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Showa Denko (SDK) Submits Annual Securities Report and Prior-year Amendments
TOKYO, Apr 25, 2017 - (JCN Newswire) - Showa Denko ("SDK"; TSE:4004) today submitted its annual securities report for the 108th business term and amended prior-year annual securities reports to Kanto Local Finance Bureau. This is in line with the bureau's extension of deadline to May 1, 2017 as described in our news release of March 29, 2017 entitled "SDK Gains Approval for Extension of Annual Securities Report Deadline." Furthermore, SDK today disclosed its financial statements for 2016 and amended prior-year financial statements.
1. Reasons for amendments
Shoko Co., Ltd. (Shoko), a consolidated subsidiary of SDK, issued a news release on April 17, 2017 about its receipt of a report from Special Examination Committee concerning transactions between BE International Corporation (BE, a subsidiary of Shoko) and its specific customer. As disclosed in the news release, the committee found no one among officers/employees of Shoko or BE who had the perception that the subject of transactions had no substance. In actuality, however, there was only circulation of funds.
As a result, Shoko judged that these transactions should not be treated as ordinary commercial transactions involving the recording of sales, and amended relevant documents retroactive to fiscal 2014. SDK accordingly amended its relevant documents retroactive to fiscal 2014.
Furthermore, some of SDK's overseas consolidated subsidiaries had fixed-term deposits (more than three months). In this connection, errors were found regarding the title of accounts in our consolidated cash flow statements (deposit and refund by cash and cash equivalents as well as fixed-term deposits). SDK therefore made amendments retroactive to fiscal 2012, including amendments skipped before from the viewpoint of materiality.
2. Changes in profit/loss and cash flows due to the amendments
The influence of the amendments on the performance in respective years is mainly as follows:
(1) Influence of amendments on fiscal 2014 (full-year) performance
Net sales decrease 3,794 million yen due mainly to the cancellation of part of BE's net sales. Due to the cancellation of BE's net sales and provision of allowance for doubtful accounts, operating income and ordinary income decrease 363 million yen and 371 million yen, respectively. Net income decreases 571 million yen due partly to the recording of loss on impairment of goodwill (related to the acquisition of BE and recognized at the beginning of the term) as well as relevant influence on minority interests.
(2) Influence of amendments on performance of the second quarter, 2015 and fiscal 2015 (full-year)
In the second quarter, net sales decrease 2,744 million yen due mainly to the cancellation of part of BE's net sales, and operating income decreases 167 million yen. However, as a result of the improvement in non-operating income due to the amendment to gain/loss on equity-method investment, ordinary income increases 156 million yen and net income increases 275 million yen.
For full-year, net sales decrease 5,226 million yen due to similar reasons. Due partly to the provision of allowance for doubtful accounts, operating income and ordinary income decrease 164 million yen and 175 million yen, respectively. Net income decreases 48 million yen due partly to relevant influence on minority interests.
(3) Influence of amendments on performance of the second and third quarters, 2016
In the second quarter, net sales decrease 2,908 million yen due mainly to the cancellation of part of BE's net sales. Meanwhile, operating income increases 28 million yen due to reversal of allowance for doubtful accounts (following the decrease in the amount of accounts receivable regarding BE's specific customer). Ordinary income and net income attributable to owners of the parent increase 733 million yen and 739 million yen, respectively, due to the improvement in non-operating income following the retroactive amendment to the change in functional currency at overseas subsidiaries.
In the third quarter, net sales decrease 4,452 million yen due to similar reasons. Operating income increases 45 million yen. Ordinary income increases 33 million yen due to diminishing influence of the change in functional currency. Net income attributable to owners of the parent increases 45 million yen.
In addition, we cancelled sales concerning processing-on-commission transactions with articles supplied for compensation, from 2012 to the third quarter of 2015, due to double recording. This matter has no influence on our profit-and-loss account.
Furthermore, errors were found regarding the title of accounts in our consolidated cash flow statements (deposit and refund by cash and cash equivalents as well as fixed-term deposits). We therefore made amendments retroactive to fiscal 2012. We also amended the method of describing cash flows concerning the acquisition of new hydroelectric power stations based on the transaction of sale & buy-back on installment basis. We accordingly amended cash flow statements for the period from 2012 to the second quarter of 2016.
3. Annual securities reports and quarterly reports amended
Quarterly report: the second quarter of the 104th business term (Apr. 1-June 30, 2012)
Annual securities report: the 104th business term (Jan. 1-Dec. 31, 2012)
Quarterly report: the second quarter of the 105th business term (Apr. 1-June 30, 2013)
Annual securities report: the 105th business term (Jan. 1-Dec. 31, 2013)
Quarterly report: the first quarter of the 106th business term (Jan. 1-Mar. 31, 2014)
Quarterly report: the second quarter of the 106th business term (Apr. 1-June 30, 2014)
Quarterly report: the third quarter of the 106th business term (July 1-Sept. 30, 2014)
Annual securities report: the 106th business term (Jan. 1-Dec. 31, 2014)
Quarterly report: the first quarter of the 107th business term (Jan. 1-Mar. 31, 2015)
Quarterly report: the second quarter of the 107th business term (Apr. 1-June 30, 2015)
Quarterly report: the third quarter of the 107th business term (July 1-Sept. 30, 2015)
Annual securities report: the 107th business term (Jan. 1-Dec. 31, 2015)
Quarterly report: the first quarter of the 108th business term (Jan. 1-Mar. 31, 2016)
Quarterly report: the second quarter of the 108th business term (Apr. 1-June 30, 2016)
Quarterly report: the third quarter of the 108th business term (July 1-Sept. 30, 2016)
4. Financial statements and quarterly financial statements amended (Japanese standard; consolidated)
Fiscal 2012 the second quarter (Jan. 1-June 30, 2012)
Fiscal 2012 full-year (Jan. 1-Dec. 31, 2012)
Fiscal 2013 the second quarter (Jan. 1-June. 30, 2013)
Fiscal 2013 full-year (Jan. 1-Dec. 31, 2013)
Fiscal 2014 the first quarter (Jan. 1-Mar. 31, 2014)
Fiscal 2014 the second quarter (Jan. 1-June 30, 2014)
Fiscal 2014 the third quarter (Jan. 1-Sept. 30, 2014)
Fiscal 2014 full-year (Jan. 1-Dec. 31, 2014)
Fiscal 2015 the first quarter (Jan. 1-Mar. 31, 2015)
Fiscal 2015 the second quarter (Jan. 1-June 30, 2015)
Fiscal 2015 the third quarter (Jan. 1-Sept. 30, 2015)
Fiscal 2015 full-year (Jan. 1-Dec. 31, 2015)
Fiscal 2016 the first quarter (Jan. 1-Mar. 31, 2016)
Fiscal 2016 the second quarter (Jan. 1-June 30, 2016)
Fiscal 2016 the third quarter (Jan. 1-Sept. 30, 2016)
5. Outline of amendments
The following tables show the main contents of amendments in and after 2012:
www.sdk.co.jp/assets/files/english/news/2017/20170425_sdknewsrelease1_e.pdf
Contact:IR Office
Phone: 81-3-5470-3323
Source: Showa Denko K.K.
Sectors: Chemicals, Spec.Chem
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