Consolidated Financial Results
for the Fiscal Year Ended December 31, 2021 (Japanese GAAP)
February 14, 2022
Company name:
Stock code:

Earth Corporation
4985

Representative:

Katsunori Kawabata, President and Representative Director, Chairman of the Board of Directors ofeach group company
Tsuyoshi Mitsuzuka, Senior Executive Officer, Director General, Group Management Headquarters+81-3-5207-7458

Contact:
Tel:

Listing Stock Exchange: Tokyo
URL: https://corp.earth.jp/en/index.html

Ordinary annual general meeting of shareholders:
Scheduled date for dividend payment:
Scheduled date to file securities report:
Preparation of supplemental explanatory materials:
Results briefing to be held:

March 25, 2022
March 9, 2022
March 28, 2022
Yes
Yes (For securities analysts and institutional investors)(Amounts of less than one million yen are rounded down.)

1.

Consolidated Financial Results for the Fiscal Year Ended December 31, 2021
(January 1 to December 31, 2021)(1) Consolidated operating results
Sales(Percentages indicate YoY change)
Net income attributable
Ordinary income
to owners of parent

Operating income

Million yen%

Million yen%

Million yen%

Million yen%

Fiscal year ended
203,785
3.9
10,667(6.6)
11,362
(2.6)
7,142
101.4
December 31, 2021
Fiscal year ended
196,045
3.4
11,416
191.5
11,661
169.6
3,547
183.8
December 31, 2020
Note: Comprehensive income for the fiscal year ended December 31, 2021 was 7,621 million yen (52.9%), and comprehensive income
for the fiscal year ended December 2020 was 4,982 million yen (101.6%).
Ratio of net
Ratio of ordinary
Net income per Diluted net income
Operating income
income to equity
income to total
share
per sharemargincapitalassetsFiscal year ended
December 31, 2021
Fiscal year ended
December 31, 2020
Reference: Equity inearnings of affiliates

Yen

Yen

%

%

%

323.76

－

12.4

9.4

5.2

170.65

－

7.4

10.3

5.8

Fiscal year ended
December 31,
2020**million yen

Fiscal year ended
December 31, 2021**million yen(2) Consolidated financial position
Total assets

Net assets

Million yen

Equity ratio

Million yen

Net assets per share%

Million yen

Fiscal year ended
120,715
64,59649.7
2,720.37
December 31, 2021
Fiscal year ended
119,870
59,82346.1
2,507.62
December 31, 2020
Reference: Equity capital amounted to 59,958 million yen as of December 31, 2021 and 55,299 million as of December 31, 2020.

(3) Consolidated cash flows
Cash flows fromoperating activities
Fiscal year ended
December 31, 2021
Fiscal year ended
December 31, 2020

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at end of
periodMillion yen

Million yen

Million yen

Million yen

4,814(3,220)(4,610)21,027

24,590(3,168)(4,938)23,716―1―

2.

Dividends
Ratio of
Total
Payout ratio dividends todividends (consolidated)
net assets(consolidated)

Dividend per share
End of Q1 End of Q2 End of Q3 Year-end
Fiscal year ended
December 31, 2020
Fiscal year ended
December 31, 2021
Fiscal year ending
December 31, 2022
(forecast)

3.

Total

Yen

Yen

Yen

Yen

Yen

Million yen

％

%

－

0.00

－

115.00115.00

2,536

67.4

5.1

－

0.00

－

118.00118.00

2,600

36.4

4.5

－

0.00

－

118.00118.0035.8

Consolidated Earnings Forecast for the Fiscal Year Ending December 31, 2022
(January 1, 2022 to December 31, 2022)

Sales(Percentages indicate rates of YoY change)
Net income attributable
Net income
Ordinary income
to owners of parent
per share

Operating income

Million yen%

Million yen%

Million yen%

Million yen%

Yen

Six months ending
June 30, 2022

91,500－13,300－13,400

－

9,280

－

421.04Full-year

155,000－

10,750－

11,150

－

7,280

－

330.30Note: The Company will begin applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the beginningof the fiscal year ending December 31, 2022. The figures above reflect impact from the application of this standard, so rates of YoYchange referring to the fiscal year ended December 31, 2021 have been omitted.

―2―*Notes(1) Changes in significant subsidiaries during the period under review:
None(Transfers of specified subsidiaries associated with changes in the Company’s scope of consolidation)
Newly subsidiaries added:
None
Subsidiaries excluded:
None(2) Changes in accounting policies and accounting estimates and retrospective restatements
1. Accounting policy changes due to accounting standard revisions, etc.:
None
2. Other accounting policy changes:
None
3. Changes in accounting estimates:
None
4. Retrospective restatements:
None(3) Number of shares outstanding (common stock)
1. Shares outstanding(including treasury stock)

As of December
31, 2021

22,077,500

As of December
31, 2020

22,057,500

2. Treasury shares outstanding

As of December
31, 2021

36,939As of December
31, 2020

5,065

3. Average number of shares
outstanding

Fiscal year ended
December 31, 2021

22,062,456

Fiscal year ended
December 31, 2020

20,786,948*Summaries of financial statements are not subject to audit through certified public accountants or auditing corporations.
*Appropriate use of earnings forecast and other special notes
The earnings forecasts and other forward-looking statements contained in this document are based on information currently available
to the Company, and certain assumptions it considers reasonable, but are not intended to be a promise that the Company will achieve.
Actual results may vary materially from forecasts due to a variety of factors. For more information regarding assumptions made when
formulating earnings projections and matters to note when using these projections, please see “1. Overview of Operating Results, (4)Future Prospects” on page five of the accompanying materials.

―3―

Accompanying Materials ― Contents
1. Overview of Business Results, etc. ......................................................................... 2(1) Overview of business results for the fiscal year under review .................................................... 2(2) Overview of financial position for the fiscal year under review ................................................... 5(3) Overview of cash flows for the fiscal year under review ........................................................ 5(4) Future outlook ........................................................................................ 7(5) Basic Policy concerning the Allocation of Profits and Dividends for Fiscal 2021 and Fiscal 2022 ........................ 8
2. Basic Views on Selection of Accounting Standards ............................................................. 9
3. Consolidated Financial Statements and Primary Notes ......................................................... 10(1) Consolidated Balance Sheet ............................................................................. 10(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income............................ 12
Consolidated Statement of Income ........................................................................ 12
Consolidated Statement of Comprehensive Income............................................................ 14(3) Consolidated Statement of Changes in Equity ............................................................... 15(4) Consolidated Statement of Cash Flows .................................................................... 17(5) Notes to Consolidated Financial Statements ................................................................ 18(Notes to going concern assumptions) ...................................................................... 18(Change in presentation of results) ........................................................................ 18(Segment information, etc.) .............................................................................. 19(Per share information) ................................................................................. 24(Significant subsequent events) ........................................................................... 24(6) Other ................................................................................................ 24―1―

1. Overview of Business Results, etc.
(1) Overview of business results for the fiscal year under review
Although the Japanese economy continued to incur impact from the COVID-19 pandemic throughout the fiscal year ended
December 31, 2021, new infections decreased thanks to various policies and growth in Japan's vaccinated population, while theeconomy and social conditions exhibited signs of gradual recovery, including the holding of the Tokyo 2020 Olympic andParalympic Games, which had been postponed for one year. However, the future of the pandemic remains extremely uncertain, andpriority measures have been put in place to thwart the spread of new variants in some regions.
Meanwhile, conditions in Asian regions in which the Earth Corporation is conducting business development continue to require
close attention because waves of COVID-19 infections continue to intermittently impact various nations in these Asian regions.
Under these economic conditions, the Company announced its medium-term management plan, “Act For SMILE－COMPASS
2023－” in February 2021. In accordance with the Company’s corporate philosophy, “We act to live in harmony with the Earth,”the plan includes four fundamental policies: “Reform Corporate Compass & Infrastructure,” “Expand Profit Foundation in Asia,”“ESG/Open Innovation,” and “Generate Cost Synergies.” The Company is striving to implement priority measures associated withthese policies during the fiscal year ended December 31, 2021, the first year of the plan.
During the fiscal year ended December 31, 2021, the Company generated 203,785 million yen in sales (+3.9% YoY). This sales
growth was due in part to upward impact stemming from factors associated with the Household Products Business, including
ongoing high customer demand and the launch of new products in response to lifestyle changes caused by COVID-19. Also
contributing to this growth was expansion in the General Environment and Sanitation Business that was caused by an increase incontract numbers. Meanwhile, gross profit rose due to higher sales and the introduction of new products, but operating income
amounted to 10,667 million yen (-6.6% YoY), while ordinary income came to 11,362 million yen (-2.6% YoY). These declines wereprimarily due to an increase in returns of insecticides and repellents, active investment in marketing and human resources, and arise in logistical costs. At the same time, net income attributable to owners of parent reached a record high of 7,142 million yen(+101.4% YoY) in part because it did not incur downward impact it previously sustained during the fiscal year ended December 31,
2020, when the Company recorded impairment losses on goodwill associated with its acquisition of Earth Corporation Vietnam as
extraordinary losses.
Results by segment were as follows.
Household Products Business
Through its Household Products Business, the Company endeavored to rejuvenate corresponding markets through advertising,
the creation of appealing sales areas, and other means of communicating with customers while pursuing new customers with thelaunch of new products and updating existing products to improve their value. At the same time, it strove to lower manufacturingcosts and raise the efficiency of its sales-related spending as it targeted improvement in profitability. Overseas, despite downward
impact stemming from lockdowns implemented in response to the COVID-19 pandemic, the Company generated sales growth,particularly in China, thanks to its proactive investment of management resources.
In the fiscal year ended December 31, 2021, sales generated through the Household Products Business amounted to 188,493
million yen (+5.1% YoY), rising thanks primarily to growth in the market share of insecticides and repellents that resulted fromfavorable sales of new products in this category and sales of bath salts, which saw an expansion in the size of their market due tochanges in customer demand caused by COVID-19. Meanwhile, gross profit increased due to the introduction of new products andhigher sales, but segment operating profit declined to 9,944 million yen (-0.4% YoY) as a result of growth in returns of insecticides
and repellents, active investments in marketing and human resources, and soaring logistical costs.

―2―

Results in the Household Products Business(Millions of yen)

Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2021

ChangeRate of change

Insecticides and repellents

65,99069,000

3,010

4.6%

Household products

104,164

110,154

5,990

5.8%

Oral hygiene products

45,222

46,935

1,712

3.8%

Bath salts

26,33429,915

3,580

13.6%

Other household products

32,60633,303697

2.1%

Pet products and others

9,220

9,338

118

1.3%

Total sales

179,374

188,493

9,119

5.1%

Segment income (operating income)
9,980
9,944
(35)
(0.4%)
Note: Sales include internal sales and transfers made within and between segments, which amounted to 9,615 million yen during
the fiscal year ended December 31, 2020 and 11,804 million yen during the fiscal year ended December 31, 2021.
Insecticides and repellents
In Japan, demand continues to grow due to lifestyle changes associated with the pandemic, including recommendations toventilate living spaces and more time spent at home. However, the size of the market for insecticides and repellents declined
compared to the fiscal year ended December 31, 2020, when it was strong, due mainly to falling temperatures that began theirdownward slide in August 2021. Under these circumstances, the return rate for insecticides and repellents rose to 6.5% (+1.7
points YoY), up from the record-low level it reached in the fiscal year ended December 31, 2020. Regardless, the market shareof the Company's insecticides and repellents increased to 55.8% (Company estimate; +0.8 points YoY) thanks to growth in salesof products such as Earth Mushiyoke Net EX (insect repellent) and Kobae ga Hoi Hoi (fruit fly traps), as well as contribution
from new products including Osu Dake Earth Red Muen Push (no-flame fumigation of cockroaches, mites, fleas).
Overseas, the Company observed favorable results in terms of sales generated through e-commerce channels China. It also
reported sales increases in ASEAN regions such as Thailand and Vietnam despite downward impact from lockdowns
implemented in response to the COVID-19 pandemic. Meanwhile, sales generated through exports to the Middle East and otherregions also achieved growth.
Sales amounted to 69,000 million yen (+4.6% YoY).
Household products
Sales of oral hygiene products came to 46,935 million yen, up 3.8% YoY, thanks to ongoing strong performance from
Mondahmin Premium Care Sensitive (a mouthwash) and Shumitect (a line of toothpastes formulated to prevent dentin
hypersensitivity).
Shifts in customer demand in response to the COVID-19 pandemic saw the market for bath salts expand. Bath salt sales were
29,915 million yen, up 13.6% YoY, due to continuing favorable performance from products such as Onpo tablets, the granularform of Kikiyu (a carbonated bath agent), and packaged bath salts Iiyu Tabidachi.
Despite a YoY decline in sales of dehumidifiers and cooling agents caused by falling temperatures that began their downward
slide in August 2021, sales of other household products rose to 33,303 million yen (+2.1% YoY) thanks to expansion in sales of
the Company's Rakuhapi series of cleaning products, which occurred amid continuously strong demand.
Segment sales amounted to 110,154 million yen (+5.8% YoY).
Pet products and others
Sales of pet products and other miscellaneous products rose to 9,338 million yen (+1.3% YoY), driven primarily by an increasein customers who began to keep pets during the COVID-19 pandemic and growth in sales of cleaning towels and other pet careproducts, as well as pet food, that occurred as people spent more time at home and developed more deep communication with
their pets. Also contributing to expansion in sales of pet products and other miscellaneous products were proactive sales measures,
including updates to existing products and efforts aimed at raising recognition among customers through the introduction of
products with new features.

―3―General Environment and Sanitation BusinessIn the General Environment and Sanitation Business, the Company is enhancing its in-house hygiene management as relevantlaws in Japan are revised and safety standards for food, pharmaceutical products, and medical care are adjusted on an international
scale. Accordingly, the Company observed growth in demand among core customers (food, pharmaceutical, and packing material
factories) for its high-quality hygiene management services, which leverage the Company's specialized knowledge, skills, andexpertise.
Under these circumstances, we endeavored to maintain and expand our contracts by providing standout quality assurance services
through the enhancement of our technological development capabilities. At the same time, we actively invested in the constructionof an internal framework that facilitates the prompt fulfillment of customer needs associated primarily with software development
aimed at improving operational efficiency and recruiting and training human resources. Along with these efforts, we intensified our
initiatives in the pharmaceutical and regenerative medicine industries and efforts associated with auditing and consulting services
related to food safety management.
Consequently, sales in the General Environment and Sanitation Business amounted to 27,234 million yen (+3.1% YoY), while
segment income (operating income) fell to 1,114 million yen (-21.5% YoY) due to an increase in the Company's cost of sales ratio
and a rise in personnel expenses that occurred due to the Company's active investment in human resources.
Results in the General Environment and Sanitation Business
Fiscal year ended
December 31, 2020

(Millions of yen)
Fiscal year ended
December 31, 2021

ChangeRate of change

Sales

26,42027,234813

3.1%

Segment income (operating income)

1,419

1,114

(305)

(21.5%)

Note: Sales include internal sales and transfers made within and between segments, which amounted to 134 million yen in thefiscal year ended December 31, 2020 and 138 million yen in the fiscal year ended December 31, 2021.

―4―

(2) Overview of financial position for the fiscal year under review(Consolidated financial position)(Millions of yen)

Total assets

Fiscal year ended
December 31, 2020
119,870

Fiscal year ended
December 31, 2021
120,715

Liabilities

60,046

56,118

Net assets

59,82364,596

4,773

46.1

49.7

3.6 points

2,507.62

2,720.37

212.75Equity ratio (%)
Net assets per share (yen)Change845(3,927)

As of December 31, 2021, total assets amounted to 120,715 million yen, up 845 million yen compared to December 31, 2020.
This increase occurred despite declines in notes and accounts receivable—trade, investment securities, and goodwill and wasprincipally due to growth in inventories and retirement benefit assets.
Total liabilities amounted to 56,118 million yen, down 3,927 million yen compared to December 31, 2020. This decline occurred
despite growth in electronically recorded obligations—operating and was mainly due to decreases in notes and accounts payable—
trade, income taxes payable, and borrowings.
Net assets rose to 64,596 million yen, up 4,773 million yen compared to December 31, 2020. This growth was chiefly due to anincrease in retained earnings.
Consequently, the Company's equity ratio rose to 49.7%, an increase of 3.6 points compared to December 31, 2020.
Reference: Cash flow-related indicators
Fiscal year
Fiscal year
ended
ended
December 31, December 31,
2017
2018

Fiscal year
Fiscal year
ended
ended
December 31, December 31,
2019
2020

Fiscal year
ended
December 31,
2021

Equity ratio (%)

38.0

37.0

37.3

46.1

49.7

Equity ratio on a fair market value basis (%)

97.1

93.4

107.4

107.1

111.9

Interest-bearing debt to cash flow ratio(annual)

2.4

62.1

2.1

0.2

0.8

102.1

24.2

105.3

549.6

634.1

Interest coverage ratio(3) Overview of cash flows for the fiscal year under review(Consolidated cash flow)(Millions of yen)
Fiscal year ended
December 31, 2020

Fiscal year ended
December 31, 2021

ChangeCash flows from operating activities

24,5904,814(19,776)

Cash flows from investing activities(3,168)(3,220)(51)

Cash flows from financing activities(4,938)(4,610)328

Effect of exchange rate change on cash
(79)
327
406
and cash equivalents
Net increase (decrease) in cash and cash
16,403(2,688)(19,092)
equivalents
Cash and cash equivalents at end of
23,71621,027(2,688)
periodAs of December 31, 2021, cash and cash equivalents (below, "cash") stood at 21,027 million yen, down 2,688 million yen compared
to December 31, 2020.
In the fiscal year ended December 31, 2021, net cash provided by operating activities amounted to 4,814 million yen (versus 24,590
million yen in the fiscal year ended December 31, 2020). The primary sources of this cash were 10,963 million yen in profit before
income taxes (7,278 million yen in the fiscal year ended December 31, 2020), 3,536 million yen in depreciation (3,334 million yen in
the fiscal year ended December 31, 2020), and 1,836 million yen in amortization of goodwill (2,849 million yen in the fiscal year
ended December 31, 2020). Downward impact on cash stemmed mainly from 5,562 million yen in income taxes paid (2,639 million―5―yen in the fiscal year ended December 31, 2020) and a 5,114 million-yen increase in inventories (in contrast with a decrease of 300
million yen in the fiscal year ended December 31, 2020).
Net cash used in investing activities was 3,220 million yen (3,168 million yen used in the fiscal year ended December 31, 2020).
This figure primarily consisted of 2,616 million yen in purchase of property, plant, and equipment (2,298 million yen in the fiscal year
ended December 31, 2020).
Net cash used in financing activities amounted to 4,610 million yen (4,938 million yen used in the fiscal year ended December 31,2020). Cash used consisted mainly of 2,536 million yen in dividends paid (2,023 million yen in the fiscal year ended December 31,2020) and 1,314 million yen in repayments of long-term borrowings (3,279 million yen in the fiscal year ended December 31, 2020).

―6―

(4) Future outlook
Although the Japanese economy showed signs of gradual recovery due to a variety of policies implemented in response to the
COVID-19 pandemic and expansion in Japan's vaccinated population, future circumstances remain extremely uncertain due to therapid spread of new COVID-19 variants, while trends associated with consumer spending and business activities continue to require
close observation. Additionally, business environments surrounding the industries in which Earth Corporation develops its products
and services continue to change on a daily basis due to a variety of factors, including growth in buying power stemming from M&A
among retailers, expansion in e-commerce channels, fragmentation of customer needs, and soaring raw material prices.
Under these circumstances, the Group will continue to focus on "creating a market with customers" in accordance with its Corporate
Philosophy of acting to "to live in harmony with the Earth" as it simultaneously contributes to the achievement of the Sustainable
Development Goals (SDGs). Additionally, in accordance with its medium-term management plan, "Act For SMILE－COMPASS
2023－" (in effect until the end of 2023), the Company will remain conscious of capital efficiency while conducting management thatfurther enhances profitability.
In terms of overseas expansion, which is currently Earth Corporation's most important growth driver, the Company will improve
profitability and establish a foundation for earnings by maintaining local subsidiaries in China and other ASEAN regions (its primarytarget areas for expansion) and proactively investing its management resources. Furthermore, with regard to strategies associated with
exports and cross-border e-commerce, the Company will aim to generate earnings by focusing on highly profitable products andthrough the development and introduction of products that meet the unique needs of each of the countries in which it operates.
As it expands its operations in Japan, the Company will endeavor to generate steady earnings amid external environmental changes
caused by climate change and the COVID-19 pandemic. At the same time, it will continue to launch new products and services in
response to these changes while also conducting promotional campaigns and developing new sales channels on an ongoing basis.
Additionally, Earth Corporation will leverage the experience and knowledge it has accumulated as a leader in the field of insecticides
and repellents as it promotes the MA-T (Matching Transformation) system, an innovative catalytic technology developed in Japan.
The Company believes that its mission includes enhancing the credibility of the MA-T system throughout society, expanding positive
economic impact through the creation of new industries, and exploring possible solutions to social issues. Through the platform
provided by Japan MA-T Industrial Association, Earth Corporation will collaborate with a wide range of companies, research institutes,
and organizations as it attempts to augment the value of MA-T and facilitate its utilization across a broad spectrum of industries.
Earth Corporation is evaluating the results of these activities in each of its individual business divisions and categories, gradually
establishing profit management indicators that enable it to closely monitor profitability. At the same time, the Company is striving toincrease its investment efficiency moving forward. In support of these efforts, it maintains an awareness of capital costs when
formulating hurdle rates for individual investment projects. Additionally, the Company will actively invest in a variety of large-scale
system-related projects that aim to generate work style reforms and improve labor productivity, including upgrades to core systems
and Group ICT infrastructure.
Incorporating impact from these efforts, the Company's full-year consolidated earnings forecast for the fiscal year ending December
31, 2022 projects 155,000 million yen in sales, 10,750 million yen in operating income, 11,150 million yen in ordinary income, and7,280 million yen in net income attributable to owners of parent.
Included below are forecasts for each of the Company's business segments.
Household Products Business
Earth Corporation projects that demand for product lines that it handles through its Household Products Business will remain highthanks to lifestyle changes caused by the COVID-19 pandemic. At the same time, the Company does not believe that it will be able tocompensate for downward impact from soaring raw material prices through its own independent efforts alone. Given thesecircumstances, the Company will aim to secure sufficient earnings by adopting policies targeting sales growth, higher earnings in
categories where it has captured high market shares, appropriate allocation of management resources, and improved cost efficiency.
Earth Corporation projects that the COVID-19 pandemic will continue to cause major changes in the market for insecticides andrepellents, which are a major source of earnings, while also raising corresponding demand. Facing these circumstances as a leading
Japanese manufacturer of insecticides and repellents, the Company believes that facilitating the spread of accurate information
regarding the prevention of insect-borne diseases is one of its responsibilities. In accordance with this view, it will aim to strengthen―7―

sales through educational activities such as "insecticide and repellent seminars" and the establishment of "insecticide and repellent
stations." In terms of household products, we will aim to achieve maximum scale and profitability in all major product categories,
including oral hygiene products, bath salts, clothing care products, and deodorizing air fresheners. To facilitate the achievement ofthese aims, we will introduce new products, generate buzz through promotional campaigns, and develop new sales vectors, such as ecommerce and BtoB channels.
With regard to overseas expansion, we will develop products and implement sales measures that satisfy the unique needs of eachof the countries in which we operate. Through these efforts, we will ensure response that is appropriate for the different climates,
cultures, preferences, and laws and regulations associated with each of these countries. Moving forward, our local subsidiary inThailand will aim to improve its profit structure primarily through efficient investment in marketing while striving to generate growththrough a focus on business categories where it can leverage the competitive advantage of our corporate group. Meanwhile, we willtake advantage of Vietnam's favorable geographic location by continuing to invest in our Vietnamese subsidiary, which is a major
production base facilitating our medium- to long-term expansion overseas. Through our local subsidiary in Malaysia, we will target
full-scale launches of insecticides and repellents while aiming to expand existing brands and strengthen distribution channels. Using
new companies that we plan to acquire for the purpose of accelerating our business development in the Philippines, we will broaden
the scope of our operations in the same country while maintaining a particular focus on insecticides and repellents. Additionally, we
will actively pursue business expansion in other ASEAN regions as we aim to establish local subsidiaries and capitalize on M&A
opportunities. In China, Earth Corporation will strive to improve its earnings efficiency by allocating management resources to ecommerce sales (a channel that is rapidly growing due to COVID-19) while launching products through which it can leverage its
competitive advantages, including insecticides and repellents, masks, and dehumidifying agents.
In the meantime, we will aim to secure adequate profits through ongoing efforts aimed at lowering manufacturing- and sales-related
costs, cutting down on product returns, and limiting marketing expenditures.
Consequently, we project segment sales of 137,763 million yen and segment income (operating income) of 9,320 million yen in theHousehold Products Business.
General Environment and Sanitation Business
The core customers of our General Environment and Sanitation Business (primarily companies associated with the food,
pharmaceutical, and packaging material industries) are facing stringent requirements regarding the establishment of hygiene
management measures aimed at preventing food poisoning and contamination through foreign matter. Accordingly, they are exhibiting
growing need for the high-quality hygiene management services that Earth Corporation provides using its specialized knowledge,
technology, and expertise.
In response to these circumstances, we will utilize the Saito General Research Institute as a base for promoting research,technological development, and the training of human resources. At the same time, we will provide services using IoT technology andvarious AI systems, expand auditing activities related to food safety, and step up expansion in the life science field as we aim toachieve stable earnings growth through an increase in annual contracts.
Based on these factors, we project segment sales of 27,700 million yen and segment income (operating income) of 1,430 million
yen in the General Environment and Sanitation Business.
Earth Corporation will begin applying the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the
beginning of the fiscal year ending December 31, 2022. Accordingly, the consolidated earnings projections indicated above reflect
impact stemming from the application of this standard and forecasts regarding rates of year-on-year change have been omitted.

(5) Basic Policy concerning the Allocation of Profits and Dividends for Fiscal 2021 and Fiscal 2022
We view the return of profits to our shareholders as an important management issue, and accordingly strive to ensure both stabledividends and a dividend on equity ratio (DOE) of four to five percent while securing internal reserves in pursuit of sustainable growth
and the maintenance of a sound management structure.
The Company will primarily use internal reserves for strategic investments and M&A targeting an expanded revenue base in Asia,
investment in core system upgrades and other ICT infrastructure construction projects, research and development expected to lead toopen innovation, and capital investment aimed at improving production efficiency. In addition, the Company will consider conducting
share buybacks in flexible accordance with cash flow conditions and stock price trends.

―8―Based on these policies, we project 118 yen per share in full-year dividends, which, as stated in our IR release entitled "Notice ofRevisions to Earnings and Dividend Forecasts for the Fiscal Year Ended December 31, 2021" (released on January 31, 2022 in Japaneseonly), is an increase of 3 yen per share from our previous forecast. As a result of this upward revision, we now project a DOE ratio of
4.5% and a consolidated dividend payout ratio of 36.4%.
The Company also plans to pay 118 yen per share in full-year dividends in the fiscal year ending December 31, 2022.

2. Basic Views on Selection of Accounting Standards
Over the near term, the Company will prepare its financial statements based on Japanese generally accepted accounting principles(GAAP), taking into account the inter-period comparability of financial statements and comparability across companies.
In terms of the application of International Financial Reporting Standards (IFRS), the Company will take appropriate measuresin light of the existing circumstances in Japan and overseas―9―3. Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheet(Millions of yen)
Fiscal year ended
December 31, 2021
(as of December 31, 2021)

Fiscal year ended
December 31, 2020(as of December 31, 2020)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade

23,716
21,23621,027
21,210Electronically recorded obligations - operating
Merchandise and finished goods

1,509
17,403

1,730
21,622Work in process
Raw materials and supplies

789
3,986

1,315
4,564

Other
Allowance for doubtful accounts

2,124
(20)

2,568
(20)

Total current assets

70,74774,018Non-current assets
Property, plant and equipment
Buildings and structures

29,002

29,489

Accumulated depreciation and impairment(14,982)(15,884)

Buildings and structures, net

14,01913,604

Machinery, equipment and vehicles

15,598

16,536

Accumulated depreciation and impairment(11,357)(12,426)

Machinery, equipment and vehicles, net

4,240

4,110

Land

7,875

7,873

Leased assets
Accumulated depreciation and impairment

115
(58)

255
(79)

56

176

Leased assets, net
Construction in progress
Other
Accumulated depreciation and impairment
Other, net

389

253

8,616
(7,166)

9,198(7,666)

1,449

1,532

28,03027,551

Goodwill
Other

2,260
4,008

423
3,853

Total intangible assets

6,268

4,276

Investments and other assets
Investment securities

8,001

6,025

Retirement benefit asset
Deferred tax assets

4,343
1,152

6,114
1,132

Other
Allowance for doubtful accounts

1,333
(7)

1,612
(16)

Total investments and other assets

14,823

14,86849,122

46,696

119,870

120,715

Total property, plant and equipment
Intangible assets

Total non-current assets
Total assets―10―Fiscal year ended
December 31, 2020(as of December 31, 2020)(Millions of yen)
Fiscal year ended
December 31, 2021
(as of December 31, 2021)

Liabilities
Current liabilities
Notes and accounts payable – trade
Electronically recorded obligations - operating

22,4989,216

22,617
9,832

Short-term borrowings
Current portion of long-term borrowings

1,756
1,314

1,480
1,018

Accounts payable – other
Income taxes payable

10,0173,640

10,721
1,520

Accrued consumption taxes
Provision for bonuses

1,684
312

526
255

Provision for sales returns
Other

595
3,848

434
3,892

Total current liabilities

54,88452,300

2,218
1,329

1,200
1,178

Retirement benefit liability
Asset retirement obligations

454
505

382
516

Other

652

540

Non-current liabilities
Long-term borrowings
Deferred tax liabilities

Total non-current liabilities

5,161

3,818

60,046

56,118

Share capital
Capital surplus

9,829
9,859

9,895
9,928

Retained earnings
Treasury shares

33,322(17)37,929(215)

Total shareholders’ equity

52,99457,537

2,723

1,297

(789)
371

(22)
1,146

2,304

2,421

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests

4,524

4,638

Total net assets

59,82364,596

119,870

120,715

Total liabilities and net assets―11―(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income
Fiscal year ended
December 31, 2020
(from January 1, 2020
to December 31, 2020)
196,045
117,094
78,951(Millions of yen)
Fiscal year ended
December 31, 2021
(from January 1, 2021
to December 31, 2021)
203,785
121,451
82,334

6,228
8,172
15,891(11)
16,880
250
1,076
1,123
2,440
1,349
2,673
11,45967,535

6,662
8,392
17,09812
17,587
202
1,092
1,277
1,836
1,435
3,172
12,89571,666

Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Commission income
Rental income from buildings
Other11,416

10,667

47
115
—
30
66
149

85
141
157
27
46
300

Total non-operating income
Non-operating expenses
Interest expenses
Stock issuance expenses
Foreign exchange losses
Compensation for damage
Other
Total non-operating expenses

408

759

49
58
35
—
19
163

16
—

11,661

11,362

7
46

121
32

Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Transportation and storage costs
Advertising expenses
Promotion expenses
Provision of allowance for doubtful accounts
Salaries and allowances
Provision for bonuses
Travel and transportation expenses
Depreciation
Amortization of goodwill
Rent expenses on land and buildings
Research and development expenses
Other
Total selling, general and administrative expenses

Ordinary income
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities

—
30
18
65

Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Impairment losses
Loss on valuation of investment securities
Amortization of goodwill
Loss on valuation of golf club membership

54

153

11
146
3,831
39
409
0

8
174
368
1
—
—

Total extraordinary losses
Profit before income taxes

4,437
7,278

553
10,963

Income taxes – current
Income taxes – deferred

4,366
(941)

3,455
80

―12―

Fiscal year ended
December 31, 2020
(from January 1, 2020
to December 31, 2020)
3,425(Millions of yen)
Fiscal year ended
December 31, 2021
(from January 1, 2021
to December 31, 2021)
3,536

Net income
Net income attributable to non-controlling interests

3,853
305

7,426
283

Net income attributable to owners of parent

3,547

7,142

Total income taxes―13―Consolidated Statement of Comprehensive Income

Fiscal year ended
December 31, 2020
(from January 1, 2020
to December 31, 2020)
3,853(Millions of yen)
Fiscal year ended
December 31, 2021
(from January 1, 2021
to December 31, 2021)
7,426

Other comprehensive income
Valuation difference on available-for-sale securities

907(1,414)Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax

(365)
587

767
841

Total other comprehensive income

1,129

194

4,982

7,621

4,585

7,259

397

361

Net income

Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests―14―

(3) Consolidated Statement of Changes in Equity
Fiscal year ended December 31, 2020 (from January 1, 2020 to December 31, 2020)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury shares

Total shareholders'equity

3,478

3,509

31,798(16)

38,770

6,350

6,350

Share capital
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares
Dividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period12,700(2,023)(2,023)

3,547

3,547
(1)

(1)

6,350

6,350

1,524

(1)

14,223

9,829

9,859

33,322(17)

52,994(Millions of yen)
Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares
Dividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period

1,792

(424)

(100)

Non-controllinginterests

Total net assets

4,285

44,322

12,700(2,023)
3,547
(1)

930

(365)

472

239

1,277

930

(365)

472

239

15,500

2,723

(789)

371

4,524

59,823―15―

Fiscal year ended December 31, 2021 (from January 1, 2021 to December 31, 2021)(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings

Treasury shares

Total shareholders'equity

9,829

9,859

33,322(17)

52,99465

65

Share capital
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares
Dividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period131(2,536)(2,536)

7,142

7,142
(198)

(198)

2

2

65

68

4,606

(198)

4,542

9,895

9,928

37,929(215)

57,537(Millions of yen)
Accumulated other comprehensive income
Valuation
Foreign currency Remeasurements
difference ontranslationof defined benefit
available-for-saleadjustment
plans
securities
Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new shares
Dividends of surplus
Net income attributable toowners of parent
Purchase oftreasury shares
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in
items other thanshareholders’ equity
Total changes of items during
periodBalance at end of current
period

2,723

(789)

371

Non-controllinginterests

Total net assets

4,524

59,823131(2,536)
7,142
(198)

2

(1,425)

767

775

113

230

(1,425)

767

775

113

4,773

1,297

(22)

1,146

4,638

64,596―16―

(4) Consolidated Statement of Cash Flows
Fiscal year ended December 31,
2020 (from January 1, 2020 to
December 31, 2020)(Millions of yen)
Fiscal year ended December 31,
2021 (from January 1, 2021 to
December 31, 2021)

7,278
3,334

10,963
3,536

3,831
2,849

368
1,836

(428)

(635)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Amortization of goodwill
Increase (decrease) in retirement benefit assets andliabilities
Increase (decrease) in allowance for doubtful accounts

(13)

9

Interest and dividend income
Interest expenses

(162)
49

(227)
16

Foreign exchange losses (gains)
Loss (gain) on sale of investment securities

18
(46)

(33)
(32)

Loss (gain) on valuation of investment securities
Decrease (increase) in trade receivables

39
(201)

1
(161)

Decrease (increase) in inventories
Decrease (increase) in other assets

300
268

(5,114)(271)

Increase (decrease) in trade payables
Increase (decrease) in other liabilities
Other

4,976
4,797
227

668
(597)
(161)

Subtotal

27,117

10,165Interest and dividends received
Interest paid
Income taxes paid

162
(49)
(2,639)227(16)(5,562)

Net cash provided by (used in) operating activities

24,5904,814(2,298)64(2,616)
186

(20)
62

(101)
68

(51)
(1,106)
180

－
(805)
48

(3,168)(3,220)Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of investment securities
Proceeds from sale of investment securities
Purchase of shares of subsidiaries and associates
Other payments
Other proceeds
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings(12,029)(274)

Repayments of long-term borrowings
Proceeds from issuance of shares resulting fromexercise of share acquisition rights
Purchase of treasury shares(3,279)(1,314)

12,595

－

(1)

(198)

Purchase of treasury shares of subsidiaries
Dividends paid－
(2,023)(86)(2,536)

Dividends paid to non-controlling interests
Other

(158)
(42)

(158)
(41)

(4,938)(4,610)(79)

327

16,403
7,312(2,688)23,71623,71621,027

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
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period―17―(5) Notes to Consolidated Financial Statements(Notes to going concern assumptions)None to be reported.
(Change in presentation of results)(Changes to consolidated balance sheet)
For the fiscal year ended December 31, 2020, the Company recorded all impact stemming from electronically recordedmonetary claims (operating) under the current asset account titled "notes and accounts receivable—trade." However, to improve
clarity, we have included a separate account entitled "electronically recorded monetary claims—operating" to reflect this impact
in our consolidated balance sheet for the fiscal year ended December 31, 2021. To reflect this change in presentation, we haverecomposed our consolidated financial statements for the fiscal year ended December 31, 2020, lowering the balance of the"notes and accounts receivable—trade" account (under "current assets") from 22,746 million yen to 21,236 million yen andincluding an "electronically recorded monetary claims—operating" account with a balance of 1,509 million yen.
Accordingly, we have also included an "electronically recorded obligations—operating" account in our consolidated balance
sheet for the fiscal year ended December 31, 2021 to reflect impact from electronically recorded obligations (operating), which
was reflected in the balance of "notes and accounts payable—trade" (under "current liabilities") in our consolidated balance
sheet for the fiscal year ended December 31, 2020. To reflect this change in presentation, we have recomposed our consolidated
financial statements for the latter fiscal year, lowering the balance of the "notes and accounts payable—trade" account on thecorresponding consolidated balance sheet from 31,714 million yen to 22,498 million yen and including an "electronicallyrecorded obligations—operating" with a balance of 9,216 million yen.

―18―

(Segment information, etc.)
a. Segment information
1. Overview of reportable segments
Earth Corporation's reportable segments represent constituent units of the Company’s corporate group for which separate financial
information is available. These segments are subject to periodic reviews conducted by the Company’s Board of Directors with theaim of evaluating business performance and facilitating decisions regarding the allocation of management resources.
Earth Corporation maintains a Household Products Business and a General Environment and Sanitation Business, and these twobusinesses constitute the Company's reportable segments.
Through its Household Products Business, the Company manufactures, sells, purchases, imports, and exports a variety of products,
including household insecticides and repellents; gardening supplies; household products (mouthwash, denture-related supplies,
toothpaste and associated products, bath salts, deodorizing air fresheners, etc.); pet products; chemical agents used for communicabledisease control and in the fields of agriculture, forestry, and animal husbandry; and raw materials for overseas markets.
Through General Environment and Sanitation Business, the Company provides hygiene management services for facilities suchas factories and hospitals.
2. Method for calculating sales, profit or loss, assets, liabilities and other items for each reportable segment
The accounting methods we apply for all reportable segments are compliant with the "material matters that serve as the basis for
preparation of consolidated financial statements" as outlined in Japan's Regulation on Terminology, Forms, and Preparation Methodsof Consolidated Financial Statements.
The income figures of our reportable segments indicate operating income generated through these segments.
Intersegment sales and transfers are based on prevailing market prices.
3. Sales, income or loss, assets, liabilities and other items for each reportable segment
Fiscal year ended December 31, 2020 (from January 1, 2020 to December 31, 2020)(Millions of yen)
Reportable segments
Adjustments*2

Amountrecorded inconsolidated
financialstatements*3

196,045－

196,045

134

9,749

(9,749)－179,374

26,420205,795(9,749)196,045

Segment income

9,980

1,419

11,40016

11,416

Segment assets

122,438

16,519138,958(19,088)

119,870

Depreciation*4

2,962

372

3,334

－

3,334

Amortization of goodwill

2,440

－

2,440

－

2,440

759

3,591

－

3,591

Household Products
Business

General Environment
and Sanitation
Business

169,759

26,286

9,615

Total

Total

Sales
Sales generated throughexternal customers
Intersegment sales andtransfers*1

Other items

Increases in tangible andintangible non-current
2,831
assets*4
Notes: 1. Includes internal sales within and among segments
2. Adjustments were as follows:―19―

(1) The 16 million-yen adjustment to segment income comprised eliminations of intersegment transactions.
(2) The 19,088 million-yen downward adjustment to segment assets is comprises eliminations of intersegment transactions.
3. Segment income (losses) are adjusted according to the amount of operating income indicated on the consolidated statements
of income.
4. "Depreciation" and "Increase in tangible and intangible non-current assets" include both amortization of, and increases in,long-term prepaid expenses.

―20―

Fiscal year ended December 31, 2021 (from January 1, 2021 to December 31, 2021)(Millions of yen)
Reportable segments
General Environment
Household Products
and Sanitation
Business
Business

Adjustments*2

Amount recordedin consolidated
financialstatements*3

Total

Sales
Sales generated throughexternal customers
Intersegment sales andtransfers*1

176,689

27,095

203,785－

203,785

11,804138

11,942(11,942)－

Total

188,493

27,234

215,728(11,942)

203,785

Segment income

9,944

1,114

11,059(391)

10,667

Segment assets

124,919

16,959141,879(21,163)

120,715

3,115

421

3,536

－

3,536

－

1,836

－

1,836

369

3,090

－

3,090

Other items
Depreciation*4
Amortization of goodwill

1,836
Increases in tangible andintangible non-current
2,721
assets*4
Notes: 1. Includes internal sales within and among segments
2. Adjustments were as follows:(1) The 391 million-yen adjustment to segment income comprised eliminations of intersegment transactions.
(2) The 21,163 million-yen downward adjustment to segment assets is comprises eliminations of intersegment transactions.
3. Segment income (losses) are adjusted according to the amount of operating income indicated on the consolidated statements
of income.
4. "Depreciation" and "Increase in tangible and intangible non-current assets" include both amortization of, and increases in,long-term prepaid expenses.
b. Related information
Fiscal year ended December 31, 2020 (from January 1, 2020 to December 31, 2020)
1. Information by product and service(Millions of yen)Insecticides andrepellents
Sales generated throughexternal customers

60,984

Household products
100,084

Pet products andothers
8,690

General Environment
and Sanitation
26,286

Total
196,045

2. Information about geographical areas(1) Sales
Sales by geographical area have been omitted because sales generated through external customers in Japan accounted for morethan 90% of sales reported on the Company's consolidated statement of income.

―21―

(2) Property, plant and equipment(Millions of yen)
Japan

China

Thailand

25,558

946

Other
1,393

Total
132

28,0303. Information by the major customer(Millions of yen)
Customer name or title

Sales

Name of related segment

PALTAC Corporation

41,607

Household Products Business

ARATA Corporation

34,601

Household Products Business

Fiscal year ended December 31, 2021 (from January 1, 2021 to December 31, 2021)
1. Information by product and service(Millions of yen)Insecticides
and repellents
Sales generated throughexternal customers

Household products

62,858Pet products
and others

105,158

General Environment
and Sanitation

8,672

Total

27,095

203,785

2. Information about geographical areas(1) Sales
Sales by geographical area have been omitted because sales generated through external customers in Japan accounted for morethan 90% of sales reported on the Company's consolidated statement of income.
(2) Property, plant and equipment(Millions of yen)
Japan

China
25,010Thailand
1,010

Other
1,425

Total
105

27,551

3. Information by the major customer(Millions of yen)
Customer name or title

Sales

Name of related segment

PALTAC Corporation

42,459Household Products Business

ARATA Corporation

35,971

Household Products Business―22―

c. Information about impairment loss on non-current assets by reportable segment
Fiscal year ended December 31, 2020 (from January 1, 2020 to December 31, 2020)(Millions of yen)
Reportable segments
GeneralEnvironment andHousehold
Sanitation
Products BusinessBusiness
Impairment
losses3,704

Adjustments

Total

126

3,831

Total

－

3,831

Fiscal year ended December 31, 2021 (from January 1, 2021 to December 31, 2021)(Millions of yen)
Reportable segments
GeneralEnvironment andHousehold
Sanitation
Products BusinessBusiness
Impairment
losses311

Adjustments

Total

57

368

Total

－

368

d. Amortization of goodwill and unamortized goodwill by reportable segment
Fiscal year ended December 31, 2020 (from January 1, 2020 to December 31, 2020)(Millions of yen)
Reportable segments
GeneralEnvironment andHousehold
Sanitation
Products BusinessBusiness
Amortizationof goodwill

2,849

Adjustments

Total

－

2,849

Total

－

2,849

Unamortized
2,260
－
2,260
－
2,260
goodwill
Note: Amortization of goodwill in the Household Products Business includes amortization resulting from extraordinary losses.
Fiscal year ended December 31, 2021 (from January 1, 2021 to December 31, 2021)(Millions of yen)
Reportable segments
GeneralEnvironment andHousehold
Sanitation
Products BusinessBusiness

Adjustments

Total

Total

Amortizationof goodwill

1,836

－

1,836

－

1,836

Unamortized
goodwill

423

－

423

－

423

―23―

(Per share information)

Fiscal year ended December 31, 2020
Fiscal year ended December 31, 2021
(from January 1, 2020 to December 31, 2020) (from January 1, 2021 to December 31, 2021)
Net assets per share

2,507.62 yen

2,720.37 yen

Net income per share

170.65 yen

323.76 yen

Notes: 1. Due to a lack of dilutive shares, diluted net income per share for the fiscal years ended December 31, 2020 and 2021 havebeen omitted.
2. The basis for calculating loss per share is as follows:
Fiscal year ended December 31,
2020(from January 1, 2020 to
December 31, 2020)

Fiscal year ended December 31,
2021(from January 1, 2021 to
December 31, 2021)(millions of yen)

3,547

7,142

Amount not attributable to common(millions of yen)shareholders
Net income attributable to ownersof parent attributable to common (millions of yen)
stock

－

－

3,547

7,142

20,78622,062Item

Net income attributable to ownersof parent

Average number of common stock (thousands ofoutstanding during the fiscal year
shares)(Significant subsequent events)
None to be reported.

(6) Other
For further details, please refer to the announcement entitled "Notice of Change of Directors" released on February 14, 2022
(available in Japanese only).

―24―