Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
July 31, 2020
Listed company: Nippon Kayaku Co., Ltd. (URL https://www.nipponkayaku.co.jp/english/)
Listed stock exchange: First Section, Tokyo Stock Exchange
Code No.: 4272
Representative (name, position): Atsuhiro Wakumoto, President
Director in charge of inquiries: Tsutomu Kawamura, Director, General Manager of Finance & Accounting Division, Financial Group
Filing date of quarterly securities report: August 7, 2020
Scheduled date for start of dividend payments: -
Preparation of supplementary materials for quarterly financial results: Yes
Quarterly results presentation meeting: Yes (for securities analysts and institutional investors)
1. Consolidated Business Results for the First Quarter of Fiscal Year Ending March 31, 2021 (April 1, 2020- June 30, 2020)
(Figures shown are rounded down to the nearest million yen.)
(1) Consolidated Operating Results
(Percentages indicate amount of change from the same period of the previous fiscal year.)
Net sales | Operating income | Ordinary income | Profit attributable to | ||||||||||
owners of parent | |||||||||||||
First quarter of | Million yen | % | Million yen | % | Million yen | % | Million yen | % | |||||
fiscal year ending | 36,825 | (14.1) | 2,773 | (41.5) | 2,984 | (35.1) | 1,748 | (44.0) | |||||
March 31, 2021 | |||||||||||||
First quarter of | |||||||||||||
fiscal year ended | 42,893 | 0.9 | 4,744 | (11.9) | 4,595 | (27.1) | 3,122 | (29.9) | |||||
March 31, 2020 | |||||||||||||
Note: Comprehensive income | |||||||||||||
First quarter of fiscal year ending March 31, 2021: | 4,326 million | yen (-%) | |||||||||||
First quarter of fiscal year ended March 31, 2020: | 120 million | yen | ((97.5)%) | ||||||||||
Profit attributable to owners of | Profit attributable to owners of | ||||||||||||
parent per share-primary | parent per share-diluted | ||||||||||||
First quarter of | Yen | Yen | |||||||||||
fiscal year ending | 10.24 | - | |||||||||||
March 31, 2021 | |||||||||||||
First quarter of | |||||||||||||
fiscal year ended | 18.03 | 18.03 | |||||||||||
March 31, 2020 |
Note 1: The percentage year-on-year change in comprehensive income for the first quarter of the fiscal year ending March 31, 2021 exceeds 1,000% and is therefore indicated with a dash (-).
Note 2: Profit attributable to owners of parent per share-diluted for the first quarter of the fiscal year ending March 31, 2021 is indicated with a dash (-) because the dilutive shares that do exist do not have a significant dilutive effect.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
(2) Consolidated Financial Position
Total assets | Net assets | Equity ratio | ||||||||
As of June 30, | Million yen | Million yen | % | |||||||
287,373 | 211,776 | 73.5 | ||||||||
2020 | ||||||||||
As of March 31, | 278,496 | 210,019 | 75.2 | |||||||
2020 | ||||||||||
Reference: Equity As of June 30, 2020: 211,112 million yen | ||||||||||
As of March 31, 2020: 209,344 million yen | ||||||||||
2. Status of Dividends | ||||||||||
Dividend amount per share | ||||||||||
End of first | End of second | End of third | End of year | Year | ||||||
quarter | quarter | quarter | ||||||||
Yen | ||||||||||
Fiscal year ended | - | 15.00 | - | 15.00 | 30.00 | |||||
March 31, 2020 | ||||||||||
Fiscal year ending | - | |||||||||
March 31, 2021 | ||||||||||
Fiscal year ending | ||||||||||
March 31, 2021 | 15.00 | - | 15.00 | 30.00 | ||||||
(forecast) |
Note: Changes to the most recent dividend forecast: None
3. Consolidated Business Results Forecasts for the Fiscal Year Ending March 31, 2021 (April 1, 2020- March 31, 2021)
(Percentages indicate amount of change from the same period of the previous fiscal year.)
Profit attributable to | Profit attributable to | ||||||||
Net sales | Operating income | Ordinary income | owners of parent | owners of parent per | |||||
share | |||||||||
Million yen | % | Million yen | % | Million yen | % | Million yen | % | Yen | |
First half | 77,000 | (10.1) | 4,500 | (50.3) | 5,000 | (45.3) | 3,000 | (52.7) | 17.57 |
Note: Changes to the most recent forecast for consolidated business results: Yes
Notes regarding consolidated business results forecasts
The forecasts for the first half of the fiscal year ending March 31, 2021 announced on May 22, 2020 have been revised. See the disclosure today entitled, Notice of Revision to the Business Results Forecasts for the First Half of the Fiscal Year Ending March 31, 2021 for further details.
We are not disclosing consolidated business results forecasts for the fiscal year ending March 31, 2021 at the present time because it is difficult to predict the impact from the spread of the novel coronavirus (COVID-19). The full-year forecasts will be disclosed once we have determined them.
Notes
- Significant changes in subsidiaries during the first quarter (changes in designated subsidiaries that result in changes in scope of consolidation): None
- Adoption of special accounting methods for presenting the quarterly consolidated financial statements: None
- Changes to accounting policies and estimates and restatement
- Changes to accounting policies associated with revision of accounting standards or similar items: None
- Changes other than [1]: None
- Changes to accounting estimates: None
- Restatements: None
- Number of shares issued (common stock)
-
Number of shares issued at end of the fiscal period (including treasury stock) As of June 30, 2020: 177,503,570 shares
As of March 31, 2020: 177,503,570 shares
-
Number of shares issued at end of the fiscal period (including treasury stock) As of June 30, 2020: 177,503,570 shares
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
-
Number of treasury stock at end of the fiscal period As of June 30, 2020: 6,709,860 shares
As of March 31, 2020: 6,709,685 shares - Average number of shares during the fiscal period (cumulative)
First quarter of fiscal year ending March 31, 2021: 170,793,776 shares
First quarter of fiscal year ended March 31, 2020: 173,144,631 shares
-
Number of treasury stock at end of the fiscal period As of June 30, 2020: 6,709,860 shares
- Quarterly summary financial statements are not subject to audit by a certified public accountant or audit firm.
- Analysis related to appropriate use of the business forecasts, and other notes
(Disclaimer concerning forward-looking statements)
The information in this report constitutes forward-looking statements regarding future events and performance. This information is based on the beliefs and assumptions of management in light of information currently available to it at the time of announcement and subject to a number of uncertainties that may affect future results. Actual business results may differ substantially from the forecasts herein due to various factors. For matters pertaining to business forecasts, please refer to "(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts" on page 3 of the Supplementary Information.
(How to obtain the materials for the briefing on quarterly financial results)
We have scheduled a teleconference for securities analysts and institutional investors on Friday, July 31, 2020. The materials for the briefing will be posted on the corporate website.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
Supplementary Information | |
Contents | |
1. Qualitative Information Concerning Results for the First Quarter | 2 |
(1) Analysis of Operating Results | 2 |
(2) Analysis of Financial Position | 3 |
(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts | 3 |
2. Quarterly Consolidated Financial Statements and Notes to Consolidated Financial Statements | 4 |
(1) Consolidated Balance Sheets | 4 |
(2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income | 6 |
(3) Notes to Quarterly Consolidated Financial Statements | 8 |
(Notes Regarding Assumptions for the Going Concern) | 8 |
(Notes in Case of Significant Change in Shareholders' Equity) | 8 |
(Segment Information and Other Items) | 8 |
(Business Combinations, etc.) | 10 |
(Additional Information) | 11 |
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 1 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
1. Qualitative Information Concerning Results for the First Quarter
(1) Analysis of Operating Results
During the first quarter of this consolidated fiscal year (April 1 to June 30, 2020), a rapid deceleration in the global economy was seen from restrictions on economic activity to prevent the spread of the novel coronavirus. The increase in people infected with the virus led to restrictions on overseas travel and stay-at-home restrictions in the U.S. and Europe from March onward, and economic activity stagnated as steps were taken to close stores and other businesses, leading to an even greater deceleration in the economy. In China, economic conditions remained severe despite the resumption of economic activity and consequent signs of recovery, owing to the impact of stagnant overseas demand, restrictions on economic activities, and other factors. The declaration of a State of Emergency by the Japanese government in light of the spread of the virus caused further slowing of consumer spending and corporate revenues, making the future of the Japanese economy uncertain.
Amid these conditions, the Nippon Kayaku Group worked to implement the key themes and resolve the mid- and long-term key issues outlined in "KAYAKU Next Stage," the mid-term business plan launched in the fiscal year ended March 31, 2020, while also making active use of staggered work, telecommuting, and other systems to accommodate the restrictions on corporate activity. We took these steps to ensure the safety of employees working in the Company and at Group companies while also implementing a new lifestyle and promote efficient workstyles aimed at minimizing the impact on our business.
As a result, net sales for the first quarter of this consolidated fiscal year totaled 36,825 million yen, a decrease of 6,067 million yen (14.1%) year-on-year. Sales in the pharmaceuticals business outperformed the first quarter of the previous fiscal year, while sales in the functional chemicals and the safety systems businesses declined.
Operating income totaled 2,773 million yen, a decrease of 1,970 million yen (41.5%) year-on-year, due to the decline in net sales.
Ordinary income totaled 2,984 million yen, a decrease of 1,610 million yen (35.1%) year-on-year.
Profit attributable to owners of parent was 1,748 million yen, a decrease of 1,373 million yen (44.0%) year-on-year.
Performance by business segment is as described below.
[Functional Chemicals Business]
Sales stood at 15,833 million yen, a decrease of 1,141 million yen (6.7%) year-on-year.
The functional materials business outperformed the first quarter of the previous fiscal year, despite a decline in vehicle-related sales. This resulted from strong sales of epoxy resins used in semiconductor encapsulation and circuit boards due to increased demand for IT equipment such as high-speed (5G) communications devices and PCs.
The color materials business underperformed the first quarter of the previous fiscal year due to slow sales of dyes for textiles due to the impact from the spread of the novel coronavirus. Sales of colorants for inkjet printers for consumer use were firm due to telecommuting.
The catalyst business outperformed the same period of the previous fiscal year, both in Japan and overseas.
The Polatechno Group saw slow sales of both dye-type polarizing films and components for X-ray analysis systems due to the impact from the spread of the novel coronavirus, underperforming the same period of the previous fiscal year.
The decline in sales of the color materials business and the Polatechno Group resulted in a 224 million yen (13.0%) decline in segment profit from the same period of the previous fiscal year to 1,504 million yen.
[Pharmaceuticals Business]
Sales stood at 12,690 million yen, an increase of 842 million yen (7.1%) year-on-year.
Pharmaceuticals in Japan were impacted by two drug price revisions in October 2019 and April 2020. Nevertheless, the segment outperformed the first quarter of the previous fiscal year as growth in sales contributed to performance due to the switch to biosimilars and generic drugs, and growth in the antibody biosimilars, TRASTUZUMAB BS and INFLIXIMAB BS, in particular. The new drug, APREPITANT capsules, also contributed to sales.
Although sales of active pharmaceutical ingredients and contract production for the Japanese domestic market underperformed the same period of the previous fiscal year, exports outperformed the same period of the previous fiscal year. Diagnostic agents underperformed the same period of the previous fiscal year, owing to the impact from the reduction in medical exams due to the spread of the novel coronavirus.
Segment profit was totaled 2,151 million yen, an increase of 75 million yen (3.6%) year-on-year.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 2 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
[Safety Systems Business]
Sales stood at 6,301 million yen, a decrease of 5,643 million yen (47.2%) year-on-year.
Sales of airbag inflators, micro gas generators for seatbelt pretensioners, and squibs underperformed the first quarter of the previous fiscal year owing to the slump in the automotive market in all regions outside of China, including Japan, under the impact from the spread of the novel coronavirus.
A decline in sales due to the slump in the automotive market led to segment profit of 262 million yen, a decrease of 1,825 million yen (87.4%) from the same period of the previous fiscal year.
[Other]
Sales stood at 1,999 million yen, a decrease of 125 million yen (5.9%) year-on-year.
The agrochemicals business overall saw a year-on-year decline despite the year-on-year growth in domestic sales as exports underperformed the same period during the previous fiscal year.
Sales in real estate and other business increased compared to the first quarter of the previous fiscal year. Segment profit totaled 507 million yen, an increase of 69 million yen (15.9%) year-on-year, owing to growth
sales for real estate and other businesses.
(2) Analysis of Financial Position
Status of Assets, Liabilities, and Net Assets
Total assets were 287,373 million yen, an increase of 8,876 million yen from the end of the previous consolidated fiscal year. The main increases were in securities, an increase of 5,292 million yen; investment securities, an increase of 2,809 million yen; and goodwill, an increase of 2,467 million yen. The main decrease was in cash and deposits, a decrease of 3,264 million yen.
Liabilities were 75,596 million yen, an increase of 7,119 million yen compared to the end of the previous consolidated fiscal year. The main increases were in short-term loans payable, an increase of 9,528 million yen; and deposits received (included in "other" under current liabilities), an increase of 857 million yen. The main decreases were in income taxes payable, a decrease of 2,451 million yen; and accrued expenses (included in "other" under current liabilities), a decrease of 862 million yen.
Net assets were 211,776 million yen, an increase of 1,757 million yen compared to the end of the previous consolidated fiscal year. The main increases were in unrealized holding gains on other securities, an increase of 1,943 million yen; and translation adjustments, an increase of 590 million yen. The main decrease was in retained earnings, a decrease of 813 million yen (a 2,561 million yen decrease from dividends paid and a 1,748 million yen increase in profit attributable to owners of parent).
(3) Analysis of Forward-looking Statements, Including Consolidated Business Forecasts
The future business environment surrounding the Nippon Kayaku Group still bears the risk of an economic slowdown despite signs of a recovery in the global economy, due to uncertainty over an economic downswing under the impact from the spread of the novel coronavirus and U.S.-China trade friction, among other factors. The Japanese economy is still feeling the impact from the spread of the novel coronavirus and is being supported by monetary easing and the benefits from economic measures implemented by the Japanese government, but is expected to gradually improve from the second half of 2020.
Under these conditions, the Nippon Kayaku Group will work to ascertain and respond globally to the changing conditions. We will endeavor to keep our employees safe, while also continuing efforts to minimize the significant impact of this infectious disease on the business results of the Nippon Kayaku Group. The Nippon Kayaku Group also aims to respond flexibly to changes in the business environment and pursue optimal use of operating capital to increase the shareholder value, as well as expand existing businesses in global growth markets, accelerate the development of new businesses and new products, and enhance profits.
The forecasts for the first half of the fiscal year ending March 31, 2021 announced on May 22, 2020 have been revised. See the disclosure today entitled, Notice of Revision to the Business Results Forecasts for the First Half of the Fiscal Year Ending March 31, 2021 for further details.
Moreover, because it is difficult to predict the impact that the spread of the novel coronavirus will have on performance for the full consolidated fiscal year ending March 31, 2021, the Company is not disclosing forecasts at present. We will disclose full-year forecasts once we have determined them.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 3 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
2. Quarterly Consolidated Financial Statements and Notes to Consolidated Financial Statements
(1) Consolidated Balance Sheets
As of March 31, 2020 | As of June 30, 2020 | ||
Million yen | |||
Assets | |||
Current assets | |||
Cash and deposits | 43,222 | 39,958 | |
Notes and accounts receivable-trade | 51,940 | 48,678 | |
Electronically recorded monetary claims-operating | 1,846 | 1,346 | |
Securities | 4,132 | 9,425 | |
Merchandise and finished goods | 30,987 | 30,542 | |
Work in process | 1,640 | 1,419 | |
Raw materials and stores | 14,988 | 16,882 | |
Other | 4,384 | 4,934 | |
Allowance for doubtful accounts | (39) | (33) | |
Total current assets | 153,102 | 153,155 | |
Non-current assets | |||
Property, plant and equipment | |||
Buildings and structures, net | 40,249 | 40,910 | |
Machinery, equipment and vehicles, net | 24,748 | 24,508 | |
Other, net | 20,961 | 21,672 | |
Total property, plant and equipment | 85,960 | 87,091 | |
Intangible assets | |||
Goodwill | 748 | 3,216 | |
Other | 2,613 | 4,928 | |
Total intangible assets | 3,362 | 8,144 | |
Investments and other assets | |||
Investment securities | 30,661 | 33,471 | |
Net defined benefit asset | 1,291 | 1,313 | |
Other | 4,140 | 4,219 | |
Allowance for doubtful accounts | (22) | (23) | |
Total investments and other assets | 36,071 | 38,980 | |
Total non-current assets | 125,393 | 134,217 | |
Total assets | 278,496 | 287,373 | |
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 4 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
As of March 31, 2020 | As of June 30, 2020 | ||
Million yen | |||
Liabilities | |||
Current liabilities | |||
Notes and accounts payable-trade | 15,914 | 15,501 | |
Short-term loans payable | 4,359 | 13,888 | |
Accounts payable-other | 8,917 | 8,613 | |
Income taxes payable | 2,646 | 195 | |
Other | 6,961 | 7,079 | |
Total current liabilities | 38,800 | 45,278 | |
Non-current liabilities | |||
Bonds payable | 12,000 | 12,000 | |
Long-term loans payable | 6,182 | 6,129 | |
Net defined benefit liability | 426 | 434 | |
Other | 11,067 | 11,754 | |
Total non-current liabilities | 29,676 | 30,318 | |
Total liabilities | 68,477 | 75,596 | |
Net assets | |||
Shareholders' equity | |||
Common stock | 14,932 | 14,932 | |
Additional paid-in capital | 15,757 | 15,757 | |
Retained earnings | 184,156 | 183,342 | |
Treasury stock | (7,871) | (7,871) | |
Total shareholders' equity | 206,975 | 206,161 | |
Accumulated other comprehensive income | |||
Unrealized holding gains on other securities | 7,856 | 9,799 | |
Translation adjustments | (4,589) | (3,998) | |
Remeasurements of defined benefit plans | (897) | (849) | |
Total accumulated other comprehensive income | 2,369 | 4,951 | |
Non-controlling interests | 675 | 664 | |
Total net assets | 210,019 | 211,776 | |
Total liabilities and net assets | 278,496 | 287,373 | |
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 5 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
(2) Consolidated Statements of Income & Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
First quarter of | First quarter of | ||
fiscal year ended March | fiscal year ending March | ||
31, 2020 | 31, 2021 | ||
Million yen | |||
Net sales | 42,893 | 36,825 | |
Cost of sales | 28,057 | 24,676 | |
Gross profit on sales | 14,836 | 12,148 | |
Selling, general and administrative expenses | 10,092 | 9,375 | |
Operating income | 4,744 | 2,773 | |
Non-operating income | |||
Interest income | 67 | 61 | |
Dividend income | 385 | 331 | |
Equity in earnings of affiliates | 143 | 42 | |
Other | 216 | 184 | |
Total non-operating income | 812 | 618 | |
Non-operating expenses | |||
Interest expense | 73 | 50 | |
Foreign exchange losses | 805 | 288 | |
Other losses | 82 | 68 | |
Total non-operating expenses | 961 | 407 | |
Ordinary income | 4,595 | 2,984 | |
Extraordinary income | |||
Gain on sales of non-current assets | 0 | 0 | |
Total extraordinary income | 0 | 0 | |
Extraordinary loss | |||
Loss on disposal of non-current assets | 78 | 104 | |
Loss on valuation of investment securities | 88 | - | |
Total extraordinary loss | 166 | 104 | |
Profit before income taxes | 4,428 | 2,879 | |
Income taxes-current | 774 | 124 | |
Income taxes-deferred | 488 | 1,006 | |
Total income taxes | 1,263 | 1,131 | |
Profit | 3,165 | 1,748 | |
Profit attributable to non-controlling interests | 43 | 0 | |
Profit attributable to owners of parent | 3,122 | 1,748 | |
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 6 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
Consolidated Statements of Comprehensive Income
First quarter of | First quarter of | |
fiscal year ended March | fiscal year ending March | |
31, 2020 | 31, 2021 | |
Million yen | ||
Profit | 3,165 | 1,748 |
Other comprehensive income | ||
Unrealized holding gains on other securities | (1,484) | 1,943 |
Translation adjustments | (1,582) | 586 |
Remeasurements of defined benefit plans | 21 | 47 |
Share of other comprehensive income of companies | 0 | 0 |
accounted for by the equity-method | ||
Total other comprehensive income | (3,045) | 2,577 |
Comprehensive income | 120 | 4,326 |
Comprehensive income attributable to: | ||
Owners of parent | 249 | 4,330 |
Non-controlling interests | (129) | (4) |
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 7 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
(3) Notes to Quarterly Consolidated Financial Statements
(Notes Regarding Assumptions for the Going Concern) No items to report
(Notes in Case of Significant Change in Shareholders' Equity) No items to report
(Segment Information and Other Items)
First quarter of the fiscal year ended March 31, 2020 (April 1, 2019-June 30, 2019) 1. Information on sales and profit (loss) by reportable segment
Reportable segments | Other | Adjust- | Consoli- | |||||
Functional | Pharma- | Safety | Total | ments | dated | |||
(Note 1) | ||||||||
chemicals | ceuticals | systems | Total | (Note 2) | (Note 3) | |||
business | business | business | ||||||
Million yen | ||||||||
Sales | 16,974 | 11,848 | 11,945 | 40,768 | 2,124 | 42,893 | - | 42,893 |
Sales to third parties | ||||||||
Intersegment sales | 25 | 0 | - | 25 | 24 | 50 | (50) | - |
and transfers | ||||||||
Total | 17,000 | 11,848 | 11,945 | 40,794 | 2,149 | 42,943 | (50) | 42,893 |
Segment profit | 1,729 | 2,075 | 2,088 | 5,892 | 438 | 6,331 | (1,587) | 4,744 |
Note 1: "Other" indicates a business segment that is not included in the reportable segments, including the agrochemicals business and real estate business.
Note 2: The 1,587 million yen downward adjustment to segment profit reflects a negative 1,602 million yen in corporate expense not allocable to the reportable segments and 15 million yen in eliminations for intersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments.
Note 3: Segment profit has been adjusted to correspond with the total operating income as shown in the consolidated statements of income.
- Changes in reportable segments No items to report
- Information concerning impairment losses on non-current assets, goodwill, etc. by reportable segment No items to report
First quarter of the fiscal year ending March 31, 2021 (April 1, 2020-June 30, 2020) 1. Information on sales and profit (loss) by reportable segment
Reportable segments | Other | Adjust- | Consoli- | |||||
Functional | Pharma- | Safety | Total | ments | dated | |||
(Note 1) | ||||||||
chemicals | ceuticals | systems | Total | (Note 2) | (Note 3) | |||
business | business | business | ||||||
Million yen | ||||||||
Sales | ||||||||
Sales to third parties | 15,833 | 12,690 | 6,301 | 34,825 | 1,999 | 36,825 | - | 36,825 |
Intersegment sales | 34 | 0 | - | 34 | 23 | 58 | (58) | - |
and transfers | ||||||||
Total | 15,867 | 12,690 | 6,301 | 34,860 | 2,023 | 36,884 | (58) | 36,825 |
Segment profit | 1,504 | 2,151 | 262 | 3,918 | 507 | 4,426 | (1,652) | 2,773 |
Note 1: "Other" indicates a business segment that is not included in the reportable segments, including the agrochemicals business and real estate business.
Note 2: The 1,652 million yen downward adjustment to segment profit reflects a negative 1,664 million yen in corporate expense not allocable to the reportable segments and 11 million yen in eliminations for intersegment transactions. The corporate expense is mainly a general and administrative expense that is not attributed to the reportable segments.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 8 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
Note 3: Segment profit has been adjusted to correspond with the total operating income as shown in the consolidated statements of income.
2. Changes in reportable segments
(Revision of the method for allocation of corporate expenses)
From the first quarter of the consolidated fiscal year under review, the Company's general and administrative expenses which has previously been allocated among the reportable segments, have been reclassified as corporate expenses. This was done to reflect the actual state of responsibility for management activities for the entire Group and to more accurately ascertain the performance of each reportable segment.
This has resulted in increases in segment profit in the first quarter of the consolidated fiscal year under review of 774 million yen in the functional chemicals business, 455 million yen in the pharmaceuticals business, 456 million yen in the safety systems business, and 79 million yen in the other businesses, and a decrease of 1,765 million yen in adjustments to segment profit compared calculations under the previous method.
The segment information provided for the first quarter of the previous fiscal year has been recalculated to show segment profit and loss after the revision.
3. Information concerning impairment losses on non-current assets, goodwill, etc. by reportable segment (Material change in the amount of goodwill)
The acquisition of a business from Henkel AG & Co. KGaA in the functional chemicals business resulted in goodwill. This event resulted in an increase in goodwill of 2,602 million yen in the first quarter of the consolidated fiscal year under review.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
- 9 -
Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
(Business Combinations, etc.)
(Business combination through acquisition)
The Company approved transfer of the LCD and semiconductor cleaner business operated by Henkel AG & Co. KGaA (Head office: Düsseldorf, Germany) to the Company at the Board of Directors meeting on December 24, 2019. The business transfer agreement was concluded on the same day, and the business was transferred on April 1,
2020. A summary of the transaction is provided below.
- Summary of business combination
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Name and description of business acquired
Name of company acquired from: Henkel AG & Co. KGaA
Description of business: LCD and semiconductor cleaner business - Reason for business combination
LCD and semiconductor cleaners are always used to wash substrates and in the developing and photoresist stripping processes of circuit formation when manufacturing LCDs, semiconductors, and other products. Many different cleaners are used in large volumes. The Company has acquired the business as an addition to its existing epoxy resins for semiconductor encapsulation, MEMS resist, LCD sealants, acrylate for solder resist, and other products to expand and grow the business domain as manufacturer of materials for LCDs and semiconductors and contribute to the achievement of the business targets for 2025. - Date of business combination April 1, 2020
- Legal form of business combination Business transfer for cash
- Name of company after combination No change.
- Main grounds for the decision to acquire the business The company paid cash to acquire the business.
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Name and description of business acquired
- Period of performance for the acquired business included in the Consolidated Statements of Income for the first quarter of the consolidated fiscal year under review:
April 1 to June 30, 2020- Breakdown of the acquisition cost of business acquired and type of payment:
6,228 million yen in cash was paid as compensation for the business.
4. Amount of goodwill, reason for recognition of goodwill, and amortization method and period
- Amount of goodwill recognized 2,602 million yen
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Reason for recognition
To recognize the additional earning power expected from future expansion of the business. - Amortization method and period Straight-line depreciation over eight years
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
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Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
(Additional Information)
(Company split from consolidated subsidiary (simple, abbreviated absorption-type split))
At its Board of Directors meeting held on March 31, 2020, Nippon Kayaku passed the following resolution for the Company to take over the business of manufacturing and selling polarizing films for LCDs, polarizing films for projectors, and other precision-processed products (hereafter, "the business") from its consolidated subsidiary, POLATECHNO CO., LTD. (hereafter, "Polatechno"), via an absorption-type split (hereafter, "the absorption-type split"), effective on October 1, 2020 (planned date).
1. Summary of transaction
(1) Companies involved in the business combination and names and descriptions of the business
The business of Polatechno, a wholly-owned subsidiary, in manufacturing and selling polarizing films for LCDs, polarizing films for projectors, and other precision-processed products
(2) Date of business combination
Date of Board of Directors resolution approving the absorption-type split agreement (Nippon Kayaku): March 31, 2020
Date of Board of Directors resolution approving the absorption-type split agreement (Polatechno): March 27, 2020
Conclusion date of absorption-type split agreement: May 22, 2020
Date on which the absorption-type split agreement will become effective: October 1, 2020 (planned date)
Note: This absorption-type merger constitutes an abbreviated split under Article 784, Paragraph 1 of the Companies Act for Polatechno, the company splitting off the business; and as a simple split under Article 796, Paragraph 2 of the Companies Act for Nippon Kayaku, the succeeding company. Both companies therefore intend to execute the absorption-type split agreement without obtaining approval from the Shareholders Meeting.
(3) Legal form of business combination
The form is an absorption-type split (simple absorption-type split) in which Polatechno is the splitting company and Nippon Kayaku is the succeeding company.
(4) Name of company after business combination
There are no changes planned to the names, location of headquarters, titles and names of representatives, capital, and fiscal year-end of either company as a result of this absorption-type split at the present time. However, in regard to the description of the main businesses of the split company after the absorption-type split, there are planned changes to the land leasing business by the date on which the absorption-type split will be concluded.
(5) Other information concerning the summary of the transaction
Incorporating the business into the Company as a business division will enable more effective use and optimal allocation of the management resources possessed by both companies, such as human resources, sales channels, production locations, and intellectual property. The Company is aiming to improve the efficiency of and expand the business by integrating the R&D structures of both companies to improve the efficiency and speed of R&D, strengthen governance, and achieve other benefits.
2. Summary of accounting standards implemented
The Company plans to handle the combination as a transaction under common control in accordance with ASBJ Statement No.21, Accounting Standard for Business Combinations (January 16, 2019) and ASBJ Guidance No.10, Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (January 16, 2019).
(Accounting estimates of the impact from the spread of the novel coronavirus)
The Nippon Kayaku Group estimated impairment losses on non-current assets and determined the recoverability of deferred tax assets for accounting purposes based on internal and external information available at the time the consolidated financial statements were produced. Although the impact and degree of impact from the spread of the novel coronavirus will differ depending on the business, the trend in significant economic deceleration due to declaration of a State of Emergency and the stagnation of economic activities is concerning, and we expect this to impact the performance of the Nippon Kayaku Group.
While we recognize the uncertainty over forecasts of when the spread of the virus will be brought under control,
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
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Nippon Kayaku Co., Ltd.
Summary of Consolidated Financial Results [Japanese GAAP]
For the First Quarter of the Fiscal Year Ending March 31, 2021
we based our decisions on the recoverability of deferred tax assets and recognition of impairment losses in calculating accounting estimates in businesses where there is concern over an impact from declining operating revenues on assumption that the spread of the novel coronavirus will peak out between April and June of 2020 and will subsequently improve.
This document is an English translation of parts of the Japanese-language original.
All financial information has been prepared in accordance with generally accepted accounting principles in Japan.
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Nippon Kayaku Co. Ltd. published this content on 04 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2020 03:01:10 UTC