Sysmex : Summary of Consolidated Financial Results for the Fiscal Year Ending March 31, 2023

Summary of Consolidated Financial Results [ IFRS ]

for the First Six Months of the Fiscal Year Ending March 31, 2023

November 9, 2022

Listed company name

:

Sysmex Corporation

Code

:

6869

Listed stock exchanges

:

Tokyo Stock Exchange

URL

:

www.sysmex.co.jp/en

Company representative

: Hisashi Ietsugu, Chairman and CEO

Contact

: Kensuke Iizuka, Senior Executive Officer

and Executive Vice President of Corporate

Business Administration

Phone

:

078(265)-0500

Scheduled date for filing of quarterly report

:

November 11, 2022

Scheduled date for dividend payment

:

December 5, 2022

Preparation of supplementary material for

:

Yes

quarterly earnings

Holding of earnings announcement

:

Yes

1. Results for the First Six Months of the Fiscal Year Ending March 31, 2023

(Unit: Millions of Yen)

(1) Operating results

(% changes as compared with the corresponding period of the previous fiscal year)

Net Sales

Operating profit

Profit before tax

Profit

Six months ended

194,022

15.0%

33,150

(0.3)%

34,546

9.2%

23,921

9.6%

Sep. 30, 2022

Six months ended

168,753

27.8%

33,251

66.2%

31,628

74.8%

21,824

73.5%

Sep. 30, 2021

Profit

Total

Basic earnings

Diluted earnings

attributable to

comprehensive

owners of the

per share (Yen)

per share (Yen)

income

parent

Six months ended Sep. 30, 2022

23,989

9.4%

39,366

73.2%

114.66

114.61

Six months ended Sep. 30, 2021

21,924

73.3%

22,729

58.8%

104.90

104.67

Note: Changes in accounting policy have been retroactively applied to the figures for the first six months of the fiscal year ended March 31, 2022. Figures shown here are after this retroactive application.

(2) Financial condition

	Total assets		Total equity	Equity attributable	Equity attributable
		to owners of the	to owners of the
				parent	parent to total assets
As of Sep. 30, 2022		511,230	380,388	379,707	74.3%
As of Mar. 31, 2022		483,707	349,053	348,303	72.0%

2. Dividend

		Dividend per share
		First quarter		Second quarter	Third quarter	Year-end	Annual
		(Yen)		(Yen)	(Yen)	(Yen)	(Yen)
Year ended Mar. 31, 2022		￣	37.00	￣	39.00		76.00
Year ending Mar. 31, 2023		￣	40.00
Year ending Mar. 31, 2023							40.00		80.00
(Forecast)						￣

Note: Revision of dividends forecast for this period: No

3. Financial Forecast for the Year Ending March 31, 2023

(% changes as compared with the corresponding period of the previous fiscal year)

	Net Sales		Operating profit	Profit before tax	Profit attributable to	Basic earnings
		owners of the parent	per share (Yen)
Year ending	420,000	15.5%	77,000	14.2%	74,500	15.8%	51,000	15.7%	243.76
Mar. 31, 2023

Note: Revision of financial forecast for this period: Yes

4. Other Information

1. Changes in significant consolidated subsidiaries (which resulted in changes in scope of consolidation): Yes
   Excluded: One company (Sysmex International Reagents Co., Ltd.)
2. Changes in accounting policies and accounting estimates
3. 1. Changes in accounting policies required by IFRS: No
   2. Other changes in accounting policies: No
   3. Changes in accounting estimates: No
4. Number of outstanding stock (common stock)
5. 1. Number of outstanding stock at the end of each fiscal period (including treasury stock):

209,675,082 shares as of Sep. 30, 2022; 209,657,362 shares as of Mar. 31, 2022

2) Number of treasury stock at the end of each fiscal period:

447,308 shares as of Sep. 30, 2022; 447,255 shares as of Mar. 31, 2022

1. Average number of outstanding stock for each period (cumulative): 209,218,108 shares for the six months ended Sep. 30, 2022 209,014,581 shares for the six months ended Sep. 30, 2021

Note: Quarterly summaries of financial results are excluded from quarterly reviews.

• Explanation regarding the appropriate use of financial forecast and other information
  1. The forecasts and future projections contained herein have been prepared on the basis of rational

decisions given the information available as of the date of announcement of this document. These forecasts do not represent a commitment by the Company, and actual performance may differ substantially from forecasts for a variety of reasons. Please refer to "3) Consolidated financial forecast" within "1. Qualitative information on quarterly financial results" on page 4 of the attachment to this document for cautionary statements concerning the conditions and performance forecasts that serve as the basis for these forecasts.

2. Supplementary financial materials (in Japanese and English) will be posted on the Sysmex website on Wednesday, November 9, 2022.

Content of Supplementary Materials
1. Qualitative information on quarterly financial results	2
1)	Operating performance analysis	2
2)	Financial conditions analysis	4
3)	Consolidated financial forecast	4
2. Condensed quarterly consolidated financial statements and notes	5
1)	Condensed quarterly consolidated statement of financial position	5
2)	Condensed quarterly consolidated statement of income	7
3)	Condensed quarterly consolidated statement of other comprehensive income	8
4)	Condensed quarterly consolidated statement of changes in equity	9
5)	Condensed quarterly consolidated statement of cash flows	11
6)	Notes to the condensed quarterly consolidated financial statements	12
	1. Notes related to the going concern assumption	12
	2. Segment information	12

－ 1 －

1. Qualitative information on quarterly financial results

1) Operating performance analysis

Future-related information contained in the text below is based on the judgement as of the end of the fiscal period under review.

In the past, the Group booked configuration and customization costs in cloud computing contracts as other non-current assets. However, in the fiscal year ended March 31, 2022 we began recognizing these costs as expenses when the services are received, in accordance with a decision announced in April 2021 by the IFRS Interpretation Guidelines Committee. These changes in accounting policy have been applied retroactively, and we are comparing and analyzing the figures for the first six months of the previous fiscal year to reflect this retroactive treatment.

In the first six months of the fiscal year ending March 31, 2023, the Japanese economy was characterized by a weakening recovery in personal consumption, owing to the resurgence of COVID-

19. The economic outlook remained opaque, clouded by such factors as further yen depreciation, which pushed up the cost of imports, and sharply higher resource prices. Overseas, overall socioeconomic activity continued to normalize. Even so, the situation remains unpredictable due to lockdowns in China, centered on Shanghai, the prolonged Russian invasion of Ukraine, soaring resource and energy prices, and the risk of significant fluctuations in the financial and capital markets.

On the healthcare front, aging populations in developed countries are driving demand for more efficient healthcare. Economic growth in emerging markets is causing healthcare demand to increase and prompting higher levels of healthcare quality and service enhancements. At the same time, rapid advances in the application of artificial intelligence, information and communications technology, and other leading-edge technologies to the healthcare sector are expected to continue providing opportunities for growth. The global COVID-19 pandemic has also prompted considerations about healthcare systems and the potential for major changes in the healthcare environment itself. We anticipate further opportunities for growth, such as improving access to healthcare and a focus on self-medication.

Against this backdrop, Sysmex launched the UF-1500 Fully Automated Urine Particle Analyzer (UF-1500), a new product for use in urine sediment testing. The UF-1500 inherits the high levels of functionality and usability of our flagship fully automated urine particle analyzer, while achieving greater compactness. By expanding the product lineup, we will deliver a wider range of solutions tailored to the customer's environment and contribute to the streamlining and standardization of urine testing at small and medium-sized facilities.

In an effort toward the realization of personalized medicine, we applied for a partial change of the manufacturing and marketing approval for the OncoGuide™ NCC Oncopanel System*1, a gene mutation analysis set to include its use as a companion diagnostic for patients with advanced biliary tract cancer harboring FGFR2*2 gene rearrangements, including gene fusions. If, through these initiatives, the system can be used to determine indications for the use of futibatinib*3 in the future, it will provide another treatment option to patients with locally advanced or metastatic biliary tract cancer.

In addition, Sysmex and TOHO HOLDINGS CO., LTD. established a system for the supply of quality control reagents for clinical chemistry tests requiring a high level of refrigerated transportation. The new system reduces transportation frequency, allows the reuse of transportation materials, and makes the overall transportation process dry ice-free. This is the first initiative in the domestic in vitro diagnostic products industry to combine consolidated cargo and pharmaceutical wholesalers' general delivery system (for ordinary products) in dry-ice free long-haul deliveries. We expect this initiative to contribute significantly to environmentally sustainable cold chains.

As the global general distributor, Sysmex continued to market hinotori™ to medical institutions in Japan. (The hinotori Surgical Robot System is the first made-in-Japanrobotic-assisted surgery system.) Based on our launch in the Japanese market, we are putting together regulatory affairs and sales systems in preparation to enter overseas markets.

*1 OncoGuide™ NCC Oncopanel System:

On December 25, 2018, Sysmex received manufacturing and marketing approval as Japan's first medical device for cancer genome profiling under the Ministry of Health, Labour and Welfare's Sakigake Designation system. This combination medical device was subsequently covered under the NHI as of June 1, 2019.

*2 FGFR2 gene:

Four types of fibroblast growth factor receptors (FGFRs), FGFR1-4, have been identified. These

－ 2 －

are proteins involved in cell growth and proliferation. When FGFR genes with abnormalities including fusion, mutation, and amplification are activated, they are thought to lead to cancer cell proliferation, survival, migration, tumor angiogenesis, drug resistance, etc.

*3 Futibatinib (development code: TAS-120):

A novel oral anticancer drug currently under development by Taiho Pharmaceutical Co., Ltd. for the treatment of patients with advanced solid tumors with FGFR1-4 genetic aberrations, including biliary tract cancer, who were previously treated with chemotherapy or other therapies.

Net sales by destination

		Six months ended	Six months ended	YoY
		Sep. 30, 2021	Sep. 30, 2022
		(Previous
		Amount	Percentage of	Amount	Percentage of
		period = 100)
		(Millions of yen)	total (%)	(Millions of yen)	total (%)
Japan	25,557	15.0	28,792	14.9	112.7
	Americas	38,227	22.7	50,262	25.9	131.5
	EMEA	49,238	29.2	55,178	28.4	112.1
	China	42,145	25.0	42,865	22.1	101.7
	Asia Pacific	13,585	8.1	16,923	8.7	124.6
Overseas subtotal	143,196	85.0	165,229	85.1	115.4
Total	168,753	100.0	194,022	100.0	115.0

In Japan, sales rose for immunochemistry reagents, mainly in relation to COVID-19 testing. Sales of hematology and medical robotics instruments also grew. As a result, sales in Japan rose 12.7% year on year, to ¥28,792 million.

Overseas, testing demand recovered compared with the first six months of the previous fiscal year, when demand was affected by COVID-19. In the hematology field, sales of reagents increased, as did sales of reagents in the urinalysis and hemostasis fields. These factors, plus ongoing yen depreciation, caused overseas Group sales to rise 15.4% year on year, to ¥165,229 million. The overseas sales ratio rose 0.1 percentage point, to 85.1%.

Selling, general and administrative (SG&A) expenses expanded 19.0%, to ¥52,982 million, owing mainly to the resumption of sales and service activities that had been constrained across all regions in the previous period due to the pandemic. In addition, R&D expenses increased 25.1% year on year, to ¥14,528 million, owing to active investment in development.

As a result, during the first six months of the fiscal year ending March 31, 2023, the Group recorded consolidated net sales of ¥194,022 million, up 15.0% year on year. Operating profit fell 0.3%, to ¥33,150 million; profit before tax increased 9.2%, to ¥34,546 million, and profit attributable to owners of the parent rose by 9.4%, to ¥23,989 million.

Performance by segment

(1) Japan

Sales rose for immunochemistry reagents, mainly in relation to COVID-19 testing. Sales of medical robotics instruments also grew. As a result, sales in Japan rose 11.7% year on year, to ¥30,966 million.

On the profit front, performance was affected by higher SG&A and R&D expenses, but higher sales and an improved cost of sales ratio lifted segment profit (operating profit) 29.1%, to ¥23,878 million.

(2) Americas

In North America, sales of instruments, reagents and maintenance services increased in the hematology and urinalysis fields due to a resurgence in testing demand and higher sales of instruments. As a result, sales in the region grew 32.6%, to ¥47,302 million.

Segment profit (operating profit) fell 27.4%, to ¥1,289 million, as the cost of sales ratio deteriorated and SG&A expenses increased.

(3) EMEA

Sales of instruments and reagents increased in the fields of hematology, urinalysis,

－ 3 －