アインホールディングス（9627） – Summary of Financial Statements for Fiscal Year Ended April 2022

Summary of Financial Statements for Fiscal Year Ended April 2022 【Japan GAAP】(Consolidated) June 3, 2022 Name of listed company: AIN HOLDINGS INC. Exchange listed on: Code number: Representative: Inquiries: Prime Market of Tokyo Stock Exchange and Sapporo Securities Exchange 9627 Kiichi Otani, President and Representative Director Toshihide Mizushima, Representative Senior Managing Director TEL: +81-11-814-1000 URL: https://www.ainj.co.jp/ Date of the ordinary general meeting of shareholders: Date of scheduled payment of dividends: Date of filing securities report: Supplementary documents for this summary of financial statements: Yes (Supplementary materials are disclosed on the July 28, 2022 July 29, 2022 July 29, 2022 Explanation meeting for financial results: Company’s website appropriately as the financial statements.) Yes (for institutional investors and analysts) (Amounts are rounded down to the nearest million yen.) 1. Consolidated results for the fiscal year ended April 2022 (from May 1, 2021 to April 30, 2022) (1) Consolidated operating results (Percentage figures show year-on-year changes.) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Year ended April 30, 2022 Year ended April 30, 2021 Million yen 316,247 297,305 % Million yen 6.4 15,139 1.6 10,932 % Million yen % Million yen 38.5 (32.0) 16,041 12,649 26.8 (24.8) 7,092 6,697 % 5.9 (27.0) (Note) Comprehensive income: Year ended April 30, 2022: ¥7,126 million (+5.1%) Year ended April 30, 2021: ¥6,783 million (-24.9%) Earnings per share Diluted earnings per share Return on equity Ordinary profit to total assets Operating profit to net sales Year ended April 30, 2022 Year ended April 30, 2021 Yen 201.47 189.04 Yen – – % 6.0 5.9 % 7.7 6.4 % 4.8 3.7 (Reference) Share of profit of entities accounted for using equity method: Year ended April 30, 2022: ¥2 million Year ended April 30, 2021: ¥10 million (2) Consolidated financial position Total assets Net assets Shareholders’ equity ratio Net assets per share As of April 30, 2022 As of April 30, 2021 Million yen 212,461 203,662 Million yen 119,010 115,837 % 56.0 56.8 Yen 3,385.51 3,267.49 (Reference) Equity capital: As of April 30, 2022: ¥118,923 million As of April 30, 2021: ¥115,758 million (3) Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Million yen 26,156 14,928 Million yen (13,943) (9,493) Million yen (7,753) 3,643 Cash and cash equivalents at end of year Million yen 59,470 55,009 Year ended April 30, 2022 Year ended April 30, 2021 2. Dividends Year ended April 30, 2021 Year ended April 30, 2022 Year ending April 30, 2023 (forecast) Yen – – – Yen 0.00 0.00 0.00 Yen – – – Dividends per share 1Q-end 2Q-end 3Q-end Year-end Annual Total dividends (annual) Dividends payout ratio (consolidated) % 29.1 27.3 Dividends on net assets (consolidated) % 1.7 1.7 Yen 55.00 55.00 Yen Million yen 55.00 55.00 1,948 1,932 60.00 60.00 19.2 3. Consolidated financial forecast for the fiscal year ending April 30, 2023 (from May 1, 2022 to April 30, 2023) (Percentage figures show year-on-year changes.) Net sales Operating profit Ordinary profit Net income First half Full year Million yen 172,833 363,000 % 13.0 14.8 Million yen 8,485 20,000 % 46.9 32.1 Million yen 8,732 20,500 % 42.5 27.8 Million yen 4,497 11,000 % 34.7 55.1 Earnings per share Yen 128.02 313.15 * Notes (1) Major changes in subsidiaries during the fiscal year (changes in specified subsidiaries resulting in change in scope of consolidation): No Newly consolidated: – Excluded: – (2) Changes in accounting principles, changes in accounting estimates, and restatement of revisions 1) Changes in accounting principles as a result of revisions to accounting standards, etc.: Yes No 2) Changes in accounting principles other than 1): No 3) Changes in accounting estimates: No 4) Restatement of revisions: (3) Number of outstanding shares (common stock): 1) Number of outstanding shares (including treasury stock): 2) Number of shares held in 3) Average number of shares outstanding: treasury: As of April 30, 2022 35,428,212 shares As of April 30, 2021 35,428,212 shares As of April 30, 2022 300,911 shares As of April 30, 2021 891 shares Fiscal year ended April 30, 2022 35,202,302 shares Fiscal year ended April 30, 2021 35,427,408 shares *This Summary of Financial Statements is outside the scope of audit procedures. *Statement regarding the proper use of financial forecasts and other special remarks (Caution concerning forward-looking statements) The above forecasts are calculated based on the information available as of the publication date of this material, and actual financial results may vary due to change in future economic conditions and others. AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Contents of Attachment 1. Operating Results and Other …………………………………………………………………………………………………………………………. 2 (1) Overview of operating results for the current fiscal year …………………………………………………………………………………. 2 (2) Overview of financial position for the current fiscal year …………………………………………………………………………………. 3 (3) Overview of cash flows for the current fiscal year ………………………………………………………………………………………….. 3 (4) Future outlook ……………………………………………………………………………………………………………………………………….. 5 2. Basic Stance on Selection of Accounting Standards …………………………………………………………………………………………… 5 3. Consolidated Financial Statements and Major Notes………………………………………………………………………………………….. 6 (1) Consolidated balance sheet ……………………………………………………………………………………………………………………… 6 (2) Consolidated statement of income and comprehensive income ……………………………………………………………………….. 8 Consolidated statement of income……………………………………………………………………………………………………………… 8 Consolidated statement of comprehensive income ……………………………………………………………………………………… 10 (3) Consolidated statement of changes in net assets………………………………………………………………………………………… 11 (4) Consolidated statement of cash flows ……………………………………………………………………………………………………….. 13 (5) Notes to consolidated statements …………………………………………………………………………………………………………….. 15 (Notes on the premise of a going concern)…………………………………………………………………………………………………….. 15 (Notes on significant changes in the amount of shareholders’ equity)………………………………………………………………….. 15 (Changes in accounting policies) …………………………………………………………………………………………………………………. 15 (Changes in presentation of financial statements) …………………………………………………………………………………………… 16 (Segment information, etc.) ………………………………………………………………………………………………………………………… 17 (Per-share information) ……………………………………………………………………………………………………………………………… 21 (Material subsequent events) ……………………………………………………………………………………………………………………… 21 – 1 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 1. Operating Results and Other (1) Overview of operating results for the current fiscal year During the current fiscal year (May 1, 2021 to April 30, 2022), the Japanese economy continued to face challenging conditions due to the COVID-19 pandemic. Although there were signs of a pickup in consumer spending, the outlook remained uncertain. In this economic environment, the AIN HOLDINGS Group (the Group) rigorously implemented measures to prevent the spread of COVID-19 and worked to provide healthcare and retail services, in line with its mission to “contribute to local healthcare” and “provide beauty and happiness” – two of the Group’s materiality issues. To help solve various social issues through its business activities, AIN HOLDINGS aims to be a company that “people welcome to their communities.” In March 2022, the Group received certification as an Outstanding Health and Productivity Management Organization for 2022 (large enterprise category) under a program run jointly by the Ministry of Economy, Trade and Industry (METI) and Nippon Kenko Kaigi that recognizes leading companies in health and productivity management. To “ensure a sound management base,” one of its other materiality issues, the Group is working to improve the health of employees to reduce the staff turnover rate and lift productivity by harnessing the performance of every employee. Recognizing the importance of creating a sustainable society amid the growing impact of climate change, the Group is tackling another materiality issue, “protect the environment and reduce environmental impact.” In April 2022, the Group endorsed the recommendations of the TCFD* to improve information disclosure for all stakeholders. The Group also joined the TCFD Consortium, a group of domestic companies, financial institutions and other bodies that have endorsed and are working to implement the TCFD recommendations. Going forward, the Group will disclose appropriate information using the TCFD recommendations and explore the best approach for dialogue with stakeholders, aiming to increase corporate value while building mutual trust with stakeholders. Through businesses that support human health and beauty, the Group will work to realize sustainability management in order to generate sustainable growth and create social, environmental and economic value. For the fiscal year under review, net sales rose 6.4% year on year to ¥316,247 million, operating profit increased 38.5% to ¥15,139 million, ordinary profit increased 26.8% to ¥16,041 million and profit attributable to owners of parent increased 5.9% year on year to ¥7,092 million. *Task Force on Climate-Related Financial Disclosures, established by the Financial Stability Board (FSB) at the request of the G20 finance ministers and central bank governors. The task force published its recommendations in its final report in 2017. (Dispensing pharmacy business) In February 2022, the Group launched its official Ain Group dispensing pharmacy app, “Anytime AIN Pharmacy.” With the app, users can video call or message primary care pharmacists for advice and access online pharmaceutical treatment guidance services (bookings, medication usage advice via video calls, pharmaceutical deliveries, credit card payments). By providing services to meet the increasingly diverse needs of patient, such as by responding to the start of the repeat prescription in April, the easing of regulations on online pharmaceutical treatment guidance, and the expected start of digital prescriptions, we aim to create an environment that allows every patient to easily access pharmaceutical treatments in their local community. In business development, the Group is targeting further business expansion through a strategy of actively opening large pharmacies and using M&A deals that emphasize investment returns, while also improving pharmacy operating efficiency. The business continues to be impacted by the COVID-19 pandemic, but sales and profits both increased year on year, supported by a recovery in the number of prescriptions and steady growth in sales at dispensing pharmacies opened in the previous fiscal year. – 2 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 As a result, for the fiscal year under review, the dispensing pharmacy business reported sales of ¥283,111 million, up 7.6% year on year, and segment income of ¥25,082 million, up 19.7%. During the fiscal year, the Group opened a total of 49 dispensing pharmacies, including those acquired through M&A deals, and closed 10 dispensing pharmacies and sold 5, resulting in a total of 1,099. (Cosmetic and drug store business) The cosmetic and drug store business continued to face a challenging market environment due to the impact of the COVID-19 pandemic. The Group continued to create appealing retail displays by strengthening product lineups. Also, the Group pushed ahead with store openings in locations with good prospects for profitability and optimized costs. The business opened its third store in the Fukuoka area in March 2022, AINZ & TULPE FUKUOKA TENJIN-NISHI DORI, and its fourth store in the same area the following month, AINZ & TULPE LaLaport FUKUOKA. The AINZ & TULPE FUKUOKA TENJIN-NISHI DORI store is steadily becoming the flagship store in the area, helping to raise the visibility of the AINZ & TULPE brand in Fukuoka. However, the cosmetic and drug store business reported sales of ¥20,558 million, up 5.9% year on year, and a segment loss of ¥1,764 million, compared with a segment loss of ¥1,999 million in the previous fiscal year, which included an ongoing impact from the COVID-19 pandemic. During the same period, the Group opened 12 AINZ & TULPE stores and closed three stores, resulting in a total of 78 cosmetic and drug stores at the end of the fiscal year. (Other businesses) Net sales from other businesses declined 14.9% year on year to ¥12,677 million and the segment loss narrowed to ¥146 million from ¥721 million in the previous fiscal year, mainly reflecting efficiency improvements in store operations at retail stores acquired in March 2020. million. (2) Overview of financial position for the current fiscal year The balance of total assets at the end of the fiscal year increased ¥8,798 million from the end of the previous fiscal year to ¥212,461 million. This mainly reflected declines for notes and accounts receivable – trade and for goodwill, outweighed by increases for cash and deposits and for leasehold and guarantee deposits. The balance of liabilities at the end of the fiscal year under review increased by ¥5,625 million to ¥93,450 The balance of short- term and long-term debts decreased by ¥3,508 million to ¥8,458 million. Total net assets increased by ¥3,173 million to ¥119,010 million and the shareholders’ equity ratio decreased 0.8 percentage points to 56.0%. (3) Overview of cash flows for the current fiscal year In the fiscal year under review, cash on hand and in banks (“cash”) increased ¥4,460 million year on year to ¥59,470 million. Cash flows from each category and their relevant factors are as follows. (Cash flows from operating activities) million in the previous fiscal year. Net cash provided by operating activities was ¥26,156 million, compared with net cash provided of ¥14,928 The main items that were positive for cash flow were income before income taxes of ¥13,125 million, as well as depreciation and amortization of ¥4,792 million and amortization of goodwill of ¥4,133 million related to – 3 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 business expansion through new store openings and M&A. The main item negative for cash flow was income taxes paid of ¥4,396 million. (Cash flows from investing activities) the previous fiscal year. Net cash used in investing activities was ¥13,943 million, compared with net cash used of ¥9,493 million in This mainly reflected payments of ¥2,322 million for purchases of shares in subsidiaries resulting in change in scope of consolidation related to shares acquired in four companies through M&A deals, ¥5,880 million for purchases of property, plant and equipment related to the opening of new cosmetic and drug stores and dispensing pharmacies, ¥3,842 million for payments of leasehold and guarantee deposits and ¥3,186 million for increase in investments and other assets. (Cash flows from financing activities) the previous fiscal year. Net cash used in financing activities was ¥7,753 million, compared with net cash provided in ¥3,643 million in The main items were net repayment of ¥3,548 million from short-term and long-term debt repayment and proceeds, ¥2,015 million of purchase of treasury shares, and ¥1,948 million for cash dividends paid. Changes in the Group’s cash flow indicators are shown below. Year ended April 30, 2019 Year ended April 30, 2020 Year ended April 30, 2021 Year ended April 30, 2022 Shareholders’ equity ratio (%) Equity ratio based on market value (%) Debt redemption term (years) Interest coverage ratio (times) 54.9 165.7 0.8 117.8 57.3 110.4 0.4 276.8 56.8 105.6 0.8 334.7 56.0 96.6 0.3 671.8 Equity ratio based on market value = market capitalization / total assets Debt redemption term = interest-bearing debt / operating cash flows Interest coverage ratio = operating cash flows / interest paid Notes: Shareholders’ equity ratio = Equity capital / total assets *All indicators are calculated based on consolidated financial data. *Interest-bearing debt includes all liabilities recorded on the balance sheet on which interest is being paid. *Operating cash flows and interest paid are calculated using the cash flows from operating activities and the interest paid on the consolidated statements of cash flows. – 4 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 (4) Future outlook For the fiscal year ending April 30, 2023, we forecast net sales of ¥363,000 million (up 14.8% year on year), ordinary profit of ¥20,500 million (up 27.8%) and profit attributable to owners of parent of ¥11,000 million (up 55.1%). In the dispensing pharmacy business, Pharmacy Holdings Co. Ltd. which operates a chain of around 100 dispensing pharmacies, became a subsidiary in 2022. With the acquisition of Pharmacy Holdings, which has a corporate philosophy of “providing support for health in the community to help more people lead healthier lives,” we will combine our mutual expertise to enhance patient services, increasing the Group’s corporate value as a key part of community healthcare provision throughout Japan. In the cosmetic and drug store business, we will continue to create attractive retail displays by strengthening product lineups, improve the appeal of AINZ & TULPE stores, overhaul store opening strategies for each area to ensure stores are opened in locations with good prospects for profitability, and optimize costs. We will also continue to develop the business into a second key source of earnings after the dispensing pharmacy business. In the fiscal year ending April 30, 2023, we anticipate a continued impact on earnings from the COVID-19 pandemic. However, at this stage, there are no clear indications of when the pandemic will be contained. If conditions change dramatically, the Group will revise its forecasts as necessary and disclose them in a timely manner. 2. Basic Stance on Selection of Accounting Standards The Group has adopted Japanese accounting standards in order to facilitate comparison with other domestic companies in the same sector. The Group plans to appropriately address the adoption of International Financial Reporting Standards (IFRS) while taking into account trends in Japan and overseas. – 5 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 3. Consolidated Financial Statements and Major Notes (1) Consolidated balance sheet Previous fiscal year (As of April 30, 2021) Current fiscal year (As of April 30, 2022) (Million yen) Assets Current assets Cash and deposits Notes and accounts receivable – trade Merchandise Supplies Short-term loans receivable Accounts receivable – other Other Total current assets Non-current assets Property, plant and equipment Buildings and structures Accumulated depreciation Buildings and structures, net Land Construction in progress Other property, plant and equipment 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 Deferred tax assets Net defined benefit asset Leasehold and guarantee deposits Other Allowance for doubtful accounts Total investments and other assets Total non-current assets Total assets 55,271 13,475 14,018 266 144 9,284 3,936 96,398 32,561 (16,290) 16,270 10,390 638 10,017 (7,087) 2,930 30,229 39,057 3,609 42,666 2,697 422 4,415 60 20,319 8,198 (1,743) 34,368 107,264 203,662 59,729 10,110 14,568 222 306 11,832 3,995 100,765 34,876 (17,364) 17,512 8,581 1,804 10,000 (7,262) 2,737 30,636 36,352 4,866 41,219 2,503 196 5,319 20 22,785 10,309 (1,294) 39,840 111,696 212,461 – 6 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Previous fiscal year (As of April 30, 2021) Current fiscal year (As of April 30, 2022) (Million yen) Liabilities Current liabilities Accounts payable – trade Short-term borrowings Income taxes payable Deposits received Provision for bonuses Provision for bonuses for directors Provision for point card certificates Contract liabilities Other Total current liabilities Non-current liabilities Long-term borrowings Lease obligations Retirement benefit liability 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 differences on available-for-sale securities Remeasurements of defined benefit plans Total accumulated other comprehensive loss Non-controlling interests Total net assets Total liabilities and net assets 46,758 3,670 2,157 13,979 2,594 16 461 – 4,522 74,160 8,297 37 3,329 2,000 13,664 87,825 21,894 20,500 73,506 (3) 115,899 (12) (128) (141) 78 115,837 203,662 50,756 2,643 4,391 15,415 2,713 18 – 544 5,321 81,805 5,815 9 3,578 2,242 11,645 93,450 21,894 20,500 78,661 (2,018) 119,038 (39) (75) (114) 86 119,010 212,461 – 7 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 (2) Consolidated statement of income and comprehensive income Consolidated statement of income Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) (Million yen) Net sales Cost of sales Gross profit Selling, general and administrative expenses Advertising expenses Promotion expenses Salaries, allowances and bonuses Provision of allowance for doubtful accounts Provision for bonuses to employees Provision for bonuses to directors Retirement benefit expenses Provision for reward obligations Legal and employee benefits expenses Correspondence and transportation expenses Lease expenses Rent expenses Depreciation expenses Amortization of goodwill Taxes Other Total selling, general and administrative expenses Operating profit Non-operating income Interest income Dividend income Share of profit of entities accounted for using equity method Gains on investments in partnership Commissions received Real estate rental revenue Gains on donations of fixed assets Consignment income Technical advisory fee Subsidies for employment adjustment Other non-operating income Total non-operating income Non-operating expenses Interest expenses Loss on sales of receivables Rental expenses on real estate Provision of allowance for doubtful accounts Other Total non-operating expenses Ordinary profit – 8 – 297,305 251,150 46,155 1,998 1,103 7,693 33 902 16 261 461 2,397 894 91 4,708 1,178 4,245 1,490 7,746 35,222 10,932 38 44 10 68 18 185 28 193 68 1,182 472 2,308 44 79 220 182 64 590 12,649 316,247 266,275 49,971 1,875 595 7,457 – 972 18 281 – 2,626 997 70 5,042 1,234 4,133 1,587 7,938 34,832 15,139 41 45 2 83 22 384 18 172 74 173 303 1,323 38 87 219 6 69 421 16,041 AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) (Million yen) Extraordinary income Gain on sales of non-current assets Gain on sale of business Surrender value of insurance Gain on sales of shares of subsidiaries and associates Gain on step acquisitions Other extraordinary income Total extraordinary income Extraordinary losses Loss on sale and retirement of non-current assets Impairment losses on fixed assets Loss on valuation of investment securities Loss on temporary store closures Loss on cancellation of rental contracts Other extraordinary losses Total extraordinary losses Income before income taxes Income taxes – current Income taxes – deferred Total income taxes Profit Profit (loss) attributable to non-controlling interests Profit attributable to owners of parent 19 408 53 111 – 31 624 410 804 37 52 56 145 1,506 11,767 5,251 (172) 5,079 6,687 (9) 6,697 200 13 5 – 131 55 406 329 2,302 116 – 493 80 3,322 13,125 6,925 (899) 6,025 7,100 8 7,092 – 9 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Consolidated statement of comprehensive income Profit Other comprehensive income Unrealized holding gains (losses) on securities Remeasurements of defined benefit plans, net of tax Total other comprehensive gain Total comprehensive income Comprehensive income attributable to owners of parent Comprehensive income attributable to non-controlling interests Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) (Million yen) 6,687 64 31 95 6,783 6,792 (9) 7,100 (26) 52 26 7,126 7,118 8 – 10 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 (3) Consolidated statement of changes in net assets Previous fiscal year (May 1, 2020 to April 30, 2021) Common stock Capital surplus Retained earnings Treasury stock 21,894 20,500 68,758 (2) 111,151 – 4,748 21,894 20,500 73,506 Accumulated other comprehensive income Unrealized holding gains (losses) on securities Remeasurements of defined benefit plans Total accumulated other comprehensive income (loss) Non-controlling interests Total net assets (77) (159) (236) 88 111,003 Shareholders’ equity (1,948) 6,697 31 31 (128) (141) (Million yen) Total shareholders’ equity (1) (1) (1) (3) (1,948) 6,697 4,747 115,899 (1,948) 6,697 (1) 85 4,833 115,837 95 95 (9) (9) 78 Balance at the beginning of current year Net changes during the year Cash dividends paid Profit attributable to owners of parent Acquisition of treasury stock Net change in items other than shareholders’ equity Total changes during the year Balance at the end of current year Balance at the beginning of current year Net changes during the year Cash dividends paid Profit attributable to owners of parent Acquisition of treasury stock Net change in items other than shareholders’ equity Total changes during the year Balance at the end of current year – 64 64 (12) – 11 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Current fiscal year (May 1, 2021 to April 30, 2022) Balance at the beginning of current year Cumulative effect of accounting change Balance at the beginning of current year reflecting changes in accounting policies Net changes during the year Cash dividends paid Profit attributable to owners of parent Acquisition of treasury stock Net change in items other than shareholders’ equity Total changes during the year Balance at the end of current year Balance at the beginning of current year Cumulative effect of accounting change Balance at the beginning of current year reflecting changes in accounting policies Net changes during the year Cash dividends paid Profit attributable to owners of parent Acquisition of treasury stock Net change in items other than shareholders’ equity Total changes during the year Balance at the end of current year Common stock Capital surplus Retained earnings Treasury stock Shareholders’ equity (Million yen) Total shareholders’ equity 21,894 20,500 73,506 (3) 115,899 21,894 20,500 73,517 (3) 115,909 10 (1,948) 7,092 (1,948) 7,092 (2,015) (2,015) – – 5,143 (2,015) 3,128 21,894 20,500 78,661 (2,018) 119,038 Accumulated other comprehensive income Unrealized holding gains (losses) on securities Remeasurements of defined benefit plans Total accumulated other comprehensive income (loss) Non-controlling interests Total net assets (12) (128) (141) 78 115,837 (12) (128) (141) 78 115,847 52 52 (75) 26 26 8 8 (114) 86 119,010 10 10 (1,948) 7,092 (2,015) 34 3,162 (26) (26) (39) – 12 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 (4) Consolidated statement of cash flows Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) (Million yen) Cash flows from operating activities Profit before income taxes Depreciation and amortization Amortization of goodwill (Gain) loss on sales of shares of subsidiaries and associates Impairment losses on fixed assets Increase (decrease) in allowance for doubtful accounts Gain on step acquisitions Decrease in provision for point card certificates Increase in defined benefit liability Increase in contract liabilities Gain on transfer of business Increase in allowance for bonuses to employees Decrease in allowance for bonuses to directors Interest and dividend income Interest expenses Share of profit of entities accounted for using equity method Gains on investments in partnerships Gains on donations of property, plant and equipment Gains on sales of investments in securities Loss on valuation of investment securities Losses on disposal and sales of fixed assets Decrease in accounts receivable (Increase) decrease in inventories Increase in other assets Increase in other accounts receivable Increase (decrease) in accounts payable Increase (decrease) in other liabilities Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by operating activities 11,767 4,243 4,436 (111) 804 210 – (1) 304 – (399) 249 (0) (82) 44 (10) (68) (28) (9) 37 391 138 1,172 (539) (221) (844) (2) 21,482 86 (44) (6,595) 14,928 13,125 4,792 4,133 – 2,302 (2) (131) – 364 105 (13) 109 2 (87) 38 (2) (83) (18) (34) 116 128 4,111 (171) (359) (2,376) 3,235 1,217 30,502 89 (38) (4,396) 26,156 – 13 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Previous fiscal year (May 1, 2020 to April 30, 2021) Current fiscal year (May 1, 2021 to April 30, 2022) (Million yen) Cash flows from investing activities Payments for purchases of property, plant and equipment Proceeds from sales of property, plant and equipment Payments for purchases of investments in securities Proceeds from sales of investments in securities Purchases of subsidiaries’ shares resulting in obtaining controls Payments for loans receivable Proceeds from collections of loans receivable Payments for investments in capital Proceeds from returns of investments in capital Payments for purchase of intangible fixed assets Proceeds from sales of intangible assets Payments of leasehold and guarantee deposits Proceeds from refund of leasehold and guarantee deposits Increase in other investments Proceeds from withdrawal of time deposits Payments for time deposits Other, net Net cash used in investing activities Cash flows from financing activities Net decrease in short-term loans payable Proceeds from long-term debts Repayments of long-term debts Redemption of bonds Repayments of lease obligations Payments for purchase of treasury stock Cash dividends paid Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (3,930) 1,001 (557) 293 (997) (20) 680 (0) 0 (1,811) 7 (2,219) 1,070 (3,110) 146 (12) (34) (9,493) (21) 12,625 (6,792) – (218) (1) (1,948) 3,643 9,078 45,931 55,009 (5,880) 2,131 (905) 819 (2,322) (53) 340 (0) 1 (2,535) 10 (3,842) 1,442 (3,186) 47 (9) – (13,943) (6) 300 (3,842) (134) (107) (2,015) (1,948) (7,753) 4,460 55,009 59,470 – 14 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 (5) Notes to consolidated statements (Notes on the premise of a going concern) There are no applicable matters to be reported. (Notes on significant changes in the amount of shareholders’ equity) The Company is repurchasing a total of 300,000 shares in accordance with a resolution approved by the Board of Directors at a meeting on June 7, 2021 (200,000 shares) and a resolution approved by the Board of Directors at a meeting on December 6, 2021 (100,000 shares). As a result of the repurchases, during the current fiscal year, the Company’s treasury shares increased by ¥2,015 million, resulting in a balance of ¥2,018 million at the end of the period. (Changes in accounting policies) (Application of Accounting Standard for Revenue Recognition, etc.) The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020; “Revenue Recognition Standard”), etc. from the beginning of the fiscal year under review. Under the new standard, the Company recognizes revenue when promised goods or services are transferred to a customer, with the amount expected to be received upon exchange of the goods or services recognized as revenue. The main changes arising from the application of the new accounting standard are as follows. With respect to reward points provided to customers at the time of sale through the customer loyalty program service, the Company previously booked the amount equivalent to the number of points expected to be redeemed in the future as allowance for point cards and allowance for point cards was recorded under selling, general and administrative expenses. Under the new accounting standard, the Company identifies points awarded as performance obligations and allocates the transaction price based on the stand-alone selling price calculated by taking into actual redemption rates and other factors. As a result of the change, some sales promotion expenses and other expenses are deducted from sales. The application of the Revenue Recognition Standard is subject to the transitional treatment provided for in the supplementary provisions of Paragraph 84 of the Revenue Recognition Standard. If the new accounting policy is applied prior to the beginning of the current fiscal year, the cumulative effect of the retroactive application is added to or subtracted from retained earnings at the beginning of the current fiscal year and the new accounting policy is applied to balances at the beginning of said period. As a result, in the fiscal year under review, the application of the accounting standard reduced sales by ¥1,150 million, reduced selling, general and administrative expenses by ¥1,160 million and increased operating profit, ordinary profit and profit before income taxes each by ¥9 million. In the fiscal year under review, income before income taxes increased by ¥9 million on the consolidated statement of cash flow. After reflecting the cumulative impact on net assets at the start of the fiscal year under review, the start-of-year balance for retained earnings on the consolidated statement of changes in net assets increased by ¥10 million. The impact on per-share data is immaterial. As a result of the application of the Revenue Recognition Standard, “provision for point card certificates” – 15 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 included in “current liabilities” in the consolidated financial statements for the previous fiscal year has been included in “contract liabilities” from the current fiscal year. In accordance with the transitional treatment stipulated in Article 89-2 of the Revenue Recognition Standard, figures for the previous fiscal year have not been restated to reflect the new presentation approach. (Application of Accounting Standard for Fair Value Measurement, etc.) The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019; “Fair Value Measurement Standard”), etc. from the beginning of the fiscal year under review. In accordance with the transitional treatment stipulated in Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), the Company has decided to apply the new accounting policies in the Fair Value Measurement Standard going forward. These changes have no impact on the Company’s quarterly consolidated financial statements. (Changes in presentation of financial statements) (Consolidated Statement of Income) Due to an increase in financial materiality, “Loss on cancellation of rental contracts,” which was included under “Other extraordinary losses” in the previous fiscal year, has been presented as a separate item from the fiscal year under review. The consolidated financial statements for the previous fiscal year have been restated to reflect this change. As a result, in the consolidated statement of income, “Other extraordinary losses” of ¥202 million in the previous fiscal year have been restated and shown separately as “Loss on cancellation of rental contracts” of ¥56 million and “Other extraordinary losses” of ¥145 million. – 16 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 (Segment information, etc.) Segment information 1. Description of the reportable segments The Company’s reportable segments consist of those of its components for which it is possible to obtain separate financial information that is examined by its Board of Directors on a regular basis for the purpose of deciding on the allocation of corporate resources and assessing business performance. The Group’s business comprises three units that together represent its main business units, namely, dispensing pharmacy business that consists of operation of dispensing pharmacies, selling of generic drugs, recruiting and consulting services, and cosmetic and drug store business that consists of the management of cosmetic and drug stores as well as other businesses, which includes a retail store business and a real-estate leasing business. The formulation and examination of business strategy is conducted individually for each Based on the above, the Company has classified its business into three reportable segments – the dispensing pharmacy business, the cosmetic and drug store business, and other businesses. 2. Methods to determine the amounts of net sales, income or losses, assets, liabilities and other items by business. reportable segment The methods used for accounting for the reportable business segments are generally similar to those described in the Basic Important Matters for Preparation of Consolidated Financial Statements. The income figures for the reportable segments are expressed at the ordinary profit level. Intersegment sales and transfers are based on prevailing market prices. As explained in “Changes in accounting policies,” the accounting treatment for revenue recognition has changed due to the application of the Accounting Standard for Revenue Recognition, etc. from the beginning of the fiscal year under review. As a result, the calculation method for profit and loss in business segments has also changed. Compared with the previous method, in the fiscal year under review, the new method reduced sales in the cosmetic and drug store business segment by ¥1,097 million and increased segment income by ¥9 million, and reduced sales in the other businesses segment by ¥53 million. – 17 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 3. Sales, income (loss), assets, liabilities and other items for each reportable segment I. Previous fiscal year (May 1, 2020 to April 30, 2021) Reportable segments Dispensing pharmacy business Cosmetic and drug store business Other businesses Total (Million yen) Adjustments (Note) 1 Consolidated (Note) 2 Sales to third parties 263,095 19,419 – – Total sales 263,095 19,419 20,947 161,497 (1,999) 13,326 18,227 (5,577) 184,293 19,368 203,662 14,791 103 14,894 (721) 9,469 303 151 – 352 297,305 103 297,408 3,411 4,436 804 4,871 – (103) (103) – – 1,031 297,305 297,305 12,649 – 4,436 804 5,903 291 3,702 2,571 4,278 516 3,299 536 6 288 1,218 Sales Intersegment sales Segment income (loss) Segment assets Other Depreciation and amortization Amortization of goodwill Impairment losses Increase of tangible and intangible assets Notes: 1. Segment income (loss) in “Adjustments” totaling (¥5,577 million) includes ¥6,684 million in corporate expenses, (¥1,278 million) in (income) losses that may not be allocated to the reporting segments, and ¥171 million in elimination due to intersegment transactions. Corporate expenses consist mainly of expenses associated with the administrative divisions and the system logistics division of the parent company, which are not part of the reportable segments. Segment assets in “Adjustments” totaling ¥19,368 million consist mainly of assets associated with the administrative divisions and the system logistics division of the parent company, which are not part of the reportable segments, and the difference in elimination of intersegment transactions. 2. Segment income (loss) is adjusted with the ordinary income of consolidated statements of income. – 18 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 II. Current fiscal year (May 1, 2021 to April 30, 2022) Reportable segments Dispensing pharmacy business Cosmetic and drug store business Other businesses Total (Million yen) Adjustments (Note) 1 Consolidated (Note) 2 Sales to third parties 283,111 20,558 – – Total sales 283,111 20,558 25,082 166,198 (1,764) 12,810 23,170 (7,128) 188,279 24,181 212,461 12,576 100 12,677 (146) 9,269 287 140 127 435 316,247 100 316,347 3,352 4,133 2,270 7,626 – (100) (100) 517 – 32 1,287 316,247 – 316,247 16,041 3,870 4,133 2,302 8,913 2,531 3,985 1,121 6,162 534 6 1,021 1,028 Sales Intersegment sales Segment income (loss) Segment assets Other Depreciation and amortization Amortization of goodwill Impairment losses Increase of tangible and intangible assets Notes: 1. Segment income (loss) in “Adjustments” totaling (¥7,128 million) includes ¥8,170 million in corporate expenses, (¥1,164 million) in (income) losses that may not be allocated to the reporting segments, and ¥121 million in elimination due to intersegment transactions. Corporate expenses consist mainly of expenses associated with the administrative divisions and the system logistics division of the parent company, which are not part of the reportable segments. Segment assets in “Adjustments” totaling ¥24,181 million consist mainly of assets associated with the administrative divisions and the system logistics division of the parent company, which are not part of the reportable segments, and the difference in elimination of intersegment transactions. 2. Segment income (loss) is adjusted with the ordinary income of consolidated statements of income. – 19 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Related information Previous fiscal year (May 1, 2020 to April 30, 2021) 1. Information by product and service 2. Information by region (1) Net sales This disclosure has been omitted because the same information is disclosed under Segment Information. This disclosure has been omitted as the Group’s sales to external customers in Japan accounted for more than 90% of sales on the consolidated statement of income. (2) Property, plant and equipment This disclosure has been omitted because the Group had no property, plant and equipment located outside Japan at the balance sheet date. Current fiscal year (May 1, 2021 to April 30, 2022) 1. Information by product and service 2. Information by region (1) Net sales This disclosure has been omitted because the same information is disclosed under Segment Information. This disclosure has been omitted as the Group’s sales to external customers in Japan accounted for more than 90% of sales on the consolidated statement of income. (2) Property, plant and equipment This disclosure has been omitted because the Group had no property, plant and equipment located outside Japan at the balance sheet date. Information regarding impairment losses of fixed assets for each reported segment Previous fiscal year (May 1, 2020 to April 30, 2021) This disclosure has been omitted because the same information is disclosed under Segment Information. Current fiscal year (May 1, 2021 to April 30, 2022) This disclosure has been omitted because the same information is disclosed under Segment Information.- 20 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Information about goodwill amortization amount and year-end balance for each reportable segment Previous fiscal year (May 1, 2020 to April 30, 2021) Dispensing pharmacy business Cosmetic and drug store business Other businesses Corporate / Eliminations Total (Million yen) Amortization of current fiscal year Balance at the end of current fiscal year 4,278 37,821 6 54 151 1,182 – – 4,436 39,057 Current fiscal year (May 1, 2021 to April 30, 2022) Dispensing pharmacy business Cosmetic and drug store business Other businesses Corporate / Eliminations Total (Million yen) Amortization of current fiscal year Balance at the end of current fiscal year 3,985 35,263 6 47 140 1,041 – – 4,133 36,352 Information about gains on bargain purchase for each reported segment Previous fiscal year (May 1, 2020 to April 30, 2021) There are no applicable matters to be reported. Current fiscal year (May 1, 2021 to April 30, 2022) There are no applicable matters to be reported. Previous fiscal year Current fiscal year (May 1, 2020 to April 30, 2021) (May 1, 2021 to April 30, 2022) 3,267.49 yen 189.04 yen 3,385.51 yen 201.47 yen Notes: 1. Diluted earnings per share is not mentioned since dilutive shares do not exist. 2. The basis of calculation of net assets per share and earnings per share is as follows. Previous fiscal year Current fiscal year (May 1, 2020 to April 30, 2021) (May 1, 2021 to April 30, 2022) 6,697 – 6,697 7,092 – 7,092 35,427,408 35,202,302 (Per-share information) Net assets per share Earnings per share Profit attributable to owners of parent (million yen) Amount not attributable to ordinary shareholders (million yen) Net income attributable to owners of the parent pertaining to common stock (million yen) Average number of shares outstanding (shares) (Material subsequent events) (Business combination through acquisition) May 23, 2022. (1) Overview of business combination At a meeting of the Board of Directors on May 9, 2022, the Company approved the acquisition of shares in Pharmacy Holdings Co. Ltd. (head office: Fukuyama City, Hiroshima Prefecture), making it a subsidiary. The shares were acquired on – 21 – AIN HOLDINGS INC. (9627) Summary of Financial Statements for Fiscal Year Ended April 30, 2022 Business: Ownership of shares, managemant and control of operating companies (mainly managemenet of dispensing Adding Pharmacy Holdings to the Group will further expand the AIN Group’s chain of dispensing pharmacies and bring together mutual business expertise that enhances patient services, increasing the Group’s corporate value as a key part of (i) Name and business of acquired company Name: Pharmacy Holdings Co. Ltd. pharmacies), real estate leasing (ii) Main reasons for business combination community healthcare provision. (iii) Date of business combination May 23, 2022 (iv) Legal form of business combination Acquisition of shares (v) Name of company after acquisition No change 100% (vi) Share of voting rights acquired (vii) Main basis for determining company has been acquired Cash payment for shares in the company (2) Breakdown of acquisition price and payments Information has not been disclosed, as the sellers are individuals and the share purchase contract stipulates confidentiality. – 22 –