Note:   This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. August 10, 2022
SANIX INCORPORATED Company name: Listing: Tokyo Stock Exchange / Fukuoka Stock Exchange 4651 Securities code: URL: https://sanix.jp/lang_en/ Representative: Hiroshi Munemasa, President and Representative Director Inquiries: Hiroshi Soga, Executive officer, Deputy General manager of Corporate Division, General manager of Corporate Planning Division, Management & Planning Division Telephone: +81-92-284-5072 Scheduled date to file quarterly securities report: August 10, 2022 Scheduled date to commence dividend payments: Preparation of supplementary material on quarterly financial results: Yes Holding of quarterly financial results briefing: Yes (for Institutional investor) (Yen amounts are rounded down to millions, unless otherwise noted.) 1. Consolidated financial results for the three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022)
Reference:  Equity As of June 30, 2022: As of March 31, 2022: ¥4,923 million ¥4,709 million

3. Consolidated financial forecasts for the fiscal year ended March 31, 2023(from April 1, 2022 to

1.Revision from the most recently announced forecast of consolidated business results: None
*  Notes
(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None Newly included:  - companies (Company name) Excluded: - companies (Company name) (2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement Changes in accounting policies due to revisions to accounting standards and other regulations: (i) Yes Changes in accounting policies due to other reasons: None (ii) (iii)   Changes in accounting estimates: None (iv)  Restatement: None Note :For details, please see 2. Quarterly Consolidated Financial Statements and Main Notes to the Statements (3) Notes on Consolidated Financial Statements (Changes in Accounting Policies) on page 8 of the attachment.
(4) Number of issued shares (common shares) *  Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation. *  Proper use of earnings forecasts, and other special matters The forward-looking statements, including results forecasts, included in this material are based on the information that the Company has obtained and certain assumptions that the Company considers reasonable. Actual results may differ significantly for a range of factors. The assumptions for the results forecasts and cautions in the use of the forecasts are described in 1. Qualitative Information for the three months ended June 30, 2022, (3) Information on the Future Outlook, Including the Forecasts of Consolidated Business Results on page 5 of the Attachment.
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1. Qualitative Information for the Three months ended June 30, 2022
(1)  Information of Consolidated Business Results
During the first quarter under review (April 1 to June 30, 2022), the outlook for the Japanese economy, which had been stagnant due to the COVID-19 pandemic, remained uncertain due to steep rises in the prices of oil and consumer goods partly as a result of Russia's military advance in Ukraine despite signs of recovery beginning to appear in economic activities. In this situation, SANIX INCORPORATED and its consolidated subsidiaries (hereinafter the “Group”) continued their respective operations, while ensuring that COVID-19 preventive measures were taken and working to strengthen and expand the foundation for each business. The Group implemented a reorganization on June 1, 2022 to ensure the growth of its businesses and facilitate growth through the pursuit of synergy between the businesses, while responding flexibly to the rapidly changing market environment with the goal of creating a comfortable environment for the next generation as stated in its corporate philosophy. Consequently, the classification of reportable segments changed in the first quarter under review. Details are provided in the section, (3) Notes regarding the Quarterly Consolidated Financial Statements (Segment Information, etc.), under 2. Quarterly Consolidated Financial Statements and the Primary Notes for the Three Months Ended June 30, 2022. Accordingly, in the year-on-year comparisons below, the figures for the same period of the previous year have been restated to reflect the new segment classification in the comparative analysis. However, the year-on-year comparison of the new Solar Engineering (SE) Division, operating the business of photovoltaic power generation systems for detached houses, and the Photovoltaic (PV) Division, operating the business of photovoltaic power generation systems for corporations, is omitted due to the practical difficulty of recalculating figures from the same period of the previous year. Net sales of the Group as a whole in the first quarter under review totaled ¥11,346 million (up 2.8% year on year) thanks in part to the launch of the SE Division, which added net sales of photovoltaic power generation systems specializing in detached houses. The Group's consolidated profit included operating profit of ¥341 million (operating loss of ¥102 million in the same period of the previous year), ordinary profit of ¥270 million (ordinary loss of ¥138 million in the same period of the previous year), and profit attributable to owners of parent of ¥174 million (loss attributable to owners of parent of ¥ 300 million in the same period of the previous year) thanks in part to a rebound from the decrease in sales due to the statutory inspections conducted and the repair expenses incurred at Tomakomai power plant in the previous year. The consolidated results of the individual segment for the first quarter under review were as follows:
a. HS (Home Sanitation) Division
Home Sanitation (HS) Division has been working to expand the business while continuing to take thorough measures to prevent COVID-19 infections. Despite a 12.7% decrease in foundation repairs/home reinforcement systems, termite eradication services increased 6.3% year on year and under-floor/roof ventilation systems increased 3.3% year on year. As a result, net sales in this segment increased to ¥3,344 million (up 1.4% year on year). Operating profit for the segment came to ¥651 million (down 9.1% year on year) due to an increase in personnel and other fixed expenses associated with addition of employees principally for new sales offices.
b. ES (Establishment Sanitation) Division
The ES Division improved relationships with building and condominium owners and partner companies, including management companies, by expanding business through an active increase of personnel and the opening of a new sales office. Net sales for building water proofing work rose 85.6% year on year and net sales for water supply and drainage repairs increased 9.6% year on year. However, net sales for the installation of the Company's main anti-rust equipment (brand name: Daelman Shock) decreased 29.0% year on year. As a result, net sales in this segment decreased to ¥547 million (down 8.1% year on year). Operating loss for the segment came to ¥13 million (operating profit of ¥43 million in the same period of the previous year) due to an increase in personnel and other fixed expenses associated with addition of employees, principally for new sales offices.
c. SE (Solar Engineering) Division
(division for sale of photovoltaic power for detached houses) SE Division was established in the first quarter under review as a new division focusing on sale of photovoltaic power generation systems developed specifically for detached houses. As a result, net sales for the segment totaled ¥401 million. Operating result was a loss of ¥44 million largely due to expenses incurred for the launch of the new business division.
d. PV(Photovoltaic) Division
(division for sale of photovoltaic power for corporations)
Through reorganization in the first quarter under review, the PV Division was re-established as a unit selling photovoltaic power generation systems developed specifically for corporations. It focused on the construction and maintenance of photovoltaic power generation systems and other products and the wholesaling of photovoltaic power equipment, which resulted in n net sales in line with the plan. As a result, net sales for the segment totaled ¥1,691 million. Operating result was a loss of ¥67 million due to an increase in costs caused by a rise is prices of materials and other goods despite a decrease in SG&A expenses thanks to the reallocation of personnel with the SE Division through reorganization.
e. PPS(Power Producer and Supplier) Division
The PPS Division has been reducing its business since the second half of the previous fiscal year, considering that maintaining profit is difficult due to a significant rise in the cost of procurement chiefly caused by a surge in prices in the wholesale electric power market. To eliminate the risk of price volatility in electric power procurement, the Company stopped accepting new applications for power supply and demand contracts and shifted a part of its retail contracts for electric power to distributor agreements. As a result, net sales fell 68.2% from that for the fourth quarter of the previous fiscal year (January 1 to March 31, 2022) but increased 10.8% year on year to ¥1,289 million thanks to a year-on-year increase in unit price and the amount of supply. Operating result was a loss of ¥28 million (operating profit of ¥106 million in the same period of the previous year) due to procurement costs remaining high in comparison to the same period of the previous year, in which the unit price in the electric power market was low, despite a successful reduction of the risk of price volatility in electric power procurement as a result of progress in the shift of retail contracts in the PPS business.
f. ERD (Environmental Resources Development) Division
In the business of the Environmental Resources Development (ERD) Division, plastic fuel sales decreased 6.8% year on year due to a fall in the amount of waste materials priced relatively high received at some factories. Meanwhile, landfill sales increased 21.9% year on year and waste liquid treatment sales grew 5.6% year on year due to an increase in the acceptance volume, and power plant sales rose 23.5% year on year, rebounding from the suspension of power generation at Tomakomai power plant in April in the previous year for statutory inspections. As a result, net sales in this segment increased to ¥4,071 million (up 0.8% year on year). Operating profit for the segment amounted to ¥710 million (up 308.0% year on year) due to a rebound from lower sales due to the statutory inspection of the Tomakomai power plant and the repair expenses posted in the previous fiscal year.
(2)  Information of Consolidated Financial Position
Total assets at t the end of the first quarter under review amounted to ¥34,429 million, a decrease of ¥524 million from the end of the previous fiscal year. This was caused chiefly by a rise in cash and deposits of ¥1,249 million and a decrease in notes and accounts receivable – trade of ¥1,891 million. Total liabilities stood at ¥29,485 million, a decrease of ¥736 million from the end of the previous consolidated fiscal year. The decrease was primarily attributable to decreases of ¥581 million in notes and accounts payable - trade, ¥341 million in short-term borrowings, and ¥179 million in income taxes payable, which more than offset an increase of ¥ 385 million in other current liabilities caused by a rise in accrued consumption taxes. Net assets totaled ¥4,944 million, a rise of ¥212 million from the end of the previous consolidated fiscal year. The key contributions to the increase included the posting of profit attributable to owners of parent of ¥174 million. Consequently, the capital-to-asset ratio came to 14.3% at t he end of the first quarter under review, compared with 13.5% at the end of the previous fiscal year.
(3)  Information on the Future Outlook, Including the Forecasts of Consolidated Business
Results
There is no change in the forecast of consolidated business results for the current fiscal year ending March 31, 2023, from the forecasts announced on May 16, 2022.
2. Quarterly Consolidated Financial Statements and the Primary Notes for the

(Quarterly Consolidated Statements of Comprehensive Income)

(3) Notes regarding the Quarterly Consolidated Financial Statements (Notes on matters related to going concern assumption) : None (Notes to Remarkable Changes in the amount of Shareholders' Equity) : None
(Changes in accounting policies)
(Adoption of the Accounting Standard for Revenue Recognition) The Company began applying the Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Implementation Guidance No. 31 issued on June 17, 2021, hereinafter the “Fair Value Measurement Accounting Standard Implementation Guidance”) at the beginning of the first quarter under review. Accordingly, the Company will apply the new accounting policies prescribed in the Fair Value Measurement Accounting Standard Implementation Guidance in the future in accordance with the transitional handling stipulated in Paragraph 27-2 of the Fair Value Measurement Accounting Standard Implementation Guidance. The application has no effect on quarterly consolidated financial statements.
(Additional information)
(Application of the Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System) The Company and some of its consolidated subsidiaries in Japan made a shift from the consolidated taxation system to the group tax sharing system in the first quarter of the fiscal year under review. Consequently, with respect to accounting processing and disclosures for income tax, local corporate income tax and tax effect accounting, the Company started to apply the Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System (ASBJ Practical Issues Task Force No. 42 issued on August 12, 2021, hereinafter "PITF No. 42"). In addition, based on Paragraph 32-(1) of PITF No. 42, the Company considers that there will be no impact of changes in its accounting policy resulting from the application of PITF No. 42.
(Segment Information, etc.)

1. Information concerning the Amount of Net Sales and Operating Income (loss) by Segment The “Other” segment is a retail business selling photovoltaic power generation and electric power as a set to detached houses through alliances with other companies. (note 2) Negative ¥921 million for adjustments of Operating income (loss) represents corporate expenses not allocated to reportable segments. Corporate expenses are mainly general and administrative expenses note attributable to reportable segments. (note 3) Operating income is adjusted to operating loss of quarterly consolidated statements of income.
II . Three months ended June 30,2022 (From April 1, 2022 to June 30, 2022) 1. Information concerning the Amount of Net Sales and Operating Income (loss) by Segment (note 1) Negative ¥866 million for adjustments of Operating income (loss) represents corporate expenses not allocated to reportable segments. Corporate expenses are mainly general and administrative expenses note attributable to reportable segments. (note 2) Operating income is adjusted to operating loss of quarterly consolidated statements of income.
2. Information on changes in reportable segments
The Group has implemented a reorganization with the goal of facilitating growth through the pursuit of synergy between the businesses. As a result, starting from the first quarter of the fiscal year under review, the reportable segments are as follows: the HS Division, ES Division, SE Division, PV Division, PPS Division, and ERD Division. The segment information for the first quarter of the previous fiscal year presented in this report has been prepared based on the reportable segments after this change. However, it is practically difficult to prepare a report for the photovoltaic power generation system business for detached houses that was included in the former SE Division by dating back the necessary financial information and including it in the new SE Division. Therefore, it is included in the PV Division.
3. Others
(1) Important matters related to going concern assumption
In the previous fiscal year, the Group posted a significant operating loss, ordinary loss, and loss attributable to owners of parent due to a substantial increase in the cost of procuring electric power in the PPS business, and there were events or circumstances that may cause significant doubt about the Group's going concern assumption. To resolve this situation, the Group changed to a policy of establishing supply agreements within the range of direct procurement in the previous fiscal year, stopped accepting new applications for electric power supply and demand agreements, and ended, rather than renewing, direct wholesale agreements unlikely to turn a profit in March 2022. In the first quarter under review, the Group mostly completed the shift of unprofitable projects among its retail electric power agreements to agreements for distribution to other companies. Consequently, the risk of price volatility in electric power procurement was significantly reduced, and the Group posted operating profit, ordinary profit, and profit attributable to owners of parent for the first quarter of the fiscal year under review.    However, profit remains lower than the conventional level chiefly due to resource prices remaining high, and there remains a certain amount of uncertainty regarding the financial outlook. Therefore, the Group continues to recognize the presence of events or circumstances that may cause significant doubt about the going concern assumption in the first quarter under review.    In terms of funding, we have explained the situation to the financial institutions and received their understanding of financial support. We have already procured the necessary funds and have obtained their agreement not to exercise the right to claim for forfeiture of the benefit of time with regard to the violation of financial covenants that have arisen in some of our loans. Based on the above, the Group believes that there is no material uncertainty regarding the going concern assumption.
Note 1.Descriptions are omitted for items that are handled in such a wide range that it is difficult to grasp their quantity. 2.1,000 tsubo is approximately 3,305.785  ㎡. 3. The Group reclassified its reportable segments in the first quarter under review, and year-on-year comparisons of the SE Division and the PV Division are omitted due to the practical difficulty of recalculating figures for the same period of the previous year.