Translation
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 document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results
for the Year Ended May 31, 2023
(Based on Japanese GAAP)
July 10, 2023
Company name:Sanko Gosei Ltd.

Stock exchange listing: Tokyo
Stock code:
7888
Representative:
Inquiries:

URL

http://www.sankogosei.co.jp

Representative Director/President
Director/Executive Officer

Kenso Kuroda
Akira Serikawa

Scheduled date of ordinary general meeting of shareholders:
Scheduled date to file Securities Report:

August 24, 2023
August 25, 2023

Scheduled date to commence dividend payments:
Preparation of supplementary material on financial results:

August 25, 2023
Yes

Holding of financial results meeting:

Yes

TEL

0763-52-7105(for analysts and institutional investors)(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the year ended May 31, 2023 (from June 1, 2022 to May 31, 2023)(1) Consolidated operating results
Percentages indicate year-on-year changes
Profit attributable toNet sales
Operating profit
Ordinary profit
owners of parent
Millions of yen% Millions of yen% Millions of yen% Millions of yen%
Year ended May 31, 2023
81,113
23.5
3,484
37.0
3,468
43.5
2,096
15.7
Year ended May 31, 2022
65,661
19.1
2,543
5.5
2,416
23.8
1,811
39.1

Earnings per share

Profit attributable toOrdinary profit/total Operating profit/net
owners ofassets
sales
parent/equity
Yen%%%–
8.7
5.6
4.3
–
8.4
4.2
3.9

Diluted earnings pershare

Yen
68.78
59.43

Year ended May 31, 2023
Year ended May 31, 2022
(2) Consolidated financial position

Total assets
As of May 31, 2023
As of May 31, 2022

Net assets

Equity ratio

Millions of yen
65,58058,409Millions of yen
25,95023,251

Cash flows fromoperating activities
Millions of yen
6,790
3,011

Cash flows frominvesting activities
Millions of yen(2,873)(2,352)

Net assets per share%
38.9
39.1

Yen
835.82748.46(3) Consolidated cash flows

Year ended May 31, 2023
Year ended May 31, 2022

Cash flows from
Cash and cash equivalents
at end of periodfinancing activities
Millions of yen
Millions of yen(2,248)
8,775(2,360)6,822

2. Cash dividends
Annual dividends per share
1st quarter-end 2nd quarter-end 3rd quarter-end Fiscal year-end

Year ended May 31, 2022
Year ended May 31, 2023
Year ending May 31, 2024
(Forecast)of dividends
Total cash
Dividend payout Ratio
to net assets
dividends (Total) ratio (Consolidated) (Consolidated)

Total

Yen

Yen

Yen

Yen

Yen

Millions of yen

%%

––

7.00
7.00

––

7.00
9.00

14.00
16.00

426
487

23.6
23.3

2.02.0–

9.00

–

9.00

18.00

123.9

3. Forecast of consolidated financial results for the year ending May 31, 2024 (from June 1, 2023 to May 31, 2024)
Net sales
Full year

Millions of yen
85,000Percentages indicate year-on-year changes
Profit attributable toOperating profit
Ordinary profit
Earnings per shareowners of parent% Millions of yen% Millions of yen% Millions of yen%Yen
4.8
3,800
9.1
3,600
3.8
2,300
9.7
75.44

4. Notes(1) Changes in significant subsidiaries during the year ended May 31, 2023
(changes in specified subsidiaries resulting in the change in scope of consolidation):No(2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:
Changes in accounting policies due to other reasons:

NoNo

Changes in accounting estimates:
Restatement of prior period financial statements:

NoNo(3) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of May 31, 2023

30,688,569 shares As of May 31, 2022

30,688,569 shares

Number of treasury shares at the end of the period
As of May 31, 2023

204,786 shares As of May 31, 2022

204,749 shares

30,483,809 shares Year ended May 31, 2022

30,483,837 shares

Average number of shares during the period
Year ended May 31, 2023

2

Consolidated financial statements
Consolidated balance sheets(Millions of yen)
As of May 31, 2022

As of May 31, 2023

AssetsCurrent assets
Cash and deposits
Notes receivable - trade

6,822
32

8,775
99

Electronically recorded monetary claims - operatingAccounts receivable - trade631
14,007

1,044
15,728Merchandise and finished goods
Work in process

1,896
3,306

1,322
4,580

Raw materials and supplies
Other

1,777
2,248

1,763
3,329

(0)

–

30,72136,644

22,16524,025

Accumulated depreciation(13,008)(13,987)

Buildings and structures, net

9,157

10,038

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

Machinery, equipment and vehicles

32,39634,325

Accumulated depreciation(22,890)(24,779)

9,5059,546

Tools, furniture and fixtures

Machinery, equipment and vehicles, net

10,55011,263

Accumulated depreciation(8,573)(9,382)Tools, furniture and fixtures, net

1,977

1,881

4,977

5,072

977

1,285

26,59527,824

Goodwill
Other

109
416

80
453

Total intangible assets

526

534

Investments and other assets
Investment securities

1817

Deferred tax assets
Other350
196

353
205

Land
Construction in progress
Total property, plant and equipment
Intangible assets

Total investments and other assets
Total non-current assets
Total assets

3566577

27,68728,93558,40965,580(Millions of yen)
As of May 31, 2022

As of May 31, 2023

Liabilities
Current liabilities
Notes and accounts payable - trade

6,963

7,940

Electronically recorded obligations - operating
Short-term borrowings

2,585
6,341

3,794
5,811

Current portion of long-term borrowings
Lease liabilities

1,870
1,151

2,194
1,242

464
169

538
195

Provision for bonuses for directors (and other officers)
Other34
3,560

53
5,940

Total current liabilities

23,141

27,710Non-current liabilities
Long-term borrowings

7,343

7,403

Lease liabilities
Deferred tax liabilities

3,359
53

3,311
80

Provision for retirement benefits for directors (and otherofficers)

18

16

Retirement benefit liability
Other

832
408

724
382

Total non-current liabilities

12,017

11,91935,15839,630Shareholders' equity
Share capital

4,008

4,008

Capital surplus
Retained earnings

4,071
14,7294,071
16,399(43)(43)

22,76624,436

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

(3)
279

(1)
1,214

Remeasurements of defined benefit plans

(226)

(170)

49

1,042

Income taxes payable
Provision for bonuses

Total liabilities
Net assets

Treasury shares
Total shareholders' equity
Accumulated other comprehensive income

Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

4435

470

23,251

25,95058,40965,580Consolidated statements of income and consolidated statements of comprehensive income
Consolidated statements of income(Millions of yen)
Fiscal year ended
May 31, 2022

Fiscal year ended
May 31, 2023

Net sales

65,661

81,113

Cost of sales

55,956

69,622Gross profit

9,704

11,490

Selling, general and administrative expenses

7,160

8,006

Operating profit

2,543

3,484

Non-operating income
Interest income

1134

Dividend income
Foreign exchange gains

193

1262

Rental income
Gain on sale of scraps

65
39

61
56

Other

155

46

Total non-operating income

365

461

Interest expenses
De361
52

368
18

Commission expenses
Other

1366

53
37

Total non-operating expenses

493

477

2,416

3,468

Gain on sale of non-current assets
National subsidies

188
150–

Total extraordinary income

2040Extraordinary losses
Loss on sale of non-current assets

822

Loss on retirement of non-current assets
Loss on valuation of investment securities

59–

52
5Impairment losses
Loss on tax purpose reduction entry of non-current assets

–
15104
–

Total extraordinary losses

83

185

Profit before income taxes

2,537

3,284

Income taxes - current
Income taxes - deferred

643
41

1,168
4

Total income taxes

684

1,173

1,853

2,111

Non-operating expenses

Ordinary profit
Extraordinary incomeProfit
Profit attributable to non-controlling interests
Profit attributable to owners of parent

541

14

1,811

2,096

Consolidated statements of comprehensive income(Millions of yen)

ProfitOther comprehensive income

Fiscal year ended

Fiscal year ended

May 31, 2022

May 31, 2023
1,853

2,111

Valuation difference on available-for-sale securities
Foreign currency translation adjustment

(0)
1,123

2956

Remeasurements of defined benefit plans, net of tax

5155

1,174

1,014

Comprehensive income

Total other comprehensive income

3,027

3,125

Comprehensive income attributable toComprehensive income attributable to owners of parent

2,953

3,089

7435

Comprehensive income attributable to non-controllinginterests

6Consolidated statements of changes in equity
Fiscal year ended May 31, 2022
(Millions of yen)
Shareholders' equity
Share capital
Balance at beginning of period

Capital surplus

4,008

Retained earnings

4,071

Total shareholders'equity

Treasury shares

13,344(43)

21,381

Changes during period
Dividends of surplus

(426)

(426)

Profit attributable to ownersof parent

1,811

1,811

Purchase of treasury shares

(0)

(0)

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

––

1,385

(0)

1,385

4,008

4,071

14,729(43)

22,766

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period(2)Foreigncurrencytranslation
adjustment

Total
Remeasurement accumulated Non-controlling
Total net assetsinterestss of definedotherbenefit planscomprehensive
income

(810)

(278)

(1,092)360

20,649Changes during period
Dividends of surplus(426)

Profit attributable to ownersof parent

1,811

Purchase of treasury shares(0)

Net changes in items otherthan shareholders' equity

(0)

1,090

51

1,14175

1,216

Total changes during period

(0)

1,090

51

1,14175

2,601

Balance at end of period

(3)

279

(226)

49435

23,251

7Fiscal year ended May 31, 2023
(Millions of yen)
Shareholders' equity
Share capital
Balance at beginning of period

Capital surplus

4,008

Retained earnings

4,071

Total shareholders'equity

Treasury shares

14,729(43)

22,766

Changes during period
Dividends of surplus

(426)

(426)

Profit attributable to ownersof parent

2,096

2,096

Purchase of treasury shares

(0)

(0)

Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

––

1,670

(0)

1,670

4,008

4,071

16,399(43)

24,436

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning of period(3)Foreigncurrencytranslation
adjustment

Total
Remeasurement accumulated Non-controlling
Total net assetsinterestss of definedotherbenefit planscomprehensive
income279(226)

49435

23,251

Changes during period
Dividends of surplus(426)

Profit attributable to ownersof parent

2,096

Purchase of treasury shares(0)

Net changes in items otherthan shareholders' equity

2935

55

993

35

1,028

Total changes during period

2935

55

993

35

2,698

Balance at end of period

(1)

1,214

(170)

1,042

470

25,9508

Consolidated statements of cash flows(Millions of yen)

Cash flows from operating activities
Profit before income taxes

Fiscal year ended

Fiscal year ended

May 31, 2022

May 31, 2023
2,537

3,284

3,162
35

3,565
38

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in retirement benefit liability

(0)
(9)

(0)
(74)

Interest and dividend income
Interest expenses

(12)
361

(34)
368

Gain on sales of property,plant and equipment
Loss on sales and retirement of property,plant and equipment

(188)
8(0)
22

Loss on retirement of property, plant and equipment
Loss (gain) on valuation of derivatives

59525218

Loss (gain) on valuation of investment securities
Impairment losses

––

5104

Decrease (increase) in trade receivables
Decrease (increase) in inventories(108)
194(1,559)(450)

Decrease (increase) in other assets
Increase (decrease) in trade payables(368)(1,189)

(593)
1,514

Increase (decrease) in other liabilities
Other, net(522)
4

1,993
16

Subtotal

4,015

8,270

Interest and dividends received
Interest paid

12(384)34(368)

Income taxes paid

(632)

(1,146)

Net cash provided by (used in) operating activities

3,011

6,790

(0)
(2,995)(0)(2,751)

Proceeds from sale of property, plant and equipment
Other, net

773
(129)

6(126)Net cash provided by (used in) investing activities(2,352)(2,873)

Depreciation
Amortization of goodwill

Cash flows from investing activities
Purchase of investment securities
Purchase of property, plant and equipment

9

(Millions of yen)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings

Fiscal year ended

Fiscal year ended

May 31, 2022

May 31, 2023
290

(697)

Proceeds from lomg-term loans payable
Repayments of long-term borrowings

1,759(2,248)2,000(1,855)

Redemption of bonds
Repayments of lease liabilities(75)(1,659)–(1,263)

(426)
–

(426)
(5)

Dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

(0)

(0)

(2,360)(2,248)445

284

Net increase (decrease) in cash and cash equivalents(1,256)

1,952

Cash and cash equivalents at beginning of period

8,079

6,822

Cash and cash equivalents at end of period

6,822

8,775

10