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

1.

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

Net sales

Three-month period
ended June 30, 2020Three-month period
ended June 30, 2019

Operating profit

Profit attributable toowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen%

31,768

3.5

5,732

9.6

5,750

6.5

4,045

3.6

30,699

3.1

5,230

14.7

5,401

9.8

3,903

11.0

(Note) Comprehensive income： Three-month period ended June 30, 2020: 2,624million yen［(6.0)%］
Three-month period ended June 30, 2019: 2,792million yen［(21.9)%〕

Profit per share
Three-month period
ended June 30, 2020Three-month period
ended June 30, 2019

Fully diluted profit per share
Yen

Yen

52.87

－

51.05

－

(2) Consolidated financial conditions
Total assets

Net assets
Million yen%

312,668
311,042

212,399
213,048

65.7
66.0

As of June 30, 2020
As of March 31, 2020

(Reference) Shareholders’ equity: As of June 30, 2020: 205,569million yen

2.

Shareholders’ equity ratio

Million yen

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

Dividends
Dividend per share
End of Q1

End of Q2

End of Q3

End of FY

Total

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2020

－

32.00

－

32.00

64.00

Year ending March 31, 2021

－
32.00

64.00

Year ending March 31, 2021
(Projection)

32.00(Note)Revisions to dividends projection published most recently: No3.

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

Operating profit% Million yen

Profit attributable toowners of parent

Ordinary profit% Million yen% Million yen

Second quarter(aggregate)

64,200

5.6

9,100

(6.9)

9,400

(4.6)

Full-year

132,000

7.1

17,000(9.9)

17,900(8.9)

Profit per share

%

Yen

6,800

(3.4)

88.88

13,000(5.6)

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

Since it is difficult to accurately predict when the coronavirus outbreak will end, the above forecasts do not factor in the impact of thevirus. Based on the assumption that the coronavirus outbreak is gradually brought under control and the assumption that it continues,
the Company estimates a negative impact on net sales of 2-4%. However, if the outbreak drags on or if there is any other materialchange in the situation, the Company will disclose information in a timely and appropriate manner.

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

FY 3/2021 1Q

76,758,362

FY 3/2020

76,758,362

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

FY 3/2021 1Q

250,069

FY 3/2020

250,049

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

FY 3/2021 1Q

76,508,303

FY 3/2020 1Q

76,457,719* This Summary of Quarterly Consolidated Financial Statements is exempt from quarterly review procedures.
* Explanation about the proper use of financial projections and other important notes(Note about forward-looking information)
In these materials, earnings forecasts and other statements about the future are forward-looking statements based on the information
currently available and certain assumptions that the company regards as reasonable. Accordingly, the Company cannot makepromises to achieve such forecasts. Actual financial results may differ materially from these forecasts depending on a number ofimportant factors. Please see “1.Qualitative information on quarterly results (3) Description of projections of consolidated businessresults” on page 3 for information regarding the forecast of consolidated financial results.

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

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

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

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

3

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

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

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

6

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

6

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

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

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

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

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

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

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

101

1. Qualitative information on quarterly results(1) Description of operating results
In the first quarter under review, net sales were 31,768 million yen, rising 0.6% year on year in Japan despite the effects of the
COVID-19 outbreak, such as the voluntary cancellation and restriction of sales activities and decreased outpatient visits, and rising
3.5% as a result of inclusion of a Chinese subsidiary in the scope of consolidation.
Looking at profit, operating profit was 5,732 million yen (up 9.6% year on year), ordinary profit was 5,750 million yen (up 6.5% year
on year), and profit attributable to owners of parent was 4,045 million yen (up 3.6% year on year).
The cost-to-sales ratio rose 1.6 percentage points year on year due to growth in external sales of subsidiaries, despite offset of the cost
increase arising from the NHI drug price revision by reduced costs related to crude drugs. In addition, the cost-to-SGA ratio fell 2.6
percentage point year on year, partly due to the voluntary cancellation of activities due to the coronavirus outbreak. As a result, theoperating profit margin was 18.0%, rising 1.0 percentage point from a year ago.
[Consolidated business results](Unit: million yen)
FY 3/2020 1Q

Year-on-year change(ratio of change)

FY 3/2021 1Q

1,068

Net sales

30,69931,768Operating profit

5,230

5,732

Ordinary profit

5,401

5,750

348
6.5%

Profit attributable to ownersof parent

3,903

4,045

141
3.6%

3.5%
502
9.6%

To expand the Kampo market and establish its presence there in a sustained manner, which is a strategic challenge adopted in theMedium-Term Management Plan, the Company has positioned geriatric health, cancer (supportive care) and women’s health as threeimportant domains. The Company has been active in providing information on matters focused on “Drug fostering” program
formulations*1 and “Growing” formulations*2.
Net sales of overall prescription Kampo products in the first quarter under review fell 0.3% year on year, reflecting challenging
conditions, including the voluntary cancellation or restriction of visits to medical institutions, and severe restrictions on information
provision activities due to the cancellation or postponement of scientific events amid the coronavirus outbreak, in addition to theimpact of NHI drug price revision.
Net sales for Daikenchuto, a “Drug fostering” program formulation that is a staple item for the Company, increased 0.1% year on year.
The Company is making renewed efforts to ensure full information provision in the hospitals market. At the same time, the Company
is continuing to step up activities for winning new markets targeting practitioners, focusing on a sense of abdominal flatulence, thetreatment of which is assumed to show a low degree of satisfaction, among constipation symptoms. In "growing" formulations,
Hochuekkito and Goreisan performed solidly.
Still unable to properly conduct visit-based sales activities as before, the Company has significantly increased web seminars, whichhave proven to be effective to some extent. The Company has also introduced new activities according to the situation of each region
and medical area, including actively incorporating strategy proposals by MRs.
Moving forward, the Company will continue to further enhance e-promotions in addition to hybrid activities using online activities orconventional visit-based activities depending on the requirements of health care professionals and will push ahead with proactive andeffective information provision activities.
Demand for Kampo medicine among health care professionals is increasingly growing and diversifying. The Company will continue
its activities for providing appropriate information on subjects, including evidence in basic and clinical medicine, clinical practiceguidelines in which Kampo products are described, and the proper use of Kampo medicine based on Kampo diagnosis.
*1 “Drug fostering” program formulations:
Formulations the Company is addressing by looking hard at the structure of diseases in recent years, targeting diseases that are
difficult to treat with new drugs for which prescription Kampo preparations prove specifically effective in domains where demand for
medical treatment is high, and calling the establishment of evidence “drug fostering”*2 “Growing” formulations:
Growth drivers aimed at registration in clinical practice guidelines as strategic formulations after five drug fostering program
formulations by constructing evidence (such as data on safety and effectiveness) in domains where the degree of satisfaction withmedical treatment and the degree of drug contribution are low2(2) Description of financial condition
The financial position at the end of the first quarter under review was as follows:
Total assets at the end of the first quarter increased 1,625 million yen from the end of the previous fiscal year, to 312,668 million yen.
Current assets increased 6,786 million yen from the end of the previous fiscal year, mainly due to a rise in cash and deposits despite adecrease in notes and accounts receivable-trade. Non-current assets decreased 5,160 million yen from the end of the previous fiscal
year, mainly due to a decrease in other in investments and other assets associated with the consolidation of Tsumura Shengshi
Pharmaceuticals Co., Ltd. from the fiscal year under review, offsetting an increase in buildings and structures.
Total liabilities were 100,268 million yen, an increase of 2,275 million yen from the end of the previous fiscal year. Current
liabilities increased 2,477 million yen from the end of the previous fiscal year, mainly due to an increase in other in current liabilities,
which offset a decrease in note and accounts payable-trade.
Non-current liabilities fell 202 million yen from the end of the previous fiscal year.
Net assets totaled 212,399 million yen, a decrease of 649 million yen from the end of the previous fiscal year. Shareholders’ equity
rose 1,334 million yen from the end of the previous fiscal year, mainly reflecting an increase in retained earnings. Accumulated
other comprehensive income dropped 1,143 million yen from the end of the previous fiscal year, chiefly attributable to a fall in foreign
currency translation adjustment. Non-controlling interests decreased 840 million yen from the end of the previous fiscal year.
As a result, the equity ratio fell 0.3 percentage points, to 65.7%.
Cash flows in the first quarter under review were as follows:
At the end of the first quarter under review, cash provided by operating activities was 5,446 million yen, cash provided by investing
activities was 1,214 million yen and cash used in financing activities was 1,810 million yen.
Cash provided by operating activities was 5,446 million yen. Looking at its breakdown, a major cash inflow item was profit before
income taxes of 5,741 million yen, while a major cash outflow item was income taxes paid of 3,233 million yen. Compared to theprevious fiscal year, cash inflow increased 551 million yen.
Cash provided by investing activities was 1,214 million yen. Looking at its breakdown, a major cash inflow item was decrease(increase) in time deposits of 2,336 million yen. Compared to the previous fiscal year, cash inflow decreased 5,703 million yen.
Cash used in financing activities was 1,810 million yen. Looking at its breakdown, a major cash outflow item was dividends paid of
2,348 million yen. Compared to the previous fiscal year, cash outflow decreased 545 million yen.
As a result, cash and cash equivalents increased 4,163 million yen from the end of the previous fiscal year, and when combined with
the increase in cash and cash equivalents of 3,519 million yen associated with the consolidation of a subsidiary, reached 65,375
million yen.
(3) Description of projections of consolidated business results
The projections of consolidated business results for the fiscal year ending March 31, 2021, which were published on May 11, 2020,
remain unchanged.
Since it is difficult to accurately predict when the coronavirus outbreak will end, the above forecasts do not factor in the impact of thevirus. Based on the assumption that the coronavirus outbreak is gradually brought under control and the assumption that it continues,
the Company estimates a negative impact on net sales of 2-4%. However, if the outbreak drags on or if there is any other materialchange in the situation, the Company will disclose information in a timely and appropriate manner.
The Company’s Shizuoka Plant, Ibaraki Plant and Ishioka Center, LOGITEM TSUMURA CO., LTD. and YUBARI TSUMURA
CO., LTD. and the bases of Group companies located in China have all put measures in place to prevent the virus from spreading andare operating as usual. With the safety of its employees, customers and business partners as its number one priority, the Company willcontinue seeking to prevent the spread of the coronavirus, determining a course of action based on Government guidance and actionplans while seeking to continue business in an appropriate manner.

3

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

4

As of June 30, 2020

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

67,281
46,661
10,456
14,20450,502
11,991(22)

194,288

201,075

68,67291,603(83,069)

74,42890,469(84,464)

77,20780,43312,016
1,324

11,608
1,268

13,341

12,877

10,7501,213
14,241(0)

11,040
1,314
5,926
(0)

26,204

18,281

116,753

111,592

311,042

312,668

(Unit:Million yen)
As of March 31, 2020
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Income taxes payable
Provision for sales returns
Other

As of June 30, 2020

10,12822,874
3,607
10
11,856

7,474
23,8302,518
717,122

Total current liabilities

48,47650,953

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

30,00012,39472
7,049

30,00012,39672
6,845

Total non-current liabilities

49,51649,314

Total liabilities

97,993

100,268

Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares

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

30,142
13,837160,150(678)

202,116

203,451

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 shareholders’ equity

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

2,974
10
2,673
(2,614)(926)

Total accumulated other comprehensive income

3,260

2,117

7,671

6,830

213,048

212,399

311,042

312,668

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

Three-month period ended
June 30, 2020
(From April 1, 2020
to June 30, 2020)

Net sales
Cost of sales

30,69912,424

31,76813,363Gross profit

18,275

18,404

Selling, general and administrative expenses

13,044

12,671

Operating profit

5,230

5,732

170
126

153
132

－

107

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

48

42

346

435

26

68

Share of loss of entities accounted for using equity method

29－

Foreign exchange losses
Other

112
6

346
3

Total non-operating expenses

175

418

5,401

5,750

0

0

Gain on sales of investment securities－

0

Total extraordinary income

0

0

0
1

0
9

Ordinary profit
Extraordinary income
Gain on sales of non-current assets

Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets

2

9Profit before income taxes

Total extraordinary losses

5,399

5,741

Income taxes

1,460

1,798

Profit

3,939

3,942

35

(102 )

3,903

4,045

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

6

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

Three-month period ended
June 30, 2020
(From April 1, 2020
to June 30, 2020)

3,939

3,942

(1,019)(1,068)
933
(11)

207
(76)
(1,459)
22

17

(12)

(1,147)(1,318)Comprehensive income

2,792

2,624

Comprehensive income attributable to
Owners of parent
Non-controlling interests

2,648
143

2,902
(278)

7

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

Three-month period ended
June 30, 2020
(From April 1, 2020
to June 30, 2020)

5,399
1,642

5,741
1,794

－

149

(0)
(297)
26

0
(286)
68

29

(107)

2

9

718
(3,034)(289)

440(2,637)(2,498)

－

(0)

(139)
3
2,359

(72)
3
5,840

Subtotal

6,422

8,445

Interest and dividends received
Interest paid
Income taxes paid

302
(45)
(1,783)312(77)(3,233)

Net cash provided by (used in) operating activities

4,895

5,446

9,991
(1,944)0(181)(12,428)

2,336
(600)
4
(44)
(12,169)

12,425

12,170

(907)
(0)
0
(36)

(451)
(1)
0
(29)

6,918

1,214

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

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

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

Three-month period ended
June 30, 2020
(From April 1, 2020
to June 30, 2020)

Cash flows from financing activities
－

1,249

Dividends paid
Payments from changes in capital of subsidiaries that do not
result in change in scope of consolidation
Other(2,343)(2,348)

－

(699)

(12)

(12)

Net cash provided by (used in) financing activities(2,356)(1,810)

Proceeds from short-term borrowings

Effect of exchange rate change on cash and cash equivalents

440

(687)

Net increase (decrease) in cash and cash equivalents

9,898

4,163

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

56,24357,692－

3,519

Cash and cash equivalents at end of period

66,14265,3759

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