I am Taisuke Murai, President & CEO of VITAL KSK HOLDINGS, INC.
I will explain financial results for the first half of the fiscal year ending
March 31, 2024.

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Here is what we will discuss today. I will begin with an explanation withrespect to financial highlights for the first half of the fiscal year ending
March 31, 2024.
I will then discuss major topics related to the areas of activities outlined
in our Long-Term Vision 2035, announced in May this year.
Next, I would like to talk about achieving management that is consciousof ROE, which is a focus under our fifth medium-term management plan.
Finally, I will explain our full-year earnings forecasts for FY2023.

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First of all, I will provide an explanation with respect to financial
highlights for the first half of the fiscal year ending March 31, 2024.

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Net sales for the period under review were ¥294,213 million, up ¥4,047
million from the previous period. Although transactions with some foreign
pharmaceutical manufacturers were suspended from the current fiscal
year, the drop in sales attributable to this was more than offset by sales
growth of COVID-19 treatments, resulting in an increase in net sales.
Operating profit increased ¥1,347 million year on year, to ¥2,868 million.
This was due to the absence of an allowance for doubtful accounts forlarge customers recorded the previous fiscal year, and an increase inprofit due to the growth in sales of COVID-19 treatments.
Ordinary profit increased ¥1,055 million year on year, to ¥3,478 million,
mainly due to an increase in operating profit.
Profit attributable to owners of parent increased by ¥910 million year on
year, to ¥2,347 million, mainly due to the aforementioned reasons as well
as a gain on sales of investment securities.

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I would now like to explain profit by segment.
First, net sales in the pharmaceutical wholesaling business increased by¥3,371 million from the same period last year, to ¥277,201 million, due
to a significant increase in sales of COVID-19 treatments, which offset
the suspension of transactions with some foreign pharmaceuticalmanufacturers and a drop in sales of COVID-19-related test reagents andequipment. Gross profit rose ¥631 million from the level a year earlier, to¥19,760 million, reflecting the impact of increased sales and progresswith price negotiations based on an awareness of transaction costs withevery single customer. Meanwhile, SG&A expenses amounted to ¥17,119
million, down ¥616 million from the level a year earlier in the absence of
the allowance for doubtful accounts for some large customers recorded
the previous fiscal year. As a result, the segment achieved operating
profit of ¥2,640 million, up ¥1,247 million from the level a year earlier.
Next, the pharmacy business posted net sales of ¥9,386 million, an
increase of ¥377 million from the same period of the previous year, due
to one extra store as a result of business acquisition, as well as efforts
to expand income from dispensing technical fees and income frompharmaceutical management fees and an increase in the number ofprescriptions received as a result of increased movement of people withthe downgrading of COVID-19 to a Class 5 infectious disease under the5Infectious Diseases Act. Gross profit was ¥2,336 million, falling ¥26
million year on year under the impact of NHI drug price revisions, and
SG&A expenses amounted to ¥2,221 million, down ¥108 million year on
year due to a significant decrease in amortization of goodwill. As a result,the segment reported operating profit of ¥114 million, an increaseof ¥82 million year on year.
Next, the veterinary drug wholesale business recorded net sales of¥5,589 million, an increase of ¥275 million from the same period of theprevious year, driven by sales growth in companion animal operations.
However, gross profit dropped ¥11 million year on year, to ¥822 million
under the impact of higher purchase prices, while SG&A expenses fell
¥11 million year on year, to ¥639 million due to a decrease in theallowance for doubtful accounts. As a result, the segment posted
operating profit of ¥183 million, mostly unchanged year on year.
And finally, we have the other businesses segment. Net sales grew by¥24 million year on year, to ¥2,035 million, due to increased revenue inthe sports facility management business as a result of greater movementof people following the downgrading of COVID-19 to a Class 5 infectious
disease under the Infectious Diseases Act. Gross profit rose by ¥90
million year on year, to ¥1,984 million due mainly to the sales growth andimprovement in the profitability of the nursing supplies rental business.
SG&A expenses climbed ¥53 million year on year, to ¥2,093 million, due
to rising electricity charges and gas prices, despite cost-cutting efforts.
As a result, the segment posted an operating loss of ¥108 million,
representing a year-on-year improvement of ¥38 million.

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Next, I will explain in detail the main reasons for the increase or decreasein net sales compared to the same period of the previous year.
Firstly, we have been focusing for some time on sales of products eligible
for the price maintenance premium, which allows products to maintainhigher prices for longer. These efforts have paid off, and our sales inthis category increased by ¥9,100 million. Sales of original drugs also
increased by ¥5,100 million. However, sales of long-listed products fellby ¥13,100 million, largely due to the impact of NHI drug revisions.
Furthermore, the suspension of transactions with some foreign
pharmaceutical manufacturers from this fiscal year pushed sales down by¥6,800 million, although many more foreign manufacturers continued tosupport the Group. Our transactions with some of these manufacturers
showed significant growth thanks to close collaboration, offsetting the
aforementioned decline of ¥6,800 million and resulting in growth in total
sales from transactions with foreign pharmaceutical manufacturers in thesecond quarter under review, with sales reaching 101% of the level ayear earlier.
An increase of ¥8,000 million as a result of growth in sales of COVID-19
treatments and increased sales in the Pharmacy Business and theVeterinary Drug Wholesale Business also contributed, and ultimately net

6sales amounted to ¥294,200 million, up ¥4,000 million year on year.

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Next, I will discuss in detail our implementation of initiatives based on anawareness of the contribution margin that led to a significant increase inoperating profit in the Pharmaceutical Wholesaling Business.
As an infrastructure company supporting local healthcare, we haveworked to build a stable pharmaceutical distribution system. As part ofthese efforts, we ensured we negotiated the right prices based on thevalue of individual pharmaceutical products, and prioritized reviewing
transactions with customers who demand excessive discounts without
considering distribution costs, which led to the improvement oftransactions with a negative contribution margin.
In addition to cost reduction, we have also begun collaborating with somecustomers to solve common social issues such as labor shortages, work
style reforms, rising fuel and price costs, and CO2 reduction.
I would like to highlight two examples. Starting with the first example.
While examining the optimal delivery system with a chain pharmacy, we
also agreed to charge for urgent deliveries. As a result, we achieved
highly efficient delivery and reduced the number of urgent deliveries by
76%.
Moving on to the second example. We collaborated with customers in7

certain areas to optimize delivery times and frequency in order to realize
efficient pharmaceutical delivery. As a result, the number of deliveries
was reduced by 33% by working out effective and efficient delivery
times, leading to an improvement in work stoppages at customers related
to the receipt of products and a 50% reduction in overtime hours forlogistics personnel.
As in these examples, we will continue to strive to further increase ourcorporate value by securing appropriate profits that will lead tosustainable growth and implementing initiatives to solve social issues.

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Next, I would like to discuss the balance sheet.
Total assets were ¥321,745 million, an increase of ¥24,429 million fromthe end of the previous fiscal year. This is attributable to an increase of¥19,661 million in current assets due to a rise of ¥11,434 million in cash
and deposits reflecting unsettled notes and accounts payable-trade as aresult of the end of September being a bank holiday and an increase of¥9,429 million in notes and accounts receivable-trade. Meanwhile, noncurrent assets also climbed ¥4,769 million, reflecting an increase inunrealized gains on investment securities due to rising stock prices.
Total liabilities came to ¥218,979 million, up ¥21,829 million from theend of the previous fiscal year. This is attributable to a rise of ¥22,216
million in notes and accounts payable-trade due to the impact of themonth-end bank holiday and an increase in purchases.
Net assets were ¥102,766 million, an increase of ¥2,601 million from theend of the previous fiscal year. This is mainly attributable to an increasein unrealized gains on investment securities.

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Next, I would like to talk about major topics for this fiscal year.

9In our Long-Term Vision 2035 announced in May of this year, we definedeight main areas of activity.
These are sophistication of logistics functions, overhaul ofpharmaceutical wholesale business, expansion of medical product sales,
strengthening of rental business, expansion of pharmacy business,cooperation with central and local governments, expansion of life
support business, and business expansion in the companion animal andagritech fields.
I would now like to highlight some major topics that are currently a focus
in these areas.

10The first step is sophistication of logistics functions.

11We are in the process of developing a GDP framework.
We have established a new GDP Control Department within Vital KSK
Holdings for the purpose of developing a management framework incompliance with GDP as stipulated in the Ministry of Health, Labour andWelfare's Guide to Good Distribution Practice for Medicinal Products, andperiodically auditing and controlling the operation of the framework. In
addition, at operating companies, we have established a GDP Quality
Assurance Department at VitalNet and a Quality Assurance Department
at KSK, and the entire group is working together to build a logistics
framework for the future GDP legislation.
In addition, we will build an advanced supply chain that can also handle
special pharmaceutical products that require more strict temperature
control.

12We are also working on expansion of the 3PL business as part of our
growth strategy, and the net sales of this business were 117.2% of thelevel a year earlier. We will continue to expand our investment inoutsourcing business contracts for pharmaceutical companies.
In addition, sales of Pivratz® Intravenous Injection 150mg from Idorsia
Pharmaceuticals Japan Co., Ltd., for which we are solely responsible for
distribution in Japan, were 154.4% of the level a year earlier. Idorsia has
multiple drug development pipelines targeting diseases with high clinicalneeds in Japan, and we will continue striving to further improve thesupply chain going forward.

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As an example of our efforts to advance logistics functions, I would liketo highlight a demonstration project for drone long-distancepharmaceutical delivery implemented in October this year.
This project is being undertaken in anticipation of a large-scale disastersuch as a major Nankai Trough earthquake that prevents use of overlandroutes, or drone delivery combined with telemedicine to contribute tocommunity healthcare.
The first demonstration experiment in March this year had threeparticipants: Wakayama Medical University, NTT Communications, andKSK, a member of our group, and in the latest second demonstration
experiment, Wakayama Prefecture and Hidagawa-cho also took part.

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The latest demonstration project has three aims.
The first is to confirm the practicality of pharmaceutical delivery throughlevel 3 drone flights. Level 3 flights are defined as out-of-sight flights
over uninhabited areas.
The second is to verify the feasibility of long-distance flights to medical
facilities located in remote areas.
The third is to identify issues for subsequent level 4 flights, which aredefined as the automatic flight of a drone in a range out of the view ofthe operators in an airspace over a densely populated area.

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The demonstration experiment conducted in Hidakagawa-cho, Wakayama
Prefecture on October 24 was also covered by the media.
Please see the website of our group company, KSK.

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Next, I will discuss sales expansion of medical products.

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In July 2022, the Company introduced MAPs, professional sales staff
with expertise in hospital care, pharmaceuticals, equipment, anddiagnostics, as part of its efforts to strengthen its sales structure inorder to expand its share of the hospital market, which is expected to
grow.
Steady progress has been made through activities in the first year since
the launch of MAPs, with 85 medical departments visited for the firsttime and 112 hospital doctors gained through contact points. As a result,
we have seen an increase in new transactions involving medical-related
products, such as medical devices and diagnostic reagents.
I would like to highlight one such example.
MAPs working in Fukushima Prefecture succeeded in creating new sales
contacts with operating theater cardiac surgeons through continuous
visits to core hospitals in the region. They then proposed to these
doctors an assistive suit that greatly reduced fatigue from prolonged
standing, which led to a new transaction. Furthermore, anesthesiologists
and gastroenterologists who saw the suits liked them, leading to a stringof sales.

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We will continue to strengthen our activities through MAPs and strive toincrease sales of products other than prescription drugs in the hospital
market, which is expected to grow.

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Next, I will discuss the strengthening of our rental business.

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The rental business, which we started as part of efforts to strengthen
initiatives in areas besides prescription drugs, is also showing results.
Our rental services are also greatly appreciated by customers because
they save customers the trouble of disposal and rental charges can beclaimed as expense. In this rental business, we offer a wide range of
products never handled before, and I would like to introduce some ofthem to you.
Let me start with the vegemeter, a device that visualizes vegetable intake
and can be rented on a daily basis. After the reclassification of COVID-19
as a Category 5 disease, all kinds of events started being held again
across Japan, and rental demand for the vegemeter is increasing because
it is an ideal product for health fairs.
In addition, rising utility costs have become a major issue in recent years
and, against this backdrop, there is also growing interest in LED lighting.
Recently, we have received an increasing number of inquiries from newsocial welfare corporations as well as medical corporations.
Furthermore, we are proposing the use of rental equipment such as AEDs
to customers we have never dealt with before such as local governments
and nursing care facilities.

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In this way, we will aim to evolve from a pharmaceutical wholesaler into a
healthcare-related distributor by developing new sales channels, inaddition to providing a wide range of new products and services also
develop.

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Next, we have expansion of the pharmacy business.

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During the past year, the number of stores in our pharmacy business has
increased by one, to 88 stores.
In addition, the number of prescriptions grew steadily, reaching 103% of
the level a year earlier, partly due to greater movement of people as aresult of the reclassification of COVID-19 as a Category 5 disease.
Furthermore, as a result of efforts to calculate dispensing fees forpharmacy functions required by the government, technical feesamounted to ¥1,792 million, 105.7% of the level a year earlier.

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At the same time, we are also taking steps to strengthen our pharmacy
functions.
The number of pharmacies cooperating with specialized medical
institutions, which require advanced pharmacy management and a highlevel of expertise, primarily in cancer treatment, increased by one to four.
We are also working to increase certified pharmacists such as
pharmacists specializing in community pharmacy care and pharmacists
specializing in outpatient oncology, and more than half of thegovernment approved pharmacists in Miyagi Prefecture are employed byour group.
Amid the transition from inpatient treatment to outpatient and hometreatment for cancer, we will continue to strengthen our pharmacy
functions to ensure that patients living in the community can take their
medication with peace of mind.

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In addition, the number of pharmacies cooperating with local health carefacilities that fulfil a family pharmacy function in the community has
increased significantly to 17.
The rate of calculation of fees for the guidance provided by family
pharmacists who are responsible for the centralized management of
medications taken by patients is also much higher than the national
average, and we feel that the trust of patients in the community is
growing.
We are also steadily building up a track record in home medical care,which is in ever-increasing demand in Japan's aging society, and our
private home care result in particular was 116.3% of the level a year
earlier.
We will continue to develop community-based stores so that patients cantake their medication with peace of mind wherever they are.

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Moving on to cooperation with central and local governments.

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Looking at central and local government contracts for the delivery of
COVID-19 vaccines and other products since 2020, we have contracts
with 107 local governments as of October 2023.
Furthermore, since April 2021, the Group has played a role in the
distribution of more than 1.63 million vials of COVID-19 vaccine over the
past two and a half years, which means that the Group has contributed tomore than 16 million vaccinations.
As a community-based company, we will continue to deepen ourpartnerships with central and local governments going forward.

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Next, I will explain about expansion of life support business27

As of March 31, 2023, the Group had 1,190 female employees,
representing approximately 32% of the total workforce.
A company where women play an active part, that is, a company thatprovides a good working environment for women, is also a good place formen to work. In the future, as we enter an era in which diverse work
styles will be required not only for childcare but also for nursing care andother various circumstances, improvement of the workplace environment
is an important issue that companies must address.

We offer a number of training programs, seminars, and social events forfemale employees.
One of these is to support MS, that is, sales personnel in thepharmaceutical wholesale business, who are returning to work after
taking child care leave. We hold discussions with senior MS who havereturned from child care leave and MS who are currently on child careleave in an effort to dispel various concerns and anxieties.
We also hold seminars on diseases specific to women and theirprevention, and regularly hold opinion exchange meetings to promote

28cross-departmental connections within the organization, creating anenvironment that increases the job satisfaction and the healthawareness of our female employees.

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Finally, although not a major area of activity in our long-term vision, I
would like to introduce our disaster response efforts to the torrential
rains that hit Akita, Japan, in July of this year.
The torrential rains that hit Akita Prefecture on July 15 caused
widespread flooding and many of our customers were also affected. On
the following day, the 16th, the water gradually began to recede, but it
remained difficult to ascertain the full extent of the damage. We
immediately made the decision to dispatch disaster response vehicles
and staff, and delivered polyethylene tanks, drinking water, and otherrelief supplies to the area.
As a company responsible for life-related products, we believe it isimportant to be able to respond not only under normal conditions but
also in an emergency. In Japan, where major disasters occur frequently
every year, we will continue to aim for sustainable growth in order tofulfill our mission of delivering medicines safely and securely to those
who need them at any time.

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I would now like to mention a number of initiatives for achieving our goal
under the Fifth Medium-Term Management Plan of ROE conscious
management.

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At the end of March this year, the Tokyo Stock Exchange asked listedcompanies to disclose and implement specific improvement measures forachieving management that is conscious of cost of capital and stock
price.
We had been implementing initiatives based on an awareness of ROE
prior to this, for example, releasing Strengthening Efforts Toward
Corporate Value Enhancement on October 28 last year.
Our Board of Directors is currently gaining an understanding of the costof capital and profitability of capital, as well as calculating ROE and ROIC
for each segment and affiliated company and analyzing the issues to beaddressed for improvement of ROE.
Moreover, next fiscal year is the final fiscal year of our Fifth Mediumterm Management Plan, and we will be working on formulating the Sixth
Medium-term Management Plan starting from FY2025. Under the Sixth
Medium-term Management Plan, we plan to disclose ROE exceeding thecost of capital as our target.

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Our ROE forecast for the current fiscal year is 5.2%, and our targets fornext fiscal year and the fiscal year ending March 31, 2032 are 5.4% and8.0% respectively.
To achieve these ROE targets, we will work to improve the ratio of net
profit to net sales by improving unprofitable transactions and optimizing
costs, improve asset turnover through the disposal of idle assets and thesale of cross-shareholdings, and increase financial leverage through thepayment of dividends and the acquisition of treasury shares.

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Furthermore, we have introduced a ROE-linked RS compensation plan thisfiscal year to promote the groupwide implementation of ROE-conscious
management.
The plan is not only for senior executives but also for department/branchmanager class employees, giving them the same perspective asshareholders and further incentivizing them to improve businessperformance and enhance corporate value in the medium to long term.
We have been holding briefings about introduction of the plan since Julythis year and I feel that the way of thinking of frontline
department/branch manager class employees is starting to change andthat this also led to our strong financial results in the second quarter.

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Finally, I will explain our full-year earnings forecasts for FY2023.

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There are no changes to our full-year results forecast for the fiscal year
ending March 31, 2024 at present.
This is because, although progress made against the full-year forecasts
for operating profit and ordinary profit in the first half was 61.0% and58.0% respectively, sales of COVID-19 treatments, which have been themain profit driver, are expected to stop sharply from October as patients
will be asked to pay a portion of the cost for COVID-19 drugs.
Progress made against the full-year target for profit attributable toowners of parent in the first half was 45.1% because we are planning alarge gain on the sale of cross-shareholdings in the second half of thecurrent fiscal year. If we judge changes to the full-year forecast
necessary in the future, we will announce the revisions in a timely
manner.

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Looking at shareholders returns, we changed our dividend policy to DOE
of 2% or more last fiscal year and accordingly our full-year dividend
forecast for the current fiscal year is ¥39 comprising an interim dividendof ¥19 and a year-end dividend of ¥20.
Meanwhile, we forecast a total payout ratio, including the acquisitions oftreasury shares implemented so far this fiscal year, of 69.2%.
We recognize that the return of profit to shareholders is a key
management issue and are committed to strengthening shareholder
returns.

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Please refer to the note on forward-looking statements shown here.

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Finally, I would like to ask you to direct any inquiries your might haveabout today's presentation to our Corporate communications Department.
This concludes my presentation.
Thank you for your attention.

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