Shinnihonseiyaku : Consolidated Financial Results for the Nine Months Ended June 30,2022

Consolidated Financial Results

for the Nine Months Ended June 30, 2022

[Japanese GAAP]

					August 9, 2022
Company name:	Shinnihonseiyaku Co., Ltd.	Stock exchange listing:	Tokyo Stock Exchange
Code number:	4931	URL:	https://corporate.shinnihonseiyaku.co.jp
Representative	Takahiro Goto, President & Representative Director of the Board and Chief Executive Officer
Contact:	Tetsuya Ono, Corporate Officer, General Manager of Corporate Administration
Div. and Finance & Accounting Dept.				(TEL) [phone]
Scheduled date of filing the quarterly securities report:		August 10, 2022
Scheduled date of commencing dividend payments:		-
Availability of supplementary briefing material on quarterly financial results	Yes
Schedule of quarterly financial results briefing session:		Yes (for institutional investors and analysts)

(Amounts less than 1 million yen are rounded down.)

1. Consolidated Financial Results for the Nine Months Ended June 30, 2022 (October 1, 2021 to June 30, 2022)

(1) Consolidated Operating Results (Cumulative)

(% indicates the change from the corresponding period of the previous fiscal year.)

Net Sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Nine months ended

27,121

7.2

2,769

15.4

2,759

14.0

1,862

14.6

June 30, 2022

Nine months ended

25,289

-

2,400

-

2,419

-

1,624

-

June 30, 2021

(Note) Comprehensive income

Nine months ended June 30, 2022

1,859 million yen (14.4%)

Nine months ended June 30, 2021

1,624 million yen (-%)

Basic earnings per

Diluted earnings per

share

share

Yen

Yen

Nine months ended

86.86

86.22

June 30, 2022

Nine months ended

75.24

74.50

June 30, 2021

(Note)

As the Company began preparing quarterly consolidated financial statements in the third quarter of the fiscal year ended

September 2021, the rate of change from the same quarter of the previous year is not presented for the nine months ended June

30, 2021.

(2)

Consolidated Financial Position

Total assets

Net assets

Equity ratio

Million yen

Million yen

%

As of June 30, 2022

22,960

17,408

75.1

As of September 30, 2021

23,240

16,180

68.8

(Reference) Equity As of June 30, 2022

17,234 million yen

As of September 30, 2021

15,995 million yen

(Note)

In the third quarter of the fiscal year ending September 30, 2022, the Company finalized the provisional accounting treatment

for a business combination. Accordingly, the figures as of September 30, 2021 are ones in which a significant revision of the

initial allocation of the acquisition cost was reflected as a result of finalizing the provisional accounting treatment.

2.

Dividends

Annual dividends

1st quarter-end

2nd quarter-end

3rd quarter-end

Year-end

Total

Yen

Yen

Yen

Yen

Yen

Fiscal year ended

-

0.00

-

32.50

32.50

September 30, 2021

Fiscal year ending

-

0.00

-

September 30, 2022

Fiscal year ending September

30.00

30.00

30, 2022 (Forecast)

(Note)

Revision from the most recently announced dividend forecast: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending September 30, 2022 (October 1, 2021 to September 30, 2022)

(% indicates changes from the previous fiscal year.)

Net Sales

Operating profit

Ordinary profit

Profit attributable

Basic earnings per

to owners of parent

share

Million yen

%

Million yen

%

Million yen

%

Million yen

%

Yen

Full year

37,000

－

3,095

－

3,020

－

2,067

－

96.60

(Notes) 1.

Revision from the most recently announced financial results forecast: No

• 2. As the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29) and other standards have been applied since the beginning of the fiscal year ending September 30, 2022, the financial result forecast reflects figures based on the above standards. Accordingly, percentage changes presenting the year-on-year increase (decrease) from financial results prior to the application of the standards are not presented.

• Notes

1. Significant changes to subsidiaries during the first nine months of the fiscal year under review (transfers of

specific subsidiaries with changes in the scope of consolidation)	No
New company	__ company(ies) (company name)
Excluded company	__ company(ies) (company name)
(2) Accounting policies adopted specially for the preparation of the consolidated quarterly financial statements:	No

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement

1)	Changes in accounting policies due to the revision of accounting standards:		Yes
2)	Changes in accounting policies other than 1) above:			No
3)	Changes in accounting estimates:				No
4)	Retrospective restatement:				No
(4) Total number of shares issued (common stock)
1)	Total number of shares issued at the end of	As of June	21,855,200	As of September	21,855,200 shares
	the period (including treasury shares)	30, 2022	shares	30, 2021
2)	Total number of treasury shares at the end	As of June	398,415	As of September	451,385 shares
	of the period	30, 2022	shares	30, 2021
3)	Average number of shares during the	Nine months ended	21,440,203	Nine months ended	21,596,658 shares
	period (cumulative)	June 30, 2022	shares	June 30, 2021

• These quarterly financial results are outside the scope of quarterly review by certified public accountants or auditing firms.
• Explanation on the proper use of financial results forecast and other notes
  Financial results forecasts and other forward-looking statements herein are based on currently available information and certain assumptions that the Company deems reasonable, and actual results, etc. may differ significantly from these forecasts due to various factors.
  (How to obtain the Supplementary Briefing Material and the contents of the financial results briefing)
  The Shinnihonseiyaku Group plans to stream online the financial results briefing for institutional investors and analysts on Tuesday, August 9, 2022. The supplementary briefing material used in this briefing is disclosed today on TDnet and is posted on the Company's website.

Table of Contents
1.	Qualitative Information for Quarterly Financial Results for the Period Under Review .............................................	2
	(1)	Explanation on Business Results ..........................................................................................................................	2
	(2)	Explanation on Financial Position ........................................................................................................................	2
	(3)	Explanation on Consolidated Financial Results Forecast and Other Forward-Looking Information ...................	2
2.	Quarterly Consolidated Financial Statements and Primary Notes ..............................................................................	3
	(1)	Quarterly Consolidated Balance Sheet .................................................................................................................	3

1. Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of

Comprehensive Income ........................................................................................................................................	5
(3) Notes to the Quarterly Consolidated Financial Statements...................................................................................	7
(Notes on going concern assumption).........................................................................................................................	7
(Notes when there was a substantial change in the amount of shareholders' equity) .................................................	7
(Changes in accounting policies) ................................................................................................................................	7
(Segment information, etc.) ........................................................................................................................................	8
(Matters related to business combination) ..................................................................................................................	8

- 1 -

1. Qualitative Information for Quarterly Financial Results for the Period Under Review

1. Explanation on Business Results
   Forward-looking statements herein are based on the Shinnihonseiyaku Group's judgments on the final day of the third quarter under review.
   The Company used provisional accounting treatment concerning the business combination with Flatcraft, Inc., which took place on June 30, 2021, in the third quarter of the previous fiscal year. However, since it was finalized during the third quarter under review, the figures after the revision as a result of finalizing provisional accounting are used for comparison with and analysis of the third quarter of the previous fiscal year and the previous fiscal year.
   During the first nine months of the fiscal year under review, the Japanese economy showed signs of economic activities returning to normal due to various measures against COVID-19. Overseas, on the other hand, infections resurged, and this caused restrictions on activities and had other effects. Further, the outlook remains uncertain mainly due to changes to the international situation and surging prices of raw materials.
   In this market environment, the Group worked on key challenges in accordance with "VISION 2025," the four-yearmedium-term management plan, setting the fiscal year under review as the first year.
   Mail order drove net sales through faster acquisition of new customers as a result of continuing our aggressive advertising for "PERFECT ONE Glow & Cover Cushion Foundation" in cosmetics, which we did in the second quarter of the fiscal year under review. Health Foods saw the acquisition of new customers remain strong, resulting from an increase in the amount of investment in advertisements for food with a functional claim "W no Kenko Aojiru (Doubly Healthy Green Drink)." Additionally, the order closing rates in up-selling and cross-selling to regularly purchasing customers have reached a record high thanks to strengthening product proposals and sales promotion by communicators of the call center, which led to an increase in spending per customer. In EC sales, sales at external malls, in particular, stayed firm as people's awareness of "PERFECT ONE FOCUS," a skincare brand for young people, surged at a stroke through the better use of influencers and social-media-based measures.
   In direct store sales and wholesale, the situation remained hard as a recovery in the number of customers visiting our stores was weak. Nonetheless, in the wake of the rising awareness of "PERFECT ONE FOCUS" and the launch of a new product line, the number of wholesale stores handling our products increased over 3,500 stores from the end of the second quarter to about 8,300 stores.
   In overseas sales, progress in sales activities has been delayed in China, in particular, which is a focal country for sales expansion, due to the impact of lockdowns caused by spreading COVID-19 infections.
   As a result of the foregoing, for the first nine months of the fiscal year under review, net sales were 27,121 million yen (up 7.2% year-on-year), operating profit was 2,769 million yen (up 15.4% year-on-year), ordinary profit was 2,759 million yen (up 14.0% year-on-year), and profit attributable to owners of parent was 1,862 million yen (up 14.6% year-on-year).
   The Group's business segments consist of Mail Order, Direct Store Sales/Wholesale, and Overseas Sales of cosmetics and merchandise related to healthcare. As the ratio of Direct Sales/Wholesale and Overseas Sales to overall sales is insignificant, and their materiality as disclosed information is low, a description by business segment has been omitted.
2. Explanation on Financial Position
   Total assets as of the end of the third quarter under review were 22,960 million yen, a decrease of 279 million yen from the end of the previous fiscal year. This was mainly due to a fall of 439 million yen in cash and deposits and a drop of 383 million yen in accounts receivable - trade in contrast to an increase of 527 million yen in merchandise.
   Liabilities totaled 5,552 million yen, a decrease of 1,507 million yen from the end of the previous fiscal year. This was mainly due to decreases of 209 million yen in accounts payable - other, 572 million yen in income taxes payable and 152 million yen in provision for bonuses as well as a drop of 298 million yen in long-term borrowings.
   Net assets totaled 17,408 million yen, an increase of 1,228 million yen from the end of the previous fiscal year. This was mainly due to an increase of 1,166 million yen in retained earnings.
3. Explanation on Consolidated Financial Results Forecast and Other Forward-Looking Information
   The forecast for the fiscal year ending September 2022 has not changed from the forecast announced in "Consolidated Financial Results for the Fiscal Year Ended September 30, 2021" dated November 12, 2021.
   Financial results and other forward-looking statements herein are based on information available to the Company and certain assumptions deemed reasonable at the date of publication of this document. Actual results, etc. may differ significantly from these forecasts due to various factors.

- 2 -

2. Quarterly Consolidated Financial Statements and Primary Notes

(1) Quarterly Consolidated Balance Sheet

(Unit: Million yen)

	Previous consolidated fiscal year	Third quarter of the current
	fiscal year
	(As of September 30, 2021)
	(As of June 30, 2022)
Assets
Current assets
Cash and deposits	13,652	13,213
Accounts receivable - trade	3,196	2,812
Merchandise	1,264	1,791
Other	483	575
Allowance for doubtful accounts	(67)	(63)
Total current assets	18,528	18,329
Non-current assets
Property, plant and equipment	2,157	2,075
Intangible assets
Goodwill	1,029	950
Other	448	606
Total intangible assets	1,478	1,557
Investments and other assets	1,075	998
Total non-current assets	4,711	4,630
Total assets	23,240	22,960

- 3 -