Restar : 1Q FY2023 (Apr 2023 – Jun 2023) Consolidated Financial Summary

Note: This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Three Months Ended June 30, 2023

[Japanese GAAP]

August 10, 2023

Company name: Restar Holdings Corporation

Stock exchange listing: Tokyo

Code number: 3156

URL: https://www.en.restargp.com/

Representative:

Tomoharu Asaka

Representative Director

Contact:

Atsuki Ishida

Corporate Officer

Phone: [phone]

Scheduled date of filing quarterly securities report: August 14, 2023

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: No

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

1. Consolidated Financial Results for the Three Months Ended June 30, 2023 (April 1, 2023 to June 30, 2023)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Three months ended

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

June 30, 2023

119,563

6.2

2,755

(32.3)

1,752

(52.3)

683

(69.3)

June 30, 2022

112,552

22.8

4,072

211.4

3,678

187.8

2,230

(11.5)

(Note) Comprehensive income:

Three months ended June 30, 2023:

¥

1,574

million

[

(23.1) %]

Three months ended June 30, 2022:

¥

2,048

million

[

(2.2) %]

Basic earnings

Diluted earnings per

per share

share

Three months ended

Yen

Yen

June 30, 2023

22.74

22.41

June 30, 2022

74.17

73.27

(2) Consolidated Financial Position

Total assets

Net assets

Capital adequacy ratio

Net assets per share

As of

Millions of yen

Millions of yen

%

Yen

June 30, 2023

279,456

84,571

28.6

2,659.38

March 31, 2023

269,427

85,095

30.0

2,686.31

(Reference) Equity:

As of June 30, 2023:

¥

79,962

million

As of March 31, 2023:

¥

80,772

million

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2. Dividends

				Annual dividends
	1st	2nd	3rd		Year-end	Total
	quarter-end	quarter-end	quarter-end
	Yen		Yen	Yen		Yen	Yen
Fiscal year ended March 31, 2023	-		40.00	-		75.00	115.00
Fiscal year ending March 31, 2024	-
Fiscal year ending March 31, 2024			55.00	-		60.00	115.00
(Forecast)
(Note) Revision to the forecast for dividends announced most recently:	No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2024(April 1, 2023 to March 31, 2024)

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable

Basic earnings per

to owners of parent

share

Millions of

Millions of

Millions of

Millions of

yen

%

yen

%

yen

%

yen

%

Yen

Full year

500,000

2.6

10,000

(30.7)

7,000

(41.9)

7,000

(1.2)

232.80

(Note) Revision to the financial results forecast announced most recently:

No

* Notes:

(1) Changes in significant subsidiaries during the three months ended June 30, 2023

(Changes in specified subsidiaries resulting in changes in scope of consolidation):

No

New

-

(Company name:

)

Exclusion:

-

(Company name:

)

(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements:

No

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2023: 30,072,643 shares

March 31, 2023: 30,072,643 shares

1. Number of treasury shares at the end of the period: June 30, 2023: 4,616 shares
   March 31, 2023: 4,568 shares
2. Average number of shares outstanding during the period: Three months ended June 30, 2023: 30,068,063 shares Three months ended June 30, 2022: 30,068,326 shares

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(1) Explanation of Operating Results

Forward-looking statements in the text are based on judgments made as of the end of the first quarter of the current consolidated fiscal year.

The business merger with Lavinics Co., Ltd. on April 12, 2022, was accounted for on a provisional basis in the first quarter of the previous consolidated fiscal year. Since it was finalized at the end of the previous consolidated fiscal year, comparisons and analysis with the same period of the previous consolidated fiscal year use the amounts after the revision due to the finalization of the provisional accounting treatment. Therefore, in comparing and analyzing the results with the same period of the previous year, the revised amounts due to the finalization of the provisional accounting treatment are used.

During the first quarter of the fiscal year under review, the Japanese economy has experienced a gradual normalization of economic activities, with the COVID-19 infection reclassified as a class 5 infectious disease. Personal consumption and corporate earnings show a moderate recovery, and the previously surging prices of resources, energy, and raw materials are also regaining stability. In the business environment surrounding our company, despite the easing of the semiconductor shortage and a recovery of the in-vehicle equipment market, the future remains uncertain due to, among other factors, a slowed Chinese economy, sluggish demand for PCs and smartphones, and the behavior of exchange rates in response to the implementation of monetary policies.

Under these circumstances, we are strengthening the management foundations for further growth. We are in the midst of corporate restructuring for the purpose of transitioning from a pure holding company to an operating company as of April 1, 2024, through an absorption-type merger with our wholly-owned subsidiaries. In addition, the trade name of our company will be changed to "Restar Corporation." The management system has been refreshed, and the business offices in the Tokyo metropolitan area have been consolidated. By leveraging the strength of individual businesses and integrating assets, including various functions and customer bases, we aim to further increase corporate value.

In July 2023, we made AIT Japan Inc., a subsidiary of WPG Holdings Limited (headquarters: Taipei, Taiwan;), a consolidated subsidiary of our company, aiming to strengthen the management foundations to meet diversifying customer needs and accelerate global expansion. We will cooperate with the WPG Group to promote collaboration, with the aim of further accelerating business expansion in the global market.

(Overview of Consolidated Operating Results)

(millions of yen)	Three months ended	Three months ended	Change
June 30, 2022	June 30, 2023
Net sales	112,552	119,563	6.2%
Operating profit	4,072	2,755	(32.3%)
Ordinary profit	3,678	1,752	(52.3%)
Profit attributable to owners of
parent	2,230	683	(69.3%)

- Performance Highlights

Consolidated net sales for the first quarter of the fiscal year under review increased. This was due mainly to an expansion of new transactions in the Procurement Business and the firm Electronic Equipment Business, owing to the improved demand-supply conditions for semiconductors, despite a decrease in sales of the EMS Business due to the sluggishness in the smartphone and tablet business. Operating profit decreased due to the difference in exchange rate trends, inventory write-downs for specific customer, allowance for doubtful accounts, and the absence of special demand year on year in the devices business, and a sales decrease in the EMS business. As a result of recording of interest expenses due to rising interest rates, ordinary profit decreased, and the profit attributable to owners of the parent also decreased.

As a result, net sales for the first quarter of the fiscal year under review were ¥119,563 million, up 6.2% year-on-year, operating profit was ¥2,755 million, down 32.3% year-on-year, ordinary profit was ¥1,752 million, down 52.3% year-on-year, and profit attributable to owners of parent was ¥683 million, down 69.3% year-on-year.

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(Operating Results by Reportable Segment)

The Group has four reportable segments for the allocation of management resources and evaluation of business performance. These four segments are the Semiconductor and Electronic Components Business, the Procurement Business, the Electronic Equipment Business, and the Environmental Energy Business.

Effective from the first quarter of the fiscal year under review, the business segments to be included as reportable have been changed, and comparisons and analysis for the first quarter of the fiscal year under review are based on the new segments. The segment to which Vitec WPG Limited (located in Hong Kong) belongs has been changed from "Procurement Business" to "Semiconductor and Electronic Components Business.

1) Semiconductor and Electronic Components Business

Reportable Segment	Business			Business Description
			Sales of semiconductors, electronic components, and related products in Japan and
Semiconductor and			overseas; system proposals with a variety of line card combinations; provision of high-
Devices	value-added solutions and	technical support, including	liquid crystal systems and
Electronic
		overseas products; design and manufacturing; LSI design development and support;
Components
		and reliability test service
Business
		Electronics manufacturing service for electronic components, modules, etc., with
	EMS	cutting-edge technology, procurement, production management and quality assurance
			at our factories
(millions of yen)			Three months ended		Three months ended		Change
		June 30, 2022		June 30, 2023
Net sales			85,062		81,755		(3.9%)
Devices			79,328		78,820		(0.6%)
EMS			5,734		2,935		(48.8%)
Segment profit			3,889		1,748		(55.0%)

- Performance Overview

In the devices business, sales declined slightly due to a decrease in sales for servers and office equipment, although sales for industrial equipment and in-vehicle devices grew. In the EMS business, despite the expansion of the business for in-vehicle displays, sales declined due to the sluggishness in the mainstay smartphone/tablet business. Segment profit decreased due to the difference in exchange rate trends, in addition to inventory write-downs and allowance for doubtful accounts, and the absence of special demand year on year in the devices business, and a sales decrease in the EMS business.

As a result, the Semiconductor and Electronic Components Business recorded net sales of ¥81,755 million, down 3.9% year-on- year, and segment profit of ¥1,748 million, down 55.0% year-on-year.

2) Procurement Business

Reportable Segment	Business		Business Description
Procurement	Procurement	Operation and proposal of optimal supply chain management through global
Business	procurement/trading for electronics and entrustment service for related operations
(millions of yen)			Three months ended	Three months ended	Change
		June 30, 2022	June 30, 2023
Net sales			20,868	30,099		44.2%
Segment profit			612	474		(22.4%)

- Performance Overview

In the procurement business, sales increased due to the expansion of new and existing transactions. Segment profit decreased due to the difference in exchange rate trends.

As a result, the Procurement Business recorded net sales of ¥30,099 million, up 44.2% year-on-year, and segment profit of ¥474 million, down 22.4% year-on-year.

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3) Electronic Equipment Business

Reportable Segment	Business		Business Description
			Proposal, design, construction, and maintenancein of solutions for video, audio,
	Electronic	communications, and measurement in various fields such as broadcasting, business,
	equipment	education, medical care/life sciences, public facilities, factory automation/ security,
Electronic			and electronic measuring instruments
		Development and manufacture of cashless payment terminals that combine our basic
Equipment Business
		digital and communications technologies with near-field communication (NFC)
	System equipment	technologies and sales of overseas made payment terminals; application development;
			development, manufacture, and sales of Individual Number authentication-related
			devices
(millions of yen)			Three months ended	Three months ended	Change
		June 30, 2022	June 30, 2023
Net sales			3,214	3,960	23.2%
Electronic equipment		2,595	3,199	23.3%
System equipment			618	761	23.1%
Segment loss			(376)	(258)	－

- Performance Overview

In the electronic equipment business, sales increased mainly owing to a recovery in demand for public events, and an increase in demand for video and sound equipment and ICT-related equipment following the relocation and renovation of offices. In the system equipment business, sales increased owing to an increase in sales of overseas-made payment terminals and access control terminals for offices, following the recovery of the component procurement of supply chain. Segment profit improved due to higher sales.

As a result, the Electronic Equipment Business recorded net sales of ¥3,960 million, up 23.2% year-on-year, and segment loss of ¥258 million.

4) Environmental Energy Business

Reportable Segment	Business		Business Description
			Community coexistence-based operation and management services for the introduction
	Energy	and popularization of renewable energy from our own solar power stations (in Japan
			and overseas) and wind power stations, etc.
Environmental	Power producer	Electric power supply to public facilities and private-sector companies primarily using
Energy Business	renewable energy, and	electric power consulting including	local production and
and supplier (PPS)
	consumption of the power for community revitalization
			Production and sale, as well as system consulting, of vegetables made in completely
	Vegetable factory	closed vegetable factories, to commercial and retail markets including convenience
			stores, supermarkets, and food service chains
(millions of yen)			Three months ended	Three months ended		Change
		June 30, 2022	June 30, 2023
Net sales			3,407	3,747		10.0%
Energy			1,192	1,166		(2.2%)
Power producer and supplier (PPS)		1,932	2,319		20.0%
Vegetable factory			282	262		(7.2%)
Segment profit			51	1,165		－

- Performance Overview

In the energy business, power generation from solar power stations in Japan and overseas remained firm. In the PPS business, sales increased owing mainly to the contribution of owned power sources. In the vegetable factory business, sales declined slightly

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