Otsuka : Consolidated Financial Statements for the fiscal year ended December 31, 2022

Consolidated Financial Statements

for the fiscal year ended December 31, 2022

Otsuka Holdings Co., Ltd.

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Financial Information

1. Basis of Preparation of Consolidated Financial Statements

The consolidated financial statements of Otsuka Holdings Co., Ltd. (hereinafter referred to as the "Company") are prepared in accordance with International Financial Reporting Standards (hereinafter referred to as "IFRS") pursuant to the provision of Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976; hereinafter referred to as the "Ordinance on Consolidated Financial Statements").

2. Audit Certification

In accordance with the provision of Article 193-2, paragraph (1) of the Financial Instruments and Exchange Act, the consolidated financial statements for the fiscal year ended December 31, 2022 were audited by KPMG AZSA LLC.

3. Special Effort to Ensure the Appropriateness of Consolidated Financial Statements and Others, and Development of a System for Preparing Consolidated Financial Statements Appropriately in Accordance with IFRS

The Company has been making special effort to ensure the appropriateness of consolidated financial statements and others, and developing a system for preparing consolidated financial statements and others appropriately in accordance with IFRS. The details are as follows:

1. In order to develop a system that ensures a proper understanding of the contents of accounting standards, etc. and an adequate response to changes in accounting standards and others, the Company has joined the Financial Accounting Standards Foundation, regularly provides internal training, subscribes to professional journals published by the Japanese Institute of Certified Public Accountants, attends seminars hosted by the Financial Accounting Standards Foundation and auditing firms, etc., and makes other efforts.
2. With regard to application of IFRS, the Company keeps up on accounting standards by obtaining press releases and standards published by the International Accounting Standards Board. In addition, the Company has developed the group's accounting policies and accounting guidelines in accordance with IFRS and practices accounting procedures based on these policies and guidelines to prepare appropriate consolidated financial statements in accordance with IFRS.

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1. Consolidated Financial Statements

1. Consolidated Financial Statements

1. Consolidated Statements of Financial Position

				(Millions of yen)
	Note	FY2021		FY2022
	(As of December 31, 2021)		(As of December 31, 2022)
Assets
Current assets
Cash and cash equivalents	6, 33	410,684	471,634
Trade and other receivables	7, 33	380,191	423,426
Inventories	8	180,350	223,507
Income taxes receivable		8,543	2,954
Other financial assets	9, 33	20,074	17,481
Other current assets	10	48,036	52,934
Subtotal		1,047,880	1,191,939
Assets held for sale	11	1,508	91
Total current assets		1,049,389	1,192,030
Non-current assets
Property, plant and equipment	12, 20	487,089	510,674
Goodwill	13	295,735	335,442
Intangible assets	13	522,662	579,786
Investments accounted for using the equity method	15	227,790	241,743
Other financial assets	9, 33	173,956	177,421
Deferred tax assets	16	31,936	53,460
Other non-current assets	10, 23	32,355	12,156
Total non-current assets		1,771,526		1,910,685
Total assets		2,820,915	3,102,716

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				(Millions of yen)
	Note	FY2021		FY2022
	(As of December 31, 2021)		(As of December 31, 2022)
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables	17, 33	170,103	198,356
Bonds and borrowings	18, 33	32,877	26,440
Lease liabilities	20	17,096	17,717
Other financial liabilities	19, 33	1,988	3,307
Income taxes payable		10,490	28,340
Provisions	22	9,542	763
Contract liabilities	25	12,458	13,376
Other current liabilities	21	213,302	250,891
Subtotal		467,859	539,193
Liabilities directly associated with assets held for sale	11	50		-
Total current liabilities		467,910	539,193
Non-current liabilities
Bonds and borrowings	18, 33	102,754	93,775
Lease liabilities	20	59,726	56,229
Other financial liabilities	19, 33	24,815	30,515
Net defined benefit liabilities	23	14,075	16,011
Provisions	22	1,358	1,507
Contract liabilities	25	57,771	50,736
Deferred tax liabilities	16	27,560	29,410
Other non-current liabilities	21	19,753		22,787
Total non-current liabilities		307,815	300,975
Total liabilities		775,725	840,168
Equity
Equity attributable to owners of the Company
Share capital	24	81,690	81,690
Capital surplus	24	506,724	506,579
Treasury shares	24	(45,572)	(44,858)
Retained earnings	24	1,482,197	1,553,219
Other components of equity	24	(14,046)	128,775
Total equity attributable to owners of the Company		2,010,994	2,225,407
Non-controlling interests		34,195	37,140
Total equity		2,045,189		2,262,547
Total liabilities and equity		2,820,915	3,102,716

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(ii) Consolidated Statements of Income

				(Millions of yen)
		FY2021		FY2022
	Note	(Fiscal year ended		(Fiscal year ended
		December 31, 2021)		December 31, 2022)
Revenue	5, 25	1,498,276	1,737,998
Cost of sales	26	(495,030)	(569,501)
Gross profit		1,003,245	1,168,496
Selling, general and administrative expenses	22, 26	(622,326)	(724,129)
Share of profit of investments accounted for using the	15	8,508	5,780
equity method
	(232,299)	(275,230)
Research and development expenses	26
Impairment losses	14	(6,479)	(41,521)
Other income	27	11,348	23,445
Other expenses	28	(7,499)		(6,518)
Operating profit		154,497	150,323
Finance income	29	13,981	28,693
Finance expenses	29	(4,840)	(6,063)
Profit before tax		163,638	172,954
Income tax expenses	16	(34,429)		(35,534)
Profit for the year		129,209	137,419
Attributable to:
Owners of the Company	31	125,463	134,019
Non-controlling interests	31	3,745	3,400
Profit for the year
	129,209	137,419
Earnings per share:
Basic earnings per share (Yen)		231.32	247.01
Diluted earnings per share (Yen)		231.15	246.99

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