SANIX INCORPORATED
Consolidated Financial Summary

For the Fiscal Year ended March 31, 2014.

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, 2014

Consolidated Financial Statements
For the Fiscal year ended March 31, 2014
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,Management Corporate Officer, General Manager, Management and Planning Division

1. Consolidated Financial Highlights for the Year ended March 31, 2014
(April 1, 2013 to March 31, 2014)(1)

Consolidated Operating Results(Millions of Yen)
Fiscal Yearbetween April 1 and March 31
FY2012Net Sales．．．．．．．．．．．．．．．．．．．．．．．．

(2)% change

FY201343,366% change

37.9

84,221

94.2

Operating Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
1,870

356.4

4,508

141.0

Recurring Profit．．．．．．．．．．．．．．．．．．．．．．．．．
1,788

414.1

4,309

140.9

Net Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．
1,575

-

2,964

88.2

Net Income per Share(￥)．．．．．．．．．．．．．．．．．．．
¥33.01-¥62.13-Net Income per Share, Diluted(￥)．．．．．．．．．．．．．

-

-

-

Return on Equity．．．．．．．．．．．．．．．．．．．．．．．．
19.8%
Ratio of Recurring Profit to Net Assets．．．．．．．．．．．．．．．．．．．
7.1%
4.3%
Ratio of Operating Income to Net Sales．．．．．．．．．．．．．．．．．．．．．．
(Reference) Comprehensive income．．．．．．．．
1,629
-

28.8%

-

10.2%

-

5.4%

-

2,991

-

-

Consolidated Financial Position(Millions of Yen)
As of March 31
FY2012FY2013

Total Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 29,196
Net Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 8,837
Shareholders' Equity Ratio (%)．．．．．．．．．．．．．．．．．．．
30.2%
Net Assets per Share (￥)．．．．．．．．．．．．．．．．．．．．．．．．
184.6255,316Note (1) Shareholders’ equity(3)

11,82721.3%
247.17

Fiscal Year ended March 31, 2014

11,798million yen

Fiscal Year ended March 31, 2013

8,808 million yen

Consolidated Financial Cash Flows(Millions of Yen)
Fiscal Yearfrom April 1 to March 31
FY2012FY2013

Cash Flows from Operating Activities．．．．．．．．．．．．．．．．．．．．．．．．
2,184
Cash Flows from Investing Activities．．．．．．．．．．．．．．．．．．
(222)
230
Cash Flows from Financing Activities．．．．．．．．．．．．．．．．．．．
Balance of Cash and Cash Equivalents at End of Period．．．．．．．．．．．．．
3,547

4,933
(1,728)
2,433
9,204

2. Dividends
Fiscal Yearfrom April 1 to March 31
FY2012FY2014(Forecast)

FY2013

Dividend per Share at the end of 1st Half (￥)．．．．．．．．．．．．．．．．．．．．．．．．
¥0.00
¥0.00
Dividend per Share at the end of the year (￥)．．．．．．．．．．．．．．．．．．．．．．．．
¥0.00
¥0.00
Annual dividend per Share (￥)．．．．．．．．．．．．．．．．．．．．．．．．
¥0.00
¥0.00
Total dividend．．．．．．．．．．．．．．．．．．．．．．．．．．．
Pay-out ratio (%)．．．．．．．．．．．．．．．．．．．．．．．．
Ratio of dividend to total capital (%)．．．．．．．．．．．．．．．．．．．．．．．．
-

¥0.00
¥0.00
¥0.00
-

3. Forecasts for Consolidated Business Results(For the fiscal year ending March 31, 2015)(Millions of Yen)FY2014First Half

% cahnge

Full YearNet Sales．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
97.5%
62,600140.7%
3,600
Operating Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
Recurring Profit．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
142.5%
3,500
Net Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
112.9%
2,240¥46.86Net Income per Share(￥)．．．．．．．．．．．．．．．．．．．．．．．．
-% change

161,500

91.8%

14,000210.5%

13,800220.2%

8,830

197.8%¥184.73-

4. Others(1) Changes in significant subsidiaries during FY2013: No(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
FY2012FY2012

48,919,396
48,919,396
Number of shares issued and outstanding at period end．．．．．．．．．．．．．．．．．．．．．．．．
1,210,375
1,186,243
Number of treasury stocks at period end．．．．．．．．．．．．．．．．．．．．
Average Number of shares outstanding during the priod．．．．．．
47,709,229
47,714,474(Reference) Non-consolidated Financial Statement
1.Non-consolidated Highlights for the year ended March 31,2014(1)Non-consolidated Operating Results
Fiscal Yearbetween April 1 and March 31

Net Sales．．．．．．．．．．．．．．．．．．．．．．．．

FY2012% change

FY201331,123% change

12.2

34,356

10.4

Operating Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
1,678

-

868

(48.3)

Recurring Profit．．．．．．．．．．．．．．．．．．．．．．．．．
1,641

-

927

(43.5)Net Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．
1,755

-

949

(45.9)Net Income per Share(￥)．．．．．．．．．．．．．．．．．．．
¥36.79-¥19.90-Net Income per Share, Diluted(￥)．．．．．．．．．．．．．

-

-

-

-

(2) Non-consolidated Financial Position
As of March 31
FY2012FY2013

Total Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 25,933
Net Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 7,581
Shareholders' Equity Ratio (%)．．．．．．．．．．．．．．．．．．．
29.2%
Net Assets per Share (￥)．．．．．．．．．．．．．．．．．．．．．．．．
158.91

43,181
8,577
19.9%
179.702.Foercasts for Non-consolidated Business Results
FY2014First Half

% cahnge% change

Full YearNet Sales．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
189.0%
48,500123.0%
2,400
Recurring Profit．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
Net Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
1,530
58.3%
Net Income per Share(￥)．．．．．．．．．．．．．．．．．．．．．．．．
¥32.01145,000

322.0%

12,500 8,050

748.0%¥168.41-

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

2

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

5

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

6

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

6

Ⅱ. Group Outline

8

Ⅲ. Management Policies
1. Fundamental Management Policies ...................................................................….....…………….……….…

10

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

10

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

10

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

11

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

12

Ⅳ. Consolidated Financial Statements
1. Consolidated Balance Sheet…………..……………………………………………..…………………….……..…

13

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

15

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

15

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

16

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

17

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

19

5. Note regarding assumption of a going concern……………………………………….…………………………..

20

6. Segment Information…………………………………………………………………….…………………………...

21

Supplemental information ……………………………………………………………….………………………..….

22

I. Business Results
1. Earnings(1) Current Fiscal Year Overview
In the current fiscal year, the Japanese economy has been gradually recovering with a solid shift in consumer
spending and visible signs of recovery in production and capital investment, as well as a steady upturn in
employment.

Under such circumstances, our group has been concentrating its business resources and stimulating demand
to rapidly penetrate the commercial PV business based on the “Renewable Energy Feed in Tariff Purchasing
Program,” which started in July 2012. By expanding our operations in the business, we will strive to promote
the contribution of environmentally-friendly energy to society.

The Commercial Photovoltaics (PV) Division recorded substantial revenue growth in the current fiscal yearwith commercial PV and wholesale PV components, contributing to sales. In contrast, the Home Sanitation(HS) Division recorded decreased revenue due to the large shift of its human resources to the commercial PV
business. At the Establishment Sanitation (ES) Division, commercial PV systems for buildings andcondominiums recorded revenue growth. The Environmental Resources Development Division recorded
revenue growth in plastic fuel, electricity sales at TOMAKOMAI Power Plant, and organic waste processing.
As a result, group-wide net sales increased by 94.2% to 84,221 million yen from the same period theprevious year.

In terms of profitability, the Commercial PV Division had substantially increased costs for a proactive
expansion in sales, installation, and the logistic system to address the hike in demand, while commercial PV
systems recorded substantial revenue growth, resulting in increased profit. As a result, for the whole group,
the operating income increased by 141.0% to 4,508 million yen, ordinary income was up 140.9% to 4,309
million yen, with net income increasing by 88.2% to 2,964 million yen from the same period the previous
year.
(thousand of yen)
Consolidated Operating Results

FY2012FY2013%Change

Difference

Net Sales

43,366

84,221

94.2

40,855

Operating Income

1,870

4,508

141.0

2.637

Ordinary Income

1,788

4,309

140.9

2,521

Net Income

1,575

2,964

88.2

1,389

2

Consolidated results of individual divisions for the year were as follows:a. Commercial Photovoltaic Solution (CPS) Division
The sales of commercial PV systems covering from sales and components sourcing to installation increased by
594.4% to 42,167 million yen from the same period the previous year, while wholesale PV components
increased by 158.7% to 9,172 million yen from the same period the previous year. As a result, the net sales ofthe division increased by 433.8% to 51,340 million yen from the same period the previous year.
Absorbing increased proactive costs, such as advertising expenses, labor costs with enhanced recruitment,
and logistics network maintenance costs, with substantial revenue growth effects, the operating income was
4,410 million yen compared with 320 million yen in the same period the previous year.

b. Home Sanitation (HS) Division
The sales of existing products, such as termite control, increased by 33.7% from the same period the previous
year. In contrast, with a significant number of human resources shifted from the division to the CPS Division,residential PV systems decreased by 83.0% from the same period the previous year. As a result, the net salesof the division decreased by 27.0% to 10,818 million yen compared to the same period the previous year.
With the rising fixed cost ratio of selling and general administrative expenses to reduced sales, the operating
income decreased by 35. 7% to 1,141 million yen compared to the same period the previous year.

c. Establishment Sanitation (ES) Division
The sales from work on buildings and condominiums related to maintenance and management, decreased by
11.3% compared to the same period the previous year. The sales from the PV systems that we started to sellin the KANTO region, increased by 133.9% compared to the same period the previous year. As a result, net
sales increased by 51.6% to 6,011 million yen compared to the same period the previous year.
With the revenue growth effect, the operating income increased by 36.5% to 190 million yen compared to thesame period the previous year.

d. Environmental Resources Development (ERD) Division
The sales from plastic fuel, with increased acceptance volume of waste plastic, increased by 5.1% compared tothe same period the previous year. With stable operation of TOMAKOMAI Power Plant, the revenues fromelectricity sales increased by 1.4% compared to the same period the previous year. The sales from organic
waste processing with increased acceptance volume increased by 10.4% compared to the same period theprevious year. As a result, the net sales of the division increased by 7.2% to 16,051 million yen compared tothe same period the previous year.
The operating income decreased by 12.9% to 1,364 million yen compared to the same period the previous
year due to high transferring cost the plastic fuel to TOMAKOMAI power plant, and so on.

3(2) Prospect for Next Year
The prospects for next year are good with expectations for the economic recovery of our group companies
with the upturn in the domestic economy. Although the “Renewable Energy Feed in Tariff Purchasing
Program” reduced the commercial PV purchasing unit price in April 2014 from 36 yen to 32 yen before tax for
10kW or more, our group will still be able to proactively deploy our business.
The Group has been engaging in business, such as direct sales and installation of commercial “Changes in
Organization and Personnel Changes” as of March 26, 2014, the organization was revised to establish direct
sales and installation structures in eastern Japan, with large potential as a market, while handling thebusiness at our company.
As of April 1, the CPS Division established the SE-West section at our key area in western Japan, as well as the
SE-East section in eastern Japan to establish a direct sales and installation structure, striving to expand
operations further. In addition, to improve profitability, we will endeavor to reduce the cost of components
through self-manufacture of inverters, as well as improving installation.
The HS Division mainly engages in maintenance for existing customers of our residential services, such as
termite control and under-floor ventilation systems. However, the division will record decreased sales due tothe operational transfer of the residential PV system to the SE-West section from this fiscal year.
The ES Division sales will be substantially decreased, due to the operational transfer of the PV systems to the
SE-East section as of April 1. The division will engage in maintaining buildings and condominiums.
The ERD Division will continually work to enhance the quality of plastic fuel to raise the efficiency of thepower generation of TOMAKOMAI Power Plant. The revenues from plastic fuel are expected to remain steady,while the revenues from electricity sales are expected to increase, projecting increased sales for the division.
With the above-mentioned prospects for the consolidated financial outlook for the next fiscal year of ourwhole group, we expect net sales to increase 91.8% to 161,500 billion yen, the operating income to increase
210.5% to 14,000 million yen, the ordinary income to increase 220.2% to 13,800 million yen, and the net
profit to increase 197.8% to 8,830 million yen, compared to the same period the previous year.

42. Financial Condition(1) Assets, Liabilities and Net Assets

Total assets as of the end of the current fiscal year increased by 26,120 million yen to 55,316 million yen fromthe previous fiscal year. The total liabilities increased by 23,130 million yen to 43,489 million yen from theprevious fiscal year. Net assets increased by 2,990 million yen to 11,827 million yen from the previous fiscal
year. As a result, the capital-to-asset ratio was 21.3%.
<Assets>
Current assets increased by 163.8% to 38,648 million yen from the end of the previous fiscal year, mainly
due to the increase in cash and deposits and accounts receivable by 14,848 million yen.
Fixed assets increased by 14.6% to 16,668 million yen from the end of the previous fiscal year, mainly due
to the increase in property, plant and equipment by capital expenditure in machines and equipment
together with buildings under installation by 1,855 million yen.

<Liabilities>
Current liabilities increased by 146.0% to 36,581 million yen from the end of the previous fiscal year,
mainly due to the increased notes payable and accounts payable by 14,654 million yen, short-termloans-payable by 1,662 million yen and income tax payable by 1,357 million yen.
Noncurrent liabilities increased by 25.9% to 6,907 million yen from the end of the previous fiscal year,
mainly due to the increased long-term borrowings by 875 million yen and lease obligations by 251 million
yen.

<Net Assets>
Net assets increased by 33.8% to 11,827 million yen from the previous fiscal year, mainly due to the current
net income of 2,964 million yen.
(2) Cash Flows
Cash and cash equivalents (hereinafter “the funds”) increased from the previous fiscal year by 5,656 million
yen to 9,204 million yen at the end of the current fiscal year.
The cash flow and the factors in the current fiscal year were as follows:(Net cash provided by operating activities)
For net cash provided by operating activities , the income increased by 2,748 million yen to 4,933 million yen
from the same period the previous year. The key factors include increased notes and account receivable-tradeby 14,848 million yen, and net income before income taxes of 4,309 million yen recorded, with notes andaccount payable-trade increased by 14,665 million yen.
(Net cash provided by investing activities )For net cash provided by investing activities, spending increased by 1,506 million yen to 1,728 million yen
from the same period the previous year, mainly due to the expenditure of 1,686 million yen for tangible fixed
assets obtained.
(Net cash provided by financing activities )For net cash provided by financing activities, the income was 2,433 million yen with decreased of 2,203
million yen from the same period the previous year, mainly due to increase in short-term loans payable.

5The Cash Flow Indicators:

Shareholders' equity ratio
Shareholders' equity ratio on a market
price basis
Interest-bearing liabillities ratio tocash flow
Interest coverage ratio(Note)Shareholder’s equity ratio:

FY2009FY2010FY2011FY2012FY2013

35.1%

34.7%

33.4%

30.2%

21.3%

42.1%

55.6%

53.3%

92.0%

99.2%

13.10

136.73

5.34

3.24

1.96

3.60

0.29

7.36

13.30

25.71

Shareholder’s equity/Total assets

Share ratio on a market price basis:

Total market value of stock/Total assets

Interest-bearing liabilities 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 interestis paid.

Interest payment used in the calculation of the interest coverage ratio is the amount of interest expanse

reported on the consolidated cash flow statement.

3. Basic Shareholder Return Policy; Cash Dividends
As a basic corporate policy, the Company focuses on returning profit to our shareholders, based on the dividend on
the equity ratio, together with the overall consideration of operational expansion and internal reserves.
While recording increased profit in current net income for the current fiscal year, however, retained earnings in theshareholders' equity was negative. Therefore, much to our regret, no dividend

is scheduled for distribution in thecurrent period. Nevertheless, we are striving to expand the performance and internal reserves to generate profits
to pay dividends again in the near future.

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 these risks occurring, the SANIX Group endeavors to take proper measures toavert these risks and minimize any impacts in the event of occurrence.
Certain future-related statements included in this document are estimates made by the Company based on
the information available at the end of the current fiscal year.
(1)Government measures
The SANIX Group’s PV business expects the commercial PV system market to expand rapidly along withthe enforcement of the Act on Special Measures Concerning New Energy Use by Operators of Electric
Utilities. However, if customers become less willing to invest due to revision in the purchase price or
period that is subject to annual review according to the “Renewable Energy Feed in Tariff Purchasing
Program,” or abolition of it, there might be disadvantageous effects on the performance or the financial
state of our group.
(2)Foreign exchange rate fluctuations
In the Group’s PV business, most of the PV modules have been sourced from Chinese and South Korean
6manufacturers. Purchase prices are expected to rise in the future, and purchase price fluctuations due tothe exchange rate may impact the Group’s performance and financial state.
(3)Human resources recruitment and retention
Our group’s PV business requires a number of employees to be engaged in various functions from sales
and installation to customer management. To address such needs, mid-career employees will be
proactively hired, including those qualified as electrical engineers. However, any larger-than-expectedshortage in the number of employees due to difficulty in recruitment or considerable rise of labor costs
in sales due to rapid market changes in the PV business may have negative effects on the performanceand the financial state of the group.
(4)Industrial accidents and natural disasters
Although we take all possible measures, if any unexpected, material accident during PV systeminstallation, or waste disposal operations, or unexpected disasters, such as climatic events, may impact
the group’s performance and financial state.
(5)Resource recycling power generation system
One of the factors for stable operation of the ERD Division is the maintenance or improvement in plastic
fuel quality at SANIX Energy’s TOMAKOMAI Power Plant. However, since plastic fuel originates fromwaste, any inconsistency in the quality or properties that may affect the stable operation of the power
plant may be disadvantageous to the performance or financial state of the group.
(6)Power demand trend
The ERD Division may experience fluctuations in the electric power unit price at the electricity sales
business of SANIX Energy’s TOMAKOMAI Power Plant due to demand-supply fluctuations for seasonal
demand and the supply of electricity and the resumption of nuclear power plant operations. Decline of
the electric power unit price above projections may have an unprofitable impact on the group’s
performance and financial status.
(7)Statutory regulations
As our key business lines include PV system sales/installation, residential maintenance, commercial
waste disposal, power generation and electricity sales, we are subject to statutory regulations, such as
the “Installation Industry Act,” “Act on Special Measures Concerning New Energy Use by Operators ofElectric Utilities,” “Act on Specified Commercial Transactions,” “Waste Disposal and Public Cleaning Law
and related laws,” and the “Electricity Business Act.”The Group endeavors to enhance compliance. However, any enforcement of amendment or
establishment of such regulations, or of administrative action, such as suspension of sales, in whole or inpart, or cancellation of approvals, may impact the group’s performance and financial state.

7

II. Group Outline
The Group consists of the Company and 10 other consolidated subsidiaries. Its major business fields are
sales/installation of PV systems, environmental sanitary services for general households, environmental
sanitary services for corporations and recycling-based power generation. The structure of each company inrelation to the Group’s business fields is as follows:
1) CPS Division
SANIX Engineering Incorporated, a consolidated subsidiary, has been conducting sales and installation for the
rapidly penetrating commercial PV systems. The Company sells wholesale PV component. From March 2015,
the division’s PV operation is scheduled to shift from SANIX Engineering Incorporated to SE-West section andSE-East section as of June 1.
2) HS Division
The Company engages in environmental sanitation work for general households, specifically termite control,
repairing foundations, under-roof/floor ventilation systems, and PV system installation for households. From
March 2015, the division’s PV operation is scheduled to shift to the SE-West section.
3) ES Division
The Company offers corporate environmental sanitation services, specifically buildings and condominiums
plumbing installation and maintenance, and PV system installation for multi-dwelling business operators.
From March 2015, the division’s PV operations are scheduled to shift to the SE-East section.
4) ERD Division
The Company sells plastic fuel to its consolidated subsidiary SANIX Energy Incorporated. SANIX Energy
generates and sells electricity by using plastic fuel, purchased from SANIX and Hokkaido SANIX Environment
Incorporated, SANIX’s consolidated subsidiary. K.K. C&R, SANIX’s consolidated subsidiary, disposes ofincinerator ash from SANIX Energy. K.K. HOKUHAI, SANIX ’s consolidated subsidiary, leases facilities to K.K.
C&R.

PV modules sold and used for installation by our group have been partially sourced to our consolidated
subsidiary SHANRI (Shanghai) Energy Science and Technology Co., Ltd. Chemicals and business vehicles usedby our group have been sourced and leased from our consolidated subsidiary SUNAIM Incorporated.
Information system operation of our divisions has been outsourced to our consolidated subsidiary SANIX
Software Design Incorporated.

8

9

III. Management Policies
1. Fundamental Business Management Policies
Since its foundation, we have been engaged in overall environmental sanitation management operations,conducting the environmental sanitation business for households, environmental sanitation for businessoffices, and the building maintenance business for buildings and condominiums facilities. In addition,
positioning it as the core business, we decided to concentrate our management resources on the commercial
PV business, in which rapid penetration can be expected along with the enforcement of the “Renewable
Energy Feed in Tariff Purchasing Program,” which started in July 2012. Therefore, the Company will enhance
its corporate value, and accelerate the shift to the power generation business through industrial waste
recycling and energy-related companies.

2. Target Management IndicesAs our group’s mid- and long-term management strategy, the Group will drive the PV business to establish its
position in the green energy field, while enhancing the business base together with the resource recycling
power generation business. The targeted management benchmark will be the operating income ratio thatprecisely captures the state of productivity in balance with costs. In the medium term, we will target an
operating margin of 10%, expecting a substantial increase in sales in the PV business, which will account for asignificant share of sales.

3. Medium- and Long-Term Business Strategies and Issues to Be Addressed(1) CPS Division
With proactive promotion of renewable energy by the government, the division will stimulate demand forcommercial PV, a market with huge potential, concentrating the management resources. In the medium term,
We will expand the market share by further expanding the sales structure in western Japan, while
establishing the structure in eastern Japan where full-fledged business is scheduled in the March 2015
period.
(2) HS Division
The division will conduct detailed maintenance for existing customers, including termite control andunder-roof/floor ventilation systems. In addition, from the standpoint of consumer protection, compliancewill be thoroughly ensured.
(3) ES Division
The division will maintain existing customers of building facility maintenance and protection, including
plumbing installation and maintenance for buildings and condominiums.
(4) ERD Division
The division conducts the electricity sales business at TOMAKOMAI Power Plant, using plastic fuel accepted,
processed and produced at 14 plastic resource development plants across the country and Hokkaido SANIX
Environment. From 2016, when retail electricity is liberalized, TOMAKOMAI Power Plant will become a useful
power supply base. Addressing the coming opportunity to incorporate the new power demand brought by
the retail electricity liberalization, we will be engaging in the power retail business with mid- and long-term
prospects.

10

4. Challenges the Company faces
Although the business environment surrounding the company will remain severe, eco-businesses, such as
renewable energy promotion and resource recycling energy deployment, are expected to play an increasingly
important role in society in terms of environmental protection. To promote these businesses, we have beentackling the following management challenges:(1)Human resources recruitment and structural enhancement
As the commercial PV business requires engaging a number of employees from sales and installation tocustomer management, the recruitment of such employees will be an important challenge. In terms of sales,
we will establish a sales structure that enables community-based introduction and repeat sales as well as
driving the development of potential needs. As for installation, we will establish a structure to address
demand and increase the number of installations by hiring technical staff, including qualified electrical
workers.
(2)Cost reduction of PV system components
The commercial PV business has been rapidly expanding the market. With the rapid increase in the sales ofour products, the Group expects to achieve a dramatic increase in market share. However, addressing the
rapidly changing market is an important challenge. The Group is realizing opportunities, further enhancing
cost reductions and sourcing capabilities on modules and power conditioner components, while executing
cost reductions through in-house manufacturing.
(3)Retail electricity liberalization and stable operation at TOMAKOMAI Power Plant
Companies are attempting to identify business opportunities for the retail electricity liberalization scheduled
in 2016. In order to address the new electricity demand brought by the liberalization, stable operation of
TOMAKOMAI Power Plant, which should be a power base, will be an important challenge for the SANIX Group.
By improving the quality of plastic fuel together with stable operation, we will enhance the potential of theretail electricity business.
(4)Plastic fuel sales
Our environmental resources development business sells plastic fuel to users as an alternative fossil fuel. In
order to offer this fuel to other users, it is important to ensure the quality and volume. We will strive toincrease the acceptance volume of waste plastic, to expand sales channels of plastic fuel and to create astructure that enables stable supply.
(5)Promotion of compliance
SANIX Group businesses are subject to statutory regulations, such as the “Installation Industry Act,” “Act on
Special Measures Concerning New Energy Use by Operators of Electric Utilities,” “Act on Specified Commercial
Transactions,” “ Waste Disposal and Public Cleaning Law and related laws,” and the “Electricity Business Act.”
In addition, in terms of consumer protection, it is important to enhance compliance. We will regularly
conduct training, while enhancing the moral and legal knowledge of employees to provide customers withexcellent services.
(6) Enhancement of safety and disaster-prevention measures
The creation of an accident- and disaster-free environment when working at height for PV system installation,and the operation of equipment and heavy machines at environmental resources development businessplants are important management challenges. While ensuring safe installation work and eliminating unsafe
environments and behavior in operations, we will strive to enhance the disaster prevention systems and takeevery possible measure to ensure safety management.
11

5. Other Significant Management Issues
No applicable matter.

12

IV. Consolidated financial Statements
1. Consolidated Balance Sheet(thousands of Yen)
As of March 31
FY2012FY20133,559,160
7,356,616
60,036
260,0092,577,620
298,920681,265△142,104
14,651,525

9,237,009
22,205,080
113,503584,283
5,447,067
597,129
1,089,619△624,897
38,648,796

9,705,554△7,815,155
1,890,399
11,981,923△11,423,926
557,9978,889,529
556,626△205,382
351,243464,340
941,983△769,376
172,607
12,326,117

9,601,276△7,710,467
1,890,809
12,316,969△11,046,772
1,270,196
9,179,989
1,061,376△345,167
716,208
905,446
1,018,076△799,577
218,498
14,181,149

625,370
60,123
685,493

513,363
59,371
572,735

316,576
705,601
95,696856,122△440,823
1,533,173
14,544,785
29,196,310

339,001
722,807
312,701
998,452△458,710
1,914,251
16,668,136
55,316,932

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:

Fixed Assets:
Property, Plant and Equipment:
Buildings and structures, net
Less: Accumulated Depreciation
Buildings and Structures (net of depreciation)
Machinery, equipment and vehicles, net
Less: Accumulated Depreciation
Machinery, Equipment and Vehicles (net of depreciation)
Land
Lease assets, net
Less: Accumulated Depreciation
Leased Assets (net)
Construction in progress
Other
Less: Accumulated Depreciation
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:13

(thousands of Yen)
As of March 31
FY2012FY2013Liabilities:
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:

5,459,789
3,338,000
848,190
3,166,433
931,437
119,644362,883
249,243
68,871
12,320316,254
14,873,068

20,114,703
5,000,000
948,496
4,836,350
1,813,247
198,4101,720,525
719,070
204,329
32,342994,394
36,581,870

50,0002,819,551
272,054
42,647
46,3491,419,934
179,756－
373,699
282,051
5,486,044
20,359,113

30,0003,695,132
523,758－
49,317－
181,256
1,534,705
429,384
463,833
6,907,389
43,489,259

14,041,834－△3,733,267△1,610,889
8,697,677

14,041,834
4,413△768,586△1,581,964
11,695,697

78,14732,356－
110,503
29,016
8,837,197
29,196,310

91,83344,491△33,905
102,419
29,556
11,827,673
55,316,932

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
Liability Related to Retirement Benefits
Provision for disposal site closing expenses
Other
Total Non-Current Liabilities:

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

Valuation and translation adjustments:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Adjustment for Retirement Benefits (Cumulative)
Total Valuation and translation adjustments:

Minority Interests:
Total Net Assets:
Total Liabilities and Net Assets:14

2. Consolidated Statement of Income and Comprehensive Income(Consolidated Statement of Income)(thousands of Yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Sales commission
Advertising expenses
Provision of allowance for doubtful accounts
Salaries and Bonuses
Provision for bonuses
Retirement benefit expenses
Provision for directors' retirement benefits
Legal welfare expenses
Rent expenses
Depreciation
OthersTotal 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
Subsidy income
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Rent expenses
Foreign exchange losses
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 cancellation of lease contracts
Impairment loss
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)

from April 1 to March 31
FY2012FY201343,366,108
84,221,741
29,995,849
62,800,497
13,370,258
21,421,244
899,259
1,142,124
50,395
4,957,186
33,679139,1131,500
615,345837,843
123,968
2,699,345
11,499,762
1,870,495

947,451
1,967,772
497,586
6,969,933
103,488
146,306
1,500
837,653914,656
194,628
4,331,950
16,912,927
4,508,316

5,978
11,5303,774
69,985－46,263
137,531

13,342
7,750
3,775
74,92430,20878,599208,600

164,203
2,308
36,883
15,725219,120
1,788,906

188,361
2,217
104,938
111,414406,931
4,309,984

138,075
5,199
143,274－－－794
18,657
19,452
1,912,729
358,674△21,325
337,348
1,575,380
368
1,575,011－－－
4,309,984
1,891,559△546,796
1,344,763
2,965,220
540
2,964,680

15

(Comprehensive Income)(thousands of Yen)

Income before minority interests
Other comprehensive income
Share of other comprehensive income of associates accounted
for using 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 interestsfrom April 1 to March 31
FY2012FY2013
1,575,380
2,965,220
25,374

13,68528,27753,652
1,629,033
1,628,664
368

12,13525,821
2,991,042
2,990,502
540

16

3. Consolidated Statements of Changes in Net Assets(thousands of Yen)

from April 1 to March 31
FY2012FY2013
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

14,041,834

14,041,834―
14,041,834―
14,041,834(5,377,499)(3,733,267)

1,575,011
69,221
1,644,232(3,733,267)

2,964,680(1,610,767)(1,610,889)

(122)
―
(122)
(1,610,889)

(918)
29843
28,924(1,581,964)

7,053,567

8,697,677

1,575,011
69,221(122)―
1,644,110
8,697,677

2,964,680
―
(918)
34256
2,998,019
11,695,697

2,964,680(768,586)

17

(thousands of Yen)

from April 1 to March 31
FY2012FY2013
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

52,772

78,14725,37425,374
78,147

13,685
13,68591,833

52,772

110,503

4,078
53,652
57,731
110,503(8,083)(8,083)
102,419

28,64729,016368
368
29,016540
540
29,556

7,134,986

8,837,197

69,221

-

4,078

-

1,575,011(122)
54,021
1,702,210
8,837,197

2,964,680(918)
34,256(7,543)2,990,475
11,827,673

18

4. Consolidated Cash Flow Statement(thousands of Yen)
From April 1 to March 31
FY2012FY2013

Net 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:
Net 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:

1,912,729

4,309,984

386,714547,507

18,657
37,152－
112,006

1,500(1,419,934)

56,9241,500(28,290)

135,457

112,006

20,02238,060500,680(17,508)

1,482,236

163,440(21,093)(5,199)188,361794－－(4,746,431)
442,900－(14,848,763)

4,013,467(3,229,343)

56,512(537,999)

1,131,171

14,665,227(94,866)

469,827

2,512,401

2,915,631(967,335)

17,492

20,596(165,264)(191,877)－(202,285)(536,176)

22,383

1,720

2,184,726

4,933,689(11,300)
258,075
103,643(615,817)－
48,600(3,790)(1,714)(222,302)(21,200)(1,686,897)
18,610(1,241)－(83,691)
43,984
1,676(1,728,759)

19

(thousands of Yen)
From April 1 to March 31
FY2012FY2013

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

1,013,000
210,000(861,724)－(20,000)(108,801)(122)(1)(2,158)230,192(11,055)
2,181,561
1,365,530

1,662,000
1,870,025(894,137)－(20,000)(186,735)－－
2,303
2,433,456
18,261
5,656,648
3,547,860

768－

3,547,860

9,204,509

5.Note regarding assumption of a going concern
There is no events or situations that arouse serious doubt regarding the assumption of a going
concern.

20

6.Segment Information
Segment Information by Type of BusinessPrior consolidated fiscal year (From April 1, 2012 to March 31, 2013)(Thousands of Yen)
Segments

CPS

HS

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. . . . . . . . . . 3,965,643 14,967,900 43,366,108
Operating income(loss) . . . . . . . . . . . .320,368. . . . . . . . 1,775,560.

139,481

1,567,654－－－ 43,366,108

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

Assets . . . . . . . . . . . . . . . . . . . . . . .3,735,173. . . . . . . . . .6,439,869. . . . . . . . . .1,139,765..
10,125,736 21,440,546

7,755,764 29,196,310

Others:Depreciation expenses . . . . . . . . . . . . . .10,519. . . . . . . . . .49,712. . . . . . . . . . . 9,711. . . . . . . . 371,927..

441,871

56,949498,821

Amortization of goodwill . . . . . . . . . . . . . . . . . －..........－. . . . . . . . . . .－. . . . .112,006..

112,006－－

Capital expenditures. . . . . . . . . . . . . . . 180,108. . . . . . . . . . . 66,311. . . . . . . . . . . 1,866. . . . . . . . 791,198

1,039,484

62,7791,102,264

Consolidated fiscal year (From April 1, 2013 to March 31, 2014)(Thousands of Yen)
Segments

CPS

HS

ES

ERD

Total

Elimination Consolidated
or Group

Sales:
Sales to customers . . . . . . . . . . . . . .51,340,380......
10,818,889

6,011,468 16,051,002 84,221,741－ 84,221,741

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

－－－－

Total . . . . . . . . . . . . . . . . . . . . . . . . 51,340,380. . . . . . . . . . .10,818,889. . . . . . . . . . 6,011,468 16,051,002 84,221,741
Operating income(loss) . . . . . . . . . .4,410,370. . . . . . . . . . 1,141,210.

190,383

1,364,711－－－ 84,221,741

7,106,674 (2,597,358) 4,508,316

Assets . . . . . . . . . . . . . . . . . . . . . .27,018,936. . . . . . . . . . .3,181,721. . . . . . . . . .1,482,707..
11,969,862 43,653,227 11,663,704 55,316,932
Others:Depreciation expenses . . . . . . . . . . . . . .89,921. . . . . . . . . .37,120. . . . . . . . . . . 8,829. . . . . . . . 251,826..

387,698

159,808

Amortization of goodwill . . . . . . . . . . . . . . . . . －..........－. . . . . . . . . . .－. . . . .112,006..

112,006－

547,507－

Capital expenditures. . . . . . . . . . . . . . . 680,814. . . . . . . . . . 181,398. . . . . . . . . . . 21,141. . . . . . . . . 972,802

1,856,156

158,315

2,014,472

21

Supplemental information
Net Sales by Division(thousand of Yen)
Changesfrom April 1 to March 31
FY2012FY2013

Commercial PV system

6,072,427

42,099,603

36,027,176

wholesale of PV components

3,545,219

9,172,596

5,627,377

68,18068,180others－Commercial Photovoltaic Solution Total:

9,617,646

51,340,380

41,654,553

Houseuse PV system

7,683,512

1,309,147(6,374,364)

Termite Eradication Service

2,690,613

3,264,981

574,368

Under-Roof/Floor Ventilation System

1,310,653

1,641,459

330,806

Foundation Repairing/Home Reinforcement System

831,293930,975

99,681Other

2,298,845

3,672,325

1,373,480

Home Sanitation Division Total:

14,814,917

10,818,889(3,996,028)

Commercial and houseusePV system
Anti-rust equipment installation

1713569
600,5814017557
476,935

2,303,987(123,646)

Repair of building water-works

762,981807,161

44,179Waterproofing of building

300,172

195,494(104,678)

Other

588,338

514,319(74,018)

Establishment Sanitation Division Total:

3,965,643

6,011,468

2,045,825

Plastic fuel8,665,286

9,103,080

437,793

Industrial waste (Organic Waste Water Recycle)
Generation of electricity

3,370,228
1,602,055

3,416,438
1,768,754

46,210166,699

Final disposal

607,591628,248

20,657

Other722,738

1,134,481

411,742

Environmental Resources Development Division Total:

14,967,900

16,051,002

1,083,102

Total Net Sales:

43,366,108

84,221,741

40,855,633

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