Consolidated Financial Results for the Three Months Ended September 30,2021

Consolidated Financial Results

for the Three Months Ended September 30, 2021

[Japanese GAAP]

November 08, 2021

Company name: ENVIPRO HOLDINGS Inc.

Stock exchange listing: Tokyo Stock Exchange

Code number: 5698

URL: https://www.envipro.jp/

Representative: Tomikazu Sano

Representative Director, President/CEO

Contact: Naoki Takekawa

Director in charge of Management Department

Phone: [phone]

Scheduled date of filing quarterly securities report: November 12, 2021

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Not scheduled

(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Three Months Ended September 30, 2021 (July 01, 2021 to September 30, 2021)

(1) Consolidated Operating Results

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Three months ended

Million yen

%

Million yen

%

Million yen

%

Million yen

%

September 30, 2021

14,292

92.1

795

516.1

921

325.0

666

377.2

September 30, 2020

7,439

(26.7)

129

(70.8)

216

(55.7)

139

(56.6)

(Note) Comprehensive income:

Three months ended September 30, 2021:

¥

679 million

[

419.1%]

Three months ended September 30, 2020:

¥

130 million

[

(56.9)%]

Basic earnings

Diluted earnings per

per share

share

Three months ended

Yen

Yen

September 30, 2021

45.12

43.15

September 30, 2020

9.49

9.09

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

As of

Million yen

Million yen

%

September 30, 2021

26,292

13,646

50.4

June 30, 2021

26,548

13,333

48.8

(Reference) Equity: As of

September 30, 2021:

¥

13,259

million

As of

June 30, 2021:

¥

12,959

million

2. Dividends

				Annual dividends
	1st	2nd		3rd		Year-end	Total
	quarter-end	quarter-end	quarter-end
	Yen		Yen	Yen		Yen	Yen
Fiscal year ended June 30, 2021	-		0.00	-		25.00	25.00
Fiscal year ending June 30, 2022	-
Fiscal year ending June 30, 2022			0.00	-		33.00	33.00
(Forecast)
(Note) Revision to the forecast for dividends announced most recently:	No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending June 30, 2022(July 01, 2021 to June 30, 2022)

(% indicates changes from the previous corresponding period.)

	Net sales	Operating profit	Ordinary profit	Profit attributable	Basic earnings per
	to owners of parent	share
	Million		Million			Million			Million
	yen	%	yen	%		yen		%	yen	%	Yen
Full year	54,000	31.9	2,390	12.2		2,850		13.6	1,950	30.7	132.07
(Note) Revision to the financial results forecast announced most recently:	No
* Notes:
(1) Changes in significant subsidiaries during the three months ended September 30, 2021
(changes in specified subsidiaries resulting in changes in scope of consolidation):	No
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements:	Yes

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
3. Total number of issued shares (common shares)
4. 1. Total number of issued shares at the end of the period (including treasury shares):

September 30, 2021:	15,051,227	shares
June 30, 2021:	15,051,227	shares
2) Total number of treasury shares at the end of the period:
September 30, 2021:	282,131	shares
June 30, 2021:	286,091	shares
3) Average number of shares during the period:
Three months ended September 30, 2021:	14,767,606 shares
Three months ended September 30, 2020:	14,721,901 shares

• These consolidated financial results are outside the scope of audit by certified public accountants or audit firms
• Explanation of the proper use of financial results forecast and other notes

The financial results forecast and other forward-looking statements in this material are based on information currently available to the Company and certain assumptions deemed to be reasonable, and actual results may differ significantly due to various factors. Please see the "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" from page 4 of the attached document of this material for the conditions for financial and other results, as well as important matters to be aware of when using the financial results forecast.

Table of Contents of Appendix
1. Qualitative Information on Quarterly Financial Results ...................................................................................................................	2
(1)	Explanation of Business Results ......................................................................................................................................................	2
(2)	Explanation of Financial Position ..................................................................................................................................................	3
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information ...............................................	4
2. Quarterly Consolidated Financial Statements and Primary Notes ....................................................................................................	5
(1)	Quarterly Consolidated Balance Sheets .........................................................................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income ..................................................................................	7
(3)	Notes to the Quarterly Consolidated Financial Statements ............................................................................................................	9
(Notes on Going Concern Assumption) ...............................................................................................................................................	9
(Notes in the Case of Significant Changes in Shareholders' Equity) ...................................................................................................	9
(Adoption of Special Accounting Methods for Preparing Quarterly Consolidated Financial Statements).............................................	9
(Changes in Accounting Policies) ..........................................................................................................................................................	9
(Additional Information) ......................................................................................................................................................................	9
(Segment Information).........................................................................................................................................................................	11
(Significant Subsequent Events) ..........................................................................................................................................................	14

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1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Business Results

In the Group's business areas during the three months ended September 30, 2021, amid the prolonged COVID- 19 pandemic, demand for steel products has been weak since the beginning of the period under review due mainly to soaring ocean freight rates and reduced production in the manufacturing industries primarily caused by the semiconductor shortage. However, in the latter half of the period under review, demand for steel products rose, partly driven by expectations of an economic recovery with the spread of COVID-19 having passed its peak.

As a result, the ferrous scrap price (Tokyo Steel (Tahara) Tokkyu Grade Seaborne Price) came to ¥50,000 as of September 30, 2021, the same level as that at the end of the previous fiscal year, and the average price during the three months was ¥49,461, trending upward from ¥23,225 of the same period of the previous fiscal year. With regard to the prices of nonferrous metals, the average prices during the three months of copper, aluminum, and nickel rose above those seen in the same period of the previous fiscal year.

Amid this environment, in the three months ended September 30, 2021, with a strategic concept of challenging ourselves to resolve issues toward realizing a "Decarbonized society," "Circular economy society" and "Distributed society" by viewing it as a business opportunity, based on our mission statement "Contribute to create a sustainable society." ,we have proceeded with measures to establish "Realization of concrete cases of the circular economy" and "A disciplined group of autonomous individuals with emergent abilities."

As a result, for the three months ended September 30, 2021, net sales were ¥14,292 million (up 92.1% year on year), operating profit was ¥795 million (up 516.1% year on year), ordinary profit was ¥921 million (up 325.0% year on year), and profit attributable to owners of parent was ¥666 million (up 377.2% year on year).

Results by segment are as follows, with net sales shown as inter-segment sales or sales including transfers. The classification of reportable segments has been changed from the end of the previous fiscal year, and the amounts stated for the previous fiscal year are those compiled based on the classification of reportable segments following the change.

Summary of Business Results by Segment
<Net sales>			(Million yen)
		Three months ended	Three months ended	Increase/decrease
		September 30, 2020	September 30, 2021	ratio
	Resource Circulation Business	2,795	4,762	70.4%
	Global Trading Business	5,356	11,109	107.4%
	Lithium-ion Batteries Recycling Business	62	147	133.7%
	Others	94	127	34.0%
	Adjustment	(870)	(1,853)	－
	Total	7,439	14,292	92.1%
<Segment profit (loss)>			(Million yen)
		Three months ended	Three months ended	Increase/decrease
		September 30, 2020	September 30, 2021	ratio
	Resource Circulation Business	242	685	182.1%
	Global Trading Business	61	302	387.7%
	Lithium-ion Batteries Recycling Business	(37)	18	－
	Others	31	45	46.9%
	Adjustment	(81)	(130)	－
	Total	216	921	325.0%

(Note) Segment profit (loss) is adjusted with ordinary profit in the quarterly consolidated statements of income.

1) Resource Circulation Business

While metal scrap prices remained at the same level as that at the end of the previous fiscal year, demand for

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ferrous scrap and other high-grade scraps produced from large-scale shredders increased. As a result, the price gap between those of high-grade and low-grade scraps has widened, which enabled us to secure revenue. In addition, handling volume of ferrous scrap discharged from large-scale demolished properties has been continuing to increase from the previous fiscal year, and combined with an increase in share of profit of entities accounted for using equity method, they have all led to an increase in both sales and profit.

As a result, net sales in the Resource Circulation Business segment were ¥4,762 million (up 70.4% year on year), while segment profit was ¥685 million (up 182.1% year on year).

2) Global Trading Business

The business environment remained challenging as exports of metal scrap to overseas destinations were sluggish with a resurgence of the spread of COVID-19, in addition to soaring ocean freight rates due to difficulties in booking freighters. Amid such an environment, an increase in sales volume mainly through capturing domestic demand led to an increase in both sales and profit.

As a result, net sales in the Global Trading Business segment were ¥11,109 million (up 107.4% year on year), while segment profit was ¥302 million (up 387.7% year on year).

1. Lithium-ionBatteries Recycling Business
   In addition to stable prices of cobalt, nickel and copper, handling volume rose due to purchasing from leading

battery manufacturers, etc. and acceptance of waste batteries processing by making use of the disposal business license. Also, a decrease in depreciation due to the recording of an impairment loss on non-current assets during the previous fiscal year led to an increase in both sales and profit.

As a result, net sales in the Lithium-ion Batteries Recycling Business segment were ¥147 million (up 133.7% year on year), while segment profit was ¥18 million (segment loss was ¥37 million in the same period of the previous fiscal year).

1. Others
   The Environment Management Consulting Business remained robust and posted increases in both sales and

profit, owing to a steady stream of orders for services including CDP evaluation improvement support, formulation of carbon neutral strategies and Task Force on Climate-related Financial Disclosures (TCFD) response support, as well as for consulting services mainly to facilitate a circular economy.

Concerning the Welfare Service Business for Persons with Disabilities, although the usage rate at the facilities saw firm growth, mainly driven by the increased recognition of the facilities, profitability worsened due to the revision of compensation and personnel expenses increased owing to the improved employee treatment, leading to an increase in sales and a decrease in profit.

As a result, net sales in the Others segment were ¥127 million (up 34.0% year on year), while segment profit was ¥45 million (up 46.9% year on year).

(2) Explanation of Financial Position Status of assets, liabilities, and net assets

Total assets at September 30, 2021 amounted to ¥26,292 million (down ¥256 million, or 1.0% from the end of the previous fiscal year). Current assets amounted to ¥17,021 million (down ¥479 million, or 2.7% from the end

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