Summary of Consolidated Financial Statements
for the Second Quarter of the Term Ending March 31, 2021(Japan GAAP)
November 5, 2020
Name of Listed Company: TSUMURA & CO.
Exchange: Tokyo Stock Exchange
Code:
4540
URL:
https://www.tsumura.co.jp
Representative:
President, Representative Director and CEO
Name: Terukazu Kato
Contact:
Head of Corporate Communications Dept.
Name: Ritsuko Inukai
Telephone: 81-3-6361-7100
Scheduled date of submission: November 6, 2020
Scheduled date of dividend payment commencement: December 4,2020
Preparation of supplementary materials for the quarterly financial statements: Yes
Holding of the quarterly results briefing: Yes (for institutional investors and securities analysts and news media)(Figures are rounded down to the nearest one million yen.)

1.

Consolidated business results for the Second quarter of the term ending March 31, 2021
(From April 1, 2020 to September 30, 2020)(1) Financial results (year to date)(Figures in percentages denote the year-on-year change.)

Net sales
Six-month period ended
September 30, 2020
Six-month period ended
September 30, 2019

Operating profit

Profit attributable toowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen%

63,994

5.2

11,12413.8

11,114

12.8

8,083

14.9

60,802

4.3

9,776

9.2

9,856

3.0

7,037

(0.6)

(Note) Comprehensive income： Six-month period ended September 30, 2020: 6,604million yen［120.7%］
Six-month period ended September 30, 2019: 2,993million yen［(58.4)%〕

Profit per share
Six-month period ended
September 30, 2020
Six-month period ended
September 30, 2019

Fully diluted profit per share
Yen

Yen

105.66

－

92.03

－

(2) Consolidated financial conditions
Total assets

Net assets

Shareholders’ equity ratio

Million yen

Million yen%

308,415
311,042

223,924
213,048

68.0
66.0

As of September 30, 2020
As of March 31, 2020

(Reference) Shareholders’ equity: As of September 30, 2020: 209,670 million yen

2.

As of March 31, 2020: 205,377million yen

Dividends
Dividend per share
End of Q1

End of Q2

End of Q3

End of FY

Total

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2020

－

32.00

－

32.00

64.00

Year ending March 31, 2021

－

32.00
32.00

64.00

Year ending March 31, 2021
(Projection)(Note)Revisions to dividends projection published most recently: No3.

Projections of consolidated business results for the term ending March 31, 2021
(From April 1, 2020 to March 31, 2021)(Figures in percentage show the rate of increase or decrease from the previous fiscal year for full-year
and from the second quarter of the previous fiscal year for second quarter (aggregate).)Net sales
Million yen

Full-year

132,000

Operating profit% Million yen

7.1

17,000

Profit attributable toowners of parent

Ordinary profit% Million yen(9.9)% Million yen

17,900(8.9)

13,000

Profit per share

%

Yen

(5.6)

169.92(Note)Revisions to dividends projection published most recently: No

The forecasts do not reflect the effects of the COVID-19 pandemic because its ending and how it will affect the Group’s businesses isdifficult to predict accurately at this point. As for the COVID-19 pandemic’s effects, expenses centered on those for activities remain
intact at the end of the first half under review due to causes including restrictions on information activities. Meanwhile, Kampo
preparations for a variety of disorders are increasing in the clinical environment. The Company assumes that the pandemic will have
limited effects on its plans if it advances activities through e-promotions and other strategies. The Company predicts that theuncertainty about the future will continue. The Company will disclose information timely and appropriately when any change occurs.

Notes(1) Important changes of subsidiaries during the term(change of specified subsidiaries that lead to a change in the scope of consolidation): No(Note) TSUMURA SHENGSHI PHARMACEUTICALS CO., LTD. was included in the scope of consolidation in the firstquarter because its importance had increased, although the company does not meet the conditions for transfer of specificsubsidiaries.
(2) Application of special accounting practices in consolidated quarterly financial statements preparation: Yes(Note) For details, see “2. Quarterly Consolidated Financial Statements and Key Notes (4) Notes to the Quarterly Consolidated
Financial Statements (application of specific accounting treatment to the preparation of quarterly financial statements)” on
page 10 of the material attached hereto.
(3) Changes in accounting principles and procedures and the method for indication, etc.
1) Changes associated with the revision of accounting principles, etc.: No
2) Change other than 1):
No3) Accounting estimate change:
No4) Retrospective restatement:No(4) Number of shares issued (common stock)1) Number of shares issued at the end of theterm(including treasury stock) (shares)

FY 3/2021 2Q

76,758,362

FY 3/2020

76,758,362

2) Number of treasury stock at the end of theterm(shares)

FY 3/2021 2Q

250,139

FY 3/2020

250,049

3) Average number of shares during the term
(shares)

FY 3/2021 2Q

76,508,283

FY 3/2020 2Q

76,472,210* This Summary of Quarterly Consolidated Financial Statements is exempt from quarterly review procedures.
* Explanation about the proper use of financial projections and other important notes(Note about forward-looking information)
In these materials, earnings forecasts and other statements about the future are forward-looking statements based on the information
currently available and certain assumptions that the company regards as reasonable. Accordingly, the Company cannot make promises
to achieve such forecasts. Actual financial results may differ materially from these forecasts depending on a number of importantfactors. Please see “1.Qualitative information on quarterly results (3) Description of projections of consolidated business results” onpage 3 for information regarding the forecast of consolidated financial results.

○Contents of accompanying materials
1.Qualitative information on quarterly results ·······························································································

2(1) Description of operating results ······································································································

2(2) Description of financial condition ····································································································

3(3) Description of projections of consolidated business results ······································································

3

2.Quarterly Consolidated Financial Statements and Key Notes···········································································

4(1) Quarterly Consolidated Balance Sheets ·····························································································

4(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income ·····

6

Quarterly Consolidated Statements of Income
For the Second Quarter Consolidated Accumulative Term ······································································

6

Quarterly Consolidated Statements of Comprehensive Income
For the Second Quarter Consolidated Accumulative Term ······································································

7(3) Quarterly Consolidated Statements of Cash Flows ················································································

8(4) Notes to the Quarterly Consolidated Financial Statements ·······································································

10(Notes on premise of a going concern) ······························································································

10(Notes on case of extreme change in shareholder's equity amount) ·····························································

10(Transfer of important subsidiaries during the quarter under review) ·························································

10(Application of specific accounting treatment to the preparation of quarterly financial statements) ·······················

101

1. Qualitative information on quarterly results(1) Description of operating results
During the first half under review, the prescription medicine market continued to confront difficult circumstances under the adverse
effects of the COVID-19 pandemic. In this environment, Kampo formulations for prescriptions marketed by Tsumura & Co., and its
consolidated subsidiaries (the “Group”) showed signs of a recovery in sales, reflecting factors including a slow recovery in the numberof outpatients at general clinics and the resumption of visiting activities despite restrictions imposed by medical institutions.
As a result, net sales for domestic businesses grew 1.7% year on year. Including sales at a Chinese subsidiary newly added to the scopeof consolidation, net sales rose 5.2% year on year, to 63,994 million yen. Looking at profit, operating profit was 11,124 million yen (up13.8% year on year), ordinary profit was 11,114 million yen (up 12.8% year on year), and profit attributable to owners of parent was
8,083 million yen (up 14.9% year on year).
The cost-to-sales ratio rose 0.7 percentage point year on year, supported by an increase in external sales subsidiaries posted for certain
products whose cost ratios were high, even though reduced costs related to crude drugs absorbed the cost increase arising from NHI
drug price revisions. In addition, the cost-to-SGA ratio fell 1.9 percentage points year on year, partly due to the voluntary cancellationof activities due to the coronavirus outbreak. As a result, the operating profit margin was 17.4%, rising 1.3 percentage points from a year
ago.
[Consolidated business results](Unit: million yen)
FY 3/2020 2Q

Year-on-year change(ratio of change)

FY 3/2021 2Q

3,191

Net sales

60,802

63,994

Operating profit

9,776

11,124

Ordinary profit

9,856

11,114

1,257
12.8%

Profit attributable to owners ofparent

7,037

8,083

1,045
14.9%

5.2%
1,348
13.8%

To expand the Kampo market and establish its presence there in a sustained manner, which is a strategic challenge adopted in theMedium-Term Management Plan, the Company has positioned geriatric health, cancer (supportive care) and women’s health as threeimportant domains. The Company has been active in providing information on matters focused on “Drug fostering” program
formulations*1 and “Growing” formulations*2. In the first half under review, net sales for overall prescription Kampo products increased
1.1% year on year, in spite of NHI drug price revisions and restrictions imposed on information activities in keeping with the effects of
the COVID-19 pandemic.
Net sales for Daikenchuto, a drug fostering program formulation that represents a staple item for Tsumura & Co. (the “Company”),
decreased 0.5% year on year. The Company is enforcing information activities at all hospitals. At the same time, the Company iscontinuously accelerating activities for winning new markets, focusing on a sense of abdominal flatulence, which is viewed to produce
a low level of satisfaction with treatment at general clinics among constipation symptoms. In growing formulations, Hochuekkito,
Goreisan and Kamishoyosan performed solidly.
Looking at sales activities, the Company increased web seminars, which have proven somewhat effective under sustained conditions
that prevent the sufficient execution of conventional visit-based information provision activities. Moreover, the Company is aggressively
executing measures through its medical representatives. The Company is advancing new activities that match conditions in respective
areas and medical districts.
The Company will continue upgrading e-promotion and advancing positive and effective information activities, in addition to using
online and conventional visit-based for different purposes according to requests made by health care professionals. Demand for Kampo
medicine among health care professionals is increasingly growing and diversifying. The Company will continue its activities forproviding appropriate information on subjects, including evidence in basic and clinical medicine, clinical practice guidelines in which
Kampo products are described, and the proper use of Kampo medicine based on Kampo diagnosis.
*1 “Drug fostering” program formulations:
Formulations the Company is addressing by looking hard at the structure of diseases in recent years, targeting diseases that are difficult
to treat with new drugs for which prescription Kampo preparations prove specifically effective in domains where demand for medical
treatment is high, and calling the establishment of evidence “drug fostering”*2 “Growing” formulations:
Growth drivers aimed at registration in clinical practice guidelines as strategic formulations after five drug fostering program
formulations by constructing evidence (such as data on safety and effectiveness) in domains where the degree of satisfaction with medical
treatment and the degree of drug contribution are low2(2) Description of financial condition
The financial position at the end of the second quarter under review was as follows:
Total assets at the end of the second quarter under review decreased 2,626 million yen from the end of the previous fiscal year, to308,415 million yen. Current assets increased 784 million yen from the end of the previous fiscal year, mainly due to a rise in work inprogress, which offset a fall in raw materials and supplies. Non-current assets decreased 3,411 million yen from the end of the previous
fiscal year, mainly due to a decrease in other in investments and other assets associated with the consolidation of Tsumura Shengshi
Pharmaceuticals Co., Ltd. from the fiscal year under review, offsetting an increase in buildings and structures.
Total liabilities were 84,490 million yen, a decrease of 13,502 million yen from the end of the previous fiscal year. Current liabilities
decreased 3,981 million yen from the end of the previous fiscal year, mainly due to a decline in short-term borrowings, which offset anincrease in long-term borrowings scheduled for repayment within one year that resulted from their transfer. Non-current liabilities
declined 9,521 million yen from the end of the previous fiscal year mainly due to the transfer of long-term borrowings to current liabilities.
Net assets totaled 223,924 million yen, an increase of 10,875 million yen from the end of the previous fiscal year. Shareholders’ equity
rose 5,351 million yen from the end of the previous fiscal year, mainly reflecting an increase in retained earnings. Accumulated othercomprehensive income dropped 1,059 million yen from the end of the previous fiscal year, chiefly attributable to a fall in foreign
currency translation adjustment. Non-controlling interests increased 6,582 million yen from the end of the previous fiscal year.
As a result, the equity ratio rose 2.0 percentage points, to 68.0%.
Cash flows in the first half under review were as follows:
During the first half under review, cash provided by operating activities was 10,654 million-yen, cash used in investing activities was
2,539 million yen, and cash used in financing activities was 7,206 million yen.
Cash provided by operating activities was 10,654 million yen. Looking at its breakdown, profit before income taxes of 11,105 million
yen was a major cash inflow item and income taxes paid of 3,316 million yen was a major cash outflow item. Compared to a year ago,cash inflow increased 1,957 million yen.
Cash used in investing activities was 2,539 million yen. Looking at its breakdown, purchase of property, plant and equipment of 4,136
million yen was a major cash outflow item. Compared to a year ago, cash outflow increased 7,278 million yen.
Cash used in financing activities was 7,206 million yen. Looking at its breakdown, repayments of short-term borrowings of 13,398
million yen was a major cash outflow item. Compared to a year ago, cash outflow rose 4,676 million yen.
As a result, cash and cash equivalents increased 195 million yen from the end of the previous fiscal year, and when combined with theincrease in cash and cash equivalents of 3,519 million yen associated with the consolidation of a subsidiary, reached 61,407 million yen.
(3) Description of projections of consolidated business results
The projections of consolidated business results for the fiscal year ending March 31, 2021, which were published on May 11, 2020,
remain unchanged.
The forecasts do not reflect the effects of the COVID-19 pandemic because its ending and how it will affect the Group’s businesses isdifficult to predict accurately at this point. As for the COVID-19 pandemic’s effects, expenses centered on those for activities remain
intact at the end of the first half under review due to causes including restrictions on information activities. Meanwhile, Kampo
preparations for a variety of disorders are increasing in the clinical environment. The Company assumes that the pandemic will have
limited effects on its plans if it advances activities through e-promotions and other strategies. The Company predicts that the uncertainty
about the future will continue. The Company will disclose information timely and appropriately when any change occurs.
The Company’s Shizuoka Plant, Ibaraki Plant and Ishioka Center, LOGITEM TSUMURA CO., LTD. and YUBARI TSUMURA CO.,LTD. and the bases of Group companies located in China have all put measures in place to prevent the virus from spreading and areoperating as usual. With the safety of its employees, customers and business partners as its number one priority, the Company willcontinue seeking to prevent the spread of the coronavirus, determining a course of action based on Government guidance and actionplans while seeking to continue business in an appropriate manner.

3

2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheets(Unit:Million yen)
As of March 31, 2020
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Other
Accumulated depreciation
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investment and other assets
Investment securities
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investment and other assets
Total non-current assets
Total assets

4

As of September 30, 2020

61,957
47,161
10,33812,41850,553
11,882(22)

63,27846,55910,874
13,91648,197
12,268(21)

194,288

195,073

68,67291,603(83,069)

76,264
92,480(86,263)

77,20782,481

12,016
1,324

11,357
1,399

13,341

12,757

10,7501,213
14,241(0)

11,406
1,415
5,281
(0)

26,204

18,103

116,753

113,341

311,042

308,415

(Unit:Million yen)
As of March 31, 2020
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings

As of September 30, 2020

10,12822,874

8,729
11,075－

9,376

Income taxes payable
Provision for sales returns
Other

3,607
10
11,856

3,641
10
11,662

Total current liabilities

48,47644,495

Non-current liabilities
Bonds payable
Long-term borrowings
Retirement benefit liability
Other

30,00012,39472
7,049

30,000
3,004
70
6,920

Total non-current liabilities

49,51639,995

Total liabilities

97,99384,490Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

30,142
14,041
158,610(678)

30,142
13,837
164,167(678)

202,116

207,468

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans

2,767
87
2,673
(1,318)
(949)

3,156
335
2,673
(3,060)(903)

Total accumulated other comprehensive income

3,260

2,201

7,671

14,254

213,048

223,924

311,042

308,415

Total shareholders’ equity

Non-controlling interests
Total net assets
Total liabilities and net assets5(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income
Quarterly Consolidated Statements of Income / For the Second Quarter Consolidated Accumulative Term
(Unit:Million yen)Six-month period ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)

Six-month period ended
September 30, 2020
(From April 1, 2020
to September 30, 2020)

Net sales
Cost of sales

60,802
24,893

63,994
26,596Gross profit

35,90837,397

Selling, general and administrative expenses

26,132

26,272

Operating profit

9,776

11,124

315
133

265
135

－

69

104

190

552

660

Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodOther
Total non-operating income
Non-operating expenses
Interest expenses

63

167

Share of loss of entities accounted for using equity method

39－

Foreign exchange losses
Other

237
132

485
18

Total non-operating expenses

472

671

9,856

11,114

2
0

0
4

2

4

1
20

0
13

Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

21

13

Profit before income taxes

Total extraordinary losses

9,837

11,105

Income taxes

2,729

3,198

Profit

7,108

7,906

Profit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

6

70

(176)

7,037

8,083

Quarterly Consolidated Statements of Comprehensive Income / For the Second Quarter Consolidated Accumulative Term
(Unit:Million yen)Six-month period ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans,net of tax
Share of other comprehensive income (loss) of entities
accounted for using equity method
Total other comprehensive income (loss)

Six-month period ended
September 30, 2020
(From April 1, 2020
to September 30, 2020)

7,108

7,906

(1,233)(1,714)(1,135)
(23)

389
248
(1,969)
45

(8)

(16)

(4,115)(1,302)Comprehensive income

2,993

6,604

Comprehensive income attributable to
Owners of parent
Non-controlling interests

3,040
(47)

7,024
(419)

7

(3) Quarterly Consolidated Statements of Cash Flows(Unit:Million yen)Six-month period ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)
Cash flows from operating activities
Profit before income taxes
Depreciation

Six-month period ended
September 30, 2020
(From April 1, 2020
to September 30, 2020)

9,837
3,243

11,105
3,871

－

294

(0)
(448)
63

2
(400)
167

39

(69)

19

13

1,550
(5,342)
204

515
(762)
(1,181)

(0)

(4)

(280)
6
1,266

(144)
4
199

Subtotal

10,157

13,611

Interest and dividends received
Interest paid
Income taxes paid

475
(62)
(1,873)528(169)(3,316)

Net cash provided by (used in) operating activities

8,696

10,654

14,226(6,065)
4(335)(21,127)

2,321(4,136)0(105)(18,162)

21,121

18,178(2,996)
(0)
1
(88)

(451)
(155)
1
(31)

4,739

(2,539)Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Share of loss(profit) of entities accounted for using equity
methodLoss (gain) on sales and retirement of property, plant andequipment
Decrease (increase) trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Loss (gain) on sales of short-term and long-term investment
securities
Decrease (increase) in retirement benefit asset
Increase (decrease) in retirement benefit liability
Other

Cash flows from investing activities
Decrease (increase) in time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of short-term and long-term investment securities
Proceeds from sales and redemption of short-term andlong-term investment securities
Purchase of investments in capital of subsidiaries
Loan advances
Collection of loans receivable
Other
Net cash provided by (used in) investing activities8

(Unit:Million yen)Six-month period ended
September 30, 2019
(From April 1, 2019
to September 30, 2019)

Six-month period ended
September 30, 2020
(From April 1, 2020
to September 30, 2020)

Cash flows from financing activities
Proceeds from short-term borrowings

－

1,848

Decrease in short-term loans payable－(13,398)－

7,567(2,447)(56)(2,448)
(49)

－

(699)

Proceeds from share issuance to non-controllingshareholders
Dividends paid
Dividends paid to non-controlling interests
Payments from changes in capital of subsidiaries that do not
result in change in scope of consolidation
Other

(25)

(26)

Net cash provided by (used in) financing activities(2,529)(7,206)

Effect of exchange rate change on cash and cash equivalents

(349)

(712)

Net increase (decrease) in cash and cash equivalents

10,556

195

Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from inclusionof subsidiaries in consolidation

56,24357,692－

3,519

Cash and cash equivalents at end of period

66,80061,4079

(4) Notes to the Quaterly Consolidated Financial Statements(Notes on premise of a going concern)
No relevant items.
(Notes on case of extreme change in shareholder's equity amount)
No relevant items.
(Important changes of subsidiaries during the term)
No relevant items.
TSUMURA SHENGSHI PHARMACEUTICALS CO., LTD. was included in the scope of consolidation in the first quarter because
its importance had increased, although the company does not meet the conditions for transfer of specific subsidiaries.
(Application of specific accounting treatment to the preparation of quarterly financial statements)(Deferment of cost variance)
Cost variance caused by seasonal changes in operation rates, etc. is expected to be eliminated for the most part by the end of the costaccounting period, which is, therefore, deferred as “current assets (other) or current liabilities (other).”10