Consolidated Financial Statements for
the Fiscal Year Ended March 31, 2023
[Japanese GAAP]May 12, 2023
Company name: VITAL KSK HOLDINGS, INC.
Stock exchange listing: Tokyo Stock Exchange
Code number: 3151
URL: https://www.vitalksk.co.jp/english/
Representative: Mr. Taisuke Murai, President & CEO
Contact: Mr. Kiharu Takahashi, Executive Officer and General Manager of Corporate PlanningPhone: +81-3-5787-8565
Scheduled date of annual meeting of shareholders: June 28, 2023
Scheduled date of commencing dividend payments: June 8, 2023
Scheduled date of filing securities report: June 30, 2023
Preparation of supplementary explanatory materials: Yes
Financial results briefing: Yes (for institutional investors and analysts)(Amounts of less than one million yen are rounded down.)
1. Consolidated Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 – March 31, 2023)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net salesYear ended

Million yen

Operating profit%

Million yen

Profit attributable toowners of parent

Ordinary profit%

Million yen%

Million yen%

March 31, 2023
579,7720.4
2,470(16.1)
5,960
2.2
4,831
1.3
March 31, 2022
577,249
7.5
2,945
5,834 741.4
4,770 307.1(Note) Comprehensive income: Year ended March 31, 2023: ¥2,491 million [-%]
Year ended March 31, 2022: ¥(1,663) million [-%]
Ratio of ordinary
Basic earnings Diluted earnings
Ratio of operating
Return on equity
profit to total
per shareper share
profit to net sales
assetsYear ended

Yen

Yen

%

%

%

March 31, 2023
92.69
4.9
2.0
March 31, 2022
87.88
4.7
1.9
(Note) Share of profit (loss) of entities accounted for using equity method: Year ended March 31, 2023: ¥108 million
Year ended March 31, 2022: ¥87 million

0.4
0.5

(2) Consolidated Financial Position
Total assets
As ofMillion yen

March 31, 2023
March 31, 2022
(Reference) Equity:

Net assets

Equity ratio

Net assets per share

Million yen%

Yen

297,316
100,165
313,033
100,041
As of March 31, 2023: ¥98,986 million
As of March 31, 2022: ¥98,961 million

33.3
31.6

1,911.44
1,858.86(3) Consolidated Cash Flows
Cash flows fromoperating activities
Year ended

March 31, 2023
March 31, 2022

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents at year-end

Million yen

Million yen

Million yen

Million yen(3,001)
7,487(1,038)(2,013)(4,080)(8,486)15,147
23,239

2. Cash Dividends
1stquarterend
Year ended

March 31, 2022
March 31, 2023
Year ending
March 31, 2024
(Forecast)

Cash dividends per share
2nd
3rd
Yearquarter- quarterend
end
end

Total

Total
dividends(annual)Ratio of
Payout ratio dividends to(consolidated) net assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

-

12.00
12.00

-

14.00
27.00

26.00
39.00

1,400
2,019

29.6
42.1

1.4
2.1

-

19.00

-

20.00

39.00

38.8

3. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2024 (April 1, 2023 - March 31, 2024)(% indicates changes from the previous corresponding period.)
Net sales

Operating profit

Million yen

First half
Full year

290,000
576,000%-

Ordinary profit

Profit attributable to Basic earnings
owners of parent
per share

Million yen%

Million yen%

Million yen

%

Yen

2,400
4,700

-

3,100
6,000

27.9
0.7

2,000
5,200

39.1
7.6

38.62
100.41* For the forecast of consolidated results for the year ending March 31, 2024, percentage changes in comparison
with the results for the year ended March 31, 2023 have been omitted. For performance forecast, please see “1.
Overview of Operating Results, etc.; (4) Future Outlook” on page 4.
* Notes:(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting inchanges in scope of consolidation): None
(2) 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: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None
(3) Total number of outstanding shares (common shares)
1) Total number of outstanding shares at the end of the period (including treasury stocks):
March 31, 2023: 61,224,796 shares
March 31, 2022: 61,224,796 shares2) Total number of treasury stocks at the end of the period:
March 31, 2023: 9,438,699 shares
March 31, 2022: 7,987,331 shares
3) Average number of shares during the period:
Year ended March 31, 2023: 52,119,939 sharesYear ended March 31, 2022: 54,280,124 shares

(Reference) Summary of Non-consolidated Results
1. Non-consolidated Results for the Fiscal Year Ended March 31, 2023 (April 1, 2022 - March 31, 2023)(1) Non-consolidated Operating Results(% indicates changes from the previous corresponding period.)
Net salesYear ended

March 31, 2023
March 31, 2022

Operating profit

Ordinary profit

ProfitMillion yen%

Million yen%

Million yen%

Million yen

5,161
4,901

5.3
93.1

4,392
4,118

6.6
118.6

4,355
4,085

6.6
118.3

4,355
4,073

Basic earnings per
share
Year ended

March 31, 2023
March 31, 2022

%

6.9
121.9

Diluted earnings per
share

Yen

Yen

83.57
75.04

-

(2) Non-consolidated Financial Position
Total assets
As ofMarch 31, 2023
March 31, 2022

(Reference) Equity:

Net assets

Equity ratio

Net assets per share

Million yen

Million yen%

Yen

69,162
69,162

48,251
46,25169.8
66.9

931.75868.78

As of March 31, 2023: ¥48,251 million
As of March 31, 2022: ¥46,251 million* These financial results are outside the scope of audit procedures by certified public accountants or audit
corporations.
* Explanation of the proper use of performance forecast and other notes- The earnings forecast and other forward-looking statements herein are based on the information currently
available and certain assumptions deemed reasonable by the Company, and thus actual results may differ
significantly from these forecasts due to a wide range of factors. For cautionary notes on assumptions that form
the basis of the performance forecast and the use of performance forecast, please see “Overview of Operating
Results, etc.” on page 2 of the attached materials.
- The Company plans to hold a financial results briefing for institutional investors and analysts on May 17, 2023.
The presentation materials to be used at the briefing will be posted on the Company’s website immediately after
the briefing.

Table of Contents
1. Overview of Operating Results, etc. ............................................................................................................... 2(1) Overview of Operating Results for the Fiscal Year Under Review .............................................................. 2(2) Overview of Financial Position for the Fiscal Year Under Review ............................................................. 3(3) Overview of Cash Flows for the Fiscal Year Under Review ........................................................................ 4(4) Future Outlook ............................................................................................................................................. 4(5) Important Events Related to Going Concern Assumption ........................................................................... 6(6) Dividend Policy and Payments for This Period and Next Period................................................................. 6
2. Overview of the Corporate Group .................................................................................................................. 7
3. Management Policy......................................................................................................................................... 8(1) Basic Management Policies ......................................................................................................................... 8(2) Target Management Indicators ..................................................................................................................... 8(3) Medium- and Long-term Business Strategies .............................................................................................. 8(4) Issues to be Addressed ................................................................................................................................. 9(5) Other Important Management Matters ....................................................................................................... 10
4. Basic Idea for Selection of Accounting Standards ......................................................................................... 10
5. Consolidated Financial Statements and Primary Notes .................................................................................. 11(1) Consolidated Balance Sheets...................................................................................................................... 11(2) Consolidated Statements of Income and Comprehensive Income ............................................................. 13(3) Consolidated Statements of Changes in Equity.......................................................................................... 15(4) Consolidated Statements of Cash Flows .................................................................................................... 17(5) Notes to Consolidated Financial Statements .............................................................................................. 19(Notes on going concern assumption) ................................................................................................... 19(Changes in accounting policies)........................................................................................................... 19(Segment information) .......................................................................................................................... 19(Per share information) .......................................................................................................................... 23(Significant subsequent events) ............................................................................................................. 23

1

1. Overview of Operating Results, etc.
(1) Overview of Operating Results for the Fiscal Year Under Review
The Japanese economy during the year ended March 31, 2023 remained unpredictable with the ongoing
COVID-19 pandemic, while vaccination rates increased.
Under these circumstances, the Group started its fifth medium-term management plan for the three-year
period from the year ending March 31, 2023 to the year ending March 31, 2025. In the fifth medium-term
management plan, the Company will continue to work on its long-term vision toward 2025 of “Becoming an
indispensable presence in regional and community healthcare by strategically providing products and services tosupport medicine and nursing.” In addition, under its medium-term vision “to drive business model innovation for
the next generation,” the Company has set out practical tasks to “1. Explore a pharmaceutical distribution modelto adapt to changes in the market structure and meet market characteristics,” “2. Evolve distribution andmarketing models tailored to the advancement of DX in the field of medical care,” and “3. Promote the Groupmanagement that meets Prime Market requirements.” By steadily solving these issues, we will aim to further
evolve as a company indispensable for local healthcare.
For the year ended March 31, 2023, net sales were ¥579,772 million (100.4% of that of the same period of theprevious year), operating profit was ¥2,047 million (83.9% of that of the same period of the previous year),ordinary profit was ¥5,960 million (102.2% of that of the same period of the previous year), and profit
attributable to owners of parent was ¥4,831 million (101.3% of that of the same period of the previous year).
Performance results by business segment are as follows.
1) Pharmaceutical Wholesale BusinessIn the year ended March 31, 2023, the pharmaceutical wholesale business, which is our Group’s primarybusiness segment, achieved steady sales, mainly of COVID-19-related prescription pharmaceuticals and medical
devices and clinical test reagents, etc., despite the negative impact of NHI drug price revision rate of 6.69% on a
pharmaceutical spending basis. As a result, sales increased from the previous year.
Operating profit was expected to exceed the level a year earlier due to increased sales of COVID-19-related
medical equipment and clinical test reagents, etc., as well as higher-than-expected revenue from COVID-19
vaccine delivery continued to be commissioned by national and local governments since the previous fiscal year,
in addition to thorough price negotiations with an awareness of transaction costs and sales of vaccines.
However, on October 28, 2022, some of the Group’s customers filed for voluntary bankruptcy with the Tokyo
District Court. The Group judged that its receivables may become uncollectible and recorded an allowance for
doubtful accounts in the second quarter. Although the Company subsequently reversed the allowance for doubtful
accounts in the fourth quarter on expectations that a portion of the receivables is recoverable, profitability was
still adversely impacted and operating profit was below the level a year earlier.
As a result, net sales were ¥546,058 million (100.3% of that of the same period of the previous year), andsegment profit (operating profit) was ¥2,053 million (84.0% of that of the same period of the previous year).
2) Pharmacy BusinessIn the pharmacy business, we worked to calculate relevant dispensing fees, aiming to offer family pharmacies
as required by the government; however, due to the impact of drug price revisions, net sales were ¥18,361 million2

(99.8% of the level a year earlier) and segment profit (operating profit) was ¥106 million (51.9% of the level ayear earlier).
3) Veterinary Drug Wholesale BusinessIn the veterinary drug wholesale business, although net sales were ¥10,879 million (104.6% of the level ayear earlier) due to increased sales of increased sales of pet-related products, segment profit (operating profit)
was ¥339 million (91.4% of the level a year earlier) due to the recording of an allowance for doubtful accounts.
4) Other Businesses
In other businesses, strong sales in the agricultural chemicals wholesale business were offset by a lackluster
performance in the nursing care business and the sports facility management business due to impacts of COVID19, and net sales were ¥4,473 million (106.5% of the level a year earlier), and segment loss (operating loss) was¥204 million (segment loss of ¥131 million in the same period of the previous year).

(2) Overview of Financial Position for the Fiscal Year Under Review
Assets as of the end of the year ended March 31, 2023 amounted to ¥297,316 million, a decrease of ¥15,717
million from the end of the previous consolidated fiscal year. Assets comprised ¥188,502 million of current assetsand ¥108,813 million of non-current assets.
Current assets mainly comprised ¥19,029 million of cash and deposits, ¥118,386 million of notes andaccounts receivable - trade, ¥30,846 million of inventories and ¥16,665 million of accounts receivable - other.
Current assets decreased ¥10,030 million from the end of the previous consolidated fiscal year, due primarily to adecrease of ¥7,942 million in cash and deposits and a decrease of ¥1,146 million in notes and accounts receivable trade.
Non-current assets comprised ¥49,024 million of property, plant and equipment, ¥3,377 million of intangible
assets and ¥56,411 million of investments and other assets. Non-current assets decreased ¥5,687 million from theend of the previous consolidated fiscal year, due primarily to a decrease of ¥2,865 million in investment securities,
a decrease of ¥2,056 million in goodwill, and a decrease of ¥1,597 million in construction in progress, offsetting an
increase of ¥4,182 million in land.
Liabilities amounted to ¥197,150 million, a decrease of ¥15,841 million from the end of the previous
consolidated fiscal year. Liabilities comprised ¥178,659 million of current liabilities and ¥18,491 million of noncurrent liabilities.
Current liabilities mainly comprised ¥164,571 million of notes and accounts payable - trade and ¥2,095
million of income taxes payable. Current liabilities decreased ¥11,433 million from the end of the previous
consolidated fiscal year, due primarily to a decrease of ¥12,113 million in notes and accounts payable - trade and adecrease of ¥303 million in income taxes payable.
Non-current liabilities mainly comprised ¥8,676 million of deferred tax liabilities, ¥6,790 million of longterm borrowings, and ¥1,498 million of lease obligations. Non-current liabilities decreased ¥4,407 million from theend of the previous consolidated fiscal year, due primarily to a decrease of ¥1,774 million in retirement benefit
liability and a decrease of ¥1,068 million in deferred tax liabilities.
Net assets amounted to ¥100,165 million, an increase of ¥123 million from the end of the previous
consolidated fiscal year, due primarily to the reporting of profit attributable to owners of parent of ¥4,831 million,a decrease of ¥994 million due to an increase in treasury shares and a ¥1,672 million decrease in valuationdifference on available-for-sale securities.
3(3) Overview of Cash Flows for the Fiscal Year Under Review
Cash and cash equivalents (collectively, “Cash”) as of the end of the year ended March 31, 2023 amounted to¥15,147 million (compared to ¥23,239 million at the end of the previous consolidated fiscal year).
a) Cash Flows from Operating Activities
Cash used in operating activities during the year ended March 31, 2023 was ¥3,001 million (¥7,487 million
provided for the previous consolidated fiscal year). This is attributable mainly to decreasing factors such as adecrease in trade payables of ¥12,113 million (an increase of ¥9,624 million for the previous consolidated fiscal
year), a gain on sale and valuation of investment securities of ¥4,118 million (¥2,536 million for the previous
consolidated fiscal year), and income taxes paid of ¥3,527 million (¥1,512 million for the previous consolidated
fiscal year), offsetting increasing factors such profit before income taxes of ¥8,111 million (¥7,648 million for theprevious consolidated fiscal year), a decrease in trade receivables of ¥1,146 million (an increase of ¥4,933 million
for the previous consolidated fiscal year), and a decrease in guarantee deposits of ¥4,278 million (a decrease of¥13 million for the previous consolidated fiscal year).
b) Cash Flows from Investing Activities
Cash used in investing activities during the year ended March 31, 2023 was ¥1,038 million (¥2,013 million
used for the previous consolidated fiscal year). This is attributable mainly to decreasing factors such as purchaseof property, plant and equipment of ¥5,840 million (¥3,415 million for the previous consolidated fiscal year) andpurchase of intangible assets of ¥759 million (¥725 million for the previous consolidated fiscal year) despite
increasing factors such as proceeds from sale of investment securities of ¥5,491 million (¥2,588 million for theprevious consolidated fiscal year).
c) Cash Flows from Financing Activities
Cash used in financing activities during the year ended March 31, 2023 was ¥4,080 million (¥8,486 million
used for the previous consolidated fiscal year). This is attributable to decreasing factors such as dividends paid of¥1,365 million (¥651 million for the previous consolidated fiscal year), repayments of long-term borrowings of¥970 million (¥5,370 million for the previous consolidated fiscal year) and purchase of treasury shares of ¥998
million (¥1,559 million for the previous consolidated fiscal year).

(4) Future Outlook
With the year 2025 just around the corner, when the baby boomers will be late-stage elderly, the restrictions
on social security payments and revisions to the system in anticipation of social structural changes that have been
implemented are considered to continue in the future. Similarly, although in the pharmaceutical wholesale business,the core business of the Group, the market for new drugs such as anticancer drugs is expected to continued
growing and demand will be strong, overall growth is expected to be restrained, reflecting less frenzied sales of
COVID-related products in addition to ongoing drug price revisions and continued encouragement of the use ofgenerics, and it will be necessary to realize further efficiency in distribution channels in order to ensure a stablesupply.
In the field of medical care, new diagnostic and therapeutic techniques that use cutting-edge technology is
about to bring forth substantial innovations. In addition to regenerative medicine, new diagnostic drugs, medical
devices, robots, and other means of diagnosis and medical treatment will drive future market growth, while also4posing new distribution challenges. Furthermore, in the health care domain centering on medical care, theadvancement of DX is expected to contribute to improving efficiency for regional healthcare providers and bringsignificant changes to every business involved in the domain.
In light of these changes in the market structure and business environment, the Group has formulated a new
Long-term Vision 2035 to replace its long-term vision toward 2025 described above (see below). Based on a newlong-term vision, the Group will expand medical care-related businesses with the aim of developing a sustainabledistribution structure for drugs and medical products through independence and cooperation and contributing to theresolution of social issues and the extension of healthy life expectancy.
[Long-term Vision 2035]
To transform the future of medical care by transcending boundaries and “acting as a bridge” to cutting-edge
medicines<Major practical issues>- Sophistication of logistics functions- Overhaul of pharmaceutical wholesale business- Expansion of medical product sales

Expansion of 3PL business
Optimal business strategies in each business area
Further development into drug-related business- Strengthening of rental businessChanges to the way medication is picked up- Expansion of pharmacy business

Various last-mile delivery solutions- Strengthening of cooperation with central and local governments
Contribution to extension of healthy life expectancy- Expansion of life support business

Parenting support and disease prevention- Buisiness expansion in the companion animal and agritech fields
Area expansion and new business development
The Group has also established the fifth Medium-Term Management Plan, spanning three years from April 2022
to March 2025, and is implementing the plan with "Business model innovation looking at next-generation
capabilities" as its medium-term vision.
In addition to various initiatives in line with the Long-term Vision and Medium-term Vision, the Group will also
continue to focus on initiatives to enhance its corporate value announced on October 28, 2022.
<Enhancement of corporate governance>- Introduction of a performance-based restricted stock unit plan to align the interests of shareholders andmanagers- Transition to a company with an Audit & Supervisory Committee to strengthen the functions of the Board* Both measures are on condition of approval at the 14th Annual Shareholders’ Meeting of the Company to beheld on June 29, 2023.
<Improvement of capital efficiency>- Strengthening of shareholder returns- Purchase of treasury shares

Dividend policy: Dividend on equity (DOE) of 2% or more
Total return ratio of 50% or more
Acquisition of treasury shares will continue until the highest
PBR in the industry is achieved- Disposal of cross-shareholdings

Reduction of cross-shareholdings to less than 20% of5consolidated net assets by the year ending March 31, 2026
- ROE targets

and to less than 10% by the year ending March 31, 2032
5.2% for the year ending March 31, 2024 and 8.0% for theyear ending March 31, 2032

As for the forecast of results for the year ending March 31, 2024, the Company expects net sales of ¥576,000
million, operating profit of ¥4,700 million, ordinary profit of ¥6,000 million (100.7% of that of the same period of
the previous year), and profit attributable to owners of parent of ¥5,200 million (107.6% of that of the same periodof the previous year)
Income from the provision of sales information to manufacturers was previously recognized as administrative
service fee income under non-operating income; however, from now on, given the Group’s policy of expanding
business utilizing digital data, income from the information business including income from the provision of sales
information to manufacturers will also be considered as income from core business activities and we havetherefore decided to include this income in net sales from the year ending March 31, 2024, and this change inpresentation method is reflected in this forecast of consolidated results.
(5) Important Events Related to Going Concern Assumption
Not applicable.
(6) Dividend Policy and Payments for This Period and Next Period
The Group recognizes the return of profits to shareholders as a management task of paramount importance.
To fulfill this task, it will make efforts to maintain stable and continuous dividend payment and to enhance internal
reserves from the long-term perspective of maximizing corporate value.
For the year ended March 31, 2023, the Group has decided to pay the interim dividend of ¥12 per share, aspreviously paid, and a year-end dividend of ¥27 per share, bringing the total annual dividend to ¥39 per share.
For the year ending March 31, 2024, based on its policy of DOE of 2% or more, the Group expects to pay anannual dividend of ¥39 per share consisting of the interim dividend of ¥19 per share and the year-end dividend of¥20 per share.

62. Overview of the Corporate GroupThe Group (the Company and the associated companies of the Company) comprises the Company, its 18
subsidiaries and four affiliates. The Group is mainly engaged in businesses associated with the four businesses ofthe pharmaceutical wholesale business, the pharmacy business, the veterinary drug wholesale business, and otherbusinesses. Other businesses include the retail of pharmaceuticals, the wholesale of agricultural chemicals, thetransportation business, the nursing care service business, the consulting services for medical institutions, the nonlife insurance agency business, the real estate brokerage business and the operation of parking lots.
Business

Associated companies
VITAL KSK HOLDINGS, INC. (the Company), VITAL-NET, INC.,
Pharmaceutical Wholesale Business
KSK Co., Ltd., Finese Co., Ltd.
Pharmacy Business
OHNO CO. LTD., Goodneighbor Inc., KENKODO YAKKYOKU, G.K.
Veterinary Drug Wholesale Business AGRO-JAPAN, Inc.
Health Care Management Institute Ltd., VITAL-GREEN, Inc., VITALOther Businesses
CARE, Inc., Tanpopo Co., Ltd., VITAL-EXPRESS, Inc., Daishin
Tsushou Co., Ltd., PLEARC, Inc., 8 other companies
The following figure illustrates the Company’s business structure.

7

3. Management Policy(1) Basic Management Policies
On April 1, 2009, the VITAL KSK Group was launched upon the establishment of VITAL KSK HOLDINGS,
INC., a joint holding company, through the share transfer of VITAL-NET, INC. and KSK Co., Ltd. and 14 years
have passed since then.
With “Towards realization of healthy and prosperous society” as its corporate slogan, the VITAL KSK Group
adopted "To transform the future of medical care by transcending boundaries and "acting as a bridge" to cuttingedge medicines" as its new long-term vision from the year ending March 31, 2024, and is working to tackle thepractical issues described above.
(2) Target Management Indicators
The Group formulated its fifth medium-term management plan for the three-year period from the year ending
March 31, 2023 to the year ending March 31, 2025.
Targets
Year ending March 31, 2023
Plan
(Millionyen)
Net sales

Sales ratio(%)

563,300

YoY(%)

Year ending March 31, 2024
Plan
(Million
yen)

97.6

576,000

Sales ratio(%)

Year ending March 31, 2025
Plan
(Million
yen)

YoY
(%)
―

576,000

Sales ratio
(%)

YoY
(%)
100.0

Operating profit

2,300

0.41

78.1

4,700

0.82

―

5,300

0.92

112.8

Ordinary profit

4,900

0.87

84.0

6,000

1.04

122.4

6,200

1.08

103.3

Profit attributable toowners of parent

4,500

0.80

94.3

5,200

0.90

115.6

5,400

0.94

103.8

* As explained earlier, income from the provision of sales information to manufacturers was previously recognized as administrative
service fee income under non-operating income; however, from now on, given the Group's policy of expanding business utilizing
digital data, income from the information business including income from the provision of sales information to manufacturers will
also be considered as income from core business activities. The presentation method has, therefore, changed and income will be
included in net sales from the year ending March 31, 2024. The plans for the year ending March 31, 2024 and the year ending
March 31, 2025 in the above chart have also been changed accordingly. Year-on-year comparisons for net sales and operating
profit for the year ending March 31, 2024 are omitted due to this change in the presentation method.

(3) Medium- and Long-term Business Strategies
As stated above, the Group started its fifth medium-term management plan in April 2022. The Group aims torealize its newly established Long-term Vision: “Vision 2035: To transform the future of medical care bytranscending boundaries and “acting as a bridge” to cutting-edge medicines.” Additionally, in its fifth mediumterm management plan, in order to achieve its medium-term vision “To Drive Business Model Innovation for the
Next Generation,” the Group is working through the three basic policies, “Exploring a pharmaceutical
distribution model to adopt changes in the market structure and meet market characteristics,” “Evolving
distribution and marketing models tailored to the advancement of DX in the field of medical care,” and“Promoting the Group management that meets Prime Market requirements.”8

[Major Practical Issues]<Pharmaceutical Wholesale Business>
1. Establishing a system that accommodates changes in the market structure(1) Realizing low-cost operations with improved and optimized processes(2) Conducting efficient and effective marketing activities to prescribers(3) Expanding MS functions (to replace MR functions)
2. Strengthening efforts for “hospitals,” the core regional health care providers, and reorganizing sales
structures
3. Promoting DX for dispensing pharmacies
4. Sustainably improving supply chain management capabilities(1) Expanding the scope of packaged product delivery using inventory management systems(2) Developing a third-party logistics (3PL) business(3) Implementing a supply chain concept utilizing dispensing centers(4) Sustainably increasing logistics quality and efficiency<Group management strategy>
1. Financial strategy(1) Achieving ROE of 5% or more
(2) Implementing appropriate shareholder return policies(Dividend on equity (DOE) of 2% or more and total return ratio of 50% or more)(3) Reducing cross-shareholdings
2. Reviewing and developing corporate governance at a higher level
3. Further enhancing corporate communication (CC)
(1) Conducting appropriate CC activities in light of the Internet age and the financial strategy(2) Enhancing disclosure in English (including the Company’s website, notices of convocation of general
meetings of shareholders)(3) Conducting CC activities that address task force on climate-related financial disclosures (TCFD) in
addition to environmental, social, and governance (ESG) activities(4) Issues to be Addressed
Amid ongoing changes in the social structure and discussions about reforming social security systems anddrug pricing systems, including health system reform, workstyle reform for doctors, revision of the Infectious
Diseases Control Act and other laws, digital transformation of health care and Community Health Care Visions,in the prescription pharmaceuticals domain, drug prices were revised five times in the space of three-and-a-halfyears: in October 2019, April 2020, April 2021, April 2022 and April 2023. Drug price revisions are planned totake place every year and the government is likely to continue with its policy to limit medical costs in the future.
Under such circumstances, the Group started its fifth medium-term management plan in April 2022. In thepharmaceutical wholesale business, not only did the Group construct a business system to continue to create
profits even under low growth in the prescription pharmaceutical market, but based on a foundation of the9Group’s strengths in moving deeper into regional healthcare through its network with local governments, nursing
professionals and other regional healthcare providers, in addition to its network of medical institutions developed
through the prescription pharmaceutical wholesale business, the Group has made efforts to “become the corporategroup of choice” for manufacturers, public administration, customers, and the community by providing supportand solutions through a wide range of products and services as it steadily progresses into growth sectors. In
particular, we will focus our efforts on being able to meet needs for digital transformation in the field of medicalcare, which is expected to advance rapidly in the future. We will also continue to develop medical-related
business and explore new sources of revenue, aiming to realize our long-term vision newly established in 2023.
(5) Other Important Management Matters
Not applicable.

4. Basic Idea for Selection of Accounting Standards
In order to ensure comparability between companies over time, the Group prepares its consolidated financial
statements in accordance with the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated
Financial Statements (excluding Chapters 7 and 8) (Ordinance of the Ministry of Finance No. 28 of 1976).
The Group will appropriately apply international accounting standards, while taking domestic and overseas
situations into account.

10

5. Consolidated Financial Statements and Primary Notes(1) Consolidated Balance Sheets
As of March 31, 2022
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Inventories
Accounts receivable - other
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
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction 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
Long-term loans receivable
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

11(Million yen)
As of March 31, 2023

26,971
119,533
31,788
16,617
3,672(50)
198,532

19,029118,386
30,846
16,665
3,616(41)
188,50247,987(28,684)
19,303
1,951(1,355)595
20,735
6,814(3,929)
2,885
1,629
3,739
(3,126)612
45,76150,310(29,940)
20,3701,988(1,451)537
24,917
6,604(4,229)
2,375
31
4,184
(3,391)
792
49,024

2,874
1,356
805
5,036

818
1,415
1,143
3,377

47,508
1,588
7,684
383
7,115
(576)
63,703
114,501
313,033

44,642
1,419
7,589
400
3,362
(1,002)56,411
108,813297,316(Million yen)
As of March 31, 2023

As of March 31, 2022
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Lease liabilities
Deferred tax liabilities
Provision for retirement benefits for directors(and other officers)
Provision for share awards for directors (andother officers)
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Remeasurements of defined benefit plans
Total accumulated other comprehensive
incomeNon-controlling interests
Total net assets
Total liabilities and net assets

12

176,685
990
970
2,399
1,542
7,505
190,092

164,571
990
970
2,095
1,569
8,462
178,659

7,760
2,129
9,744

6,790
1,498
8,676

193

196

51

54

2,629
391
22,898
212,991855
419
18,491
197,150

5,000
12,81064,402(6,581)
75,631

5,000
12,81067,864(7,575)78,09921,645

19,972

1,683

913

23,32920,8861,080
100,041
313,033

1,179
100,165
297,316(2) Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Gain on investments in investment partnerships
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
Rental income
Administrative service fee income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rental expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Loss on retirement of non-current assets
Impairment losses
Loss on sale of investment securities
Loss on valuation of investment securities
Other
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

For the fiscal year ended
March 31, 2022
577,249
533,272
43,97641,0302,945

For the fiscal year ended
March 31, 2023
579,772
534,80944,96342,492
2,470

62
49
804

617
31
751

87

108

240
1,556
300
3,100

240
1,554
377
3,682

99
85
27
212
5,834

96
79
15
192
5,960

310
2,545
18
2,873

22
4,201
4,224

19
4
946
8
80
1,059
7,648
2,575
191
2,767
4,880
110
4,770

14
3
1,791
26
56
180
2,072
8,111
3,184
(7)
3,177
4,934
102
4,831

13

Consolidated Statements of Comprehensive Income(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-salesecurities
Remeasurements of defined benefit plans, net oftax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests

For the fiscal year ended
March 31, 2022
4,880

For the fiscal year ended
March 31, 2023
4,934

(5,819)(1,690)

(546)

(762)

(178)

11

(6,543)(1,663)(2,442)
2,491(1,773)

2,388

110

102

14

(3) Consolidated Statements of Changes in Equity
Fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022)(Million yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

5,000

12,81060,285(5,025)

Total shareholders’equity73,070Changes during period
Dividends of surplus

(653)

(653)

Profit attributable to owners ofparent

4,770

4,770

Purchase of treasury shares
Disposal of treasury shares bystocks payment trust(1,559)(1,559)3

3

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

-

-

4,116

(1,555)

2,561

5,000

12,81064,402(6,581)

75,631

Non-controllinginterests

Total net assets

972

103,916

Accumulated other comprehensive income

Balance at beginning of period

Valuationdifference on
available-for-salesecurities

Remeasurementsof defined benefit
plans

27,652

2,220

Total accumulated
othercomprehensive
income29,873

Changes during period
Dividends of surplus(653)

Profit attributable to owners ofparent

4,770

Purchase of treasury shares(1,559)

Disposal of treasury shares bystocks payment trust
Net changes in items other thanshareholders’ equity

3(6,006)(537)(6,543)108(6,435)

Total changes during period(6,006)(537)(6,543)108(3,874)

Balance at end of period

21,645

1,683

23,3291,080

100,041

15

Fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)(Million yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

5,000

12,81064,402(6,581)

Total shareholders’equity75,631

Changes during period
Dividends of surplus(1,369)(1,369)Profit attributable to owners ofparent

4,831

4,831

Purchase of treasury shares

(998)

(998)

Disposal of treasury shares forstocks payment trust

4

4

Change in scope of consolidation00

Net changes in items other thanshareholders’ equity
Total changes during period
Balance at end of period

-

-

3,461

(994)

2,467

5,000

12,81067,864(7,575)78,099

Accumulated other comprehensive income

Balance at beginning of period

Valuationdifference on
available-for-salesecurities

Remeasurementsof defined benefit
plans

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets

21,645

1,683

23,3291,080

100,041

Changes during period
Dividends of surplus(1,369)Profit attributable to owners ofparent

4,831

Purchase of treasury shares(998)

Disposal of treasury shares forstocks payment trust

4

Change in scope of
consolidation0

Net changes in items other thanshareholders’ equity(1,672)(769)

Total changes during period(1,672)(769)(2,442)

98

123

Balance at end of period

19,972913

20,886

1,179

100,165

16(2,442)98(2,343)

(4) Consolidated Statements of Cash Flows(Million yen)
For the fiscal year ended
March 31, 2023

For the fiscal year ended
March 31, 2022
Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Amortization of goodwill
Increase (decrease) in allowance for doubtful
accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in retirement benefit liability
Interest and dividend income
Rental income
Administrative service fee income
Interest expenses
Loss (gain) on investments in investment
partnerships
Share of loss (profit) of entities accounted forusing equity method
Loss (gain) on sale and valuation of investment
securities
Loss on valuation of shares of subsidiaries andassociates
Loss (gain) on sale and retirement of property,
plant and equipment
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in accounts receivable - other
Decrease (increase) in guarantee deposits
Increase (decrease) in trade payables
Other, net
SubtotalInterest and dividends received
Office work fee received
Interest paid
Income taxes paid
Income taxes refund
Other, net
Net cash provided by (used in) operating activities

17

7,648
2,780
946
343

8,111
3,010
1,791
343

(15)

416

106
(3,323)(853)(240)(1,556)99

26(1,679)(783)(240)(1,554)
96

-

(617)

(87)

(108)

(2,536)(4,118)

11

-

(286)

(4)

(4,933)(2,450)(1,109)
13
9,624
1,348
5,528
852
1,548
(98)
(1,512)
1,156
10
7,487

1,146
942
(73)
4,278
(12,113)(1,468)(2,597)
790
1,580
(96)
(3,527)836
12(3,001)

(Million yen)
For the fiscal year ended
March 31, 2023

For the fiscal year ended
March 31, 2022
Cash flows from investing activities
Net decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sale of investment securities
Proceeds from repayment of investment securities
Proceeds from redemption of investment
securities
Loan advances
Proceeds from collection of loans receivable
Purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings
Repayments of lease liabilities
Purchase of treasury shares
Dividends paid
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Cash and cash equivalents at end of period

18

(200)
(3,415)(150)(5,840)

551

200

(725)
(885)
2,588
7

(759)
(353)
5,491
4

-

100

(10)
40

(60)
89

(217)

-

252
(2,013)238(1,038)(210)(5,370)(694)(1,559)(651)(2)(8,486)(3,013)
26,252

(970)
(742)
(998)
(1,365)(4)(4,080)(8,121)
23,239-29

23,23915,147

(5) Notes to Consolidated Financial Statements(Notes on going concern assumption)
Not applicable.
(Changes in accounting policies)
The Company has applied the “Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31, June 17, 2021; hereinafter “Fair Value Measurement Guidance”) from the beginning of
consolidated fiscal year under review, and has decided to prospectively apply the new accounting policies stipulatedby the Fair Value Measurement Guidance in accordance with the transitional treatment provided in Paragraph 27-2of the Fair Value Measurement Guidance. There are no effects on the consolidated financial statements for the fiscal
year under review due to the application of the Implementation Guidance(Segment information)
1. Overview of reportable segments
The Group’s reportable segments are components of the Group about which separate financial information isavailable. These segments are subject to periodic examinations to enable the company’s Board of Directors to decide
how to allocate resources and assess performance.
The Group’s segment is categorized based on the business of its operating company, and thus its main segments,
the “Pharmaceutical Wholesale Business,” the “Pharmacy Business,” and the “Veterinary Drug Wholesale Business”
comprise the Group’s reportable segments.
The “Pharmaceutical Wholesale Business” is engaged in sales of drugs, diagnostic products, medical devices,materials, etc. to medical institutions, such as hospitals, clinics, and pharmacies. The “Pharmacy Business” isengaged in sales of drugs, medical devices and equipment, and hygiene materials, etc. to general consumers. The“Veterinary Drug Wholesale Business” is engaged in sales of veterinary drugs, feeds, etc. to farms, ranches,
veterinary hospitals, clinics, etc.
2. Method of measurement for the amounts of net sales, income (loss), assets and other items for each reportablesegment
The method of accounting for the reportable business segments is generally the same as those stated in “Basis for
the Presentation of the Consolidated Financial Statements.”
Profit in the reportable segments is based on operating profit.
Inter-segment revenues and transfers are calculated at prevailing market prices.

19

3. Information on net sales, income (loss), assets and other items by reportable segment
For the fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022)
Reportable segment
Pharmacy
Business

Veterinary
Drug
Wholesale
Business544,249

18,397

10,399573,0474,201

577,249-

577,249

8,811

3

0

8,815

2,502

11,317(11,317)-553,061

8,401

10,399581,862

6,704

588,566(11,317)577,249

2,443

205

371

3,020

(131)

2,889

56

2,945

295,496

10,6105,186

311,292

8,780

320,073(7,039)313,033

2,476

144

14

2,636

144

2,780

-

2,780

15

327

-

343

-

343

-

343

3,218

48

112

3,380

803

4,184

-

4,184

Pharmaceutical
Wholesale
Business
Net sales
Net sales to outside
customers
Inter-segment net sales
or transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation
Amortization of
goodwill
Increase in property,
plant and equipment, andintangible assets(Million yen)Amountrecorded in
Consolidated
Statements ofIncome(Note 3)

Total

Others(Note 1)

Total

Adjustment(Note 2)

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as
wholesale of agricultural chemicals, nursing care service business, transportation business, and consulting
services for medical institutions.
2. Adjustment of segment income (loss) of ¥56 million and adjustment of segment assets of ¥(7,039) million
refer to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income to operating loss reported on the consolidated
statements of income.

20

For the fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)
Reportable segment(Million yen)Amountrecorded in
Consolidated
Statements ofIncome(Note 3)

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

546,058

18,361

10,879575,299

4,473

579,772-

579,772

10,4529

0

10,462

2,553

13,015(13,015)-

Total

556,511

18,371

10,879585,7617,026

592,788(13,015)579,772

Segment income (loss)

2,053

106

339

2,499

(204)

2,295

175

2,470

281,594

8,794

5,288

295,676

9,666

305,343(8,027)297,316

2,640

142

17

2,800

210

3,010

-

3,010

15

327

-

343

-

343

-

343

6,070

57

9

6,137

836

6,974

-

6,974

Pharmaceutical
Wholesale
Business

Net sales
Net sales to outside
customers
Inter-segment net
sales or transfers

Segment assets
Other items
Depreciation
Amortization of
goodwill
Increase in property,
plant and equipment,
and intangible assets

Total

Others(Note 1)

Total

Adjustment(Note 2)

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as
wholesale of agricultural chemicals, nursing care service business, transportation business, and consulting
services for medical institutions.
2. Adjustment of segment income (loss) of ¥175 million and adjustment of segment assets of ¥(8,027)
million refer to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income to operating profit reported on the consolidated
statements of income.

[Related information]
1. Information by product and service
Statement has been omitted as net sales to outside customers in a single product/service category exceed 90% of
total net sales in the consolidated statements of income.
2. Information by geographic area
(1) Net sales
Not applicable as there are no net sales to outside customers other than in Japan.
(2) Property, plant and equipment
Not applicable as there are no property, plant or equipment in areas other than in Japan.
3. Information by major customer
Statement has been omitted as no outside customer accounts for 10% or more of total net sales in the
consolidated statements of income.

21

[Information concerning impairment loss on non-current assets by reportable segment]
Fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022)(Million yen)
Reportable segment
Pharmaceutical
Wholesale
Business
Impairment losses

922

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

23

Others

Total
-

946

Total

-

Amountrecorded in
Consolidated
Statements ofIncomeAdjustment

946

-

946

Fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)(Million yen)
Reportable segment
Pharmaceutical
Wholesale
Business
Impairment losses

78

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

1,713

Others

Total
-

1,791

Total

-

Amountrecorded in
Consolidated
Statements ofIncomeAdjustment

1,791

-

1,791

[Information concerning amortization of goodwill and unamortized balances by reportable segment]
Fiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022)(Million yen)
Reportable segment
Pharmaceutical
Wholesale
Business

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

Others

Total

Total

Amountrecorded in
Consolidated
Statements ofIncomeAdjustment(Goodwill)
Amortization expense

15

327

-

327

-

343

-

343

Balance at end of period

35

2,839

-

2,874

-

2,874

-

2,874

Fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)(Million yen)
Reportable segment
Pharmaceutical
Wholesale
Business

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

Others

Total

Total

Amountrecorded in
Consolidated
Statements ofIncomeAdjustment(Goodwill)
Amortization expense

15

327

-

343

-

343

-

343

Balance at end of period

19

798

-

818

-

818

-

818

22

(Per share information)

Net assets per share
Basic earnings per share

For the fiscal year ended
March 31, 2022
¥1,858.86¥87.88For the fiscal year ended
March 31, 2023
¥1,911.44¥92.69(Notes) 1. Diluted earnings per share is not stated as there are no dilutive shares.
2. Basis of calculation of basic earnings per share and diluted earnings per share is as follows:
For the fiscal year ended
March 31, 2022
Basic earnings per share
Profit income attributable to owners ofparent (Million yen)Amount not attributable to common
stockholders (Million yen)
Profit attributable to owners of parent
relating to common stock (Million yen)
Average number of shares of common stock
outstanding during the period (Thousand
shares)For the fiscal year ended
March 31, 2023

4,770

4,831

-

-

4,770

4,831

54,28052,119For the fiscal year ended
March 31, 2022
100,041

For the fiscal year ended
March 31, 2023
100,165

1,080

1,179

(1,080)(1,179)98,961

98,98653,23751,786

3. Basis for the calculation of net assets per share is as follows:

Total net assets (Million yen)Amount deducted from total net assets(Million yen)(Non-controlling interests) (Million yen)
Year-end net assets corresponding to common
stock (Million yen)
Number of common stock at the year-end
used to calculate net assets per share(Thousand shares)(Note) The Company shares held by the Custody Bank of Japan, Ltd. (Trust Account E) as trust assets for the “Board
Benefit Trust (BBT)” are included in treasury stock to be deducted in the calculation of average number ofshares during the period for the purpose of calculating basic earnings per share (120 thousand shares for the
fiscal year ended March 31, 2022, and 116 thousand shares for the fiscal year ended March 31, 2023).
(Significant subsequent events)
Not applicable.

23