Carlit : Second Quarter of FY2022 Financial Results

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

October 31, 2022

Consolidated Financial Results

for the Second Quarter of the Fiscal Year Ending March 31, 2023

(Based on Japanese GAAP)

Company name: Carlit Holdings Co., Ltd. (hereafter 'the Company')

Listed exchange: Prime Section, Tokyo Stock Exchange	Code Number: 4275
URL:	https://www.carlithd.co.jp
Representative:	Hirofumi Kaneko, Representative Director and President
Inquiries:	Koshi Sawa, General Manager of PR and Sustainability Promotion Dept.
Telephone:	[phone]

Scheduled date to file quarterly securities report: November 8, 2022

Scheduled date to commence dividend payments: -

Preparation of explanatory materials for quarterly financial results: Yes

Holding of quarterly financial results briefing: Yes

(Amounts are rounded down to the nearest million yen)

1. Consolidated financial results for the six months of the fiscal year ending March 31, 2023 (from April 1, 2022 to September 30, 2022)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes)
		Net sales	Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Six months ended	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen		%
	Sep. 30, 2022	17,586	9.9	1,104	6.3	1,287	13.2	951		(6.8)
	Sep. 30, 2021	16,006	-	1,039	-	1,137	-	1,020		-
Note: Comprehensive income For the six months ended Sep. 30, 2022: ¥1,023 million [(28.3)%]
		For the six months ended Sep. 30, 2021: ¥1,428 million [-%]
		Basic earnings	Diluted earnings
		per share	per share
	Six months ended		Yen		Yen
	Sep. 30, 2022		40.01		-
	Sep. 30, 2021		42.92		-
(2) Consolidated financial position
		Total assets	Net assets	Equity-to-asset ratio	Net assets per share
	As of	Millions of yen	Millions of yen		%			Yen
	Sep. 30, 2022		51,197		31,547		61.6		1,327.06
	Mar. 31, 2022		50,078		30,903		61.7	1,300.41

Reference: Shareholders' equity: As of Sep. 30, 2022: ¥31,547 million; As of Mar. 31, 2022: ¥30,903 million

2. Cash dividends

		Annual dividends per share
	1st quarter-end	2nd quarter-end	3rd quarter-end	Fiscal year-end	Total
	Yen	Yen	Yen	Yen	Yen
Fiscal year ended	-	0.00	-	16.00	16.00
Mar. 31, 2022
Fiscal year ending	-	0.00
Mar. 31, 2023
Fiscal year ending
Mar. 31, 2023			-	16.00	16.00
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Forecasts of consolidated financial results for the fiscal year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)

								Profit attributable	Basic
	Net sales		Operating profit	Ordinary profit	earnings per
		to owners of parent
								share
	Millions of		%	Millions of	%	Millions of	%	Millions of	%	Yen
	yen		yen	yen	yen
Full year	35,000		3.3	2,500	(0.3)	2,700	(1.6)	1,900	(18.7)	79.90

Note: Revisions to the forecasts of consolidated financial results most recently announced: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Yes
   Note: For details, please refer to "2. Quarterly Consolidated Financial Statements, (3) Notes to Quarterly
3. 
   Consolidated Financial Statements" on page 11 of the attached document.
4. Changes in accounting policies, changes in accounting estimates, and restatement
5. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None

1. Number of issued shares (common shares)
2. 1. Total number of issued shares at the end of the period (including treasury shares)

	As of Sep. 30, 2022	24,050,000 shares	As of Mar. 31, 2022	24,050,000 shares
(ii) Number of treasury shares at the end of the period
	As of Sep. 30, 2022	277,447 shares	As of Mar. 31, 2022	285,316 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Six months ended Sep. 30,	23,768,624 shares	Six months ended Sep. 30,	23,774,684 shares
2022		2021

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters (Notice concerning forward-looking statements)
  The forward-looking statements described in this document, such as business forecasts, are based on information available at the time of release of these materials and reasonable assumptions made by the Company, and do not represent a commitment from the Company that they will be achieved. Actual financial results, etc. may differ significantly from this forecast due to various factors. For assumptions used for earnings forecasts and notes on the use of earnings forecasts, please refer to "1. Quarterly
  Qualitative Information on Business Results, (3) Explanation of Forward-Looking Statements including Forecasts of Consolidated Financial Results" on page 5 of the attached document.
  (Acquisition method of explanatory materials for financial results and contents of financial results briefing)
  After the results briefing, the Company will promptly post the presentation materials on its website.
  (Other special matters) Not applicable

Table of Contents
1. Quarterly Qualitative Information on Business Results ..................................................................................	2
(1)	Explanations of Business Results..................................................................................................................	2
(2)	Summary of the Consolidated Balance Sheets and Cash Flow Statements ..............................................	5
(3)	Explanation of Forward-Looking Statements Including Forecasts of Consolidated Financial Results	..5
2．Quarterly Consolidated Financial Statements ................................................................................................	6
(1)	Quarterly Consolidated Balance Sheets .......................................................................................................	6
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income.............................................	8
	Quarterly Consolidated Statements of Income (For the six months) .......................................................	8
	Quarterly Consolidated Statements of Comprehensive Income (For the six months) ............................	9
(3)	Quarterly Consolidated Statements of Cash Flows ...................................................................................	10
(4)	Notes to Quarterly Consolidated Financial Statements ............................................................................	11
	Going Concern Assumption ........................................................................................................................	11
	Significant Changes in Amounts of Shareholders' Equity .......................................................................	11
	Adoption of Accounting Treatment Specific to the Preparation of Quarterly Consolidated Financial
	Statements...................................................................................................................................................	11
	Segment information ..................................................................................................................................	11

1

1. Quarterly Qualitative Information on Business Results

(i) Announcement of the new Medium-term Management Plan

The Company formulated its new Medium-term Management Plan "Challenge 2024," with fiscal year 2022 as the starting year and disclosed it on June 15, 2022.

The Company has established its management policy, "Aiming to enhance corporate value through the optimization of our business portfolio" based on a review of the previous Medium-term Management Plan. According to this policy, we will carry out specific measures centered on our five strategies of "Accelerating growth businesses," "Expanding and improving research and development," "Improving the profitability of existing businesses," "Advancing ESG management," and "Rebuilding business infrastructure." We will also work to further enhance corporate governance, to give shape to "profitable growth" and "ESG," aiming to become a corporate group that is trusted by society.

(ii) Issuance of integrated report

On October 7, 2022, the Company issued its integrated report "Carlit Report 2022" and posted it on our website.

Carlit Report 2022 includes the policy of our new Medium-term Management Plan created through back-casting based on our vision of "Supporting happy lifestyles by combining the power of 'chemicals' and 'technology' to contribute to a sustainable society," our performance goals, and our environmental and social initiatives. Carlit Report 2022 also expands our ESG information disclosure on initiatives related to our response to climate change and on human capital to implement sustainable management.

(1) Explanations of Business Results

(i) Explanation of operating results

In the six months ended September 30, 2022, despite the impact of surging costs for raw materials and energy, due to strong sales and price updates in chemicals, electronic materials, and ceramics in the chemical products business segment, and in silicon wafers for semiconductors in the industrial materials business segment, we enjoyed increased sales and profit compared to both the same period of the previous fiscal year and the plans.

Furthermore, for the previous fiscal year, we recorded ¥392 million yen in bargain purchase, due to acquiring shares of Minamisawa Construction Co., Ltd. on September 2021. For this fiscal year, we recorded ¥88 million in extraordinary income on gain on sales of investment securities.

(Percentages indicate year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Six months ended	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
Sep. 30, 2022	17,586		9.9	1,104	6.3	1,287	13.2	951	(6.8)
Sep. 30, 2021	16,006		-	1,039	-	1,137	-	1,020	-

(ii) Explanation by business segment

Our main products and services are as follows.

Chemical products

Explosives = decrease in sales and profit

・Industrial explosives experienced both a decrease in sales due to the withdraw from unprofitable manufacturing locations and a decrease in profit due to surging costs for raw materials and energy.

・Automotive emergency flares saw an increase in sales for new vehicles. In terms of replacements for automobile inspections, sales increased due to an increased number of inspections and an increase in sales of emergency flares with glass-breaking function in response to torrential rain disasters and from customers' improved safety awareness. However, profit decreased due to surging costs for raw materials.

・Sales and profit increased for smoke fires for highway use from increased demand due to the recovery in traffic volume and price updates.

・Raw materials for fireworks enjoyed increases in sales and profit with the partial return of fireworks displays.

2