GNI : Amendment of "FY2022 difference between forecast and actual" document

	March 7, 2023
Company Name:	GNI Group Ltd.
Representative:	Director, Representative Executive Officer,
	President and CEO
	Ying Luo, PhD
	(Security Code: 2160, TSE Growth)
Contact Person:	Director, Investor Relations
	Akihiro Nakano
	(TEL. [phone])

Amendment of "Differences between previous forecast and actual figures

in FY2022 consolidated financial statements" document

March 7, 2023 - GNI Group Ltd., (TSE Growth listed code: 2160) announced that it was amending "

Differences between previous forecast and actual figures in FY2022 consolidated financial statements" document which it disclosed on February 15, 2023, as follows.

１． Reason for the amendment:

The following errors have been found in "Consolidated Financial Results for FY2022(IFRS)."

• The tax calculation associated with the market valuation of CellCarta, an investee of the Group, was inappropriate.

• Depreciation and amortization in segment information did not include depreciation expenses for intangible fixed assets.
• In the information related to products and services, the foreign exchange rate applied to convert Renminbi to Japanese yen was not updated, so the ETUARY®'s sales revenue in Japanese yen was incorrect.

• In the consolidated statement of cash flows, some item under "depreciation and amortization" in cash flows from operating activities was inadvertently included in "other." (No impact on "Net cash provided by operating activities" figures)

Therefore, we have revised the consolidated statement of financial position, consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated statement of cash flows, as well as the portions related to the above items.

２． Where amendments are added:

The entire updated document is attached below, in which the amendments are underlined.

_______________________________________________________________________________________________

About GNI Group, Inc.:

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GNI Group is a global healthcare company listed on the Growth Board of the Tokyo Stock Exchange and engaged in drug discovery, pharmaceutical development, biomaterial development, clinical studies, manufacturing, and sales in both the United States and China. For more information, please visit our website below: https://www.gnipharma.com/

This material contains statements concerning the current plans, expectations, and strategies of GNI Group Ltd. (GNI Group). Any statements contained herein that pertain to future operating performance and that are not historic facts are forward-looking statements. Forward-looking statements may include, but are not limited to, words such as "believe," "plan," "strategy," "expect," "forecast," "possibility" and similar words that describe future operating activities, business performance, events, or conditions. Forward-looking statements, whether spoken or written, are based on judgments made by the management of GNI Group, based on information that is currently available to it. As such, these forward-looking statements are subject to various risks and uncertainties, and actual business results may vary from the forecasts expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forward-looking statements. The information contained in this material does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Any decision to invest in or acquire securities of GNI Group must be based on the information contained in the preliminary offering circular issued or to be issued by GNI Group in connection with any such offer and not on the contents hereof.

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1) The differences between the forecast and the final figures for fiscal year 2022

				Revenue			Operating profit			Profit before tax			Profit for the year			Profit attributable to			Basic earnings
												owners of the parent			per share
				(JPY Million)		(JPY Million)		(JPY Million)		(JPY Million)		(JPY Million)		(JPY)
	Forecast		18,023	2,050		1,214	35	1,217	25.65
	Actual		17,418	1,377		767	(868)	388	8.19
	Difference		(605)	(673)	(447)	(903)	(829)	-
	Difference in ratio		(3.4%)	(32.8%)		(36.8%)	-	(68.1%)	-
	(%)
	(Reference)		12,690	1,624		1,107	55	1,066	22.72
	2021 Actual

2) The reasons for the differences

Revenue was 3% below the previous forecast. This is due to the rapid spread of COVID-19 in China in November and December 2022 after the zero-COVID policy was lifted.

The lower-than-forecasted operating profit and profit before tax were mainly due to the following factors.

• One-timewrite-off of RMB 20.4 million (JPY 395.3 million) of IPO listing expenses incurred before we decided not to pursue HKEX listing further but rather to seek the transactions with Catalyst Biosciences, Inc. ("CBIO") in the U.S. (including the write-off of accumulated IPO expenses of RMB 17.0 million that has been capitalized)
• Significantly increased R&D spending at Cullgen for targeted protein degradation ("TPD") drug platform with multiple IND-enabling studies to build a future pipeline in cancer and inflammatory diseases
• Slightly elevated selling expenses due to frequent lockdowns during COVID-19 pandemics in China
• Increase in SG&A expenses at the Company's Tokyo Headquarter that provides essential group-wide corporate planning, accounting, banking and administrative services as a listed member of the TSE's Growth board (primarily coming from professional services for M&A activities and enhancement of management team by hiring more executives / managers)
• Valuation loss of our shares in private company, CellCarta (formerly Reveal) by 51.3% to USD 2.4 million
• Valuation loss of our shares in public company, Societal (formerly Recro Pharma) by 12.9% to USD 251.4 thousand
• Non-cashaccrual of the interest expenses of USD 6.4 million related to Cullgen's past financing

The lower-than-forecasted profit for the year and profit attributable to owners of the parent was, in addition to the above factors, tax burden at the consolidated level. Income tax expense was JPY 1.6billion yen, which was high compared to profit before tax of JPY 767 million. The reason is that while the income generated by Continent, Berkeley Advanced Biomaterials LLC and other profitable subsidiaries are taxed respectively, the loss incurred by cost centers like Cullgen and Tokyo Headquarter cannot be recognized as deferred tax assets because taxable income is not anticipated in the foreseeable future in those entities.

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