Nicca Chemical : Summary of Consolidated Financial Results for the Six Months Ended March 31, 2022 (Based on Japanese GAAP)

Translation

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results

for the Six Months Ended June 30, 2022

(Based on Japanese GAAP)

July 28, 2022

Company name:

Nicca Chemical Co., Ltd.

Stock exchange listing: Tokyo, Nagoya

Stock code:

4463

URL

https://www.nicca.co.jp/

Representative:

President and Representative

EMORI Yasumasa

Inquiries:

Director, Member of the Board

SAWASAKI Shoya

TEL [phone]

General manager of Administration Division

Scheduled date to file Quarterly Securities Report:

August 12, 2022

Scheduled date to commence dividend payments:

September 7, 2022

Preparation of supplementary material on quarterly financial results:

Yes

Holding of quarterly financial results meeting:

Yes

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the six months ended June 30, 2022 (from January 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)

Percentages indicate year-on-year changes

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Six months ended June 30, 2022

24,917

-

1,386

-

1,823

-

1,058

-

Six months ended June 30, 2021

24,100

22.0

1,413

315.8

1,596

239.0

1,583

801.5

(Note) Comprehensive income

Six months ended June 30, 2022

3,194 Millions of yen〔11.6%〕

Six months ended June 30, 2021

2,863 Millions of yen〔－%〕

Earnings per share

Diluted earnings per share

Yen

Yen

Six months ended June 30, 2022

67.14

-

Six months ended June 30, 2021

100.59

-

(Note)"Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others have been applied since the beginning of the first quarter of the consolidated fiscal year. The figures for the second quarter of the fiscal year ending December 31, 2022 are after applying the accounting standards, etc., and there is no statement of any rate of change from the same quarter of the previous fiscal year.

(2) Consolidated financial position

		Total assets			Net assets		Equity ratio		Net assets per share
		Millions of yen		Millions of yen			%		Yen
As of June 30, 2022		56,818		30,183			48.7		1,755.08
As of December 31, 2021		54,533		27,323			45.9		1,589.37
(Reference) Equity Six months ended June 30, 2022 27,682 Millions of yen
Ended December 31, 2021	25,051 Millions of yen
2. Cash dividends
					Annual dividends per share
	1st quarter-end	2nd quarter-end		3rd quarter-end	Fiscal year-end	Total
		Yen			Yen			Yen		Yen	Yen
Year ended December 31, 2021		-			8.00			-		14.00	22.00
Year ending December 31, 2022		-			11.00
Year ending December 31, 2022 (Forecast)								-		11.00	22.00

(Note) Revisions to the forecast of cash dividends since the latest announcement: No

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3. Forecast of consolidated financial results for the year ending December 31, 2022 (from January 1, 2022 to December 31, 2022)

Percentages indicate year-on-year changes

	Net sales		Operating profit		Ordinary profit		Profit attributable to	Earnings per share
				owners of parent
	Millions of yen	%	Millions of yen		%	Millions of yen		%	Millions of yen	%	Yen
Full year	51,500	-	2,500		-	3,000		-	1,800	(30.7)	114.14

(Note) 1. Revisions to the forecast for financial results since the latest announcement: Yes

2."Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others have been applied since the beginning of the first quarter of the consolidated fiscal year. The above consolidated earnings forecasts are based on the figures after applying the accounting standards, etc., and there is no statement of any rate of change from the previous fiscal year.

4. Notes
(1)	Changes in significant subsidiaries during the six months ended June 30, 2022	No
	(changes in specified subsidiaries resulting in the change in scope of consolidation):
(2)	Application of special accounting methods for preparing quarterly consolidated financial statements:	Yes

(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements

Changes in accounting policies due to revisions to accounting standards and other regulations:	Yes
Changes in accounting policies due to other reasons:	No
Changes in accounting estimates:	No
Restatement of prior period financial statements:	No

(4) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of June 30, 2022	17,710,000 shares	As of December 31, 2021	17,710,000 shares
Number of treasury shares at the end of the period
	As of June 30, 2022	1,937,421 shares	As of December 31, 2021	1,948,421 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)

Six months ended June 30, 2022

15,767,865 shares

Six months ended June 30, 2021

15,742,437 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Appropriate use of earnings forecasts and other special items

The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable.

Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual earnings may differ significantly due to various factors.

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Attached Material Index
1. Qualitative information on financial results for the quarter under review ........................................................................................	4
(1) Explanation of operating results ..................................................................................................................................................	4
(2) Explanation of financial position .................................................................................................................................................	5
(3) Explanation of forward-looking information, such as forecasts of consolidated financial results ..............................................	6
2. Consolidated quarterly financial statements and major notes ................................................................................................ ................	7
(1) Consolidated balance sheets ............................................................................................. .............................................................	7
(2) Consolidated statements of income (cumulative) and consolidated statements of comprehensive income (cumulative) ............	9
Consolidated statements of income (cumulative) ........................................................................................................................	9
Consolidated statements of comprehensive income (cumulative). ................................................................................... ..........	10
(3) Consolidated statements of cash flows .........................................................................................................................................	11
(4) Notes to consolidated quarterly financial statements ...................................................................................................................	13
(Notes on the assumptions of going concern) ........................................................................................... ....................................	13
(Notes on substantial changes in the amount of shareholders' equity) ..........................................................................................	13
(Application of accounting methods specific to the preparation of consolidated quarterly financial statements) ........................	13
(Changes in accounting policies) ...................................................................................................................................... .............	13
(Segment Information, etc.)............................................................................................................................................................	15
(Important subsequent events) ............................................................................................... ........................................................	17

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1. Qualitative information on financial results for the quarter under review

Effective from the first quarter of the consolidated fiscal year under review, the Company has adopted "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others.

For this reason, the figures for the consolidated second quarter under review in the "Explanation of operating results" are after applying the accounting standards, etc., so there is no statement of any rate of change from the same quarter of the previous year.

(1) Explanation of operating results

During the consolidated second quarter under review (from January 1, 2022 through June 30, 2022), the global economy continued to face unpredictable circumstances, although there were signs of the normalization of economic activities amid the COVID-19 pandemic, Shanghai's lockdowns, Russia's invasion of Ukraine, supply chain disruptions, accelerating inflation and other global uncertainties still need to be monitored carefully. While personal consumption has shown signs of recovery in Japan, the future remains uncertain both in Japan and overseas, as concern over a further rise in prices is intensifying due mainly to soaring raw material prices, as well as the rapid depreciation of the yen in response to monetary policies implemented by Europe and the U.S.

Under these circumstances, the Group set forth its corporate vision, "To be the most reliable innovation company by customers all over the world" for sustainable growth through 2025. And it is working on five company-wide basic strategies ("Major changes in its business structure," "Productivity reform," "Stronger financial base," "Promotion of sustainable management," and "Evolution from a big-family-like company") under the 5-yearmedium-term management plan "INNOVATION 25" (2021-2025). The aim is to transform itself into a truly strong corporate group that achieves steady growth by leveraging the drastically changing business environment as business opportunities and focusing on businesses that deliver values increasingly needed by society, based on the three management pillars of Innovation, Efficiency, and Sustainability.

Net sales for the consolidated second quarter under review were 24,917 million yen (2Q FY2021/12: 24,100 million

yen), operating profit was 1,386 million yen (2Q FY2021/12: 1,413 million yen), ordinary profit was 1,823 million yen

(2Q FY2021/12: 1,596 million yen), and profit attributable to owners of parent was 1,058 million yen (2Q FY2021/12: 1,583 million yen).

Segment results are as follows. Net sales in each segment do not include intersegment sales.

(Chemicals)

Net sales were 18,014 million yen (2Q FY2021/12: 16,665 million yen) and segment profit was 973 million yen (2Q

FY2021/12: 908 million yen).

Despite the ongoing impact of the pandemic, a recovery in demand was seen in all but a few markets, and higher sales, price revisions, and the yen's depreciation also contributed to the strong segment sales. The Ukraine situation resulted in a sharp rise in raw material prices, although higher sales, cost control efforts, the impact of the depreciation of the yen, and price revisions contributed to segment profit.

(Cosmetics)

Net sales were 6,307 million yen (2Q FY2021/12: 7,283 million yen) and segment profit was 1,223 million yen (2Q

FY2021/12: 1,443 million yen).

With regard to Demi Cosmetics, despite the negative impact of a decrease in salon visitors amid the COVID-19 pandemic, sales were steady, owing mainly to higher sales of its mainstay hair-care brand products. With regard to consolidated subsidiaries, sales of DEMI KOREA CO., LTD. continued to increase despite the market deterioration caused by the pandemic, although sales of Yamada Pharmaceutical Co., Ltd. decreased, normalizing after a temporary increase in production due to a large-scale contract project in the same period of the previous fiscal year. In addition, sales were affected by soaring prices of raw/other materials across the board, but recovered to a certain extent mainly as a result of cost reduction efforts.

(Other)

Net sales were 568 million yen (2Q FY2021/12: 150 million yen), and segment profit was 49 million yen (2Q

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FY2021/12: 40 million yen).

*As a reference for year-on-year changes, the following table shows the comparison with the same period of the previous fiscal year, using figures for the second quarter of 2021 after the simplified application of "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others.

Consolidated Financial Summary

					Millions of yen
	Second quarter of the	Second quarter of	Second quarter of the	Change from the previous year
	fiscal year ended	the fiscal year ended	fiscal year ended
	December 2021	December 2021	December 2022
	Amount of	Rate of change
	（Former standard）	（New standard）	（New standard）	increase/decrease
Net sales	24,100	23,237	24,917	+1,680	+7.2%
Operating profit	1,413	1,376	1,386	+10	+0.8%
(Operating profit margin)	5.9%	5.9%	5.6%
Ordinary profit	1,596	1,596	1,823	+227	+14.2%
Profit attributable to	1,583	1,583	1,058	(524)	(33.1%)
owners of parent

Consolidated segment results

									Millions of yen
	Second quarter of the	Second quarter of the	Second quarter of the
	fiscal year ended	fiscal year ended	fiscal year ended	Change from the	Change from the
	December 2021	December 2021	December 2022	previous year	previous year
	（Former standard）	（New standard）	（New standard）
	Net sales	Segment	Net sales	Segment	Net sales	Segment	Net sales	Rate of	Segment	Rate of
	profit	profit	profit	change	profit	change
Chemicals	16,665	908	16,171	900	18,041	973	+1,870	+11.6%	+73	+8.2%
Cosmetics	7,283	1,443	6,914	1,414	6,307	1,223	(607)	(8.8％)	(191)	(13.5％)
Other	150	40	150	40	568	49	+417	+276.8%	+8	+21.8%
Elimination,	－	(978)	－	(978)	－	(859)	－	－	+119	－
etc.
Total	24,100	1,413	23,237	1,378	24,917	1,368	+1,680	+7.2%	+10	+0.8%

(2) Explanation of financial position

① Situation with assets, liabilities, and net assets (Assets)

Total assets at the end of the second quarter of the consolidated fiscal year under review increased 2,284 million yen from the end of the previous fiscal year to 56,818 million yen. This was mainly due to an increase of 673 million yen in cash and deposits, 1,018 million yen in merchandise and finished goods, and 1,198 million yen in raw materials and supplies.

(Liabilities)

Total liabilities at the end of the second quarter of the consolidated fiscal year under review decreased 574 million yen from the end of the previous fiscal year to 26,635 million yen. This was due mainly to a decrease of 433 million yen in other (mainly accounts payable) and a decrease of 143 million yen in notes and accounts payable - trade in current liabilities.

(Net assets)

Total net assets at the end of the second quarter of the consolidated fiscal year under review increased 2,859 million yen from the end of the previous fiscal year to 30,183 million yen. This was mainly due to an increase of 838 million yen in retained earnings and 1,904 million yen in foreign currency translation adjustment.

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