SK Electronics : Summary Report of Consolidated Financial Statements for the Second Quarter of the Fiscal 2021

Second Quarter, FYE September 2021 Financial Report [Japan GAAP] (Consolidated)

				May 17, 2021
Company Name	SK-Electronics Co., Ltd.	Stock Exchange Listing: Tokyo Stock Exchange
Code No.	6677		URL http://www.sk-el.co.jp
Representative	(Title) President	Masanori Ishida
Contact	(Title) Director	Yasuhisa Mukaida	(TEL) [phone]
Second Quarter Earnings Report	May 17, 2021	Scheduled Date for Commencement of Dividend Payments: －
Preparation of Summary Supplementary Explanatory Materials: Yes
Quarterly Earnings Presentations: Yes

(Rounded down to the nearest ¥ million)

1. Consolidated Results of Operations for the Second Quarter FYE 9/2021 (October 1, 2020 through March 31, 2021)

(1) Consolidated Results of Operations (cumulative)

(% indicates increase/decrease from the same period the prior year)

Net income

attributable to

Net Sales

EBITDA

Operating Income

Ordinary Income

owners of the

parent

¥millions

%

¥millions

%

¥millions

%

¥millions

%

2Q FYE 9/2021

8,927

−15.6

1,859

−31.0

365

5.2

149

−53.8

80

−60.0

2Q FYE 9/2020

10,575

−22.8

2,694

−45.2

347

−90.4

324

−91.3

201

−92.5

(Note) Comprehensive Income

2Q FYE

9/2021:

783 million

yen (86.9%)

2Q FYE 9/2020: 418 million yen (−82.4%)

Net Income per Share

Diluted Net Income per

Share

Yen

Yen

2Q FYE 9/2021

7.68

－

2Q FYE 9/2020

19.18

－

(Note) EBITDA = Operating

Income + Depreciation

(2) Consolidated Financial Position

Total Assets

Net Assets

Equity Ratio

Net Assets per Share

¥millions

¥millions

%

Yen

2Q FYE 9/2021

32,483

23,063

71.0

2,198.95

FYE 9/2020

31,778

22,385

70.4

2,134.25

(Reference) Owned Capital

2Q FYE 9/2021: 23,063 million yen

FYE 9/2020: 22,385 million yen

2. Dividends

		Dividend per Share
	First Quarter	Second Quarter	Third Quarter	Fiscal Year End	Total
	Yen	Yen	Yen	Yen	Yen
FYE 9/2020	－	0.00	－	10.00	10.00
FYE 9/2021	－	0.00
FYE 9/2021 (Projected)			－	20.00	20.00

(Note) Revisions to most recently announced dividend forecast: No

3. Projected Consolidated Results of Operations for FYE 9/2021 (October 1, 2020 through September 30, 2021)

(% indicates increase/decrease compared to prior year or prior year interim period)

											Net income
											attributable to		Net Income
	Net Sales	EBITDA		Operating Income	Ordinary Income	owners of the		per Share
											parent
	¥millions	%				¥millions		%	¥millions	%	¥millions		%	Yen
Full Year	21,500	12.5	4,740		13.3	1,500		-	1,500	-	1,110		-	104.88
(Note) Revisions to most recently announced earnings projection: No

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*Notes

(1) Changes in significant subsidiaries during the period	:None
(2) Adoption of special accounting treatment for the preparation of quarterly consolidated financial statements	:None
(3) Changes in accounting policies and changes in accounting estimates and retrospective restatements
<1> Changes in accounting policies in conjunction with revisions of accounting standards	:None
<2> Changes in accounting policies other than those in <1>	:Yes
<3> Changes in accounting estimates	:None
<4> Retrospective restatements	:None

(4) Number of shares issued and outstanding (common stock)

<1> Number of shares issued and outstanding at the	2Q FYE 9/2021	11,368,400 shares	FYE 9/2020	11,368,400 shares
end of the period (including treasury stock)
<2> Number of shares of treasury stock at the end of
2Q FYE 9/2021	879,782 shares	FYE 9/2020	879,782 shares
the period
<3> Average number of shares during the period
2Q FYE 9/2021	10,488,618 shares	2Q FYE 9/2020	10,485,720 shares
(Quarterly cumulative)

(Note) The number of treasury shares deducted when calculating the number of shares of treasury stock at the end of the period includes shares held in trust for the director stock-based compensation system.

*This quarterly earnings report is exempt from quarterly review procedures by either a certified public accountant or an audit firm.

*Explanation concerning appropriate use of the projected operating results and other special remarks

The forward-looking statements, including the operating income forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed reasonable. Actual business results may differ substantially due to a number of factors. Please see page 2 1. "Qualitative Information on Consolidated Operating Results for the Second Quarter of FYE September 2021, (3) Qualitative Explanation on Consolidated Earnings Projections" concerning the assumptions used as the basis for the projected operating income and matters to note before using the projected operating income.

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○ Attachments Table of Contents

1. Qualitative Information on the Consolidated Operating Results for the Second Quarter of FYE September 2021..........................	2
(1)	Qualitative Explanation of the Consolidated Results of Operations ...............................................................................................	2
(2)	Qualitative Explanation of the Consolidated Financial Position.....................................................................................................	2
(3)	Qualitative Explanation on Consolidated Earnings Projections......................................................................................................	2
2. Quarterly Consolidated Financial Statements & Notes ....................................................................................................................	3
(1)	Quarterly Consolidated Balance Sheets..........................................................................................................................................	3
(2)	Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income......................................	5
(3)	Notes to the Quarterly Consolidated Financial Statements.............................................................................................................	7
(Notes Relating to the Assumptions of Going Concerns)...................................................................................................................	7
(Notes in the Event of Significant Changes in Shareholders' Equity)................................................................................................	7
(Changes in Accounting Policies that are Difficult to Distinguish from Changes in Accounting Estimates).....................................	7
(Additional Information)....................................................................................................................................................................	7

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1. Qualitative Information on the Consolidated Operating Results for the Second Quarter of FYE September 2021

(1) Qualitative Explanation of the Consolidated Results of Operations

In the first half of the consolidated FYE September 2021, although some economic activities showed signs of an uptick after the declaration of emergency was lifted in May 2020, the outlook is still murky for the economies in Japan and abroad mainly because the third declaration of emergency was issued in some regions as a result of another wave of COVID-19.

In the flat-panel display industry, demand for LCD panels increased because sales of TVs and notebook PCs remained strong as consumers spent more time at home. In addition, the prices of LCD panels, particularly large LCD panels for TVs, continued increasing from June 2020 because of stronger concern about shortages of panel components. Following such a situation, panel manufacturers continued to implement mass production. This delayed development of LCD panels mainly for TVs. As a result of this, demand for photomasks for LCDs remained weak.

On the other hand, in organic EL panels, there was solid demand for the development of photomasks for organic ELs because of active development for further high definition.

During such a situation, the SK-Electronics Group decreased net sales year-on-year because the continued travel restrictions resulting from the spread of COVID-19 restricted overseas operating activities. But the group increased operating income mainly due to measures for cutting costs and a decrease in depreciation.

Accordingly, the SK-Electronics Group posted consolidated net sales of ¥8,927 million, a decrease of 15.6% year-on-year, operating income of ¥365 million, an increase of 5.2%, and ordinary income of ¥149 million, a decrease of 53.8%. Meanwhile, net income attributable to owners of the parent totaled ¥80 million, a decrease of 60.0% year-on-year.

(2) Qualitative Explanation of the Consolidated Financial Position

At the end of the second quarter of the consolidated FYE September 2021, total assets came to ¥32,483 million, an increase of ¥704 million versus the end of the prior consolidated fiscal year. This mainly reflected declines in cash and deposits and increases in notes and accounts receivable - trade, and construction in progress.

Total liabilities stood at ¥9,419 million, an increase of ¥26 million versus the end of the prior consolidated fiscal year. This primarily reflected an increase in other current liabilities and a decline in notes and accounts payable - trade and long-term loans payable.

Total net assets were ¥23,063 million, an increase of ¥678 million versus the end of the prior consolidated fiscal year. This primarily reflected an increase in valuation difference on available-for-sale securities and foreign currency translation adjustment.

(3) Qualitative Explanation on Consolidated Earnings Projections

The full year earnings projections remain unchanged from those in the FYE September 2020 Financial Report that was announced on November 9, 2020.

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2. Quarterly Consolidated Financial Statements & Notes

(1) Quarterly Consolidated Balance Sheets

				(Unit: ¥ thousands)
			Prior consolidated fiscal year	Second Quarter FYE 9/2021
			(FYE 9/2020)	(Ended March 31, 2021)
Assets
	Current assets
		Cash and deposits	10,331,416	8,481,184
		Notes and accounts receivable - trade	3,940,395	4,541,443
		Merchandise and finished goods	79,406	67,891
		Work in process	217,444	292,805
		Raw materials and supplies	2,471,882	2,239,284
		Other	704,251	643,320
		Allowance for doubtful accounts	(1,116)	(1,462)
		Total current assets	17,743,680	16,264,468
	Noncurrent assets
		Property, plant, and equipment
		Buildings and structures, net	3,205,604	3,147,326
		Machinery, equipment, and vehicles, net	5,852,577	5,422,597
		Land	1,667,702	1,667,702
		Construction in progress	2,142,603	4,757,150
		Other, net	184,569	157,135
		Total property, plant, and equipment	13,053,058	15,151,912
		Intangible assets
		Software	266,237	202,461
		Other	242	3,852
		Total intangible assets	266,479	206,314
		Investments and other assets
		Other	848,816	1,002,489
		Allowance for doubtful accounts	(133,273)	(141,665)
		Total investments and other assets	715,542	860,823
		Total noncurrent assets	14,035,080	16,219,050
	Assets	31,778,761	32,483,518

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