Envipro : Consolidated Financial Results for the Fiscal Year Ended June 30, 2021

Consolidated Financial Results for the Fiscal Year Ended June 30, 2021

[Japanese GAAP]

August 11, 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 Annual General Meeting of Shareholders: September 28, 2021

Scheduled date of commencing dividend payments: September 29, 2021

Scheduled date of filing annual securities report: September 28, 2021

Availability of supplementary briefing material on annual financial results: Available

Schedule of annual financial results briefing session: Not scheduled (The briefing will be video streamed instead of holding a normal
				briefing session.)
						(Amounts of less than one million yen are rounded down)
1. Consolidated Financial Results for the Fiscal Year Ended June 30, 2021 (July 01, 2020 to June 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
Fiscal year ended		Million yen		%	Million yen	%	Million yen	%	Million yen	%
June 30, 2021		40,933		20.8	2,130	169.6	2,508	168.3	1,491	147.8
June 30, 2020		33,879		(6.8)	790	(5.9)	934	(18.1)	602	(23.5)

(Note) Comprehensive income:	Fiscal year ended June 30, 2021:
	Fiscal year ended June 30, 2020:

¥	1,441 million	[	124.2%]
¥	643 million	[	(15.5) %]

	Basic earnings per		Diluted earnings per	Rate of return on	Ordinary profit to	Operating profit to
	share			share	equity		total assets ratio		net sales ratio
Fiscal year ended	Yen		Yen				%		%			%
June 30, 2021	101.15			96.84				12.1		9.6			5.2
June 30, 2020	41.03			39.25				5.3		4.1			2.3
(Reference) Share of profit of entities accounted for using equity method: Fiscal year ended June 30, 2021:		¥	380	million
					Fiscal year ended June 30, 2020:		¥	123	million
(2) Consolidated Financial Position
	Total assets			Net assets		Equity ratio	Net assets per share
As of	Million yen		Million yen		%				Yen
June 30, 2021	26,548		13,333			48.8				877.72
June 30, 2020	25,913		12,012			45.0				791.67
(Reference) Equity: As of	June 30, 2021:	¥	12,959 million
As of	June 30, 2020:	¥	11,654 million
(3) Consolidated Cash Flows
	Cash flows from	Cash flows from			Cash flows from		Cash and cash
		equivalents at the end
	operating activities	investing activities			financing activities
				of period
Fiscal year ended	Million yen	Million yen			Million yen				Million yen
June 30, 2021		(252)		(15)			(2,866)				7,117
June 30, 2020	2,632		(1,001)			5,897				10,242

2. Dividends

			Annual dividends				Payout	Dividends
					Total	to net
								ratio
	1st		2nd	3rd		Year-end	Total	dividends	assets
			(consolidated)
	quarter-end	quarter-end	quarter-end			(consolidated)
Fiscal year ended		Yen	Yen	Yen		Yen	Yen	Million yen	%	%
June 30, 2020		-	0.00	-		10.00	10.00	147	24.4	1.3
June 30, 2021		-	0.00	-		25.00	25.00	369	24.7	3.0
Fiscal year ending
June 30, 2022		-	0.00	-		33.00	33.00		25.0
(Forecast)

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 to	Basic earnings
		owners of parent	per share
	Million yen		%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	54,000		31.9	2,390	12.2	2,850	13.6	1,950	30.7	132.07

* Notes:

1. Changes in significant subsidiaries during the fiscal year ended June 30, 2021 (changes in specified subsidiaries resulting in changes in scope of consolidation): No
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: No
   4. Retrospective restatement: No
4. Total number of issued shares (common shares)
5. 1. Total number of issued shares at the end of the period (including treasury shares):

June 30, 2021:	15,051,227	shares
June 30, 2020:	15,051,227	shares

2) Total number of treasury shares at the end of the period:

June 30, 2021:	286,091	shares
June 30, 2020:	329,326	shares

3) Average number of shares during the period:
Fiscal Year ended June 30, 2021:	14,747,731	shares
Fiscal Year ended June 30, 2020:	14,673,332	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 item (4) "Future Outlook" on page 5 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．Overview of Business Results, etc. ..............................................................................................................2
(1)	Overview of Business Results for the Period under Review .....................................................................	2
(2) Overview of Financial Position for the Period under Review ...................................................................	4
(3)	Overview of Cash Flows for the Period under Review .............................................................................	4
(4) Future Outlook ...........................................................................................................................................	5
(5) Significant Events regarding Going Concern Assumption ......................................................................	5
2．Basic Stance Concerning Choice of Accounting Standards .......................................................................	5
3．Consolidated Financial Statements and Primary Notes ................................................................................	6
(1)	Consolidated Balance Sheets .....................................................................................................................	6
(2)	Consolidated Statements of Income and Comprehensive Income .............................................................	8
(3)	Consolidated Statements of Changes in Net Assets .................................................................................	10
(4) Consolidated Statements of Cash Flows ..................................................................................................	12
(5) Notes to the Consolidated Financial Statements ......................................................................................	14
(Notes on Going Concern Assumption) ........................................................................................................	14
(Additional Information) ...............................................................................................................................	14
(Consolidated Statements of Income) ............................................................................................................	14
(Segment Information) ...................................................................................................................................	15
(Per Share Information) .................................................................................................................................	18
(Significant Subsequent Events) .....................................................................................................................	19

1

1. Overview of Business Results, etc.

(1) Overview of Business Results for the Period under Review

During the fiscal year ended June 30, 2021, the world economy and the Japanese economy remained in a severe situation due to the global COVID-19 pandemic, and the impact of trends in future infections on the economy remains unclear.

In the Group's business areas, the uncertain situation continued, with ocean freight rates soaring due to tight supply and demand of cargo ships against the backdrop of the worldwide shortage of shipping containers in addition to the prolonged COVID-19 pandemic. However, demand for steel products has remained robust as domestic and overseas production in the manufacturing industries bounced back. Furthermore, using recycled raw materials, including ferrous scrap, is more appreciated amid the global trend of decarbonization.

As a result, the ferrous scrap price (Tokyo Steel (Tahara) Tokkyu Grade Seaborne Price) increased from ¥24,500 at the end of the previous fiscal year to ¥51,500 at the end of the fiscal year under review, and the average price during the fiscal year under review was ¥36,054, trending upward from ¥22,943 in the previous fiscal year. With regard to the prices of nonferrous metals, the average prices of copper, aluminum, and nickel rose above those of the previous fiscal year.

Amid this environment, during the fiscal year ended June 30, 2021, we have set forth "CASH IS KING," "Restructuring of work," and "Reaffirming the raison d'etre" as our basic policy to address the COVID-19 crisis based on our mission statement "Contribute to create a sustainable society," and have proceeded with the reinforcement of our foundation.

In the Lithium-ion Batteries Recycling Business, we reviewed our earnings plan and recorded an impairment loss. In the Global Trading Business, we decided to change the business form of the subsidiary in Uganda operated by 3WM Co., Ltd, a consolidated subsidiary of the Company engaged in the used car business, etc., through a business transfer or other means, due in part to the change in the business environment caused by the COVID-19 pandemic, and recorded a restructuring loss. In addition, as a result of careful discussions regarding the recoverability of some receivables in biomass fuel trading, we recorded provision of allowance for doubtful accounts. These extraordinary losses, including other items, amounted to ¥834 million. Meanwhile, we recorded a gain on sale of investment securities due to the sale of cross-shareholdings, and extraordinary income, including other items, amounted to ¥427 million.

As a result, for the fiscal year ended June 30, 2021, net sales were ¥40,933 million (up 20.8% year on year), operating profit was ¥2,130 million (up 169.6% year on year), ordinary profit was ¥2,508 million (up 168.3% year on year), and profit attributable to owners of parent was ¥1,491 million (up 147.8% 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 fiscal year under review, and the amounts stated for the previous fiscal year are those compiled based on the classification of reportable segments following the change.

2

Summary of Business Results by Segment

<Net sales>			(Million yen)
	The 11th term	The 12th term	Increase/decrease
	(Fiscal year ended	(Fiscal year ended
	ratio
	June 30, 2020)	June 30, 2021)
Resource Circulation Business	10,746	14,216	32.3%
Global Trading Business	25,792	31,033	20.3%
Lithium-ion Batteries Recycling Business	97	356	264.2%
Others	295	354	20.0%
Adjustment	(3,052)	(5,026)	-
Total	33,879	40,933	20.8%
<Segment profit (loss)>			(Million yen)
	The 11th term	The 12th term	Increase/decrease
	(Fiscal year ended	(Fiscal year ended
	ratio
	June 30, 2020)	June 30, 2021)
Resource Circulation Business	540	2,080	285.2%
Global Trading Business	638	711	11.4%
Lithium-ion Batteries Recycling Business	(127)	(80)	-
Others	30	84	173.6%
Adjustment	(147)	(287)	-
Total	934	2,508	168.3%

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

1. Resource Circulation Business
   Metal scrap prices rose, and, partly due to the purchasing of metal scrap discharged from large-scale demolished

properties, both prices and handling volume increased compared to the previous fiscal year. In addition, the revisions to waste disposal fee we have pursued from the previous fiscal year enabled us to secure profit margins, and combined with the effects of factors including the streamlining of production processes and 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 ¥14,216 million (up 32.3% year on year), while segment profit was ¥2,080 million (up 285.2% year on year).

2) Global Trading Business

We secured profit margin by utilizing regular sales schemes and passing on prices in our logistics agency services in a challenging business environment, which included a continuation of soaring ocean freight rates, difficulties in booking freighters, and restrictions on overseas business due to COVID-19. In addition, expanding domestic stockyards and securing handling volume through trilateral trade led to an increase in both sales and profit.

As a result, net sales in the Global Trading Business segment were ¥31,033 million (up 20.3% year on year), while segment profit was ¥711 million (up 11.4% year on year).

3) Lithium-ion Batteries Recycling Business

In addition to an increase in 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, leading to an improvement in profitability. The deficit contracted with the business turning a profit in the fourth quarter, partly as a result of a decrease in depreciation due to recording of an impairment loss.

As a result, net sales in the Lithium-ion Batteries Recycling Business segment were ¥356 million (up 264.2% year on year), while segment loss was ¥80 million (segment loss was ¥127 million in the previous fiscal year).

We will continue to aggressively apply management resources to make these pillars of our growth strategy.

3