JTEC : Consolidated Financial Results for the Six Months Ended December 31, 2021(Based on Japanese GAAP)

Consolidated Financial Results for the Six Months Ended December 31, 2021

[Japanese GAAP]

	February 14, 2022
Company name:	JTEC Corporation
Stock exchange listing:	Tokyo Stock Exchange
Code number:	3446
URL:	https://www.j-tec.co.jp/english/
Representative:	Takashi Tsumura, President
Contact:	Yasuhito Hirai, Director and General Manager of Management Department
Phone:	[phone]

Scheduled filing date for quarterly securities report:	February 14, 2022
Scheduled date for commencement of dividend payments:	None
Availability of supplementary briefing materials on quarterly financial results:	Not available

Financial results briefing session: Scheduled (for institutional investors and analysts)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Six Months Ended December 31, 2021 (July 1, 2021 to December 31, 2021)

	(1) Consolidated Operating Results (cumulative)						(Percentages indicate rates of year-on-yearchange)
					Net sales				Operating profit			Ordinary profit					Profit attributable to
													owners of parent
	Six months ended	Millions of yen	%		Millions of yen	%		Millions of yen		%		Millions of yen	%
	December 31, 2021	339			-	(231)				-	(234)			-	(169)	-
	December 31, 2020				-			-		-				-				-			-			-	-
	(Note) Comprehensive income: For the six months ended December 31, 2021: ¥(169) million [-%]
					For the six months ended December 31, 2020: ¥- million [-%]
					Basic earnings		Diluted earnings
					per share				per share
	Six months ended			Yen				Yen
	December 31, 2021	(28.98)				-
	December 31, 2020				-				-
	(Note) The Company began preparing consolidated financial statements from the end of the consolidated fiscal year ended
	June 30, 2021. Therefore, there are no year-on-year change figures for the six months ended December 31, 2021,
	nor figures or year-on-year changes for the six months ended December 31, 2020.
	(2) Consolidated Financial Position
					Total assets	Net assets			Equity ratio
					Millions of yen	Millions of yen						%
	As of December 31, 2021				3,142			2,090						66.5
	As of June 30, 2021				3,382			2,257						66.8
	(Reference) Shareholders' equity: As of December 31, 2021: ¥2,090 million
					As of June 30, 2021: ¥2,257 million
	2. Dividends
																	Annual dividends
										1st			2nd			3rd			Year-end	Total
										quarter-end			quarter-endquarter-end
										Yen						Yen	Yen					Yen	Yen
	Fiscal year ended June 30, 2021				-					0.00			-				0.00			0.00
	Fiscal year ending June 30, 2022				-					0.00
	Fiscal year ending June 30, 2022 (Forecast)														-				0.00			0.00

(Note) Changes in dividend forecast from the most recent announcement: None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 to June 30, 2022) (Percentages indicate rates of year-on-year change)

			Net sales		Operating profit	Ordinary profit		Profit attributable to	Basic earnings
					owners of parent	per share
			Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%		Yen
	Full year			1,700		-		194		-		232		-		150		-		25.76

(Note) Changes in financial results forecast from the most recent announcement: None

Notes:

1. Changes in specific subsidiaries during the period (changes in specified subsidiaries resulting in a change in the scope of consolidation): None
   Newly included: None
   Excluded: None
2. Application of special accounting treatment in preparing the quarterly financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and retrospective restatement
4. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
5. Total number of issued shares (common stock)
6. 1. Total number of issued shares at the end of the period (including treasury shares):

December 31, 2021: 5,864,000 shares

June 30, 2021: 5,855,000 shares

1. Total number of treasury shares at the end of the period: December 31, 2021: 148 shares
   June 30, 2021: 99 shares
2. Average number of shares outstanding during the period Six months ended December 31, 2021: 5,856,646 shares Six months ended December 31, 2020: 5,854,901 shares

* The quarterly financial statements are outside the scope of quarterly reviews by certified public accountants and auditing firms.

* Explanation of the proper use of financial results forecast and other notes

The earnings forecasts and other forward-looking statements herein are based on information currently available to the Company and certain assumptions deemed reasonable by the Company, and are not intended to be construed as assurance that they will be accomplished in the future. Actual results may differ significantly from the forecasts due to a wide range of factors. Please see page four of the attached materials, "1. Qualitative Information on Quarterly Financial Results (3) Explanation of Financial Results Forecast and Other Forward-Looking Information" for more information regarding assumptions made when formulating earnings projections and matters to note when using these projections.

Contents of Attached Materials
1. Qualitative Information on Quarterly Financial Results ......................................................................................................	2
(1)	Explanation of Business Results ......................................................................................................................................	2
(2)	Explanation of Financial Condition ...................................................................................................................................	3
(3)	Explanation of Financial Results Forecast and Other Forward-Looking Information ........................................................	4
2. Quarterly Consolidated Financial Statements and Primary Notes .....................................................................................	5
(1)	Consolidated Balance Sheet ............................................................................................................................................	5
(2)	Consolidated Statement of Income and Consolidated Statement of Comprehensive Income..........................................	6
Consolidated Statement of Income ....................................................................................................................................	6
Consolidated Statement of Comprehensive Income ..........................................................................................................	7
(3)	Consolidated Statement of Cash Flows............................................................................................................................	8
(4)	Notes to the Financial Statements....................................................................................................................................	9
(Notes on going concern assumption)................................................................................................................................	9
(Notes in the event of significant changes in shareholders' equity) ....................................................................................	9
(Changes in accounting policies)........................................................................................................................................	9
(Additional information).......................................................................................................................................................	9
(Segment information)........................................................................................................................................................	9

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1. Qualitative Information on Quarterly Financial Results

All matters relating to the future in the sections below reflect the current views of the Group as of December 31, 2021. We began preparing consolidated financial statements from the end of the consolidated fiscal year ended June 30, 2021. Accordingly, we have not performed a comparative analysis with the previous fiscal year.

(1) Explanation of Business Results

In the first half of the fiscal year ending June 30, 2022, the Japanese economy saw sluggishness in company activities and personal spending due to the impact of the Delta variant of COVID-19. Later, as the number of cases fell due to the effect of vaccinations there were signs of recovery in economic activities. However, the number of cases is rising again in other countries due to the emergence of the Omicron variant, creating an unpredictable situation for Japan going forward.

Further, the outlook remains uncertain due in part to the impact of semiconductor shortages and parts procurement difficulties on various industries, soaring fuel prices, and inflation concerns in the global economy.

Under these economic circumstances, the Company strove to strengthen and expand the business foundation through two businesses that use proprietary technology, namely the Optical segment and the LS & Equipment Development segment. The results of ESCO, Ltd. are included in the Other business category.

As a result, during the six months ended December 31, 2021, we recorded net sales of ¥339,554 thousand, an operating loss of ¥231,970 thousand, an ordinary loss of ¥234,717 thousand, and a loss attributable to owners of parent of ¥169,740 thousand.

Results by segment were as follows. (Optical segment)

In the first half of the fiscal year ending June 30, 2022, the segment booked sales on products for synchrotron radiation facilities, including Advanced Photon Source (APS) in the United States, European Synchrotron Radiation Facility (ESRF) in France, Sirius in Brazil, and Taiwan Photon Source (TPS) in Taiwan.

While close attention will need to be paid to the Omicron variant, the impact of COVID-19 on the facilities in each country is on the decline as they are in the process of returning to normal operation.

In terms of manufacturing, there were delays in the manufacturing process for mirrors that were scheduled to be delivered in the second quarter, resulting in sales being booked later than forecasted. These products are expected to be delivered in the third quarter of the current fiscal year.

In terms of sales, we have received large orders from facilities in the United States, China, and Japan as was announced three times from the end of the previous fiscal year in our press releases. There have also been orders from facilities in other countries, which have resumed projects that were postponed due to the COVID-19 pandemic.

In Japan, we have received an increasing number of orders from the Super Lightsource for Industrial Technology of Japan (SLIT-J; scheduled for completion in 2023) in the Tohoku region. In China, while travel restrictions continue, order from the fourth-generation synchrotron radiation facility under construction in Beijing that possess world-class number of beamlines, the X-ray free electron laser facility under construction in Shanghai, and other facilities have increased. Furthermore, orders from facilities in European countries, such as Germany, the United Kingdom, Switzerland, and Italy, have grown as they execute plans to upgrade to the fourth-generation facilities. Demand is on the rise not only from existing synchrotron radiation facilities, but also from new and upgraded facilities.

As a result, sales in the Optical segment during the period under review were ¥189,295 thousand and the segment loss was ¥54,333 thousand.

(LS & Equipment Development segment)

In the first half of the fiscal year ending June 30, 2022, the segment's earnings were driven by sales of large automated cell culture systems KB-4000 and MakCell, as well as protypes of manufacturing equipment for controlled drug-release devices under research and development. Large automated cell culture systems are sold to pharmaceutical companies and will continue to be a focus along with sales promotion of general-purpose equipment that uses the CELLFLOAT® system.

As for the quartz crystal unit wafer machining system, one of our new businesses, we have worked to explore

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sales channels following the delivery during the previous fiscal year.

As a result, sales in the LS & Equipment Development segment during the period under review were ¥117,192 thousand and the segment loss was ¥21,585 thousand.

(Other segment)

The Other segment includes results from subsidiary ESCO, Ltd. and records sales associated with contracted measurements and services related to thermal desorption spectrometry (TDS) equipment.

As a result, sales in the Other segment during the period under review were ¥33,066 thousand and the segment loss was ¥9,071 thousand.

In the consolidated fiscal year ended June 30, 2021, the Company acquired shares in ESCO, Ltd., which was included in the scope of consolidation. As the deemed acquisition date was June 30, 2021 and the difference between the closing date of the subsidiary and the consolidated reporting date is within three months, the consolidated financial results for the six months ended December 31, 2021 reflects performance of the acquired company during the three months from July 2021 to September 2021.

1. Explanation of Financial Condition
2. 1. Status of assets, liabilities and net assets (Assets)
      As of December 31, 2021, current assets amounted to ¥1,215,163 thousand, down ¥256,876 thousand from their level on June 30, 2021. This change was primarily due to a ¥258,358 thousand decline in accounts receivable-trade, offsetting a ¥57,177 thousand increase in work in process. Non-current assets came to ¥1,927,792 thousand, up ¥17,791 thousand compared to June 30, 2021. This was mainly because deferred tax assets increased ¥67,663 thousand, while progress in depreciation reduced buildings and structures by ¥17,059 thousand and machinery, equipment and vehicles by ¥11,390 thousand.
      As a result, total assets were ¥3,142,956 thousand, down ¥239,085 thousand from their level on June 30, 2021.

(Liabilities)

Current liabilities came to ¥402,510 thousand, down ¥33,422 thousand from their level on June 30, 2021. This change was primarily because short-term borrowings decreased ¥200,000 thousand, while current liabilities (other) increased ¥97,173 thousand and accounts payable-trade rose ¥56,902 thousand due in part to growth in advances received. Non-current liabilities were ¥650,342 thousand, down ¥37,795 thousand compared to June 30, 2021. This was due to a ¥37,728 thousand decrease in long-term borrowings.

As a result, total liabilities were ¥1,052,853 thousand, down ¥71,217 thousand from their level on June 30, 2021.

(Net assets)

Total net assets amounted to ¥2,090,103 thousand, down ¥167,868 thousand from their level on June 30, 2021. This was primarily due to the booking of a loss of ¥169,740 thousand.

2) Cash flows

Cash and cash equivalents ("cash") amounted to ¥786,349 thousand as of December 31, 2021, down ¥61,352 thousand compared to June 30, 2021.

(Cash flows from operating activities)

Net cash provided by operating activities was ¥179,924 thousand. This was primarily because while the Company booked a loss before income taxes of ¥235,179 thousand and inventories increased ¥71,783 thousand, trade receivables decreased ¥248,282 thousand, and advances received and trade payables rose ¥130,286 thousand and ¥56,902 thousand, respectively.

(Cash flows from investing activities)

Net cash used in investing activities was ¥10,445 thousand. This result was chiefly due to ¥11,205

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