Summary of Financial Statements for the Second Quarter of Fiscal Year Ending April 2014
[Japan GAAP] (Consolidated)

November 28, 2013

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:
December 13, 2013–

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, 2014 (May 1, 2013 to October 31, 2013)(1) Consolidated operating results(Percentage figures show year-on-year changes.)
Net sales
Operating income
Ordinary income
Net income
Six months ended October 31, 2013
Six months ended October 31, 2012
(Note) Comprehensive income:Million yen%

Million yen%

Million yen%

Million yen%

83,024

10.6

5,012

19.1

5.163

15.9

2,899

35.6

75,0909.1
4,209(12.0)
4,454(8.6)
Six months ended October 31, 2013: ¥2,881 million (+34.1%)
Six months ended October 31, 2012: ¥2,148 million(-5.9%)

2,137

(9.6)

Net income
per share

Diluted net income
per share
Yen

Yen

Six months ended October 31, 2013

181.89–Six months ended October 31, 2012

134.10–(2) Consolidated financial position
Shareholders’equity ratio

Net assets

Total assets

Net assets per
share

Million yen

Million yen%

Yen

As of October 31, 2013

99,98540,28140.2

2,524.37

As of April 30, 2013

95,83938,35640.0

2,403.43(Reference) Shareholders’ equity:

As of October 31, 2013: ¥40,240 million

As of April 30, 2013: ¥38,312million

2. Dividends
Record dateYear ended April 30, 2013

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

60.00

60.00

0.00

Year ending April 30, 2014
Year ending April 30, 2014
(forecast)(Note) Revision to the most recently announced dividend forecasts: No–

3. Consolidated financial forecasts for the fiscal year ending April 30, 2014 (May 1, 2013 to April 30, 2014)(Percentage figures show year-on-year changes.)

Million yen%

Million yen%

Million yen%

Million yen%

Net income
per shareYen

172,000

11.3

11,28016.3

11,650

13.2

6,000

18.2

376.31

Net sales
Full year

Operating income

Ordinary income

Net income(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 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.:
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
2013
stock):
2) Number of shares held in
As of October 31,
treasury:
20133) Average number ofSix months ended
shares outstanding:
October 31, 201315,944,106 shares As of April 30, 201315,944,106 shares

3,416 shares As of April 30, 2013

3,366 shares

Six months ended
October 31, 2012

15,940,748 shares

15,940,707 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 Second Quarter of the Fiscal Year Ending April 30, 2014

Contents
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
3. Quarterly consolidated financial statements ............................................................................................................................ 4(1) Quarterly consolidated balance sheets............................................................................................................................... 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 PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

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, 2013 to October 31, 2013), the Japanese economy
recovered steadily, albeit at a moderate pace. Corporate earnings improved and capital investment and consumer
spending showed signs of a pickup.
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. It also pushed ahead with thecomprehensive development of medical malls and opened urban drug and cosmetic stores.
AIN PHARMACIEZ INC. has been constructing a new head office building in Shiroishi-ku, Sapporo City to respond tobusiness expansion. On November 11, 2013, the Company moved its head office to the new building.
In the first six months of the fiscal year, net sales rose 10.6% year on year to ¥83,024 million, operating income
increased 19.1% to ¥5,012 million, ordinary income grew 15.9% to ¥5,163 million, and net income increased 35.6% to¥2,899 million.
Financial results by business segment are as follows.
(Dispensing pharmacy business)
In the dispensing pharmacy business, sales at existing dispensing pharmacies increased, supported by growth inaverage sales per prescription due to an increase in longer-term prescriptions.
New pharmacies opened since the previous fiscal year are having a positive impact on earnings. Medical mall dispensing
pharmacies are performing well due to a firmer footing in local markets, and this is being complemented by stable earnings
from specialist dispensing pharmacies near hospitals.
Also, in order to improve the profitability of existing dispensing pharmacies, the business pushed ahead with a new
project to revitalize its pharmacies. This project encourages dispensing pharmacy personnel to think for themselves, without
being bound by existing rules, in order to assess and rebuild all processes in dispensing pharmacy operations on a
pharmacy by pharmacy basis. This approach has already yielded results at various types of dispensing pharmacies in theGroup.
We aim to deliver further benefits by sharing and extending these operational improvements at individual pharmacies toall parts of the Group.
As a result, for the first six months of the fiscal year, the dispensing pharmacy business reported sales and profit growth,with sales rising 11.0% year on year to ¥73,954 million and segment income increasing 12.6% to ¥6,400 million.
During the period under review, the Group opened 30 new dispensing pharmacies, including those acquired throughM&A deals, and transferred one dispensing pharmacy, resulting in a total of 589.
(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 in the business environment for online sales of OTC
drugs.
Against this backdrop, the Group continued to open stores under its specialist, highly original drug and cosmetic store
brand, ainz & tulpe, particularly in urban areas with high customer traffic.
With ainz & tulpe, the Group is aiming to boost the sales capabilities and improve the profitability of each store. These
efforts include reinforcing merchandise lineups to tailor them to each retail area and location, and upgrading sales
promotion methods using communication apps such as LINE.
As a result, for the first six months of the fiscal year, the drug and cosmetic store business reported an increase in salesof 6.4% year on year to ¥8,736 million. However, segment income declined 84.1% to ¥4 million.
During the period under review, there were no new store openings. However, three stores were closed in Sapporo City,
mainly in suburban locations, resulting in a Group total of 58 stores.
(Other businesses)
Net sales and segment loss from other businesses were ¥333 million and ¥252 million, respectively.
(2) Consolidated financial position
The balance of total assets at the end of the second quarter increased by ¥4,145 million from the end of the previous
fiscal year to ¥99,985 million.
This mainly reflected an increase in inventories, other accounts receivable, property, plant and equipment such as landand buildings and goodwill, due to the Group’s business expansion through new store openings and M&A deals.
2

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

The balance of liabilities rose ¥2,220 million to ¥59,704 million, mainly reflecting an increase in accounts payable.
The balance of long- and short- term debt decreased by ¥2,124 million to ¥13,407 million.
Total net assets increased by ¥1,925 million to ¥40,281 million and the shareholders’ equity ratio improved 0.2
percentage points to 40.2%.
(Cash flows)
In the first six months of the fiscal year, cash and cash equivalents (“cash”) increased by ¥1,733 million from theprevious fiscal year end to ¥20,172 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 ¥9,324 million, comparedwith ¥2,370 million provided in the same period a year earlier. The main cash inflows were income before income taxes
and minority interests of ¥5,318 million, decrease in accounts receivable of ¥2,840 million, increase in accounts payableof ¥3,924 million. The main cash outflow was income taxes paid of ¥2,439 million.
Net cash used in investing activities amounted to ¥4,215 million, compared with ¥3,508 million used a year earlier. Thiswas mainly due to payments of ¥2,204 million for the acquisition of property, plant and equipment and intangible fixed
assets and ¥1,703 million for purchases of subsidiaries’ shares resulting in obtaining controls.
Net cash used in financing activities was ¥3,375 million, compared with ¥41 million provided a year earlier. This was
mainly attributable to a net cash outflow of ¥2,183 million from interest-bearing debt repayment and proceeds, and cash
dividends paid of ¥956 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 May 28, 2013, in light ofearnings trends at new stores and existing stores in the first six 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 second quarter, and multiplying theestimated effective tax rate by income before income taxes for the quarter. In addition, deferred income taxes are included
in income taxes.
(3) Changes in accounting principles, changes in accounting estimates, and restatement of revisions(Change in accounting policies that may be difficult to distinguish from changes in accounting estimates)
There are no applicable matters to be reported.

3

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

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

Fiscal year endedApril 30, 2013
(As of April 30, 2013)
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
Deferred assets
Stock issuance cost
Total deferred assets
Total assets

4

Six months ended
October 31, 2013
(As of October 31,
2013)

18,460,349
7,043,984
7,816,853
127,546955,372445,000
7,180,659
1,142,498(9,917)
43,162,346

20,182,789
4,739,882
8,879,691
129,973
1,009,810
1,070,600
8,232,499
904,861(7,479)45,142,627

8,247,806
6,030,803
3,271,425
17,550,035

8,546,174
6,777,257
3,531,777
18,855,209

19,574,539
1,031,265
20,605,804

20,162,730
1,065,406
21,228,136

2,789,730
946,439
6,985,755
4,066,340(267,829)
14,520,435
52,676,275

2,579,047
958,713
7,085,228
4,404,729(267,829)
14,759,888
54,843,234

1,296
1,296
95,839,919－－
99,985,862

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

(Thousand yen)

Fiscal year endedApril 30, 2013
(As of April 30, 2013)
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
Allowance for retirement benefits
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
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets

5

Six months ended
October 31, 2013
(As of October 31,
2013)

24,084,746
7,483,090
2,427,308
7,906,269
1,098,611
12,929315,919
2,357,917
45,686,791

28,514,343
7,088,191
2,442,643
7,745,771
1,239,449
11,935322,070
2,151,623
49,516,028

8,048,584
1,659,245
2,088,777
11,796,607
57,483,398

6,318,919
1,747,143
2,122,140
10,188,204
59,704,232

8,682,976
7,872,970
21,704,510(5,837)
38,254,620

8,682,976
7,872,970
23,647,473(6,047)40,197,373

57,85557,85544,04438,356,520
95,839,919

42,76942,76941,48640,281,629
99,985,862

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

(2) Quarterly consolidated statements of income and comprehensive income
Quarterly consolidated statements of income
Six months ended
October 31, 2012
(May 1, 2012 to
October 31, 2012)

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
Losses on sales of investments in securities
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 loss
Net income

6(Thousand yen)Six months ended
October 31, 2013
(May 1, 2013 to
October 31, 2013)

75,090,551
63,593,065
11,497,485
7,287,507
4,209,97883,024,578
70,366,857
12,657,720
7,645,115
5,012,604

38,68623,09230,721
51,98674,561
191,377
410,426

36,53920,9198,499
41,537
66,897
207,854382,247

71,18236,82917,50340,364
165,879
4,454,524

66,65942,67523,032
98,962
231,330
5,163,522－
10,88150,000809
61,69049,667
4,051
193,941
10,134
257,794

70,697
107,387
1,463
320,000
46,919546,467
3,969,747
1,850,379
2,119,367(18,238)
2,137,606

59,440－－－43,714
103,154
5,318,161
2,421,312
2,896,849(2,558)2,899,407

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

Quarterly consolidated statements of comprehensive income
Six months ended
October 31, 2012
(May 1, 2012 to
October 31, 2012)

Income before minority interests
Other comprehensive income
Unrealized holding gains (losses) on securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to shareholders of
the parent
Comprehensive income (loss) attributable to minority
interests

7(Thousand yen)Six months ended
October 31, 2013
(May 1, 2013 to
October 31, 2013)

2,119,367

2,896,849

29,59529,5952,148,963(15,085)(15,085)
2,881,763

2,167,202

2,884,321(18,238)(2,558)AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014(3) Quarterly consolidated statements of cash flows(Thousand yen)Six months ended
October 31, 2013
(May 1, 2013 to
October 31, 2013)

Six months ended
October 31, 2012
(May 1, 2012 to
October 31, 2012)

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Impairment losses on investments in securities
Increase in allowance for retirement benefits
Increase in allowance for bonuses to employees
Increase (decrease) in allowance for bonuses todirectors
Interest and dividend income
Interest expenses
Losses on disposal and sales of fixed assets
Decrease in accounts receivable
Increase in inventories
Increase in other accounts receivable
Increase 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

3,969,747
997,084
822,858
1,463
123,127
142,606

5,318,161
1,080,684
990,207－73,585
127,16889(994)(61,778)
71,18259,815454,732(1,438,970)(2,365,679)
2,117,445
362,715
5,256,439
67,080(73,195)(2,879,474)
2,370,850(57,458)
66,65955,3892,840,730(813,637)(986,963)
3,924,305(840,959)
11,776,878
53,436(66,855)(2,439,440)
9,324,018(2,519,146)(2,204,368)

240,739

409,491(368,760)
77,300(107,380)
299,729(416,908)(1,703,903)(103,000)
537,901－－(956,835)(3,508,711)(1,965,344)
824,862(6,900)27,602
210,398(4,215,812)

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

(Thousand yen)Six months ended
October 31, 2012
(May 1, 2012 to
October 31, 2012)

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 provided by (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

1,542,227
2,350,000(2,859,928)(194,033)(210)(797,039)
41,015(1,096,844)
15,935,326
14,838,482

9Six months ended
October 31, 2013
(May 1, 2013 to
October 31, 2013)(91,654)
124,578(2,216,669)(234,664)(209)(956,444)(3,375,064)
1,733,142
18,439,646
20,172,789

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

(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, 2012 (May 1, 2012 to October 31, 2012)
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

66,622,833

8,208,949

258,769

75,090,551－

75,090,551(2) Intersegment sales

－

－

3,306

3,306

(3,306)－

Total sales

66,622,833

8,208,949

262,076

75,093,858(3,306)75,090,551

Segment income (loss)

5,682,556

26,290(223,915)

5,484,931(1,030,406)

4,454,524

Other

Total

Sales

Notes:

1. The adjustment of ¥(1,030,406) thousand to segment income (loss) includes ¥969,892 thousand in corporate
expenses, ¥23,150 thousand in losses that are not allocated to reportable segments, and ¥37,363 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]:
The dispensing pharmacy segment includes five dispensing pharmacy companies that have been acquired by theGroup. During the first six months of the fiscal year, the increase in goodwill related to these companies was¥2,025,848 thousand.
II Six months ended October 31, 2013 (May 1, 2013 to October 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

73,954,006

8,736,578

333,994

83,024,578－

83,024,578(2) Intersegment sales－－

94,46994,469(94,469)－

Total sales

73,954,006

8,736,578

428,463

83,119,048(94,469)

83,024,578

Segment income (loss)

6,400,982

4,176(252,838)

6,152,321(988,799)

5,163,522

Other

Total

Sales

Notes:

1. The adjustment of ¥(988,799) thousand to segment income (loss) includes ¥939,630 thousand in corporate
expenses, ¥82,850 thousand in losses that are not allocated to reportable segments, and ¥(33,681) thousand ineliminations due to intersegment transactions.
10

AIN PHARMACIEZ INC. (9627) Summary of Financial Statements for the Second Quarter of the Fiscal Year Ending April 30, 2014

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]:
The dispensing pharmacy segment includes eight dispensing pharmacy companies that have been acquired by theGroup. During the first six months of the fiscal year, the increase in goodwill related to these companies was ¥1,405,598
thousand.

11