Kanematsu : Consolidated Financial Summary for the First Half of the Fiscal Year Ending March 31, 2024 (IFRS) TSE

Member of Financial Accounting Standards Foundation

Consolidated Financial Summary for

the First Half of the Fiscal Year Ending March 31, 2024 (IFRS)

Company name: Kanematsu Corporation	November 2, 2023
Stock Exchange listing: Prime Market, Tokyo Stock Exchange
Stock code:	8020	URL: https://www.kanematsu.co.jp
Representative:	President, Yoshiya Miyabe
Contact:	General Manager of Accounting Dept., Reiki Fujii
	TEL [phone]

Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): November 9, 2023

Scheduled date for commencement of dividend payments:	December 5, 2023
Supplementary documents for quarterly results:	Yes
Quarterly results briefing:	Yes
	(Figures of less than one million are rounded down.)

1. Consolidated business results for the first half of the fiscal year ending March 2024 (April 1, 2023 - September 30, 2023)

(1) Consolidated business results (sum total)						(%: Change from the same period of the previous fiscal year)
			Revenue			Operating profit	Profit before tax	Profit for the period		Profit attributable to	Total comprehensive
						owners of the parent	income for the period
			Million yen	%	Million yen	%	Million yen	%	Million yen		%		Million yen	%	Million yen	%
	First half to	474,129	5.5	22,407	1.6	20,373	(4.7)	13,457	(9.8)			12,339	1.0		24,338	0.9
	September 2023
	First half to	449,459	23.4	22,052	54.8	21,382	57.8	14,915	58.7			12,212	67.6		24,130	145.8
	September 2022
			Basic earnings per share		Diluted earnings per share
						Yen				Yen
	First half to				147.69				147.20
	September 2023
	First half to				146.21				145.90
	September 2022
	(Notes)	The basic earnings per share and the diluted earnings per share are calculated based on	the profit attributable to owners of the parent.
(2) Consolidated financial condition
			Total assets					Total equity			Equity attributable to		Percentage of equity attributable to
									owners of the parent			owners of the parent
					Million yen				Million yen		Million yen					%
	As of September 30,		703,338				163,277				146,716					20.9
		2023
			677,588				143,423				128,525					19.0
	As of March 31, 2023
2. Dividends
													Annual dividends
	(Record date)				End of			End of			End of				Year end			Fiscal
				first quarter			second quarter			third quarter
							Yen		Yen			Yen					Yen			Yen
	Fiscal year ended March 2023			-			37.50			-				37.50			75.00
	Fiscal year ending March 2024			-			45.00
		Fiscal year ending										-				45.00			90.00
		March 2024 (Forecasts)
	(Notes)	Revisions to dividend forecasts	published most recently:	None

3. Forecasts for consolidated results ending March 2023 (April 1, 2023 - March 31, 2024)

(%: Changes from the previous year)

	Revenue		Operating profit		Profit before tax		Profit attributable		Basic earnings
				to owners of the parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	960,000	5.3	40,500	4.1	36,000	0.9	23,500	26.5	281.32

(Note) Revisions to results forecasts published most recently: None

* Notes

1. Important change in subsidiaries during the term (Change in scope of consolidation): None
2. Changes in accounting policies and changes in accounting estimates

1.	Changes in accounting policies required by IFRS:	Yes
2.	Changes in accounting policies other than 1.:	None
3.	Changes in accounting estimates:	None

1. Number of outstanding shares (common shares)

1. Number of outstanding shares including treasury stock

	First half (2023/9):	84,500,202 shares	Fiscal year (2023/3):	84,500,202 shares
2.	Number of treasury stock
	First half (2023/9):	942,020 shares	Fiscal year (2023/3):	956,231 shares
3.	Average number of shares during the period (First half)
	First half (2023/9):	83,548,525 shares	First half (2022/9):	83,524,869 shares

• Quarterly consolidated financial summaries are not subject to quarterly review by a certified public accountant or an audit corporation.
• Explanation about the proper use of results forecasts, and additional information
  The forward-looking statements, including results forecasts, included in this document are based on information that the Company has obtained and certain assumptions that the Company considers reasonable. The Company does not promise to achieve them. Actual results might be significantly different from the forecasts in the document, depending on various factors. Refer to "(3) Information on the future outlook, including consolidated business performance forecasts" in "1. Qualitative Information on Consolidated Results, Etc. for the First Half of the Fiscal Year Ending March 31, 2024" on page 3 of accompanying materials for further information on results forecasts.

Accompanying Materials - Contents
1. Qualitative Information on Consolidated Results, Etc. for the First Half of the Fiscal Year
Ending March 31, 2024	2
(1)	Details of consolidated results	2
(2)	Details of financial position	3
(3)	Information on the future outlook, including consolidated business performance forecasts	3
2. Condensed Consolidated Financial Statements and Major Notes	4
(1)	Condensed consolidated statement of financial position	4
(2)	Condensed consolidated statements of income / Condensed consolidated statements of
	comprehensive income	6
	Condensed consolidated statements of income	6
	First half	6
	Condensed consolidated statements of comprehensive income	7
	First half	7
(3)	Condensed consolidated statement of changes in equity	8
(4)	Condensed consolidated statements of cash flows	10
(5)	Notes on condensed consolidated financial statements	11
	(Notes on the going concern assumption)	11
	(Change in accounting policies) …………………………………………………….………………….…….....11
	(Segment information)	12
	(Significant subsequent events)	12

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1. Qualitative Information on Consolidated Results, Etc. for the First Half of the Fiscal Year Ending March 31, 2024

(1) Details of consolidated results

During the six months under review (from April 1, 2023 to September 30, 2023), the global economy continued facing uncertain conditions including the ongoing high interest rates and inflations in Europe and the U.S., the economic slowdown in China, and the escalating tensions in the Middle East.

The U.S. economy saw mixed signals: while the expectation for prolonged monetary tightening against the backdrop of solid personal consumption and employment conditions placed a downward pressure on the economy, energy- related investments remained strong.

In Europe, although monetary tightening was reaching a turning point in response to the slowing inflation, the economy currently remained sluggish against the backdrop of weak domestic and external demand, leaving an outlook for economic recovery unclear.

In China, the economy slowed down since spring as the surging demand as a rebound from the cancellation of the zero- COVID policy ran its course. There is a concern that the slower recovery in personal consumption and the weak property prices may place a downward pressure on the economy.

The Japanese economy recovered slowly thanks to the recovery in inbound demand following the removal of restrictions placed on people's activities during the COVID-19 pandemic and solid capital investments on the back of the ongoing digital transformation. Meanwhile, there is a concern about the risk of economic downswing due to the rising energy prices and inflation.

In this environment, the results of the Group for the half under review are as shown below.

Revenue increased centered on the mobile business whose sales were in the recovery trend, the energy business which benefited from the cheaper yen, and the steel tubing business. Although profit increased in the ICT solutions business and the steel tubing business that had a solid performance and in the aerospace business that saw strong transactions in airplane-related parts, the energy business that was affected by the impact of falling domestic demand, the meat products business that was mainly affected by the impact of higher market prices overseas and the cheaper yen and the feedstuff business the prices of whose main grains had softened saw profit decrease compared with the same period of the previous year when a strong performance had been recorded.

As a result, consolidated revenue increased ¥24,670 million (5.5%) year on year, to ¥474,129 million. Consolidated gross profit also increased ¥6,254 million (10.1%) from a year earlier, to ¥68,355 million. Consolidated operating profit rose ¥355 million (1.6%) from a year earlier, to ¥22,407 million due to an increase in gross profit. Despite an increase in operating profit, profit before tax fell ¥1,009 million (4.7%) year on year, to ¥20,373 million due to a smaller finance income, while profit attributable to owners of the parent rose ¥127 million (1.0%) year on year, to ¥12,339 million.

Results for each business segment are described below

(i) Electronics & Devices

Revenue increased ¥13,072 million year on year, to ¥147,593 million, attributable to higher revenue in the mobile business, the semiconductor parts and manufacturing equipment business, and the ICT solutions business. Operating profit fell ¥584 million, to ¥9,843 million, due to smaller profits in the industrial electronics and electronic materials business and the semiconductor parts and manufacturing equipment business, while profit attributable to owners of the parent increased ¥1,525 million, to ¥6,202 million.

(ii) Foods, Meat & Grain

Revenue fell ¥2,195 million year on year, to ¥170,649 million, reflecting drops in revenue in the meat products business. Operating profit rose ¥606 million, to ¥5,329 million, due to higher profits in the feedstuff business and the foods business, although profit attributable to owners of the parent slid ¥822 million, to ¥2,518 million.

(iii) Steel, Materials & Plant

Revenue increased ¥13,404 million year on year, to ¥105,573 million, due to higher revenues mainly in the energy business and the steel tubing business. Operating profit shrank ¥638 million, to ¥5,083 million, mainly due to a weaker profit in the energy business. Profit attributable to owners of the parent decreased ¥1,207 million, to ¥2,106 million.

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(iv) Motor Vehicles & Aerospace

Revenue increased ¥1,558 million year on year, to ¥44,212 million, due to a rise in revenues mainly in the aerospace business. Operating profit rose ¥1,022 million, to ¥1,703 million, due to increases in profit in the aerospace business and the motor vehicles and parts business. Profit attributable to owners of the parent increased ¥628 million, to ¥1,119 million.

(v) Other

Revenue decreased ¥1,169 million year on year, to ¥6,100 million. Operating profit fell ¥52 million, to ¥438 million, and profit attributable to owners of the parent shrank ¥62 million, to ¥471 million.

1. Details of financial position
   (i) Assets, liabilities and equity
   Total assets at the end of the first half of the fiscal year under review increased ¥25,750 million from the end of the previous fiscal year, to ¥703,338 million.
   Interest-bearing debt decreased ¥4,391 million from the end of the previous fiscal year, to ¥223,503 million, while net interest-bearing debt after deducting cash and deposits rose ¥26,591 million from the end of the previous fiscal year, to ¥174,539 million mainly due to payments to acquire shares of Kanematsu Electronics, Ltd. to make it a wholly owned subsidiary after a TOB and an increase in operating capital. Interest-bearing debt does not include lease liabilities.
   In terms of equity, equity attributable to owners of the parent rose ¥18,191 million from the end of the previous fiscal year, to ¥146,716 million, mainly due to the accumulation of profit attributable to owners of the parent and increases in other components of equity resulting from the depreciation of the yen.
   As a result, the equity ratio attributable to owners of the parent came to 20.9%. The net debt-equity ratio ("net DER") was 1.19 times.

(ii) Cash flows

Cash and cash equivalents at the end of the first half of the fiscal year under review decreased ¥31,196 million from the end of the previous fiscal year, to ¥48,266 million.

The state of cash flows and factors for each category for the first half of the fiscal year under review are as follows:

(Cash flows from operating activities)

Net cash provided by operating activities in the first half under review stood at ¥1,789 million (versus ¥1,791 million used in the first half of the previous fiscal year), mainly reflecting the accumulation of operating revenue.

(Cash flows from investing activities)

Net cash used in investing activities in the first half under review stood at ¥1,818 million (versus ¥5,535 million used in the first half of the previous fiscal year), mainly reflecting investments in new businesses, although there were proceeds mainly from the sale of property, plant and equipment.

(Cash flows from financing activities)

Net cash used in financing activities in the first half under review stood at ¥31,991 million (versus ¥3,292 million used in the first half of the previous fiscal year), mainly due to the repayment of short-term borrowings obtained for the TOB of Kanematsu Electronics Ltd. and payments to acquire its shares to make the company a wholly owned subsidiary.

1. Information on the future outlook, including consolidated business performance forecasts We have not changed the forecasts for consolidated results that we announced on May 9, 2023.

* Note on forward-looking statements:

The forward-looking statements, including results forecasts, included in this material are based on information that the Company has obtained and certain assumptions that the Company considers reasonable. The Company does not promise to achieve them. Actual results may differ materially from forecasts due to a number of factors.

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2. Condensed Consolidated Financial Statements and Major Notes

(1) Condensed consolidated statement of financial position

		(Million yen)
	As of March 31, 2023	As of September 30, 2023
Assets
Current assets
Cash and cash equivalents	79,462	48,266
Trade and other receivables	245,890	272,966
Inventories	156,071	167,282
Other financial assets	5,633	12,395
Other current assets	28,896	33,575
Total current assets
515,954	534,487
Non-current assets
Property, plant and equipment	47,188	45,404
Goodwill	14,481	15,555
Intangible assets	28,055	28,212
Investments accounted for using the equity method	19,947	20,387
Trade and other receivables	1,606	1,655
Other investments	37,888	45,693
Other financial assets	6,656	6,600
Deferred tax assets	2,221	1,748
Other non-current assets	3,589	3,594
Total non-current assets
161,634	168,850
Total assets	677,588	703,338

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		(Million yen)
	As of March 31, 2023	As of September 30, 2023
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables	206,609	230,961
Bonds and borrowings	162,189	118,843
Lease liabilities	7,685	7,334
Other financial liabilities	23,939	9,697
Income taxes payable	6,488	4,464
Provisions	358	216
Other current liabilities	29,199	30,282
Total current liabilities
436,469	401,800
Non-current liabilities
Bonds and borrowings	65,704	104,659
Lease liabilities	12,992	11,810
Other financial liabilities	3,512	3,727
Retirement benefits liabilities	6,198	6,219
Provisions	2,155	2,184
Deferred tax liabilities	5,975	8,565
Other non-current liabilities	1,156	1,093
Total non-current liabilities
97,695	138,260
Total liabilities	534,164	540,061
Equity
Share capital	27,781	27,781
Capital surplus	-	-
Retained earnings	80,543	89,550
Treasury stock	(1,259)	(1,237)
Other components of equity
Exchange differences on translation of foreign	8,878	14,034
operations
Financial assets measured at fair value through	11,829	14,897
other comprehensive income
Cash flow hedges	752	1,690
Total other components of equity
21,460	30,621
Total equity attributable to owners of the parent	128,525	146,716
Non-controlling interests	14,898	16,561
Total equity	143,423	163,277
Total liabilities and equity	677,588	703,338

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1. Condensed consolidated statements of income / Condensed consolidated statements of comprehensive income
   (Condensed consolidated statements of income) (First half)

		(Million yen)
	FY2022 First half	FY2023 First half
	(From April 1, 2022	(From April 1, 2023
	to September 30, 2022)	To September 30, 2023)
Revenue	449,459	474,129
Cost of sales	(387,357)	(405,774)
Gross profit
62,101	68,355
Selling, general and administrative expenses	(45,328)	(50,904)
Other income (expenses)
Gain (loss) on sale or disposal of property, plant and	(88)	1,852
equipment and intangible assets, net
Other income	5,778	3,776
Other expenses	(410)	(672)
Total other income (expenses)
5,278	4,957
Operating profit	22,052	22,407
Finance income
Interest income	117	560
Dividend income	577	907
Other finance income	249	158
Total finance income
945	1,627
Finance costs
Interest expenses	(1,496)	(3,155)
Other finance costs	(7)	(80)
Total finance costs	(1,504)	(3,236)
Share of profit (loss) of investments accounted for using	(110)	(424)
the equity method
Profit before tax
21,382	20,373
Income tax expense	(6,467)	(6,916)
Profit for the period
14,915	13,457
Profit for the period attributable to:
Owners of the parent	12,212	12,339
Non-controlling interests	2,703	1,118
Total
14,915	13,457
Earnings per share attributable to owners of the parent
Basic earnings per share (yen)	146.21	147.69
Diluted earnings per share (yen)	145.90	147.20

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(Condensed consolidated statements of comprehensive income) (First half)

		(Million yen)
	FY2022 First half	FY2023 First half
	(From April 1, 2022	(From April 1, 2023
	to September 30, 2022)	to September 30, 2023)
Profit for the period	14,915	13,457
Other comprehensive income
Items that will not be reclassified to profit or loss
Financial assets measured at fair value through other	875	3,127
comprehensive income
Remeasurements of defined benefit plans	(0)	-
Share of other comprehensive income of investments	(13)	(10)
accounted for using the equity method
Total items that will not be reclassified to profit or loss
861	3,116
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	6,394	5,810
Cash flow hedges	371	928
Share of other comprehensive income of investments	1,586	1,024
accounted for using the equity method
Total items that may be reclassified to profit or loss
8,353	7,764
Other comprehensive income for the period, net of tax	9,214	10,881
Total comprehensive income for the period	24,130	24,338
Total comprehensive income for the period attributable to:
Owners of the parent	19,621	21,547
Non-controlling interests	4,508	2,791
Total
24,130	24,338

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(3) Condensed consolidated statement of changes in equity

(Million yen)

			Equity attributable to owners of the parent
						Other components of equity
						Exchange	Financial assets
	Share capital	Capital surplus		Retained earnings	Treasury stock	measured at fair
		differences on
		value through other
						translation of
						comprehensive
						foreign operations
						income
Balance as of April 1, 2022	27,781	27,164		89,280	(1,305)	5,296	10,068
Profit for the period				12,212
Other comprehensive income						6,199	827
Total comprehensive income for the	-	-		12,212	-	6,199	827
period
Dividends				(2,923)
Dividends paid to non-
controlling interests
Acquisition of treasury stock					(1)
Disposal of treasury stock		(0)			47
Equity transactions with		(0)
non-controlling interests
Share-based payment transactions		22
Put options granted to non-		(1,054)
controlling interests
Total transactions with owners	-	(1,032)		(2,923)	46	-	-
Transfer from other components of				101			(101)
equity to retained earnings
Balance as of September 30, 2022	27,781	26,131		98,671	(1,258)	11,495	10,793

	Equity attributable to owners of the parent
	Other components of equity		Total equity	Non-controlling	Total equity
		Remeasurements	Total other		attributable to	interests
		components of		owners of the
	Cash flow hedges	of defined benefit
		plans	equity		parent
Balance as of April 1, 2022	1,198	－	16,563		159,484	39,798	199,282
Profit for the period			－		12,212	2,703	14,915
Other comprehensive income	383	(0)	7,409		7,409	1,805	9,214
Total comprehensive income for the period	383	(0)	7,409		19,621	4,508	24,130
Dividends			－		(2,923)		(2,923)
Dividends paid to non-controlling interests			－		－	(1,088)	(1,088)
Acquisition of treasury stock			－		(1)		(1)
Disposal of treasury stock			－		47		47
Equity transactions with non-controlling			－		(0)	63	62
interests
Share-based payment transactions			－		22		22
Put options granted to non-controlling			－		(1,054)		(1,054)
interests
Total transactions with owners	－	－	－		(3,908)	(1,025)	(4,933)
Transfer from other components of equity to		0	(101)		－		－
retained earnings
Balance as of September 30, 2022	1,581	－	23,870		175,197	43,281	218,479

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