Annual Report 2015
From April 1, 2014 to March 31, 2015

Securities Code 4775

Good Medical Practicethrough Good Management
Medical institutions like hospitals and clinics need good management to provide good medical care.
Providing good medical care from the outset, however, also results in good management.
Therefore, good medical care and good management are both essential to the provision ofefficient, high-quality healthcare. When treating patients, doctors have pride and a sense of
mission that cause them to do everything in their power for the patient they are treating.
Consequently, Sogo Medical’s mission is to provide the institutional support that enables doctors to focus on theprovision of this good medical care.

Management Principles
At Sogo Medical, a unique set of management principles is at the center of the work that we doand the way we undertake it. Our Pledge dedicates our lives to valuing human life through our
vocation and putting our hearts into our work. The Mission Statement declares the Company’s
purpose. Our Corporate Credo outlines the assurances and promises we make to society.

Our Pledge
We shall, in our own lives, highly value
the irreplaceable lives of others.

Mission Statement
We shall work to build a better society
through good medical practice.

Corporate Credo

We shall strive always to be right-thinking,grateful, diligent, modest, honest, refined,straight and fair independent people.

1. We shall be a company that values
each life as irreplaceable.

We believe that our work contributes
to the advancement of society andbenefits many people, andshall therefore conduct our work
responsibly and efficiently.

3. We shall encourage our employees tolive full lives, and grow together
with them as a company.

We shall not hesitate to do goodnor prevent harm.

SOGO MEDICAL CO., LTD.

2. We shall be a good partner to our
suppliers and earn their trust.

4. We shall seek to cultivate thecharacter, skills, and insight of each
employee, to meet our
responsibilities both as a company as
a whole and as individual citizens.

01

Contents
Company Profile
02 Business Overview
06 Sogo Medical’s Development
08 Financial and Non-Financial Highlights

President’s Message
12 General Outline
15 Medium-Term Management Plan Main Priority Initiatives
19 Long-Term Care Business Initiatives
20 Achieving Our Long-Term Vision

Business Report
22 Medical Practice Support Business
26 Pharmacy BusinessBusiness Performance by Segment
30 Higashinihon Office
32 Nishinihon Office
34 Kyushu Office

Corporate Governance
36 Directors, Audit & Supervisory Board Members and Corporate Executive Officers
38 Corporate Governance
40 CSR Management and Topics
42 Internal Control System and Compliance System

Financial Reports
43 Five-Year Summary of Consolidated Financial Statements
44 Management’s Discussion and Analysis
50 Risk Information
52 Consolidated Financial Statements

Corporate Information
Stock Information

A cautionary note on
forward-looking statements• This annual report contains forward-looking statements relating to performance projections and future predictions that are based on
judgments made in light of information available at the time of writing, and as a result includes risks and uncertainties. For this reason, there isa possibility that actual results may differ from such forecasts.
• If it becomes necessary to make revisions to items presented in this annual report after publication, the revised items will be updated on thecompany website in the “Investor Relations” section.

Annual Report 2015

02 Company Profile

Toward a Better Society
in which People can Livewith a Sense of Security

Business Overview

Providing Total Consulting-Based Medical Management Support
Sogo Medical offers total consulting-based medical
management support that enables hospitals andclinics to provide efficient, high-quality healthcare.
We are engaged in a variety of activities that support
good medical practice.
Our DtoD system helps to stimulate local medical
practices through doctor introductions, support forthe succession of medical practices, and thecoordination of medical care. We have alsoestablished 538 dispensing pharmacies nationwide,and lease medical equipment and rent TVs to help
improve the quality of amenities for patients.

Major Business Areas

Pharmacies
DesignConstruction

RentalMedicalInstitutions
Leasing

Patients

DtoD System
Management Consulting

SOGO MEDICAL CO., LTD.

Long-Term
CareCompany Profile

03

At Sogo Medical, the concept “good medical practice throughgood management” is the foundation for our mission tocontribute to making a better society by supporting regional
healthcare. With our long-term vision of realizing a unique
Japanese healthcare business model, we are advancing ourefforts to build a base of regional healthcare networks
through our Doctor to Doctor (DtoD) system and high-value
pharmacies as part of our medium-term management plan.
Through these business activities, we will contribute toward abetter society in which people can live with a sense of security.

25
Expanding the Number of
Dispensing Pharmacies Nationwide

Number ofdispensing
pharmacies

538

2

7

1 2
8

6
1
4

16
5
24
9

77
9
20
18

5
12
4
1
3
14
38 5
22 13
31 6
9
1
17
6 2 4

20 7
24 4
1 29
15 11

As of March 31, 2015

Annual Report 2015

04 Company Profile

Business Overview
Medical Practice Support

Percentage
of total sales

23.9%

We conduct consulting to formulate
basic plans and to support medical
practice management improvement.
We also put into practice our DtoD
system, which supports doctors
who are wishing to start up or transfer practices, or coordinate healthcare networks. We are furthermore
involved in other ways of supporting
medical practices, such as renting
out TVs for patients in hospitals,
leasing medical equipment, andplanning the design and construction of medical and long-term carefacilities.
Please refer to page 44 for our achievements in Medical
Practice Support.

Pharmacies

Percentage
of total sales

74.7%

We operate our patient-oriented Sogo
Pharmacies, as well as dispensing
pharmacies that pursue service of thehighest quality. We actively open newpharmacies near clinics, hospitals, andhealthcare malls for which we provide
medical start-up support through our
DtoD system. In addition, we provide ourpharmacists with training programs to letthem demonstrate their highest abilities,
offer nutrition consultations with nationally certified senior nutritionists, andprovide support for self-medication,*
thereby ensuring our pharmacies provide
genuine added value.
Please refer to page 46 for our achievements in Pharmacies.

Other Activities

Percentage
of total sales

1.4%

SOGO MEDICAL CO., LTD.

*Self-medication: Taking responsibility for one’s own health,a person treats slight physical ailments on his or her own.

We are expanding business with
Sogo Care Network Co., Ltd.,
which manages fee-based residential homes for the elderly, and withSun Villa Co., Ltd., which manages
fee-based homes with long-termcare for the elderly.

Company Profile05

Contributing to the Revitalization of Local Medical Carethrough the DtoD System
Change of practice
Support forlaunch of practiceRegistrationema t en
io t on f hes tr
u c t a l th c a r e
ur e sgis

Re

ic r a c
e tic

Su

n

pp

Sogo
Medical

ti o

Su

or t

tr a

tr a

gis

ti o

Re

n

Introduction ofence, Succession
end
successor
epdInDoctors inDoctors in
Supportpublicprivatepracticepractice
p
c t
bli c
pu r aC h a n g e to o f peC hang

The DtoD system is a framework that supports
both the ambitions of doctors and good
medical practices. For example, one service
offered under the DtoD system provides
extensive nationwide placement information to
doctors wishing to change their practice,suggesting opportunities that provide the best
match. The DtoD system also provides
comprehensive support to doctors seeking to
go into private practice, from practice start-up
preparation, including the drawing up of
management principles and a business plan,
through post-launch follow-up. The system
can also introduce successors to medical
practice owners who have worked to build up
a practice over many years when they have no
person ready to carry forward the business.
We also introduce hospitals with superior
doctors to meet their needs and support
overall healthcare coordination.
The DtoD system also connects hospitals,
doctors in public practice, and doctors inprivate practice within the region, contributing to
the creation of important ties among practitioners to realize efficient, high-quality healthcare.

pp

or t

h
lis n
a b diEst o o rc
Hospitals

Introduction of superior doctors
Support for overall healthcare coordination

High-Value Pharmacies with Local Roots
Focusing on our Sogo Pharmacies, wehave expanded to 538 dispensary pharmacies nationwide to serve as “general
healthcare stations.”
By putting our pharmacists’ abilities towork, we have promoted in-home medical care, supported disease prevention
efforts, offered self-medication support,
and accelerated the use of generic pharmaceuticals, all to promote the establishment of high-value pharmacies.
Also, through our independent training
system, we are furthering efforts toimprove the quality of medical service by
providing our pharmacists with thenecessary medical and pharmaceuticalknowledge, communication ability, technical skills, and proper attitude.

Promote in-homemedical care

Supportdiseaseprevention efforts
and offerself-medication
supportAccelerate useof genericpharmaceuticals

Apply information and communication
technologies (ICT) to strengthen customer service
Promote standardization

Annual Report 2015

06 Company Profile

Sogo Medical's Development

Net Sales(¥ billion)

These figures are proof of our acceptance by society.
We will continue to support good medical practice to build a better society.

120

100
Net Sales

Ordinary Income

80

60

40

June 1978
Sogo Medical Leasing Co.,
Ltd. established with acapitalization of ¥20 million

October 1994
Design andconstruction of medical
facilities begun

November 1989
"Green Members" (now"Succeed Members") system
for medical personnel
launched

November 1987
TV rental business forpatients launched

20
June 1988
Pharmacy business launched0
1979

Major Events

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1978-1987

1988-1996

•1978

•1988

June
Pharmacy businesslaunched•1989

November"Green Members"
First Sogo Pharmacy,
in Sakuradai(now "Succeed Members") system
for medical personnel launched•1994

October
Design and construction of medical facilities begun

•1987

June
Sogo Medical Leasing Co.,
Ltd. established with acapitalization of ¥20 million

NovemberTV rental business forpatients launched
Area around the Fukuoka Tenjin Center Bldg.
at the time of the company's establishment

SOGO MEDICAL CO., LTD.

Company Profile

07

March 2015
All shares of Hokendohjinsha Inc.,a medical and health information
services company, acquired
Ordinary Income(¥ billion)

November 2011
Long-term care service
business launched

5

4
March 2014
Net sales reach ¥100
billion3
August 2007
Business alliance
formed with Mitsui &Co., Ltd.

2001
April

2

All shares of TV rental
company acquired
September Listed on First Section ofTokyo Stock Exchange
October
DtoD system launched1
2005
April Hospital operational
management
contracting begun
June First healthcare mallestablished

August 2000
Listed on Second
Section of Tokyo
Stock Exchange

0

-1
1997

1998

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

January 2002
100th Sogo
Pharmacy
opened2010

2011

June 2010
300th Sogo
Pharmacy
openedNovember 2004
200th Sogo
Pharmacy
opened2012

2013

December 2012
400th Sogo
Pharmacy
opened2014

2015

April 2014
500th Sogo
Pharmacy
opened1997-2005

2006-2015•2000

AugustListed on Second Sectionof Tokyo Stock Exchange•2007

AugustBusiness alliance formed with Mitsui & Co., Ltd.

•2011

•2001

April
All shares of TV rental
company acquired
At our listing on the Second Section of
the Tokyo Stock Exchange
September
Listed on First Section of Tokyo Stock Exchange
October
DtoD system launched

NovemberLong-term care service
business launched

•2014

March
Net sales reach¥100 billion
Fee-Based Residential Home for Elderly
April"Midori-no-Kaze: Shimoori"
500th Sogo Pharmacy opened

•2015

March
All shares of Hokendohjinsha Inc., a medical andhealth information services company, acquired

•2005

April
Hospital operational management contracting begun
JuneFirst healthcare mall established

Annual Report 2015

08 Company Profile

Financial and Non-Financial Highlights

Each humble activity adds up
and leads to steady growth.

A total of 434 doctors
attended our seminars.
Seminar Participation from Doctors
We hold seminars for doctors seeking
to start their own private practices,
providing support to make these
doctors' dreams into a reality.

514 new
practicequestionnaires
collected.

56,505 doctors are registered with our DtoD system.

New Practice Questionnaires

Support for Doctors Who Wish to Change Jobs orOpen a Practice Now or in the Future(As of March 31, 2015)

Interviews were carried out with doctors to ascertain theirwishes and determine what an ideal medical practice would
be. These questionnaires have allowed Sogo Medical tosupport each physician in providing better medical care.
(As of March 31, 2015)

94 individuals achieved Start-Up
Support PPI Level III or above.

Our support creates an environment in which doctors cangive their full attention to providing medical care and realize
their aspiration to change jobs or open a private practice.

1,567 hospitals,
clinics, and otherinstitutions are members.

Practice Process Innovation (PPI)Internal Certification
This cer tification systempromotes human resource
development in the areas ofstart-up support, personnel
placement, and pharmacy
management, and improves
the quality of support for
medical practices.

Start-Up
Support PPI

Level III or above:
94 persons

Personnel
Placement PPI

Level III or above:
111 persons

Pharmacy
Level III or above:
Management PPI 89 persons

Net Sales¥107.9
103.3

54.9

65.8
59.6 64.4

70.4 72.7

80.2

Succeed Members
We provide support for running a medical practice andachieving good management at medical institutions from avariety of angles that includes human resources, facilities,
funding, and information.

Operating Income / Operating Income
to Net Sales Ratio

billionOperatingincome

86.6

1.6
3.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

SOGO MEDICAL CO., LTD.

4.8

4.1
3.0
1.6
2.8

¥5.0

Operating income to
net sales ratio

5.0 billion

4.3

3.2
2.4

4.7
3.8

6.0
4.6

5.7

5.0

4.9

4.6%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Company Profile09

As of March 31, 2015

We ran economic comparison simulationsfor 115 pharmacies.
Economic Comparison Reports
As new policies have been adopted for locating pharmacies
outside of hospitals and clinics, we forecast and analyze
economic conditions for medical institutions before and after
this shift to facilitate the smooth functioning of pharmaceuticaldispensing.
(As of March 31, 2015)

1,768
Pharmacists

About 9 in 10 pharmacy
staff members aretrained in giving
support to people withdementia.
Supporters of
Dementia Patients
Aiming to improve the quality of care given to patients withdementia and reinforcing collaboration with other occupations.

Pharmacists
A broad-based training system
helps pharmacists improve theirskills and expand pharmacy
services.
(As of March 1, 2015)

We provided feedback to
doctors from 51,969 trace
reports.
Trace Reports

Sogo Pharmacies

Information from patients, including dosage
schedules, was shared with doctors to
improve the quality of care given to patientsin collaboration with medical institutions.
(As of March 31, 2015)

Total Assets / Capital Adequacy Ratio
Total
assetsThere arenow 538
Sogo
Pharmacies.

¥69.8

We have expanded to 538 dispensary pharmacies nationwide to serve as "general healthcare stations" with roots intheir local communities. By putting our pharmacists' skills
into action we are helping to improve local medical care.

Total Net Assets / ROE

66.9 billion

Capitaladequacy ratio

53.1

Total net assets

57.1

43.0

36.2
27.5 28.3 29.5 29.9
50.1
49.6
43.3
33.1 34.1

¥26.5

ROE

14.7 15.0 15.9

40.5

37.7%

37.8
36.7

35.7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

91

96

11.1
10.0

17.4

14.1
8.6

10.0

19.5

13.1

21.6

23.9

13.6
12.3

billion

12.6

11.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fiscal year ended March 31

Annual Report 2015

10 President’s Message

President’s Message

12 General Outline
15

Medium-Term Management Plan Priority Initiative 1

Undertaking New Businesses

Medium-Term Management Plan Priority Initiative 2

16 Improving Existing Businesses
18

Medium-Term Management Plan Priority Initiative 3

Enhancing Corporate Value

19 Long-Term Care Business Initiatives
20 Achieving Our Long-Term Vision

SOGO MEDICAL CO., LTD.

President’s Message

11

Contributing to Society
through Valuable Service

Itsuo Tashiro

Representative Director, President and Chief Executive Officer

Annual Report 2015

12 President’s Message

General Outline
What kind of efforts has Sogo Medical made in its various businesses this fiscal year torealize the long-term vision of establishing a unique Japanese healthcare business model?

"We have experienced steady growth by actively pursuing
the two pillars of our business—support for medical
practices and pharmacy management."
Sogo Medical has worked to establish a unique Japanese healthcare business model since its very firstday. Working toward this goal, in the previous fiscal year we exceeded our performance target of ¥100
billion in net sales and reached ¥103.3 billion, growing at a steady pace. This growth shows that ourbusiness model is being accepted by society and meeting the demand that exists.
This fiscal year we continued to pursue the two pillars of our business—support for medical practices
and pharmacy management. In the medical practice support business, we developed healthcare malls
to meet the demands of regional communities, lent support to doctors seeking to start their own
practices, and provided management consulting for medical institutions. Our prime motivation for
putting energy into supporting private practices is to ensure the continuation of regional healthcare.
Doctors in private practice are advancing in age and there is a dearth of successors to carry on theirpractices. At the same time, greater competition in recent years means that there is not enough land
where practices can be set up, making it difficult to open new clinics. To solve these problems on bothsides, we introduce doctors who are seeking to start a private practice to practices/clinics that have no
successor, and are promoting "third-party succession" to ensure that clinics carry on and regional
healthcare becomes revitalized.
In the pharmacy business we have been opening up new pharmacies and have had a large numberof new pharmacies join the Sogo Medical Group as we work to transform these pharmacies into
"general healthcare stations" with roots in their local communities. We now operate a total of 538
pharmacies as of the end of the last fiscal year, most of which work side-by-side with a medical
institution. Our intention is not to merely keep opening more pharmacies, but to position pharmacies aspartners to doctors with private practices with deep connections to local healthcare.

What kind of results have emerged from assetsthat do not appear on the balance sheet*?

"We continue to register physicians in our DtoD
system and collect responses from new practice questionnaires,
putting emphasis on the process."
We have expanded the number of doctors registered in our DtoD system who wish to change jobs oropen a private practice. We have also collected results from our new practice questionnaire conductedto provide more support for opening medical practices. At present we have 56,505 working doctors
registered in the system and have collected 514 questionnaires, numbers that indicate the great trust
invested in Sogo Medical.
Efforts to accumulate assets that do not appear on the balance sheet, which represent a focus on
the process over particular results, permeate the workplace.
* Assets that do not appear on the balance sheet: Defined as personnel, corporate culture, brand strength, unique arrangements, or otherassets that do not show up as accounting assets on the balance sheet such as cash equivalents or real estate.

SOGO MEDICAL CO., LTD.

President’s Message

13

The company is very active in human resource development.
What kind of systems are you employing?

"We have a human resource development system
to support the growth of each employee that isbased on our belief that a company is its people."
At Sogo Medical we believe that a company is its people. To enable
every employee to set meaningful goals and targets, and to continue
growing as individuals, in the fiscal year ended March 31, 2011 webegan rebuilding our personnel system. New company-wide systems
were put in place starting in April 2014 that include rankings,
evaluations, remuneration, and talent development.
In our business to support medical practices, we have established
an internal quality system in the area of Practice Process Innovation(PPI), and today 94 employees are certified at Level III or above instart-up support, 111 in personnel placement, and 89 in pharmacy
management. To train pharmacists with the skills to be the best in
their profession, we have developed a unique on-the-job program
known as "GOES"—the Gradable OJT Educational System for
Pharmacists—which has produced a large number of pharmacists
trusted by patients and doctors alike.
In the next fiscal year we will expand our current training systems,
and create new offerings, including level-specific training to improve
individual abilities. These training programs are also assets that do
not appear on the balance sheet.

Practice Process Innovation (PPI)Internal Certification

Gradable OJT Educational System (GOES) for Pharmacists

Start-Up Support PPIPPINew Employee
Training

Pharmacy Management PPI• Introductory
residentialtraining course for
new employees
hired regularly

PPI Skills for Different Levels
Leadership skills
Implementation skills(ability to perform)
Knowledge and skills(ability to retain)
Level I

Level II

Level IIIne s sB u s i ma n c eorp er fLevel IV

Level V

Skill Improvement

Personnel Placement PPI• OJT / Blocktraining for new
employees• Follow-up
training

Skill Improvement
Training• Communication• Medical knowledge• Practical skills(pharmaceutical affairs,
technical skills, attitude)• Physical assessment
training• In-home medical caretraining• Overseas trainingetc.

• Board-certified
pharmacy specialist
training

Gradable OJT Educational System (GOES) for Pharmacists

Annual Report 2015

14 President’s Message

General Outline
Please tell us what kind of business performance was achieved this fiscal year from
implementing the measures outlined above in relation to targets set. Also please talkabout next year's goals based on that performance level and degree of achievement.

"We have embarked upon the new medium-term management plan
and are expanding our efforts. We have provided much start-up
support and have been opening new pharmacies."
Our new three-year medium-term management plan got underway in April 2014: "Further Challenge—Toward a better society in which people can live with a sense of security." The plan sets forth
medium-term goals and specific priority measures. Following this plan, we expanded our undertakings
beyond those pursued to date. We developed new services for evident societal needs, and have also
been working to solve problems being faced by society. As a result of new pharmacy openings, net
sales rose this fiscal year by 4.5% over the previous year to ¥107,945 million. Operating income rose
0.1% to ¥5,017 million, and ordinary income rose 3.1% to ¥5,227 million, but due to changes in thecorporate tax rate and other tax rates, plus the effects of revisions to the amount of deferred tax assets,
our net income for the year decreased 2.8% to ¥2,774 million.
We engaged in 308 projects involving support for medical practice start-ups (including clinic
successions and healthcare malls), leading to new lease contracts and new pharmacy openings.
We opened 48 new pharmacies (including 9 opened through M&A activities). As a result, the total
number of pharmacies reached 538 as of March 31, 2015, 45 more than the previous year.
With a further expansion of our DtoD system and our high-value pharmacy business, we will aim fornet sales of ¥120,000 million and ordinary income of ¥5,500 million in the next fiscal year, and net
income of ¥3,252 million in the current fiscal year.

SOGO MEDICAL CO., LTD.

President’s Message

15

Medium-Term Management Plan Priority Initiative 1

Undertaking New Businesses
Please talk about the efforts that were made and results achieved during the year todevelop new businesses that contributed to building a platform for regional
healthcare networks.

"Hokendohjinsha Inc. became a Group company and we began tooffer health services to companies and insured individuals."
We offer comprehensive support for medical management from multiple perspectives, based on the
consulting services we provide to a large number of medical institutions. Currently we offer support forbrand creation, which is a vital factor for major hospitals to become indispensable to their regions. We
are also looking into new business areas such as medical standardization and the sharing of medical
information to improve the efficiency of medical care.
As such developments were taking place, in March 2015 we brought Hokendohjinsha Inc. under theumbrella of the Sogo Medical Group. The purpose of the acquisition was to begin offering healthservices to different segments—insured individuals (insured by health insurance associations, thenational health insurance system, mutual aid associations, etc.), corporate personnel divisions, andorganizations of other types. We have always worked to support good medical practice for medical
institutions and patients. With this new company under our umbrella, Sogo Medical can now provide
comprehensive support that includes insured individuals. This will help us to build a platform forregional healthcare networks and go a long way toward establishing a unique Japanese healthcare
business model by making medical costs more reasonable.
Medical and Health Information Services through Hokendohjinsha
Consulting and counseling services

Publishing service

Katei no Igaku ("Household Medicine") published by
Hokendohjinsha Inc.

Annual Report 2015

16 President’s Message

Medium-Term Management Plan Priority Initiative 2

Improving Existing Businesses
Please talk about the results of medical practice support efforts this year
based on the DtoD system.

"Both the number of practice start-up support projects
and the number of doctors registered with the system havebeen on the rise. The broad trust in Sogo Medical isdemonstrated by these figures."This fiscal year, our support allowed 308 doctors to open medical practices. Also, thenumber of working doctors wishing to transfer or start up a practice reached 56,505.
We also held 24 seminars nationwide, attended by 434 doctors seeking to start up apractice. Of these, about 40% brought their families along. Opening a practice is a big
dream in life for a doctor, a dream that requires a lot of passion and effort to realize. The
cooperation of one's family naturally plays an important part. For that reason we
encourage the doctors to participate together with their spouses or family members toallow everyone to understand the circumstances involved.
While strengthening our collaboration with doctors in this way, we also focus on
projects to build large-scale facilities, and have opened healthcare malls across thecountry. For example, the LaLaport Tokyo-Bay Clinic Mall (Funabashi, Chiba) houses 4
clinics—internal medicine, pediatrics, dermatology, and ophthalmology—plus a Sogo
Pharmacy, offering great convenience as a healthcare mall. Medical Hills Korigaoka is a
residential home for the elderly with services that cover internal medicine,
ophthalmology, and orthopedic surgery, plus a Sogo Pharmacy. The facility brings
convenience to area residents and links medical care to a facility for senior citizens. (Formore details, see pp. 22–23.)
It is not easy to venture outside of conventional wisdom and create a healthcare mallalways attuned to the medical care that people need in a particular local area. But webelieve such efforts will hold great significance for society in the times to come. For
medical care to be made available where it is needed and desired is not simply an ideal
but something that should be possible to provide by working flexibly with people andlocations.
Practice Start-Up Support and Doctors Registered

Practice start-up support
Currently registered working doctors who wish to transfer now or in the future

56,505 doctors
48,43040,77832,054
26,174

SOGO MEDICAL CO., LTD.

314

308 projects

215

147

160

2011/3

12/3

13/3

14/3

15/3

President’s Message

17

Please talk about the company's efforts to establish high-value
pharmacies during this fiscal year.

"We have worked actively to alleviate patients' anxietiesand dissatisfactions."
Sogo Medical has established a total of 538 pharmacies nationwide. Of the 48 newpharmacies opened this fiscal year, 22 were in Higashinihon, 16 in Nishinihon, and 10 inKyushu.
In October 2014 at Sogo Pharmacies in Tsushima, Nagasaki Prefecture, pharmacists
began offering lifestyle advice to prevent the worsening of diabetes, covering such topics
as diet, exercise, and taking medicine. This business of providing support at pharmacies
for the self-management of diabetes was commissioned by the local government and is
the first initiative of its kind in Japan. (For more details, see pp. 26–27.)
Sogo Medical is promoting qualification as Supporters of Dementia Patients—people
trained to have good knowledge and understanding of dementia to be able to give
support and warmly help to look out for people who suffer from cognitive impairment
and their families. This initiative aims to improve the quality of care for people withdementia and to strengthen connections to other professions.
In addition, we have introduced an electronic medicine scheduler smartphone
application, HealthCare Note, and developed and updated private brand products. (Formore details, see p. 29.)
We have many other initiatives that aim to improve patients' quality of life, makemedical costs more affordable, and improve in-home medical care services. For
example, for patients who are frequently prescribed painkillers for headaches, with theconsent of the physician, regular counseling on the use of the drugs has resulted in a
reduction in both the number of medications and the frequency of headaches. Also,
when dispensing medicine to residents of homes for the elderly that offer services, apharmacist accompanies the doctor and nurse on a home visit, and information is
exchanged with the facility staff, which enhances team-based medical care.
We will continue to actively take measures to alleviate patients' anxieties anddissatisfactions, and build a platform for regional healthcare networks.

Number of Pharmacies

538 pharmacies
493
417
328

2011/3

366

12/3

13/3

14/3

15/3
Annual Report 2015

18 President’s Message

Medium-Term Management Plan Priority Initiative 3

Enhancing Corporate Value

Please talk about the efforts made and results achieved this year with regard tocreating mechanisms that enable employees to take pride in their work and feel asense of purpose, and that allow the organization to grow with its employees.

"We have begun structural reforms in human resources to enable allof our employees to grow and enjoy enriched lives."
Sogo Medical has launched a Diversity Promotion Project for carrying out structural reforms in humanresources that will enable diverse personnel to take on more responsibility and that will promote theadvancement of women, with the ultimate goal of enhancing corporate value and achieving sustainablegrowth. We have set up a committee for promoting leadership opportunities for female employees anda committee for promoting participation of foreign citizens, senior persons, and workers from otherindustries. One goal is to promote more women to leadership positions so that the overall percentage
reaches over 30% by March 2017. We are also concentrating on creating hiring opportunities forpeople with disabilities and have set up a department within the company that provides a supportive
environment in which people with disabilities can work. Among those we have hired are disabledathletes who compete in international sports competitions.
Based on the principle that as our company grows, our employees grow with it, we promote work-lifebalance among our employees so that they may enjoy enriched lives. We believe that creating a
comfortable work environment in which they are motivated and can thrive shows good faith to ouremployees. We have adopted a number of support systems such as allowing shorter, flexible working
hours and providing childcare support to help with raising children, plus a nursing care leave system
and long-term income protection insurance. We are taking initiatives at our pharmacies especially,
where about half of pharmacists are female, to establish internal systems that match female
employees' life plans and create a work environment in which they can feel comfortable and have theopportunity to grow.
Percentage of Female Employees in
Leadership Positions
Goal: Over 30% by March 2017

Promoting the Hiring of People with Disabilities
Disabled athletes who compete in international sports competitions
are amongst those hired

Rie Urata

Takashi Hori

Goalball (Japan women's team captain)

Wheelchair rugby

Yuki Yoshida
Swimming

SOGO MEDICAL CO., LTD.

President’s Message

19

Long-Term Care Business Initiatives
Please talk about the company's efforts in the long-term care business.

"We are concentrating on long-term care in pursuit of the company's
vision."
It is impossible to fulfill our vision without working in the field of long-term care. Sogo Medical manages
4 facilities—a fee-based home with long-term care for the elderly run by Sun Villa Co., Ltd. (a Group
company) and 3 fee-based residential homes for the elderly run by Sogo Care Network Co., Ltd. (alsoa Group company). We are additionally looking into how we can contribute to local communities
through long-term care and are studying possibilities for expanding into other areas.
In providing long-term care, beyond creating the facilities themselves, offering the necessary services
is the biggest challenge. We are putting great effort into hiring the personnel needed and are offering
many kinds of training to raise employee skill levels.

Villanova Otani, a fee-based home with long-term care for the elderly
At Villanova Otani, we carry out daily health management
and provide optimum services around the clock, frommeals to housekeeping and nursing care, in order to help
residents lead healthy lives. Our daily health management
and emergency response systems are sound, and if
nursing care becomes necessary such services areprovided in line with the physical condition of eachresident to maintain their mental and physical health andenable robust living.

Villanova Otani (Kitakyushu, Fukuoka)

Midori-no-Kaze, fee-based residential homes for the elderly
Various systems are in place at these fee-based housing facilities for emergency medical treatment,
general medical services, living assistance services, and long-term care insurance services, providing
urgent help rapidly when needed, thus ensuring residents’ peace of mind 24 hours a day, 365 days ayear. We provide sincere services that allow residents to live comfortably and peacefully.

Midori-no-Kaze, Shimoori(Onojo, Fukuoka Prefecture)

Midori-no-Kaze, Futsukaichi(Chikushino, Fukuoka Prefecture)

Midori-no-Kaze, Nagao(Fukuoka, Fukuoka Prefecture)

Annual Report 2015

20 President’s Message

Achieving Our Long-Term Vision
How close has Sogo Medical come to achieving its target balance of total
sales—60% in Higashinihon, 30% in Nishinihon, and 10% in Kyushu?
Please talk particularly about what measures have been taken to boost
the proportion of sales in Higashinihon.

"We are emphasizing the hiring of able personnel in
Higashinihon to reinforce sales in that part of thecountry."This year our total sales breaks down to: 37.5% in Higashinihon (eastern Japan), 26.7%
in Nishinihon (western Japan), and 35.8% in Kyushu. Sogo Medical was established in
Kyushu, so shoring up our foundation in this region plays a part in these figures, but now
the ratio of sales between Kyushu and Higashinihon is about 1:1. To boost the ratio for
Higashinihon, where the market scale is much larger, we need to carry out training ofdifferent kinds to raise the skill levels of our employees and also assign more personnel
to Higashinihon. However, to relocate personnel hired in Nishinihon or Kyushu to the
distant Higashinihon area may run up against household-related issues and other typesof resistance. Local hiring to secure the proper personnel is one way to ensure a
workplace in which every person is comfortable and motivated to work, and lead theway to expanding our activities in Higashinihon.

What has the company done to achieve the target ratio of 50:50 in sales
between medical practice support and pharmacies?

"We are staying focused on achieving our long-term vision
and will continue meeting the challenges we face."
We continue to maintain the goal of a 50:50 split in sales between medical practicesupport and pharmacies. The medical profession is today facing a major turning point,
particularly in pharmacies, with revisions to dispensing fees and medicine pricestandards taking place once every two years, not to mention an anticipated further risein consumption tax and other difficult conditions. In the pharmacy business, there is alimit to what we can control in the external environment. For this reason, if we are goingto achieve a 50:50 sales ratio split, we must focus on expanding our medical practicesupport business, which currently stands at about 24% of total sales. Specifically, we
will be supporting the management of medical institutions and developing healthcaremalls, centered around our DtoD system.
Our business strength comes from the relationships of trust we have built over theyears—trust with doctors, with our business associates, with people in local
communities, and mutually among our employees. The stronger we can make theseties, the more power we have to grow. I look forward to everyone's continued support inthese endeavors.

SOGO MEDICAL CO., LTD.

President’s Message

21

Long-Term Vision and Medium-Term Management Plan
Long-Term Vision “Establish a unique Japanese healthcare business model”
Our main objective is to create a unique Japanese-style healthcare business that helps create medical
systems through which patients can receive efficient and high-quality medical treatment.

Medium-Term Management Plan
(April 2014–March 2017, three-year period)

Major regional
hospitals
Dispensing
pharmacies

Further Challenge

Hospitals

Residential homes
and facilities forthe elderly—Toward a better society in which people
can live with a sense of security—

Healthcaremalls

In-homecare

Clinics

We are striving to build a platform for regional
healthcare networks by leading the industry with our
DtoD system and high-value pharmacies.

Main Priority Initiatives
1 Undertaking

2 Improving Existing Businesses

New Businesses
We will provide support for
managing and coordinating
medical services ranging
from acute medical care to
in-home care in order to help
build a platform for regional
healthcare networks.

3 Enhancing

We will provide medical support based aroundthe DtoD system by constructing exemplary
healthcare malls, enhancing support for startingup practices, improving user services, andexpanding recurring businesses.
We will create high-value pharmacies by helping
pharmacists fully utilize their skills to enhancecoordination between pharmacies and medical
institutions, make medical costs more affordable,
and improve in-home medical care services andself-medication support.

Corporate Value
Acting in accordancewith our management
principles, we strive toalways be an organizationthat grows with its
employees and at which
employees can take pridein their work and feel asense of purpose.

Toward Achieving Our Long-Term Vision for Our 50th Term (fiscal year ending March 31, 2028)

As we approach our 50th anniversary, we will develop
operations in the Nishinihon and Higashinihon areas
inorder to expand our share of the medical
practice support market.

By region

By business

Higashinihon
36%

MedicalPractice
Support30%

Nishinihon
27%
Kyushu37%

Pharmacies
70%

36th

(fiscal year ended March 31, 2014)

MedicalPractice
Support50%

Nishinihon
30%

Pharmacies
50%

MedicalPractice
Support40%

Higashinihon
50%

Nishinihon
30%

Higashinihon
60%

Pharmacies
60%

Kyushu20%

Kyushu
10%
42th

50th

(fiscal year ending March 31, 2020)(fiscal year ending March 31, 2028)

Target sales structure
corresponding to market size

Targeted ratio of sales by region 60:30:10
Targeted ratio of sales by business 50:50

Annual Report 2015

22 Business Report

SOGO MEDICAL Business Report

Enacting Change witha Strong Sense of Purpose
Sogo Medical offers various forms of support to provide higher quality medical
services and medical care more closely tied to local communities around Japan.
In this section we introduce six leading examples fromour medical practice support and pharmacy businesses.

Dr. Hajime Otani

Head Physician
Korigaoka Otani Heart Clinic

Medical Practice Support Business
Case

1

A Healthcare Mall Attached toa Residential Home for the Elderly
to Revitalize the Community

Support for the Opening
and Operation of Medical
Hills Korigaoka
Medical Hills Korigaoka is a healthcare mall that
opened in September 2014 in the Korigaoka
neighborhood of Hirakata, Osaka Prefecture. The
mall brings together a medical institution withsupportive senior housing, offering internal
medicine, ophthalmology, and a pharmacy all in
one location for better community healthcare. An
orthopedic surgery department was added in
April 2015. We talked with the two doctors who
made this healthcare mall into a reality and got
their impressions of how business is running.

SOGO MEDICAL CO., LTD.

The concept behind thehealthcare mall was tofocus on chronic diseases.

Dr. Kohyama first met with Mr.
Kawae for a consultation in 2012 inwhich the doctor said he felt readyto set up a branch hospital.
Considering that patients would
have to travel some distance fortreatment, the first step was to find
an appropriate location.
After some searching, Mr.
Kawae found Korigaoka, a quiet
residential neighborhood. Since alarge number of senior citizens
lived in the area, Mr. Kawae was
excited that the location would
make it possible to set up ahealthcare mall that focused on
chronic diseases. Complications
often accompany chronic illnesses
such as diabetes, so he felt thatthe mall would need to provide
medical care in the areas ofinternal medicine, ophthalmology,
and orthopedics—the latter tocover rheumatism. Behind the site
was an elementary school fromwhich children's voices could beheard in the schoolyard, making it
ideal for a housing facility for theelderly. With these ideas in mind,
Mr. Kawae immediately met with
Dr. Kohyama to set up a plan.

With Dr. Otani—who wanted toopen his own clinic—on board, thehealthcare mall plan began to pickBusiness Report

23

Masahiko Kawae

Nishinihon Sales Management Division
Sogo Medical Co., Ltd.

Dr. Masaki Kohyama

Jimeikai Kohyama Ganka, Korigaoka(ophthalmology clinic)

up steam. Working with Dr.
Kohyama in ophthalmology and Dr.
Otani in internal medicine, the three
formed a solid team to bringhigh-quality medical care to a local
community.

all the way up until we opened ourdoors. Also, I am very satisfied withthe healthcare mall style, which
offers the benefit of mutual cooperation."

Doctors working together andwithin the community offer many
chances to connect, bringing
benefits down the line.
"I think we were able to accomplish
so much thanks to Mr. Kawae's
efforts," reflected Dr. Kohyama. "I
am a physician and a businessowner. I wear many hats alreadyand that makes it difficult to take on
new tasks. The successful establishment of this healthcare mall isdue entirely to Mr. Kawae, with his
serious, hard-working approach,and broad-mindedness." Dr. Otani
agreed: "It was a tremendous help
to be able to leave the details to him

Process
2012: Dr. Kohyama consults with
Sogo Medical about openinga branch hospital
Mr. Kawae searches fora location and discovers Korigaoka*

Mr. Kawae himself considers thetrue benefits to lie ahead, as well as
much of the work. "My job is todraw the lines between the pointsof connection. This time fatebrought me together with Dr.
Kohyama and Dr. Otani, and that
led to finding this location. I plan tocontinue playing a role in ensuringthat this place becomes a healthy
community for people of all generations."

A survey on medical facilities in
the area was conducted,
and appropriate clinics designed
With Dr. Otani's endorsement,
the healthcare mall plan picks up speed

April 2015:
Orthopedic surgery is added;
full-scale launch* The Urban Renaissance Agency, a semipublic Japanese housing agency, rebuilds apartment buildings, transforming them into community welfare centers.
The Korigaoka site was part of the plan to revitalize the area with a senior housing facility.

Annual Report 2015

24 Business Report
SOGO MEDICAL Business Report

Enacting Change witha Strong Sense of Purpose

Dr. Hiroyasu Taniguchi
Head Physician
Taniguchi Eye Clinic

Medical Practice Support Business
Case2

Support for Finding a Successor
to a Medical Clinic
Opened 23 Years Earlier

No successor could befound for two years,
but persistence paid off.

Taniguchi Eye Clinic
Third-Party Succession
A local doctor who founded and ran his own eye
clinic for many years in the city of Sasebo,
Nagasaki Prefecture began to consider retirementin 2012 and wanted to pass the clinic on to ayounger doctor. He consulted with Sogo Medical
and we searched for a successor for him, andencountered Dr. Taniguchi. This is a case of a
doctor from the next generation taking over at a
medical institution that is well-regarded locally.

SOGO MEDICAL CO., LTD.

"We were the ones who helped this
doctor open his practice 23 years
ago," says Sogo Medical's Takuya
Moriguchi. The doctor recently
contacted the company, saying hehad begun thinking of handing overthe practice, and asked if thecompany could find someone rightaway, but this proved to be adifficult task. The search tooknearly two full years.

Finally we were introduced to Dr.
Taniguchi, who had been working
in the city of Shimabara, Nagasaki
Prefecture by a friendly associate.
At the time, however, Dr. Taniguchi
did not have a strong desire toopen his own practice and it took
some time before he could be
convinced to visit the clinic in
Sasebo.
Dr. Taniguchi: "I thought I might
open my own practice someday,
but at the time there was little
sense of reality to that plan. I
wasn't at all enthusiastic about
pursuing it right away, but mymother, who lives in Sasebo, fell ill
and I happened to be reading thematerial that Mr. Moriguchi had
given me. That's when I started togive it some serious thought." Partof the materials prepared by
Moriguchi included a financial planand various contract details. This
careful handling earned Dr. Taniguchi's solid trust.

Business Report

25

Takuya Moriguchi
Nagasaki Branch
Sogo Medical Co., Ltd.

We handle all of the paperwork
so that the doctor can focus onproviding medical care.
Once the hand-over procedure andpreparation for the reopening
kicked into gear, Mr. Moriguchi wasbusy throughout the day, every day.
Our Group company Somtech Co.,
Ltd. was subcontracted to renovate
the aging building. Medical equipment had to be discarded and newcontracts drawn up. Every day wasa whirlwind of activity. With just amonth and a half to complete theconstruction, Mr. Moriguchi visited
the site to give instructions on adaily basis. Having seen how many
patients came to the clinic not
knowing it was under construction
to be reopened as the Taniguchi Eye
Clinic, he said, "I then realized how
important this clinic was to thepeople of the area, and felt sure it
was the right thing to have it stay

open in new hands."
While the clinic was being
renovated, Dr. Taniguchi was glad
to be able to continue working in
Shimabara and even attend a
professional conference. "A doctor
just wants to concentrate on
providing medical care. I am reallygrateful to Mr. Moriguchi for allowing me to leave everything in his
hands. I have been able to build
trust with my new patients and I
feel strongly that setting up my own
practice here was the right thing todo." In the bright, naturally lit reception room, many patients are
waiting to see Dr. Taniguchi again
today.

Process
2012: Sogo Medical receives
a request from an eye doctor tohelp find a successor for his clinic

After nearly two years of searching,
Dr. Taniguchi is introduced

Proposal is made to Dr. Taniguchi

He decides to accept, andpreparations begin for the reopening

April 2014: Taniguchi Eye Clinic
opens its doors

Annual Report 2015

26 Business Report
SOGO MEDICAL Business Report

Enacting Change witha Strong Sense of Purpose3
Sharing support status

Sogo
Pharmacy

AttendingPhysicianCommission

Tsushima City

1

2

Lifestyle cautions
put into writing

Patient

Consulting
and support
through meetingsand phone calls

Tsushima
City

Fukuoka Prefecture
Saga
Prefecture
Nagasaki Prefecture

Kyoko Takarabe
Public Health Division
Tsushima City Government

Pharmacy Business
Case

3

Sogo Pharmacy Efforts Support
Health on a Distant Island

Tsushima, Nagasaki Prefecture
Advisory for Diabetes Patients
According to the city of Tsushima, the incidenceof diabetes among its residents is 1.3 times higher
than the average for the prefecture, and double
the average for diabetic kidney disease. To resolve
this health issue, the Public Health Division of
the city government joined hands with Sogo
Medical to begin a program to support patients
through medical collaboration. With this new
initiative, pharmacists provide regular support in
the form of advice on diet and exercise—the firstsuch collaborative endeavor in the country, forwhich it is garnering wide attention.

SOGO MEDICAL CO., LTD.

Doctors and pharmacists working
together help people make lifestyleadjustments that are difficult when trying
to manage their condition on their own.
"To treat and improve a person's
diabetic condition depends on how
involved you become in the patient's
life," reflected Mr. Taniguchi. Tsushima
is not only located on a remote island,
where getting around requires driving,
but there is also a tradition of using alarge amount of sugar. These factors
contribute to the higher incidence ofdiabetes on the island compared toother towns and cities. With this reality
in mind, Sogo Medical and city officials
met many times to devise practicalmethods for preventing diabetes andimproving the situation. The answer

Sogo Pharmacy Toyotama Location,
Pharmacist Sayaka Fukuda (left)

we came up with was medical
collaboration—a new initiative. The
system would utilize the five Sogo
Pharmacies in Tsushima as consultation centers for patients. Pharmacists
would collaborate with attending
physicians to check on patients' dietand exercise and give advice to help
them improve their nutrition and makelifestyle adjustments.
Mr. Kuroiwa of the Tsushima Public
Health Division commented: "I appreciated the assistance very much. It isreassuring to know that we can relyon pharmacists to talk with each
person once a month. The main
problem we face is how to lengthen
the healthy lifespan of the people in
Tsushima. We plan to further develop

Business Report27

Motohiro Kuroiwa
Public Health Division
Tsushima City Government

Katsushi Taniguchi
Iki-Tsushima Block
Sogo Medical Co., Ltd.

such model cases and also look intohome healthcare." This program tosupport patients in managing theircondition through medical collaboration got underway in October 2014.

Enhancing collaborative efforts tocontrol the worsening of conditions
and reduce medical costs.
After six months with the program,
pharmacist Sayaka Fukuda feels that it isdifficult for a person to stay vigilant about
improving their lifestyle habits. "Naturallysome people are better at it than others,
but we are slowly starting to see someresults with more people being proactive
about their own health. Some people will
gradually stop doing as they are
instructed as their sense of urgency
fades, however. For those people I try to
set small, achievable goals that will allow
them to build upon multiple accomplishments," Ms. Fukuda says.
At the pharmacy many different
things are being tried. Patients' informa-tion is entered into a computer systemand shared, and staff meetings are held
once a month to improve pharmacists'
ability to provide guidance. Mr. Taniguchi, who oversees the pharmacies, says,"The pharmacists have become more
motivated as they relate with patients on
a more personal level, which has also
created a sense of connectedness." Headds, "I would like to see more opportunities for the role of the pharmacist to
expand, utilizing this kind of synergy."
Ms. Takarabe of Tsushima's Public
Health Division commented, "Twohospitals were reorganized and consolidated in May 2015, reopening as Nagasaki
Tsushima Hospital. I would like to haveseminars held here for citizens, and use
the combined expertise of registerednurses, public health nurses, and pharmacists in ways that further strengthen theirties to one another." We will surely be able
to see further progress with this program
designed to curb the worsening of
illnesses and reduce medical costs.

Process
2008: The city of Tsushima createsthe "Kenko Tsushima 21 Plan"
The high number of individuals withdiabetes and diabetic kidneydisease is found to be a central issue
Sogo Medical proposes an advisoryfor diabetes patients
October 2014: Program to support
patient self-management throughmedical collaboration starts
Program will continue
for 3 years through 2017

Annual Report 2015

28 Business Report
SOGO MEDICAL Business Report

Enacting Change witha Strong Sense of Purpose

Filling prescriptions at the Takata Clinic

Team Kesen no Wa study meeting

Emergency response study through participation in
the Kesen Pharmacists Association's Committee for Emergency Disaster Response

Discussion meeting with the Kesen Pharmacists Association andCollege of Pharmacy students about helping those affected by disasters

Pharmacy Business
Case

4

Iwate-Akita Block

Sogo Pharmacy Takata
Location Collaborative Efforts
in the Area Struck by the Great
East Japan Earthquake

Takata Clinic set up in a prefab housing
unit after the tsunami

SOGO MEDICAL CO., LTD.

We actively participate in collaborative projects
with other occupations.
In the city of Rikuzentakata, which was
hit hard by the tsunami caused by theGreat East Japan Earthquake, theparticipation of the Takata pharmacy incommunity affairs holds greater
significance than perhaps for pharmacies in other areas. After the disaster,
the Kesen Pharmacists Associationcommissioned Sogo Medical to quickly
set up a pharmacy in a prefab housing
unit, and we became involved inconsultations on weekends when there
was usually a shortage of workers.
Our local staff felt that this was thetime when it was most necessary to
collaborate with people in other professions. The pharmacy continues toparticipate in various activities anddevelop initiatives through community
collaboration. One is the home care
support group known as Team Kesenno Wa. The team consists of doctors,
dentists, pharmacists, nurses, care
workers, nutritionists, and others.
Coming together from many professions, they offer home care for
Rikuzentakata's rapidly aging
populace. The pharmacy also participates in ARTSOAP, a project that aims
to revive a network for cancer
treatment and palliative care, working
to improve interdisciplinary collaboration, boost knowledge, and takeadvantage of the expertise of various
professions.
The efforts to support mental andphysical health, working in close
collaboration with the community, arefar from over. We will continue toexplore how we can contribute as apharmacy and strive to improve
services further.

Business Report

Case

5

HealthCare Note
(Electronic Medicine Scheduler)
Smartphone Application

Case

29

6

Bringing Smiles to Patientsand Customers through Safe,
Original Products

Products from the SOGO SMILE series

Shortening waiting time for patients and reducing stress.
Enhancing functionality as a "personal pharmacy."
To get a prescription filled at a
pharmacy, usually one mustfirst hand over the prescription,
show one's medication record,
state a preference regarding
generic drugs, and provide
other information, then wait forthe medicine to be prepared.
Because of the limited
number of records that can be
kept in a paper-bound medicine
scheduler—even though suchschedulers can be useful—they
do raise issues of practicality.
To overcome such problems,
our pharmacies began offering
the free smartphone application
HealthCare Note in fiscal year
2014. Patients do not have tophysically go to the pharmacy
until their prescription is filled, atwhich point they are called topick up the medicine throughtheir smartphone. This system
reduces stress and allows
people to make better use of
their time. Because it allows apatient's medication record tobe checked in advance, thepharmacy is able to prepare theneeded medicine with greater
reliability.
These ef for ts follow the
Ministry of Health, Labour andWelfare's policy of promoting
pharmacies as health information repositories for the community. We plan to continue
expanding services to providethat "personal pharmacy" experience.

Unifying the brand as healthcare stations
for the public in order to become
more engaged in local communities.
To further expand pharmacies
nationwide, Sogo Pharmacies
in particular, we have established the PR concept ofpharmacies as "healthcare
stations for the public." Basedon this concept, we arebuilding a unified brand that
includes developing new
private brand products, andintroducing original uniforms.
The brand name for the
products is SOGO SMILE andthe accompanying slogan is"Greater peace of mind, more
smiles." Together with an
original logo, we aim toi n c re a s e t h e ove r a l l b rand

appeal.
Among the private brandgoods that were jointly developed by nutritionists andpharmacists are a black
vinegar drink and organic tea,
both developed with acommitment to high-quality
ingredients. Such products
are working to enhance thevalue of our pharmacies.
Through various initiatives
both at the pharmacies themselves and outside in thecommunity, we aim for ourpharmacies to be a reliable
source of support for local
residents.

Annual Report 2015

30 Business Performance by Segment

Higashinihon Office

We take responsibility for our work,
knowing it will improve people's lives
and contribute to social advancement.

Shigeyuki Nakano
Senior Managing Officer
Manager of Higashinihon Office

SOGO MEDICAL CO., LTD.

This fiscal year we developed and opened
healthcare malls, supported medical practices,
provided consulting services, and opened
high-value pharmacies. Through these and otheractivities we were able to bring joy to morecustomers and steadily expand our reach.
In the coming year we will aim to build an evenstronger organization by matching the company's
direction and vision to the source of ourenergy—the aspirations of our employees.
First, in medical practice support we will takeadvantage of our DtoD system to alleviate theanxieties and dissatisfactions of patients, doctors
employed in public practice, and major regional
hospitals. We will continue to develop healthcaremalls to solve issues being faced by local
communities. The challenge in this kind of work is
how to actualize employees' personal growth,boost productivity, and keep customers satisfied.
Also, what is needed in the pharmacy businessis for pharmacies to function well and to make gooduse of a comprehensive community care system.
Up to this point, pharmacies have focused ondispensing medicine, but by adding new services
we can turn them into high-value pharmacies. We
will not work alone as a single company, but will
partner with others and share our wisdom, surely
reaching greater new potential.
In the process of implementing our medium-termbusiness plan, "Further Challenge—Toward a better
society in which people can live with a sense of
security," every employee will examine if theiractions are for the benefit of everyone involved,
share their wisdom, and boldly take action. We takeresponsibility for our work and believe that it will
help improve the lives of many people and support
the advancement of society.

Business Performance by Segment

31

Performance for the Year Ended March 2015

Practice Start-up/Transfer Support
and Number of Doctors Registered

Percentage of Total Sales

Doctors wishing to start up or transfer practices
Practice start-up support
Practice transfer support

33,216
doctors

28,329Higashinihon Office

23,84137.5%

2,757projects

2,825

2,078

165

projects

152
97

2013/3

Net Sales

14/3

15/3

Number of Pharmacies

Medical Practice Support

Pharmacies¥

Existing

Newly opened

39,614227

millionpharmacies

36,70022

206

31,747

26,522¥ 30,997

pharmacies

35

173
21

million23,601205
152

10,1778,145
2013/3pharmacies171¥ 8,617
million

14/3

15/3

2013/3

14/3

15/3

Annual Report 2015

32 Business Performance by Segment

Nishinihon Office
Helping employees improve their skills
and contributing to local communities
by meeting diverse needs.

Takao Nakashima
Executive Managing Officer
Manager of Nishinihon Office

SOGO MEDICAL CO., LTD.

This fiscal year marked the start of our three-year
medium-term business plan, "Further Challenge—Toward
a better society in which people can live with a sense of
security." We have been striving to build a platform forregional healthcare networks by leading the industry with
our DtoD system and high-value pharmacies. We havefurthermore made a good deal of progress, not only in theWest Japan region, but also by expanding healthcaremalls in a wide area within the western jurisdiction, withgrowing services.
In the coming fiscal year we aim to extend these initiatives and steadily carry out the pledge that represents ourmanagement principles, following Our Pledge, Mission
Statement and Corporate Credo.
In medical practice support, we are obtaining more
contracts for operational management at major regional
hospitals. We are also developing exemplary healthcaremalls to provide medical services that society and local
communities desire, and are improving the quality of ourstart-up support. In these ways we are meeting diverse
needs.
In the pharmacy business, to bolster in-home medicalcare, we are expanding coordination between pharmacies and home-visit nursing stations. Also, to promote
self-medication support and high-value pharmacies, weare trying to bring more "healthcare stations for the public"
into local communities, at which citizens can feel free tocome in and get advice on health, and leave with peace ofmind.
We also focus on helping employees improve theirskills, which increases the value of our human resources,
though internal management certification in Practice
Process Innovation (PPI) and an on-the-job program
known as GOES—the Gradable OJT Educational System
for Pharmacists.
In Japan's super-aged society, changes are continually
taking place in the medical system. As changes occur, we
are using our position as a company involved in medicalcare and working to build a future in which people can livewith peace of mind.

Business Performance by Segment

33

Performance for the Year Ended March 2015

Practice Start-up/Transfer Support
and Number of Doctors Registered

Percentage of Total Sales

Doctors wishing to start up or transfer practices
Practice start-up support
Practice transfer support

14,557doctors

12,363

Nishinihon Office26.7%

2,073 projects

10,229
1,632
1,352

88

106

projects

63

2013/314/3

15/3

Number of Pharmacies

Net Sales
Medical Practice Support

Pharmacies¥

Existing

Newly opened

28,20527,390143

millionpharmacies

16

127

pharmacies

32

20,067
17,526¥ 19,784
million

95
20

127

13,725pharmacies¥ 8,420

9,863

14/3

95

million

6,341
2013/375

15/3

2013/3

14/3

15/3

Annual Report 2015

34 Business Performance by Segment

Kyushu Office
We aim to alleviate customers' anxieties
and help create a better society thatprovides peace of mind.

Kazuya Watabe
Senior Managing Officer
Manager of Kyushu Office

SOGO MEDICAL CO., LTD.

This fiscal year all of our employees madeself-improvement efforts and worked to hone theirskills, and as a result they took important steps
forward in solidifying their relationships with customers.
The coming fiscal year is the second year of our
medium-term management plan—"Further Challenge—
Toward a better society in which people can live witha sense of security."
We aim to take measures based on our management principles that give our employees a sense of
pride in their work and a sense of purpose, and allow
us to grow as a regional office with our employees.
We aim to achieve the goal of building a platform
for regional healthcare networks by leading the industry with our DtoD system and high-value pharmacies.
To accomplish this we are solving problems for major
regional hospitals through management support. By
placing importance on valuing our existing customers
we have become highly dependable. We are also
taking full advantage of our DtoD system to develop
exemplary healthcare malls which provide the medical services that society and local communities
desire.
In the pharmacy business, we are putting ourpharmacists' abilities to work. Fulfilling our role as agood partner to medical institutions, we ensure thatour pharmacies provide genuine added value by
strengthening the coordination of medical care,making medical costs more reasonable, expanding
in-home medical care, and providing support for
self-medication.
As a company with foundations in consulting, we
supply a variety of services that aim to alleviate theanxieties and dissatisfactions held by society, themedical services community, and our customers. We
do this through our DtoD system and high-value
pharmacies. We promise to listen to the opinions of
our clients and do our very best to work together asa regional office so that we may be of service andbring joy to our customers.

Business Performance by Segment

35

Performance for the Year Ended March 2015

Practice Start-up/Transfer Support
and Number of Doctors Registered

Percentage of Total Sales

Doctors wishing to start up or transfer practices
Practice start-up support
Practice transfer support

7,394 doctors
6,412

Kyushu Office

5,409

35.8%

889

704 projects
569

55

projects

55

56

2013/314/3

15/3

Number of Pharmacies

Net Sales
Medical Practice Support

Pharmacies¥

Existing

168

37,79337,238million12

28,087pharmacies

160
149

33,24911

million

137

9,150

7,184
14/3

10

pharmacies¥ 29,752

26,065

2013/3

Newly opened

149

158

pharmacies¥ 8,040
million

15/3

2013/3

14/3

15/3

Annual Report 2015

36 Corporate GovernanceDirectors, Audit & Supervisory Board Members
and Corporate Executive Officers (As of June 19, 2015)
Board of Directors

Itsuo Tashiro

Kenji Sakamoto

Representative Director,
President and Chief Executive
Officer

Representative Director,
Executive Vice President

Shinya Mikita

Makoto Kuroda

Masatoshi Sadahisa

Moritaka Nakashima

Director & Senior Executive
Managing Officer

Director & Senior Executive
Managing Officer

Director & Executive
Managing Officer

Director & Executive
Managing Officer

Hirosada Oyamada

Makoto Nogami

Kiyotaka Watanabe

Director & SeniorCorporate Adviser

Director (External Director)

Director (External Director)

Audit & Supervisory Board Members

Minoru Ohno

Shoji Hirao

Naomasa Mitsukado

Setsuko Gondou

Standing Auditor(External Auditor)

Standing Auditor

Auditor (External Auditor)

Auditor (External Auditor)

SOGO MEDICAL CO., LTD.

Corporate Governance37

Corporate Executive Officers

Itsuo Tashiro

Kenji Sakamoto

Shinya Mikita

Makoto Kuroda

President and Chief Executive
Officer

Executive Vice President

Senior Executive Managing
Officer

Senior Executive Managing
Officer

In charge of Consulting Division,
Business Promotion Division
Manager of Business Promotion Division

In charge of Management Division,
Management Strategy Division
Manager of Management Strategy Division

In charge of President's Officeand Corporate Auditing Division

In charge of Higashinihon Office,Nishinihon Office, Kyushu Office

Takao Nakashima

Kohichi Hashimoto

Takahide Terada

Masatoshi Sadahisa

Executive Managing Officer

Executive Managing Officer

Executive Managing Officer

Executive Managing Officer

Manager of Nishinihon Office

Manager of President's Office

Manager of Consulting Division

In charge of Personnel Division
Manager of Personnel Division

Joji Haraguchi

Moritaka Nakashima

Executive Managing Officer

Executive Managing Officer

Representative Director andPresident of Somtech Co., Ltd.

In charge of Business Administration
Division, SME Co., Ltd.
Representative Director and Presidentof SME Co., Ltd.

Genichi Shimmura

Kazuya Watabe

Yuriko Tanigawa

Shigeyuki Nakano

Senior Managing Officer

Senior Managing Officer

Senior Managing Officer

Senior Managing Officer

Assistant Manager ofConsulting Division

Manager of Kyushu Office

Manager of Administration Division

Manager of Higashinihon OfficeTakamichi Okuno

Nobuo Fujii

Toshikazu Matsuo

Osamu Yamasaki

Managing Officer

Managing Officer

Managing Officer

Managing Officer

Assistant Manager of Administration
DivisionManager of General Affairs Department

Assistant to Manager ofHigashinihon Office

Assistant Manager of Business
Promotion Division
Manager of Pharmacy Business
Promotion Department

Higashinihon Office
Manager of Higashinihon SalesManagement Division

Masatomo Hara

Katsuyuki Honda

Managing Officer

Managing Officer

Higashinihon Office
Manager of Higashinihon Pharmacy
Management Division
Representative Director and Presidentof Matsumura Co., Ltd.
Representative Director and Presidentof Akatsuki Pharmacy Co., Ltd.

Assistant Manager of Personnel
DivisionManager of Personnel Department

Akihiro Shitozawa
Senior Managing Officer
Manager of Business
Administration Division

Annual Report 2015

38 Corporate GovernanceCorporate Governance
Basic Policy

Sogo Medical considers one of its most important issues
facing management to be recognizing the importance ofcorporate ethics based on legal compliance, while also making
prompt decisions in response to the ever-changing businessenvironment and working to make management sounder inorder to record continued corporate value. To achieve that, it isnecessary to build good relationships with customers, clients,
local communities, employees, and other stakeholders, at thesame time as enhancing corporate governance by strengthening, improving, and implementing functional systems requiredby law, including the general meeting of shareholders, board of
directors, audit and supervisory board, and independent
external auditors.
We also aim to increase management transparency byproviding fast, accurate, and wide-ranging information disclosure to all our shareholders and investors.

Corporate Governance System (As of June 19, 2015)

The board of directors is made up of 9 members, of which 2 areoutside directors, reflecting the company’s size while emphasizing
mobility.
Sogo Medical has adopted an audit and supervisory board
system with a board of auditors and believes including external
auditors allows for the effective monitoring of management.
Board of directors’ meetings are held every month as a generalrule with decisions made about important company matters.
Managing directors’ meetings attended by working managing
directors and standing directors are held twice per month as a
general rule, to make decisions about which matters to discuss atboard of directors’ meetings and about important matters that are
not decided at board meetings. Individual item meetings attended
separately by working managing directors, standing directors andother relevant management are generally held twice per month,respectively. As a general rule these meetings decide importantmatters not decided at managing directors' meetings, and discuss
important issues brought up at managing directors' meetings. At
management meetings, working managing directors, executive

managing officers, and other involved management in attendance
deliberate and exchange information regarding managementrelated issues.
Sogo Medical has adopted a corporate executive officer system
in which officers selected by the board of directors perform theadministration of business matters under the direction of the boardof directors.
The company also holds regular new employee training andgradable training through the year as well as working to improve
compliance with workplace training on the subject of corporate
ethics and compliance management given by staff responsible forpromoting compliance.
Sogo Medical declares the following basic policy, “We do not
involve ourselves with anti-social forces or client companies who
have a relationship with anti-social forces, under any circumstances.”
For the purpose of removing anti-social forces, together with thecooperation of outside expert organizations such as lawyers andrelevant administrative bodies, we will work as a group to create acorresponding structure.

Auditing System (As of June 19, 2015)

The audit and supervisory board comprises 4 auditors, ofwhich 2 are standing auditors and 2 are part-time auditors.
Three of these are external auditors to ensure fairness andtransparency. Each auditor attends board of directors’
meetings, while standing auditors also attend and offer
opinions at managing directors’ meetings, management
meetings, and individual item meetings.
Auditors monitor the legality of operations based on financial
standards, audit planning, and task divisions, as outlined by
the audit and supervisory board.
Internal audits are held systematically by the corporate

SOGO MEDICAL CO., LTD.

auditing division, consisting of 9 members, auditing all divisions
and reporting the results directly to the president. Audited
divisions are given guidance on where they need to improve,with further reporting required on whether improvement has
been made or not, ensuring an efficient audit process.
Collectively, the audit and supervisory board members,
corporate auditing division, independent external auditors, andinternal control division exchange information regarding audit
planning and audit results as required, working to achieve
efficient and effective audits.

Corporate Governance

39

Governance Systems (As of June 19, 2015)

General Meeting of Shareholders
Selection / Dismissal

Selection / Dismissal

Board of Directors

Audit & Supervisory
Board

Directors
9 members

Audit(2 external directors)
Financial Audit
Selection /Dismissal /Supervision

Selection /Dismissal /Supervision

Selection / Dismissal

Audit & Supervisory
Board Members
4 members (3 external auditors)

Corporate Auditor Division

Independent External Auditors(Mutual Coordination)
Financial Audit

ReportRepresentative Director, President and Chief Executive Officer
Corporate Executive Officers

Corporate Auditing DivisionInternal Control DivisionInternal Control
Internal Auditing

Divisions

Help Desk
6 Sogo Medical employees
3 outside lawyers

ReportRequest Advice /Report Information

Corporate Ethics Helpline

Officer Remuneration

Shareholders monitor remuneration through a limit to the total
amount of remuneration for directors and audit and supervisory board members (including bonuses) decided throughresolutions at the general meeting of shareholders. The
president (who is the representative director and an executive

officer) decides remuneration for directors after consulting withthe board of directors and compensation for auditors is
decided after discussion among auditors, in both cases within
the limits decided at the general meeting of shareholders.

Total Remuneration of Each Category of Officers in Fiscal 2015
Total by form of remuneration (¥ million)

Officer category

Directors

Number ofrecipients

Basic
Stock
compensation options

Bonuses

Retirementcompensation

12

231

231

–

–

–

Audit & supervisoryboard members

1

9

9

–

–

–

Outside officers

5

17

17

–

–

–

Total

18

258

258

–

–

–

(not including
external directors)(not including
external auditors)

Notes: 1. The total remuneration for directors does not include
employee salaries for those directors who are also
employed as employees.
2. Remuneration for Sogo Medical officers only includes theamount paid by Sogo Medical, excluding payments fromsubsidiaries.
3. No Sogo Medical officer receives a consolidated salary of
more than ¥100 million.
4. Annual remuneration for directors (not including employee
salaries for people who are both directors and employees)
was given a firm limit of ¥300 million with a limit to increases
of 2% of the previous fiscal year’s consolidated net income
in a resolution at the 34th General Meeting of Shareholders
held on June 20, 2012.
5. Annual compensation for audit and supervisory board
members was limited to ¥50 million in a resolution at the 24th
General Meeting of Shareholders held on June 18, 2002.

Annual Report 2015

40 Corporate Governance

CSR Management & Topics
Our CSR activities are the very same as our business activities—
working to build a better society through good medical practice.
We work hard to develop valuable human resources who can promote
good medical practice and make a better society a reality.
1. We shall understand and share our management principles andfulfill our corporate mission through our work.

Four Principal
Elements of CSR

2. We shall provide services that surpass customer expectations.
3. We shall create an environment in which employees feelsecure and derive fulfillment in their work.

4. As a member of society, we shall be committed to complianceand earn the trust of customers and other people.

The Sogo Medical Group’s CSR activities are
the same as its business activities—to build abetter society through good medical practice.
Our job is to support good medical care, andthat is connected to the development ofsociety and improving the lives of many people.
Through supporting good medical care in the
future, we aim to fulfill our social mission as acompany.

Developing personnel to carry out next-generation management

Understanding other people
and other divisions isessential for total
optimization thinking.

Sosojuku: Developing next-generation leaders
Sosojuku is the name of our training school, and its name carries
the meaning of creating a new Sogo Medical. In order to develop
personnel to carry out next-generation management, andcultivate the character needed for leadership, we provide training
to polish each trainee's foresight, imagination and ability to thinkin terms of total optimization.
Basic Course

1. Basic conceptual skills
2. Basic business models
3. Basic business communication
4. How to read financial statements and financial summaries
5. Basics of finance and accounting
6. Basics of business strategy

Advanced Course

1. Understanding strategies of listed healthcare companies
2. Recognizing and understanding the outside environment
3. Image of a unique Japanese healthcare business model among trainees
4. Quick presentation and extraction of ideas for new businesscandidates
5. Screening and narrowing down new business candidates
6. Verifying feasibility of new business candidates
7. Development of business models for new business candidates
8. Formulation of business strategies and business plans for new
business candidates
9. Formulation of business development plans for new business candidates

SOGO MEDICAL CO., LTD.

Student from the program’s 3rd cycle

Tsunashi Shimoshinbara
Pharmacy Business Promotion Division

Through one year of training, I further improved my awareness beyond thepharmacy business to encompass a company-wide perspective. This enabled
me to master total optimization thinking. As a result of active, collaborative
communication and discussion crossing boundaries between areas such as
pharmacies, sales, the head office and Group companies, we were able toprovide the HealthCare Note service (electronic medicine scheduler) at
pharmacies by using ICT. We also made progress in developing products forover-the-counter sales.

We must aim to be
a company essential to society.
Student from the program’s 7th cycle

Masahiro MonjiHigashinihon Sales Management Division,
Higashinihon Office

I entered the school in February 2015 and learned about corporate strategy andthinking. I feel that, thanks to this program, I can now carry out company analysis
at a deeper level when considering, for example, how other companies are
generating their profits, and whether they have potential for the future. In the
future, I would like to apply what I've learned at the Sosojuku school todevelopment of healthcare malls, create new businesses for the local community,and develop the ideal healthcare mall.

Corporate GovernanceCompliance Efforts
and StanceCompliance is generally thought of in the sense of “regulatory compliance,” or conforming with laws and internal regulations. However, weundertake compliance in a broader sense. In addition to complying withlaws, we consider compliance to mean acting in an ethical manner andeschewing any activity that would inconvenience society as we strive
aggressively to meet society’s expectations. Our compliance goesbeyond obeying the letter of the law, and our actions extend to arespect for the social norms that form the background for these laws.
We endeavor to be a company that delivers essential value to all people.
As such, we remain sensitive to changes in society, considering
individually what society requires and following through with actions tosatisfy those needs.

41

Meeting the responsibilities
required by society
Fulfilling our
responsibility as
a company

Ethical practiceGeneralcompliance

Our compliance

Regulatory compliance(compliance in a narrow sense)

Our Pledge, Mission Statement, Corporate Credo

Improving the skills of pharmacists

Going beyond specialization,
to growth as a healthcare provider
In order to develop valuable human resources who cancontribute to society, we provide thorough personnel education from two perspectives: a skill improvement course (GOES)
for developing specialized capabilities as a pharmacist, and amanagement course for developing the ability to operate apharmacy.
Skill Improvement Course

New Employee
Training-Introductory
residential training
course for periodic
new recruits-OJT/Blocktraining for new
employees-Follow-up
training

Skill Improvement
Training-Communication training-Medical knowledge
training-Pharmaceuticals,
technical skills, attitude(practical skill training)-Physical
assessment training-In-home medicalcare training-Overseas training
etc.
Development ofcertified pharmacists

Gradable OJT Education System (GOES) for Pharmacists
Management Course(for selected candidates)

Management capabilities are developed through Pharmacy Management
training suitable for each experience Area Managers Division Manager
level and position.
Block Managers

Pharmacy Managers
Pharmacists

Career Improvement Training

Strive to provide peace of mind,
and ensure treatment reaches
a successful conclusion.
GOES trainee

From April 2009 to the present

Kanako Miyazaki
Board-Certified Pharmacy Specialist,
Tenjin Chuo Location, Sogo Pharmacy

I learned about pharmaceutical knowledge and techniques, as well as communication,and I realized the importance of these topics for achieving successful treatment. By
understanding the condition and needs of the patient, we can communicate the rightamount of information at the right time, so patients can take their medication with peaceof mind. At present, I am participating in team medicine as a board-certified pharmacist
for diabetes, based on what I have learned in GOES. I am working to provide moredetailed guidance while improving my specialized expertise.

Systematic learning is also
useful in consulting.
GOES trainee

From April 2010 to May 2014

Hirofumi Kuwabata
Consulting Promotion Division

Because I have systematically acquired the knowledge and skills needed by aboard-certified pharmacist, I can do my work as a pharmacist while being
constantly aware of potential problems. In addition, I've learned about topics suchas inventory management, insurance billing, and risk management, anddeveloped an understanding of pharmacy operation. Also, I made a career change
in 2014, starting work as a consultant supporting medical institutions by leveraging
my previous experience and knowledge. In the future, I would like to propose
measures to improve management at major hospitals.

Annual Report 2015

42 Corporate GovernanceInternal Control System and Compliance System
Sogo Medical is striving to build up its Group-wide
compliance system by establishing a common corporate charter and code of ethics shared by the Sogo
Medical Group.
In order for directors and employees to perform theirduties with corporate social responsibility and corporate
ethics in mind, we put our compliance policy (Sogo
Medical action standards) into practice, while making
the policy thoroughly understood and enforced. In orderfor directors and employees of the Sogo Medical Groupto perform their duties in accordance with the law andthe articles of association, we have placed a director in
charge of compliance (legal department management
officer) as well as formed an internal control committee,
which is managed by the compliance division(according to policies of dividing duties). We have also
set up a help desk (corporate ethics helpline), which
employees can contact with requests for advice or toreport information and get a speedy response. In orderto enhance compliance knowledge among directors
and employees of the Sogo Medical Group, we areupgrading training, as part of our efforts to improveknowledge of respecting compliance.

Information Management System
Sogo Medical has a system in place for storing and managing
information related to work carried out by directors. Based on thelaw and its own internal regulations, directors make and keep theminutes of board meetings and other information related to important work duties as well as the decisions made, which are collectively recorded and managed appropriately. We have also established document management regulations for directors’ decisions
and reports, based on which we store and manage this information.
Information is managed carefully based on our information
management and information system management regulations.

Risk Management System
We have installed a function in the compliance division that supervises risk management of the entire Group and placed a director in
charge of it. In order to establish fundamental policy and promotion
systems for risk management, we have determined risk management regulations, and constructed and put into operation risk
management systems. The compliance division evaluates theeffectiveness of the establishment and operations of risk management. In the case a problem is identified, the division provides
recommendations for improvement to the respective departments
to enhance effective monitoring.
Also, to make precise response guidelines for the entire Group
when a crisis occurs, we have determined standard crisis management regulations, created a business continuity plan (BCP) and adisaster prevention manual, and are preparing a system that allows
accurate response in times of emergency.

Comments from an External Audit & Supervisory Board Member

Naomasa Mitsukado
Auditor (External Auditor)

SOGO MEDICAL CO., LTD.

One year has passed since I was appointed, as an attorney, to be an
external auditor for Sogo Medical. The company's mission statement
is "To build a better society through good medical practice," and weare striving to implement measures to realize a unique Japanese
healthcare business model in which we contribute to building a
medical system that can efficiently provide high-quality care to
citizens.
Perpetual action by the company is essential for achieving thesegoals, but strengthening and ensuring consistent compliance is anecessary precondition for achieving quick management decisionmaking and improving company value in response to the corporate
environment. Compliance is frequently translated into Japanese
simply as "obeying the law," but its true meaning goes beyond that andincludes respect for social norms and corporate ethics. To ensure thissort of management, Sogo Medical has an audit & supervisory board,
comprised of a total of 4 auditors: 2 standing auditors and 2 part-time
auditors. Each auditor attends board of directors' meetings, expresses
honest opinions, and freely asks questions from his or her own
specialized field or perspective. Directors in charge and other executives always answer with due seriousness and clarity. It is this good“ventilation" of issues that is thought to be a barometer of compliance.

Financial Reports

43

Five-Year Summary of Consolidated Financial Statements
Years Ended March 31

2011

2012

2013

2014

2015
107,945
5,017
5,227
2,774
26,521
69,811
1,824.14
192.2040.00(20.00)
20.8
37.7
11.0
17.6
1.8
15,3406,051(5,296)(1,637)
4,968
2,951
1,190

Net sales(¥ million)

72,78980,22286,658103,318

Operating income(¥ million)

4,148

4,848

4,324

5,014

Ordinary income(¥ million)

4,212

4,881

4,343

5,068

Net income(¥ million)

2,167

2,504

2,532

2,856

Total net assets(¥ million)

17,421

19,511

21,63623,934

Total assets(¥ million)

43,05753,16057,13866,982

Net assets per share(yen)

1,206.58

1,351.39

1,496.64

1,655.73

Net income per share(yen)

149.67173.46175.41

197.82

Cash dividends per share

(yen)

30.00

35.00

40.00

40.00

(Includes interim dividend)(yen)(15.00)(17.50)(20.00)(20.00)

Dividend payout ratio

(%)

20.0

20.2

22.8

20.2

Capital adequacy ratio

(%)

40.5

36.7

37.8

35.7

Net income to shareholders’ equity ratio

(%)

13.1

13.6

12.3

12.6

Price-earnings ratio(times)

7.3

8.6

9.5

10.5

Price-to-book-ratio(times)

0.9

1.1

1.1

1.2

(thousands of shares)

15,34015,34015,34015,340Cash flows from operating activities(¥ million)

4,179

4,484

7,269

7,461

Cash flows from investing activities(¥ million)(4,111)(4,086)(3,380)(5,335)

Cash flows from financing activities(¥ million)(1,275)(170)(2,777)(1,370)Cash and cash equivalents at end of period(¥ million)

3,756

3,984

5,095

5,851

Number of regular employees(people)

2,097

2,195

2,508

2,650

Number of part-time employees(people)

602

623

735

1,064

Number of shares outstanding

Note: The number of regular and part-time employees indicates the average number of people employed during the year (excluding members of the Sogo
Medical Group dispatched outside the Group and including personnel dispatched from outside the Group to the Sogo Medical Group). Part-time
employees indicates people working part-time, contract employees, and dispatched personnel.

Other Financial Data (Consolidated)

Years Ended March 31

2011

2012

2013

2014

2015
4.6
4.8
2.6
1.5
7.6
121.5
83.7
23.7
0.4

Operating income to net sales ratio

(%)

5.7

6.0

5.0

4.9

Ordinary income to net sales ratio

(%)

5.8

6.1

5.0

4.9

Net income to net sales ratio

(%)

3.0

3.1

2.9

2.8

(times)

1.7

1.5

1.5

1.5

Return on assets

(%)

10.6

10.2

7.9

8.2

Current ratio

(%)

129.6

131.7

128.8

122.0

Fixed assets to capitalization

(%)

77.1

78.1

80.0

81.7

Interest-bearing debt ratio

(%)

19.4

27.4

25.1

23.2

(times)

0.3

0.5

0.4

0.4

Total assets turnover

Net debt-to-equity ratio

Notes: 1. Interest-bearing debt includes lease obligations and installment purchase accounts payable that are included in the consolidated balance sheet.
2. Method of calculating the net debt-to-equity ratio: (Interest-bearing debt – cash and deposits - certificates of deposit)/shareholders’ equity.
(On April 1, 2015, we carried out a 2-for-1 split of common stock, and calculations have been carried out, assuming this stock split, for net assets per share,
dividends per share, interim dividends per share, and total number of issued shares in and prior to the fiscal year ended in March 2015.)
Annual Report 2015

44 Financial Reports

Management’s Discussion and Analysis
1. Operation Results
Overview of Performance During the YearNet sales increased 4.5%, to ¥107,945 million, from theprevious year. This was due to the effects of increased
revenue from opening new pharmacies. In terms of income,
operating income increased by 0.1% to ¥5,017 million, andordinary income by 3.1% to ¥5,227 million. Net income fell
by 2.8% to ¥2,774 million due to changes in corporate tax
rates and other tax changes.
In April 2014, Sogo Medical began a new three-year
medium-term management plan "Further Challenge−
Toward a better society in which people can live with asense of security." This plan establishes medium-termgoals and specific priority measures. It expands and further
evolves previous efforts, and at the same time, we aretaking up issues confronting society by developing newservices that are needed in the world.
In this year, we provided support for doctors starting apractice in 308 cases (including inherited practices andhealthcare malls), and expanded into businesses such aslease agreements and opening new pharmacies. The
number of doctors wishing to start or transfer their practice
who are registered with our DtoD system reached 56,505 at
the end of the year (an increase of 8,075 from the end of theprevious year). This year, we opened 48 pharmacies(including 9 due to M&A), and as a result, the number ofpharmacies at the end of the year increased by 45 to a totalof 538. There were 22 new pharmacies opened in Higashinihon, 16 in Nishinihon, and 10 in Kyushu.

By Business
Medical Practice Support
The Medical Practice Support segment comprises theprovision of such services as medical management
consulting for medical institutions and doctors, the DtoD
system, TV rental for patients in hospitals, leasing andinstallment sales of medical equipment, and the planning,
designing, and construction of medical facilities.
Net sales from medical practice support for the year were¥25,811 million, a reduction of 13.3% from the previous
year. This was due to a drop of 20.3% in leasing and installment net sales to ¥15,243 million, even though results fromconsulting and rental were flat. Operating income increased
by 4.8% to ¥1,005 million. The following describes thesituation in each division.

(1) Consulting
Net sales from the consulting division posted a 1.3%
increase year on year, to ¥1,693 million. Of this amount,medical institution management consulting sales rose
1.7%, to ¥1,061 million. Sales related to support for
doctors who wish to transfer or start up practice rose
0.7%, to ¥632 million. In addition to supporting 5,535
transfer projects, we also supported 308 practicestart-up support projects, which extended into leasing
contracts and the opening of new pharmacies.

(2) Rental
Segment Financial Results by Business and Region
From the fiscal year ended March 2013, Sogo Medical
reformed its organizational and management structure,
adopting a region-based structure, in order to draw up
strategies and conduct business through prompt decision
making at a regional level. Accompanying this reform, theprevious reportable segments, “Medical Practice Support,”“Pharmacies,” and “Others,” were abandoned in favor of
the region-based reportable segments “Higashinihon,”“Nishinihon,” and “Kyushu.”In this report, for the convenience of readers and to allow
for comparison between years, there is analysis based on
the previous segments in the “By Business” section andbased on the new segments in the “By Region” section.

SOGO MEDICAL CO., LTD.

Net sales in the rental division were ¥5,922 million, a
0.1% increase over the previous year. Within theseresults, net sales of products increased by 4.7% to¥1,728 million, and rental sales decreased by 1.6% to¥4,193 million.

Financial Reports(3) Leasing and Installment

2013

Years Ended March 31

Net sales in the leasing/installment division fell 20.3%
year on year, to ¥15,243 million. This is due to a 33.6%
decrease, to ¥5,159 million, in medical equipment sales.
Despite accounts receivables-installment sales rising
7.1%, to ¥1,806 million, lease receivables and investment
assets fell 15.5%, to ¥1,701 million, and operating assets
fell 5.2%, to ¥3,508 million. Although the number ofleasing contracts recovered somewhat from the downturn after the increase in consumption tax, there was adecrease of 14.9% year on year to ¥9,928 million.

Medical Practice Support

22,062

29,779Consulting

1,334

1,672

Rental

5,795

5,914

Leasing and Installment Sales 12,979

19,113

Others

1,952

3,079

Pharmacies

63,42072,171OthersOperating income (¥ million)(4) Others (Including the Design andConstruction of Medical Facilities)

Pharmacies

Net sales in the others division fell 4.1% year on year, to¥2,952 million.

Sales by BusinessPharmacies

1,473

63,42029,77925,81122,062
2013/3

14/3

92

(115)
(582)

Consulting Sales

314

4,752

4,805

959
(115)
(582)

1,005

14/3

1,693

2013/3

14/3

14/3

15/3

(123)
(670)
15/3

2013/3

Rental Sales

Leasing and Installment Sales(¥ million)

RentalSales of rental
contracts

5,535

Installment

308

15/3

(¥ million)
Sales of leasing
contracts

Leasing

Sales ofmedicalequipment

7,767
1,373

1,650

1,728

4,422

4,263

4,193

215

2013/3

1,672
1,334

(projects)

Practice start-up
support4,279(¥ million)

OthersPharmacies

333
(511)

15/3

5,066

4,752

4,409

Practice Transfer/Start-up Support
MedicalPractice
Support

4,409
(511)

92
80,660959

Elimination/Corporate

1,175
72,171

333

107,945
25,811
1,693
5,922
15,243
2,952
80,660
1,473
5,017
1,005
4,805
(123)
(670)

(¥ million)
MedicalPractice
Support

1,366

5,014

Elimination/Corporate

Operating Income by Business
Others1,366

Others(¥ million)
MedicalPractice
Support

1,175
4,324

Medical Practice Support

2015

2014

86,658 103,318

Net sales (¥ million)45

2013/3

14/3

15/3

2,168
445
907

568
954

5,159
514
945

9,458

9,824

8,622

2013/3

14/3

15/3

Annual Report 2015

46 Financial Reports

Management’s Discussion and Analysis

By Region

Pharmacies
The pharmacy division comprises dispensing pharmacies
that target patients who have received diagnoses frommedical institutions.
We opened 48 new pharmacies (including 9 pharmacies
from M&A activities), and as a result the number ofpharmacies at year-end was 538, up 45 from last year,
contributing ¥2,871 million toward net sales. Net sales fromexisting pharmacies rose 0.8%, to ¥68,130 million. Sales
from the 78 pharmacies opened in the previous fiscal year
rose 158.5%, to ¥8,168 million. As a result, net sales fromthe pharmacy division rose 11.8%, to ¥80,660 million. Also,
operating income rose 1.1%, to ¥4,805 million.

Higashinihon
Although sales declined in the leasing and installment
division and rental division, in the pharmacies division, net
sales increased by 7.9% to ¥39,614 million year on year.
This was due to the contribution of sales from pharmacy
subsidiaries whose stock was acquired in the previous year,
as well as factors such as increased revenue due toopening of new pharmacies.
Operating income fell to ¥842 million, a 34.7% drop, due
to an increase in sales management costs.

Nishinihon
Number of Pharmacies / Pharmacy Sales
Number ofpharmacies

Net sales(¥ million)

72,171
63,420493

80,660538

417

Although sales from leasing and installment declined, there
was a 3.0% increase in net sales from pharmacies, to¥28,205 million. This was due to the contribution of sales
from pharmacy subsidiaries whose stock was acquired in
the previous year, as well as factors such as increased
revenue due to opening of new pharmacies.
Operating income showed a 14.1% increase over theprevious year, to ¥1,510 million, due to increased profits
driven by higher sales from pharmacies.

Kyushu2013/3SOGO MEDICAL CO., LTD.

14/3

15/3

Net sales rose by 1.5% from the previous year, to ¥37,793
million, due to factors such as increased revenue due toopening new locations in the pharmacies division, andincreased sales in the rental division.
Operating income was ¥2,643 million, an increase of
1.2% year on year.

Financial Reports

2013

Years Ended March 31

2014

2015

107,945
Higashinihon
31,747 36,700
39,614
Medical Practice Support 8,145 10,177
8,617
Pharmacies
23,601 26,522
30,997
Nishinihon
20,067 27,390
28,205
Medical Practice Support 6,341 9,863
8,420
Pharmacies
13,725 17,526
19,784
Kyushu33,249 37,238
37,793
Medical Practice Support
9,150
7,184
8,040
Pharmacies
26,065 28,087
29,752Others
1,989
1,595
2,331
(
)
Operating income ¥ million
5,014
4,324
5,017
Higashinihon
1,289
1,282
842
Nishinihon
1,324
989
1,510
Kyushu
2,611
2,256
2,643
Others346
247
620
Adjustments
(558)
(452)
(599)
Net sales (¥ million)

86,658 103,318

Net Sales by Region(¥ million)
Higashinihon Nishinihon

KyushuOthers

2,331

1,989
1,595

37,23837,79327,39028,20536,70039,61433,24920,06731,747
2013/314/3

47

Forecast for the Fiscal Year Ending March 31, 2016
The year ending in March 2016 will be the second year of
our medium-term management plan "Further Challenge—
Toward a better society in which people can live with asense of security."
By working on our three priority initiatives—undertaking
new business, improving existing business, and enhancing
corporate value—we hope to further promote the DtoD
system and valuable pharmacies, and improve results byincreasing both revenue and sales. In order to achieve
results commensurate with market scale, which has been
an issue since the previous medium-term management
plan, we are continuing to make a broad range of efforts.
These include strengthening our branch system, carryingout planned personnel rotation, developing consultants,
developing valuable human resources using the PPI
system for in-house certification, and accumulating
off-balance-sheet assets to build a foundation for the
future.
As for specific initiatives Sogo Medical will take, we offer
medical management support and coordination to major
regional medical institutions, design the promotion ofprojects such as healthcare malls, and actively make efforts
in continuing our practice start-up support and newpharmacy openings. We are expecting to take on 480
practice start-up support projects (a 55.8% year-on-yearrise), and to open 50 new pharmacies (a 4.2% increase).
As a result of these initiatives, we forecast net sales torise 11.2%, to ¥120,000 million. We anticipate operating
income to rise 10.7%, to ¥5,566 million, ordinary income torise 5.2%, to ¥5,500 million, and net income for the year torise 17.2%, to ¥3,252 million.

15/3

Operating Income by Region(¥ million)
Higashinihon Nishinihon

KyushuOthersAdjustments

346

620

2,611

2,643

247
2,256

2013/3

989

1,324

1,282

1,289

(452)

(558)
14/3

1,510
842
(599)
15/3

Annual Report 2015

48 Financial Reports

Management’s Discussion and Analysis
2. Financial Position
AssetsTotal assets at the end of the year increased by ¥2,828
million over the previous year, to ¥69,811 million. Current
assets declined by ¥463 million, to ¥36,584 million. Factors
underlying this were an ¥884 million drop in cash anddeposits, an ¥840 million drop in notes and accounts
receivable-trade, and a ¥1,068 million increase ininventories. Noncurrent assets rose by ¥3,291 million to¥33,226 million. This was due to increases of ¥1,345 million
in buildings and structures, ¥914 million in land, and ¥557
million in investment securities.

Liabilities
Liabilities for the year were ¥43,290 million, a ¥241 million
increase over the previous year. Current liabilities fell by¥249 million to ¥30,109 million. This was the result of a
¥1,531 million increase in notes and accounts
payable-trade, and a ¥747 million increase in the current
portion of long-term loans payable. Noncurrent liabilities
rose by ¥490 million year on year to ¥13,180 million. Thiswas due to a ¥1,644 million increase in long-term loans
payable, and a ¥1,395 million decrease in long-term
accounts payable (installment purchase). In addition,interest-bearing debt (including lease obligations andaccounts payable-installment purchases) increased by¥1,020 million to ¥16,572 million, and the net debt-to-equity
ratio—found by subtracting cash and deposits frominterest-bearing debt and dividing the result by
shareholders' equity—rose by 0.03 points, to 0.44.

Net Assets
As of March 31, 2015, net assets were ¥26,521 million, a
year-on-year increase of ¥2,587 million. Net income
increased net assets by ¥2,774 million and dividends
payments decreased net assets by ¥577 million. As a result,the capital adequacy ratio was 37.7%, an increase of 2.0
percentage points compared to 35.7% on March 31, 2014.

Cash Flows
As of March 31, 2015, cash and cash equivalents totaled¥4,968 million, a year-on-year decrease of ¥882 million(15.1%). The primary factors are described below.

Cash Flows from Operating Activities
Cash provided by operating activities increased by ¥6,051
million. The major cash increases were ¥5,175 million fromincome before income taxes, ¥3,746 million from adjustment for depreciation and amortization, and ¥1,050 million
from a decrease in notes and accounts receivable-trade.
The major cash decreases were ¥1,735 million from adecrease in notes and accounts payable-trade and ¥2,108
million from income taxes paid.

Cash Flows from Investing Activities
Cash decreased by ¥5,296 million as a result of investing
activities. This was due to acquisition of own-used assets(¥3,767 million), acquisition of subsidiary stock (¥579
million), acquisition of investment securities (¥270 million),and expenditures for assignment of business from others(¥263 million).

Cash Flows from Financing Activities
Cash decreased by ¥1,637 million as a result of financing
activities. This was due to the fact that, despite an increasein cash due to long-term loans payable (¥4,749 million),
there was a decrease in cash from repayment of long-termloans payable (¥3,211 million), repayment of installment
payables (¥2,094 million), repayment of lease obligations(¥512 million) and payment of dividends (¥577 million).

Trends in Cash Flows
Operating cash flow
Free cash flow

Investment cash flow(¥ million)

7,461

7,269

6,051
3,888
2,126
755

(3,380)2013/3SOGO MEDICAL CO., LTD.

(5,335)(5,296)

14/3

15/3

Note: Free cash flow = cash flows from operating activities+ cash flows from investingFinancial Reports

49

3. Financial Strategies
Issues on the Financial Front

Shareholder Returns

Under our medium-term management plan, with our DtoD
system as our starting point, we are making efforts to
expand business. We accelerated the openings of newpharmacies, and we also actively took challenges in new
fields like the long-term care business and management
contracting. We plan on continuing these policies.
Therefore, we anticipate that suitable funds will be neededto achieve these goals in the years to come.
Capital for the 48 new pharmacies (including 9
pharmacies from M&A transactions) that we opened in thefiscal year ended March, 2015 was provided by our retained
earnings as well as financial institution loans and leasing.
To make “good medical practice” a reality, Sogo Medical
must not only target the stable management of medical
institutions; we must also achieve stable management of
our own operations. Holding to the basic principle ofexpanding shareholders’ equity through the accumulationof income, while considering an appropriate level of debt
leveraging, we seek to maintain a net debt-to-equity ratio of
0.5.
While making steady progress in line with our growthstrategies, we must at the same time shore up our financialbase. We recognize that in the future, we must step up ourefforts to create a balanced capital structure.

Our basic policy on shareholder returns is to maintain apayout ratio of approximately 20%. Owing to our increase in
net income during the year under review, our dividend
remained the same as last year, ¥80 per share. We
recognize that there are calls to raise our payout ratio
further, but at present we consider it important to retain
earnings to avoid degrading our financial base over the longterm, and we intend to apply the cash on hand toward
investment in growth in order to expand the scale of ourbusiness operations. Through this investment in growth, we
expect our stock price to rise, and we aim to pay backshareholders through increases in the value of their shares.
Also, on April 1, 2015, we carried out a 2-for-1 split ofcommon stock. This was done in order to lower the
price-per-unit investment in our stock. This will provide anenvironment in which all of our investors can makeinvestments more easily, while also improving liquidity of
our shares and expanding the pool of investors.
We expect the number of Sogo Medical shareholders toincrease in the future as our trading volume grows. In order
to attract the attention of numerous investors, we arehoping to expand our market capitalization to ¥100 billion in
the medium to long term. The first step to realizing this goal
is to work toward the achievement of our new medium-term
management plan.

Interest-Bearing Debt / Net Debt-to-Equity Ratio

Trends in Dividends

Interest-bearing debt (¥ million)

14,330Net debt-to-equity ratio (times)

15,552

Dividends (¥)

16,572

80

0.4

0.4

80

14/3

80

0.4

22.8

2013/3

Dividend payout ratio (%)

15/3

2013/3

20.2
14/3

20.8
15/3

Annual Report 2015

50 Financial Reports

Risk Information
Business Risks
Business risks related to the operational performance
reported in this annual report that have a possibility ofmaterially affecting investor decisions are listed below.
Points regarding future events are based on
judgments made as of June 19, 2015.

1. Pharmacies
A. Pharmacies and separation of dispensing andprescribing functions
In order to increase the quality of healthcare, the Japanese
government is pursuing policies encouraging theseparation of prescribing and dispensing functions so that
medical institutions focus on medical activities such as
medical treatment and pharmacies provide drug history
management, patient compliance instructions, and otherservices.
However, if the degree of separation reduces in the future,
this could have an effect on new pharmacy openings andthe overall performance of pharmacies.

B. Pharmacy regulations
To perform dispensing duties within our Group, it isnecessary to receive permission to open a new pharmacy
and be designated as a health insurance pharmacy by theprefectural or city governor, as well as receive other kinds ofdesignation as necessary. In the unlikely event that a
pharmacy was forced to suspend business or was closed
down as the result of a legal infraction or some otherreason, this could have an effect on the performance ofpharmacies.

C. Drug price and dispensing fee revisions
Dispensing sales comprise revenue from drugs anddispensing fees. Revenue from drugs is based on official
prices called the Drug Price Standards decided under the
Health Insurance Act, while revenue from dispensing fees isalso based on fees decided under the same act. Changes
in drug prices and dispensing fees as a result of official
revisions could have an effect on the performance ofpharmacies.

SOGO MEDICAL CO., LTD.

D. Dispensing errors
Our Group treats the prevention of dispensing errors as animportant issue, therefore we increase the skill andknowledge of pharmacists through training and implement
multiple checks and a dispensing error prevention system.
Our Group has also taken out liability insurance forpharmacists in all its pharmacies as a precautionary
measure. However, in the case of a major dispensing error
leading to loss of public trust, financial losses from lawsuits,
or other losses, there could be an effect on theperformance of pharmacies.

E. Consumption tax
Under the Consumption Tax Act, dispensing sales are
not subject to consumption tax, but pharmaceuticals
purchased by our Group are taxable. Consequently,
consumption tax paid by our Group on purchases isrecorded as consumption tax on the statement of income
as part of dispensing cost of sales. When consumption tax
was introduced and later increased, the increase was taken
into account in drug price revisions and the company was
also able to have it taken into account when negotiatingwith our suppliers. However, if future rises in consumption
tax are not reflected in drug prices or our suppliers’ prices,
there could be an effect on the performance of pharmacies.

F. Recruitment of pharmacists and the pharmacy
opening plan
Under the Pharmaceutical Affairs Act, a fixed number ofpharmacists are required at pharmacies, and under the
Pharmacists Act, dispensing duties must be performed bypharmacists. Our Group presently has enough pharmacists
at all its pharmacies to meet the criteria of thePharmaceutical Affairs Act. Our company also has apharmacist recruitment plan based on its new pharmacy
opening plan and by implementing recruitment activities
and supplementing the main period of hiring in recruitment
season with initiatives throughout the year, our Group
expects to recruit enough pharmacists such that there will
be no obstacles to its pharmacy opening plan. However, if
it proves impossible to recruit enough pharmacists or if ourGroup’s pharmacy opening plan is delayed and recruitment
nonetheless goes ahead, so that for a time there are more
pharmacists than are needed, there could be an effect on
the performance of pharmacies.

Financial Reports

2. Rental
A. Rental transactions
Sogo Medical operates a system whereby patients pay touse TVs and other items that are placed in medical
institutions based on rental contracts. Net sales from rental
transactions (revenue from rental fees) vary based on thenumber of TVs and the rental fee. Presently, there is a
downward trend in the number of beds, which is having aknock-on effect on the number of TVs in medical
institutions. Revenue from rental fees is affected by the
number of beds, their occupancy rates and the number ofhours patients spend watching TV.

51

B. Product sales
To increase the efficiency of funds collection, Sogo Medicalsells part of the property from the contracts it acquires
during the fiscal year and records it on the statement ofincome as product sales. These sales transactions refer tosales to another leasing company of the equipment fromthe leasing contracts or installment contracts signed withcustomers. We collect receivables from customers and paythat money to the leasing company. We profit from thedifference between the purchasing price from the supplierand the selling price to the leasing company. If sales
increase, unearned lease contract and installment
receivables decrease and revenue from lease fees andinstallment sales also decrease.

B. Responding to technological advances
The shift to digital-only terrestrial broadcasting in July 2011is now complete, but if it became necessary to respond toa similar advance in technology, while there would be thepossibility of exploiting new business opportunities such as
through product development, the obsolescence ofexisting equipment and subsequent investment could havean effect on the performance of the rental division.

C. Consumption tax
If consumption tax is increased but not reflected in patients’
TV rental fees or absorbed through the cutting of costs, it
could have an effect on the performance of the rental
division.

3. Leasing / installment

4. DtoD promotion
The DtoD system supports practice succession, healthcare
cooperation, and doctors transferring practice. The system
helps to solve problems by comprehensively providing
assistance to doctors wishing to start or change practice,doctors in practice seeking successors, and medical
institutions looking for excellent doctors and healthcare
partners. Revenues from the DtoD system come not only
directly in such forms as introduction fees as part of doctortransfer support and consulting fees for doctors starting
new practices, but also indirectly through related businessexpansion that increases productivity and profitability.
As the number of doctors in public practice, medical
practice owners, and medical institutions registered in thesystem increases, DtoD results will steadily improve. As afundamental strategy, Sogo Medical plans to further
promote and strengthen the DtoD system and expand its
business. However, if DtoD business expansion does not
go according to plan, it could have an effect on our
performance.

A. Changes in interest rates
Ultralow interest rate policies in the leasing/installment
business environment have led to increasingly fierce
competition with other companies over lease fees.
Leasing/installment contracts and profit margins areaffected by changes in interest rates.

5. Personal information protection
The Group handles personal information as defined in theProtection of Personal Information Act in all of its various
businesses. In 2006, our Group acquired PrivacyMark
certification and we are working to prevent personal
information leaks. However, in the event that personal
information was leaked, loss of public trust, financial losses
from lawsuits, or other losses could affect our performance.

Annual Report 2015

52 Financial Reports

Consolidated Financial Statements
Consolidated Balance Sheet
2013

2014

2015

(Apr. 1, 2012–
Mar. 31, 2013)(Apr. 1, 2013–
Mar. 31, 2014)(Apr. 1, 2014–
Mar. 31, 2015)

5,115

5,873

4,988

Notes and accounts receivable-trade

14,32718,326

17,485

Accounts receivable-installment sales

1,377

1,687

1,806

Lease receivables and investment assets

2,120

2,014

1,701

Inventories

4,973

6,475

7,543

687

762

628

1,595

1,933

2,450

(13)

(26)

(19)

30,18437,04736,584

Property for lease

7,985

6,871

5,929

Buildings and structures, net

6,203

7,418

8,763

Land

3,018

3,078

3,992

Other, net

1,591

2,065

3,116

Total property, plant and equipment

18,79919,43321,801

Goodwill

3,279

5,294

5,252

Other

711

953

1,031

3,990

6,248

6,283

Investment securities

1,290

1,008

1,566

Deferred tax assets

587

568

468

2,294

2,681

3,107

(8)

(5)

(0)

4,163

4,252

5,141

26,95329,93433,226

57,13866,982

69,811

AssetsCurrent assets
Cash and deposits

Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment

Intangible assets

Total intangible assets
Investments and other assets

Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

SOGO MEDICAL CO., LTD.

Financial Reports

53(¥ million)

2013

2014

2015

(Apr. 1, 2012–
Mar. 31, 2013)(Apr. 1, 2013–
Mar. 31, 2014)(Apr. 1, 2014–
Mar. 31, 2015)

15,065

20,372

18,841

Short-term loans payable

330

350

360

Current portion of long-term loans payable

1,679

2,155

2,903

Lease obligations

519

503

363

Accrued expenses

1,541

1,725

2,072

Income taxes payable

1,077

1,333

1,452

129

175

190

Other

3,093

3,743

3,925

Total current liabilities

23,43730,35830,109

3,570

5,191

6,835

824

944

1,028

Long-term accounts payable-installment purchase

5,604

4,450

3,055

Other

2,064

2,103

2,260

Total noncurrent liabilities

12,063

12,68913,18035,50143,04843,290Capital stock

3,513

3,513

3,513

Capital surplus

4,136

4,136

4,136

Retained earnings

14,77917,05819,255

Treasury stock(1,043)(1,043)(1,044)

Total shareholders’ equity

21,386

23,66525,861

Valuation difference on available-for-sale securities

222

240

475

Total accumulated other comprehensive income

222

240

475

Subscription rights to shares

1

−

−

Minority interests

26

28

184

21,63623,934

26,521

57,13866,982

69,811

Liabilities
Current liabilities
Notes and accounts payable-trade

Deferred profit on installment sales

Noncurrent liabilities
Long-term loans payable
Lease obligations

Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income

Total net assets
Total liabilities and net assets

Annual Report 2015

54 Financial Reports

Consolidated Financial Statements
Consolidated Statements of Income(¥ million)

2013

2014

2015

(Apr. 1, 2012–
Mar. 31, 2013)(Apr. 1, 2013–
Mar. 31, 2014)

Net sales

86,658103,318

107,945

Cost of sales

73,503

88,88993,139Gross profit

13,155

14,42814,805

Selling, general and administrative expenses

8,831

9,414

9,787

Operating income

4,324

5,014

5,017

Non-operating income

151

183

368

Dividends income

15

16

20

Dividends income of life insurance

12

−

−

Rent income

30

35

38

Insurance cancellation refunds

−

−

106

Other

93

130

202

Non-operating expenses

132

128

159

Interest expenses

67

57

75

Loss on valuation of investments securities

−

−

17

Other

65

71

65

4,343

5,068

5,227

201

48

−

Gain on sales of investment securities

178

41

−

Contributed income

23

7

−

Extraordinary loss

85

70

51

Impairment loss

4

34

51

Loss on sales of investment securities

−

26

−

Loss on valuation of investment securities

6

−

−

Litigation expenses

39

−

−

Office transfer expenses

35

9

−

Income before income taxes

4,460

5,046

5,175

Income taxes-current

1,747

2,082

2,236

Income taxes-deferred

175

105

163

Total income taxes

1,922

2,187

2,400

Income before minority interests

2,537

2,858

2,774

5

2

0

2,532

2,856

2,774

Ordinary income
Extraordinary income

Minority interests in income
Net income

SOGO MEDICAL CO., LTD.

(Apr. 1, 2014–
Mar. 31, 2015)

Financial Reports

Consolidated Statements of Comprehensive Income
2013(¥ million)

2014

2015

(Apr. 1, 2012–
Mar. 31, 2013)(Apr. 1, 2013–
Mar. 31, 2014)

2,537

2,858

2,774

Valuation difference on available-for-sale securities

106

18

234

Total other comprehensive income

106

18

234

2,643

2,876

3,009

Comprehensive income attributable to owners of the parent

2,638

2,874

3,009

Comprehensive income attributable to minority interests

5

2

0

Income before minority interests

55(Apr. 1, 2014–
Mar. 31, 2015)

Other comprehensive income

Comprehensive income
Comprehensive income attributable toConsolidated Statements of Change in Net Assets(¥ million)
Accumulated othercomprehensive income

Shareholders’ equity
Total
shareholders’equityValuation difference
on available-forsale securities

Subscription
rights tosharesMinority
interests

Net
assets(1,043)

19,395116--

19,511

(541)

-

(541)

-

-

-

(541)

-

2,532

-

2,532

-

-

-

2,532

-

-

-

(0)

(0)

-

-

-

(0)

-

-

-

-

-

106

1

26

133

Balance at the end of FY2013

3,513

4,136

14,779(1,043)

21,386222

1

26

21,636

Dividends from surplus

-

-

(577)

-

(577)

-

-

-

(577)

-

-

2,856

-

2,856

-

-

-

2,856

-

-

-

(0)

(0)

-

-

-

(0)

-

-

-

-

-

18

(1)

2

18

Balance at the end of FY2014

3,513

4,136

17,058(1,043)

23,665240-

28

23,934

Dividends from surplus

-

-

(577)

-

(577)

-

-

-

(577)

-

-

2,774

-

2,774

-

-

-

2,774

-

-

-

(1)

(1)

-

-

-

(1)

-

-

-

-

-

234

-

156

390

3,513

4,136

19,255(1,044)25,861

475

-

184

26,521

Capitalstock

CapitalsurplusRetainedearnings

Balance at the end of FY2012

3,513

4,136

12,788Dividends from surplus

-

-

-

Net income
Purchase of treasury stock
Net changes of items otherthan shareholders’ equity

Net income
Purchase of treasury stock
Net changes of items otherthan shareholders’ equity

Net income
Purchase of treasury stock
Net changes of items otherthan shareholders’ equity
Balance at the end of FY2015

Treasurystock

Annual Report 2015

56 Financial Reports

Consolidated Financial Statements
Consolidated Statements of Cash Flows(¥ million)

2013(Apr. 1, 2012–
Mar. 31, 2013)

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Interest and dividends income
Capital cost and interest expenses
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in accounts receivable-installment
Net decrease (increase) in lease receivables and investment assets
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in other assets/liabilities
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Purchase of own-used assets
Proceeds from sales of own-used assets
Purchase of property for lease
Purchase of investment securities
Proceeds from sales of investment securities
Expenditures for business transfer
Purchase of investments in subsidiaries resulting in change in scope of consolidation
Payments of loans receivable
Other, net
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Repayments of lease obligations
Repayments of installment payables
Cash dividends paid
Purchase of treasury stock
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
Cash and cash equivalents at end of period

SOGO MEDICAL CO., LTD.

2014

2015

(Apr. 1, 2013–
Mar. 31, 2014)(Apr. 1, 2014–
Mar. 31, 2015)

4,460
3,267
4
(17)
148
622
(1)
54
(1,003)
1,529
(118)
261
9,207
17
(148)
(1,807)
7,269

5,046
3,522
34
(18)
126
(3,468)(264)
106(1,222)
4,932
181
439
9,416
18
(130)
(1,842)
7,461

5,175
3,746
51
(22)
131
1,050
(104)
313
(953)
(1,735)
(223)
839
8,269
22
(131)
(2,108)6,051(3,032)
349
(74)
−
341
−
(455)
(191)
(317)
(3,380)(3,308)
88
(69)
(97)
444
−
(2,277)−(115)(5,335)(3,767)
−
(96)
(270)
−
(263)
(579)
−
(318)
(5,296)(12)
1,500(1,376)(593)(1,755)(541)(0)
1(2,777)
1,111
3,984
5,095

6
3,650
(1,910)(573)(1,963)
(577)
(0)
(1)
(1,370)
755
5,095
5,851

9
4,749
(3,211)(512)(2,094)(577)(1)−(1,637)
(882)
5,851
4,968

Financial Reports

Segment Information(¥ million)

2013

Apr. 1, 2012–Mar. 31, 2013

Sales
Unaffiliated sales
Intersegment sales
Total
Segment profit
Segment assets

57

Reportable Segments

Reconciliations* 2

Consolidated
amounts* 3

Others*1

Total

85,063

1,595

86,658-86,658

3

41

810

851

(851)

-

33,253
2,256
15,123

85,104
4,529
45,764

2,406
247
3,278

87,5104,776
49,042

(851)
(452)
8,095

86,658
4,324
57,138Higashinihon

Nishinihon

KyushuTotal

31,747

20,06733,24925

1131,772
1,282
19,09320,079989
11,547

Notes:*1. Others includes items such as TV rental for hotels, which are not classified as reportable segments.
*2. Reconciliations were as follows:(1) Reconciliation for reportable segment loss (¥452 million) included elimination of intersegment sales (¥6 million) and overall corporate expenses (–¥459 million).
The overall corporate expenses were mainly classified as general and administrative expenses and were not allocated to reportable segments.
(2) Reconciliation for reportable segment assets (¥8,095 million) included elimination investment against equity (–¥5,114 million) and overall corporate assets(¥13,985 million). The overall corporate assets were mainly classified as parent company deposits and were not allocated to reportable segments.
*3. Reportable segment profits were reconsolidated with the operating income of the consolidated income statement.

2014

Reportable Segments

101,329

1,989

103,318-

103,318

3

369

2,457

2,826

(2,826)-37,241
2,611
16,524

101,698
5,225
55,112

4,446
346
3,285

106,145
5,572
58,398(2,826)
(558)
8,584

103,318
5,014
66,982

Nishinihon

Kyushu

Total

Sales
Unaffiliated sales

36,70027,39037,23819346

36,7191,289
22,936

27,737
1,324
15,651

Total
Segment profit
Segment assets

Consolidated
amounts* 3

Total

Higashinihon

Intersegment sales

Reconciliations* 2

Others*1

Apr. 1, 2013–Mar. 31, 2014

Notes:*1. Others includes items such as TV rental for hotels, which are not classified as reportable segments.
*2. Reconciliations were as follows:(1) Reconciliation for reportable segment loss (¥558 million) included elimination of intersegment sales (¥5 million) and overall corporate expense (–¥563 million).
The overall corporate expenses were mainly classified as general and administrative expenses and were not allocated to reportable segments.
(2) Reconciliation for reportable segment assets (¥8,584 million) included elimination investment against equity (–¥7,529 million) and overall corporate assets(¥17,040 million). The overall corporate assets were mainly classified as parent company deposits and were not allocated to reportable segments.
*3. Reportable segment profits were reconsolidated with the operating income of the consolidated income statement.

2015

Apr. 1, 2014–Mar. 31, 2015

Sales
Unaffiliated sales
Intersegment sales
Total
Segment profit
Segment assets

Reportable Segments

Reconciliations* 2

Consolidated
amounts* 3

Others*1

Total

105,6132,331

107,945-

107,945

2

796

4,823

5,620

(5,620)-37,796
2,643
15,272

106,410
4,996
56,156

7,155
620
5,698

113,565
5,617
61,855(5,620)
(599)
7,955

107,945
5,017
69,811

Higashinihon

Nishinihon

KyushuTotal

39,61428,20537,79355738

39,670842
25,02928,943
1,510
15,854

Notes:*1. Others includes items such as TV rental for hotels, which are not classified as reportable segments.
*2. Reconciliations were as follows:(1) Reconciliation for reportable segment loss (¥599 million) included elimination of intersegment sales (¥26 million) and overall corporate expenses (–¥572 million).
The overall corporate expenses were mainly classified as general and administrative expenses and were not allocated to reportable segments.
(2) Reconciliation for reportable segment assets (¥7,955 million) included elimination investment against equity (–¥8,464 million) and overall corporate assets(¥17,150 million). The corporate overall assets were mainly classified as parent company deposits and were not allocated to reportable segments.
*3. Reportable segment profits were reconsolidated with the operating income of the consolidated income statement.

Annual Report 2015

58 Corporate Information

Corporate Information (As of June 1, 2015)
Corporate Outline
Company Name
Head Office
FoundedCapitalListedBanking
Relationships

Sogo Medical Co., Ltd.
Fukuoka Tenjin Center Bldg. 16F, 2-14-8 Tenjin, Chuo-ku, Fukuoka
June 12, 1978
¥3,513 million
First Section, Tokyo Stock Exchange. (Code 4775)
The Bank of Fukuoka, Ltd., Mizuho Bank, Ltd., The Kitakyushu Bank, Ltd., Sumitomo Mitsui Banking Corp., The Bank of Tokyo-Mitsubishi
UFJ, Ltd. Mitsubishi UFJ Trust and Banking Corporation, Sumitomo Mitsui Trust Bank, The 77 Bank, Ltd., The Kita-Nippon Bank, Ltd., The
Bank of Yokohama, Ltd., The Gunma Bank, Ltd., The Joyo Bank, Ltd., The Chiba Bank, Ltd., The Shizuoka Bank, Ltd., The Hachijuni Bank,
Ltd., The Bank of Kyoto, Ltd., The Senshu Ikeda Bank, Ltd., The Kiyo Bank, Ltd., The Hiroshima Bank, Ltd., The San-in Godo Bank, Ltd.,The Miyazaki Bank, Ltd., The Oita Bank, Ltd., The Bank of Saga, Ltd., The Eighteenth Bank, Ltd., The Higo Bank, Ltd., The Kagoshima Bank,
Ltd., The Nishi-Nippon City Bank, Ltd., The Chikuho Bank, Ltd., Development Bank of Japan Inc., The Norinchukin Bank, etc.
Group Companies Somtech Co., Ltd. (planning, design and construction of hospitals, clinics and assisted living facilities)
Sogo Medical Pharmacy Chubu Co., Ltd. (pharmacies)
Aoba Pharmacy Co., Ltd. (pharmacies)
Maeda & Co., Ltd. (pharmacies)
Yataya Pharmacy Co., Ltd. (pharmacies)
Taikodo Yakkyoku Honten Co., Ltd. (pharmacies)
Care Medical Co., Ltd. (pharmacies)
Beauty Drug Saito Co., Ltd. (pharmacies)
Nakano Pharmacy Co., Ltd. (pharmacies)
Matsumura Co., Ltd. (pharmacies)
Akatsuki Pharmacy Co., Ltd. (pharmacies)
Pharma Systems Co., Ltd. (pharmacies)
Sogo Media Supply Co., Ltd. (TV rental service for hotels, etc.)
Sogo Medipro Co., Ltd. (medical staff introduction and temporary placement services)
Sogo Real Estate Co., Ltd. (lease and management business for medical facilities)
SME Co., Ltd. (wholesale of pharmaceuticals, etc.)
Sogo Care Network Co., Ltd. (fee-based residential homes for the elderly)
Sun Villa Co., Ltd. (fee-based assisted living facilities for the elderly)
Hokendohjinsha Inc. (medical and health information service)
595 (3 offices, 23 branches, 4 sales offices, 1 satellite office, 547 pharmacies, 17 in-hospital stores)
Bases
3,307 full-time workers, 1,208 part-time workers
Employees

Corporate Timeline
Jun. 1978

Oct. 1987
Nov. 1987
Jun. 1988
Oct. 1989
Nov. 1989
Oct. 1994
Aug. 2000
Apr. 2001

Sep. 2001
Oct. 2001
Jan. 2002
Dec. 2003
Apr. 2005
Aug. 2007
Jun. 2010

SOGO MEDICAL CO., LTD.

Established Sogo Medical Leasing Co., Ltd. with a capitalizationof ¥20 million, for business purposes of leasing medical
equipment and consulting for medical institutions.
Started real estate agency and practice inheritance businesses.
Started the TV rental business for patients.
Established the first Sogo Pharmacy.
Name changed to Sogo Medical Co., Ltd.
Started the “Green Members” (now “Succeed Members”)
member system targeted to medical personnel.
Started the planning, design, and construction of medical facilities.
Listed on Second Section of Tokyo Stock Exchange.
Acquired all outstanding shares of Orix Media Supply Co., Ltd.,a company that carried out TV rentals for hospitals, etc.
Began operation of stores within hospitals.
Listed on First Section of Tokyo Stock Exchange.
Started the DtoD system.
Acquired all outstanding shares of the pharmacies Hello Medical Co.,
Ltd., Hello Network Co., Ltd. and Hase Dispensing Pharmacy Co., Ltd.
Started temporary introduction and placement service of othermedical staff.
Started hospital operational management contracting.
Formed business alliance with Mitsui and Co., Ltd..
Acquired all outstanding shares of Aoba Pharmacy Co., Ltd., a pharmacy.

Jan. 2011
Oct. 2011
Nov. 2011
Jun. 2012
Nov. 2012
Dec. 2012
Apr. 2013
Aug. 2013
Dec. 2013
Mar. 2014
Apr. 2014
Aug. 2014
Sep. 2014
Oct. 2014
Mar. 2015
May 2015

Started wholesale marketing of medical and pharmaceutical products.
Acquired all outstanding shares of Maeda Pharmacy Co., Ltd., a pharmacy.
Started long-term care service businesses, such as residential homes for the elderly.
Acquired all outstanding shares of Sun Villa Co., Ltd., a fee-based
residential home for the elderly.
Acquired all outstanding shares of Yataya Pharmacy Co., Ltd., a pharmacy.
Acquired all outstanding shares of Sumiredo Pharmacy Co., Ltd., a pharmacy.
Absorption-type merger with Sogo Medical Pharmacy Kanto Co., Ltd., a pharmacy.
Acquired all outstanding shares of pharmacies Taikodo Yakkyoku Honten
Co., Ltd. and TM Yakkyoku Co., Ltd.
Acquired all outstanding shares of Care Medical Co., Ltd., a pharmacy.
Acquired all outstanding shares of pharmacies Beauty Drug Saito Co.,
Ltd. and Nakano Pharmacy Co., Ltd.
Absorption-type merger with Sogo Healthcare Service Co., Ltd., acompany operating shops in hospitals.
Acquired all outstanding shares of pharmacies Matsumura Co., Ltd.
and Akatsuki Pharmacy Co., Ltd.
Absorption-type merger with Sumiredo Pharmacy Co., Ltd., a pharmacy.
Absorption-type merger with pharmacies Taikodo Yakkyoku
Honten Co., Ltd. and TM Yakkyoku Co., Ltd.
Acquired 61.6% of stock of Hokendohjinsha Inc., a medical and healthinformation service company.
Acquired all outstanding shares of Pharma Systems Co., Ltd., a pharmacy.

Shareholder Composition

59

Stock Information (As of March 31, 2015)
Shareholder Composition
Total Number of Issued Shares 7,670,078 shares

Major Shareholders (Top 10 Largest Shareholders)Name of Shareholder

Number of Shareholders

5,859 shareholders

Mitsui & Co., Ltd.

Number of Unit Shareholders

5,240 shareholders

The SFP Value Realization Master Fund Limited

Number of Shares Held Shareholding
Ratio(thousands of shares)

1,550

21.5%

489

6.8%

Century Tokyo Leasing Corporation
The Bank of Fukuoka, Ltd.
Hirosada Oyamada
The Kitakyushu Bank, Ltd.
Japan Trustee Services Bank, Ltd. (Trust account)
State Street Bank and Trust Company 505001(Standing proxy: Settlement Sales Department, Mizuho Bank, Ltd.)

361
307
226
202
132

5.0%
4.3%
3.1%
2.8%
1.8%

122

1.7%

Employees Shareholders’ Association of Sogo Medical
Northern Trust Co (AVFC) Sub A/C Non Treaty

122

1.7%

116

1.6%

(Standing proxy: Citibank Japan Ltd.)(Standing proxy: Tokyo Branch, Hong Kong and Shanghai Banking Corporation Limited)

Ratios of controlling shares are calculated excluding Sogo Medical treasury stock (451 thousand shares).

Breakdown of Shares by Type of Shareholder
Treasury Stock
451 thousand shares (5.9%)

Financial Institutions
1,460 thousand shares(19.0%)

Number ofsharesIndividuals
and Others
2,013 thousand shares(26.3%)

Securities Firms
42 thousand shares(0.6%)

7,670

Financial Institutions
31 shareholders (0.5%)

Other Companies
56 shareholders (1.0%)

Securities Firms
20 shareholders(0.3%)

Number of
Shareholders

5,859

thousandsharesForeign Companies, etc.
1,657 thousand shares (21.6%)

Foreign Companies, etc.
95 shareholders (1.6%)

Individuals and Others
5,657 shareholders (96.6%)

Other Companies
2,044 thousand shares (26.6%)

Share Price and Trading Volume
Share Price (yen)
3,500
3,000
2,500
2,000
1,500
1,000
0

Trading Volume (ten thousand shares)
150
100
50
0

4

5

6

7

8 9 10 11 12 1
2012

2

3

4

5

6 7
2013

8

9 10 11 12 1

2

3

4

5

6 7 8
2014

9 10 11 12 1

2 3 4
2015

5

(On April 1, 2015, we carried out a 2-for-1 split of common stock. Figures on share price and trading volume prior to and including theyear ended March 2015 were calculated assuming that the stock split had been performed.)For further inquiries, please contact: Sogo Medical Co., Ltd., Public and Investor Relations Division
TEL: +81-92-713-9181 E-mail: ir@sogo-medical.co.jp http://www.sogo-medical.co.jp/english/

Annual Report 2015

[ Notes ][ Notes ]Fukuoka Tenjin Center Bldg. 16F,
2-14-8 Tenjin, Chuo-ku, Fukuoka
www.sogo-medical.co.jp/english

Printed in Japan