SANIX INCORPORATED
Consolidated Financial Statements
For the third quarter
Ended December 31, 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.

Consolidated Financial Statements for the Third Quarter ended December 31, 2015
SANIX INCORPORATED
Stock Listed:Tokyo Stock Exchange First Section, Fukuoka Stock Exchange

Code No;

4651

URL:

http://www.sanix.jp/lang_en/

President and CEO:Shin-ichi Munemasa

Contact:

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

1. Consolidated Financial Highlights for the Third Quarter ended December 31, 2015
(1) Consolidated Operating Results(Millions of Yen)
Third Quarters
From April 1 to December 31
FY2015FY2014%change%change

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

45.912(34.1%)

69,627

35.1%

Operating Income···················································(2,857)-(3,779)-Ordinary Income ····················································(2,709)-(4,049)-Net Income····························································(3,492)-(5,244)-Net Income per Share (¥) ········································(¥73.06)-(¥109.83)-

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

-

-

-

-

(Reference) Comprehensive Income ·························(3,523)-(5,057)-(2) Consolidated Financial Position(Millions of Yen)
As of December 31

As of March 31

FY2015FY2014

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

37,97649,120Net Assets·····························································

3,804

7,331

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

9.9%

14.9%

Net assets per share(¥) ···········································¥78.93

Reference)¥152.74

Shareholders’ equity as of December 31, 2015

3,773 million yen

Shareholders’ equity as of March 31, 2015

7,302 million yen

2. Dividends
At the end of
1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter
0.00

0.00

0.00

0.00

Annual(Dividends per Share)
FY2014 ended March 31, 2015 ……………….

0.00

0.00

0.00

FY2015 ending March 31 ,2016 ……...................

0.00

0.00

0.00

FY2015 ending March 31 ,2016(forecast) ……..

3. Forecasts for Consolidated Business Results(For the fiscal year ending March 31, 2016)(millions of yen)
FY2015FY%change

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

62,410(34.7%)

Operating Income···················································(1,720)-Ordinary Income ····················································(1,620)-Net Income····························································(2,480)-Net Income per Share (¥) ········································(¥51.88)-

4. Others(1) Changes in significant subsidiaries during the period: None
(2) Adoption of special quarterly accounting methods: None
(3) Changes in accounting principles, accounting estimates and correction of prior errorsⅰ) 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)Number of shared issued and outstanding at period end····························The third quarter

Full Year

Ended December 31,

Ended March 31,

2015

2015

48,919,396

48,919,396

Number of treasury stocks at period end ·················································

1,113,393

1,113,143

Average number of shares issued and outstanding during the fiscal term ·····

47,806,148

47,751,728*Implementation status about the quarterly review:
This summary of financial statements is exempt from quarterly review procedure required by Financial Instruments andExchange Act. A part of quarterly review for securities report based on Financial Instruments and Exchange Act have notfinished at the time of disclosure of this summary of financial statements.
*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 ineconomic conditions.

Index of the attachment
1. Qualitative Information for the third quarter ended December 31, 2015
(1) Qualitative Information of Consolidated Operation Results……….........................................

1(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 the period……………......................……….….…

4(2) Adoption of special quarterly accounting methods................…..………………………………

4(3) Changes in accounting principles, procedures and presentation methods............................

4

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

5

4. Consolidated Financial Statements for the third quarter ended Dec. 31, 2015
(1) Consolidated Quarterly Balance Sheets ....................................................................….....…

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

8

Statements of Income for the third quarter
For the third quarter………………………………………………………………………..

8

Comprehensive Income for the third quarter
For the third quarter………………………………………………………………………..

9(3) Note for this Consolidated Financial Statements………………………………….……………..

10

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

10

5. Supplemental Information
Consolidated Net Sales by Division….…………………………….…………………………...…

11

1

1. Qualitative Information for the third quarter ended December 31, 2015
(1) Qualitative Information of Consolidated Operation Results
In the third quarter of the fiscal year ending March 31, 2016 (April 1, 2015 to December 31,2015), 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 due to concerns about decelerating economy.
Under such a business environment, our Group concentrated on the integrated business ranging
from the development and procurement of members for photovoltaic (PV) systems to the sales,
construction and maintenance of PV systems. The operation of the “Renewable Energy Feed in
Tariff Purchasing Program” was revised in January 2015, and the output control rules werechanged, so the market environment surrounding the PV system had drastically changed.
To respond to changes in the business environment and achieve sustainable growth, the Group
took steps to strengthen its sales and construction systems in accordance with the market
environment and implemented radical management rationalization. The Group offered early
retirement to 609 employees in the first quarter and to an additional 229 employees in the third
quarter.
As for sales in the third quarters under view, the Group was hurt by changes in the market
environment for the solar electric power business, so the sales results in a significant fall. As aconsequence, the net sales of the entire Group were ¥45,912 million, or down 34.1% from a year
earlier.
In terms of profitability, the Group posted an operating loss with drastic decrease in revenue inSolar Engineering business, however costs are gradually decreasing due to management
rationalization. As a consequence, for the whole Group, the operating loss was ¥2,857 million
compared to the operating loss of ¥3,779 million in the same period of the previous year, and theordinary loss was ¥2,709 million compared to the ordinary loss of ¥4,049 million in the same
period of the previous year. In addition, the Group posted ¥371 million for temporary expenses
arising from the elimination and consolidation, for expenses for terminating vehicles, and the net
loss belonging to the shareholders of the parent money stood at ¥3,492 million compared to the
net loss belonging to the shareholders of the parent company of ¥ 5,244 million in the same
period of the previous year.
Consolidated results of individual divisions for this quarter were as follows:2a. Solar Engineering (SE) Division
In the third quarter, the sales in the East Japan region increased by 39.0% year-on-year.
However, sales in the West Japan region declined by 61.4% due to the effect of a change in themarket environment. As a consequence, the sales were ¥29,290 million (down 43.4%
year-on-year). Given the large decline in sales, the ratio of fixed costs, including personnel
expenses, to sales did not improve, and an operating loss of ¥1,349 million was posted(compared to an operating loss of ¥3,075 million in the same period of the previous year).

b. Environmental Resources Development (ERD) Division
Plastic fuel sales declined 6.1% from a year earlier, despite a slightly higher collection volume ofwaste plastic, due to a fall in unit prices. At TOMAKOMAI Power Plant, a legal inspection andperiodic repair of boilers and that of turbines were conducted in the first 3Q under review. Chiefly
due to the effect of the inspections and repairs, electricity sales fell 4.5% year on year.
As a consequence, the sales were ¥10,899 million (down 2.3% year on year). The operating
loss was ¥191 million due to both the decline in sales and the added expenses associated withthe maintenance and inspection work at the TOMAKOMAI power station (down 73.0% year onyear).

c. 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 ¥5,047 million (down
15.0% year on year).The operating income decreased by 57.0% to ¥547 million due to cost
reduction, compared to the same period the previous year.

d. Establishment Sanitation (ES) Division
The ES Division concentrated on sanitation maintenance-related customer management suchas high-rise building and condominiums. As a result, net sales were ¥675 million yen (down
14.2% year on year). However, cost reduction measured results in an operating profit of ¥32
million in spite of decreases in segment sales (compared to the operating loss of ¥57 million yen
in the same period of the previous year).

3(2) Qualitative Information of Consolidated Financial Position
Total assets amounted to ¥37,976 million at the end of the third quarters of this consolidated
fiscal year, decrease of ¥11,143 million from the end of the previous consolidated fiscal year. Thiswas mainly due to a decrease in cash and deposits, notes receivable-trade and accounts
receivable-trade. Liabilities amounted to ¥34,172 million, a decrease of ¥7,617 million from theend of the previous consolidated fiscal year. This was mainly due to a decrease of Notes andaccounts payable-trade, Accounts payable-other and Long-term loans payable, on the otherhands, an increase in Short-term loans payable. Net assets totaled ¥3,804 million, a decrease of¥3,526 million from the end of the previous consolidated fiscal year. This was primarily due to the
net loss of ¥3,492 million incurred during this third quarters.
Consequently, the ratio of owners’ equity was 9.9% compared to 14.9% in the same period of ayear earlier.

(3) Qualitative Information on the Forecast of Consolidated Business Results
The Company states a revision of its consolidated earnings forecast for the fiscal year ending
March 31, 2016 that it announced on November 13, 2015 in this document and the Revision of
Earnings Forecast for the Fiscal Year Ending March 31, 2016 published today. For more
information, please refer to the Revision of Earnings Forecast.

Consolidated forecast for the full fiscal year ending March 31, 2016
(From April 1, 2015 to March 31, 2016)(Millions of yen)

Net Sales

Operating
IncomeOrdinary
IncomeNet
IncomeNet Income
per Share(YEN)

Previous Forecast(A)

67,760

850

920

60

¥1.26

Revised Forecast(B)

62,410(1,720)(1,620)(2,480)(¥51.88)(B-A)(5,350)(2,570)(2,540)(2,540)-(%)(7.9%)----

95,629(3,142)(3,439)(4,966)(¥103.98)

Changes
Percent Change
Reference
Results for FY2014(ended March 31,2015)

4

2. Other Information(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries
resulting in the change in consolidation scope): None

(2) Adoption of special quarterly accounting methods: None

(3) Changes in accounting principles, procedures and presentation methods:
The Accounting Standard for Business Combinations (Accounting Standards Board of Japan(ASBJ) Statement No. 21 issued September 13, 2013; hereinafter the “Business Combinations
Accounting Standard”), the Accounting Standard for Consolidated Financial Statements (ASBJ
Statement No. 22 issued September 13, 2013; hereinafter the “Consolidated AccountingStandard”) and the Accounting Standard for Business Divestitures (ASBJ Statement No. 7 issued
September 13, 2013; hereinafter the “Business Divestitures 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 those subsidiaries over which the Company’s control
continues are recorded as capital surplus. The method of recording acquisition-related expenses
has been changed to a method of recording them as expenses for the consolidated fiscal year inwhich they arise. With respect to business combinations implemented after the beginning of thefirst quarter of the fiscal year under review, the accounting method has been changed to amethod of reflecting the review of the allocation amount of acquisition costs based on theprovisional accounting in consolidated financial statements for the quarter in which the businesscombinations occur.
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 thestatements, the quarterly consolidated financial statements for the first three quarters of theprevious fiscal year and the consolidated financial statements for the previous fiscal year havebeen reclassified.
The application of the Business Combinations Accounting Standard, etc. follows the transitionalarrangements stipulated in Paragraph 58-2 (4) of the Business Combinations AccountingStandard, Paragraph 44-5 (4) of the Consolidated Accounting Standard and Paragraph 57-4 (4) of
the Business Divestitures Accounting Standard, and they are, and will be, applied from the
beginning of the first quarter of the fiscal year under review.
As a result, capital surplus at the end of the third quarter under review declined ¥2 million.

5

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 andalso posted an operating loss in the third quarters of the fiscal year under review, an event or
situation that gives rise to significant doubt as to the going concern assumption exists.
To resolve the situation above, the Group have strengthened the framework in the Kanto,
Kansai and Chukyo regions with a large market, in order to address drastic changes in thebusiness environment in the SE Division in a timely and appropriate manner and are stepping up
marketing activities to receive orders. In the fourth quarter, the Group will work to maintain asteady number of installations.
In terms of profitability, the Group is working to improve its income structure, reducing overall
fixed costs, however, it is essential to implement management rationalization to respond thechange of the business environment, maintaining sustainable growth. So, the Group implemented
measures such as the voluntary retirement of 229 employees and the elimination andconsolidation of 6 stores in SE Division during the third quarter under review. In the fourth quarter,
the Group plans to dismiss 70 employees for reorganization by the end of February.
We expect that profitability will improve and the Group will remain in the black through thesemeasures, and the Group has assets that can be converted to funds, and the establishment of an
overdraft facility account that will make flexible financing possible. Moreover, we expect tocontinue to have the support and cooperation of our main financing bank. So, as a result ofreviewing 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. As a result of reviewing our future cash management plan, we have judged thatsignificant uncertainty about the going concern assumption is not recognized, given that there isno significant doubt as to our financing if we implement these measures.

6

4. Consolidated Financial Statements for the third quarter ended Dec. 31, 2015
(1) Consolidated Quarterly Balance Sheets(Millions of Yen)

As of March 31
FY2014
Assets:Current Assets:
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process-construction
Raw materials and supplies
Other
Allowance for doubtful accounts
Total Current Assets:
Fixed Assets:
Property, Plant and Equipment:
Buildings and structures, net
Machinery, equipment and vehicles, net
Land
Other, net
Total Property, Plant and Equipment:
Intangible Fixed Assets:
Goodwill
Other, net
Total Property, Plant and Equipment:
Investments and Other Assets
Total Fixed Assets:
Total Assets:

As of December 31
FY2015

7,026
14,800
504
1,738
8,043
694
(1,237)31,569

4,641
6,911
880
1,080
7,283
788
(842)
20,742

2,533
1,640
9,399
1,525
15,099

2,337
1,686
9,399
1,444
14,868

401
143
545
1,906
17,551
49,120

317
168
486
1,879
17,23337,976

7(Millions of Yen)

As of March 31
FY2014
Liabilities:
Current Liabilities:
Notes and accounts payable-trade
Short-term loans payable
Accounts payable-other
Lease obligations
Provision
Other
Total Current Liabilities:
Non-Current Liabilities:
Bonds payable
Long-term loans payable
Provision for retirement benefits
Provision for directors' 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
Deferred gains or losses on hedges
Foreign currency translation adjustment
Adjustment for Retirement Benefits (Cumulative)
Total Valuation and translation adjustments:
Non controlling interests
Total Net Assets:
Total Liabilities and Net Assets:

As of December 31
FY2015

18,537
6,360
4,408
208
31
6,013
35,5609,528
10,385
3,524
211
32
4,964
28,647

10
3,045
170
477
1,490
1,034
6,229
41,789

2,298
170
489
1,534
1,031
5,524
34,172

14,041
4(5,588)(1,481)
6,976

14,041
1(9,081)(1,481)
3,480

171
184
(30)
325
29
7,331
49,120

188
0
111
(7)
292
31
3,804
37,976

8(2) Consolidated Quarterly Statements of Income and Comprehensive Income
Statements of Income for the third quarter(Millions of Yen)
The third quarter
From April 1 to December 31
FY2014

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income:Interest income
Dividends income
Land and house rent revenue
Subsidy income
Foreign exchange gain or loss
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Commision paid
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary loss:
Cost of earlier voluntary retirement
Impairment loss
Total extraordinary loss
Net loss before taxes and other adjustments
Income taxes-current
Income taxes-deferred
Total income taxes
Net income (loss)
Net income (loss) attributed to non-controlling shareholders
Net income (loss) attributed to parent company's shareholders

FY201569,62755,885
13,741
17,520(3,779)45,912
36,415
9,497
12,354(2,857)

36
8
54
45
75
220

50
11
51
90
67
81
352

168
22
257
42
490
(4,049)

165
11
27
204
(2,709)(4,049)
349
847
1,196
(5,246)(1)(5,244)

371
147
518
(3,228)259
2262(3,490)2(3,492)9Comprehensive Income for the third quarter(Millions of Yen)

Net loss
Other comprehensive income
Share of other comprehensive income of associates
accounted for using equity method
Deferred gains or losses on hedges
Foreign currency translation adjustment
Retirement benefit adjustment
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toparent company
non-controlling shareholders

The third quarter
from April 1 to December 31
FY2014FY2015(5,246)(3,490)
63

16

108
16
188
(5,057)

0
(72)
22
(33)
(3,523)(5,055)(1)(3,526)210(3) Notes for this Consolidated Financial Statements(Notes to going concern assumption) None
(Notes to remarkable changes in Shareholders' Equity) None

(Segment Information)
I. Prior third quarter (From April 1, 2014 to December 31, 2014)(Millions of Yen)

Segments

SE

HS

ES

ERD

Total

Adjustment Consolidated(note 1)

Sales:
Sales to customers
Internal sales among segments
and transfer accounts
Total
Operating income(loss)(note 2)51,752

5,934

787

11,152

69,627-

69,627

-

-

-

-

-

-

-

51,752(3,075)

5,934
1,274

787
(57)

11,152708

69,627(1,150)(2,628)69,627(3,779)(note 1) Negative ¥2,628 million for adjustments of Operating income (loss) represents corporate expenses notallocated to reportable segments. Corporate expenses are mainly general and administrative expenses
note attributable to reportable segments.
(note 2) Operating income (loss) is adjusted to operating loss of Consolidated quarterly statements of income.

II. This quarter (From April 1, 2015 to December 31, 2015)(Millions of Yen)

Segments

SE

HS

ES

ERD

Total

Adjustment Consolidated(note1)

Sales:
Sales to customers
29,290Internal sales among segments
and transfer accounts
Total
29,290Operating income(loss)(1,349)(note2)

5,047

675

10,89945,912-45,912

-

-

-

-

-

-

5,047
547

675
32

10,899191

45,912(578)(2,279)45,912(2,857)(note 1) Negative ¥2,279 million for adjustments of Operating income (loss) represents corporate expenses notallocated to reportable segments. Corporate expenses are mainly general and administrative expenses
note attributable to reportable segments.
(note 2) Operating income (loss) is adjusted to operating income of Consolidated quarterly statements of income.

11

5. Supplemental Information
Consolidated Net Sales by Segment(Millions of Yen)

Commercial PV system
Wholesale of PV system components
Other
Solar Engineering Division Total:
Termite Eradication Service
Under-Roof/Floor Ventilation System
Foundation Repairing/Home Reinforcement System
Other
Home Sanitation Division Total:

The third quarter
from April 1 to December 31
FY2014FY201544,811
24,751
6,864
4,459
76
79
51,752
29,290Changes(20,060)(2,405)
3(22,462)

2,136
854
427
2,516
5,934

1,927
691
300
2,127
5,047

(208)
(163)
(126)
(389)
(887)

90
340
59
296
787

19
324
59
271
675

(70)
(15)
0
(25)
(111)

Plastic fuelIndustrial waste (Organic Waste Water Recycle)
Generation of electricity
Final disposal
Other
Environmental Resources Development Division Total:

5,862
2,808
1,158
491
832
11,152

5,440
2,750
1,252
607
847
10,899

(421)
(57)
94
115
15
(253)

Total Net Sales:

69,62745,912(23,714)Anti-rust equipment installation
Repair of building water-works
Waterproofing of building
Other
Establishment Sanitation Division Total: