SANIX INCORPORATED
Consolidated Financial Statements
For the First quarter ended June 30, 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.

Consolidated Financial Statements
For the First quarter ended June 30, 2014

SANIX INCORPORATED
Stock Listed:Tokyo Stock Exchange First Section, Fukuoka Stock Exchange

Code No;

4651

URL:

http://www.sanix.jp/index_e.htm

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 first quarter ended June 30, 2013
(1) Consolidated Operating Results(Millions of Yen)First Quarter
From April 1 to June 30
FY2014FY2013%change%change

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

21,71437.8%

15,753

78.6%

Operating Income·······························································(1,129)-965-

Ordinary Income·································································(1,005)-924-

Net Income··········································································(1,222)-778-

Net Income per Share (¥)··················································(¥25.62)

-

16.32

-

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

-

-

-

-

(Reference) Comprehensive Income·······························(1,208)-776-(2) Consolidated Financial Position(Millions of Yen)
As of June 30

As of March 31

FY2014FY2013

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

53,651

55,316

Net Assets ···········································································

10,777

11,827

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

20.0%

21.3%

Net assets per share(¥)······················································¥225.14

Reference¥247.17

Shareholders’ equity as of June 30 2014

10,748 million yen

Shareholders’ equity as of March 31 2014

11,798 million yen

2. Dividends
At the end of
1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

FY2013 ended March 31, 2013. ……………….

0.00

0.00

0.00

0.00

0.00

FY2014 ending March 31 ,2014 ……...................

0.00
0.00

0.00

0.00

0.00

Annual(Dividends per Share)

FY2014 ending March 31 ,2013(forecast) ……..

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

Full Year%change

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

51,20061.6%

161,500

91.8%

Operating Income·······························································(1,250)-14,000210.5%

Ordinary Income·································································(1,140)-13,800220.2%Net Income··········································································(1,490)-8,830

197.8%Net Income per Share (¥)··················································--¥184.73-

There is no change from initial projections for semi-annual and annual operational results publicly announced on Aug.5, 2014.

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··································First Quarter

Full Year

Ended June 30,2014

Ended March 31,2013

48,919,396

48,919,396

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

1,177,693

1,186,243

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

47,735,265

47,708,927*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 ineconomical conditions.

Index of the attachment
1. Qualitative Information for the first quarter ended June 30, 2013

1(1) Qualitative Information of Consolidated Operation Results …………………………………………………….

1(2) Qualitative Information of Consolidated Financial Position ......................................………..…..….…….…

2(3) Qualitative Information of the Forecast of Consolidated Business Results …………..….………………...…

2

2. Consolidated Financial Statements for the first quarter ended June 30, 2013

4(1) Consolidated Quarterly Balance Sheets ......................................................................….....…………….…

4(2) Consolidated Quarterly Statements of Income and Comprehensive Income........................……………….

6

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

6

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

7(3) Note regarding assumption of a going concern……………………………………………………………..……

7

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

7

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

8

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

8
8

This mateial is a abridged translation translation of Japanese version of the attatchment of Consolidated Financial Statements for
the First quarter ended June 30, 2014 of SANIX INCORPORATED.

1

1.Qualitative Information for the first quarter ended June 30, 2014
(1) Qualitative Information of Consolidated Operation Results
In the first quarter of the fiscal year ending March 31,2015 (April 1, 2014 to June 30, 2014), the Japanese economy
was affected by weak demand following the last-minute shopping spree ahead of the consumption tax hike.
However, business conditions remained on a modest recovery path, supported by improvement in corporate
earnings and employment.
Under such a business environment, our Group concentrated on sales and installation of commercial photovoltaic(PV) systems, which are expected to expand under the “Renewable Energy Feed in Tariff Purchasing Program,”
which started in July 2012. In a move to restructure the Group’s commercial PV business, the Group established
the West Japan SE Business Headquarters in the West Japan region, which is its main area of operation, and theEast Japan SE Business Headquarters, with a view to establishing a system for direct sales and direct installation in
the East Japan Region, effective April 1, 2014. In addition, the Group’s wholly owned subsidiary Sanix Engineering
Incorporated, which had been in charge of the commercial PV business, had the business taken over by the Solar
Engineering (SE) Division, effective June 1, 2014. As a result of this restructuring, the Group changed the name of
the Commercial Photovoltaics (PV) Division to the Solar Engineering (SE) Division and also transferred thebusiness of PV systems for homes, etc. belonging to the Home Sanitation (HS) Division and the Establishment
Sanitation (ES) Division to the SE Division, effective from the first quarter under review.
Figures for the same period of the previous year have been restated to reflect the new segment classification foryear on year comparison.
As for sales in the first quarter under review, the SE Division posted substantial revenue growth in PV systems. In
the Environmental Resources Development (ERD) Division, revenue from the electricity sales of TOMAKOMAI
Power Plant increased, but plastic fuel revenue and organic waste processing revenue declined due to decreases
acceptance volumes. The HS and ES Divisions posted sharp revenue declines because they transferred PV
business to the SE Division and focused on sanitation-related maintenance for existing customer.
As a consequence, the Net Sales of the entire group were ¥21,714 million, or up 37.8% from a year earlier.
In terms of profitability, in the SE Division, PV systems registered increased profit. However, power companies took
a long time investigating grid connection, preventing growth in the number of installations and, as a result, profit
growth was not enough to absorb fixed costs and the segment posted an operating loss.

The ERD Division

reported decreased profit due to a reduction in acceptance volumes. The HS and ES Divisions showed decreased
profits due to lower sales as a result of switching to a system of focusing on maintenance for existing customer. As
a consequence, for the whole group, the operating loss of ¥1,129 million compared to the operating income of ¥965
million in the same period of a prior year, and the ordinary loss was ¥1,005 million(ordinary income of ¥924 million
in the same period of a prior year), with the net loss of ¥1,222 million from net income of ¥778 million of net incomein the year earlier period.
Consolidated results of individual divisions for this quarter were as follows:
Earnings of Individual Divisions:
Solar Engineering (SE) Division
The number of installations of commercial PV systems, which are the main product in this segment, increased to¥15,635 million.The division posted an operating loss of ¥930 million (compared with operating income of ¥680
million in the same period of the previous year), reflecting a sharp increase in fixed costs such as labor costs as a2

percentage of sales. This is because the Group expects the number of installations of PV systems to increasesteadily through the second half of fiscal year and continued to actively recruit installation staff necessary to
improve and expand the installation system. However, in the first quarter under review, the timing of installations
was delayed largely because power companies took a long time examining grid connection and sales only
increased 82.9% compared with the same period of the previous year.
(For reference: Changes in SE Division staff: Average number of staff increased from 555 in Apr-Jun 2013 to 2,395
in Apr-June 2014)
Environmental Resources Development (ERD) Division
Revenue from plastic fuel decreased 21.6% year on year, reflecting a reduction in the acceptance volume of waste
plastic. Revenue from electricity sales rose 19.6% compared to the same period of the previous year due to stable
operation of the TOMAKOMAI Power Plant. Revenue from organic waste processing fell 7.1% year on year, due todecreased acceptance volume. As a result, the net sales decreased 6.1% to ¥3,841 million compared to the year
earlier period.The operating income decreased 14.6% to ¥374 million due to decrease in sales.
Home Sanitation (HS) Division
The HS Division transferred houseuse PV system business, which was included in its results for the first quarter ofthe previous fiscal year, to the SE Division and focused on sanitation management-related maintenance for existingcustomer including “termite control” and “sub-floor/roof ventilation system”. As a result, the net sales decreased
21.2% to ¥2,064 million compared to the year earlier period.The operating income decreased 32.8% to ¥330 million
due to decrease in sales.

Establishment Sanitation (ES) Division
The ES Division transferred PV system business, which was included in its results for the first quarter of theprevious fiscal year, to the SE Division and focused on sanitation management-related maintenance for existingcustomer of buildings, condominiums, etc. As a result, the net sales decreased 54.6% to ¥273 million compared to
the year earlier period.The operating loss of ¥50 million due to decrease in sales(operating income of ¥15 million in
the same period of a prior 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 ¥53,651 million, a decrease of ¥1,665 million
compared with the end of the previous consolidated fiscal year. Major factors were a decrease in cash and deposits,
offsetting an increase in raw materials and supplies. Total liabilities were ¥42,874 million, a decrease of ¥615 million
compared with the end of the previous consolidated fiscal year. Major factors were decreases in notes andaccounts payable-trade, income taxes payable and accounts payable other, offsetting an increase in short-termloans payable. Total net assets were ¥10,777 million, a decrease of ¥1,050 million compared with the end of theprevious consolidated fiscal year. A major factor was the recording of a net loss of ¥1,222 million yen.
As a result, the ratio of owners’ equity was 20.0% at the end of the first quarter under review as compared with21.3% at the end of the previous consolidated fiscal year.

(3) Qualitative information on the forecast of consolidated business results
SANIX has revised the consolidated earning forecast for the first half of the fiscal year ending March 31,2015, whichwere announced May 14,2014, on August 5, 2014.

3

Because it has been taking longer than the Company anticipated at the time of the previous announcement of theoperating results forecast for the first half (May 14, 2014) for an electric utility companies to investigate eachconnection after the submission of an application for the connection to grid system, the number of installations was
lower than planned. The main reason for the long time taken for the connection investigation is considered to be therising volume of administrative work on each electric utility companies is required to undertake as a result of asignificant increase in the number of certifications generation facilities of commercial PV system in February andMarch 2014.
The Company has revised its forecast net sales as described as follows, given the impact of the situation explained
above on its results for the first six months of the current fiscal year, although this situation is expected to be
gradually rectified on the current fiscal year.
With respect to income, mainly reflecting the fact that net sales will underperform the previous forecast, operating
income, ordinary income and net income are all expected to be lower than the previous forecast.
The Company has not changed its operating results forecast for the full fiscal year ending March 2015 announced
on May 14, 2014 because, in commercial PV systems, the level of the application for facility certification to theCompany since May 2014 has reached the point where it significantly exceeds the initially anticipated level, and theCompany believes that it will be able to make up for a shortfall in sales against forecast net sales for the first six
months of the current fiscal year in the second half of the current fiscal year by revising its sales strategy andfocusing on acquiring projects whose construction will commence promptly.

Revision of consolidated forecast for the 1st half of the fiscal year ending March 31, 2015(From April 1 to September 30, 2014)
Net
Income per
Operating
OrdinaryNet
Net Sales
Share
IncomeIncomeIncome(YEN)(Millions of Yen)
Previous Forecast(A)
62,600
3,600
3,500
2,240
46.86
Revised Forecast(B)
51,200(1,250)(1,140)(1,490)(31.21)
Change(B-A)(11,400)(4,850)(4,640)(3,730)Precet Change(%)-18.2%
Reference: results for the 1st half of the
31,692
1,495
1,443
1,051
22.05
fiscal year ended March 31,2014

4

2. Consolidated Financial Statements for the first quarter ended June 30, 2012
(1) Consolidated Quarterly Balance Sheets(millions of Yen)
As of March 31

As of June 30

FY2013

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:

9,237

3,265

22,205

21,819

113

367

584

958

5,447

10,216

1,686

1,347

(624)

(1,225)38,64836,749

1,890

2,484

1,270

1,288

9,179

9,269

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:

1,840

1,335

14,181

14,378

513

485

59

58

572

544

1,914

1,979

16,66816,90255,31653,651

5(millions of Yen)
As of March 31

As of June 30

FY2012FY2013Liabilities:
Current Liabilities:
Notes and accounts payable-trade
Short-term loans payable
Accounts payable-other
Lease obligations
Provision
Other
Total Current Liabilities:

20,114

18,565

5,000

8,843

4,836

4,250

1,720

151

236

47

4,673

4,507

36,58136,365

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:

30

30

3,695

3,440

181

172

429

444

1,534

1,409

1,036

1,011

6,907

6,508

43,48942,874

14,041

14,041

4

4

(768)

(1,845)Net Assets:
Shareholders' Equity:
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total Shareholders' Equity:(1,581)(1,570)11,695

10,630

91

109

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

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

44

34

-33

(25)

102

117

29

28

11,827

10,77755,31653,651

6(2) Consolidated Quarterly Statement of Income(millions of Yen)First Quarter
From April 1 to June 30
FY2013

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income:Interest income
Dividends income
Foreign exchange gains
Land and house rent revenue
Other
Total non-operating income
Non-operating expenses:
Interest expenses
Commision paid
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income (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)

FY201415,753

21,714

11,121

16,907

4,631

4,806

3,665

5,935

965

(1,129)

1

1

4

5

18

18

-

87

18

76

43

190

42

50

18
22

4
-

0

12

84

66

924

(1,005)924(1,005)

149

116

(2)

101

146

217

778

(1,223)00778(1,222)

7（Comprehensive Income）(millions of Yen)FY2012

Income before minority interests
Other comprehensive income
Share of other comprehensive income of associates accounted forusing equity method
Foreign currency translation adjustment
Total Valuation on Retirement benefit
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to parent company
Comprehensive income attributable to minority interests(3) Notes to Quarterly Consolidated Financial Statements(Notes to going concern)

None(Notes to remarkable changes in Shareholders' Equity)

None

FY2013778(1,223)

(3)

17

1

(10)

－

8

(2)

15

776

(1,208)776(1,207)

(0)

(0)

8

(Segment Information)
I. Prior First Quarter (From April 1, 2013 to June 30, 2013)(millions of Yen)(note 1)

(note 2)

Sales:
Sales to customers

8,544

2,619

602

3,986

15,753－15,753

Internal sales among segments
－

－

－

－

－

－

－

8,544

2,619

602

3,986

15,753－15,753

680

492

15

439

1,626

(660)

965

and transfer accounts
Total
Operating income(loss)(note 1) Negative ¥660 million 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 loss of Consolidated quarterly statements of income.

II. This First Quarter (From April 1, 2014 to June 30, 2014)(millions of Yen)(note1)(note2)

Sales:
Sales to customers

15,635

2,064

273

3,741

21,714－

21,714

Internal sales among segments
－

－

－

－

－

－

－

15,635

2,064

273

3,741

21,714－

21,714

(930)

330

(50)

374

(275)

(854)

(1,129)and transfer accounts
Total
Operating income(loss)(note 1) Negative ¥854 million yen 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.

9

3. Supplemental Information
Consolidated Net Sales by Segment(Thousands of Yen)First quarter
Changesfrom April 1 to June 30
FY2013

FY2014

Photovoltaic power generation system6784

14,8408,056

Wholesale of photovoltaic system components

1,760

765

(994)

－

29

29

Solar Engineering Division Total:

8,544

15,635

7,090

Termite Eradication Service

1,027

752

(178)

Under-Roof/Floor Ventilation System

462

283

(144)

Foundation Repairing/Home Reinforcement System

290

145

42
(555)

Others

Other

839

882

Home Sanitation Division Total:

2,619

2,064

Anti-rust equipment installation

133

25

(108)

Repair of building water-works

261

113

(147)

Waterproofing of building

59

25

(33)

Other

148

108

(40)

Establishment Sanitation Division Total:

602

273

(329)

2,427

1,903

(523)

817

977

159

Generation of electricity

441

410

(31)

Final disposal

154

174

19

Other

145

276

130

Environmental Resources Development Division Total:

3,986

3,741

(244)

Total Net Sales:

15,753

21,714

5,960

Plastic fuelIndustrial waste (Organic Waste Water Recycle)