April 13, 2021

Consolidated Financial Results for the Fiscal Year Ended February 28, 2021
[Japanese GAAP]
Listing: Tokyo (JASDAQ)
Freund Corporation
6312
URL: http://www.freund.co.jp
Iwao Fusejima, President & CEO
Masao Wakai, Director, Division Director, Corporate Planning Division
Tel: +81-3-6890-0750
Scheduled date of Annual General Meeting of Shareholders:
May 28, 2021
Scheduled date of filing of Annual Securities Report:
May 31, 2021
Scheduled date of payment of dividend:
May 31, 2021
Preparation of supplementary materials for financial results:
Yes
Holding of financial results meeting:Yes
Company name:Securities code:
Representative:
Contact:(All amounts are rounded down to the nearest million yen)

1. Consolidated Financial Results for the Fiscal Year Ended February 28, 2021
(March 1, 2020 – February 28, 2021)(1) Consolidated results of operations(Percentages represent year-on-year changes)
Net sales

Operating profit

Million yen

Fiscal year ended Feb. 28, 2021
Fiscal year ended Feb. 29, 2020
Note: Comprehensive income%

Million yen

Profit attributable toowners of parent

Ordinary profit%

Million yen%

Million yen%

16,765(0.0)
1,147 105.5
1,344 130.7
995 161.0
16,772(8.9)
558 (54.3)
582 (56.1)
381 (54.8)
Fiscal year ended Feb. 28, 2021:
975 million yen(up 196.8%)
Fiscal year ended Feb. 29, 2020:
328 million yen(down 64.5%)
Net income per
Diluted net
Ordinary profit Operating profit
Return on equity
share
income per shareon total assets
on net sales
Yen

Fiscal year ended Feb. 28, 2021
Fiscal year ended Feb. 29, 2020
Reference: Equity in earnings of affiliates

%

%

%

59.47
7.3
22.79
2.9
Fiscal year ended Feb. 28, 2021: - million yen
Fiscal year ended Feb. 29, 2020: - million yen

Yen

6.9
3.2

6.8
3.3

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Feb. 28, 2021
As of Feb. 29, 2020
Reference: Equity capital

Equity ratio

Million yen

Net assets per share%Yen

829.2167.7
790.94
71.6
As of Feb. 29, 2020: 13,243 million yen

20,49913,88418,505
13,243As of Feb. 28, 2021: 13,884 million yen(3) Consolidated cash flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of the period

Million yen

Million yen

Million yen

Million yen

2,280
(27)

(1,726)
(852)

(371)
(325)

4,498
4,314

Fiscal year ended Feb. 28, 2021
Fiscal year ended Feb. 29, 2020

2. Dividends
Dividend per share
1Q-end2Q-end

Yen

Yen

Yen

Yen

-

0.00
0.00

-

20.00
20.00

20.00
20.00

-

0.00

-

20.00

20.00

Fiscal year ended Feb. 29, 2020
Fiscal year ended Feb. 28, 2021
Fiscal year ending Feb. 28, 2022
(forecast)

3Q-end Year-end

Total

Total
dividends

Dividend
Dividend on
payout ratio
equity(consolidated) (consolidated)

Yen Million yen

334
334

%

%

87.8
33.6

2.5
2.5

42.4

3. Consolidated Forecast for the Fiscal Year Ending February 28, 2022 (March 1, 2021 – February 28, 2022)
Net sales
Full year

Operating profit(Percentages represent year-on-year changes)
Profit attributable to
Net income perowners of parent
share

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen%

Yen

18,500

10.3

1,100

(4.2)

1,130

(16.0)

790(20.7)

47.18

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): None
Newly added: -Excluded: -(2) Changes in accounting policies and accounting-based estimates, and restatements
1) Changes in accounting policies due to revisions in accounting standards, others:None2) Changes in accounting policies other than 1) above:None3) Changes in accounting-based estimates:

None4) Restatements:

None(3) Number of outstanding shares (common stock)1) Number of shares outstanding at the end of the period (including treasury shares)
As of Feb. 28, 2021:

18,400,000 shares

As of Feb. 29, 2020:

18,400,000 shares

As of Feb. 29, 2020:

1,655,480 sharesFiscal year ended Feb. 29, 2020:

16,744,520 shares

2) Number of treasury shares at the end of the period
As of Feb. 28, 2021:

1,655,480 shares

3) Average number of shares outstanding during the period
Fiscal year ended Feb. 28, 2021:

16,744,520 shares

Reference: Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended February 28, 2021
(March 1, 2020 – February 28, 2021)(1) Non-consolidated results of operations
Net sales
Fiscal year ended Feb. 28, 2021
Fiscal year ended Feb. 29, 2020

(Percentages represent year-on-year changes)
Ordinary profit
ProfitOperating profit

Million yen%

Million yen%

Million yen%

Million yen%

12,432
11,908

4.4
(9.2)

898
534

68.0
(54.7)

951
588

61.5
(54.4)

661
361

83.3
(60.2)Net income per share Diluted net income per share
Fiscal year ended Feb. 28, 2021
Fiscal year ended Feb. 29, 2020

Yen

Yen

39.53
21.56

-

(2) Non-consolidated financial position
Total assets
Million yen

As of Feb. 28, 2021
As of Feb. 29, 2020
Reference: Shareholders’ equity

Net assets

Equity ratio

Million yen

17,244
12,85016,93012,514As of Feb. 28, 2021: 12,850 million yen

Net assets per share%Yen

767.42
74.5
747.3973.9
As of Feb. 29, 2020: 12,514 million yen

This financial report is not subject to audit by certified public accountants or auditing firms.
Cautionary statement with respect to forecasts of future performance and other special items
Forecasts regarding future performance in these materials are based on certain assumptions judged to be valid and information
currently available to the Company. Actual performance may differ significantly from these forecasts for a number of reasons.
Please refer to the section “1. Overview of Results of Operations (4) Outlook” on page 4 of the attachments regarding
preconditions or other related matters for forecasts shown above.

Freund Corporation (6312) Financial Results for FY2/21

Contents of Attachments
1. Overview of Results of Operations

2(1) Results of Operations

2(2) Financial Position

3(3) Cash Flows3(4) Outlook

4(5) Basic Policy for Profit Distribution, and Dividends in the Current and Next Fiscal Years

4

2. Basic Approach to the Selection of Accounting Standards

4

3. Consolidated Financial Statements and Notes

5(1) Consolidated Balance Sheet

5(2) Consolidated Statements of Income and Comprehensive Income

7(3) Consolidated Statement of Changes in Equity

9(4) Consolidated Statement of Cash Flows

11(5) Notes to Consolidated Financial Statements

13

Going Concern Assumption

13

Changes in Accounting Policies

13

Additional Information

13

Business Combinations

14

Segment and Other Information

16

Per Share Information

19

Subsequent Events

19

4. Others

19

Orders and Sales

191Freund Corporation (6312) Financial Results for FY2/21

1. Overview of Results of Operations(1) Results of Operations
In the fiscal year that ended February 28, 2021, there was an unprecedented economic downturn in Japan in April
and May 2020 because of the global COVID-19 pandemic. Economic activity resumed after the state of
emergency ended in May 2020 and the Japanese economy has been recovering slowly.
However, another state of emergency was declared in January 2021 in response to the third wave of i nfections
that started in November. The pace of the economic recovery declined because of this upturn in infections and theoutlook for the economy is uncertain.
The COVID-19 pandemic triggered a sharp economic downturn worldwide. Following this decline, the global
economy has been recovering at a moderate pace as each country took actions aimed at supporting theireconomies while controlling the spread of the pandemic. However, the outlook for the global economy has
become even more uncertain because of the renewed growth of COVID-19 cases.
In the pharmaceutical industry, which is the primary source of demand for Freund Group products, companies
must take actions in response to changes in the business climate. Changes include heightened measures to holddown healthcare expenditures, such as national health insurance drug price revisions and the increasing use ofgeneric drugs, and the rising cost of R&D programs as well as the associated risk. In addition, the benefits ofmeasures by the Japanese government to increase the use of generic drugs are declining, resulting in a slow
decline in the growth rate of the generic drug market.
The fiscal year ended in February 2021 was the first year of the Freund Group’s Eighth Medium-termManagement Plan covering the three-year period ending February 2023. This plan is centered on the themes ofcustomers, new products, a global perspective and growth. In addition, the plan has the following seven goals.
1. Group solidarity and collaboration
2. Always use the customer’s perspective
3. Make innovation a priority
4. Global management of the Freund Group
5. Progress based on a strategy for growth
6. Business process and working style reforms
7. Make compliance/governance a priority
While focusing on these goals, the overall objective is to structure business operations so that performance is notvulnerable to a change in conditions in any particular market where the Freund Group operates. During thecurrent fiscal year, all group companies were working on reaching the consolidated targets of sales of 17,800
million yen and an operating profit of 1,000 million yen.
Net sales decreased 0.0% year-over-year to 16,765 million yen, operating profit increased 105.5% to 1,147
million yen, ordinary profit was up 130.7% to 1,344 million yen, and profit attributable to owners of parent
increased 161.0% to 995 million yen.
Results by business segment were as follows.
Machinery Business Segment
In the machinery segment, where granulating and coating equipment are the main products, there was only asmall increase in sales as some export shipments were delayed because of the COVID-19 crisis. But operating
profit increased in part because a U.S. subsidiary received a COVID-19 subsidy of about 2.1 million dollars fromthe U.S. government and every Freund Group company implemented cost-reduction measures.
In November 2020, Freund acquired Cos.Mec S.r.l., an Italian manufacturer of pharmaceutical production
machinery. This company, which is now a wholly owned subsidiary, was included in the consolidated financial
statements beginning with the fourth quarter of the fiscal year that ended in February 2021.
As a result, net sales increased 0.5% year-over-year to 11,171 million yen and segment profit increased 248.5% to1,084 million yen.

2

Freund Corporation (6312) Financial Results for FY2/21

Chemicals Business Segment
Sales and operating profit of pharmaceutical excipients used for oral drugs declined in part because sales of someproducts were affected by production reductions at some customers and by the postponement of deliveries to the next
fiscal year.
Sales and operating profit of food preservatives also decreased. The main reason was lower sales of souvenirs fortourists and confectionery products at department stores because of the spread of COVID-19.
Sales and operating profit for the production of health food products for other companies increased as thesecompanies increased their inventories of these products.
As a result, net sales decreased 1.1 % year-over-year to 5,593 million yen and segment profit decreased 30.1% to
546 million yen.
(2) Financial Position
Total assets increased 1,994 million yen from the end of the previous fiscal year to 20,499 million yen at the endof the current fiscal year. This mainly reflected increases of 1,089 million yen in goodwill, 597 million yen inbuildings and structures, net, 212 million yen in securities and 203 million yen in raw materials and supplies.
Total liabilities increased 1,353 million yen from the end of the previous fiscal year to 6,614 million yen at theend of the current fiscal year. This mainly reflected increases of 391 million yen in lease obligations (non-current
liabilities), 239 million yen in advances received, 183 million yen in income taxes payable and 115 million yen in
retirement benefit liability.
Net assets increased 640 million yen from the end of the previous fiscal year to 13,884 million yen at the end of
the current fiscal year.
(3) Cash FlowsThe balance of cash and cash equivalents at the end of the current fiscal year was 4,498 million yen, up 184
million yen over the end of the previous fiscal year (this compares with a decrease of 1,220 million yen in theprevious fiscal year).
The cash flow components during the current fiscal year and the main reasons for changes are as described below.
Cash flows from operating activities
Net cash provided by operating activities was 2,280 million yen (compared with net cash used of 27 million yen
in the previous fiscal year). Although there were negative factors including a decrease in trade payables of 340
million yen, there were positive factors including profit before income taxes of 1,323 million yen and a decreasein trade receivables of 674 million yen and depreciation of 414 million yen.
Cash flows from investing activities
Net cash used in investing activities was 1,726 million yen (compared with net cash used of 852 million yen in
the previous fiscal year). There were negative factors including expenditures for acquisition of equity insubsidiaries accompanying change in scope of consolidation (acquisition of Cos.Mec) of 1,106 million yen and apayment for the purchase of property, plant and equipment of 469 million yen.
Cash flows from financing activities
Net cash used in financing activities was 371 million yen (compared with net cash used of 325 million yen in theprevious fiscal year). This was mainly the result of dividends paid of 333 million yen.

3

Freund Corporation (6312) Financial Results for FY2/21(4) Outlook
The COVID-19 pandemic has reduced economic activity in Japan and around the world. The global economy isexpected to recover slowly as countries and companies continue to work on maintaining the proper balance between
measures to prevent infections and measures to return to normal economic activity. There are many sources of
uncertainty, notably the speed of vaccinations, the length of vaccine efficacy and the ability of vaccines to provide
protection against new strains of COVID-19. Consequently, the outlook is uncertain.
In the pharmaceutical industry, which is the primary source of demand for Freund Group products, in Japan, sales
volumes of some high-priced drugs increased, but the pharmaceuticals market was negatively affected by the reductionsin national health insurance drug prices and reluctance of people to see a physician because of the COVID-19 crisis.
Although Japan’s aging population is expected to contribute to an increase in the volume of pharmaceutical sales, asmall decrease in total pharmaceutical sales is expected because of government measures to hold down drug prices,such as by revising national health insurance drug prices and recalculating the outlook for market growth. In addition,
the benefits of measures by the Japanese government to increase the use of generic drugs are declining, resulting
in a slow decline in the growth rate of the generic drug market.
The global pharmaceutical market as well has been impacted by the reluctance of people to see physicians because of
the COVID-19 crisis. Nevertheless, global pharmaceutical sales are expected to continue growing as the populations ofaffluent countries age while in emerging countries populations and the quality of medical care increase.
Due to the current business climate, the Freund Group is currently implementing the Eighth Medium-termManagement Plan, which covers the three-year period ending in February 2023. Further strengthening sales
capabilities in the machinery and chemicals businesses is one goal of the new plan. Another goal is building an
infrastructure for utilizing the Group’s technologies for meeting customers’ most important needs. All of these
initiatives will create a sound base for even more aggressive product development and sales activities worldwide.
Based on these strategies, we expect sales to increase 10.3% year-over-year to 18,500 million yen and operating
profit, ordinary profit, and profit attributable to owners of parent to decrease 4.2%, 16.0% and 20.7% to 1,100
million yen, 1,130 million yen, and 790 million yen, respectively.
This forecast is based on the premise that the impact of the COVID-19 crisis will slowly decline and finally cometo an end by February 2022.
For the performance of foreign subsidiaries, we assume an average exchange rate of 105 yen to the U.S. dollar
and 125 yen for the euro during the fiscal year.
(5) Basic Policy for Profit Distribution, and Dividends in the Current and Next Fiscal Years
Maximizing shareholder value is the highest priority of Freund. Our policy is to use the benefits of higher
shareholder value for earnings distributions to shareholders while retaining earnings for making the company
stronger in order to adapt swiftly and accurately to changes in the operating environment.
The basic policy for the distribution of earnings is to make distributions based on results of operations. The target
for the annual consolidated dividend payout ratio is 30%. We will maintain stable distributions while taking into
account the need for retained earnings in order to build a stronger base of operations and take actions aimed at
growth.
For the fiscal year ended February 28, 2021, we plan to pay an ordinary year-end dividend of 20 yen per share.
For the fiscal year ending February 2022, we plan to pay an ordinary year-end dividend of 20 yen per share.
We will use retained earnings for the fiscal year ended February 28, 2021 for making our operations stronger,
entering new business domains and other activities that contribute to future growth.
2. Basic Approach to the Selection of Accounting Standards
The Group has a policy of preparing its consolidated financial statements using Japanese GAAP to permit
comparisons with other fiscal years as well as comparisons with the performance of other Japanese companies.

4

Freund Corporation (6312) Financial Results for FY2/21

3. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet
FY2/20(As of Feb. 29, 2020)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Electronically recorded monetary claims-operating
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Business insurance funds
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

5(Thousands of yen)
FY2/21(As of Feb. 28, 2021)

4,314,123
5,013,789
417,513647,754
1,390,426
1,013,444
139,944
261,804(5,471)

4,498,482
4,659,895
210,221212,500
798,624
1,457,682
1,217,155
151,597
362,421(10,342)

13,193,328

13,558,237

3,327,759(1,909,199)
1,418,559
2,026,554(1,390,508)
636,046
1,231,252
530,193
1,423,302(1,029,473)
393,828
4,209,880

3,940,707(1,924,716)
2,015,990
2,474,831(1,647,906)
826,924
1,159,307
349,369
1,522,699(1,139,664)
383,035
4,734,626

19,811
76,27096,081

1,089,741
24,13875,6591,189,539

319,151
269,227
208,497
1,530
213,029(5,400)1,006,036
5,311,999

334,321269,227
214,482
1,251
203,302(5,400)1,017,185
6,941,351

18,505,327

20,499,588

Freund Corporation (6312) Financial Results for FY2/21(Thousands of yen)
FY2/21(As of Feb. 28, 2021)

FY2/20(As of Feb. 29, 2020)
Liabilities
Current liabilities
Notes and accounts payable-trade
Electronically recorded obligations-operating
Short-term borrowings
Income taxes payable
Accrued expenses
Advances received
Provision for bonuses
Provision for bonuses for directors (and otherofficers)
Other

1,754,324
1,367,537
32,82961,729333,886
775,289
237,693

1,754,454
1,212,083
55,793245,299379,357
1,014,771
269,7426,000

32,000454,630
5,023,920

853,926
5,817,429

35,5472,601
165,114
31,68334,689394,370
280,598
46,472-

23,6972,512
237,458
5,261,378

17,648797,476
6,614,905

Net assets
Shareholders’ equity
Share capital
Capital surplus

1,035,600
1,289,513

1,035,600
1,289,513

Retained earnings
Treasury shares

11,964,299(773,363)

12,625,221(773,363)

Total shareholders’ equity

13,516,050

14,176,972

13,68022,149(298,749)
12,967(330,168)
15,729Total current liabilities
Non-current liabilities
Long-term accounts payable-other
Lease obligations
Retirement benefit liability
Asset retirement obligations
Provision for retirement benefits for directors (andother officers)
Other
Total non-current liabilities
Total liabilities

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

6(272,101)(292,289)

13,243,948

13,884,682

18,505,327

20,499,588

Freund Corporation (6312) Financial Results for FY2/21(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statement of Income
FY2/20(Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)

Net sales

16,772,877

16,765,389

Cost of sales

11,344,395

11,126,271

Gross profit

5,428,481

5,639,118

Selling, general and administrative expenses

4,870,030

4,491,453

558,450

1,147,664

Interest income

4,380

3,667

Dividend income

7,547

7,023

Technical support fee income

5,974

9,881

Rental income

1,266

1,297

Insurance claim income

4,548

152,876

Operating profit
Non-operating income

Foreign exchange gains

786

-

Other

10,89433,364

Total non-operating income

35,397208,111

719

2,008

Compensation expenses

8,373

1,199

Foreign exchange losses

-

5,782

1,888

1,858

Non-operating expenses
Interest expenses

Other
Total non-operating expenses

10,981

10,848582,866

1,344,926

Gain on sales of non-current assets

14,231

25,748Gain on sales of investment securities

2,200

-

Total extraordinary income

16,431

25,748Loss on retirement of non-current assets

26,44536,396

Loss on sales of non-current assets

1,155

7,546

Ordinary profit
Extraordinary income

Extraordinary losses

Loss on valuation of investment securities

950-

Impairment loss

2,188

3,631

Total extraordinary losses

30,73947,574

Profit before income taxes

568,558

1,323,101

Income taxes-current

237,283

315,532

Income taxes-deferred(50,252)

11,756

Total income taxes

187,030

327,288

Profit381,528

995,812

Profit attributable to owners of parent

381,528

995,8127

Freund Corporation (6312) Financial Results for FY2/21

Consolidated Statement of Comprehensive Income
FY2/20(Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)

381,528

995,812(21,778)

8,469(33,096)(31,419)

2,050

2,761

(52,825)(20,188)328,703

975,624

328,703

975,624

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net oftax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparent8

Freund Corporation (6312) Financial Results for FY2/21(3) Consolidated Statement of Changes in Equity
FY2/20 (Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

1,035,600

1,289,513

Retained earnings

Treasury shares

Total shareholders’equity11,918,177(773,363)

13,469,928(515)
1,035,600

1,289,513

11,917,661(515)(773,363)

13,469,412

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period(334,890)(334,890)

381,528

381,528---

46,637-

46,637

1,035,600

1,289,513

11,964,299(773,363)

13,516,050(Thousands of yen)

Accumulated other comprehensive income
Valuation
Total accumulated
Foreign currency Remeasurements
difference onothertranslationof defined benefit
available-for-salecomprehensive
adjustment
plans
securities
incomeBalance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

35,459(265,653)

10,917(219,276)

Total net assets

13,250,651(515)

35,459(265,653)

10,917(219,276)

13,250,136

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period(334,890)
381,528(21,778)(33,096)

2,050(52,825)(52,825)(21,778)(33,096)

2,050(52,825)(6,187)

13,680(298,749)

12,967(272,101)

13,243,948

9

Freund Corporation (6312) Financial Results for FY2/21

FY2/21 (Mar. 1, 2020 – Feb. 28, 2021)(Thousands of yen)
Shareholders’ equity
Share capital
Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus

1,035,600

1,289,513

Retained earnings

Treasury shares

Total shareholders’equity11,964,299(773,363)

13,516,050-

1,035,600

1,289,513

11,964,299(773,363)

13,516,050

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period(334,890)(334,890)

995,812995,812---660,921-660,921

1,035,600

1,289,513

12,625,221(773,363)

14,176,972(Thousands of yen)

Accumulated other comprehensive income
Valuation
Total accumulated
Foreign currency Remeasurements
difference onothertranslationof defined benefit
available-for-salecomprehensive
adjustment
plans
securities
incomeBalance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

13,680(298,749)

12,967(272,101)

Total net assets

13,243,948-

13,680(298,749)

12,967(272,101)

13,243,948

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
sharesNet changes in items
other thanshareholders’ equity
Total changes during
periodBalance at end of period(334,890)
995,8128,469(31,419)

2,761(20,188)(20,188)8,469(31,419)

2,761(20,188)

640,733

22,149(330,168)

15,729(292,289)

13,884,682

10

Freund Corporation (6312) Financial Results for FY2/21(4) Consolidated Statement of Cash Flows
FY2/20(Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)

568,558
386,491
2,188
8,373
-

1,323,101
414,446
3,631
1,199
27,42025,126(152,876)
32,090(24,000)

26,000(3,270)(11,927)719

250(10,691)
2,008(1,827)(13,075)(2,200)950
321
26,445

1,091(18,202)36,396(1,106,299)(590,227)(94,541)
921,933
114,548
66,026

674,520(112,902)
186,875(340,684)(42,301)
235,536

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment loss
Payment compensation costs
Amortization of goodwill
Insurance claim income
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for bonuses for
directors (and other officers)
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on cancellation of insurance policies
Loss on retirement of property, plant and equipment
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other assets
Increase (decrease) in trade payables
Increase (decrease) in advances received
Increase (decrease) in other liabilities
Other, net(352)(6,757)

Subtotal

273,960

2,280,153

11,927(719)
19,469(324,133)

10,691(2,008)152,876
7,121(174,019)

Other, net(8,373)

5,659

Net cash provided by (used in) operating activities(27,868)

2,280,475

Interest and dividends received
Interest paid
Proceeds from insurance income
Income taxes refund
Income taxes paid

Cash flows from investing activities
Expenditures for acquisition of equity in subsidiaries
accompanying change in scope of consolidation
Payments for asset retirement obligations
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for retirement of property, plant andequipment
Purchase of intangible assets-(1,106,137)(835,378)
30,470(4,700)(469,320)
88,986(585)(4,410)(56,637)(8,321)

Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from cancellation of insurance funds
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Payments into negotiable certificates of deposit(2,502)
4,200
9,661(1,697)147-(3,558)(28,729)
21,695(211,950)

Net cash provided by (used in) investing activities(852,322)(1,726,445)

11

Freund Corporation (6312) Financial Results for FY2/21

FY2/20(Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)

Cash flows from financing activities
Proceeds from short-term borrowings

36,38948,548

Repayments of short-term borrowings-(76,018)(3,653)(9,141)(25,398)-(333,131)(333,793)-(1,560)Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents(325,794)(371,966)(14,323)

2,296

Net increase (decrease) in cash and cash equivalents(1,220,308)

184,359

Cash and cash equivalents at beginning of period

5,534,431

4,314,123

Cash and cash equivalents at end of period

4,314,123

4,498,482

Repayments of lease obligations
Payments from changes in ownership interests in
subsidiaries that do not result in change in scope of
consolidation
Dividends paid
Other, net

12Freund Corporation (6312) Financial Results for FY2/21(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
Not applicable.
Additional Information
The COVID-19 pandemic is affecting the Freund Group’s operations as shipments of products in the Machinery
Business were delayed and sales of food preservatives in the Chemicals Business declined because of slow salesof confectionery products associated with closings and reduced operating hours of amusement parks anddepartment stores.
The enormous negative effects of the COVID-19 pandemic on economic and social activities are having asignificant impact on the business activities of the Freund Group. Furthermore, this crisis is likely to continue
longer than was initially expected. Based on the assumption that this crisis will slowly end toward the end of
February 2022, the decision was made to make revisions to accounting estimates for impairment losses on
non-current assets, the recoverability of deferred tax assets and other items.

13

Freund Corporation (6312) Financial Results for FY2/21

Business Combinations
Business combination through acquisition
1. Summary of business combination(1) Acquired companies and their business activities
Acquired companies: Cos.Mec S.r.l. and its subsidiaryBusiness activities:
Producing and selling pharmaceutical manufacturing equipment(2) Reasons for acquisition
Freund is guided by the management vision of contribution to better medical care and health for people
worldwide and creating and utilizing technologies for fulfilling lives and food safety. In March 2020, Freund
started its Eighth Medium-term Management Plan, which includes the goals of managing operations on a global
scale and taking strategic actions for growth.
The Japanese pharmaceutical market is expected to continue growing steadily as the population ages. However,pharmaceutical sales in emerging countries are projected to increase faster than in affluent countries because ofrising populations and the growing demand for pharmaceuticals.
Following an examination that took these factors into consideration about the acquisition of Cos.Mec, amanufacturer of pharmaceutical production machinery in Italy, Freund reached the decision to sign a contract
for the acquisition of this company.
Purposes and reasons of acquiring Cos.Mec

a

b

c

d

There is very little duplication between the products of the Freund Group and those of Cos.Mec. In addition,use of the Freund Group’s sales network is expected to increase sales of Cos.Mec pharmaceuticalintermediate handling and processing machinery, which are widely used in the pharmaceutical industry.
Freund also believes that the Cos.Mec sales network can increase sales of the Freund Group’s granulation andcoating machinery, which are two of the Group’s core products.
Most of the customers of Cos. Mec and the Freund Group are located in different countries and regi ons. This
will make it possible to cross-sell the products of the two companies.
Backed by 30 years of experience, Cos.Mec is highly cost competitive and manufactures its machineryinternally, resulting in consistently strong sales and earnings.
Acquiring Cos.Mec gives the Freund Group sound positions in Japan (Freund Corporation), the United States(Freund-Vector Corporation) and Europe (Cos.Mec). With these three bases, the Freund Group is even better
positioned to sell products worldwide, including emerging countries.

(3) Acquisition dateNovember 5, 2020 (acquisition of equity interests)
September 30, 2020 (assumed acquisition date)(4) Legal form of acquisition
Acquisition of equity interests with cash.
(5) Company’s name after acquisition
There is no change in the company’s name.
(6) Percentage of voting rights acquired
100%(7) Basis for choosing the company to acquire
Freund acquired the equity interests in exchange for cash.

14Freund Corporation (6312) Financial Results for FY2/21

2. Period of the acquired companies’ performance included in th e consolidated financial statements
From October 1 to December 31, 2020.
3. Acquisition cost of acquired company and breakdown by type of consideration
Payment for the acquisition:

Cash

Acquisition cost:

9,750,000 euros (1,192,425,000 yen)
9,750,000 euros (1,192,425,000 yen)This acquisition cost is a provisional figure. The final acquisition cost may be different because of thepossibility of adjustments to the price. The euro-denominated figures are converted into yen at the exchange
rate on November 5, 2020.
4. Goodwill resulting from the acquisition(1) Value of goodwill
8,775,000 euros (1,089,673,000 yen)This is a provisional figure for goodwill that will be finalized later because the allocation of the cost of thisacquisition had not been completed as of the end of the current fiscal year.
(2) Source of goodwill
The source is primarily the expectation of excess earnings power emerging from business development in the
future.
(3) Amortization method and amortization period
Goodwill is amortized over ten years by the straight-line method.

15

Freund Corporation (6312) Financial Results for FY2/21

Segment and Other Information
Segment information
1. Overview of reportable segment
The reportable segments of the Group are components for which discrete financial information is available andwhose operating results are regularly reviewed by the Board of Directors to make decisions about resource
allocation and to assess performance.
The primary business activities of the Group include manufacture and sale of machinery and chemical products.
Consequently, the Group has two reportable business segments: the Machinery Business and the Chemicals
Business.
Main products and services of each reportable segment
Machinery Business:

Granulating devices; construction of granulating machinery plants; measuring
instruments and parts; and outsourced granulation of synthetic resins

Chemicals Business:

Pharmaceutical excipients and dietary supplements; food preservatives; R&D,
formulation studies and other projects for pharmaceuticals, food, chemicals andother products; and development and technology licensing of new dosage forms ofpharmaceutical products

2. Calculation method for net sales, profit or loss, assets, liabilities, and other items for each reportable segment
The accounting policies for reportable business segments are generally the same as those described in“Significant Accounting Policies in the Preparation of Consolidated Financial Statements.”
Segment profit (loss) for reportable business segments are based on operating profit (loss).
Inter-segment sales are based on prices used for third-party transactions.
3. Information related to net sales, profit or loss, assets, liabilities, and other items for each reportable segment
FY2/20 (Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)

Reportable segment
Machinery
Chemicals
Business
BusinessAmounts shown on
consolidated financial
statements (Note 2)

Adjustment(Note 1)Total

Net sales
External sales
Inter-segment sales andtransfers

11,118,858

5,654,018

16,772,877-

16,772,877

-

-

-

-

-

11,118,858

5,654,018

16,772,877-

16,772,877

Segment profit

311,116

781,690

1,092,806(534,356)

558,450

Segment assets

9,167,797

4,197,371

13,365,169

5,140,158

18,505,327

Total

Other items
Depreciation
250,634
130,195
380,829
5,662
386,491
Increase in property, plant and
660,048
290,799
950,848348
951,196
equipment and intangible assets
Notes: 1. Contents of adjustments are as follows.
(1) The negative adjustment of 534,356 thousand yen to segment profit is corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of general and administrative
expenses that are not attributable to any of the reportable segments.
(2) The 5,140,158 thousand yen adjustment to segment assets is corporate assets that are not allo cated to any of
the reportable segments. Corporate assets mainly consist of the Company’s surplus funds (cash and deposits),
long-term investment funds (investment securities and insurance funds), and assets of the administrative
operations of the Company.
(3) The 5,662 thousand yen adjustment to depreciation is mainly depreciation of corporate assets that are notallocated to any of the reportable segments.
(4) The 348 thousand yen adjustment to increase in property, plant and equipment and intangible asse ts is mainly
the sum of corporate assets that are not allocated to the reportable segments.
2. Segment profit is adjusted to be consistent with operating profit recorded in the consolidated statement ofincome.

16

Freund Corporation (6312) Financial Results for FY2/21

FY2/21 (Mar. 1, 2020 – Feb. 28, 2021)(Thousands of yen)

MachineryBusiness

Reportable segment
Chemicals
BusinessAmounts shown on
consolidated financial
statements (Note 2)

Adjustment(Note 1)Total

Net sales
External sales
Inter-segment sales andtransfers
Total

11,171,415

5,593,974

16,765,389-

16,765,389

-

-

-

-

-

11,171,415

5,593,974

16,765,389-

16,765,389

Segment profit

1,084,329

546,1121,630,441(482,777)

1,147,664

Segment assets

11,613,333

4,234,078

15,857,713

4,652,176

20,499,588

Other items
Depreciation
259,797
148,937
408,735
5,711
414,446
Increase in property, plant and
421,900
203,940
625,840
11,407637,248equipment and intangible assets
Notes: 1. Contents of adjustments are as follows.
(1) The negative adjustment of 482,777 thousand yen to segment profit is corporate expenses that are notallocated to any of the reportable segments. Corporate expenses mainly consist of general and administrative
expenses that are not attributable to any of the reportable segments.
(2) The 4,652,176 thousand yen adjustment to segment assets is corporate assets that are not allocated to any of
the reportable segments. Corporate assets mainly consist of the Company’s surplus funds (cash and deposits),
long-term investment funds (investment securities and insurance funds), and assets of the administrative
operations of the Company.
(3) The 5,711 thousand yen adjustment to depreciation is mainly depreciation of corporate assets that are notallocated to any of the reportable segments.
(4) The 11,407 thousand yen adjustment to increase in property, plant and equipment and intangible assets ismainly the sum of corporate assets that are not allocated to the reportable segments.
2. Segment profit is adjusted to be consistent with operating profit recorded in the consolidated statement ofincome.

Related information
FY2/20 (Mar. 1, 2019 – Feb. 29, 2020)
1. Information by product or service
This information is omitted because the same information is presented in segment information.
2. Information by region(1) Net sales(Thousands of yen)

Japan

US

12,195,441

1,393,026

Latin America

Europe1,502,174

557,828

Other
1,124,406

Note: 1. Classification of net sales is based on the location of the client and categorized by country or region.

(2) Property, plant and equipment
Japan2,973,552

US
1,147,321(Thousands of yen)
Italy

Total

89,006

4,209,880

3. Information by major client
Not applicable.

17

Total
16,772,877

Freund Corporation (6312) Financial Results for FY2/21

FY2/21 (Mar. 1, 2020 – Feb. 28, 2021)
1. Information by product or service
This information is omitted because the same information is presented in segment information.
2. Information by region(1) Net sales(Thousands of yen)

Japan

US

12,089,840

1,571,995

Latin America

Europe642,003702,471

Other
1,759,078

Total
16,765,389

Note: 1. Classification of net sales is based on the location of the client and categorized by country or region.

(2) Property, plant and equipment
Japan2,988,811

US
1,158,830(Thousands of yen)
Italy

Total

586,985

4,734,626

3. Information by major client
Not applicable.
Information related to impairment losses on non-current assets for each reportable segment
FY2/20 (Mar. 1, 2019 – Feb. 29, 2020)
The Company has recognized impairment losses related to non -current assets of 203 thousand yen in the
Machinery Business segment and 1,984 thousand yen in the Chemicals Business segment.
FY2/21 (Mar. 1, 2020 – Feb. 28, 2021)
There was no impairment loss allocated to reportable segments. The amount of impairment losses related to
non-current assets that was not allocated to these segments was 3,631 thousand yen.
Information related to goodwill amortization and the unamortized balance for each reportable segment
FY2/20 (Mar. 1, 2019 – Feb. 29, 2020)
Not applicable.
FY2/21 (Mar. 1, 2020 – Feb. 28, 2021)
Goodwill amortization of 27,420 thousand yen was recorded in the Machinery Business segment. Unamortizedbalance of this goodwill was 1,089,741 thousand yen.
Information related to gain on bargain purchase for each reportable segment
Not applicable.

18

Freund Corporation (6312) Financial Results for FY2/21

Per Share Information(Yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)
829.21

FY2/20(Mar. 1, 2019 – Feb. 29, 2020)
790.94

Net assets per share

22.79
59.47
Net income per share
Notes: 1. Diluted net income per share is not presented since the Company has no outstanding dilutive shares.
2. The basis of calculating the net income per share is as follows:(Thousands of yen)
FY2/20FY2/21(Mar. 1, 2019 – Feb. 29, 2020) (Mar. 1, 2020 – Feb. 28, 2021)
381,528
995,812
Profit attributable to owners of the parent
Amounts not attributable to common shareholders
Profit attributable to common shareholders of parent
Average number of common shares outstanding during
the period (Thousand shares)--

381,528

995,812

16,744

16,744

Subsequent Events
Not applicable.
4. Others
Orders and Sales(1) Orders received
Operating segment

FY2/20(Mar. 1, 2019 – Feb. 29, 2020)
AmountYear-on-year (%)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)
AmountYear-on-year (%)

Machinery Business
10,227,445
86.4
12,386,712
121.1
Notes: 1. No orders received are shown for the Chemicals Business because production is based on sales plans rather thanspecific orders.
2. Orders received are based on selling prices; inter-segment transactions have been eliminated.
3. Orders received do not include consumption taxes.

(2) Order backlog
Operating segment

FY2/20(Mar. 1, 2019 – Feb. 29, 2020)
AmountYear-on-year (%)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)
AmountYear-on-year (%)

Machinery Business
4,695,673
86.5
6,615,881
140.9
Notes: 1. No order backlog is shown for the Chemicals Business because production is based on sales plans rather thanspecific orders.
2. Order backlog is based on selling prices; inter-segment transactions have been eliminated.
3. Order backlog does not include consumption taxes.

(3) Sales
Operating segment
Machinery Business

FY2/20(Mar. 1, 2019 – Feb. 29, 2020)(Thousands of yen)
FY2/21(Mar. 1, 2020 – Feb. 28, 2021)

AmountAmountComposition (%)

11,118,858

66.3

11,171,415

Composition (%)
66.6

Chemicals Business

5,654,018

33.7

5,593,974

33.4

Total

16,772,877

100.0

16,765,389

100.0

Notes: 1. Sales are based on selling prices; inter-segment transactions have been eliminated.
2. Sales do not include consumption taxes.
This summary report is solely a translation of “Kessan Tanshin” (in Japanese, including attachments), which has been
prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience of readers
who prefer an English translation.

19