SANIX INCORPORATED
Summary of Consolidated Financial Statements
For the First Half Ended September 30, 2019
[Japanese Standards]

The financial figures in this document are based on Japanese Accounting Standards and accompanying laws. Amounts arerounded off to 1 decimal place. This document is an English translation of the Japanese-language original.

Consolidated Financial Statements for the First Half ended September 30, 2019
SANIX INCORPORATED
Stock Listed:Tokyo Stock Exchange First Section, Fukuoka Stock Exchange

Code No;

4651

URL:

https://sanix.jp

President and CEO:

Hiroshi Munemasa

Contact:

Kozo Inoue, Director, Management Corporate Officer,
General Manager of Corporate Planning Division, Administration Division andManagement & Planning Division

1. Business Results – Operating results for the First Half ended September 30, 2019
(April 1, 2019 to September 30, 2019)(1) Consolidated Operating Results(In Millions of Yen)First Half
From April 1 to September 30
FY2019%change

FY2018%change

Net Sales······························································

24,5380.4%

24,447

1.2%

Operating Income ··················································

1,551

125.4%

688

396.6%

Ordinary Income ····················································

1,429

107.4%

688－

Net Income ···························································

1,140

487.2%

194－

Net Income per Share (¥) ········································¥23.85

－

¥4.06

－

Net Income per Share, Diluted(¥)······························

－

－

－

－

(Note) Comprehensive Income ································

1,084

－

173

－

(2) Consolidated Financial Position(In Millions of Yen)
As of September 30

As of March 31

FY2019FY2018

Total Assets···························································

30,10831,009Net Assets ····························································

5,278

4,193

Shareholders’ Equity Ratio (%) ·······························

17.4%

13.4%

Net assets per share(¥)···········································¥109.84¥87.08(Reference) Equity Capital ·······································

5,250

4,162

2. Dividends
End of Quarterly Period
1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

0.00

0.00

0.00

0.00

0.00

0.00

Annual(Dividends per Share)
FY2018 ended March 31, 2019 (¥) ···························

0.00

0.00

FY2019 ended March 31, 2020 (¥) ···························

0.00

0.00

FY2019 ended March 31, 2020(¥) (Forecast) ·············(Note) Revision from the most recently announced dividend forecast: None

3. Forecasts for Consolidated Business Results (April 1, 2019 to March 31, 2020)(In Millions of Yen)
Fiscal Year 2018
Full Year%change

Net Sales······························································

50,131(1.2%)

Operating Income ··················································

2,248

83.6%

Ordinary Income ····················································

2,079

75.8%

Net Income ···························································

1,579

557.7％Net Income per Share (¥) ········································¥33.04(Note) Revision from the most recently announced forecast of consolidated business results: Exist* Notes(1) Changes in significant subsidiaries during the period(Change in scope of consolidations resulting from change in subsidiaries): None
Number of subsidiaries newly consolidated－
Name of subsidiaries newly consolidated－
Number of subsidiaries excluded from consolidation－
Name of subsidiaries excluded from consolidation－(2) Adoption of special quarterly accounting methods: None
(3) Changes in accounting policies and accounting estimates retrospective restatementⅰ) Changes in accounting policies based on revisions of accounting standard: Noneⅱ) Changes in accounting policies other than ones based on revisions of accounting standard: Noneⅲ) Changes in accounting estimates: Noneⅳ) Retrospective restatement: None
(4) Number of Issued and Outstanding Shares (Common Stock)(Shares)
End of term
September 30,

March 31,

2019

2018

Number of issued and outstanding shares ,end of period (including treasury stock)48,919,396

48,919,396

Number of treasury stock ,end of period··································································

1,114,253

1,114,173

Average number of shares during the fiscal term ······················································

47,805,212*

47,805,473* September 30, 2018

* This summary of financial statements is exempt from audit procedure required by Financial instruments and Exchange Act.
* Note to ensure appropriate use of forecasts:
Forecasts in this document are based on assumptions, prospects and plans as of the date of this document. Actual results may
differ significantly from these forecasts, due to various factors affecting the Company’s business performance, such as change ineconomical conditions. For details of these assumptions, prospects and plans, and for notes appropriate use of forecasts for thebusiness results, please see page 2 of the Attachment.

Index of the attachment
1. Qualitative Information for the First Half ended September 30, 2019 ...................
(1) Information of Consolidated Business Results .............................................................................
(2) Information of Consolidated Financial Position ............................................................................

224(3) Information on the Future Outlook,
Including the Forecasts of Consolidated Business Results ........................................................

5

2. Quarterly Consolidated Financial Statements and the Primary Notes for theFirst Half ended September 30, 2019 ........................................................................................

6(1) Quarterly Consolidated Balance Sheets ........................................................................................

6(2) Quarterly Consolidated Statements of Income and Comprehensive Income ..........................

8

Quarterly Consolidated Statements of Income
for the first half of the fiscal year ending March 31,2020 ........................................................

8

Quarterly Consolidated Statements of Comprehensive Income
for the first half of the fiscal year ending March 31,2020 ........................................................

9(3) Quarterly Consolidated Statements of Cash Flows .....................................................................

10(4) Notes regarding the Quarterly Consolidated Financial Statements ...........................................

12

Note to the Assumption of a Going Concern ...........................................................................

12

Notes to Remarkable Changes in the amount of Shareholders’ Equity ..............................

12

Segment Information, etc. ........................................................................................................

13

3. Others ....................................................................................................................................................

15

Consolidated Net Sales by Division ................................................................................................

15

2

1. Qualitative Information for the First Half ended September 30, 2019(1) Information of Consolidated Business Results
In the first half of the fiscal year ending March 31, 2020 (April 1, 2019 to September 30,2019), the Japanese economy continued to follow a modest recovery path with a steady
improvement in employment and income conditions and consumer spending showing an
upward trend on the back of favorable corporate earnings, despite the effect of a slowdown inoverseas economies.
Under these circumstances, the Group made an organizational change, in which it set up
the Energy Business Division and established a structure consisting of five business divisions
under the Medium-Term Management Plan (FY2019-FY2021), which puts priority on
establishing a stable profit structure based on existing businesses and at the same time aims
to achieve further growth by developing new businesses and services.
Sales increased in the HS Division and in the ES Division as a result of a review of theallocation of management resources, including human resources, to expand the businesssize in the previous Medium-Term Management Plan. Sales also rose in the Environment
Resources Development Business Division, reflecting the thorough acceptance inspection ofwaste plastic articles. Meanwhile, sales declined in the SE Division due to a revision of sales
prices of solar electric power systems associated with a FIT price cut. Sales also fell in the
Energy Business Division, chiefly due to a decrease in the recipients of high-voltage power
supply. As a result, the net sales of the entire Group stood at ¥24,538 million (up 0.4% year
on year).
Profit increased in the ES Division and in the Environment Resources Development
Business Division, reflecting the increase in sales. Profit also rose in the SE Division, despite
a fall in sales. This was thanks to cost reductions, particularly of materials. As a result, for theentire Group, operating income came to ¥1,551 million (up 125.4% year on year) and ordinary
income was ¥1,429 million (up 107.4% year on year). Net income attributable to owners of
the parent company stood at ¥1,140 million (up 487.2% year on year).
Consolidated results of individual divisions for the first quarter were as follows:a. SE (Solar Engineering) Division
Although the degree of decline in the solar market is gradually becoming smaller, sales
from solar electric power systems fell, due primarily to the effect of a sales price revisionassociated with the FIT price cut. As a result, net sales fell to ¥5,606 million (down 5.7% year
on year).
Despite the fall in sales, the segment posted operating income of ¥298 million (up 439.4%
year on year) primarily due to cost cutting, mainly through the transfer of staff to the HSDivision and a further decrease in the cost of materials.

3b. HS (Home Sanitation) Division
The HS Division strengthened the sales and construction systems so that the Division
would be able to make carefully crafted proposals for the maintenance of ordinary houses by
increasing personnel through transfers and recruitment for the purpose of expanding the sizeof its business. Termite extermination increased 8.7% year on year, and underfloor/ceiling
ventilation systems rose 36.3% year on year. As a result, the division’s sales rose to ¥5,884
million (up 7.1% year on year).
Operating income stood at ¥1,235 million (down 0.3% year on year) after an increase in
expenses such as labor caused by the addition of personnel was offset by sales growth.

c. ES (Establishment Sanitation) Division
The ES Division increased personnel through transfers and recruitment for the purpose of
expanding its business size and strengthened its relationships with the owners of buildings
and condominiums and partner companies, including management companies. Sales ofanti-rust equipment installation (brand name: Daelman Shock), our main product, increased
27.9% year on year, and sales of building waterproof paint repair rose 79.8% year on year.
As a consequence, the division’s net sales rose ¥1,102 million (up 21.7% year on year).
Operating income climbed to ¥137 million (up 6.8% year on year) thanks to growth in sales
that more than offset an increase in expenses such as labor due to the addition of personnel.

d. Environmental Resources Development (ERD) Division
Plastic fuel sales increased 14.6% year on year due to the thorough acceptance inspectionof waste plastic articles, despite a decrease in the volume of waste plastics received. As aresult, net sales rose to ¥8,045 million (up 10.6% year on year).
Operating income stood at ¥1,655 million (up 133.5% year on year), chiefly reflecting
thorough acceptance inspection in the waste plastic and organic wastewater recycling
businesses and a reduction in costs through the examination of costs.

e. Energy Business Division
Net sales stood at ¥5,041 million yen (down 13.1% year on year), reflecting a decline inretail sales of electric power, chiefly due to a fall in the number of high-voltage power
contracts.
An operating loss of ¥30 million (operating income of ¥253 million in the same period of theprevious fiscal year) was posted due to the significant impact of the decrease in net sales.

4(2) Information of Consolidated Financial Positiona. Information on the status of Assets, of Liabilities, and of Net Assets
Total assets at the end of the first half of the fiscal year under review amounted to ¥30,108
million, a decrease of ¥901 million from the end of the previous fiscal year. This was caused
chiefly by a fall in cash and deposits of ¥1,402 million, a decrease in notes and accounts
receivable-trade of ¥897 million, and an increase of ¥1,180 million in property, plant, andequipment.
Total liabilities stood at ¥24,829 million, a decline of ¥1,985 million from the end of theprevious fiscal year. This was attributable largely to decreases in short-term loans payable of¥2,170 million and accounts payable-other of ¥1,273 million, which more than offset increases
in bonds payable of ¥500 million and long-term loans payable of ¥830 million. Net assets
totaled ¥5,278 million, an increase of ¥1,084 million from the end of the previous fiscal year.
The key contributions to the increase included the posting of net income attributable to theowners of the parent company of ¥1,140 million.
Consequently, the capital-to-asset ratio for the first half of the fiscal year under review cameto 17.4%, an increase from 13.4% at the end of the previous fiscal year.

b. Information on Consolidated Cash Flows
Cash and cash equivalents (hereinafter “cash”) as of September 30, 2019 totaled ¥2,982
million, a decrease of ¥1,515 million (33.7 %) from March 31, 2019 due to net cash used ininvesting activities and financing activities of ¥1,753 million and ¥523 million, respectively,
despite cash provided by operating activities of ¥819 million.
Cash flows and the reasons for changes in cash flows during the first half of the fiscal year
under review are described below.
(Net Cash Provided by Operating Activities)
Net cash provided by operating activities totaled ¥819 million (compared with net cash usedof ¥1,468 million in the same period last year). This was mainly due to a decrease in accounts
payable-other of ¥1,356, while income before income taxes of ¥1,429 million was posted andtrade receivables decreased by ¥897 million.
(Net Cash Provided by Investment Activities)
Net cash used in investing activities totaled ¥1,753 million (compared with net cash used of¥473 million in the same period of the previous year). This was mainly due to the payment of¥1,492 million for the purchase of property, plant and equipment.
(Net Cash Provided by Financing Activities)
Net cash used in financing activities amounted to ¥523 million (compared with net cash
provided of ¥642 million in the same period of the previous year). The major causes included
an increase of ¥819 million in net long-term loans payable and proceeds from the issuance ofbonds of ¥500 million, which were more than offset by a decrease of ¥2,170 million in net

5short-term loans payable.

(3) Information on the Future Outlook, Including the Forecasts of Consolidated BusinessResults
The Company revised the forecasts for the consolidated business results for the fiscal
year ending March 31, 2020 on November 13, 2019 as described below, taking into accountthe results for the first half of the fiscal year.
Net sales are expected to fall below the previous forecast due to a decrease in net sales inthe Energy Business Division.
Operating income, ordinary income, and net income attributable to owners of the parent
company are expected to exceed the previous forecasts thanks to the results for the first halfof the fiscal year under review, which exceeded the forecasts despite net sales falling short of
the forecast.

The forecast of Consolidated Business Results for the full fiscal year ending March 31, 2020
(From April 1, 2019 to March 31, 2020)

Previous Forecast
Revised Forecast
Changes
Rate of Change
Reference:
Results for FY2018(ended March 31,2019)(In Millions of Yen)
Net Income
Net Income
per Share/¥

Net Sales

Operating
IncomeOrdinary
Income(A)

50,900

1,910

1,810

1,370

¥28.66(B)

50,131

2,248

2,079

1,579

¥33.04

(B－A)

- 768

338

269

209

－

(％)

(-1.5)(17.7)(14.9)(15.3)－

50,719

1,224

1,182

240

¥5.02

6

2. Quarterly Consolidated Financial Statements and the Primary Notes for theFirst Half ended September 30, 2019(1) Quarterly Consolidated Balance Sheets(In Millions of Yen)

As of Mar. 31

As of Sep. 30

FY2018FY2019Assets :Current Assets :Cash and deposits

5,238

3,835

Notes and accounts receivable-trade

6,010

5,112

Merchandise and finished goods

1,019

444

Work in process-construction

122

398

Raw materials and supplies

3,546

3,610

Other

975

1,351

Allowance for doubtful accounts

(299)

(269)

16,613

14,483

Buildings and structures (net of depreciation)

1,901

1,824

Machinery, Equipment and Vehicles(net of depreciation)

1,355

1,652

Land

7,811

8,053

989

1,706

12,057

13,238262

319

Total Current Assets
Fixed Assets:
Property, Plant and Equipment :Other (net of depreciation)
Total Property, Plant and Equipment
Intangible Fixed Assets :Investments and Other Assets :

2,074

2,067

Total Fixed Assets

14,395

15,625

Total Assets

31,00930, 108

7(In Millions of Yen)

As of Mar. 31

As of Sep. 30

FY2018FY2019Liabilities :Current Liabilities :Notes and accounts payable-trade

4,188

3,664

Short-term loans payable

12,297

10,127

143

132

3,930

2,657

Accrued income taxes

462

519

Provision for bonuses

4172

Current portion of long-term loans payable
Accounts payable

12

15

Other

2,488

2,545

Total Current Liabilities

23,52919,834

-

500

210

1,040

9

9

Allowance for resource-recycling expenses

Non-Current Liabilities :Bonds payable
Long-term loans payable
Provision for directors’ retirement benefits
Provision for disposal site closing expenses
Liability related to retirement benefits

603

613

1,642

1,661

819

1,170

3,285

4,995

26,81524,82914,041

14,0411

1Retained earnings(8,357)(7,216)

Treasury stock(1,481)(1,481)

Total Shareholders’ Equity

4,204

5,345

Other
Total Non-Current Liabilities
Total Liabilities
Net Assets :Shareholders’ Equity :Capital stock
Capital surplus

Accumulated other comprehensive income :Valuation difference on available-for-sale securities

60

49

Foreign currency translation adjustment

(17)

(101)

Adjustment for retirement benefits (cumulative)

(85

(42)

Total Accumulated other comprehensive income

(42)

(94)

31

27

Non-controlling Interests
Total Net Assets

4,193

5,278

Total Liabilities and Assets

31,00930,1088(2) Quarterly Consolidated Statements of Income and Comprehensive Income(Quarterly Consolidated Statements of Income)(for the first half of the fiscal year ending March 31, 2019)(In Millions of Yen)First Half
From April 1 to September 30
FY2019FY2018Net sales

24,447

24,538

Cost of sales

16,943

15,675Gross profit

7,503

8,863

Selling, general and administrative expenses

6,815

7,311

688

1,551

4

8

Operating income
Non-operating income :Interest income
Dividends income

1

1Land and house rent revenue

32

31

Foreign exchange gains

88

Subsidy income

02Compensation income

70

-

Other

12

20

Total non-operating income

129

72

98

101

Commision paid

11

75

Other

18

17

Total non-operating expenses

128

194

689

1,429

Loss on disaster

377-

Total extraordinary loss

377-

Income (loss) before income taxes and minority interests

312

1,429

Income taxes-current

158

296

Income taxes-deferred

(40)

(4)

Total income taxes

117

292

Net Income (loss)

194

1,137

Net Income (loss) belonging to the non-controlling shareholders

0
194

（3）
1,140

Non-operating expenses :Interest expenses

Ordinary income (loss)
Extra ordinary loss :Net income

belonging to the shareholders of the parent

company9(Quarterly Consolidated Statements of Comprehensive Income)(for the first half of the fiscal year ending March 31, 2019)(In Millions of Yen)First Half
From April 1 to September 30
FY2019FY2018Net Income

194

1,137

Other comprehensive income :Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(2)
0

(10)
-

(20)

(84)

1

42

Foreign currency translation adjustment
Adjustment for retirement benefit adjustment
Total other comprehensive income
Comprehensive net income

(21)

(52)

173

1,084

172

1,088

0

（3）

(Breakdown)Comprehensive income belonging to the shareholders of the parent
company
Comprehensive income belonging to non-controlling shareholders

10(3) Quarterly Consolidated Statements of Cash Flows(In Millions of Yen)First Half
From April 1 to September 30
FY2019FY2018Net Cash Provided by (Used in) Operating Activities
Income before income taxes and minority interests

312

1,429

Depreciation and amortization

394

431

Amortization of goodwill

56-

Increase(Decrease) in Provision for bonuses
Increase (Decrease) in allowance for disposal site closing expenses
Increase (Decrease) in allowance for resource-recycling expenses
Increase (Decrease) in allowance for disaster loss

-

167

14

9

9

3

377

-

Increase (decrease) in provision for retirement benefits

44

61

Increase (decrease) in allowance for doubtful accounts

(222)

(17)

Interest income and dividends income

(5)

(9)

Interest expenses

98

101

Increase (decrease) in notes and accounts receivable-trade

37

897

Increase (decrease) in inventories

(818)

217

Increase (decrease) in other current assets

(289)

(414)

Increase (decrease) in notes and accounts payable-trade

(969)

(454)

Accounts payable(323)(1,356)

Increase (decrease) in accrued consumption taxes

(154)

(106)

Increase (decrease) in other current liabilities

148

180

Other, net

178

64

(1,111)

1,206

5

9

SubtotalInterest and dividends income received
Interest expenses paid

(101)

(97)

Income taxes paid

(296)

(306)

36

7

(1,468)819

Payments into time deposits

(520)

(832)

Proceeds from withdrawal of time deposits

328

659

(214)

(1,492)0

1

Income taxes refund
Net cash provided by (used in) operating activities

Net Cash Provided by (Used in) Investing Activities

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Other, net

(10)

(88)

Net cash provided by (used in) investing activities(417)(1,753)742（2,170)Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable

20

928

Repayment of long-term loans payable

(65)

(109)

-

500

Repayments of finance lease obligations

(88)

(118)

Other, net

34

445

642

(523)

(7)

(58)

(1,249)(1,515)

Proceeds from issuance of bonds

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

11

Cash and cash equivalents, beginning of the period

5,083

4,497

Cash and cash equivalents, end of the quarter

3,833

2,982

12

(4) Notes regarding the Quarterly Consolidated Financial Statements(Notes to the Assumption of a Going Concern): None(Notes to Remarkable Changes in the amount of Shareholders’ Equity): None13(Segment Information, etc.)
Ⅰ The previous first half (From April 1, 2018 to September 30, 2018)ⅰ) Information concerning the Amount of Net Sales and Operating Income (loss)
by Segment(In Millions of Yen)

Segments

Elimination
or Group(note 1)

Consolidated(note 2)

SE

HS

ES

ERD

Energy

Total

5,947

5,495

905

6,294

5,804

24,447-24,447

-

-

-

(980)

-

(980)

(980)

-

5,947

5,495

905

7,275

5,804

25,427(980)

24,447

55

1,238

128

708

253

2,384

(1,696)

688

Sales:
Sales to customers
Internal sales among
segments
and transfer accounts
Total
Operating income (loss)(note 1)
Negative ¥1,696 million for adjustments of Operating income (loss) represents corporate expenses not allocatedto reportable segments. Corporate expenses are mainly general and administrative expenses note attributable toreportable segments.
(note 2)
Operating income (loss) is adjusted to operating loss of quarterly consolidated statements of income.

Ⅱ The first half (From April 1, 2019 to September 30, 2019)ⅰ) Information concerning the Amount of Net Sales and Operating Income (loss) by
Segment(In Millions of Yen)

Segments
SE

HS

ES

ERD

EnergyTotal

Elimination
or Group(note 1)

5,606

5,884

1,102

6,903

5,041

24,538----(1,142)-(1,142)(1,142)

Consolidated(note 2)

24,538

Sales:
Sales to customers
Internal sales among
segments and transfer
accounts
and transfer accounts
Total
Operating income (loss)

5,606

5,884

1,102

8,045

5,041

25,680(1,142)

24,538

298

1,235

137

1,655

(30)

3,295

(1,744)

1,551(note 1)
Negative ¥1,744 million for adjustments of Operating income (loss) represents corporate expenses not allocatedto reportable segments. Corporate expenses are mainly general and administrative expenses note attributable toreportable segments.
(note 2)
Operating income (loss) is adjusted to operating loss of quarterly consolidated statements of income.

14ii) Change in Reportable Segments
The reportable segments have been changed in association with an organizational change made on
April 1, 2019. From the first quarter under review, the Power Producer and Supplier (PPS) business,
which was included in the Environmental Resources Development (ERD) Division, and the energy
business development department, which was established on April 1, 2019, arepresented as theEnergy Business Division. The segment information for the first half of the previous fiscal year isprepared based on the reportable segments after the organizational change.

15

3. OtherConsolidated Net Sales by Division(In Millions of Yen)

From April 1 to September 30
FY2019FY2018Commercial PV system
Wholesale of PV components

Changes

5,564

5,417

(146)

288

121

(167)

94

67

(27)

5,947

5,606

(340)

1,831

1,991

160

870

1,187

316

Foundation Repairing/Home Reinforcement
System

1,110

969

(141)

OthersOthersSolar Engineering Total
Termite Eradication Service
Under-Roof/Roof Ventilation System

1,681

1,736

54

Home Sanitation Division Total

5,495

5,884

389

Anti-rust equipment installation

433

554

12

Repair of building water-woks

201

215

14

Water proofing of building

79

143

63

Others

191

188

(2)

Establishment Sanitation Division Total

905

1,102

196

4,105

4,703

598

1,518

1,644

125

925

962

37

Final disposal

377

470

93

OthersEnvironmental
Division Total :

349

264

(84)

7,275

8,045

770

5,804

5,011

(792)

Plastic fuelPower Stations
Industrial waste
Recycle)(Organic

Resources

Electricity sales
OthersEnergy Business Division Total:
Adjustment of inter-segment sales
Total Net Sales

Waste

Water

Development

-

30

30

5,804

5,041

(762)

(980)

(1,142)(161)

24,447

24,53891