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

(English Translation)

Consolidated Financial Results

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

		November 12, 2021
Company name: Nichi-Iko Pharmaceutical Co., Ltd.	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:	November 12, 2021
Scheduled date of commencement of dividend payment:	-
Presentation of supplementary materials on quarterly financial results:	Yes
Holding of quarterly financial presentation meeting:	Yes

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

1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending March 31, 2022 (From April 1, 2021 to September 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
Second quarter	¥85,931		-¥8,790		-¥14,026	-¥13,626	-¥14,760	-¥14,593
of fiscal year
million			million		million	million	million	million
ending March
(-4.1%)		(-%)			(-%)	(-%)	(-%)	(-%)
31, 2022
Second quarter	¥89,631		¥1,360			¥523	¥369	¥114	¥146
of fiscal year
million			million		million	million	million	million
ended March 31,
(-2.1%)		(-65.3%)		(-86.1%)	(-91.9%)	(-96.1%)	(-95.1%)
2021
	Total		Basic earnings		Diluted
	comprehensive			earnings per
		per share
	income				share
Second quarter	-¥14,006
of fiscal year
million		-¥224.30			-¥224.30
ending March
(-%)
31, 2022
Second quarter	-¥1,051
of fiscal year
million		¥2.28				¥2.28
ended 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

attributable to

attributable

Total assets

Total equity

to owners of

owners of

to owners of

parent per share

parent

the parent to

total assets

Second quarter

of fiscal year

¥365,080

¥102,337

¥101,502

27.8%

¥1,441.09

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

¥-

¥0.00

March 31, 2022

Fiscal year ending

March 31, 2022

¥-

¥0.00

¥0.00

(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 previous fiscal year)
					Profit
	Revenue		Core operating	Operating	attributable to	Basic earnings
		profit	profit	owners of	per share
					parent
	¥185,000		-¥11,900	-¥17,100	-¥18,600
Annual	million		million	million	million	-¥275.39
	(-1.7%)		(-%)	(-%)	(-%)

(Note)

Revisions to recently announced forecast of financial results: None

*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 September 30, 2021	71,382,652 shares
As of March 31, 2021	65,162,652 shares

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

As of September 30, 2021	948,025 shares
As of March 31, 2021	1,036,650 shares
(iii) Average number of shares during the period (cumulative quarter):
Second quarter of fiscal year ending March 31, 2022	65,061,333 shares
Second quarter of fiscal year ended March 31, 2021	63,974,164 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 Friday, November 12, 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
3. Other.....................................................................................................................................................	21

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

1. Explanation on Operating Results
   In the cumulative second quarter under review, the outlook of Japanese economy remained uncertain due to continued restrictions on social and economic activities associated with a resurgence in the spread of novel coronavirus disease (COVID-19), highlighted by a state of emergency declaration and implementation of priority preventative measures.
   In the generic drug industry, further enhancement of profitability is required in the face of falling drug prices following the drug price revision. Furthermore, it is also necessary to take further steps to address not only the quality aspect, but also the aspect of supply stability.
   Under such circumstance, the Company is endeavoring to improve manufacturing and quality control framework, while placing maximum focus on the resumption of manufacturing and shipments at Toyama Plant 1. Furthermore, in August 2021, the Group resolved to form a capital and business alliance with MEDIPAL HOLDINGS CORPORATION (hereinafter referred to as "MEDIPAL") for the purpose of creating an alliance model enabling stable and efficient supply of generic drugs by combining MEDIPAL's pharmaceutical distribution infrastructure with the Company's pharmaceutical manufacturing and marketing infrastructure, and in September 2021, implemented third-party allotment of shares with MEDIPAL as the allottee.

1. Results by segment

	Nichi-Iko Group			Sagent Group
	Second	Second		Second		Second
(in millions of yen)	quarter of	quarter of		quarter of		quarter of
fiscal year	fiscal year	Change	fiscal year		fiscal year	Change
	ended March	ending March		ended March		ending March
	31, 2021	31, 2022		31, 2021		31, 2022
Revenue	72,513	65,614	-6,899	17,304		20,316	+3,011
Core operating profit	2,449	-8,137	-10,586	-1,088		-652	+435

(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

The Nichi-Iko Group is gradually resuming production and shipments after conducting stringent quality control on products manufactured at Toyama Plant 1 in order to deliver pharmaceuticals to customers with security and trust, and is proceeding with initiatives aimed at optimization of the Group's overall production system with a view to creating a stable supply system.

Results in Nichi-Iko Group during the cumulative second quarter of the current fiscal year showed revenue of 65,614 million yen (a decrease of 6,899 million yen year-on-year) and segment loss of 8,137 million yen (a decrease of 10,586 million yen year-on-year), a significant decrease in both sales and profit, due to drop in drug prices as a result of the drug price revision, decrease in sales

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