IR PRESENTATION

December 2013

Results Overview© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

1

Consolidated P/L
In the first six months of the fiscal year, net sales rose 10.6% year on year to ¥83,024 million, operating income
increased 19.1% to ¥5,012 million, ordinary income grew 15.9% to ¥5,163 million, and net income increased 35.7% to¥2,899 million.

FY4/13 2Q
results

FY4/14 2Q
plan

Gross profit

75,09011,497

81,59012,600% of net sales

15.3

15.4

7,287

7,688

7,645

9.7

9.4

9.2

4,2094,912

5,012

5.6

6.0

6.0

4,454

5,122

5,163

% of net sales

5.9

6.3

6.2

Net income

2,1372,550

2,899% of net sales

2.8

3.1

3.5

134.10159.96(¥ million)

Net sales

SG&A expenses% of net sales

Operating income% of net sales

Ordinary income

Net income pershare(¥)

FY4/14 2Q
results

YoYchange

83,024 +7,934
12,657 +1,160

YoYchange(%)

Vs plan(%)+10.6+1.8+10.1+0.5+358+4.9(0.6)+803+19.1+2.0+709+15.9+0.8+762+35.7+13.7

181.89 +47.79+35.6

+13.7

15.2

Figures in the table are rounded down

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

2

Dispensing Pharmacy Business（Consolidated）
The dispensing pharmacy business reported sales and profit growth, with sales rising 11.0% year on year to ¥73,954
million and segment income increasing 12.6% to ¥6,400 million.

(¥ million)

FY4/13 2Q
results

FY4/14 2Q
plan

66,622
9,033

72,110
9,869

13.6

13.7

3,621

3,879

3,842

5.4

5.4

5.2

5,411

5,990

6,183

8.1

8.3

8.4

5,682

6,148

6,4008.58.5

8.7535581589

Net sales
Gross profit% of net sales

SG&A expenses% of net sales

Operating income% of net sales

Segment income% of net sales

Number of stores

FY4/14 2Q
results

YoYchange73,954 +7,332
10,025+992

YoYchange(%)

Vs plan(%)+11.0+2.6+11.0+1.6+221+6.1(1.0)

+772

+14.3

+3.2+718+12.6+4.1+54+10.1+1.4

13.6

Figures in the table are rounded down
Segment income is adjusted ordinary income shown on the quarterly consolidated statements of income
Prescription volume :+5.9% YoY
Average prescription price: +4.4% YoY© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

3

Drug and Cosmetic Store Business(Consolidated)
The drug and cosmetic store business reported an increase in sales of 6.4% year on year to ¥8,736 million. However,segment income declined 84.6% to ¥4 million.

FY4/13 2Q
results

FY4/14 2Q
plan

FY4/14 2Q
results

8,208
2,592

9,039
2,782

8,736
2,741

31.6

30.8

31.4

2,614

2,778

2,756

31.8

30.7

31.5(21)4(15)－0.04－

Segment income

26514% of net sales

0.30.60.05

Number of stores

586158(¥ million)

Net sales
Gross profit% of net sales

SG&A expenses% of net sales

Operating income% of net sales

YoYchange

YoYchange(%)

Vs plan(%)+528+6.4(3.4)+149+5.7(1.5)

+142

+5.4

(0.8)

+6－－(22)(84.6)(92.2)

00.0(4.9)

Figures in the table are rounded down
Segment income is adjusted ordinary income shown on the quarterly consolidated statements of income© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

4

Consolidated B/S
The shareholders’ equity ratio improved 0.2 percentage points to 40.2%.
(¥ million)(¥ million)

End-FY4/13
AssetsCurrent assets
Cash on hand andin banks

Fixed assets

End-FY4/14 2Q
AssetsLiabilities

43,162
18,46052,676

Current
liabilities
Short-term debt
Lease obligations

Long-term
liabilities

45,686
7,483
498

11,796

Current assets
Cash on hand andin banks

Fixed assets

Liabilities

45,142
20,182

54,843Current
liabilities
Short-term debt
Lease obligations

Long-term
liabilities

49,516
7,088513

10,188

Lease obligations

6,318
1,253

0 Total net assets

40,281

Total liabilities
and net assets

99,985

Lease obligations

8,048
1,223

1 Total net assets

38,356

Deferred
assetsTotal liabilities
and net assets

95,839Total assets

Net cash

1,206

Net cash

5,008

Shareholders’ equityratio（%）

40.0

Shareholders’ equityratio（%）

40.2

Investments insecurities

2,789

Deferred
assetsTotal assets

95,839Long-term debt

Investments insecurities

2,579

99,985Long-term debt

Figures in the table are rounded down
Net cash = Cash on hand and in banks-Interest-bearing debt

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

5Assets
The balance of total assets at the end of the second quarter increased by ¥4,146 million from the end of the previous
fiscal year to ¥99,985 million.
(¥ million)

End-FY4/13 2Q

End-FY4/13

End-FY4/14 2Q

ChangeInventories

14,853
10,924
9,768

18,4607,043
7,944

20,182
4,739
9,009+1,722(2,304)+1,065

Total current assets

42,54843,16245,142+1,980

7,971
5,947
1,024

8,247
6,030
1,229

8,546
6,777
1,279+299+747+50

16,533

17,55018,855+1,305125

99

69(30)

Total intangible fixed assets

20,501

20,605

21,228+623

Investments in securities

3,127
1,120
6,632

2,789
946
6,985

2,579
958
7,085

(210)
+12+100

12,91949,95492,511

14,52052,676
95,83914,75954,84399,985+239+2,167+4,146

Cash on hand and in banks
Notes and accounts receivable

Buildings and structures,net
Land
Lease assets

Total property,plant and equipment
Lease assets

Deferred tax assets
Lease and guarantee depositsTotal investments and other assets
Total fixed assets
Total assets
Figures in the table are rounded down

Changes(¥):End-FY4/14 2Q compared with end-FY4/13

Capital expenditures (Purchases of property, plant and equipment and intangible fixed assets + deposits/guarantees) totaled ¥2,525million© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

6

Liabilities and Net Assets
The balance of liabilities rose ¥2,221 million to ¥59,704 million, mainly reflecting an increase in accounts payable.
The balance of long- and short- term debt decreased by ¥2,125 million to ¥13,406 million.
(¥ million)

End-FY4/13 2Q

End-FY4/13

End-FY4/14 2Q

ChangeAccounts payable

25,25524,08428,514+4,430

Short-term debt

7,823

7,483

7,088

(395)

Lease obligations

398

498

513

+15

48,02845,68649,516+3,830

6,227

8,048

6,318

(1,730)

778

1,223

1,253

+30

9,384

11,796

10,188(1,608)

Total liabilities

57,41357,48359,704+2,221

Common stock

8,682

8,682

8,682

-

Capital surplus

7,872

7,872

7,872

-

Retained earnings

18,767

21,70423,647+1,943

Total shareholders’ equity

35,317

38,25440,197+1,943

Total net assets

35,09738,35640,281+1,925

Total liabilities and net assets

92,511

95,83999,985+4,146

Total current liabilities
Long-term debt(including bonds)
Lease obligations
Total long-term liabilities

Figures in the table are rounded down
Changes(¥)：End-FY4/14 2Q compared with end-FY4/13© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

7

Consolidated C/FCash and cash equivalents increased by ¥1,733 million from the previous fiscal year end to ¥20,172 million.

(¥ million)

FY4/13 2Q

ChangeFY4/14 2Q

Net cash provided by operating activities

2,370

9,324+6,954

Income before income taxes and minority interests

3,969

5,318+1,349

Depreciation and amortization

997

1,080+83

Amortization of goodwill

822

990+168

decrease in accounts receivable

454

2,840

+2,386(Increase) decrease in inventories(1,438)

(813)

+625

(Increase) decrease in other accounts receivable(2,365)(986)+1,379Net cash used in investing activities(3,508)(4,215)(707)

Payments for purchases of property, plant andequipment, and intangible fixed assets(2,519)(2,204)

+315

(416)

(1,703)(1,287)

Net cash provided by (used in) financing activities

41(3,375)(3,416)

Proceeds from issuance of new shares－－－

Net increase in cash and cash equivalents(1,096)

1,733+2,829Cash and cash equivalents at end of the period

14,83820,172+5,334Purchase of shares in affiliated companies

Figures in the table are rounded down
© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

8

Business Value Analysis
FY4/13 2Q
Shareholders’ equity ratio (%)

Market value equity ratio (%)
PER (times)
EPS (¥)PBR (times)
BPS (¥)ROA (%)ROE (%)EBITDA (¥ million)
EV/EBITDA (times)
Net Ｄ/Ｅ ratio (times)
Net cash (¥ million)
Shareholder value (¥ million)

Market capitalization (¥ million)

37.9
97.4
134.102.57
2,199.73
0.01(389)
90,084End-FY4/13
40.0
79.3
14.97
318.371.98
2,403.43
5.6
14.1
13,6985.37(0.03)
1,206
74,72975,973

FY4/14 2Q
40.2
67.9
181.891.69
2,524.37(0.12)
5,008
67,921

Change+2.3(29.5)+47.79(0.88)+324.64(0.13)+5,397(22,163)

Figures in the table are rounded down
Changes：End-FY4/14 2Q compared with end-FY4/13

Shareholder value = EV – net interest-bearing debt
Net D/E ratio = (interest-bearing debt – cash on hand and in banks) / shareholders’ equity
Share prices used to calculate market capitalization:
end FY4/13 2Q ¥5,650(end-Oct 2012), end-FY4/13 ¥4,765(end-Apr 2013), end-FY4/14 2Q ¥4,260 (end-Oct 2013).
Net cash ＝Cash on hand and in banks －Interest-bearing debt

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

9

Consolidated P/L（Progress）
Dispensing pharmacy business plans improvement of the profit by the opening of new dispensing pharmacies, M&A .
We forecast FY4/14 net sales will rise 11.3% YoY, and ordinary income will rise 13.2% YoY.

(¥ million)

Net sales
Gross profit% of net sales

FY4/13
results

FY4/14
planYoYchangeYoYchange(%)

FY4/14 2Q
results

154,560 172,000 +17,440
24,442 26,960 +2,518
15.8

15.7+10.3

83,024
12,657

14,74015,680
9.1

+6.4

7,645

9.5+940

9,701

11,280
6.6

+16.3

5,012

6.3

+1,579+1,358+13.2

5,163+925

+18.2

2,899

+57.94+18.2

181.89

SG&A expenses% of net sales

Operating income% of net sales

10,292

11,650% of net sales

6.7

6.8

Net income

5,075

6,000

% of net sales

3.3

3.5

318.37376.31

Ordinary income

Net income pershare(¥)

+11.3

15.2
9.2
6.0
6.2

3.5

Progress(%)

48.3
46.9
48.8
44.4
44.3

48.3
48.3

Figures in the table are rounded down

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

10

Operating Outlook© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

11

Analysis of results①Vs planchangeFY4/13 2Q
results

FY4/14 2Q
plan

FY4/14 2Q
results

Net sales

75,09081,59083,024+1,434+10.6+1.8

Gross profit

11,497

12,60012,657% of net sales

15.3

15.4

15.2+57

+10.1

+0.5

7,287

7,688

7,645

9.7

9.4

9.2(43)+4.9(0.6)

4,209

4,912

5,012

5.6

6.0

6.0+100+19.1+2.0+41+15.9+0.8+349+35.7+13.7+21.93+35.6+13.7(¥ million)

SG&A expenses% of net sales

Operating income% of net sales

4,454

5,1225,163% of net sales

5.96.3

6.2

Net income

2,1372,5502,899% of net sales

2.8

3.1

3.5

134.10159.96181.89Ordinary income

Net income pershare(¥)

YoYchange(%)

Vs plan(%)

Figures in the table are rounded down© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

12

Analysis of results②■ Net sales(¥ million)

YoY
FY4/13 2Q FY4/14 2Q FY4/14 2Qresultsplan
resultschange(%)

Net sales

75,09081,59083,024+10.6

Vs plan(%)

Analysis+1.8

64,47364,948+3.4+0.7

Stores opened in
the previous year

869

5,599

5,436+525.5(2.9)

Marketing to attract clinics to the malls
went on a scheduled.

Nearhospitals

－

1,087

1,908－+75.5

Dispensing pharmacy business plans
improvement of the profit by M&A.

Medical mallformat

－

7949－

(38.0)The occupancy rates for medical malls
has been 80.0%.

(3.4)

The Shibuya Center-Gai Store ,openedin the previous year, is much less thanplan.

Same store

New store

Dispensing Pharmacy Business

62,823

Sales supported by growth in averagesales per prescription due to an increasein longer-term prescriptions increased.

Drug and Cosmetic
Store Business

8,208

9,039

8,736+6.4

Figures in the table are rounded down

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

13

Analysis of results③■ Operating income(¥ million)

Operating income% of net sales

YoY
FY4/13 2Q FY4/14 2Q FY4/14 2Q
resultsplan
resultschange(%)

4,209

4,912

5,012

5.6

6.0

6.0+19.1

Vs plan(%)

Analysis+2.0
Cost of sales

Cost of sales
Operating expenses

M&A of them（unplanned）
SG&A expenses
M&A of them（unplanned）

63,593 68,990 70,366－－883+10.7+2.0－－

Cost of sales has been more than plan byunplanned M&A.

SG&A expenses

7,287

7,688

7,645

+4.9

(0.6)

－－39－

－

Results have been less than plan by cutting
down expenses(Travel expense, Conference
expense and Training expense).

Figures in the table are rounded down

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

14

Store NetworkThe Group opened 30 new dispensing pharmacies, including those acquired through M&A deals.
■ Number of stores

647

Hokkaido
103(Dispensing pharmacy : 589
Drug and cosmetic store : 58)■ Targets for new store opening
FY-4/14 2Q
Plan

Dispensing
pharmacy

FY-4/14

ResultPlan

Nearhospitals

131147

Medical mallformat347M&A

515002130

26686

Drug and cosmetic store
Total

Tohoku86

Kanto, Koshinetsu
321

Total number of stores includes
the three franchise stores.

Kinki, Other areas
137

80 properties secured

End –FY 4/14 2Q■ Transition of Dispensing pharmacies
Organic
M&AClose
No. of storesFY-4/06

FY-4/07

FY-4/08

FY-4/09

FY-4/10FY-4/11FY-4/12FY-4/13

FY-4/14 2Q

16178218

14
18
3247

2391
5356

24
38375

21
32397

1835
5448

27
28
9494

38
38
10560

15
15
1589

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

15Promoting Generic Drugs
We have already attained the 30% target set by the government. Base on international methodology,
generic drugs account for over 50% of prescriptions at our dispensing pharmacies. And there is still
substantial room for growth in generic drug usage.
■ Generic drug dispensing volume
Mar.12
Generic drug dispensing
volumeAverage premiums for genericdrug dispensing systems

Apr. 12Oct. 12Apr. 13

Nov. 13

Apr. 14 target

31.7%

32.1%

34.0%

34.6%
(50.3%)

35.6%(51.7%)

37.0%(53.3%)

12.9

12.4

14.5

15.0

16.0

17.0

Consolidated basis
International methodology shown in brackets■ Projected new generic drug launches and annual sales in Japan20142015(¥ million)

2016-172018-20

Blopress

114,862

Plavix102,144

Crestor

86,250Zetia

50,590Diovan108,302

Adoair50,270

Olmetec

83,496

Lyrica45,325

Allegra57,300Jzoloft

48,220Zyprexa

54,946

Symbicort

27,822Elplat29,320Zosyn

22,734

Alimta35,800Urief

22,156

Figures in the table are rounded down
FY12 data© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

16

Drug and Cosmetic Store Business
The drug and cosmetic store business reported an decrease in sales of ¥303 million vs plan to ¥8,736 million.

(¥ million)
Net sales

FY4/14 2Q FY4/14 2Qplanresults

Vs planchange9,039

8,736(303)8,261

8,122(139)778614(164)

SG&A expenses

2,778

2,757

(21)

Operating income

4(15)

(19)

Same store

236266+308(34)(42)

Same store
Stores opened in
the previous year

Stores opened in
the previous year

AnalysisSame store
Net sales have unreached because of unplanned store-closing.

Stores opened in the previous year
The Shibuya Center-Gai Store is much less than plan.

SG&A expenses
Owing to overhead cost reduction by the BPR project.

Figures in the table are rounded down

50,000The number of customers
25,00040,00020,00030,000●Improvements to operations

15,00020,00010,00010,0005,00000
2013/5 6© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

7891012The number of customers

・Make improvements to the merchandise lineup
・Stronger sales promotion
・Capture card members

Net sales(¥ thousand)Net sales■ Project for improvements to operationsin the Shibuya Center-Gai Storetarget17FY4/14 Plan (Consolidated)
We forecast FY4/14 net sales will rise 11.3% and ordinary income will rise 13.2% year on year.

(¥ million)

Net sales
Gross profit% of net sales

SG&A expenses% of net sales

Operating income% of net sales

FY4/13
results

FY4/14plan

YoYchange154,560
24,442

172,000
26,960+17,440

+11.3

15.8

15.7+2,518+10.3

14,74015,6809.5

9.1+940

+6.4

9,701

11,280

6.3

6.6+1,579+16.3+1,358

+13.2

+925

+18.2

+57.94+18.2

10,292

11,650% of net sales

6.7

6.8

Net income

5,075

6,000

% of net sales

3.3

3.5

318.37376.31

Ordinary income

Net income pershare(¥)

YoYchange(%)

Figures in the table are rounded down

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

18Inquiries related to this presentation should be addressed toAIN PHARMACIEZ INC.
Corporate Planning Division
TEL(81)11-814-0010
FAX(81)11-814-5550
http://www.ainj.co.jp/
This document may not be reproduced or distributed to any third party withoutprior approval of AIN PHARMACIEZ INC. This document has been prepared
for information purpose only and does not form part of a solicitation to sell orpurchase any securities. Information contained herein may be changed orrevised without prior notice. This document may contain forecastingstatements as to future results of operations. No forecast statement can be
guaranteed and actual results of operations may differ from those projected.

© 2013 AIN PHARMACIEZ Inc. All Rights Reserved.

19