新日本科学（2395） – Consolidated Financial Results for the Nine Months of the Fiscal Year Ending March 31, 2022 (Under Japanese GAAP)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. February 2, 2022 Consolidated Financial Results for the Nine Months of the Fiscal Year Ending March 31, 2022 (Under Japanese GAAP) Company name: Listing: Securities code: URL: Representative: Inquiries: Shin Nippon Biomedical Laboratories, Ltd. Tokyo Stock Exchange 2395 https://www.snbl.co.jp/ Ryoichi Nagata, Representative Chairman, President & CEO Toshiyuki Iwata, Senior Officer, Senior Director of Corporate Communications Department +81-3-5565-6216 Telephone: Scheduled date to file quarterly securities report: Scheduled date to commence dividend payments: Preparation of supplementary material on quarterly financial results: Yes Holding of quarterly financial results briefing: None February 2, 2022 – (Yen amounts are rounded down to millions, unless otherwise noted.) 1. Consolidated financial results for the nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021) (1) Consolidated operating results (cumulative) (Percentages indicate year-on-year changes.) Revenue Operating profit Ordinary profit Profit attributable to owners of parent Nine months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % December 31, 2021 December 31, 2020 12,946 10,420 24.2 3.5 3,300 103.0 1,626 3.1 4,684 184.5 1,646 (23.1) 5,247 255.4 1,476 (8.0) Note: Comprehensive income For the nine months ended December 31, 2021: ¥3,633 million For the nine months ended December 31, 2020: ¥(1,369) million [–%] [–%] Basic earnings per share Diluted earnings per share Total assets Net assets Equity ratio Net assets per share Nine months ended December 31, 2021 December 31, 2020 Yen 126.05 35.47 Yen – – (2) Consolidated financial position As of December 31, 2021 March 31, 2021 Reference: Equity Millions of yen Millions of yen 37,366 36,972 18,707 15,838 As of December 31, 2021: As of March 31, 2021: ¥18,576 million ¥15,734 million % 49.7 42.6 Yen 446.19 377.94 2. Cash dividends Fiscal year ended March 31, 2021 Fiscal year ending March 31, 2022 Fiscal year ending March 31, 2022 (Forecast) First quarter-end Second quarter-end Third quarter-end Fiscal year-end Total Annual dividends per share Yen – – Yen 0.00 0.00 Yen – – Yen 20.00 Yen 20.00 40.00 40.00 Note: Revisions to the forecast of cash dividends most recently announced: Yes For details, please see “Notice Regarding Revisions of Consolidated Earnings and Dividend Forecasts for the Full-Year of the Fiscal Year Ending March 31, 2022” announced today. 3. Consolidated earnings forecasts for the year ending March 31, 2022 (from April 1, 2021 to March 31, 2022) Fiscal year ending March 31, 2022 Revenue Operating profit Ordinary profit (Percentages indicate year-on-year changes.) Profit attributable to owners of parent Profit per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen 17,900 18.5 4,100 62.1 5,630 54.4 5,800 58.4 139.31 Note: Revisions to the forecast of consolidated financial results most recently announced: Yes For details, please see “Notice Regarding Revisions of Consolidated Earnings and Dividend Forecasts for the Full-Year of the Fiscal Year Ending March 31, 2022” announced today. * Notes (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None (2) Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement (i) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes (ii) Changes in accounting policies due to other reasons: None (iii) Changes in accounting estimates: None (iv) Restatement: None Note: For details, please see page 11 of the attachment, “(3). Notes to quarterly consolidated financial statements (Changes in accounting policies)” of “2. Quarterly consolidated financial statements and significant notes thereto.” (4) Number of issued shares (common shares) (i) Total number of issued shares at the end of the period (including treasury shares) (ii) Number of treasury shares at the end of the period As of December 31, 2021 As of March 31, 2021 As of December 31, 2021 As of March 31, 2021 year) Nine months ended December 31, 2021 Nine months ended December 31, 2020 41,632,400 shares 41,632,400 shares 361 shares 358 shares 41,632,041 shares 41,632,042 shares (iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal * Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation. * Proper use of earnings forecasts, and other special matters The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual financial results may differ significantly from the forecasts for various reasons. For more information regarding our suppositions that form the assumptions for the earnings forecasts, please see page 5 of the attachment, “(3) Explanation of consolidated earnings forecasts and other forward-looking statements.” Attached Material Index 1. Qualitative information on quarterly consolidated financial results for the nine months ended December 31, 2021 ………………………………………………………………………………………………………………… 2 (1) Explanation of operating results ……………………………………………………………………………………….. 2 (2) Explanation of financial position………………………………………………………………………………………. 4 (3) Explanation of consolidated earnings forecasts and other forward-looking statements …………….. 5 2. Quarterly consolidated financial statements and significant notes thereto ……………………………………… 7 (1) Quarterly consolidated balance sheet ………………………………………………………………………………… 7 (2) Quarterly consolidated statement of income and consolidated statement of comprehensive income ………………………………………………………………………………………………………………………….. 9 Quarterly consolidated statement of income (cumulative) ……………………………………………………. 9 Quarterly consolidated statement of comprehensive income (cumulative) ……………………………. 10 (3) Notes to quarterly consolidated financial statements ………………………………………………………….. 11 (Notes on going concern assumption) ………………………………………………………………………………. 11 (Notes when there are significant changes in amounts of equity) …………………………………………. 11 (Changes in accounting policies) …………………………………………………………………………………….. 11 (Segment information) ………………………………………………………………………………………………….. 12 – 1 – 1. Qualitative information on quarterly consolidated financial results for the nine months ended December 31, 2021 (1) Explanation of operating results In the pharmaceutical industry, companies have been increasingly turning to contract research organizations (CROs) that specialize in outsourcing with the aim of accelerating and streamlining research and development in Japan and abroad, and this trend has only further accelerated during the novel coronavirus disease (COVID-19) pandemic. Moreover, research and development involving new modalities in drug discovery is in full swing, particularly with respect to therapeutic antibodies, nucleic acid medicine, peptide drugs, gene therapy, and regenerative medicine, in addition to research and development of COVID-19 vaccines and therapeutic agents. With the CRO business at the core of its operations, the Company has been addressing such trends by placing its focus on meeting customer needs which involves taking swift action, improving services, and persistently enhancing quality with the aim of the Company being far and away the first name that comes to mind for clients when they consider CRO. Under such circumstances, revenue for the nine months ended December 31, 2021 increased by ¥2,525 million (up 24.2%) year on year to ¥12,946 million. Operating profit increased by ¥1,674 million (up 103.0%) year on year to ¥3,300 million, and ordinary profit increased by ¥3,037 million (up 184.5%) year on year to ¥4,684 million. Profit attributable to owners of parent increased by ¥3,771 million (up 255.4%) year on year to ¥5,247 million due mainly to the recording of extraordinary income of ¥1,360 million in the first quarter. As of December 31, 2021, the Company had 1,002 employees (an increase of 16 employees from the end of March 2021), and the ratio of female employees was 51.0%. Operating results by segment of the SNBL Group and initiatives for SDGs/ESG are as follows. (i) CRO business The CRO business comprises the preclinical CRO business, which undertakes preclinical studies mainly using cells and laboratory animals, and the clinical business, which undertakes clinical studies. The preclinical CRO business achieved continuous favorable results for the nine months ended December 31, 2021. The following initiatives implemented by the Company have shown positive results. The importance of the Company-established framework for breeding and supplying large laboratory animals within the SNBL Group, the only such framework being built in Japan, has increased due to research and development involving new modalities in drug discovery coming into full swing. This has led to orders received from both Japan and overseas. The Company promptly introduced the cutting-edge devices required to evaluate the efficacy and safety of new modalities of drug discovery and built an evaluation system. Synergies were demonstrated between this system and the above Company-established framework for breeding and supplying large laboratory animals within the SNBL Group. This led to orders received related to new modalities of drug discovery. The Company has achieved steady progress in concluding contracts to undertake comprehensive research at the drug discovery stage with a major pharmaceutical company, an initiative that began in April 2019, leading to orders received from several companies at the drug discovery stage. As a result of the above efforts, orders received increased substantially by ¥5,895 million (up 50.5%) year on year to ¥17,569 million, which is a record high for orders received for a first-nine-month period. The order backlog has also posted a record high. Orders received from overseas during the nine months ended December 31, 2021 was ¥4,958 million, which was also a significant 2.2-fold increase year on year thanks to strong orders from Europe and North America, and the ratio of overseas orders received was 28.2% (up from 19.0% in the same period of the previous fiscal year). The clinical business has been engaging in operations upon having established PPD-SNBL K.K. (“PPD-SNBL”) as a joint venture with PPD International Holdings, LLC, an international CRO based in the United States. PPD-SNBL also made solid progress in orders received mostly pertaining to their mainstay business of implementing global studies (studies conducted simultaneously in multiple countries and regions) in Japan that PPD International Holdings, LLC had acquired. Furthermore, as PPD-SNBL is an equity method affiliate of the Company (present equity stake is 40%), earnings from PPD-SNBL are not reflected in the revenue or operating profit of the Company’s CRO business. PPD-SNBL’s contribution is a non-operating income item and it is recorded as “share of profit of entities accounted for using equity method.” The share – 2 – of profit of entities accounted for using equity method from PPD-SNBL’s contribution amounted to ¥864 million (¥538 million in the same period of the previous fiscal year). PPD, which owns 60% of PPD-SNBL’s shares, became a wholly owned subsidiary of Thermo Fisher Scientific Inc. through a share acquisition in December 2021. The CRO business posted revenue of ¥12,406 million, which was an increase of ¥2,461 million (up 24.7%) relative to the nine months ended December 31, 2020. Operating profit of the CRO business significantly increased by ¥1,644 million (up 74.4%) year on year to ¥3,854 million. Given the successful results achieved by high occupancy of the laboratory facilities due to strong orders and a substantial order backlog in the preclinical CRO business, as well as cost-saving initiatives involving innovation in internal operating processes (the promotion of robotization and automation in work processes and so-called “Zero Mission” activities that aim to eliminate the use of paper), the operating profit margin of the CRO business was 31.1%, 8.9 percentage points higher than the same period of the previous fiscal year. (ii) Translational Research business (TR business) Translational research (TR) means to encourage discovered promising seeds and new technologies which are generated through fundamental research performed at Japanese and overseas universities, bio-ventures, and research institutes, to make available in clinical practice by creating additional value to them through implementations of their preclinical and clinical trials. The Company’s TR business has engaged in drug discovery based on proprietary intranasal drug delivery technologies and intranasal devices to increase nasal drug absorption since 1998, and further engages in research and development for the proprietary nose-to-brain delivery technologies to control drug delivery to the brain. Drugs delivered intranasally represent a platform technology combining the Company’s powdered formulation technology and delivery devices. These drugs are characterized by their rapid onset of action based on absorbability through the nasal mucosa, and the ability to store the drugs at room temperature is another strength. During the nine months ended December 31, 2021, the TR business mainly worked on development support to SNLD, Ltd. (“SNLD”), which was established in October 2020 for the purpose of engaging in clinical development of the nasal neurodegenerative disease rescue medication. The Company’s wholly owned subsidiary SNLD is planning and preparing for the forthcoming start of Phase I clinical trials in the fiscal year 2021. It has also concurrently pursued to create new intranasal portfolios, including nasal vaccines. Amid these circumstances, the TR business posted revenue for the nine months ended December 31, 2021 increased by ¥11 million year on year to ¥12 million, while it posted operating loss of ¥496 million, relative to operating loss of ¥456 million for the nine months ended December 31, 2020. (iii) Medipolis business The Company owns a large tract of land of 340 hectares (840 acres) in the highlands of Ibusuki City, Kagoshima Prefecture called Medipolis Ibusuki. Making use of this natural asset (approximately 90% forest), the Company engages in a geothermal power generation business, serving as an environmentally friendly social enterprise and attracting a high level of attention as a renewable energy source; a hospitality business, operating hotel accommodation facilities underpinned by the concept of wellbeing; and an aquaculture business, conducting research into the breeding of Japanese eels in their juvenile stage (glass eels), which are listed as endangered, in artificial habitats. The geothermal power generation business has run smoothly since it began operations in February 2015, and in the nine months ended December 31, 2021, the Company focused on new power generation projects. The construction of a hot spring power generation plant that will utilize residual steam from the hot spring sources supplied to the hotel’s bathing facilities has been making steady progress and is expected to go into operation during the fiscal year ending March 31, 2023. In addition, in September 2021 we began joint research with Kyushu University on CCS (carbon dioxide capture and storage) inside the site of Medipolis Ibusuki, which involves capturing carbon dioxide from the atmosphere and storing it deep underground. In 2020, we have sectionalized our accommodation facilities into three by function in line with our customers’ needs. We operate the Amafuru Oka as a healing resort hotel, Ibusuki Bay Hills Hotel & Spa as a facility for general lodging and medium- to long-term stays, and HOTEL Freesia as an accommodation facility for patients of the Medipolis Proton Therapy and Treatment Center. In the Medipolis business, low hotel occupancy rates persisted due to the spread of COVID-19. As a result, Medipolis business posted revenue of ¥414 million for the nine months ended December 31, 2021, which was a decrease of ¥8 million (2.1%) relative to the nine months ended December 31, 2020, but posted operating profit of ¥11 million, relative to operating loss of ¥42 million for the nine months ended December 31, 2020 due to the high operation of the 1,500kW binary geothermal power plant. – 3 – Initiatives for SDGs/ESG In September 2015, the UN General Assembly adopted the “Sustainable Development Goals (SDGs)” as globally shared targets to be met by 2030 that were established so that the people of the world can live in happiness. The SDGs are actually the same as the Company’s all-time corporate philosophy of “We are a company that values the environment, life, and people” and the Company’s slogan “I’m happy, you are happy, and everyone is happy,” and the Company accordingly has an awareness of being an industry leader in initiatives for SDGs/ESG. In the period under review, the SDGs Committee, which the Company established as an advisory body to the Board of Directors on August 27, 2021, conducted lively discussion on a monthly basis. The Company discloses a sustainability report that is produced based on these achievements regarding initiatives for SDGs/ESG, each of the Company’s policies, and information based on TCFD Recommendations on a dedicated page of the Company’s website (https://www.snbl.co.jp/esg/). (2) Explanation of financial position Changes in financial position for the nine months ended December 31, 2021 from the end of the previous fiscal year were as follows: Total assets as of December 31, 2021 increased by ¥394 million compared to the balance as of the end of the previous fiscal year, to ¥37,366 million (up 1.1%). Current assets increased by ¥614 million compared to the balance as of the end of the previous fiscal year, to ¥15,394 million (up 4.2%) due mainly to an increase in securities. Non-current assets decreased by ¥220 million compared to the balance as of the end of the previous fiscal year, to ¥21,972 million (down 1.0%) due mainly to a decrease in market value in investment securities. Liabilities decreased by ¥2,474 million compared to the balance as of the end of the previous fiscal year, to ¥18,659 million (down 11.7%). Current liabilities decreased by ¥486 million compared to the balance as of the end of the previous fiscal year, to ¥11,429 million (down 4.1%) due mainly to a decrease in short-term borrowings. Non-current liabilities decreased by ¥1,988 million compared to the balance as of the end of the previous fiscal year, to ¥7,229 million (down 21.6%) due mainly to a decrease in long-term borrowings. Net assets increased by ¥2,868 million compared to the balance as of the end of the previous fiscal year, to ¥18,707 million (up 18.1%) due mainly to the posting of ¥5,247 million in profit attributable to owners of parent, while the Company posted a decrease of ¥1,998 million in valuation difference on available-for-sale securities due to a decrease in market value in investment securities as stated above. – 4 – (3) Explanation of consolidated earnings forecasts and other forward-looking statements (i) Consolidated earnings forecasts As announced in the “Notice Regarding Revisions of Consolidated Earnings and Dividends Forecasts for the Full-Year of the Fiscal Year Ending March 31, 2022” on February 2, 2022, the Company made the following revisions to its cash dividend and consolidated earnings forecasts for the year ending March 31, 2022, which were announced on May 10 and October 21, 2021, respectively. [Revision of the earnings forecasts] Revenue Operating profit Ordinary profit (Millions of yen, unless otherwise noted) Profit attributable to owners of parent Profit per share (Yen) Previous forecast (A) Revised forecast (B) Change (B-A) Change (%) 17,400 17,900 +500 +2.9 3,800 4,100 +300 +7.9 4,600 5,630 +1,030 +22.4 4,900 5,800 +900 +18.4 117.69 139.31 2,529 87.95 3,645 3,661 15,110 (Reference) Results for the fiscal year ended March 31, 2021 The main reason for the upward revision is that the consolidated financial results for the nine months ended December 31, 2021 exceeded the Company’s projections and orders received in the preclinical CRO business which is a core earnings driver of the Company have continued to be solid. For further details, please refer to “Notice Regarding Revisions of Consolidated Earnings and Dividends Forecasts for the Full-Year of the Fiscal Year Ending March 31, 2022”. (ii) Dividend forecasts With one of the management priorities set on returning profits with shareholders, the Company has a policy of steadily distributing profits, taking into account the internal reserve required for the enhancement of its business structure as well as for the investment for future business growth. Based on the full year consolidated earnings forecasts for the fiscal year ending March 2022 announced today and after comprehensively considering our financial condition and the return of profits to shareholders, the year-end dividend forecast has been revised upwardly to 40 yen per share (20 yen per share in the previous forecast), of which 10 yen is a special dividend. [Conceptual diagram of the preclinical CRO business] – 5 – [Orders received in the preclinical CRO business] Results for the nine months ended December 31, 2019 Full-year results for the fiscal year ended March 31, 2020 Results for the nine months ended December 31, 2020 Full-year results for the fiscal year ended March 31, 2021 (Millions of yen) Results for the nine months ended December 31, 2021 Orders received Order backlog 9,516 11,656 13,194 11,299 11,673 13,686 15,271 13,275 17,569 19,070 [Other key indicators] (Millions of yen, unless otherwise noted) Results for the nine months ended December 31, 2019 Full-year results for the fiscal year ended March 31, 2020 From April 2019 to December 2019 From April 2019 to March 2020 Results for the nine months ended December 31, 2020 From April 2020 to December 2020 Full-year results for the fiscal year ended March 31, 2021 From April 2020 to March 2021 Results for the nine months ended December 31, 2021 From April 2021 to December 2021 Fiscal year ending March 31, 2022 (Forecast) From April 2021 to March 2022 Depreciation R&D expenses Number of employees at period-end (people) 849 269 960 1,229 400 985 867 285 1,029 1,187 392 986 853 319 1,002 1,180 541 1,025 – 6 – 2. Quarterly consolidated financial statements and significant notes thereto (1) Quarterly consolidated balance sheet As of March 31, 2021 As of December 31, 2021 (Thousands of yen) Assets Current assets Cash and deposits Notes and accounts receivable – trade, and contract assets Securities Inventories Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant and equipment Buildings and structures, net Land Other, net Total property, plant and equipment Intangible assets Investments and other assets Investment securities Other Total investments and other assets Total non-current assets Total assets 7,230,744 2,954,087 55,765 4,071,369 470,119 (2,056) 14,780,029 7,566,161 2,803,260 2,528,549 12,897,971 213,762 8,286,937 793,704 9,080,641 22,192,374 36,972,404 5,590,840 3,074,499 1,150,523 4,248,471 1,332,425 (2,100) 15,394,660 7,207,549 2,907,745 2,873,983 12,989,278 210,528 7,555,061 1,217,276 8,772,338 21,972,146 37,366,806 – 7 – (Thousands of yen) As of March 31, 2021 As of December 31, 2021 Liabilities Current liabilities Accounts payable – trade Short-term borrowings Income taxes payable Advances received Provision for loss on business liquidation Other Total current liabilities Non-current liabilities Long-term borrowings Lease obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 95,012 3,486,826 683,229 5,317,925 15,419 2,317,390 11,915,803 8,669,916 529,324 18,573 9,217,814 21,133,617 9,679,070 2,306,771 3,854,474 (197) 15,840,118 2,096,313 (2,201,981) (105,667) 104,335 15,838,786 36,972,404 77,996 2,968,219 350,875 5,719,412 – 2,313,112 11,429,617 6,790,431 419,483 19,608 7,229,523 18,659,141 9,679,070 2,306,771 8,316,667 (200) 20,302,308 97,485 (1,823,617) (1,726,132) 131,488 18,707,665 37,366,806 – 8 – (2) Quarterly consolidated statement of income and consolidated statement of comprehensive income Quarterly consolidated statement of income (cumulative) (Thousands of yen) Nine months ended December 31, 2020 Nine months ended December 31, 2021 Revenue Cost of revenue Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Foreign exchange gains Other Total non-operating income Non-operating expenses Interest expenses Foreign exchange losses Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Gain on sale of investment securities Gain on sale of shares of subsidiaries and associates Gain on change in equity Other Total extraordinary income Extraordinary losses Loss on retirement of non-current assets Impairment losses Loss on liquidation of business Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent – 9 – 10,420,521 5,394,774 5,025,746 3,399,697 1,626,049 1,813 – 538,347 – 129,784 669,945 144,265 503,053 2,119 649,439 1,646,555 1,776 48,234 – – – 50,011 4,607 5,863 – 10,470 1,686,096 157,507 41,985 199,493 1,486,602 9,876 1,476,725 12,946,186 5,924,777 7,021,408 3,720,904 3,300,504 5,217 500 848,144 490,576 139,025 1,483,464 98,411 – 1,457 99,868 4,684,099 796 – 1,096,054 322,435 514 1,419,800 19,436 8,981 30,641 59,059 6,044,840 703,623 85,824 789,448 5,255,391 7,423 5,247,968 Quarterly consolidated statement of comprehensive income (cumulative) (Thousands of yen) Nine months ended December 31, 2020 Nine months ended December 31, 2021 Profit Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 1,486,602 (2,613,716) (242,499) – (2,856,216) (1,369,613) (1,380,169) 10,555 5,255,391 (1,998,828) 329,082 48,102 (1,621,643) 3,633,748 3,627,503 6,244 – 10 – (3) Notes to quarterly consolidated financial statements (Notes on going concern assumption) Not applicable. (Notes when there are significant changes in amounts of equity) Not applicable. (Changes in accounting policies) (Application of Accounting Standard for Revenue Recognition, Etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) from the beginning of the first quarter ended June 30, 2021 and has recognized revenue at the amount expected to receive in exchange for the promised goods or services when control of the goods or services is transferred to customers. As a result of this change, for contracts that consist of multiple performance obligations, revenue was previously recognized when all the performance obligations in the contract were satisfied, but now when a contract contains multiple performance obligations, revenue is recognized at each time when a performance obligation is satisfied. Further to the application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations, the Company has followed the transitional treatment prescribed in the proviso of paragraph 84 of the Accounting Standard for Revenue Recognition, and the cumulative effect of retroactively applying the new accounting policy prior to the beginning of the first quarter ended June 30, 2021 has been added to or deducted from the opening balance of retained earnings of the first quarter ended June 30, 2021, and the new accounting policy has been applied from such opening balance. The effects of the application of the Accounting Standard for Revenue Recognition on profit and loss and the opening balance of retained earnings for the nine months ended December 31, 2021, described above, is immaterial. Due to the application of the Accounting Standard for Revenue Recognition and relevant revised ASBJ regulations, “Notes and accounts receivable – trade,” which was presented in “Current assets” in the consolidated balance sheet for the previous fiscal year, is now included in “Notes and accounts receivable – trade, and contract assets” from the first quarter ended June 30, 2021. In accordance with the transitional treatment stipulated in paragraph 28-15 of “Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12, March 31, 2020), a breakdown of revenue in relation to contracts with clients concluded during the first nine month of the previous fiscal year have not been restated in this document. (Application of Accounting Standards for Fair Value Measurement, Etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019) and relevant guidance from the beginning of the first quarter ended June 30, 2021, and has applied the new accounting policy stipulated by the Accounting Standard for Fair Value Measurement and relevant guidance prospectively in accordance with the transitional treatment stipulated in paragraph 19 of the Accounting Standard for Fair Value Measurement and paragraph 44-2 of “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). This change has no effects on the quarterly consolidated financial statements. – 11 – (Segment information) I. Nine months ended December 31, 2020 (from April 1, 2020 to December 31, 2020) 1. Disclosure of revenue and profit (loss) for each reportable segment Reportable segments CRO business Translational Research business Medipolis business Subtotal Other (Note 1) Total Adjustments (Note 2) (Thousands of yen) Amount recorded on the quarterly consolidated statement of income (Note 3) Revenue Revenues from external customers Transactions with other segments Total 9,932,187 980 386,343 10,319,510 101,010 10,420,521 – 10,420,521 12,988 – 36,707 49,696 264,514 314,210 (314,210) 9,945,176 980 423,050 10,369,206 365,525 10,734,732 (314,210) 10,420,521 Segment profit (loss) 2,209,547 (456,443) (42,880) 1,710,223 (36,971) 1,673,251 (47,201) 1,626,049 (Notes) 1 The “Other” classification serves as a business segment not included as one of the reportable segments, and accordingly includes the real estate business and other such businesses. 2 Segment profit (loss) adjustments amounting to negative ¥47,201 thousand consist of ¥44,517 thousand in elimination of intersegment transactions and negative ¥91,719 thousand in corporate expenses not allocated to a reportable segment. Corporate expenses are mainly general and administrative expenses, which are not attributable to the reportable segments. 3 Segment profit (loss) has been calculated upon adjusting operating profit in the quarterly consolidated statement of income. II. Nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021) 1. Disclosure of revenue and profit (loss) for each reportable segment Reportable segments CRO business Translational Research business Medipolis business Subtotal Other (Note 1) Total Adjustments (Note 2) (Thousands of yen) Amount recorded on the quarterly consolidated statement of income (Note 3) Revenue Revenues from external customers Transactions with other segments Total 12,363,758 11,895 385,152 12,760,807 185,379 12,946,186 – 12,946,186 42,675 800 28,946 72,421 384,349 456,771 (456,771) 12,406,433 12,695 414,099 12,833,228 569,728 13,402,957 (456,771) 12,946,186 Segment profit (loss) 3,854,351 (496,500) 11,068 3,368,919 (17,688) 3,351,231 (50,726) 3,300,504 (Notes) 1 The “Other” classification serves as a business segment not included as one of the reportable segments, and accordingly includes the real estate business and other such businesses. 2 Segment profit (loss) adjustments amounting to negative ¥50,726 thousand consist of ¥36,077 thousand in elimination of intersegment transactions and negative ¥86,804 thousand in corporate expenses not allocated to a reportable segment. Corporate expenses are mainly general and administrative expenses, which are not attributable to the reportable segments. 3. Segment profit (loss) has been calculated upon adjusting operating profit in the quarterly consolidated statement of income. – – – 12 –