Summary of Financial Statements for the Fiscal Year Ended March 31, 2018 [Japanese GAAP] (Consolidated)

Transcription

1 Summary of Financial Statements for the Fiscal Year Ended [Japanese GAAP] (Consolidated) April 27, 2018 Shares listed on: Tokyo Stock Exchange Name of listed company: MITSUBISHI STEEL MFG. CO., LTD. Code No.: 5632 URL: Representative: Motoyuki Sato, President Contact: Mitsuaki Hosoya, Manager, Accounting Department Tel.: Scheduled date of regular general meeting of shareholders: June 22, 2018 Scheduled start date of dividend payments: June 25, 2018 Scheduled date for filing securities report: June 22, 2018 Supplementary briefing materials on results available: Yes Briefing on results held: Yes (for institutional investors and analysts) (All figures are rounded down to the nearest million yen.) 1. Financial results for fiscal year ended (April 1, 2017 ) (1) Consolidated operating results (Percentages represent year-on-year changes.) Net sales Operating income Ordinary income Net income attributable to owners of parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % 118, ,219 (16.6) 2,837 (11.7) 2,904 (17.1) 103,742 (2.6) 3,861 (9.9) 3,214 (2.2) 3, Note: Comprehensive income: : 3,334 million yen (11.1%); : 3,002 million yen (--%) Net income per share Diluted net income per share Return on equity Ordinary income to total assets Operating income to net sales Yen Yen % % % Reference: Equity in earnings (losses) of affiliates: : (411) million yen; March 31, 2017: (733) million yen * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, The figure for net income per share is calculated based on the assumption that this reverse stock split took place at the beginning of the previous consolidated fiscal year. (2) Consolidated financial position Total assets Net assets Shareholders equity ratio Net assets per share Millions of yen Millions of yen % Yen 153,757 72, , ,104 67, , Reference: Shareholders equity: : 62,648 million yen; : 60,422 million yen * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, The figure for net assets per share is calculated based on the assumption that this reverse stock split took place at the beginning of the previous consolidated fiscal year. (3) Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period Millions of yen Millions of yen Millions of yen Millions of yen (4,520) (6,975) 1,302 28,376 5,377 (3,376) 6,855 38, Dividends Annual dividends per share End Q1 End Q2 End Q3 Year-end Total Total annual dividends Payout ratio (consolidated) Dividends to net assets (consolidated) Yen Yen Yen Yen Yen Millions of yen % % Fiscal year ending March 31, 2019 (forecast) * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, Year-end dividends per share for the fiscal year ending show the amount after this reverse stock split. The figure for total annual dividends is indicated as.

2 3. Forecast of consolidated financial results for fiscal year ending March 31, 2019 (April 1, 2018 March 31, 2019) (Percentages represent changes from previous year for full-year figures and year-on-year changes for quarterly figures.) Net sales Operating income Ordinary income Net income Net income per attributable to share owners of parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Cumulative through second 65, ,300 (23.4) 900 (41.8) 700 (13.7) quarter Full-year 140, , , , (1) Changes in significant subsidiaries during period under review (changes in specific subsidiaries accompanied by changes in the scope of consolidation): Yes Newly added: 1 company (name) PT. JATIM TAMAN STEEL MFG. Removed: companies (name) (2) Changes in accounting policies, changes in accounting estimates, and retrospective restatements Changes in accounting policies due to the revisions of accounting standards, etc.: None Any changes in accounting policies other than those under above: None Changes in accounting estimates: None Retrospective restatements: None (3) Number of shares outstanding (common shares) Number of shares outstanding at the end of the period (including treasury stock) Number of treasury shares at the end of the period Average number of shares during the period 15,709,968 shares 325,198 shares 15,385,271 shares 15,655,668 shares 269,939 shares 15,385,977 shares * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, The figures for the number of shares outstanding at the end of the period, number of treasury shares at the end of the period, and average number of shares during the period are calculated based on the assumption that this reverse stock split took place at the beginning of the previous consolidated fiscal year. Reference: Overview of non-consolidated financial results 1. Non-consolidated financial results for fiscal year ended (April 1, 2017 ) (1) Non-consolidated operating results (Percentages represent year-on-year changes.) Net sales Operating income Ordinary income Net income Millions of yen % Millions of yen % Millions of yen % Millions of yen % 70, , , ,731 (25.7) 58,020 (1.2) 2,210 (22.2) 2,612 (24.8) 3, Net income per share Diluted net income per share Yen Yen * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, The figure for net income per share is calculated based on the assumption that this reverse stock split took place at the beginning of the previous consolidated fiscal year. (2) Non-consolidated financial position Total assets Net assets Shareholders equity ratio Net assets per share Millions of yen Millions of yen % Yen Fiscal year ended March 31, 95,311 49, , Fiscal year ended March 31, ,771 47, , Reference: Shareholders equity: : 49,640 million yen; : 47,691 million yen * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, The figure for net assets per share is calculated based on the assumption that this reverse stock split took place at the beginning of the previous consolidated fiscal year. * Summaries of financial results are not subject to audit procedures by a certified public accountant or audit firm. * Status of implementation of audit procedures This summary of financial results is not subject to audit procedures pursuant to the Financial Instruments and Exchange Act of Japan. As of the date on which this summary of financial results was released, audit procedures were underway on the financial statements. For detailed information on financial forecasts, refer to 1. Overview of Operating Results, etc.: (4) Future Outlook on page 3 of the Attached Materials.

3 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended Table of contents for Attached Materials 1. Overview of Operating Results, etc....2 (1) Overview of this Year s Operating Results...2 (2) Overview of this Year s Financial Position...3 (3) Overview of this Year s Cash Flow...3 (4) Future Outlook Basic Approach to Selection of Accounting Standards Consolidated Financial Statements and Major Notes...4 (1) Consolidated Balance Sheet...4 (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income...6 (3) Consolidated Statement of Changes in Equity...8 (4) Consolidated Statement of Cash Flows (5) Notes on Consolidated Financial Statements (Notes on the Going Concern Assumption) (Segment Information, etc.) (Per Share Information) (Significant Subsequent Events) Appendix (Consolidated)

4 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended 1. Overview of Operating Results, etc. (1) Overview of this Year s Operating Results [Operating Results] Net sales Operating income Ordinary income Net income attributable to owners of parent Net income per share 118,742 3,219 2,837 2, ,742 3,861 3,214 3, Change 15,000 (641) (377) (599) In terms of the Group s operating environment in the fiscal year under review (from April 2017 to March 2018), while domestic demand in the construction machinery industry trended downward in response to exhaust restrictions in the second half, overseas demand was strong, including demand in China and Southeast Asia regions. In the automotive industry, domestic sales of light and compact cars drove entire domestic demand; demand was also strong overseas, particularly in Europe, North America, and China. Under these circumstances, the Group posted consolidated net sales of 118,742 million yen, an increase of 15,000 million yen (14.5%) year-on-year. Consolidated operating income fell by 641 million yen (16.6%) year-on-year to 3,219 million yen due to decreased income for the Springs Business and other businesses, while factors, including rising raw material prices, dampened income growth for the Special Steel Bars Business. Net income attributable to owners of the parent company was 2,904 million yen. The results by segment are shown below. Segment results Year-on-year changes Net sales Operating Operating Net sales income income Net sales Operating income Special Steel Bars Business 52,926 1,613 40,160 1,267 12, % % Springs Business 47, ,733 1,467 1, % (577) (39.3)% Formed & Fabricated 10, , , % (208) (60.0)% Products Business Machinery Business 9, , (56) (0.6)% (213) (34.5)% Other businesses 3, , % (59) (31.6)% Subtotal 124,855 3, ,418 3,891 Adjustments (6,112) 41 (5,675) (30) Total 118,742 3, ,742 3,861 15, % (641) (16.6)% The Special Steel Bars Business posted net sales of 52,926 million yen, an increase of 12,765 million yen (31.8%) year-on-year, due to increased sales accompanying domestic and export market recovery and sales price increases corresponding to increased raw material prices. Although the sales growth contributed to a certain extent, operating income was 1,613 million yen, an increase of 346 million yen (27.3%) year-on-year, largely due to the effects of increased costs accompanying rising prices for major raw materials, ferroalloy, and subsidiary materials. The Springs Business posted net sales of no more than 47,897 million yen, an increase of 1,164 million yen (2.5%) year-on-year, mainly affected by a drop in sales at a North American subsidiary and exchange-rate effects, despite factors such as recoveries of export of commercial vehicles and demand for construction machinery. Operating income was 890 million yen, a decrease of 577 million yen (39.3%) year-on-year, as rising sales centered on the domestic market failed to offset the impact of rising costs associated with the startup of overseas facilities, lower revenue at a North American subsidiary, and rising materials costs. The Formed & Fabricated Products Business posted net sales of 10,787 million yen, an increase of 1,325 million yen (14.0%) year-on-year; major contributing factors included increased sales of precision forgings and sales expansion of special alloy powder. Operating income was 138 million yen, a decrease of 208 million yen (60.0%) year-on-year, due to the effects of the rising prices of alloy raw materials and increased costs accompanying quality improvements in turbine wheels and relocation to a new plant. The Machinery Business posted net sales of 9,328 million yen, a decrease of 56 million yen (0.6%) year-on-year due to lower sales of power generation-related products, which an increase in sales of forging machinery failed to offset. Operating income was 406 million yen, a decrease of 213 million yen (34.5%) year-on-year, largely due to lower sales of power generation-related products. Other businesses, including distribution and service businesses, posted net sales of 3,914 million yen, an increase of 237 million yen (6.5%) year-on-year, and operating income of 129 million yen, a decrease of 59 million yen (31.6%) year-on-year. 2

5 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (2) Overview of this Year s Financial Position Total assets at the end of the consolidated fiscal year under review stood at 153,757 million yen, up 18,653 million yen from the end of the previous consolidated fiscal year. Major factors included gains in property, plant, and equipment resulting from the acquisition of a special steel manufacturing company in Indonesia and increases in accounts receivable-trade due to the last day of the fiscal period falling on a bank holiday. Total liabilities at the end of the consolidated fiscal year under review were 81,553 million yen, up 13,522 million yen from the end of the previous consolidated fiscal year, primarily due to increases in long-term lease obligations and short-term loans payable accompanying the acquisition of a special steel manufacturing company in Indonesia. Net assets at the end of the consolidated fiscal year under review were 72,204 million yen, up 5,131 million yen from the end of the previous consolidated fiscal year due to an increase in retained earnings. (3) Overview of this Year s Cash Flow During the consolidated fiscal year under review, net cash used in operating activities was 4,520 million yen; net cash used in investing activities was 6,975 million yen; and net cash provided by financing activities was 1,302 million yen. As a result, cash and cash equivalents fell by 10,303 million yen during the consolidated fiscal year under review to 28,376 million yen at the end of the consolidated fiscal year under review. [Cash flows from operating activities] Net cash used in operating activities totaled 4,520 million yen. While net income before taxes and other adjustments was 5,830 million yen and there were cash inflows generated by factors such as depreciation and amortization of 3,605 million yen, outflows were generated by factors such as a gain on step acquisitions of a special steel manufacturing company in Indonesia of 2,497 million yen, an increase in notes and accounts receivable-trade of 6,395 million yen due mainly to the effect of the ending date of the fiscal period falling on a bank holiday, and payment of income taxes of 1,618 million yen. [Cash flows from investing activities] Net cash used in investing activities totaled 6,975 million yen. This figure reflected outflows, including expenditures of 2,478 million yen on the share purchase of the special steel manufacturing company in Indonesia and expenditures of 5,366 million yen for purchases of property, plant and equipment, and intangible fixed assets. [Cash flows from financing activities] Net cash provided by financing activities totaled 1,302 million yen. This figure reflected a cash inflow of 5,448 million yen in long-term loans payable for allocation to capital investment activities; repayment of 2,016 million yen in long-term loans payable; expenditures of 1,149 million yen on acquisition of treasury stock in subsidiaries; and payment of 921 million yen in dividends. (4) Future Outlook An overview of the business environment in which the Group operates shows expectations of a continued gentle recovery in the domestic economy and a trend of continuing recovery in the global economy. A look at the Group s key markets the construction machinery industry and the automotive industry suggests overseas demand will play a leading role in the former industry and strong domestic and overseas demand in the latter industry. However, the costs of subsidiary materials and logistics costs are rising alongside raw material prices. Other topics of concern include anxiety about the effects of protectionist trade policies by major nations. Under these conditions, the Group will move forward with strategic investment, research and development, and continual improvement activities to develop a production structure for ensuring stable supply and meeting growing demand and to allow the Group to improve its competitive strengths. With the continued understanding of its customers, to secure appropriate margins, the Group will persistently seek to implement price reforms that reflect the rising prices of raw materials and other inputs. Overseas, it will advance initiatives that capitalize on the Group s combined strengths to realize stable earnings in the special steel business in Indonesia and to demonstrate synergies with existing facilities through advances into global markets. Based on the above, for the full year ending, the Group forecasts consolidated net sales of 140,000 million yen, consolidated operating income of 5,000 million yen, consolidated ordinary income of 4,500 million yen, and consolidated net income attributable to owners of parent of 3,000 million yen. 2. Basic Approach to Selection of Accounting Standards To facilitate comparisons from period to period and between entities, the Group for the time being will continue to prepare its consolidated financial statements based on J-GAAP. The Group will duly address the application of International Financial Reporting Standards (IFRS) after taking into account various circumstances both in Japan and abroad. 3

6 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended 3. Consolidated Financial Statements and Major Notes (1) Consolidated Balance Sheet Assets Consolidated fiscal year ended Consolidated fiscal year ended Current assets Cash and deposits 16,202 14,797 Notes and accounts receivable-trade 24,476 29,102 Electronically recorded monetary claims 3,395 5,615 Securities 22,500 13,600 Merchandise and finished goods 6,964 8,316 Work in process 4,079 4,659 Raw materials and supplies 3,671 6,634 Other 2,299 2,828 Allowance for doubtful accounts (5) (8) Total current assets 83,584 85,546 Fixed assets Property, plant and equipment Buildings and structures, net 8,782 9,504 Machinery, equipment and vehicles, net 8,457 13,715 Leased assets, net 263 3,584 Other, net 9,282 10,295 Total property, plant and equipment 26,786 37,100 Intangible fixed assets Goodwill - 3,409 Land use rights - 7,856 Other 1,973 1,644 Total intangible fixed assets 1,973 12,910 Investments and other assets Investment securities 18,131 15,207 Net defined benefit assets 1,518 1,830 Other 3,287 1,340 Allowance for doubtful accounts (177) (177) Total investments and other assets 22,759 18,200 Total fixed assets 51,519 68,211 Total assets 135, ,757 4

7 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended Liabilities Current liabilities Consolidated fiscal year ended Consolidated fiscal year ended Notes and accounts payable-trade 11,118 10,973 Electronically recorded monetary obligations 5,358 6,374 Short-term loans payable 10,701 17,068 Lease obligations Income taxes payable Other 4,691 4,870 Total current liabilities 32,674 40,229 Non-current liabilities Long-term loans payable 23,091 24,944 Lease obligations 102 2,968 Net defined benefit liabilities 9,163 9,503 Provision for directors retirement benefits Provision for directors stock benefits - 10 Other 2,875 3,748 Total non-current liabilities 35,356 41,323 Total liabilities 68,030 81,553 Net assets Shareholders equity Capital stock 9,924 10,003 Capital surplus 3,622 3,693 Retained earnings 47,372 49,352 Treasury stock (1,111) (1,271) Total shareholders equity 59,807 61,776 Accumulated other comprehensive income Valuation difference on available-for-sale securities 4,241 4,392 Deferred gains or losses on hedges - (8) Foreign currency translation adjustments (2,147) (1,864) Remeasurements of defined benefit plans (1,478) (1,648) Total accumulated other comprehensive income Non-controlling interests 6,650 9,556 Total net assets 67,073 72,204 Total liabilities and net assets 135, ,757 5

8 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income Consolidated statement of income (April 1, 2016 ) (April 1, 2017 ) Net sales 103, ,742 Cost of sales 87, ,852 Gross profit 15,872 16,889 Selling, general and administrative expenses 12,011 13,670 Operating income 3,861 3,219 Non-operating income Interest income Dividend income Other Total non-operating income Non-operating expenses Interest expenses Equity in losses of affiliates Foreign exchange losses Other Total non-operating expenses 1,415 1,072 Ordinary income 3,214 2,837 Extraordinary income Gain on sales of fixed assets Gain on sales of investment securities 2, Gain on step acquisitions - 2,497 Total extraordinary income 2,156 2,992 Income before income taxes 5,370 5,830 Income taxes-current 715 1,161 Income taxes-deferred 847 1,750 Total income taxes 1,563 2,911 Net income 3,807 2,918 Net income attributable to non-controlling interests Net income attributable to owners of parent 3,504 2,904 6

9 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended Consolidated statement of comprehensive income (April 1, 2016 ) (April 1, 2017 ) Net income 3,807 2,918 Other comprehensive income Valuation difference on available-for-sale securities (635) 150 Deferred gains or losses on hedges - (8) Foreign currency translation adjustments (367) 343 Remeasurements of defined benefit plans 238 (31) Share of other comprehensive income of entities accounted for using equity method (40) (37) Total other comprehensive income (804) 416 Comprehensive income 3,002 3,334 (Breakdown) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 2,664 3,

10 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (3) Consolidated Statement of Changes in Equity (April 1, 2016 ) Shareholders equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders equity Balance at beginning of period 9,924 3,603 44,376 (1,110) 56,793 Changes during period Changes in shares of parent arising from transactions with (0) (0) non-controlling interests Dividends of surplus (923) (923) Net income attributable to owners of parent 3,504 3,504 Issue of new shares Purchase of treasury stock (0) (0) Changes of scope of consolidation Net changes of items other than shareholders equity Total changes during period ,995 (0) 3,013 Balance at end of period 9,924 3,622 47,372 (1,111) 59,807 Valuation difference on available-forsale securities Accumulated other comprehensive income Deferred gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans Total other comprehensive income Non-controlling interests Total net assets Balance at beginning of period 4,877 - (1,756) (1,665) 1,455 6,147 64,397 Changes during period Changes in shares of parent arising from transactions with (0) non-controlling interests Dividends of surplus (923) Net income attributable to owners of parent 3,504 Issue of new shares Purchase of treasury stock (0) Changes of scope of consolidation Net changes of items other than (636) - (390) 186 (840) 321 (519) shareholders equity Total changes during period (636) - (390) 186 (840) 502 2,675 Balance at end of period 4,241 - (2,147) (1,478) 615 6,650 67,073 8

11 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (April 1, 2017 ) Shareholders equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders equity Balance at beginning of period 9,924 3,622 47,372 (1,111) 59,807 Changes during period Changes in shares of parent arising from transactions with non-controlling interests Dividends of surplus (924) (924) Net income attributable to owners of parent 2,904 2,904 Issue of new share Purchase of treasury stock (160) (160) Changes of scope of consolidation (7) (7) Net changes of items other than shareholders equity Total changes during period ,980 (160) 1,969 Balance at end of period 10,003 3,693 49,352 (1,271) 61,776 Valuation difference on available-forsale securities Accumulated other comprehensive income Deferred gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans Total other comprehensive income Non-controlling interests Total net assets Balance at beginning of period 4,241 - (2,147) (1,478) 615 6,650 67,073 Changes during period Changes in shares of parent arising from transactions with 3,930 3,930 non-controlling interests Dividends of surplus (17) (942) Net income attributable to owners of parent 13 2,918 Issue of new shares 157 Purchase of treasury stock (160) Changes of scope of consolidation (7) Net changes of items other than 151 (8) 282 (169) 256 (1,020) (764) shareholders equity Total changes during period 151 (8) 282 (169) 256 2,905 5,131 Balance at end of period 4,392 (8) (1,864) (1,648) 871 9,556 72,204 9

12 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (4) Consolidated Statement of Cash Flows (April 1, 2016 ) (April 1, 2017 ) Cash flows from operating activities Income before income taxes 5,370 5,830 Depreciation and amortization 3,300 3,605 Amortization of negative goodwill (27) - Increase (decrease) in allowance for doubtful 21 3 accounts Increase (decrease) in net defined benefit liabilities (88) (70) (Increase) decrease in net defined benefit assets (207) (211) Interest and dividend income (334) (346) Interest expenses Foreign exchange losses (gains) Equity in (earnings) losses of affiliates Loss (gain) on sales and disposal of property, (12) (58) plant and equipment and intangible fixed assets Loss (gain) on sales of investment securities (2,132) (434) Loss (gain) on valuation of investment securities - (2,497) Decrease (increase) in notes and accounts receivable-trade (4,390) (6,395) Decrease (increase) in inventories 900 (2,355) Increase (decrease) in notes and accounts payable-trade 1,765 (107) Other (87) (707) Subtotal 5,298 (2,883) Interest and dividend income received Interest expenses paid (333) (365) Income taxes (paid) refund 76 (1,618) Net cash provided by (used in) operating activities 5,377 (4,520) Cash flows from investing activities Payments into time deposits (24) (9) Proceeds from withdrawal of time deposits Purchase of investment securities (10) (10) Proceeds from sales of investment securities 2, Purchases of shares of subsidiaries resulting in change in scope of consolidation - (2,478) Purchase of property, plant and equipment (4,784) (5,088) Proceeds from sales of property, plant and equipment Purchase of intangible fixed assets (542) (277) Purchase of long-term prepaid expenses (4) (2) Payments for loans receivable (428) (4) Proceeds from collection of loans receivable Other (107) 252 Net cash provided by (used in) investing activities (3,376) (6,975) 10

13 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended Cash flows from financing activities Net increase (decrease) in short-term loans payable (April 1, 2016 ) (April 1, 2017 ) Proceeds from long-term loans payable 10,558 5,448 Repayment of long-term loans payable (2,765) (2,016) Proceeds from issuance of common shares Purchase of treasury stock (1) (160) Purchase of treasury stock of subsidiaries - (1,149) Dividends paid to non-controlling interests (17) (17) Repayments of lease obligations (87) (65) Cash dividends paid (920) (921) Net cash provided by (used in) financing activities 6,855 1,302 Effect of exchange rate changes on cash and cash equivalents (242) (110) Net increase (decrease) in cash and cash equivalents 8,613 (10,303) Cash and cash equivalents at beginning of period 29,766 38,680 Increase (decrease) in cash and cash equivalents resulting from changes in scope of consolidation Cash and cash equivalents at end of period 38,680 28,376 11

14 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (5) Notes on Consolidated Financial Statements (Notes on the Going Concern Assumption) Not applicable (Segment Information, etc.) (Segment information) 1. Overview of reporting segments The Company s reporting segments are components of the Company for which separate financial information is available and that are subject to periodic review by the Board of Directors and the Management Committee in determining the allocation of management resources and evaluating business performance. The Company classifies its business divisions by product. Each business division engages in business activities based on comprehensive strategies for its products for Japan and overseas markets. Accordingly, the Company consists of product-specific segments based on its business divisions. Its four reporting segments are the Special Steel Bars Business, Springs Business, Formed & Fabricated Products Business, and Machinery Business. The major products of each segment are listed below. Reporting segment Special Steel Bars Springs Formed & Fabricated Products Machinery Major products, etc. Special steel bars (carbon steels, low-alloy steels, spring steels, non-heated steels, bearing steels, free-cutting steels, tool steels, nitriding steels) Coil springs, stabilizer bars, leaf springs, torsion bars, coiled wave springs, precision springs, various hinges, precision press products, plastic molded products, press assemblies, rubber track pads for shoe plates, tire protectors, tire chains, and various other automobile and construction-machinery repair parts and products Castings, precision castings, precision machinery products, general forgings, special alloy materials and special alloy machinery products, permanent magnets, parts using permanent magnets, special alloy powder, and fine special alloy powder Forging machinery, general industrial machinery, steel fabrication, environmental equipment, magnetic separators, conveying equipment, weighing instruments, and anti-vibration equipment 2. Net sales, income (loss), assets, and other amounts by reporting segment (April 1, 2016 ) Reporting segment Amount in Formed & consolidated Special Other Total Adjustments Springs Fabricated Machinery financial Steel Bars Products statements Net sales Sales to external customers 36,685 46,727 9,248 8,923 2, , ,742 Inter-segment sales or transfers 3, ,520 5,675 (5,675) Total 40,160 46,733 9,462 9,384 3, ,418 (5,675) 103,742 Segment income 1,267 1, ,891 (30) 3,861 Segment assets 47,955 47,337 11,125 15,674 3, ,094 10, ,104 Depreciation and amortization 1,055 1, ,300 3,300 Amortization of goodwill Increase in property, plant and equipment, and intangible fixed assets 1,404 2, ,136 5,136 Notes: 1. The Other category includes businesses such as distribution and services not included in reporting segments. 2. Adjustments to net sales include adjustments for internal transactions. Adjustments to segment income include elimination of inter-segment transactions. 3. Adjustments to segment assets consist of corporate assets not allocated to reporting segments. 4. Segment income is adjusted against operating income reported on the Consolidated Statement of Income. 12

15 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended (April 1, 2017 ) Reporting segment Amount in Formed & consolidated Special Other Total Adjustments Springs Fabricated Machinery financial Steel Bars Products statements Net sales Sales to external customers 49,219 47,886 10,609 8,924 2, , ,742 Inter-segment sales or transfers 3, ,812 6,112 (6,112) Total 52,926 47,897 10,787 9,328 3, ,855 (6,112) 118,742 Segment income 1, , ,219 Segment assets 70,282 42,294 11,448 15,954 3, ,708 10, ,757 Depreciation and amortization 1,035 1, ,605 3,605 Amortization of goodwill Increase in property, plant and equipment, and intangible fixed assets 1,748 2, ,319 5,319 Notes: 1. The Other category includes businesses such as distribution and services not included in reporting segments. 2. Adjustments to net sales include adjustments for internal transactions. Adjustments to segment income include elimination of inter-segment transactions. 3. Adjustments to segment assets consist of corporate assets not allocated to reporting segments. 4. Segment income is adjusted against operating income reported on the Consolidated Statement of Income. (Per Share Information) (April 1, 2016 ) (April 1, 2017 ) Net assets per share 3, yen 4, yen Net income per share yen yen Notes: 1. Diluted net income per share is not stated above because no shares were subject to dilution. 2. The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, The figures for net assets per share and net income per share are calculated based on the assumption that the reverse stock split took place at the beginning of the previous consolidated fiscal year. 3. For calculations of net income per share, shares of Company stock held by the board incentive plan (BIP) trust, an executive incentive plan, are included in treasury stock, which is excluded from calculations of average number of shares during the period. The number of shares of treasury stock held by the BIP trust in this consolidated fiscal year after the reverse stock split was 54,300 shares. The average number of shares during the period of such treasury stock excluded from calculations of net income per share was 0 shares during the previous consolidated fiscal year and 27,819 shares, after the reverse stock split, during the consolidated fiscal year under review. 4. The bases for calculation of net income per share are as follows: Net income attributable to owners of parent (millions of yen) Value not attributed to common shares (millions of yen) Net income attributable to owners of parent attributed to common shares (millions of yen) Average number of outstanding common shares during the period (shares) (April 1, 2016 ) (April 1, 2017 ) 3,504 2,904 3,504 2,904 15,385,977 15,385,271 13

16 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended 5. The bases for calculation of net assets per share are as follows: Total net assets (millions of yen) 67,073 72,204 Amounts deducted from total net assets (millions of yen) 6,650 9,556 Net assets at end of period applicable to common shares (millions of yen) 60,422 62,648 Number of common shares at end of period used in calculating net assets per share (shares) 15,385,729 15,384,770 (Significant Subsequent Events) In its meeting held December 8, 2017, the Company board of directors resolved to make Gebrüder Ahle GmbH & Co. KG a wholly owned subsidiary through the additional purchase of all outstanding shares of its stock. 1. Business combination through acquisition (1) Name and lines of business of acquired company Name of acquired company: Gebrüder Ahle GmbH & Co. KG Lines of business: (2) Main reason for business combination Design, manufacture, and sale of coil springs for automotive and other uses This decision to advance into the European market by acquiring a spring manufacturing company in Europe was made, following advancement into the Mexican market and the development of a stabilizer business in China, to help realize the Springs Business s goal of becoming a global supplier of springs for use in automotive suspensions (coil springs, stabilizers), one of the policies of the 2016 medium-term management plan. (3) Date of business combination April 12, 2018 (4) Legal form of business combination Acquisition of stock paid for in cash (5) Company name after business combination MSSC Ahle GmbH (planned) (6) Percentage of voting rights acquired Percentage of voting rights held immediately prior to acquisition: 0% Percentage of additional voting rights acquired on date of business combination: 100% Percentage of voting rights held after acquisition: 100% (7) Main grounds for acquiring the company Stock acquired by the Company through cash payment 2. Cost of acquisition of additional shares and breakdown by payment type Payment for acquisition: Cost of acquisition: in cash, EUR11.6 million EUR11.6 million 3. Resulting goodwill, source of goodwill, amortization method, and amortization period Not yet finalized 4. Amounts of assets received and liabilities accepted on the date of business combination and main details thereof Not yet finalized 5. Effect of this event on consolidated profit and loss The effect of this event on the Company s projections of consolidated business performance for the fiscal year ending March 31, 2019, has not been finalized. 14

17 MITSUBISHI STEEL MFG. CO., LTD. (5632): Summary of Financial Statements for Fiscal Year Ended 4. Appendix (Consolidated) 1. Financial results (April 2016 March 2017) Full year (April 2017 March 2018) Year-on-year change Changes (%) Results for fiscal year ended March 2018 Full year Forecast for fiscal year ending March 2019* Forecast for fiscal year ending March 2019 Changes (%) Net sales 103, ,742 15, , , Operating income 3,861 3,219 (641) (16.6) 3,219 5, Ordinary income 3,214 2,837 (377) (11.7) 2,837 4, Net income attributable to owners of parent 3,504 2,904 (599) (17.1) 2,904 3, * Announced on April 27, 2018 Net income per share * The Company implemented a reverse stock split for shares of common stock at a 10:1 ratio effective October 1, For this reason, the figure for net income per share is calculated based on the assumption that this reverse stock split took place at the beginning of the previous consolidated fiscal year. 2. Quarterly results Q1 (April - June) March 2017 March 2018 Q2 (July - Sept.) Q3 (Oct. - Dec.) Q4 (Jan. - March) Q1 (April - June) Q2 (July - Sept.) Q3 (Oct. - Dec.) Q4 (Jan. - March) Net sales 23,888 24,417 26,852 28,584 28,630 29,288 29,863 30,960 Operating income ,448 1, Ordinary income ,440 1,105 1, Net income attributable to owners of parent 3. Net sales by segment Q1 (April - June) 232 1,125 1, ,828 March 2017 March 2018 Q2 (July - Sept.) Q3 (Oct. - Dec.) Q4 (Jan. - March) Q1 (April - June) Q2 (July - Sept.) Q3 (Oct. - Dec.) Q4 (Jan. - March) Special Steel Bars 8,926 9,364 10,249 11,620 13,131 12,581 12,528 14,683 Springs 11,010 10,304 13,260 12,158 11,980 12,130 12,423 11,364 Steel Castings and Forgings 2,291 2,471 2,315 2,383 2,480 2,447 2,821 3,038 Machinery 2,055 2,849 1,630 2,849 1,631 2,359 2,262 3,075 Other , Adjustments (1,240) (1,514) (1,559) (1,361) (1,549) (1,237) (1,143) ( 2,181) Total 23,888 24,417 26,852 28,584 28,630 29,288 29,863 30, Summary of Consolidated Balance Sheet Account March 31, 2017 March 31, 2018 Changes Account March 31, 2017 March 31, 2018 Changes Current assets 83,584 85,546 1,961 Liabilities 68,030 81,553 13,522 Cash and deposits 38,702 28,397 (10,305) Notes and accounts receivable-trade Notes and accounts payable-trade 16,476 17, ,871 34,718 6,846 Interest-bearing debt 33,792 42,013 8,221 Inventories 14,715 19,610 4,894 Other 17,761 22,190 4,429 Other 2,294 2, Fixed assets 51,519 68,211 16,691 Net assets 67,073 72,204 5,131 Property, plant and equipment 26,786 37,100 10,313 Shareholders equity 59,807 61,776 1,969 Intangible fixed assets 1,973 12,910 10,936 Investments and other assets 22,759 18,200 (4,558) Total assets 135, ,757 18,653 Accumulated other comprehensive income Non-controlling interests Total liabilities and net assets ,650 9,556 2, , ,757 18,653 15