ゼリア新薬工業（4559） – [Delayed]Consolidated Financial Results for the Fiscal Year Ended March 31, 2022[Japanese GAAP]

Consolidated Financial Results for the Fiscal Year Ended March 31, 2022 (Under Japanese GAAP) Listed Company: Zeria Pharmaceutical Co., Ltd. Code Number: 4559 Representative: Mitsuhiro Ibe, Representative Director, President & COO Person in charge of reference: Tomoyuki Nishizawa, Director, Public Relations Division Scheduled date of ordinary general meeting of shareholders: June 29, 2022 Scheduled date to commence dividend payments: June 30, 2022 Scheduled date to submit the Securities Report: June 29, 2022 Preparation of supplementary documents to the financial results: Holding of financial results presentation: Yes Yes (for analysts, institutional investors and the press) May 11, 2022 (Stock Exchange: Tokyo Stock Exchange) (URL: https://www.zeria.co.jp/) TEL (03) 3661-1039 1. Consolidated Financial Highlights (April 1, 2021 through March 31, 2022) (1) Consolidated Financial Results (Percentage figures indicate changes from the previous year.) (Amounts under a million yen are truncated.) Net sales Operating profit Ordinary profit % Year ended 12.8 March 31, 2022 March 31, 2021 – Note: Comprehensive income: For the year ended March 31, 2022: 2,992 million yen [(52.1)%] Million yen 6,366 3,475 Million yen 59,532 52,757 % 83.2 – Million yen 5,935 3,208 % 85.0 – For the year ended March 31, 2021: 6,250 million yen [–%] Profit attributable to owners of parent Million yen 3,961 3,143 % 26.0 – Basic earnings per share Diluted earnings per share Return on equity Ordinary profit to total assets Operating profit to net sales Yen 87.76 68.22 Year ended March 31, 2022 March 31, 2021 Reference: Share of profit (loss) of entities accounted for using equity method: For the year ended March 31, 2022: − million yen For the year ended March 31, 2021: − million yen Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations from the start of the fiscal year ended March 31, 2022, and each figure for the fiscal year ended March 31, 2021, is the figure after retrospectively applying the accounting standard and relevant revised ASBJ regulations. Consequently, the percentage of year-on-year change of each figure for the fiscal year ended March 31, 2021, is not shown. Yen – – 10.7 6.6 7.1 5.8 4.8 2.8 % % % (2) Consolidated Financial Position Total assets Net assets Equity ratio Net assets per share Million yen 124,282 121,860 As of March 31, 2022 March 31, 2021 Reference: Equity: As of March 31, 2022: 54,894 million yen As of March 31, 2021: 55,985 million yen Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations from the start of the fiscal year ended March 31, 2022, and each figure as of March 31, 2021, is the figure after retrospectively applying the accounting standard and relevant revised ASBJ regulations. Million yen 55,092 56,152 1,236.09 1,225.09 44.2 45.9 Yen % (3) Consolidated Cash Flows Year ended March 31, 2022 March 31, 2021 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at the end of term Million yen 8,950 6,894 Million yen (2,892) (17,460) Million yen (4,841) 11,185 Million yen 11,579 9,668 2. Dividends First quarter Yen – – Annual dividends Second quarter Third quarter Year-end Total Total dividends paid (Total) Payout ratio (Consolidated) Dividend rate for net assets (Consolidated) Yen Yen Yen 17.00 17.00 Yen – – Year ended March 31, 2021 March 31, 2022 Year ending March 31, 2023 (Forecast) 3. Consolidated Financial Forecast for Fiscal Year Ending March 31, 2023 (April 1, 2022 through March 31, 2023) 1,561 1,566 34.00 35.00 17.00 18.00 Million yen 49.8 39.9 18.00 18.00 36.00 28.5 % – – % 2.9 2.8 (Percentage figures indicate changes from the same period of the previous year.) Basic earnings per share Yen 63.05 126.10 Net sales Operating profit Ordinary profit Profit attributable to owners of parent First six months Full year Million yen 33,000 66,000 % 15.4 10.9 Million yen 3,500 7,000 % 31.0 10.0 Million yen 3,500 7,000 % 12.3 17.9 Million yen 2,800 5,600 % 32.3 41.4 * Notes (1) Significant changes of subsidiaries during the fiscal year ended March 31, 2022 (changes in specified subsidiaries resulting in changes in scope of consolidation): None Inclusion: – (Company name: –) (2) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements after Exclusion: – (Company name: –) error corrections 1) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes 2) Changes in accounting policies due to other reasons: None 3) Changes in accounting estimates: None 4) Restatement of prior period financial statements after error corrections: None Note: For details, please refer to “3. Consolidated Financial Statements and Significant Notes Thereto, (5) Notes to consolidated financial statements (Change in accounting policy)” on page 18 of the Attached Material. (3) Number of shares issued (common shares) 1) Number of shares issued as of the end of the term (including treasury shares): As of March 31, 2022: 53,119,190 shares As of March 31, 2021: 53,119,190 shares 2) Number of shares of treasury shares as of the end of the term: As of March 31, 2022: 8,709,322 shares 3) Average number of shares during the term: For the year ended March 31, 2022: 45,139,009 shares For the year ended March 31, 2021: 46,071,761 shares As of March 31, 2021: 7,420,461 shares Reference: Summary of Non-consolidated Financial Results Non-consolidated Financial Highlights (April 1, 2021 through March 31, 2022) (1) Non-consolidated Financial Results (Percentage figures indicate changes from the previous year.) Net sales Operating profit Ordinary profit Year ended March 31, 2022 March 31, 2021 Million yen 31,956 31,570 % 1.2 – Million yen 782 390 % 100.6 – Million yen 1,594 1,088 % 46.4 – Profit Million yen 1,392 1,273 % 9.3 – Basic earnings per share Diluted earnings per share Yen Year ended March 31, 2022 March 31, 2021 Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations from the start of the fiscal year ended March 31, 2022, and each figure for the fiscal year ended March 31, 2021, is the figure after retrospectively applying the accounting standard and relevant revised ASBJ regulations. Consequently, the percentage of year-on-year change of each figure for the fiscal year ended March 31, 2021, is not shown. Yen – – 30.85 27.65 (2) Non-consolidated Financial Position Total assets Net assets Equity ratio Net assets per share Million yen 94,903 95,027 As of March 31, 2022 March 31, 2021 Reference: Equity: As of March 31, 2022: 38,252 million yen As of March 31, 2021: 41,329 million yen Note: The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and relevant revised ASBJ regulations from the start of the fiscal year ended March 31, 2022, and each figure as of March 31, 2021, is the figure after retrospectively applying the accounting standard and relevant revised ASBJ regulations. Million yen 38,252 41,329 861.34 904.39 40.3 43.5 Yen % * Financial Results Reports Are Not Required to Be Audited by Certified Public Accountants or An Audit Corporation. * Cautionary Statement with Respect to Appropriate Use of Financial Forecast and Other Special Matters The description about the future including the projection in this document is based on information available to the Company at present and certain presumptions which the Company considers reasonable. Consequently, any descriptions herein do not constitute assurances regarding actual results by the Company. The actual results for future terms may differ from the information in this document due to various factors. For the assumptions made in financial forecasts and cautions concerning the use thereof, please refer to “1. Summary of Business Results (1) Summary of business results for the current fiscal year” on page 2 of the Attached Material. ○Table of contents of attachments 1. Summary of Business Results ……………………………………………………………………………………………………. 2 (1) Summary of business results for the current fiscal year …………………………………………………………… 2 (2) Overview of financial position for the current fiscal year ………………………………………………………… 4 2. Basic Policy on Selection of Accounting Standards………………………………………………………………………. 6 3. Consolidated Financial Statements and Significant Notes Thereto ………………………………………………….. 7 (1) Consolidated balance sheet ………………………………………………………………………………………………….. 7 (2) Consolidated statement of income and consolidated statement of comprehensive income ……………. 9 Consolidated statement of income ………………………………………………………………………………………… 9 Consolidated statement of comprehensive income ………………………………………………………………… 10 (3) Consolidated statement of changes in equity ………………………………………………………………………… 11 (4) Consolidated statement of cash flows ………………………………………………………………………………….. 13 (5) Notes to consolidated financial statements …………………………………………………………………………… 15 (Notes on premise of a going concern) ………………………………………………………………………………… 15 (Significant matters that form the basis for the preparation of consolidated financial statements) .. 15 (Change in accounting policy) ……………………………………………………………………………………………. 18 (Segment information, etc.) ……………………………………………………………………………………………….. 19 (Per share information) ……………………………………………………………………………………………………… 23 (Significant subsequent events) ………………………………………………………………………………………….. 23 4. Other …………………………………………………………………………………………………………………………………….. 24 (1) Sales of major products and merchandise Consolidated …………………………………………………………. 24 (2) Status of pipeline of new drugs …………………………………………………………………………………………… 25 1 1. Summary of Business Results (1) Summary of business results for the current fiscal year (i) Business results for the current fiscal year Net sales for the current fiscal year were 59,532 million yen (up 12.8% from the previous fiscal year). As for profits, operating profit was 6,366 million yen (up 83.2% from the previous year), ordinary profit was 5,935 million yen (up 85.0% from the previous year), and profit attributable to owners of parent was 3,961 million yen (up 26.0% from the previous year). In the current fiscal year, the overseas sales to net sales ratio was 41.4%, compared with 36.2% in the previous fiscal year. The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. are effective from the beginning of the current fiscal year, and comparisons and analysis with the previous fiscal year are made using figures after retroactive application of the said accounting standard. Next, we would like to report on the results by business segment. (Ethical Pharmaceuticals Business) In this business segment, we have been striving to maximize product value by further enhancing the information provision activities of MRs (medical representatives), including digital marketing, based on compliance with the promotion code. As for our mainstay product, Asacol, a therapeutic agent for ulcerative colitis, sales in the domestic market remained at the same level as the previous year, affected by the NHI drug price revision, although sales grew on a volume basis. In the overseas market, sales remained steady on the back of growth in sales of Asacol 1600mg. In addition, sales of DIFICLIR, a treatment for Clostridium difficile infection, made a significant contribution to sales as a result of aggressive investment of sales resources in response to its recommendation as a first-line drug in the European guidelines for the treatment of infectious diseases. In addition, sales of Acofide, a therapeutic agent for functional dyspepsia, increased due in part to the elimination of inventory adjustments resulting from the termination of co-promotion with Astellas Pharma Inc. in the previous fiscal year. On the other hand, sales of Entocort (domestic sales name: Zentacort), an inflammatory bowel disease therapeutic agent, decreased due to difficult conditions in some regions such as Canada and Spain. With regard to Ferinject, an iron deficiency anemia treatment launched in Japan in September 2020, we are working to build the market, particularly in the gastroenterology and obstetrics and gynecology fields. As a result, net sales in the business amounted to 37,006 million yen (up 23.6% from the previous fiscal year). (Consumer Healthcare Business) In this business segment, we have been building the market by supplying products that support the self-medication of consumers amid the advance of the super-aging society. Sales of the main brands, Hepalyse range increased due to the growth of the pharmaceutical Hepalyse range and the recovery of sales of Hepalyse W range for convenience stores from the second half of the fiscal year. On the other hand, sales of the Chondroitin range, WithOne range and hygiene products such as disinfectants decreased due to the impact of competitive products. In addition, efforts were made to strengthen product lineups, and new products such as IONA Spa&Mineral W cleansing and Hi Jelly FE were launched. In addition, as part of efforts to develop and nurture Western herbal preparations, in addition to Prefemin, a treatment for premenstrual syndrome, which is currently on the market, the Company sequentially launched Belfemin, a medicine to improve swelling of the feet, and Colpermin, a medicine to improve irritable bowel syndrome (IBS) during the current fiscal year. As a result, net sales in the business amounted to 22,370 million yen (down 1.2% from the previous fiscal year). 2 (Other Business) Net sales in this segment amounted to 156 million yen (down 0.3% from the previous fiscal year), mainly due to insurance agency business and real estate lease revenue. (Status of Research and Development) In the Research and Development division, Zeria is carefully selecting development themes and promoting new drug research and development including in-licensed, centered on the priority gastrointestinal field under a global development structure in coordination with Tillotts Pharma AG. The Phase III global clinical trial of Z-100 for the treatment of cervical cancer was conducted in seven Asian countries including Japan, but failed to demonstrate a statistically significant difference in overall survival, the primary endpoint of the trial. However, Z-100 has been shown to exhibit a variety of pharmacological effects based on its immunostimulatory properties, including suppression of cancer. Furthermore, in the previous study (2004-2013), a subgroup analysis limited to stage IIIB subjects showed a significant difference in overall survival, the primary endpoint, in the Z-100 group compared to the placebo group, and we intend to continue the research and development of Z-100 in the future. Regarding Zeria’s own original drug Z-338 (Acofide), Phase III trials are being conducted for pediatric functional dyspepsia patients in Japan. In addition, we are providing an investigational drug for a Phase II multicenter investigator-initiated clinical trial being conducted by Kyushu University to support research to explore the efficacy and safety of acotiamide in patients with esophagogastric junction outflow obstruction. Furthermore, we are supporting activities to obtain manufacturing and marketing approvals in Thailand, Indonesia, and five Latin American countries under license agreements with Meiji Seika Pharma Co., Ltd. and FAES FARMA, S.A. for the exclusive development and marketing of the drug. Phase III trials have been conducted in Japan for ZG-801, a therapeutic agent for hyperkalemia in-licensed from Vifor (International) AG of Switzerland. On the other hand, with regard to the Phase III global study (indication: chronic heart failure accompanying hyperkalemia) in chronic heart failure patients with a background of hyperkalemia that Vifor (International) AG was conducting in the U.S., Europe, and other countries, in which we participated as the company in charge of Japan, Vifor (International) AG decided to terminate the study before the start of the study in Japan due to the global spread of the COVID-19 pandemic. As for consumer healthcare products, we obtained the manufacturing and marketing approval for Colpermin, a medicine to improve irritable bowel syndrome (IBS), in August 2021, and launched it in March 2022. As a result of these activities, research and development expenses for the current fiscal year were 4,789 million yen (down 11.5% from the previous fiscal year). (Status of Production and Distribution) In Zeria’s Production and Distribution division, we are reducing costs by consolidating production and promoting in-house production based on the premise of securing quality and stable supply, while taking measures to prevent the spread of COVID-19 infections. In production-related divisions, we took thorough measures against the risk of infection at each plant due to the spread of COVID-19 and secured product inventories through accelerated production in order to maintain a stable supply system. In addition, as a response to quality assurance, with the enforcement of the revisions to the ministerial ordinance on GMP (Good Manufacturing Practices – standards for manufacturing and quality controls relating to pharmaceuticals and quasi-drugs) (enacted on August 1, 2021), more stringent GMP operations have become essential, and we have improved our GMP operation system, including strengthening the education and training of plant employees. Furthermore, during the fiscal year under review, the Company initiated a review of the production system at its four domestic plants, including the Saitama and Tsukuba plants owned by the Company and the plants owned by two subsidiaries (Kenso-Seiyaku Co., Ltd.’s Tsukuba Plant and IONA INTERNATIONAL CORPORATION’s Fukushima Plant), and began consolidation of production lines and in-house production. We will accelerate these initiatives and continue to work on further cost reduction. 3 In logistics-related divisions, we took full advantage of the effects of the relocation of the Tokyo Logistics Center in 2020 to strengthen the joint delivery system and reduce logistics costs. We will continue to promote the reinforcement of the joint delivery system mainly by expanding the number of participating companies to further improve operational efficiency. In addition, the government has been strengthening its inspection system of manufacturing facilities due to frequent large-scale recalls of generic drug manufacturers and distributors resulting from discrepancies between the approval documents and actual manufacturing conditions and violations of GMP ordinances. Based on these cases of violations, we have re-inspected each of our plants as necessary to confirm that there are no problems, and have also changed the system to centralized management by the Headquarters organization to further strengthen the GMP system. We will ensure that there continues to be no issues going forward by strengthening education and training efforts at each plant, enhancing departments related to quality control, and reinforcing our framework for oversight by the relevant departments at Headquarters. (ii) Future outlook For the fiscal year ending March 31, 2023, we forecast net sales of 66,000 million yen (up 10.9% from the previous year), operating profit of 7,000 million yen (up 10.0% from the previous year), ordinary profit of 7,000 million yen (up 17.9% from the previous year), and profit attributable to owners of parent of 5,600 million yen (up 41.4% from the previous year). Net sales Profit In the Ethical Pharmaceuticals Business, the Company expects sales to increase both in the overseas market with the growth of DIFICLIR and Asacol, and in the domestic market with the growth of Ferinject and Acofide. In the Consumer Healthcare Business, although the end of the spread of COVID-19 is still uncertain due to the emergence of new mutant strains, the Company expects sales of Hepalyse range and other major products to recover through the introduction of new products and strengthening of sales promotion activities in line with changes in consumers’ behavioral patterns and needs. Due to the increase in net sales, we expect an increase in operating profit, ordinary profit, and profit attributable to owners of parent. (2) Overview of financial position for the current fiscal year (i) Assets, liabilities, and net assets Total assets at the end of the current fiscal year were 124,282 million yen, an increase of 2,421 million yen from the end of the previous fiscal year. Current assets increased 4,349 million yen to 41,663 million yen from the end of the previous fiscal year, and non-current assets decreased 1,927 million yen to 82,618 million yen from the end of the previous fiscal year. Major changes in current assets included an increase of 1,910 million yen in cash and deposits, an increase of 2,646 million yen in accounts receivable – trade, an increase of 846 million yen in inventories such as merchandise and finished goods, and a decrease of 1,060 million yen in other current assets including a decrease in advance payments to suppliers. The breakdown of changes in non-current assets was a decrease of 494 million yen in property, plant and equipment, a decrease of 863 million yen in intangible assets, and a decrease of 568 million yen in investments and other assets. Total liabilities at the end of the current fiscal year were 69,189 million yen, an increase of 3,482 million yen from the end of the previous fiscal year. Current liabilities decreased 9,604 million yen to 44,193 million yen from the end of the previous fiscal year, and non-current liabilities increased 13,086 million yen to 24,996 million yen from the end of the previous fiscal year. Current liabilities decreased mainly due to a decrease of 10,315 million yen in short-term borrowings. Non-current liabilities increased mainly due to an increase of 12,566 million yen in long-term borrowings. Net assets at the end of the current fiscal year were 55,092 million yen, a decrease of 1,060 million yen from the end of the previous fiscal year. 4 This was mainly due to profit attributable to owners of parent of 3,961 million yen, dividends paid at the end of the previous period and in the current interim period of 1,543 million yen, an increase of 2,595 million yen in treasury shares, a decrease of 330 million yen in valuation difference on available-for-sale securities, an increase of 616 million yen in foreign currency translation adjustment and a decrease of 1,287 million yen in remeasurements of defined benefit plans. As a result, equity ratio at the end of the current fiscal year decreased by 1.7% from the end of the previous fiscal year to 44.2%. (ii) Status of cash flows Cash and cash equivalents (below, “cash”) at the end of the current fiscal year increased 1,910 million yen from the beginning of the period to 11,579 million yen. This was due to net cash provided by operating activities of 8,950 million yen, despite net cash used in investing activities of 2,892 million yen and net cash used in financing activities of 4,841 million yen. The status of each cash flow and its factors for the current fiscal year are as follows. [Net cash provided by (used in) operating activities] Net cash provided by operating activities amounted to 8,950 million yen in the current fiscal year (up 2,056 million yen from the previous fiscal year). This was due to factors including profit before income taxes of 5,721 million yen, depreciation of 4,700 million yen, an increase in trade receivables of 2,029 million yen, a decrease in other current assets of 1,412 million yen, and income taxes – current of 874 million yen. [Net cash provided by (used in) investing activities] Net cash used in investing activities totaled 2,892 million yen in the current fiscal year (up 14,567 million yen from the previous fiscal year). This was mainly due to expenditures of 1,063 million yen for the purchase of property, plant and equipment and 1,640 million yen for the purchase of investment securities. [Net cash provided by (used in) financing activities] Net cash used in financing activities totaled 4,841 million yen in the current fiscal year (down 16,026 million yen from the previous fiscal year). This was mainly due to a decrease of 13,241 million yen in short-term borrowings, proceeds from long-term borrowings of 16,158 million yen, repayment of long-term borrowings of 3,388 million yen, purchase of treasury shares of 2,603 million yen, and dividends paid of 1,538 million yen. 5 Trends in cash flow-related indicators Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Equity ratio (%) Equity ratio based on market value (%) Ratio of interest-bearing debt to cash flow (years) Interest coverage ratio (times) 45.9 78.9 7.4 30.8 (Notes) 1. Each indicator is calculated as follows. 44.2 68.0 6.0 29.4 Equity ratio: equity/total assets (i) (ii) Equity ratio based on market value: market capitalization/total assets (iii) Ratio of interest-bearing debt to cash flow: interest-bearing debt/cash flow (iv) Interest coverage ratio: cash flow/interest payments 2. All of the above ratios are calculated based on consolidated financial figures. 3. Market capitalization is calculated based on the number of shares issued excluding treasury shares. 4. Operating cash flow is used for cash flow calculations. 5. Interest-bearing debt includes all liabilities on the consolidated balance sheets for which interest is paid. 2. Basic Policy on Selection of Accounting Standards In order to ensure comparability among companies and over time, the Group prepares its consolidated financial statements in accordance with the Regulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (excluding Chapters VII and VIII) (Ministry of Finance Order No. 28 of 1976). It is the Company’s policy to apply International Financial Reporting Standards in an appropriate manner, taking into consideration various domestic and overseas circumstances. 6 3. Consolidated Financial Statements and Significant Notes Thereto (1) Consolidated balance sheet As of March 31, 2021 As of March 31, 2022 (Thousands of yen) 9,793,938 306,855 13,328,772 3,032 5,969,887 1,504,855 3,629,263 2,916,210 (138,662) 37,314,152 24,369,295 (16,995,431) 7,373,864 14,719,435 (12,480,106) 2,239,328 12,350,879 116,803 5,281,242 (3,727,836) 1,553,405 23,634,282 6,429,153 27,950,633 6,343,457 1,346,567 42,069,811 5,915,274 67,603 12,453,878 443,272 (37,835) 18,842,193 84,546,287 121,860,440 11,704,282 231,444 15,975,368 – 6,721,583 1,409,684 3,819,276 1,855,502 (53,425) 41,663,717 24,540,208 (17,664,571) 6,875,636 15,072,462 (13,151,051) 1,921,411 12,354,010 480,590 5,439,464 (3,931,769) 1,507,694 23,139,343 5,830,459 27,539,473 6,786,202 1,049,892 41,206,029 7,005,587 108,187 10,736,005 475,407 (51,945) 18,273,242 82,618,615 124,282,333 Assets Current assets Cash and deposits Notes receivable – trade Accounts receivable – trade Securities 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 Land Construction in progress Other Accumulated depreciation Other, net Total property, plant and equipment Intangible assets Goodwill Sales right Trademark right Other Total intangible assets Investments and other assets Investment securities Deferred tax assets Retirement benefit asset Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 7 Liabilities Current liabilities Accounts payable – trade Short-term borrowings Income taxes payable Provision for bonuses Other Total current liabilities Non-current liabilities Long-term borrowings Deferred tax liabilities Provision for loss on cancellation of contracts Retirement benefit liability Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares Total shareholders’ equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests Total net assets Total liabilities and net assets (Thousands of yen)As of March 31, 2021 As of March 31, 2022 1,693,938 44,158,858 562,594 1,268,150 6,113,932 53,797,474 5,819,600 3,344,317 281,160 1,308,891 55,578 1,100,744 11,910,291 65,707,766 6,593,398 11,685,121 46,353,650 (14,997,702) 49,634,467 137,448 2,599,199 3,614,155 6,350,802 167,402 56,152,673 121,860,440 2,049,590 33,842,933 458,297 1,530,935 6,311,307 44,193,063 18,385,860 3,905,088 490,142 1,073,819 55,827 1,086,057 24,996,794 69,189,858 6,593,398 11,685,121 48,860,697 (17,593,074) 49,546,143 (193,416) 3,215,379 2,326,536 5,348,499 197,832 55,092,474 124,282,333 8 59,532,829 17,384,577 42,148,251 35,782,192 6,366,058 17,239 192,216 78,050 287,506 315,462 329,990 72,465 717,918 5,935,646 3,513 14,589 – 18,103 – 4,027 – 227,958 231,985 5,721,764 726,625 1,020,344 1,746,969 3,974,794 13,609 3,961,184 (2) Consolidated statement of income and consolidated statement of comprehensive income Consolidated statement of income (Thousands of yen)Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 52,757,184 15,796,484 36,960,699 33,484,983 3,475,716 32,131 223,142 118,097 373,371 238,195 322,794 79,445 640,435 3,208,652 1,991 375,143 681,614 1,058,749 1,179 4,041 32,539 273,096 310,856 3,956,545 837,063 (35,353) 801,710 3,154,835 11,710 3,143,125 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Other Total non-operating income Non-operating expenses Interest expenses Foreign exchange losses Other Total non-operating expenses Ordinary profit Extraordinary income Gain on sale of non-current assets Gain on sale of investment securities Gain on write-off debts Total extraordinary income Extraordinary losses Loss on sale of non-current assets Loss on retirement of non-current assets Impairment losses Provision for loss on cancellation of contracts Total extraordinary losses Profit before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit attributable to non-controlling interests Profit attributable to owners of parent 9 Consolidated statement 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 Total other comprehensive income Comprehensive income Comprehensive income attributable to Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 (Thousands of yen) 3,974,794 (330,865) 636,557 (1,287,618) (981,925) 2,992,868 2,958,880 33,987 3,154,835 594,679 941,024 1,559,672 3,095,377 6,250,212 6,247,882 2,329 10 (3) Consolidated statement of changes in equity Fiscal year ended March 31, 2021 Restated balance 6,593,398 11,685,121 44,781,872 (13,846,605) 49,213,786 Shareholders’ equity Share capital Capital surplus Retained earnings Treasury shares 6,593,398 11,685,121 44,832,502 (13,846,605) 49,264,416 (Thousands of yen)Total shareholders’ equity (50,629) (50,629) (1,571,347) 3,143,125 (1,571,347) 3,143,125 (1,151,096) (1,151,096) Total changes during period – – 1,571,777 (1,151,096) 420,681 Balance at end of period 6,593,398 11,685,121 46,353,650 (14,997,702) 49,634,467 Restated balance (457,231) 1,648,794 2,054,482 3,246,045 168,384 52,628,216 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 Non-controlling interests Total net assets (457,231) 1,648,794 2,054,482 3,246,045 168,384 52,678,846 (50,629) (1,571,347) 3,143,125 (1,151,096) 594,679 950,404 1,559,672 3,104,757 (981) 3,103,775 Total changes during period 594,679 950,404 1,559,672 3,104,757 (981) 3,524,456 Balance at end of period 137,448 2,599,199 3,614,155 6,350,802 167,402 56,152,673 Balance at beginning of period Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity Balance at beginning of period Cumulative effects of changes in accounting policies Changes during period Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity 11 Share capital Capital surplus Retained earnings Treasury shares 6,593,398 11,685,121 46,353,650 (14,997,702) 49,634,467 (Thousands of yen)Total shareholders’ equity 89,448 (1,543,585) 3,961,184 (2,595,372) (2,595,372) Shareholders’ equity 89,448 (1,543,585) 3,961,184 Fiscal year ended March 31, 2022 Balance at beginning of period Changes during period Change in scope of consolidation Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity Total changes during period – – 2,507,047 (2,595,372) (88,324) Balance at end of period 6,593,398 11,685,121 48,860,697 (17,593,074) 49,546,143 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 Non-controlling interests Total net assets 137,448 2,599,199 3,614,155 6,350,802 167,402 56,152,673 89,448 (1,543,585) 3,961,184 (2,595,372) Balance at beginning of period Changes during period Change in scope of consolidation Dividends of surplus Profit attributable to owners of parent Purchase of treasury shares Net changes in items other than shareholders’ equity (330,865) 616,179 (1,287,618) (1,002,303) 30,429 (971,874) Total changes during period (330,865) 616,179 (1,287,618) (1,002,303) 30,429 (1,060,198) Balance at end of period (193,416) 3,215,379 2,326,536 5,348,499 197,832 55,092,474 12 (4) Consolidated statement of cash flows Cash flows from operating activities Profit before income taxes Depreciation Impairment losses Amortization of goodwill Increase (decrease) in provision for bonuses Increase (decrease) in provision for loss on cancellation of contracts Increase (decrease) in retirement benefit liability Interest and dividend income Interest expenses Foreign exchange losses (gains) Loss (gain) on sale of investment securities Decrease (increase) in trade receivables Decrease (increase) in inventories Increase (decrease) in trade payables Decrease (increase) in other current assets Increase (decrease) in other current liabilities Decrease (increase) in retirement benefit asset Other, net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by (used in) operating activities Cash flows from investing activities Payments into time deposits Proceeds from withdrawal of time deposits Purchase of property, plant and equipment Purchase of intangible assets Purchase of investment securities Proceeds from sale of investment securities Purchase of shares of subsidiaries resulting in change in scope of consolidation Other payments Other proceeds Net cash provided by (used in) investing activities (Thousands of yen)Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 3,956,545 3,748,527 32,539 687,532 (15,806) 273,096 265,372 (255,273) 238,195 19,761 (375,143) 825,613 (753,889) (40,683) 287,194 (879,563) (556,585) (68,257) 7,389,175 255,268 (223,545) (526,607) 6,894,290 (125,000) 125,000 (733,812) (15,398,851) (72,078) 1,245,014 (2,464,640) (87,818) 51,374 (17,460,812) 5,721,764 4,700,838 – 699,707 220,865 179,902 218,716 (209,456) 315,462 (53,551) (14,589) (2,029,753) (542,344) 284,495 1,412,991 (223,635) (763,810) 3,589 9,921,192 209,456 (304,746) (874,969) 8,950,932 (125,000) 125,000 (1,063,805) (356,699) (1,640,950) 163,769 – (6,150) 11,021 (2,892,814) 13 (Thousands of yen)Fiscal year ended March 31, 2021 Fiscal year ended March 31, 2022 Cash flows from financing activities Net increase (decrease) in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments of lease liabilities Purchase of treasury shares Dividends paid Dividends paid to non-controlling interests 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 (decrease) in cash and cash equivalents resulting from change in scope of consolidation Cash and cash equivalents at end of period 12,744,803 4,500,000 (3,121,015) (212,969) (1,154,486) (1,567,830) (3,224) 11,185,277 169,930 788,686 8,880,252 – 9,668,938 (13,241,762) 16,158,850 (3,388,135) (225,371) (2,603,156) (1,538,123) (3,513) (4,841,212) 564,008 1,780,913 9,668,938 129,430 11,579,282 14 (5) Notes to consolidated financial statements (Notes on premise of a going concern) Not applicable. (Significant matters that form the basis for the preparation of consolidated financial statements) 1 Scope of consolidation (A) Number of consolidated subsidiaries: 17 Tillotts Pharma AG Tillotts Pharma AB Tillotts Pharma Ltd. Tillotts Pharma UK Ltd. Tillotts Pharma Czech s.r.o. Tillotts Pharma Spain S.L.U. Tillotts Pharma GmbH Tillotts Pharma France SAS Tillotts Pharma Italy srl Pharmaceutical Joint Stock Company of February 3rd ZPD A/S Zeria Healthway Co., Ltd. IONA INTERNATIONAL CORPORATION Kenso-Seiyaku Co., Ltd. Zevice Co., Ltd. Zeriap Co., Ltd. Zeria USA,INC. Of the above, Tillotts Pharma Italy srl was included in the scope of consolidation because it was newly established. In addition, Zeriap Co., Ltd., which was a non-consolidated subsidiary until the previous fiscal year, is included in the scope of consolidation due to its increased importance. (B) Major non-consolidated subsidiaries Zeria Shoji Co., Ltd. Zeria Ecotech Co., Ltd. Non-consolidated subsidiaries are excluded from the scope of consolidation because they are small companies and their combined total assets, net sales, net income or loss, and retained earnings do not have a material impact on the consolidated financial statements. 2 Application of equity method Names of major non-consolidated subsidiaries not accounted for by the equity method Zeria Shoji Co., Ltd. Zeria Ecotech Co., Ltd. Non-consolidated subsidiaries not accounted for by the equity method are excluded from the scope of equity method because their net income and retained earnings have a minimal effect on the consolidated financial statements and they are insignificant in the aggregate. 3 Fiscal year of consolidated subsidiaries Of the consolidated subsidiaries, Tillotts Pharma AG, Pharmaceutical Joint Stock Company of February 3rd, ZPD A/S, and other overseas consolidated subsidiaries have a fiscal year ending December 31. In preparing the consolidated financial statements, the financial statements of these subsidiaries as of their fiscal year-end are used. However, adjustments necessary for consolidation are made for significant transactions that occurred between January 1 and March 31, the end of the consolidated fiscal year. 4 Matters related to accounting policies (A) Valuation standards and methods for significant assets (1) Investment securities Other securities Other than stocks and other securities without market price ·········· Market value method (unrealized gains or losses are reported as a separate component 15 of net assets, and the cost of securities sold is determined by the moving-average method) Stocks and other securities without market price ·········· Cost method based on the moving-average method (2) Derivatives (3) Inventories ······ Market value method ······ Mainly stated at cost determined by the weighted average method (the carrying value on the balance sheet is written down to reflect the effect of lower profit margins) (B) Depreciation and amortization method for significant depreciable assets (1) Property, plant and equipment (excluding leased assets) The straight-line method is used for the Saitama Plant (including warehouses) and Tsukuba Plant, and the declining-balance method is used for all others. However, buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998 and facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated using the straight-line method. Overseas consolidated subsidiaries use the straight-line method. The useful lives of major assets are as follows. 3 to 50 years Buildings and structures Machinery, equipment and vehicles (2) Intangible assets (excluding leased assets) 2 to 15 years The straight-line method is used. However, trademark rights, for which useful lives cannot be determined, are not amortized. Software for internal use is amortized by the straight-line method over the estimated useful life (5 years). (3) Leased assets Finance lease transactions that do not transfer ownership are depreciated using the straight-line method over the lease period with a residual value of zero. (4) Long-term prepaid expenses The straight-line method is used. (C) Accounting for significant provisions (1) Allowance for doubtful accounts (D) Accounting for retirement benefits To provide for possible bad debt expenses on trade receivables, etc. as of the end of the current fiscal year, an allowance for doubtful accounts is provided in the amount deemed uncollectible based on historical bad debt ratios for general receivables and on an individual assessment of collectibility for specific receivables for which there is concern about default. (2) Provision for bonuses To provide for bonuses to employees to be paid after the next fiscal year, an amount accrued for the current fiscal year among the estimated future payments is recorded. (3) Provision for loss on cancellation of contracts To provide for losses due to contract cancellations, an allowance is provided for the estimated amount of losses. (1) Method of attributing estimated retirement benefits to periods of service The estimated amount of retirement benefits is attributed to the period until the end of the current fiscal year based on the benefit calculation method. (2) Method of amortizing actuarial gains and losses and prior service cost Prior service cost is amortized by the straight-line method over a fixed number of years (10 years) within the average remaining service period of employees at the time the cost is incurred. Actuarial gains and losses are amortized by the straight-line method over a fixed number of years (10 years) within the average remaining service period of employees at the time of their accrual, starting from the following fiscal year of accrual. (3) Accounting for unrecognized actuarial gains and losses and unrecognized prior service cost Unrecognized actuarial gains and losses and unrecognized prior service cost are recognized in accumulated other comprehensive income under net assets, remeasurements of defined benefit plans, after adjusting for tax effects. 16 (E) Basis for recording significant income and expenses The Group’s principal business is the manufacture and sale of products and the sale of merchandise in the Ethical Pharmaceuticals Business and Consumer Healthcare Business. For the sale of these products and merchandise, the Group usually recognizes revenue when the products and merchandise are inspected and accepted by the customer, since it is considered that the customer has acquired control over the products and merchandise and the performance obligation has been satisfied when the products and merchandise are inspected and accepted by the customer. For sales in Japan, revenue is recognized at the time of shipment if the period between the time of shipment and the time of acceptance by the customer is a normal period of time. Revenue is measured at the amount of consideration promised in the contract with the customer, less any returns, discounts and rebates. Deductions other than those for confirmed payments, such as rebates and sales incentives paid to customers, are estimated and recognized to the extent that it is probable that a material reversal will not occur, taking into consideration the content of the contract and past results. The consideration for transactions is received within one year of satisfaction of the performance obligation and does not include a significant financial component. Certain consolidated subsidiaries identify points granted to customers as performance obligations, allocate the transaction price based on the independent sales price, and recognize revenue when the points are used. (F) Basis of translation of significant assets and liabilities denominated in foreign currencies into Japanese yen Receivables and liabilities denominated in foreign currencies are translated into yen at the spot exchange rates prevailing on the consolidated balance sheet date, with translation differences recognized as gains or losses. Assets and liabilities of overseas consolidated subsidiaries are translated into yen at the spot exchange rate on the balance sheet date of the overseas consolidated subsidiaries, and revenues and expenses are translated into yen at the average exchange rate during the accounting period of the relevant overseas consolidated subsidiaries, with the translation differences included in the foreign currency translation adjustments and non-controlling interests in net assets. (G) Significant hedge accounting methods (1) Hedge accounting methods In principle, deferred hedge accounting is applied. Foreign exchange contracts that meet the requirements for allocation method are accounted for using the allocation method. (2) Hedging instruments and hedged items Forward exchange contracts are used as hedging instruments and forecasted import transactions denominated in foreign currencies are used as hedged items. (3) Hedging policy The Company uses forward exchange contracts and other hedging instruments to hedge foreign exchange fluctuation risks of forecasted import transactions denominated in foreign currencies, and hedging instruments, such as forward exchange contracts, are made within the scope of forecasted import transactions denominated in foreign currencies that are hedged items. (4) Evaluation of hedge effectiveness The evaluation of hedge effectiveness is omitted because the hedging instruments are identical to the material terms of the hedged forecasted transactions, and it can be assumed that the hedging instruments will completely offset the market fluctuations at the inception of the hedge and continuously thereafter. (H) Amortization method and period of goodwill Goodwill of Tillotts Pharma AG, Pharmaceutical Joint Stock Company of February 3rd and ZPD A/S is amortized by the straight-line method over 20 years. (I) Scope of cash in the consolidated statements of cash flows Cash (cash and cash equivalents) in the consolidated statements of cash flows include cash on hand, deposits that can be withdrawn on demand, and short-term investments with maturities of three months or less at the time of acquisition that are readily convertible to cash and are exposed to insignificant risk of changes in value. 17 (Change in accounting policy) Adoption of Accounting Standard for Revenue Recognition The Company adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the current fiscal year, and recognized revenue at the amount expected to be received in exchange for the promised goods or services when the control of the promised goods or services is transferred to the customer. As a result, sales incentives paid to customers, which were previously treated as selling, general and administrative expenses, are now deducted from net sales. In addition, for expected future returns, the Company previously recognized a provision for sales returns based on the amount equivalent to gross profit, but has changed to a method whereby revenue is not recognized at the time of sale, in accordance with the provisions for variable consideration. The change in accounting policy was in principle applied retrospectively, and the consolidated financial statements for the previous fiscal year was prepared on a retrospective basis. However, the following methods prescribed in paragraph 85 of the Accounting Standard for Revenue Recognition are applied. (1) Not to retrospectively adjust comparative information for contracts for which almost all revenue amounts were recognized in accordance with the previous treatment prior to the beginning of the previous fiscal year (2) Retrospectively adjust comparative information for variable consideration included in contracts for which almost all revenue amounts have been recognized in accordance with the previous treatment prior to the beginning of the current fiscal year, using the amounts that existed when the uncertainty regarding the variable consideration amounts was resolved In addition, “Notes and accounts receivable – trade,” which were presented in “Current assets” in the consolidated balance sheets for the previous fiscal year, are presented separately as “Notes receivable – trade” and “Accounts receivable – trade” in the consolidated balance sheets from the current fiscal year. As a result, compared to before the retrospective application, net sales for the previous fiscal year decreased by 2,684,888 thousand yen, cost of sales and provision for sales returns decreased by a total of 10,743 thousand yen, selling, general and administrative expenses decreased by 2,707,785 thousand yen, and operating profit, ordinary profit and profit before income taxes each increased by 33,640 thousand yen, respectively. In addition, the balance of retained earnings at the beginning of the previous fiscal year decreased by 50,629 thousand yen due to the cumulative effect on net assets at the beginning of the previous fiscal year. Due to the application of the Accounting Standard for Revenue Recognition, etc., “Provision for sales returns” of 48,674 thousand yen and “Provision for sales rebates” of 77,210 thousand yen, which were presented in current liabilities in the consolidated balance sheets for the previous fiscal year, were reclassified 1,103 thousand yen to “Other” in current assets and 126,988 thousand yen to “Other” in current liabilities. The effect on the per share information for the previous fiscal year is minimal. Application of Accounting Standard for Fair Value Measurement, etc. The Company adopted the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019.), etc. from the beginning of the current fiscal year. 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), the new accounting policies prescribed by the Accounting Standard for Fair Value Measurement, etc., are to be applied prospectively. There is no impact on the consolidated financial statements for the current fiscal year. 18 (Segment information, etc.) [Segment information] 1. Overview of reportable segments The Company’s reportable segments are components of the Company for which separate financial statements are available and which are subject to periodic review by the Board of Directors in order to determine the allocation of management resources and evaluate their performance. The Company’s reportable segments are Ethical Pharmaceuticals Business and Consumer Healthcare Business, as the Company’s business activities are focused on ethical and OTC drugs. In the Ethical Pharmaceuticals Business, the Company conducts research, development, manufacturing, and sales of ethical pharmaceuticals. In the Consumer Healthcare Business, the Company conducts manufacturing, purchase, and sales of OTC drugs, health foods, quasi-drugs, and cosmetics for self-medication. 2. Method of calculating net sales, profit or loss, assets, liabilities and other items by reportable segment The accounting method for reported business segments is generally the same as that described in the “Significant matters that form the basis for the preparation of consolidated financial statements.” Profits of reportable segments are based on operating profit (after amortization of goodwill), and intersegment revenues and transfers are based on prevailing market prices. As stated in “Change in accounting policy,” the Company has adopted the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from the beginning of the current fiscal year, and has changed its accounting method for revenue recognition, and therefore, the calculation method for net sales and profit or loss of business segments has been changed in the same manner. The segment information for the previous fiscal year is presented based on the calculation method for net sales and profit or loss after the change. 3. Information on net sales, profit or loss, assets, liabilities and other items by reportable segment Previous fiscal year (April 1, 2020 to March 31, 2021) Reportable segment Ethical Pharmaceuticals Business Consumer Healthcare Business Total Other (Note 1) Total Adjustment (Note 2) (Unit: thousand yen) Amount recorded in consolidated financial statements (Note 3) Net sales 29,951,180 22,648,865 52,600,046 157,137 52,757,184 – 52,757,184 – 106 106 642,549 642,655 (642,655) – Total 29,951,180 22,648,971 52,600,152 799,686 53,399,839 (642,655) 52,757,184 3,495,727 4,693,312 8,189,039 262,407 8,451,446 (4,975,730) 3,475,716 64,709,346 27,393,057 92,102,403 5,077,427 97,179,830 24,680,609 121,860,440 2,668,123 925,594 3,593,718 80,669 3,674,388 74,139 3,748,527 507,511 180,020 687,532 – 687,532 – 687,532 Sales to external customers Intersegment sales and transfers Segment profit Segment assets Other items Depreciation Amortization of goodwill Increase in property, plant and equipment and intangible assets 13,859,972 482,695 14,342,667 12,418 14,355,085 167,231 14,522,317 (Notes) 1. “Other” is a business segment not included in the reportable segments and includes the insurance agency business 2. (i) Adjustment of segment profit of (4,975,730) thousand yen is mainly corporate expenses such as general and administrative expenses that are not allocated to each reportable segment. (ii) Adjustment of segment assets of 24,680,609 thousand yen is mainly corporate assets not allocated to each and real estate business. reportable segment. 3. Segment profit is adjusted with operating profit in the consolidated financial statements. 19 (Unit: thousand yen) Amount recorded in consolidated financial statements (Note 3) 4. Depreciation and increase in property, plant and equipment and intangible assets include amortization and increase in long-term prepaid expenses. Current fiscal year (April 1, 2021 to March 31, 2022) Reportable segment Ethical Pharmaceuticals Business Consumer Healthcare Business Total Other (Note 1) Total Adjustment (Note 2) Net sales 37,006,163 22,370,061 59,376,224 156,604 59,532,829 – 59,532,829 – 96 96 558,468 558,565 (558,565) – Total 37,006,163 22,370,157 59,376,321 715,073 60,091,394 (558,565) 59,532,829 6,911,845 4,038,239 10,950,085 261,047 11,211,132 (4,845,074) 6,366,058 68,184,856 27,106,630 95,291,486 5,006,873 100,298,359 23,983,973 124,282,333 3,657,903 863,256 4,521,160 82,997 4,604,157 96,681 4,700,838 506,749 192,957 699,707 – 699,707 – 699,707 Sales to external customers Intersegment sales and transfers Segment profit Segment assets Other items Depreciation Amortization of goodwill Increase in property, plant and equipment and intangible assets 641,547 562,919 1,204,466 38,549 1,243,015 216,851 1,459,867 (Notes) 1. “Other” is a business segment not included in the reportable segments and includes the insurance agency business 2. (i) Adjustment of segment profit of (4,845,074) thousand yen is mainly corporate expenses such as general and administrative expenses that are not allocated to each reportable segment. (ii) Adjustment of segment assets of 23,983,973 thousand yen is mainly corporate assets not allocated to each and real estate business. reportable segment. 3. Segment profit is adjusted with operating profit in the consolidated financial statements. 4. Depreciation and increase in property, plant and equipment and intangible assets include amortization and increase in long-term prepaid expenses. 20 [Related information] Previous fiscal year (April 1, 2020 to March 31, 2021) 1. Information by product and service Ethical pharmaceuticals Consumer healthcare products Other Total 29,951,180 22,648,865 157,137 52,757,184 (Unit: thousand yen) Sales to external customers 2. Information by region (1) Net sales Ethical pharmaceuticals Consumer healthcare products Other Total 37,006,163 22,370,061 156,604 59,532,829 (Unit: thousand yen) Japan 33,660,572 Europe 15,114,127 Other 3,982,484 (Unit: thousand yen) Total 52,757,184 (Notes) 1. Net sales are based on the location of customers and are classified by country or region. 2. Major countries or regions included in each category Other: Asia, Africa, Oceania, Latin America, and North America (2) Property, plant and equipment Japan 21,195,865 Other 2,438,417 (Unit: thousand yen) Total 23,634,282 (Note) Major countries or regions included in each category Other: Europe and Asia Current fiscal year (April 1, 2021 to March 31, 2022) 1. Information by product and service Sales to external customers 2. Information by region (1) Net sales Japan 34,863,897 Europe 20,954,241 Other 3,714,690 (Unit: thousand yen) Total 59,532,829 (Notes) 1. Net sales are based on the location of customers and are classified by country or region. 2. Major countries or regions included in each category Other: Asia, Africa, Oceania, Latin America, and North America (2) Property, plant and equipment Japan 20,460,876 Other 2,678,466 (Unit: thousand yen) Total 23,139,343 (Note) Major countries or regions included in each category Other: Europe and Asia [Information on impairment losses on fixed assets by reportable segment] Previous fiscal year (April 1, 2020 to March 31, 2021) Consumer Healthcare Business Other Total (Unit: thousand yen) Ethical Pharmaceuticals Business 32,539 Impairment loss – – 32,539 Current fiscal year (April 1, 2021 to March 31, 2022) Not applicable. 21 [Information on amortization of goodwill and unamortized balance by reportable segment] Previous fiscal year (April 1, 2020 to March 31, 2021) Ethical Pharmaceuticals Business Consumer Healthcare Business 507,511 180,020 Amortization for the current fiscal year Balance at end of period 4,522,335 1,906,818 Current fiscal year (April 1, 2021 to March 31, 2022) Eth