Futaba : 2023年 アニュアルレポート（英文）

FINANCIAL STATEMENTS 2023

Year Ended 31st March, 2023

Highlights of the Year Year Ended 31st March, 2023 Millions of Japanese Yen

20232022

Net Sales

Net Income (Loss) Attributable to

Owners of the Parent

Net Income (Loss) per Share (Yen)

Cash Dividends

Corporate Data As of 31st March, 2023

60,326 53,451

(3,500) (2,669)

(82.51) (62.92)

8911,188

Corporate Name	FUTABA CORPORATION
Founded	1948
Principal Office	629 Oshiba, Mobara, Chiba Prefecture 297-8588, Japan
Common Stock	Authorized	196,099,900 shares
	Issued	42,426,739 shares
Capitalized	¥22,559 million
Shareholders	14,043
Employees	3,823

- 1 -

Futaba Corporation and Consolidated Subsidiaries

Consolidated Financial Statements for the Year Ended March 31, 2023, and Independent Auditor's Report

- 2 -

Deloitte Touche Tohmatsu LLC Marunouchi Nijubashi Building 3-2-3 Marunouchi Chiyoda-ku, Tokyo 100-8360 Japan

Tel: [phone]

Fax: [phone] www.deloitte.com/jp/en

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of Futaba Corporation:

Opinion

We have audited the consolidated financial statements of Futaba Corporation and its consolidated subsidiaries (the "Group"), which comprise the consolidated balance sheet as of March 31, 2023, and the consolidated statement of operations, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, all expressed in Japanese yen.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of March 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Convenience Translation

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the current period. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.

Member of

Deloitte Touche Tohmatsu Limited

- 3 -

Revenue recognition of Futaba Corporation

Key audit matter description

Futaba Corporation (the "Company") and its consolidated subsidiaries manufacture and sell electronic device products and production equipment. Net sales were ¥60,326 million in the consolidated statement of operations for the year ended March 31, 2023, of which the Company recorded the largest part of the net sales, and therefore, the net sales of the Company were material.

Since the Company manufactures and sells standard products as well as customer specific products in response to individual requests from customers, the number of products handled by the Company is diverse. Furthermore, the total of net sales consists of various types of products with small individual sales price since the selling price is often relatively small. In addition, a large amount of sales data is processed daily due high volume of transactions.

The process of sales transaction is highly automated and dependent on the core operating system, and the system is designed and built to connect each transaction and master data registered in various subsystems in the operating process. Specifically, although customer orders are mainly processed via the electronic data interchange and the shipping process is handled based on shipping documents generated from the system, some orders are input and processed manually. The sales amount is automatically calculated based on a standard unit price list that is manually entered, and product quantities ordered that are also preliminarily entered upon receiving a customer order and determined manually at the time of shipment. Finally, sales data that is automatically calculated in the core operating system is interfaced to the accounting system. As a result, sales transactions are automatically recorded.

Audit responses

In order to address the key audit matter, we performed the following procedures, among others:

1. Evaluation and testing internal controls
2. • In addition to understanding the Company's process flows related to product sales, we evaluated the design and operating effectiveness of controls over entering sales related data, such as customer order, contract terms and master unit price of products in the core system.
   • With assistance of our IT specialists, we obtained an understanding of the data process flow from the inception of sales transactions to recording in the accounting system, data processing and automated internal controls in IT systems, and we also evaluated the design and operating effectiveness of IT automated controls over the automatically calculation of sales amount based on shipping volume and applicable sales unit price, and the interface between the core operating system and accounting system.
   • We tested the design and operating effectiveness of general IT controls such as user access controls, system program change management controls and system operation controls of core systems related to product sales.
3. Substantive procedures to address the matter
4. • We obtained an understanding of business unit performance and performed an analysis of relevant indicators, such as gross margin ratio to identify unusual trends and items. In addition, we analyzed the trends of daily recorded sales data. As a result of those analysis, we inquired of management for sales transactions that presented unusual trends or movements deviated from our understanding of the Company business and the industry trends and performed detail substantive testing with supporting documents deemed necessary.

- 4 -