シップヘルスケアホールディングス（3360） – Summary of Financial Statements for Fiscal Year Ended March 31, 2022 [Japanese GAAP](Consolidated)

Summary of Financial Statements for Fiscal Year Ended March 31, 2022 [Japanese GAAP] (Consolidated) May 10, 2022 https://www.shiphd.co.jp/en/ (Name) Futoshi Ohashi (Name) Hiroshi Yokoyama Tel.: +81-6-6369-0130 SHIP HEALTHCARE HOLDINGS, INC. Shares listed on: Tokyo Stock Exchange 3360 Name of listed company: Code: Representative: Contact: Scheduled date for regular general meeting of shareholders: June 29, 2022 Scheduled start date for dividend payments: June 30, 2022 Scheduled date for filing securities report: June 29, 2022 Supplementary briefing materials on results: Y Briefing on results: Y (for institutional investors and analysts) (Title) President (Title) Executive Director URL 1. Consolidated financial results for the fiscal year ended March 31, 2022 (April 1, 2021 – March 31, 2022) (1) Consolidated operating results Net sales Operating profit FY ended March 2022 FY ended March 2021 % (Millions yen) (5.9) 514,353 16.0 497,156 Note: Comprehensive income: FY ended March 2022: ¥ 11,061 million ((23.4) %); (Millions yen) 20,505 21,800 % － 2.6 FY ended March 2021: ¥ 14,442 million (35.8 %) (All figures are rounded down to the nearest millions yen.) (Percentages represent year-on-year changes.) Profit attributable to owners of parent Ordinary profit (Millions yen) 21,287 21,761 % (2.2) 9.2 (Millions yen) 12,172 12,280 % (0.9) 4.0 FY ended March 2022 FY ended March 2021 Net income per share Diluted net income per share (Yen) 117.01 117.95 (Yen) 129.01 129.99 Return on equity Return on assets Operating margin % 10.6 11.5 % 6.4 6.8 % 4.0 4.4 Reference: Share of profit (loss) of entities accounted for using equity method: FY ended March 31, 2022: ¥357 million; FY ended March 31, 2021: ¥(40) million Note1: As the Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations have been applied from the beginning of this fiscal year, the figures for the fiscal year ended March 31, 2022 are those after retrospectively applying the accounting standard and relevant revised ASBJ regulations. Due to the above reason, YoY rate of change in net sales for the fiscal year ended March 31, 2022 are not shown. Note2: The company executed a two-for-one common stock split, effective on April 1, 2021. “Net income per share” and “Diluted net income per share” are calculated as if the relevant stock split was executed at the beginning of the previous consolidated fiscal year ended March 31, 2021. (2) Consolidated financial condition Total assets Net assets Equity capital ratio FY ended March 2022 FY ended March 2021 (Millions yen) 335,074 334,498 Reference: Equity: FY ended March 2022: ¥118,289 million; FY ended March 2021: ¥111,440 million Note: The company executed a two-for-one common stock split, effective on April 1, 2021. “Net assets per share” are calculated as if the relevant stock split was executed at the beginning of the previous consolidated fiscal year ended March 31, 2021. (Millions yen) 122,318 115,103 % 35.3 33.3 Net assets per share (Yen) 1,253.73 1,181.14 (3) Consolidated cash flows Net cash from operating activities Net cash from investing activities Net cash from financing activities Cash and cash equivalents at end of period FY ended March 2022 FY ended March 2021 (Millions yen) 12,428 19,772 (Millions yen) (3,870) (19,289) (Millions yen) (8,842) (10,465) (Millions yen) 72,804 72,950 2. Dividends FY ended March 2021 FY ended March 2022 FY ending March 2023 (projected) Annual dividends End Q3 Year-end (Yen) 80.00 41.00 (Yen) – – End Q1 End Q2 (Yen) – – – (Yen) 0.00 0.00 0.00 Total Total annual dividends Payout ratio (consolidated) (Yen) (Millions yen) 3,774 80.00 3,868 41.00 Dividends to net assets (consolidated) % 3.5 3.4 % 30.8 31.8 31.7 – 42.00 42.00 Note: The company executed a two-for-one common stock split, effective on April 1, 2021. Annual dividends for the year ended March 31, 2021 are actual amounts paid prior to the relevant stock split. Annual dividends for the year ended March 31,2022 and Forecasted annual dividends for the year ending March 31, 2023 are the amount after the relevant stock split. 3. Forecast of consolidated financial results for the fiscal year ending March 31, 2023 (April 1, 2022 – March 31, 2023) Net sales Operating profit Ordinary profit (Millions yen) % (Millions yen) % (Millions yen) (Percentages represent changes from previous year.) Net income per share Profit attributable to owners of parent (Millions yen) (Yen) % % 7,500 (1.2) 7,500 1.7 4,500 21,000 2.4 21,000 (1.4) 12,500 9.3 2.7 47.69 132.49 Cumulative through second quarter Full-year 250,000 560,000 6.5 8.9 Notes (1) Changes made in significant subsidiaries during consolidated cumulative quarter under review: (2) Changes made in accounting policies, accounting estimates, and/or restatements: (i) Changes in accounting policies associated with changes in accounting standards, etc.: (ii) Any changes in accounting policies other than those under (i) above: (iii) Changes in accounting estimates: (iv) Restatements: (3) Number of shares issued and outstanding (common stocks) None Yes None None None (i) Number of shares issued and outstanding at the end of the period (including treasury stock) (ii) Number of treasury stock at the end of the (iii) Average number of shares during the period period FY ended March 2022 101,669,400 shares 101,669,400 shares FY ended March 2021 FY ended March 2022 7,319,116 shares FY ended March 2021 7,319,054 shares FY ended March 2022 94,350,306 shares FY ended March 2021 94,470,499 shares Note: The company executed a two-for-one common stock split, effective on April 1, 2021. “Number of shares issued and outstanding at the end of the period”, “Number of treasury stock at the end of the period”, and “Average number of shares during the period” are calculated as if the relevant stock split was executed at the beginning of the previous consolidated fiscal year ended March 31, 2021. Reference: Overview of non-consolidated financial results 1. Non-consolidated financial results for fiscal year ended March 31, 2022 (April 1, 2021–March 31, 2022) (1) Non-consolidated operating results Net sales Operating profit Ordinary profit (Percentages represent year-on-year changes.) Net income (Millions yen) 8,075 7,657 % 5.5 6.5 (Millions yen) 6,237 6,377 % (2.2) 10.6 (Millions yen) 6,270 6,214 % 0.9 7.4 (Millions yen) 6,173 6,137 % 0.6 8.8 FY ended March 2022 FY ended March 2021 FY ended March 2022 FY ended March 2021 Net income per share Diluted net income per share (Yen) 65.43 64.97 (Yen) 59.27 58.87 Note: The company executed a two-for-one common stock split, effective on April 1, 2021. “Net income per share” and “Diluted net income per share” are calculated as if the relevant stock split was executed at the beginning of the previous consolidated fiscal year ended March 31, 2021. (2) Non-consolidated financial condition FY ended March 2022 FY ended March 2021 Total assets Net assets Equity capital ratio Net assets per share (Millions yen) 83,219 85,527 (Millions yen) 48,634 48,395 % 58.4 56.6 (Yen) 515.46 512.93 Reference: Equity: FY ended March 31, 2022: ¥ 48,634 million; FY ended March 31, 2021: ¥ 48,395 million Note: The company executed a two-for-one common stock split, effective on April 1, 2021. “Net assets per share” are calculated as if the relevant stock split was executed at the beginning of the previous consolidated fiscal year ended March 31, 2021. * This summary of financial results is not subject to quarterly review by a Certified Public Accountant or an audit firm. * Information on appropriate use of financial forecasts and other special notes: • The forecasts of financial results and other forward-looking statements provided herein are based on information available at the time this document was prepared and certain assumptions considered reasonable. Actual results may differ significantly from forecasts due to various factors. For assumptions underlying forecasts of financial results, notes on use of forecasts of financial results, and other related information, please refer to “Future outlook” on page 5 of the Annexed Materials. • The Company is a holding company and the bulk of its revenue consists of dividends received from subsidiaries and revenues from their operating costs. Detailed information on non-consolidated financial forecasts is omitted since information is not important for investment information and business indicators. SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Index of attached materials 1. Qualitative information on quarterly results ……………………………………………………………………………………….. 2 (1) Description of business results …………………………………………………………………………………………………. 2 (2) Analysis of financial position …………………………………………………………………………………………………… 3 (3) Analysis of cash flows …………………………………………………………………………………………………………… 4 (4) Future outlook ……………………………………………………………………………………………………………………….. 5 2. Basic approach in selecting accounting standards ……………………………………………………………………………….. 5 3. Consolidated financial statements and notes thereto ……………………………………………………………………………. 6 (1) Consolidated balance sheet ………………………………………………………………………………………………………. 6 (2) Consolidated statement of income and consolidated statement of comprehensive income ………………… 8 (3) Consolidated statements of changes in shareholders’ equity …………………………………………………………. 10 (4) Consolidated statement of cash flows ……………………………………………………………………………………….. 12 (5) Notes on consolidated financial statements ……………………………………………………………………………….. 14 (Notes on the going concern assumption) ………………………………………………………………………………….. 14 (Changes in accounting policy) ……………………………………………………………………………………………….. 14 (Changes in presentation method) ……………………………………………………………………………………………. 14 (Segment information, etc.) …………………………………………………………………………………………………….. 15 (Per-share information) …………………………………………………………………………………………………………… 20 (Important subsequent information)………………………………………………………………………………………….. 21 1 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 1. Qualitative information on business results (1) Description of business results The Japanese economy during FY ended March 2022 showed signs of recovery with the progress of vaccinations under the long-running effect of COVID-19, however the outlook for the global economy remains uncertain due to the re-spread of COVID-19 caused by the new variant ‘omicron’ in January 2022, in addition, geopolitical risks surrounding the tense situation in Ukraine, rising raw fuel prices and interest rates, shortages of electrical components, and the trends of financial measures and exchange rate. Healthcare industry in which the Group operates, although the impact of the infectious diseases is easing, the provision of regular medical care remained restrained due to continued restrictions on medical treatment and postponement of surgeries because of COVID-19. On the other hand, new initiatives beyond the conventional framework, such as remote diagnosis using DX, etc., have emerged. Under such conditions, the Group’s business performance declined due to more small-sized projects in Total Pack Produce business than in previous years, difficulties in procuring electronic components and plastic vinyl products for manufacturer business that we had to temporarily postpone new contracts, and the impact of a reactionary decline in demand for infection control products. For FY ending March 2022, the various factors noted above resulted in net sales of 514,353 million yen (previous consolidated FY was 497,156 million yen), operating profit of 20,505 million yen (down 5.9% YoY), ordinary profit of 21,287 million yen (down 2.2% YoY), and profit attributable to owners of the parent of 12,172 million yen (down 0.9% YoY). Accounting Standard for Revenue Recognition (ASBJ Statement No.29, March 31,2020) have been applied from the beginning of the current fiscal year. Due to the application, the explanation regarding business results does not include the YoY comparison (%) concerning net sales since the accounting method is different from the consolidated cumulative period for the previous fiscal year. For details, please refer to “3. Consolidated financial statements and notes thereto (5) Notes on consolidated financial statements (Segment information, etc.)”. Business results by segment are summarized below. The Company has changed the classification of reportable segments from this consolidated fiscal year. Comparison and analysis with the previous fiscal year are based on the classification after the change. (i) Total Pack Produce business In Total Pack Produce business, the business performance declined due to the fact that most of the project projects that reached completion year were medium to small in scale, the impact of order adjustments due to tight procurement of electrical component parts by manufacturers, and the impact of a reactionary decline in demand for infection control products using subsidies for measures against COVID-19. On the other hand, we were newly commissioned to provide a variety of service businesses for countermeasures against COVID-19, including the development and operation of the Osaka Corona Large-Scale Medical and Medical Care Center. In Overseas business, the medical equipment sales business in the Republic of the Union of Myanmar, despite the impact of the lockdown due to COVID-19, military coup, and financial sanctions by the U.S. and Europe, the results were generally as planned. As a result, this segment recorded net sales of 99,539 million yen (previous consolidated FY was 104,355 million yen) and segment profit (operating profit) of 9,265 million yen (down 5.3% YoY). (ii) Medical Supply business In Medical Supply business, although the impact of restrictions on medical treatment at medical institutions continued, the number of SPD contracts continue to increase, and the new medical material logistics base “Osaka Solution Center” is now in full-scale operation. On the other hand, profits decreased due to a reactionary decline in demand for infectious disease control products and delays in delivery of some products. As a result, this segment recorded net sales of 360,635 million yen (previous consolidated FY was 341,157 million yen) and segment profit (operating profit) of 6,209 million yen (down 10.8% YoY). (iii) Lifecare business In Lifecare business, the occupancy rate remained high thanks to the use of our detailed information sharing system, which connects residents and their families via the Internet as an infection control measures. Also, the business performance was firm with increase of three facilities through M&A and the number of contract customers in the food supply business, and because the hydroponics which is an employment support business for people with handicaps got on track. As a result, this segment recorded net sales of 25,247 million yen (previous consolidated FY was 24,571 million yen) and segment profit (operating profit) of 2,407 million yen (up 7.6% YoY). (iv) Dispensing Pharmacy business In Dispensing Pharmacy business, the number of consultations has been on a recovery trend compared to previous fiscal year, and new store openings and small M&A contributed to the solid business performance although there was some influence due to the public drug price revision. As a result, this segment recorded net sales of 28,930 million yen (previous consolidated FY was 27,070 million yen) and segment profit (operating profit) of 3,200 million yen (up 11.0% YoY) 2 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (2) Analysis of Financial Position (i) Current assets The balance of current assets at the end of this consolidated fiscal year stood at 226,529 million yen (vs. a balance of 221,890 million yen at the end of the previous consolidated fiscal year), an increase of 4,638 million yen since the end of the previous consolidated fiscal year. Major reasons included increases of 2,638 million yen in merchandise and finished goods and 640 million yen in electronically recorded monetary claims-operating and decrease of 759 million yen in allowance for doubtful accounts, despite decrease of 688 million yen in short-term loans receivable. (ii) Non-current assets (iii) Current liabilities The balance of non-current assets at the end of this consolidated fiscal year stood at 108,545 million yen (vs. a balance of 112,607 million yen at the end of the previous consolidated fiscal year), a decrease of 4,062 million yen since the end of the previous consolidated fiscal year. Major reasons included decreases of 2,517 million yen in investment securities, 1,268 million yen in goodwill, and 1,380 million yen in construction in progress, despite increases of 783 million yen in buildings and structures. The balance of current liabilities at the end of this consolidated fiscal year stood at 148,371 million yen (vs. a balance of 151,942 million yen at the end of the previous consolidated fiscal year), a decrease of 3,571 million yen since the end of the previous consolidated fiscal year. Major reasons included decreases of 2,137 million yen in notes and accounts payable – trade, 2,118 million yen in current portion of long-term loans payable, despite increase of 1,153 million yen in short-term loans payable. (iv) Non-current liabilities The balance of non-current liabilities at the end of this consolidated fiscal year stood at 64,384 million yen (vs. a balance of 67,451 million yen at the end of the previous consolidated fiscal year), a decrease of 3,066 million yen since the end of the previous consolidated fiscal year. Major reasons included decrease of 2,750 million yen in long-term loans payable and 254 million yen in deferred tax liabilities. (v) Net assets The balance of net assets at the end of this consolidated fiscal year stood at 122,318 million yen (vs. a balance of 115,103 million yen at the end of the previous consolidated fiscal year), an increase of 7,214 million yen since the end of the previous consolidated fiscal year. Major reasons included an increase 12,172 million yen in retained earnings from profit attributable to owners of parent, despite decrease of 3,774 million yen in retained earnings due to payment of dividends and 2,420 million yen in valuation differences on available-for-sale securities. 3 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (3) Analysis of cash flows The balance of cash and cash equivalents at the end of this consolidated fiscal year stood at 72,804 million yen, decrease 146 million yen from the balance of 72,950 million yen at the end of the previous consolidated fiscal year. (i) Cash flow from operating activities Cash flow provided from operating activities was 12,428 million yen (down 7,343 million yen compared to the previous consolidated fiscal year). Major contributing factors included the recording of 20,804 million yen in profit before income taxes and 3,609 million yen in depreciation and amortization, despite payment of 9,170 million yen in income taxes, increase of 3,325 million yen in inventories, and decrease of 1,645 million yen in notes and accounts payable – trade. (ii) Cash flow from investing activities Cash flow expensed in investing activities was 3,870 million yen (down 15,419 million yen compared to the previous consolidated fiscal year). Major contributing factors included expenditures of 3,124 million yen on purchase of property, plant, and equipment and 346 million yen on purchase of intangible assets. (iii) Cash flow from financing activities Cash flow expensed in financing activities was 8,842 million yen (up 1,623 million yen compared to the previous consolidated fiscal year). Major contributing factors included expenditures of 6,056 million yen on repayment of long-term loans payable and 3,774 million yen on cash dividends paid, despite proceeds of 1,014 million yen from short-term loans payable. Reference: Trends in cash flow indices Equity capital ratio (%) 35.0 66.5 Mark-to-market equity capital ratio (%) Years of debt redemption (years) Interest coverage ratio (times) * Equity capital ratio = equity capital/total assets 80.6 2.3 FY ended March 2018 FY ended March 2019 FY ended March 2020 FY ended March 2021 FY ended March 2022 31.9 72.3 6.9 40.9 33.0 67.9 2.9 89.4 33.3 87.7 3.4 61.1 35.3 56.0 5.1 43.7 Mark-to-market equity capital ratio = total market capitalization/total assets Years of debt redemption = interest-bearing debt/operating cash flows Interest coverage ratio = operating cash flows/interest paid Notes: 1. All indices are calculated from consolidated-basis financial data. 2. Total market capitalization is calculated by multiplying the closing stock price at the end of the fiscal year by total number of shares issued and outstanding (after subtracting treasury stock) as of the end of the fiscal year. 3. Calculations of operating cash flows are based on cash flows from operating activities on the Consolidated Cash Flow Statement. Interest-bearing debt consists of all debt on the Consolidated Balance Sheet for which interest is paid. The amount of interest paid is based on interest paid as shown on the Consolidated Cash Flow Statement. 4 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (4) Future outlook As the baby boom generation ages and low birth rates continue, projections indicate Japan will continue to see restraints on remuneration for medical and nursing care costs, and reductions in their price. In addition, since the enactment of the Act for Securing Comprehensive Medical and Long-term Care in the Community, progress is being made to develop comprehensive community care systems through continuing reforms in the structure of providing medical care, with completion envisioned for 2025. Given these conditions and drawing on advanced capabilities in providing comprehensive and optimal solutions in medical, healthcare, welfare, nursing care, and services, the Group will seek to contribute to society by meeting a wide range of needs based on the SHIP philosophy and Group mission to “Creating environments for medical professionals”. The business performance projected for the next fiscal year (FY ending March 2023) is summarized below. The items described in “Important subsequent information” are reflected in the earnings forecast. Net sales Operating profit Ordinary profit Profit attributable to owners of parent FY ending March 2023 (projected) Profit margin (Unit: Millions yen, %) FY ended March 2022 (actual) YoY change Profit margin 560,000 21,000 21,000 12,500 – 3.8 3.8 2.2 8.9 2.4 (1.4) 2.7 514,353 20,505 21,287 12,172 – 4.0 4.1 2.4 The projected amount of (year-end) dividends per share in FY ending March 2023 is 42 yen. 2. Basic approach in selecting accounting standards To facilitate comparisons from period to period and between entities, the Group for the time being will continue to prepare its consolidated financial statements based on J-GAAP. The Group will duly address the application of International Financial Reporting Standards (IFRS) after taking into account various circumstances both in Japan and abroad. 5 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 3. Consolidated financial statements and notes thereto (1) Consolidated balance sheet Assets Current assets Fiscal year ended March 31, 2021 (Unit: Millions yen) Fiscal year ended March 31, 2022 Cash and deposits Notes receivable – trade Accounts receivable – trade Notes and accounts receivable – trade Electronically recorded monetary claims – operating Lease investment assets Merchandise and finished goods Work in process Raw materials and supplies Short-term loans receivable Other Allowance for doubtful accounts Total current assets Non-current assets Property, plant, and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Machinery, equipment and vehicles Accumulated depreciation Machinery, equipment and vehicles, net Land Real estate for rent Accumulated depreciation Real estate for rent, net Construction in progress Other Accumulated depreciation Other, net Total property, plant, and equipment Intangible assets Goodwill Other Total intangible assets Investments and other assets Investment securities Long-term loans receivable Net defined benefit asset Deferred tax assets Claims provable in bankruptcy, claims provable in rehabilitation and other Guarantee deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 6 73,907 － － 113,720 4,080 3,349 16,139 1,893 691 2,406 7,356 (1,654) 221,890 34,378 (14,917) 19,461 8,039 (2,704) 5,335 15,947 14,599 (3,691) 10,907 2,629 12,863 (9,203) 3,659 57,941 9,604 976 10,581 26,125 7,655 936 3,443 65 6,509 1,088 (1,739) 44,085 112,607 334,498 73,808 2,163 109,399 － 4,720 3,634 18,778 2,317 1,010 1,718 9,872 (895) 226,529 36,716 (16,470) 20,245 8,195 (3,448) 4,746 16,293 14,895 (3,902) 10,993 1,249 14,560 (10,092) 4,468 57,995 8,336 1,017 9,354 23,608 7,518 1,012 3,184 86 6,260 1,266 (1,741) 41,195 108,545 335,074 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 (Unit: Millions yen) Fiscal year ended March 31, 2022 102,209 21,481 1,248 5,926 6,168 2,508 12,400 151,942 25,066 32,721 2,902 1,652 849 4,260 67,451 219,394 15,553 23,891 83,565 (15,526) 107,483 3,923 0 68 (35) 3,957 3,663 115,103 334,498 100,071 22,173 2,401 3,807 4,980 2,461 12,473 148,371 25,041 29,970 2,938 1,397 873 4,162 64,384 212,756 15,553 23,908 91,964 (15,526) 115,899 1,503 1 842 44 2,390 4,028 122,318 335,074 Liabilities Current liabilities Notes and accounts payable – trade Electronically recorded obligations – operating Short-term loans payable Current portion of long-term loans payable Income taxes payable Provision for bonuses Other Total current liabilities Non-current liabilities Bonds with share acquisition rights Long-term loans payable Net defined benefit liability Deferred tax liabilities Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury stock Total shareholders’ equity Accumulated other comprehensive income Valuation differences on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets 7 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (2) Consolidated statement of income and consolidated statement of comprehensive income Consolidated statement of income Fiscal year ended March 31, 2021 (Unit: Millions yen) Fiscal year ended March 31, 2022 Net sales Cost of sales Gross profit Sales, general, and administrative expenses Directors’ compensation Salaries and allowances Bonuses Retirement benefit expenses Provision for bonus Other Total sales, general, and administrative expenses Operating profit Non-operating profit Interest income Dividend income Equity gains of affiliated companies Reversal of allowance for doubtful accounts Foreign exchange profit Other Total non-operating profit Non-operating expenses Interest expenses Equity losses of affiliated companies Foreign exchange loss Provision for doubtful accounts Commission paid Other Total non-operating expenses Ordinary profit Extraordinary profit Gains on sales of non-current assets Gains on sales of investment securities Other Total extraordinary profit Extraordinary losses Losses on step acquisitions Losses on sales of non-current assets Losses on retirement of non-current assets Impairment loss Other 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 8 497,156 442,670 54,486 1,507 10,968 1,445 431 1,147 17,185 32,685 21,800 313 281 － － 119 714 1,430 325 40 － 631 219 251 1,468 21,761 5 27 2 35 92 6 148 271 42 561 21,235 8,975 (102) 8,873 12,362 82 12,280 514,353 460,709 53,643 1,521 11,223 1,325 458 1,004 17,605 33,138 20,505 289 211 357 270 － 344 1,473 283 － 284 32 43 46 691 21,287 1 1 0 3 － 1 243 241 0 486 20,804 7,921 496 8,418 12,385 213 12,172 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 (Unit: Millions yen) Fiscal year ended March 31, 2022 Consolidated statement of comprehensive income Net income Other comprehensive income Valuation differences on available-for-sale securities Foreign currency translation adjustments Remeasurements of defined benefit plans Share of other comprehensive income of entities accounted for using equity method Total other comprehensive income Comprehensive income (Breakdown) Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests 12,362 1,904 285 (107) (2) 2,079 14,442 14,295 146 12,385 (2,420) 1,016 84 (4) (1,323) 11,061 10,605 455 9 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (3) Consolidated statement of changes in shareholders’ equity Previous consolidated fiscal year (April 1, 2020–March 31, 2021) Capital stock Capital surplus Retained earnings Treasury stock Shareholders’ equity (Unit: Millions yen) Total shareholders’ equity 15,553 23,895 74,841 (14,447) 99,841 Balance at beginning of current period Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury stock Change of scope of consolidation Capital increases by consolidated subsidiaries Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period Balance at beginning of current period Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury stock Change of scope of consolidation Capital increases by consolidated subsidiaries Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period (4) (3,556) 12,280 (3,556) 12,280 (1,078) (4) － － (4) 8,724 (1,078) 7,641 15,553 23,891 83,565 (15,526) 107,483 Accumulated other comprehensive income Valuation difference on available-for-sale securities Differed gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets 2,019 － (152) 75 1,942 2,897 104,681 0 0 0 220 220 68 (3,556) 12,280 (1,078) (4) － 2,780 10,422 1,904 1,904 3,923 (110) (110) 2,014 2,014 765 765 (35) 3,957 3,663 115,103 (1,078) 10 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 This consolidated fiscal year (April 1, 2021–March 31, 2022) Capital stock Capital surplus Retained earnings Treasury stock Shareholders’ equity (Unit: Millions yen) Total shareholders’ equity 15,553 23,891 83,565 (15,526) 107,483 Balance at beginning of current period Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury stock Change of scope of consolidation Capital increases by consolidated subsidiaries Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period Balance at beginning of current period Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury stock Change of scope of consolidation Capital increases by consolidated subsidiaries Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period － 8,398 (0) 8,415 15,553 23,908 91,964 (15,526) 115,899 Accumulated other comprehensive income Valuation difference on available-for-sale securities Differed gains or losses on hedges Foreign currency translation adjustments Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets 3,923 0 68 (35) 3,957 3,663 115,103 (0) (3,774) 12,172 (0) － 17 (3,774) 12,172 (0) － 17 (3,774) 12,172 17 17 0 0 1 773 773 842 79 79 44 (2,420) (2,420) 1,503 (1,566) (1,566) 365 365 (1,200) 7,214 2,390 4,028 122,318 11 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 (Unit: Millions yen) Fiscal year ended March 31, 2022 (4) Consolidated statement of cash flows Cash flows from operating activities Income before income taxes Depreciation and amortization Impairment loss Amortization of goodwill Share of loss (profit) of entities accounted for using equity method [( ) represents profit] Increase (decrease) in provision for bonuses [( ) represents decrease] Increase (decrease) in allowance for doubtful accounts [( ) represents decrease] Increase (decrease) in lease investment assets [( ) represents increase] Increase (decrease) in net defined benefit liability [( ) represents decrease] Loss on retirement of property, plant, and equipment Loss on retirement of intangible assets Interest and dividend income Interest expenses Decrease (increase) in notes and accounts receivable – trade [( ) represents increase] Decrease (increase) in inventories [( ) represents increase] Increase (decrease) in notes and accounts payable – trade [( ) represents decrease] Other Subtotal Interest and dividend income received Interest expenses paid Income taxes paid Cash flows from operating activities 21,235 3,170 271 1,957 40 312 1,498 151 (36) 21 127 (595) 325 (12,344) (1,679) 11,598 704 26,757 642 (323) (7,304) 19,772 20,804 3,609 241 1,879 (357) (66) (159) (285) 117 243 0 (500) 283 (97) (3,625) (1,645) 544 21,283 599 (284) (9,170) 12,428 12 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 (Unit: Millions yen) Fiscal year ended March 31, 2022 Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant, and equipment Proceeds from sales of property, plant, and equipment Purchase of intangible assets Payments of short-term loans receivable Collection of short-term loans receivable Payments of long-term loans receivable Collection of long-term loans receivable Purchase of investment securities Proceeds from sales and redemption of investment securities Purchase of shares of subsidiaries and associates Purchase of shares of subsidiaries resulting in change in scope of consolidation Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation Other Cash flows from investing activities Cash flows from financing activities Net increase (decrease) in short-term loans payable [( ) represents decrease] Proceeds from long-term loans payable Repayments of long-term loans payable Purchase of treasury stock Cash dividends paid Dividends paid to non-controlling shareholders Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation Repayments of lease obligations Other Cash flows from financing activities Effect of exchange rate change on cash and cash equivalents Increase (decrease) in cash and cash equivalents [( ) represents decrease] Cash and cash equivalents at the beginning of the period Cash and cash equivalents from newly consolidated subsidiaries Cash and cash equivalents at the end of the period (218) 167 (4,632) 499 (378) (849) 241 (143) 266 (408) 140 (9,797) (4,122) － (54) (19,289) (2,542) 1,586 (4,555) (1,078) (3,556) (69) － (248) 0 (10,465) 123 (9,859) 82,810 － 72,950 (185) 146 (3,124) 70 (346) (401) 330 (220) 269 (15) 1 (121) (216) 24 (83) (3,870) 1,014 299 (6,056) (0) (3,774) (16) (48) (249) (11) (8,842) 130 (154) 72,950 8 72,804 13 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (5) Notes on consolidated financial statements (Notes on the going concern assumption) Not applicable (Change in accounting policy) (Application of Accounting Standard for Revenue Recognition, etc.) The Accounting Standard for Revenue Recognition (ASBJ Statement No.29, March 31,2020; hereinafter, “Accounting Standard for Revenue Recognition”) has been applied from the beginning of the current consolidated fiscal year. In accordance with the Accounting Standard for Revenue Recognition, when control of a promised goods and/or service is transferred to the customer, revenue will be recognized for the amount expected to be received in exchange for the good and/or service. As a result, for transactions for which our role in providing products to customers is an agent, mainly for revenues related to product sales in Medical Supply business, the Company has changed to a method of recognizing revenue with the net amount obtained by deducting the amount paid to the supplier of the product from the amount received from the customer although the Company previously recognized the total amount received from customers as revenue. When applying the Accounting Standard for Revenue Recognition, the Company comply with the transitional treatment stipulated in the proviso of article 84 of Accounting Standard for Revenue Recognition. The cumulative impact of retroactively applying the new accounting policy prior to the beginning of the current fiscal year is added or subtracted to the retained earnings at the beginning of the current fiscal year and the new accounting policy is applied from the beginning balance. As a result, net sales and cost of sales for the current consolidated cumulative period decreased by 4,889million yen, respectively. However, there is no cumulative impact on net assets at the beginning of the current consolidated fiscal year, so there is no impact on the beginning balance of retained earnings for the current consolidated fiscal year. For the impact on segment information, please refer to “3. Consolidated financial statements and notes thereto (5) Notes on consolidated financial statements (Segment information, etc.)”. Due to the application of Accounting Standard for Revenue Recognition, “Notes and accounts receivable” recorded in “Current assets” in the consolidated balance sheet for the previous consolidated fiscal year will be included in “Notes receivable – trade”, “Accounts receivable – trade”, and “Other” from the current consolidated fiscal year. In accordance with the transitional treatment stipulated in article 89-2 of the Accounting Standard for Revenue Recognition, the previous consolidated fiscal year has not been reclassified using the new recording method. (Application of accounting standards related to fair value measurement, etc.) The Accounting Standard for Fair Value Measurement (ASBJ Statement No.30, July 4, 2019; hereinafter, “Accounting Standard for Fair Value Measurement”) has been applied from the beginning of the current consolidated fiscal year. In accordance with transitional treatment stipulated in the provision of paragraph 19 in Accounting Standards for Fair Value Measurement and article 44-2 in Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), new accounting policy under Accounting Standards for Fair Value Measurement will be applied in the future. There is no impact on the consolidated financial statements. (Changes in presentation method) Since the “subsidy income” of “non-operating income” posted independently in the previous consolidated fiscal year is less important, it is included in “Other” from the current consolidated fiscal year. In order to reflect this change in presentation method, the consolidated financial statements for the previous consolidated fiscal year have been reclassified. As a result, in the consolidated income statement for the previous consolidated fiscal year, “subsidy income” of 298 million yen and “Other” of 416 million yen, which were stated in “non-operating income”, are now reclassified as “Other” of 714 million yen. 14 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (Segment information, etc.) [Segment information] 1 Overview of reportable segments The Company’s reportable segments are Company components for which separate financial information is available and subject to periodic review by the Board of Directors in determining the allocation of management resources and evaluating business performance. The Company classifies its business divisions by service. The Company formulates comprehensive strategies reflecting the nature of the activities of each business division and subsidiary and undertakes business activities based on these strategies. Accordingly, the Company organizes its segments based on its business divisions. Its four reportable segments are the Total Pack Produce business, the Medical Supply business, the Life Care business, and the Dispensing Pharmacy business. The Total Pack Produce segment engages in sales of medical devices and medical equipment based on bulk orders; consulting on topics including medicine, healthcare, welfare, and nursing care facilities; and leasing of real estate to medical facilities and other tenants. The Medical Supply segment engages in sales of medical examination and treatment materials and special treatment materials. The Life Care segment operates homes for senior citizens, group homes, and other facilities and nutritional services. The Dispensing Pharmacy segment operates dispensing pharmacies, among other business activities. From the current fiscal year, due to the change in management accounting categories, The Company has changed the classification of reportable segments, such as including businesses that were previously included in “Other” into “Total Pack Produce Business”. The segment information for the previous consolidated fiscal year is created according to the changed classification. 2 Methods for calculating net sales, profit (loss), assets, and other amounts by reportable segment The accounting methods for reportable segments are same as those outlined under “Significant Matters that Serve as the Basis for Preparation of Consolidated Financial Statements.” Reportable segment profit figures are based on operating profit. Intersegment revenues and transfers are based on market prices. As described in the change in accounting policy, the accounting method for revenue recognition was changed due to the Accounting Standard for Revenue Recognition that has been applied from the beginning of the current consolidated fiscal year, the company has also changed the method of calculation profit or loss for business segments. As a result of this change, sales to external customers in the “Medical Supply Business” segment for the current consolidated fiscal year have decreased by ¥ 4,889 million compared to the previous method. Although the internal sales or transfers between segments of the “Dispensing Pharmacy Business” segment for the current consolidated fiscal year decreased by ¥ 30,958 million in the same way, this event has no effect on the amount recorded in the consolidated income statement 15 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 3 Net sales, profit (loss), assets, and other amounts by reportable segment Previous consolidated fiscal year (April 1, 2020–March 31, 2021) Reportable segment Total Pack Produce business Medical Supply business Lifecare business Dispensing Pharmacy business Subtotal Adjustments*1 (Unit: Millions yen) Amount recorded on consolidated financial statements*2 104,355 341,157 24,571 27,070 497,156 － 497,156 3,658 3,203 228 27,410 34,501 (34,501) － 108,014 344,361 24,800 54,481 531,657 (34,501) 497,156 9,781 6,958 2,237 2,884 21,861 (61) 21,800 118,465 143,889 34,449 25,753 322,557 11,940 334,498 1,608 484 － 393 578 532 209 － 622 401 33 3,093 1,957 271 283 538 27 － 3,170 1,957 271 77 － － － 9,621 10,015 10,015 Net sales (1) Sales to outside customers (2) Intersegment sales or transfers Subtotal Segment profit Segment assets Other items Depreciation Amortization of goodwill Impairment loss Investment in entities accounted for using equity method Increase in property, plant, and equipment, and intangible fixed assets 1.202 2,986 295 375 4,860 91 4,951 Notes: 1. The amounts of the various adjustments are described below. (1) The figure of (61) million yen in adjustments to segment profit includes (78) million yen for the cancellation of intersegment transactions and 0 million yen for companywide costs not allocated to an individual reportable segment. These companywide costs consist mainly of parent company operating expenses and sales, general, and administrative expenses not attributable to individual reportable segments. (2) The figure of 11,940 million yen in adjustments to segment assets includes (19,293) million yen for cancellation of intersegment transactions, and 31,690 million yen for companywide assets not allocated to an individual reportable segment. These companywide assets consist mainly of assets related to administrative sections not attributable to individual reportable segments. (3) The figure of 91 million yen in adjustments to increase in property, plant, and equipment, and intangible fixed assets consists mainly of capital investment related to administrative sections not attributable to individual reportable segments. 2. Segment profit is adjusted against the operating profit reported on the consolidated statement of income. 16 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Consolidated fiscal year under review (April 1, 2021–March 31, 2022) Reportable segment Total Pack Produce business Medical Supply business Lifecare business Dispensing Pharmacy business Subtotal Adjustments*1 (Unit: Millions yen) Amount recorded on consolidated financial statements*2 99,539 360,635 25,247 28,930 514,353 － 514,353 2,176 1,256 188 101 3,724 (3,724) － 101,716 361,892 25,436 29,032 518,077 (3,724) 514,353 9,265 6,209 2,407 3,200 21,082 121,743 144,820 34,755 27,629 328,947 (577) 6,127 20,505 335,074 1,628 503 － 560 955 411 241 － 646 408 － 3,545 1,879 241 314 556 － － 3,608 1,879 241 63 － － － 9,803 10,363 10,363 Net sales (1) Sales to outside customers (2) Intersegment sales or transfers Subtotal Segment profit Segment assets Other items Depreciation Amortization of goodwill Impairment loss Investment in entities accounted for using equity method Increase in property, plant, and equipment, and intangible fixed assets 1,326 712 499 491 3,029 205 3,235 Notes: 1. The amounts of the various adjustments are described below. (1) The figure of (577) million yen in adjustments to segment profit includes (73) million yen for the cancellation of intersegment transactions and (509) million yen for companywide costs not allocated to an individual reportable segment. These companywide costs consist mainly of parent company operating expenses and sales, general, and administrative expenses not attributable to individual reportable segments. (2) The figure of 6,127 million yen in adjustments to segment assets includes (19,662) million yen for cancellation of intersegment transactions, and 26,538 million yen for companywide assets not allocated to an individual reportable segment. These companywide assets consist mainly of assets related to administrative sections not attributable to individual reportable segments. (3) The figure of 205 million yen in adjustments to increase in property, plant, and equipment, and intangible fixed assets consists mainly of capital investment related to administrative sections not attributable to individual reportable segments. 2. Segment profit is adjusted against the operating profit reported on the consolidated statement of income. 17 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 [Related information] Previous consolidated fiscal year (April 1, 2020–March 31, 2021) 1 Product and service-specific information This information is reported under segment information and is therefore omitted here. 2 Region-specific information (1) Net sales This information is omitted because sales to external customers in Japan account for more than 90% of net sales on the Consolidated Statement of Income. (2) Property, plant, and equipment This information is omitted because property, plant, and equipment located in Japan account for more than 90% of property, plant, and equipment on the Consolidated Balance Sheet. 3 Information concerning key individual customers Not applicable because sales to no single external customer account for 10% or more of net sales on the Consolidated Statement of Income. This consolidated fiscal year (April 1, 2021–March 31, 2022) 1 Product and service-specific information This information is reported under segment information and is therefore omitted here. 2 Region-specific information (1) Net sales This information is omitted because sales to external customers in Japan account for more than 90% of net sales on the Consolidated Statement of Income. (2) Property, plant, and equipment This information is omitted because property, plant, and equipment located in Japan account for more than 90% of property, plant, and equipment on the Consolidated Balance Sheet. 3 Information concerning key individual customers Not applicable because sales to no single external customer account for 10% or more of net sales on the Consolidated Statement of Income. [Information concerning impairment losses on fixed assets per reportable segment] Previous consolidated fiscal year (April 1, 2020–March 31, 2021) This information is reported under segment information and is therefore omitted here. This consolidated fiscal year (April 1, 2021–March 31, 2022) This information is reported under segment information and is therefore omitted here. 18 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 [Information concerning amounts of amortization of goodwill and remaining unamortized balances, per reportable segment] Previous consolidated fiscal year (April 1, 2020–March 31, 2021) Reportable segment Total Pack Produce business Medical Supply business Lifecare business Dispensing Pharmacy business Subtotal (Goodwill) Ending balance Note: Amounts of amortization of goodwill is omitted because similar information is reported under segment information. 9,604 1,943 1,436 2,226 3,997 － 9,604 This consolidated fiscal year (April 1, 2021–March 31, 2022) Reportable segment Total Pack Produce business Medical Supply business Lifecare business Dispensing Pharmacy business Subtotal (Goodwill) Ending balance Note: Amounts of amortization of goodwill is omitted because similar information is reported under segment information. 8,336 1,946 1,424 3,991 974 － 8,336 (Unit: Millions yen) Companywide/ cancellation Total (Unit: Millions yen) Companywide/ cancellation Total [Information on gains on bargain purchases per reportable segment] Previous consolidated fiscal year (April 1, 2020–March 31, 2021) No important gains on bargain purchases occurred. This consolidated fiscal year (April 1, 2021–March 31, 2022) No important gains on bargain purchases occurred. 19 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Notes: 1. The company executed a two-for-one common stock split, effective on April 1, 2021. “Net assets per share”, “Net income per share”, and “Diluted net income per share” are calculated as if the relevant stock split was executed at the beginning of the previous consolidated fiscal year ended March 31, 2021. 2. “Net income per share” and “Diluted net income per share” are calculated based on the following information: Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 94,470,499 94,350,306 (Per-share information) Net assets per share Net income per share Diluted net income per share Account Net income per share Profit attributable to owners of parent (millions yen) Amount not attributable to owners of common stock (millions yen) Profit attributable to owners of parent related to common stock (millions yen) Average shares of common stock during the period (shares) Diluted net income per share Adjustment for profit attributable to owners of parent (millions yen) [Interest income (after tax equivalent deduction) (millions yen)] Increase in number of common stock (shares) [Bonds with share acquisition rights included in above (shares)] Description of potentially dilutive common shares not included in the computation of diluted earnings per share because of their anti-dilutive effect Total net assets (millions yen) Amount subtracted from total net assets (millions yen) [Non-controlling interests included in above (millions yen)] Ending balance of net assets related to common stock (millions yen) Ending number of shares of common stock used in calculation of net assets per share (shares) – – 3. Net assets per share were calculated based on the following information: Account Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 (Yen) 1,181.14 129.99 117.95 12,280 － 12,280 (16) [(17)] 9,503,636 [9,503,636] 115,103 3,663 [3,663] 111,440 (Yen) 1,253.73 129.01 117.01 12,172 － 12,172 (16) [(17)] 9,529,091 [9,529,091] 122,318 4,028 [4,028] 118,289 94,350,346 94,350,284 20 SHIP HEALTHCARE HOLDINGS, INC. (3360): Summary of Financial Statements for Fiscal Year Ended March 31, 2022 (Important subsequent information) (Business combination through acquisition) At a meeting of the Board of Directors held on April 27, 2022, the Company resolved to acquire shares of Kingrun Co., Ltd. and made into an affiliate, also entered into a share transfer agreement on the same date. 1. Overview of the business combination (1) Name and business of the acquired company Name of the acquired company: Kingrun Co., Ltd. Business: Curtain leasing and sales business for medical institutions and nursing care facilities, comprehensive support business for furniture, fittings, and facilities, cleaning business, renovation business, welfare vehicle sales business, nursing care facility management business, food supply business, agricultural business, energy conservation business (2) Principal purpose of the business combination The company’s product capabilities and extensive customer base are expected to create synergies for the entire group, including the Total Pack Produce business, and further enhance the corporate value. (3) Date of the business combination July 1, 2022 (scheduled) (4) Legal form of the business combination Acquisition of shares for consideration of cash (5) Name following the business combination Kingrun Co., Ltd. (6) Ratio of voting rights acquired Ratio of voting rights held immediately prior to acquisition: 14.9% Ratio of voting rights to be acquired on the date of the business combination: 83.1% Ratio of voting rights after the acquisition: 98.0% (7) Grounds for deciding on the company to be acquired The Group’s mission is “Creating environment for medical professionals” under the management philosophy of “SHIP” (Sincere (heart of sincerity), Humanity (heart of humanity), Innovation (spirit of innovator), and PartnerSHIP (spirit of partnership)). Based on the above philosophy, the Group has set “Medical”, “Health”, “Nursing”, “Welfare”, and “Services” as its business domains, and mainly develops Total Pack Produce Business (comprehensive provision of consulting services to medical institutions, manufacturing, sales, and leasing of medical equipment and facilities, and real estate leasing to medical institutions), Medical Supply Business (sales of medical consumables and equipment), Lifecare Business (operation of nursing care homes and group homes, food supply, and rehabilitation support service), and Dispensing Pharmacy Business (operation of dispensing pharmacies). Kingrun Co., Ltd. and its subsidiaries are the pioneers in the curtain leasing and sales business for medical institutions and nursing care facilities, and are also engaged in other businesses such as comprehensive support for furniture, fittings, and facilities, cleaning business, renovation business, welfare vehicle sales business, nursing care facility management business, food supply business, etc., and their strength lies in building medium- to long-term relationships with medical institutions and nursing care facilities nationwide through these wide-ranging business. Kingrun Co., Ltd. and its subsidiaries’ product capabilities and extensive customer base are expected to create synergies for the entire group, including the Total Pack Produce business, and further enhance the corporate value. 2. Acquisition Cost and Consideration of Acquired Company by Item Consideration for acquisition: Cash Acquisition cost: 3. Description and amount of major acquisition-related expenses Advisory cost, etc. (approximation): 330 million yen 8,708 million yen 8,708 million yen 4. Amount of goodwill generated, grounds for generation, amortization method and amortization period 5. Breakdown of principal amounts of assets to be acquired and liabilities assumed on the date of the business Not confirmed at the present moment. combination Not confirmed at the present moment. 21