H2O Retailing : FINANCIAL REPORT 2023

Annual Securities Report

(Report in accordance with Article 24, paragraph (1) of the Financial Instruments and Exchange Act)

(104th fiscal year)Fiscal Year

From 1 Apr. 2022 to 31 Mar. 2023

H2O RETAILING CORPORATION

Contents

Annual securities report for the 104th fiscal year

[Cover]

1

Company Information	2
Ⅰ	Overview of the Company	2
1. Summary of Business Results	2
2. Company History	4
3. Description of Business	5
4. Overview of Subsidiaries and Associates	7
5 Information about Employees	10
Ⅱ	Overview of Business	13
1. Management policies, Management Environment and Issues to be Resolved, etc.	13
2. Fundamental Policy and Initiatives for Sustainability	17
3. Business Risk	20
4. Management analysis of Financial Position, Operating results and Cash Flows	23
5. Critical Contracts for Operation	30
6. Research and Development Activities	30
Ⅲ	Information about Facilities	31
1. Overview of Capital Expenditures, etc.	31
2. Major Facilities	31
3. Planned Additions, Retirements, etc. of Facilities	34
Ⅳ	Information About Submitting Company	35
1. Information about Shares, etc.	35
2. Acquisitions and Disposal of Treasury Shares	51
3. Dividend Policy	52
4. Status of Corporate Governance, etc.	53
Ⅴ	Financial Information	80
1. Consolidated Financial Statements	83
2. Non-consolidated Financial Statements	159

Cover

Document title

Annual Securities Report

Clause of stipulation

Article 24, paragraph (1) of the Financial Instruments and Exchange Act

Place of filing

Director-General of the Kanto Local Finance Bureau

Filing date

28 Jun. 2023

Fiscal year

The 104th fiscal year (From 1 Apr. 2022 to 31 Mar. 2023)

Company name

H2O Retailing Corporation

Company name in English

H2O Retailing Corporation

Job title and name of representative

ARAKI Naoya, President and Representative Director

Address of registered headquarters

8-7, Kakudacho, Kita-ku, Osaka

Telephone number

06-6365-8120 (Representative)

Name of contact person

YOSHIMATSU Hiroyuki, Executive officer

Nearest place of contact

Telephone number

Osaka Umeda Twin Towers South 14th Floor, 1-13-1 Umeda, Kita-ku, Osaka 06-6365-8120 (Representative)

Name of contact person

YOSHIMATSU Hiroyuki, Executive officer

Place for public inspection

Tokyo Stock Exchange, Inc.

(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)

These documents are translations of the audited Japanese original for reference purpose only and do not contain or constitute any guarantee.

Company Information

Ⅰ. Overview of the Company

1 Summary of Business Results

(1) Business Results of the Group

Term	100th fiscal year	101th fiscal year	102th fiscal year	103th fiscal year	104th fiscal year
Fiscal year-end	Mar. 2019	Mar. 2020	Mar. 2021	Mar. 2022	Mar. 2023
Net sales (Millions of yen)	926,872	897,289	739,198	518,447	628,089
Ordinary profit (loss) (△) (Millions of yen)	21,376	11,831	△2,907	2,346	13,004
Profit (loss) attributable to owners of parent (△) (Millions of yen)	2,162	△13,150	△24,791	9,872	16,382
Comprehensive income (Millions of yen)	3,592	△30,174	△11,005	9,235	25,778
Net Asset (Millions of yen)	279,603	244,634	229,277	260,938	272,814
Total Assets (Millions of yen)	663,335	586,904	625,945	654,558	686,423
Book value per share (Yen)	2,252.28	1,967.90	1,843.78	1,922.25	2,137.87
Earnings(loss) (△) per share (Yen)	17.50	△106.38	△200.45	79.84	135.85
Diluted of earnings (loss) per share (Yen)	17.39	―	―	79.26	134.81
Equity ratio (%)	42.0	41.5	36.4	36.2	36.2
Return on equity (ROE) (%)	0.8	△5.0	△10.5	4.2	6.7
Price earnings ratio (PER) (times)	88.1	―	―	10.6	11.0
Cash flow from operating activities (Millions of yen)	15,392	9,871	12,755	6,465	30,295
Cash flow from investing activities (Millions of yen)	△36,682	△22,451	△20,761	△5,203	5,782
Cash flow from financing activities (Millions of yen)	9,581	△16,440	31,859	△28,578	△12,549
Cash and cash equivalents at the end of period (Millions of yen)	55,229	25,958	49,991	33,174	57,020
Number of employees (Separately, average number of temporary employees) (Persons)	9,634 (15,816)	9,570 (15,291)	8,983 (14,961)	9,856 (16,891)	9,485 (15,247)

(NOTE)

1. Diluted of earnings (loss) per share for the 101th and 102th fiscal years is not disclosed because it is loss per share although there are dilutive shares.

2. For the 101th and 102th fiscal year, the price earnings ratio (PER)is not presented in this report because a loss attributable to the owner of parent was recorded.

3. The "Accounting Standards for Revenue Recognition" has been applied (ASBJ Statement No. 29, 31 Mar. 2020), and major management indicators after the end of 103th fiscal year have been applied.

(2) Business Results of the Reporting Company

Term	100th fiscal year	101th fiscal year	102th fiscal year	103th fiscal year	104th fiscal year
Fiscal year-end	Mar. 2019	Mar. 2020	Mar. 2021	Mar. 2022	Mar. 2023
Operating revenue (Millions of yen)	13,556	13,194	14,261	12,288	13,221
Ordinary profit (loss) (△) (Millions of yen)	2,334	3,760	2,992	△2,039	△1,761
Profit (loss) attributable to owners of parent (△) (Millions of yen)	405	1,196	△20,721	11,585	7,786
Share capital (Millions of yen)	17,796	17,796	17,796	17,796	17,796
Total number of issued shares (Thousands of shares)	125,201	125,201	125,201	125,201	125,201
Net Asset (Millions of yen)	226,428	205,389	193,858	199,222	202,220
Total Assets (Millions of yen)	470,291	435,538	459,333	443,437	470,738
Net assets per share (Yen)	1,822.07	1,650.53	1,557.56	1,607.42	1,727.15
Dividends per share (Interim dividend per share) (Yen)	40.00 (20.00)	40.00 (20.00)	25.00 (12.50)	25.00 (12.50)	25.00 (12.50)
Earnings (loss) per share (Yen)	3.29	9.68	△167.54	93.69	64.57
Diluted earnings (loss) per share (Yen)	3.27	9.61	―	93.01	64.08
Equity ratio (%)	47.9	46.9	42.0	44.7	42.7
Return on equity (ROE) (%)	0.2	0.6	△10.4	5.9	3.9
Price earnings ratio (PER) (times)	469.3	81.8	―	9.0	23.1
Dividend payout ratio (%)	1,217.3	413.4	―	26.7	38.7
Number of employees [Separately, average number of temporary employees] (Persons)	82 (13)	92 (14)	95 (19)	125 (24)	134 (27)
Total shareholder return [Benchmark index: (%) (%) TOPIX including dividends]	81.3 (95.0)	44.8 (85.9)	52.5 (122.1)	50.2 (124.6)	84.5 (131.8)
Highest share price (Yen)	2,213	1,572	1,007	1,020	1,579
Lowest share price (Yen)	1,466	660	602	768	828

(NOTE)

• 1. Diluted earnings (loss) per share in the 102th fiscal year is not included as it is a net loss per share, there is dilutive shares.

• 2. For the 102th fiscal year, the price earnings ratio (PER) and the total shareholder return rate were not presented in this Report, because a loss attributable to the owner of parent was recorded.

• 3. The highest and lowest share prices are those on the First Section of the Tokyo Stock Exchange before 3 Apr. 2022, and those on Prime Market of the Tokyo Stock Exchange after 4 Apr. 2022.