Ａｂａｌａｎｃｅ（3856） – Announcement of Financial Results Briefing for the Second Quarter of the Fiscal Year Ending June 30, 2022 (Video with English support)

March 30, 2022 Name of Company: Abalance Corporation Representative: Yasuaki Mitsuyuki, Representative Director and President Stock Code: 3856, TSE Second Section Contact: Kazuya Tao, General Manager, Administration Division Telephone: +813-6864-4001 Announcement of Financial Results Briefing for the Second Quarter of the Fiscal Year Ending June 30, 2022 (Video with English support) We have decided to disclose our financial results briefing for the second quarter of the fiscal year ending June 30, 2022 to the public via video streaming with English-language support, placing the highest priority on preventing the spread of COVID-19 and ensuring safety. We strive to disclose information in a timely and fair manner, and hope you will take this opportunity to deepen your understanding of our group’s business and initiatives. Release Date Tuesday, March 30, 2022 at 5 p.m. Release Method Public access through video streaming with English-language support Presenter Yasuaki Mitsuyuki, Representative Director and President Contents of Abalance Group Briefing “Financial Results for the Second Quarter (Interim) of the Fiscal Year Ending June 30, 2022” and Future Outlook Summary of Consolidated Financial Results (2Q of FY06/2022) Solar Panel Manufacturing Business (VSUN) Green Energy Business (WWB Corporation, Valors Inc., etc.) Further Promotion of Company Ownership of Solar Power Plants Agreement Tender Offer and Conclusion of Capital and Business Alliance Medium-Term Management Plan: 3-Year Budget Projections Strengthening Measures to Improve Corporate Value URL：https://irtv.jp/channel/5848 Return to Shareholders If you have any questions regarding this briefing on financial results (video streaming), please click on the “Inquiries” button, and select “Regarding business performance, financial statements, and IR” from a pulldown menu on our website. Our staff will reply to your inquiries shortly. Abalance Group”Financial Results for the Second Quarter (Interim) of the Fiscal Year Ending June 30, 2022” and Future OutlookMarch 2022Abalance CorporationSecurities Code: 3856(Second Section of the Tokyo Stock Exchange)Copyright © 2022 Abalance CorporationSummary of Consolidated Financial Results (2Q of FY06/2022)◼ Net sales: ¥26.65 billion, operating profit: ¥532 million, ordinary profit ¥340 million, profit attributable to owners of parent: ¥803 million Solar panel manufacturing and green energy businesses lead the consolidated performance◼ Net sales: Increased significantly by ¥15.08 billion YoY (+130%) ◼ Profits: Decreased except profit attributable to owners of parent VSUN: Panel manufacturing and sales to Europe and the United States increased significantlyIn terms of profits, component and marine transport costs soared under the COVID-19 pandemic (however 2Q was in a recovery trend) In the green energy business, both sales and profits increased, and M&A was actively implemented ¥1.02 billion collected as settlement relating to construction contract agreement of the previous fiscal year (recorded as extraordinary income in 1Q)*Percentage in parentheses represents year-on-year changes.Upward revision of full-year performance forecast (as of January 31, 2022)Consolidated net sales: ¥38.5 billion (previous forecast: ¥35.0 billion), stage profit is unchanged considering conservatively the impact from the COVID-19 pandemic.(1) 2Q/FY2021 Cumulative total(2) 2Q/FY2022 Cumulative total(3) Difference(= (2) − (1))Rate of change(= (3)/(1))*(4) Full-year budgetProgress rate(= (2)/(4))(Millions of yen)Net sales11,57326,655+15,082Operating profitOrdinary profitProfit attributable to owners of parent845881348532340803(313)(541)+455*(4) Full-year budget presents values after upward revision.+130%(37%)(61%)+131%38,5001,4001,43085869%38%24%94%Copyright © 2022 Abalance Corporation22Solar Panel Manufacturing Business(VSUN)◼ Net sales: ¥22.72 billion, Segment profit: ¥220 millionNet sales: ¥22.72 billion (+159%), Segment profit: ¥223 million ((59%))➢ 2Q Sales grew significantly (1Q: ¥7.4 billion, 2Q: ¥15.3 billion) with strong orders➢ Segment surplus was secured despite soaring costs of manufacturing components and marine transportSoaring peaked out and profits are expected to recover from 3Q/FY2022◼ 【訳出せず】VSUN plant production and operational status has recovered to normal operation.➢ Measures to adjust supply chain were successful leading to normal operation➢ Also managed to minimize impact from Chinese New Year and Vietnam’s Tet (New Year)*Percentage in parentheses represents year-on-year changes.【Financing[Funds procured] USD 5 million (December 2021)[Use of funds] Procured short-term working capital from a domestic bank (Hong Kong Branch)Committed to support financing from domestic banks as a Group for VSUN’s growth.(1) 2Q/FY2021 Cumulative total(2) 2Q/FY2022 Cumulative total(3) Difference(= (2) − (1))Rate of change(= (3)/(1))(4) Full-year budgetProgress rate(= (2)/(4))Net sales8,76022,723+13,963+159%28,500Segment profit545223(322)(59%)1,000* (4) Full-year budget presents values after upward revision of consolidated performance as of January 31, 2022.* Segment profit presents values before company-wide expenses not allocated to each reportable segment are deducted.* Since consolidation of VSUN started from 2Q/FY2021, values presented under “(1) 2Q/FY2021 Cumulative total” are for a period of three months (from September 2020 to December 2020).(Millions of yen)80%22%Copyright © 2022 Abalance Corporation33Green Energy Business (WWB Corporation, Valors Inc., etc.)◼ Net sales: ¥3.61 billion, segment profit: ¥610 millionNet sales: ¥3.61 billion (+45%), segment profit: ¥619 million (+23%)➢ [Flow-type] Solar power plant sales and product sales business grew (+25%)➢ [Stock- type] Electricity sales revenue and O&M revenue increased substantially through company ownership (+137%)◼ 【訳出せず】Electricity sales revenue for the fiscal year under review is expected to exceed ¥2.0 billion, segment profit is making favorable progress.➢ Promotion of company ownership of power plants progressing smoothly with secured stable earnings◼ Actively conducted M&A for power plants to be company-owned and to strengthen procurementTarget companyTarget businessInitial full-year revenueCampanio Solar Co., Ltd.Acquisition of solar power plantApprox. ¥160 millionJSP Co., Ltd., JSE Co., Ltd.Acquisition of solar power plantApprox. ¥120 millionJapan Life Support Co., Ltd.Interconnected low-voltage power plants, works in process, personnel resources, etc.Approx. ¥1,700 million*Initial full-year revenue is based on calendar year sales.(1) 2Q/FY2021 Cumulative total(2) 2Q/FY2022 Cumulative total(3) Difference(= (2) − (1))Rate of change(= (3)/(1))(4) Full-year budgetProgress rate(= (2)/(4))(Millions of yen)Power plant sales/ product sales, etc.Electricity sales revenue/O&MTotal net salesSegment profit2,0644372,5025012,5811,0363,618619+517+599+1,116+118+25%6,800+137%+45%+23%2,2009,00068038%47%40%91%*Segment profit presents values before company-wide expenses not allocated to each reportable segment are deducted.Copyright © 2022 Abalance Corporation44Further Promotion of Company Ownership of Solar Power Plants◼ Examples of Group-developed power plants are as follows.◼ Committed to resume overseas investment at a suitable timing under the COVID-19 pandemic.Examples of power plant development and acquisitionHanabatake Solar Power Plant(* 1)Full operation in January 2022, electricity sales revenue: approx. ¥170 million expectedNagamine Solar Power Plant Successively interconnected as from November 2021, electricity sales revenue: approx. ¥170 million expectedKawaguchi-ko Solar Power Plant Interconnected July 2021, electricity sales revenue: approx. ¥60 million expectedFukushima City Oonami Solar Power PlantInterconnected June 2021, electricity sales revenue: approx. ¥220 million expectedKakuda City Solar Power PlantInterconnected March 2021, electricity sales revenue: approx. ¥750 million expectedWind power projects (onshore/small-sized)Interconnected, initial investment project, electricity sales revenue: approx. ¥50 million expected(*1) Hanabatake Solar Power Plant is under full operation with the interconnection of Block V. Examples of power plants under development (*2)Taiwa-cho and Oohiramura Solar Power Plant Planned to be interconnected as from December 2022 (under development), electricity sales revenue: approx. ¥530 million expected(*2) (M&A projects) Kobe City Solar Power Plant, Kuranami Solar Power Plant, and Naka City Solar Power Plant are in progress. Copyright © 2022 Abalance Corporation55Tender Offer and Conclusion of Capital and Business Alliance Agreement◼ Announcement was made on the commencement of tender offer of the shares of Meiji Machine Co., Ltd. (Securities Code: 6334) and conclusion of a capital and business alliance agreement with the Company (as of February 21, 2022)◼ Tender offer period initially announced: From February 22, 2022 to March 23, 2022 (20 business days)◼ Purpose, etc. of tender offer: ➢ To recognize as an equity-method affiliate and further develop a capital and business tie-up➢ To set 4,554,700 shares (39.99%) as upper limit of shares to be purchased➢ To have Meiji Machine Co., Ltd. maintain its listing◼ Assumed synergies(a)(b)(c)Strengthening of sales of solar sharing system (farming-type solar power generation system)Sales expansion of machinery and equipment targeting the whole of Southeast AsiaOperation of safe and hygienic hog and poultry farms through the use of photocatalysts◼ Future Policy⚫ Combined development of package proposals and sales, etc. relating to the sixth industrialization (where agriculture, forestry and fisheries will further increase the original value of agricultural products and other products, thereby improving the income of agriculture, forestry and fisheries) and solar sharing system (farming-type solar power generation system)⚫ Realization of regional revitalization brought about by expansion of business with companies that emphasize environmental protection, strong competitiveness among agricultural workers, and improved productivity⚫ Expansion of market from mainly Japan to the whole of Southeast Asia through the use of customer bases⚫ Strengthening of machinery maintenance system and ability to propose new sales/resales⚫ Increase in sales of photocatalyst products by making use of business foundation developed with milling- and feed-related companies, tracing back potential demand to take measures preventing infectious diseases and addressing neighbors and thus solve customers’ problemsWe recognize that it is important to maintain the unique corporate culture and management autonomy of Meiji Machine Co., Ltd., and therefore intend to develop a close partnership while maintaining its listing and respecting its present independent management as a listed company. Going forward, we, as a Group, will seek to increase the medium- to long-term corporate value and stock value.Copyright © 2022 Abalance Corporation66Medium-Term Management Plan: 3-Year Budget ProjectionsCopyright © 2022 Abalance Corporation77Strengthening Measures to Improve Corporate Value◆ Going forward, in line with the medium-term management plan(FY2022-2024), the following items will be positioned as strengthening measures. The measures will be conscious of the need to improve corporate value while performance will be enhanced with operating profit as the core.◆ By implementing these measures, we will improve the medium- to long-term corporate value so as to secure funds for future growth. We sincerely ask for the kind understanding of our shareholders.Strengthening Measures to Improve Corporate Value1. Securing of various financing methods2. Formation and development of strategic partnerships3. Re-designation to the Prime Market and realization of VSUN public offering (UPCoM OTC market)4. Implementation of M&A focusing on renewable energy field5. Strengthening of IR with the intention of being included in the portfolio of institutional investors (including overseas investors)6. Increase in information disclosure conscious of ESG rating scores7. Initiatives toward acquiring analyst coverage8. Systematic improvement of capital adequacy ratio (financial soundness)Copyright © 2022 Abalance Corporation88Return to ShareholdersOfficial announcement of interim dividend (as of February 14, 2022)To express our gratitude to our shareholders for support under the COVID-19 pandemic, the interim dividend will be ¥8 per share (ordinary dividend of ¥7 and special dividend of ¥1)Year-end dividendThe year-end dividend is yet to be decided. While matters such as future business performance and financial condition will be considered, we are committed to continuously enhancing shareholders’ return.Details of dividendsAmount determinedLatest dividend forecast(officially announced on August 16, 2021)Previous fiscal year results(2Q of FY06/2021)Record dateDecember 31, 2021Same as leftDecember 31, 2020Dividend per shareUndetermined¥7¥8(Ordinary dividend: ¥7)(Special dividend: ¥1)Total dividend amount¥44 millionEffective dateMarch 15, 2022Source of dividendRetained earnings―――¥37 millionMarch 16, 2021Retained earningsCopyright © 2022 Abalance Corporation99Disclaimer◼ The information contained in this document has been prepared based on economic and social conditions and certain assumptions deemed reasonable by the Group, and is subject to change without notice due to changes in the business environment and other factors.◼ Any forward-looking statements provided in this document are based on the Group’s current prospects, forecasts and certain assumptions that involve risks, and they include uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. The achievement of the plan and other descriptions is not guaranteed in any way.◼ These risks and uncertainties include, but are not limited to, general industry and market conditions, as well as international and domestic economic conditions including fluctuations in interest rates and exchange rates.Copyright © 2022 Abalance Corporation1010