Nicca Chemical : Summary of Consolidated Financial Results for the Second Quarter of the Fiscal Year 2023(Based on Japanese GAAP)

FOR TRANSLATION PURPOSE ONLY

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 version and the original Japanese version, the latter shall prevail.

July 28, 2023

Summary of Consolidated Financial Results

for the Second Quarter of the Fiscal Year 2023 (FY12/2023)

[Japanese GAAP]

Company name: NICCA CHEMICAL CO., LTD.

Stock exchange listing:

Tokyo and Nagoya

Securities code:

4463

URL:

https://www.nicca.co.jp

Representative:

President & CEO (Chief Executive Officer)

Yasumasa Emori

Inquiries:

CFO (Chief Financial Officer) (Administration)

Shoya Sawasaki

TEL: [phone] (main)

Scheduled date to file Quarterly Securities Report:

August 10, 2023

Scheduled date to commence dividend payments:

September 7, 2023

Preparation of supplementary material on financial results:

Yes

Holding of financial results meeting:

Yes

(Amounts less than one mil. yen are rounded down)

1. Consolidated financial results of the second quarter of FY12/2023 (January 1, 2023 - June 30, 2023)

(1) Consolidated operating results (cumulative)

(Percentages indicate year-on-year increase/decrease)

Net sales

Operating profit (loss)

Ordinary profit (loss)

Net profit (loss) attributable to

owners of parent

mil. yen

%

mil. yen

%

mil. yen

%

mil. yen

%

2Q of FY12/2023

24,306

(2.5)

432

(68.8)

766

(58.0)

285

(73.1)

2Q of FY12/2022

24,917

－

1,386

－

1,823

－

1,058

－

(Note) Comprehensive income 2Q of FY12/2023:

1,670 mil. yen [(47.7)%]

2Q of FY12/2022:

3,194 mil. yen [11.6%]

Net profit (loss) per share

Diluted net profit (loss) per share

yen

yen

2Q of FY12/2023

18.06

－

2Q of FY12/2022

67.14

－

Note: The Company has applied the "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan Guidance No. 29 of March 31, 2020), etc. since the beginning of the previous first quarter consolidated fiscal period, and the Accounting Standard has been applied to the figures of the second quarter of FY12/2022, so quarterly comparison of increase/decrease rates relative to the previous FY are not shown.

(2) Consolidated financial position

		Total assets	Net assets	Equity ratio	Net assets per share
		mil. yen	mil. yen	%	yen
2Q of FY12/2023		55,582	31,690	52.4	1,842.86
FY12/2022		56,122	30,392	49.8	1,771.74
(Reference) Shareholders equity	2Q of FY12/2023:	29,111 mil. yen
		FY12/2022:	27,960 mil. yen

2. Cash dividends

		Annual dividends per share
	1Q-end	2Q-end	3Q-end		Year-end	Total
	yen	yen	yen		yen	yen
FY12/2022	－	11.00	－		19.00	30.00
FY12/2023	－	16.00
FY12/2023 (forecasts)			－		16.00	32.00

Note: Revisions to dividend forecasts published most recently: No

3. Consolidated performance forecasts for FY12/2023 (January 1, 2023 - December 31, 2023)

(Percentages indicate year-on-year increase/decrease)

	Net sales		Operating profit	Ordinary profit	Net profit attributable to	Net profit per share
		owners of parent
	mil. yen		%	mil. yen	%	mil. yen	%	mil. yen	%	yen
Full-term	51,000		0.7	2,100	(20.1)	2,400	(23.4)	1,300	(38.5)	82.34

Note: Revisions to performance forecasts published most recently: Yes

FOR TRANSLATION PURPOSE ONLY

*Notes

1. Changes in important subsidiaries during the current consolidated cumulative period

(changes in specified subsidiaries resulting in the change in scope of consolidation):No

(2) Application of Special Accounting Methods to the Preparation of Quarterly Consolidated Financial Statements: Yes

①	Changes in accounting policies due to revisions to accounting standards and other regulations:	No
②	Changes in accounting policies due to other reasons:	No
③	Changes in accounting estimates:	No
④	Restatement of prior period financial statements:	No

(3) Number of issued shares (common shares)

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

2Q of FY12/2023:

17,710,000 shares

FY12/2022:

17,710,000 shares

• Number of treasury stock at the end of the period

2Q of FY12/2023:

1,913,013 shares

FY12/2022:

1,928,421 shares

• Average number of shares during the period

2Q of FY12/2023:

15,789,138 shares

2Q of FY12/2022:

15,767,865 shares

• Quarterly summary of financial results is not included in a quarterly review by a certified public accountant or an auditing firm.
• Explanation regarding appropriate use of the performance forecasts and other special notes (Notes on descriptions about the future, etc.)
  Descriptions about the future such as performance forecasts contained in this document are based on information currently available to the Company and certain presumptions considered as reasonable, and those are not intended to indicate the Company should assure that it would realize such forecasts. Meanwhile, actual performance may differ substantially, influenced by a wide variety of factors in the future.

FOR TRANSLATION PURPOSE ONLY	NICCA CHEMICAL CO., LTD. (4463)
	Summary of Consolidated Financial Results for the Second Quarter of FY12/2023
○ Table of Contents: Appendix
1. Qualitative Information regarding the Financial Results of the Current Quarter	.....................................................	2
(1)	Descriptions regarding operating results	2
(2)	Descriptions regarding financial position	3
(3)	Descriptions regarding future prospects such as consolidated performance forecasts	3
2. Quarterly Consolidated Financial Statements and Principal Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Statements of Comprehensive Income	6
	Quarterly Consolidated Statements of Income
	For the second quarter consolidated cumulative period	6
	Quarterly Consolidated Statements of Comprehensive Income
	For the second quarter consolidated cumulative period	7
(3)	Quarterly Consolidated Statements of Income and Statements of Comprehensive Income	8
(4)	Notes on Quarterly Consolidated Financial Statements	9
	(Notes on Going Concern Assumption)	9
	(Notes in Case of Significant Changes in the Amount of Shareholders' Equity)	9
	(Application of Special Accounting Methods to the Preparation of Quarterly Consolidated Financial Statements) ....	9
	(Segment Information, etc.)	10

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FOR TRANSLATION PURPOSE ONLY	NICCA CHEMICAL CO., LTD. (4463)
	Summary of Consolidated Financial Results for the Second Quarter of FY12/2023

1. Qualitative Information regarding the Financial Results of the Current Quarter

1. Descriptions regarding operating results

During the second quarter consolidated fiscal period (Jan. 1, 2023 - Jun. 30, 2023), global economy has still been facing concerns about worldwide recession such as slowdown in consumption impacted by high inflation and high interest rates in the USA, due to the unstable international situations caused by prolonged invasion into Ukraine by Russia. Meanwhile, Japanese economy has seen gradual upswing thanks to the progress of various measures against COVID-19 infections. However, there has been a high inflation due to such as rise in prices of imported goods and energies, and suppressed consumer confidence, resulting in still remaining uncertainty about the future both domestically and globally.

In such an environment, the Group considered what it should aim at in very long spans of 20, 30 years and so forth for the future in starting up its Medium-Term Business Plan, and set its corporate purpose as "Activate Your Life". The phrase "Activate Your Life" means, in cooperation with our stakeholders, resolving various social issues by means of infinite power of surface science, and contributing to better life and brilliant future. Based on this corporate purpose, the Company set its medium-term growth vision as "The most respected innovation company for customers all over the world", and developed its three-years'Medium-Term Business Plan named "INNOVATION25" (2023-2025) which has already been started. At present, the Company is working on promoting the five major strategies of its Medium-Term Business Plan, namely "Major transformation of business structure", "Well-balanced investment", "Productivity reform", "Promotion of sustainable management", and "Evolution of the extended family policy".

We continue to convert the drastically-changing management environment to our business chances, put its efforts to business activities which provide values increasingly required by our society, and aim at permanent growth.

Consolidated performance of the current second quarter consolidated cumulative period was as follows: Net sales: 24,306 mil. yen (decrease by 2.5% YoY); Operating profit: 432 mil. yen (decrease by 68.8% YoY); Ordinary profit: 766 mil. yen (decrease by 58.0% YoY); and Net profit attributable to owners of parent: 285 million yen (decrease by 73.1% YoY).

Operating results of individual business segments are as follows. Please note that Net sales of each segment as shown below does not include inter-segment sales.

(Chemicals Business)

Net sales was 17,160 mil. yen (decrease by 4.9% YoY), and Segment profit was 444 mil. yen (decrease by 54.3% YoY).

Despite obtaining some new business opportunities and other positive factors, sales of textile chemicals substantially decreased because of less demand impacted by inventory adjustment of apparel products in the United States and Europe and by lower utilization rates in China due to abruptly widespread COVID-19 infections, resulting in lower revenues and lower earnings.

(Cosmetics Business)

Net sales was 6,823 mil. yen (increase by 8.2% YoY), and Segment profit was 850 mil. yen (decrease by 30.5% YoY).

Sales of DEMI cosmetics was affected by worsened market conditions due to decreasing number of guests visiting beauty salons, launching and sales expansion of new brands led to steady growth. With respect to consolidated subsidiaries, sales by DEMI KOREA CO., LTD. and commissioned business done by Yamada Pharmaceutical maintained good performance. On the other hand, strategic promotion investment and other measures for DEMI cosmetics resulted in decreased profit.

(Other Business)

Net sales was 322 mil. yen (decrease by 43.3% YoY), and Segment profit was 58 mil. yen (increase by 18.6% YoY).

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FOR TRANSLATION PURPOSE ONLY	NICCA CHEMICAL CO., LTD. (4463)
	Summary of Consolidated Financial Results for the Second Quarter of FY12/2023

1. Descriptions regarding financial position

• Assets, Liabilities, Net assets

(Assets)

Total assets as of the end of the current second quarter consolidated fiscal period was 55,582 mil. yen, i.e. decrease by 539 mil. yen as compared to the end of the previous consolidated FY. This is mainly due to decrease in Notes and accounts receivable - trade by 395 mil. yen and decrease in Merchandise and finished goods by 314 mil. yen.

(Liabilities)

Total liabilities as of the end of the current second quarter consolidated fiscal period was 23,891 mil. yen, i.e. decrease by 1,837 mil. yen as compared to the end of the previous consolidated FY. This is mainly due to decrease in Notes and accounts payable by 689 mil. yen, decrease in Long-term loans payable by 634 mil. yen, and decrease in Short-term loans payable by 350 mil. yen.

(Net assets)

Total net assets as of the end of the current second quarter consolidated fiscal period was 31,690 mil. yen, i.e. increased by 1,297 mil. yen as compared to the end of the previous consolidated FY. This is mainly due to increase in Foreign currency translation adjustment by 1,119 mil. yen.

• Cash flow status

Cash and cash equivalents as of the end of the current second quarter consolidated cumulative period was 6,448 mil. yen, i.e. increased by 185 mil. yen as compared to the end of the previous consolidated FY.

(Cash flows from operating activities)

Net cash provided by operating activities was 1,759 mil. yen. This is mainly due to proceeds from such as Net profit before income taxes and minority interests of 768 mil. yen, Depreciation of 1,101 mil. yen, Decrease in notes and accounts receivable - trade by 738 mil. yen, and Decrease in inventories by 636 mil. yen on one hand, and Decrease in notes and accounts payable - trade by 874 mil. yen and Income taxes paid of 531 mil. yen on the other.

(Cash flows from investing activities)

Net cash used in investing activities was 501 mil. yen. This is mainly due to Proceeds from withdrawal of time deposits of 550 mil. yen, Payments into time deposits of 485 mil. yen, and Purchase of property, plant and equipment of 567 mil. yen.

(Cash flows from financing activities)

Net cash used in financing activities was 1,415 mil. yen. This is mainly due to Repayments of borrowings (net) of 1,034 mil. yen and Cash dividends paid of 299 mil. yen.

(3) Descriptions regarding future prospects such as consolidated performance forecasts

Consolidated performance forecasts for the full term of FY12/2023 were revised from those published on February 10, 2023, based on currently available information and predictions.

－ 3 －