Hirose Electric : Quarterly Financial Report (Third Quarter)

English translation

【Document to be filed】Quarterly Financial Report

【Provisions to base upon】Article 24-4-7, paragraph 1 of the Financial Instruments and Exchange Act 【Filing to】Director-General of the Kanto Local Finance Bureau

【Date of filing】February 14, 2022

【Fiscal Period】3rd quarter of 75th term (from October 1, 2021 to December 31, 2021) 【Company name】HIROSE ELECTRIC CO., LTD.

【Title and name of representative】Kazunori Ishii, President

【Location of head office】2-6-3 Nakagawa Chuoh, Tsuzuki-Ku, Yokohama, Kanagawa, Japan 【Telephone number】[phone]

【Contact person】Keiji Hara, General Manager of Accounting Department

【Place of contact】2-6-3 Nakagawa Chuoh, Tsuzuki-Ku, Yokohama, Kanagawa, Japan 【Telephone number】[phone]

【Contact person】Keiji Hara, General Manager of Accounting Department

【Place where the document to be filed is available for public inspection】Tokyo Stock Exchange, Inc. (2-1,Nihonbashi-kabutocho,Chuo-ku, Tokyo, Japan)

【Company Information】

1. Overview of the Company

1. Changes in major management indicators

			(Yen in millions)
	74th Fiscal Term	75th Fiscal Term	74th Fiscal Term
	Consolidated Cumulative	Consolidated Cumulative
	Third Quarter	Third Quarter
Fiscal period	From April 1, 2020	From April 1, 2021	From April 1, 2020
to December 31, 2020	to December 31, 2021	to March 31, 2021
Revenue	98,479	122,004	133,538
(Third quarter from Oct 1 to Dec 31)	(37,443)	(42,817)
Quarterly profit before tax or	20,814	32,168	28,332
profit before tax
Quarterly profit attributable to	14,982	23,787	19,916
owners of parent
(5,644)	(8,990)
(Third quarter from Oct 1 to Dec 31)
Quarterly comprehensive income	18,842	25,930	28,431
attributable to owners of parent
Equity attributable to owners of	316,368	327,578	326,092
parent
Total Assets	356,493	373,574	370,504
Quarterly earnings per share	413.09	669.01	549.10
-basic (Yen)
(155.61)	(254.31)
(Third quarter from Oct 1 to Dec 31)
Quarterly earnings per share	413.07	668.82	549.04
-diluted (Yen)
Ratio of total equity attributable to	88.7	87.7	88.0
owners of parent (%)
Cash flows from operating	24,002	30,044	35,818
activities
Cash flows from investing	(14,748)	9,953	(20,702)
activities
Cash flows from financing	(9,153)	(25,034)	(9,278)
activities
Balance of cash and cash	50,921	73,803	57,837
equivalents at end of the quarter

(Notes) 1. We prepare the condensed quarterly consolidated financial statements, and the transition of the major management indicators are not included.

2. The financial data above are based on the condensed quarterly consolidated financial statements and consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS).

2. Description of Business

There were no significant changes in our business during the cumulative third quarter of the fiscal year ending March 31, 2022.

There were also no changes in major subsidiaries.

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1. Business Overview

1. Risk Factors
   Regarding the business and financial situation stated in this report, there were no matters that may have significant impact on the investment decision and no significant changes in the risk factors stated in the annual securities report for the previous fiscal year during the nine months ended December 31, 2021.
   There were no material events.

2. Management Analysis of Financial Position, Operating Results and Cash Flows Forward-looking statements below were determined as of December 31, 2021.

(1) Overview of Operating Results

In the third quarter of the fiscal year ending March 31, 2022, we could see the signs of recovery in production and consumption activities after the state of emergency was lifted at the end of September, 2021. However, the infection has spread again from the beginning of 2022 and uncertainty of Japanese economy has been appearing.

In overseas market, American and European countries are moving toward the living with COVID-19 and the economic activity has been restarted. As a result, we can see the signs of recovery in business conditions. In China, although recovery speed has decreased in summertime, Chinese economy has been improved from autumn and continues to be strong.

Under this situation, Hirose group has been expanding global business mainly for smartphone market, automotive market and industrial market, and promoting reinforcement of development, sales and production system for new products with highly added value to respond advanced market needs quickly.

Hirose's newly released compact FPC-to-board connector, the BM50 Series, has been recognized as a CES® Innovation Awards Honoree in the Mobile Devices & Accessories category. Selection for the CES® 2022 Innovation Awards program was held prior to the Consumer Electronics Show (CES) 2022, the world's largest trade show. Hirose's new products have been evaluated in the market.

As a result, the sales for mainly consumer electronics and industrial business has been strong, and the revenue in the cumulative third quarter increased by 23.9% to JPY 122,004 million compared to the same period of the previous fiscal year. Operating profit increased by 46.0% to JPY 31,018 million, and quarterly profit attributable to owners of parent increased by 58.8% to JPY 23,787 million as compared with the cumulative third quarter of fiscal 2020.

The business results by reportable segments are as stated below. [Multi-pin connectors]

Our flagship multi-pin connectors include a variety of connector types such as circular connectors, rectangular connectors, connectors for ribbon cables, connectors for printed circuit boards, connectors used for FPCs (flexible printed circuits boards) and nylon connectors. This kind of connectors are used widely, such as for smartphones, tablet PC, communication equipment, automotive electronics, measuring and control equipment, FA equipment, and medical electronics equipment, as well as other industrial equipment. We expect that demands for this connectors will grow associated with progress of advanced information and telecommunications network society, and energy saving society considering environment in the future. Segment sales for the cumulative third quarter of the fiscal year ending March 31, 2022 increased by 24.6% to JPY 109,823 million, operating profit increased by 42.7% to JPY 28,587 million compared with the cumulative third quarter of the fiscal 2020.

[Coaxial connectors]

Coaxial connectors are a special type of high-performance connector used primarily for microwave and other high- frequency signals. This is used mainly for antenna connection of Wi-Fi and Bluetooth for smartphone and PC, GPS antenna connection for automobile and high-frequency signal connection for wireless communication device and electronic measuring instruments. Optical fiber connectors and coaxial switches are also included in this segment. Segment sales for the cumulative third quarter of the fiscal 2021 increased by 19.4% to JPY 8,512 million. Operating profit increased by 97.3% to JPY 2,205 million.

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[Other products]

This segment includes micro switches and instruments for connectors. Segment sales for the cumulative third quarter of the fiscal 2021 increased by 13.7% to JPY 3,669 million, operating profit increased by 144.7% to JPY 227 million.

(2) Overview of Cash Flows

Cash and cash equivalents at the third quarter of the fiscal year ending March 31, 2022 increased by JPY 15,966 million to JPY 73,803 million compared to the end of the fiscal year ended March 31, 2021.

a. Cash flows from operating activities

Cash flows from operating activities increased by JPY 30,044 million. (In the fiscal 2020.3Q, it increased by JPY 24,002 million.) This increase was mainly due to a rise in capital by appropriating quarterly profit before tax, JPY 32,168 million, and depreciation and amortization, JPY 12,349 million.

b. Cash flows from investing activities

Cash flows from investing activities increased by JPY 9,953 million. (In the fiscal 2020.3Q, it decreased by JPY 14,748 million.) This is mainly due to proceeds from sale and redemption of investments, JPY 13,379 million, proceeds from net decrease in time deposits, JPY 13,145 million, and payments for purchase of property, plant and equipment, JPY 10,392 million.

c. Cash flows from financing activities

Cash flows from financing activities decreased by JPY 25,034 million. (In the fiscal 2020.3Q, it decreased by JPY 9,153 million.) This is because of decrease in capital by payment for share buy-back, JPY 14,578 million and dividends paid, JPY 10,010 million.

(3) Analysis of financial condition

Total assets of FY2021.3Q increased by JPY 3,070 million to JPY 373,574 million compared to the end of the previous consolidated fiscal year mainly because cash and cash equivalent increased. Total liabilities increased by JPY 1,585 million to JPY 45,996 million due to the increase in trade and other payables. Although Hirose repurchase treasury shares, quarterly profit attributable to owners of parent was recorded and retained earnings increased. As a result, total equity increased by JPY 1,486 million to JPY 327,578 million. The ratio of total equity attributable to owners of parent resulted 87.7%, decreased by 0.3% compared with the previous consolidated fiscal year end.

(4) Assumptions used for accounting estimates

There are no significant changes in the accounting estimated from "Management Analysis of Financial Position, Operating Results and Cash Flows" stated in the annual securities report of FY 2020 and assumptions used for the estimates.

(5) Research and development

Our research and development expenses for the nine months ended December 31, 2021 were JPY 5,861 million. As the achievement of research and development activities, fixed assets including tools appropriated to JPY 1,625 million. When these amount are added up, the total of R&D investment amount was JPY 7,486 million. There were no significant changes in research and development activities for the period.

3. Material Agreements, etc

There were no decision or conclusion of significant business agreement during the three months ended December 31, 2021.

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3. Information on the Company

1. Information on the Company's Shares

(1) Total number of shares, etc.

① Total Number of Shares

	Class		Total number of shares authorized to be issued (Shares)
	Ordinary share				80,000,000
	Total				80,000,000
②Issued Shares
	Number of shares issued as	Number of shares	Stock exchange on which
	the Company is listed or
Class	of the end of third quarter	issued as of the filing	authorized financial	Description
(Shares)	date (Shares)	instruments firms
	(December 31, 2021)	(February 14, 2022)	association where the
				Company is registered
Ordinary				Tokyo Stock Exchange, Inc.	The number of shares
38,175,942	38,175,942	per unit of shares is
share	(the first section)
			100 shares
Total	38,175,942	38,175,942	−	−

(Note) The number of shares issued as of the filing date do not include the share issued by share acquisition rights from February 1, 2022 to the filing date of this report.

1. Information on the share acquisition rights, etc.

• Details of share option plans

Not applicable.

• Other information about share acquisition rights Not applicable.

1. Information on Moving Strike Convertible Bonds Not applicable.
2. Changes in the total number of shares issued, common stock, etc.

	Change in the	Balance of the	Change in	Balance of	Change in capital	Balance of
Date	total number of	total number of	common stock
common stock	reserve	capital reserve
issued shares	issued shares	(Yen in
	(Yen in millions)	(Yen in millions)	(Yen in millions)
	(Thousand Shares)	(Thousand Shares)	millions)
From Oct 1, 2021 to	−	38,175	−	9,404	−	12,007
Dec 31, 2021

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