Toppan : Consolidated Financial Results for the Three Months Ended June 30, 2021

	Consolidated Financial Results
	for the Three Months Ended June 30, 2021
	[Japanese GAAP]
	August 6, 2021
Company name: TOPPANInc.	Stock exchange listing: Tokyo Stock Exchange
Code number: 7911	URL: https://www.toppan.co.jp/

Representative: Hideharu Maro, President & Representative Director

Contact: Takashi Kurobe, Director & Managing Executive Officer, Finance & Accounting Division Phone: [phone]

Scheduled date of filing quarterly securities report: August 10, 2021

Scheduled date of commencing dividend payments: ―

Availability of supplementary briefing material on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled (for securities analysts and institutional investors) (Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Three Months Ended June 30, 2021 (April 1, 2021 to June 30, 2021)

(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	Million yen	%	Million yen	%	Million yen	%	Million yen	%
	June 30, 2021	342,987	4.5	8,330	170.3	11,115	351.2	9,166	1,312.4
	June 30, 2020	328,283	(4.7)	3,082	(17.3)	2,463	(49.4)	649	(77.6)

(Note) Comprehensive income:	Three months ended June 30,	2021: ¥17,425 million [(71.5)%]
	Three months ended June 30,	2020: ¥61,211 million [98.2%]

Basic earnings per share

Diluted earnings per share

Three months ended

Yen

Yen

June 30, 2021

26.89

‒

June 30, 2020

1.87

‒

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

As of June 30, 2021

2,334,210

1,456,531

56.8

As of March 31, 2021

2,363,503

1,453,164

56.0

(Reference) Equity: As of June 30, 2021: ¥1,325,017 million

As of March 31, 2021: ¥1,323,721 million

2. Dividends

Annual dividends

1st quarter-end

2nd quarter-end

3rd quarter-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended March 31, 2021

‒

20.00

‒

20.00

40.00

Fiscal year ending March 31, 2022

‒

Fiscal year ending March 31, 2022

20.00

‒

20.00

40.00

(Forecast)

(Note) Revision to the forecast for dividends announced most recently: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2022 (April 1, 2021 to March 31, 2022)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable	Basic earnings
		to owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	1,450,000	(1.2)	52,000	(11.5)	51,000	(12.2)	31,000	(62.2)	92.46

(Note) Revision to the financial results forecast announced most recently: No

* Notes:

1. Changes in significant subsidiaries during the three months ended June 30, 2021 (changes in specified subsidiaries resulting in changes in scope of consolidation): No
2. Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No
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: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
5. Total number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2021:	349,706,240 shares
March 31, 2021:	349,706,240 shares

2) Total number of treasury shares at the end of the period:

June 30, 2021:	10,992,953 shares
March 31, 2021:	7,671,677 shares

3) Average number of shares during the period:

Three months ended June 30, 2021: 340,905,173 shares

Three months ended June 30, 2020: 346,154,219 shares

• These quarterly financial results are outside the scope of quarterly review by certified public accountants or audit 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 certain assumptions relating to economic situations and market trends deemed reasonable as of the date of publication of this document. Actual results may differ significantly from these forecasts due to a wide range of factors.

Table of Contents

1. Qualitative Information on Quarterly Financial Results for the Period under Review ··························2

1. Explanation of Operating Results ··················································································2
2. Explanation of Financial Position ··················································································4
3. Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information ········4

1. Quarterly Consolidated Financial Statements and Primary Notes ·················································5

1. Quarterly Consolidated Balance Sheets············································································5
2. Quarterly Consolidated Statements of Income and Comprehensive Income ··································7 Quarterly Consolidated Statements of Income ····································································7 Quarterly Consolidated Statements of Comprehensive Income ················································9
3. Notes to Quarterly Consolidated Financial Statements ························································ 10 (Notes on Going Concern Assumption)·········································································· 10
   (Notes in the Case of Significant Changes in Shareholders' Equity) ········································· 10 (Changes in Accounting Policies) ················································································ 10 (Notes to Quarterly Consolidated Statements of Cash Flows) ················································ 12 (Segment Information) ····························································································· 13 (Matters Concerning Revenue Recognition) ···································································· 14 (Significant Subsequent Events) ·················································································· 14

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operating Results

The Japanese economy during the three months under review (from April 1, 2021 to June 30, 2021) continued to face challenging conditions, mainly reflecting the ongoing fourth wave of COVID-19, although measures taken against the pandemic are expected to produce effects. The economic outlook remained uncertain, given trends in new infections both in Japan and overseas, uncertainty in overseas economies surrounding trade issues, and the impact of fluctuations in financial and capital markets, with continued monitoring of developments required.

The operating environment of TOPPAN Inc. (the "Company") and its group companies (collectively, the "Group") remained challenging due to factors such as weaker personal consumption and corporate activity caused by the COVID-19 pandemic, as well as declining demand for paper media due to the impact of the shift to digital information media. Meanwhile, a rise in new types of demand created by lifestyle changes is anticipated, including growth in online demand and consciousness of environmental hygiene. In addition, corporations are expected to take an active part in achieving the Sustainable Development Goals (SDGs).

Amid this environment, the Group has positioned "transforming the business portfolio" to enhance profitability, "strengthening management foundations" to generate new growth and "expanding ESG initiatives" to support sustainable value enhancement as the three management priorities, based on which the Group will strive to expand business further. In addition, under the key concept of "Digital & Sustainable Transformation," the Group has introduced "Erhoeht-X" as the concept for group-wide digital transformation (DX) initiatives as it aims to support the digital transformation of businesses and society. To contribute to achieving the SDGs, the Group takes action in accordance with TOPPAN Business Action for SDGs, a blueprint specifying areas of focus. To establish new revenue models promptly while ensuring a stable financial base, the Group will work to proactively allocate management resources to new businesses. Meanwhile, in existing businesses, the Group will work to enhance competitiveness by strengthening technological development and reducing costs.

As a result, for the three months ended June 30, 2021, net sales increased by 4.5% from the same period of the previous year, to ¥342.9 billion. In addition, operating profit increased by 170.3%, to ¥8.3 billion, and ordinary profit rose by 351.2%, to ¥11.1 billion. Profit attributable to owners of parent was ¥9.1 billion, a 1,312.4% increase.

Due to the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc., net sales were ¥3.2 billion less, and operating profit and ordinary profit were ¥0.2 billion less each, compared with values calculated by applying the previous method.

Trends by business segment during the three months ended June 30, 2021 are as follows.

Information & Communication

In the security business, manufacturing of smart cards decreased, resulting in negative year-on-year growth. Overseas, subsidiaries acquired at the end of the fiscal year ended March 31, 2020 responded to demand for e- government-related systems and credit cards. In addition, the Company launched ID authentication services targeting markets in Europe and China, which enable corporations to generate customer touch points and manage their supply chains, as part of its efforts to expand overseas security business.

Sales of business forms themselves declined despite efforts to tap into demand for forms related to vaccination, offset by factors such as a decrease in forms used by tellers mostly at financial institutions due to an increase in non-face-to-face procedures. In data printing services, sales increased year on year thanks to efforts to tap into demand for notices related to economic stimulus and other initiatives, mainly from government agencies, and a recovery in demand for direct mail, particularly from financial institutions.

In the content and marketing business, sales from publication printing declined year on year due to a decrease in magazines and books, despite an increase in game cards. Meanwhile, overall sales in the content and marketing business increased year on year thanks to an increase in digital content, which was achieved by tapping into demand for digitalization, and a reaction to the previous fiscal year's sharp decline in the commercial printing business, including pamphlets and catalogs, and sales promotion-related tools, which was caused by the spread

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of COVID-19. With regard to initiatives for DX, the Company focused on services using digital technology, including the development of a service that helps ensure effective sales promotions by visualizing customers' purchase data with store signage equipped with cameras. In the e-book business, amid the increasingly fierce competition attributed to the full-scale entry of overseas companies, BookLive Co., Ltd. enjoyed success with its original comics, which were produced based on data analysis, thus contributing to increases in new customers and sales.

In business process outsourcing (BPO), performance remained strong, reflecting the capturing of outsourcing demand from businesses, the national government, and local authorities.

As a result, the Information & Communication segment posted net sales of ¥193.8 billion, up 3.7% year on year, and operating profit of ¥4.3 billion, up 57.9% year on year.

With the application of the Accounting Standard for Revenue Recognition, etc., net sales increased ¥0.9 billion while operating profit decreased ¥0.0 billion.

Living & Industry

In the packaging business, sales of flexible packaging increased year on year, despite a decrease in sales for processed food applications and medical and pharmaceutical applications in Japan in reaction to the rise in the previous fiscal year, offset by expansion in Indonesia and other countries. Sales of folding cartons remained almost unchanged from the previous year's level, with a decline in packaging for toiletries offset by efforts to expand sales of sustainable packaging. With demand for eco-friendly products increasing, the Company worked to achieve both high barrier functionality and environmentally friendliness. For example, the Company developed a paper package which uses GL BARRIER, a transparent barrier film with world-class barrier performance. In Europe and North America, the Company focused on expanding sales of eco-friendly products using barrier films.

In the décor materials business, in Japan the housing market was on a moderate recovery trend and signs of recovery were seen mainly in refurbishment projects in the commercial market including stores. In addition, overseas markets remained strong due to the expansion of demand for interiors, such as furniture. To meet increasing environmental hygiene needs, the Company developed antiviral/antibacterial clear sheet products, which can be affixed to things such as tables and touch panels, and obtained certification from the Society of International sustaining growth for Antimicrobial Articles (SIAA), a third-party organization.

As a result, the Living & Industry segment posted net sales of ¥104.8 billion, up 1.1% year on year, and operating profit of ¥8.0 billion, up 47.8% year on year.

With the application of the Accounting Standard for Revenue Recognition, etc., net sales decreased ¥3.4 billion and operating profit decreased ¥0.1 billion.

Electronics

In the semiconductor business, sales of photomasks remained strong due to the growth in demand for semiconductors for a wide range of applications, including those for in-vehicle applications, in addition to an increase in demand mainly reflecting expanded use of 5G and AI. Sales of FC-BGA substrates, which are high- density semiconductor package substrates, increased year on year, reflecting rising demand due to an increase in the volume of communication data. The Company tapped into demand for high-value-added large and multilayer products, taking advantage of its industry-leading quality and technology. In addition, the Company enhanced initiatives in preparation for the widespread adoption of IoT devices. For example, the Company achieved the downsizing of, and enabled wireless firmware updates to modules for the next-generation low power wide area (LPWA) ZETA protocol, thus making it possible to save space and improve the efficiency of maintenance operations.

In displays, sales of color filters decreased year on year due to the impact of a business transfer, although demand for products mainly for in-vehicle applications was on a recovery trend. Sales of anti-reflection films remained strong due to increasing remote work and at-home demand for products for televisions, laptops and monitors. Sales of TFT LCD panels increased year on year despite the impact of the lockdown in Malaysia, which

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