ロート製薬（4527） – Consolidated Financial Results for the Fiscal Year Ended March 31, 2022

May 12, 2022 Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 4527 Company name: ROHTO Pharmaceutical Co., Ltd. Stock code: Representative: Masashi Sugimoto, President and COO Masaya Saito, Vice President and CFO Contact: Telephone: 81-(0) 6-6758-8223 Scheduled date of Annual General Meeting of Shareholders: Scheduled date of filing of Annual Securities Report: Scheduled date of dividend payment: Supplementary materials for financial results: Financial results meeting: Stock Exchange listing: TSE, First Section URL: https://www.rohto.co.jp/ [Japanese GAAP] June 27, 2022 June 28, 2022 June 13, 2022 Yes Yes (for institutional investors and analysts) (All amounts are rounded down to the nearest million yen.) 1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 – March 31, 2022) (1) Consolidated results of operations Net sales Operating income (Percentages represent year-on-year changes.) Profit attributable to owners of parent Ordinary income Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Millions of yen 199,646 181,287 Note: Comprehensive income (Millions of yen): % Millions of yen % Millions of yen % Millions of yen 21,018 29,084 29,349 – – – 16,743 5.2 23,910 (0.4) 22,990 (3.7) Fiscal year ended Mar. 31, 2022: 26,772 -% Fiscal year ended Mar. 31, 2021: 19,794 75.6% % – 8.6 Basic net income per share Diluted net income per share ROE Ordinary income on total assets Operating income to net sales Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Yen 184.26 146.78 Reference: Equity in earnings of affiliates (Millions of yen): Fiscal year ended Mar. 31, 2022: 143 Fiscal year ended Mar. 31, 2021: 396 Note 1: The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), Yen 183.73 146.36 % 12.6 11.7 % 11.6 10.8 % 14.7 12.7 from the beginning of the current fiscal year, and the figures for the fiscal year ended March 2022 are after the application of the said accounting standard. The percentage changes from the same period of the previous fiscal year are not stated. Note 2: The provisional accounting treatment for business combinations has been finalized in the current fiscal year. The figures for the fiscal year ended March 31, 2021 have been restated accordingly. (2) Consolidated financial position As of Mar. 31, 2022 As of Mar. 31, 2021 Total assets Net assets Equity ratio Millions of yen 274,627 226,149 Millions of yen 183,832 156,612 Net assets per share Yen 1,559.62 1,363.42 % 64.8 68.8 Reference: Shareholders’ equity (Millions of yen): Note: The provisional accounting treatment for business combinations has been finalized in the current fiscal year. The figures for As of Mar. 31, 2022: 177,905 As of Mar. 31, 2021: 155,525 the fiscal year ended March 31, 2021 have been restated accordingly. (3) Consolidated cash flows Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Cash flows from operating activities Millions of yen 27,250 20,008 Cash flows from investing activities Millions of yen (16,406) (10,237) Cash flows from financing activities Millions of yen 3,470 (2,347) Cash and cash equivalents at end of period Millions of yen 70,905 52,254 Dividends on Equity (consolidated) % 2.2 2.5 % 19.1 19.5 21.6 2. Dividends Dividend per share 1Q-end 2Q-end 3Q-end Year-end Total Total dividends Payout ratio (consolidated) Fiscal year ended Mar. 31, 2021 Fiscal year ended Mar. 31, 2022 Fiscal year ending Mar. 31, 2023 (forecast) Yen – – Yen 13.00 15.00 Yen – – Yen 15.00 21.00 28.00 36.00 Yen Millions of yen 3,193 4,106 – 18.00 – 19.00 37.00 3. Consolidated Earnings Forecast for the Fiscal Year Ending March 31, 2023 (April 1, 2022 – March 31, 2023) Net sales Operating income Ordinary income Net income per share Full year Millions of yen 218,000 % Millions of yen 28,000 9.2 % Millions of yen 28,000 (4.6) % Millions of yen 19,500 (3.7) % (7.2) Yen 170.95 Note: From the viewpoint of promoting constructive dialogue for medium-to long-term corporate value enhancement, we will (Percentages represent year-on-year changes.) Profit attributable to owners of parent disclose the earnings forecast for the full year only. * Notes scope of consolidation): None (1) Changes in significant subsidiaries during the period (changes in specific subsidiaries resulting in change in (2) Changes in accounting policies and accounting estimates, and restatements 1) Changes in accounting policies due to revisions in accounting standards:Yes 2) Changes in accounting policies other than 1) above: None 3) Changes in accounting estimates: None 4) Restatements: None Note: For details, please refer “(5) Notes to Consolidated Financial Statements”, under “3. Consolidated Financial Statements and Major Notes” on page 16 of the attachment (3) Number of common shares issued 1) Number of shares outstanding at the end of the period (including treasury shares): As of Mar. 31, 2022: 118,089,155 shares As of Mar. 31, 2021: 118,089,155 shares 2) Number of shares of treasury shares at the end of the period: As of Mar. 31, 2022: 4,019,262 shares As of Mar. 31, 2021: 4,019,044 shares 3) Average number of shares outstanding during the period: Fiscal year ended Mar. 31, 2022: 114,070,031 shares Fiscal year ended Mar. 31, 2021: 114,070,140 shares Reference: Summary of Non-consolidated Financial Results 1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (April 1, 2021 – March 31, (1) Non-consolidated results of operations (Percentages represent year-on-year changes.) Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Net sales Operating income Ordinary income Net income Millions of yen 101,207 101,009 % Millions of yen 16,723 – 13,018 (5.1) % Millions of yen 17,516 – 12,564 (1.9) % Millions of yen 13,035 – 8,920 (12.6) % – 27.8 Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Basic net income per share Diluted net income per share Yen 114.27 78.20 Yen 113.94 77.97 Notes: The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), from the beginning of the current fiscal year, and the figures for the fiscal year ended March 2022 are after the application of the said accounting standard. The percentage changes from the same period of the previous fiscal year are not stated. 2022) (2) Non-consolidated financial position Total assets Net assets Equity ratio As of Mar. 31, 2022 As of Mar. 31, 2021 Millions of yen 172,621 153,277 Millions of yen 122,859 114,864 Net assets per share Yen 1,073.69 1,003.60 % 71.0 74.7 Reference: Shareholders’ equity (Millions of yen): As of Mar. 31, 2022: 122,476 As of Mar. 31, 2021: 114,481 Note 1: This summary report is not subject to the audit conducted by certified public accountants or audit firms. Note 2: Cautionary statement with respect to forward-looking statements and other special items Forecasts regarding future performance in these materials are based on assumptions judged to be valid and informationavailable to the Company at the time the materials were created. These materials are not promises by the Company regarding future performance. Actual results of operations may differ significantly from the forecasts depending onvarious factors. For discussion of the assumptions and other factors considered by the Company in preparing the aboveprojections, please refer to page 2 of the attachments “1. Overview of Results of Operations and Other Information, (1) Overview of Results of Operations.” ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 (4) Basic Policy of Profit Distribution and Dividends for the Current and Next Fiscal Years Contents of Attachments 1. Overview of Results of Operations and Other Information (1) Overview of Results of Operations (2) Overview of Financial Position (3) Overview of Cash Flows 2. Basic Approach to the Selection of Accounting Standards 3. Consolidated Financial Statements and Major Notes (1) Consolidated Balance Sheets (2) Consolidated Statements of Income and Comprehensive Income (3) Consolidated Statements of Change in Shareholders’ Equity (4) Consolidated Statements of Cash Flows (5) Notes to Consolidated Financial Statements Going Concern Assumption Notes on Business Combinations Segment and Other Information Per-share Information Material Subsequent Events 2 2 5 6 7 7 8 8 10 13 17 19 19 20 21 25 25 Application of Special Accounting Methods for Preparation of Quarterly Consolidated Financial Statements 19 1 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 1. Overview of Results of Operations and Other Information (1) Overview of Results of Operations Net sales Operating income Ordinary income Fiscal year ended Mar. 31, 2022 Fiscal year ended Mar. 31, 2021 Year-on-year change (%) 199,646 181,287 – 29,349 22,990 – (Millions of yen) Profit attributable to owners of parent 21,018 16,743 – 29,084 23,910 – During the current fiscal year, the Japanese economy showed signs of gradual recovery in economic activities,although the situation remained severe due to the influence of COVID-19 infections. Overseas, the situation remains unpredictable due to soaring crude oil prices and high raw material costs resulting from economic slowdown due to China’s zero-COVID policy and Russia’s invasion of Ukraine. Under these circumstances, the Rohto Group has created the slogan of “Connect for Well-being,” suggesting people around the world living energetically and happily each day, both physically and mentally, throughout the variousstages of their lives. We are endeavoring to further increase corporate value. Consequently, the consolidated net sales increased significantly to 199,646 million yen in the current fiscal year. Compared to the same period of the previous year, when sales fell sharply due to the influence of COVID-19infections, progress in vaccination and the resumption of economic activity led to a recovery in consumer sentiment, which contributed to sales growth. As a result of a significant sales growth and efforts to efficiently utilize selling, general and administrative expenses,the Company achieved a significant increase in all profit categories, with an operating income of 29,349 millionyen, ordinary income of 29,084 million yen, and net income attributable to owners of the parent of 21,018 millionyen. Note: From the beginning of the current fiscal year, the Company has applied the Accounting Standard for RevenueRecognition (ASBJ Statement No. 29). Consequently, the accounting treatment of revenues differs from that of theprevious fiscal year. The percentage changes from the previous fiscal year are not stated. The rate of change from the prior first half was not given in the narrative. If we were to apply the new revenuerecognition standard to the prior first half, the rate of change was as follows: sales rose 15.6%, Cost of sales 1.4%,operating income 27.8.%, ordinary income 21.7%, and profit attributable to owners of parent 25.7% year-on-year. Sales and profits at all levels increased to all-time highs. Japan America Europe Asia Subtotal Total Reportable segment Others (Millions of yen) Net sales (Sales to customers) Fiscal year ended Mar. 31, 2021 Fiscal year ended Mar. 31, 2022 Year-on-year change (Amount) Year-on-year change (%) 115,629 7,687 8,149 48,056 179,522 1,764 181,287 121,417 10,037 10,297 55,988 197,740 1,906 199,646 2,350 2,147 7,931 141 – – – – 30.6. 26.4 16.5 8.0 – – 2 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Japan to the increase in sales. Sales to outside customers totaled 121,417 million yen. Sales of high-value eye drops increased due in part to an increase in the number of people complaining of eyestrain as a result of longer contact time with digital devices due to the COVID-19 pandemic, and the anti-pollen allergy products brand eye drops “ROHTO Alguard” also contributed Net sales of sunscreens, which declined significantly due to the impact of the COVID-19 pandemic in the previous fiscal year, grew above the pre-COVID-19 levels driven by the strong performance of “SKIN AQUA.” In addition, sales of “MELANO CC,” “HADALABO,” “DEOCO,” and “ROHTO V5” continued to be strong. Moreover, the COVID-19 (SARS-CoV-2) antigen rapid test kits also contributed to the increase in sales. In addition to ROHTO pharmaceuticals Co., Ltd. standalone, Nitten Pharmaceutical Co., Ltd. (the company name changed to Rohtonitten K.K. as of April 1 2011), which newly launched “lacrimal duct tube” this fiscal year, Qualitech Pharma Co., Ltd., and Amato Pharmaceutical Products, Ltd., which has “BORRAGINOL®,” as its main product and became subsidiaries in August 2021 also contributed to the increase in sales. Meanwhile, sales of lip balms, especially colored ones, were sluggish due to the habit of wearing masks. Segment income (operating income) increased significantly to 19,547 million yen due to the substantial increase in sales and reduction in cost of sales ratio. Note: As described in the note for “(1) Explanation of Results of Operations,” if we were to apply the new revenue recognition standard to the prior first half, sales rose 13.5% and operating income 33.5% year-on-year. Sales to customers significantly increased 30.6% year-on-year to 10,037 million yen. Hydrox Laboratories, which became a subsidiary in October 2021 and manufactures and sells alcohol disinfectants and other products, also contributed to the increase in sales. Segment income (operating income) was 216 million yen (down 52.8% year-on-year) due to an increase in procurement costs for raw materials and supplies as well as a deterioration in the cost of sales ratio due to the impact Sales to customers significantly increased 26.4% year-on-year to 10,297 million yen. Sales of the main-stay anti-inflammatory analgesic products performed well. The Company also began cultivating the eye drop market with the May 2021 launch of “Rohto Dry Aid,” an eye drop that has obtained the CE marking. Segment income (on an operating income basis) increased to 563 million yen (up 50.2 % year-on-year) as a result of efforts to efficiently utilize selling, general and administrative expenses, despite a deterioration in the cost of sales ratio due to an increase in procurement costs for raw materials and supplies as well America of labor shortages. Europe as the impact of labor shortages. Asia Sales to customers significantly increased 16.5% year-on-year to 55,988 million yen. As for sales, sunscreen and lip balm, which fell sharply in the previous fiscal year due to the COVID-19 pandemic, showed a recovery trend. And eye drops also performed well thanks to the launch of new products and aggressive sales promotion activities. “Acnes”, an acne treatment, continued to contribute to sales growth due to an increase in skin problems associated with the wearing of masks. While sales in China and Hong Kong continued to perform well due to the economic recovery from the COVID-19 pandemic, sales were sluggish in Vietnam due to the lockdown policy and the resulting decline in factory capacity utilization. Segment income (operating income) increased significantly to 8,365 million yen (up 20.8% year-on-year) due to 3 strong sales. ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 4 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Outlook for the fiscal year ending Mar. 31, 2023 Net sales Operating income Ordinary income (Millions of yen) Profit attributable to owners of parent Fiscal year ending Mar. 31, 2023 (forecast) Fiscal year ended Mar. 31, 2022 (results) Year-on-year change after adjustment (%) 218,000 199,646 9.2 28,000 29,349 (4.6) 28,000 29,084 (3.7) 19,500 21,018 (7.2) The future economic outlook remains uncertain due to the continuing spread of COVID-19 infections and economic slowdown by China’s zero-COVID policy, affecting business activities and markets in some areas. In addition, following Russia’s invasion of Ukraine, the supply of products to both countries has been suspended and the situation continues to be unpredictable due to soaring crude oil prices, etc. Under such conditions, the Rohto Group will adapt to the changes in the business environment, aiming to expand business further and improve earnings by creating new products that respond appropriately to changing customer needs. The Group is also taking on the challenge of various innovations including alliances with a wide range of companies. Based on this situation, for the next fiscal year, the Company projects net sales of 218.0 billion yen, operating income of 28.0 billion yen partly due to an increase in R&D expenses resulting from progress in developing regenerative medicine and medical-use ophthalmic drugs in Japan segment, ordinary income of 28.0 billion yen, and profit attributable to owners of parent to be 19.5 billion yen. These forecasts are based on an exchange rate of 125 yen to the U.S. dollar. (2) Overview of Financial Position Total assets at the end of the current fiscal year increased 48,477 million yen from the end of the previous fiscal year to 274,627million yen. This was mainly due to increases of 19,827 million yen in cash and deposit, 9,532 million yen in buildings and structures, and 3,845 million yen in merchandise and finished goods, while there was a decrease of 1,020 million yen in construction in progress. Total liabilities increased 21,257 million yen from the end of the previous fiscal year to 90,794 million yen. This was mainly due to increases of 7,563 million yen in long-term loans payable, 5,720 million yen in short-term loans payable, and 4,056 million yen in notes and accounts payable- trade, despite the decrease of income taxes payable of 1,891 million yen. Net assets increased 27,220 million yen from the end of the previous fiscal year to 183,832 million yen. This was mainly due to increases of 16,684 million yen in retained earnings and 6,055 million yen in foreign currency translation adjustment, while there was a decrease of 724 million yen in valuation difference on available-for-sale securities. 5 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 (3) Overview of Cash Flows Item Cash and cash equivalents at the beginning of the period Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Increase in cash and cash equivalents from newly consolidated subsidiaries Cash and cash equivalents at the end of the period Fiscal year ended Mar. 31, 2021 Fiscal year ended Mar. 31, 2022 Year-on-year change (Amount) (Millions of yen) 44,665 20,008 (10,237) (2,347) 96 7,519 69 52,254 27,250 (16,406) 3,470 4,335 18,650 – 52,254 70,905 7,589 7,242 (6,169) 5,818 4,239 11,130 (69) 18,650 During the current fiscal year, there was a net increase of 18,650 million yen in cash and cash equivalents to 70,950 million yen. Operating activities Investing activities Net cash provided by operating activities increased 7,242 million yen year-on-year to 27,250 million yen. This was because profit before income taxes was 27,953 million yen, and there were 7,216 million yen of depreciation and amortization and 3,323 million yen of increase in trade payables as cash flow increasing factors, while there were 8,823 million yen of income tax paid and 3,061 million yen of increase in inventories as cash flow decreasing factors. Net cash used in investing activities increased 6,169 million yen year-on-year to 16,406 million yen. This was mainly due to payments of 10,267 million yen for the purchase of property, plant and equipment and 3,697 million yen for the purchase of investment securities. Financing activities Net cash provided by financing activities amounted to 3,470 million yen in the current fiscal year (vs negative cash flow of 2,347 million yen in the same period of the previous year). This was mainly due to proceeds from long-term loans payable of 9,450 million yen, while there were 3,422 million yen of cash dividends paid, and 3,133 million yen of repayment of long-term loans payable. 6 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 (4) Basic Policy of Profit Distribution and Dividends for the Current and Next Fiscal Years Constantly and consistently returning to shareholders the profits earned through business activities is one of our highest priorities. The fundamental policy is to pay a dividend based on results of operations. Retained earnings will be used effectively for development of new products, investments in manufacturing equipment, entering into new businesses and other attempts to respond appropriately to changes in the operating environment. We believe that these investments will contribute to future earnings, thereby enabling the Company to pay a large and stable dividend to shareholders. Regarding dividends, following the resolution by the Board of Directors, the Company plans to distribute a year-end dividend of 21 yen per share for the fiscal year ended on March 31, 2022. Added to the interim dividend of 15 yen, which has been distributed already, this will bring the annual dividend to 36 yen per share. For the fiscal year ending on March 31, 2023, with our gratitude to all the shareholders who support us on a regular basis, we plan to pay interim dividends of 18 yen per share, year-end dividends of 19 yen per share bringing the annual total to 37 yen per share. companies. 2. Basic Approach to the Selection of Accounting Standards The Rohto Group will continue to prepare consolidated financial statements using the generally accepted accounting principles in Japan for the time being to permit comparisons with prior years and with the financial data of other We will take suitable actions with regard to the application of International Financial Reporting Standards by taking into account associated factors in Japan and other countries. 7 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 3. Consolidated Financial Statements and Major Notes (1) Consolidated Balance Sheets Prior Fiscal Year End (As of Mar. 31, 2021) Current Fiscal Year End (As of Mar. 31, 2022) (Millions of yen) Assets Current assets Cash and deposits Notes and accounts receivable-trade Electronically recorded monetary claims-operating Merchandise and finished goods Work in process Raw materials and supplies 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 Tools, furniture and fixtures Accumulated depreciation Tools, furniture and fixtures, net Land Other Construction in progress 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 Deferred tax assets Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 52,964 31,207 16,943 13,848 2,799 11,278 4,315 (285) 133,071 48,683 (29,303) 19,379 51,474 (43,434) 8,040 15,642 (13,474) 2,167 12,887 6,609 1,371 (666) 705 49,790 3,304 4,590 7,894 26,226 3,361 4,606 5,170 (3,971) 35,392 93,078 226,149 8 72,791 33,310 18,551 17,694 3,264 12,569 6,304 (179) 164,306 62,272 (33,359) 28,912 60,109 (50,183) 9,926 17,739 (15,217) 2,521 15,121 5,588 1,284 (515) 769 62,839 2,954 6,337 9,292 28,132 5,420 5,297 6,092 (6,754) 38,188 110,320 274,627 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Prior Fiscal Year End (As of Mar. 31, 2021) Current Fiscal Year End (As of Mar. 31, 2022) (Millions of yen) Liabilities Current liabilities Notes and accounts payable-trade Electronically recorded obligations-operating Short-term loans payable Accrued expenses Income taxes payable Accrued consumption taxes Provision for bonuses Provision for directors’ bonuses Provision for sales returns Provision for sales rebates Refund liability Other Total current liabilities Non-current liabilities Long-term loans payable Deferred tax liabilities Net defined benefit liability Provision for loss on guarantees Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Subscription rights to shares Non-controlling interests Total net assets Total liabilities and net assets 9,603 1,727 2,312 22,566 4,948 1,190 2,612 30 792 2,410 8,277 56,471 – 5,787 998 3,451 1,675 1,153 13,066 69,537 6,504 5,661 145,511 (4,936) 152,741 6,717 (3,062) (870) 2,784 382 704 156,612 226,149 9 13,660 2,609 8,033 16,266 3,056 129 3,048 40 – – 14,116 10,528 71,488 13,350 1,450 3,332 55 1,117 19,306 90,794 6,504 5,787 162,195 (4,936) 169,551 5,992 2,992 (631) 8,354 382 5,543 183,832 274,627 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 (2) Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) (Millions of yen) Net sales Cost of sales Gross profit Provision for sales returns Gross profit-net Promotion expenses Advertising expenses Salaries and bonuses Provision for bonuses Selling, general and administrative expenses Provision for directors’ bonuses Retirement benefit expenses Depreciation Amortization of goodwill Research and development expenses Provision for doubtful accounts Other Operating income Non-operating income Interest income Total selling, general and administrative expenses Dividend income Share of profit of entities accounted for using equity method Gain on investments in investment partnerships Other Total non-operating income Non-operating expenses Interest expenses Provision for doubtful accounts Other Total non-operating expenses Ordinary income 181,287 74,326 106,960 234 106,726 20,228 20,297 13,967 1,187 30 680 1,438 372 7,903 90 17,540 83,736 22,990 341 1,051 396 140 708 2,639 145 1,124 448 1,718 23,910 199,646 83,157 116,488 116,488 – 11,575 26,539 16,308 1,340 40 692 1,640 457 8,740 (133) 19,937 87,139 29,349 368 380 143 – 684 1,580 248 1,158 438 1,844 29,084 10 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) Extraordinary income Gain on change in equity Gain on sales of investment securities Gain on sales of shares of subsidiaries and associates Gain on bargain purchase National subsidies Total extraordinary income Extraordinary losses Loss on disposal of fixed assets Impairment loss Loss on valuation of investment securities Loss on sales of shares of subsidiaries and associates Loss on valuation of shares of subsidiaries and associates 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 37 29 2,723 – – 2,791 82 1,609 1,484 16 502 3,695 23,006 8,207 (1,971) 6,236 16,770 27 16,743 – – 76 430 128 636 – 892 642 – 232 1,767 27,953 7,480 (677) 6,803 21,150 131 21,018 11 Consolidated Statements of Comprehensive Income Profit Other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans, net of tax 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 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) (Millions of yen) Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) 16,770 2,572 (461) 972 (59) 3,024 19,794 19,843 (48) 21,150 (733) 6,115 239 0 5,622 26,772 26,588 183 12 (3) Consolidated Statements of Change in Shareholders’ Equity Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Balance at beginning of current period Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in scope of consolidation Decrease in retained earnings due to exclusion of equity method companies Change in ownership interest of parent due to transactions with non-controlling interests 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 Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in scope of consolidation Decrease in retained earnings due to exclusion of equity method companies Change in ownership interest of parent due to transactions with non-controlling interests Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period Capital stock Capital surplus Treasury shares Shareholders’ equity Retained earnings (Millions of yen) Total shareholders’ equity 6,504 5,661 131,985 (4,935) 139,215 6,504 5,661 131,985 (2,965) 16,743 (205) (46) (4,935) (0) – 139,215 (2,965) 16,743 (0) – (205) (46) – 6,504 – 5,661 13,525 145,511 (0) (4,936) 13,525 152,741 Valuation difference on available-for-sale securities Accumulated other comprehensive income Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income 4,144 (2,617) (1,843) (316) 4,144 (2,617) (1,843) (316) – (2,572) (2,572) 6,717 (445) (445) (3,062) 972 972 (870) 3,100 3,100 (2,784) 13 Subscription rights to shares Non-controlling interests Total net assets ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Balance at beginning of current period Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in scope of consolidation Decrease in retained earnings due to exclusion of equity method companies Change in ownership interest of parent due to transactions with non-controlling interests Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period 749 749 (45) (45) 704 140,032 – 140,032 (2,965) 16,743 (0) – (205) (46) – 3,055 16,580 156,612 382 382 – – 382 14 Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Capital stock Capital surplus Treasury shares Shareholders’ equity Retained earnings 6,504 5,661 145,511 (4,936) (Millions of yen) Total shareholders’ equity Balance at beginning of current period Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in scope of consolidation Decrease in retained earnings due to exclusion of equity method companies Change in ownership interest of parent due to transactions with non-controlling interests 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 Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in scope of consolidation Decrease in retained earnings due to exclusion of equity method companies Change in ownership interest of parent due to transactions with non-controlling interests Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period 6,504 5,661 0 126 (912) 144,599 (3,422) 21,018 – 6,504 126 5,787 17,596 162,195 (0) (4,936) 17,722 169,551 Valuation difference on available-for-sale securities Accumulated other comprehensive income Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income 6,717 (3,062) (870) 2,784 6,717 (3,062) (870) 2,784 (4,936) (0) 0 152,741 (912) 151,828 (3,422) 21,018 (0) 0 – – 126 (724) (724) 5,992 6,055 6,055 2,992 239 239 (631) 5,570 5,570 8,354 15 Subscription rights to shares Non-controlling interests Total net assets ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Balance at beginning of current period Cumulative effects of changes in accounting policies Restated balance Changes of items during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Disposal of treasury shares Change in scope of consolidation Decrease in retained earnings due to exclusion of equity method companies Change in ownership interest of parent due to transactions with non-controlling interests Net changes of items other than shareholders’ equity Total changes of items during period Balance at end of current period 704 704 4,839 4,839 5,543 156,612 (912) 155,700 (3,422) 21,018 (0) 0 – – 126 10,409 28,132 183,832 382 382 – 382 16 (4) Consolidated Statements of Cash Flows Cash flows from operating activities Income before income taxes and non-controlling interests Depreciation Impairment loss Amortization of goodwill Increase (decrease) in allowance for doubtful accounts Increase (decrease) in provision for bonuses Increase (decrease) in net defined benefit liability Increase (decrease) in provision for sales returns Increase (decrease) in provision for sales rebates Increase (decrease) in provision for loss on guarantees Provision for doubtful accounts Loss on disposal of fixed assets Loss (gain) on sales of investment securities Gain on bargain purchase Loss (gain) on valuation of investment securities Loss on valuation of shares of subsidiaries and associates Loss (gain) on sales of subsidiaries and associates National Subsidies Interest and dividend income Interest expenses Share of (profit) loss of entities accounted for using equity method Loss (gain) on change in equity Decrease (increase) in notes and accounts receivable – trade Decrease (increase) in inventories Increase (decrease) in notes and accounts payable – trade Other, net Subtotal Interest and dividend income received Interest expenses paid Payments for performance of guarantee obligation Income taxes paid Income taxes refund Net cash provided by (used in) operating activities ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) (Millions of yen) 23,006 27,953 6,376 1,609 372 (233) (44) 384 234 231 (11) 1,124 82 (29) – 1,484 502 (2,707) – (1,393) 145 (396) (37) 2,464 3,188 (2,811) (5,272) 28,268 1,390 (143) (1,735) (7,798) 27 20,008 7,216 892 457 (139) 288 77 – – – 1,158 – (76) (430) 642 232 – (128) (752) 248 (143) – (30) (3,061) 3,323 (634) 37,093 738 (228) (1,622) (8,823) 92 27,250 17 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) (Millions of yen) Net cash provided by (used in) investing activities (10,237) 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 Purchase of investment securities Proceeds from sales and redemption of investment securities Purchase of shares of subsidiaries resulting in change in scope of consolidation Subsidies received Payments of long-term loans receivable Collection of long-term loans receivable Other, net Cash flows from financing activities Net increase (decrease) in short-term loans payable Proceeds from long-term loans payable Repayments of long-term loans payable Cash dividends paid Cash dividends paid to non-controlling interests Purchase of shares of subsidiaries resulting in no change in scope of consolidation Other, net Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Increase in cash and cash equivalents from newly consolidated subsidiary Cash and cash equivalents at end of period (692) 634 (8,721) 597 (1,583) (1,514) 3,416 (1,516) – (966) 108 (0) (169) 2,883 (1,880) (2,965) (0) (214) (2,347) 96 7,519 44,665 69 52,254 (1,918) 963 (10,267) 12 (1,061) (3,697) 1,000 (1,203) 128 (404) 41 (0) (16,406) 1,273 9,450 (3,133) (3,422) (0) (489) (208) (3,470) 4,335 18,650 52,254 – 70,905 18 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 (5) Notes to Consolidated Financial Statements Going Concern Assumption No reportable information. Changes in Accounting Policies Application of the Accounting Standard for Revenue Recognition The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) at the beginning of the first quarter of the current fiscal year. Based on this standard, revenue expected to be received in exchange for the provision of goods and services is recognized when the control of the goods and services is transferred to customers. As a result, as for sales with a right of return, previously recorded as a provision for sales returns based on the amount of gross profit, instead of recognizing revenue at the time of sale, we now recognize a refund liability for goods or products that are expected to be returned in the amount of the consideration received or receivable in accordance with the provisions on variable consideration. Furthermore, for some transactions for which no provision for sales rebates was previously recorded, additional refund liabilities have been recognized as the new standard clarifies how to account for these cases. In such cases, the Company estimates the amount of the variable portion of the transaction consideration. It includes in the transaction price only the portion of transaction price that is not likely to have significant reduction in the recognized revenue. In addition, the Company has changed its accounting method for consideration paid to customers, such as sales commissions. They were previously included in selling, general and administrative expenses, but now deducted from the transaction price. For the application of the Accounting Standard for Revenue Recognition, in accordance with the transitional treatment prescribed in Paragraph 84 of this standard, the cumulative effect of the retrospective application of the new accounting standard, if it is applied prior to the first quarter of the current fiscal year, is added to or subtracted from retained earnings at the beginning of the first quarter of the current fiscal year. The new standard is then applied beginning with this amount of retained earnings. However, the Company has applied the method prescribed in Paragraph 86 of this standard and has not retrospectively applied the new accounting standard to contracts in which almost all revenue were recognized in accordance with the previous treatment prior to the beginning of the first quarter of the current fiscal year. In addition, the Company has applied the method prescribed in Paragraph 86, Article 1 of the Accounting Standard for Revenue Recognition, and accounted for contract changes made prior to the beginning of the first quarter of the current fiscal year based on the contract terms after reflecting all contract changes, and added or subtracted the cumulative effect of such changes to retained earnings at the beginning of the first quarter of the current fiscal year. As a result, for the current fiscal year, net sales decreased 8,887 million yen, cost of sales increased 0 million yen, reversal of provision for sales returns decreased 287 million yen, gross profit-net decreased 9,175 million yen, selling, general and administrative expenses decreased 9,072 million yen, and operating income, ordinary income and profit before income taxes decreased 103 million yen respectively. In addition, the balance of retained earnings at the beginning of the current fiscal year decreased by 912 million yen. Due to the application of the Accounting Standard for Revenue Recognition, the provision for sales returns and provision for sales rebates, etc. that were presented under current liabilities in the consolidated balance sheets in the previous fiscal year are, from the current fiscal year, included in the refund liabilities under current liabilities. In accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue Recognition, no reclassification has been made to the prior year’s consolidated financial statements to conform to the new presentation.Furthermore, in accordance with the transitional treatment prescribed in Paragraph 89-3 of the Accounting Standard for Revenue Recognition, the Company has not presented the disaggregated information on revenues from contracts with customers for the previous fiscal year. Application of the Accounting Standard for Fair Value Measurement The Company has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019), etc. from the beginning of the first quarter of the current fiscal year, and has applied the new accounting standard set forth by the Accounting Standard for Fair Value Measurement, etc. prospectively in accordance with the transitional treatment prescribed in Paragraph 19 of the Accounting Standard for Fair Value Measurement and Paragraph 44-2 of the Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). As a result of this change, the corporate bonds, which were previously considered to be financial instruments that were extremely difficult to determine the fair value and the Company used the acquisition cost as the quarterly consolidated balance sheet value, is now evaluated at the fair value. Even in cases where observable inputs are not available, the fair value is calculated using unobservable inputs based on the best available information. 19 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 (Business Combinations) Finalization of provisional accounting treatment for business combinations The Company had used a provisional accounting treatment for the business combination with Interstem Co., Ltd. on March 23, 2021, but it was finalized in the current fiscal year. With the finalization of this provisional accounting treatment, there was a significant change in acquisition cost allocation. As a result, other under intangible assets increased mainly, and the amount of goodwill, provisionally calculated as 1,972 million yen at the previous fiscal year end, decreased by 658 million yen to 1,313 million yen after the accounting treatment was finalized. The intangible assets identified from the acquisition cost allocation process was 1,070 million yen of in-process research and development costs. The key assumptions in this measurement include milestone achievements (including the launch of developed products using the Cultured Chondrocyte Implantation (CCI) kit), probability of R&D success, post-launch sales revenue and raw material unit cost projections, and discount rates. 20 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Segment and Other Information Segment Information 1. Overview of reportable segments Segments used for financial reporting are the Company’s constituent units for which separate financial information is available and for which the Board of Directors performs periodic studies for the purposes of determining the allocation of resources and evaluating performance. The Company undertakes manufacture and sales activities mainly in the health and beauty care categories. Within Japan, these operations are mainly handled by the Company. Overseas, operations are mainly handled by The Mentholatum Company, Inc. in America, The Mentholatum Company Ltd. (UK). in Europe, and The Mentholatum (Asia Pacific) Ltd. and Mentholatum (China) Pharmaceutical Co., Ltd. in Asia, together with overseas affiliates. These affiliates each operate as autonomous business units, formulating comprehensive strategies in each region and developing business activities for the products and services they undertake. Accordingly, the Company comprises the four geographical reportable segments of Japan, America, Europe, and Asia based on our manufacturing and sales structure. In each segment, we manufacture and sell eye care (including eye drops and eyewash preparations), skincare (including dermal medicines, lip balm, sunscreens, and functional cosmetics, etc.), internal medicines (including gastrointestinal medicines, traditional Chinese herbal medicines and supplements), and other products and services, such as in-vitro test kits. 2. Calculation methods for net sales, profits/losses, assets, liabilities, and other items for each reportable segment The accounting treatment methods for reportable segments are generally the same as those listed in “Significant Accounting Policies in the Preparation of Consolidated Financial Statements” presented in the Group’s annual securities report (Yuka Shoken Hokokusho.) determined based on market prices. Profits for reportable segments are generally operating income figures. Inter-segment sales and transfers are As described in Changes in Accounting Policies, the Company has applied the Accounting Standard for Revenue Recognition from the beginning of the first quarter of the current fiscal year and changed the accounting method for revenue recognition. The calculation for segment information has also been changed accordingly. As a result of this change, net sales in the Japan segment for the current fiscal year decreased by 8,887 million yen and segment profit decreased by 103 million yen, compared with the previous method. 21 3. Information related to net sales, profit/loss, assets, liabilities, and other items for each reportable segment Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Reportable segment (Note 1) Japan America Europe Asia Subtotal Others (Note 2) Total Adjustment (Note 3) 115,629 7,687 8,149 48,056 179,522 1,764 181,287 181,287 3,351 1,090 52 3,137 7,632 28 7,660 (7,660) 118,980 8,778 8,202 51,193 187,154 1,793 188,947 (7,660) 181,287 14,656 458 375 6,926 22,416 118 22,534 455 22,990 164,120 17,038 8,940 64,885 254,985 1,745 256,730 (30,580) 226,149 – 4,268 227 257 56 303 1,042 5,872 88 372 31 – 5,904 372 (Millions of yen) Reported in consolidated statements of income (Note 4) – 5,904 372 – – – – 8,695 113 106 1494 10,410 24 10,434 10,434 Segment liabilities 47,758 2,287 2,319 18,906 71,272 375 71,648 (2,110) 69,537 Notes: 1. “America” includes the business activities of overseas entities in the U.S. and Brazil, and others; “Europe” those in the U.K., Poland and South Africa, and others; and “Asia” those in China, Taiwan, Vietnam, and others. 2. “Others” is the business that is excluded from reportable segments, and includes the business activities of entities in 3. (1) “Adjustment” to segment profit of 455 million yen indicates elimination for intersegment transactions. (2) “Adjustment” to segment assets of (30,580) million yen and liabilities of (2,110) million yen indicate an elimination for intersegment transactions. 4. Segment profit is adjusted with operating income reported in the consolidated statements of income. 5. The provisional accounting treatment for business combinations has been finalized in the current fiscal year. The segment information for the fiscal year ended March 31, 2020 have been restated accordingly. Net sales (1) Sales to customers (2) Inter-segment sales and transfers Total Segment profit Segment assets Other items Depreciation Amortization of goodwill Increase in property, plant and equipment and intangible fixed assets Australia. 22 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Current Fiscal Year (Apr. 1, 2021– Mar. 31, 2022) (Millions of yen) Reported in consolidated statements of income (Note 4) 199,646 199,646 6,557 457 – – – – – Reportable segment (Note 1) Japan America Europe Asia Subtotal Others (Note 2) Total Adjustment (Note 3) 121,417 10,037 10,297 55,988 197,740 1,906 199,646 121,417 10,037 10,297 55,988 197,740 1,906 199,646 3,383 1,149 46 2,927 7,507 58 7,565 (7,565) – 124,800 11,187 10,344 58,915 205,247 1,964 207,212 (7,565) 199,646 19,547 216 563 8,365 28,693 171 28,864 484 29,349 198,238 20,171 9,667 74,789 302,866 1,714 304,580 (29,953) 274,627 Segment liabilities 66,036 3,820 2,424 20,331 92,612 258 92,871 (2,076) 90,794, 4,842 331 317 1,030 6,522 356 91 457 9 – 35 – 6,557 457 10,704 119 158 936 11,918 29 11,948 11,948 Notes: 1. “America” includes the business activities of overseas entities in the U.S. and Brazil, and others; “Europe” those in the U.K., Poland and South Africa, and others; and “Asia” those in China, Taiwan, Vietnam, and others. 2. “Others” is the business that is excluded from reportable segments, and includes the business activities of entities in 3. (1) “Adjustment” to segment profit of 484million yen indicates elimination for intersegment transactions. (2) “Adjustment” to segment assets of (29,953) million yen and liabilities of (2,076) million yen indicate an elimination for intersegment transactions. 4. Segment profit is adjusted with operating income reported in the consolidated statements of income. Net sales Revenue From Contracts with Customers (1) Sales to customers (2) Inter-segment sales and transfers Total Segment profit Segment assets Other items Depreciation Amortization of goodwill Increase in property, plant and equipment and intangible fixed assets Australia. 23 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Related information Prior Fiscal Year (Apr. 1, 2020– Mar. 31, 2021) 1. Products and services information (Millions of yen) Eye care products Skincare products Internal medicines Others Total Sales to customers 42,071 111,063 23,333 4,820 181,287 Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) 1. Products and services information (Millions of yen) Eye care products Skincare products Internal medicines Others Total Sales to customers 43,102 124,055 25,604 6,884 199,646 Impairment loss on fixed assets for each reportable segment Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) (Millions of yen) Reportable segment Japan America Europe Asia Subtotal Others Adjustment Total 1,536 – – 72 1,609 – – 1,609 Impairment losses on fixed assets Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) (Millions of yen) Reportable segment Japan America Europe Asia Subtotal Others Adjustment Total 384 – 508 – 892 – – 892 Impairment losses on fixed assets Information on gain on negative goodwill by reportable segment. Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) No reportable information. Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) (Millions of yen) Reportable segment Japan America Europe Asia Subtotal Others Adjustment Total 430 – – – 430 – – 430 Gain on bargain purchase 24 ROHTO Pharmaceutical Co., Ltd. (4527) Financial Results for FY3/21 Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) 1,363.42 Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) 1,559.62 Notes: 1. Basis for calculation of basic net income per share and diluted net income per share are as follows. (Millions of yen) Prior Fiscal Year (Apr. 1, 2020 – Mar. 31, 2021) Current Fiscal Year (Apr. 1, 2021 – Mar. 31, 2022) Per-share Information Net assets per share Basic net income per share Diluted net income per share Item Basic net income per share Profit attributable to owners of parent Amount not available to common stock shareholders Profit attributable to owners of parent applicable to common stock Average number of common stock shares outstanding during the period (thousand shares) Diluted net income per share Adjusted to profit attributable to owners of parent Increase in the number of common stock shares (thousand shares) [of which subscription rights to shares (thousand shares)] Summary of dilutive shares not the calculation of “diluted net income per share” since there was no dilutive effect. included in Total net assets on the balance sheets Deduction from total net assets [of which subscription rights to shares] [of which non-controlling interests] Net assets applicable to common stock Number of common stock shares used in calculation of net assets per share (thousand shares) Material Subsequent Events No reportable information. (Yen) 184.26 183.73 21,018 21,018 114,070 – – 330 [ 330] 183,832 5,926 [ 382] [5,543] 177,905 114,069 146.78 146.36 16,743 16,743 114,070 – – 330 [ 330] – 156,612 1,087 [ 382] [ 704] 155,525 114,070 2. Basis for calculation of net assets per share is as follows. (Millions of yen) Item Prior Fiscal Year End (As of Mar. 31, 2021) Current Fiscal Year End (As of Mar. 31, 2022) * This financial report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers who prefer an English translation. 25