Espec : Consolidated Financial Results for the Three Months Ended June 30, 2021(Under Japanese GAAP)

Financial Accounting Standards Foundation Member

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy

between this translated document and the Japanese original, the original shall prevail.

August 6, 2021

	Consolidated Financial Results
	for the Three Months Ended June 30, 2021
		(Under Japanese GAAP)
Company name:	ESPEC CORP.
Listing:	Tokyo Stock Exchanges, First Section
Securities code:	6859
URL:	https://www.espec.co.jp
Representative:	Masaaki Ishida, President
Inquiries:	Keiji Oshima, Chief Officer of Corporate Control Headquarters
Telephone:	[phone]
Scheduled date to file quarterly securities report:	August 10, 2021
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended June 30, 2021 (from April 1, 2021 to June 30, 2021)

(1) Consolidated operating results (cumulative)

(Percentages indicate year-on-year changes.)

		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, 2021	8,050		17.0	22		-		87		-	(24)		-
	June 30, 2020	6,877		(14.4)	(159)		-		(87)		-	(173)		-
Note: Comprehensive income For the three months ended June 30, 2021	¥ 125 million [ 236.1 %]
		For the three months ended June 30, 2020	¥ 37 million [ - %]
		Basic earnings	Diluted earnings
		per share		per share
	Three months ended			Yen			Yen
	June 30, 2021			(1.06)			-
	June 30, 2020			(7.59)			-

Note: The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter of fiscal 2021 ending March 31, 2022, and the figures for the first three months ended June 30, 2021 are shown after the application of this accounting standard.

(2) Consolidated financial position

Total assets

Net assets

Equity-to-asset ratio

Net assets per share

As of

Millions of yen

Millions of yen

%

Yen

June 30, 2021

55,852

43,082

77.1

1,926.27

March 31, 2021

58,607

44,984

76.8

1,967.34

Reference:

Equity

As of June 30, 2021

¥43,082 million

As of March 31, 2021

¥44,984 million

2. Cash dividends

Annual dividends per share

First quarter-end

Second quarter-end

Third quarter-end

Fiscal year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended

-

10.00

-

41.00

51.00

March 31, 2021

Fiscal year ending

-

March 31, 2022

Fiscal year ending

March 31, 2022

18.00

-

42.00

60.00

(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

3. Forecast of consolidated operating results for the fiscal year ending March 31, 2022 (From April 1, 2021 to March 31, 2022) (Percentages indicate year-on-year changes.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
Fiscal year ending	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
September 30, 2021	18,500	7.0	1,200	63.5	1,250	49.8	750	51.7	33.28
March 31, 2022	42,200	9.1	3,300	28.3	3,400	19.7	2,400	22.3	106.89

Note: Has there been a correction in the results forecast this quarter: Yes

The Company made ESPEC THERMAL TECH SYSTEM CORP. a consolidated subsidiary on July 20, 2021 (deemed acquisition date: July 1, 2021). Therefore, revisions have been made only to the full-term consolidated forecast for net sales.

*Notes

1. Changes in significant subsidiaries during the period
   (changes in specified subsidiaries resulting in the change in scope of consolidation): None

Newly included: (Company name:	)
Excluded: (Company name:	)

1. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: Yes
   Note: For details, see "Application of special accounting methods in the creation of quarterly consolidated financial statements" on p.9.
2. Changes in accounting policies, changes in accounting estimates, and restatement

1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
2. Changes in accounting policies due to other reasons: None
3. Changes in accounting estimates: None
4. Restatement: None

Note: For details, see "Changes in accounting policies" on p.9.

(4) Number of issued shares (common shares)

1)	Total number of issued shares at the end of the period (including treasury shares)
		As of June 30, 2021		23,781,394 shares
		As of March 31, 2021		23,781,394 shares
2)	Number of treasury shares at the end of the period
		As of June 30, 2021		1,415,593 shares
		As of March 31, 2021		915,593 shares
3) Average number of shares outstanding during the period（cumulative from the beginning of the fiscal year）
		Three months ended June 30, 2021		22,699,134 shares
		Three months ended June 30, 2020		22,866,072 shares

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

Statements concerning the future such as the results forecasts, etc., included in this document are based on currently available information and certain assumptions judged reasonable and actual results, etc., may differ due to various factors. Please refer to "Description of consolidated operating forecasts and other forward-looking information" on p.4 for forecast assumptions and notes of caution for usage.

1. Qualitative information concerning consolidated financial results -----------------------------------------------------------------------	2
(1) Description of operating results --------------------------------------------------------------------------------------------------------------------	2
(2)	Description of financial position --------------------------------------------------------------------------------------------------------------------	4
(3) Description of consolidated operating forecasts and other forward-looking information --------------------------------------------	4
2. Quarterly consolidated financial statements and significant notes ---------------------------------------------------------------------	5
(1) Quarterly consolidated balance sheets --------------------------------------------------------------------------------------------------------	5
(2)	Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive income ------------	7
	Quarterly consolidated statements of income
	(Three months ended June 30, 2021) ----------------------------------------------------------------------------------------------------------	7
	Quarterly consolidated statements of comprehensive income
	(Three months ended June 30, 2021) ----------------------------------------------------------------------------------------------------------	8
(3) Notes to the quarterly consolidated financial statements ------------------------------------------------------------------------------------	9
	(Notes on the assumption of a going concern) -------------------------------------------------------------------------------------------------	9
	(Note on significant changes in shareholders' equity) ----------------------------------------------------------------------------------------	9
	(Application of special accounting methods in the creation of quarterly consolidated financial statements) -------------------	9
	(Changes in accounting policies) ------------------------------------------------------------------------------------------------------------------	9
	(Additional information) -----------------------------------------------------------------------------------------------------------------------------	10
	(Segment information) -------------------------------------------------------------------------------------------------------------------------------	11
	(Material subsequent events) ---------------------------------------------------------------------------------------------------------------------	12

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1. Qualitative Information concerning consolidated financial results

Forward-looking statements contained herein are based on the Group's judgment as of June 30, 2021. The Company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter of fiscal 2021, the year ending March 31, 2022, and the figures for the first three months ended June 30, 2021 are shown after the application of this accounting standard.

(1) Description of operating results

During the first three months of fiscal 2021, the year ending March 31, 2022, the Japanese economy continued to pick up, mainly in the manufacturing industry along with economic recovery in the U.S. and China, amid concerns about the resumed spread of COVID-19, semiconductor shortages, and U.S.-China friction.

Among the Company's main customers, investments recovered in relation to automobiles and were strong with regard to electronics, underpinned by shifts towards carbon neutrality and digitization in society, amid improvement in corporate earnings. The Company's initiatives included strengthening activities centered on markets related to 5G and IoT where investment is likely to expand and markets related to automated driving and electrification.

As a result, in the consolidated results for the first quarter of the fiscal year, the amount of orders-received increased 54.2% year on year to ¥12,695 million and net sales increased 17.0% year on year to ¥8,050 million. On the earnings front, operating profit improved ¥182 million year on year to a profit of ¥22 million, driven by sales growth. Loss attributable to owners of parent narrowed ¥149 million year on year to ¥24 million.

		Previous consolidated	This consolidated
		1st quarter (fiscal 2020)	1st quarter (fiscal 2021)	Change (%)
		(Millions of yen)	(Millions of yen)
	Orders-received	8,231	12,695	54.2
	Net sales	6,877	8,050	17.0
	Operating profit (loss)	(159)	22	-
	Ordinary profit (loss)	(87)	87	-
	Loss attributable to	(173)	(24)	-
	owners of parent
Performance by segment
This consolidated 1st quarter (Fiscal 2021)
		Orders-received	Net sales	Operating profit (loss)
	Equipment business	Millions of yen	Millions of yen	Millions of yen
	10,737	6,612	90
	Service business	1,744	1,370	(6)
	Other business	274	122	(61)
	Elimination	(62)	(56)	0
	Total	12,695	8,050	22

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[Equipment business]

In the environmental test chambers field, in Japan, orders-received and net sales both increased year on year for versatile standardized products and customized products. In addition, trends were strong in overseas markets, and net sales increased year on year in China, the U.S., Europe, Southeast Asia, and South Korea.

In the energy devices equipment field, orders-received and net sales both increased year on year and orders were acquired for evaluation systems for secondary batteries due to recovery in automotive-related investment.

In the semiconductor equipment field, orders-received increased year on year, but net sales decreased while investment related to memory and automobiles continued.

As a result, the equipment business on the whole saw orders-received increase 64.3% to ¥10,737 million and net sales increase 21.4% year on year to ¥6,612 million. Operating profit increased ¥112 million year on year to ¥ 90 million due to increased net sales.

	Previous consolidated	This consolidated
	1st quarter (fiscal 2020)	1st quarter (fiscal 2021)	Change (%)
	(Millions of yen)	(Millions of yen)
Orders-received	6,534	10,737	64.3
Net sales	5,449	6,612	21.4
Operating profit (loss)	(22)	90	-

[Service business]

In the after-sales service and engineering field, both orders-received and net sales increased year on year due to strong performance in business such as preventative maintenance service.

In laboratory testing services and facility rentals, orders-received and net sales both increased year on year due mainly to the recovery in orders of laboratory testing services.

As a result, the service business on the whole saw orders-received increase 18.7% year on year to ¥1,744 million and net sales increase 29.0% to ¥1,370 million. On the earnings front, the segment posted an operating loss of ¥6 million, which is an improvement of ¥118 million year on year.

	Previous consolidated	This consolidated
	1st quarter (fiscal 2020)	1st quarter (fiscal 2021)	Change (%)
	(Millions of yen)	(Millions of yen)
Orders-received	1,470	1,744	18.7
Net sales	1,062	1,370	29.0
Operating loss	(125)	(6)	-

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