Financial Results for the Second Quarter Ended April 30, 2018
[Japan GAAP] (Consolidated)
Date:

June 1, 2018

Company Name and Code:

Tomoe Engineering Co., Ltd. and Subsidiaries - 6309
(URL: http://www.tomo-e.co.jp/index_e.html)

Stock exchange listing:

1st Section, Tokyo Stock Exchange

Head Office:5-15, Kitashinagawa 5-chome, Shinagawa-ku, Tokyo, Japan

President:

Hitoshi Yamamoto

Investor Relations Contacts:

Toshiaki Yakura, Director, General Manager of Accounting Division, Tel: (03) 3442-5127

Date to report Quarterly Consolidated Financial Statement: June 11, 2018
Date for Dividend Payment:

July 4, 2018

Preparation of Supplementary Explanatory Materials for Quarterly Operating Results: Yes
Briefing Session for Quarterly Operating Results: Yes (for institutional investors)* Any fractional sums less than one million (or one thousand) yen are disregarded
1. Consolidated Financial Data for the Second Quarter Ended April 30, 2018
(1) Results of Operation (Consolidated)

Quarter Ended April 30, 2018
Quarter Ended April 30, 2017

(Percent: Change from the same quarter of the previous year)
Net Sales
Operating Income
Ordinary Income
Millions ofMillions ofMillions ofYenPercent
Yen
Percent
Yen
Percent
20,923
6.8
1,319
23.6
1,346
28.6
19,599
-1.3
1,067
16.2
1,046
32.6

Quarter Ended April 30, 2018
Quarter Ended April 30, 2017

Net Income Attributable toOwners of the Parent
Millions ofYen
Percent
889
33.1
668
32.1

Net Income per Share

Fully Diluted Quarterly
Net Income per Share

Yen
89.14
66.98

Yen-(Note) Comprehensive income
Second Quarter ended April 30, 2018: 930 million yen (0.7%)

Second Quarter ended April 30, 2017: 924 million yen (245.2%)(2) Financial Condition (Consolidated)

Quarter Ended April 30, 2018Year Ended October 31, 2017

Total Assets (A)(Millions of Yen)
37,66336,580Net Assets (B)(Millions of Yen)
27,71427,008Net Assets Ratio(B) / (A) (Percent)
73.6
73.8

(Reference) Net assets
Second Quarter ended April 30, 2018: 27,714 million yen

Year Ended October 31, 2017: 27,008 million yen

2. Dividend Status(Record Date)
Year Ended October 31, 2017
Year Ending October 31, 2018Year Ending October 31, 2018 (Prospect)FirstQuarter-Interim
Term
22.50
22.50

Annual Dividend (Yen)
ThirdEnd ofQuarter
Fiscal Year
22.50

(Note) Revisions since the most recently released dividend projection: None-22.50

Annual45.00
45.00

3. Forecast for Earnings for the Year Ending October 31, 2018 (Consolidated)(Percent change from the previous Full Business Year)Net Sales
Operating Income
Ordinary Income(Millions of Yen) (Percent) (Millions of Yen) (Percent) (Millions of Yen) (Percent)
Full Business Year
43,000
4.6
2,190
-0.4
2,200-0.9
Net Income Attributable to Net Income per ShareOwners of the Parent(Millions of Yen) (Percent)
Yen
Full Business Year
1,490-0.9
149.32(Note) Revisions since the most recently released dividend projection: NoneNotes(1) Significant changes in subsidiaries during this period (changes in specific subsidiaries involving changes in thescope of consolidation): None
Number of new subsidiaries: __(Company names):
Number of eliminated subsidiaries: __(Company names):(2) Adoption of simplified accounting method and the specific accounting method: None
(3) Changes of the principles, procedures, and representation of the accounting policies
1) Change due to revision of accounting standard: None
2) Other changes than the above 1): None
3) Change in accounting estimates: None
4) Retrospective restatements: None
(4) Number of outstanding shares (Common stock)1) Number of outstanding shares as of quarter-end and year-end (including treasury stocks)
At April 30, 2018: 10,533,200 shares

At October 31, 2017: 10,533,200 shares

2) Number of treasury stocks as of quarter-end and year-end
At April 30, 2018: 554,817 shares

At October 31, 2017: 554,817 shares

3) Number of average shares (accumulated quarterly total)
At April 30, 2018: 9,978,383 shares

At April 30, 2017: 9,978,455 shares*The quarterly earnings report is exempt from the quarterly review by certified public accountant or audit firm.
*Explanations for appropriate use of the earnings forecast and other special instructions
The forward-looking statements such as a forecast of our financial results described herein are based on theinformation currently available to us and certain assumptions that we believe are reasonable. Actual results could
differ materially due to various factors.
Please refer to the Financial Results for the Quarter (Attachments) on page 3, (3) [Analysis of Future Forecast onConsolidated Earnings Forecast] of 1. [Qualitative Information on Quarterly Consolidated Operating Results] for theoperating results forecast.

Table of Contents (Supporting Data)

1. Qualitative Information on Quarterly Consolidated Operating Results....................................................2(1) Analysis of Operating Results................................................................................................................................2(2) Analysis of Financial Condition..............................................................................................................................3(3) Analysis of Future Forecast on Quarterly Consolidated Earnings Forecast.......................................................3
2. Quarterly Consolidated Financial Statement and Notes.................................................................................................4(1) Quarterly Consolidated Balance Sheet. ................................................................................................4(2) Quarterly Consolidated Statements of Income & Quarterly Consolidated Statements of Comprehensive
Income......................................................................................................................................6Quarterly Consolidated Statements of Income.....................................................................................................6Quarterly Consolidated Statements of Comprehensive Income.........................................................................7(3) Quarterly Consolidated Statements of Cash Flows………………………………………………..8(4) Notes on Quarterly Consolidated Financial Statements……………………………………………………..10(Note for premise of going concern)……………………………………………………………...10(Notes for significant changes in shareholder’s equity)…………………………………………...10(Segment information) ………………………………………………………………………………...101

1. Qualitative Information on Quarterly Consolidated Operating Results(1) Analysis of Operating Results
During the consolidated second quarter under review, Japan’s economy initially grew steadily, and yet eventually
was on a decelerating trend driven by a slump in the growth of exports and cutbacks in personal consumption andcapital investment. Overseas economies remained firm as a whole, in the context of an ongoing expansion of theUS economy, the gradual recovery of European economies, and the underlying strength of the Asian economies likeChina. However, it will be necessary to monitor factors such as the stability of newly developing countries’
currencies, the price of crude oil, and the spat between the U.S. and China over trade.
Given these circumstances, net sales for the Tomoe Engineering Group for the consolidated second quarter
increased 6.8% from the same period last year to 20,923 million yen because of increasing sales in both theMachinery & Equipment Business and Chemical Products Business. From an earnings aspect, operating
income was 1,319 million yen, 23.6% up from the same period last year because of higher income in bothBusinesses, while ordinary income came to 1,346 million yen, 28.6% up from the same period last year because ofappropriation of foreign exchange gains. Net income attributable to owners of the parent was shifted to 889 millionyen, 33.1% up from the same period last year.
Operating results by segment were as follows.
(Machinery & Equipment Business)
In the Machinery & Equipment Business, net sales of components and repair services for domestic public sector
demand, net sales of machinery, equipment and works for domestic private sector demand, and net sales ofequipment, works, components and repair services for overseas remained steady. As a result, net sales forconsolidated second quarter year-to-date period were 5,223 million yen, 8.6% up from the same period last year.
With respect to earnings, operating income was 355 million yen, 37.6% up from the same period of the prior year,
mainly because of improved profitability in sales of machinery, and profit-increasing effects in sales of equipment,
works, components and repair services for domestic public sector demand.
(Chemical Products Business)
In the Chemical Products Business, net sales of materials for motor vehicles, housing and construction applicationsin the industrial materials sector, materials for semiconductor fabrication equipment in the advanced materials sector,
transport materials for semiconductor manufacturing applications in the electronics materials sector, and net sales ofresin based on Hong Kong and the Shenzhen plastic compounding business were robust.
As a result, net sales for consolidated second quarter year-to-date period were 15,700 million yen, 6.2% up from thesame period last year.
With respect to earnings, operating income was driven by the growth in net sales for products in the industrial
materials sector which have comparatively high margins, the electronics materials sector and the advanced materials
sector, and amounted to 963 million yen, 19.2% up from the same period one year earlier.

2(2) Analysis of Financial Condition[1] Assets, Liabilities, and Net Assets
Total assets as of the end of the consolidated second quarter under review were 37,663 million yen, up 3.0% or
1,082 million yen from the end of the previous consolidated fiscal year. This mainly reflected a reduction of 932
million yen in notes and accounts receivable–trade, an increase of 1,323 million yen in electronically recordedmonetary claims, and an increase of 470 million yen in merchandise and finished goods.
Liabilities were 9,948 million yen, up 3.9% or 376 million yen from the end of the previous consolidated fiscal year,
mainly because of a decrease of 238 million yen in provision for Bonuses, an increase of 443 million yen inelectronically recorded monetary debt, and an increase of 162 million yen in advances received.
Net assets stood at 27,714 million yen, 705 million yen or 2.6% up from the end of the previous consolidated fiscalyear. This mainly reflected an increase in retained earnings recorded under quarterly net income attributable toowners of the parent.
As a result of the above changes, the equity ratio at the end of the consolidated second quarter under reviewdecreased by 0.2 point compared with the end of the previous consolidated fiscal year to 73.6%.
[2] Cash Flow Status
Cash and cash equivalents as of the end of the consolidated second quarter under review decreased by 2,104
million yen to 5,788 million yen from the end of the previous consolidated fiscal year. The status of eachconsolidated cash flow and their factors during the second quarter are as follows:(Net Cash Provided by (Used in) Operating Activities)
Net cash provided in operating activities was 294 million yen (decreased in cash flow provided by 135 million yen
from the same consolidated quarter of the previous year). Income before income taxes was 1,346 million yen, andnotes and accounts payable-trade increased by 339 million yen, advances received increased by 163 million yen,inventory increased by 852 million yen, accounts receivable-trade increased by 417 million yen, and payment ofincome taxes was 392 million yen.
(Net Cash Provided by (Used in) Investing Activities)
Net cash used in investing activities was 2,125 million yen (increase in cash flow used by 96 million yen from thesame consolidated quarter of the previous year), mainly for the disbursements to time deposits of 2,000 million yen,and purchase of property, plant and equipment of 95 million yen.
(Net Cash Provided by (Used in) Financing Activities)
Net cash used in financing activities was 224 million yen (the same amount as the consolidated quarter of theprevious year) for the payment of cash dividends of 224 million yen.
(3) Analysis of Future Forecast on Quarterly Consolidated Earnings Forecast
There are no revisions to the consolidated earnings forecast figures for the fiscal year ending October 31, 2018 thatwere announced in the “Notice on changes in earnings forecast” released on May 29, 2018.

3

2. Quarterly Consolidated Financial Statement and Notes(1) Quarterly Consolidated Balance Sheets (Second Quarter)(Thousands of Yen)
End of Previous YearEnd of Second Quarter(October. 31, 2017)(April 30, 2018)

AssetsCurrent Assets
Cash and Deposits

7,893,336

7,788,551

Notes and Accounts Receivable-Trade12,423,898

11,491,173

Electronically Recorded Monetary Claims

1,823,085

3,146,343

Merchandise and Finished Goods3,045,330

3,516,257

Work in Process

1,121,215

1,266,900

Raw Materials and Supplies

626,777825,957

Deferred Tax Assets

551,335

499,069

Others169,602225,293-5,793-3,27927,648,788

28,756,266

Allowance for Doubtful Accounts
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment

4,447,596

4,446,846

Accumulated Depreciation-1,714,451-1,765,933

Buildings and Structures, Net

2,733,144

2,680,912

Machinery, Equipment and Vehicles

3,753,847

3,740,852-3,339,171-3,322,778

414,676

418,073

1,931,034

1,930,610－

14,740999,146

973,544-914,964-892,188

84,181

81,355

5,163,038

5,125,692

186,343

148,191

Investment Securities

1,520,735

1,560,981

Guarantee Deposits

293,537

293,951

1,693,578

1,706,592

Others101,325

94,992

Allowance for Doubtful Accounts-26,386-23,425

Total Investments and Other Assets

3,582,791

3,633,091

Total Noncurrent Assets

8,932,172

8,906,976

Total Assets

36,580,961

37,663,242

Buildings and Structures

Accumulated Depreciation
Machinery, Equipment and Vehicles, NetLand
Construction in progress
Others
Accumulated Depreciation
Others, Net
Total Property, Plant and Equipment
Intangible Assets
Investments and Other Assets

Net Defined Benefit Assets4

(Thousands of Yen)
End of Previous YearEnd of Second Quarter(October. 31, 2017)(April 30, 2018)

Liabilities and Net Assets
Liabilities
Current Liabilities
Notes and Accounts Payable-Trade

4,090,419

3,945,074

Electronically Recorded Monetary Debt

1,665,615

2,109,302

Accounts Payable-Others

520,046

562,923

Income Taxes Payable

437,430

455,852

Advances Received

57,481

220,171

Provision for Bonuses

982,841

744,778

Provision for Directors' Bonuses

64,67830,420Allowance for Product Warranty

185,258

164,152

Others

189,552

328,522

8,193,325

8,561,198

Noncurrent Liabilities
Provision for Directors' Retirement Benefits

5,460

5,460

Net Defined Benefit Liabilities

57,49859,4061,315,959

1,322,551

Total Noncurrent Liabilities

1,378,918

1,387,417

Total Liabilities

9,572,243

9,948,615

Capital Stock

1,061,210

1,061,210

Capital Surplus

1,483,410

1,483,410

Retained Earnings

23,889,646

24,554,599-363,876-363,876

Total Shareholders’ Equity26,070,389

26,735,343

Accumulated Other Comprehensive Income
Valuation Difference on Available-for-Sale
Securities
Deferred Gains or Losses on Hedges

551,039

571,681

2,508

3,292

Foreign Currency Translation Adjustment

214,564

199,973

Total Adjustment on Net Defined Benefit

170,216

204,337

Total Accumulated Other Comprehensive Income

938,328

979,283

Total Net Assets

27,008,718

27,714,627

Total Liabilities and Net Assets

36,580,961

37,663,242

Total Current Liabilities

Deferred Tax Liabilities

Net Assets
Shareholders’ Equity

Treasury Stock5(2) Quarterly Consolidated Statements of Income & Quarterly Consolidated Statements of Comprehensive
IncomeQuarterly Consolidated Statements of Income (Second Quarter)(Thousands of Yen)
Second Quarter Ended
April 30, 2017
19,599,063

Second Quarter Ended
April 30, 2018
20,923,688

15,286,201

16,246,088

4,312,862

4,677,600

3,245,634

3,358,185

1,067,227

1,319,414

Interest Income

712

958

Dividends Income

8,875

11,307

Rent Income

3,415

3,440

－18,794

7,369

18,506

20,37353,009Interest Expenses

9,033

13,497

Commission Paid

7,487

7,487

Sales Discount2,9672,854

Foreign Exchange Losses

16,358－Others

4,808

2,326

Total Non-Operating Expenses

40,655

26,166

Ordinary Income

1,046,945

1,346,257

1,046,945

1,346,257

Income Taxes-Current

341,679

422,926

Income Taxes-Deferred

36,90133,864

Total Income Taxes

378,581456,790

Net Income or Net Loss (-)

668,363

889,467

Net Income or Net Loss (-)

668,363

889,467

Net Sales
Cost of Sales
Gross Profit
Selling, General and Administrative Expenses
Operating Income
Non-Operating Income

Foreign Exchange GainOthers
Total Non-Operating Income
Non-Operating Expenses

Income before Income Taxes and Minority Interests

Attributable to Owners of the Parent

6Quarterly Consolidated Statements of Comprehensive Income (Second Quarter)(Thousands of Yen)
Second Quarter Ended

Second Quarter Ended

April 30, 2017
668,363

April 30, 2018
889,467

Valuation Difference on Available-for-sale Securities

115,496

20,642

Deferred Gains or Losses (-) on Hedges

18,496784

Foreign Currency Translation Adjustment

78,480-14,591

Net Defined Benefit

43,42034,120Total Other Comprehensive Income

255,894

40,955924,258

930,422924,258

930,422Net Income
Other Comprehensive Income

Comprehensive Income(Breakdown)Comprehensive Income Attributable to Owners of theParent7

(3) Quarterly Consolidated Statements of Cash Flows(Thousands of Yen)
Second Quarter Ended

Second Quarter Ended

April 30, 2017

April 30, 2018

Net Cash Provided by (Used in) Operating Activities
Income before Income Taxes

1,046,945

1,346,257

Depreciation and Amortization

210,754

193,508

Increase (Decrease) in Provision for Bonuses(142,729)(237,479)

Increase (Decrease) in Provision for Directors' Bonuses(21,504)(34,258)

Increase (Decrease) in Allowance for Product Warranty

15,006(21,106)

Increase (Decrease) in Net Defined Benefit Liability(1,867)

1,907

Decrease (Increase ) in Net Defined Benefit Asset(10,493)

2,045

176

(5,464)

Interests and Dividends Income(9,587)(12,266)

Interest Expenses

9,033

13,497

Foreign Exchange Losses (Gains)

26,74957,787

Decrease (Increase) in Notes and Accounts

260,966(417,848)

Decrease (Increase) in Inventories(697,651)(852,828)

Increase (Decrease) in Notes and Accounts Payable-Trade(34,260)

339,322

Increase (Decrease) in Accounts Payable-Others(32,506)

38,760

Increase (Decrease) in Advances Received

327,596

163,205

Others, Net

99,772112,953

1,046,400

687,993

Interests and Dividends Income Received

9,486

12,080Interest Expenses Paid(9,040)(13,504)

Income Taxes Returned (Paid)(616,439)(392,121)Net Cash Provided by (Used in) Operating Activities

430,406

294,446

Increase (Decrease) in Allowance for Doubtful Accounts

Receivable-Trade

Sub Total8

(Thousands of Yen)
Second Quarter Ended

Second Quarter Ended

April 30, 2017

April 30, 2018

Net Cash Provided by (Used in) Investment Activities(1,700,000)(2,000,000)(119,629)(95,417)

900-

Purchase of Intangible Fixed Assets-(19,493)

Purchase of Investment Securities(8,745)(10,018)

Payments of Loans Receivable(660)(1,390)

Collection of Loans Receivable

750

2,110

Guarantee Deposits (Increase)(200,524)(2,149)(1,754)542(2,029,663)(2,125,817)

(285)

-

Cash Dividends Paid

(224,516)(224,513)

Net Cash Provided by (Used in) Financing Activities(224,802)(224,513)

72,714(48,900)

Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period(1,751,345)(2,104,785)

8,056,223

7,893,336

Cash and Cash Equivalents at End of This Quarter

6,304,877

5,788,551

Disbursement to Time Deposits
Purchase of Property, Plant and Equipment
Proceeds from Sales of Property, Plant and Equipment

Others, Net
Net Cash Provided by (Used in) Investment Activities
Net Cash Provided by (Used in) Financing Activities
Purchase of Treasury Stock

Cash and Cash Equivalents
Effect of Exchange Rate Change on Cash and CashEquivalents

9(4) Notes on Quarterly Consolidated Financial Statements(Note for premise of going concern)
There are no pertinent matters to report.
(Notes for significant changes in shareholder’s equity)
There are no pertinent matters to report.
(Segment Information, etc.)
Second Quarter Ended April 30, 2017
Information Pertaining to the Amount of Net Sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferred
Total
Segment Profit

Machinery & Equipment
Business

Chemical Products
Business

4,810,117

14,788,946

19,599,063

19,599,063----4,810,117

14,788,946

19,599,063

19,599,063

258,686

808,541

1,067,227

1,067,227

Total

Grand Total(Note) The total amount of segment profit is identical to the operating income reported on the Quarterly Consolidated Statements of Income.

Second Quarter Ended April 30, 2018
Information Pertaining to the Amount of Net Sales or Net Loss of Each Reporting Segment(Thousands of Yen)
Reported Segment

Net Sales
Net Sales to UnaffiliatedCustomers
Internal Net Sales among
Segments or AmountTransferredTotal
Segment Profit

Machinery & Equipment
Business

Chemical Products
Business

5,223,166

15,700,521

20,923,688

20,923,688----

5,223,166

15,700,521

20,923,688

20,923,688

355,924

963,489

1,319,414

1,319,414

Total

Grand Total(Note) The total amount of segment profit is identical to the operating income reported on the Quarterly Consolidated Statements of Income.

10