Sinanen : Consolidated Financial Summary for the Fiscal Year Ended March 31, 2023 （520KB）

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.

Consolidated Financial Summary for the Fiscal Year Ended March 31, 2023

				May 12, 2023
Company name: Sinanen Holdings Co., Ltd.	Shares listed: Tokyo Stock Exchange
Securities code:	8132	URL: https://sinanengroup.co.jp/en/
Representative	(Position)	President and CEO	(Name) Masaki Yamazaki
Contact:	(Position)	Finance and Accounting Manager	(Name) Yutaka Hoshino	Tel: [phone]

Scheduled date of Ordinary General Meeting of Shareholders: June 27, 2023

Scheduled date of start of dividend payment:

June 28, 2023

Scheduled date of filing of securities report:

June 27, 2023

Preparation of supplementary materials: Yes

Convening of a results meeting:

Yes

(Note: Amounts are rounded to nearest million yen.)

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 - March 31, 2023)

(1) Consolidated operating results

(Percentage figures represent year-on-year change)

Net sales

Operating profit

Ordinary profit

Profit attributable to owners of

parent

million yen

%

million yen

%

million yen

%

million yen

%

FY 2022

342,254

18.3

895

(63.9)

1,227

(62.5)

478

(80.8)

FY 2021

289,340

－

2,480

－

3,272

－

2,487

－

(Note) Comprehensive income	FY 2022	-44 million yen (-%)	FY 2021	2,557 million yen	(-%)
	Profit per share			Diluted profit per share		Return on equity	Ratio of ordinary		Ratio of operating
				profit to total assets	profit to sales
			yen		yen			%	%		%
FY 2022		43.82		－			0.9	1.2		0.3
FY 2021		228.33		－			4.7	3.2		0.9
(Reference) Gains and losses on	FY 2022	-256	million yen	FY 2021	-23 million yen
equity-method investments

Note: The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) has been applied from the beginning of the previous fiscal year. Figures for the year ended March 31, 2022 have been restated to reflect application of the standard, and year-on-year changes have been omitted.

(2) Consolidated financial position

	Total assets	Net assets		Equity ratio
		million yen		million yen		%
FY 2022		101,350		53,631		52.9
FY 2021		104,908		54,381		51.2
(Reference) Shareholders' equity	FY 2022 53,616 million yen	FY 2021	53,687 million yen

Net assets per share

yen 4,902.63

4,922.46

(3) Status of consolidated cash flow

	Cash flow from operating	Cash flow from investing
	activities	activities
	million yen	million yen
FY 2022	389	(698)
FY 2021	1,133	2,154

Cash flow from financing

activities

million yen 435 (3,120)

Cash and cash equivalents at

end of period

million yen 9,927 9,948

2. Dividends

		Dividend per share
	End of 1Q	End of 2Q	End of 3Q		End of FY
	yen	yen	yen		yen
FY 2021	－	－	－		75.00
FY 2022	－	－	－		75.00
FY 2023 (forecast)	－	－	－		75.00

Total

yen

75.00

75.00

75.00

Total dividend	Dividend	Net payout
amount	payout ratio	ratio
(total)	(consolidated)	(consolidated)
million yen	%	%
817	32.8	1.6
820	171.2	1.5
	63.0

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3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023 - March 31, 2024) (Percentage figures represent year-on-year change)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Profit per share
		owners of parent
	million yen		%	million yen	%	million yen	%	million yen	%	yen
Full year	360,000		5.2	2,000	123.2	2,300	87.3	1,300	171.5	118.98

• Notice:
• 1. Changes in main subsidiaries during the period (Changes in specific subsidiaries accompanied by changes in the

scope of consolidation): None

New: - company(ies) (Company name(s)) Excluded: - company(ies) (Company name(s))

1. Changes in accounting policies, accounting estimates, and restatements
2. 1. Changes in accounting policies due to revision of accounting standards: Yes
   2. Changes in accounting policies other than those in (a): None
   3. Changes in accounting estimates: None
   4. Restatements: None

Note: See "(5) Explanation concerning consolidated financial statements (Changes in accounting policies)" under "4. Consolidated Financial Statements and Main Notes" on page 18 of the attachment for details.

1. Number of shares issued (common stock)
2. 1. Number of shares issued (including treasury shares)
   2. Number of treasury shares
   3. Average number of shares during the period

FY 2022	13,046,591	shares	FY 2021	13,046,591	shares
FY 2022	2,110,406	shares	FY 2021	2,139,955	shares
FY 2022	10,926,588	shares	FY 2021	10,895,036	shares

(Reference) Summary of non-consolidated financial results
1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 - March 31, 2023)
(1) Non-consolidated operating results				(Percentage figures represent year-on-year change)
	Net sales		Operating profit		Ordinary profit		Net income
	million yen		%	million yen		%	million yen		%	million yen		%
FY 2022	2,869		(8.2)	(324)		－	484		(36.4)	2,535		144.5
FY 2021	3,126		5.7	101		(67.4)	761		(25.1)	1,037		(42.7)
	Profit per share	Diluted profit per share
			yen			yen
FY 2022			232.09			－
FY 2021			95.21			－

(2) Non-consolidated financial position

	Total assets	Net assets
		million yen	million yen
FY 2022		36,926	26,297
FY 2021		33,546	24,234
(Reference) Shareholders' equity	FY 2022	26,297 million yen

Equity ratio	Net assets per share
	%	yen
	71.2	2,404.61
	72.2	2,222.03
FY 2021	24,234 million yen

• Financial results summaries are not subject to audit by certified public accountant or auditing firm.
• Cautionary statement regarding business results forecasts and special notes

(Caution regarding forward-looking statements)

The financial forecasts and other forward-looking statements contained herein are based on currently available information and assumptions considered by the Company to be reasonable and do not represent a commitment from the Company that they will be achieved. Actual results may differ materially due to various factors. See "(4) Outlook" under "1. Overview of Operating Results" on page 5 of the attachment for the underlying assumptions of and precautions for using the forecasts.

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• Attachment Table of Contents

1. Overview of Operating Results	2
(1)	Overview of operating results in this fiscal year	2
(2)	Overview of financial status for this fiscal year	3
(3)	Overview of cash flow in this fiscal year	4
(4)	Outlook	5
(5)	Basic policy regarding distribution of profits and dividend for this year and following year	5
2. Corporate Group	6
3. Basic Approach to Selecting Accounting Standards	9
4. Consolidated Financial Statements and Main Notes	10
(1)	Consolidated balance sheet	10
(2)	Consolidated profit or loss and comprehensive income statement	12
(3)	Statement of changes in consolidated equity	14
(4)	Consolidated statement of cash flows	16
(5)	Notes related to consolidated financial statements	18
	(Notes related to the assumptions of a going concern)	18
	(Changes in accounting policies)	18
	(Changes in method of presentation)	18
	(Segment information)	19
	(Per share information)	24
	(Significant subsequent events)	24

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1. Overview of Operating Results

(1) Overview of operating results in this fiscal year

During the fiscal year under review, the Japanese economy showed signs of recovery from COVID-19, however the situation remains unpredictable due to factors including soaring resource prices worldwide, the manifestation of geopolitical risks stemming from the prolonged conflict in Ukraine, and rapid fluctuations in exchange rates.

In the domestic energy industry, crude oil prices and propane contract prices, which affect the purchasing prices in our mainstay area of petroleum and LP gas, have dropped somewhat in response to a decrease in demand due to concerns of a recession due to global inflation since the summer. However, there is still a strong sense of uncertainty over the supply of Russian crude oil, which has continued to keep these prices at a high level. In the electric power industry, the supply-demand situation remains tight in line with government-issued requests to conserve power in summer and winter, with prices in the wholesale electricity market remaining at a high level until December. However, despite the winter demand months after the new year, the situation remains opaque with a nearly 40% drop in spot prices year on year due to sluggish demand. From a long-term view as well, the business environment surrounding the Company is changing significantly with the adoption of the "necessity for immediate reduction of greenhouse effect gases in a rapid, sweeping fashion" in the Sixth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC) in March 2023.

In the midst of this environment, the Group reached the final year of the 2nd Medium-Term Management Plan, which is positioned as the foundation for a leap toward the centennial anniversary in 2027. During this plan, we have focused on selection and concentration among existing businesses and improving capital efficiency through utilizing and selling off low-efficiency assets. In addition, we have made strategic investments in new business such as the bicycle sharing business. As in the previous fiscal year, we also continued to accelerate human resources investment and IT-related investment to promote digital transformation (DX) according to plan.

As a result, unit selling prices for the fiscal year under review increased owing to a sharp rise in the price of crude oil and propane contract prices. This resulted in net sales of 342,254 million yen (up 18.3% year on year). As procurement costs remain high in the mainstay of the electric power business, due to a delay in passing prices in regard to procured power at relatively higher prices in anticipation of increased demand in the winter, gross profits were 33,336 million yen (down 3.1% year on year). Due to a decrease in gross profit and an increase of 513 million yen in selling, general and administrative expenses due to increased personnel expenses and commission expenses including IT-related investment, operating profits were 895 million yen (down 63.9% year on year), and ordinary profits were 1,227 million yen (down 62.5% year on year). Also, the Company recorded extraordinary losses of 2,762 million yen in the large-scale onshore wind power generation business in South Korea under way since 2020 resulting from revisions to the city planning ordinance for the proposed construction site making the initial expected plans and development considerably difficult, and impairment loss on non-current assets. Therefore, profit attributable to owners of parent showed a significant decrease in profit of 478 million yen (down 80.8% year on year).

The circumstances and results of each business field are as follows.

[Retail/Wholesale Energy & Related Business (B to C Business)]

The sales volume was up owing to significantly higher unit selling prices in conjunction with soaring crude oil and propane contract prices in the mainstay area of LP gas and kerosene.

Significantly impacted gross profit due to substantial rises in procurement costs affecting the sales of electric power resulted in a decrease in profit despite an increase in sales of housing equipment, etc.

As an effort to secure new revenue streams, during the fiscal year under review, we launched a business related to building maintenance and management for housing complexes in the Tohoku area and a real estate business involving buying, selling, and management of real estate in the Kanto area.

As a result of the above, net sales for the fiscal year under review in the Retail/Wholesale Energy & Related Business (B to C Business) were 81,419 million yen (up 11.3% year on year) and operating profit was 150 million yen (down 85.5% year on year).

[Energy Solution Business (B to B Business)]

In our mainstay petroleum business, like the B to C Business, the sales volume increased as unit selling prices went up substantially owing primarily to the sharp increase in crude oil prices.

An operating loss was recorded due to severely deteriorating gross profit in the electric power business due to the impact of the same rising procurement costs as B to C Business despite securing long-term contracts in the marine fuel sector and an increase in gross profits for sales of petroleum products centered on Oil Square, which has improved light oil sales capacity.

Also, the initial expected plans and development were judged to be considerably difficult at the large-scale onshore wind power generation business in South Korea, and Company will continue to negotiate with all parties concerned including the possibility of selling the shares.

As a result of the above, net sales for the fiscal year under review in the Energy Solution Business (B to B Business) were 241,251 million yen (up 22.0% year on year) and operating loss was 346 million yen (operating profit for the previous fiscal year was 573 million yen).

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[Non-energy Business]

Overall, both sales and profits were up for Non-energy Businesses thanks to the bicycle sharing business and system business performing well despite a lull in demand in the antimicrobial business.

The circumstances of each business are outlined below.

Both sales and profits were up for the bicycle business operator Sinanen Bike Co., Ltd. thanks to promotion of developing new corporations in addition to price revisions to deal with soaring global transportation costs and raw material prices in line with eliminating the global parts shortage.

Bicycle sharing business operator Sinanen Mobility Plus Co., Ltd. promoted development of bicycle sharing service DAICHARI locations, primarily in highly profitable target areas. It also launched field tests together with new municipalities, and as of March 31, 2023, the scale of the business has grown to more than 3,100 stations and more than 10,000 bicycles. This is the first time since its establishment that full-year profitability has been achieved, supported by advances in operational efficiency based on usage data and price revisions made in April 2022.

Environmental and recycling business operator Sinanen Ecowork Co., Ltd. saw lower sales and profit due to a decrease in the volume of construction waste associated with sluggishness in new housing starts.

Antimicrobial business operator Sinanen Zeomic Co., Ltd. saw decreased sales and profits due to a lull in demand for antimicrobial products associated with the spread of COVID-19. As a new growth strategy, it is also working to grow sales in the Chinese and Taiwanese markets and to expand our absorbent agents business.

Systems business operator Minos Co., Ltd. saw steady demand for its flagship LP gas backbone operation system. Power CIS*, its customer information system supporting liberalization of electricity retail sales, also grew and performed well, expanding to encompass more than 8.7 million customer houses under management. During the fiscal year under review, it also commenced the development of a next-generation system targeting a FY 2027 release.

Core building management and maintenance business operator Takara Building Maintenance Co., Ltd. saw steady contributions from regular management operations at sites including condominiums and funeral halls, while efforts to expand the area of its management operations for housing complexes also proceeded smoothly, resulting in an increase in both sales and profits. Results show that we are on track to secure stable revenue for the next fiscal year, including a new contract to operate a municipal funeral hall. The four group companies in the building management and maintenance business commenced full-scale integration operations in October 2022 aiming to leverage group synergies and the advantage of scale, finally completing integration in October 2023 with plans to offer service as a general building maintenance company going forward.

As a result of the above, net sales for the fiscal year under review in the Non-energy Business were 19,354 million yen (up 6.9% year on year) and operating profit was 856 million yen (up 324.9% year on year).

From the fiscal year under review, the Non-energy/Global Business has been renamed as the Non-energy Business. This change is in name only and does not affect segment information.

*CIS stands for Customer Information System. It is a system allowing centralized management of everything from customer information management to fee calculation and invoicing according to contract type.

1. Overview of financial status for this fiscal year (Assets)
   Current assets as of the end of the fiscal year under review for the Company and its group companies were 58,760 million yen, a decrease of 3,037 million yen compared to the previous fiscal year. The decrease was primarily due to a decrease of 2,352 million yen in trade receivables as notes and accounts receivable.
   Non-current assets as of the end of the fiscal year under review were 42,589 million yen, a decrease of 520 million yen compared to the previous fiscal year. The main reason for this was an impairment in non-current assets related to the large-scale onshore wind power generation business in South Korea despite an increase in construction in progress of the new building in Higashishinagawa.
   As a result, total assets were 101,350 million yen, down 3,558 million yen compared to the previous fiscal year.

(Net assets)

Net assets for the fiscal year under review were 53,631 million yen due to a decrease of 817 million yen according to payment of dividends despite recording a profit attributable to owners of parent of 478 million yen, resulting in drop of 749 million yen compared to the previous fiscal year.

As a result of the above, the equity ratio increased 1.7 percentage points compared to the previous fiscal year to 52.9%.

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