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Consolidated Financial Statements for the Second Quarter of the Fiscal Year Ending March 31, 2015 [Japanese GAAP] November 7, 2014 Company name: VITAL KSK HOLDINGS, INC. Stock exchange listing: Tokyo Stock Exchange Code number: 3151 URL: http://www.vitalksk.co.jp/ Representative: Mr. Ken Suzuki, President & CEO Contact: Mr. Kiharu Takahashi, General Manager of Accounting & Finance Phone: +81-3-3275-3303 Scheduled date of filing quarterly report: November 12, 2014 Scheduled date of commencing dividend payments: December 1, 2014 Preparation of supplementary explanatory materials: Yes Quarterly financial results briefing: Yes (for institutional investors and analysts) (Amounts of less than one million yen are rounded down.) 1. Consolidated Results for the Second Quarter of the Fiscal Year Ending March 31, 2015 (April 1, 2014 - September 30, 2014) (1) Consolidated Operating Results (% indicates changes from the previous corresponding period.) Net sales Operating income Ordinary income Net income Six months ended Million yen % Million yen % Million yen % Million yen % September 30, 2014 265,486 (3.9) 724 (39.3) 3,233 11.3 2,536 30.4 September 30, 2013 276,227 2.4 1,193 (39.0) 2,905 (17.8) 1,945 (15.3) (Note) Comprehensive income: Six months ended September 30, 2014: ¥5,533 million [270.6%] Six months ended September 30, 2013: ¥1,492 million [(28.3)%] Net income per share Diluted net income per share Six months ended Yen Yen September 30, 2014 43.76 43.61 September 30, 2013 32.82 - (2) Consolidated Financial Position Total assets Net assets Equity ratio Million yen Million yen % As of September 30, 2014 283,232 69,380 24.4 As of March 31, 2014 279,373 67,566 24.0 (Reference) Equity: As of September 30, 2014: ¥68,969 million As of March 31, 2014: ¥67,172 million 2. Cash Dividends Annual dividends 1st quarter-end 2nd quarter-end 3rd quarter-end Year-end Total Yen Yen Yen Yen Yen Year ended March 31, 2014 - 8.00 - 8.00 16.00 Year ending March 31, 2015 - 8.00 Year ending March 31, 2015 (Forecast) - 10.00 18.00 (Note) Revision to the forecast for dividends announced most recently: None

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Consolidated Financial Statements for the Second Quarter of

the Fiscal Year Ending March 31, 2015

[Japanese GAAP]

November 7, 2014

Company name: VITAL KSK HOLDINGS, INC.

Stock exchange listing: Tokyo Stock Exchange

Code number: 3151

URL: http://www.vitalksk.co.jp/

Representative: Mr. Ken Suzuki, President & CEO

Contact: Mr. Kiharu Takahashi, General Manager of Accounting & Finance

Phone: +81-3-3275-3303

Scheduled date of filing quarterly report: November 12, 2014

Scheduled date of commencing dividend payments: December 1, 2014

Preparation of supplementary explanatory materials: Yes

Quarterly financial results briefing: Yes (for institutional investors and analysts)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Results for the Second Quarter of the Fiscal Year Ending March 31, 2015

(April 1, 2014 - September 30, 2014)

(1) Consolidated Operating Results (% indicates changes from the previous corresponding period.)

Net sales Operating income Ordinary income Net income

Six months ended Million yen % Million yen % Million yen % Million yen %

September 30, 2014 265,486 (3.9) 724 (39.3) 3,233 11.3 2,536 30.4

September 30, 2013 276,227 2.4 1,193 (39.0) 2,905 (17.8) 1,945 (15.3)

(Note) Comprehensive income: Six months ended September 30, 2014: ¥5,533 million [270.6%]

Six months ended September 30, 2013: ¥1,492 million [(28.3)%]

Net income per share

Diluted net income per share

Six months ended Yen Yen

September 30, 2014 43.76 43.61

September 30, 2013 32.82 -

(2) Consolidated Financial Position Total assets Net assets Equity ratio

Million yen Million yen %

As of September 30, 2014 283,232 69,380 24.4

As of March 31, 2014 279,373 67,566 24.0

(Reference) Equity: As of September 30, 2014: ¥68,969 million

As of March 31, 2014: ¥67,172 million

2. Cash Dividends

Annual dividends

1st quarter-end

2nd quarter-end

3rd quarter-end

Year-end Total

Yen Yen Yen Yen Yen

Year ended March 31, 2014 - 8.00 - 8.00 16.00

Year ending March 31, 2015 - 8.00

Year ending March 31, 2015 (Forecast)

- 10.00 18.00

(Note) Revision to the forecast for dividends announced most recently: None

3. Forecast of Consolidated Results for the Fiscal Year Ending March 31, 2015

(April 1, 2014 - March 31, 2015)

(% indicates changes from the previous corresponding period.)

Net sales Operating income Ordinary income Net income

Net income per share

Million yen % Million yen % Million yen % Million yen % Yen

Full year 551,600 (2.3) 1,800 (43.6) 6,000 (9.5) 4,300 1.5 75.51 (Note) Revision to the forecast of consolidated results announced most recently: None

* Notes:

(1) Changes in significant subsidiaries during the period under review: Yes

New: One company Name: OHNO Co., LTD. Exclusion: ― company Name: ―

(Note) For details, please refer to page 6 of the attached materials, “Matters Concerning Summary Information

(Notes) (1) Changes in Significant Subsidiaries during the Period under Review.” (2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes

(Note) For details, please refer to page 6 of the attached materials, “Accounting Policies Adopted Specially for the

Preparation of Quarterly Consolidated Financial Statements.”

(3) Changes in accounting policies, changes in accounting estimates and retrospective restatement

1) Changes in accounting policies due to the revision of accounting standards: Yes

2) Changes in accounting policies other than 1) above: None

3) Changes in accounting estimates: None

4) Retrospective restatement: None

(4) Total number of outstanding shares (common shares)

1) Total number of outstanding shares at the end of the period (including treasury stocks):

September 30, 2014: 61,224,796 shares

March 31, 2014: 61,224,796 shares

2) Total number of treasury stocks at the end of the period:

September 30, 2014: 5,309,890 shares

March 31, 2014: 3,080,296 shares

3) Average number of shares during the period:

Six months ended September 30, 2014: 57,973,779 shares

Six months ended September 30, 2013: 59,266,511 shares

* Presentation regarding the implementation status of the quarterly review procedures

These quarterly financial results are outside the scope of quarterly review procedures under the Financial

Instruments and Exchange Act. At the time of disclosure of these quarterly financial results, quarterly review

procedures for the quarterly consolidated financial statements under the Financial Instruments and Exchange Act

have not been completed.

* Explanation of the proper use of performance forecast and other notes

The earnings forecast and other forward-looking statements herein are based on the information currently

available and certain assumptions deemed reasonable by the Company, and thus actual results may differ

significantly from these forecasts due to a wide range of factors. For cautionary notes on assumptions that form

the basis of the performance forecast and the use of performance forecast, please see “Explanation of Consolidated

Performance Forecast and Other Forward-looking Information” on page 5 of the attached materials.

The Company is scheduled to hold a financial results briefing for institutional investors and analysts on November

20, 2014. The proceedings and audio data of the briefing, along with the briefing materials on the quarterly

financial results to be used in the briefing, will be posted on the Company website immediately after the briefing.

1

Table of Contents

1. Qualitative Information on Quarterly Financial Results ................................................................................ 2

(1) Explanation of Operating Results .............................................................................................................. 2

(2) Explanation of Financial Position .............................................................................................................. 4

(3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information ................. 5

2. Matters Concerning Summary Information (Notes) .................................................................................... ...6

(1) Changes in Significant Subsidiaries during the Period under Review ......................................................... ...6

(2) Accounting Policies Adopted Specially for the Preparation of Quarterly Consolidated Financial

Statements .................................................................................................................................................. 6

(3) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement ...... 6

3. Quarterly Consolidated Financial Statements ................................................................................................ 7

(1) Quarterly Consolidated Balance Sheets ..................................................................................................... 7

(2) Quarterly Consolidated Statements of Income and Comprehensive Income ............................................. 9

Quarterly Consolidated Statements of Income ........................................................................................... 9

Quarterly Consolidated Statements of Comprehensive Income ................................................................. 10

(3) Quarterly Consolidated Statements of Cash Flows .................................................................................... 11

(4) Notes to Quarterly Consolidated Financial Statements ............................................................................ 13

(Notes on going concern assumption) ................................................................................................. 13

(Notes in the case of significant changes in amount of shareholders’ equity) ..................................... 13

(Segment information) ........................................................................................................................ 13

2

1. Qualitative Information on Quarterly Financial Results

(1) Explanation of Operating Results

The Japanese economy during the six months ended September 30, 2014 remained on a moderate recovery

trend, led by the government’s economic and financial policies and other factors. However, since this April, due

mainly to a slowdown in consumer spending resulting from the impact of the government’s implementation of

consumption tax hike, etc., the future outlook is uncertain.

In the pharmaceutical wholesale industry, our Group’s primary business segment, Japan’s medical expense

curbing policy led to drug price revision in April 2014, which lowered drug price standards by 2.65% (5.64%

excluding the increase corresponding to consumption tax hike). When it comes to pharmaceutical distribution

during the six months ended September 30, 2014, following the increased demand in advance of the

government’s implementation of consumption tax hike in April 2014, the pharmaceutical market shrank slightly

as a result of the reaction to such increased demand and the impact of rapid category changes, etc. (shifting of

main products in prescription drug sale from long-listed drugs to generic products and those covered by the

premium pricing scheme for the promotion of new drug creation and resolution of unapproved drugs/off-label

use).

Under these circumstances, the Group has entered the second year of its three-year second medium-term

management plan, which started in April 2013. Led by the two medium-term visions, “Building a Win-Win

relationship with customers in the pharmaceutical wholesale business” and “Investing in business related to

comprehensive community care system and contributing to building regional healthcare infrastructure,” our

goal is to become a Health Care Coordinator in the region.

In January 2014, the Group company INOUE SEISHO DOU CO., LTD. (head office: Takaoka City,

Toyama Prefecture) and FINESE Co., Ltd. (“FINESE”), a company in the same industry with its head office

located in Kanazawa City, Ishikawa Prefecture, were merged and FINESE became an equity method affiliate of

the Company in order to strengthen our core pharmaceutical wholesale business. On April 25, 2014, FINESE

issued new shares through a third-party allotment to the Company (capital contribution ratio: 33.4%) to further

strengthen our relationships. The capital and business alliance agreement concluded between the Company and

FINESE is expected to further increase earning power and expand business opportunities by creating a

contiguous span encompassing the Tohoku, Niigata and Kinki areas, the Group’s main business areas, with the

Hokuriku area, where the newly merged company’s business infrastructure has been reinforced.

In July 2014, as part of the Group’s healthcare coordination business, two residences for elderly people

with supportive service were opened, one in Aoba-ku, Sendai City (named Bell Heart West Park) and one in

Toyooka City, Hyogo Prefecture (named Shiki-no-Sato Toyooka). Not only will this promise strengthen our

relationship with nearby medical institutions, but also it is expected to provide new revenue for the Group in its

residential and nursing care businesses. Also in the same month, VITAL-NET, INC. (head office: Sendai City,

Miyagi Prefecture), a business subsidiary of the Company, made OHNO Co., LTD., which operates over 50

dispensing pharmacies in the area spanning Tokyo and five prefectures mainly in Miyagi Prefecture, its wholly

owned subsidiary. Taking advantage of this opportunity, the Group aims to further promote its healthcare

coordination business so that it will be able to further enhance its earning power.

However, in the pharmaceutical wholesale business, our Group’s primary business segment, sales total of

long-listed drugs fell far below our expectations due to the rapid category changes, in addition to the reaction to

the increased demand in advance of the government’s implementation of consumption tax hike and the trend of

restraining medical examinations. As a result of the above, for the six months ended September 30, 2014,

consolidated net sales were ¥265,486 million (96.1% of that of the same period of the previous year),

consolidated operating income was ¥724 million (60.7% of that of the same period of the previous year),

consolidated ordinary income was ¥3,233 million (111.3% of that of the same period of the previous year), and

consolidated net income was ¥2,536 million (130.4% of that of the same period of the previous year).

3

Performance results by business segment are as follows.

1) Pharmaceutical Wholesale Business

In the pharmaceutical wholesale business, the Group focused on the sale of new products (original drugs)

and products covered by the premium pricing scheme for the promotion of new drug creation and resolution of

unapproved drugs/off-label use, and worked to maintain sales total. In terms of profits, the Group worked with

several manufacturers to secure profits through joint purchasing, as well as focused on negotiations for delivery

prices by single unit and single price in order to respond accurately to category changes. The Group’s main

business subsidiaries (VITAL-NET, INC. and KSK CO., LTD.) used the “VK Marketing” sales strategy system,

which went into full-fledged operation from April 2012, to implement sales strategies based on sales profit and

loss conditions by client, continuing to focus on maintaining and improving earning power while also engaging

in negotiations to improve business dealings with unprofitable clients.

However, the impact of the market shrinkage as mentioned above could not be offset. As a result, net sales

were ¥255,412 million (94.9% of that of the same period of the previous year), and segment income (operating

income) was ¥654 million (65.5% of that of the same period of the previous year).

2) Other Businesses

In other businesses, although net sales substantially increased because of making OHNO Co., LTD. a

consolidated subsidiary, the impact of the reaction to the increased demand in advance of the government’s

implementation of consumption tax hike primarily in the wholesale business of veterinary drugs and

agricultural chemicals was huge. Consequently, net sales were ¥10,074 million (141.7% of that of the same

period of the previous year) and segment income (operating income) was ¥27 million (18.5% of that of the

same period of the previous year).

4

(2) Explanation of Financial Position

1) Condition of Assets, Liabilities and Net Assets

Assets as of the end of the second quarter of the fiscal year under review amounted to ¥283,232 million,

an increase of ¥3,859 million from the end of the previous consolidated fiscal year. Assets comprised ¥188,639

million of current assets and ¥94,593 million of fixed assets.

Current assets mainly comprised ¥27,469 million of cash and deposits, ¥120,042 million of notes and

accounts receivable-trade, ¥26,940 million of inventories and ¥12,793 million of accounts receivable-other.

Current assets decreased ¥11,958 million, due primarily to the ¥2,793 million decrease in cash and deposits and

the ¥6,319 million decrease in notes and accounts receivable-trade from the end of the previous consolidated

fiscal year.

Fixed assets comprised ¥37,187 million of property, plant and equipment, ¥7,111 million of intangible

assets and ¥50,294 million of investments and other assets. Fixed assets increased ¥15,817 million, due

primarily to the ¥5,785 million increase in buildings and structures, the ¥7,861 million increase in investment

securities and the ¥3,185 million decrease in construction in progress from the end of the previous consolidated

fiscal year.

Liabilities amounted to ¥213,852 million, an increase of ¥2,045 million from the end of the previous

consolidated fiscal year. Liabilities comprised ¥178,357 million of current liabilities and ¥35,495 million of

long-term liabilities.

Current liabilities mainly comprised ¥170,445 million of notes and accounts payable-trade, ¥1,614 million

of short-term bank loans and ¥1,655 million of provision for bonuses. Current liabilities decreased ¥10,545

million, due primarily to the ¥10,224 million decrease in notes and accounts payable-trade from the end of the

previous consolidated fiscal year.

Long-term liabilities mainly comprised ¥9,275 million of net defined benefit liability, ¥3,315 million of

negative goodwill, and ¥10,050 million of convertible bond-type bonds with subscription rights to shares.

Long-term liabilities increased ¥12,591 million, due primarily to the ¥812 million increase in long-term debt

and the ¥10,050 million increase in convertible bond-type bonds with subscription rights to shares resulting

from the issuance of euro-yen zero coupon convertible bonds from the end of the previous consolidated fiscal

year.

Net assets amounted to ¥69,380 million, an increase of ¥1,813 million from the end of the previous

consolidated fiscal year, due primarily to the reporting of net income of ¥2,536 million, the ¥3,011 million

increase in valuation difference on investment securities, and the ¥2,073 million increase in treasury stocks

purchased and deducted from net assets.

2) Condition of Cash Flows

Cash and cash equivalents on a consolidated basis (collectively, “Cash”) as of the end of the second

quarter of the fiscal year under review amounted to ¥24,113 million.

(Cash flows from operating activities)

Cash provided by operating activities for the six months ended September 30, 2014 amounted to ¥735

million. This was mainly attributable to increasing factors such as the recording of income before income taxes

and minority interests of ¥3,520 million and depreciation, which are non-cash items, of ¥1,225 million, and the

¥7,481 million decrease in notes and accounts receivable-trade, in spite of decreasing factors such as the

¥11,884 million decrease in notes and accounts payable-trade.

(Cash flows from investing activities)

Cash used in investing activities for the six months ended September 30, 2014 amounted to ¥9,225 million.

This was mainly attributable to decreasing factors such as purchase of property, plant and equipment of ¥2,841

million and purchase of stocks of subsidiaries and affiliates of ¥7,866 million, in spite of increasing factors

such as net decrease in time deposits of ¥1,734 million.

(Cash flows from financing activities)

Cash provided by financing activities for the six months ended September 30, 2014 amounted to ¥7,396

5

million. This was mainly attributable to the increasing factors such as proceeds from issuance of convertible

bond-type bonds with subscription rights to shares of ¥10,017 million, in spite of decreasing factors such as

cash dividends paid of ¥464 million, repayments of lease obligations of ¥365 million, and purchase of treasury

stocks of ¥2,073 million.

(3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information

In light of recent performance trends, etc., the Company has revised the performance forecast for the fiscal

year ending March 31, 2015, announced on August 5, 2014. For details, please see “Notice Concerning

Revision of Performance Forecast,” announced on November 5, 2014.

6

2. Matters Concerning Summary Information (Notes)

(1) Changes in Significant Subsidiaries during the Period under Review

On July 14, 2014, all shares of OHNO Co., LTD. were acquired and the company has been included in the

scope of consolidation from the second quarter of the fiscal year under review.

(2) Accounting Policies Adopted Specially for the Preparation of Quarterly Consolidated Financial Statements

Calculation of tax expenses

Tax expenses are calculated by the method in which the effective tax rate on income before income taxes

for the current consolidated fiscal year after application of tax effect accounting is reasonably estimated, and

the income before income taxes was multiplied by such estimated effective tax rate.

(3) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement

Effective from the first quarter of the fiscal year, the Company has applied the “Accounting Standard for

Retirement Benefits” (Accounting Standards Board of Japan (ASBJ) Statement No. 26, May 17, 2012;

hereinafter the “Retirement Benefits Accounting Standard”) and the “Guidance on Accounting Standard for

Retirement Benefits” (ASBJ Guidance No. 25, May 17, 2012; hereinafter the “Guidance on Retirement

Benefits”), in accordance with the provisions in the main clause of Paragraph 35 of the Retirement Benefits

Accounting Standard and the main clause of Paragraph 67 of the Guidance on Retirement Benefits. Accordingly,

the method of calculating retirement benefit obligations and service costs has been reviewed and the method of

attributing projected retirement benefits to periods has been changed from the straight-line basis to the benefit

formula basis. Additionally, the method of determining the discount rate has been changed from the one that

uses a discount rate based on the period of bonds approximate to the average remaining service periods of

employees to the one that uses a single weighted average discount rate reflecting the estimated period of

retirement benefit payments and the amount of retirement benefit payment for each estimated payment period.

As for application of the Retirement Benefits Accounting Standard, etc. in line with the transitional

treatment provided in Paragraph 37 of the Retirement Benefits Accounting Standard, the effect of the change in

the calculation method of retirement benefit obligations and service costs is added to or deducted from retained

earnings as of at the beginning of the first quarter of the fiscal year under review.

As a result, at the beginning of the first quarter of the fiscal year ending March 31, 2015, net defined

benefit asset decreased ¥496 million, net defined benefit liability increased ¥1,325 million and retained

earnings decreased ¥1,178 million. In addition, operating income, ordinary income and income before income

taxes and minority interests for the six months ended September 30, 2014 increased ¥46 million, respectively.

7

3. Quarterly Consolidated Financial Statements (1) Quarterly Consolidated Balance Sheets

(Million yen)

As of March 31, 2014 As of September 30, 2014

Assets

Current assets

Cash and deposits 30,263 27,469

Notes and accounts receivable-trade 126,361 120,042

Inventories 28,210 26,940

Accounts receivable-other 13,738 12,793

Other 2,461 1,810

Allowance for doubtful accounts (438) (417)

Total current assets 200,597 188,639

Fixed assets

Property, plant and equipment

Buildings and structures, net 11,586 17,372

Land 17,145 17,378

Other, net 5,502 2,437

Total property, plant and equipment 34,234 37,187

Intangible assets

Other 1,984 7,111

Total intangible assets 1,984 7,111

Investments and other assets

Investment securities 32,601 40,463

Other 11,362 11,191

Allowance for doubtful accounts (1,408) (1,360)

Total investments and other assets 42,556 50,294

Total fixed assets 78,776 94,593

Total assets 279,373 283,232

8

(Million yen)

As of March 31, 2014 As of September 30, 2014

Liabilities

Current liabilities

Notes and accounts payable-trade 180,669 170,445

Short-term bank loans 1,950 1,614

Income taxes payable 785 1,030

Provision for bonuses 1,844 1,655

Other provision 173 173

Other 3,480 3,438

Total current liabilities 188,903 178,357

Long-term liabilities Convertible bond-type bonds with subscription

rights to shares –

10,050

Long-term debt 3,000 3,812

Other provision 229 209

Negative goodwill 3,683 3,315

Net defined benefit liability 8,176 9,275

Other 7,813 8,832

Total long -term liabilities 22,903 35,495

Total liabilities 211,806 213,852

Net assets

Shareholders’ equity

Common stock 5,000 5,000

Capital surplus 12,675 12,675

Retained earnings 38,427 39,320

Treasury stock (1,986) (4,060)

Total shareholders’ equity 54,116 52,935

Accumulated other comprehensive income

Valuation difference on available-for-sale securities 12,642 15,653

Remeasurements of defined benefit plans 413 379

Total accumulated other comprehensive income 13,055 16,033

Minority interests 394 410

Total net assets 67,566 69,380

Total liabilities and net assets 279,373 283,232

9

(2) Quarterly Consolidated Statements of Income and Comprehensive Income

Quarterly Consolidated Statements of Income

Six Months Ended September 30, 2013 and 2014

(Million yen)

For the six months ended

September 30, 2013

For the six months ended

September 30, 2014

Net sales 276,227 265,486

Cost of sales 256,140 245,517

Gross profit 20,086 19,969

Reversal of provision for sales returns 167 173

Provision for sales returns 163 173

Gross profit-net 20,089 19,969

Selling, general and administrative expenses 18,896 19,245

Operating income 1,193 724

Non-operating income

Interest income 81 74

Dividend income 331 370

Amortization of negative goodwill 368 368

Equity in earnings of associated company – 813

Administrative service income 740 691

Other 221 258

Total non-operating income 1,743 2,577

Non-operating expenses

Interest expenses 22 25

Bond issuance cost - 32

Other 9 10

Total non-operating expenses 31 68

Ordinary income 2,905 3,233

Extraordinary income

Gain on sales of fixed assets 6 0

Insurance income - 162

Compensation income 81 60

Other 77 76

Total extraordinary income 165 299

Extraordinary losses

Loss on sales of fixed assets 0 –

Loss on impairment of fixed assets 12 6

Other 13 6

Total extraordinary losses 26 12

Income before income taxes and minority interests 3,044 3,520

Income taxes 1,077 964

Income before minority interests 1,967 2,555

Minority interests 22 18

Net income 1,945 2,536

10

Quarterly Consolidated Statements of Comprehensive Income

Six Months Ended September 30, 2013 and 2014

(Million yen)

For the six months ended

September 30, 2013

For the six months ended

September 30, 2014

Income before minority interests 1,967 2,555 Other comprehensive income

Valuation difference on available-for-sale securities (474) 2,736 Share of other comprehensive income of associated

company accounted for using equity method – 274

Remeasurements of defined benefit plans, net of tax – (33)

Total other comprehensive income (474) 2,977

Comprehensive income 1,492 5,533

Comprehensive income attributable to: Owners of the parent 1,470 5,514 Minority interests 22 18

11

(3) Quarterly Consolidated Statements of Cash Flows

(Million yen)

For the six months ended

September 30, 2013

For the six months ended

September 30, 2014

Cash flows from operating activities Income before income taxes and minority interests 3,044 3,520 Depreciation 1,068 1,225 Loss on impairment of fixed assets 12 6 Amortization of goodwill 5 78 Amortization of negative goodwill (368) (368) Increase (decrease) in allowance for doubtful accounts (21) (70) Equity in (earnings) loss of associated company – (813) Increase (decrease) in provision for bonuses (101) (438) Increase (decrease) in net defined benefit liability – 343 Increase (decrease) in provision for retirement benefits (375) – Interest and dividend income (412) (445) Rent income (33) (46) Administrative service income (740) (691) Interest expenses 22 25 Loss (gain) on sales and valuation of investment

securities (37) (8)

Loss (gain) on sales and retirement of property, plant

and equipment (5) (0)

Decrease (increase) in notes and accounts receivable-

trade (5,878) 7,481

Decrease (increase) in inventories 1,565 1,578 Decrease (increase) in accounts receivable-other 1,556 943 Increase (decrease) in notes and accounts payable-trade (15,655) (11,884) Decrease (increase) in guarantee deposits (212) (43) Other, net (717) (1,043)

Subtotal (17,285) (650)

Interest and dividend income received 420 446 Administrative service income received 728 692 Compensation income received 81 60 Proceeds from insurance income – 162 Interest expenses paid (18) (26) Income taxes paid (2,225) (799) Income taxes refund 190 860 Other, net (1) (9) Net cash provided by (used in) operating activities (18,110) 735

12

For the six months ended

September 30, 2013

For the six months ended

September 30, 2014

Cash flows from investing activities Net decrease (increase) in time deposits 1,993 1,734 Purchase of property, plant and equipment (2,297) (2,841) Proceeds from sales of property, plant and equipment 101 0

Purchase of intangible assets (304) (446)

Purchase of investment securities (271) (21) Proceeds from sales of investment securities 161 13 Purchase of stocks of subsidiaries and affiliates – (7,866) Proceeds from distribution of investment in partnerships 84 15 Other, net 150 186

Net cash provided by (used in) investing activities (382) (9,225)

Cash flows from financing activities Proceeds from issuance of convertible bond-type bonds

with subscription rights to shares – 10,017

Proceeds from long-term debt 3,000 1,200 Repayments of long-term debt – (916) Repayments of lease obligations (312) (365) Purchase of treasury stocks (0) (2,073) Cash dividends paid (473) (464) Other, net (2) (2)

Net cash provided by (used in) financing activities 2,211 7,396

Net increase (decrease) in cash and cash equivalents (16,282) (1,093)

Cash and cash equivalents at the beginning of period 33,360 25,206

Cash and cash equivalents at the end of period 17,078 24,113

13

(4) Notes to Quarterly Consolidated Financial Statements

(Notes on going concern assumption)

For the six months ended September 30, 2014 (from April 1, 2014 to September 30, 2014)

Not applicable.

(Notes in the case of significant changes in amount of shareholders’ equity)

For the six months ended September 30, 2014 (from April 1, 2014 to September 30, 2014)

Not applicable.

(Segment information)

I. For the six months ended September 30, 2013 (from April 1, 2013 to September 30, 2013)

Information on net sales and income (loss) by reportable segment

(Million yen)

Reportable segment

Others

(Note 1) Total

Adjustment

(Note 2)

Amount

recorded in

Quarterly

Consolidated

Statements of

Income

(Note 3)

Pharmaceuti-

cal

Wholesale

Business

Total

Net sales

Net sales to outside customers 269,114 269,114 7,112 276,227 – 276,227

Inter-segment net sales

or transfers 659 659 1,303 1,962 (1,962) –

Total 269,773 269,773 8,415 278,189 (1,962) 276,227

Segment income 999 999 148 1,148 45 1,193

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as

retail of pharmaceuticals, etc., wholesale of agricultural chemicals and veterinary drugs, transportation

business, nursing care service business and consulting services for medical institutions.

2. ¥45 million of adjustment of segment income refers to elimination of inter-segment transactions.

3. Adjustments are made to reconcile segment income to operating income reported on the quarterly

consolidated statements of income.

14

II. For the six months ended September 30, 2014 (from April 1, 2014 to September 30, 2014)

Information on net sales and income (loss) by reportable segment

(Million yen)

Reportable segment

Others

(Note 1) Total

Adjustment

(Note 2)

Amount

recorded in

Quarterly

Consolidated

Statements of

Income

(Note 3)

Pharmaceuti-

cal

Wholesale

Business

Total

Net sales

Net sales to outside customers 255,412 255,412 10,074 265,486 – 265,486

Inter-segment net sales

or transfers 1,192 1,192 1,297 2,490 (2,490) –

Total 256,604 256,604 11,372 267,976 (2,490) 265,486

Segment income 654 654 27 682 41 724

(Notes) 1. “Others” is the segment which is not included in reportable segments, including such businesses as

retail of pharmaceuticals, etc., wholesale of agricultural chemicals and veterinary drugs, transportation

business, nursing care service business and consulting services for medical institutions.

2. ¥41 million of adjustment of segment income refers to elimination of inter-segment transactions.

3. Adjustments are made to reconcile segment income to operating income reported on the quarterly

consolidated statements of income.