Summary of Consolidated Financial Results for the Nine -Month Period ended December 31, 2015 Japanese GAAP

Transcription

1 This summary is a translation of KESSAN TANSHIN which is an unaudited report. for the Nine -Month Period ended December 31, 2015 Japanese GAAP January 21, 2016 Company name: SOGO MEDICAL CO., LTD. Stock exchange listings: Tokyo 1st Section Securities code: 4775 URL: Representative: (Title) Representative Director, President and Chief Executive Officer (Name) Itsuo Tashiro Inquiries: (Title) Director & Senior Executive Managing Officer (Name) Makoto Kuroda Tel: ir@sogo-medical.co.jp Quarterly securities report filing date (as planned) : February 10, 2016 Dividend payable date (as planned) : - Supplemental material of quarterly results is available. There will not be a convening briefing of quarterly results for institutional investors and analysts. (Amounts are rounded down.) 1.Consolidated Financial Results (from April 1, 2015 to December 31, 2015) (1)Consolidated operating results (%indicates changes from the same period of the previous year.) Net sales Operating income Ordinary income Profit attributable to owners of parent Nine-month period ended Millions of Yen % Millions of Yen % Millions of Yen % Millions of Yen % December 31, , , , , December 31, , ,828 (7.7) 3,001 (3.7) 1,658 (5.3) Notes: Comprehensive income Nine-month period ended December 31,2015 2,147million (19.1%) Nine-month period ended December 31,2014 1,803million (-0.6%) Net income per share Diluted net income per share Nine-month period ended Yen Yen December 31, December 31, Note: Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. Consolidated net income per share has been calculated assuming that the stock split was instituted at the start of the previous fiscal year. (2)Consolidated financial positions Total assets Net assets Capital adequacy ratio Millions of Yen Millions of Yen % As of December 31, ,466 30, As of March 31, ,811 26, References: Owner s equity As of December 31, ,115million As of March 31, ,336million

2 2.Dividends Dividend per share First quarter Second quarter Third quarter Year end Annual Yen Yen Yen Yen Yen FY FY FY2015(forecast) Note: Correction of dividend forecast from the most recent dividend forecast:none Note: Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. The interim dividend and the yearend dividend (estimate base) for the fiscal year ending March 31, 2016 are stated adjusted for the effects of the stock split. 3.Consolidated forecasts for FY2015 (from April 1, 2015 to March 31, 2016) (% indicates year-on-year change.) Net sales Operating income Ordinary income Profit attributable Net income to owners of parent per share Millions of Yen % Millions of Yen % Millions of Yen % Millions of Yen % Yen Full-year 120, , , , Note:Corrrection of dividend forecast from the most recent dividend forecast:none 4.Others (1)Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from change is subsidiaries): None (2)Applying of specific accounting of the consolidated quarterly financial statements: None (3)Changes in accounting policies and accounting estimates, retrospective restatement 1Changes in accounting policies based on revisions of accounting standard: Yes 2Changes in accounting policies other than ones based on revisions of accounting standard : None 3Changes in accounting estimates: None 4Retrospective restatement: None (4)Number of issued and outstanding shares (common stock) 1Number of issued and outstanding shares at the end of fiscal year (including treasury stock): December 31,2015: 15,340,156shares March31,2015: 15,340,156shares 2Number of treasury stock at the end of fiscal year: December 31,2015: 182,728shares March31,2015: 902,282shares 3Average number of shares: December 31,2015: 14,959,290shares Decembe31,2014: 14,438,119shares Note: Dated April 1, 2015, Sogo Medical has instituted a 2-for-1 common stock split. The number of shares in issue (including treasury stock) at the end of the fiscal year under review, the number of treasury stock at the end of the fiscal year under review, and the average number of shares in issue during the fiscal year under review have been calculated assuming that the stock split was instituted at the start of the previous fiscal year. Implementation status of quarterly review procedures This summary is not subject to quarterly review procedures based on The Financial Instruments and Exchange Law of Japan. The quarterly review procedures for quarterly financial statements have not been completed. Notes for using forecasted information and others These forecasts are based on currently available information.acrual financial results could differ from the forecast due to varipus factors.plese refer to page 6 (3)Qualitative Information on Consolidated Financial Forecasts for FY2015 for assumptions and cautions on the use of these financial forecasts.

3 Contents 1. Qualitative Information on Financial Results... 2 (1) Qualitative Information on Consolidated Operating Results... 2 (2) Qualitative Information on Consolidated Financial Position... 5 (3) Qualitative Information on Consolidated Financial Forecasts for FY Summary Information Quarterly Consolidated Financial Statements... 7 (1) Quarterly Consolidated Balance Sheet... 7 (2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income... 9 (3) Notes to Quarterly Consolidated Financial Statements (Note on the Going-Concern Assumption) (Note on Significant Changes in Shareholders' Equity)

4 1. Qualitative Information on Financial Results (1) Qualitative Information on Consolidated Operating Results (in millions, except percentages) 3Q FY2014 Margin 3Q FY2015 Margin Change Change Sales 79,011 % 88,472 % 9, % Higashinihon 28,815 31,508 2, Medical practice support 6,194 5,326 (868) (14.0) Pharmacies 22,620 26,182 3, Nishinihon 20,750 24,564 3, Medical practice support 6,191 5,359 (832) (13.4) Pharmacies 14,558 19,205 4, Kyushu 27,763 29,558 1, Medical practice support 5,630 4,305 (1,324) (23.5) Pharmacies 22,133 25,252 3, Others 1,681 2,841 1, Operating Income 2, , , Higashinihon Nishinihon , Kyushu 1, , Others (140) (31.6) Reconciliation (435) - (442) - (7) - Ordinary Income 3, , , Profit attributable to owners of parent 1, , In April 2014, Sogo Medical launched a three-year medium-term management plan which was dubbed Further Challenge Toward a better society in which people can live with a sense of security. The plan outlines medium-term goals and specific priority initiatives. In the year ending March 31, 2016, which is the second year of our current medium-term plan, the Sogo Medical Group is tackling the challenge of solving the problems confronted by society by further expanding and advancing the initiatives carried out thus far and by developing new services that are needed around the world. Revenue in our 3Q continued to increase. We are steadily nearing our goal of attaining earnings that are commensurate with market levels, owing to a rise in total sales in Higashinihon (eastern Japan). 2

5 In the medical practice support business, sales rose in the consulting and rental divisions. However, in the leasing and installment division, sales declined due to the strategic promotion of policies that emphasized focus on profits. In 3Q, Sogo Medical supported the startup of 226 private practices, including succession start-ups and health care malls. At the end of 3Q, the number of doctors wishing to transfer/start-up a practice via the DtoD System stood at 60,853 doctors, an increase of 4,348 doctors compared with the end of FY2014. In the dispensing pharmacies business, there were 43 new openings in 3Q, including 25 pharmacies acquired via M&A deals. The total number of pharmacies at the end of 3Q to 575. In a breakdown of pharmacy openings by region, 15 pharmacies were opened in East Japan, 23 in West Japan, and five in Kyushu. Of the 43 pharmacies opened in 3Q, 10 were opened by doctors using the Sogo Medical practice start-up support system. Looking at management performance in the second quarter, sales totaled 88,472 million, a growth of 12.0% year-on-year, in part reflecting an increase in sales from existing pharmacies and sales growth benefits from the opening of new pharmacies (including sales contribution from subsidiaries in which we acquired equity). Consequently, operating income stood at 4,031 million, a growth of 42.5%, ordinary income was 4,129 million, an increase of 37.6%, and net income attributable to owners of the parent totaled 2,118 million, a rise of 27.7%. 3

6 Segment financial results were as follows: 1 Higashinihon (East Japan) Although sales declined in the leasing and installment division, sales rose in the consulting and rental divisions. In addition, we garnered benefit from sales growth reflecting new pharmacy openings in the pharmacy division. Altogether, we posted net sales of 31,508 million, a growth of 9.3% year-on-year. Meanwhile, we recorded operating income of 564 million, an increase of 80.6% reflecting an increase in gross profit from a rise in sales in the rental and pharmacy divisions. 2 Nishinihon (West Japan) Although sales declined in the leasing and installment division, sales rose in the consulting and rental divisions. In addition, we garnered benefit from sales growth reflecting new pharmacy openings in the pharmacy division (including sales contribution from subsidiaries in which we acquired equity). Altogether, we posted net sales of 24,564 million, a growth of 18.4% year-on-year. Meanwhile, we recorded operating income of 1,450 million, an increase of 89.1% reflecting an increase in gross profit from a rise in sales in the consulting and pharmacy divisions. 3 Kyushu Although sales decreased in the leasing and installment division, net sales reached 29,558 million, a growth of 6.5% year-on-year, due in part to an increase in sales from existing pharmacies and sales growth benefits from the opening of new pharmacies. Meanwhile, operating income totaled 2,154 million, a rise of 23.9%, owing to an increase in gross profit on the back of a growth in sales in the consulting and pharmacy divisions. 4

7 (2) Qualitative Information on Consolidated Financial Position Analysis of Assets, Liabilities, and Net Assets (in millions except percentages and ratios) March 31,2015 December 31,2015 Change Total Assets 69,811 74,466 4,654 including Cash and Deposits 4,988 7,777 2,789 Liabilities 43,290 44, including Interest-Bearing Debt *1 16,572 18,449 1,876 Net Assets 26,521 30,301 3,780 Shareholders' Equity Ratio (%) Net Debt-to-Equity Ratio (times) * (0.09) *1.Interest-Bearing Debts include lease obligations and accounts payable-installment purchases. *2. Net Debt-to-Equity Ratio =( Interest-Bearing Debts-Cash and Deposits) / Shareholders' Equity Total assets at the end of 3Q stood at 74,466 million, an increase of 4,654 million versus the end of FY2014. Current assets totaled 39,250 million, an increase of 2,665 million year-on-year. This primarily reflects an increase in cash and deposits of 2,789 million. Meanwhile, noncurrent assets totaled 35,215, an increase of 1,989 million. This primarily reflects an increase in goodwill of 1,548 million. As of December 31, 2015, our total liabilities stood at 44,164 million, an increase of 874 million versus the same time a year earlier. Current liabilities were 29,727 million or 381 million lower. Although notes and accounts payable-trade increased 222 million, income tax payable decreased 935 million. Noncurrent liabilities totaled 14,436, an increase of 1,256 million. This was primarily attributable to an increase in long-term loans payable of 2,488 million, although long-term accounts payable-installment purchases declined 855 million and lease obligations fell 482 million.it should be noted that interest-bearing debt (including lease obligations and accounts payable-installment purchases) increased 1,876 million to 18,449 million. Consequently, the net debt-to-equity ratio (interest-bearing debt less cash and deposits divided by shareholders equity) was 0.35, compared to 0.09 as of the previous fiscal year-end. Net assets at the end of 3Q totaled 30,301 million, an increase of 3,780 million versus the end of FY2014. Despite a decrease due to dividend payments of 629 million, net assets were buoyed in part by 2,262 million owing to the retirement of treasure stock as a part of a stock swap, and an increase in net income attributable to owners of the parent of 2,118million. Extrapolating from this, 5

8 the equity ratio was 40.4% at the end of 3Q, owing to a 2.7 percentage point increase from 37.7% at the end of FY2014. (3)Qualitative Information on Consolidated Financial Forecasts for FY2015 There are not any changes in consolidated financial forecasts for FY2015 which were announced on April 21, Summary Information Changes in accounting policies and accounting estimates, retrospective restatement (Changes in accounting policies) From 1Q FY2015, Sogo Medical began applying the Accounting Standard for Business Combinations (ASBJ Statement No.21, September 13, 2013), Accounting Standard for Consolidated Financial Statements (ASBJ Statement No.22, September 13, 2013), and the Accounting Standard for Business Divestitures (ASBJ Statement No.7, September 13, 2013). Accordingly, the Company has changed its booking method and will now post acquisition-related expenses in the consolidated fiscal year in which they are incurred. In addition, the disclosure terminology (change in reporting method) has been changed for quarterly net income and minority interest has been changed to non-controlling interest. Consequently, the consolidated financial statements for 3Q FY2014 and for FY2014 have been restated to reflect this change in reporting method. Sogo Medical, as of the start of 1Q FY2015, has adopted the Accounting Standard for Business Combinations in accordance with the transitional treatment set forth in Paragraph 58-2 (4) of Accounting Standard for Business Combinations, Paragraph 44-5 (4) of Accounting Standard for Consolidated Financial Statements, and Paragraph 57-4 (4) of Accounting Standard for Business Divestitures. In light of this, the negative impact to operating income, ordinary income, and income before income taxes was 50 million, respectively, in 3Q FY

9 3. Quarterly Consolidated Financial Statements (1) Quarterly Consolidated Balance Sheet As of March 31, 2015 (in millions) As of December 31, 2015 Assets Current assets Cash and deposits 4,988 7,777 Notes and accounts receivable-trade 17,485 16,952 Accounts receivable-installment sales 1,806 1,716 Lease receivables and investment assets 1,701 1,474 Inventories 7,543 8,625 Other 3,078 2,723 Allowance for doubtful accounts (19) (19) Total current assets 36,584 39,250 Noncurrent assets Property, plant and equipment Property for lease, net 5,929 4,973 Buildings and structures, net 8,763 9,216 Other, net 7,108 8,001 Total property, plant and equipment 21,801 22,191 Intangible assets Goodwill 5,252 6,800 Other 1, Total intangible assets 6,283 7,773 Total investments and other assets 5,141 5,250 Total noncurrent assets 33,226 35,215 Total assets 69,811 74,466 7

10 (in millions) As of March 31, 2015 As of December 31, 2015 Liabilities Current liabilities Notes and accounts payable-trade 18,841 19,063 Short-term loans payable Current portion of long-term loans payable 2,903 3,985 Lease obligations Income taxes payable 1, Other 6,188 5,514 Total current liabilities 30,109 29,727 Noncurrent liabilities Long-term loans payable 6,835 9,324 Lease obligations 1, Long-term accounts payable-installment purchase 3,055 2,200 Other 2,260 2,366 Total noncurrent liabilities 13,180 14,436 Total liabilities 43,290 44,164 Net assets Shareholders' equity Capital stock 3,513 3,513 Capital surplus 4,136 5,566 Retained earnings 19,255 20,744 Treasury stock (1,044) (211) Total shareholders' equity 25,861 29,612 Accumulated other comprehensive income Valuation difference on available-for-sale securities Total accumulated other comprehensive income Non-controlling interests Total net assets 26,521 30,301 Total liabilities and net assets 69,811 74,466 8

11 (2) Quarterly Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Quarterly Consolidated Statements of Income) (in millions) Nine-Month Period ended December 31,2014 Nine -Month Period ended December 31,2015 Net sales 79,011 88,472 Cost of sales 68,806 75,863 Gross profit 10,204 12,609 Selling, general and administrative expenses 7,376 8,577 Operating income 2,828 4,031 Non-operating income Dividends income Rent income Insurance premiums refunded cancellation Other Total non-operating income Non-operating expenses Interest expenses Other Total non-operating expenses Ordinary income 3,001 4,129 Extraordinary loss Impairment loss Loss on sales of shares of subsidiaries and associates - 87 Total extraordinary loss Income before income taxes 2,978 3,861 Income taxes-current 1,174 1,482 Income taxes-deferred Total income taxes 1,320 1,742 Net income 1,658 2,119 Profit (loss) attributable to non-controlling interestst 0 1 Profit (loss) attributable to owners of parent 1,658 2,118 9

12 (Quarterly Consolidated Statements of Comprehensive Income) Nine-Month Period ended December 31,2014 (in millions) Nine -Month Period ended December 31,2015 Net income 1,658 2,119 Other comprehensive income Valuation difference on available-for-sale securities Total other comprehensive income Comprehensive income 1,803 2,147 Comprehensive income attributable to Comprehensive income attributable to owners of the parent 1,803 2,145 Comprehensive income attributable to non-controlling interests

13 (3) Notes to quarterly Consolidated Financial Statements (Note on the Going-Concern Assumption) None (Note on Significant Changes in Shareholders' Equity) On June 15, 2015, Sogo Medical conducted a stock swap turning Shokando into a wholly-owned subsidiary. Reflecting this transaction, capital surplus increased 1,429 million in 3Q, and treasury stock decreased 832 million. 11