Summary of Financial Statements for the First Quarter of Fiscal Year Ending April 2015
[Japan GAAP] (Consolidated)

August 25, 2014

Name of listed company:

AIN PHARMACIEZ INC.

Exchange listed on:First Section of Tokyo Stock Exchange and Sapporo Securities Exchange

Code number:

9627

URL:

http://www.ainj.co.jp/

Representative:
Inquiries:

Kiichi Otani, President and Representative Director
Toshihide Mizushima, Senior Managing Director and Chief Director of Administration
TEL: +81-11-814-1000
Date of filing quarterly securities report:
September 16, 2014
Start of dividend payment:–

Supplementary documents for quarterly results:

No

Quarterly results briefing:No(Amounts are rounded down to the nearest million yen.)
1. Consolidated results for the first quarter of fiscal year ending April 30, 2015 (May 1, 2014 to July 31, 2014)(1) Consolidated operating results(Percentage figures show year-on-year changes.)
Net sales
Operating income
Ordinary income
Net income
Three months ended July 31, 2014
Three months ended July 31, 2013
(Note) Comprehensive income:Million yen%

Million yen%

Million yen%

Million yen%

43,3545.2

1,707(28.4)

1,825(26.6)

1,004(33.8)

5.7
2,484
6.7
¥1,060 million (-28.2%)¥1,478 million (+42.2%)

1,516

66.3

41,21413.7
2,384
Three months ended July 31, 2014:
Three months ended July 31, 2013:
Net income
per share

Diluted net income
per share
Yen

Yen

Three months ended July 31, 2014

63.34

–

Three months ended July 31, 2013

95.16

–

(2) Consolidated financial position
Net assets

Total assets

Shareholders’equity ratio

Net assets per
share

Million yen

Million yen%

Yen

As of July 31, 2014

100,492

42,73642.4

2,687.56

As of April 30, 2014

101,382

42,24041.5

2,656.86(Reference) Shareholders’ equity:

As of July 31, 2014: ¥42,609 million

As of April 30, 2014: ¥42,122 million

2. Dividends

Year ended April 30, 2014

End of firstquarterYen–

End of second
quarter
Yen
0.00

Dividend per share
End of third
quarterYen–

End of year

Full year

Yen

Yen

60.00

60.00

–
Year ending April 30, 2015
Year ending April 30, 2015
–
0.00
30.00
30.00
(forecast)(Note) Revision to the most recently announced dividend forecasts: Yes*The Company intends to conduct a 2-for-1 stock split of common shares with an effective date of October 1, 2014.
Consequently, the year-end dividend per share for the fiscal year ending April 30, 2015 (forecast) is based on the number ofshares after the stock split. Assuming no stock split, the forecast for the year-end dividend is ¥60.00 per share.

3. Consolidated financial forecasts for the fiscal year ending April 30, 2015 (May 1, 2014 to April 30, 2015)(Percentage figures show year-on-year changes.)

Million yen%

Million yen%

Million yen%

Million yen%

Net income
per shareYen

89,2607.5

3,590(28.4)

3,830(25.8)

1,970(32.1)

62.13

190,000

11.6

10,2601.5

10,700

1.1

5,500

4.6

173.46

Net salesFirst sixmonthsFull year

Operating income

Ordinary income

Net income(Note) Revision to the most recently announced consolidated financial forecasts: No*The Company intends to conduct a 2-for-1 stock split of common shares with an effective date of October 1, 2014. Net
income per share for the fiscal year ending April 30, 2015 (forecast) has been calculated assuming the stock split was
conducted at the start of the current fiscal year. Assuming no stock split, forecasts for net income per share are ¥124.26 forthe first six months of the fiscal year and ¥346.91 for the full year. For more details about the stock split, please refer to "(3)Notes on quarterly consolidated financial statements (Material Subsequent Events)" on page 9 of the Attachment.
*Notes(1) Major changes in subsidiaries during the period (changes in specified subsidiaries resulting from changes in scope of
consolidation): No
Newly consolidated: –Excluded: –(2) Application of specified accounting methods for the preparation of quarterly consolidated financial statements: Yes(Note) For detail, please refer to “2. Matters concerning summary information (notes) (2) Application of specified
accounting methods for the preparation of quarterly consolidated financial statements” on page 3 of the
Attachment.
(3) Changes in accounting principles, changes in accounting estimates, and restatement of revisions
1) Changes in accounting principles as a result of revisions to accounting standards, etc.:
Yes2) Changes in accounting principles other than 1):
No3) Changes in accounting estimates:
No4) Restatement of revisions:No(Note) For detail, please refer to “2. Matters concerning summary information (notes) (3) Changes in accounting
principles, changes in accounting estimates, and restatement of revisions” on page 3 of the Attachment.
(4) Number of outstanding shares (common stock)1) Number of outstanding
shares (including treasury
As of July 31, 2014
stock):
2) Number of shares held in
As of July 31, 2014
treasury:
3) Average number ofThree months ended
shares outstanding:July 31, 2014

15,944,106 shares As of April 30, 2014

15,944,106 shares

89,916 shares As of April 30, 2014

89,916 shares

Three months ended
July 31, 201315,940,723 shares

15,854,190 shares*Status of execution of the quarterly review of financial statements
This quarterly financial summary is not subject to the quarterly review procedure based on the Financial Instruments andExchange Act. As of the time of disclosure, this review procedure for quarterly financial statements had not been
completed.
*Statement regarding the proper use of financial forecasts and other special remarks
The above forecasts are calculated based on the information available as of the publication date of this material, and actual
financial results may vary due to change in future economic conditions and others.

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

Contents of the Attachment
1. Qualitative information on consolidated results for the period under review............................................................................ 2(1) Consolidated operating results ........................................................................................................................................... 2(2) Consolidated financial position ........................................................................................................................................... 3(3) Forecast of consolidated financial results and other forward-looking information............................................................... 3
2. Matters concerning summary information (notes) ................................................................................................................... 3(1) Major changes in subsidiaries during the period ................................................................................................................ 3(2) Application of specified accounting methods for the preparation of quarterly consolidated financial statements ............... 3(3) Changes in accounting principles, changes in accounting estimates, and restatement of revisions .................................. 3
3. Quarterly consolidated financial statements ............................................................................................................................ 4(1) Quarterly consolidated balance sheet ................................................................................................................................ 4(2) Quarterly consolidated statements of income and comprehensive income ........................................................................ 6
Quarterly consolidated statement of income ....................................................................................................................... 6
Quarterly consolidated statement of comprehensive income.............................................................................................. 7(3) Notes on quarterly consolidated financial statements ........................................................................................................ 8(Notes on the premise of a going concern)......................................................................................................................... 8(Notes on significant changes in the amount of shareholders’ equity) .............................................................................. 8(Segment Information, etc.) .............................................................................................................................................. 8(Material Subsequent Events) ............................................................................................................................................ 9

1

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

1. Qualitative information on consolidated results for the period under review(1) Consolidated operating results
During the first three months of the current fiscal year (May 1, 2014 to July 31, 2014), the Japanese economy recoveredat a moderate pace, supported by improvements in corporate earnings and the employment market. The pullback indemand after the consumption tax hike also gradually eased.
In this economic environment, the AIN PHARMACIEZ Group (the Group) worked to expand its business and increase
earnings. Specifically, the Group opened new dispensing pharmacies and used M&A to expand the business. It also
pushed ahead with the comprehensive development of medical malls and developed its urban drug and cosmetic store
business.
In the first three months of the fiscal year, net sales increased 5.2% year on year to ¥43,354 million, operating income
decreased 28.4% to ¥1,707 million, ordinary income decreased 26.6% to ¥1,825 million, and net income decreased
33.8% to ¥1,004 million.
Financial results by business segment are as follows.
(Dispensing pharmacy business)
In the dispensing pharmacy business, sales continued to rise at existing dispensing pharmacies, supported by growthin average sales per prescription due to an increase in longer-term prescriptions.
Under dispensing fee revisions in April 2014, the dispensing fee system is being revised to reflect the functions ofdispensing pharmacies in order to improve pharmaceutical management and promote dispensing services for homehealthcare patients. As a result of these changes, average technical fees per prescription declined at existing pharmacies.
This drop in technical fees, along with an increase in procurement costs in real terms due to the consumption tax hike, led
to a deterioration in profitability at dispensing pharmacies.
The Group will continue to expand the business through new pharmacy openings and M&A deals, securing profits by
utilizing economies of scale and improving dispensing pharmacy operations on a pharmacy by pharmacy basis. The
Group will also upgrade patient services, build links with local medical service providers, mainly in the area ofhome-based dispensing, and promote wider use of generic drugs in order to fulfill the new role being asked of dispensing
pharmacies.
As a result, for the first three months of the fiscal year, the dispensing pharmacy business reported higher sales but
lower income year on year, with net sales rising 6.3% to ¥38,836 million and segment income decreasing 19.6% to ¥2,441
million.
During the period under review, the Group opened 15 new dispensing pharmacies, including those acquired throughM&A deals, and closed two pharmacies, including relocations, resulting in a total of 629.
(Drug and cosmetic store business)
In the drug and cosmetic store business, the market environment remained challenging due to a narrowing competitive
gap between companies in the sector and the emergence of new competitors from sector consolidation and realignmentthat also extends to other business sectors, as well as changes to restrictions on online sales of OTC drugs. Thesechanges in the business environment, together with the impact of a pullback in demand after the consumption tax hike,led to a decline in sales at existing stores compared with the same period a year earlier.
Against this backdrop, the Group is continuing to open urban drug and cosmetic stores under the ainz & tulpe brand,
particularly in urban areas with high customer traffic. Steps are also being taken to revitalize existing stores.
With ainz & tulpe, the Group is working to expand the customer base. These efforts include reinforcing merchandise
lineups to tailor them to each retail area and location, based on the brand’s store concept as a specialist drug andcosmetics retailer, and sales promotion using a range of different communication tools targeted at each customer
segment, such as emails for Ainz Point Club cardholders and communication apps such as LINE.
In July 2014, the Company concluded a provisional contract to lease eight above-ground floors and two basement
floors in the STV Central Building in Sapporo’s Odori area (Chuo ward, Sapporo).
The Group intends to convert the building into a specialist health and beauty retail complex focused on the ainz & tulpe
brand. The complex is scheduled to open in autumn 2015.
As a result, for the first three months of the fiscal year, the drug and cosmetic store business reported a decrease insales of 4.8% year on year to ¥4,314 million. Segment income increased 108.4% to ¥41 million.
During the period under review, there were no store openings or store closures, resulting in a total of 59 drug stores atthe end of the period.
(Other businesses)
Net sales and segment loss from other businesses were ¥203 million and ¥134 million, respectively.
2

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

(2) Consolidated financial position
The balance of total assets at the end of the first quarter decreased by ¥890 million from the end of the previous fiscal
year to ¥100,492 million.
This mainly reflected an increase in inventories, property, plant and equipment such as land and buildings and adecrease in cash on hand and in banks, accounts receivables and deferred tax assets, due to the Group’s businessexpansion through new store openings and M&A deals.
The balance of liabilities decreased by ¥1,386 million to ¥57,756 million, mainly reflecting an increase in accounts
payable and a decrease in accrued income taxes and net defined benefit liability.
The balance of short- and long-term debt decreased by ¥667 million to ¥10,370 million.
Total net assets increased by ¥496 million to ¥42,736 million and the shareholders’ equity ratio improved 0.9
percentage points to 42.4%.
(3) Forecast of consolidated financial results and other forward-looking information
The Group has made no change to its earnings forecasts for the first six months of the fiscal year and for the full fiscal
year, announced on May 27, 2014, in light of earnings trends at new stores and existing stores in the first three months of
the fiscal year and future store opening plans.

2. Matters concerning summary information (notes)(1) Major changes in subsidiaries during the period
There are no applicable matters to be reported.

(2) Application of specified accounting methods for the preparation of quarterly consolidated financial statements
Tax expenses were calculated by reasonably estimating the effective tax rate after the application of tax effectaccounting to net income before taxes for the consolidated fiscal year including the first quarter, and multiplying theestimated effective tax rate by income before income taxes for the quarter.
(3) Changes in accounting principles, changes in accounting estimates, and restatement of revisions[Changes in accounting principles]
From the first quarter of the fiscal year ending April 30, 2015, the Company has applied the “Accounting Standard for
Retirement Benefits” (Accounting Standards Board of Japan (ASBJ) Statement No. 26, May 17, 2012; herein, “theretirement benefit accounting standard”) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ
Guidance No. 25, May 17, 2012; herein, “the retirement benefit guidance”), specifically content stipulated in paragraph 35of the retirement benefit accounting standard and stipulated in paragraph 67 of the retirement benefit guidance. As aresult, the methods for calculating retirement benefit obligations and service costs have been revised in the following
respects: the method for attributing projected benefits to periods has been changed from the straight-line basis to thebenefit formula basis, and the method for determining the discount rate has been changed from a bond period based on
the number of years approximate to the average remaining working lives of employees to a single weighted-average
discount rate that reflects the periods until the expected payment of retirement benefits and the amount of projected
benefits for each such period.
For the application of the Accounting Standard and the Guidance, pursuant to past adjustments stipulated in paragraph
37 of the Accounting Standard , monetary effects accompanying changes in the method for calculating retirement benefit
liability and service costs, are adjusted with retained earnings at the beginning of the period starting from the first quarterof the consolidated fiscal year ending April 30, 2015.
As a result, net defined benefit asset at the beginning of the period for the first quarter of the fiscal year ending April 30,
2015 increased by ¥8,366 thousand, while net defined benefit liability decreased by ¥592,370 thousand. In parallel,
retained earnings increased by ¥386,510 thousand. The application of the new accounting standard had an immaterial
impact on operating income, ordinary income and net income before income taxes in the first quarter of the current fiscal
year.

3

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheet(Thousand yen)

AssetsCurrent assets
Cash on hand and in banks
Notes and accounts receivable
Merchandise
Supplies
Deferred tax assets
Short-term loans
Other accounts receivable
Other current assets
Total current assets
Fixed assets
Property, plant and equipment
Buildings and structures, net
Land
Other property, plant and equipment, net
Total property, plant and equipment
Intangible fixed assets
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investments and other assets
Investments in securities
Deferred tax assets
Deposits and guarantees
Other investments and other assets
Allowance for doubtful accounts
Total investments and other assets
Total fixed assets
Total assets

4

Fiscal year endedApril 30, 2014
(As of April 30, 2014)

Three months ended
July 31, 2014
(As of July 31, 2014)

18,846,760
6,718,670
9,578,858
180,570
1,245,406
708,297
5,679,761
1,376,190
44,334,515

18,419,096
6,150,578
10,247,477
180,364
1,155,615
718,2975,544,907
1,050,729
43,467,068

9,962,423
6,698,782
2,922,726
19,583,933

10,227,995
6,834,555
2,861,777
19,924,328

20,017,440
1,111,957
21,129,397

19,765,666
1,148,461
20,914,128

2,559,386
1,068,129
8,081,230
4,866,487(240,307)
16,334,926
57,048,257
101,382,772

2,606,853
805,365
8,126,042
4,888,931(240,307)
16,186,885
57,025,341
100,492,409

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

(Thousand yen)

Liabilities
Current liabilities
Accounts payable
Short-term debt
Accrued income taxes
Deposits received
Allowance for bonuses to employees
Allowance for bonuses to directors
Reserve for reward obligations
Other current liabilities
Total current liabilities
Long-term liabilities
Long-term debt
Net defined benefit liability
Other long-term liabilities
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income (loss)
Unrealized holding gains on securities
Remeasurements of defined benefit plans
Total accumulated other comprehensive (loss) income
Minority interests
Total net assets
Total liabilities and net assets

5

Fiscal year endedApril 30, 2014
(As of April 30, 2014)

Three months ended
July 31, 2014
(As of July 31, 2014)

28,002,426
6,535,438
3,079,805
8,686,700
1,149,395
11,934332,315
2,551,384
50,349,400

30,594,186
6,463,409
688,1078,643,995
971,644
4,774
332,315
2,387,491
50,085,924

4,502,810
1,927,033
2,363,437
8,793,281
59,142,681

3,907,380
1,367,478
2,395,506
7,670,364
57,756,289

8,682,976
7,872,970
26,007,464(417,338)
42,146,073

8,682,976
7,872,970
26,446,904(417,338)
42,585,513

34,590(58,224)(23,633)
117,651
42,240,091
101,382,772

74,928(51,321)
23,606
127,000
42,736,120
100,492,409

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statement of income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Commissions received
Real estate rental revenue
Consignment income
Other non-operating income
Total non-operating income
Non-operating expenses
Interest expenses
Losses on sales of accounts receivables
Real estate rental expenses
Other non-operating expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gains on sales of investments in securities
Gains on sales of fixed assets
Insurance income
Other extraordinary income
Total extraordinary income
Extraordinary losses
Losses on disposal and sales of fixed assets
Impairment losses on investments in securities
Directors’ retirement benefits
Other extraordinary losses
Total extraordinary losses
Income before income taxes and minority interests
Income taxes
Income before minority interests
Minority interests in income (loss)
Net income

6(Thousand yen)Three months ended
July 31, 2013
(May 1, 2013 toJuly 31, 2013)
41,214,597
34,966,188
6,248,408
3,864,047
2,384,360

Three months ended
July 31, 2014
(May 1, 2014 to
July 31, 2014)
43,354,567
37,406,339
5,948,228
4,240,549
1,707,678

15,686
19,551
2,169
20,17032,529130,424
220,533

17,46420,506
12,113
19,54737,91281,854
189,400

28,157
21,291
11,76558,720119,935
2,484,958

20,68020,995
12,943
17,221
71,8401,825,237

13,8894,051
193,941
9,523
221,405－－－－－

20,897－－
10,18431,081
2,675,282
1,157,779
1,517,503
527
1,516,976

17,396
16,41676,9608,254
119,026
1,706,211
692,681
1,013,529
9,348
1,004,181

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

Quarterly consolidated statement of comprehensive income

Income before minority interests
Other comprehensive income
Unrealized holding gains (losses) on securities
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to shareholders of
the parent
Comprehensive income (loss) attributable to minority
interests

7(Thousand yen)Three months ended
July 31, 2013
(May 1, 2013 toJuly 31, 2013)
1,517,503

Three months ended
July 31, 2014
(May 1, 2014 to
July 31, 2014)
1,013,529(39,265)

40,337―

6,902(39,265)
1,478,238

47,2401,060,770

1,477,711

1,051,421

527

9,348

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

(3) Notes on quarterly consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters to be reported.

(Notes on significant changes in the amount of shareholders’ equity)
There are no applicable matters to be reported.
(Segment Information, etc.)
I Three months ended July 31, 2013 (May 1, 2013 to July 31, 2013)
1. Net sales and income (loss) by reportable segment
Reportable segments(Thousand yen)
Carried onquarterly
Adjustments
consolidated(Note) 1
statements ofincome(Note) 2

Dispensing
pharmacy

Drug andcosmetic store(1) Sales to third parties

36,524,575

4,529,796

160,224

41,214,597－

41,214,597(2) Intersegment sales－－

46,118

46,118(46,118)－

Total sales

36,524,575

4,529,796

206,343

41,260,715(46,118)

41,214,597

Segment income (loss)

3,036,543

19,959(114,326)

2,942,175(457,216)

2,484,958

Other

Total

Sales

Notes:

1. The adjustment of ¥(457,216) thousand to segment income (loss) includes ¥431,887 thousand in corporate
expenses, ¥41,818 thousand in losses that are not allocated to reportable segments, and ¥(16,488) thousand ineliminations due to intersegment transactions.
Overall group expenses consist mainly of expenses associated with the administrative divisions of the parent
company, such as general affairs and accounting divisions.
2. Segment income (loss) is adjusted with the ordinary income of quarterly consolidated statements of income.

2. Impairment losses on fixed assets and goodwill by reportable segment[Significant impairment losses on fixed assets]:
There are no applicable matters to be reported.
[Significant changes in the amount of goodwill]:
The dispensing pharmacy business segment includes five dispensing pharmacy companies that have been acquiredby the Group. During the first three months of the fiscal year, the increase in goodwill related to these companies was¥1,277,149 thousand.

II Three months ended July 31, 2014 (May 1, 2014 to July 31, 2014)
1. Net sales and income (loss) by reportable segment
Reportable segments(Thousand yen)
Carried onquarterly
Adjustments
consolidated(Note) 1
statements ofincome(Note) 2

Dispensing
pharmacy

Drug andcosmetic store(1) Sales to third parties

38,836,628

4,314,131

203,80743,354,567－

43,354,567(2) Intersegment sales－－

75,97675,976(75,976)－

Total sales

38,836,628

4,314,131

279,784

43,430,544(75,976)

43,354,567

Segment income (loss)

2,441,147

41,585(134,199)

2,348,533(523,295)

1,825,237

Other

Total

Sales

Notes:

1. The adjustment of ¥(523,295) thousand to segment income (loss) includes ¥519,946 thousand in corporate
expenses, ¥25,153 thousand in losses that are not allocated to reportable segments, and ¥(21,804) thousand in
8

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the First Quarter of the Fiscal Year Ending April 30, 2015

eliminations due to intersegment transactions.
Overall group expenses consist mainly of expenses associated with the administrative divisions of the parent
company, such as general affairs and accounting divisions.
2. Segment income (loss) is adjusted with the ordinary income of quarterly consolidated statements of income.
2. Impairment losses on fixed assets and goodwill by reportable segment[Significant impairment losses on fixed assets]:
There are no applicable matters to be reported.
[Significant changes in the amount of goodwill]:
There are no applicable matters to be reported.

(Material Subsequent Events)(Stock split and revisions to Articles of Incorporation due to stock split)
The Company approved the following stock split at a meeting of the Board of Directors on August 25, 2014.
1. Objectives of stock split
The Company intends to conduct a stock split in order to increase the liquidity of its shares and expand the investorbase.
2. Summary of stock split(1) Method of stock split
The number of common shares held by shareholders listed on the register of shareholders as of the record date
(September 30, 2014) will be split at the ratio of two shares for each share.
(2) Increase in number of shares due to stock split
Number of issued shares prior to stock split:
Increase in number of shares due to stock split:
Number of issued shares after stock split:
Number of authorized shares after stock split:

15,944,106 shares
15,944,106 shares
31,888,212 shares
44,000,000 shares*Note: The number of authorized shares is unchanged and no revisions have been made to the Articles of Incorporation
with respect to this stock split.

3. Stock split schedule
Announcement of record date:
Record date:
Effective date:

September 5, 2014
September 30, 2014
October 1, 2014

4. Impact on per share information
Per share information is as follows, assuming the stock split was conducted at the start of the previous fiscal year.
First quarter of the previous fiscal year
First quarter of the current fiscal year
(May 1, 2013 to July 31, 2013)(May 1, 2014 to July 31, 2014)
Net income per share¥47.58¥31.67*Note: Diluted net income per share is not shown, as there are no dilutive securities.

9