SANIX INCORPORATED
Summary of Consolidated Financial Statements
For the First Quarter Ended June 30, 2017
[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 Quarter ended June 30, 2017
SANIX INCORPORATED
Stock Listed:Tokyo Stock Exchange First Section, Fukuoka Stock Exchange

Code No;

4651

URL:

http://sanix.jp

President and CEO:

Hiroshi Munemasa

Contact:

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

1. Business Results – Operating results for the First Quarter ended June 30, 2017
(April 1, 2017 to June 30, 2017)(1) Consolidated Operating Results(In Millions of Yen)First Quarter
From April 1 to June 30
FY2017%change

FY2016%change

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

12,098

6.5%

11,358(27.6%)

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

396

－

(446)

－

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

292

－

(368)

－

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

209

－

(621)

－

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

¥4.38

－

(¥13.01)－

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

－

－

－

－

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

222

－

(758)

－

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

As of March 31
FY2016FY2017
Total Assets ···························································

29,84531,645Net Assets ····························································

3,068

2,845

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

10.2%

8.9%

Net assets per share(¥) ···········································¥63.49¥58.86(Reference) Equity Capital ·······································

3,035

2,813

2. Dividends
Quarterly Period
1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Annual(Dividends per Share)
FY2016 ended June 30, 2016··································

0.00

FY2017 ended June 30, 2017··································

0.00

FY2017 ended March 31, 2018 (Forecast)·················

3. Forecasts for Consolidated Business Results (April 1, 2017 to March 31, 2018)(In Millions of Yen)
Fiscal Year 2017
From April 1 to March 31
Second Half%change

Full Year%change

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

23,6560.0%

47,680(6.4%)

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

80(22.7%)

1,210

16.7%

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

0

－

1,090

20.2%

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

(100)

－

810

94.7%

Net Income per Share (¥) ········································(¥2.09)¥16.94* 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
June 30, 2017

March 31, 2017

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··································································

1,113,718

1,113,668

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

47,805,715*

47,805,897* June 30, 2016

* 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 quarter ended June 30, 2017.........................

2(1) Information of Consolidated Business Results .............................................................................

2(2) Information of Consolidated Financial Position ............................................................................
(3) Information on the Future Outlook,
Including the Forecasts of Consolidated Business Results ........................................................

4
4

2. Quarterly Consolidated Financial Statements and the Primary Notes for the
first quarter ended June 30, 2017 ...............................................................................................

5(1) Quarterly Consolidated Balance Sheets ........................................................................................

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

7

Quarterly Consolidated Statements of Income
for the first quarter of the fiscal year ending March 31,2018 ..................................................

7

Quarterly Consolidated Statements of Comprehensive Income
for the first quarter of the fiscal year ending March 31,2018 ..................................................

8(3) Notes regarding the Quarterly Consolidated Financial Statements ...........................................

9Notes regarding the Assumption of a Going Concern ...........................................................

9Notes to Remarkable Changes in the amount of Shareholders’ Equity ..............................

10

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

11

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

12

Important Information regarding the Assumption of Going Concern ..................................

12

4. Supplemental Information .............................................................................................................

14

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

14

2

1. Qualitative Information for the first quarter ended June 30, 2017(1) Information of Consolidated Business Results
In the first quarter of the fiscal year ending March 31, 2018 (April 1, 2017 to June 30, 2017),
the Japanese economy continued to follow a modest recovery path as consumer confidence
backed by improved employment and income conditions picked up in addition to a rise incorporate earnings, despite future uncertainty remaining due partly to political instability
overseas.
In this business environment, the Group steadily implemented management streamlining,
including employee reductions, store mergers and closures, and logistics and production
downsizing, during the previous fiscal year in line with its medium-term business plan
(FY2016-FY2018) established in light of the business environment surrounding the solar
energy market that continued to shrink due to factors such as the legislative revisions for the
Feed-In Tariffs (FIT). Further, the Group established the Headquarters Overseeing SE, HS
and ES during the fiscal year under review, constituting the second year of the medium-termbusiness plan, as part of its restructuring to establish cross-organizational functions thatwould facilitate effective operation and efficient installations through the cooperation of thethree businesses, Solar Engineering (SE), Home Sanitation (HS), and Establishment
Sanitation (ES), which shared their operating facilities. Additionally, some of the personnel
were relocated from the SE Division to the HS and ES Divisions for more appropriate
placement.
While net sales in the SE Division decreased due to the shrinkage of the market for solar
power generation, the appropriate distribution of personnel and other management resources
resulted in an increase in the revenue of the HS and ES Divisions, and the Environmental
Resources Development Division also achieved increased sales based on the expansion of
its new electric power business. Consequently, the total net sales of the Group increased
6.5% year on year, to ¥12,098 million.
The profitability of all four divisions increased, thanks primarily to reduced expenses as aresult of management streamlining and lower cost of materials. As a result, the overall
financial results of the Group included operating income of ¥396 million (operating loss of¥446 million in the same period of the previous year), ordinary income of ¥292 million(ordinary loss of ¥368 million in the same period of the previous year), and profit attributableto owners of parent of ¥209 million (loss attributable to owners of parent of ¥621 million in thesame period of the previous year).
Consolidated results of individual divisions for the first quarter were as follows:

3a. Solar Engineering (SE) Division
Sales of PV systems decreased, which was mainly caused by the market contraction and a
decline in the number of installations of commercial PV systems. As a consequence, thesales were ¥4,500 million (decreased 21.8% year on year).
Despite the fall in sales, the operating result improved from a loss of ¥68 million in thesame period of the previous year to income of ¥442 million in the quarter under review as aresult of a reduction in expenses due to management streamlining, cost of materials, labor
expenses, etc.
b. Home Sanitation (HS) Division
Employees who were relocated from other organizations in the Group joined the HSDivision to grow the size of its business, which focused on the improvement of marketing andconstruction systems for home maintenance-related services such as termite eradication
services and foundation repair and home reinforcement services. As a result, the sales were¥2,329 million (increased 40.8% year on year).
Operating income rose by 58.8% year on year, to ¥402 million, thanks to the large increase
in segment sales despite an increase in the labor expenses for the additional employees andother costs.
c. Establishment Sanitation (ES) Division
Employees who were relocated from other organizations in the Group joined the ES
Division to grow the size of its business, which focused on the improvement of marketing andinstallation systems for the maintenance-related services for buildings and condominiums
with anti-rust equipment installation as the key product and service. As a result, net sales
were ¥310 million (increased 33.3% year on year).
Operating income climbed to ¥40 million (increased 184.7% year on year) based on thestrong growth of segment sales, which offset an increase in the labor expenses for the
additional employees and other costs.
d. Environmental Resources Development (ERD) Division
Plastic fuel increased 8.0% year on year, and organic wastewater recycling rose by 12.3%
year on year. Electricity sales grew by 89.3% year on year, due primarily to an increase inelectric energy suppliers since the second quarter of the previous fiscal year. As aconsequence, the sales were ¥4,957 million (increased 33.5% year on year).
Operating income stood at ¥338 million (increased 164.0% year on year) as a result of
increased profitability, attributable largely to higher unit prices for the collection of waste
plastic based on efficiency- and profitability-focused strategies and a fall in expenses for the
repair work at Tomakomai Power Plant.

4(2) Information of Consolidated Financial Position
The status of Assets, Liabilities and Net Assets
Total assets as of the end of the first quarter under review amounted to ¥29,845 million, adecrease of ¥1,799 million from the end of the previous fiscal year, which was caused chiefly
by a fall in cash and deposits of ¥738 million and a decline in notes and accounts
receivable-trade of ¥948 million. Total liabilities stood at ¥26,776 million, a reduction of¥2,022 million from the end of the previous fiscal year, which was attributable largely todecreases in notes and accounts payable-trade of ¥1,135 million, short-term loans payable of¥288 million, the current portion of long-term loans payable of ¥151 million, accounts
payable-other of ¥166 million, and income taxes payable of ¥268 million. Net assets totaled¥3,068 million, an increase of ¥222 million from the end of the previous fiscal year. The key
contributors to this included profit attributable to owners of parent of ¥209 million.
Consequently, the capital-to-asset ratio for the first quarter of the fiscal year under review
came to 10.2%, an increase from 8.9% at the end of the previous fiscal year.

(3) Information on the Future Outlook, Including the Forecasts of Consolidated BusinessResults
There is no change in the forecast of consolidated business results for the current fiscal
year ending March 31, 2018, from the forecasts announced on May 11, 2017.

5

2. Quarterly Consolidated Financial Statements and the Primary Notes forthe first quarter ended June 30, 2017
(1) Quarterly Consolidated Balance Sheets(In Millions of Yen)

As of March 31

As of June 30

FY2016FY2017

Assets :Current Assets :Cash and deposits

5,578

4,839

Notes and accounts receivable-trade

6,017

5,069

549

462

Merchandise and finished goods
Work in process-construction

304

244

Raw materials and supplies

4,605

4,540

Other

1,010

1,180

Allowance for doubtful accounts

(544)

(523)

17,522

15,813

Buildings and structures (net of depreciation)

1,720

1,682

Machinery, Equipment and Vehicles(net of depreciation)

1,234

1,225

Land

7,941

7,941

Other, net

1,382

1,381

Total Property, Plant and Equipment

12,278

12,230Goodwill

177

149

Other

148

143

Intangible Fixed Assets

325

292

Investments and Other Assets :

1,518

1,508

Total Fixed Assets

14,122

14,032

31,64529,845

Total Current Assets
Fixed Assets:
Property, Plant and Equipment :Intangible Fixed Assets :Total Assets

6(In Millions of Yen)

As of March 31

As of June 30

FY2016FY2017

Liabilities :Current Liabilities :Notes and accounts payable-trade

6,365

5,229

Short-term loans payable

12,96912,681

535

384

2,644

2,478

Accrued income taxes

428

159

Allowance for resource-recycling expenses

27

17

Current portion of long-term loans payable
Accounts payable

Other

2,615

2,725

Total Current Liabilities

25,586

23,676Long-term loans payable

484

437

Provision for directors’ retirement benefits

163

163

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

538

551

1,404

1,422

620

524

3,212

3,100

28,79926,776

14,041

14,0411

1Retained earnings(9,777)(9,568)Treasury stock(1,481)(1,481)

Total Shareholders’ Equity

2,784

2,994

Other
Total Non-Current Liabilities
Total Liabilities
Net Assets :Shareholders’ Equity :Capital stock
Capital surplus

Valuation and translation adjustments :Valuation difference on available-for-sale securities

71

73

Foreign currency translation adjustment

(28)

(22)

Adjustment for Retirement Benefits (Cumulative)

(14)

(10)

Total Valuation and translation adjustments

28

40

32

33

Total Net Assets

2,845

3,068

Total Liabilities and Assets

31,64529,845

Non-controlling Interests

7(2) Quarterly Consolidated Statements of Income and Comprehensive Income(Quarterly Consolidated Statements of Income)(For the first quarter of the fiscal year ending March 31, 2018)(In Millions of Yen)First Quarter
From April 1 to June 30
FY2017FY2016

Net sales

11,35812,098

Cost of sales

8,284

8,376

Gross profit

3,074

3,722

Selling, general and administrative expenses

3,520

3,325

Operating income (loss)

(446)

396

7

2

Non-operating income :Interest income
Dividends income

1

1Land and house rent revenue

16

15

Foreign exchange gains

96

-

-

20

Other

26

18

Total non-operating expenses

148

58

Interest expenses

53

53

Rent expenses

011

Subsidy income

Non-operating expenses :Foreign exchange losses
Other

-

38

16

58

70

161

(368)

292

Cost of earlier voluntary retirement

177-

Total extra ordinary loss

177

-

(546)

292

72

84

Income taxes-deferred2(1)

Total income taxes

75

82

(621)

210

0

1

(621)

209

Total non-operating expenses
Ordinary income (loss)
Extra ordinary loss :Income (loss) before income taxes and minority interests
Income taxes-current

Net Income
Net Income (loss) belonging to the non-controlling shareholders
Net income (loss) belonging to the shareholders of the parent
company8(Quarterly Consolidated Statements of Comprehensive Income)(For the first quarter of the fiscal year ending March 31, 2018)(In Millions of Yen)First Quarter
From April 1 to June 30
FY2017FY2016(621)

210

Share of other comprehensive income of associates
accounted for using equity method(5)2Foreign currency translation adjustment

(94)

6

Retirement benefit adjustment

(37)

3

Total other comprehensive income

(137)

12

(758)

222

(759)

221

0

1

Income before minority interests
Other comprehensive income :Comprehensive net income
Comprehensive income attributable toComprehensive income (loss) belonging to non-controllingshareholders
Comprehensive income (loss) belonging to the shareholdersof the parent company

9(3) Notes regarding the Quarterly Consolidated Financial Statements(Notes regarding the Assumption of Going Concern)
While the Group incurred a significant operating loss, ordinary loss, and loss
attributable to owners of parent in both the fiscal year ended March 31, 2015 and thefiscal year ended March 31, 2016, it achieved operating income, ordinary income, andprofit attributable to owners of parent during the previous fiscal year and, in the firstquarter under review as well, the Group earned operating income of ¥396 million,
ordinary income of ¥292 million, and profit attributable to owners of parent of ¥209
million. The Group is still working toward achieving the targets in its medium-termbusiness plan, however, and its interest-bearing debt is ¥14,110 million, which is highcompared with its liquidity on hand. Accordingly, the Group recognizes that it is stillsusceptible to events and conditions that cast significant doubt on going concern
assumptions.
To overcome the situation, the Company believes that, in light of the businessenvironment surrounding the solar electric power business, it is essential to further
strengthen the business foundation to achieve sustainable growth. The Company isthus focusing on the following measures as part of the medium-term business plan
(FY2016 - FY2018) announced on April 15, 2016.
ⅰ) A well-balanced allocation of management resources to business divisions
The Company is scaling down the SE Division to an appropriate size based on areasonable analysis of the external environment, rebuilding the HS Division and ESDivision, and further improving efficiency of the Environmental Resources
Development Division.
ⅱ) Strengthening the business base through thorough streamlining
During the previous fiscal year, the Company disposed of assets in accordancewith the downsizing of the SE Division (store mergers and closures, reduction of
power conditioner production, logistics and procurement downsizing, and the closureof a logistics center). The number of employees has reached the level initiallyplanned as a result of voluntary retirement that was encouraged in order to reduce
the workforce to an appropriate level for the sales volume in the medium-termbusiness plan. In addition, the salaries of all employees have been reduced.
ⅲ) Enhancement of the governance system
At the 38th Annual general Meeting of Shareholders held on June 29, 2016, theCompany increased the number of outside directors by one to a total of three. The
Company is also strengthening the management oversight functions of the Board of

10

Directors and changing the business execution system to clarify the responsibilities ofeach business division.
Many of these measures were initiated during the previous fiscal year, resulting inincreased profitability that has enabled the businesses to remain in the black. In
addition, the Headquarters Overseeing SE, HS and ES was established during the
fiscal year under review, the second year of the medium-term business plan, in order tofurther strengthen the business foundation of each business and establish
cross-organizational functions that would facilitate effective operation and efficientinstallations through the cooperation of the three segments while also transferring someof the personnel from the SE Division to the HS and ES Divisions. With regard to
funding, the Company has steadily implemented its medium-term business plan
(FY2016 - FY2018) developed on the assumption of the continued support of the main
financing bank. The Company expects to continue to receive support and cooperation
with regard to financing, and will work to stabilize its cash management.
The Company is still in the process of taking the above measures, however, and themain financing bank, while indicating its understanding, has not guaranteed its support
and cooperation; the Company therefore recognizes that at present, there is a material
uncertainty regarding the going concern assumption.
The quarterly consolidated financial statements were prepared based on theassumption of a going concern and do not reflect the impact of such a material
uncertainty regarding the going concern assumption.
(Notes to Remarkable Changes in the amount of Shareholders’ Equity): None11(Segment Information, etc.)
Ⅰ The previous first quarter (From April 1, 2016 to June 30, 2016)
Information concerning the Amount of Net Sales and Operating Income (loss)
by Segment(In Millions of Yen)

Elimination
or Group(note 1)

Segments

Sales:
Sales to customers
Internal sales among
segments

SE

HS

ES

ERD

Total

5,757

1,655

232

3,713

11,358-

11,358

-

-

-

-

-

-

-

5,757

1,655

232

3,713

11,358-

11,358

(68)

253

14

128

327

(773)

(446)

And transfer accounts
Total
Operating income (loss)

Consolidated(note 2)

(note 1)
Negative ¥773 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 quarterly consolidated statements of income.

Ⅱ The first quarter (From April 1, 2017 to June 30, 2017)
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)

4,500

2,329

310

4,957

12,098-12,098

-

-

-

-

-

-

-

4,500

2,329

310

4,957

12,098-12,098

442

402

40

338

1,223

(826)

396

Segments

Sales:
Sales to customers
Internal sales among
segments
And transfer accounts
Total
Operating income (loss)

Consolidated(note 2)

(note 1)
Negative ¥826 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 quarterly consolidated statements of income.

12

3. Other
Important Information regarding Assumption of Going Concern
While the Group incurred a significant operating loss, ordinary loss, and loss
attributable to owners of parent in both the fiscal year ended March 31, 2015 and thefiscal year ended March 31, 2016, it achieved operating income, ordinary income, andprofit attributable to owners of parent during the previous fiscal year and, in the firstquarter under review as well, the Group earned operating income of ¥396 million,
ordinary income of ¥292 million, and profit attributable to owners of parent of ¥209
million. The Group is still working toward achieving the targets in its medium-termbusiness plan, however, and its interest-bearing debt is ¥14,110 million, which is highcompared with its liquidity on hand. Accordingly, the Group recognizes that it is stillsusceptible to events and conditions that cast significant doubt on going concern
assumptions.
To overcome the situation, the Company believes that, in light of the businessenvironment surrounding the solar electric power business, it is essential to further
strengthen the business foundation to achieve sustainable growth. The Company isthus focusing on the following measures as part of the medium-term business plan
(FY2016 - FY2018) announced on April 15, 2016.
ⅰ) A well-balanced allocation of management resources to business divisions
The Company is scaling down the SE Division to an appropriate size based on areasonable analysis of the external environment, rebuilding the HS Division and ESDivision, and further improving efficiency of the Environmental Resources
Development Division.
ⅱ) Strengthening the business base through thorough streamlining
During the previous fiscal year, the Company disposed of assets in accordancewith the downsizing of the SE Division (store mergers and closures, reduction of
power conditioner production, logistics and procurement downsizing, and the closureof a logistics center). The number of employees has reached the level initiallyplanned as a result of voluntary retirement that was encouraged in order to reduce
the workforce to an appropriate level for the sales volume in the medium-termbusiness plan. In addition, the salaries of all employees have been reduced.
ⅲ) Enhancement of the governance system
At the 38th Annual general Meeting of Shareholders held on June 29, 2016, theCompany added an outside director to make a total of three in order to strengthen the
management oversight function of the Board of Directors, and changed the business
operation system to clarify the responsibilities of each business division.

13

Many of these measures were initiated during the previous fiscal year, resulting inincreased profitability that has enabled the businesses to remain in the black. In
addition, the Headquarters Overseeing SE, HS and ES was established during the
fiscal year under review, the second year of the medium-term business plan, in order tofurther strengthen the business foundation of each business and establish
cross-organizational functions that would facilitate effective operation and efficientinstallations through the cooperation of the three segments while also transferring someof the personnel from the SE Division to the HS and ES Divisions. With regard to
funding, the Company has steadily implemented its medium-term business plan
(FY2016 - FY2018) developed on the assumption of the continued support of the main
financing bank. The Company expects to continue to receive support and cooperation
with regard to financing, and will work to stabilize its cash management.
The Company is still in the process of taking the above measures, however, and themain financing bank, while indicating its understanding, has not guaranteed its support
and cooperation; the Company therefore recognizes that at present, there is a material
uncertainty regarding the going concern assumption.
The quarterly consolidated financial statements were prepared based on theassumption of a going concern and do not reflect the impact of such a material
uncertainty regarding the going concern assumption.

14

4. Supplemental Information
Consolidated Net Sales by Division(In Millions of Yen)

From April 1 to June 30
FY2017FY2016
Commercial PV system
Wholesale of PV components

Changes

5,238

4,147

(1,090)

488

266

(221)

30

86

56

5,757

4,500

(1,256)

Termite Eradication Service

634

728

93

Under-Roof/Roof Ventilation System

182

315

132

Foundation Repairing/Home Reinforcement
System

259

460

201

OthersSolar Engineering Total

578

825

246

Home Sanitation Division Total

1,655

2,329

674

Anti-rust equipment installation

16

100

84

Repair of building water-woks

78

83

4

Water proofing of building

30

28

(2)

Others

107

97

(10)

OthersEstablishment Sanitation Division Total

232

310

77

1,698

1,835

136

1,224

2,318

1,093

Generation of electricity

410

460

50

Final disposal

172

164

(8)

OthersEnvironmental
Division Total :

207

179

(27)

3,713

4,957

1,244

11,35812,098739

Plastic fuelIndustrial waste
Recycle)Total Net Sales(Organic

Resources

Waste

Water

Development