Shinwa : Consolidated Financial Results for the Year Ended March 31, 2021

Consolidated Financial Results

for the Fiscal Year Ended March 31, 2021

[IFRS]

May 13, 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: Hiroshi Yamada, President and Representative Director

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

Phone: [phone]

Scheduled date of Annual General Meeting of Shareholders: June 25, 2021

Scheduled date of filing the annual securities report: June 28, 2021

Scheduled date of commencing dividend payments: June 10, 2021

Availability of supplementary briefing material on annual financial results: Yes

Schedule of annual 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 Fiscal Year Ended March 31, 2021 (April 1, 2020 to March 31, 2021)

(1) Consolidated Operating Results			(% indicates changes from the previous corresponding period.)
		Revenue	Operating profit	Profit before tax			Profit
	Fiscal year ended	Million yen	%	Million yen	%	Million yen	%		Million yen	%
	March 31, 2021	13,885	(18.7)	1,853	(16.2)		1,784	(16.6)		1,242	(15.3)
	March 31, 2020	17,081	(2.5)	2,210	12.5		2,139	12.9		1,467	10.2
		Profit attributable to	Comprehensive
		owners of parent	income
	Fiscal year ended	Million yen	%	Million yen	%
	March 31, 2021	1,231	(16.0)	1,253	(14.4)
	March 31, 2020	1,467	10.2	1,464	9.9
						Ratio of return		Ratio of profit		Ratio of
		Basic earnings	Diluted earnings	on equity
			before tax to		operating profit
		per share		per share	attributable to
					total assets		to revenue
						owners of parent
	Fiscal year ended		Yen		Yen		%			%			%
	March 31, 2021	87.42		87.09		8.8			8.1			13.3
	March 31, 2020	104.85		104.21		11.0			10.0			12.9

Reference: Share of profit (loss) of investments accounted for using equity method:

Fiscal year ended March 31, 2021: ¥- million

Fiscal year ended March 31, 2020: ¥- million

(2) Consolidated Financial Position

			Equity	Equity	Equity
			attributable to
	Total assets	Total equity	attributable to	attributable to
	owners of
	owners of	owners of
			parent to total
			parent	parent per share
			assets
	Million yen	Million yen	Million yen	%	Yen
As of March 31, 2021	22,236	14,443	14,379	64.7	1,019.59
As of March 31, 2020	21,620	13,788	13,740	63.6	975.26

(3) Consolidated Cash Flows

Cash flows from

Cash flows from

Cash flows from

Cash and cash

equivalents at end of

operating activities

investing activities

financing activities

period

Fiscal year ended

Million yen

Million yen

Million yen

Million yen

March 31, 2021

2,892

(181)

(1,104)

4,738

March 31, 2020

3,121

(515)

(1,227)

3,120

2. Dividends

Annual dividends

Dividends

Payout

to equity

1st

2nd

3rd

Total

attributable

ratio

quarter-

quarter-

quarter-

Year-end

Total

dividends

to owners

(consolidated)

end

end

end

of parent

(consolidated)

Fiscal year ended

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

－

0.00

－

44.00

44.00

619

42.0

4.6

March 31, 2020

Fiscal year ended

－

0.00

－

35.00

35.00

493

40.0

3.5

March 31, 2021

Fiscal year ending

March 31, 2022

－

0.00

－

32.00

32.00

40.0

(Forecast)

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		%
First half	7,182		12.5	799	7.2	763	7.2	521		6.2
Full year	15,000		8.0	1,700	(8.3)	1,629	(8.7)	1,128		(9.2)
	Profit attributable to	Basic earnings per share
	owners of parent
	Million yen		%		Yen
First half	521		7.7		36.94
Full year	1,128		(8.4)		80.00

* Notes:

1. Changes in significant subsidiaries during the year 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):

March 31, 2021: 14,103,000 shares

March 31, 2020: 14,089,200 shares

1. Total number of treasury shares at the end of the period: March 31, 2021: - shares
   March 31, 2020: - shares
2. Average number of shares during the period:

Fiscal year ended March 31, 2021: 14,090,031 shares

Fiscal year ended March 31, 2020: 13,993,754 shares

*These consolidated financial results are outside the scope of audit 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 (1) Overview of Operating Results for the Fiscal Year under Review in 1. Overview of Operating Results, etc. on page 2 and (4) Future Outlook in 1. Overview of Operating Results, etc. on page 5 of the Attachment.

Table of Contents
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 ....................................................	3
(3)	Overview of Cash Flows for the Fiscal Year under Review ..............................................................	4
(4)	Future Outlook ..................................................................................................................................	5
(5)	Basic Policy for Distribution of Profits and Dividends for the Fiscal Year under Review and Next
	Fiscal Year ........................................................................................................................................	6
2. Basic Stance Concerning Choice of Accounting Standards ...................................................................	6
3. Consolidated Financial Statements and Primary Notes..........................................................................	7
(1)	Consolidated Statement of Financial Position ...................................................................................	7
(2)	Consolidated Statements of Profit or Loss and Comprehensive Income............................................	9
(3)	Consolidated Statement of Changes in Equity...................................................................................	11
(4)	Consolidated Statement of Cash Flows .............................................................................................	12
(5) Notes to Consolidated Financial Statements......................................................................................	13
	(Notes on going concern assumption)...........................................................................................	13
	(Segment information) .................................................................................................................	13
	(Per share information).................................................................................................................	14
	(Significant 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 March 31, 2021, the Japanese economy faced extremely challenging conditions, with the spread of the novel coronavirus infection causing a serious slowdown across socioeconomic activity. While there are some signs of economic improvement at present, the employment situation and private consumption remain weak, and the situation continues to be unpredictable due to increasing downside risks stemming from coronavirus trends both in Japan and overseas.

In the construction industry, which is the main supply destination of products manufactured by the Company, total construction investments during the period from April 2020 to February 2021 decreased from the previous fiscal year to ¥47,600.0 billion (down 1.6% year on year), according to the "Comprehensive construction statistics" published by the Ministry of Land, Infrastructure, Transport and Tourism.

In such a business environment, aiming to improve operating efficiency while prioritizing the health of its employees and customers, the Group has strived to prevent the spread of the disease and carry out efficient business operations through measures such as promoting working from home at all its facilities and encouraging the use of web conferences. In addition, the spread of the novel coronavirus infection caused a delay in the launch of GUANGDONG NISSHINCHUANGFU ADVANCED CONSTRUCTION MATERIALS Co., Ltd., a Chinese manufacturing subsidiary established in November 2019, but the subsidiary commenced manufacturing and selling from June 2020.

In terms of profit, the Group has worked to improve profitability primarily by focusing on the manufacture and supply of safety equipment and other high value-added products, which remained in high demand despite the coronavirus crisis. In terms of costs, the Group has also endeavored to reduce costs and control expenditure through all sorts of measures such as reducing directors' compensation and other fixed costs and reviewing new investment projects. As a result, the gross profit ratio for the fiscal year ended March 31, 2021 came to 26.1% (improved by

0.8 percentage points year on year) and the operating profit ratio came to 13.3% (improved by 0.4 percentage points year on year).

As a result, revenue for the fiscal year ended March 31, 2021 amounted to ¥13,885 million (down 18.7% year on year), operating profit was ¥1,853 million (down 16.2% year on year), profit before tax came to ¥1,784 million (down 16.6% year on year), and profit attributable to owners of parent amounted to ¥1,231 million (down 16.0% year on year).

As the Group is comprised of a single business segment of the manufacturing and sales business of scaffolding equipment and logistics equipment, information by segment is not provided. The performance of each business Division is as follows.

1) Scaffolding Equipment Division

The Scaffolding Equipment Division develops two product groups: "wedge binding type scaffolding" primarily targeted at low- to mid-rise structures such as detached housing; and "next generation scaffolding" for mid- to high-rise large structures and public works.

During the fiscal year ended March 31, 2021, the overall demand in scaffolding equipment declined affected by the suspension and postponement of construction work as well as the postponement of new construction investment projects due to the spread of the novel coronavirus infection causing the declaration of a state of emergency. Meanwhile, revenue found support by focusing on the supply of safety equipment aimed at enhancing safety at construction sites, which remained in high demand.

As a result of these factors, revenue for the Scaffolding Equipment Division amounted to ¥10,818 million (down 25.6% year on year).

2