Shin Nippon Biomedical Laboratories : Consolidated Financial Results for the Nine Months of the Fiscal Year Ending March 31, 2022 (Under Japanese GAAP)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

February 2, 2022

Consolidated Financial Results

for the Nine Months of the Fiscal Year Ending March 31, 2022

(Under Japanese GAAP)

Company name:	Shin Nippon Biomedical Laboratories, Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	2395
URL:	https://www.snbl.co.jp/
Representative:	Ryoichi Nagata, Representative Chairman, President & CEO
Inquiries:	Toshiyuki Iwata, Senior Officer, Senior Director of Corporate Communications
	Department
Telephone:	[phone]

Scheduled date to file quarterly securities report:	February 2, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
	Revenue		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Nine months ended	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
December 31, 2021	12,946		24.2	3,300	103.0	4,684	184.5	5,247	255.4
December 31, 2020	10,420		3.5	1,626	3.1	1,646	(23.1)	1,476	(8.0)

Note: Comprehensive income	For the nine months ended December 31, 2021:	¥3,633 million	[-%]
		For the nine months ended December 31, 2020:	¥(1,369) million	[-%]
	Basic earnings	Diluted earnings
		per share	per share
Nine months ended		Yen	Yen
December 31, 2021		126.05	-
December 31, 2020		35.47	-

(2) Consolidated financial position

	Total assets	Net assets	Equity ratio	Net assets per share
As of	Millions of yen	Millions of yen	%	Yen
December 31, 2021	37,366	18,707	49.7	446.19
March 31, 2021	36,972	15,838	42.6	377.94
Reference: Equity
As of December 31, 2021:	¥18,576 million
As of March 31, 2021:	¥15,734 million

2. Cash dividends

		Annual dividends per share
	First quarter-end	Second quarter-end		Third quarter-end		Fiscal year-end	Total
	Yen	Yen		Yen		Yen	Yen
Fiscal year ended	-	0.00		-		20.00	20.00
March 31, 2021
Fiscal year ending	-	0.00		-
March 31, 2022
Fiscal year ending
March 31, 2022						40.00	40.00
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: Yes

For details, please see "Notice Regarding Revisions of Consolidated Earnings and Dividend Forecasts for the Full-Year of the Fiscal Year Ending March 31, 2022" announced today.

3. Consolidated earnings forecasts for the year ending March 31, 2022 (from April 1, 2021 to March 31, 2022)

(Percentages indicate year-on-year changes.)

	Revenue		Operating profit	Ordinary profit	Profit attributable to	Profit per share
		owners of parent
	Millions of		%	Millions of	%	Millions of	%	Millions of	%	Yen
	yen		yen	yen	yen
Fiscal year ending	17,900		18.5	4,100	62.1	5,630	54.4	5,800	58.4	139.31
March 31, 2022
Note: Revisions to the forecast of consolidated financial results most recently announced: Yes

For details, please see "Notice Regarding Revisions of Consolidated Earnings and Dividend Forecasts for the Full-Year of the Fiscal Year Ending March 31, 2022" announced today.

* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None

Note: For details, please see page 11 of the attachment, "(3). Notes to quarterly consolidated financial statements (Changes in accounting policies)" of "2. Quarterly consolidated financial statements and significant notes thereto."

(4) Number of issued shares (common shares)

1. Total number of issued shares at the end of the period (including treasury shares)

As of December 31, 2021	41,632,400 shares
As of March 31, 2021	41,632,400 shares

(ii) Number of treasury shares at the end of the period

As of December 31, 2021	361 shares
As of March 31, 2021	358 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Nine months ended December 31, 2021	41,632,041 shares
Nine months ended December 31, 2020	41,632,042 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters
  The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Consequently, any statements herein do not constitute assurances regarding actual results by the Company. Actual financial results may differ significantly from the forecasts for various reasons. For more information regarding our suppositions that form the assumptions for the earnings forecasts, please see page 5 of the attachment, "(3) Explanation of consolidated earnings forecasts and other forward-looking statements."

Attached Material
	Index
1. Qualitative information on quarterly consolidated financial results for the nine months ended
December 31, 2021.................................................................................................................................	2
(1)	Explanation of operating results.....................................................................................................	2
(2)	Explanation of financial position....................................................................................................	4
(3)	Explanation of consolidated earnings forecasts and other forward-looking statements.................	5
2. Quarterly consolidated financial statements and significant notes thereto.............................................	7
(1)	Quarterly consolidated balance sheet .............................................................................................	7
(2)	Quarterly consolidated statement of income and consolidated statement of comprehensive
	income ............................................................................................................................................	9
	Quarterly consolidated statement of income (cumulative) .............................................................	9
	Quarterly consolidated statement of comprehensive income (cumulative)..................................	10
(3)	Notes to quarterly consolidated financial statements ....................................................................	11
	(Notes on going concern assumption) ...........................................................................................	11
	(Notes when there are significant changes in amounts of equity) .................................................	11
	(Changes in accounting policies) ..................................................................................................	11
	(Segment information) .................................................................................................................	12

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1. Qualitative information on quarterly consolidated financial results for the nine months ended December 31, 2021

1. Explanation of operating results
   In the pharmaceutical industry, companies have been increasingly turning to contract research organizations (CROs) that specialize in outsourcing with the aim of accelerating and streamlining research and development in Japan and abroad, and this trend has only further accelerated during the novel coronavirus disease (COVID-19)pandemic. Moreover, research and development involving new modalities in drug discovery is in full swing, particularly with respect to therapeutic antibodies, nucleic acid medicine, peptide drugs, gene therapy, and regenerative medicine, in addition to research and development of COVID-19 vaccines and therapeutic agents. With the CRO business at the core of its operations, the Company has been addressing such trends by placing its focus on meeting customer needs which involves taking swift action, improving services, and persistently enhancing quality with the aim of the Company being far and away the first name that comes to mind for clients when they consider CRO.
   Under such circumstances, revenue for the nine months ended December 31, 2021 increased by ¥2,525 million (up 24.2%) year on year to ¥12,946 million. Operating profit increased by ¥1,674 million (up 103.0%) year on year to ¥3,300 million, and ordinary profit increased by ¥3,037 million (up 184.5%) year on year to ¥4,684 million. Profit attributable to owners of parent increased by ¥3,771 million (up 255.4%) year on year to ¥5,247 million due mainly to the recording of extraordinary income of ¥1,360 million in the first quarter.
   As of December 31, 2021, the Company had 1,002 employees (an increase of 16 employees from the end of March 2021), and the ratio of female employees was 51.0%.
   Operating results by segment of the SNBL Group and initiatives for SDGs/ESG are as follows.
2. 1. CRO business
      The CRO business comprises the preclinical CRO business, which undertakes preclinical studies mainly using cells and laboratory animals, and the clinical business, which undertakes clinical studies.
      The preclinical CRO business achieved continuous favorable results for the nine months ended December 31, 2021. The following initiatives implemented by the Company have shown positive results.
   2. • The importance of the Company-established framework for breeding and supplying large laboratory animals within the SNBL Group, the only such framework being built in Japan, has increased due to research and development involving new modalities in drug discovery coming into full swing. This has led to orders received from both Japan and overseas.
      • The Company promptly introduced the cutting-edge devices required to evaluate the efficacy and safety of new modalities of drug discovery and built an evaluation system. Synergies were demonstrated between this system and the above Company-established framework for breeding and supplying large laboratory animals within the SNBL Group. This led to orders received related to new modalities of drug discovery.
      • The Company has achieved steady progress in concluding contracts to undertake comprehensive research at the drug discovery stage with a major pharmaceutical company, an initiative that began in April 2019, leading to orders received from several companies at the drug discovery stage.

As a result of the above efforts, orders received increased substantially by ¥5,895 million (up 50.5%) year on year to ¥17,569 million, which is a record high for orders received for a first-nine-month period. The order backlog has also posted a record high. Orders received from overseas during the nine months ended December 31, 2021 was ¥4,958 million, which was also a significant 2.2-fold increase year on year thanks to strong orders from Europe and North America, and the ratio of overseas orders received was 28.2% (up from 19.0% in the same period of the previous fiscal year).

The clinical business has been engaging in operations upon having established PPD-SNBL K.K. ("PPD- SNBL") as a joint venture with PPD International Holdings, LLC, an international CRO based in the United States. PPD-SNBL also made solid progress in orders received mostly pertaining to their mainstay business of implementing global studies (studies conducted simultaneously in multiple countries and regions) in Japan that PPD International Holdings, LLC had acquired. Furthermore, as PPD-SNBL is an equity method affiliate of the Company (present equity stake is 40%), earnings from PPD-SNBL are not reflected in the revenue or operating profit of the Company's CRO business. PPD-SNBL's contribution is a non-operating income item and it is recorded as "share of profit of entities accounted for using equity method." The share

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