ARE : Consolidated Financial Results for the Second Quarter Ended September 30, 2023

Consolidated Financial Results for the Second Quarter Ended September 30, 2023

ARE Holdings, Inc. (former company name: Asahi Holdings, Inc.) [IFRS]

October 26, 2023

Stock code:

5857

Shares listed:

Tokyo Stock Exchange - Prime Market

URL:

https://www.asahiholdings.com/english

Representative:

Tomoya Higashiura, Representative Director, President & CEO

For further information please contact:

Yoko Yanagida, Head of Corporate Communications

(Phone) [phone]

Filing date of Quarterly Report:

November 13, 2023

Start of dividend payment:

November 17, 2023

Supplementary materials for the financial results:

Yes

Investor conference for the financial results:

Yes (for institutional investors, analysts)

(Rounded down to the nearest million yen)

1. Results of the six months ended September 30, 2023 (From April 1, 2023 to September 30, 2023)

(1) Results of operations (cumulative)

(Percentage: Changes relative to corresponding previous period)

Revenue

Operating

Profit before

Profit

Profit

Total

profit

tax

attributable to

comprehensive

owners of parent

income

The six months ended

Millions of yen %

Millions of yen %

Millions of yen %

Millions of yen %

Millions of yen %

Millions of yen %

September 30, 2023

151,896

14.5

6,981

(39.3)

7,193

(29.8)

5,259

(27.9)

5,259

(27.9)

15,670

48.9

September 30, 2022

132,653

37.0

11,493

(16.1)

10,241

(24.9)

7,293

(24.4)

7,293

(24.4)

10,523

(28.1)

	Basic earnings per share	Diluted earnings per share
The six months ended	Yen	Yen
September 30, 2023	68.62	62.56
September 30, 2022	93.30	84.63

(2) Financial Position

	Total assets	Total equity
As of	Millions of yen	Millions of yen
September 30, 2023	392,324	119,309
March 31, 2023	287,448	106,957

2. Dividend payments

Equity attributable to

owners of parent

Millions of yen 119,309 106,957

Equity attributable to owners of parent ratio

%

30.4

37.2

			Dividends per share
	First quarter	Second quarter	Third quarter	Year-end	Annual
	Yen	Yen	Yen	Yen	Yen
Year ended March 31, 2023	-	45.00	-	45.00	90.00
Year ending March 31, 2024	-	45.00
Year ending March 31, 2024			-	45.00	90.00
(Forecast)
(Note) Revisions in dividend forecast in the current quarter: No

3. Forecast (From April 1, 2023 to March 31, 2024)	(Percentage: Changes relative to corresponding previous period)
				Operating	Profit before	Profit		Basic earnings
	Revenue		attributable to
		profit		tax		per share
						owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen %	Millions of yen	%	Yen
Year ending March 31, 2024	290,000	(0.8)	19,000	(1.4)	18,500	15.2	13,200	20.8	172.23
(Note) Revisions in forecast in the current quarter: Yes

• Notes
• 1. Changes in significant subsidiaries during the period: No
  2. Changes in accounting policies and accounting estimates
  3. 1. Changes in accounting policies required by IFRS: No
     2. Changes other than (i) above: No
     3. Changes in accounting estimates: No
  4. Number of issued shares (common stock)
  5. 1. Number of issued shares at the quarter end (including treasury stock)

	As of September 30, 2023	79,708,688 shares
	As of March 31, 2023	79,708,688 shares
(ii) Number of treasury stock at the quarter end
	As of September 30, 2023	3,065,553 shares
	As of March 31, 2023	3,065,458 shares

(iii) Averaged number of shares during the period (quarterly cumulative period)

Six months ended September 30, 2023	76,643,173 shares
Six months ended September 30, 2022	78,173,306 shares

• The quarterly financial statements are not subject to quarterly reviews by accounting auditors.
• Statement regarding the proper use of financial forecasts and other special remarks (Notes on forward looking statements, etc.)
  These forecast performance figures are based on the information currently available to the Company's management and certain assumptions judged rational. Accordingly, there might be cases in which actual results materially differ from forecasts of this report. Please refer to page 3 "1. Qualitative Information (3) Consolidated Performance Forecasts" for the assumptions used and other notes.

【Appendix】
		Table of contents of the appendix
1. Qualitative Information	2
(1)	Consolidated Business Performance	2
(2)	Consolidated Financial Position and Cash Flows for the Six Months Ended September 30, 2023	2
(3)	Consolidated Performance Forecasts	3
2. Condensed Consolidated Financial Statements	4
(1)	Condensed Consolidated Statements of Financial Position	4
(2)	Condensed Consolidated Statements of Income for the Six Months Ended September 30, 2023	6
(3)	Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended September 30, 2023 7
(4)	Condensed Consolidated Statements of Changes in Equity	8
(5)	Condensed Consolidated Statements of Cash Flows	10
(6)	Notes on Assumptions for Going Concern	11
(7)	Notes on Condensed Consolidated Financial Statements	11
1.	Reporting entity	11
2.	Basis of preparation	11
3.	Material accounting policies	11
4.	Significant accounting estimates and associated judgements	11
5.	Segment information	11
6.	Subsequent events	13

－ 1 －

1. Qualitative Information

1. Consolidated Business Performance

The Japanese economy had shown signs of a mild recovery during the six months ended September 30, 2023, but monetary tightening mainly in the US and Europe, changes in the Chinese economy, and other factors have led to an uncertain outlook for the business environment. Under these conditions, the Group's results in each business segment were as follows.

Precious Metals business

Revenue increased from the same period of the previous fiscal year due to the higher sales volume of gold in the precious metals recycling business and higher income from the precious metals refining business in North America. On the other hand, such factors as the continuing decline in prices of rhodium and palladium, and the impact of inventory adjustments at electronics and catalyst customers resulted in operating profit decreasing from the same period of the previous fiscal year.

Environmental Preservation business

The volume of industrial waste handled and utilization rates at treatment facilities were steady, but the lower price of processing for medical waste that resulted from the change in status of the novel coronavirus disease (COVID-19) under the Infectious Diseases Control Law, the suspension of existing businesses during the construction of a new incinerator at the Yokohama Plant, and other factors resulted in declines in both revenue and operating profit compared to the same period of the previous fiscal year.

As a result of the above, revenue during the six months ended September 30, 2023 was 151,896 million yen,

1. 1. year-on-yearincrease of 19,243 million yen (+14.5 percent). Operating profit was 6,981 million yen, a year- on-year decrease of 4,511 million yen (-39.3 percent). Profit before tax was 7,193 million yen, a year-on-year decrease of 3,047 million yen (-29.8 percent). Profit was 5,259 million yen, a year-on-year decrease of 2,033 million yen (-27.9 percent). Profit attributable to owners of parent for the period was therefore 5,259 million yen, a year-on-year decrease of 2,033 million yen (-27.9 percent). By segment, revenue in the Precious Metals business was 143,930 million yen, a year-on-year increase of 20,035 million yen (+16.2 percent). In the Environmental Preservation business, revenue was 8,001 million yen, a year-on-year decrease of 756 million yen (-8.6 percent).
2. Consolidated Financial Position and Cash Flows for the Six Months Ended September 30, 2023

As of September 30, 2023, total assets amounted to 392,324 million yen, up 104,876 million yen from the previous fiscal year end. This was mainly due to an increase of 5,815 million yen in cash and cash equivalents, an increase of 80,204 million yen in trade and other receivables and an increase of 19,699 million yen in other (current) financial assets and (non-current) financial assets.

Total liabilities amounted to 273,015 million yen, up 92,523 million yen from the previous fiscal year end. This was due mainly to an increase of 85,275 million yen in bonds and loans payable.

Total equity amounted to 119,309 million yen, up 12,352 million yen from the previous fiscal year end. This was due mainly to an increase of 15,670 million yen in comprehensive income and a decrease of 3,448 million yen used for dividends.

As a result, the equity attributable to owners of parent ratio changed to 30.4%, from 37.2% at the end of the previous fiscal year.

Net cash provided by operating activities amounted to 10,431 million yen due mainly to 7,193 million yen of profit before tax, 1,787 million yen of depreciation and amortization, 5,283 million yen of decrease in inventories, 60,901 million yen of increase in trade and other receivables, 53,778 million yen of increase in trade, loans and other payables, 1,874 million yen of income taxes paid and 2,134 million yen of income taxes refunded.

Net cash used in investing activities amounted to 13,209 million yen due mainly to 2,791 million yen of proceeds from withdrawal of time deposits, 1,895 million yen of purchase of property, plant and equipment, 401 million yen of purchase of intangible assets and 13,547 million yen of payments for loans receivable.

Net cash provided by financial activities amounted to 10,434 million yen due mainly to 14,052 million yen of proceeds from long-term loans payable and 3,447 million yen of cash dividends paid.

－ 2 －

As a result, cash and cash equivalents as of September 30, 2023 increased 5,815 million yen from March 31, 2023, to 23,767 million yen.

(3) Consolidated Performance Forecasts

The consolidated financial forecast for the year ending March 31, 2024, as announced on April 27, 2023, has been revised as follows. For details, please refer to the "Notice of Difference between Financial Forecast and Actual Financial Results for the Six Months Ended September 30, 2023 and Revision to Financial Forecast for the Year Ending March 31, 2024" released today (October 26, 2023).

Revisions of the consolidated financial forecast for the year ending March 31, 2024 (April 1, 2023 to March 31, 2024)

				Profit	Basic earnings
	Revenue	Operating profit	Profit before tax	attributable to
	per share
				owners of parent
	Millions of yen	Millions of yen	Millions of yen	Millions of yen	Yen
Previous forecast (A)	250,000	19,000	18,500	13,200	172.23
Revised forecast (B)	290,000	19,000	18,500	13,200	172.23
Change (B-A)	40,000	-	-	-	-
Change (%)	16.0	-	-	-	-
(Ref.)	292,449	19,263	16,052	10,929	141.19
Results for the previous FY
(FY ended March 31, 2023)

－ 3 －

2. Condensed Consolidated Financial Statements

1. Condensed Consolidated Statements of Financial Position

	As of	As of
	March 31,	September 30,
	2023			2023
	Millions of yen	Millions of yen
ASSETS
Current assets
Cash and cash equivalents	17,952			23,767
Trade and other receivables	154,046			234,250
Inventories	40,854			35,585
Income tax receivables	1,345			34
Other financial assets	3,609			19,702
Other current assets	20,567			24,729
Total current assets	238,374			338,071
Non-current assets
Property, plant and equipment	42,553			44,624
Goodwill	1,003			1,003
Intangible assets	1,255			1,493
Deferred tax assets	3,498			2,718
Net defined benefit asset	263			309
Financial assets	429			4,034
Other non-current assets	69			69
Total non-current assets	49,073			54,253
Total assets	287,448			392,324

－ 4 －

	As of	As of
	March 31,	September 30,
	2023			2023
	Millions of yen	Millions of yen
LIABILITIES and EQUITY
Liabilities
Current liabilities
Trade and other payables	26,024			27,627
Loans payable	91,494			157,388
Income tax payable	210			1,221
Other financial liabilities	3,740			6,353
Provisions	1,462			1,347
Other current liabilities	2,547			1,400
Total current liabilities	125,480			195,338
Non-current liabilities
Bonds and loans payable	52,868			72,250
Deferred tax liabilities	275			2,836
Net defined benefit liability	107			121
Other financial liabilities	1,704			2,367
Other non-current liabilities	53			99
Total non-current liabilities	55,010			77,676
Total liabilities	180,491			273,015
Equity
Capital stock	7,790			7,790
Capital surplus	12,103			12,235
Treasury stock	(5,925)			(5,925)
Retained earnings	96,319			98,149
Other components of equity	(3,330)			7,060
Total equity attributable to owners of parent	106,957			119,309
Total equity	106,957			119,309
Total liabilities and equity	287,448			392,324

－ 5 －

(2) Condensed Consolidated Statements of Income for the Six Months Ended September 30, 2023

	The six months	The six months
	ended September 30,	ended September 30,
	2022			2023
	Millions of yen	Millions of yen
Revenue	132,653			151,896
Cost of sales	(116,521)			(140,413)
Gross profit	16,131			11,483
Selling, general and administrative expenses	(4,005)			(4,548)
Other operating income	68			123
Other operating expenses	(56)			(76)
Share of profit (loss) of investments accounted for	(644)			-
using equity method
Operating profit	11,493			6,981
Finance income	965			1,111
Finance costs	(1,143)			(899)
Other non-operating income	425			-
Other non-operating expenses	(1,498)			-
Profit before tax	10,241			7,193
Income tax expenses	(2,947)			(1,933)
Profit	7,293			5,259
Profit attributable to:
Owners of parent	7,293			5,259
Non-controlling interests	-	-
Profit	7,293			5,259
Earnings per share
Basic earnings per share (Yen)	93.30			68.62
Diluted earnings per share (Yen)	84.63			62.56

－ 6 －

1. Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended September 30, 2023

		The six months	The six months
		ended September 30,	ended September 30,
		2022			2023
		Millions of yen	Millions of yen
Profit	7,293			5,259
Other comprehensive income
Items that will not be reclassified to profit or loss
Financial assets measured at fair value	(0)			-
through other comprehensive income
Remeasurements of defined benefit plans	22			19
Share of other comprehensive income of	(0)			-
investments accounted for using equity method
Total items that will not be reclassified to profit	22			19
or loss
Items that may be reclassified to profit or loss
Cash flow hedges	1,417			7,493
Translation adjustments of foreign operations	1,789			2,897
Total items that may be reclassified to profit or	3,207			10,390
loss
Other comprehensive income, net of tax	3,230			10,410
Comprehensive income	10,523			15,670
Comprehensive income attributable to:
Owners of parent	10,523			15,670
Non-controlling interests	-	-
Comprehensive income		10,523			15,670

－ 7 －

(4) Condensed Consolidated Statements of Changes in Equity

												(Millions of yen)
				Equity attributable to owners of parent
												Other components of
		Capital		Capital			Treasury		Retained	equity
						Translation		Cash flow
		stock		surplus			stock		earnings	adjustments
												of foreign		hedges
												operations
Balance at April 1, 2022	7,790	11,955	(1,819)	92,353			(1,390)	(3,748)
Profit	-		-			-	7,293			-		-
Other comprehensive	-		-			-		-	1,789	1,417
income
Total comprehensive	-		-			-	7,293			1,789	1,417
income
Purchase of treasury stock	-		-			(4,106)		-			-		-
Dividends	-		-			-	(3,538)			-		-
Changes due to loss of	-		-			-		-	-		-
control of subsidiaries
Reclassified from other
components of equity to	-		-			-	22			-		-
retained earnings
Share-based payment	-	77			-		-	-		-
transactions
Total transactions with	-	77	(4,106)	(3,516)			-		-
owners
Balance at September 30,	7,790	12,033	(5,925)	96,130			399	(2,330)
2022

(Millions of yen)

Equity attributable to owners of parent

Balance at April 1, 2022 Profit

Other comprehensive income

Total comprehensive income

Purchase of treasury stock Dividends

Changes due to loss of control of subsidiaries Reclassified from other components of equity to retained earnings Share-based payment transactions

Total transactions with owners

Balance at September 30, 2022

Other components of equity

Financial		Remeasure-
assets
measured at		ments of		Total			Total			Total equity
fair value		defined
through other		benefit
comprehen-		plans
sive income
(3)		-	(5,142)	105,137	105,137
-		-		-	7,293	7,293
(0)	22	3,230	3,230	3,230
(0)	22	3,230	10,523	10,523
-		-		-	(4,106)	(4,106)
-		-		-	(3,538)	(3,538)
0		-	0	0	0
-	(22)	(22)			-			-
-		-		-	77	77
0	(22)	(22)	(7,566)	(7,566)
(3)		-	(1,934)	108,094	108,094

－ 8 －