SANIX INCORPORATED
Consolidated Financial Statements

For the First quarter ended June 30, 2015.

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.

Aug. 10, 2015

Consolidated Financial Statements
For the first quarter ended June 30, 2015
SANIX INCORPORATED
Stock Listed:Tokyo 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,

Director, Management Corporate Officer,
General Manager of Management and Planning Division

1. Consolidated Financial Highlights for the first quarter ended June 30, 2015
(April 1, 2015 to June 30, 2015)(1)

Consolidated Operating Results(Millions of Yen)First Quarter
between April 1 and June 30

Net Sales ．．．．．．．．．．．．．．．．．．．．．．．．

% change

FY2015% change

37.8

15,690(27.7)

Operating Income ．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
(1,129)-(1,332)-

Ordinary Income ．．．．．．．．．．．．．．．．．．．．．

(1,005)-(1,368)-Net Income．．．．．．．．．．．．．．．．．．．．．．．．．．．．

(1,222)-(1,754)-Net Income per Share(￥)．．．．．．．．．．．．．．．．．．． (¥25.62)-(¥36.70)-

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

-

-

-

-

(1,208)-(1,695)-(Reference) Comprehens ive income ．．．．．．．．

(2)

FY2014
21,714

Consolidated Financial Position(Millions of Yen)
As of June 30
FY2014(Reference)

FY2015

Total Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．49,120

41,293

Net Assets．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．7,331

5,635

Shareholders' Equity Ratio (%)．．．．．．．．．．．．．．．．．．．

14.9%

13.6%

Net Assets per Share (￥)．．．．．．．．．．．．．．．．．．．．．．．． 152.74

117.26

Shareholders’ equity

First quarter ended June 30, 2015:

5,605 million yen

Fiscal Year ended March 31, 2015:

7,302 million yen

2ndquareterAt the end of
3rdquareter

4thquareter

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

2. Dividends
1stquareter

Annual

(Di vi dends per Sha re)
FY2014 ended Ma rch 31,2015

0.00

FY2015 ended Ma rch 31,2016

0.00

FY2015 ended Ma rch 31,2016 (foreca s ts )

3. Forecasts for Consolidated Business Results(For the fiscal year ending March 31, 2016)(Millions of Yen)FY2015First Half

% cahnge

Full Year% change

Net Sa l es ．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
35,298(19.8)

78,000(18.4)

Opera ti ng Income ．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
(280)

-

4,000

-

Ordi na ry Income ．．．．．．．．．．．．．．．．．．．．．．．

(350)

-

3,820

-

Net Income ．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．
(760)

-

2,820

-

Net Income per Sha re(￥)．．．．．．．．．．．．．．．．．．．．．．．．
(¥15.90)¥58.994. Others(1) Changes in significant subsidiaries during FY2015: None
(2) Adoption of special quarterly accounting methods: None
(3) Changes in accounting principles, procedures, and the presentationⅰ)Changes in accounting principles due to revisions to accounting standards: Yesⅱ)Changes other than shown in ⅰ) above: Noneⅲ)Changes in accounting estimates: Noneⅳ)Correction of prior period error: None
(4) Number of Shares Issued and Outstanding(Shares)
First Quartr

Full Year

ended June 30,2015

ended March 31,2015

Number of s ha res i s s ued a nd outs ta ndi ng a t peri od end ．．．．．．．．．．．．．．．．．．．．．．．．
48,919,396
48,919,396
Number of trea s ury s tocks a t peri od end ．．．．．．．．．．．．．．．．．．．．1,113,193

1,113,143

Avera ge Number of s ha res outs ta ndi ng duri ng the pri od ．．．．．．

47,735,265

47,806,228

Implementation status about the quarterly review:
This earnings report is exempt from audit procedure based upon the Financial Instruments and Exchange Act. It is under the audit
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

1. Qualitative Information for the first quarter ended June 30, 2015
(1) Qualitative Information of Consolidated Operation Results …………………………………………………………………………………..

2(2) Qualitative Information of Consolidated Financial Position …………………………………………………………………………………..

3(3) Qualitative Information of the Forecast of Consolidated Business Results …………………………………………………………….

3

2. Other information(1) Changes in significant subsidiaries during FY2015………………………………………………………………………………………………….

3(2) Adoption of special quarterly accounting methods………………………………………………………………………………………………..

3(3) Changes in accounting principles, procedures, and the presentation……………………………………………………………………..

3

3. Important information regarding assumption of a going concern………………………………………………………………………….

4

4. Consolidated Financial Statements for the first quarter ended June 30, 2015
(1) Consolidated Quarterly Balance Sheets ......................................................................….....…………………………………..…

5(2) Consolidated Quarterly Statements of Income and Comprehensive Income........................……………………………………

7

Consolidated Quarterly Statements of Income
For the first quarter..... .......................................................…………………………………………………………………………..

7

Comprehensive Income
For the first quarter........................................................... ……………………………………………………………………………

8(3) Notes to Quartely Consolidated Financial Statements
Note regarding assumption of a going concern………………………………………………………………………………………………….

8

Note regarding significant changes in the amount of shareholders’ equity…………………………………………………………

8

Segment Information…………………………………………………………………………………………………………………………………………

9

5. Supplemental Information
Net Sales by Segment……………………………………………………………………………………………………………………………………………

10

2

1. Qualitative Information for the first quarter ended June 30, 2015
(1) Qualitative Information of Consolidated Operation Results

In the first quarter of the fiscal year ending March 31, 2016 (April 1, 2015 to June 30, 2015), the Japanese
economy continued to follow a modest recovery path, with improved corporate earnings and an upturn in
employment conditions. However, the outlook remained uncertain, reflecting rising raw material prices
linked with the depreciation of the yen, among other factors.
In this business environment, our Group concentrated on the integrated business ranging from thedevelopment and procurement of members for photovoltaic (PV) systems to the sales, construction andmaintenance of PV systems. In the business environment surrounding PV systems, the operation of the“Renewable Energy Feed in Tariff Purchasing Program” was revised in January 2015, and the output control
rules were changed. The Group strengthened its framework in the areas controlled by Tokyo Electric Power
Company, the Chubu Electric Power Company and The Kansai Electric Power Company, which are large
markets, to respond accurately to trends in the market environment created by these institutional changes
in each area of electric power companies, taking into account the appropriate personnel structures in the
Kyushu and the Shikoku regions.
In addition, to respond to the medium-term business environment surrounding PV systems, the Group
implemented management rationalization to maintain sustainable growth and completed measures such as
the voluntary retirement of 609 employees and the elimination and consolidation of 20 stores in the firstquarter under review.
As for sales in the first quarter under review, the Solar Engineering (SE) Division posted a decline in sales in
the installation of PV systems as sales decreased significantly in the Kyushu and the Shikoku regions, where
the impact of institutional changes such as the output control rules was significant, while sales increased
substantially in the East Japan region. As a consequence, the net sales of the entire Group were ¥15,690
million, or down 27.7% from a year earlier.
In terms of profitability, the SE Division posted an operating loss, reflecting the projection that the positiveeffect of reducing costs by management rationalization, etc. would begin to appear from the second quarterof the fiscal year under review, as well as lower sales. As a consequence, for the whole Group, the operating
loss was ¥1,332 million compared to the operating loss of ¥1,129 million in the same period of the previous
year, and the ordinary loss was ¥1,368 million compared to the ordinary loss of ¥1,005 million in the same
period of the previous year. In addition, the Group posted ¥284 million for temporary expenses such as
special retirement benefits arising from the recruitment of voluntary retirement as an extraordinary loss,
and the net loss belonging to the shareholders of the parent company stood at ¥1,754 million compared to
the net loss belonging to the shareholders of the parent company of ¥1,222 million in the same period of
the previous year.
Consolidated results of individual divisions for this quarter were as follows:a. Solar Engineering (SE) Division
Segment sales slumped as demand fell significantly in Kyushu and Shikoku, areas that both account for alarge proportion of sales. As a results, costs only decreased slightly due to streaming operations in 1Q,
causing the operating loss of ¥1,150 compared to the operating loss of ¥930 million in the same period of
the previous year(reference : The segment had an average of 2,288 employees at end March 2015, and 1,619 at end June 2015)b. Environmental Resources Development (ERD) Division
Plastic fuel sales declined 8.3% from a year earlier, despite higher collection volume of waste plastic, due
to a fall in unit prices. As a results, Electricity sales fell 11.5% year on year owing to a decline in electricity
prices. Operating profit was ¥223 million (down 40.5% year-on-year with the decline in sales).

3c. Home Sanitation (HS) Division
The HS Division focused on maintenance-related customer management such as termite control services
and floor/ceiling ventilation systems. As a result, net sales were ¥1,942 million (down 5.9% year onyear).The operating income increased by 16.5% to ¥384 million yen due to cost reduction, compared to thesame period the previous year.
d. Establishment Sanitation (ES) Division
The ES Division concentrated on sanitation maintenance-related customer management such as high-risebuilding and condominiums. As a result, net sales were ¥237 million yen (down 12.9% year on year).
However, cost reduction measured results in an operating profit of ¥11 million yen in spite of decreases insegment sales (compared to the operating loss of ¥50 million yen in the same period of the previous year).

(2) Qualitative Information of Consolidated Financial Position
Assets, Liabilities and Net Assets

Total assets at the end of the first quarter under review were ¥41,293 million, a decrease of ¥7,827
million, compared with the end of the previous consolidated fiscal year. Major factors were a decrease of¥3,392 million in cash and deposits, and a decrease of ¥4,543 million in notes and accounts
receivable-trade. Total liabilities were ¥35,657 million, a decrease of ¥6,132 million ,compared with theend of the previous consolidated fiscal year. Major factors were decreases in notes and accounts
payable-trade, income taxes payable and accounts payable-other, offsetting an increase in short-termloans payable. Total net assets were ¥5,635 million, a decrease of ¥1,695 million compared with the end of
the previous consolidated fiscal year. A major factor was the recording of a net loss of ¥1,754 million yen
attributed to parent company.
As a result, the ratio of owners’ equity was 13.6% at the end of the first quarter under review ascompared with14.9% at the end of the previous consolidated fiscal year.

(3) Qualitative information on the forecast of consolidated business results
There is no change in the forecast of consolidated business results for the current fiscal year ending March
31, 2016, the SANIX Group announced on May 13, 2015.
2. Other information(1) Changes in significant subsidiaries during FY2015: None(2) Adoption of special quarterly accounting methods: None(3) Changes in Accounting Policies, Changes in Accounting Estimates and Restatement of Revisions
The Accounting Standard for Business Combinations (Accounting Standards Board of Japan (ASBJ)
Statement No. 21 issued September 13, 2013; hereinafter the “Business Combinations AccountingStandard”), the Accounting Standard for Consolidated Financial Statements (ASBJ Statement No. 22
issued September 13, 2013; hereinafter the “Consolidated Accounting Standard”) and the AccountingStandard for Business Divestitures (ASBJ Statement No. 7 issued September 13, 2013; hereinafter the“Business Divestures Accounting Standard”) have been applied from the first quarter of the fiscal year
under review, and differences arising from changes in equity interest of the Company in thosesubsidiaries over which the Company’s control continues are recorded as capital surplus. The method ofrecording acquisition-related expenses has been changed to a method of recording them as expenses
for the consolidated fiscal year in which they arise. With respect to business combinations implemented
after the beginning of the first quarter of the fiscal year under review, the accounting method has been

4changed to a method of reflecting the review of the allocation amount of acquisition costs based on thedecided provisional accounting in consolidated financial statements for the quarter in which the date of
the business combinations occurs.
In addition, the statement of net income, etc. has been changed, and the statement of minority interests
has been changed to non-controlling interests. To reflect these changes in statements, the quarterly
consolidated financial statements for the first quarter of the previous fiscal year and the consolidated
financial statements for the previous fiscal year have been reclassified.
The application of the Business Combinations Accounting Standard, etc. follows the transitionalarrangements stipulated in Paragraph 58-2 (4) of the Business Combinations Accounting Standard,Paragraph 44-5 (4) of the Consolidated Accounting Standard and Paragraph 57-4 (4) of the Business
Divestures Accounting Standard, and they are applied from the beginning of the first quarter of the fiscal
year under review going forward.
There is no impact on the quarterly consolidated financial statements in the first quarter of the fiscal
year under review.

3. Important information regarding assumption of a going concern
As the Group recorded a significant operating loss and net loss in the previous fiscal year and also posted
an operating loss in the first quarter of the fiscal year under review, an event or situation that gives rise tosignificant doubt as to the going concern assumption exists.
To resolve the situation above, however, the Group is working to improve its income structure, reducing
overall fixed costs by strengthening the framework in the Kanto, Kansai and Chukyo regions with a large
market, while taking into account the appropriate personnel structure in the Kyushu and Shikoku regions inorder to address drastic changes in the business environment in the SE Division in a timely and appropriatemanner. To respond to the medium-term business environment surrounding the PV systems business, theGroup judged that the implementation of further management rationalization would be essential, andcompleted the voluntary retirement of 609 employees and the elimination and consolidation of 20 stores by
the end of June 2015 in this business segment.
As a result of reviewing our future cash management plan, we have judged that significant uncertainty
about the going concern assumption is not recognized, given that there is no significant doubt as to ourfinancing if we implement these measures.

5

4. Consolidated Financial Statements for the first quarter ended June 30, 2015
(1) Consolidated Quarterly Balance Sheets(Millions of Yen)
As of March 31

As of June 30

FY2014FY2015

Assets:Current Assets:
Cash and deposits

7,026

3,634

Notes and accounts receivable-trade

14,800

10,257

Merchandise and finished goods

504

875

Work in process-construction

1,738

1,606

Raw materials and supplies

8,043

8,053

Other

694

561

Allowance for doubtful accounts(1,237)(1,119)Total Current Assets:

31,56923,868

Buildings and Structures (net of depreciation)

2,533

2,464

Machinery, Equipment and Vehicles (net of depreciation)

1,640

1,743

Land

9,399

9,399

Oter,net

1,525

1,356

15,09914,965

Goodwill

401

373

Other, net

143

145

Total Property, Plant and Equipment:

545

519

Total Investments and Other Assets:

1,906

1,940

17,551

17,424

49,12041,293

Notes and accounts payable-trade18,537

12,051

Short-term loans payable

6,360

9,273

Accounts payable-other

4,408

3,184

Accured consumption taxes

208

108

Provision

31

66

Other

6,013

5,061

Total Current Liabilities:

35,56029,745

Fixed Assets:
Property, Plant and Equipment:

Total Propert,Plant and Equipent
Intangible Fixed Assets:

Total Fixed Assets:
Total Assets:
Liabilities:
Current Liabilities:

Non-Current Liabilities:
10

10

3,045

2,750

Provision for directors' retirement benefits

170

170

Provision for landfill closure cost

477

496

Retirement benefits liabilities

1,490

1,511

Other

1,034

972

Total Non-Current Liabilities

6,229

5,912

41,78935,657

Bonds payable
Long-term loans payable

Total Liabilities

6(Millions of Yen)FY2014FY2015Net Assets:
Shareholders' Equity:
Capital stock

14,041

14,041

4

4

Retained earnings(5,588)(7,343)

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

Total Shareholders' Equity:

6,976

5,221

Valuation difference on available-for-sale securities

171

203

Foreign currency translation adjustment

184

202

Adjustment for Retirement Benefits (Cumulative)

(30)

(22)

Total Valuation and translation adjustments:

325

383

Capital surplus

Valuation and translation adjustments:

Non-controlling interests
Total Net Assets:

29

29

7,331

5,635

Total Liabilities and Net Assets:

49,12041,293

7(2) Consolidated Statement of Income and Comprehensive Income
Consolidated Statement of Income(Millions of Yen)First quarter
from April 1 to June 30
FY2014FY2015Net sales

21,714

15,690

Cost of sales

16,907

12,713Gross profit

4,806

2,977

Selling, general and administrative expenses

5935

4309

(1,129)(1,332)

Interest income

1

16

Dividends income

57Land and house rent revenue

18

17

Operating income (loss)
Non-operating income:Subsidy income

87

-

46

45

Other

30

25

Total non-operating income

190

110

Interest expenses

50

50

Rent expenses

44Foreign exchange losses-

85

Non-operating expenses:

Other

12

6

Total non-operating expenses

66

146

(1,005)(1,368)

Cost of earlier voluntarty retirement-284

Total extraordinary loss-

284

(1,005)(1,653)

Income taxes-current

116

100

Income taxes-deferred

101

(0)

Total income taxes

217

100

(1,223)(1,753)(0)0△1,222(1,754)

Ordinary income (loss)
Extraordinary loss:

Loss before income taxes and minority interests

Net loss
Net income(loss)
attributed to non-contorolling shareholders
Net loss
attributed to parent company's shareholders

8Comprehensive Income(Millions of Yen)First quarter
from April 1 to June 30
FY2014FY2015Net l os s

(1,223)(1,753)

Sha re of other comprehens i ve i ncome of a s s oci a tes
a ccounted for us i ng equi ty method

17

31

Forei gn currency tra ns l a ti on a djus tment

(10)

18

Other comprehens i ve i ncome

Reti rement benefi t a djus tment

8

7

Tota l other comprehens i ve i ncome

15

57(1,208)(1,695)(1,207)(1,696)(0)0Comprehens i ve i ncome
Comprehens i ve i ncome a ttri buta bl e toComprehensive income attributable to parent company
Comprehensive income attributable to non-contorolling shareholders(3) Notes to Quarterly Consolidated Financial Statements(Notes to going concern): None(Notes to remarkable changes in Shareholders' Equity): None9(Segment Information)
Segment Information by Type of BusinessPrior first quarter (From April 1, 2014 to June 30, 2014)(Millions of Yen)

Segments

SE

HS

Sales:
Sales to customers . . . . . . . . . . . . . . . . .15,635
...
2,064
Internal sales among segments
and transfer accounts. . . . . . . . . . . . . . . . . . .－....... －Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15,635. . . . . . . . . 2,064.......
Operating income(loss) . . . . . . . . . . . . .(930). . . . . . . . 330

ES

ERD

Total

Adjustments(note 1)

Consolidated(note 2)

273

3,741

21,714－

21,714

－
273
(50)

－
－
3,741 21,714
374
(275)

－
－
(854)

－
21,714(1,129)(note 1)
Negative ¥854 million for adjustments of Operating income (loss) represents corporate expenses not allocated toreportable segments. Corporate expenses are mainly general and administrative expenses note attributable toreportable segments.
(note 2)
Operating income (loss) is adjusted to operating loss of Consolidated quarterly statements of income.

This first quarter (From April 1, 2015 to June 30, 2015)(Millions of Yen)

Segments

SE

HS

Sales:
Sales to customers . . . . . . . . . . . .
10,043 1,942
Internal sales among segments
and transfer accounts. . . . . . . . . . . . . . . . . . .－....... －Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10,043. . . . . . . . . 1,942.......
Operating income(loss) . . . . . . . . . . . (1,150). . . . . . . . . . 384

ES

ERD

Total

237

3,465

15,690

－
237
11

－
－
3,465 15,690
223
(530)

Adjustments(note 1)

Consolidated(note 2)
15,690

－
－
(801)

－
(1,332)(note 1)
Negative ¥801 million yen for adjustments of Operating income (loss) represents corporate expenses not allocatedto reportable segments. Corporate expenses are mainly general and administrative expenses note attributable toreportable segments.
(note 2)
Operating income (loss) is adjusted to operating income of Consolidated quarterly statements of income.

10

5. Supplemental information
Net Sales by Division(Millions of Yen)First quarter
from April 1 to June 30
FY2014

Changes

FY2015

Commercial PV system

13,438

8,078(5,359)wholesale of PV components

2,167

1,935

(232)

29

29

0

Solar Engineering Total:

15,635

10,043(5,591)

Termite Eradication Service

752

810

58

Under-Roof/Floor Ventilation System

283

253

(30)

Foundation Repairing/Home Reinforcement System

145

125

(20)

others

Other

882

753

(128)

Home Sanitation Division Total:

2,064

1,942

(121)

Anti-rust equipment installation

25

10

(14)

Repair of building water-works

113

120

6

Waterproofing of building

25

13

(12)

Other

108

94

(14)

Establishment Sanitation Division Total:

273

237

(35)

1,903

1,717

(186)

Industrial waste (Organic Waste Water Recycle)

977

864

(112)

Generation of electricity

410

419

9

Final disposal
Other

174
276

182
280

8
4

Environmental Resources Development Division Total:

3,741

3,465

(275)

Total Net Sales:

21,714

15,690(6,024)

Plastic fuel