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

Disclaimer: This document is an English translation of the original document in Japanese and has been prepared solely for reference purposes. In the event of any discrepancy between this English translation and the original in Japanese, the original shall prevail in all respects.

Consolidated Financial Results

for the Fiscal Year Ended March 31, 2022

[Japanese GAAP]

May 13, 2022

Company name: Totech Corporation

Stock exchange listing: Tokyo Stock Exchange

Securities code: 9960

URL: https://www.totech.co.jp/

Representative: Katsumi Nagao, Representative Director and President

Contact: Toshikazu Kanai, Executive Officer and General Manager of Finance and Accounting Division

Phone: [phone]

Scheduled date of general shareholders' meeting: June 24, 2022

Scheduled date of commencing dividend payments: June 27, 2022

Scheduled date of filing securities report: June 24, 2022

Availability of supplementary explanatory materials on annual financial results: None

Schedule of annual financial results briefing session: None

(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 profit	Ordinary profit	Profit attributable to
			owners of parent
	Fiscal year ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
	March 31, 2022	110,120	0.4	6,297	2.0	7,120	4.6	4,724	(1.5)
	March 31, 2021	109,650	(6.4)	6,176	(4.5)	6,806	1.4	4,795	0.7

(Note) Comprehensive income: Fiscal year ended March 31, 2022: ¥4,227 million [(42.6)%] Fiscal year ended March 31, 2021: ¥7,369 million [66.0%]

	Basic earnings	Diluted		Return on	Ratio of	Ratio of
	earnings		ordinary profit	operating profit
	per share		equity
	per share		to total assets	to net sales
Fiscal year ended	Yen		Yen	%	%	%
March 31, 2022	345.82		-	11.8	8.6	5.7
March 31, 2021	351.29		-	13.5	8.4	5.6

(Reference) Share of loss (profit) of entities accounted for using equity method:

Fiscal year ended March 31, 2022: ¥ - million

Fiscal year ended March 31, 2021: ¥ - million

Note: The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, issued on March 31, 2020) and other related standards from the beginning of the fiscal year under review, and therefore the figures for the fiscal year ended March 31, 2022 shows the amounts after the application of these accounting standards.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio	Net assets per share
	Million yen	Million yen	%	Yen
As of March 31, 2022	84,611	41,669	49.2	3,049.57
As of March 31, 2021	81,484	38,591	47.4	2,826.87

(Reference) Equity: As of March 31, 2022: ¥ 41,669 million As of March 31, 2021: ¥ 38,591 million

Note: The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, issued on March 31, 2020) and other related standards from the beginning of the fiscal year under review, and therefore the figures for the fiscal year ended March 31, 2022 shows the amounts after the application of these accounting standards.

(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

11,010

(5,127)

(3,296)

(7,660)

March 31, 2021

5,242

(2,265)

(3,795)

(4,880)

2. Dividends

Annual dividends per share

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

%

%

-

17.00

-

67.00

84.00

1,148

23.9

3.2

March 31, 2021

Fiscal year ended

-

17.00

-

122.00

139.00

1,900

40.2

4.7

March 31, 2022

Fiscal year ending

March 31, 2023

-

49.00

-

98.00

147.00

40.2

(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 profit	Ordinary profit	to owners of
		per share
							parent
Full year	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
122,000	10.8	7,000	11.2	7,500	5.3	5,000	5.8	365.92

* 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: - (

)

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards and other regulations: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

As of March 31, 2022:	13,988,000 shares
As of March 31, 2021:	13,988,000 shares
2) Total number of treasury shares at the end of the period:
As of March 31, 2022:	323,986 shares
As of March 31, 2021:	336,374 shares

3) Average number of shares outstanding during the period:

Year ended March 31, 2022:	13,662,155 shares
Year ended March 31, 2021:	13,649,842 shares

(Note) The total number of treasury shares at the end of the period includes the shares of the Company (11,800 shares as of March 31, 2022) held by Custody Bank of Japan, Ltd. (Trust Account E) as trust assets of Board Benefit Trust (J- ESOP). The shares of the Company (13,731 shares as of March 31, 2022) held by Custody Bank of Japan, Ltd. (Trust Account E) are included in the treasury shares that are deducted in the calculation of the average number of shares outstanding during the period.

• These 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

The forward-looking statements such as financial results forecast included in this document are based on the information currently available to the Company and certain assumptions deemed reasonable, and the Company does not in any way guarantee the achievement of these projections. Actual results may differ significantly due to various factors. For the assumptions underlying the financial forecasts and notes on the use of the financial forecasts, please refer to "1. Overview of Operating Results, (4) Future Outlook" on page 4 of the attached document.

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
2. Basic Policy on Selection of Accounting Standards ...........................................................................	4
3. Consolidated Financial Statements and Principal Notes .....................................................................	5
(1)	Consolidated Balance Sheets ..........................................................................................................	5
(2)	Consolidated Statements of Income and Comprehensive Income .................................................	7
(3)	Consolidated Statements of Changes in Equity ..............................................................................	9
(4)	Consolidated Statements of Cash Flows ......................................................................................	11
(5)	Notes to Consolidated Financial Statements ................................................................................	12
	(Notes on going concern assumption) ....................................................................................	12
	(Changes in accounting policies) ...........................................................................................	12
	(Changes in presentation method) ............................................................................................	13
	(Segment information, etc.) ...................................................................................................	14
	(Per share information) ..........................................................................................................	15
	(Significant subsequent events) .............................................................................................	16

1

1. Overview of Operating Results, etc.

(1) Overview of Operating Results for the Fiscal Year under Review

With regard to the Japanese economy in the fiscal year under review, prospects have been extremely uncertain. Although there have been visible signs of improvement in the performance of the private sector and the manufacturing industry in particular, faced with the prolonged impact of the spread COVID-19 infections, continued restricted economic activities and an increase in worldwide geopolitical risks have caused delays in the recovery of consumer spending and a surge in raw material prices.

Turning to the construction industry in which the Totech Group operates, while public investments have remained steady and there have been visible signs of a rally in private capital investment, the impact of the surge in construction material prices, delays in delivery times, and other issues resulted in the operating environment remaining severe in terms of supply.

Under these circumstances, the Totech Group's operating results for the fiscal year under review were as follows.

Despite strong orders, net sales were ¥110,120 million (up 0.4% year on year) mainly due to delays in the start and progress of a portion of construction work resulting from the impact of the semiconductor supply shortage across Japan. On the profit front, net sales decreased for the product sales business, which sees relatively high sales but a low-profit margin, but thanks to the construction business performing well, operating profit was ¥6,297 million (up 2.0% year on year) even though there was an increase in selling, general and administrative expenses such as personnel expenses. Ordinary profit was ¥7,120 million (up 4.6% year on year) due to factors such as recording foreign exchange gains, but profit attributable to owners of parent was ¥4,724 million (down 1.5% year on year) due to recording gain on sale of investment securities in extraordinary income in the previous fiscal year. Due to the application of the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, issued on March 31, 2020; hereinafter referred to as the "Revenue Recognition Accounting Standard") and other related standards, net sales decreased by ¥1,407 million, and operating profit and ordinary profit decreased by ¥42 million each.

The product sales business primarily purchases and sells facilities equipment with a focus on air conditioners, controllers, and energy efficient equipment, and provides related installation and after-sales services, etc. Despite strong orders in the fiscal year under review particularly due to redevelopment projects beginning to take off in urban areas, net sales were ¥72,875 million (down 1.2% year on year) due to factors such as difficulties in securing some air conditioner products offered for sale caused by the deterioration of the semiconductor supply environment. On the profit front, gross profit was ¥14,822 million (down 0.7% year on year) thanks to the expansion of air conditioner maintenance projects with relatively high profit margins partially making up for the impact of decreased net sales. Note that due to the application of the Revenue Recognition Accounting Standard and other related standards, net sales decreased by ¥1,407 million, and operating profit decreased by ¥42 million.

The construction business engages in instrumentation work, design and execution of a variety of construction, and maintenance. Against a backdrop of worldwide efforts to achieve carbon neutrality moving forward and an increase in energy prices, net sales came to ¥38,755 million in the fiscal year under review (up 4.5% year on year) thanks to further growth in demand for instrumentation systems supplied by the Totech Group in an environment where even higher energy efficiency is sought. Furthermore, gross profit was ¥12,542 million (up 10.9% year on year), impacted by the expansion of maintenance projects for instrumentation systems, which has a relatively high profit margin, and a decrease in costs thanks to smooth progress in developing highly skilled employees. Note that the business's financial results were not affected by the application of the Revenue Recognition Accounting Standard and other related standards.

2