Summary of Consolidated Financial Statements
for the Second Quarter of the Term Ending March 2018 (Japan GAAP)
November 8, 2017
Name of Listed Company: TSUMURA & CO.

Exchange: Tokyo Stock Exchange

Code:

URL:

4540

Representative:
Contact:

http://www.tsumura.co.jp

Position: President & Representative Director
Position: Head of Corporate Communications Dept.
Telephone: 81-3-6361-7100

Name: Terukazu Kato
Name: Noboru Suzuki

Scheduled date of submission: November 9, 2017
Scheduled date of dividend payment commencement: December 5, 2017
Preparation of supplementary materials for the quarterly financial statements: Yes.
Holding of the quarterly results briefing: Yes (for institutional investors, 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 2018
(From April 1, 2017 to September 30, 2017)(Figures in percentages denote the year-on-year change.)(1) Financial results (year to date)
Net sales

Profit attributable toowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen%

58,282

3.4

8,985

14.2

9,248

25.6

6,614

24.5

56,359

3.3

7,868

-20.2

7,366

-26.9

5,311

-18.8

Six month period ended
September 30, 2017
Six month period ended
September 30, 2016
(Note) Comprehensive income

Operating profit

Six month period ended September 30, 2017: 7,254 million yen (－%)
Six month period ended September 30, 2016: -589 million yen (－%)

Profit per share

Fully diluted profit per share
Yen

Six month period ended
September 30, 2017
Six month period ended
September 30, 2016

Yen

96.16

－

75.57

－

(2) Consolidated financial conditions
Total assets
Million yen

As of September 30, 2017
As of March 31, 2017
(Reference) Shareholders’ equity:

Shareholders’equity ratio

Net assets
Million yen%

258,464
162,450
222,008
157,397
As of September 30, 2017: 159,737 million yen

61.8
69.7
As of March 31, 2017: 154,783million yen

2. Dividends
Dividend per share
End of firstquarter

End of second
quarterYen

End of third
quarterYen

F Y 3/2017
32.00－
F Y 3/2018
32.00－
FY 3/2018 (Projection)(Note) Revisions to dividends projection published most recently: No

End of fiscal year
Yen

Total

Yen

Yen

－

32.00

64.00

－

32.00

64.00

3. Projections of consolidated business results for the term ending March 2018 (From April 1, 2017 to March 31, 2018)(Figures in percentage show the rate of increase or decrease from the previous fiscal year for full-year.)Net sales
Million yen

Operating profit%

Million yen

Profitattributable to ownersof parent

Ordinary profit%

Million yen%

Million yen

Profit per share%

Yen

Full-year
120,700
5.0
17,600 10.1
18,10010.4
12,7001.7
175.60(Note) Revisions to business results projection published most recently: No
At a board meeting held on September 22, 2017, the Board of Directors resolved to issue new shares and dispose oftreasury shares by way of third-party allotment. The profit per share in the projections of consolidated business results
takes the effect of the issuance of new shares and the disposal of treasury shares into consideration. For more
information, please refer to “2. Quarterly Consolidated Financial Statements and Key Notes, (4) Notes to the Quarterly
Consolidated Financial Statements (Significant subsequent events) ”on page 7 of the accompanying materials.

Notes(1) Important changes of subsidiaries during the term(change of specified subsidiaries that lead to a change in the scope of consolidation): No(2) Application of special accounting practices in consolidated quarterly financial statements preparation: Yes(3) Changes in accounting principles and procedures and the method for indication, etc.
1) Changes associated with the revision of accounting principles, etc.:
No2) 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 the term(including treasury stock) (shares)
2) Number of treasury stock at the end of the term
(shares)
3) Average number of shares during the term (shares)

FY 3/2018 2Q

70,771,662

FY 3/201770,771,662

FY 3/2018 2Q

1,989,382

FY 3/2017

1,989,282

FY 3/2018 2Q

68,782,351

FY 3/2017 2Q

70,284,235* This Summary of Quarterly Consolidated Financial Statements does not require the quarterly audit procedure.

* 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 theinformation 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 important factors. Please see “1.Qualitative information on quarterly results (3) Description of projections ofconsolidated business results” on page 2 for information regarding the forecast of consolidated financial results.

○Contents of accompanying materials

1. Qualitative information on quarterly results(1) Description of operating results…………………………………….………………………………………………

2(2) Description of financial position………………………..……..…………………………………………………...

2(3) Description of projections of consolidated business results………………….…………………………………….

2

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

3(1) Quarterly Consolidated Balance Sheets……………………………………………………………….……………

3(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income

4

Quarterly Consolidated Statements of Income
For the Second Quarter Consolidated Accumulative Term…………………………………………….…………

4

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

5(3) Quarterly Consolidated Statements of Cash Flows………………………………………………………………...

6(4) Notes to the Quarterly Consolidated Financial Statements………………………………………………………...

7(Notes on premise of a going concern)…………………………………………………………………………….

7(Notes on case of extreme change in shareholder's equity amount)……………………………………………….

7(Transfer of important subsidiaries during the quarter under review)……………………………………………..

7(Application of specific accounting treatment to the preparation of quarterly financial statements)……………...

7(Significant subsequent events)…………………………………………………………………………………….

7

- 1 -

1. Qualitative information on quarterly results(1) Description of operating results
In the first half of the consolidated fiscal year (from April 1 to September 30, 2017), net sales rose 3.4% year on
year, to 58,282 million yen.
Operating profit stood at 8,985 million yen, up 14.2% year on year, and ordinary profit came to 9,248 million yen,
up 25.6% year on year. Profit attributable to owners of parent was 6,614 million yen, up 24.5%. The cost of sales
ratio declined 1.1 percentage point year on year, and the ratio of selling, general and administrative expenses fell 0.3
percentage point year on year. The operating profit margin stood at 15.4%, up 1.4 percentage points from a year
earlier.
Sales of prescription Kampo products increased 3.4% year on year. As healthcare professionals’ needs for Kampo
are diversified, the Company is focusing on meetings with doctors, presentations for medical institutions, and Kampo
seminars. The Company is providing appropriate information on evidence in basic and clinical medicine, medical
practice guidelines in which Kampo is described, and the use of different Kampo products.
The Company will provide more information on Kampo medicine and Kampo products and will seek to expand
the Kampo market, which has large potential, focusing on three fields: geriatric field, cancer domain (supportivecare), and gynecology field.
(2) Description of financial position
The financial position at the end of the first half under review was as follows:
Total assets rose 36,456 million yen from the end of the previous fiscal year mainly due to an increase in cash anddeposits, to 258,464 million yen.
Liabilities increased 31,402 million yen chiefly due to the issuance of bonds, to 96,014 million yen.
Net assets climbed 5,053 million yen, to 162,450 million yen.
As a result, the equity ratio declined 7.9 percentage points, to 61.8%.
Cash flows in the first half under review were as follows:
Cash provided by operating activities stood at 11,413 million yen. Compared with the first half of the previous
fiscal year, cash provided declined 2.1 billion yen, mainly due to an increase in notes and accounts receivable-trade.
Cash used in investing activities came to 19,011 million yen. Cash used increased 14,367 million yen year on year.
Cash provided by financing activities was 25,317 million yen. Cash provided rose 30,930 million yen from thefirst half of the previous fiscal year, chiefly reflecting proceeds from the issuance of bonds.
As a result, cash and cash equivalents at the end of the first half under review increased 17,538 million yen fromthe end of the previous fiscal year, to 47,439 million yen.
(3) Description of projections of consolidated business results
The projections of consolidated business results for the fiscal year ending March 31, 2018 published on May 11,2017 remain unchanged.

- 2 -2. Quarterly Consolidated Financial Statements and Key Notes(1) Quarterly Consolidated Balance Sheets(Unit: million yen)
As ofMarch 31, 2017
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Securities
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
Investments and other assets
Investment securities
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investment and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Income taxes payable
Provision for sales returns
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans payable
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
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
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

-3-

As of
September 30, 2017

29,931
40,347－
8,122
14,547
29,467
12,266(4)
134,679

52,08942,214
9,998
8,009
12,89527,982
13,639(4)
166,825

64,42971,301(71,044)
64,686266

64,426
77,101(73,386)
68,141360

17,530
1,058
3,786
(0)
22,37687,329222,008

18,287
1,440
3,409
(0)
23,137
91,639258,464

6,696
12,5811,901
13
10,691
31,883

5,986
25,3142,573
514,32048,200－24,37684
8,267
32,72764,611

30,000
9,376
93
8,343
47,81396,014

19,4871,940
129,937(5,393)145,972

19,4871,940
134,350(5,394)150,385

3,845
925
2,673
1,470
(102)
8,811
2,613
157,397
222,008

4,395
1,221
2,673
1,070
(8)
9,352
2,713
162,450
258,464(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, 2016
(From April 1, 2016
to September 30, 2016)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Bond issuance cost
Foreign exchange losses
Other
Total non-operating expenses
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
Loss on disaster
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent-4-

Six month period ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)

56,35924,25632,102
24,234
7,868

58,282
24,40433,87824,893
8,985

29
199
20
－
179
428

33
202
35
104
148
524

72
－
848
9
930
7,366

90
143
－
27
261
9,248

0
－
0

4
25
30

－
14
4
19
7,346
1,921
5,425
114
5,311

12
28
－
40
9,238
2,469
6,768
153
6,614

Quarterly Consolidated Statements of Comprehensive Income / For the Second Quarter Consolidated Accumulative Term
(Unit: million yen)

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

Six month period ended
September 30, 2016
(From April 1, 2016
to September 30, 2016)
5,425

Six month period ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)
6,768

(169)
(2,044)(3,818)
102

549
296
(446)
94

(83)

(7)

(6,014)
(589)

486
7,254

(198)
(390)

7,154
99

Share of other comprehensive income (loss) of entities
accounted for using equity method
Total other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to
Owners of parent
Non-controlling interests-5-(3) Quarterly Consolidated Statements of Cash Flows(Unit: million yen)Six month period ended
September 30, 2017
(From April 1, 2017
to September 30, 2017)

Six month period ended
September 30, 2016
(From April 1, 2016
to September 30, 2016)
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Bond issuance cost
Share of (profit) loss of entities accounted for using equity
methodLoss (gain) on sales and retirement of property,
plant and equipment
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable - trade
Loss (gain) on sales of short-term and long-term investment
securities
Decrease (increase) in net defined benefit asset
Increase (decrease) in net defined benefit liability
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
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
Payments of loans receivableCollection of loans receivable
Payments into time deposits
Proceeds from withdrawal of time deposits
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Decrease in short-term loans payable
Proceeds from issuance of bonds
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from newly consolidated
subsidiary
Increase in cash and cash equivalents resulting from merger
with unconsolidated subsidiaries
Cash and cash equivalents at end of period

-6-

7,346
2,593
(3)
(228)
72
－

9,238
3,028
0
(236)
90
143

(20)

(35)

14

36

3,337
428
342

(1,883)
3,031
(650)

－

(25)

(143)
(46)
2,369
16,062246(70)(2,724)
13,513

(192)
(43)
415
12,916238(61)(1,680)11,413(4,854)0(19)(5)(4,315)
11(121)(10,006)

－

39

(1)
2
(18)
24
228
(4,644)(3)
2(4,644)24
0(19,011)－－(3,283)(2,257)(49)(22)(5,613)(828)
2,428
25,128(2,267)29,856(0)(2,199)(49)(22)
25,317(181)
17,53829,901

290

－

28

－

27,87647,439

(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.
(Transfer of important subsidiaries during the quarter under review)No relevant items.
Though not a transfer of a specified subsidiary, Tsumura China Inc. has been consolidated due to the completionof investment in the company during the first quarter of the fiscal year under review.
(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 partby the end of the cost accounting period, which is, therefore, deferred as “current liabilities (other).”(Significant subsequent events)(Completion of payment for issuing of new shares and disposal of treasury shares through third-party allotment)
The Company announces that, at a meeting held on September 22, 2017, its Board of Directors passed resolutions to implement theissuance of new shares and disposal of treasury shares by way of third party-allotment (hereinafter referred to collectively as “the ThirdParty Allotment”) to Ping An Life Insurance Company of China, Ltd. (Headquarters: Guangdong Province, China; hereinafter “Ping An
Life”), which is a subsidiary of Ping An Insurance (Group) Company of China, Ltd. (Headquarters: Guangdong Province, China; hereinafter“Ping An Insurance”), and the payment procedures have been completed on October 13, 2017.
Following the Third-Party Allotment, the percentage of voting rights held by Ping An Life became 10.04%, and the largest shareholder of
the Company has changed.
Outline of the issuance of new shares and disposal of treasury shares by the Third-Party Allotment
October 13, 2017
（1）Payment Date
（2）Number of new shares issued and number of shares diposed of 7,675,900 shares of common stock, which is the total of (i) and (ii)below(i) Number of new shares issued common stock 5,986,700 shares(ii)Number of shares diposed of common stock 1,689,200 shares
JPY 3,559.5 per share（3） Issue price and disposal value
JPY 27,322,366,050（4） Paid-in amountJPY 1,779.75 per share（5） Appropriation to capital
JPY 10,654,829,325（6） Total appropriation to capital
By way of third-party allotment（7） Method of Subscription or Allotment（Ping An Life 7,675,900 shares）
Tsumura and Ping An Insurance plan to establish a joint venture, and（8） Specific uses of capitalthe capital will be applied to the following businesses through thejoint venture.
(i) Business related to strengthening the crude drug procurement structure(ii) Business related to analysis and research focusing on traditional Chinese medicines(*)(iii) Business related to manufacturing and selling traditional Chinese medicines, etc.
(*)Traditional Chinese medicines: Medicines used in traditional Chinese medicine (or TCM)

-7-