Espec : Consolidated Financial Results for the Fiscal Year Ended March 31, 2021(Under Japanese GAAP)

Financial Accounting Standards Foundation Member

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy

between this translated document and the Japanese original, the original shall prevail.

May 14, 2021

	Consolidated Financial Results
	for the Fiscal Year Ended March 31, 2021
	(Under Japanese GAAP)
Company name:	ESPEC CORP.
Listing:	Tokyo, Stock Exchange, First section
Securities code:	6859
URL:	http://www.espec.co.jp
Representative:	Masaaki Ishida, President
Inquiries:	Keiji Oshima, Chief Officer of Corporate Control Headquarters
Telephone:	[phone]

Scheduled date of annual general meeting of shareholders:	June 23, 2021
Scheduled date to commence dividend payments:		June 24, 2021
Scheduled date to file annual securities report:			June 24, 2021
Preparation of supplementary material on financial results:	Yes
Holding of financial results briefing:			Yes (An on-demand video of the presentation meeting is
								scheduled to be posted on the Company's website.)
						(Yen amounts are rounded down to millions, unless otherwise noted.)
1. Consolidated financial results for the fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)
(1) Consolidated operating results							(Percentages indicate year-on-year changes.)
		Net sales			Operating profit		Ordinary profit			Profit attributable to
							owners of parent
	Fiscal year ended	Millions of yen		%	Millions of yen		%		Millions of yen		%		Millions of yen	%
	March 31, 2021	38,668		(8.9)		2,572		(31.3)		2,840		(27.8)		1,961	(30.4)
	March 31, 2020	42,443		-		3,742		-		3,933		-		2,818	-

Note: Comprehensive income	For the fiscal year ended March 31, 2021:	¥3,271million [ 48.8 %]
			For the fiscal year ended March 31, 2020:	¥2,199million [ - %]
		Basic earnings	Diluted earnings	Return on equity	Ratio of ordinary	Ratio of operating
			per share	per share	profit to total assets	profit to net sales
	Fiscal year ended		Yen	Yen		%	%	%
	March 31, 2021		85.79	-		4.5	4.9	6.7
	March 31, 2020		123.26	-		6.6	6.9	8.8

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

For the fiscal year ended March 31, 2021	¥ - million
For the fiscal year ended March 31, 2020	¥ - million

Note: Rates of change in comparison to the previous fiscal year are omitted because the year ended March 31, 2019 was an irregular 15-month period due to a change in the fiscal year-end at overseas consolidated subsidiaries.

(2) Consolidated financial position

			Total assets		Net assets	Equity-to-asset ratio	Net assets per share
	As of		Millions of yen		Millions of yen	%		Yen
	March 31, 2021			58,607		44,984	76.8		1,967.34
	March 31, 2020			57,461		42,731	74.4		1,868.77
Reference: Equity
	As of March 31, 2021	¥ 44,984 million
	As of March 31, 2020	¥ 42,731 million
	(3) Consolidated cash flows
			Cash flows from		Cash flows from	Cash flows from		Cash and cash equivalents
			operating activities		investing activities	financing activities		at end of period
	Fiscal year ended		Millions of yen		Millions of yen	Millions of yen		Millions of yen
	March 31, 2021			3,041		(2,034)	(1,503)		17,301
	March 31, 2020			4,870		(1,942)	(931)		16,779

2. Cash dividends

		Annual dividends per share		Total cash		Ratio of
						Payout ratio	dividends to
	First	Second	Third	Fiscal		dividends
	Total	(Consolidated)	net assets
	quarter-end	quarter-end	quarter-end	year-end	(Total)
			(Consolidated)
	Yen	Yen	Yen	Yen	Yen	Millions of yen	%	%
Fiscal year ended	-	22.00	-	46.00	68.00	1,567	55.2	3.7
March 31, 2020
Fiscal year ended	-	10.00	-	41.00	51.00	1,175	59.4	2.7
March 31, 2021
Fiscal year ending
March 31, 2022	-	18.00	-	42.00	60.00		57.2
(Forecast)

Note: The year-end dividend for the year ended March 31, 2021 was revised from ¥38 per share to ¥41. For further details, please refer to "Notice of Differences between Consolidated Financial Forecast Figures and Financial Results for Fiscal 2020 and Resolution of Dividend of Surplus" announced on May 14, 2021.

3. Forecasts of consolidated operating results for fiscal 2021, ending March 31, 2022 (From April 1, 2021 to March 31, 2022)

(Percentages indicate year-on-year changes.)

	Net sales		Operating profit		Ordinary profit	Profit attributable to	Basic earnings
			owners of parent	per share
Fiscal year ending	Millions of yen		%	Millions of yen		%	Millions of yen	%	Millions of yen	%	Yen
September 30, 2021	18,500		7.0	1,200		63.5	1,250	49.8	750	51.7	32.80
March 31, 2022	41,000		6.0	3,300		28.3	3,400	19.7	2,400	22.3	104.96

Note: With regard to the forecast of consolidated operating results for the fiscal year ending March 31, 2022, the final year of the medium term management plan, initial targets were net sales of ¥52 billion, operating profit of ¥5.2 billion, and operating profit to net sales of 10%, but they have been revised as described.

* Notes

1. Changes in significant subsidiaries during the period
   (changes in specified subsidiaries resulting in the change in scope of consolidation): None

Newly included: (Company name:	)
Excluded: (Company name: )

1. Changes in accounting policies, changes in accounting estimates, and restatement

1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
2. Changes in accounting policies due to other reasons: None
3. Changes in accounting estimates: None
4. Restatement: None

1. Number of issued shares (common shares)
   1) Total number of issued shares at the end of the period (including treasury shares)

	As of March 31, 2021	23,781,394 shares
	As of March 31, 2020	23,781,394 shares
2) Number of treasury shares at the end of the period
	As of March 31, 2021	915,593 shares
	As of March 31, 2020	915,230 shares
3) Average number of shares outstanding during the period
	As of March 31, 2021	22,865,944 shares
	As of March 31, 2020	22,864,168 shares

• Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  Statements concerning the future such as the results forecasts, etc., included in this document are based on currently available information and certain assumptions judged reasonable and actual results, etc., may differ due to various factors.
  Note: For details, see "Outlook for Fiscal 2021" on p. 5.

Index of Attached Material
1. Summary of Business Results -------------------------------------------------------------------------------------------------------------------	2
(1)	Overview of Fiscal 2020 Operating Results -------------------------------------------------------------------------------------------------	2
(2)	Overview of Fiscal 2020 Consolidated Financial Situation ------------------------------------------------------------------------------	4
(3)	Overview of Fiscal 2020 Cash Flows ---------------------------------------------------------------------------------------------------------	4
(4)	Outlook for Fiscal 2021 ---------------------------------------------------------------------------------------------------------------------------	5
(5)	Basic Policy on Profit Distributions and Dividends for Fiscal 2020 and Fiscal 2021 ----------------------------------------------	5
2. Basic Stance on the Selection of Accounting Standards ---------------------------------------------------------------------------------	6
3. Consolidated Financial Statements ------------------------------------------------------------------------------------------------------------	7
(1)	Consolidated Balance Sheets ------------------------------------------------------------------------------------------------------------------	7
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income -------------------------------	9
	Consolidated Statements of Income ----------------------------------------------------------------------------------------------------------	9
	Consolidated Statements of Comprehensive Income -----------------------------------------------------------------------------------	10
(3)	Consolidated Statements of Changes in Net Assets ------------------------------------------------------------------------------------	11
(4) Consolidated Statements of Cash Flows --------------------------------------------------------------------------------------------------	13
(5)	Notes to the Consolidated Financial Statements -----------------------------------------------------------------------------------------	14
	(Notes on the assumption of a going concern)--------------------------------------------------------------------------------------------	14
	(Important Matters Concerning the Basis for Preparing Consolidated Financial Statements) --------------------------------	14
	(Additional Information) -------------------------------------------------------------------------------------------------------------------------	17
	(Segment Information and Others) ----------------------------------------------------------------------------------------------------------	17
	(Per-Share Information) -----------------------------------------------------------------------------------------------------------------------	22
	(Material Subsequent Events) ----------------------------------------------------------------------------------------------------------------	23

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1. Summary of Business Results

1. Overview of Fiscal 2020 Operating Results

1. Operating Results for Fiscal 2020
   During fiscal 2020, the year ended March 31, 2021, the Japanese economy drastically worsened as economic activity came to a standstill due to the global spread of COVID-19, but economic activities, primarily in China, continued to normalize, and a moderate recovery was achieved. However, there are concerns about the worsening of U.S.-China friction and a resurgence of COVID-19, so the future remains uncertain.
   Among the Company's main customers, investment related to digitalization was strong, and trends toward resuming some investments was seen from the third quarter onward in automotive-related and other markets as well.
   With restrictions such as limitations on movement in place, the Company's initiatives included advancing online sales and strengthening activities centered on markets related to 5G and IoT and automated driving and electrification.
   As a result, in the consolidated results for fiscal 2020, orders-received decreased 13.8% year on year to ¥37,580 million and net sales decreased 8.9% to ¥38,668 million. On the earnings front, decreased net sales saw operating income fall 31.3% to ¥2,572 million and profit attributable to owners of parent decreased 30.4% to ¥1,961 million.

	Year Ended March 31, 2020	Year Ended March 31, 2021	Change (%)
	(Millions of yen)	(Millions of yen)
Orders-Received	43,571	37,580	(13.8)
Net sales	42,443	38,668	(8.9)
Operating profit	3,742	2,572	(31.3)
Ordinary profit	3,933	2,840	(27.8)
Profit attributable to	2,818	1,961	(30.4)
owners of parent
2) Performance by Segment
Consolidated results by operating segment for fiscal 2020
	Orders-Received	Net sales	Operating profit
	(Millions of yen)	(Millions of yen)	(Millions of yen)
Equipment Business	30,775	30,669	2,062
Service Business	6,153	6,063	446
Other Business	976	2,241	60
Elimination	(304)	(305)	3
Total	37,580	38,668	2,572

In the environmental test chambers field, in Japan, orders-received and net sales both decreased year on year for versatile standardized products and customized products. In overseas markets, net sales increased year on year in China and Southeast Asia, but decreased in Europe, the U.S., South Korea and Taiwan.

In the energy devices equipment field, orders-received and net sales both decreased year on year due to sluggish sales of evaluation systems for secondary batteries and fuel cells.

In the semiconductor equipment field, investment, mainly related to memory, continued to increase, but orders-received declined year on year. Net sales increased, mainly due to recording sales of large-scale projects ordered in the previous fourth quarter.

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As a result, the Equipment Business on the whole saw orders-received decrease 11.3% to ¥30,755 million and net sales decrease 10.7% to ¥30,669 million, compared to the last year. Operating income decreased 32.2% year on year to ¥2,062 million due to decreased net sales

	Year Ended March 31, 2020	Year Ended March 31, 2021	Change (%)
	(Millions of yen)	(Millions of yen)
Orders-Received	34,682	30,755	(11.3)
Net sales	34,361	30,669	(10.7)
Operating profit	3,041	2,062	(32.2)

< Service Business >

In the after-sales service and engineering field, business activities were restricted in the first quarter but recovered from the second quarter onwards, and both orders-received and net sales remained level year on year.

In commissioned tests and facility rentals, orders-received and net sales both decreased year on year due mainly to sluggish market conditions of commissioned tests.

As a result, the Service Business on the whole saw orders-received decrease 3.5% year on year to ¥6,153 million and net sales decrease 6.1% to ¥6,063 million. On the earnings front, operating income decreased 30.9% year on year to ¥446 million due to a decrease in net sales and deteriorating cost ratio.

	Year Ended March 31, 2020	Year Ended March 31, 2021	Change (%)
	(Millions of yen)	(Millions of yen)
Orders-Received	6,378	6,153	(3.5)
Net sales	6,459	6,063	(6.1)
Operating profit	646	446	(30.9)

In the Other Business, which is centered on the environmental preservation and plant factory businesses, forest creation activities decreased due to the cancellations and postponements of events, such as planting festivals, and alongside this, plant factory results were sluggish. Orders-received declined 64.0% to ¥976 million year on year due to receipt of a large-scale order for a plant factory in the previous fiscal year. Net sales increased 22.4% to ¥2,241 million due to recording the aforementioned large-scale plant factory project, while operating profit rose 22.4% to ¥60 million.

	Year Ended March 31, 2020	Year Ended March 31, 2021	Change (%)
	(Millions of yen)	(Millions of yen)
Orders-Received	2,715	976	(64.0)
Net sales	1,831	2,241	22.4
Operating profit	49	60	22.4

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