Shionogi : FY2022 3Q Financial Results & Supplement

Consolidated Financial Results for the Third Quarter of Fiscal Year 2022 (IFRS)

Name of Listed Company:SHIONOGI & CO., LTD.

January 30, 2023

Listed Exchanges: Tokyo

Code: 4507

URL: https://www.shionogi.com

Representative:Isao Teshirogi, Ph.D., Representative Director, Chairman and President

Contact responsibility:Yoshimasa Kyokawa, Vice President,Corporate Communications Department

Tel.:[phone]

Scheduled date of quarterly securities report submission:

February 13, 2023

Scheduled date of dividend payments:

-

Preparation of supplemental material for the quarterly financial results: Yes

Holding of presentation for the quarterly financial results:

Yes (for investment analysts)

(Note: All amounts are rounded down to the nearest million yen.)

1. Consolidated results for the period from April 1, 2022 to December 31, 2022

(1) Consolidated operating results

(% shows changes from the same period of the previous fiscal year)

Profit attributable

Comprehensive

Revenue

Operating profit

Profit before tax

Profit

to owners of

income

parent

Millions

%

Millions

%

Millions

%

Millions

%

Millions

%

Millions

%

of yen

of yen

of yen

of yen

of yen

of yen

Nine months ended

338,347

54.1

146,473 142.4

198,786 165.8

157,773 123.1

157,729 122.2

165,830 105.3

December 31, 2022

Nine months ended

219,626

(2.1)

60,422 (42.5)

74,784 (37.6)

70,731 (20.6)

71,000 (20.3)

80,790 (16.3)

December 31 2021

Basic earnings per

Diluted earnings per

share

share

Yen

Yen

Nine months ended

527.81

527.63

December 31, 2022

Nine months ended

235.51

235.43

December 31, 2021

(2) Consolidated financial position

Equity attributable to

Ratio of equity

Total assets

Total equity

attributable to owners of

owners of parent

parent to total assets

Millions of yen

Millions of yen

Millions of yen

%

As of December 31, 2022

1,261,616

1,078,526

1,055,240

83.6

As of March 31, 2022

1,150,601

993,285

975,661

84.8

2. Dividends

Dividends per share

(Date of record)

End of

End of

End of

Year-end

Annual

first quarter

second quarter

third quarter

Yen

Yen

Yen

Yen

Yen

Year ended March 31, 2022

－

55.00

－

60.00

115.00

Year ending March 31, 2023

－

60.00

－

Year ending March 31, 2023

60.00

120.00

(forecast)

Note: Revisions of the most recent dividend forecast:

None

3. Consolidated financial forecast for the year ending March 31, 2023

(% shows changes from the same period of the previous fiscal year)

Revenue

Operating profit

Profit before tax

Profit attributable to

Basic earnings per

owners of parent

share

Millions

%

Millions

%

Millions

%

Millions

%

Yen

of yen

of yen

of yen

of yen

Year ending March 31, 2023

421,000 25.6

147,000

33.3

210,000

66.3

170,000 48.9

568.87

Note: Revisions of the most recent consolidated financial forecast: Yes

• Notes

(1) Significant changes in subsidiaries during the period (changes in specified subsidiaries involving changes

in scope of consolidation): None

(2) Changes in accounting policies, changes/restatements of accounting estimates

a) Changes in accounting policies required by IFRS	: None
b) Changes in accounting policies other than a) above : None
c) Changes in accounting estimates	: None

(3) Number of shares issued (common stock)

a) Number of shares issued (including treasury stock)
As of December 31, 2022:	311,586,165	shares
As of March 31, 2022:	311,586,165	shares
b) Number of treasury stock
As of December 31, 2022:	17,279,573	shares
As of March 31, 2022:	10,103,385	shares
c) Average number of shares issued during the period
Nine months ended December 31, 2022:	298,837,625	shares
Nine months ended December 31, 2021:	301,477,545	shares

Note: The average number of treasury shares during the period include the Company's shares held by the trust account of Sumitomo Mitsui

Trust Bank, Limited. (Second-tier trustee: the trust account of Custody Bank of Japan, Ltd.) related to Shionogi Infectious Disease Research

Promotion Foundation. (Q3 ended December 31, 2022: 3,000,000 shares) The number of treasury shares deducted for calculation of the

average number of shares during the period include these treasury shares. (Q3 ended December 31, 2022: 3,000,000 shares)

• This report of financial results is unaudited.
• Explanation Concerning the Appropriate Use of Financial Results Forecasts and Other Special Instructions (Cautionary note concerning forward-looking statements)
  The forecast of financial results and forward-looking statements contained in this report are based on information currently available to the Company as well as certain assumptions that it judges to be reasonable. Actual results may differ materially due to a variety of factors.
  For the assumptions used in forecasts and precautionary statements regarding the use of the forecasts, please refer to "1. Overview of Operating Results and Financial Position (4) Outlook" on page 3 of the accompanying materials.

(Method of Obtaining Financial Results Supplementary Materials and Details of Results Briefing Meeting)

Financial results supplementary materials are posted via TDnet on the date of disclosure. The Company plans to hold a results briefing meeting for analysts on Monday, January 30, 2023. Plans are also in place to post explanatory details (Transcript) together with financial results explanatory materials distributed to analysts on January 30, 2023 on the Company's website in a timely manner after the results briefing.

SHIONOGI & CO.,LTD. (4507)

Financial Results for the 3rd Quarter of FY2022

CONTENTS

1. Overview of Operating Results and Financial Position	2
(1)	Operating Results for the Third Quarter of the Fiscal Year Ending March 31, 2023	2
(2)	Financial Position for the Third Quarter of the Fiscal Year Ending March 31, 2023	2
(3)	Cash Flows for the Third Quarter of the Fiscal Year Ending March 31, 2023	3
(4)	Outlook	3
2. Consolidated Financial Statements and Notes	4
(1)	Consolidated statement of profit or loss and Consolidated statement of comprehensive
	income	4
(2)	Consolidated statement of financial position	6
(3)	Consolidated statement of changes in equity	8
(4)	Consolidated statement of cash flows	9
(5)	Notes	11
	Going concern assumption	11
	Segment informatioin	11

1

SHIONOGI & CO.,LTD. (4507)

Financial Results for the 3rd Quarter of FY2022

1. Overview of Operating Results and Financial Position

1. Operating Results for the Third Quarter of the Fiscal Year Ending March 31, 2023
   For the Nine months ended December 31, 2022 (April 1, 2022 to December 31, 2022), operating results were as follows.

				Millions of yen
	Nine months ended	Nine months ended	Change	Percentage change
	December 31, 2022	December 31, 2021	(%)
Revenue	338,347	219,626	118,721	54.1
Operating profit	146,473	60,422	86,051	142.4
Core operating profit *	144,029	61,917	82,112	132.6
Profit before tax	198,786	74,784	124,002	165.8
Profit attributable to owners of	157,729	71,000	86,728	122.2
parent

• The Company has established "core operating profit" as a profit indicator to present ordinary profitability. This has been adopted as the Company's proprietary earnings management indicator. Core operating profit is an adjusted profitin which non-recurring items (impairment, gain on sales of property, plant, and equipment, etc.) are deducted from operating profit.

Revenue increased 54.1 percent year on year. As for COVID-19-related products, the Japanese government purchased doses of the COVID-19 antiviral treatment Xocova for 2 million people under a contract for domestic supply that Shionogi signed with the Ministry of Health, Labour and Welfare, recording revenue of 100billion yen. In domestic sales of prescription drugs, revenue for Intuniv expanded, but overall revenue decreased 21.4 percent, reflecting a decrease in revenue for Cymbalta due to the market entry of a generic versions, as well as returns of Xofluza and Rapiacta in the second quarter. In overseas subsidiary sales and exports, despite the absence of a one-time payment the Shionogi Group received in the first quarter of the previous fiscal year in connection with the transfer of marketing rights for FORTAMET in the United States, revenue increased 16.9 percent because cefiderocol (U.S. brand name: Fetroja, European brand name: Fetcroja), which has shown effectiveness against multidrug-resistantGram-negative bacteria, continued to perform well in the United States and Europe. Royalty income increased 28.7 percent due to growth in sales of the HIV franchise out-licensed to ViiV, centered on Dovato, Cabenuva and other products as well as the impact of exchange rates.

Research and development expenses increased because of investment in key projects and priority issues such as potential treatments and vaccines for COVID-19. However, operating profit surged 142.4 percent year on year because of increase in revenue. Core operating profit climbed 132.6 percent as a result of adjustment of non-recurring items, including the sale of investment property in the second quarter. Profit before tax increased 165.8 percent due to an increase in dividends because sales of the HIV franchise by ViiV expanded steadily, ViiV received a one-time payment in connection with the settlement of litigation with GileadSciences, Inc. and the Shionogi Group received dividends from ViiV in the current fiscal year that were originally scheduled to be received in the fourth quarter of fiscal 2021. Profit attributable to owners of parent increased 122.2 percent year on year, reflecting the refund received in the first quarter of fiscal 2021 in connection with a favorable judgement regarding the complaint for the rescission of tax reassessment by the Osaka Regional Taxation Bureau.

1. Financial Position for the Third Quarter of the Fiscal Year Ending March 31, 2023
   As of December 31, 2022, total assets were ¥1,261,616 million, an increase of ¥111,014 million from the end of the previous fiscal year.
   Non-current assets were ¥512,064 million, an increase of ¥20,668 million from the end of the previous fiscal year due to an increase in intangible assets, including in-process R&D assets. Current assets were ¥749,552 million, an increase of ¥90,346 million from the end of the previous fiscal year due to increases in inventories and trade receivables, as well as increases and decreases in cash and cash equivalents, and in time deposits and bonds of more than three months (included in "Other financial assets" in current assets).
   Equity was ¥1,078,526 million, an increase of ¥85,241 million from the end of the previous fiscal year. This was due to recording of profit, payment of cash dividends, purchase of treasury shares, an increase in exchange differences on translation of foreign operations (included in "Other components of equity"), and an increase in non-controlling interests resulting from a third-party allotment at a subsidiary.
   Liabilities totaled ¥183,089 million, an increase of ¥25,773 million from the end of the previous fiscal year.
   Non-current liabilities were ¥37,767 million, an increase of ¥4,847 million from the end of the previous fiscal year. Current liabilities were ¥145,322 million, an increase of ¥20,926 million from the end of the previous fiscal year.

2

SHIONOGI & CO.,LTD. (4507)

Financial Results for the 3nd Quarter of FY2022

1. Cash Flows for the Third Quarter of the Fiscal Year Ending March 31, 2023
   Net cash provided by operating activities during the nine months ended December 31, 2022 was ¥116,387 million, an increase of ¥39,677 million year on year. Factors included profit before tax and increases in dividends received from ViiV, trade receivables and inventories.
   Net cash used in investing activities was ¥79,298 million, a decrease of ¥38,665 million year on year. Factors included purchase of intangible assets and increases and decreases of time deposits.
   Net cash used in financing activities was ¥83,633 million, an increase of ¥47,899 million year on year, mainly because of an increase due to purchase of treasury shares, which was offset by a capital increase through third-party allotment at a subsidiary.
   As a result, cash and cash equivalents at the end of the third quarter totaled ¥218,669 million, a decrease of ¥35,751 million from the end of the previous fiscal year.
2. Outlook
   Based on recent performance trends, the Shionogi Group has revised its financial forecast for the fiscal year ending March 31, 2023, released on October 24, 2022, as follows.
   .
   1) Revisions of Financial Forecast

Revised forecasts for the year ending March 31, 2023

				Profit	Basic
		Operating	Profit before	attributable to
	Revenue	earnings per
	profit	tax	owners of
		share
				parent
	Millions of yen	Millions of yen	Millions of yen	Millions of yen	Yen
Previous forecast (A)	410,000	120,000	174,000	142,000	471.58
New forecast (B)	421,000	147,000	210,000	170,000	568.87
Change (B-A)	11,000	27,000	36,000	28,000	－
Percentage Change (%)	2.7	22.5	20.7	19.7	－
(Reference) For the year	335,138	110,312	126,268	114,185	378.75
ended March 31, 2022
(Reference) Y on Y change (%)	25.6	33.3	66.3	48.9	－

2) Reasons for revisions to consolidated earnings forecasts

Related to the HIV franchise partnered with ViiV, we received increasing royalty and dividend income exceeding previous forecasts due to the sales growth of Dovato and Cabenuva. In addition,the base business, including the sales of cefiderocol in Europe and the United States, is showing steady progress.

Furthermore, we invested the largest amount of R&D expense in our history, primarily on projects related to COVID-19. As a results, we obtained domestic manufacturing and marketing approval for Xocova and signed a purchase agreement for a total of 2 million people with the Japanese government. Regarding the earnings forecast for COVID- 19-related projects, there were many uncertainties such as a timing of Xocova's approval and the number of purchases, so cost of goods sold and selling, general and administrative expenses were conservatively calculated. Therefore, all profit items are expected to exceed the previous forecast. Regarding the overseas expansion of Xocova, we are making steady progress in development,in constructing a production system, and in consultations with governments around the world on provisions, and further increases in sales are expected.

In addition, we expected to make a certain amount of investment in this fiscal year as a growth investment, but because we are focusing on COVID-19 related businesses, some of the originally planned growth investments will be shifted to the next fiscal year, and we expect a decrease in selling, general and administrative expenses. On the other hand, R&D expenses are expected to increase as we continue to actively invest in future growth drivers, including COVID-19 related projects, but we will continue to appropriately control these expenses.

As a result, revenue and all profit items are expected to exceed the previous forecasts, and we have revised our full- year consolidated earnings forecast for the fiscal year ending March 31, 2023 upward accordingly.

Revenue and all profit items in the revised forecast are expected to increase year-on-year. If the revised forecast is achieved, revenue and all profit items are expected to be the highest performance since Shionogi's founding.

3