Shin Nippon Biomedical Laboratories : Consolidated Financial Results for the Three Months of the Fiscal Year Ending March 31, 2023 (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.

July 29, 2022

Consolidated Financial Results

for the Three Months of the Fiscal Year Ending March 31, 2023

(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, Managing Executive Officer & Senior Director, Corporate
	Communications
Telephone:	[phone]

Scheduled date to file quarterly securities report:	July 29, 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 three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
		Revenue		Operating profit	Ordinary profit	Profit attributable to
			owners of parent
Three months ended	Millions of yen		%	Millions of yen		%	Millions of yen		%	Millions of yen	%
June 30, 2022		4,046		33.1	714		45.2	2,772		312.1	1,944	6.5
June 30, 2021		3,041		(4.2)	491		9.9	672		(8.1)	1,826	183.9
Note: Comprehensive income	For the three months ended June 30, 2022:	¥3,167 million		[14.2%]
		For the three months ended June 30, 2021:	¥2,773 million		[35.2%]
	Basic earnings	Diluted earnings
		per share		per share
Three months ended				Yen			Yen
June 30, 2022				46.70			-
June 30, 2021				43.87			-
(2) Consolidated financial position
		Total assets	Net assets		Equity ratio		Net assets per share
As of		Millions of yen	Millions of yen			%		Yen
June 30, 2022				45,280			21,225			46.5		506.15
March 31, 2022				39,312			19,723			49.8		469.85
Reference: Equity
As of June 30, 2022:		¥21,072 million
As of March 31, 2022:		¥19,561 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		-		40.00	40.00
March 31, 2022
Fiscal year ending	-
March 31, 2023
Fiscal year ending
March 31, 2023		20.00		-		20.00	40.00
(Forecast)

Note: Revisions to the forecast of cash dividends most recently announced: None

Year-end dividend for the fiscal year ended March 31, 2022 includes a special dividend of ¥10.00.

3. Consolidated earnings forecasts for the year ending March 31, 2023 (from April 1, 2022 to March 31, 2023)

(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
Six months ending	10,570		32.8	2,510	27.4	4,700	85.8	3,310	(5.5)	79.50
September 30, 2022
Fiscal year ending	22,830		28.6	5,210	24.2	7,890	11.5	5,590	(21.5)	134.27
March 31, 2022
Note: Revisions to the forecast of consolidated financial results most recently announced: Yes

For details, please refer to the "Revisions of the Earnings Forecasts for the Six Months and Full-Year of the FY Ending March 31, 2023" 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: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

As of June 30, 2022	41,632,400 shares
As of March 31, 2022	41,632,400 shares

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

As of June 30, 2022	420 shares
As of March 31, 2022	390 shares

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

Three months ended June 30, 2022	41,632,009 shares
Three months ended June 30, 2021	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 three months ended
June 30, 2022..........................................................................................................................................	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.............................................	6
(1)	Quarterly consolidated balance sheet .............................................................................................	6
(2)	Quarterly consolidated statement of income and consolidated statement of comprehensive
	income ............................................................................................................................................	8
	Quarterly consolidated statement of income (cumulative).............................................................	8
	Quarterly consolidated statement of comprehensive income (cumulative)....................................	9
(3)	Notes to quarterly consolidated financial statements ...................................................................	10
	(Notes on going concern assumption) ..........................................................................................	10
	(Notes when there are significant changes in amounts of equity) ................................................	10
	(Changes in accounting policies) .................................................................................................	10
	(Segment information) ..................................................................................................................	11
	(Subsequent events)......................................................................................................................	12

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1. Qualitative information on quarterly consolidated financial results for the three months ended June 30, 2022

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 research and development in Japan and abroad while improving cost efficiency and simplifying their correspondence with regulatory authorities, 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, cell 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, aiming to become far and away the first name that comes to mind for clients when they consider CRO.
   Under such circumstances, revenue for the three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022) increased by ¥1,005 million (up 33.1%) year on year to ¥4,046 million. Operating profit increased by ¥222 million (up 45.2%) year on year to ¥714 million, and ordinary profit increased by ¥2,099 million (up 312.1%) year on year to ¥2,772 million, in part due to recording foreign exchange gains of ¥1,686 million (foreign exchange losses of ¥7 million in the three months ended June 30, 2021). Profit attributable to owners of parent increased by ¥117 million (up 6.5%) year on year to ¥1,944 million, despite the increase of income taxes and the absence of extraordinary income of ¥1,360 million recorded in the three months ended June 30, 2021 due to share transfer and third-party allocation of new shares to Pharmaron Beijing Co., Ltd. (Pharmaron Group) in relation to Biomedical Research (GZ) Ltd., which engages in the business of laboratory animal breeding, raising, and quarantine.
   As of June 30, 2022, the SNBL Group had 1,050 employees on a consolidated basis excluding part-time and hourly employees (an increase of 56 employees from the end of March 2022), and the ratio of female employees was 51.8% (51.2% at the end of March 2021).
   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 steady results for the three months ended June 30, 2022. 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 built by a CRO in the world, has increased due to research and development involving new modalities in drug discovery coming into full swing. This has led to an increase in orders received from overseas.
      • The Company has introduced the cutting-edge devices required to evaluate the efficacy and safety of new modalities in drug discovery, and built an evaluation system from an earlier stage. 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 in drug discovery.
      • The Company has achieved steady progress in concluding contracts to undertake comprehensive research at the drug discovery stage with major pharmaceutical companies, and has already received orders from multiple companies for such studies.

As a result of the aforementioned initiatives, orders received for the three months ended June 30, 2022 increased by ¥433 million (up 7.1%) year on year to ¥6,566 million despite the high level of three months ended June 30, 2021. The order backlog as of June 30, 2022, was ¥22,589 million, which is also a record high. In addition, orders received from overseas increased substantially by ¥1,074 million (up 66.6%) year on year, to ¥2,686 million. The main driver was an increase in orders from Europe and North American customers, and the ratio of overseas orders received out of total orders received was 40.9% (26.3% for the three months ended June 30, 2021). Moreover, in the three months ended June 30, 2022, expansion of the animal facility for primates was completed, and its total capacity has been increased by approximately 10%.

Meanwhile, the clinical business has been engaging in contract operations at PPD-SNBL K.K. ("PPD- SNBL"), a joint venture with PPD International Holdings, LLC ("PPD"), an international clinical CRO based in the United States. PPD-SNBL also made solid progress in business operations mostly pertaining

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