Nippon Aqua : Non-consolidated Financial Results for the Fiscal Year Ended December 31,2021

Non-consolidated Financial Results

for the Fiscal Year Ended December 31, 2021

[Japanese GAAP]

February 10, 2022

Company name: Nippon Aqua Co., Ltd.

Code number: 1429 (listed on the Tokyo Stock Exchange)

(URL: http://www.n-aqua.jp)

Representative: Fumitaka Nakamura, President and Representative Director

Contact: Mitsuharu Yamada, General Manager of Finance and Accounting

Phone: [phone]

Scheduled date of Ordinary General Meeting of Shareholders: March 25, 2022

Scheduled date of dividend payout: March 28, 2022

Scheduled date of filing annual securities report: March 25, 2022

Supplementary materials on financial results prepared: Yes

Financial results briefing held: Yes (for institutional investors and analysts)

(Figures are rounded down to the nearest million yen.)

1. Non-consolidated Financial Results for the Fiscal Year Ended December 31, 2021 (January 1, 2021-

	December 31, 2021)
(1) Financial Results							(Percentage figures indicate year-on-year changes.)
				Net sales				Operating profit	Ordinary profit		Profit
			Million yen	%		Million yen	%		Million yen	%				Million yen	%
	Fiscal year ended	23,903	9.3		1,412	(25.5)		1,429	(25.2)			953	(29.0)
	December 31, 2021
	Fiscal year ended		21,872	2.4		1,896	(0.7)		1,911	0.1			1,342	5.3
	December 31, 2020
			Basic earnings		Diluted earnings per						Ratio of		Ratio of
				Return on equity		ordinary profit to		operating profit to
				per share			share
											total assets		net sales
				Yen				Yen			%			%			%
	Fiscal year ended	29.52				－			12.2			8.3			5.9
	December 31, 2021
	Fiscal year ended		41.57				41.56			18.5			12.2			8.7
	December 31, 2020
(2) Financial Position
				Total assets	Net assets		Equity ratio	Net assets per share
					Million yen		Million yen				%				Yen
	As of December 31, 2021			18,279		7,951				43.5				246.09
	As of December 31, 2020			16,021		7,638				47.7				236.46

[Reference] Shareholders' equity: As of December 31, 2021: 7,951 million yen As of December 31, 2020: 7,638 million yen

(3) Cash Flows

Cash flows from	Cash flows from	Cash flows from	Cash and cash
equivalents
operating activities	investing activities	financing activities
at end of period

Fiscal year ended December 31, 2021 Fiscal year ended December 31, 2020

Million yen	Million yen	Million yen		Million yen
520	(355)	109	1,926
694		(311)		1,651
(609)

2. Dividends

Dividend per share

Total

Ratio of

End of

End of

End of 1st

dividends

Payout ratio

dividends to

2nd

3rd

Year-end

Total

quarter

(annual)

net assets

quarter

quarter

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

Fiscal year ended

－

0.00

－

20.00

20.00

646

48.1

8.9

December 31, 2020

Fiscal year ended

－

0.00

－

20.00

20.00

646

67.7

8.3

December 31, 2021

Fiscal year ending

December 31, 2022

－

0.00

－

22.00

22.00

48.4

(forecast)

3. Financial Forecasts for the Fiscal Year Ending December 31, 2022 (January 1, 2022-December 31, 2022) (Percentage figures indicate year-on-year changes.)

Net sales		Operating profit		Ordinary profit		Profit		Basic earnings
				per share
Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen

Six months ending June 30, 2022 Fiscal year ending December 31, 2022

12,053	12.5	886	167.2	886	164.3	611	186.2	18.92
26,490		2,121		50.2		2,121		48.4		1,470		54.1		45.50
10.8

* Notes

1. Changes in accounting policies, changes in accounting estimates and restatements
2. 1. Changes in accounting policies due to revisions of accounting standards, etc.: No
   2. Changes in accounting policies other than (i): No
   3. Changes in accounting estimates: No
   4. Restatements: No
3. Number of issued shares (common shares)

(i) Number of issued shares at end of period under review (including treasury shares)

As of December 31, 2021	34,760,000 shares
As of December 31, 2020	34,760,000 shares
(ii) Number of treasury shares at end of period under review
As of December 31, 2021	2,449,128 shares
As of December 31, 2020	2,457,628 shares
(iii) Average number of shares during period under review
Fiscal year ended December 31, 2021	32,307,845 shares
Fiscal year ended December 31, 2020	32,299,492 shares

• Financial results are not subject to audit by certified public accountants or audit corporations.
• Notes concerning appropriate use of financial forecasts and other significant matters
  Financial forecasts and other forward-looking statements in this release are based on data currently available to the Company and certain assumptions that the Company believes are reasonable. They are not intended as a guarantee

that the Company will achieve such results. Actual results may differ materially from them for various reasons. For details of the assumptions used in the forecast of financial results and cautionary notes concerning appropriate use of the financial forecasts, please refer to "(4) Future Outlook" on page 3 of the Attachment.

Contents of Attachment
1. Overview of Operating Results, Etc. ................................................................................................... 2
(1)	Overview of Operating Results for the Fiscal Year Under Review	................................................. 2
(2)	Overview of Financial Position for the Fiscal Year Under Review	................................................ 2
(3)	Overview of Cash Flows for the Fiscal Year Under Review ...........................................................	3
(4)	Future Outlook ................................................................................................................................	3
2. Basic Policy on Selection of Accounting Standards ............................................................................	6
3. Financial Statements and Primary Notes .............................................................................................	7
(1)	Balance Sheet ..................................................................................................................................	7
(2) Income Statement ............................................................................................................................	9
(3)	Statement of Changes in Equity ....................................................................................................	10
(4)	Cash Flow Statement .....................................................................................................................	12
(5)	Notes to Financial Statements .......................................................................................................	13
	(Notes on Going Concern Assumption) ...................................................................................	13
	(Segment Information, Etc.) .....................................................................................................	13
	(Equity in Earnings (Losses) of Affiliates, Etc.) ......................................................................	13
	(Per Share Information) ............................................................................................................	14
	(Important Subsequent Events) ................................................................................................	14

1

1. Overview of Operating Results, Etc.

(1) Overview of Operating Results for the Fiscal Year Under Review

During the fiscal year ended December 31, 2021, the Japanese economy continued to be heavily affected by the spread of COVID-19. As thorough measures for infection prevention and vaccinations were promoted, various policies took effect and overseas economies improved. Signs of improvement were thus seen in the economy. However, as COVID-19 variants continue to spread unabated, the outlook of the economy remains unpredictable.

Amid this environment, under the basic policy of tackling the "decarbonization" issue in housing and buildings by promoting energy conservation in homes through the innovation of insulating material technologies and recycling technologies, the Company proactively made efforts to win orders in each division by taking advantage of the product appeal of highly-airtight and highly-insulated AQUA FOAM and the strength of our nationwide construction network.

As a result, regarding the financial results of the Company in the fiscal year under review, net sales increased by 9.3% year on year to 23,903 million yen. Due to the rise in urethane raw material prices, cost of sales increased by 15.7% year on year to 19,163 million yen. Consequently, operating profit declined 25.5% from a year earlier to 1,412 million yen and ordinary profit fell 25.2% year on year to 1,429 million yen. Profit totaled 953 million yen, decreasing 29.0% from a year earlier.

As part of the Company's initiatives to improve profitability, in our mainstay Single-family Homes Division, we introduced the newly-developed AQUA FOAM LITE, which reduces raw material usage by approximately 30%, in June of the fiscal year under review, striving to improve construction work profit as urethane raw material prices remained high.

The financial results by item are listed below.

1. Insulating materials for single-family homes
   In the single-family homes market, there were signs of a recovery in monthly housing starts and demand for AQUA FOAM, an insulating material essential for highly-airtight and highly-insulated housing, increased amid discussions on whether it should be mandatory for houses to meet energy efficiency standards in order to achieve a decarbonized society. As a result, sales of the Single-family Homes Division increased by 5.9% year on year to 13,185 million yen.
2. Insulating materials for buildings
   In the buildings market, sales of the Buildings Division increased by 13.4% year on year to 5,499 million yen, thanks to the efforts to carry out multiple construction work that includes insulation-installing, fireproofing and waterproofing work.
3. Product sales
   Sales of raw materials, machinery, etc. increased by 14.0% year on year to 5,217 million yen.

1. Overview of Financial Position for the Fiscal Year Under Review

(Total assets)

Total assets totaled 18,279 million yen as of December 31, 2021, up 2,257 million yen, or 14.1%, from the end of the previous fiscal year.

(Current assets)

Current assets totaled 13,591 million yen as of December 31, 2021, up 2,121 million yen, or 18.5%, from the end of the previous fiscal year. Key factors contributing to this increase include increases of 274 million yen in cash and deposits, 1,279 million yen in accounts receivable - trade, and 806 million yen in accounts receivable - other, partially offset by decreases of 125 million yen in merchandise, and 157 million yen in work in process.

(Non-current assets)

Non-current assets totaled 4,688 million yen as of December 31, 2021, up 135 million yen, or 3.0%, from the end of the previous fiscal year. Key factors contributing to this increase include increases of 172 million yen in buildings due to the completion of the Sendai recycling plant, and 122 million yen due to the acquisition of machinery and equipment, partially offset by a decrease of 207 million yen in assets due to depreciation.

2