I, Kitabatake, will now give an overview of results from the first half of the financial
period ending March 2015.

1First, the results highlights.
The highlights for this first half included increased sales and profits, continuing thetrend from the first quarter.
Driving this was the Cardiac & Vascular Company, with double‐digit growth inoverseas interventional systems and neurovascular products the main factor.
factorIn the Blood Management business, new products performed well and allowed thebusiness to maintain sales and profit growth despite what remained a difficult
market environment.
As was explained in the first quarter results announcement, the General HospitalCompany was affected in the first quarter by the consumption tax increase; in thesecond quarter it was affected by the restrained patients consultation due to healthinsurance revision, and other factors that led to difficulty in sales numbers.
However, cost improvement continues for general hospital products.
Mr. Matsumura,
M
M t
who
h iis ini chargehoff ththe G
Generall H
Hospital
it l CCompany, will
ill givei a moredetailed explanation of this hereafter.

2Now, the numbers:
Sales increased 3% to 233.3 billion yen. Operating profit was 33 billion yen, an 8%
increase over the previous period. Ordinary income increased 15% from theprevious period, but this includes a positive 2.5 billion yen in foreign exchange
effect.
Net income was 12% increase. Because tax rates were different in FY13 and FY14,
and then higher for this period, net income increase was just by 12%.
We had not only a higher amount, but also a higher margin in gross profit, with thepercentage going from 51.8% to 52.7%. For operating profit, too, last year’s 13.5%
grew to 14.1%, for an improvement in both profit amount and profitability.

3This slide is a waterfall chart showing the positive and negative factors that
influenced operating profit.
First, I will explain the negative factors: The factor labeled “prices” refers to thereimbursement price revision in Japan that occurred this year, of which many of you
are aware. The other portion of this factor was price pressure in general, which
combined with the revision totaled 3.9 billion yen.
There was an increase of 2.6 billion yen in SG&A expenses, but that was somewhat
offset by Duraheart development expenses not being incurred in this period for a 2billion yen savings; this left SG&A expenses with a 600‐million‐yen negative impact
on operating profit.
Positive factors included 1.7 billion yen in favorable foreign exchange, 2.4 billion yen
in gross profit created by expanded sales, and the effects of portfolio mix
improvements by expansion of highly profitable Cardiac and Vascular business,
driving a positive 1.1 billion yen. There was also a 1.8‐billion‐yen positive impact
from lowering costs. In total, we achieved a 2.5‐billion‐yen increase in operating
profit, going from 30.5 to 33 billion yen.

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Next is sales by region. The basic pattern of overseas regions making up for theJapan market remains the same as the previous quarter. Japan experienced adecrease of 4%, while overseas regions saw 8% growth. This resulted in overseas
markets accounting for 62% of all sales.
Now, by overseas region: The local distributors re‐arrangement in China has lagged
slightly, resulting in negative sales growth in China. However, other overseas regions
achieved
hd double‐digitd bl d or near‐double‐digitd bl d salesl growth.
h Europe was 11%, Americas
was 7%, and Asia was 11%, for a total overseas growth of 8%.

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Now, sales by company: Companies with more overseas sales Cardiac & Vascularand Blood Management were positive, in part due to favorable exchange rates.
General Hospital was negative. As the arrow in the circular graph shows, thepercentage of sales from the Cardiac & Vascular Company increased to 47%. This isdue to both the sales of that company’s products, as well as the foreign exchange
favorability realized through a higher amount of overseas sales.

6Next is business profit by company: Cardiac & Vascular and Blood Management
were positive, while General Hospital was negative. Profitability remained at thesame level as the previous year.
I’ll now explain in more detail concerning each company.

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First, the Cardiac & Vascular Company: Sales totaled 108.9 billion yen, for growth of8%. Business profit increased 7% to 21.5 billion yen. The aforementioned Japanesereimbursement price revision affected Cardiac & Vascular the most of any company,
with a negative impact of 1.9 billion yen. However, this was more than covered by
the 6.8 billion yen increase in overseas, particularly driven by interventional andneurovascular products. Cost improvement also continued in interventional systems
and other businesses for a further 600‐million‐yen improvement.

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Next is the General Hospital Company. Sales amounts were 78.4 billion yen; a 3%
decrease from the previous period. Business profit was 9.6 billion yen, a decrease of12%. In sales, the aforementioned consumption tax increase and market
environment shifts had a 1.7‐billion‐yen negative impact. The company has been
executing a transforming of its product portfolio since last year in Americas todecrease its percentage of low‐profitability business. This has led to higher
profitability, but a 700‐million‐yen decrease in sales.
We recently announced a transformation of Hospital business portfolio in Europe aswell; B‐to‐B business in Europe has seen double‐digit growth for a 500‐million‐yen
positive impact. Cost improvement in general hospital products also contributed
500 million yen in positive impact. One note regarding operating margin ability: It
has decreased from 13% to 12% when compared with the first half of last year;
however, this is because a very high percentage was achieved in the second quarterof last year, but then followed by a drastic drop. After that drop, the percentage hassteadily improved in each quarter starting with the fourth of last year, leading up to
this most recent result. Mr. Matsumura will later explain that in more detail.

9Next, the Blood Management Company: This company has experienced a difficult
market environment in Japan and abroad. Blood bags and other commodity‐typeproduct sales have suffered. However, the company has achieved double‐digit
growth overseas in therapeutic apheresis, while automated blood processing
systems have seen double‐digit growth globally for an overall 1.3‐billion‐yen
increase in sales. These new products have enabled the Blood Management
Company to increase both sales and profit, and we hope to see further positive
yresults in the second half of this year.

10Here are the products that have been launched during the first half of FY2014.
Ultimaster is listed at the top: It was launched in the first quarter in Europe, andthen in Asia, Central and South America in the second quarter, and sales aregrowing well.

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I’ll now outline some of our second‐half efforts.

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As you have heard, we began a system of “Business‐led management” in April thisyear. TheTh greatest effect
ff we hhave seen fromfthishi change
hh beenhasbi profit;
infi we havehseen large improvements in the ability to manage profitability, resulting insignificant growth during this fiscal year. We will work toward further improvementin the second half as well.
Regarding sales, our results for the first half are slightly below guidance. In thesecond half, we intend to improve this situation by achieving sales growth beyond
what we had in the first.
As is shown here, each company will work to improve its sales: In Cardiac & Vascular,
the focus will be in interventional systems and neurovascular products, and in BloodManagement on automated blood processing system and therapeutic apheresis.
I GInGenerall Hospital,
H i l thishi willill beb accomplishedli h d throughhh expanded
d d sales
l off pumps andd
infusion solutions, and new glucose monitor and test tip. This is how we plan toexpand sales in the second half.
As I mentioned, we worked to expand profitability in the first half by keeping SG&A
expenses down, but in the second half we will move on SG&A expenditure for theexpansion of sales and accelerate new product development.

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We plan to launch these products in the second half. In particular, the newneurovascular products pictured here are highly innovative ones that we will initiallylaunch overseas.

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Finally, information we were unable to convey in our press release dated October 23
regarding the transformation of Hospital business portfolio in Europe: At the time of
the release, we stated that up to 260 employees would be affected, but we wereunable to explain the costs that would be associated. We have therefore included a
6.4 billion yen extraordinary loss in our third‐quarter outlook. The 4.0 billion yen
effect that will remain after taxes will correct our net income forecast down from37.5 to 33.5 billion yen. These figures are based on exchange rates of 100 yen to theUS dollar and 140 yyen to the Euro.
This concludes my explanation of first‐half results.

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