in exchange for the goods or services when control over the promised goods or services is transferred to a customer. As a result, we changed the method of sales discount to be deducted from net sales as sales allowance and returns which had previously been recognized as non-operating expenses. In addition, the goal achievement rebate is reflected in the transaction price only to the extent when it is probable that a significant reversal in the amount of cumulative revenue recorded will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The application of the Revenue Recognition Accounting Standard, etc., are subject to the transitional treatment specified in the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative effect of the retrospective application of the new accounting policy to periods prior to the beginning of the consolidated fiscal year under review was added to or subtracted from the beginning balance of retained earnings for the consolidated fiscal year under review, and the new accounting policy has been applied from the beginning balance of the period. As a result, in the consolidated fiscal year ended March 31, 2022, net sales and operating income decreased by 15 102,899 thousand yen, and ordinary income, income before income taxes and profit decreased by 33,105 thousand yen, respectively. Also, the beginning balance of retained earnings decreased by 9,490 thousand yen. In accordance with the transitional treatment specified in Paragraph 89-2 of the Revenue Recognition Accounting Standard, we have not used the new presentation method to restate figures for the previous fiscal year. In accordance with the transitional treatment specified in Paragraph 89-3 of the Revenue Recognition Accounting Standard, notes to “Revenue Recognition related” for the previous fiscal year ended is not described. (Changes in accounting policies) (Application of Accounting Standard for Fair Value Measurement, etc.) We have decided to apply the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter the “Fair Value Measurement Accounting Standard”), etc., effective from the beginning of the consolidated fiscal year ended March 31, 2022 and apply the new accounting policy specified in the Fair Value Measurement Accounting Standard, etc., prospectively, in accordance with the transitional treatment specified in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No.10, July 4, 2019). There is no impact of the application of said Accounting Standard on our consolidated financial statements. (Additional information) (Accounting estimates associated with the spread of COVID-19) Regarding accounting estimates associated with the spread of COVID-19, the spread of COVID-19 is the event that widely influences the economy and business activities; in some of the Company’s locations, factory operations are affected due to travel restrictions, etc., to prevent the spread of COVID-19 imposed by governments, etc., of each country, and the business partners’ production adjustment, etc. It is difficult to reasonably forecast when COVID-19 will be resolved, and the impact to the future business performance of the Group at this time. Regarding estimation of collectability for deferred tax assets and impairment of non-current assets, they are analyzed and assessed based on currently available external sources. As a result, we assume that the impact to the future business performance of the Group is limited and are working on accounting estimates. The impact of the spread of COVID-19 is high in uncertainty, therefore, in the event of a change in assumption mentioned above, it may impact the financial condition and operating results. (Stock granting trust for Officers) The Company implemented the stock compensation system “Stock granting trust for Officers” for Directors (excluding Outside Directors and Directors who are members of the Audit and Supervisory Committee, hereinafter the same) and Corporate Executive Officers (hereinafter referred to as the “Directors, etc.”) with the aim of achieving the targets by boosting the motivation of Directors, etc., to contribute to the improvement of the Company’s mid- to long-term business performance and enhancement of its corporate value. (1) Details of the transaction This system is a stock compensation system that the Trustor (hereinafter referred to as the “Trust”) acquires the Company’s shares by contributing to the Trust of the Company through the Trust, and executes the granting of 16 Company shares equivalent to the number of points which were awarded to each Director, etc., by the Company. The timing of execution of the Company’s shares in principle is at retirement of Officers, etc. (2) Company shares remaining in the Trust The Company shares remaining in the Trust are recorded in net assets as treasury stock with the book value of the Trust (excluding the amount of incidental cost). The carrying amount and the number of shares for the previous consolidated fiscal year resulted 77,615 thousand yen, 33,997 shares, and for the consolidated fiscal year under review resulted 77,615 thousand yen, 33,997shares. (Segment information, etc.) [Segment information] 1. Description of reportable segments The Company’s reportable segments shall be part of its organizational units whose financial information is individually available, and shall be subject to regular review by its Board of Directors for the purpose of deciding the allocation of its managerial resources and evaluating its business performance. The Company mainly operates in the manufacture and sales of synthetic resin products. The Company is responsible for businesses in Japan, and overseas subsidiaries of China (including Hong Kong) and Southeast Asia (Indonesia, Thailand, and Vietnam) are responsible for each area. Each subsidiary is an independent management unit, and engages in its business activities by comprehensively developing strategies. Therefore, the Group is composed of the segments based on the Company and consolidated subsidiaries. In order to provide appropriate information regarding business activities and business environment, the Company consolidated three segments whose areas of manufacture/sale or elements of products are generally similar, defined as “Japan,” “China,” and “Southeast Asia” as reportable segments. 2. Method of measurement for the amounts of sales, profits/losses, assets, liabilities, and other items for each reportable segment The accounting method used for reportable business segments is generally the same as stated in “Important Matters That Form the Basis for Preparing Consolidated Financial Statements.” Reportable segment income figures are based on operating income. Inter-segment sales and transfers are mainly based on market prices. 17 3. Information on net sales and income (loss) by reportable segment For the fiscal year ended March 31, 2021 (Thousand yen) Reportable segment Total Japan China Southeast Asia 23,075,224 17,523,795 33,039,794 73,638,812 89,972 234,495 566 325,033 23,165,196 17,758,290 33,040,359 73,963,846 Net sales Net sales to outside customers Inter-segment net sales or transfers Total Segment income 1,798,628 968,888 1,362,505 4,130,020 Segment assets 21,658,812 22,800,639 31,545,077 76,004,528 Other Depreciation and amortization Increase in property, plant and equipment and Intangible assets For the fiscal year ended March 31, 2022 Net sales Net sales to outside customers Inter-segment net sales or transfers Total Other Depreciation and amortization Increase in property, plant and equipment and Intangible assets 18 995,190 921,129 1,983,358 3,899,677 1,903,193 235,242 1,372,655 3,511,091 (Thousand yen) Reportable segment Japan China Southeast Asia Total 20,735,214 21,395,749 40,565,858 82,696,820 93,771 247,566 94 341,431 20,828,984 21,643,315 40,565,952 83,038,251 Segment income 669,194 1,046,347 1,449,298 3,164,840 Segment assets 22,470,323 25,893,113 34,734,028 83,097,464 1,057,457 973,485 2,049,241 4,080,184 801,281 343,873 1,482,556 2,627,711 4. Difference between the total reportable segment and the amount recorded in consolidated financial statements, and description of said difference (comparability adjustment) For the fiscal year ended March 31, 2021 (Thousand yen) For the fiscal year ended March 31, 2022 Net sales Total reportable segment Inter-segment eliminations Net sales in Consolidated Financial Statements Income Total reportable segment Inter-segment eliminations Corporate expenses* Operating income in Consolidated Financial Statements reportable segment. Assets Total reportable segment Corporate assets *1 Other adjustment *2 For the fiscal year ended March 31, 2021 (Thousand yen) For the fiscal year ended March 31, 2022 73,963,846 (325,033) 73,638,812 4,130,020 (1,001) (1,237,045) 2,891,974 76,004,528 25,276,056 (8,893,847) 92,386,737 83,038,251 (341,430) 82,696,820 3,164,840 31,290 (1,225,834) 1,970,297 83,097,464 19,387,713 (8,500,791) 93,984,385 * Corporate expenses are mainly the expenses of the parent company’s management department which does not belong to a For the fiscal year ended March 31, 2021 (Thousand yen) For the fiscal year ended March 31, 2022 *1 Corporate assets are mainly the assets of the parent company’s management department which does not belong to a reportable Total assets in Consolidated Financial Statements segment. *2 Other adjustment is mainly the amount of transaction elimination. (Thousand yen) Total Reportable segment Adjustment Consolidation Other For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 Depreciation and amortization 3,899,677 4,080,184 13,396 16,021 3,913,073 4,096,205 Increase in property, plant and equipment and Intangible assets 3,511,091 2,627,711 113,639 83,844 3,624,730 2,711,555 * The adjustment of increase in property, plant and equipment and intangible assets is mainly the capital expenditure and the transaction elimination of the parent company’s management department which does not belong to a reportable segment. 19 (Revenue Recognition related) Broken-down information of revenue from contracts with customers For the fiscal year ended March 31, 2022 Synthetic resin product related business Other* Total (Thousand yen) Southeast Asia Japan China Other Revenue from contracts with customers 82,667,862 Net sales to outside customers * Other indicates the real-estate rental business. 20,706,255 21,395,749 40,565,858 ― 82,667,862 ― ― ― ― 28,958 28,958 20,706,255 21,395,749 40,565,858 82,667,862 28,958 82,696,820 20 (Per share information) For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 ¥3,153. 43 Net assets per share Net assets per share Basic earnings per share Basic earnings per share (Notes) 1. Diluted earnings per share is not described as dilutive shares do not exist. ¥127. 08 ¥3,299.10 ¥46. 61 2. For the purpose of calculating the basic earnings per share, the treasury shares remaining in trust posted as treasury shares in Shareholders’ equity are included in the treasury shares deducted in the calculation of the average number of shares during the fiscal year under review. For the purpose of calculating the net assets per share, the treasury shares so remaining in trust are included in the treasury shares deducted from the total number of shares issued at the end of the fiscal year under review. For the purpose of calculating the basic earnings per share, the average number of treasury shares, so deducted, during the previous consolidated fiscal year was 47,014 shares, and during the consolidated fiscal year under review was 33,997 shares. For the purpose of calculating the net assets per share, the number of treasury shares, so deducted, as of the end of the previous consolidated fiscal year was 33,997 shares, and as of the end of the consolidated fiscal year under review was 33,997 shares. 3. The basis for the calculation of basic earnings per share is as follows. For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 3,005,675 1,058,206 ― ― 3,005,675 1,058,206 23,652,134 22,703,658 Net income per share Profit attributable to owners of parent reported in the consolidated statement of income (Thousand Yen) Amount not attributable to common shareholders (Thousand Yen) Profit attributable to owners of parent relevant to common shares (Thousand Yen) Average number of common shares during period (Shares) Net assets per share Total of net assets reported in the consolidated balance sheet (Thousand Yen) Main items of the difference (Thousand Yen) (Of which Non-controlling interests) Net assets relevant to common shares (Thousand Yen) Total number of issued common shares (Shares) Total number of treasury shares of common shares (Shares) Number of common shares used to calculate net asset per share (Shares) 64 (64) 72,895,403 26,813,026 3,696,769 23,116,257 4. Calculation basis for net assets per share is as follows: For the fiscal year ended March 31, 2021 For the fiscal year ended March 31, 2022 72,895,467 73,196,972 74 (74) 73,196,898 25,313,026 3,126,076 22,186,950 21 (Significant subsequent events) treasury shares as follows. The Company, at the Board of Directors meeting held on May 12, 2022, resolved regarding purchase of 1. Reason for purchase of treasury shares In order to enable expeditious capital policy corresponding to changes in the business environment, along with improving capital efficiency. 2. Class of shares for purchase Common shares of the Company 3. Total shares for purchase 500,000 shares (Maximum) 4. Total purchase cost of the shares 1,000,000,000 yen (Maximum) 5. Purchase period May 13, 2022 to April 28, 2023 6. The method of acquisition Market buying in the Tokyo Stock Exchange 22