SANIX INCORPORATED
Summary of Consolidated Financial Statements
For the Fiscal Year Ended March 31, 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 Fiscal Year ended March 31, 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 Management & Planning Division

1. Business Results – Operating results for the Fiscal Year ended March 31, 2017
(April 1, 2016 to March 31, 2017)(1) Consolidated Operating Results(In Millions of Yen)
Fiscal Year
From April 1 to March 31
FY2016%change

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

50,955

Operating Income ··················································FY2015%change(17.7%)

61,916(35.3%)

1,036－(2,229)－Ordinary Income ····················································

907－(1,949)－Profit attributable to owners of parent ·························

416－(4,604)－

Basic earnings per share (¥) ····································

¥8.70

－

(¥96.32)－

Diluted earnings per share (¥) ··································

－

－

－

－

Rate of return on equity ···········································

15.4

－

(93.0)－

Ordinary income to total assets ratio ··························

2.9

－

(4.9)

－

Operating income to net sales ratio ···························

2.0

－

(3.6)

－

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

216－(4,699)－(2) Consolidated Financial Position(In Millions of Yen)
Fiscal YearAs of March 31
FY2015FY2016
Total Assets ···························································

31,64531,248Net Assets ····························································

2,845

2,629

Capital adequacy ratio (%) ·····································

8.9%

8.3%

Net assets per share(¥) ···········································¥58.86¥54.34(Reference) Owner's equity ·····································

2,813

2,597

(3) Consolidated Financial Cash Flows(In Millions of Yen)
Fiscal Year
From April 1 to March 31
FY2015FY2016
Cash Flows from Operating Activities·························

1,668(5,403)

Cash Flows from Investing Activities ··························

(409)

1,062

Cash Flows from Financing Activities ·······················

1,437

1,288

Cash and Equivalents ,End of Period ························

4,875

2,218

2. Dividends
Quarterly Period
Total

1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

AnnualPayoutDividends

Dividend

ratio

to Net Assets

paid(consolidated)(consolidated)

－

－

－

－

－

－

(Dividends per Share)
FY2015 ended March 31,
2016 ·································FY2016 ended March 31,2017 ·································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
From April 1 to March 31
First Half%change

Full YearNet Sales······························································

23,6560.0%

47,680%change(6.4%)

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

80(22.7%)

1,210

16.7%

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

0

－

1,090

20.2%

Profit attributable to owners of parent ·························

(100)

－

810

94.7%

Basic earnings per share (¥) ····································(¥2.09)* Notes(1) Changes in significant subsidiaries during the period(Changes 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－¥16.94

(2) 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
(3) Number of issued and outstanding shares (common stock)(Shares)
End of term
FY 2016

FY 2015

48,919,396

48,919,396

Number of treasury stock at the end of fiscal year ·················································

1,113,668

1,113,443

Average number of shares during the period ·······················································

47,805,834

47,806,103

Number of issued and outstanding shares at the end of fiscal year(including treasury stock)(Reference) Business Result-Overview of non-consolidated Operating Results
1. Business Results – Operating results for the Fiscal Year ended March 31, 2017
(April 1, 2016 to March 31, 2017)(1) Non-Consolidated Operating Results(In Millions of Yen)
Fiscal Year
From April 1 to March 31
FY2016%change

FY2015%change

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

45,614(19.6%)

56,700(30.3%)

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

621－(2,800)－Ordinary Income ····················································

830－(2,599)－Net Income ···························································

540－(4,700)－

Basic earnings per share (¥) ····································¥11.31－(¥98.33)－

Diluted earnings per share (¥) ··································

－

－

－

－

(2) Non-Consolidated Financial Position(In Millions of Yen)
Fiscal YearAs of March 31
FY2015FY2016
Total Assets ···························································

26,53826,056

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

1,370

793

Capital adequacy ratio (%) ·····································

5.2%

3.0%

Net assets per share(¥) ···········································¥28.67¥16.59(Reference) Owner's equity ·····································

1,370

793

* 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. Information on Business Results & Financial Position for the fiscal year
ended March 31, 2017 ........................................................................................... 2(1) Information on Consolidated Business Results ..................................................................... 2(2) Information on Consolidated Financial Position ..................................................................... 4(3) Information on Consolidated Cash Flows ............................................................................... 5(4) Outlook for the next fiscal year ................................................................................................. 6(5) Important Events concerning the Assumption of Going Concern ........................................ 7

2. Basic Position regarding the Choice of Accounting Standards ............................ 8
3. Consolidated Financial Statements And Main Notes to the Statements ............ 9(1) Consolidated Balance Sheets................................................................................................... 9(2) Consolidated Statements of Income and Comprehensive Income ..................................... 11
Consolidated Statements of Income ...................................................................................... 11
Consolidated Statements of Comprehensive Income ......................................................... 12(3) Consolidated Statements of Changes in Net Assets. ...................................................... 13(4) Consolidated Statements of Cash Flows ................................................................................ 15(5) Notes to the Consolidated Financial Statements ................................................................... 17
Notes to the Assumption of a Going Concern ...................................................................... 17

4. Supplement Information .......................................................................................................... 19
Consolidated Net Sales by Division ....................................................................................... 19

2

1. Information on Business Results & Financial Position for the fiscal year
ended March 31, 2017(1) Information on Consolidated Business Results
In the fiscal year ended March 31, 2017 (April 1, 2016 to March 31, 2017), theJapanese economy continued to follow a modest recovery path, with improved
employment and income conditions. However, the economic outlook remained
uncertain due to concerns such as sluggish consumer spending, growing uncertainty
about overseas economies and the risk of sharp fluctuations in foreign exchange rates.
With respect to the market conditions surrounding the solar energy business,legislative revisions for the Feed-In Tariffs (FIT) and a fall in unit purchase prices havecaused the market to contract.
In this business environment, the Group recognizes the need to further strengthen its
business foundations to achieve sustainable growth, and it began to execute its new
medium-term business plan (FY2016-FY2018) in April 2016. Under its policy ofundertaking management reform, in the first half of the fiscal year under review, theGroup has been pursuing structural reform initiatives that include implementing a
voluntary retirement program, consolidating and eliminating stores, and downsizing
logistics and production operations with the aim of building an appropriate businessscale in a consistent manner.
As for sales in the fiscal year under review, the Solar Engineering (SE) Division was
unable to avoid the adverse effect of changes in the environment and the contraction of
the market for the solar electric power business, and sales declined significantly. As aconsequence, the net sales of the entire Group were ¥50,955 million (down 17.7% year
on year).
In terms of profitability, although sales declined considerably in the SE Division, cost
reductions as a result of management rationalization initiatives and lower materials
costs, among other factors, led to an improvement in the gross margin and a significant
fall in selling, general and administrative expenses, and income moved into the black at
all levels in the fiscal year under review. As a consequence, for the whole Group,
operating income was ¥1,036 million compared to an operating loss of ¥2,229 million in
the previous year, and ordinary income was ¥907 million compared to an ordinary lossof ¥1,949 million in the previous year. The Group posted expenses related to voluntary
retirement of ¥177 million as an extraordinary loss. Consequently, the Group posted
profit attributable to owners of parent of ¥416 million, as opposed to a loss of ¥4,604
attributable to the owners of the parent in the previous year.
Consolidated results of individual divisions for the first three quarters under review
were as follows:

3a. Solar Engineering (SE) Division
The wholesale sales of PV systems declined 64.7% year on year, reflecting 29.6%
decline in the number of installations of industrial-use PV systems, despite
aggressive marketing activities in response to the changes in the market environment
with respect to the solar electric power business. As a consequence, sales were¥26,225 million (down 34.2% year on year).
Despite the significant decline in sales, the Company achieved operating income of¥1,669 million, as opposed to an operating loss of ¥202 million in the previous year,
reflecting the successful reduction of personnel and other fixed expenses mainly due
to management rationalization and a focus on cost reductions, including costs ofmaterials such as photovoltaic modules. It should be noted that the Company
achieved the operating income net of an inventory valuation loss of ¥777 million
associated with the decrease in profitability for power conditioners that had been
manufactured in-house.
b. Home Sanitation (HS) Division
Sales of basic repair and house reinforcement construction services for ordinary
homes rose from the previous fiscal year, reflecting reinforced sales activities andaccount management strategies aimed at rebuilding the HS division that had longsuffered declining sales. As a result of the initiatives that succeeded in putting an end
to the declining sales, the division’s sales were ¥6,562 million (up 0.7% year on year).
Operating income stood at ¥979 million (up 59.3% year on year), primarilyreflecting

successful

cost

reductionmeasuresfocusingonmanagement

rationalization along with the reinforced marketing activities resulting in higher
productivity.
c. Establishment Sanitation (ES) Division
Sales in anti-rust equipment installation and waterproofing of buildings,
maintenance-related services for buildings and condominiums, increased from theprevious fiscal year. As a result, net sales were ¥1,033 million (up 11.8% year onyear).
Operating income came to ¥94 million (up 75.7% year on year) mainly due to theincrease in segment sales.
d. Environmental Resources Development (ERD) Division
Plastic fuel sales secured the level recorded in the previous fiscal year, despite thelower collection volume of waste plastic due to a rise in unit prices implemented aspart of the business strategy. Electricity sales achieved year-on-year growth due to arise in the number of service contracts concluded with high-voltage consumers in thePower Producer and Supplier business. As a consequence, sales amounted to¥17,133 million (up 17.3% year on year).

4

Operating income stood at ¥1,029 million (up 264.7% year on year), reflecting an
improvement in the gross margin ratio mainly attributable to the revision of unit prices
for the collection of waste plastic, a fall in costs related to inspection and repair workat Tomakomai Power Plant, and improved profitability in the collection volume oforganic wastewater recycling.

(2) Information on Consolidated Financial Position
Total assets as of the end of the fiscal year under review stood at ¥31,645 million, an
increase of ¥396 million compared with the end of the previous consolidated fiscal year.
Total liabilities were ¥28,799 million, an increase of ¥180 million compared with a year
earlier. Net assets totaled ¥2,845 million, representing an increase of ¥216 million froma year ago. As a consequence, the shareholders’ equity ratio stood at 8.9% as ofMarch 31, 2017.
(The status of Assets)
Current assets at the end of the period increased to ¥17,522 million, representing
3.5% increase over a year ago, primarily due to ¥2,540 million increase in cash anddeposits, partially offset by ¥675 million decrease in notes and accounts
receivable-trade and ¥1,082 million decrease in raw materials and supplies.
Non-current assets decreased by 1.4% from a year ago, to ¥14,122 million,
primarily reflecting ¥139 million decrease in tangible fixed assets due to depreciation
related to buildings and structures.
(The status of Liabilities)
Current liabilities were ¥25,586 million, representing 3.8% increase over a year ago,
primarily reflecting ¥2,851 million increase in short-term loans payable partially offset
by ¥861 million decrease in notes and accounts payable-trade, ¥653 million decreasein accounts payable-other, and ¥360 million decrease in the current portion of
long-term loans payable.
Long-term liabilities were ¥3,212 million, representing 19.2% decrease ascompared with a year earlier, primarily due to ¥593 million decrease in long-termloans payable and ¥128 million decrease in lease obligations.
(The status of Net Assets)
Net assets were ¥2,845 million, representing 8.2% increase as compared with theend of the previous fiscal year, primarily reflecting ¥416 million in Profit attributable toowners of parent.

5(3) Information on Consolidated Cash Flows
Cash and cash equivalents (hereinafter, “cash”) were ¥4,875 million at the end of the
fiscal year under review, representing ¥2,656 million increase from a year earlier.
Cash flows and reasons for changes in cash flows during the period are described
below.
(Net Cash Provided by Operating Activities)
Cash flow from operations of ¥1,668 million (as opposed to the net use of ¥5,403
million in the preceding fiscal year) was primarily the result of ¥1,704 million decrease
in inventory.
(Net Cash Provided by Investment Activities)
The use of ¥409 million in investing activities (as opposed to net inflow of ¥1,062
million for the previous period) was primarily ¥454 million for acquisition of tangible
fixed assets.
(Net Cash Provided by Financing Activities)
Cash flow from financing activities of ¥1,437 million (as compared with ¥1,288
million in the preceding fiscal year) was primarily the result of ¥2,851 million in net
proceeds from short-term loans payable, partially offset by ¥954 million in net
repayment of long-term debt.

(Reference: The Cash Flow Indicators)
Fiscal Year
Shareholders’ equity ratio
Shareholders’ equity ratio on a market
price basis
Interest-bearing liabilities ratio to cash
flow
Interest coverage ratio

FY2012FY2013

FY2014FY2015FY2016

30.2%

21.3%

14.9%

8.3%

8.9%

92.0%

99.2%

37.6%

32.9%

28.9%

3.24

1.96

-

-

8.77

13.3

25.71

-

-

6.76

(Note) Shareholder’s equity ratio: Shareholder’s equity/Total assets
Share ratio on a market price basis: Total market value of stock/Total assets
Interest-bearing liabilities ratio to cash flow:

Operating cash flow/Interest payment

Interest coverage ratio: Operating cash flow/Interest payment
1. The basis of the calculation for all values is consolidated financial data.
2. Market capitalization is calculated by multiplying the closing price of SANIX shares at the endof the fiscal year by the number of shares outstanding at the end of the fiscal year.
3. Operating cash flow refers to Cash Flows from Operating Activities according to theconsolidated statement of cash flows. Interest-bearing liabilities are comprised of all liabilities
on the consolidated balance sheet on which interest is payable. Interest expenditure refers tointerest expenses paid according to the consolidated statement of cash flows.

6(4) Outlook for the next fiscal year
In the fiscal year ended March 31, 2017, the Group returned to profitability at alllevels for the first time in three years, achieving sales and profit that were both higher
than expected for the initial year of the medium-term management plan. For the fiscal
year ending March 31, 2018, we will take steps to build stronger operating foundations
by promoting structural reform activities in pursuit of sustainable and robust business
management. As part of the structural reform initiatives, the Company launched the
Headquarters Overseeing SE, HS and ES at the time of the announcement oforganizational changes with effect from April 1, 2017, with the aim of establishing amore effective approach to sales activities along with more efficient operations for
installation work through inter-segment cooperation among SE, HS and ES operating inthe same sales offices.
In the SE Division, the Company will take steps to launch new services, bolstering
maintenance services in response to changes in the market conditions associated withthe revisions of legislation for the Feed-In Tariffs (FIT). Given the challenging market
conditions for the solar energy business, the Company expects to suffer a decline insales in the SE Division for the fiscal year ending March 31, 2018. The Company plans
to implement cost reduction initiatives, including a reduction in personnel expenses andother fixed operating costs, by reassigning part of the workforce out of the SE Division
to the HS Division and by achieving lower materials costs.
In the HS Division, the Company expects growth in sales on the strength of theinitiatives aimed at enhancing the division’s capabilities with respect to new customer
development and after-sales support services delivered to existing customers byreassigning part of the workforce from the SE Division to this division. An increase in
the workforce will result directly in higher fixed expenses for the division, but theCompany expects that the higher fixed expenses will be absorbed by the growth insales, seeking to maintain the division’s current profitability.
In the ES Division, the Company expects to achieve higher sales on the strength of
the initiatives aimed at enhancing the division’s capabilities with respect to new
customer development and after-sales support services delivered to existing customers,
as well as building stronger business alliances. While an increase in the workforce will
result in higher fixed expenses for the division, the Company aims to improve thedivision’s profitability by strengthening its approach, as is the case with the HS Division.
In the Environmental Resources Development Division, the Company expects growthin sales, given that electricity sales are set to rise with the contribution of increased
sales to high-voltage consumers in the Power Producer and Supplier business. The
Company aims to achieve an improvement in profitability on the strength of its
initiatives in implementing the revision of unit prices for the collection of waste plastic

7

and reducing waste recycling costs and others. Meanwhile, an increase is expected incosts associated with the statutory inspection that takes place at Tomakomai Power
Plant once every two years.
In the Environmental Resources Development Division, the Company expects growthin sales, given that electricity sales are set to rise with the contribution of increased
sales to high-voltage consumers in the Power Producer and Supplier business. The
Company aims to achieve an improvement in profitability on the strength of its
initiatives implementing the revision of unit prices for the collection of waste plastic andreducing waste recycling costs and others. Meanwhile, an increase is expected in costs
associated with the statutory inspection that takes place at Tomakomai Power Plant
once every two years.
For the consolidated fiscal year ending March 31, 2018, SANIX Group aims toachieve sales of ¥47,680 million (down 6.4% year on year) with operating income of¥1,210 million (up 16.7%), ordinary income of ¥1,090 million (up 20.2%), and profit
attributable to owners of parent of ¥810 million (up 94.7%).

(5) Important Events concerning the Assumption of Going Concern
The Group recorded a significant operating loss, ordinary loss, and loss attributableto owners of parent in both the fiscal year ended March 31, 2015 and the fiscal year
ended March 31, 2016. In the fiscal year under review, however, the Group recorded
operating income of ¥1,036 million, ordinary income of ¥907 million and profit
attributable to owners of parent of ¥416 million.
Nevertheless, the Group is still working toward achieving the medium-term businessplan, and its interest-bearing debt is ¥14,634 million, which is high compared with its
liquidity on hand. Accordingly, the Company recognizes that it is still susceptible toevents 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 its business foundation to achieve sustainable growth. The Company istherefore 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 the
ES Division, and further improving the efficiency of the Environmental Resources
Development Division.
ⅱ) Strengthening the business base through thorough streamlining
The Company is disposing of assets in accordance with the downsizing of the SE

8Division (the elimination and consolidation of stores, the scaling down of the
production of power conditioners, the downsizing of logistics and production
operations, and the closure of a logistics center).
The Company called for voluntary retirement (approximately 500 employees) to
reduce employee numbers to an appropriate level for its sales and 391 employees
took voluntary retirement as a result, which was fewer than the number called for but
is more or less in line with the initial plan if natural attrition is taken into account. The
Company is also reducing the wages of all employees across the board.
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
Directors and changing the business execution system to clarify the responsibilities ofeach business division.

The Company expects that its profitability will improve through these initiatives andwill remain in the black. The Company has steadily implemented the medium-termbusiness plan (FY2016 - FY2018) formulated on the assumption of the continued
support of the main financing bank. The Company expects to continue to receive
support and cooperation in financing and will work to stabilize cash management.
However, we have not completed these initiatives, and the support and cooperationof the main financing bank is not ensured, although we have obtained its
understanding. We therefore recognize that there is significant uncertainty regarding
the going concern assumption.

2. Basic Position regarding the Choice of Accounting Standards
The Group will use the Japanese standards for the time being. In addition, our policy
is to take proper steps toward the adoption of the International Financial ReportingStandards while giving due consideration to the circumstances in Japan and othercountries.

9

3. Consolidated Financial Statements and Main Notes to the Statements(1) Consolidated Balance Sheets(In Millions of Yen)

As of March 31
FY2016FY2015

Assets :Current Assets :Cash and deposits

3,038

5,578

Notes and accounts receivable-trade

6,693

6,017

Merchandise and finished goods

962

549

Work in process-construction

514

304

Raw materials and supplies

5,688

4,605

8

12

Deferred tax assets
Other

718

997

Allowance for doubtful accounts

(693)

(544)

16,93017,522

Total current assets
Fixed Assets:
Tangible fixed assets :Buildings and structures, net
Less: Accumulated depreciation

8,882

8,774

(6,973)(7,053)

1,909

1,720

12,332

11,651(11,009)(10,417)

1,323

1,234

Land

8,001

7,941

Lease assets, net

1,183

1,223

Less: Accumulated depreciation

(564)

(677)

Lease Assets, net

618

546

Construction in progress

393

672

Buildings and structures (net of depreciation)
Machinery, Equipment and vehicles, net
Less: Accumulated depreciation
Machinery, Equipment and vehicles (net of depreciation)

Other, net
Less: Accumulated depreciation

958

934

(787)

(771)

171

163

12,417

12,278Goodwill

289

177

Other

151

148

Total Intangible fixed assets

440

325

Investment securities

91

145

Lease and guarantee deposits

644

669

Other, net
Total Tangible fixed assets
Intangible fixed assets :Investments and other assets :Deferred tax assets
Other

59

52

1,157

1,293

Allowance for doubtful accounts

(494)

(641)

Total investments and other assets

1,458

1,518

14,317

14,122

31,24831,645

Total fixed assets
Total Assets

10(In Millions of Yen)

As of March 31
FY2016FY2015

Liabilities :Current Liabilities :Notes and accounts payable-trade

7,227

6,365

Short-term loans payable

10,118

12,969896

535

Accounts payable

3,298

2,644

Accrued expenses

1,374

1,041

Lease obligations

256

248

Accrued income taxes

244

428

Accrued consumption taxes

390

275

Allowance for resource-recycling expenses

37

27

Other

799

1,050

24,64225,586

Current portion of long-term loans payable

Total current liabilities
Non-Current Liabilities :

1,077

484

Lease obligations

525

396

Deferred tax liabilities

14

31

Long-term lease deposited46

45

Long-term loans payable

170

163

1,371

1,404

Provision for disposal site closing expenses

499

538

Other

269

147

3,976

3,212

28,61828,79914,041

14,041

Provision for directors’ retirement benefits
Liability related to retirement benefits

Total non-current liabilities
Total Liabilities

Net Assets :Shareholders’ Equity :Capital stock

1

1

Retained earnings(10,193)(9,777)

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

Total shareholders’ equity

2,368

2,784

Capital surplus

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

34

71

Foreign currency translation adjustment

46

(28)

Adjustment for retirement benefits (cumulative)

148

(14)

Total valuation and translation adjustments

229

28

31

32

Total Net Assets

2,629

2,845

Total Liabilities and Assets

31,24831,645

Non-controlling Interests

11(2) Consolidated Statements of Income and Comprehensive Income(Consolidated Statements of Income)(In Millions of Yen)

From April 1 to March 31
FY2016FY2015Net sales

61,91650,955

Cost of Sales

48,13336,812Gross Profit

13,78314,142

262

242

Advertising expenses

193

171

Provision of allowance for doubtful accounts

(512)

43

Salaries and bonuses

8,701

6,725

230

85

Selling, General and Administrative expenses
Sales commission

Retirement benefit expenses
Legal welfare expenses

1,180

850

Rent expenses

1,281

1,050

Depreciation

253

157

Others

4,421

3,780

Total selling, general and administrative expenses

16,013

13,106(2,229)1,036Interest income

58

17

Dividends income

112Land and house rent revenue

68

63

Subsidy income

9126

Foreign exchange gains

230

-

Other

100

98

Total non-operating income

561

208

Interest expenses

224

236

Rent expenses22Foreign exchange losses-

7

Operating Income (Loss)
Non-Operating Income :Non-Operating Expenses :

Other

53

92

Total non-operating expenses

280

338

(1,949)907

Gain on sales of investment securities

164-

Total extra ordinary income

164-

Loss on sales of non-current assets

796-

Loss on sales of investment securities

1-

Cost of earlier voluntary retirement

403

177

Impairment loss

991-

Ordinary Income (Loss)
Extra Ordinary Income :Extra Ordinary Loss :Settlement package
Total extra ordinary loss
Income (Loss) Before Income Taxes and Minority Interests

316

-

2,509

177

(4,293)729

12

Income Taxes-Current

292

309

Income Taxes-Deferred

15

3

308

312

(4,602)416

2

0(4,604)416

Total Income Taxes
Net Income
Profit (Loss) attributable to the Non-Controlling Shareholders
Profit (Loss) attributable to Owners of Parent(Consolidated Statements of Comprehensive Income)(In Millions of Yen)

From April 1 to March 31
FY2016FY2015Net Income
Other Comprehensive Income :Valuation difference on available-for-sale securities(4,602)

416

(137)

37

Foreign currency translation adjustment

(137)

(74)

Retirement benefit adjustment

178

(162)

Total other comprehensive income
Comprehensive Net Income

(96)

(200)

(4,699)216(4,701)215

20Comprehensive Income Attributable toComprehensive Profit (Loss) attributable to Owners of Parent
Comprehensive profit (Loss) attributable to the Non-Controlling
Shareholders

13(3) Consolidated Statements of Changes in Net Assets
The previous consolidated fiscal year (April 1, 2015 to March 31, 2016)(In Millions of Yen)

Shareholders’ equity
Capital stock
Balance at the beginning ofcurrent period

Capitalsurplus14,041Retainedearnings
4

Total
shareholders’equityTreasurystock(5,588)(1,481)

6,976

Changes of items during theperiodChanges of minority
interests
Profit attributable to ownersof parent(2)(2)(4,604)(4,604)Purchase of treasury stock

(0)

(0)

Net changes of items otherthan shareholders’ equity
Total changes of items
during the period-(2)(4,604)(0)(4,607)

Balance at the end ofcurrent period

14,041

1(10,193)(1,481)

2,368(In Millions of Yen)

Accumulated other comprehensive income

Balance at the beginning ofcurrent period

Valuationdifferenceonavailable-f
or-salesecurities

Foreigncurrencytranslation
adjustment

171

184

Total
Retirement accumulated Minority
interests
benefitsotheradjustment comprehensive income
(30)

325

29

Total net
assets7,331

Changes of items during theperiodChanges of minority
interests
Profit attributable to ownersof parent(2)(4,604)Purchase of treasury stock(0)

Net changes of items otherthan shareholders’ equity

(137)

(137)

178

(96)

2

(94)

Total changes of items
during the period

(137)

(137)

178

(96)

2

(4,701)

Balance at the end ofcurrent period

34

46

148

229

31

2,629

14

The consolidated fiscal year (April 1, 2016 to March 31, 2017)(In Millions of Yen)

Shareholders’ equity
Capital stock
Balance at the beginning ofcurrent period

Capitalsurplus14,041Retainedearnings
1

Total
shareholders’equityTreasurystock(10,193)(1,481)

2,368

Changes of items during theperiodChanges of minority
interests
Profit attributable to ownersof parent

416

416

Purchase of treasury stock

(0)

(0)

Net changes of items otherthan shareholders’ equity
Total changes of items
during the period

-

-

416

(0)

416

Balance at the end ofcurrent period

14,041

1(9,777)(1,481)

2,784(In Millions of Yen)

Accumulated other comprehensive income

Balance at the beginning ofcurrent period

Valuationdifferenceonavailable-f
or-salesecurities

Foreigncurrencytranslation
adjustment

34

46

Total
Retirement accumulated Minority
interests
benefitsotheradjustment comprehensive income
148

229

31

Total net
assets2,629

Changes of items during theperiodChanges of minority
interests
Profit attributable to ownersof parent

416

Purchase of treasury stock(0)

Net changes of items otherthan shareholders’ equity

37

(74)

(162)

(200)

0

(199)

Total changes of items
during the period

37

(74)

(162)

(200)

0

216

Balance at the end ofcurrent period

71

(28)

(14)

28

32

2,845

15

(4) Consolidated Statements of Cash Flows(In Millions of Yen)

April 1 to March 31
FY2016FY2015Net Cash Provided by (used in) Operating Activities :(4,293)729

Depreciation and amortization

918

668

Impairment loss

991-

Amortization of goodwill

112

112

-

(7)

Increase (Decrease) in provision for bonuses

(1)

(12)

Increase (Decrease) in allowance for resource-recycling expenses

6

(9)

(512)

(1)

Increase (Decrease) in liabilities in retirement

59

(128)

Interest and dividends income

(70)

(20)

Interest expenses

224

236

Loss (Gain) on sales of investment securities

(162)

-

Income before income taxes and minority interests

Increase (Decrease) in reserve for directors’ retirement benefits

Increase (Decrease) in allowance for doubtful accounts

789

(2)

Increase (Decrease) in notes and accounts receivable-trade

8,107

675

Increase (Decrease) in inventories

3,108

1,704

Increase (Decrease) in other current assets

(262)

(191)

(11,074)(804)

Loss (Gain) on sales of tangible fixed assets

Increase (Decrease) in notes and accounts payable-trade
Increase (Decrease) in consumption tax refund receivable
Increase (Decrease) in other current liabilities
Other
Subtotal

(855)

(115)

(2,207)

(527)

150

(166)

(4,973)

2,137

70

20

Interest expenses paid

(229)

(246)

Income taxes paid

(287)

(252)

Income taxes refund

16

10(5,403)

1,668

Payments into time deposits(2,179)(659)

Proceeds from withdrawal of time deposits

2,945

725

Purchase of tangible fixed assets

(679)

(454)

Proceeds from sales of tangible fixed assets

709

62

Purchase of intangible assets

(93)

(25)

Proceeds from sales of investment securities

318-

Payments for lease and guarantee deposits

(20)

(131)

Collection of lease and guarantee deposits

58

71

Other

3

0

1,062

(409)

Increase (Decrease) in short-term loans payable

3,757

2,851

Repayments of long-term loans payable(2,128)(954)

Interest and dividends income received

Net cash provided by operating activities

Net Cash Provided by (used in) Investment Activities :Net cash provided by investing activities

Net Cash Provided by (used in) Financing Activities :Redemption of bonds

(20)

(10)

Repayments of finance lease obligations

(256)

(257)

16

Other
Net cash provided by financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents

(63)

(192)

1,288

1,437

(58)

(39)

Net Increase (Decrease) in Cash and Cash Equivalents(3,111)

2,656

Balance of Cash and Equivalents at beginning of period

5,329

2,218

Balance of Cash and Equivalents at end of period

2,218

4,875

17

(5) Notes to the Consolidated Financial Statements(Notes to Assumption of Going Concern)
The Group recorded a significant operating loss, ordinary loss, and loss attributableto owners of parent in both the fiscal year ended March 31, 2015 and the fiscal year
ended March 31, 2016. In the fiscal year under review, however, the Group recorded
operating income of ¥1,036 million, ordinary income of ¥907 million and Profit
attributable to owners of parent of ¥416 million.
Nevertheless, the Group is still working toward achieving the medium-term businessplan, and its interest-bearing debt is ¥14,634 million, which is high compared with its
liquidity on hand. Accordingly, the Company recognizes that it is still susceptible toevents 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 its business foundation to achieve sustainable growth. The Company istherefore 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 the
ES Division, and further improving the efficiency of the Environmental Resources
Development Division.
ⅱ) Strengthening the business base through thorough streamlining
The Company is disposing of assets in accordance with the downsizing of the SE
Division (the elimination and consolidation of stores, the scaling down of the
production of power conditioners, the downsizing of logistics and production
operations, and the closure of a logistics center).
The Company called for voluntary retirement (approximately 500 employees) to
reduce employee numbers to an appropriate level for its sales and 391 employees
took voluntary retirement as a result, which was fewer than the number called for but
is more or less in line with the initial plan if natural attrition is taken into account. The
Company is also reducing the wages of all employees across the board.
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
Directors and changing the business execution system to clarify the responsibilities ofeach business division.

18

The Company expects that its profitability will improve through these initiatives andwill remain in the black. The Company has steadily implemented the medium-termbusiness 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 in financing and will work to stabilize cash management.
However, we have not completed these initiatives, and the support and cooperationof the main financing bank is not ensured, although we have obtained its understanding.
We therefore recognize that there is significant uncertainty regarding the going concern
assumption.
The consolidated financial statements were prepared based on the assumption of agoing concern, and did not reflect the impact of these serious doubts regarding ourability to continue as a going concern.

19

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

By period
By item

From April 1 to March 31
FY2016FY2015

Changes

34,41924,228(10,190)

5,351

1,889

(3,462)

99

107

7

39,871

26,225(13,645)

2,459

2,159

(299)

895

854

(40)

377

582

204

2,787

2,965

178

6,519

6,562

42

Anti-rust Equipment Installation

41

120

78

Repair of Building Water-woks

405

348

(57)

Water Proofing of Building

121

171

50

Others

356

393

37

Commercial PV System
Wholesales of PV Components
OthersSolar Engineering Total
Termite Eradication Service
Under-Roof / Roof Ventilation System
Foundation Repairing/Home Reinforcement
SystemOthersHome Sanitation Division Total

Establishment Sanitation Division Total

924

1,033

109

Plastic Fuel

7,227

7,139

(88)

Generation of Electricity
Industrial Waste (Organic Waste Water
Recycle)

3,986

6,806

2,819

1,604

1,768

164

702

648

(53)

OthersEnvironmental Resources Development
Division Total :

1,080

770

(309)

14,601

17,133

2,532

Total Net Sales

61,91650,955(10,961)

Final Disposal(note) We have omitted description on the information that is too multifarious to see the exact volume ofitem.