SANIX INCORPORATED
Consolidated Financial Summary

For the Fiscal Year ended March 31, 2013.

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

May 14, 2013

Consolidated Financial Statements
For the Fiscal year ended March 31, 2013
SANIX INCORPORATED
Stock Listed:Tokyo Stock Exchange First Section, Osaka Stock Exchange First Section, Fukuoka
Stock Exchange

Code No.:

4651

URL:

http://sanix.jp/index_e.htm

President and CEO:Shin-ichi Munemasa

Contact:

Kozo Inoue, General Manager, Management and Planning Division

1. Consolidated Financial Highlights for the Year ended March 31, 2013
(April 1, 2012 to March 31, 2013)(1)

Consolidated Operating Results(Millions of Yen)
Fiscal Yearbetween April 1 and March 31(2)

FY2011% change

FY2012% change

Net Sales．．．．．．．．．．．．．．．．．．．．．．．

31,454

8.5

43,366

37.9

Operating Income．．．．．．．．．．．．．．．．．

409(18.3)

1,870

356.4

Recurring Profit．．．．．．．．．．．．．．．．．．．

347(19.1)

1,788

414.1

Net Income．．．．．．．．．．．．．．．．．．．．．

13(71.8)

1,575-

Net Income per Share(￥)．．．．．．．．．．．．

¥0.29

-

¥33.01-Net Income per Share, Diluted(￥)．．．．．．

-

-

-

-

Return on Equity．．．．．．．．．．．．．．．．．．
Ratio of Recurring Profit to Net Assets．．．．
Ratio of Operating Income to Net Sales．．．
(Reference) Comprehensive income．．．．．

0.2%

-

19.8%

-

1.7%

-

7.1%

-

1.3%

-

4.3%

-

32

-

1,629

-

Consolidated Financial Position(Millions of Yen)
As of March 31

Total Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．
Net Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
Shareholders' Equity Ratio (%)．．．．．．．．．．．．．．．
Net Assets per Share (￥)．．．．．．．．．．．．．．．．．．．
Note (1) Shareholders’ equity(3)

FY2011FY2012

21,28629,196

7,134

8,837

33.4%

30.2%

148.95

184.62

Fiscal Year ended March 31, 2013

7,957million yen

Fiscal Year ended March 31, 2012

7,106 million yen

Consolidated Financial Cash Flows(Millions of Yen)
Fiscal Yearfrom April 1 to March 31

Cash Flows from Operating Activities．．．．．．．．．．．．．．
Cash Flows from Investing Activities．．．．．．．．．．．．．．．
Cash Flows from Financing Activities．．．．．．．．．．．．．．
Balance of Cash and Cash Equivalents at End of Period．．

FY2011FY2012

1,260

2,184

(151)

(222)

(881)

230

1,365

3,547

2. Dividends
Fiscal Yearfrom April 1 to March 31

Dividend per Share at the end of 1st Half (￥)．．．
Dividend per Share at the end of the year (￥)．．．
Annual dividend per Share (￥)．．．．．．．．．．．．．
Total dividend．．．．．．．．．．．．．．．．．．．．．．．．
Pay-out ratio (%)．．．．．．．．．．．．．．．．．．．．．．
Ratio of dividend to total capital (%)．．．．．．．．．．

FY2011FY2012FY2013(Forecast)

¥0.00

¥0.00

¥0.00

¥0.00

¥0.00

¥0.00

¥0.00

¥0.00

¥0.00

-

-

-

-

-

-

-

-

-

3. Forecasts for Consolidated Business Results(For the fiscal year ending March 31, 2014)(Millions of Yen)FY2013First Half

Net Sales．．．．．．．．．．．．．．．．．．．
Operating Income．．．．．．．．．．．．．
Recurring Profit．．．．．．．．．．．．．．．
Net Income．．．．．．．．．．．．．．．．．
Net Income per Share(￥)．．．．．．．．

% cahnge% change

Full Year34,10087.5%

71,500

64.9%

2,825

438.8%

8,000

327.7%

2,800

450.4%

7,950

344.4%

1,680

342.9%

5,100

223.8%¥35.21¥106.90

4. Others(1) Changes in significant subsidiaries during FY2012: Yes SANIX ENGINEERING INCORPORATED(2) Changes in accounting principles, procedures, and the presentation
1) Changes due to revisions of accounting standards etc: Adopted
2) Changes other than 1): No(3) Number of Shares Issued and Outstanding(Shares)
As of March 31

Number of shares issued and outstanding at period end．
Number of treasury stocks at period end．．．．．．．．．．．．
Average Number of shares outstanding during the priod．

FY2011FY2012

48,919,396

48,919,396

1,210,021

1,210,375

47,709,406

47,709,229

Indication of audit procedure implementation status
This earnings report is exempt from audit procedure based upon the Financial Instruments and Exchange Act. It is under theaudit procedure process at the time of disclosure of this report.
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.

Index of the attachment

Ⅰ. Business Results2

1. Earnings....................................…….……………........…………………………………………………………..

2

2. Financial Condition......................................………..…..….…….……………………………………………….

5

3. Basic Corporate Policy for Profit Distribution………..….……...…………..………………………………..…...

6

4. Business and Other Risks………………………………………………………………………………………..…

6

Ⅱ. Group Outline

7

Ⅲ. Business Policies

9

1. Foundamental Business Policies ......................................................................….....…………….……….…

9

2. Target Management Indices .........................................................….............…………………..……..…....

9

3. Medium- and Long- Term Business Strategies and Issues to Be Addressed ………...………………...…….

9

4. Challenges the Company Faces...........................................................…...…………………..…….…..…….

10

5. Other Significant Management Issues ...........................................…………………..………….…………….

11

Ⅳ. Consolidated Financial Statements

12

1. Consolidated Balance Sheet…………..………………………………………………………………….……..…

12

2. Consolidated Statement of Income and Comprehensive Income………………………………………………

14

Consolidated Statement of Income………………………………………………………………………………

14

Comprehensive Income……………………………………………………………………………………………..

15

3. Consolidated Statement of Changes in Net Assets………………………………………………………………

16

4. Consolidated Cash Flow Statement………………………………………………………………………………..

18

5. Segment Information………………………………………………………………………………………………...

20

I. Business Results
1. Earnings(1) Current Fiscal Year Overview
Since the regime change took place in last December, the Japanese yen has depreciated and the stock markets havegone up in the expectation of better economic policies, although some concerns have been reveled in the Japanese
economy in the current fiscal year, such as the prolonged problems of the European sovereign debt crisis,
deceleration of the emerging economies, deteriorating relationships with neighboring countries, including territorial
disputes. There are also signs of recovery in consumer activity, corporate productions and capital investments.
Under such circumstances, our group has sold and undertaken construction of residential solar power for about
15,000 households so far. In addition, encouraged by the government’s active promotion for the use of green energy,
including the “Renewable Energy Feed in Tariff Purchasing Program” started in July 2012, we have concentrated
our business resources in commercial solar power, which is expected to become a huge market, while stimulating
demand for it. As a result, we have determined to consider that Commercial solar power as the green energy
business and electricity sales (recycling waste plastic to be used as energy) are the two important pillars of ourgroup.
Since the commercial solar power business starts to contribute to our financial state from the current fiscal year, we
will newly add the “Commercial Photovoltaic (PV) Solution Division” in addition to the existing “Home Sanitation(HS) Division,” “Establishment Sanitation (ES) Division” and “Environmental Resources Development (ERD)
Division” as the four business divisions to be disclosed. On this new operating segment, in which results of sales ofCommercial Photovoltaic system, wholesale of components for Photovoltaic system are reported. Consequently,
new business segments are applied for the figures compared with a year earlier in the following comparison table.
The Net Sales of the Commercial PV Solution(CPS) Division for the current fiscal year have increased 581.6%
compared to the year-earlier period, with the “commercial solar power system” contributing to the sales, theconstruction of which started in full scale during the fourth quarter of this fiscal year. The HS Division recorded arevenue growth in sales of “residential solar power system” but saw a decline in termite control business and otherconstruction businesses due to the personnel cut after the corporate structural reform, resulting in the 3.8%
decrease in the overall revenue of the division compared to a year earlier. The ES Division recorded 43.8% increase,with the commercial solar power systems for buildings and condominiums contributing to the result. In theEnvironmental Resources Development (ERD) Division, the revenues from plastic fuel increased due to theincrease in terms of volume and those from the electricity sales also increased because Tomakomai Power Plant
started to be in stable operation, resulting in the 25.9% increase in overall revenues compared to the year earlier
period. As a consequence, the Net Sales of the entire group were 43,366 million yen, or up 37.9% from a year
earlier.
In terms of profitability, the CPS Division turned profitable mainly due to the inauguration of the “Renewable
Energy Feed in Tariff Purchasing Program,” commitment of advertising expenses to stimulate demand for the“commercial solar power system” and re-organization of the sales and construction structure, resulting in overall
increase in profit. In the HS Division, termite control business recorded a profit decline due to the shift to thecommercial solar power business and to the personnel cut after the corporate structural reform, resulting in overall
decrease in profit for the whole division. The ES Division recorded significant increase in profit due to the sales
growth. The ERD Division also recorded significant profit increase due to revenue growth in plastic fuel andelectricity sales in addition to the cost reduction. As a consequence, for the whole group, the operating income2increased 356.4% to 1,870 million yen and the ordinary income was up 414.1% to 1,788 million yen, with the net
income increasing to 1,575 million yen from 13 million yen of net income in the year earlier period.
Millions of Yens
Consolidated
Results

Operating

FY2011Net Sales

FY2012

Rate of
Change(%)

Diference

31,45443,36637.9

11,911

Operating Income

409

1,870

356.4

1,460

Ordinary Income

347

1,788

414.1

1,440

Net Income

13

1,575

-

1,561

Consolidated results of individual divisions for the year were as follows:
Earnings of Individual Divisions:
Commercial Photovoliaic Solution (CPS) Division
Many of the business resources, including human resources, were transferred from the HS Division to the CPS
Division as part of the restructure, and in the 4th quarter of the current fiscal year, the sales of commercial solar
power system started to contribute fully to the overall revenues, including the wholesales of commercial solar
power modules and other components. As a result, the sales increased 581.6% to 9,617 million yen compared to theyear-earlier period.
The operating income was 320 million yen compared to the loss of 265 million yen in the same period of a year
earlier, absorbing initial costs for sales and advertising costs for newspaper ads and others.
Home Sanitation (HS) Division
The sales of residential solar power system increased 52.7% compared to last year. Revenues of the existingproducts, on the other hand, such as “termite control” and “sub-floor/roof ventilation system,” decreased 31.2%
compared to last year with the personnel transferred to the CPS Division. As a result, the Net Sales of the division
decreased 3.8% to 14,814 million yen compared to the year-earlier period.
The operating income decreased 28.5% to 1,775 million yen compared to the same period of a year earlier, due tothe decrease in sales of existing products with worse net sales raw material ratio.
Establishment Sanitation (ES) Division
The sales of solar power system increased 324.5% compared to the year earlier period after reinforcing the sales
activities for corporate customers and the construction structure. Works on buildings and condominiums related tomaintenance and management, on the other hand, decreased 4.3%. As a result, the Net Sales increased 43.8% to3,965 million yen compared to last year.
The operating income increased 240.4% to 139 million yen compared to a year earlier, due to significant increasein sales.
Environmental Resources Development (ERD) Division
The sales from plastic fuel increased in terms of volume and unit price for collection, resulting in 29.8% increase
compared to the year-earlier period. The revenues from electricity sales showed a significant increase of 46.3%
compared to a year earlier, due to the start of stable power generation at Sanix Energy’s Tomakomai Power Plant aswell as higher unit prices for electricity sales. In addition, organic waste-water processing recorded a 0.4% increase
from last year. As a result, the net sales increased 25.9% to 14,967 million yen compared to the year earlier period.
The operating income increased 444.8% to 1,567 million yen, along with the division turning profitable due tostable inauguration of Tomakomai Power Plant, increase in revenues in “plastic fuel” and enhancement of
profitability as a result of cost reduction.
3

(2) Prospect for Next Year
Prospect for next year is optimistic with an expectation for recovery of the economy surrounding our groupcompanies owing to the views for the upturn in the domestic economy along with the effects of government
economic measures and the financial measure taken by the Bank of Japan. In addition, the “Renewable Energy
Feed in Tariff Purchasing Program” continues to be in effect, although the purchasing unit price was modified in
April 2013 from 42 yen to 37.8 yen for 10kw or more, and our group will still be able to deploy our businessactively. Therefore, we are considering that it is a good opportunity to make a significant expansion of our green
energy business with electricity sales business.
In the CPS Division, we will continue our efforts to reduce cost for solar power modules and other components andto enhance efficiency in construction works to avoid occurrence of any disadvantages on the part of main
contractor during the remaining payout time due to lower purchasing prices of commercial solar power. In addition,
the division is expected to generate a significant profit increase as a main business unit of our group by starting oursales promotion in full scale.
The HS Division is expected to record decrease in sales, despite our efforts in providing undivided follow-ups,
including maintenance of “solar power system”, “termite control” and “sub-floor / roof ventilation system”, forexisting customers of our residential services.
The ES Division is expected to generate increased profit and better profitability, while engaged in sales andconstruction of the commercial solar power system for corporate customers owning buildings and condominiums.
In the ERD Division, we will continuously be working on enhancing the quality of plastic fuel for a better
efficiency in power generation of Tomakomai Power Plant. Although the revenues from plastic fuel will be samelevel compared to a year earlier, the unit prices of electricity are expected to fall, and it will be a major renovationof the power plant once at two years, so the revenues from electricity sales are expected to decrease.
With the above-mentioned prospects, for the consolidated financial outlook for the next fiscal year of our wholegroup, we expect the Net Sales to increase 64.9% to 71,500 mbillion yen, the operating income to increase 327.7 %to 8,000 million yen, the ordinary income to increase 344.4 % to 7,950 million yen, and the net profit to increase
223.8 % to 5,100 million yen, compared to the year earlier period.

(3) Progress of Mid-term Business Plan
On April 22, 2010 , the group announced the mid-term business plan “Spring Plan 2012”, its medium-termbusiness plan for three years from the year ended March 31,2011 through the year ended in March 31,2013.
The plan aims to build a foundation for further corporate growth, with the three business units of HS, ES and ERD
in unity.
As part of their business strategies, the HS Division will enhance its solar power system and expand its share in thedomestic residential market, while reinforcing the sales promotion structure targeting corporate customers. The ES
Division will create a scheme to ensure the profitability of the business by selection and concentration. The ERD
Division will further increase transaction of waste plastic in terms of volume and diversify delivering points, while
ensuring stable operation of Tomakomai Power Plant by enhancing the quality of fuel, so that the division willcontribute to the profitability of the whole group.
As an evaluation for the final period of the plan, ending in March 2013, our group successfully shifted our course
to the commercial solar power business and deployed business capital there, which is another foundation for our
growth. In addition, the electricity sales using plastic fuel are successfully established as one of the sources for the4

profitability of our business.
Consequently, as the consolidated financial results for the period ending in March 2013, the final period for thismid-term business plan, the group obtained the Net Sales 43,366 million yen and the operating income of 1,870
million yen, compared to the planned sales and income of 28,000 million yen and 2,000 million yen, respectively.

2. Financial Condition(1) Assets, Liabilities and Net Assets
Total assets amounted to 29,196 million yen at the end of the current consolidated fiscal year, a increase of 7,909
million yen from the end of the previous consolidated fiscal year. Liabilities amounted to 20,359 million yen, an
increase of 6,207 million yen from the end of the previous consolidated fiscal year. Net assets totaled 8,837 million
yen, a increase of 1,702million yen from the end of the previous consolidated fiscal year. Consequently, the ratio ofowners’ equity was 30.2%.

(Assets)
Current assets increased 110.4% from the end of the previous year to 14,651 million yen. This is primarily becausenotes and accounts receivable-trade and inventories increased by 4,047 million yen and 1,130 million.
Fixed assets increased 1.6% to 14,544 million yen. This is primarily because property, plant and equipment
increased by 602 million yen by depreciation.

(Liabilities)
Current liabilities increased 77.5% from the end of the previous year to 14,873 million yen. This is primarily
because notes and accounts payable-trade increased to 4,073 million yen.
Fixed liabilities decreased by 4.9% to 5,486 million yen. This is mainly because long-term loans payable decreased
by 740 million yen by repaying a loan.

(Net Assets)
Net assets increased 23.9% to 8,837 million yen, mainly due to a net income of 1,575million.

(2) Cash Flows
As of March 31, 2013, cash and cash equivalents totaled 3,547 million yen on a consolidated basis, an increase of
2,181 million yen from as of March 31, 2012.

(Cash Flows from Operating Activities)
Net cash provided by operating activities totaled 2,184 million yen (increase of 924 million yen from the last year),mainly due to increase in notes and accounts receivable-trade of 4,746 million yen, despite income before income
taxes of 1,912 million yen, increase in notes and accounts payable-trade of 4,013 million yen.

(Cash Flows from Investing Activities)
Net cash used in investment activities amounted to 222 million yen (increase of 70 million yen from the last year)
mainly due to purchase of property, plant and equipment of 615million yen.

(Cash Flows from Financing Activities)
Net cash provided by financing activities amounted to 230 million yen (decrease of 1,111 million yen from the last5

year) mainly due to increase of a short-term loan.

The Cash Flow Indicators:

Shareholders' equity ratio
Shareholders' equity ratio on amarket price basis
Interest-bearing liabillities ratio tocash flow
Interest coverage ratio

FY2008FY2009FY2010FY2011FY2012

51.3%

35.1%

34.7%

33.4%

30.2%

19.9%

42.1%

55.6%

53.3%

92.0%

－

13.10

136.73

5.34

3.24

－

3.60

0.29

7.36

13.30

(Note) Shareholders’ equity ratio: Shareholders' equity/Total assets
Share ratio on a market price basis: Total market value of stock/Total assets
Interest-bearing liabillities ratio to cash flow: Operating cash flow/Interest payment
Interest coverage ratio: Operating cash flow/Interest payment
1. Each indicator is calculated based on consolidated financial results.
2. Total market value of stock is calculated by: closing price at the year-end x outstanding shares at the year-end.
3. The operating cash flow in this table is cash flow from operating activities reported on the consolidated cash flow statement.
Interest-bearing liabilities cover all liabilities reported on the consolidated balance sheet for which interest is paid. Interest
payment used in the calculation of the interest coverage ratio is the amount of interest expense reported on the consolidated
cash flow statement.
4. Interest-bearing liabillities ratio to cash flow and interest coverage ratio data are not included in the table above for the year
ended March 2009(FY2008) as the operating cash flow was negative in these years.

3. Basic Corporate Policy for Profit Distribution
SANIX operates its business focusing on the return profit to shareholders. One of our business policies is toincrease dividends to shareholders by expanding the scope of our operators and improving earnings, while ensuring
stable dividends based on the ratio according to shareholders’ equity and other factors.
However, during the current year, the Company will not pay dividends for the year, considering retained earnings
are negative, though the Company was able to record net income in the current consolidated fiscal year. The
Company will strive for further improvement of operating results so that it can make stable distribution of profits toshareholders in the next fiscal year, meeting shareholders’ expectations, based on operating results and future plansfor business development.

4. Business and Other Risks
Major risks that may affect the operating results and business of the SANIX Group are described below.
Recognizing the possibility of occurrence of these risks, the SANIX Group endeavors to take proper measures toavert these risks and minimize the impact in the event of occurrence.
Certain future-related statements included in this document are estimates made by the Company based on theinformation available at the end of the current fiscal year.

(1) Laws and regulations concerning door-to-door-sales
Sales activities of the HS Division are mainly conducted by the door-to-door calls, which should be made incompliance with, and are subject to restrictions of, the Specific Commercial Transactions Law and the Consumer
Contract Law. From the viewpoint to strengthen the protection for consumers, the Company ensures compliancewith applicable laws and regulations in order to protect our customers. However, if the Division fails to comply
with the current and future laws and regulations applicable to its businesses, the operating results or financial
position of the Division may be negatively impacted.
(2) Movement in the door-to-door-sales trade
Any further detection of dishonest housing improvement operators, and subsequent reports in the media might havea negative impact on the Company’s future business.
6(3) Regulations and market trend in relation to solar-power generation
After the “Special Measures Law in Relation to Purchasing the Electricity Generated from Renewable Energy byElectric Power Suppliers” went into effect, the market of the commercial solar power business is expected toenhance rapidly. However, if our customers become less willing to install the system because of prolonged payout
time due to changes in feed in tariff or the in term of the purchasing program, there will be a possibility ofdisadvantageous effect on the performance or the financial state of the solar power business of our group.
(4)Laws and regulations concerning waste treatment
The businesses of the ERD Division require certain approvals and permits of administrative authorities, should
satisfy environmental emission standards and should comply with the provisions of laws and regulations
concerning waste treatment. If the Division fails to comply with the current and future laws and regulations
applicable to its businesses, or if revenue expansion is offset by a huge amount of costs necessary to comply withseverer regulations, the operating results or financial position of the Division may be negatively impacted.
(5) Resource recycling power generation system
In relation to the ERD Division, maintenance and enhancement of the quality of plastic fuel at Sanix Energy’s
Tomakomai Power Plant is one of the critical elements for our stable operations. However, since plastic fueloriginates from waste, any inconsistency in the quality or properties that may affect the stable operation of thepower plant can give disadvantageous impact on the performance or on the financial state of the Company.
(6) Supply and Demand of Electricity
In relation to the ERD Division of the Group, the sales unit prices may change due to the fluctuations of supply anddemand caused by seasonal factors or by the operations of nuclear power plants, which may impact the revenues
from the electricity sales at Sanix Energy’s Tomakomai Power Plant. A more-than-expected drop in the unit prices
for electricity sales may give a negative effect on the performance and the financial state.
(7)Retention and development of human resources
Our Group requires a great number of employees engaged in various functions of sales and technology; fromcontracting and customer management to construction. Therefore, any larger-than-expected shortage in the numberof employees may give a negative effect on the performance and the financial state, although we are trying toemploy actively experienced people in addition to new graduates regularly in an effort to secure and develop
human resources.
(8) Industrial accident/ disaster
The SANIX Group endeavors to achieve accident-free and disaster-free operations in all aspects of its businesses.
However, if a material industrial accident or disaster occurs in any plant of the SANIX Group, its reputation insociety will be damaged, payment of compensations for damage and other costs will be incurred to respond to such
accident/disaster. In addition, during the suspension of operation caused by such accident/disaster, the Company
will incur opportunity loss, which may have negative impact on the operating results and financial position of theCompany.

II. Group Outline
The Group consists of the Company and other 10 consolidated subsidiaries. Its major business fields are
sales/construction of solar power system, environmental sanitary services for general households, environmental
sanitary services for corporations and recycling-based power generation. The structure of each company in relation
to the Group’s business fields is as following;
CPS Division: It promotes the “Renewable Energy Feed in Tariff Purchasing Program,” a measure taken by thegovernment promoting green energy, and one of the consolidated subsidiaries, SANIX ENGINEERINGINCORPORATED designs and install commercial solar power systems. In addition, the Company wholesales the7solar power system equipment.
HS Division: The Company offers environmental sanitation services for ordinary houses. The main services andproducts are Termite Eradication Service, Foundation Repairing Treatment, Under-Roof/Floor Ventilation System,
and Solar Photovoltaic Power Generation System.
ES Division: The Company offers environmental sanitation services for offices and condominium. The main
services are Anti-rust equipment installation, Repair of building water-works and Waterproofing of building andSolar Photovoltaic Power Generation System.
ERD Division: The Company sells plastic fuel to its consolidated subsidiary company SANIX ENERGYINCORPORATED. SANIX ENERGY generates and sells electricity by using plastic fuel as its main fuel,purchased from SANIX and HOKKAIDO SANIX ENVIRONMENT INCORPORATED, SANIX’s consolidated
subsidiary. K.K. C&R, SANIX’s consolidated subsidiary, disposes of incinerator ash from SANIX ENERGY. K.K.
HOKUHAI, SANIX’s consolidated subsidiary, leases facilities to K.K. C&R.
In addition, the solar power modules that the Group installs or sells are purchased from a consolidated subsidiary
SHANRI (SHANGHAI) ENERGY SCIENCE AND TECHNOLOGY CO.,LTD. The Company purchaseschemicals used in each division, and leases vehicles for operations, from SUNAIM INCORPORATED, itsconsolidated subsidiary. The Company purchased information system services relating to each of its divisions fromSANIX SOFTWARE DESIGN INCORPORATED.

8

III. Business Policies
1. Fundamental Business Policies“Clean dirty places and sanitize unclean places” has consistently been the corporate mission of the Company since
its inception, and it has been engaged in providing the society in general with environmental sanitary management
services, including environmental sanitary services for general households and corporations, building maintenanceservices for commercial buildings and condominiums, as well as industrial waste disposal and recycling-based
power generation services focusing mainly on recycling. It also set the commercial solar power generation as ourcore business to enhance our green energy business.
In these four areas, SANIX is aggressively developing its ecological business by exploring latent demand,
improving services and technology and constantly tailoring services to best suit customer needs. In operating thesebusinesses, SANIX is endeavoring to enhance its profitability and capital efficiency to maximize its corporate
value.

2. Target Management Indices
Our Group’s middle to long term business strategy is to build the solar power business to establish the green energy
sector and the environment-based power generation business to solidify our business foundation and to enhance
profitability. The Company targets at achieving the ratio of operating profit to revenues of 15.0% in the medium
term.

3. Medium- and Long-Term Business Strategies and Issues to Be Addressed
CPS Division
Along with the “Renewable Energy Feed in Tariff Purchasing Program,” a measure taken by the government
promoting green energy, the division stimulates demand for commercial solar power generation, which is expected
to generate a huge market, and we are planning to focus our business resources there. In the middle to long term,
the purchasing prices are estimated to fall, but we will make efforts to enhance our market share through cost
reduction for components and enhancement of construction efficiency, so that we will be able to provide systems at
prices not prolonging the payout time for our clients.

(2) HS Division
The HS division is determined to make efforts to create a marketing organization that is closely connected to the
local community, and to provide existing customers good after- sales service through our Termite Eradication
Service, Under-Roof/Floor Ventilation Systems, and Solar Photovoltaic Power Generation System. The division
will continue emphasizing compliance with applicable laws and regulations to ensure the protection of consumers.
In the medium to long term, the Division aims expand our domestic market share of“Solar Photovoltaic Power

Generation System” for house use with developing our exiting services.

(3) ES Division
The ES Division is cultivating markets mainly in the metropolitan areas where office buildings, apartmentcomplexes, and other large facilities are concentrated. The Division provides maintenance and repairing service forwater pipes and for maintenance and repairing all facilities in buildings and apartment houses. In addition, theDivision strive to promote sales of the Solar Photovoltaic Power Generation System for housing complex. In themedium to long term, efficiency in marketing and installation work should be improved to reduce costs andincrease sales, which will lead to improvement in the operating profit ratio.
9(4) ERD Division
The main business of ERD division is resource-recycling power generation by using fuel recycled from waste
plastic in its recycling plants. As for the application of waste plastic processed by the Division’s plants, theDivision pursues sales to other customers than power plants to expand the sales volume of plastic fuel for which
demand is high as an alternative of fossil fuel. Expansion of the customer base will contribute to improvement of
its business profitability.

4. Challenges the Company faces
We expect that the business environment surrounding the Company will remain severe; however, theenvironmental industry will play an important role in society due to a rising demand for environmental protection.
Under such circumstances, the following are managerial challenges to be tackled in order for our four main
businesses to prosper.

(1) Strengthening sales and management system
The Company needs to establish high quality sales and management systems, where we can increase close contact
with our customers and cultivate underlying demand. SANIX, a team of experts, will firmly establish its brandimage and employ efficient sales and management systems.
(2)Cost Reduction of Components Related to Solar Power System
The commercial solar power will expand its market rapidly in the future. The sales of the related products willrapidly increase and out Group is also considering such products to become our core products. Thus, one of thecritical issues for our business is to increase our market share. The Group is intending to reinforce the power topurchase modules, power conditioners and other components, while making every effort to reduce costs to meet
our customers’ needs, including in-house manufacturing.
(3) A stable power plant operation in Tomakomai Power Plant and an improvement of output of power generation.
A key issue for the Sanix Energy’s Tomakomai Power Plant is a stable power plant and an improvement of output
of power generation. Effect of the operation know-how made an ability for removing foreign materials from waste
plastics improved, so we reap the result for a stable poewr plant operationand positive turnaround. In future, wewill try to improve profitability further.
(4) Sales of plastic fuelAlong with increasing the amount of waste plastic processing, ERD division now sells plastic fuel. As plastic fuelcould be an alternative energy source to fossil fuel, our foremost issue is to develop a suitable profile of this fuel,and secure the stable quality and volume of fuel production in order to meet customer demand. Hereafter, we
promote our plastic fuel branding and expand sales of our fuel to the outside and make stable supply.
(5) Recruitment and training of employees
In accordance with our Management Philosophy, “Our job is to educate and education means management”, we arecommitted to improve our services by recruiting more people and training employees. From the perspective ofprotecting customers, we are required to ensure compliance with applicable laws and regulations. The Company
considers it is our corporate mission to raise the quality of our employees as well as products and services.
Specifically, we are determined to provide employees with substantial training at each managerial class.
(6) Promotion of compliance
In order to be trusted by more customers and to provide comfortable environment more extensively, one of themost important issues for the Company is promoting strict compliance with laws and regulations, from theviewpoint of consumer protection, following our principle of "Customers Come First." Education and training will10

be provided regularly to employees to enhance their morality and knowledge on legal compliance, to ensure
delivery of safe and comfortable house environment to customers.
(7) Bolster disaster-prevention countermeasures
We make every effort to give first priority to safety at each plant in ERD division. Management takes seriously thegravity of the accident that occurred in the past, and has reviewed and strengthened its disaster prevention system
to ensure safe operations of its business.

5. Other Significant Management Issues
No applicable matter.

11

IV. Consolidated financial Statements
1. Consolidated Balance Sheet(thousands of Yen)
As of March 31
FY2011FY2012

Assets:Current Assets:
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process-construction
Raw materials and supplies
Deferred tax assets
Other
Allowance for doubtful accounts
Total Current Assets:

1,365,530

3,559,160

3,309,437

7,356,616

53,18760,036－

260,009

1,713,692

2,577,620

244,668

298,920

385,389

681,265(107,831)(142,104)

6,964,074

14,651,525

2,090,183

1,890,399

Fixed Assets:
Property, Plant and Equipment:
Buildings and structures, net
Machinery, equipment and vehicles, net
Land
Lease assets, net
Construction in progress
Other, net
Total Property, Plant and Equipment:
Intangible Fixed Assets:
Goodwill
Other, net
Total Property, Plant and Equipment:
Investments and Other Assets:
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total Investments and Other Assets:
Total Fixed Assets:

Total Assets:

239,367

557,9978,979,529

8,889,529

213,923351,243

49,943464,340

150,751

172,607

11,723,699

12,326,117

737,377

625,370

59,10560,123

796,482

685,493

500,960

316,576

781,079

705,601

128,645

95,696

828,513856,122(437,035)(440,823)

1,802,163

1,533,173

14,322,345

14,544,785

21,286,420

29,196,310

12

(thousands of Yen)
As of March 31
FY2011FY2012

Liabilities:
Current Liabilities:
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Accrued income taxes
Lease obligations
Income taxes payable
Provision for bonuses
Allowance for resource-recycling expenses
Other
Total Current Liabilities:

1,386,410

5,459,789

2,325,000

3,338,000

759,724

848,190

2,330,436

3,166,433

825,338

931,437

100,660

119,644

157,942

362,883

196,872

249,243

9,959

68,871

40,611

12,320248,016

316,254

8,380,971

14,873,068

Non-Current Liabilities:
Bonds payable
Long-term loans payable
Lease obligations
Deferred tax liabilities
Long-term lease deposited
Provision for retirement benefits
Provision for directors' retirement benefits
Provision for disposal site closing expenses
Other
Total Non-Current Liabilities:

Total Liabilities:

70,00050,0003,559,741

2,819,551

173,125

272,054

28,77642,647

46,34946,3491,382,781

1,419,934

178,256

179,756

331,431373,699－

282,051

5,770,462

5,486,044

14,151,433

20,359,113

14,041,834

14,041,834(5,377,499)(3,733,267)(1,610,767)(1,610,889)

7,053,567

8,697,677

52,772

78,147

Net Assets:
Shareholders' Equity:
Capital stock
Retained earnings
Treasury stock
Total Shareholders' Equity:

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Total Valuation and translation adjustments:

Minority Interests:
Total Net Assets:
Total Liabilities and Net Assets:－

32,356

52,772

110,503

28,64729,016

7,134,986

8,837,197

21,286,420

29,196,310

13

2. Consolidated Statement of Income and Comprehensive Income(Consolidated Statement of Income)(thousands of Yen)
from April 1 to March 31
FY2011

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income:Interest income
Dividends income
Commission for insurance office work
Land and house rent revenue
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Rent expenses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income:Gain on sales of securities
Gain on sales of fixed assets
Total extraordinary income
Extraordinary loss:
Loss on sales of fixed assets
Loss on retirement of fixed assets
Impairment loss
Loss on cancellation of lease contracts
Total extraordinary loss
Income (loss) before income taxes and minority interests
Income taxes-current
Income taxes-deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income (loss)

FY2012

31,454,477

43,366,108

21,012,601

29,995,849

10,441,876

13,370,258

10,032,006

11,499,762

409,869

1,870,495

6,197

5,978

11,411

11,530

3,967

3,774

67,67569,98543,711

46,263

132,962

137,531

171,176

164,203

2,413

2,308

21,25752,608

194,847

219,120

347,984

1,788,906―

138,075

3,706

5,199

3,706

143,274

78

―

8,678

794

―

18,657

1,458
10,215―
19,452

341,474

1,912,729

170,547

358,674

158,318(21,325)

328,865

337,348

12,608

1,575,380(1,335)368

13,944

1,575,011

14

（Comprehensive Income）(thousands of Yen)
from April 1 to March 31
FY2011

Income before minority interests
Other comprehensive income
Share of other comprehensive income of associates accounted forusing equity method
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to parent company
Comprehensive income attributable to minority interests

FY2012
12,608

1,575,380

20,15225,374－28,277

20,15253,652

32,761

1,629,033

34,096

1,628,664(1,335)368

15

3. Consolidated Statements of Changes in Net Assets(thousands of Yen)
from April 1 to March 31
FY2011

Shareholders' Equity
Capital stock:
Balance at the end of previous period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Retained earnings:
Balance at the end of previous period
Changes of items during the period
Net income
Change of scope of consolidation
Total changes of items during the period
Balance at the end of current period
Treasury Stock:
Balance at the end of previous period
Changes of items during the period
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period
Total Shareholders' Equity:
Balance at the end of previous period
Changes of items during the period
Net income
Change of scope of consolidation
Purchase of treasury stock
Disposal of treasury stock
Total changes of items during the period
Balance at the end of current period

FY2012

14,041,834

14,041,834――

14,041,834

14,041,834(5,391,444)(5,377,499)

13,944

1,575,011－

69,221

13,944

1,644,232(5,377,499)(3,733,267)(1,610,766)(1,610,767)

(12)

(122)

11

―

(1)

(122)

(1,610,767)(1,610,889)

7,039,624

7,053,567

13,944

1,575,011
69,221

(12)

(122)

11

―

13,943

1,644,110

7,053,567

8,697,677

16

(thousands of Yen)
from April 1 to March 31
FY2011

Valuation and Translation Adjustments:
Valuation difference on available- for-sale securities
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total Valuation and Translation Adjustments:
Balance at the end of previous period
Changes of items during the period
Changes of Foreign currency translation adjustment
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Minority Interests:
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period
Total Net Assets:
Balance at the end of previous period
Changes of items during the period
Change of scope of consolidation
Changes of Foreign currency translation adjustment
in change in scope of consolidation
Net income
Purchase of treasury stock
Disposal of treasury stock
Net changes of items other than owners' equity
Total changes of items during the period
Balance at the end of current period

FY2012

32,62052,772

20,15225,374

20,15225,374

52,772

78,14732,62052,772

20,15253,652

4,078
20,152

57,731

52,772

110,50330,30728,647(1,660)368(1,660)368

28,64729,016

7,102,551

7,134,986
69,221
4,078

13,944

1,575,011

(12)

(122)

11

-

18,49154,021

32,435

1,702,210

7,134,986

8,837,197

17

4. Consolidated Cash Flow Statement(thousands of Yen)
From April 1 to March 31
FY2011Net Cash Provided by (Used in) Operating Activities:
Income before income taxes and minority interests
Depreciation and amortization
Loss on disaster
Increase/ Decrease in reserve for retirement benefits
Increase/ Decrease in reserve for directors' retirement benefits
Increase/ Decrease in provision for bonuses
Decrease in allowance for resource-recycling expenses
Amortization of goodwill
Increase/decrease in allowance for doubtful accounts
Interest and dividends income
Interest expenses
Gain/ Loss on sales of fixed assets
Loss on retirement of fixed assets
Increase/ Decrease in notes and accounts receivable-trade
Increase/ Decrease in inventories
Increase/ Decrease in other current assets
Decrease in notes and accounts payable-trade
Increase/ Decrease in consumption tax refund receivable
Increase/ Decrease in other current liabilities
Other
SubtotalInterest and dividends income received
Interest expenses paid
Payment for damage repairing
Income taxes paid
Income taxes refund
Net cash provided by operating activities:

FY2012

341,474

1,912,729

371,049

386,714―18,65753,60937,152

700

1,500

2

56,924

18,814(28,290)112,006

112,006

2,631

38,060(17,608)(17,508)

171,176

163,440(3,627)(5,199)

8,678

794

(788,338)(4,746,431)(124,458)(967,335)(27,740)

442,900

518,627

4,013,467

18,46556,512970,076

1,131,171

83,677
1,709,217(94,866)
2,512,401

17,601

17,492(166,911)(165,264)(28,629)－(271,132)(202,285)―

22,383

1,260,145

2,184,72618

(thousands of Yen)
From April 1 to March 31
FY2011Net Cash Provided by (Used in) Investment Activities:
Increase in time deposits
Proceeds from sales of securities
Proceeds from sales of property, plant and equipment
Purchase of property, plant and equipment
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits
Purchase of investment securities
Other
Net cash provided by investing activities:
Net Cash Provided by (Used in) Financing Activities:
Increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Redemption of bonds
Repayments of finance lease obligations
Net decrease/ increase in treasury stock
Cash dividends paid
Other
Net cash provided by financing activities:
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of peiod
Net increase (decrease) in cash and cash equivalents
in change in scope of consolidation
Cash and cash equivalents at the end of period

FY2012―(11,300)―

258,075

4,128

103,643(92,949)(615,817)(11,212)―

18,956

48,600(68,669)(3,790)(1,580)(1,714)(151,327)(222,302)(100,000)

1,013,000―

210,000(760,747)(861,724)

100,000―(10,000)(20,000)(104,903)(108,801)

(1)

(122)

(325)

(1)

(5,659)(2,158)(881,635)

230,192―(11,055)

227,182

2,181,561

1,138,347

1,365,530―

768

1,365,530

3,547,860

19

Segment Information
Segment Information by Type of BusinessPrior consolidated fiscal year (From April 1, 2011 to March 31, 2012)(Thousands of Yen)
Segments

HS

CPS

ES

ERD

Total

Elimination Consolidated
or Group

Sales:
Sales to customers . . . . . . . . . . . . . 1,411,086 15,395,655

2,757,129 11,890,605 31,454,477－ 31,454,477

Internal sales among segments
and transfer accounts. . . . . . . . . . . .

－－Total . . . . . . . . . . . . . . . . . . . . . . . . 1,411,086 15,395,655
Operating income(loss) . . . . . . . .

(252,730) 2,469,253

Assets . . . . . . . . . . . . . . . . . . . . .

240,563

4,835,752－－－

2,757,129 11,890,605 31,454,477
41,243285,693－－－ 31,454,477

2,543,460 (2,133,590)

1,128,277 10,026,909 16,231,502

409,869

5,054,917 21,286,420

Others:Depreciation expenses . . . . . . . . . .

－61,786

13,306

345,732

420,825

62,230

Amortization of goodwill . . . . . . . . .

－

－

－

－

－

－

483,056－

Capital expenditures. . . . . . . . . . . .

－

3,317

411

290,573294,303

13,973308,277

Consolidated fiscal year (From April 1, 2012 to March 31, 2013)(Thousands of Yen)
Segments

HS

CPS

ES

ERD

Total

Elimination Consolidated
or Group

Sales:
Sales to customers . . . . . . . . . . . . . 9,617,646 14,814,917

3,965,643 14,967,900 43,366,108－ 43,366,108

Internal sales among segments
and transfer accounts. . . . . . . . . . . .

－－Total . . . . . . . . . . . . . . . . . . . . . . . . 9,617,646 14,814,917
Operating income(loss) . . . . . . . .

320,368

1,775,560

Assets . . . . . . . . . . . . . . . . . . . . .

3,735,173

6,439,869

10,51949,712－－－

3,965,643 14,967,900 43,366,108
139,481

1,567,654－－－ 43,366,108

3,803,065 (1,932,569) 1,870,495

1,139,765 10,125,736 21,440,546

7,755,764 29,196,310

Others:Depreciation expenses . . . . . . . . . .

9,711

371,927

441,871

56,949498,821

Amortization of goodwill . . . . . . . . .

－

－

－

－

－

－

－

Capital expenditures. . . . . . . . . . . .

180,108

66,311

1,866

791,198

1,039,484

62,7791,102,26420