Nichi Iko Pharmaceutical : 〔Delayed〕Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2022 (IFRS)

(English Translation)

Consolidated Financial Results

for the First Quarter of the Fiscal Year Ending March 31, 2022 (IFRS)

Company name: Nichi-Iko Pharmaceutical Co., Ltd.	August 10, 2021
Stock exchange listings:
		Tokyo Stock Exchange
Securities code: 4541	(URL https://www.nichiiko.co.jp/)
Representative: Yuichi Tamura
	President and CEO
Contact:	Shuji Ishida	Tel: [phone]
	Senior Operating Officer, Head of
	Administrative Division

Scheduled date of filing of quarterly report:	August 13, 2021
Scheduled date of commencement of dividend payment:	-
Presentation of supplementary materials on quarterly financial results:	Yes
Holding of quarterly financial presentation meeting:	No

(Note that all amounts have been rounded down to the nearest one million yen.)

1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2022 (From April 1, 2021 to June 30, 2021)

1. Consolidated Results of Operations (cumulative)

(Percentage figures represent changes from the same period of the previous fiscal year)

				Core								Profit
					Operating	Profit before		attributable
	Revenue		operating		Profit
			profit	tax	to owners of
				profit
											parent
First quarter of	¥42,943		-¥3,945		-¥4,124	-¥3,611	-¥3,881	-¥3,777
fiscal year
million			million		million	million	million	million
ending March
(-5.1%)		(-%)			(-%)	(-%)	(-%)	(-%)
31, 2022
First quarter of	¥45,265		¥726			¥491	¥494	¥304	¥290
fiscal year ended	million			million		million	million	million	million
March 31, 2021	(-2.7%)		(-61.2%)		(-71.6%)	(-82.7%)	(-83.2%)	(-84.0%)
	Total		Basic earnings		Diluted
	comprehensive			earnings per
	income		per share			share
First quarter of	-¥3,691
fiscal year
million		-¥58.90			-¥58.90
ending March
(-%)
31, 2022
First quarter of	¥193
fiscal year ended	million		¥4.54				¥4.54
March 31, 2021	(-%)

(Note)

Core operating profit is calculated by deducting gains and losses caused by extraordinary factors (extraordinary items) from operating profit.

1. Consolidated Financial Position

Ratio of total

Equity

equity

Equity attributable

Total assets

Total equity

attributable to

attributable

owners of

to owners of

to owners of

parent per share

parent

the parent to

total assets

First quarter of

fiscal year

¥354,607

¥108,021

¥106,859

30.1%

¥1,665.57

ending March

million

million

million

31, 2022

Fiscal year

¥363,572

¥112,435

¥111,167

ended March 31,

30.6%

¥1,733.58

million

million

million

2021

2. Dividends

Annual dividends per share

First quarter

Second quarter

Third quarter

Year-end

Total

Fiscal year ended

¥-

¥15.00

¥-

¥10.00

¥25.00

March 31, 2021

Fiscal year ending

¥-

March 31, 2022

Fiscal year ending

March 31, 2022

¥10.00

¥-

¥10.00

¥20.00

(forecast)

(Note)

Revisions to recently announced dividends forecast: None

3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2022 (From April 1, 2021 to March 31, 2022)

(Percentage figures represent changes from the same period of the previous fiscal year)

				Profit
	Revenue	Core operating	Operating	attributable to	Basic earnings
	profit	profit	owners of	per share
				parent
Second quarter	¥94,000 million	-¥5,000 million	-¥5,200 million	-¥5,300 million
(cumulative	-¥82.61
(4.9%)	(-%)	(-%)	(-%)
total)
Annual	¥195,000 million	¥700 million	500 million	¥200 million	¥3.12
(3.6%)	(-28.4%)	(365.4%)	(-%)

(Note)

Revisions to recently announced forecast of financial results: Yes

For details, please refer to "(3) Explanation of Forecast of Consolidated Financial Results and Other Forward-looking Statements" in "1. Qualitative Information on Financial Results for the Quarter under Review" on page 6 of the Attachment.

*Notes

1. Changes in significant subsidiaries during the consolidated cumulative quarter under review (changes in specified subsidiaries resulting in change in scope of consolidation): No
2. Changes in accounting policies and changes in accounting estimates

(i)	Changes in accounting policies required by IFRS:	No
(ii)	Changes in accounting policies due to other reasons:	No
(iii)	Changes in accounting estimates:	No

(3) Total number of issued shares (common stock)

1. Total number of issued shares as of the end of the period (including treasury shares):

As of June 30, 2021	65,162,652 shares
As of March 31, 2021	65,162,652 shares

1. Number of treasury shares as of the end of the period:

As of June 30, 2021	1,004,905 shares
As of March 31, 2021	1,036,650 shares

(iii) Average number of shares during the period (cumulative quarter):

First quarter of fiscal year ending March 31, 2022	64,141,888 shares
First quarter of fiscal year ended March 31, 2021	63,945,629 shares

(Note)

Number of treasury shares as of the end of the period includes shares held by the Employee Shareholding Incentive Plan.

• Quarterly financial results reports are exempt from quarterly reviews conducted by certified public accountants or an audit corporation.
• Explanation on the appropriate usage of forecast of financial results, and other specific matters
  (Considerations on forward-looking statements)
  The forward-looking statements including forecast of financial results contained in these materials are based on the information currently available to the Company and certain assumptions which are regarded as legitimate. As such, they do not constitute the Company's guarantee that such results would be achieved. Actual business and other results may differ substantially from the forecasts provided in these materials as a result of various factors.
  (How to obtain supplementary materials for financial results)
  Supplementary materials for financial results will be provided on the website of the Company on Tuesday, August 10, 2021.

Attachment - Contents
1. Qualitative Information on Financial Results for the Quarter under Review ........................................	2
(1)	Explanation on Operating Results ...................................................................................................	2
(2)	Explanation on Financial Position ...................................................................................................	4
(3)	Explanation of Forecast of Consolidated Financial Results and Other Forward-looking
	Statements ........................................................................................................................................	6
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes ......................................	7
(1)	Condensed Quarterly Consolidated Statement of Financial Position ..............................................	7
(2)	Condensed Quarterly Consolidated Statement of Income and Condensed Quarterly
	Consolidated Statement of Comprehensive Income ........................................................................	9
(3)	Condensed Quarterly Consolidated Statement of Changes in Equity ...........................................	11
(4)	Condensed Quarterly Consolidated Statement of Cash Flows ......................................................	15
(5)	Notes to Condensed Quarterly Consolidated Financial Statements ..............................................	17
	(Notes on premise of going concern) ...........................................................................................	17
	(Segment information)..................................................................................................................	17

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1. Qualitative Information on Financial Results for the Quarter under Review

1. Explanation on Operating Results
   In the cumulative first quarter under review, the future of the Japanese economy continued to be uncertain due to social activity and consumer spending remaining sluggish, as there was no end in sight for the novel coronavirus disease (COVID-19) pandemic.
   In the generic drug industry, further enhancement of profitability is required in the face of the drug price revision carried out in April 2021. Furthermore, it is also necessary to take steps to address issues in quality and stable supply perspective.
   Under such circumstance, the Group is endeavoring to quickly build a system for continuously providing safe and reliable pharmaceuticals in accordance with the new quality policy of "Commitment to Security and Trust" established in July, 2020, perform the rebranding of five brands (consolidation of overlapping products) focusing on stable supply of pharmaceuticals with high medical demand, promote CMO business at Nichi-Iko Gifu Plant Co., Ltd. (hereinafter referred to as "Gifu Plant"), and enhance development of value-added products.

1. Results by segment

	Nichi-Iko Group			Sagent Group
(in millions of yen)	First quarter	First quarter		First quarter		First quarter
of fiscal year	of fiscal year	Change	of fiscal year		of fiscal year	Change
	ended March	ending March	ended March		ending March
	31, 2021	31, 2022		31, 2021		31, 2022
Revenue	36,399	33,268	-3,131	8,914		9,690	+776
Core operating profit	1,237	-3,521	-4,759	-511		-423	+87

(Notes)

１． The two segments are the "Nichi-Iko Group" and the "Sagent Group," with the "Sagent Group" being made up of Sagent Pharmaceuticals, Inc. and its consolidated subsidiaries, and the "Nichi-Iko Group" being made up of companies excluding the "Sagent Group."

２． The Group has adopted "core operating profit" as an indicator representing ordinary profitability, and has also adopted "core operating profit" for segment profit. "Core operating profit" is calculated by deducting gains and losses caused by extraordinary factors from operating profit, and extraordinary factors are also excluded from revenue.

(i) Nichi-Iko Group

In Nichi-Iko Group, the product quality risk assessment of Toyama Plant 1, which was subject to administrative penalty on March this year, has been completed and we are making every effort to gradually resume shipments. In addition, efforts are being made to optimize the overall production system with an eye to establishing stable supply system throughout the Group, including realizing of synergy effects at the Gifu Plant acquired February this year.

Results in Nichi-Iko Group during the cumulative first quarter of the current fiscal year showed revenue of 33,268 million yen (a decrease of 3,131 million yen year-on-year) and segment loss of 3,521 million yen (a decrease of 4,759 million yen year-on-year) due to drop in drug prices as a result of the drug price revision, decrease in sales of Elmed products caused by stoppage of shipments from a manufacturing subcontractor (Kobayashi Kako Co., Ltd. ) and inability to ship nearly all products from Toyama Plant 1 during the first quarter as a result of Toyama Plant 1 self-

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