Nippon Sanso : Consolidated Financial Results for the First Half of FYE2023(Based on IFRS)

Consolidated Financial Results

for the First half of Fiscal Year Ending March 31, 2023

(Based on IFRS)

		November 1, 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 CEO
Inquiries:	Keita Kajiyama, General Manager, Investor Relations
Tel.:	[phone]

Scheduled date to file Securities Report: November 10, 2022

Scheduled date to commence dividend payments: December 1, 2022

Supplementary materials on quarterly financial results: Yes

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

(Amounts less than ¥1 million are omitted)

1. Financial results for the first half of FYE2023 (April 1, 2022 - September 30, 2022)

(1) 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)		%
First half of	573,699		28.2	56,185		12.7	53,872	8.2	36,422	3.6	35,149	2.5	95,894		143.5
FYE2023
First half of	447,374		16.4	49,844		35.7	49,799	35.8	35,154	63.0	34,291	63.3	39,383		2.3
FYE2022

(Reference) Income before income taxes

First half of FYE2023: ¥ 49,641million [10.3%]

First half of FYE2022: ¥ 45,026million [46.1%]

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

	Basic earnings	Diluted net income
	per share (Yen)	per share (Yen)
First half of	81.22	－
FYE2023
First half of	79.24	－
FYE2022

(2) Financial position

	Total assets	Total equity	Equity attributable to	Equity attributable to
	owners of the parent	owners of the parent ratio
	(¥ million)	(¥ million)
	(¥ million)	(%)
First half of FYE2023	2,155,691	743,006	710,499	33.0
(September 30, 2022)
FYE2022	1,977,026	661,137	628,714	31.8
(March 31, 2022)

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2. Dividends

				Annual Dividend
	End of 1st quarter		End of 2nd quarter	End of 3rd quarter	Term	Total
					end
	(Yen)		(Yen)	(Yen)	(Yen)	(Yen)
FYE2022		－	16.00	－	18.00	34.00
FYE2023		－	18.00
FYE2023				－	18.00	36.00
(est.)

Note: No revisions have been made to recently announced forecasts.

3. Forecasts for 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	1,160,000		21.2	115,000		12.0	113,000	11.7	70,500	5.8	68,000		6.1	157.11

Note: Revisions have been made to recently announced forecasts: Yes (Reference) Income before income taxes

FYE2023 full term: ¥99,000 million [8.1%]

• 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

1. Number of outstanding shares (common shares)

1. Number of outstanding shares at the end of	As of	433,092,837	As of	433,092,837
the period (including treasury stock)	Sep.30, 2022	shares	Mar. 31, 2022	shares
2. Number of treasury stocks at the end of the	As of	231,466	As of	344,870
period	Sep.30, 2022	shares	Mar. 31, 2022	shares
3. Average number of shares during the period	Sep.30, 2022	432,770,724	Sep.30, 2022	432,749,892
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 result stated in this document are based on the information currently available on 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 5, "(3) Explanation concerning predictive Information such as forecasts for business operations" in "1. General information relating to the first half results."

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○ Contents

1. General information relating to the first half results…………………………………………………………………………	2
(1) Explanation concerning business results…………………………………………………………………………………	2
(2) Explanation concerning financial position………………………………………………………………………………	3
(3) Explanation concerning predictive information such as forecasts for business operations………………………………	3
2. Condensed consolidated financial statements and main notes………………………………………………………………	4
(1) Condensed Consolidated Statement of Financial Position………………………………………………………………	4
(2) Condensed Consolidated Statement of Profit or Loss and Condensed Consolidated Statement of Comprehensive	6
Income………………………………………………………………………………………………………………………
(3) Condensed Consolidated Statement of Changes in Equity………………………………………………………………	8
(4) Condensed Consolidated Statement of Cash Flows……………………………………………………………………	10
(5) Notes to the Condensed Consolidated Financial Statements……………………………………………………………	11
(Note regarding going concern assumption) ……………………………………………………………………………	11
(Segment information) …………………………………………………………………………………………………	11

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1. General information relating to the first half results

1. Explanation concerning business results (General overview)
   In the business environment surrounding the Nippon Sanso Holdings Group (NSHD Group) in the first half of the fiscal year under review (from April 1, 2022 to September 30, 2022), we faced severe business environment where there were many uncertainties in the economic outlook, such as global energy cost surge largely due to the prolonged crisis in Ukraine, price hikes across the globe, and further depreciation of the Yen. Nevertheless, the shipment volume of air separation gases (oxygen, nitrogen, and argon) remained relatively flat compared to the same period of the previous fiscal year.

Under such circumstances, the NSHD Group achieved the following results for the first half of the fiscal year under review. Revenue on a consolidated basis increased 28.2% year-on-year to ¥573,699 million, core operating income increased 12.7% to ¥56,185 million, operating income increased 8.2% to ¥53,872 million, and net income attributable to owners of the parent increased 2.5% to ¥35,149 million.

As for the impact of foreign exchange rates year-on-year, the Yen depreciated against the USD from ¥110.10 to ¥135.30 (+¥25.20, or +22.9%), against the Euro from ¥131.16 to ¥139.14 (+¥7.98, or +6.1%), and against the AUD from ¥82.33 to ¥93.51 (¥11.18, or +13.6%). As a result, overall revenue and core operating income were favorably impacted by approximately ¥39.7 billion and ¥5.2 billion, respectively.

Core operating income is calculated by excluding from operating income certain gains and losses attributable to non- recurring factors 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.

• Gas Business in Japan

In the industrial gas-related business, revenue increased year-on-year due to higher selling prices for air separation gases, a core product, and LP gas in conjunction with cost increases, although shipment volume declined. Meanwhile, in the electronics-related business, revenue from electronic materials gases increased. In equipment and installation, both industrial gas-related, and electronics-related revenues increased compared to the previous year. On the other front, segment income decreased due to the time lag between manufacturing and distribution cost increases related to energy and general inflation, etc., and the ability to recover it from customers.

As a result, in the Gas Business in Japan, revenue increased 12.2% year-on-year to ¥194,406 million and segment income decreased 9.1% to ¥12,721 million.

• Gas Business in the United States

In the industrial gas-related business, shipment volume as well as revenue of air separation gases, a core product, were on par with those a year earlier, and sales of other bulk products increased. Sales from carbon dioxide gases, especially dry-ice, were strong. In equipment and installation, revenue from welding and cutting equipment increased significantly compared to the previous year, and sales of the electronics-related business were strong.

As a result, in the Gas Business in the United States, revenue increased 35.9% year-on-year to ¥145,961 million and segment income increased 14.0% to ¥16,072 million. Moreover, revenue and segment income were favorably impacted by the depreciation of the Yen.

• Gas Business in Europe

In the industrial gas-related business, revenue from air separation gases, a core product, despite flat shipment volumes, increased sharply, reflecting successful price initiatives offsetting significant surge in energy and other costs. Other businesses were also firm.

As a result, in the Gas Business in Europe, revenue increased 43.6% year-on-year to ¥136,308 million, and segment income increased 25.1% to ¥15,908 million. Moreover, revenue and segment income were favorably impacted by the depreciation of the Yen.

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• Gas Business in Asia & Oceania

In the industrial gas-related business, revenue increased year-on-year due to favorable sales in package gas, and on-site business, offsetting sluggish shipment volume of air separation gas, a core product. In LP gas, of which a large portion of sales are in the Australia region, revenue continued to increase due to the pass-through of higher costs unto customers and steady sales volume. In electronic-related business, revenue increased due to steady sales of both gases and equipment.

As a result, in the Gas Business in Asia & Oceania, revenue increased 38.8% year-on-year to ¥81,803 million and segment income increased 34.6% to ¥8,943 million. Moreover, revenue and segment income were favorably impacted by the depreciation of the Yen.

• Thermos Business

In Japan, the Thermos Business revenue significantly increased year on year due to steady sales of portable mugs and sports bottles after stay-at-home measures were relaxed since the beginning of the new fiscal year, and strong sales of frying pans and other new products. Overseas, revenues generally increased.

As a result, the Thermos Business revenue increased 17.9% year-on-year to ¥15,169 million, and segment income increased 11.0% to ¥3,309 million.

(2) Explanation concerning financial position

Total assets amounted to ¥2,155,691 million as of September 30, 2022, an increase of ¥178,665 million from March 31, 2022. The impact of foreign exchange rates resulted in an increase in total assets of approximately ¥137.4 billion. This mainly reflected foreign exchange rate changes, such as the Yen depreciation of ¥22.42 against the USD and that of ¥5.62 against Euro as of September 30, 2022, compared with the rates as of March 31, 2022.

[Assets]

Total current assets amounted to ¥497,503 million as of September 30, 2022, an increase of ¥75,010 million from March 31, 2022, mainly reflecting increases in other financial assets and inventories.

Total non-current assets were ¥1,658,188 million, an increase of ¥103,655 million from March 31, 2022, mainly reflecting increases in property, plant and equipment and goodwill.

[Liabilities]

Total current liabilities were ¥425,504 million, an increase of ¥93,908 million from March 31, 2022, mainly due to increases in bonds and borrowings and other financial liabilities.

Total non-current liabilities were ¥987,180 million, an increase of ¥2,887 million from March 31, 2022. The main factors were an increase in deferred tax liabilities, and a decrease in bonds and borrowings.

[Equity]

Total equity amounted to ¥743,006 million, an increase of ¥81,869 million from March 31, 2022. The main factors were an increase in exchange differences on translation of foreign operations and quarterly profit attributable to owners of the parent.

The equity attributable to owners of the parent ratio stood at 33.0%, up 1.2 percentage points from the previous fiscal year- end.

(Cash flow analysis)

[Cash flow from operating activities]

Net cash provided by operating activities increased 8.2% year-on-year to ¥72,122 million. The main components were income before income taxes, depreciation and amortization, and an increase (decrease) in inventories.

[Cash flow from investing activities]

Net cash used in investing activities increased 41.4% year-on-year to ¥42,252 million. The primary use of cash was for purchasing of property, plant and equipment.

[Cash flow from financing activities]

Net cash used in financing activities decreased 40.8% year-on-year to ¥25,448 million. The main components were repayment of long-term borrowings, a net increase (decrease) in short-term borrowings, and dividends paid.

As a result of the Company's operating, investing, and financing activities, the balance of cash and cash equivalents as of September 30, 2022, after considering the effects of exchange rate changes, was ¥101,015 million.

(3) Explanation concerning predictive information such as forecasts for business operations

The Company has revised its forecasts for business operations for the full term of the fiscal year ending March 31, 2023. For details, please refer to the "Notice Regarding Earnings Forecast Revisions" released today (November 1, 2022).

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