Summary of Consolidated Financial Statements for the Third Quarter Fiscal 2022 (JPGAAP) January 31, 2023 Tokuyama Corporation Stock exchange listings: Tokyo 4043 (URL https://www.tokuyama.co.jp/eng/) Local Code : Representative: Hiroshi Yokota, President and Representative Director Tetsuya Nakano, General Manager, Corporate Communications & Investor Relations Dept. Contact: +81-3-5207-2552 Scheduled date of dividends payout : Preparation of supplementary quarterly explanatory materials: Yes Quarterly business results IR briefing to be held: Yes (for institutional investors and analysts) 1. Consolidated results for fiscal Third quarter ended Dec. 31, 2022 (Apr. 1, 2022 – Dec. 31, 2022)
3. Consolidated performance forecast for fiscal 2022 (April 1, 2022 - March 31, 2023)
* The Company announced the release, "Notice concerning Revision of Performance Forecast for Fiscal 2022," on Jan. 31, 2023. l *Notes (1) Changes in significant subsidiaries during this period : Yes Addition to the scope of consolidation: 1    (Company Name: STAC Co., Ltd.) Reduction from the scope of consolidation  - (Note) For more details, please refer to "2. Quarterly Consolidated Financial Statements and (4) Notes on Quarterly Consolidated Financial Statements (Changes in significant subsidiaries during this period)" on page 11 of the Accompanying Materials to this Summary of Quarterly Consolidated Financial Statement. (2) Application of accounting methods specific to the preparation of the quarterly consolidated
financial statements
: Yes (Note) For more details, please refer to "2. Quarterly Consolidated Financial Statements and (4) Notes on Quarterly Consolidated Financial Statements (Application of accounting methods specific to the preparation of the quarterly consolidated financial statements)" on page 11 of the Accompanying Materials to this Summary of Quarterly Consolidated Financial Statement. (3) Changes of accounting policies, changes in accounting estimates, and retrospective restatements
(Note) Notice on the implementation of quarterly review procedures This summary of quarterly consolidated financial statements is not subject to quarterly review procedures in line with the Financial Instruments and Exchange Act. At the point of disclosure of this summary of quarterly consolidated financial statements, the quarterly consolidated financial statements review procedures in line with the Financial Instruments and Exchange Act are underway. (Note) Cautions pertaining to appropriate use of performance forecast and other particular items (Cautions related to Forward-looking statement) The performance forecast and other forward-looking statements contained in this material have been prepared on the basis of information available at this point and certain assumptions which are judged to be rational, and may be substantially different from the actual performance because of various factors that may arise from now on. (Access to supplementary explanations on business results) The Company also provides supplementary materials "Presentation for IR Meeting" through TDnet at the same date.
Contents for Accompanying Materials

(1) Explanation concerning business results
Consolidated results for the third quarter fiscal 2022 (April 1, 2022 – December 31, 2022) are summarized as follows:

Net sales
Consolidated net sales increased 22.4%, or ¥ 47,401 million compared with the corresponding period of the previous year, to ¥ 259,010 million, largely reflecting progress made in passing along elevated fuel and raw materials prices to sales prices.
Cost of  sales
Cost of sales increased 33.0%, or ¥ 46,821 million compared with the corresponding period of the previous year, to ¥ 188,666 million. This was due mainly to a upturn in raw material and fuel costs.
SG&A expenses
SG&A expenses increased 8.6%, or ¥ 4,536 million compared with the corresponding period of the previous year, to ¥ 57,181 million mainly due to increases in logistics costs and R&D expenses.
Operating profit
Operating profit decreased 23.1%, or ¥ 3,956 million compared with the corresponding period of the previous consolidated fiscal year, to ¥ 13,161 million. This decrease in operating profit was mainly due to higher logistics, raw material, fuel, and other costs and deterioration in overseas vinyl chloride monomer market conditions. Non-operating income/expenses, Ordinary profit Non-operating income/expenses deteriorated by ¥ 395 million compared with the corresponding period of the previous consolidated fiscal year. As a result of the above, ordinary profit decreased 24.6%, or ¥ 4,351 million compared with the corresponding period of the previous consolidated fiscal year, to ¥ 13,313 million. Extraordinary income/losses, Profit before income taxes, Profit, Profit attributable to owners of parent Extraordinary income/losses deteriorated by ¥ 2,290 million compared with the corresponding period of the previous consolidated fiscal year. As a result of the above, profit before income taxes decreased 33.5%, or ¥ 6,642 million compared with the corresponding period of the previous consolidated fiscal year, to ¥ 13,170 million. Profit after deducting income taxes calculated in an appropriate way decreased 36.7%, or ¥ 4,915 million compared with the corresponding period of the previous consolidated fiscal year, to ¥ 8,471 million. Profit attributable to owners of parent decreased 36.3%, or ¥ 4,849 million compared with the corresponding period of the previous consolidated fiscal year, to ¥ 8,526 million.

Chemicals
In caustic soda, earnings rose despite higher fuel and raw materials costs. This gain reflected progress in passing these costs onto domestic sales prices and higher export prices. In Vinyl chloride monomer and vinyl chloride resin, earnings decreased owing to such factors as the upswing in raw material and fuel prices, which resulted in an increase in manufacturing costs, and deterioration in overseas vinyl chloride monomer market conditions. As a result of the above, segment net sales increased 19.2% compared with the corresponding period of the previous consolidated fiscal year, to ¥ 86,432 million and operating profit decreased 52.3% to ¥ 4,729 million. The segment reported lower earnings on higher sales.
Cement
In cement, earnings deteriorated despite domestic shipments of being in line with the corresponding period of the previous year and revision of sales prices and other factors. This downturn largely reflected manufacturing costs rising as a result of higher raw material costs. As a result of the above, segment net sales increased 14.7% compared with the corresponding period of the previous year, to ¥ 43,852 million and operating loss amounted to ¥ 2,898 million (Posted operating loss of ¥ 1,087 million in the corresponding period of the previous year).
Electronic Materials
In semiconductor-grade polycrystalline silicon, despite the upswing in manufacturing costs associated with such factors as the increase in raw material and fuel prices, earnings grew owing to a variety of factors including successful efforts to promote the revision of sales prices. In IC Chemicals, while demand for semiconductor applications were on par with the previous year, earnings decreased due to such factors as the increase in raw material and fuel prices despite efforts to promote the revision of sales prices. In fumed silica, earnings increased despite higher raw material prices, largely owing to revisions to domestic sales price and higher export prices. In thermal management materials, earnings increased on the back of firm sales volumes mainly for semiconductor manufacturing equipment. As a result of the above, segment net sales increased 25.4% compared with the corresponding period of the previous consolidated fiscal year, to ¥ 67,076 million and operating profit increased 14.7% to ¥  6,955 million. The segment reported higher earnings on higher sales.
Life Science
Dental materials earnings grew thanks to an increase in shipments to overseas. APIs and intermediates earnings increased owing mainly to a robust sales volume of generic pharmaceuticals. As a result of the above, segment net sales increased 19.1% compared with the corresponding period of the previous consolidated fiscal year, to ¥ 27,940 million and operating profit increased 39.0% to ¥ 5,696 million. The segment reported higher earnings on higher sales.
Eco Business
In ion exchange membranes, earnings grew largely owing to higher shipments. In waste gypsum board recycling, despite the steady acceptance of waste gypsum board, earnings decreased owing to a variety of factors including the increase in fuel costs. Segment net sales increased 47.0% compared with the corresponding period of the previous year, to ¥ 10,365 million and operating profit amounted to ¥ 316 million (posted operating loss of ¥ 520 million in the corresponding period of the previous year).
(2) Explanation concerning financial position
(Status of assets, liabilities and net assets) As of December 31, 2022, total assets amounted to ¥ 480,431 million, an increase of ¥ 47,221 million compared with those as of March 31, 2022. Despite the decrease of cash and deposits of ¥ 11,757 million, this increase primarily reflects the increase of raw materials and supplies, property, plant and equipment, accounts receivable - trade, merchandise and finished goods, and work in process, other current assets of ¥ 19,782 million, ¥ 10,066 million, ¥ 8,126 million, ¥ 6,781 million, and ¥ 5,954 million respectively. Total liabilities amounted to ¥ 240,329 million, up ¥ 40,036 million compared with those as of March 31, 2022. The principal factor is the increase in long-term loans borrowings and current portion of long-term loans borrowings, commercial papers, other current liabilities and notes and accounts payable – trade of ¥ 30,966 million, ¥ 5,000 million, ¥ 3,523 million and ¥ 2,376 million respectively. Net assets totaled ¥ 240,102 million, an increase of ¥ 7,184 million compared with those as of March 31, 2022. This mainly reflected the increase of ¥ 3,777 million in non-controlling interests, and the increase of ¥ 3,479 million in retained earnings primarily due to posting profit attributable.
(3) Explanation concerning information related to future prediction such as
consolidated performance forecast
Based on overseas vinyl chloride products market conditions and other factors, the Company has revised the performance forecast, announced on October 28, 2022. For further details, please see the Company's news release, "Notice concerning Revision of Performance Forecast for Fiscal 2022," dated January 31, 2023. The performance forecast has been prepared on the basis of information available at this point and certain assumptions which are judged to be rational, and may be substantially different from the actual performance because of various factors that may arise from now on.
(Going Concern Assumption) Not applicable. (Major Changes in Shareholders' Equity) Not applicable. (Changes in significant subsidiaries during this period) The newly established STAC Co., Ltd. was included in the scope of consolidation during the second quarter consolidated accounting period for the consolidated fiscal year ending March 31, 2023 . (Application of accounting methods specific to the preparation of the quarterly consolidated financial statements) (Calculation of Tax Expense) The Company rationally estimated the effective tax rate after the application of accounting policy for deferred tax, which was applied to the profit/loss before income tax for the consolidated fiscal year under review including the third quarter consolidated accounting period for the consolidated fiscal year ending March 31, 2023, and calculated the tax expense by multiplying the estimated effective tax rate to the profit/loss before income tax. However, if the application of said estimated effective tax rate reduces the rationality of the calculation of tax expense, the Company applies the effective statutory tax rate.
(Additional Information)
(Transition from the consolidated taxation system to the group tax sharing system) Tokuyama and certain domestic consolidated subsidiaries transitioned from the consolidated taxation system to the group tax sharing system effective from the first quarter of  the fiscal year ending March 31, 2023. In line with this transition, accounting treatment and disclosure of corporate and local income tax as well as tax effect accounting is in accordance with the Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System (PITF No. 42, issued on August 12, 2021). Based on the provisions outlined in Paragraph 32 (1) of PITF No. 42, the Company has deemed that there is no effect of the change in accounting policy due to the application of PITF No. 42.
Third Quarter Fiscal 2021 (April 1, 2021 –December 31, 2021) 1. Information on net sales as well as profit and loss by reportable segment *1 The "Others" segment comprises businesses other than those of the reportable segments. Specifically, the segment includes overseas sales companies, a distribution company, a real estate business, etc. *2 The segment profit (loss) adjustment amount consists mainly of basic R&D expenses that are not allocable to a specific reportable segment and the amount of inter-segment eliminations. *3 With regard to segment profit (loss), operating profit in the quarterly consolidated statement of profit has been calculated by making an adjustment to the sum total of the reportable segments' profit and the "Others" segment's profit. *4 Net sales are not presented separately from earnings denved from contracts with customers and other earnings because the amount of  other earnings is insignificant. 2. Information on impairment loss on fixed assets and goodwill by reported segment Not applicable.
1. Information on net sales as well as profit and loss by reportable segment and a breakdown of earnings *1 The "Others" segment comprises businesses other than those of the reportable segments. Specifically, the segment includes overseas sales companies, a distribution company, a real estate business, etc. *2 The segment profit (loss) adjustment amount consists mainly of basic R&D expenses that are not allocable to a specific reportable segment and the amount of inter-segment eliminations. *3 With regard to segment profit (loss), operating profit in the quarterly consolidated statement of profit has been calculated by making an adjustment to the sum total of the reportable segments' profit and the "Others" segment's profit. *4 Net sales are not presented separately from earnings derived from contracts with customers and other earnings because the amount of  other earnings is insignificant. 2. Information on amortization of goodwill and unamortized balance by reportable segment In the Others segment, the Company acquired shares of Super Nano Design Co.,Ltd so that it would become the Company's subsidiary. During the third quarter fiscal 2022 (April 1, 2022 – December 31, 2022), the amount of increase in goodwill brought by the said event was ¥249 million.