Consolidated Financial Results for the Six Months Ended September 30, 2021 [IFRS]

Consolidated Financial Results

for the Six Months Ended September 30, 2021

[IFRS]

November 12, 2021

Company name: Shinwa Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange and Nagoya Stock Exchange

Code number: 3447

URL: http://www.shinwa-jp.com/en/relation/index.html

Representative: Kurio Noritake, President and Representative Director

Contact: Mitsuyoshi Hirasawa, Executive Officer, General Manager of Administration Headquarters and General Manager of Corporate Planning Department

Phone: [phone]

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

Scheduled date of commencing dividend payments: -

Availability of supplementary briefing material on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes (for institutional investors and analysts)

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

1. Consolidated Financial Results for the Six Months Ended September 30, 2021 (April 1, 2021 to September 30, 2021)

(1) Consolidated Operating Results				(% indicates changes from the previous corresponding period.)
			Revenue		Operating profit		Profit before tax	Profit
	Six months ended	Million yen	%			Million yen	%		Million yen	%	Million yen	%
	September 30, 2021	8,231	29.0			1,252	68.1			1,217	71.1	842	71.8
	September 30, 2020	6,381	(31.9)			745	(39.0)		711	(40.0)	490	(39.8)
			Profit attributable to		Comprehensive
			owners of parent			income
	Six months ended	Million yen	%			Million yen	%
	September 30, 2021	846	74.9			845	71.9
	September 30, 2020	483	(40.6)			492	(39.6)
			Basic earnings		Diluted earnings
			per share			per share
	Six months ended				Yen				Yen
	September 30, 2021				61.19					60.94
	September 30, 2020				34.33					34.19
(2) Consolidated Financial Position
															Equity
					Total assets		Total equity	Equity attributable	attributable to
						to owners of parent	owners of parent
															to total assets
					Million yen		Million yen	Million yen		%
	As of September 30, 2021		22,111		14,496		14,434		65.3
	As of March 31, 2021			22,236		14,443		14,379		64.7

2. Dividends

					Annual dividends
		1st		2nd			3rd		Year-end		Total
		quarter-end		quarter-end			quarter-end
Fiscal year ended		Yen		Yen			Yen		Yen		Yen
	－	0.00			－		35.00	35.00
March 31, 2021
Fiscal year ending		－	0.00
March 31, 2022
Fiscal year ending							－		40.00	40.00
March 31, 2022 (Forecast)
Note: Revision to the dividends forecast announced most recently: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2022 (April 1, 2021 to March 31, 2022)

(% indicates changes from the previous corresponding period.)

	Revenue		Operating profit	Profit before tax	Profit
	Million yen	%	Million yen	%	Million yen	%	Million yen	%
Full year	16,000	15.2	2,050	10.6	1,977	10.8	1,372	10.4
	Profit attributable to	Basic earnings
	owners of parent	per share
	Million yen	%		Yen
Full year	1,372	11.4		100.00

Note: Revision to the financial results forecast announced most recently: No

* Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in change in scope of consolidation): No
2. Changes in accounting policies and changes in accounting estimates
3. 1. Changes in accounting policies required by IFRS: No
   2. Changes in accounting policies other than 1) above: No
   3. Changes in accounting estimates: 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):

September 30, 2021: 14,103,000 shares

March 31, 2021: 14,103,000 shares

1. Total number of treasury shares at the end of the period: September 30, 2021: 380,000 shares
   March 31, 2021: - shares
2. Average number of shares during the period:

Six months ended September 30, 2021: 13,825,930 shares

Six months ended September 30, 2020: 14,089,200 shares

*These consolidated financial results are outside the scope of quarterly review by Certified Public Accountants or

auditing corporations.

*Explanation of the proper use of financial results forecast and other notes

Financial results forecasts were prepared based on information available at the time of the announcement of this document, and actual results may differ from the forecasts owing to a wide range of factors. For the conditions that form the assumptions for the financial results forecasts, please refer to (4) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Information in 1. Qualitative Information on Quarterly Financial Results for the Period under Review on page 5 of the Attachment.

Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review ........................	2
(1)	Explanation of Operating Results ....................................................................................................	2
(2)	Explanation of Financial Position ....................................................................................................	4
(3)	Overview of Cash Flows ..................................................................................................................	4
(4)	Explanation of Consolidated Financial Results Forecast and Other Forward-Looking
	Information ......................................................................................................................................	5
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes.....................................	6
(1)	Condensed Quarterly Consolidated Statement of Financial Position...............................................	6
(2)	Condensed Quarterly Consolidated Statements of Profit or Loss and Comprehensive Income ......	8
(3)	Condensed Quarterly Consolidated Statement of Changes in Equity ..............................................	10
(4)	Condensed Quarterly Consolidated Statement of Cash Flows.........................................................	11
(5) Notes to Condensed Quarterly Consolidated Financial Statements .................................................	12
	(Notes on going concern assumption) .........................................................................................	12
	(Significant subsequent events)...................................................................................................	12

1

1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operating Results

During the six months ended September 30, 2021, the Japanese economy continued to face challenging conditions, including the persistence of various restrictions due to the effect of the novel coronavirus infection. Although corporate earnings, the employment situation, and private consumption are showing signs of recovery and resilience in some areas, the situation is still unpredictable due to the continued risk of an economic downturn, including signs of supply chain delays in terms of supply and demand, with the economy in the process of recovering from the coronavirus crisis.

In the construction industry, which is the main supply destination of our products, according to the "Comprehensive construction statistics" published by the Ministry of Land, Infrastructure, Transport and Tourism, total construction investments from April to August 2021 were ¥20,100 billion (up 1.1% year on year), showing signs of recovery mainly in private-sector demand. Against the backdrop of this environment, revenue of our mainstay wedge binding type scaffolding and next generation scaffolding remained strong. In the Logistics Equipment Division, revenue grew substantially due to increased demand for transportation equipment and large warehousing-related projects in line with the recovery in the economy and business activities.

In terms of profit, large warehousing-related projects for major e-commerce companies in logistics equipment, in addition to a recovery in sales of scaffolding equipment, both contributed significantly to profit amid continued demand for high value-added products such as safety equipment. Meanwhile, the Group has taken measures to reduce costs and curb expenditures, as well as reviewing the prices of products, due to a greater- than-expected rise in the price of steel materials, the main raw material for our products. As a result, the operating profit ratio for the six months ended September 30, 2021 came to 15.2% (improved by 3.5 percentage points year on year).

As a result of the above, revenue for the six months ended September 30, 2021 amounted to ¥8,231 million (up 29.0% year on year). Operating profit was ¥1,252 million (up 68.1% year on year). Profit before tax amounted to ¥1,217 million (up 71.1% year on year), and profit attributable to owners of parent amounted to ¥846 million (up 74.9% year on year).

As the Group is comprised of a single business segment, information regarding the revenue of each Division is provided below.

1) Scaffolding Equipment Division

In the Scaffolding Equipment Division, demand for our mainstay wedge binding type scaffolding and next generation scaffolding was firm, including indications that scaffolding equipment rental companies were increasing their holdings, against the backdrop of resilience in demand for construction work. In addition, as demand for safety equipment to improve safety at construction sites continued to be high, sales of our products with excellent workability, as well as customer inquiries to the products, remained strong.

As a result, revenue of the Scaffolding Equipment Division for the six months ended September 30, 2021 amounted to ¥6,422 million (up 18.2% year on year).

2) Logistics Equipment Division

In the Logistics Equipment Division, with the recovery trend from the pandemic of the novel coronavirus infection, there was an increase in production activity and distribution volume in various industries. This also led to an increase in demand for the logistics equipment that we supply including, for example, an increase in demand and transportation volumes for the liquid agents used in semiconductor manufacturing. Reflecting these situations, revenue increased significantly, due to new project acquisition in addition to the growth evident in repeated projects.

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