Nippon Carbon : Summary of Consolidated Financial Results for the Year Ended December 31, 2019(Based on Japanese GAAP)

Translation

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results

for the Year Ended December 31, 2019

(Based on Japanese GAAP)

																			February 10, 2020
Company name:	Nippon Carbon Co., Ltd.
Stock exchange listing:	Tokyo
Stock code:	5302	URL http://www.carbon.co.jp
Representative:	President and Representative Director		Takafumi Miyashita
Inquiries:	Corporate Officer and General Manager of	Koji Imai		TEL [phone]
Business Control Div.
Scheduled date of ordinary general meeting of shareholders:		March 27, 2020
Scheduled date to file Securities Report:				March 27, 2020
Scheduled date to commence dividend payments:				March 30, 2020
Preparation of supplementary material on financial results:			No
Holding of financial results meeting:						No
											(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the year ended December 31, 2019 (from January 1, 2019 to December 31, 2019)
(1) Consolidated operating results												Percentages indicate year-on-year changes
		Net sales				Operating profit	Ordinary profit	Profit attributable to
					owners of parent
		Millions of yen		%	Millions of yen		%	Millions of yen	%		Millions of yen		%
Year ended December 31, 2019	44,931		(6.4)		14,827		(9.6)		15,106	(8.5)	9,700		(5.8)
Year ended December 31, 2018	48,017		71.7		16,404		538.4		16,508	450.7		10,292		247.6
		Earnings per share	Diluted earnings per	Profit attributable to		Ordinary profit/total	Operating profit/net
			share			owners of				assets			sales
							parent/equity
			Yen			Yen			%						%				%
Year ended December 31, 2019	876.81				-			23.8						19.9				33.0
Year ended December 31, 2018	931.89				-			31.8						25.1				34.2
(2) Consolidated financial position
		Total assets			Net assets		Equity ratio	Net assets per share
		Millions of yen		Millions of yen					%						Yen
As of December 31, 2019			77,939						51,654					57.9				4,080.33
As of December 31, 2018			73,598						42,734					49.7				3,303.04
(3) Consolidated cash flows
		Cash flows from		Cash flows from	Cash flows from	Cash and cash equivalents
		operating activities		investing activities	financing activities		at end of period
		Millions of yen		Millions of yen	Millions of yen		Millions of yen
Year ended December 31, 2019			4,742						(3,693)					(2,946)					17,707
Year ended December 31, 2018			12,633						(2,051)					(2,418)					19,602
2. Cash dividends
					Annual dividends per share					Total cash		Dividend payout	Ratio of dividends
																to net assets
		1st quarter-end	2nd quarter-end	3rd quarter-end	Fiscal year-end	Total			dividends (Total)	ratio (Consolidated)	(Consolidated)
		Yen			Yen		Yen		Yen	Yen	Millions of yen		%			%
Year ended December 31, 2018	-		50.00		-		50.00	100.00		1,105		10.7			3.4
Year ended December 31, 2019	-		100.00		-		100.00	200.00		2,212		22.8			5.4
Year ending December 31, 2020	-		100.00		-				100.00	200.00				34.6
(Forecast)

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3. Forecast of consolidated financial results for the year ending December 31, 2020 (from January 1, 2020 to December 31, 2020)

Percentages indicate year-on-year changes

	Net sales		Operating profit	Ordinary profit		Profit attributable to	Earnings per share
			owners of parent
Six months ending	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
21,000	(12.2)	4,900	(44.9)	4,600	(46.7)		3,100	(44.8)	280.21
June 30, 2020
Full year	43,400	(3.4)	10,000	(32.6)	9,500	(37.1)		6,400	(34.0)	578.50
4. Notes
(1) Changes in significant subsidiaries during the year ended December 31, 2019			No
(changes in specified subsidiaries resulting in the change in scope of consolidation):
(2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:	Yes
Changes in accounting policies due to other reasons:					No
Changes in accounting estimates:							No
Restatement of prior period financial statements:					No

(3) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of December 31, 2019	11,832,504	shares	As of December 31, 2018	11,832,504	shares
Number of treasury shares at the end of the period
	As of December 31, 2019	769,438	shares	As of December 31, 2018	770,233	shares
Average number of shares during the period
	Year ended December 31, 2019	11,063,324	shares	Year ended December 31, 2018	11,045,222	shares

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Consolidated financial statements

Consolidated balance sheets

			(Millions of yen)
		As of December 31, 2018	As of December 31, 2019
Assets
Current assets
Cash and deposits	19,747	17,852
Notes and accounts receivable - trade	15,270	14,010
Merchandise and finished goods	6,889	9,153
Work in process	4,351	4,829
Raw materials and supplies	3,255	4,220
Other	415	562
Allowance for doubtful accounts	(20)	(20)
Total current assets	49,908	50,607
Non-current assets
Property, plant and equipment
Buildings and structures	15,502	16,680
Accumulated depreciation and impairment loss	(9,300)	(9,536)
Buildings and structures, net	6,202	7,144
Machinery and equipment	41,826	44,008
Accumulated depreciation and impairment loss	(36,859)	(37,232)
Machinery and equipment, net	4,966	6,775
Vehicles, tools, furniture and fixtures	3,084	3,264
Accumulated depreciation and impairment loss	(2,665)	(2,708)
Vehicles, tools, furniture and fixtures, net	418	555
Land	3,516	3,523
Construction in progress	1,087	821
Total property, plant and equipment	16,192	18,820
Intangible assets	202	160
Investments and other assets
Investment securities	5,390	6,044
Deferred tax assets	402	371
Other	1,510	1,946
Allowance for doubtful accounts	(8)	(10)
Total investments and other assets	7,295	8,351
Total non-current assets	23,689	27,332
Total assets		73,598	77,939

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			(Millions of yen)
		As of December 31, 2018	As of December 31, 2019
Liabilities
Current liabilities
Notes and accounts payable - trade	7,392	5,821
Short-term loans payable	8,381	8,390
Accrued expenses	728	1,118
Income taxes payable	4,841	1,995
Provision for bonuses	193	214
Provision for bonuses for directors (and other officers)	125	96
Provision for plant relocation related expense	539	317
Other	2,144	2,770
Total current liabilities	24,346	20,725
Non-current liabilities
Long-term loans payable	4,867	3,637
Deferred tax liabilities	229	569
Retirement benefit liability	847	757
Provision for retirement benefits for directors (and other	39	43
officers)
Provision For Management Board Incentive Plan Trust	50	70
Provision for environmental measures	28	28
Asset retirement obligations	62	62
Other	391	390
Total non-current liabilities	6,517	5,559
Total liabilities	30,863	26,284
Net assets
Shareholders' equity
Capital stock	7,402	7,402
Capital surplus	7,857	7,857
Retained earnings	21,646	29,689
Treasury shares	(1,924)	(1,921)
Total shareholders' equity	34,982	43,028
Accumulated other comprehensive income
Valuation difference on available-for-sale securities	1,584	2,129
Deferred gains or losses on hedges	6	-
Foreign currency translation adjustment	42	49
Remeasurements of defined benefit plans	(77)	(66)
Total accumulated other comprehensive income	1,556	2,112
Non-controlling interests	6,195	6,513
Total net assets	42,734	51,654
Total liabilities and net assets		73,598	77,939

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Consolidated statements of income and consolidated statements of comprehensive income Consolidated statements of income

			(Millions of yen)
		Fiscal year ended	Fiscal year ended
		December 31, 2018	December 31, 2019
Net sales	48,017	44,931
Cost of sales	26,344	24,703
Gross profit	21,673	20,228
Selling, general and administrative expenses	5,269	5,401
Operating profit	16,404	14,827
Non-operating income
Interest income	1	2
Dividend income	115	121
Gain on sales of securities	33	-
Foreign exchange gains	25	-
Share of profit of entities accounted for using equity method	8	-
Subsidy income	172	169
Insurance income	-	475
Other	119	185
Total non-operating income	476	953
Non-operating expenses
Interest expenses	91	80
Foreign exchange losses	-	18
Loss on retirement of non-current assets	174	265
Share of loss of entities accounted for using equity method	-	15
Depreciation of inactive non-current assets	59	120
Other	47	174
Total non-operating expenses	372	674
Ordinary profit	16,508	15,106
Extraordinary losses
Loss on fire	273	655
Provision for plant relocation related expense	561	-
Total extraordinary losses	834	655
Profit before income taxes	15,673	14,450
Income taxes - current	4,715	4,177
Income taxes - deferred	128	123
Total income taxes	4,843	4,300
Profit	10,829	10,150
Profit attributable to non-controlling interests	536	449
Profit attributable to owners of parent		10,292	9,700

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Consolidated statements of comprehensive income

		(Millions of yen)
	Fiscal year ended	Fiscal year ended
	December 31, 2018	December 31, 2019
Profit	10,829	10,150
Other comprehensive income
Valuation difference on available-for-sale securities	(851)	549
Deferred gains or losses on hedges	6	(6)
Foreign currency translation adjustment	63	10
Remeasurements of defined benefit plans, net of tax	28	11
Total other comprehensive income	(752)	564
Comprehensive income	10,076	10,714
Comprehensive income attributable to
Comprehensive income attributable to owners of parent	9,524	10,261
Comprehensive income attributable to non-controlling	552	452
interests

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Consolidated statements of changes in equity

Fiscal year ended December 31, 2018

												(Millions of yen)
				Shareholders' equity
					Retained				Total
	Capital stock	Capital surplus			Treasury shares	shareholders'
		earnings
								equity
Balance at beginning of	7,402	7,800			12,638		(1,967)	25,874
current period
Changes of items during
period
Dividends of surplus							(1,106)				(1,106)
Profit attributable to						10,292				10,292
owners of parent
Purchase of treasury											(5)	(5)
shares
Disposal of treasury			57								48	105
shares
Net changes of items
other than shareholders'							(178)				(178)
equity
Total changes of items	-		57				9,007			43	9,108
during period
Balance at end of current	7,402	7,857			21,646		(1,924)	34,982
period
		Accumulated other comprehensive income
	Valuation	Deferred			Foreign			Remeasurements of	Total accumulated	Non-
	difference on	gains or		currency		controlling	Total net assets
			defined benefit	other comprehensive
	available-for-	losses on		translation		interests
					plans		income
	sale securities	hedges	adjustment
Balance at beginning of	2,424	-				4				(106)		2,322	5,709	33,906
current period
Changes of items during
period
Dividends of surplus												-		(1,106)
Profit attributable to												-		10,292
owners of parent
Purchase of treasury												-		(5)
shares
Disposal of treasury												-		105
shares
Net changes of items
other than shareholders'	(839)	6				38				28		(765)	485	(458)
equity
Total changes of items	(839)	6				38				28		(765)	485	8,828
during period
Balance at end of current	1,584	6				42				(77)		1,556	6,195	42,734
period

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Fiscal year ended December 31, 2019

											(Millions of yen)
				Shareholders' equity
					Retained				Total
	Capital stock	Capital surplus			Treasury shares	shareholders'
		earnings
								equity
Balance at beginning of	7,402	7,857		21,646		(1,924)	34,982
current period
Changes of items during
period
Dividends of surplus						(1,657)				(1,657)
Profit attributable to						9,700				9,700
owners of parent
Purchase of treasury										(1)	(1)
shares
Disposal of treasury										4	4
shares
Net changes of items
other than shareholders'											-
equity
Total changes of items	-		-			8,043			2	8,046
during period
Balance at end of current	7,402	7,857		29,689		(1,921)	43,028
period
		Accumulated other comprehensive income
	Valuation	Deferred			Foreign		Remeasurements of	Total accumulated	Non-
	difference on	gains or		currency		controlling	Total net assets
			defined benefit	other comprehensive
	available-for-	losses on		translation		interests
					plans		income
	sale securities	hedges	adjustment
Balance at beginning of	1,584	6		42				(77)		1,556	6,195	42,734
current period
Changes of items during
period
Dividends of surplus											-		(1,657)
Profit attributable to											-		9,700
owners of parent
Purchase of treasury											-		(1)
shares
Disposal of treasury											-		4
shares
Net changes of items
other than shareholders'	544	(6)		6				11		555	317	873
equity
Total changes of items	544	(6)		6				11		555	317	8,919
during period
Balance at end of current	2,129	-		49				(66)		2,112	6,513	51,654
period

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Consolidated statements of cash flows

			(Millions of yen)
		Fiscal year ended	Fiscal year ended
		December 31, 2018	December 31, 2019
Cash flows from operating activities
Profit before income taxes	15,673	14,450
Depreciation	1,553	1,883
Increase (decrease) in retirement benefit liability	(249)	(127)
Increase (decrease) in provision for retirement benefits for	(34)	3
directors (and other officers)
Increase(decrease) in provision for plant relocation relatede	539	(222)
expense
Interest and dividend income	(116)	(123)
Insurance income	(90)	(475)
Interest expenses	91	80
Share of loss (profit) of entities accounted for using equity	(8)	15
method
Loss (gain) on sales of investment securities	(33)	-
Loss on fire	273	665
Loss on retirement of non-current assets	174	32
Decrease (increase) in notes and accounts receivable - trade	(5,041)	1,264
Decrease (increase) in inventories	(3,647)	(3,699)
Increase (decrease) in notes and accounts payable - trade	3,052	(1,571)
Increase (decrease) in accrued expenses	209	(135)
Increase (decrease) in accounts payable - other	197	262
Decrease (increase) in accounts receivable - other	172	(277)
Other, net	268	(995)
Subtotal	12,983	11,022
Interest and dividend income received	117	123
Interest expenses paid	(91)	(80)
Income taxes refund	5	-
Income taxes paid	(471)	(6,797)
Proceeds from insurance income	90	475
Net cash provided by (used in) operating activities	12,633	4,742
Cash flows from investing activities
Purchase of property, plant and equipment	(2,081)	(3,664)
Purchase of intangible assets	(63)	(21)
Purchase of investment securities	(7)	(6)
Proceeds from sales of investment securities	75	-
Other, net	25	(0)
Net cash provided by (used in) investing activities	(2,051)	(3,693)
Cash flows from financing activities
Net increase (decrease) in short-term loans payable	(185)	50
Proceeds from long-term loans payable	100	-
Repayments of long-term loans payable	(1,105)	(1,192)
Net decrease (increase) in treasury shares	(5)	(1)
Cash dividends paid	(1,102)	(1,661)
Dividends paid to non-controlling interests	(120)	(140)
Net cash provided by (used in) financing activities	(2,418)	(2,946)
Effect of exchange rate change on cash and cash equivalents	(3)	1
Net increase (decrease) in cash and cash equivalents	8,160	(1,895)
Cash and cash equivalents at beginning of period	11,441	19,602
Cash and cash equivalents at end of period		19,602	17,707

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