Tsuzuki Denki : Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (JGAAP)

Consolidated Financial Results for the Fiscal Year Ended March 31, 2021 (JGAAP)

		May 14, 2021
Company name:	Tsuzuki Denki Co., Ltd.	Listing Stock Exchange: Tokyo
Stock code:	8157	URL: https://www.tsuzuki.co.jp/
Representative (title):	Isao Emori, Representative Director, President and CEO
Contact (title):	Toshihiro Hirai, Director and Managing Executive Officer

Tel: [phone]
Scheduled date of general shareholders' meeting:	June 25, 2021
Scheduled date for dividend payment:		June 7, 2021
Scheduled date for filing consolidated financial statements:	June 25, 2021
Preparation of supplemental explanatory materials:	Yes
Results briefing to be held:	Yes (for institutional investors and securities analysts)

1. Consolidated financial results for the fiscal year ended March 31, 2021 (April 1, 2020, to March 31, 2021)

(1) Consolidated operating results

Millions of yen (rounded down), % figures are year-on-year change

	Net sales	Operating income	Ordinary income	Profit attributable to
	owners of parent
Year ended	120,004	(4.3%)	3,202	(28.2%)	3,361	(26.6%)	2,346	(25.6%)
March 31, 2021
Year ended	125,366	5.5%	4,457	34.3%	4,577	31.0%	3,155	42.6%
March 31, 2020
Note: Comprehensive income was 2,157 million yen (+32.1%) in year ended March 31, 2021; 1,633

million yen (+1.8%) in year ended March 31, 2020.

	Earnings	Diluted	Ratio of profit to	Ratio of	Ratio of
	ordinary	operating
	per share	earnings per	shareholders'
	income to total	income to
	(yen)	share (yen)	equity
	assets	net sales
Year ended	134.06	-	7.7%	4.4%	2.7%
March 31, 2021
Year ended	182.10	-	10.8%	5.9%	3.6%
March 31, 2020

Reference: Equity in earnings affiliates in year ended March 31, 2021, nil; in year ended March 31, 2020, nil.

(2) Consolidated financial position

	Total assets	Net assets	Shareholders'	Net assets per
	(millions of yen)	(millions of yen)	equity ratio	share (yen)
Year ended	76,200	31,171	40.6%	1,760.87
March 31, 2021
Year ended	77,448	29,752	38.4%	1,706.19
March 31, 2020

Reference: Shareholders' equity in year ended March 31, 2021, 30,934 million yen; in year ended March 31, 2020, 29,752 million yen.

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(3) Consolidated cash flows

Millions of yen

Cash flows from

Cash flows from

Cash flows from

Cash and cash

equivalents at end

operating activities

investing activities

financing activities

of year

Year ended

749

(1,271)

(2,029)

15,927

March 31, 2021

Year ended

8,025

(8)

(4,950)

18,456

March 31, 2020

2. Dividends

Dividends per share for the fiscal year (yen)

Total

Dividend

Ratio of

annual

payout

dividend

dividend

End of

End of

End of

ratio

payout to

Year-

payment

first

second

third

Total

(consoli-

net

end

(millions

quarter

quarter

quarter

dated)

assets

of yen)

Year ended

-

10.00

-

45.00

55.00

1,000

30.2%

3.3%

March 31, 2021

Year ended

-

15.00

-

31.00

46.00

853

34.3%

2.7%

March 31, 2020

Year ended

-

23.00

-

24.00

47.00

30.6%

March 31, 2022

Note: The interim dividend for the year ended March 31, 2021 included a commemorative dividend of 5.0 yen per share to mark the transfer of the Company's listing to the first section of the Tokyo Stock Exchange.

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2022 (from April 1, 2021 to March 31, 2022)

• figures are year-on-year change

	Net sales	Operating income	Ordinary income	Profit attributable to	Earnings
	owners of parent	per share
	(millions of yen)	(millions of yen)	(millions of yen)
	(millions of yen)	(yen)
Full year	122,000	1.7%	4,000	24.9%	4,050	20.5%	2,700	15.1%	153.69

Note: The Company manages earnings on an annual basis, so does not disclose first-half earnings forecasts.

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*Notes

1. Changes in significant subsidiaries (which affected the scope of consolidation) during the fiscal year: None
   Newly added ___ companies (names)
   No longer consolidated ___ companies (names)
2. Changes in accounting policies, changes in accounting estimates, and restatements

1.	Changes in accounting policies due to changes in accounting standards:	None
2.	Changes in accounting policies not due to changes in accounting standards:	None
3.	Changes in accounting estimates:	None
4.	Restatements:	None

(3) Number of shares outstanding (common stock)

1. Number of shares outstanding at year end (including treasury stock)
2. Number of shares at year end (treasury stock)
3. Average number of shares over the period

Year ended		Year ended
20,177,894	March 31,	22,177,894
March 31, 2021
	2020
Year ended		Year ended
2,610,056	March 31,	4,739,641
March 31, 2021
	2020
Year ended		Year ended
17,502,032	March 31,	17,328,507
March 31, 2021
	2020

Note: The number of treasury shares includes those held in the Employee Stock Ownership Plan (ESOP) trust account (210,100 in year ended March, 2021), Directors' Compensation Board Incentive Plan (BIP) trust account (380,905 in year ended March 2021; 277,431 in year ended March 2020) and Stock-grant ESOP trust account (486,750 in year ended March 2021; 472,650 in year ended March 2020).

*The financial information in this report is not subject to audit by certified public accountants or auditing firms.

*Appropriate use of earnings forecast and other special notes.

(Note on forward-looking statements)

The earnings forecasts and other forward-looking statements contained in this document are based on information currently available to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will achieve. Actual results may vary materially from forecasts due to a variety of factors.

(How to obtain supplementary explanatory materials for financial results and results briefing materials.) The Company plans to hold a results briefing for institutional investors and analysts on Thursday, May 27, 2021. The briefing materials distributed will be posted on the Company's website promptly after the briefing.

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(Attachment)
Contents
1. Overview of results .............................................................................................................................	5
(1)	Earnings.............................................................................................................................................	5
(2)	Financial position..............................................................................................................................	8
(3)	Cash flows.........................................................................................................................................	8
(4) Outlook...............................................................................................................................................	9
(5)	Dividend policy and dividends for the year under review and coming year............................	9
2. Approach to selection of accounting standards.......................................................................	10
3. Consolidated financial statements and notes...........................................................................	11
(1)	Consolidated balance sheet.........................................................................................................	11
(2)	Consolidated statements of income and comprehensive income..........................................	13
(3)	Consolidated statement of changes in net assets.....................................................................	15
(4)	Consolidated statement of cash flows........................................................................................	17
(5)	Notes to consolidated financial statements................................................................................	19
	(Notes on premise of going concern)..........................................................................................	19
	(Additional information).................................................................................................................	19
	(Segment and other information).................................................................................................	21
	(Per share information)..................................................................................................................	25
	(Major subsequent events)...........................................................................................................	25

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1. Overview of results

(1) Earnings

While the Japanese economy continues to recover, conditions remain difficult due to the spread of the novel coronavirus (COVID-19), and the outlook is still uncertain.

In the Information Network Solutions segment, orders were solid from the third quarter onward, with the growth in demand for remote working arrangements under work-style reforms, GIGA School Concept- related orders, and cloud-based contact center solutions. However, over the year, the COVID-19 pandemic curtailed sales activities, and some customers reduced or postponed their ICT investments. Orders, net sales, and operating income declined from a year earlier, due to the absence of elevated replacement demand for servers and PCs that existed in the year ended March 2020, as technical support for some Microsoft products ended.

The year under review was the first in our medium-term management plan. Tsuzuki Denki Co., Ltd. and its subsidiaries (the "Group") launched initiatives aimed at becoming an innovation service provider to assist digital transformation (DX) and boost competitiveness of our customers. We focused on developing data use/application services and services to completely digitize all contract processes to support DX of our customers, which is accelerating as society enters the "new normal" era. ComDesign Inc., our subsidiary since September 30, 2020, began contributing to results in the third quarter in line with our goal of "reforming our business structure by expanding the services we offer," one of the key priorities in our medium-term business plan.

In the Electronic Devices business, net sales declined. Sales of LCD panels for onboard automotive information devices and SSDs increased and orders were above year-earlier levels, but HDD and embedded server business declined due to the pandemic, and there were also adjustments to factory automation (FA) equipment production amid a tight supply situation for components. However, operating income increased as costs declined.

As a result, the Group posted net sales of ¥120,004 million, down 4.3% from the previous year, operating income of ¥3,202 million, down 28.2%, ordinary income of ¥3,361 million, down 26.6%, and profit attributable to owners of parent of ¥2,346 million, down 25.6%.

Consolidated results by segment are as follows.

Information Network Solutions

In the equipment business, orders and net sales in the fourth quarter were solid due to large orders for lightweight PCs suitable for remote work and GIGA School Concept-related orders. Over the full year, despite contributions from large smartphone deals for sales personnel in the financial and insurance industry and server and storage equipment deals for public-sector customers, orders, net sales, and order backlog were below previous year levels due to the absence of elevated replacement demand for servers and PCs that existed in the year ended March 2020, as technical support for some Microsoft products ended.

In the development and construction business, despite progress on projects that had been delayed in the third quarter due to COVID-19, projects mainly for customers in the healthcare, travel, apparel, and railway industries were delayed and development and installation work was postponed. As a result, orders, net sales, and order backlog were down from the previous year.

In the service business, there was ongoing growth in maintenance and operation services for newly sold equipment. In addition, ComDesign Inc. benefited from growing demand for new and expanded installation of its cloud-based contact center solutions due to COVID-19. Therefore, orders, net sales, and order backlog were all up from the previous year.

Income was below year-earlier levels. In addition to lower sales, large equipment installation deals and lower engineer utilization rates due to delayed development and construction projects resulted in higher expense ratios.

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