Nippon Gas : Consolidated Financial Results for the Three Months Ended June 30th, 2022

Consolidated Financial Results

for the Three Months Ended June 30th, 2022

[Japanese GAAP]

August 2nd, 2022

Company name: NIPPON GAS CO., LTD.

Code number: 8174

URL: http://www.nichigas.co.jp/en/

Stock exchange listing: Tokyo Stock Exchange

Representative: Kunihiko Kashiwaya, Representative Director, Chief Executive Officer

Contact: Madoka Yamagishi, Executive Officer

Phone: [phone]

Scheduled date of filing quarterly securities report: August 12th, 2022

Scheduled date of commencing dividend payments: ―

Availability of supplementary briefing material on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled (for institutional investors)

(Amounts are rounded down to the nearest million yen.)

1. Consolidated Financial Results for the Three Months Ended June 30th, 2022 (April 1st, 2022 to June 30th, 2022)

(1) Consolidated Results of Operations					(% indicates changes from the previous corresponding period.)
				Net sales				Operating income		Ordinary income		Profit attributable to
									owners of parent
Three Months ended			Millions of yen	%	Millions of yen		%	Millions of yen	%		Millions of yen	%
		44,789	29.1		3,804	48.3		3,838	48.9	2,658	50.0
Jun. 30th, 2022
Three Months ended			34,697		-		2,565		-		2,577	-	1,772	-
Jun. 30th, 2021
(Note) Comprehensive	income: Three Months	ended Jun. 30th, 2022	¥	2,438 million [45.2%]
				Three Months ended Jun. 30th, 2021	¥1,679 million [―%]
				Basic earnings		Diluted earnings
				per share			per share
Three Months ended			Yen				Yen
	23.18				-
Jun. 30th, 2022
Three Months ended		15.18				-
Jun. 30th, 2021
(Note) The Company has adopted the "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan
(ASBJ) Statement No. 29, March 31st, 2020), etc., from the beginning of the first quarter of the consolidated fiscal year ended
March 31st, 2022. Due to a significant impact on net sales and profit, percentage changes from the previous corresponding
period for the three months ended June 30th, 2021 are not stated.
(2) Consolidated Financial Position
				Total assets			Net assets	Equity ratio
				Millions of yen		Millions of yen		%
As of Jun. 30th, 2022			143,325			69,805		48.7
As of Mar. 31st, 2022			153,811			71,890		46.7
(Reference) Equity:		As of Jun. 30th, 2022	¥69,802 million		As of Mar. 31st, 2022	¥71,887 million

2. Dividends

					Annual dividends
		End of 1Q	End of 2Q		End of 3Q	Year-end	Total
Fiscal year ended		Yen	Yen		Yen	Yen	Yen
	－	25.00		－	25.00	50.00
Mar. 31st, 2022
Fiscal year ending		－
Mar. 31st, 2023
Fiscal year ending
Mar. 31st, 2023				32.50		－	32.50	65.00
(Forecast)

(Note) Revision of dividend projection from recently announced figures: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31st, 2023 (April 1st, 2022 to March 31st, 2023)

(% indicates changes from the previous corresponding period.)

							Profit attributable	Basic
	Net sales	Operating income	Ordinary income	earnings
	to owners of parent
							per share
Six months ending	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
80,000	22.3	3,200	37.8	3,200	36.6	2,200	(10.1)	19.26
Sep. 30th, 2022
Full-year	190,000	16.9	16,500	29.1	16,500	27.6	11,000	10.3	96.67
(Note) Revision of financial results projection from recently announced figures: Yes

4. Notes

1. Significant changes of subsidiaries during the period under review: No
2. Adoption of special accounting processes for preparing quarterly consolidated financial statements: No
3. Changes to accounting policies, changes to accounting estimates, and revision restatements
4. 1. Changes to accounting policies accompanying the revision of accounting standards, etc.: No
   2. Changes to accounting policies other than 1) above: No
   3. Changes to accounting estimates: No
   4. Revision restatements: No
5. Total number of issued shares (common shares)

1)	Total number of issued shares (including treasury shares):
		Jun. 30th, 2022		116,603,698 shares
2)		Mar. 31st, 2022		118,603,698 shares
Total number of treasury shares at the end of the period:
		Jun. 30th, 2022		2,393,599 shares
3)	Mar. 31st, 2022		3,544,616 shares
Average number of shares during the period:
		Three months ended Jun. 30th, 2022		114,689,077 shares
		Three months ended Jun. 30th, 2021		116,806,315 shares

• These financial results are outside the scope of quarterly review by a certified public accountant or an audit corporation.
• Explanation of the proper use of performance forecast and other notes
  The earnings forecasts and other forward-looking statements herein are based on information available to the Company and certain assumptions deemed reasonable as of the date of publication of this document, but not

intended to deliver the Company's commitment to fulfilling them. Actual results may differ significantly from these forecasts due to a wide range of factors. Please refer to "1. Qualitative Information on Consolidated Performance for the Period under Review (3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" on page 8 of the attached Appendix for the notes on the use of preconditions for the earnings forecast and the use of the earnings forecast.

Contents of Appendix
1. Qualitative Information on Consolidated Performance for the Period under Review ---------------------------	2
(1)	Explanation of Results of Operations ---------------------------------------------------------------------------------	2
(2) Explanation of Financial Position and Cash Flows --------------------------------------------------------------------	5
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information ------------	7
2. Consolidated Financial Statements and Primary Notes -------------------------------------------------------------------	8
(1) Consolidated Balance Sheet --------------------------------------------------------------------------------------------	8
(2) Consolidated Statement of Income and Comprehensive Income -------------------------------------------------	10
(3) Consolidated Statement of Cash Flows -------------------------------------------------------------------------------	12
(4)	Notes to Consolidated Financial Statements --------------------------------------------------------------------------	14
	(Notes on Going Concern Assumption) ---------------------------------------------------------------------------	14
	(Notes in Case of Significant Changes in Shareholder's Equity) ----------------------------------------------	14
	(Segment Information)------------------------------------------------------------------------------------------------	15
3. Others ---------------------------------------------------------------------------------------------------------------------------	17

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1. Qualitative Information on Consolidated Performance for the Period under Review

(1) Explanation of Results of Operations

[Business Environment Surrounding the Group]

In Japan, there is a high possibility that COVID-19, which seemed to be under control, will spread again and economic and social activities will stagnate again. In the energy sector, the Paris Agreement (adopted at COP21) of 2015 has triggered a rapid growth of the zero-carbon (carbon neutrality) movement aimed at solving the issue of global warming, while the supply chain of energy resources has become unstable on a global scale due to factors such as the COVID-19 pandemic and Russia's invasion of Ukraine, and raw material prices continue to rise.

[Energy Solutions]

Under these circumstances, in May 2022, the Group shifted to a new management structure to accelerate the evolution of its business model toward energy solutions ("NICIGAS 3.0"). What will be most important for local communities in the future will be gas, the most important energy source to support the transition period to decarbonization, and the construction of a resilient distributed energy system that can provide energy independently even during a disaster. To meet this challenge, the Company is taking on a new challenge by reforming its existing business model and evolving its business into energy solutions.

In the energy solutions (Nippon Gas version of a smart city) that we are aiming for, we will promote distributed energy sources such as solar power generation and storage batteries (for home use, stationary use, and EVs) through alliances with other companies to realize optimal energy use in each household. We will also take advantage of the disaster-resistant characteristics of LP gas to realize an energy supply that adapts to the needs of local communities (making homes smart houses). In addition, by linking the data of each household, we will optimize the energy use of the entire community at large.

As a preparatory step toward the Nippon Gas version of a smart city, we have been actively promoting gas and electricity bundled service plans, and have grown them to a scale that accounts for about 20% of our customer base (290,000 customers). Furthermore, in February 2022, we released a rate menu ("Degawari 007") that provides EV users with the benefit of power storage between midnight and 7:00 a.m., while emitting virtually zero CO2 emissions by procuring from non-fossil power sources. We will continue to aggressively market this product as a major advance in the hybridization of gas and electricity for the smart city that we are aiming for.

In order to promote energy storage batteries, in May 2022, we entered into a capital and business alliance agreement with PowerX, Inc., a company that develops, manufactures, and sells high-performance storage batteries based on cutting-edge technology. PowerX possesses advanced technology for controlling storage batteries, and in the future will jointly provide storage batteries to our customers, install storage batteries in our sales offices, and work on energy management systems and other initiatives to contribute to society more broadly through co-creation in partnership with other companies.

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