Nippon Sanso : Consolidated Financial Results for Fiscal Year Ending March 31, 2022 (Based on IFRS)

Consolidated Financial Results for Fiscal Year Ended March 31, 2022

(Based on IFRS)

		May 11, 2022
Company name: Nippon Sanso Holdings Corporation	Stock exchange listing: Tokyo (Prime)
TSE Code:	4091 URL: https://www.nipponsanso-hd.co.jp
Representative: Toshihiko Hamada, Representative Director, President and CEO
Inquiries:	Takayoshi Umehara, General Manager, Investor Relations
Tel.:	[phone]

Scheduled date to hold Ordinary General Meeting of Shareholders: June 17, 2022

Scheduled date to file Securities Report: June 20, 2022

Scheduled date to commence dividend payments: June 20, 2022

Supplementary materials on financial results: Yes

Financial results explanatory meeting: Yes (For institutional investors and analysts)

(Amounts less than ¥1 million are omitted)

1. Consolidated financial results for FYE2022 (April 1, 2021 - March 31, 2022)

(1) Consolidated operating results

(Percentages indicate year-on-year change)

			Core operating					Net income	Total
	Revenue	Operating income	Net income	attributable to	comprehensive
	income
								owners of the parent	income
	(¥ million)	%	(¥ million)		%	(¥ million)	%	(¥ million)	%	(¥ million)	%	(¥ million)		%
FYE2022	957,169	17.0	102,710		17.7	101,183	13.9	66,637	17.2	64,103	16.1	132,363		11.3
FYE2021	818,238	(3.8)	87,251		(3.4)	88,846	(5.4)	56,863	3.3	55,214	3.5	118,924		888.9
(Reference)	Income before income taxes

FYE2022: ¥91,611 million [17.9%]

FYE2021: ¥77,706 million [(1.8) %]

Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors (non-recurring items).

					Return on equity	Income before	Core operating
		Basic earnings		Diluted net income	attributable to	income taxes to	income to revenue
		per share (Yen)		per share (Yen)	owners of the	total assets ratio	ratio (%)
					parent (%)	(%)
FYE2022		148.13		－	11.2	4.8	10.7
FYE2021		127.59		－	12.0	4.3	10.7
(Reference)	Share of profit (loss) of associates and joint ventures accounted for using the equity method
	FYE2022: ¥3,512 million	FYE2021: ¥5,602 million

(2) Consolidated financial position

	Total assets	Total equity	Equity attributable to	Equity attributable to	Equity attributable to
	owners of the parent	owners of the parent	owners of the parent
	(¥ million)	(¥ million)
	(¥ million)	ratio (%)	per share (yen)
FYE2022	1,977,026	661,137	628,714	31.8	1,452.84
(March 31, 2022)
FYE2021	1,836,294	543,900	513,164	27.9	1,185.82
(March 31, 2021)

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(3) Consolidated cash flows

	Cash flows from	Cash flows from	Cash flows from	Balance of cash and cash
	operating activities	investing activities	financing activities	equivalents at term-end
	(¥ million)	(¥ million)	(¥ million)	(¥ million)
FYE2022	148,760	(70,858)	(77,946)	93,697
FYE2021	149,231	(59,686)	(103,159)	91,058

2. Dividends

		Annual Dividend			Total amount	Payout ratio	Ratio of dividends to
	End of 1st	End of 2nd	End of 3rd		Term		equity attributable to
		Total	of dividends	(consolidated)
	quarter	quarter	quarter		end	owners of the parent
			(¥ million )	(%)
	(Yen)	(Yen)	(Yen)		(Yen)	(Yen)	(consolidated) (%)
FYE2021	－	14.00	－		16.00	30.00	12,987	23.5	2.8
FYE2022	－	16.00	－		18.00	34.00	14,718	23.0	2.6
FYE2023	－	18.00	－		18.00	36.00		23.3
(est.)

3. Forecasts for consolidated business operations for FYE2023 full term (April 1, 2022 - March 31, 2023)

(Percentages indicate year-on-year change)

				Core operating					Net income		Basic
	Revenue		Operating income	Net income	attributable to owners	earnings
		income
									of the parent		per share
	(¥ million)		%	(¥ million)		%	(¥ million)	%	(¥ million)	%	(¥ million)		%	(Yen)
Full term	950,000		(0.7)	107,000		4.2	107,500	6.2	69,000	3.5	67,000		4.5	154.82
(Reference)	Income before income taxes
	FYE2023 full term: ¥97,000 million [5.9%]

• Notes

1. Changes in significant subsidiaries during the period: None
   (Transfer of specified subsidiaries resulting in changes in the scope of consolidation)
2. Changes in accounting policies, changes in financial forecasts

1. Changes in accounting policies required by IFRS: None
2. Changes in accounting policies other than 1.: None
3. Changes in accounting estimates: None

(3) Number of outstanding shares (common shares)

1.	Number of outstanding shares at the end of the	As of	433,092,837	As of	433,092,837
	period (including treasury stock)	Mar.31, 2022	shares	Mar. 31, 2021	shares
2.	Number of treasury stocks at the end of the	As of	344,870	As of	342,332
	period	Mar.31, 2022	shares	Mar. 31, 2021	shares
3. Average number of shares during the period	FYE2022	432,749,204	FYE2021	432,752,228
shares	shares

• Financial reports are out of the scope of audit by certified public accountants or audit corporations.
• Explanation on the appropriate use of the forecasts of financial results and other comments
• • The forward-looking statements such as the forecasts of financial results stated in this document are based on the information currently available to the Company and certain assumptions that the Company judges as rational. The Company is under no obligation to guarantee their achievement. Actual financial results may vary significantly due to various reasons. For details on the assumptions of the forecasts and related matters, please see page 4, "(4) Future Outlook" in "1. Overview of Business Results."
  • The Company plans to hold a briefing of results for institutional investors and analysts on Friday, May 20, 2022. Financial results disclosed at that briefing will be posted on the Company website in a prompt manner following the briefing.
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○ Contents

1. Overview of Business Results ………………………………………………………………………………………………	4
(1) Overview of Business Results for the Fiscal Year Under Review ………………………………………………………	4
(2) Overview of Financial Position for the Fiscal Year Under Review ………………………………………………………	5
(3) Overview of Cash Flows for the Fiscal Year Under Review ……………………………………………………………	5
(4) Future Outlook ……………………………………………………………………………………………………………	6
(5) Basic Policy on Profit Distribution and Dividends for FYE2022 and FYE2023 …………………………………………	7
2. Basic Policy on Selection of Accounting Standards …………………………………………………………………………	7
3. Consolidated Financial Statements and Main Notes …………………………………………………………………………	8
(1) Consolidated Statement of Financial Position ……………………………………………………………………………	8
(2) Consolidated Statement of Profit or Loss and Consolidated Statement of Comprehensive Income ……………………	10
(3) Consolidated Statement of Changes in Equity ……………………………………………………………………………	12
(4) Consolidated Statement of Cash Flows …………………………………………………………………………………	14
(5) Notes to the Consolidated Financial Statements …………………………………………………………………………	16
(Note regarding going concern assumption) ……………………………………………………………………………	16
(Segment information) …………………………………………………………………………………………………	16
(Per-Share Information) …………………………………………………………………………………………………	19
(Significant Subsequent Events) ………………………………………………………………………………………	19

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1. Overview of Business Results

1. Overview of Business Results for the Fiscal Year Under Review (General overview)
   During fiscal year April 1, 2021 to March 31, 2022, revenue was strong. This was a result of strong economic recovery with underlying volume improvement in all business segments. Shipment volume of air separation gases (oxygen, nitrogen, and argon) all increased significantly compared to last fiscal year. Also contributing significantly to the performance was the high cost recovery, pass through, and surcharges that were implemented to recover the increasing cost of electricity, diesel, liquefied natural gas, supply chain disruptions, and other inflationary factors on a global level.

The NSHD Group achieved the following results for the fiscal year under review: revenue on a consolidated basis increased 17.0% year on year to ¥957,169 million; core operating income increased 17.7% to ¥102,710 million; operating income increased 13.9% to ¥101,183 million; and net income attributable to owners of the parent increased 16.1% to ¥64,103 million.

Core operating income is calculated as operating income excluding certain gains and expenses attributable to non-recurring factors (non-recurring items) such as losses arising from business withdrawal or downsizing.

(Overview of business performance by reportable segment)

A breakdown of business performance by reportable segment is as follows. Segment income represents core operating income.

From the fiscal year under review, the NSHD Group has changed its reportable segments. Therefore, to facilitate the year-on- year comparisons shown below, the figures for the previous fiscal year have been reclassified based on the changes to the reportable segments.

• Gas Business in Japan

In the industrial gas-related business, revenue from air separation gases, a core product, increased sharply year on year, mainly due to a general recovery in production activity in relevant industries. Additionally, revenue from LP gas rose as a result of higher cost pass through while underlying volumes were down slightly. In addition, revenue from electronic material gases and related businesses increased; industrial gas-related equipment and installation improved; medical-related equipment sales were also positive.

As a result, in the Gas Business in Japan, revenue increased 8.8% year on year to ¥372,033 million and segment income increased 3.5% to ¥30,939 million.

• Gas Business in the United States

In the industrial gas-related business, revenue from air separation gases, a core product, significantly increased year on year, driven by a recovery in production activity, with growth centered on bulk gases. In addition, sales of carbon dioxide gases were strong. In equipment and installation, demand for welding and cutting equipment recovered after weakness in the previous fiscal year, with revenue increasing sharply. In the electronics-related business, revenue also increased and remained strong. In addition, high distribution surcharges and energy pass-through occurred throughout the fiscal year further increasing revenues.

As a result, in the Gas Business in the United States, revenue increased 18.3% year on year to ¥224,801 million and segment income increased 18.1% to ¥27,314 million.

• Gas Business in Europe

While the previous fiscal year was seriously impacted by the spread of COVID-19, this fiscal year has seen a consistent and solid economic recovery. In addition, the sharp rise in record energy costs that began in the second quarter accelerated through the fourth quarter, but we responded through price pass-through and cost reduction efforts. And, much of the increase in revenue was due to our efforts to pass on prices.

As a result, in the Gas Business in Europe, revenue increased 31.1% year on year to ¥209,778 million and segment income increased 25.2% to ¥26,303 million.

• Gas Business in Asia & Oceania

In the industrial gas-related business, air separation gas revenue, a core product, increased driven by a recovery in production activity in related industries. In LP gas, which makes up a large portion of sales in the Australia region, revenue increased due to increased volume as well as higher cost pass through of LP gas prices. In the electronics-related business, revenue increased in electronic material gases in East Asia. In equipment and installation, revenue increased in the industrial gas-related business.

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As a result, in the Gas Business in Asia & Oceania, revenue increased 21.1% year on year to ¥123,533 million and segment income increased 43.9% to ¥12,837 million.

• Thermos Business

In Japan, revenue significantly increased year on year due to a recovery in shipment volumes of portable mugs and sports bottles from the previous fiscal year. Furthermore, sales volumes of frying pans and tumblers also increased, continuing from the previous fiscal year, in connection with the widespread adoption of new lifestyles where consumers spend longer periods of time at home. Overseas, shipping volume increased due to the recovery of business conditions in various regions.

As a result, revenue increased 12.0% year on year to ¥26,849 million, and segment income increased 24.6% to ¥6,441 million.

(2) Overview of Financial Position for the Fiscal Year Under Review

Total assets amounted to ¥1,977,026 million as of March 31, 2022, an increase of ¥140,731 million from March 31, 2021. Foreign exchange rates resulted in an increase in total assets of approximately ¥105.5 billion. This mainly reflected foreign exchange rate changes, such as the yen's depreciation of ¥11.68 against the U.S. dollar and the yen's depreciation of ¥6.90 against the euro as of March 31, 2022, compared with the rates as of March 31, 2021.

In the fiscal year, trade receivables increased as a result of increased revenues from economic recovery and price revision activities, etc. In addition, the Company proceeded with the planned repayment of interest-bearing debt with a focus on continued debt reduction and financial soundness. The Company will continue to communicate openly and appropriately with the bond market and financial institutions to improve our liquidity and funding capacity.

The hybrid financing raised in January 2019 and March 2019 totaled ¥250 billion, and the rating agencies (Japan Credit Rating Agency and Rating, Ltd. and Investment Information, Inc.) have approved 50% of this financing as "equity". The Company has referred to this as equity-type debt. As a financial soundness indicator that considers this hybrid financing, the Company has established the Adjusted net D/E ratio* as one of our key performance indicators and strives for the optimal composition of debt and equity. The Adjusted net D/E ratio achieved was 0.94 times, an improvement of 0.21 points from the end of the previous fiscal year.

(Note) Adjusted net D/E ratio: (Net interest-bearing debt - Equity-type debt) / (Equity attributable to owners of the parent + Equity-type debt)

[Assets]

Total current assets were ¥422,493 million, an increase of ¥53,592 million from March 31, 2021. The main changes were an increase in trade receivables, cash and cash equivalents, and the impact from yen depreciation against major currencies. Total non-current assets were ¥1,554,532 million, an increase of ¥87,139 million from March 31, 2021, mainly reflecting increases in plant, property and equipment, goodwill and the impact from yen depreciation.

[Liabilities]

Total current liabilities were ¥331,595 million, an increase of ¥5,575 million from March 31, 2021. The main changes were a decrease in bonds and borrowings, an increase in trade payables, and the impact from yen depreciation. Total non-current liabilities were ¥1,315,888 million, an increase of ¥17,918 million from March 31, 2021. The main factors were an increase in deferred tax liabilities, a decrease in bonds and borrowings, and the impact from yen depreciation.

[Equity]

Total equity amounted to ¥661,137 million, an increase of ¥117,237 million from March 31, 2021. The main factors were an increase due to the recording of profit attributable to owners of parent, a decrease due to retained earnings paid as dividends, and an increase in foreign exchange differences on translation of foreign operations.

The equity attributable to owners of the parent ratio stood at 31.8%, up 3.9 percentage points from the previous fiscal year-end.

1. Overview of Cash Flows for the Fiscal Year Under Review [Cash flow from operating activities]
   Net cash provided by operating activities decreased 0.3% year on year to ¥148,760 million. The main components were profit before income taxes, depreciation and amortization, and increase in trade receivables.
   [Cash flow from investing activities]
   Net cash used in investing activities increased 18.7% year on year to ¥70,858 million. The main use of cash was for the purchase of property, plant and equipment.
   [Cash flow from financing activities]
   Net cash used in financing activities decreased 24.4% year on year to ¥77,946 million. The main changes were repayment of
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