Shinwa : Consolidated Financial Results for the Three Months Ended June 30, 2021

Consolidated Financial Results

for the Three Months Ended June 30, 2021

[IFRS]

August 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: August 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: No

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

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

(1) Consolidated Operating Results					(% indicates changes from the previous corresponding period.)
		Revenue		Operating profit		Profit before tax	Profit
Three months ended	Million yen	%			Million yen	%		Million yen	%	Million yen	%
June 30, 2021	3,884	40.9			471	130.1			453	141.0	311	157.0
June 30, 2020	2,756	(36.1)			205	(56.7)		188	(58.7)	121	(59.6)
		Profit attributable to		Comprehensive
		owners of parent			income
Three months ended	Million yen	%			Million yen	%
June 30, 2021	313	158.6			313	159.7
June 30, 2020	121	(59.6)			120	(59.7)
		Basic earnings		Diluted earnings
		per share			per share
Three months ended				Yen				Yen
June 30, 2021				22.50					22.40
June 30, 2020				8.60					8.57
(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 June 30, 2021			21,505		13,964		13,900		64.6
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		－
March 31, 2022
Fiscal year ending			0.00			－		32.00	32.00
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	%
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
	owners of parent	per share
	Million yen	%		Yen
First half	521	7.7		36.94
Full year	1,128	(8.4)		80.00

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):

June 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: June 30, 2021: 380,000 shares
   March 31, 2021: - shares
2. Average number of shares during the period:

Three months ended June 30, 2021: 13,929,992 shares

Three months ended June 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 4 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 ....................................................................................................	3
(3)	Overview of Cash Flows ..................................................................................................................	3
(4)	Explanation of Consolidated Financial Results Forecast and Other Forward-Looking
	Information ......................................................................................................................................	4
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes.....................................	5
(1)	Condensed Quarterly Consolidated Statement of Financial Position...............................................	5
(2)	Condensed Quarterly Consolidated Statements of Profit or Loss and Comprehensive Income ......	7
(3)	Condensed Quarterly Consolidated Statement of Changes in Equity ................................................	9
(4)	Condensed Quarterly Consolidated Statement of Cash Flows.........................................................	10
(5) Notes to Condensed Quarterly Consolidated Financial Statements .................................................	11
	(Notes on going concern assumption) .........................................................................................	11
	(Significant subsequent events)...................................................................................................	11

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

(1) Explanation of Operating Results

During the three months ended June 30, 2021, the Japanese economy continued to face widespread restrictions on socioeconomic activity 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 as shown by the wave-like movements of the number of new infections and measures to control them, as well as the emergence of highly infectious variant strains.

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 in April and May 2021 was ¥7,900 billion (up 0.3% year on year), showing steady movement mainly in public works projects. 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, demand for transportation equipment increased in line with the recovery trend in the economy and business activities.

In terms of profit, demand for high value-added products such as safety equipment continued, and thus, a recovery in sales of both scaffolding equipment and logistics equipment contributed to the improvement in profitability. In terms of costs, the Group has taken multifaceted measures to reduce costs and curb expenditures in light of the fact that the price of steel materials, the main raw material for our products, has been rising as expected and that the economic environment continues to be less than optimistic. As a result, the operating profit ratio for the three months ended June 30, 2021 came to 12.1% (improved by 4.7 percentage points year on year).

As a result of the above, revenue for the three months ended June 30, 2021 amounted to ¥3,884 million (up 40.9% year on year). Operating profit was ¥471 million (up 130.1% year on year). Profit before tax amounted to ¥453 million (up 141.0% year on year), and profit attributable to owners of parent amounted to ¥313 million (up 158.6% 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, despite the current uncertain situation, demand for our mainstay wedge binding type scaffolding and next generation scaffolding was firm against the backdrop of recovery in 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 three months ended June 30, 2021 amounted to ¥3,037 million (up 32.6% 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. Reflecting these situations, the Group's business remained solid, with new projects acquired and repeated projects growing. We also secured a stable number of large warehousing-related projects for major e-commerce companies.

As a result, revenue of the Logistics Equipment Division for the three months ended June 30, 2021 amounted to ¥847 million (up 81.7% year on year).

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