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 Nine Months Ended December 31, 2019
(Based on Japanese GAAP)
January 31, 2020
Company name:
ARGO GRAPHICS Inc.
Stock exchange listing: Tokyo
Stock code:
Representative:

7595
URL http://www.argo-graph.co.jp
Chairman and CEO
Yoshimaro Fujisawa

Inquiries:

Managing Director, Administration ControlDivisionKunio Hasebe

TEL

Scheduled date to file Quarterly Securities Report:
Scheduled date to commence dividend payments:

February 7, 2020–

Preparation of supplementary material on quarterly financial results:
Holding of quarterly financial results meeting:NoNo03-5641-2018(Amounts less than one million yen are rounded down)
1. Consolidated financial results for the nine months ended December 31, 2019 (from April 1, 2019 to December 31, 2019)(1) Consolidated operating results (cumulative)
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%
Nine months ended December 31, 201935,327
8.2
4,749
29.5
5,022
28.8
3,275
25.8
Nine months ended December 31, 2018
32,643
17.7
3,667
42.9
3,898
41.3
2,603
46.7
Earnings per share

Diluted earnings per share

Yen
153.41121.93Nine months ended December 31, 2019
Nine months ended December 31, 2018

Yen
153.41121.93(2) Consolidated financial position
Total assets

Net assets

Millions of yen
45,97844,918

As of December 31, 2019
As of March 31, 2019

Equity ratio

Millions of yen
32,23729,331

Net assets per share
%
66.5
61.3

Yen
1,431.44
1,289.61

2. Cash dividends
Annual dividends per share

Year ended March 31, 2019Year ending March 31, 2020

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Yen
––Yen
40.00
25.00

Yen––

Yen
50.00

Yen
90.00

25.00

50.00

Year ending March 31, 2020 (Forecast)Total

3. Forecast of consolidated financial results for the year ending March 31, 2020 (from April 1, 2019 to March 31, 2020)Net sales
Full year

Millions of yen
46,400Percentages 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
2.7
5,130
3.6
5,380
2.5
3,550
0.6
166.251

4. Notes(1) Changes in significant subsidiaries during the nine months ended December 31, 2019(changes in specified subsidiaries resulting in the change in scope of consolidation):No(2) Application of special accounting methods for preparing quarterly consolidated financial statements:

No(3) 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:

No
No

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

NoNo(4) Number of issued shares (common shares)
Total number of issued shares at the end of the period (including treasury shares)
As of December 31, 201922,354,000 shares As of March 31, 201922,354,000 sharesNumber of treasury shares at the end of the period
As of December 31, 2019

998,354 shares As of March 31, 2019

1,000,440 shares

Average number of shares during the period (cumulative from the beginning of the fiscal year)
Nine months ended December 31, 2019

21,354,934 shares Nine months ended December 31, 20182

21,353,249 shares

Quarterly consolidated financial statements
Consolidated balance sheets(Thousands of yen)
As of March 31, 2019

As of December 31, 2019

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Electronically recorded monetary claims - operating
Investments in leases
Securities
MerchandiseWork in process
Raw materials and supplies

16,944,905
11,136,789

18,982,413
7,970,114

415,167
765,829

1,067,374
880,596

17,4991,290,049

1,018,292
640,335

180,281
4,210

165,842
3,232

Other

1,104,279

1,499,008

Total current assets

31,859,011

32,227,210

232,612220,126

Goodwill
Other

1,156,480
59,330967,763
46,152

Total intangible assets

1,215,811

1,013,916

Investments and other assets
Investment securities

10,833,276

11,780,494

778,167736,631

Non-current assets
Property, plant and equipment
Intangible assets

Other
Total investments and other assets

11,611,443

12,517,125

13,059,868

13,751,167

44,918,879

45,978,378

7,497,955
1,072,115

6,066,282
480,059

582,599
110,000

362,601
67,500Other

3,202,769

3,001,528

Total current liabilities

12,465,440

9,977,971

2,648,012
151,8712,790,435
176,674

67,63177,006

Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonusesProvision for bonuses for directors (and other officers)

Non-current liabilities
Retirement benefit liability
Provision for share-based remuneration
Provision for share-based remuneration for directors (andother officers)
Other
Total non-current liabilities
Total liabilities

3

254,342719,201

3,121,857

3,763,318

15,587,298

13,741,289

(Thousands of yen)
As of March 31, 2019

As of December 31, 2019

Net assets
Shareholders' equity
Share capital

1,873,136

1,873,136

Capital surplus
Retained earnings

2,073,167
21,417,044

2,117,348
23,605,269

Treasury shares(690,902)(689,412)

24,672,445

26,906,341

3,078,205(104,167)

3,833,216(77,479)

Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans
Foreign currency translation adjustment(108,676)(92,763)

Total accumulated other comprehensive income

2,865,361

3,662,973

Share acquisition rights

208

208

Non-controlling interests

1,793,565

1,667,565

Total net assets

29,331,581

32,237,089

44,918,879

45,978,378

Total liabilities and net assets

4Consolidated statements of income (cumulative) and consolidated statements of comprehensive income(cumulative)
Consolidated statements of income (cumulative)(Thousands of yen)
Nine months ended

Nine months ended

December 31, 2018

December 31, 2019

Net sales
Cost of sales

32,643,930
24,317,118

35,327,461
25,971,333

Gross profit

8,326,812

9,356,128

Total selling, general and administrative expenses

4,659,685

4,606,960

Operating profit

3,667,126

4,749,168

Interest income
Dividend income

27,374
123,729

29,737
141,546Gain on sales of securities
Share of profit of entities accounted for using equity method

3,026
56,184–59,518Gain on valuation of derivatives
Other–
24,51023,45821,044

Total non-operating income

234,826

275,305

Non-operating income

Non-operating expenses
Interest expenses

590–

Loss on investments in investment partnerships
Other2,399
134

341
2,006

Total non-operating expenses

3,124

2,348

3,898,828

5,022,125

550
4,306

–
12,925

Ordinary profit
Extraordinary losses
Loss on valuation of golf club membership
Loss on sales of shares of subsidiaries and associates

4,856

12,925

Profit before income taxes

Total extraordinary losses

3,893,972

5,009,199

Income taxes - current
Income taxes - deferred

1,107,723
70,871

1,414,564
152,915

Total income taxes

1,178,595

1,567,479

Profit

2,715,377

3,441,720

Profit attributable to non-controlling interests
Profit attributable to owners of parent

5

111,744

165,738

2,603,632

3,275,982

(Thousands of yen)
3rd quarter endedDecember

3rd quarter endedDecember

31, 2018

31, 2019

Net sales
Cost of sales

10,626,2557,797,681

11,176,001
8,165,911

Gross profit

2,828,573

3,010,089

Total selling, general and administrative expenses

1,516,822

1,566,246

Operating profit

1,311,751

1,443,843

Interest income
Dividend income

8,051
55,818

10,19571,361Gain on sales of securities
Gain on investments in investment partnerships

3,026
–

–
433

Share of profit of entities accounted for using equity method
Gain on valuation of derivatives

9,766
–

6,804
22,831449

14,857

77,112

126,484

13
1,199

–
–

–

67

Non-operating income

Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on investments in investment partnerships
Other
Total non-operating expenses

1,212

67

1,387,651

1,570,259

550–

Loss on sales of shares of subsidiaries and associates

4,306

12,925

Total extraordinary losses

4,856

12,925

1,382,794

1,557,333

353,404

444,975

Ordinary profit
Extraordinary losses
Loss on valuation of golf club membership

Profit before income taxes
Income taxes - current
Income taxes - deferred

84,83645,129Total income taxes

438,240

490,104

Profit944,554

1,067,229

Profit attributable to non-controlling interests

29,652

22,546

Profit attributable to owners of parent

914,902

1,044,682

6

Consolidated statements of comprehensive income (cumulative)(Thousands of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income

Nine months ended

Nine months ended

December 31, 2018

December 31, 2019

2,715,377

3,441,720(756,430)
25,585755,01142,89426,363

26,688(9,829)(14,488)(714,309)

810,106

Comprehensive income

2,001,067

4,251,826

Comprehensive income attributable toComprehensive income attributable to owners of parent

1,882,073

4,077,721

118,994

174,105

Comprehensive income attributable to non-controllinginterests

7

(Thousands of yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income

3rd quarter endedDecember

3rd quarter endedDecember

31, 2018

31, 2019
944,554

1,067,229(1,371,168)
84,880563,400
14,358

8,787

8,895

24,523(7,653)(1,252,976)

579,000

Comprehensive income(308,421)

1,646,230

Comprehensive income attributable toComprehensive income attributable to owners of parent(360,005)

1,621,602

51,58324,627

Comprehensive income attributable to non-controllinginterests

8Consolidated statements of cash flows(Thousands of yen)

Cash flows from operating activities
Profit before income taxes

Nine months ended

Nine months ended

December 31, 2018

December 31, 2019

3,893,972

5,009,199

Depreciation
Amortization of goodwill

66,200208,619

48,026
210,515

Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for directors (and(278,916)(219,998)

other officers)
Increase (decrease) in retirement benefit liability(22,500)(42,500)

140,351

180,889

Loss (gain) on sales of shares of subsidiaries and associates
Increase (decrease) in provision for share-based remuneration–46,820

12,92524,802

Increase (decrease) in provision for share-based remuneration
for directors (and other officers)

18,332

9,375(151,103)(171,284)

Interest and dividend income
Share of loss (profit) of entities accounted for using equity
methodDecrease (increase) in trade receivables(56,184)(59,518)(943,573)

2,514,467

Decrease (increase) in investments in leases
Decrease (increase) in inventories(673,444)(394,265)(114,767)
665,130

Decrease (increase) in advance payments - trade
Decrease (increase) in other current assets(44,741)(43,647)(323,684)(71,046)

Increase (decrease) in trade payables
Increase (decrease) in advances received

1,167,504
466,155(1,431,673)
124,419

Increase (decrease) in accrued consumption taxes
Increase (decrease) in other current liabilities

51,657(225,130)(73,318)(382,447)

43,045(4,326)–(5,698)3,264,824

5,903,816

171,796(590)

276,640–

Income taxes paid

(1,488,813)(1,868,198)

Net cash provided by (used in) operating activities

1,947,217

4,312,258Payments into time deposits
Proceeds from withdrawal of time deposits(1,557,127)
980,000(1,288,137)
1,077,752

Purchase of property, plant and equipment
Purchase of intangible assets(35,076)(10,408)(23,845)(554)

Purchase of investment securities
Proceeds from sales of investment securities(1,206,636)
20,121(1,010,476)–

Proceeds from redemption of securities
Proceeds from sales of shares of subsidiaries and associates

1,200,000
30,000–76,000

Increase (decrease) in provision for loss on order received
Other, net
SubtotalInterest and dividends received
Interest paid

Cash flows from investing activities

Other, net
Net cash provided by (used in) investing activities

98,055(4,356)(571,071)(1,173,617)

(Thousands of yen)

Cash flows from financing activities
Payments from changes in ownership interests in subsidiaries

Nine months ended

Nine months ended

December 31, 2018

December 31, 2019–

(134,190)

that do not result in change in scope of consolidation
Repayments of short-term borrowings(75,000)–

Dividends paid
Dividends paid to non-controlling interests(870,912)(64,516)(1,088,734)(125,862)–(331)(1,010,429)(1,349,118)(1,089)11,327

Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

364,627

1,800,850

Cash and cash equivalents at beginning of period

12,723,527

15,676,249

Cash and cash equivalents at end of period

13,088,155

17,477,100

10