SANIX INCORPORATED
Summary of Consolidated Financial Statements
For the Second Quarter Ended September 30, 2018
[Japanese Standards]

The financial figures in this document are based on Japanese Accounting Standards and accompanying laws. Amounts arerounded off to 1 decimal place. This document is an English translation of the Japanese-language original.

Consolidated Financial Statements for the First Half ended September 30, 2018
SANIX INCORPORATED
Stock Listed:Tokyo Stock Exchange First Section, Fukuoka Stock Exchange

Code No;

4651

URL:

https://sanix.jp

President and CEO:

Hiroshi Munemasa

Contact:

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

1. Business Results – Operating results for the First Half ended September 30, 2018
(April 1, 2018 to September 30, 2018)(1) Consolidated Operating Results(In Millions of Yen)First Half
From April 1 to September 30
FY2018Net Sales······························································FY2017%change

24,4471.2%%change

24,162

2.2%

Operating Income ··················································

688

396.6%

138

33.9%

Ordinary Income ····················································

689

－

(29)

－

Net Income ···························································

194

－

(155)

－

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

¥4.06

－

(¥3.25)－Net Income per Share, Diluted(¥)······························

－

－

－

－

(Note) Comprehensive Income ································

173

－

(104)

－

(2) Consolidated Financial Position(In Millions of Yen)
As of September 30

As of March 31

FY2018FY2017

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

29,95029,938Net Assets ····························································

4,249

4,076

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

14.1%

13.5%

Net assets per share(¥) ···········································¥88.15¥84.54(Reference) Equity Capital ·······································

4,214

4,041

2. Dividends
End of Quarterly Period
1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

0.00

0.00

0.00

0.00

0.00

0.00

Annual(Dividends per Share)
FY2017 ended March 31, 2018 (¥) ·························

0.00

0.00

FY2018 ended March 31, 2019 (¥) ·························

0.00

0.00

FY2018 ended March 31, 2019 (¥) (Forecast) ··········(Note) Revision from the most recently announced dividend forecast: None

3. Forecasts for Consolidated Business Results (April 1, 2018 to March 31, 2019)(In Millions of Yen)
Fiscal Year 2018
Full Year%change

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

49,434

Operating Income ··················································

1,338

7.3%

Ordinary Income ····················································

1,290

26.6%

Net Income ···························································

534(54.7%)Net Income per Share (¥) ········································¥11.19

(1.1%)(Note) Revision from the most recently announced forecast of consolidated business results: Exist* Notes(1) Changes in significant subsidiaries during the period(Change in scope of consolidations resulting from change in subsidiaries): None
Number of subsidiaries newly consolidated－
Name of subsidiaries newly consolidated－
Number of subsidiaries excluded from consolidation－
Name of subsidiaries excluded from consolidation－(2) Adoption of special quarterly accounting methods: None
(3) Changes in accounting policies and accounting estimates retrospective restatementⅰ) Changes in accounting policies based on revisions of accounting standard: Noneⅱ) Changes in accounting policies other than ones based on revisions of accounting standard: Noneⅲ) Changes in accounting estimates: Noneⅳ) Retrospective restatement: None
(4) Number of Issued and Outstanding Shares (Common Stock)(Shares)
End of term
September 30,

March 31,

2018

2018

Number of issued and outstanding shares ,end of period (including treasury stock)48,919,396

48,919,396

Number of treasury stock ,end of period······························································

1,113,923

1,113,923

Average number of shares during the fiscal term ··················································

47,805,473*

47,805,678* September 30, 2017

* This summary of financial statements is exempt from audit procedure required by Financial instruments and Exchange Act.
* 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. For details of these assumptions, prospects and plans, and for notes appropriate use of forecasts for thebusiness results, please see page 2 of the Attachment.

Index of the attachment
1. Qualitative Information for the First Half ended September 30, 2018 ....................
(1) Information of Consolidated Business Results .............................................................................
(2) Information of Consolidated Financial Position ............................................................................

225(3) Information on the Future Outlook,
Including the Forecasts of Consolidated Business Results ........................................................

6

2. Quarterly Consolidated Financial Statements and the Primary Notes for theFirst Half ended September 30, 2018 ........................................................................................

7(1) Quarterly Consolidated Balance Sheets........................................................................................

7(2) Quarterly Consolidated Statements of Income and Comprehensive Income ..........................

9

Quarterly Consolidated Statements of Income
for the first half of the fiscal year ending March 31,2019 ........................................................

9

Quarterly Consolidated Statements of Comprehensive Income
for the first half of the fiscal year ending March 31,2019 ........................................................

10(3) Quarterly Consolidated Statements of Cash Flows .....................................................................

11(4) Notes regarding the Quarterly Consolidated Financial Statements ...........................................

12

Note to the Assumption of a Going Concern...........................................................................

12

Notes to Remarkable Changes in the amount of Shareholders’ Equity ..............................

12

Segment Information, etc. ........................................................................................................

13

3. Others ....................................................................................................................................................

14

Consolidated Net Sales by Division ................................................................................................

14

2

1. Qualitative Information for the First Half ended September 30, 2018(1) Information of Consolidated Business Results
In the first half of the fiscal year ending March 31, 2019 (April 1, 2018 to September 30,2018), the Japanese economy continued to follow a modest recovery path with consumer
spending showing signs of picking up, backed by improved corporate earnings andemployment conditions, despite future uncertainty remaining due to the contingency ofoverseas economies and unstable political situations in Japan and overseas.
Under these circumstances, the Group promoted fundamental management rationalizationin line with the medium-term business plan (fiscal 2016 – fiscal 2018) that was preparedbased on the business environment surrounding the solar electric power market. In theprevious consolidated fiscal year, the Group established the “SE/HS/ES Business
Headquarters” to make the shift to a structure for more effective sales activities and more
efficient construction work through mutual cooperation among the three businesses of SE, HS
and ES and transferred personnel from the SE Division to the HS Division and the ES
Division in the first quarter of the current fiscal year to promote the further optimization of
personnel.
The Tomakomai Power Plant (Tomakomai, Hokkaido) suspended power generation
because of the effects of the Hokkaido Eastern Iburi earthquake that occurred before dawn
on September 6 during the first half under review, and the Group is proceeding with thedetailed inspection of stricken sections and recovery work. The Group expects the operation
to resume in early March 2019 and will work hard to resume the operation as soon as
possible.
As for net sales in the first half under review, sales increased in the HS Division and the ES
Division as a result of promoting the expansion of the business size by allocating
management resources including personnel, and sales also increased in the Environmental
Resources Development Business Division as a result of expanding electricity sales in thePower Producer and Supplier business. However, sales declined significantly in the SE
Division due to the impact of the contraction of the solar electric power market. As a result,net sales of the entire Group stood at ¥24,447 million (up 1.2% year on year).
Profit increased in the HS Division, the ES Division and the Environmental Resources
Development Business Division on the back of higher sales. However, profit declined
significantly in the SE Division, where sales decreased substantially. As a result, for the entire
Group, operating income came to ¥688 million (up 396.6% year on year) and ordinary income
was ¥689 million (compared with an ordinary loss of ¥29 million in the same period of theprevious year). Net income attributable to the owners of the parent company stood at ¥194
million (compared with a net loss attributable to the owners of the parent company of ¥155
million in the same period of the previous year) as a result of posting ¥377 million, theexpected amount of expenses for restoring the facilities at the Tomakomai Power Plant

3stricken by the Hokkaido Eastern Iburi earthquake, as a loss caused by the disaster under
extraordinary losses.
Consolidated results of individual divisions for the first quarter were as follows:a. SE (Solar Engineering) Division
Sales declined in solar electric power systems. In addition to the impact of the contracted
size of the solar electric power market, there was a longer-than-expected delay in theapproval of business plans of Feed-in-Tariffs (FIT) in the first half under review, which
resulted in a situation of backward shifts overall. As a result, net sales declined significantly to¥5,947 million (down 31.8% year on year).
Operating income decreased substantially due to lower sales, despite segment efforts to
reduce expenses through the transfer of personnel to the HS Division and reduce raw
material costs, and the segment posted operating income of ¥55 million (down 94.1% year onyear).
b. HS (Home Sanitation) Division
The HS Division strengthened the sales and construction systems so that the Division
would be able to make carefully crafted proposals for the maintenance of ordinary houses by
increasing personnel through transfers for the purpose of expanding its business size. As aresult, termite extermination increased 34.2% year on year, and underfloor/ceiling ventilation
systems rose 36.9% year on year. Base repair/roof reinforcement construction increased
21.8%. As a result, the division’s sales rose to ¥5,495 million (up 19.2% year on year).
Operating income stood at ¥1,238 million (up 65.2% year on year) mainly thanks to thesignificant increase in sales, an improvement in construction efficiency and a fall in
subcontract expenses, despite a rise in costs such as personnel expenses due to theincrease in personnel.
c. ES (Establishment Sanitation) Division
Sales of anti-rust equipment installation (brand name: Daelman Shock), our main product,
increased 79.8% year on year as a result of increasing personnel through transfers for the
purpose of expanding the business size of the Division, strengthening sales activities to theowners of buildings and condominiums and enhancing relationships with partner companies,
including management companies. As a consequence, the division’s net sales rose to ¥905
million (up 32.1% year on year).
Operating income rose to ¥128 million (up 30.6% year on year) mainly due to the significant
increase in sales, an improvement in construction efficiency and a fall in subcontract
expenses, despite a rise in costs such as personnel expenses due to the increase inpersonnel.
d. Environmental Resources Development (ERD) Division
Due to a rise in the collection volume of waste plastic for fuels, plastic fuel sales increased

411.8% year on year and electricity sales rose 30.0% year on year due to the expansion of thePower Producer and Supplier business. As a result, net sales amounted to ¥12,099 million(up 19.2% year on year).
Operating income increased to ¥962 million (compared with an operating loss of ¥57 million
in the same period of the previous year) due to an increase in unit prices for the collection ofwaste plastic, an improvement in fuel quality and the reduction of costs reflecting theimproved efficiency of plastic fuels, as well as higher sales in the Power Producer and
Supplier business and the contribution of the stabilized costs of power procurement.

5(2) Information of Consolidated Financial Positiona. Information on the status of Assets, of Liabilities, and of Net Assets
Total assets as of the end of the first half under review amounted to ¥29,950 million, an
increase of ¥12 million from the end of the previous consolidated fiscal year, which wascaused chiefly by an increase in merchandise and finished goods of ¥823 million and anincrease in machinery, equipment and vehicles of ¥143 million, despite a decrease in cash
and deposits of ¥1,068 million.
Total liabilities stood at ¥25,701 million, a decline of ¥160 million from the end of theprevious consolidated fiscal year, which was attributable largely to a decrease in notes andaccounts payable-trade of ¥983 million, while short-term loans payable increased by ¥742
million.
Net assets totaled ¥4,249 million, an increase of ¥172 million from the end of the previous
consolidated fiscal year, mainly due to the posting of net income attributable to the owners ofparent company of ¥194 million.
Consequently, the capital-to-asset ratio for the first quarter of the fiscal year under review
came to 14.1%, an increase from 13.5% at the end of the previous fiscal year.

b. Information on Consolidated Cash Flows
Cash and cash equivalents (hereinafter “cash”) as of September 30, 2018, totaled ¥3,833
million, a decrease of ¥1,249 million (24.6%) from March 31, 2018, due to net cash used inoperating activities and investing activities of ¥1,468 million and ¥417 million, respectively,
despite cash provided by financing activities of ¥642 million.
Cash flows and reasons for changes in cash flows during the period are described below.
(Net Cash Provided by Operating Activities)
Net cash used in operating activities totaled ¥1,468 million (compared with net cash
provided of ¥44 million in the same period last year). This was mainly due to a decrease innotes and accounts payable-trade of ¥969 and an increase in inventories of ¥818, while
income before income taxes and minority interests of ¥312 million was posted.
(Net Cash Provided by Investment Activities)
Net cash used in investing activities totaled ¥417 million (compared with net cash used of¥39 million in the same period in the previous year). This was mainly due to payments into
time deposits of ¥520 million and purchase of property, plant and equipment of ¥214 million,
despite proceeds from withdrawal of time deposits of ¥328 million.
(Net Cash Provided by Financing Activities)
Net cash provided by financing activities amounted to ¥642 million (compared with net
cash used of ¥1,184 million in the same period last year), mainly due to net increase in
short-term loans payable of ¥742 million.

6(3) Information on the Future Outlook, Including the Forecasts of Consolidated BusinessResults
The Company revised the forecasts of consolidated business results for the current fiscal
year ending March 31, 2019 on November 13, 2018, as described below.
With regard to the full-year results forecasts, the Tomakomai Power Plant of the Group has
suspended power generation due to the effects of the 2018 Hokkaido Eastern Iburi
earthquake that occurred on September 6, 2018. There is no prospect for electricity sales
during the suspension period, because the Group expects the operation to resume in early
March 2019 although the Group will work hard to resume the operation ahead of schedule.
Based on these circumstances, the Group will revise its full-year forecast for net sales as
described below.
In terms of profit, operating income and ordinary income are likely to fall below the previous
forecasts, given that net sales will be below the previous forecast and that there is the burdenof fixed costs and so on. In addition, net income attributable to the owners of the parent
company is expected to fall below the previous forecast because the Group will post
expenses for restoring the original state of the Tomakomai Power Plant as a loss caused by
the disaster under extraordinary losses.

The forecast of Consolidated Business Results for the full fiscal year ending March 31, 2019
(From April 1, 2018 to March 31, 2019)

Net Sales

Operating
IncomeOrdinary
Income(In Millions of Yen)
Net Income
Net Income
per Share/¥Previous Forecast(A)

50,000

2,190

2,100

1,610

¥33.68

Revised Forecast(B)

49,434

1,338

1,290

534

¥11.19

(B－A)

- 565

- 851

- 809

- 1,075

－

(％)

(1.1)

(38.9)(38.6)(66.8)－

49,993

1,246

1,019

1,180

¥24.68Changes
Rate of Change
Reference:
Results for FY2017(ended March 31,2018)

7

2. Quarterly Consolidated Financial Statements and the Primary Notes for theFirst Half ended September 30, 2018
(1) Quarterly Consolidated Balance Sheets(In Millions of Yen)

As of Mar. 31

As of Sep. 30

FY2017FY2018Assets :Current Assets :Cash and deposits

5,482

4,413

Notes and accounts receivable-trade

5,485

5,447

273

1,097

Merchandise and finished goods
Work in process-construction

209

218

Raw materials and supplies

4,035

4,017

Other

797

1,040

Allowance for doubtful accounts

(525)

(468)

15,75915,767

Buildings and structures (net of depreciation)

2,080

1,952

Machinery, Equipment and Vehicles(net of depreciation)

1,189

1,332

Land

7,811

7,811

844

740

11,926

11,837

Total Current Assets
Fixed Assets:
Property, Plant and Equipment :Other (net of depreciation)
Total Property, Plant and Equipment
Intangible Fixed Assets :Goodwill

65

9

Other

148

252

Intangible Fixed Assets

214

261

Investments and Other Assets :

2,037

2,083

Total Fixed Assets

14,17814,18329,93829,950Total Assets

8(In Millions of Yen)

As of Mar. 31

As of Sep. 30

FY2017FY2018

Liabilities :Current Liabilities :Notes and accounts payable-trade

5,079

4,095

Short-term loans payable

11,685

12,427

140

122

3,069

2,742

Accrued income taxes

409

294

Allowance for resource-recycling expenses

27

37

Current portion of long-term loans payable
Accounts payable

-

377

Other

2,592

2,550

Total Current Liabilities

23,00322,648325

298

Allowance for disaster loss

Non-Current Liabilities :Long-term loans payable
Provision for directors’ retirement benefits

99Provision for disposal site closing expenses

573

587

1,465

1,508

483

648

Liability related to retirement benefits
Other
Total Non-Current Liabilities
Total Liabilities

2,857

3,053

25,86125,701

14,041

14,041Net Assets :Shareholders’ Equity :Capital stock

1

1

Retained earnings(8,597)(8,403)

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

Total Shareholders’ Equity

3,964

4,159

Valuation difference on available-for-sale securities

76

73

Deferred gains or losses on hedges(0)-

Foreign currency translation adjustment

3

(17)

Adjustment for retirement benefits (cumulative)

(2)

(1)

Total Accumulated other comprehensive income

76

55

35

34

Capital surplus

Accumulated other comprehensive income :Non-controlling Interests
Total Net Assets

4,076

4,249

Total Liabilities and Assets

29,93829,9509(2) Quarterly Consolidated Statements of Income and Comprehensive Income(Quarterly Consolidated Statements of Income)(for the first half of the fiscal year ending March 31, 2019)(In Millions of Yen)First Half
From April 1 to September 30
FY2018FY2017

Net sales

24,162

24,447

Cost of sales

17,476

16,943Gross profit

6,685

7,503

Selling, general and administrative expenses

6,546

6,815

138

688

7

4

Operating income
Non-operating income :Interest income
Dividends income

1

1Land and house rent revenue

31

32

-

8

20

0

-

70

Foreign exchange gains
Subsidy income
Compensation income
Other

28

12

Total non-operating income

88

129

109

98

Non-operating expenses :Interest expenses
Foreign exchange losses

28

-

Other

117

30

256

128

(29)

689

Loss on disaster-

377

Total extraordinary loss-

377

Income (loss) before income taxes and minority interests

(29)

312

Income taxes-current

128

158

Income taxes-deferred

(4)

(40)

Total income taxes

124

117

Net Income (loss)

(154)

194

Net Income (loss) belonging to the non-controlling shareholders

1
(155)

0
194

Total non-operating expenses
Ordinary income (loss)
Extra ordinary loss :Net income (loss) belonging to the shareholders of the parent company

10(Quarterly Consolidated Statements of Comprehensive Income)(for the first half of the fiscal year ending March 31, 2019)(In Millions of Yen)First Half
From April 1 to September 30
FY2018FY2017
(154)

194

8
-

(2)
0

Foreign currency translation adjustment

33

(20)

Adjustment for retirement benefit adjustment

7

1

Net Income (loss)
Other comprehensive income :Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Total other comprehensive income
Comprehensive net income

49

(21)

(104)

173

(106)

172

1

0

(Breakdown)Comprehensive income belonging to the shareholders of the parent
company
Comprehensive income belonging to non-controlling shareholders

11(3) Quarterly Consolidated Statements of Cash Flows(In Millions of Yen)First Half
From April 1 to September 30
FY2018FY2017

Net Cash Provided by (Used in) Operating Activities
Income (loss) before income taxes and minority interests

(29)

312

Depreciation and amortization

324

394

Amortization of goodwill

56

56

(154)

-

Increase (Decrease) in allowance for disposal site closing expenses

18

14

Increase (Decrease) in allowance for resource-recycling expenses

(3)

9

-

377

Increase (Decrease) in reserve for directors’ retirement benefits

Increase (Decrease) in allowance for disaster loss
Increase (decrease) in provision for retirement benefits

27

44

Increase (decrease) in allowance for doubtful accounts

9

(222)

Interest income and dividends income

(8)

(5)

Interest expenses

109

98

Increase (decrease) in notes and accounts receivable-trade

502

37

Increase (decrease) in inventories

546

(818)

Increase (decrease) in other current assets

(135)

(289)

(1,796)(969)

Increase (decrease) in accrued consumption taxes

77

(154)

Increase (decrease) in other current liabilities

823

(174)

Other, net

62

178

Subtotal

430(1,111)

8

5Interest expenses paid

(107)

(101)

Income taxes paid

(285)

(296)

-

36

44

(1,468)

Payments into time deposits

(667)

(520)

Proceeds from withdrawal of time deposits

642

328

Purchase of property, plant and equipment

(168)

(214)

Proceeds from sales of property, plant and equipment

200

0

Other, net

(45)

(10)

Net cash provided by (used in) investing activities

(39)

(417)

(606)

742

-

20

Repayment of long-term loans payable

(357)

(65)

Repayments of finance lease obligations

(125)

(88)

Increase (decrease) in notes and accounts payable-trade

Interest and dividends income received

Income taxes refund
Net cash provided by (used in) operating activities

Net Cash Provided by (Used in) Investing Activities

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable

Other, net
Net cash provided by (used in) financing activities

(95)

34

(1,184)

642

7

(7)

Net increase (decrease) in cash and cash equivalents(1,172)(1,249)Cash and cash equivalents, beginning of the period

4,875

5,083

Cash and cash equivalents, end of the quarter

3,703

3,833

Effect of exchange rate change on cash and cash equivalents

12(4) Notes regarding the Quarterly Consolidated Financial Statements(Notes to the Assumption of a Going Concern): None(Notes to Remarkable Changes in the amount of Shareholders’ Equity): None13(Segment Information, etc.)
Ⅰ The previous first half (From April 1, 2017 to September 30, 2017)ⅰ) Information concerning the Amount of Net Sales and Operating Income (loss)
by Segment(In Millions of Yen)

Elimination
or Group(note 1)

Segments

Consolidated(note 2)

SE

HS

ES

ERD

Total

8,716

4,611

685

10,14924,162-

24,162

-

-

-

-

-

-

-

8,716

4,611

685

10,14924,162-

24,162

937

749

98

(57)

1,728

(1,590)138

Sales:
Sales to customers
Internal sales among
segments and transfer
accounts
Total
Operating income (loss)(note 1)
Negative ¥1,590 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 quarterly consolidated statements of income.

Ⅱ The first half (From April 1, 2018 to September 30, 2018)ⅰ) Information concerning the Amount of Net Sales and Operating Income (loss) by
Segment(In Millions of Yen)

SE

HS

ES

ERD

Total

Elimination
or Group(note 1)

5,947

5,495

905

12,09924,447-24,447

-

-

-

-

-

-

-

5,947

5,495

905

12,09924,447-24,447

53

1,238

128

962

2,384

(1,696)688

Segments

Consolidated(note 2)

Sales:
Sales to customers
Internal sales among
segments and transfer
accounts
Total
Operating income (loss)(note 1)
Negative ¥1,696 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 quarterly consolidated statements of income.

14

3. Others
Consolidated Net Sales by Division(In Millions of Yen)

From April 1 to September 30
FY2018FY2017
Commercial PV system
Wholesale of PV components

Changes

7,992

5,564

(2,427)

576

288

(287)

147

94

(53)

Solar Engineering Division Total

8,716

5,947

(2,768)Termite Eradication Service

Others

1,364

1,831

467

Under-Floor/Roof Ventilation System

635

870

234

Foundation Repairing/Home Reinforcement
System

911

1,110

199

1,699

1,681

(17)

Home Sanitation Division Total

4,611

5,495

883

Anti-rust equipment installation

240

433

192

Repair of building water-woks

188

201

12

OthersWater proofing of building

66

79

13

Others

188

191

2

Establishment Sanitation Division Total

685

905

220

3,672

4,105

432

4,878

6,342

1,464

889

925

35

Final disposal

359

377

17

OthersEnvironmental
Division Total :

349

349

(0)

10,14912,0991,949

24,162

24,447

284

Plastic fuelGeneration of electricity
Industrial waste (Organic
Recycle)Total Net Sales

Resources

Waste

Water

Development