Sinanen Holdings Group launched its 3rd Medium-Term Management Plan in the fiscal year under review toward the 100th anniversary of its founding in FY 2027. To achieve our vision of "Evolution into a comprehensive energy life creation group that contributes to achieving a decarbonized society," we are accelerating shift to a stronger management foundation and advancing our growth strategy. In business development, we have improved profitability by "expanding earnings from existing businesses" and "creating new businesses that contribute to the realization of a decarbonized society".

In the fiscal year under review, sales volume of petroleum products and electricity increased, resulting in net sales of 348,282 million yen (up 1.8% year on year).

In terms of profit and loss, the electricity business saw a deterioration of gross profit due to the fact we were forced to sell relative power sources procured in the previous fiscal year at a negative spread, which were affected by prices in the wholesale electricity market remaining low. As a result, operating loss was 711 million yen (compared to an operating profit of 895 million yen in the previous fiscal year). Meanwhile, the impact of recording 1,057 million yen in non-operating income, such as dividend income and insurance claim income, and other factors resulted in an ordinary profit of 93 million yen (down 92.4% year on year). Furthermore, the impact of recording extraordinary losses of 389 million yen, which includes loss on disaster because of solar power generation facilities and other equipment damaged by the 2024 Noto earthquake, resulted in a loss attributable to owners of parent of 1,039 million yen (profit attributable to owners of parent was 478 million yen in the previous fiscal year).

In addition, we reviewed the future implementation system for the electricity business to minimize loss risks. While promoting the transition to a market-linked plan for the B to B Business, in the B to C Business we have been participating in balancing groups with other companies (a system in which several electricity retailing companies form a single group and enter a single consignment supply agreement with general electric power distributors) and outsourcing power procurement and supply and demand management to optimize the balance between supply and demand.

The sales volume was down as the mainstay area of LP gas and kerosene was impacted by average temperatures that were higher than usual, and as a result, sales decreased.

In terms of profit and loss, profits increased due to the contribution of price revisions implemented in the previous fiscal year in mainstay LP gas sales.

In addition, as a new initiative to expand the number of customers as indicated in the 3rd Medium-Term Management Plan, we began sales of Melife carbon neutral LP gas, which emits virtually zero CO2 emissions.

As a result of the above, net sales for the fiscal year under review in the Retail/Wholesale Energy & Related Business (B to C Business) were 75,020 million yen (down 7.9% year on year) and operating profit was 827 million yen (up 448.0% year on year).

In terms of sales, we secured a sales volume higher than the previous fiscal year mainly for light oil and heavy oil in the mainstay petroleum business. Furthermore, sales increased in the electricity business due to such factors as the acquisition of new large customers for market-linked plans.

In terms of profits, the deterioration of gross profit in the electricity business as mentioned above had a significant impact on results, which resulted in a larger loss.

In addition, we are working on efforts to "shift our portfolio to comprehensive energy services including electricity and renewable energy," as outlined in the 3rd Medium-Term Management Plan by such as starting to supply renewable energy through an off-site corporate PPA and the launch of trade in next-generation biodiesel fuel that contributes to reducing CO2 emissions.

As a result of the above, net sales for the fiscal year under review in the Energy Solution Business (B to B Business) were 252,544 million yen (up 4.7% year on year) and operating loss was 2,569 million yen (operating loss for the previous fiscal year was 346 million yen).

Overall for Non-energy Businesses, both sales and profits were up, mainly due to strong performance in the bicycle business.

The circumstances of each business are outlined below.

The bicycle business operator Sinanen Bike Co., Ltd. posted increases in both sales and profits thanks to the company strengthening its sales of private brand products and promoting developing new corporations, in addition to the contribution of price revisions implemented from the second half of the previous fiscal year.

Bicycle sharing business operator Sinanen Mobility Plus Co., Ltd. promoted development of bicycle sharing service DAICHARI locations and started field tests together with new municipalities such as Warabi City, Saitama Prefecture. As of March 31, 2024, the scale of the business has grown to more than 3,500 stations and more than 12,000 bicycles, resulting in increased sales. However, profit decreased due to the impact of factors such as the increased selling, general and administrative expenses associated with battery replacement. In addition, we have established a system to take charge of maintenance for other companies and are improving the overall operational quality of HELLO CYCLING.

Environmental and recycling business operator Sinanen Ecowork Co., Ltd. saw lower sales and profit due to an increase in variable expenses from such as transportation costs, in addition to a decrease in the volume of construction waste wood generated which was associated with sluggishness in new housing starts.

Antimicrobial business operator Sinanen Zeomic Co., Ltd. experienced lower demand overseas stemming from the stagnation of China's economy, while sales in Japan have performed well, leading to an overall increase in both sales and profits. In addition, we are pursuing new initiatives, such as signing an exclusive distributorship agreement for a natural antimicrobial agent from Finland.

Systems business operator Minos Co., Ltd. posted profits at the same level as in the previous fiscal year due to steady demand for its flagship LP gas backbone operation system. In addition, new developments are underway as needed for the customer information system (Power CIS), including the establishment of a market-linked function that adjusts prices and services in response to market fluctuations.

The four group companies engaged in the building maintenance and management business was integrated as Sinanen Axia Co., Ltd. in October 2023 and made a fresh start as a comprehensive building maintenance company. During the fiscal year under review, although there was an increase in sales due to the expansion of its area of building maintenance operations for multi-family housing and strong performance in the facility operation business, including funeral halls and hospitals, profits decreased due to an increase in selling, general and administrative expenses associated with the integration. In addition, the company is preparing to open a new office in the Saitama area for further expansion of areas of operations as indicated in the 3rd Medium-Term Management Plan. Furthermore, we are seeing results from efforts towards "ensuring stable profits" by such as starting to manage large properties.

As a result of the above, net sales for the fiscal year under review in the Non-energy Business were 20,488 million yen (up 5.9% year on year) and operating profit was 894 million yen (up 4.5% year on year).

The environment surrounding the oil and gas businesses, which are the mainstay businesses of the Group, remains harsh as energy demand continues to decline in the face of a decreasing population in Japan, the spread of energy-saving equipment, and changes to lifestyles. Furthermore, in addition to heightened awareness of global decarbonization and SDGs, efforts to achieve carbon neutrality by 2050 are picking up steam in Japan. Demand will rise significantly for us to take responsible action as a comprehensive energy service group.

For the following fiscal year (FY 2024), which will be the 2nd year of the 3rd Medium-Term Management Plan that started from the fiscal year under review to respond to these changes in the business environment and trend of the times, we will continue to accelerate a shift to a stronger management foundation and implement growth strategies to achieve our "evolution into a comprehensive energy life creation group that contributes to achieving a decarbonized society".

The full-year financial results forecasts for the next fiscal year are net sales of 340,000 million yen (down 2.4% year on year), operating profit of 2,800 million yen (operating loss of 711 million yen for the previous fiscal year), ordinary profit of 3,100 million yen (ordinary profit of 93 million yen for the previous fiscal year), and profit attributable to owners of parent of 1,800 million yen (net loss of 1,039 million yen for the previous fiscal year). In terms of profit, we expect significant profit increases overall due to improved profitability in the electricity business, which stagnated significantly in the fiscal year under review.

The business results forecast are calculated based on information currently available to us and assumptions considered by the Company to be reasonable. If a revision of the forecast becomes necessary due to developing circumstances and business progress, such information will be disclosed without delay.