Neturen : Consolidated Financial Results for the Fiscal Year Ended March 31, 2022

Consolidated Financial Results

for the Fiscal Year Ended March 31, 2022

[Japanese GAAP]

May 12, 2022

Company name: Neturen Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange

Code number: 5976

URL: https://www.k-neturen.co.jp/

Representative: Katsumi Omiya, Representative Director, Member of the Board and President

Contact: Takaaki Aoi, General Manager, Accounting Department, Administrative Headquarters

Phone: [phone]

Scheduled date of the ordinary general meeting of shareholders: June 28, 2022

Scheduled date of commencing dividend payments: June 29, 2022

Scheduled date of filing securities report: June 29, 2022

Availability of supplementary explanatory materials on annual financial results: Available

Schedule of annual financial results briefing session: Scheduled (for institutional investors and analysts)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 - March 31, 2022)

(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
		Net sales		Operating income	Ordinary income	Profit attributable to
			owners of parent
	Fiscal year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
	March 31, 2022	53,004	24.5	3,704	302.6	4,418	199.4	2,690	903.4
	March 31, 2021	42,567	(12.8)	920	(55.9)	1,475	(28.8)	268	7.0

(Note) Comprehensive income: Fiscal year ended March 31, 2022: ¥5,420 million [301.2%] Fiscal year ended March 31, 2021: ¥1,351 million [-%]

		Diluted		Ratio of	Ratio of
	Basic earnings	Return on	operating
	earnings	ordinary income
	per share	equity	income to net
	per share	to total assets
			sales
Fiscal year ended	Yen	Yen	%	%	%
March 31, 2022	67.45	-	4.6	5.6	7.0
March 31, 2021	6.59	-	0.5	1.9	2.2

(Reference) Equity in earnings of affiliated companies:

Fiscal year ended March 31, 2022: ¥143 million

Fiscal year ended March 31, 2021: ¥118 million

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

As of March 31, 2022

82,003

66,859

72.7

1,494.67

As of March 31, 2021

75,574

62,714

74.4

1,410.69

(Reference) Equity: As of

March 31, 2022: ¥59,646 million

As of March 31, 2021: ¥56,233 million

(3) Consolidated Cash Flows

Cash flows from

Cash flows from

Cash flows from

Cash and cash

equivalents

operating activities

investing activities

financing activities

at year-end

Fiscal year ended

Million yen

Million yen

Million yen

Million yen

March 31, 2022

6,335

(40)

(1,970)

18,099

March 31, 2021

3,969

(758)

(1,595)

13,309

2. Dividends

		Annual dividends			Total			Ratio of
							Payout ratio		dividends to
	1st	2nd	3rd	Year-			dividends
	Total		(consolidated)		net assets
	quarter-	quarter-	quarter-	end		(annual)
	end	end	end						(consolidated)
Fiscal year ended	Yen	Yen	Yen	Yen	Yen		Million yen	%	%
-	5.00	-	9.00	14.00	563	212.4	1.0
March 31, 2021
Fiscal year ended	-	13.00	-	17.00	30.00	1,197	44.5	2.1
March 31, 2022
Fiscal year ending
March 31, 2023	-	15.00	-	15.00	30.00			49.9
(Forecast)

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(% indicates changes from the previous corresponding period.)

							Profit attributable	Basic earnings
	Net sales		Operating income	Ordinary income	to owners of
		per share
							parent
First half	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
29,000	18.9	1,700	(7.1)	1,900	(11.5)	1,100	(18.9)	27.57
Full year	60,000	13.2	3,600	(2.8)	4,200	(4.9)	2,400	(10.8)	60.14

* Notes:

1. Changes in significant subsidiaries during the fiscal year under review: None (Changes in specified subsidiaries resulting in changes in scope of consolidation) Newly included: -
   Excluded: -
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued and outstanding shares at the end of the year (including treasury shares):

March 31, 2022:	40,906,500 shares
March 31, 2021:	43,790,500 shares
2) Total number of treasury shares at the end of the year:
March 31, 2022:	1,000,118 shares
March 31, 2021:	3,928,280 shares
3) Average number of shares during the year:
Year ended March 31, 2022:	39,892,858 shares
Year ended March 31, 2021:	40,686,347 shares

(Note) For the number of shares that form the basis for calculation of basic earnings per share (consolidated), please refer to 3. Consolidated Financial Statements and Primary Notes, (5) Notes to Consolidated Financial Statements, (Per share information) on page 20.

• These consolidated financial results are outside the scope of audit by certified public accountants or an audit firm.
• Explanation of the proper use of financial results forecast and other notes (Notes on forward-looking statements, etc.)
  The forward-looking statements contained in this document are based on judgments made in accordance with information available at the time of the release of this document and include many uncertain factors. Actual results may differ from these forecasts due to changes in business conditions and other factors.
  For the assumptions used for the financial results forecast as well as precautions regarding the use of such forecast, please refer to "1. Overview of Operating Results, etc. (4) Future Outlook" on page 4 of the Attachments.
  (Access to the materials for the annual financial results briefing session)
  The annual financial results briefing session (for institutional investors and analysts) is scheduled for May 25, 2022. Supplementary materials for the financial results (materials for the annual financial results briefing session) will be disclosed via TDnet and on the Company's website following the briefing session.

Table of Contents - Attachments
1. Overview of Operating Results, etc. .................................................................................................... 2
(1)	Overview of Operating Results for the Fiscal Year under Review ..................................................	2
(2)	Overview of Financial Position for the Fiscal Year under Review .................................................	3
(3)	Overview of Cash Flows for the Fiscal Year under Review ............................................................	3
(4)	Future Outlook ................................................................................................................................	4
(5)	Basic Policy on Profit Distribution and Dividends for the Current and Next Fiscal Years .............	5
2. Basic Policy on Selection of Accounting Standards ............................................................................	5
3. Consolidated Financial Statements and Primary Notes.........................................................................	6
(1)	Consolidated Balance Sheets ..........................................................................................................	6
(2)	Consolidated Statements of Income and Comprehensive Income ..................................................	8
(3)	Consolidated Statements of Changes in Equity ............................................................................	10
(4)	Consolidated Statements of Cash Flows .......................................................................................	12
(5)	Notes to Consolidated Financial Statements ...................................................................................	14
	(Notes on going concern assumption) .............................................................................................	14
	(Changes in accounting policies).....................................................................................................	14
	(Segment information, etc.) .............................................................................................................	16
	(Per share information) ....................................................................................................................	20
	(Significant subsequent events) .......................................................................................................	20

1

1. Overview of Operating Results, etc.

1. Overview of Operating Results for the Fiscal Year under Review
   During the fiscal year under review, the Japanese economy gradually began to recover from the economic stagnation due to the novel coronavirus disease (COVID-19). However, the outlook remains uncertain with rampant new mutant viruses, although vaccination rollout has progressed. In addition, stagnant production activities due to tight supply and demand of parts such as semiconductors and soaring steel prices affected corporate activities. Furthermore, Russia's invasion of Ukraine has been causing great turmoil in the world economy.
   Under these circumstances, the Group has been enhancing its corporate value by promoting the basic polices set forth in its 15th medium-term management plan "Change!! New NETUREN 2023" (a plan covering the three years from April 2021 to March 2024). The basic policies of the 15th medium-term management plan are as follows:
2. 1. Establishing a profit base by further strengthening the competitiveness of core businesses and introducing new technologies, new products, and new businesses to the market;
   2. Improving our information development capabilities by promoting digitalization through the establishment of the N-DX (NETUREN Digital Transformation) system;
   3. Placing the SDGs at the center of management, promoting CO2 reduction, and contributing to the creation of a sustainable society; and
   4. Producing human resources who can strengthen the Group's sales and marketing capabilities globally. In addition, the Group has done its utmost to secure orders and further promoted the cost reduction

measures that have been developed under the circumstances of the spread of COVID-19.

As a result, net sales for the fiscal year under review were ¥53,004 million (up 24.5% year on year), operating income was ¥3,704 million (up 302.6% year on year), ordinary income was ¥4,418 million (up 199.4% year on year) and profit attributable to owners of parent was ¥2,690 million (up 903.4% year on year).

The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and other standards have been applied from the beginning of the fiscal year under review. For details, please refer to 3. Consolidated Financial Statements and Primary Notes, (5) Notes to Consolidated Financial Statements, (Changes in accounting policies).

Results by business segment are as follows.

1. Specialty Steel and Wire Products Division
   Net sales of civil engineering and construction-related products increased year on year due to strong construction demand, etc.
   Net sales of automobiles-related products increased year on year following recovery from the global market slowdown in the automotive industry.
   Net sales of construction equipment-related products increased year on year, mainly due to increased sales volume in Japan.
   As a result, net sales were ¥31,205 million (up 27.2% year on year) and operating income was ¥1,317 million (up 92.2% year on year).
2. Induction Heating Division
   Net sales of induction heat treatment-related services increased year on year due to the recovery in orders from industries such as machine tools and construction machinery.
   Net sales of induction heating equipment and related services increased year on year because demand in capital investment remained on a recovery trend.
   As a result, net sales were ¥21,666 million (up 21.1% year on year) and operating income was ¥2,327 million (up 1,267.7% year on year).

2