Daiseki : Consolidated Financial Results for the Three Months Ended May 31, 2021

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.

June 30, 2021

Consolidated Financial Results

for the Three Months Ended May 31, 2021

(Under Japanese GAAP)

Company name:	Daiseki Co., Ltd.
Listing:	Tokyo Stock Exchange / Nagoya Stock Exchange
Securities code:	9793
URL:	https://www.daiseki.co.jp/english/IR/presentation.html
Representative:	Hideki Hashira, President and Representative Director
Inquiries:	Hideki Katase, Executive Officer, General Manager of Headquarters of Planning and
	Management
Telephone:	[phone]

Scheduled date to file quarterly securities report:	July 9, 2021
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the three months ended May 31, 2021 (from March 1, 2021 to May 31, 2021)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
		Net sales		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
	Three months ended	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
	May 31, 2021	14,038		4.3	3,123	21.8	3,146	17.2	2,003	33.8
	May 31, 2020	13,451		(0.7)	2,562	(7.3)	2,682	(4.5)	1,497	(17.3)

Note: Comprehensive income	For the three months ended May 31, 2021:	¥2,192 million	[38.5%]
			For the three months ended May 31, 2020:	¥1,581 million	[(18.4)%]
		Basic earnings per share	Diluted earnings per
		share
	Three months ended		Yen	Yen
	May 31, 2021		46.81	-
	May 31, 2020		35.00	-

(2) Consolidated financial position

		Total assets		Net assets	Equity-to-asset ratio
	As of	Millions of yen	Millions of yen	%
	May 31, 2021	95,955		81,673	77.9
	February 28, 2021	95,756		80,717	77.2
Reference: Equity
	As of May 31, 2021	¥74,802 million
	As of February 28, 2021:	¥73,992 million

2. Cash dividends

			Annual dividends per share
		First quarter-end	Second quarter-		Third quarter-end		Fiscal year-end		Total
		end
		Yen	Yen		Yen		Yen		Yen
	Fiscal year ended	-	28.00		-	28.00	56.00
	February 28, 2021
	Fiscal year ending	-
	February 28, 2022
	Fiscal year ending		28.00		-	28.00	56.00
	February 28, 2022 (Forecast)
Notes: 1. Revisions to the forecast of cash dividends most recently announced: None

2. The Company plans to conduct a 1.2-for-1 share split of its common shares on the effective date of September 1, 2021, with a substantive increase in the year-end dividend forecast for the fiscal year ending February 28, 2022, of ¥5.60.

3. Consolidated earnings forecasts for the fiscal year ending February 28, 2022 (from March 1, 2021 to February 28, 2022)

(Percentages indicate year-on-year changes.)

		Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
			owners of parent	per share
		Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
	Six months ending	29,300		13.2	5,770	15.6	5,840	13.6	3,730	18.9	72.61
	August 31, 2021
	Fiscal year ending	56,600		9.8	11,400	11.3	11,500	10.0	7,400	13.4	144.05
	February 28, 2022
Notes: 1. Revisions to the earnings forecasts most recently announced: None

2. The Company plans to conduct a 1.2-for-1 share split of its common shares on the effective date of September 1, 2021. Basic earnings per share above represent the figure after the share split. In addition, basic earnings per share not factoring in the share split is ¥87.13 and ¥172.87 for the six months ending August 31, 2021 and the full fiscal year under review, respectively.

• Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
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
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

As of May 31, 2021:	43,000,000 shares
As of February 28, 2021:	43,000,000 shares

(ii) Number of treasury shares at the end of the period

As of May 31, 2021:	193,567 shares
As of February 28, 2021:	193,355 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Three months ended May 31, 2021	42,806,563 shares
Three months ended May 31, 2020	42,778,338 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 forecast figures stated above reflect projections determined based on the information currently available and may contain uncertain factors in large part. Actual business results, etc. may differ from the above forecast figures due to changes in earnings results, among others.

	Daiseki Co., Ltd. (9793)
Attached Material
1. Qualitative Information on Quarterly Consolidated Financial Results ...............................................................	2
(1)	Explanation of operating results ...................................................................................................................	2
(2)	Explanation of financial position ..................................................................................................................	2
(3)	Explanation of consolidated earnings forecasts and other forward-looking statements ...............................	2
2. Quarterly consolidated financial statements and significant notes thereto..........................................................	3
(1)	Quarterly consolidated balance sheet............................................................................................................	3
(2)	Quarterly consolidated statement of income and quarterly consolidated statement of
	comprehensive income .................................................................................................................................	5
	Quarterly consolidated statement of income (cumulative) ...........................................................................	5
	Quarterly consolidated statement of comprehensive income (cumulative) ..................................................	6
(3)	Notes to quarterly consolidated financial statements....................................................................................	7
	Notes on premise of going concern ..............................................................................................................	7
	Notes on significant changes in the amount of shareholders' equity ............................................................	7
	Significant events after reporting period.......................................................................................................	7

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Daiseki Co., Ltd. (9793)

1. Qualitative Information on Quarterly Consolidated Financial Results

1. Explanation of operating results
   During the three months ended May 31, 2021, the Japanese economy remained uncertain due to the impact of the protracted spread of novel coronavirus disease (COVID-19) since last year, with heavy restrictions imposed on social and economic activities under the third state of emergency declared in April 2021. However, the global economy is gradually recovering as COVID-19 vaccination progresses worldwide. The ensuing effect is that the domestic industrial production in Japan recovered to a level close to that before the COVID-19 crisis, with prices of resources, including crude oil and non-ferrous metal, increasing.
   Amid such an economic situation, a mainstay business of the Company group (the "Group"), the industrial waste treatment business centered on industrial wastewater treatment, has seen an upward trend in order volumes and higher plant operation rate accompanied by a recovery in the domestic industrial production, as compared to last summer. Further, with a rise in crude oil price, the selling price of recycled fuel has been on a gradual rise, and the improved profitability contributed to higher net sales and profits. Meanwhile, impacted by the state of emergency declaration, net sales underperformed the plan with the deferment of some business cases such as those for maintenance to the second half; however, net income exceeded the plan thanks to an improved profitability ratio topping the plan.
   In the soil pollution treatment business of Daiseki Eco. Solution Co., Ltd., its profitability remained unimproved owing to extended sluggishness in the unit price setting of the soil pollution treatment; however, as the impact of COVID-19 was almost completely eliminated, prompted business activities to get mobilized to pick up its brisk pace as opposed to the same period of the previous fiscal year. As a result, the increased number of acquisitions of challenging business cases such as consulting cases helped drive higher profitability, and both net sales and profits increased.
   The lead recycling business in Daiseki MCR CO., Ltd. steadily boosted its production volume, recording significant increases in net sales and profits underpinned by considerable improvement in profitability thanks to higher lead price.
   In the washing business for large tanks in System Kikou Co., Ltd., both net sales and profits underperformed the plan during the three months ended May 31, 2021, due to the recording of net sales concentrating in the second half, although the operation runs at the 100% capacity. Meanwhile, there is no problem ascertained in achieving the full-year target as sales orders have been received steadily.
   As a result, for the three months ended May 31, 2021, net sales, operating profit, ordinary profit, and profit attributable to owners of parent were ¥14,038 million (up 4.3% year on year), ¥3,123 million (up 21.8% year on year), ¥3,146 million (up 17.2% year on year), and ¥2,003 million (up 33.8% year on year), respectively, with the Group logging record highs in net sales and profits by securing the increases in both.
   As the Group consists of a single business segment, the environment-related business, the information by segment is omitted.
2. Explanation of financial position
   Total assets as of May 31, 2021 increased by ¥198 million compared with the end of the previous fiscal year, amounting to ¥95,955 million. The increase was largely due to an increase in long-term time deposits of ¥1,500 million, property, plant and equipment of ¥148 million, notes and accounts receivable - trade of ¥141 million, and inventories of ¥86 million, respectively, offset by a decrease in cash and deposits of ¥1,798 million. Liabilities decreased by ¥758 million compared with the end of the previous fiscal year, amounting to ¥14,281 million. The decrease was largely due to a decrease in income taxes payable of ¥771 million. Net assets increased by ¥956 million compared with the end of the previous fiscal year, amounting to ¥81,673 million. The increase was largely due to an increase in retained earnings of ¥805 million by recording profit gains, etc.
3. Explanation of consolidated earnings forecasts and other forward-looking statements
   No revisions have been made to the consolidated earnings forecasts announced on April 5, 2021.

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