Toagosei : Financial Information

Financial Results for

FY2023

February 20, 2024

Table of Contents

1.	Results for FY2023	P.2-
2.	Earnings Forecast for FY2024	P.11-
3.	Progress of Medium-Term	P.24-
	Management Plan
4.	Appendix	P.35-

1

Results for FY2023

2

Summary of Financial Results for FY2023

Business Environment

• Geopolitical risks heightened such as with the war in Ukraine and the outbreak of conflict in the Middle East.
• Europe and North America continued to implement high interest rate policies to curb inflation.
• The recovery in the Chinese economy was slow. There was an influx into the Southeast Asian market of cheap general-purpose chemicals produced in China .
• The rise in raw material and fuel prices pushed up general consumer goods prices in Japan. The pace of wage raises also accelerated.

Financial Results for FY2023

• We continued to revise prices to secure profits in response to the sharp rise in raw material and fuel prices.
• Acrylic ester overseas market conditions and semiconductor market conditions were sluggish. That meant the shipment volume of products decreased.
• The sales volume of adhesives for automotive batteries increased significantly. Earnings from instant glues for consumers improved.
• Sales decreased. Operating income decreased. Including gains on sales of investment securities, net income was 12.1 billion yen (down 0.3 billion yen).
• We took measures to raise PBR to over 1x.
• • Total shareholder returns of 100% during the period of the Medium-term Management Plan
  • Strengthening of profitability (2027: operating income of 24 billion yen, ROE of 8% or more, strengthened R&D capabilities and overseas expansion)
• We bought back approximately 4.7 million shares of treasury stock (3.9% of the number of outstanding shares as of the end of 2022; approximately 6.0 billion yen). We canceled approximately 5 million shares.
• We increased our year-end dividend to 33 yen.
• We increased an annual dividend by 17 yen to 53 yen (payout ratio: 51.6%).

Total shareholder returns were 100.5%.

3

Overview of Results for FY2023

		FY2022	FY2023	Change	Rate of
		Change
Net sales	(Millions of yen)	160,825	159,371	(1,453)	(0.9%)
Operating income	(Millions of yen)	14,382	12,499	(1,883)	(13.1%)
Operating income ratio		8.9%	7.8%	(1.1P)	－
Ordinary profit	(Millions of yen)	16,446	14,503	(1,942)	(11.8%)
Net income attributable to	(Millions of yen)	12,494	12,179	(314)	(2.5%)
owners of parent
Net income per share	(Yen)	101.31	102.78	1.48	－
Annual dividend	(Yen)	36.0	53.0	17.0	－
< Reference >
Average exchange rate	(Yen/USD)	129.67	139.74
Average naphtha price	(Yen/kl)	76,150	67,600

• We newly established Toagosei (Shanghai) Management Co., Ltd. in 2023. Therefore, it is included in the scope of consolidation from this consolidated fiscal year (19 consolidated subsidiaries and 2 equity-method affiliates).

4

Analysis of Changes in Operating Income

(Billions of yen)

5

Consolidated Results (by Segment)

				(Millions of yen)
Net sales
FY2022	FY2023	Volume	Unit price	Change
	A	B	B−A
Commodity Chemicals	73,929	73,488	(5,287)	4,845	(440)
Polymer & Oligomer	35,807	33,765	(3,609)	1,566	(2,041)
Adhesive Material	11,134	12,410	487	788	1,276
Performance Chemicals	10,466	9,943	(1,206)	683	(523)
Plastics	27,754	27,867	(1,503)	1,615	112
Other/adjustments	1,732	1,896	163	0	163
Total	160,825	159,371	(10,956)	9,501	(1,453)

(Millions of yen)

Operating income	FY2022		FY2023		Change
	Operating		Operating	Operating		Operating
	income		income ratio	income		income ratio
Commodity Chemicals	6,807		9.2%	6,769		9.2%	(37)
Polymer & Oligomer	4,258		11.9%	3,182		9.4%	(1,076)
Adhesive Material	(255)		(2.3%)	361		2.9%	617
Performance Chemicals	2,361		22.6%	1,547		15.6%	(814)
Plastics	1,759		6.3%	1,473		5.3%	(285)
Other/adjustments	(550)		－	(854)		－	(303)
Total	14,382		8.9%	12,499		7.8%	(1,883)

• We have transferred sustainability related businesses from "Commodity Chemicals" where they were before to "Other" from 2023. We have

made the comparison with the previous fiscal year using figures for that year prepared according to our changed classification method.

6

Consolidated Statement of Income

(Non-operating Income/Expenses and Extraordinary Income/Losses)

(Millions of yen)

Non-operating	FY2022	FY2023	Change
income/expenses
Interest and dividend	1,088	1,320	232
income
Equity in earnings of	128	185	56
affiliates
Foreign currency	753	343	(410)
exchange gains
Rent income on non-	182	174	(8)
current assets
Miscellaneous income	334	381	48
Interest expenses	(100)	(131)	(30)
Inactive facilities	(25)	(13)	11
expenses
Environment readiness	(208)	(120)	88
fee
Miscellaneous expenses	(89)	(137)	(49)
Total	2,063	2,003	(59)

(Millions of yen)

Extraordinary	FY2022	FY2023	Change
income/losses
Gain on sales of	2,554	4,079	1,524
investment securities
Subsidy income	283	84	(198)
Loss on disposal of non-	(559)	(1,255)	(695)
current assets
Loss on valuation of	(91)	(3)	87
investment securities
Loss on sales of	－	(2)	(2)
investment securities
Impairment loss on	(959)	－	959
property, plant and
equipment
Expenses of soil	(358)	－	358
pollution measures
Provision for product	－	(311)	(311)
recalls
Total	868	2,590	1,721

(Millions of yen)

Equity in earnings of
affiliates	FY2022	FY2023	Difference
(Breakdown)
Elmer's & Toagosei	136	169	33
Chubu Liquid Oxygen	(7)	15	23
Total	128	185	56

Exchange rate	Dec. 31,	Jun. 30,	Dec. 31,
	2022	2023	2023
Yen/USD	133.94	144.99	141.83
Yen/THB	3.87	4.07	4.13

7

Consolidated Balance Sheet

	Dec. 31, 2022	Dec. 31, 2023	Change
Current assets	138,985	134,860	(4,124)
Cash, deposits and	58,366	56,108	(2,258)
securities (1)
Notes and accounts	49,848	51,102	1,253
receivable
Inventories	25,511	24,792	(718)
Other current assets	5,309	2,904	(2,405)
Allowance for	(50)	(47)	3
doubtful receivables
Fixed assets	126,150	137,425	11,275
Property, plant and	90,774	96,532	5,757
equipment (2)
Intangible fixed	1,592	1,579	(13)
assets
Investment	28,472	32,912	4,440
securities (3)
Other fixed assets	5,310	6,401	1,090
Total assets	265,135	272,285	7,150

1. Decreased due to capital investment and share buybacks (securities: negotiable certificates of deposit)
2. Increased due to capital investment
3. Increased due to a rise in the market value of shareholdings

(Millions of yen)

	Dec. 31, 2022	Dec. 31, 2023	Change
Total liabilities	54,328	59,767	5,439
Notes and accounts	19,653	19,091	(562)
payable
Bank loans	11,065	11,095	30
Accrued income	2,176	2,281	105
taxes
Other liabilities	21,432	27,298	5,865

Total net assets	210,807	212,518	1,711
Shareholders'	193,053	193,828	775
equity
Accumulated other	12,915	17,681	4,765
comprehensive
Income
Non-controlling	4,837	1,008	(3,829)
Interests
Total liabilities and	265,135	272,285	7,150
net assets
Net worth ratio	77.7%	77.7%	ー

8

Consolidated Cash Flow Statements

				(Millions of yen)
		FY2022	FY2023	Change
Cash flows from operating	A	10,988	21,638	10,649
activities
Cash flows from investment	B	(3,579)	(3,528)	51
activities
Free cash flow	C=A+B	7,409	18,110	10,701
Cash flows from financial activities	D	(9,464)	(15,544)	(6,080)
Effect of exchange rate change on	E	390	230	(159)
cash and cash equivalents
Net increase or decrease in cash	F=C+D+E	(1,664)	2,796	4,461
and cash equivalents

Cash and cash equivalents at the end of the year

G

44,839

47,636

2,796

9