Consolidated Financial Statements for the Second Quarter of
the Fiscal Year Ending March 31, 2022
[Japanese GAAP]
November 9, 2021
Company name: VITAL KSK HOLDINGS, INC.
Stock exchange listing: Tokyo Stock Exchange
Code number: 3151
URL: https://www.vitalksk.co.jp/
Representative: Mr. Taisuke Murai, President & CEO
Contact: Mr. Kiharu Takahashi, Executive Officer and General Manager of Accounting & FinancePhone: +81-3-3275-3303
Scheduled date of filing quarterly report: November 12, 2021
Scheduled date of commencing dividend payments: December 6, 2021
Preparation of supplementary explanatory materials: Yes
Quarterly financial results meeting: Yes (for institutional investors and analysts)(Amounts of less than one million yen are rounded down.)
1. Consolidated Results for the Second Quarter of the Fiscal Year Ending March 31, 2022
(April 1, 2021 – September 30, 2021)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Operating profit
Profit attributable to
Net sales
Ordinary profit(loss)
owners of parent
Six months ended
Million yen%
Million yen%
Million yen%
Million yen%
September 30, 2021
285,2297.0
934
2,355 439.2
1,411
221.6
September 30, 2020
266,670(6.6)(1,111)436(85.5)
438(82.2)(Note) Comprehensive income: Six months ended September 30, 2021: ¥2,385 million [(64.3)%]
Six months ended September 30, 2020: ¥6,686 million [-%]
Basic earnings per
Diluted earnings per
share
share
Six months ended
Yen
Yen
September 30, 2021
25.67
September 30, 2020
7.98
(2) Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

As of September 30, 2021
327,259
105,590
As of March 31, 2021
311,401
103,916(Reference) Equity: As of September 30, 2021: ¥104,564 million
As of March 31, 2021: ¥102,943 million

32.0
33.1

2. Cash Dividends
Annual dividends
2nd quarter- 3rd quarterYear-end
end
end

1st
quarter-end
Year ended
March 31, 2021
Year ending
March 31, 2022
Year ending
March 31, 2022 (Forecast)(Note)

Total

Yen

Yen

Yen

Yen

Yen

-

12.00

-

0.00

12.00

-

12.00
-

12.00

24.00

Revision to the forecast for dividends announced most recently: None

3. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2022
(April 1, 2021 - March 31, 2022)(% indicates changes from the previous corresponding period.)
Net sales

Operating profit

Ordinary profit

Profit attributable toowners of parent

Million yen

Million yen

Million yen

Basic earnings
per share%

Yen

Full year
542,200
1.0
1,600
4,200 505.7
4,000 241.4(Note) Revision to forecast of consolidated results announced most recently: None

73.64

Million yen

%

%

%

* Notes:(1) Changes in significant subsidiaries during the period under review: None
(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes* For details, please see “(4) Notes to Quarterly Consolidated Financial Statements (Accounting policies adopted
specially for the preparation of quarterly consolidated financial statements)” on page 10 of the attached materials.
(3) 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
(4) Total number of outstanding shares (common shares)
1) Total number of outstanding shares at the end of the period (including treasury stocks):
September 30, 2021: 61,224,796 shares
March 31, 2021: 61,224,796 shares2) Total number of treasury stocks at the end of the period:
September 30, 2021: 6,907,698 shares
March 31, 2021: 5,990,796 shares
3) Average number of shares during the period:
Six months ended September 30, 2021: 54,968,265 shares
Six months ended September 30, 2020: 54,982,095 shares* These quarterly financial results are outside the scope of quarterly review 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.
 The Company plans to hold a financial results briefing on the Internet for institutional investors and analysts on
November 10, 2021.

Table of Contents
1. Qualitative Information on Quarterly Financial Results .................................................................................. 2
Explanation of Operating Results .................................................................................................................... 2
2. Quarterly Consolidated Financial Statements and Primary Notes.................................................................... 4(1) Quarterly Consolidated Balance Sheets ....................................................................................................... 4(2) Quarterly Consolidated Statements of Income and Comprehensive Income ............................................... 6(3) Quarterly Consolidated Statements of Cash Flows ...................................................................................... 8(4) Notes to Quarterly Consolidated Financial Statements .............................................................................. 10(Notes on going concern assumption) .................................................................................................. 10(Notes in the case of significant changes in amount of shareholders’ equity) ...................................... 10(Accounting policies adopted specially for the preparation of quarterly consolidated financial
statements) ....................................................................................................................................... 10(Changes in accounting policies) .......................................................................................................... 10(Segment information).......................................................................................................................... 111

1. Qualitative Information on Quarterly Financial Results
Explanation of Operating Results
The Japanese economy during the six months ended September 30, 2021 remained unpredictable with theongoing COVID-19 pandemic, while vaccination rates increased.
In the pharmaceutical wholesale industry, our Group’s primary business segment, Japan’s medical expense
curbing policy led to drug price revision every year since 2018, and the scope of off-year drug price revisions in
April 2021 was far beyond the original expectation. It was the negative revision of medical costs(approximately ¥430 billion down) based on the budget for fiscal year 2021.
Under these circumstances, the Group reached the final year of its fourth medium-term management planfor the three-year period from the year ending March 31, 2020 to the year ending March 31, 2022. In the fourth
medium-term management plan, the Company continues 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 to support medicine and nursing.” Furthermore, under this long-term vision, as its
medium-term vision during the fourth medium-term management plan, the Company defined the vision of “To
Become the Corporate Group of Choice” with practical tasks to “1. Construct a prescription pharmaceuticalwholesale business system to create profits continuously even in the low-growth environment,” “2. Increase
earnings through growth and expansion of emerging business (Note),” and “3. Strengthen the Groupmanagement system.” Additionally, to realize this medium-term vision, the Company is working toward thefour basic principles of “Demonstrating the comprehensive strength of the Group by implementing effective
and efficient Group management,” “Expanding and establishing provision functions and focus on growing
domains,” “Coordinating regional healthcare and providing support and solutions,” and “Developing new
earnings strategies and businesses that use our strengths and resources.”
For the six months ended September 30, 2021, net sales were ¥285,229 million (107.0% of that of thesame period of the previous year), operating profit was ¥934 million (operating loss of ¥1,111 million in thesame period of the previous year), ordinary profit was ¥2,355 million (539.2% of that of the same period of theprevious year), and profit attributable to owners of parent was ¥1,411 million (321.6% of that of the same
period of the previous year).
While the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020) and other standards reduced net sales by ¥618 million, it did not affect operating profit,
ordinary profit, and profit attributable to owners of parent.
(Note) Emerging business refers to businesses other than the prescription pharmaceutical wholesale business
Performance results by business segment are as follows.
1) Pharmaceutical Wholesale BusinessIn the pharmaceutical wholesale business, in the previous year, demand for pharmaceuticals declined
significantly due to restrictions on medical examinations and the postponement of surgeries and other medical
treatments stemming from the spread of COVID-19. However, the demand has been recovering faster than
anticipated for the six months ended September 30, 2021 even though it did not reach pre-COVID levels.
COVID-19 related product sales and rentals also performed well.
In the previous year, we couldn’t have enough time for price negotiation with customers due to the impact
of COVID-19 pandemic as well as the intensified competition in the market. As a result, we couldn’t promote
the negotiation for unit price-based contract which is one of the approaches for improvement of commercial
transaction practices of ethical drugs which we had worked on for a long time. For the six months ended
September 30, 2021, we are making our utmost efforts towards promotion of the negotiation for unit price-2

based contract, and the deal with optimized price in consideration of the value of pharmaceutical products, inline with the purpose of Guidelines for the Improvement of Commercial Transaction Practices of Ethical Drugs,
to maintain the structure to provide a stable supply of pharmaceutical products. In addition, we have focused on
the cost reduction by reviewing operational processes. Meanwhile, to fulfill our social mission of helping toputt COVID-19 to an end, we have also focused on COVID-19 vaccine-related work commissioned by thenational and local governments, which involves vaccine delivery, operation of primary vaccination clinics withdeep freezers, and repackaging in smaller units.
As a result, net sales were ¥269,146 million (106.9% of that of the same period of the previous year), andsegment profit (operating profit) was ¥739 million (¥1,152 million of segment loss in the same period of theprevious year).
The application of the Accounting Standard for Revenue Recognition and other standards reduced net
sales by 619 million, while it did not affect the segment profit.

2) Pharmacy BusinessIn the pharmacy business, net sales were ¥9,045 million (109.8% of that of the same period of theprevious year) due to the increase of one consolidated company in the dispensing pharmacy business and thegrowth in the number of prescriptions received, and segment income (operating profit) was ¥83 million(segment loss of ¥44 million in the same period of the previous year).
The application of the Accounting Standard for Revenue Recognition and other standards did not affect
net sales and the segment income.
3) Veterinary Drug Wholesale BusinessIn the veterinary drug wholesale business, net sales were ¥5,128 million (105.3% of that of the same
period of the previous year), and segment income (operating profit) was ¥189 million (103.6% of that of thesame period of the previous year) following the recovery in the market.
The application of the Accounting Standard for Revenue Recognition and other standards increased net
sales by ¥0 million, while it did not affect the segment profit.
4) Other Businesses
In other businesses, the nursing care business improved its earnings, whereas the sports facility
management business performed insufficiently. As a result, net sales were ¥1,909 million (108.4% of that of
the same period of the previous year), and segment loss (operating loss) was ¥97 million (segment loss of¥110 million in the same period of the previous year).
The application of the Accounting Standard for Revenue Recognition and other standards did not affect
net sales and the segment income.

3

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly Consolidated Balance Sheets(Million yen)
As of March 31, 2021
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, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

4

As of September 30, 2021

29,784
114,599
29,31815,367
1,632(67)
190,634

31,120121,188
31,426
15,656
3,347(58)
202,682

19,10820,6704,907
44,686

19,13020,924
6,274
46,330

3,111
1,480
4,591

3,046
1,873
4,919

55,186
16,876(574)
71,488120,766
311,401

56,97816,912(564)
73,327
124,576
327,259(Million yen)
As of March 31, 2021
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Income taxes payable
Provision for bonuses
Other provisions
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Other provisions
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

5

As of September 30, 2021

166,973
1,200
5,370
224
1,431
146
3,079
178,426

177,391
1,070
5,370
927
1,350

8,730
229
5,915
14,18429,058207,485

8,245
225
5,770
15,13329,374
221,668

5,000
12,81060,285(5,025)73,0705,000
12,81061,696(5,734)73,772

27,652

28,765

2,220

2,026

29,87330,792972
103,916
311,401

1,025
105,590327,259－
6,184
192,294

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income
Six Months Ended September 30, 2020 and 2021
(Million yen)
For the six months ended
September 30, 2020

266,670
247,603
19,066
174
158
19,082
20,194(1,111)

Net sales
Cost of sales
Gross profit
Reversal of provision for sales returns
Provision for sales returns
Gross profit - net
Selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using
equity method
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
Impairment losses
Other
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent－－
20,95320,018
934

29
433

24
409

59

14

725
403
1,651

765
319
1,533

35
43
22
102
436

48
43
20
112
2,355

33
468
4
506
16
16
81
114
828
337
491
52
438

6

For the six months ended
September 30, 2021
285,229
264,276
20,953

11

－
0
11
19
47
19
87
2,280
814
1,466
55
1,411

Quarterly Consolidated Statements of Comprehensive Income
Six Months Ended September 30, 2020 and 2021
(Million yen)
For the six months ended
September 30, 2020
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

7491

For the six months ended
September 30, 2021
1,466

6,133

1,051

(148)

(194)

210

61

6,195
6,686

919
2,385

6,634

2,330

52

55

(3) Quarterly Consolidated Statements of Cash Flows(Million yen)
For the six months ended
September 30, 2020

For the six months ended
September 30, 2021

828
1,453
16
158

2,280
1,335
47
171

(50)

(20)

(395)
(285)
(462)
(112)
(725)
35

(85)
(293)
(433)
(124)
(765)
48

(59)

(14)

(468)

8

(13)

8

2,095
971
(350)
(27)
(3,636)(1,771)(2,798)
463
716
(36)
(1,368)317
4(2,701)(6,589)(2,089)(132)
49
10,330
(176)
3,556
433
742
(49)
(286)
1,156
4
5,557

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
Office work fee
Interest expenses
Share of loss (profit) of entities accounted forusing equity method
Loss (gain) on sale and valuation of investment
securities
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

8

For the six months ended
September 30, 2020
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
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
Redemption of convertible bond-type bonds with
subscription rights to shares
Repayments of long-term borrowings
Repayments of lease obligations
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

9

For the six months ended
September 30, 2021

100
(1,756)(200)(2,328)

41

199

(291)
(25)
659
(23)
25

(190)
(177)
－
(10)
19

－

(217)

145
(1,125)133(2,772)

11,700(130)(9,700)

－

－
(296)
(0)
(714)
(2)
986
(2,840)29,442

(485)
(321)
(712)
(0)
1
(1,648)1,136
26,252

167－

26,76927,388

(4) Notes to Quarterly Consolidated Financial Statements(Notes on going concern assumption)
For the six months ended September 30, 2021 (from April 1, 2021 to September 30, 2021)
Not applicable.
(Notes in the case of significant changes in amount of shareholders’ equity)
For the six months ended September 30, 2021 (from April 1, 2021 to September 30, 2021)
Not applicable.
(Accounting policies adopted specially for the preparation of quarterly consolidated financial statements)
Calculation of tax expenses
Tax expenses are calculated by the method in which the effective tax rate on profit before income taxes forthe current consolidated fiscal year after application of tax effect accounting is reasonably estimated, and profit
before income taxes was multiplied by the estimated effective tax rate.
(Changes in accounting policies)
The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March
31, 2020) and other standards from the beginning of the first quarter. The Company now recognizes revenue as theamount expected to be received in exchange for promised goods or services when control of said goods or services
is transferred to the customer.
Previously, the Company had recorded provision for sales returns based on the amount equivalent to grossprofit regarding sales with a right of return. The Company has since changed the recognition method for goods orservices that are expected to be returned in accordance with the rule regarding variable consideration, so as not torecognize revenue at the time of sales but recognize refund liabilities at the amount it received or is expected toreceive for the said goods or services.
For the application of the revenue recognition accounting standard, the Company has followed the transitional
treatment prescribed in the Article 84 proviso of the standard. Accordingly, the cumulative effect of retroactively
applying the new accounting policy prior to the beginning of the first quarter has been added to or subtracted fromretained earnings at the beginning of the quarter, which nevertheless had no impact on the balance at the beginningof the quarter.
As a result of the above applications, net sales for the six montsh ended September 30, 2021 declined ¥618
million, cost of sales ¥612 million, reversal of provision for sales returns ¥0 million, and provision for sales returns¥6 million, while gross profit, operating profit, ordinary profit, and profit before income taxes were not affected.
The Company has applied the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July4, 2019) and other standards from the beginning of the first quarter. In accordance with the transitional treatments
prescribed in Article 19 of the Accounting Standard for Fair Value Measurement and Article 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the Company plans toapply the new accounting policies stipulated by the Accounting Standard for Fair Value Measurement and otherstandards through the future. The decision does not affect the quarterly consolidated financial statements.

10

(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 todecide 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” is engaged 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.
(Notes relating to changes in reportable segments, etc.)
Starting in the fiscal year ended March 31, 2021, the “Veterinary Drug Wholesale Business,” which waspreviously included in the “Others,” has been classified as a reportable segment given its increased quantitative
importance.
Further, from the fiscal year ending March 31, 2022, the “Pharmacy Business,” which was previously includedin the “Others,” has been classified as a reportable segment as a result of review of the classification method ofbusiness segments.
The segment information for the previous consolidated fiscal year has been prepared based on the classification
after the change.
As described in the changes in accounting policies, the Company has applied the Accounting Standard for
Revenue Recognition from the beginning of the first quarter and changed the accounting method regarding
revenue recognition, and it has changed the calculation method for profit or loss of business segments accordingly.
The change reduced net sales of the “Pharmaceutical Wholesale Business” in the six months ended September
30, 2021 by ¥619 million, while it did not affect the segment profit (operating profit). It increased net sales of the“Veterinary Drug Wholesale Business” by ¥0 million, while it did not affect the segment profit (operating profit).
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.”11

3. Information on net sales, income (loss), assets and other items by reportable segment
For the six months ended September 30, 2020 (from April 1, 2020 to September 30, 2020)(Million yen)
Reportable segment
Pharmaceutical
Wholesale
Business

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

Total

Others(Note 1)

Total

Amountrecorded in
Quarterly
Adjustment
Consolidated(Note 2)
Statements ofIncome(Note 3)

Net sales
Net sales to outside
251,796
8,240
4,870 264,908
1,761
266,670―
266,670
customers
Inter-segment net
4,038
0
0
4,039
1,236
5,276
(5,276)―sales or transfers
Total
255,835
8,241
4,871 268,947
2,998
271,946(5,276)
266,670
Segment income (loss)(1,152)(44)
182(1,013)(110)(1,124)12(1,111)(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, andconsulting services for medical institutions.
2. Adjustment of segment income (loss) of ¥12 million refers to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income (loss) to operating loss reported on the quarterly
consolidated statements of income.

For the six months ended September 30, 2021 (from April 1, 2021 to September 30, 2021)(Million yen)
Reportable segment
Pharmaceutical
Wholesale
Business

Pharmacy
Business

Veterinary
Drug
Wholesale
Business

Total

Others(Note 1)

Total

Amountrecorded in
Quarterly
Adjustment
Consolidated(Note 2)
Statements ofIncome(Note 3)

Net sales
Net sales to outside
269,146
9,045
5,128 283,320
1,909 285,229―
285,229
customers
Inter-segment net
4,287
1
0
4,289
1,245
5,535
(5,535)―sales or transfers
Total
273,434
9,047
5,128 287,610
3,154 290,764(5,535)285,229
Segment income (loss)
739
83
189
1,012
(97)
915
19
934
(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, andconsulting services for medical institutions.
2. Adjustment of segment income (loss) of ¥19 million refers to elimination of inter-segment transactions.
3. Adjustments are made to reconcile segment income (loss) to operating profit reported on the quarterly
consolidated statements of income.

12