Sanyo Special Steel : Financial Report for The Year Ended March 31, 2023

Sanyo Special Steel Co., Ltd.

Financial Report for

The Year Ended March 31, 2023

Sanyo Special Steel Co., Ltd. and Consolidated Subsidiaries

CONSOLIDATED BALANCE SHEETS

As of March 31, 2022 and 2023

							Thousands of U.S.
		Millions of yen			dollars (Note 3)
ASSETS
	2022			2023			2023
Current Assets:
Cash and bank deposits (Notes 6 and 22)	¥	14,483	¥	21,653	$	162,144
Notes and accounts receivable - trade, and contract assets (Notes 6, 10, 11 and 27)		69,019			66,372			497,022
Electronically recorded monetary claims (Note 6)		8,707			11,637			87,139
Less: Allowance for doubtful accounts		(356)			(449)			(3,365)
Inventories (Notes 8 and 10)		113,512			128,229			960,227
Income taxes receivable		18			45			335
Deposits paid in parent company (Notes 6, 22 and 27)		7,924			9,954			74,539
Other		7,196			4,258			31,894
Total current assets		220,503			241,699			1,809,935
Property, Plant and Equipment:
Land (Note 10)		13,259			13,496			101,064
Buildings and structures (Note 10)		75,042			74,816			560,248
M achinery and equipment (Note 10)		286,723			284,450			2,130,072
Construction in progress		3,408			9,026			67,588
Other (Note 10)		14,953			15,651			117,207
		393,385			397,439			2,976,179
Less: Accumulated depreciation		(281,410)			(282,256)			(2,113,642)
Total property, plant and equipment		111,975			115,183			862,537
Intangible Assets:
Goodwill		33,284			32,441			242,933
Other		4,102			3,677			27,532
Total intangible assets		37,386			36,118			270,465
Investments and Other Assets:
Investments in securities (Notes 6, 7 and 9)		4,996			5,003			37,468
Long-term loans receivable		2			3			23
Deferred tax assets (Note 14)		2,055			1,489			11,153
Net defined benefit assets (Note 13)		300			997			7,464
Other		902			935			7,003
Less: Allowance for doubtful accounts		(208)			(209)			(1,566)
Total investments and other assets		8,047			8,218			61,545
Total assets	¥	377,911	¥	401,218	$	3,004,482

1

	Thousands of U.S.
Millions of yen	dollars (Note 3)

LIABILITIES AND NET ASSETS		2022			2023			2023
Current Liabilities:
Short-term loans (Notes 6, 10 and 12)	¥	34,367	¥	35,481	$	265,699
Current portion of long-term loans (Notes 6, 10 and 12)		3,306			8,251			61,788
Commercial paper (Note 6 and 12)		12,001			30,999			232,133
Notes and accounts payable - trade		49,426			39,544			296,118
Accounts payable - other		10,262			11,120			83,272
Accrued income taxes		5,475			4,654			34,852
Accrued expenses		12,685			11,823			88,533
Provision for environmental measures		4			4			29
Other (Notes 11 and 12)		2,711			5,516			41,304
Total current liabilities		130,237			147,392			1,103,728
Long-term Liabilities:
Bonds payable (Notes 6 and 12)		10,000			10,000			74,884
Long-term loans (Notes 6, 10 and 12)		19,324			11,571			86,645
Accrued directors' and corporate auditors' retirement benefits		68			56			417
Deferred tax liabilities (Note 14)		4,743			5,279			39,533
Provision for loss on guarantees		1			1			8
Provision for environmental measures		207			133			997
Net defined benefit liabilities (Note 13)		12,165			8,752			65,535
Other (Note 12)		2,321			2,010			15,059
Total long-term liabilities		48,829			37,802			283,078
Total liabilities		179,066			185,194			1,386,806
Contingent Liabilities (Note 25)
Net Assets (Note 15)
Shareholders' Equity:
Common stock:
Authorized 94,878,400 shares in 2022 and 2023
Issued 54,507,307 shares in 2022 and 2023	¥	53,800	¥	53,800	$	402,877
Capital surplus		51,486			51,503			385,676
Retained earnings		85,733			101,028			756,533
Less: Treasury stock, at cost (19,566 shares in 2022 and 21,557 shares in 2023)		(28)			(32)			(242)
Total shareholders' equity		190,991			206,299			1,544,844
Accumulated Other Comprehensive Income:
Valuation difference on available-for-sale securities		1,383			1,894			14,180
Deferred gains (losses) on hedges		2,134			(1,101)			(8,238)
Foreign currency translation adjustments		4,120			5,626			42,127
Remeasurements of defined benefit plans		(1,634)			1,657			12,405
Total accumulated other comprehensive income		6,003			8,076			60,474
Non-controlling Interests		1,851			1,649			12,358
Total net assets		198,845			216,024			1,617,676
Total liabilities and net assets	¥	377,911	¥	401,218	$	3,004,482

2

Sanyo Special Steel Co., Ltd. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended March 31, 2022 and 2023

								Thousands of U.S.
			Millions of yen			dollars (Note 3)
			2022			2023			2023
Net Sales (Note 28)	¥	363,278	¥	393,844	$	2,949,257
Cost of Sales (Notes 8 and 16)		303,394			326,790			2,447,132
Gross profit		59,884			67,054			502,125
Selling, General and Administrative Expenses (Notes 16 and 17)
	38,467			38,562			288,766
Operating income		21,417			28,492			213,359
Other Income:
Interest and dividends		263			478			3,579
Rent income		442			347			2,598
Exchange gains		164			494			3,701
Other		243			287			2,146
			1,112			1,606			12,024
Other Expenses:
Interest		(615)			(960)			(7,191)
Other		(250)			(282)			(2,104)
			(865)			(1,242)			(9,295)
Ordinary income		21,664			28,856			216,088
Extraordinary Gains and Losses:
Gain on sale of property, plant and equipment (Note 18)		43			250			1,873
Gain on sale of investment in securities (Note 7)		92			15			116
Loss on sale and disposition of property, plant and equipment (Note 19)		(193)			(651)			(4,878)
Loss on liquidation of subsidiaries (Note 20)		(414)			(425)			(3,185)
Loss on evaluation of investments in securities (Note 7)		(219)			－			－
			(691)			(811)			(6,074)
Income before income taxes		20,973			28,045			210,014
Income Taxes: (Note 14)
Current		5,252			6,529			48,888
Deferred		224			711			5,330
			5,476			7,240			54,218
Net income		15,497			20,805			155,796
Net Income Attributable to Non-controlling Interests
	230			62			462
Net Income Attributable to Owners of the Parent	¥	15,267	¥	20,743	$	155,334
			Yen			U.S. dollars (Note 3)
			2022			2023			2023
Per Share:
Net income (Note 21)		¥	280.19		¥	380.70		$	2.85
Cash dividends			90.00			100.00			0.75
Net assets		3,615.39			3,934.50			29.46

3

Sanyo Special Steel Co., Ltd. and Consolidated Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended March 31, 2022 and 2023

							Thousands of U.S.
		Millions of yen			dollars (Note 3)
		2022			2023			2023
Net Income	¥	15,497	¥	20,805	$	155,796
Other Comprehensive Income (Loss):
Valuation difference on available-for-sale securities		(278)			511			3,825
Deferred gains (losses) on hedges		1,249			(3,235)			(24,222)
Foreign currency translation adjustments		4,828			1,591			11,917
Remeasurements of defined benefit plans		56			3,291			24,641
Share of other comprehensive income of affiliates accounted for by the equity method		69			－			－
Total other comprehensive income (Note 4)		5,924			2,158			16,161
Comprehensive Income		21,421			22,963			171,957
Comprehensive income attributable to:
Owners of the parent		21,064			22,766			170,481
Non-controlling interests		357			197			1,476

4