Taihei Dengyo Kaisha : Consolidated Financial Statements for the Nine Months Ended December 31, 2021

TAIHEI DENGYO KAISHA, LTD. (1968)

Financial Results for the Nine Months Ended December 31, 2021 [Japanese GAAP]

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TAIHEI DENGYO KAISHA, LTD. (1968)

Financial Results for the Nine Months Ended December 31, 2021 [Japanese GAAP]

1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

Regarding the Japanese economy in the nine months ended December 31, 2021, we saw signs of economic recovery as the state of emergency was lifted, but due to the situation including the appearance of new COVID- 19 variants, it is still unclear when the COVID-19 infections will settle down, and the critical situation continues.

The electric power industry, the main business of the TAIHEI DENGYO KAISHA Group (the TDK Group), has been expanding the use of renewable energy, promoting stable supply and economic efficiency on the premise of safety, and pursuing innovation in thermal power generation and other areas from the perspective of "S+3E" (safety, energy security, economic efficiency, and environment). As such, the industry has been promoting effective measures to reduce CO2 emissions while building a PDCA cycle.

Under these circumstances, the TDK Group has continued to work on achieving the targets set forth in the Mid-Term Business Plan (FY2020 - FY2022) and focuses on "Enhancing the corporate foundation for sustainable growth" and "Securing a revenue base that responds to changes in the business environment." Furthermore, the Group is implementing initiatives that take the new fields of design and material procurement into consideration, along with its conventional businesses. In this context, we established in August 2021 Taihei Engineering Service Co., Ltd., a subsidiary dedicated to engineering work, and are striving to build an order- receiving system aimed at further business expansion.

As a result, in the nine months ended December 31, 2021, orders received amounted to 77,118 million yen (a decrease of 9.9% YoY) and net sales amounted to 89,711 million yen (a decrease of 5.8% YoY) including 3,577 million yen (a decrease of 26.3% YoY) for overseas works.

Regarding profits, operating profit amounted to 7,028 million yen (a decrease of 12.8% YoY), ordinary profit amounted to 9,218 million yen (an increase of 8.9% YoY) and profit attributable to owners of parent amounted to 6,202 million yen (an increase of 11.8% YoY).

The "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan (ASBJ) Statement No. 29; March 31, 2020) and others have been applied from the beginning of the first quarter of the current consolidated fiscal year. Details are stated in "2. Quarterly Consolidated Financial Statements and Primary Notes, (3) Notes to Quarterly Consolidated Financial Statements, (Changes in accounting policies)."

Performance results by business segment are as follows.

(Construction Segment)

Orders received amounted to 29,526 million yen (a decrease of 21.0% YoY, composition ratio: 38.3%). Orders received in works for thermal power plants for business use and works for iron and steel-related plants decreased, resulting in a decrease for the overall segment.

Net sales amounted to 37,381 million yen (a decrease of 17.5% YoY, composition ratio: 41.7%). Despite an increase in that for works for thermal power plants for private use and works for iron and steel-related plants, net sales of works for thermal power plants for business use decreased, resulting in a decrease for the overall segment. Segment profit amounted to 1,683 million yen (a decrease of 45.7% YoY).

(Maintenance and Renovation Segment)

Orders received amounted to 47,592 million yen (a decrease of 1.2% YoY, composition ratio: 61.7%). Despite an increase in orders for thermal power plants for business use, orders received in works for nuclear power plants and orders for thermal power plants for private use decreased, resulting in a decrease for the overall segment.

Net sales amounted to 52,329 million yen (an increase of 4.8% YoY, composition ratio: 58.3%). Despite a decrease in that for works for nuclear power plants and works for iron and steel-related plants, net sales of works for thermal power plants for business use and works for thermal power plants for private use increased, resulting in an increase for the overall segment. Segment profit amounted to 7,733 million yen (an increase of 6.4% YoY).

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TAIHEI DENGYO KAISHA, LTD. (1968)

Financial Results for the Nine Months Ended December 31, 2021 [Japanese GAAP]

1. Explanation of Financial Position
2. 1. Assets

Current assets amounted to 87,840 million yen, down 6,668 million yen from the end of the previous consolidated fiscal year. This was due mainly to a decrease of 13,423 million yen in cash and deposits despite increases of 1,831 million yen in costs on construction contracts in progress and 4,273 million yen in other current assets.

Non-current assets amounted to 41,755 million yen, up 7,507 million yen from the end of the previous consolidated fiscal year. This was due mainly to an increase of 5,904 million yen in real estate for rent.

1. Liabilities
   Current liabilities amounted to 37,552 million yen, down 2,934 million yen from the end of the previous

consolidated fiscal year. This was due mainly to a decrease of 3,400 million yen in current portion of bonds payable and a decrease of 3,604 million yen in other current liabilities despite an increase of 4,000 million yen in short-term borrowings.

Non-current liabilities amounted to 14,069 million yen, down 1,086 million yen from the end of the previous consolidated fiscal year. This was due mainly to a decrease of 1,287 million yen in long-term borrowings.

1. Net assets
   Net assets amounted to 77,973 million yen, up 4,859 million yen from the end of the previous consolidated

fiscal year. This was due mainly to an increase of 4,627 million yen in retained earnings.

(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information

There is no change to the consolidated financial results forecast for the full year from the forecast in the "Notice concerning the Revision of the Financial Results Forecast for the Full Year Ending March 31, 2022" published on November 11, 2021 (available in Japanese).

Forward-looking statements, such as performance forecasts, made in this document are based on information currently available to the Company and certain assumptions deemed reasonable, and actual results, etc. may differ significantly due to various factors.

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