Sumitomo Dainippon Pharma : Supplementary Financial Data for the Third Quarter of the Year Ending March 31, 2017

Securities Code: 4506‌‌‌‌‌‌‌‌‌‌
Supplementary Financial Data
for the Third Quarter of the Year Ending March 31, 2017
I.	Consolidated Financial Highlights	1
II.	Consolidated Statement of (Comprehensive) Income	3
III.	Consolidated Balance Sheet	7
IV.	Quarterly Business Results	9
V.	Major Consolidated Subsidiaries	9
VI.	Development Pipeline	10
VII.	Profile of Major Products under Development	17
January 27, 2017
Sumitomo Dainippon Pharma Co., Ltd.
-	Forecasts provided in this document are based on the management's assumptions and beliefs, made in light of information available up to the day of announcement. Actual financial results may differ materially from those presented in this document, being dependent upon a number of factors.
-	All values are rounded. Therefore totals may not be consistent with aggregated figures.

1. Consolidated Financial Highlights

   FY2015 Apr.-Dec.	FY2016
   	Apr.-Dec.	Change (%)	FY2015	Change (%)	(Forecast) Note 3	Change (%)
   Net sales		304.5	305.5	0.3	403.2	8.6	[398.0] 404.0	0.2
   Cost of sales SG&A expenses		79.1 194.4	74.3 186.9	(6.0) (3.8)	104.5 261.8	3.2 6.1	[95.5] 98.5 [256.5] 259.5	(5.7) (0.9)
   SG&A expenses less R&D costs R&D costs	135.4 59.0	129.8 57.2	(4.2) (3.0)	179.8 82.0	2.4 15.0	[173.5] 178.5 [83.0] 81.0	(0.7) (1.3)
   Operating income		31.1	44.2	42.3	36.9	58.7	46.0	24.6
   Ordinary income		31.1	49.9	60.2	35.2	51.0	[44.0] 46.0	30.6
   Net income attributable to owners of the parent		23.3	29.6	26.7	24.7	59.9	[25.0] 26.0	5.3

2. Consolidated Statement of Income

   FY2016

   (Billions of yen)

   Notes

   1: Cost of sales includes provision for (reversal of) reserve for sales returns.

   2: Change (%) represents ratio of changes from the corresponding period of the previous year.

   3: The forecasts have been revised. Figures in parentheses [ ] are previously disclosed forecasts. Change (%) represents ratio of changes to the revised forecasts.

   EBITDA (Billions of yen)	46.6	63.9	55.8	65.5
   Earnings per share (yen)	58.76	74.43	62.16	65.44
   Return on equity (ROE)	5.1%	6.4%	5.5%	5.7%

3. Consolidated Statement of Cash Flows (Billions of yen)

   FY2015 Apr.-Dec.	FY2016 Apr.-Dec.
   Net cash provided by (used in) operating activities	32.5	(1.8)
   Net cash provided by (used in) investing activities	26.8	(33.7)
   Net cash provided in (used in) financing activities	(12.2)	9.9
   Cash and cash equivalents at the end of period	167.7	107.4

4. Foreign Exchange Rates

   (Billions of yen)

   FY2015 Apr.-Dec.		FY2016 Apr.-Dec.		FY2016 Assumed rate	Forex sensitivity FY2016 （Impact of yen appreciation by 1yen/USD）
   End of peiod rate	Average rate	End of peiod rate	Average rate
   Yen / USD	120.5	121.8	116.5	106.6	108.0	Net Sales	(1.8)
   Yen / RMB	18.3	19.3	16.8	15.9	16.0	Operating Income	0.2

   Note:

   Net sales and Operating income in FY2016 Apr.- Dec. decreased by 23.1 billion yen and increased by 0.2 billion yen respectively, compared to FY2015 Apr.- Dec. due to exchange rate fluctuation.

5. Capital Expenditures

   (Billions of yen)

   FY2015 Apr.-Dec.	FY2016 Apr.-Dec.	Change	FY2016
   			Forecast	Change
   Capital expenditures	5.5	4.4	(1.1)	7.1	(0.3)

   Note: The amount of capital expenditures are for tangible fixed assets and software.

   Major capital expenditure project continuing in FY2016

   Establishment of cell processing center in Central Research Labolatories (Suita city in Osaka) Total expenditures 3.6billion, to start operation in FY2017

6. Depreciation and Amortization

   (Billions of yen)

   FY2015 Apr.-Dec.	FY2016 Apr.-Dec.	Change	FY2016
   			Forecast	Change
   Property, plant and equipment	5.8	5.6	(0.3)	7.5	(0.3)
   Intangible assets	3.5	3.7	0.2	4.9	0.1
   Goodwill	4.5	4.0	(0.6)	5.7	(0.3)

   ―supplementary1―

7. Valuations and accounting procedures following the acquisition of Cynapsus (October 2016)

   (Millions of dollar)

   Before purchase price allocation	After purchase price allocation	Valuation differences	Accounting procedures (Amortization)
   In-process R&D (Intangible Assets)	－	669	669	Capitalize (Amortize after launch)
   Other assets & liabilities (Net)	(57)	(74)	(17)	Lisence fee payable in future and other liabilities
   Goodwill	－	12	12	Amortization for 20 years
   Total	(57)	607	664

   ―supplementary2―

8. Consolidated Statement of (Comprehensive) Income

9. Consolidated Statement of Income (Billions of yen)

   FY2015 Apr.-Dec. (A)	FY2016
   	Apr.-Dec. (B)	(B)-(A)	Change (%)
   Net sales		304.5	305.5	1.0	0.3
   Overseas sales [% of net sales]	158.9 52.2%	164.3 53.8%	5.4	3.4
   Cost of sales [% of net sales]		79.1 26.0%	74.3 24.3%	(4.7)	(6.0)
   Gross profit		225.5	231.2	5.7	2.5
   SG&A expenses		194.4	186.9	(7.5)	(3.8)
   Labor costs Advertising and promotion costs Sales promotion costs Amortization of goodwill, etc. *3 Other costs	57.6 22.6 10.4 2.7 42.1	55.1 19.0 9.1 5.2 41.4	(2.6) (3.6) (1.3) 2.5 (0.7)	(4.4) (16.1) (12.5) 91.0 (1.6)
   SG&A expenses less R&D costs	135.4	129.8	(5.7)	(4.2)
   R&D costs [% of net sales]	59.0 19.4%	57.2 18.7%	(1.8)	(3.0)
   Operating income		31.1	44.2	13.2	42.3
   Non-operating income Non-operating expenses		3.1 3.0	6.8 1.2	3.8 (1.8)
   Ordinary income		31.1	49.9	18.7	60.2
   Extraordinary income		6.1	4.8	(1.3)
   Gain on sales of investment securities	6.1	4.8	(1.3)
   Extraordinary loss		0.3	10.0	9.7
   Business structure improvement expenses Impairment loss	－ 0.3	10.0 －	10.0 (0.3)
   Income before income taxes		36.9	44.7	7.7	21.0
   Income taxes		13.6	15.1	1.5
   Net income		23.3	29.6	6.2	26.7
   Net income attributable to owners of the parent		23.3	29.6	6.2	26.7

   ・Japan Segment (¥5.9B)

   ・North America Segment ¥6.3B

   [ incl. FX rate impact (¥20.4B) ]

   ・China Segment (¥1.5B) [ incl. FX rate impact (¥2.7B) ]

   ・Segment mix

   ・Cost of sales decreased because unrealized profit of inventory on FY2015 FX rate realized in this period with stronger yen.

   ・Decrease due to FX rate impact

   ・Decrease in North America and FX rate impact

   ・

   ・Increase due to cost reversal from fair

   value adjustment of contingent consideration liabilities in FY2015

   ・Increase due to foreign exchange gains

   ・FY2015 : Sale of listed stock (North America)

   ・FY2016 : Sale of listed stock (Japan)

   ･Additional retirement payments related to offering the early retirement program (Japan)

   Notes 1: Cost of sales includes provision for (reversal of) reserve for sales returns.

   2: Overseas sales includes exports of non-Pharmaceutical products.

   *3: Amortization of goodwill and patent rights, fair value change of contingent consideration liability

10. Consolidated Statement of Comprehensive Income

11. FY2015 Apr.-Dec.	FY2016 Apr.-Dec.
    Net income		23.3	29.6
    Other comprehensive income		3.8	4.6
    Unrealized gains (losses) on available- for-sale securities, net of tax	3.5	(4.2)
    Deferred gains or losses on hedges	(0.0)	0.0
    Foreign currency translation adjustments	(0.1)	8.6
    Remeasurements of defined benefit plans	0.4	0.2
    Comprehensive income		27.2	34.2

    (Billions of yen)

    FX rate 16/ 3 16/ 12

    USD ¥ 112.6 ⇒ ¥ 116.5

    RMB ¥ 17.4 ⇒ ¥ 16.8

    ―supplementary3―