Alinco Incorporated : Summary of Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 20, 2022

Summary of Consolidated Financial Results

for the Second Quarter of the Fiscal Year Ending March 20, 2022

(Six Months Ended September 20, 2021)

		[Japanese GAAP]
		October 20, 2021
Company name:	ALINCO INCORPORATED	Listing: TSE 1st section
Stock code:	5933	URL: https://www.alinco.co.jp
Representative:	Nobuo Kobayashi, Representative Director and President, Chief Operating Officer
Contact:	Takashi Sakaguchi, Director, Managing Executive Officer,
	General Manager of Accounting and Control Division	Tel: [phone]

Scheduled date of filing of Quarterly Report:	November 2, 2021
Scheduled date of payment of dividend:	November 24, 2021
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results meeting:	Yes

(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 20, 2022 (March 21, 2021 - September 20, 2021)

(1) Consolidated results of operations				(Percentages represent year-on-year changes)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
	Million yen		%	Million yen	%	Million yen	%	Million yen	%
Six months ended Sep. 20, 2021	26,714		6.0	922	(5.5)	1,164	3.6	747	24.1
Six months ended Sep. 20, 2020	25,202		(11.3)	975	(51.7)	1,124	(47.8)	602	(53.8)

Note: Comprehensive income	Six months ended Sep. 20, 2021:
	Six months ended Sep. 20, 2020:

737 million yen (up 41.5%)

521 million yen (down 62.1%)

	Net income per share	Diluted net income	EBITDA
	per share
	Yen	Yen	Million yen		%
Six months ended Sep. 20, 2021	38.66	-	2,684		(6.1)
Six months ended Sep. 20, 2020	30.62	-	2,860		(26.2)
Note: EBITDA = Ordinary profit + Depreciation + Amortization of goodwill

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio	Net assets per share
	Million yen	Million yen	%	Yen
As of Sep. 20, 2021	57,437	28,089	48.9	1,446.92
As of Mar. 20, 2021	55,443	27,679	49.8	1,428.84
Reference: Shareholders' equity	As of Sep. 20, 2021: 28,062 million yen	As of Mar. 20, 2021: 27,597 million yen

2. Dividends

			Dividend per share
	1Q-end	2Q-end		3Q-end		Year-end	Total
	Yen	Yen		Yen		Yen	Yen
Fiscal year ended Mar. 20, 2021	-	19.00		-		19.00	38.00
Fiscal year ending Mar. 20, 2022	-	20.00
Fiscal year ending Mar. 20, 2022 (forecast)				-		20.00	40.00

Note: Revision to the most recently announced dividend forecast: None

3. Consolidated Forecast for the Fiscal Year Ending March 20, 2022 (March 21, 2021 - March 20, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit		Profit attributable to	Net income per
			owners of parent		share
	Million yen		%	Million yen	%	Million yen		%	Million yen		%	Yen
Full year	56,030		5.0	2,990	17.0	3,080		7.2	2,010		20.8	104.06

Reference: EBITDA forecast for the fiscal year ending March 20, 2022 6,420 million yen (up 0.2%)

Note: Revision to the most recently announced consolidated forecast: None

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None

Newly added: -

Excluded: -

1. Application of special accounting methods for presenting quarterly consolidated financial statements: None
2. Changes in accounting policies and accounting-based estimates, and restatements
3. 1. Changes in accounting policies due to revisions in accounting standards, others: None
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting-based estimates: None
   4. Restatements: None
4. Number of shares outstanding (common shares)
5. 1. Number of shares outstanding at the end of the period (including treasury shares)

As of Sep. 20, 2021:	21,039,326 shares	As of Mar. 20, 2021:	21,039,326 shares
2) Number of treasury shares at the end of the period
As of Sep. 20, 2021:	1,644,525 shares	As of Mar. 20, 2021:	1,724,357 shares
3) Average number of shares outstanding during the period
Six months ended Sep. 20, 2021:	19,346,021 shares	Six months ended Sep. 20, 2020:	19,681,355 shares

Note: For the purpose of calculating net assets per share, the number of shares of the Company held by the ALINCO Employee Shareholding Association Exclusive Trust Account (451,500 shares as of September 20, 2021) under the "Trust-type Employee Shareholding Incentive Plan (E-Ship)" is included in the number of treasury shares, which was to be deducted from the calculation of the number of shares outstanding at the end of the period. For the purpose of calculating net income per share, the Company's shares held by the trust are also included in the number of treasury shares, which was to be deducted from the calculation of the average number of shares outstanding during the period (482,257 shares for the six months ended September 20, 2021).

*The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.

*Cautionary statement with respect to forward-looking statements and other special items

Forecasts of future performance in these materials are based on assumption judged to be valid and information available to the ALINCO's management at the time the materials were prepared. Actual results may differ materially from the forecasts for a number of reasons. Please refer to "Explanation of Consolidated Forecast and Other Forward-looking Statements" on page 3 for forecast assumptions and notes of caution for usage.

ALINCO INCORPORATED (5933) Financial Results for the Second Quarter of FY3/22

Contents of Attachments

1. Qualitative Information on Quarterly Consolidated Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Consolidated Forecast and Other Forward-looking Statements	3
2. Quarterly Consolidated Financial Statements and Notes	4
(1)	Quarterly Consolidated Balance Sheet	4
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	6
(3)	Notes to Quarterly Consolidated Financial Statements	8
	Going Concern Assumption	8
	Significant Changes in Shareholders' Equity	8
	Segment and Other Information	8

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ALINCO INCORPORATED (5933) Financial Results for the Second Quarter of FY3/22

1. Qualitative Information on Quarterly Consolidated Financial Performance

(1) Explanation of Results of Operations

During the first six months of the fiscal year ending March 20, 2022, the operating environment remained challenging due to the impact of the COVID-19 pandemic. At present, the effects of policies to curb the spread of the infection, such as promoting vaccination, are expected to help the economy recover, but the outlook remains uncertain.

In the construction and housing related sectors, which are the primary industry of ALINCO group, there were indications of a recovery in industry trends in the first six months of the current fiscal year, such as the continuation of year-on-year growth in building construction starts based on floor area. In this kind of situation, sales of the new ring lock ALBATROSS system ("ALBATROSS"), our main product, have recovered to the level recorded between October 2019 and March 2020, just before the impact of the COVID-19 crisis became apparent. Moreover, in our rental business, the utilization rate for rental scaffolding materials rose to the pre-Corona level in the same period of the year before last. On the other hand, the sales growth of home fitness equipment has slowed down after the record high sales during the pandemic in the previous fiscal year.

First six months sales were 26,714 million yen, 6.0% higher than one year earlier, because of the recovery of sales in our core business of scaffolding manufacture, sales and rental. In terms of profit, operating profit decreased 5.5% to 922 million yen due to several factors that resulted in costs being significantly higher than anticipated such as, sustained rising costs of raw materials including steel and aluminum, which are affected by the international commodity market prices, and the rising procurement cost from abroad due to the depreciation of yen along with increased freight rates. Ordinary profit increased 3.6% to 1,164 million yen due to an improvement in non-operating income and expenses. Profit attributable to owners of parent increased 24.1% to 747 million yen mainly because of extraordinary income from a gain on the partial sales of stock held for business relationships and a decrease in income taxes.

The performance for each business segment was as follows. Noted that, segment sales do not include intersegment sales.

First six months of FY3/22				(Millions of yen)
Segment	Net sales	Segment profit (loss)
Amount	YoY change (%)	Amount	YoY change (%)
Construction materials	9,809	27.9	863	149.3
Scaffolding material rental	7,781	5.0	150	35.1
Home equipment	7,382	(12.6)	(25)	-
Electronic equipment	1,740	3.6	47	-
Total for reportable segments	26,714	6.0	1,036	3.1
Adjustment	-	-	127	-
Amounts shown on quarterly	26,714	6.0	1,164	3.6
consolidated statement of income

Notes: 1. Segment profit (loss) is adjusted to be consistent with ordinary profit in the quarterly consolidated statement of income.

2. The adjustment to segment profit (loss) is primarily non-operating income and expenses, such as equity-method income and losses, foreign exchange gains and losses, and interest expenses that cannot be allocated to a reportable segment.

Construction materials

Sales increased 27.9% from one year earlier to 9,809 million yen. Sales of ALBATROSS significantly increased by 94.5% because of sales to new customers, including a major construction company, and additional purchase from existing customers. In addition, sales of racks for distribution warehouses also remained strong.

The segment profit increased 149.3% from one year earlier to 863 million yen due to higher sales.

2

ALINCO INCORPORATED (5933) Financial Results for the Second Quarter of FY3/22

Scaffolding material rental

Sales increased 5.0% from one year earlier to 7,781 million yen. The utilization rate of rental scaffolding materials for medium and high-rise buildings increased. There were also strong sales for event-related rental equipment, which has been significantly affected by the pandemic, associated with the Tokyo Olympics.

The segment profit increased 35.1% from one year earlier to 150 million yen due to higher sales.

Home equipment

Sales decreased 12.6% from one year earlier to 7,382 million yen. Sales of aluminum ladders, stepladders and other products remained firm despite the impact of factors such as the unseasonable weather, which reduced footfall at mass retailers, and the continued restraint on the holding of exhibitions. However, sales of fitness equipment decreased in reaction to record high sales from the positive impact of stay-home demand one year earlier.

The segment loss was 25 million yen, a decrease of 586 million yen from the profit one year earlier, because of the decrease in sales and the rising procurement cost from abroad due to higher prices of raw materials resulting from yen depreciation and an increase in shipping cost.

Electronic equipment

Sales increased 3.6% from one year earlier to 1,740 million yen. We managed to minimize the negative impact on the supply chain of the current shortage of electronic components, primarily semiconductor components. In addition, sales increased as this business benefited from the recovery in demand for specified low-power wireless communication devices and wireless communication devices for business applications.

The segment profit made an improvement of 61 million yen from one year earlier to 47 million yen because of the sales growth despite expenses of 47 million yen related to stock acquisition through M&A.

(2) Explanation of Financial Position

Total assets increased 1,993 million yen from the end of the previous fiscal year to 57,437 million yen as of the end of the second quarter. Current assets increased 1,177 million yen to 34,363 million yen and non-current assets increased 815 million yen to 23,074 million yen. The main reason for the increase in total assets was the inclusion of Higashi Electronics Industry Co., Ltd. into the scope of consolidation on August 18, 2021, an 806 million yen increase in inventories for higher demand in the future and a 1,007 million yen increase in property, plant and equipment caused by making investments in Fukuchiyama logistic center and rental assets.

Total liabilities increased 1,583 million yen from the end of the previous fiscal year to 29,348 million yen. Current liabilities increased 749 million yen to 16,909 million yen and non-current liabilities increased 833 million yen to 12,438 million yen. The main reason for the increase in liabilities was a 1,413 million yen increase in borrowings and the inclusion of Higashi Electronics Industry into the scope of consolidation.

Total net assets increased 410 million yen from the end of the previous fiscal year to 28,089 million yen because of profit attributable to owners of parent of 747 million yen and dividend payments of 376 million yen.

(3) Explanation of Consolidated Forecast and Other Forward-looking Statements

Regarding the outlook for the future, sales in our core business are expected to remain firm compared with plan projections, as sales of ALBATROSS, our main product, to a major construction company are now underway. In addition, profit margins are expected to improve because of price increases in response to the rising raw material prices and other costs. In conclusion, there are no revisions to the consolidated forecast for the fiscal year ending March 20, 2022 that was announced on April 30, 2021.

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