Summary of Financial Statements for the Second Quarter of Fiscal Year Ending April 2017
[Japan GAAP] (Consolidated)
November 25, 2016
Name of listed company:

AIN HOLDINGS 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, Representative Senior Managing Director
TEL: +81-11-814-1000
Date of filing quarterly securities report:
December 15, 2016
Start of dividend payment:–

Supplementary documents for quarterly results:

Yes

Quarterly results briefing:

Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen.)
1. Consolidated results for the second quarter of fiscal year ending April 30, 2017 (May 1, 2016 to October 31, 2016)(1) Consolidated operating results(Percentage figures show year-on-year changes.)
Profit attributable to
Net sales
Operating income
Ordinary income
owners of parent
Six months ended October 31, 2016
Six months ended October 31, 2015
(Note) Comprehensive income:Million yen%

Million yen%

Million yen%

Million yen%

116,844

9.3

5,049

(14.4)

5,346(12.1)

2,855(13.3)

106,924
21.2
5,901
39.5
6,084
36.7
Six months ended October 31, 2016: ¥2,905 million (-11.7%)
Six months ended October 31, 2015: ¥3,290 million (+25.9%)

3,295

30.5

Earnings
per share

Diluted earnings
per share
Yen

Yen

Six months ended October 31, 2016

90.07

–

Six months ended October 31, 2015

103.93–(2) Consolidated financial position

As of October 31, 2016
As of April 30, 2016
(Reference) Shareholders’ equity:

Shareholders’equity ratio

Net assets

Total assets

Net assets per
share

Million yen

Million yen%

Yen136,847

54,96140.1

1,731.65

139,888

53,32438.1

1,679.69

As of October 31, 2016: ¥54,906 million

As of April 30, 2016: ¥53,258 million

2. Dividends

Year ended April 30, 2016

End of firstquarterYen–

End of second
quarter
Yen
0.00

Dividend per share
End of third
quarter
Yen
–

–
0.00
Year ending April 30, 2017
Year ending April 30, 2017
(forecast)(Note) Revision to the most recently announced dividend forecasts: No–

End of year

Full year

Yen

Yen

40.00

40.00

50.00

50.00

3. Consolidated financial forecasts for the fiscal year ending April 30, 2017 (May 1, 2016 to April 30, 2017)(Percentage figures show year-on-year changes.)
Profit attributable toEarnings
Net sales
Operating income
Ordinary income
owners of parent
per share
Million yen%
Million yen%
Million yen%
Million yen%
Yen
Full year

265,000

12.8

16,30011.5

16,700

10.2

9,000

13.7

283.84(Note) Revision to the most recently announced consolidated financial forecasts: No*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 forthe 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.:
No2) Changes in accounting principles other than 1):
No3) Changes in accounting estimates:
No4) Restatement of revisions:No(4) Number of outstanding shares (common stock)1) Number of outstanding
As of October 31,
shares (including treasury
2016
stock):
2) Number of shares held in
As of October 31,
treasury:
20163) Average number ofSix months ended
shares outstanding:
October 31, 2016

31,888,212 shares As of April 30, 2016

31,888,212 shares

180,644 shares As of April 30, 2016

180,595 shares

Six months ended
October 31, 2015

31,707,617 shares

31,707,568 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 and Exchange Act. Asof the time of disclosure, this review procedure for quarterly consolidated 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 HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

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 ........................................................................................................................................... 2(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(4) Additional information ........................................................................................................................................................... 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 statements of income ..................................................................................................................... 6
Quarterly consolidated statements of comprehensive income ............................................................................................. 7(3) Quarterly consolidated statements of cash flows ................................................................................................................. 8(4) Notes on quarterly consolidated financial statements ........................................................................................................ 10(Notes on the premise of a going concern) .......................................................................................................................... 10(Notes on significant changes in the amount of shareholders’ equity) ................................................................................. 10(Segment Information, etc.).................................................................................................................................................. 10

1

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

1. Qualitative information on consolidated results for the period under review(1) Consolidated operating results
During the first six months of the current fiscal year (May 1, 2016 to October 31, 2016), the Japanese economy
recovered at a moderate pace, supported by firm consumer spending. Corporate earnings remained at a high level but
lost momentum.
In this economic environment, the AIN HOLDINGS 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
developed its urban drug and cosmetic store business.
In the first six months of the fiscal year, net sales rose 9.3% year on year to ¥116,844 million, operating income
decreased 14.4% to ¥5,049 million, ordinary income decreased 12.1% to ¥5,346 million, and profit attributable to ownersof parent decreased 13.3% to ¥2,855 million.
Financial results by business segment are as follows.
(Dispensing pharmacy business)
In drug price and dispensing fee revisions in April 2016, the role of pharmacies located near hospitals was reevaluated,
but in order to realize patient-focused non-hospital dispensing services, pharmacists and dispensing pharmacies are now
being required to play a key role at the heart of local communities.
To ensure our pharmacists and dispensing pharmacies fulfill their role at the heart of local communities, the Group
continues to build links with local healthcare service providers, mainly in the area of home-based dispensing, step up theintegration and continuous management of drug information using patient medication notebooks and other means, andpromote wider use of generic drugs.
In business development, the Group continued to push ahead with business expansion by opening new dispensing
pharmacies and through M&A deals.
In November 2016, The Group decided to make AOI Pharmacy Corporation (Sendai-shi, Miyagi Prefecture) into a
subsidiary. AOI Pharmacy operates a total of 115 dispensing pharmacies across Japan. The Group intends to use theacquisition of the company to further strengthen its network of dispensing pharmacies to support local healthcare provision.
As a result, for the first six months of the fiscal year, the dispensing pharmacy business reported higher sales but lower
profit with sales rising 8.7% year on year to ¥104,297 million and segment income decreasing 8.5% to ¥7,494 million.
During the period under review, the Group opened 47 new dispensing pharmacies, including those acquired throughM&A deals, and closed 11 pharmacies, resulting in a total of 917.
(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.
Against this backdrop, the Group continued to open ainz & tulpe urban drug stores and worked to make stores more
appealing by refurbishing existing stores and strengthening merchandise lineups, particularly drug and cosmetics
products. We also actively developed proprietary merchandise brands such as LIPS and HIPS and cocodecica, leading toan increase in profit margins.
As a result, for the first six months of the fiscal year, the drug and cosmetic store business reported an increase in salesof 1.8% year on year to ¥10,288 million. However, segment loss was ¥384 million, compared with segment loss of ¥183
million in the same period a year earlier.
In the second quarter of the fiscal year, the Group opened ainz & tulpe Colette Mare SAKURAGICHO-B1 (Naka Ward,
Yokohama) and closed two stores, resulting in a total of 51 cosmetic and drug stores at the end of the second quarter.
(Other businesses)
Net sales from other businesses rose 157.9% year on year to ¥2,258 million and segment loss was ¥826 million
compared with the loss of ¥444 million a year earlier.
(2) Consolidated financial position
The balance of total assets at the end of the second quarter decreased by ¥3,041 million from the end of the previous
fiscal year to ¥136,847 million.
This mainly reflected an increase in inventories due to business expansion through new store openings and M&A,
against a decrease in notes and accounts receivable.
The balance of liabilities decreased ¥4,678 million to ¥81,885 million.
2

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

The balance of short- term and long-term debts decreased by ¥820 million to ¥19,723 million.
Total net assets increased by ¥1,637 million to ¥54,961 million and the shareholders’ equity ratio increased 2.0
percentage points to 40.1%.
(Cash flows)
In the first six months of the fiscal year, cash and cash equivalents (“cash”) increased by ¥420 million from the previous
fiscal year end to ¥22,312 million.
Cash flows from each activity and their relevant factors are as follows.
During the first six months of the fiscal year, net cash provided by operating activities was ¥6,090 million, comparedwith ¥9,221 million provided in the same period a year earlier. The main cash inflows were profit before income taxes of¥5,298 million, depreciation and amortization of ¥1,753 million, amortization of goodwill of ¥1,660 million. The main cash
outflow was income taxes paid of ¥4,666 million.
Net cash used in investing activities amounted to ¥3,053 million, compared with ¥6,117 million used a year earlier. Thiswas mainly due to payments of ¥1,544 million for the acquisition of property, plant and equipment and intangible fixed
assets and ¥2,293 million for purchases of subsidiaries’ shares resulting in obtaining controls.
Net cash used in financing activities was ¥2,616 million, compared with ¥8,157 million provided a year earlier. The main
cash inflow was ¥973 million in net proceeds from short-term and long-term debt repayment and proceeds, while the main
cash outflow was cash dividends paid of ¥1,268 million.
(3) Forecast of consolidated financial results and other forward-looking information
The Group has made no change to its earnings forecasts for the full fiscal year, announced on May 27, 2016.

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 second 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
There are no applicable matters to be reported.
(4) Additional information(Adoption of the Implementation Guidance on Recoverability of Deferred Tax Assets)
Effective from the first quarter of the current fiscal year, the Company has applied the Implementation Guidance on
Recoverability of Deferred Tax Assets (ASBJ Guidance No. 26, March 28, 2016).

3

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

3. Quarterly consolidated financial statements(1) Quarterly consolidated balance sheet
Fiscal year endedApril 30, 2016
(As of April 30, 2016)

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
Allowance for doubtful accounts
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(Thousand yen)Six months ended
October 31, 2016
(As of October 31, 2016)

22,647,300
12,385,821
10,661,177
323,473
1,149,432
639,457
5,983,629
2,806,438(3,337)56,593,392

23,012,593
7,214,813
11,509,313
314,608
1,107,321
642,728
7,508,888
1,984,822
53,295,089

14,694,738
9,537,493
3,921,089
28,153,320

14,680,304
9,525,982
3,543,443
27,749,730

33,337,372
2,248,861
35,586,233

33,776,445
2,337,342
36,113,788

2,677,643
2,038,851
10,013,440
6,062,530(1,237,174)
19,555,292
83,294,846
139,888,239

2,565,9782,163,596
10,287,169
5,449,101(777,244)
19,688,602
83,552,121
136,847,211

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

Fiscal year endedApril 30, 2016
(As of April 30, 2016)

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
Provision for sales returns
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
Unrealized holding gains on securities
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

5(Thousand yen)Six months ended
October 31, 2016
(As of October 31, 2016)

39,987,595
5,690,001
4,448,862
10,112,896
1,633,520
13,590390,200
15,815
4,452,428
66,744,908

37,693,599
7,584,837
2,177,896
11,153,793
1,984,297
15,945396,519
13,167
3,687,689
64,707,745

14,854,307
2,228,446
2,735,964
19,818,717
86,563,626

12,138,983
2,334,349
2,704,181
17,177,514
81,885,260

8,682,976
6,367,844
38,605,783(419,311)
53,237,293

8,682,976
6,367,844
40,193,311(419,598)
54,824,534(63,296)
84,867
21,57065,74853,324,613
139,888,239

13,222
68,52581,74855,66854,961,951
136,847,211

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statements of income
Six months ended
October 31, 2015
(May 1, 2015 to
October 31, 2015

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
Guarantees received
Other non-operating income
Total non-operating income
Non-operating expenses
Interest expenses
Losses on sales of accounts receivables
Real estate rental expenses
Provision of allowance for doubtful accounts
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
Other extraordinary losses
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

6(Thousand yen)Six months ended
October 31, 2016
(May 1, 2016 to
October 31, 2016)

106,924,364
90,210,692
16,713,672
10,812,265
5,901,407

116,844,279
98,479,207
18,365,071
13,315,707
5,049,363

27,14525,14435,23884,28096,099157,022
181,968
606,899

36,81323,716
17,426
106,635
69,83939,408172,802466,643

41,37939,57543,809282,600
16,767424,133
6,084,173

64,12631,92844,25029,363
169,668
5,346,338

22,9998,368
2,772
34,140150,537
5,824
50,612
28,118235,093167,018
79,00946,597
292,625
5,825,688
2,514,779
3,310,909
15,406
3,295,503

241,243
6,820
34,586282,651
5,298,780
2,453,028
2,845,752(10,080)
2,855,832

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

Quarterly consolidated statements of comprehensive income
Six months ended
October 31, 2015
(May 1, 2015 to
October 31, 2015)

ProfitOther comprehensive income
Unrealized holding gains (losses) on securities
Remearurements of defined benefit plans, net of tax
Total other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to owners ofparentComprehensive income(loss) attributable tonon-controlling interests

7(Thousand yen)Six months ended
October 31, 2016
(May 1, 2016 to
October 31, 2016)

3,310,909

2,845,752(33,205)

76,51912,958(20,246)
3,290,663(16,342)
60,1772,905,929

3,275,257

2,916,010

15,406(10,080)

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017(3) Quarterly consolidated statements of cash flows
Six months ended
October 31, 2015
(May 1, 2015 to
October 31, 2015)

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Amortization of goodwill
Increase in defined benefit liability
Increase in allowance for bonuses to employees
Increase in allowance for bonuses to directors
Interest and dividend income
Interest expenses
Losses on disposal and sales of fixed assets
Increase (decrease) in accounts receivable
Increase in inventories
Increase in other accounts receivable
Increase (decrease) in accounts payable
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for purchases of property, plant andequipment and intangible fixed assets
Proceeds from sales of property, plant andequipment and intangible fixed assets
Payments for purchase of investments in securities
Proceeds from sales of investments in securities
Purchase of subsidiaries’ shares resulting in obtaining
controls
Payments for loans receivable
Proceeds from collections of loans receivable
Payments for time deposits
Proceeds from withdrawal of time deposits
Other, net
Net cash used in investing activities

8(Thousand yen)Six months ended
October 31, 2016
(May 1, 2016 to
October 31, 2016)

5,825,688
1,417,501
1,339,030
70,809326,105184(52,290)
41,379144,019(75,008)(1,515,572)(521,028)
3,806,792
721,316
11,528,927
50,576(40,967)(2,316,854)
9,221,681

5,298,780
1,753,206
1,660,995
89,011
341,968
2,355(60,530)
64,126
235,419
5,733,772(651,501)(1,525,211)(2,918,279)
741,923
10,766,036
56,772(64,981)(4,666,987)
6,090,841(4,427,422)(1,544,246)

192,595

304,258(4,467)244,773(210)
339,729(1,131,659)(2,293,087)(871,940)
14,110(33,805)
73,771(173,426)(6,117,471)(60,001)
60,321(43,430)
235,706(52,604)(3,053,564)

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

(Thousand yen)Six months ended
October 31, 2015
(May 1, 2015 to
October 31, 2015)

Cash flows from financing activities
Net increase (decrease) in short-term debts
Proceeds from long-term debts
Repayments of long-term debts
Repayments of lease obligations
Payments for purchase of treasury stock
Cash dividends paid
Net cash (used in) provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

11,732,426
10,000(2,282,003)(351,731)(951,228)
8,157,463
11,261,673
19,389,097
30,650,771

9Six months ended
October 31, 2016
(May 1, 2016 to
October 31, 2016)

2,257,210
50,000(3,280,231)(375,300)(286)(1,268,304)(2,616,913)
420,363
21,892,179
22,312,543

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017(4) 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 Six months ended October 31, 2015 (May 1, 2015 to October 31, 2015)
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

95,940,867

10,107,600

875,896

106,924,364-

106,924,364(2) Intersegment sales--

155,311

155,311(155,311)-

Total sales

95,940,867

10,107,600

1,031,207

107,079,676(155,311)

106,924,364

Segment income (loss)

8,193,917(183,965)(444,421)

7,565,530(1,481,357)

6,084,173

Other

Total

Sales

Notes:

1. The adjustment of ¥(1,481,357) thousand to segment income (loss) includes ¥1,201,363 thousand in corporate
expenses, ¥333,062 thousand in losses that are not allocated to reportable segments, and ¥(53,069) thousand ineliminations due to intersegment transactions.
Corporate 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]:
In the dispensing pharmacy business segment, the Company acquired five dispensing pharmacy companies and one
other company. During the first six months of the fiscal year, the increase in goodwill related to these companies was¥1,025,281 thousand.
II Six months ended October 31, 2016 (May 1, 2016 to October 31, 2016)
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

104,297,439

10,288,333

2,258,506

116,844,279-

116,844,279(2) Intersegment sales--

188,175

188,175(188,175)-

Total sales

104,297,439

10,288,333

2,446,682

117,032,454(188,175)

116,844,279

Segment income (loss)

7,494,180(384,611)(826,383)

6,283,186(936,847)

5,346,338

Other

Total

Sales

Notes:

1. The adjustment of ¥(936,847) thousand to segment income (loss) includes ¥1,696,461 thousand in corporate
expenses, ¥(735,544) thousand in income that are not allocated to reportable segments, and ¥(24,070) thousandin eliminations due to intersegment transactions.
10

AIN HOLDINGS INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2017

Corporate 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]:
In the dispensing pharmacy business segment, the Company acquired nine dispensing pharmacy companies. During
the first six months of the fiscal year, the increase in goodwill related to these companies was ¥1,885,934 thousand.

11