Financial Results for FYE May 2022
July 14, 2022
The earnings forecasts in this document are based on the business environment as of the time of writing. Actualresults may differ from projections due to a variety of factors.Note also that inquiries should be submitted inJapanese.
Inquiries: Hironori Abe or Ryota Kimura (hdinfo@create-sd.co.jp), Corporate Planning Office.

1

FYE May 2022 Results
1. Consolidated Statement of Income
2. Consolidated Balance Sheet
3. Store Openings/Closings (Non-Consolidated)

4. Performance Highlights (Non-Consolidated)FYE May 2023 Plan
1. New Store Openings and Renovation of Existing Stores

2. Sales Measures
3. Digital Strategy
4. Capital Investment and Dividends
5. FYE May 2023 Plan (Consolidated)

Medium-term Management Plan
Sustainability Management

2

FYE May 2022 Results31. Consolidated Statement of Income for FYE May 2022
FYE May 2021 Results(Millions of yen)

Share
(%)

[Reference] Estimates Based onOld Standard
FYE May 2022 Results

FYE May 2022 Results(Millions of yen)

Share(%)

YoYchange

Vsplan(Millions of yen)

Share(%)(%)

YoYchange(%)(%)

Net sales

338,476

100.0

350,744

100.0103.6

99.5

354,259

100.0

104.7

Gross profit

93,365

27.6

95,578

27.3

102.4

99.7

98,878

27.9

105.9

SG&A
expenses

74,73522.1

77,402

22.1

103.6

101.2

80,752

22.8

108.1

Operatingprofit18,6295.5

18,176

5.2

97.6

93.8

18,126

5.1

97.3

Ordinary
profit19,061

5.6

18,665

5.3

97.9

94.3

18,615

5.3

97.7

Profitattributable toowners ofparent12,376

3.7

12,595

3.6

101.8

98.6

12,560

3.5

101.5

4

2. Consolidated Balance Sheet for FYE May 2022
May 31, 2021

May 31, 2022

Total assets
163,824

Total assets
176,910+13,086

Total
Current liabilities
assets
67,186

Total
Current liabilities
assets70,587
98,115+3,400+7,031

91,084

Noncurrent
assets72,740Total net
assetsNoncurrent
assets

96,63878,795

Total net
assets106,323+9,685(Millions of yen)

■ Current assets+7,031

Increase in cash equivalents+2,784

Increase in accounts receivable+1,476

Increase in merchandise+2,159■ Non-current assets +6,054
Increase in new and soon to be opened
stores, etc.

■ Total liabilities+6,054+3,400Liabilities related to retirement benefits +442
Increase in accounts payable■ Total net assets
Retained earnings+2,529+9,685+9,736+6,054

5

3. Store Openings/Closings (Non-Consolidated)■ Store openings/closings and renovations
No. of store openings
Kanagawa
in FYE May 2022
Drug storesStore
opening Prescription drug
storesStore closings: 3 drug stores (1 for S&B, and 2 after
completion of contract), 1 dedicated prescription drug
store (after completion of contract)

Tokyo

Shizuoka

Chiba

Aichi

OtherTotal

178120230

2910352150・Renovations: 36 stores (fresh foods enhancement: 4 stores, extension/renovation: 2 stores, pharmacy expansion:4 stores, etc.)■ No. of stores at year end
No. of stores as of May
31, 2022

Kanagawa

Tokyo

Shizuoka

Chiba

Aichi

Other

Total

Drug stores

390

111

8949

1829686

In-store
pharmacies
Rate of in-store
pharmacies
Dedicated prescription
drug stores

171

45

2120

107274

43.8%

40.5%

23.6%

40.8%

55.6%

24.1%

39.9%

277020137

Supermarkets

5000005

Total no. of stores

4221188951183072863. Store Openings/Closings (Non-Consolidated)
Conversion to drug store complex■ Kawasaki Hoshigaoka store (Kawasaki City, Kanagawa)・Opened in collaboration with Yuri Store supermarket
・Opened tenant stores in existing supermarkets,renovating into complex establishment
・In-store prescription drug stores
Yuri Store: Fresh foods, side dishes
Create: Other food products, daily necessities, cosmetics, medicaland health products, prescription drug stores7

4. Performance Highlights (Non-Consolidated)
OTC: Reactionary drop to previous year’s special demand for antiviral and stay-at-homeproducts
Prescription drug stores: Sales remained firm with people going back for medical exams
after the previous year

■ YoY net sales comparison at existing stores (cumulative):
99.8% (H1: 98.8%, H2:100.7%)└ OTC 98.8% Prescriptions: 108.4%
15

FYE May 2022

11.7
10508.3

FYE May 2021

8.3

3.3

0.8

0.8

6.6

-0.4

5.1

1.7

-0.8

0.6

-0.4

0.2

-1.4

-3.1

-5

5.1

4.0

-4.6

-10
Two years ago-11.0-11.7

-15

June

July

Aug.

Sept.

Oct.

Nov.

-3.4-4.5Dec.

Jan.

Feb.

-9.6

Reactionary drop following
COVID-19-related demand

Mar.

Apr.

May8

4. Performance Highlights (Non-Consolidated)■ Net sales by segment
・Prescriptions as a percentage of sales up from 9.7% to 10.6% (up 0.9 pts from previous year)
・Reactionary drop following previous year’s special demand for antiviral products, cold medicines and makeup cosmetics still sluggish
・Food products performed well despite gradual decline in stay-at-home demand

Medical andhealth products

FYE May 2021Results

FYE May 2022 Results

Net sales

ShareNet sales

Share(millions of yen)(%)(millions of yen)(%)

[Reference] Estimates Based on OldStandard
FYE May 2022 Results

YoYchange(%)

Net sales (millions ofShareyen)(%)

YoYchange(%)

89,41727.0

94,159

27.4

105.3

94,774

27.3

106.0

OTC

57,41817.3

57,35016.7

99.9

57,965

16.7

101.0

Prescriptions

31,9999.7

36,808

10.7

115.0

36,808

10.6

115.0

Cosmetics

40,906

12.3

42,075

12.2

102.9

42,526

12.2

104.0

Food products

130,882

39.4

136,437

39.6

104.2

138,089

39.7

105.5

Daily products

53,85916.2

54,815

15.9

101.8

55,403

15.9

102.9

Other*

16,848

5.1

16,8694.9

100.1

17,079

4.9

101.4

Total

331,914100.0

344,357

100.0

103.7

347,873

100.0

104.8

* “Other” includes stationery, baby products, clothing, pet products, and gardening products.

9

4. Performance Highlights (Non-Consolidated)■ Gross profit margin/SG&A ratio (Based on Old Standard)
Gross profit margin: 28.06% Up 0.29 pts YoY Up 0.12 pts vs target
Improvement factors:
・ Increase in prescriptions as percentage of sales

・ Increase sales of antigen testing agents and antipyretic analgesics
・ Continue to refrain from distributing promotional flyers

SG&A ratio: 23.22% Up 0.68 pts YoY Up 0.48 pts vs target
・ Personnel expense ratio: 12.46% Up 0.50 pts YoY Up 0.29 pts vs target
Factors behind the increase:・ Increased hiring of pharmacists to support opening of prescription drug stores・ Decrease in turnover rate from previous year

・ Other expense ratio: 10.76% Up 0.19 pts YoY Up 0.18 pts vs target
Factors behind the increase:・ Increase in utility expenses associated with sharp rise in fuel prices

・ Increase in commissions in conjunction with increase in cashless transactions

104. Performance Highlights (Non-Consolidated)■ Prescription drug store department
With people going back for medical exams and the end to longer-term prescriptions inprevious year, both number of prescriptions and net sales were firm
FYE May 2021 Results

FYE May 2022 Results

YoY change(%)

Sales at all stores (millions of yen)

31,99936,808115.0

No. of prescriptions (thousands)

3,290

3,817

116.0

Prescription unit price (yen)

9,580

9,467

98.8

30,78934,512108.4

No. of prescriptions (thousands)

3,148

3,546

108.4

Prescription unit price (yen)

9,638

9,573

99.8

1,400

1,295

92.5

No. of stores offering homebased dispensing services

154

157

+3

No. of prescriptions (thousands)

9388

95.1

42.9

42.9

±0

Sales at existing stores(millions of yen)Home-based dispensing sales(millions of yen)

Gross profit margin at all stores(%)

11

FYE May 2023 Plan12

1. New Store Openings and Renovation of Existing Stores■New store openings
40 drug stores / 65 prescription drug storesIn-store pharmacy rate 46.9% (+7.0 pts)・Greater dominance in different types of store
openings
・Further concessionary type store openings…Store openings in collaboration with Yuri Store, local
supermarkets, fresh produce stores

・Promote collaboration with regional medicalinstitutions

May 31, 2022
No. of stores

May 31, 2023
No. of stores

Drug stores

686

723

In-store
pharmacies

274

339

Rate of in-store
pharmacies

39.9%

46.9%

Dedicatedprescription
drug stores

3736

Supermarkets

5All stores

728

5764

■ Existing store renovations
Planned renovations 30 stores・Convert to concessionary type stores
・Review product lineup with greater foodproduct selection, etc.
・In-store prescription drug stores・More subdivided pharmacies... and more132. Sales Measures (Drug Store Department)■ Review business hours to meet customer needs
・Review business hours of drug stores which werereduced all across the country because of the pandemic
in line with the local area and customer needs
・Consider safety and work environment for employees,
reviewing at every store

・Earlier store open:
Approx. 30 stores
・Longer evening hours:
Approx. 100 stores■ More convenience with greater productlineup
・Handle more food items including fresh foods... Promote concessionary business, greater food productselection with renovations at existing stores

・Develop new and revamp private brand products
・Adopt wider range of eco-friendly products... Biomass plastics, recycled PET, etc.

■ Initiatives to curb SG&A expenses
・Control man-hours at each store, optimize staffing
・Install solar panels (power purchase agreements)14

2. Sales Measures (Prescription Drug Store Department)■ Greater dominance in prescription drugstores・New store openings
Prescription drug stores 65 storesIn-store pharmacy rate 46.9% (+7.0 pts)
・As of May 31, 2024: In-store pharmacy rate
50% (forecast)・Strengthen cooperation with neighboring
medical institutions■ Response to revision of medical fees・Strengthen family pharmacy functions... Training of family pharmacists, more people-focused work, increased response to
demand for at-home care, etc.

・Establish system to respond to demand, including use of IT... Utilizing prescription forwarding app
Online medication guidance, refill prescriptions, e-prescription support, etc.

・Optimize staffing... Controlling overtime hours, including a review of business hours, operating laborschedules
153. Digital Strategy■ Promote use of official app and expand
functionality
・Promote shift from traditional card members toapp members... Distributing various coupons on the app
・Expand prescription functionality on the official
app... Prescription forwarding, electronicprescription record, online medication
guidance, medication follow-up
Trend in cashless transaction ratio■Response to diverse transaction methods 50%
40%・Cashless transaction ratio: 50.0％ (May 31, 2022)
30%
Hippo transaction ratio: 20.8% (May 31, 2022)
20%

・Promote use of our own digital wallet, Osaifu
Hippo... Promoting cashless transactions, reducing
commissions

10%0%

36.5%
4.6%

46.4%

50.0%

7.1%

11.1%

19.3%

18.1%

20.1%

20.8%

FYE May 2021

FYE May 2022

19.9%

12.0%
FYE May 2020
Osaifu Hippo

Credit card

Transitit IC card, QR code16

4. Capital Investment and Dividends■Trend in dividends■Trend in capital investment

Planning aggressive capital investment
10 consecutive years of dividend increases⇒ New stores and renovations, land purchases, ... Stable and continuous dividend increase
distribution centers, system investments, etc.
(Billions of yen)

(Yen)

Trend in capital investment

20.020454010Numbers prior to FYE May 2016 restatedto reflect stock split

9.911.1

36.0

31.0
26.72521.7

201546.0

40.0
34.0

30

11.3

44.0

Stock split carried out in December 2015

351550.0

Dividends per share

50

15.0

16.718.0

19.3

51050
FYE May
2020

FYE May
2021

FYE May2022

FYE May2023(Plan)0FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYE FYEMay May May May May May May May May May May May May
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023(Forecast)

175. FYE May 2023 Full Year Plan (Consolidated)*After standard for revenue recognition applied

FYE May 2022 Results
Full-year(Millions of yen)

Share(%)

FYE May 2023 Plan
(Millions of yen)

Share(%)

YoYchange(%)

Difference(Millions of yen)

Net sales

350,744100.0

371,300

100.0

105.9

+20,555

Gross profit

95,57827.3

101,24027.3

105.9+5,661

SG&A expenses

77,402

22.1

84,27022.7

108.9+6,867

Operating profit

18,176

5.2

16,9704.6

93.4–1,206

Ordinary profit

18,665

5.3

17,4004.7

93.2–1,265

Profit12,595

3.6

11,4403.1

90.8–1,155

Plan Assumptions:・Store openings: 40 drug stores 65 prescription drug stores
・Store closings: 3 drug stores 1 prescription drug store

・Existing stores 101.6% （drug stores 100.9% prescription drug stores 108.2%）⇒ Extended business hours,
sustained high growth for prescription drug stores
・Increased utility costs due to soaring fuel prices Up 1.8 billion yen （2.8 billion yen in previous year）
・Expect to lead on hiring pharmacists in light of accelerating prescription drug store openings, raise minimum
wages, and introduce corporate-type defined contribution pension plans

18Medium-term Management Plan

19

Medium-term Management Plan
■ Net sales target (consolidated)■ Store opening strategy(Billions of yen)・Concentrate store openings in areas of population
growth in Kanto/Tokai region
・Greater dominance with different types of storeopenings

500.0

500
450

420.0
400

350

Prefectureswith a growing
population

371.3
350.7

Gunma
5 stores

Ibaraki
6 stores
Saitama
19 stores

300
FYE
May
2022

FYEMay2023

FYEMay2024FYEMay
2025

FYE
May
2026

FYEMay2027

FYEMay2028

Three-year plan targets:FYE May 2028 targets:

Net sales 420 billion yen

Net sales 500 billion yen

Ordinary margin 5.0%

Ordinary margin 5.0%

No. of stores 850

No. of stores 1,000

In-store pharmacy rate 55%

In-store pharmacy rate 65%Tokyo
118 stores

Chiba
51 stores
Aichi
18 stores

Kanagawa
Shizuoka

417 stores

89 stores

20

Sustainability Management

21

Promoting Sustainability Management■ Initiatives in FYE May 2021
* Establishment of the Sustainability Promotion Committee* Establishment of the Nomination and Remuneration Committee consisting primarily ofindependent outside directors* Creation of Basic Policy on Sustainability and identification of material issues (Materiality)■ Basic Policy on Sustainability
Based on our company creed of modesty and integrity, the Create SD Group positions

sustainability initiatives as an important management issue, and aims to achieve bothsustainable enhancement of corporate value and the realization of a sustainable society
through sincere and fair business activities.

22Sustainability Initiatives■ Business activities with the global environment in mind
Continued ISO 14001* certification*ISO 14001 - An international standard for environmental management systems⇒ Since 2001, continuous certification at all stores for more than 20 years
・Reducing waste (plastic bottle tops, cardboard recycling)・Efficient use of resources (less plastic bags, energy-saving air conditioningand lighting)・Consideration for the surrounding area (curbing noise in parking lots,exhaust gas, etc.)
・Low cost and better work environment

Future initiatives:
・Information disclosure based on the recommendations of the Task Force on Climaterelated Financial Disclosures (TCFD)⇒ Identifying climate change risks and opportunities, calculating CO₂ emissions(Scopes 1, 2, and 3), etc.
・Install solar panels
・Development of eco-friendly private brands
・Improved logistical efficiency... and more23

Sustainability Initiatives■ Contribution to health of customers, patientsand to community medical care
Support base that assists daily life, prevention,treatment, and nursing care・Promotion of family pharmacies
・Social contributions in the nursing care field, collaboration
with home medical care
・Disaster cooperation agreements with local governments,
activities to raise money
・Sales of antigen testing agents, free PCR testing・Health consultations, advice on taking prescription drugs

Lifelines that support the health and lives of localresidents⇒ Continue to open highly sustainable, communitybased stores・In the 38 years since our establishment, only 22 stores haveclosed due to poor sales
・Concentrated store openings in areas with population growth・Strict store opening standards
・Proposals on product lineup and store layout according tosize and location
・Efficient operations through dominant store openings(logistics, human resources, sales promotion)24Sustainability Initiatives■ Realization of a rewarding company that values
its employees
Good work environment and diversity for employees
・Creation of a work environment that is comfortable for women to work in (finding ways to limit
heavy loads in distribution centers and with work equipment)
・Childcare leave system and shortened work hours system above statutory requirements
・Percentage of female managers 15.6% （previous year: 14.5% two years before: 13.3%）
・Achieve statutory employment rate of 2.30% for persons with disabilities (73 people withdisabilities employed at special subsidiary)■ Promotion of honest and fair business activities
Strengthening an effective governance system
・Establishment of Nomination and Remuneration Committee and Sustainability Promotion
Committee・Revisions to whistleblowing regulations following the amended Whistleblower Protection
Act⇒ Establishment of new helpline for head office employees in addition to whistleblowingsystem

25

Promoting Sustainability Management■ Priority material issues
Material Issues

Group Direction

Business activities with the ・Reduction of greenhouse gas emissions
global environment in mind ・Improved resource and energy efficiency
・Waste reduction from 3Rs perspective

・Provide safe and secure products and services
Contribution to health ofcustomers, patients and to ・Contribute to regional medical care as a lifeline andcommunity medical care
medical infrastructure that supports the health and livesof local residents
・Continue to open highly sustainable and communitybased stores

Realization of a rewarding
company that values its
employees

・Comfortable and rewarding work environment
・Diversity and inclusion
・Development of human resources and active
participation

Promotion of honest andfair business activities

・Strengthening effective governance system
・Implementation of appropriate risk management
・Promotion of fair trade and partnerships with business
partners
・Maintaining and improving corporate morals throughcorporate activities in accordance with corporate creed,management philosophy, and code of conduct

Example Initiative
・Acquisition and maintenance of ISO 14001 certification at allstores (waste reduction, efficient utilization of resources, etc.)
・Improved energy efficiency, including air conditioning andlighting
・Reduced CO2 emissions by improving efficiency ofdistribution
・Less food waste by improving order accuracy, etc.
・Installation of solar panels on rooftops of distribution centersand stores・Enhanced expertise through in-store prescription drug storesand improved convenience with one-stop shopping foressential items
・Contribution to community health in home-based services
and nursing care domain
・Hosting of various events such as health consultation
meetings
・Opening stores based on strict standards with few store
closures
・Disaster cooperation agreements and business continuity
plans・Creation of a work environment that is comfortable forwomen to work in・Regular individual interviews from a work-life balance
perspective・Initiatives to support the development of the next generation
・Promoting and maintaining better health and improving
screening rate
・Job creation at special subsidiary
・ Establishment of Audit and Supervisory Committee,
Nomination and Remuneration Committee
・Establishment of Compliance Committee
・Whistleblower system
・Strengthening risk management and information security
・In-house training and employee education
・Appropriate information disclosure and proactive dialogue26