Freund : Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending February 28, 2017(Nine Months Ended November 30, 2016)

Consolidated Financial Results for the Third Quarter of the Fiscal Year Ending February 28, 2017 (Nine Months Ended November 30, 2016)

January 6, 2017

[Japanese GAAP]

Company name:	Freund Corporation	Listing: Tokyo (JASDAQ)
Securities code:	6312	URL: http://www.freund.co.jp
Representative:	Iwao Fusejima, President & CEO

Contact: Yuji Takanami, General Manager, Corporate Administration Division Tel: [phone]

Scheduled date of filing of Quarterly Report: January 6, 2017

Scheduled date of payment of dividend: - Preparation of supplementary materials for quarterly financial results: None Holding of quarterly financial results meeting: None

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

1. Consolidated Financial Results for the Third Quarter (March 1, 2016 - November 30, 2016) of the Fiscal Year Ending February 28, 2017

2. Consolidated results of operations (Percentages represent year-on-year changes)

   Net sales		Operating income		Ordinary income		Profit attributable to owners of parent
   Nine months ended Nov. 30, 2016	Million yen	%	Million yen	%	Million yen	%	Million yen	%
   	14,767	12.9	1,441	98.2	1,486	89.6	815	93.1
   Nine months ended Nov. 30, 2015	13,081	8.9	727	24.3	784	17.6	422	25.5

   Net income per share	Diluted net income per share
   Nine months ended Nov. 30, 2016 Nine months ended Nov. 30, 2015	Yen 47.30 24.49	Yen - -

   Note: Comprehensive income	Nine months ended Nov. 30, 2016:	474 million yen (up 33.0%)
   Nine months ended Nov. 30, 2015:	357 million yen (down 9.1%)

   The Company conducted a 2-for-1 common stock split on March 1, 2016. The net income per share has been calculated as if this stock split had taken place at the beginning of the previous fiscal year.

3. Consolidated financial position

4. Total assets	Net assets	Equity ratio	Net assets per share
   As of Nov. 30, 2016	Million yen	Million yen	%	Yen
   	18,411	11,722	63.7	679.77
   As of Feb. 29, 2016	17,206	11,529	67.0	668.57

   Reference: Equity capital As of Nov. 30, 2016: 11,722 million yen As of Feb. 29, 2016: 11,529 million yen The Company conducted a 2-for-1 common stock split on March 1, 2016. The net assets per share have been calculated as if this

   stock split had taken place at the beginning of the previous fiscal year.

5. Dividends

   Dividend per share
   1Q-end	2Q-end	3Q-end	Year-end	Total
   Fiscal year ended Feb. 29, 2016	Yen	Yen	Yen	Yen	Yen
   	-	0.00	-	25.00	25.00
   Fiscal year ending Feb. 28, 2017	-	0.00	-
   Fiscal year ending Feb. 28, 2017 (forecast)	20.00	20.00

   Note: Revision to the most recently announced dividend forecast: Yes

   Breakdown of the year-end dividend for the fiscal year ending Feb. 28, 2017: Ordinary dividends: 15.00 yen

   Commemorative dividends: 5.00 yen

   The Company conducted a 2-for-1 common stock split on March 1, 2016. The dividend per share forecast for the fiscal year ending Feb. 28, 2017 has been adjusted to reflect the stock split. Prior to this adjustment, the dividend forecast was 40 yen per share, comprising an ordinary dividend of 30 yen and a commemorative dividend of 10 yen.

6. Consolidated Forecast for the Fiscal Year Ending February 28, 2017 (March 1, 2016 - February 28, 2017)

7. (Percentages represent year-on-year changes)

   Net sales		Operating income		Ordinary income		Profit attributable to owners of parent		Net income per share
   Full year	Million yen 20,000	% 5.1	Million yen 1,900	% 41.1	Million yen 1,900	% 36.2	Million yen 1,180	% 22.8	Yen 68.43

   Note: Revision to the most recently announced consolidated forecast: None

   * Notes

8. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): None

   Newly added: - Excluded: -

9. Application of special accounting methods for presenting quarterly consolidated financial statements: Yes

   Note: Please refer to page 3 "2. Matters Related to Summary Information (Notes), (2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements" for details.

10. Changes in accounting policies and accounting-based estimates, and restatements

11. Changes in accounting policies due to revisions in accounting standards, others: Yes

12. Changes in accounting policies other than 1) above: None

13. Changes in accounting-based estimates: None

14. Restatements: None

15. Number of outstanding shares (common stock)

16. Number of shares outstanding at the end of the period (including treasury shares)

    As of Nov. 30, 2016: 18,400,000 shares As of Feb. 29, 2016: 18,400,000 shares

17. Number of treasury shares at the end of the period

    As of Nov. 30, 2016: 1,155,478 shares As of Feb. 29, 2016: 1,155,444 shares

18. Average number of shares outstanding during the period

19. Nine months ended Nov. 30, 2016: 17,244,538 shares Nine months ended Nov. 30, 2015: 17,244,556 shares Note: The Company conducted a 2-for-1 common stock split on March 1, 2016. The number of outstanding shares (common

    stock) has been calculated as if this stock split had taken place at the beginning of the previous fiscal year.

    Indication of quarterly review procedure implementation status

    The current quarterly financial report is not subject to the quarterly review procedures based on the Financial Instruments and Exchange Act. At the time of disclosure, the review procedures for the quarterly financial statements have been completed.

    Cautionary statement with respect to forecasts of future performance and other special items

    • The Company conducted a 2-for-1 common stock split on March 1, 2016.

    • Forecasts regarding future performance in these materials are based on certain assumptions judged to be valid and information currently available to the Company. Actual performance may differ significantly from these forecasts for a number of reasons. Please refer to the section "1. Qualitative Information on Quarterly Consolidated Financial Performance, (3) Explanation of Consolidated Forecast and Other Forward-looking Statements" on page 3 of the attachments regarding preconditions or other related matters for forecasts shown above.

    Contents of Attachments

20. Qualitative Information on Quarterly Consolidated Financial Performance 2

21. Explanation of Results of Operations 2

22. Explanation of Financial Position 2

23. Explanation of Consolidated Forecast and Other Forward-looking Statements 3

24. Matters Related to Summary Information (Notes) 3

25. Changes in Significant Subsidiaries during the Period 3

26. Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements 3

27. Changes in Accounting Policies and Accounting-based Estimates, and Restatements 3

28. Important Information about Going Concern Assumption 4

29. Quarterly Consolidated Financial Statements 5

30. Quarterly Consolidated Balance Sheet 5

31. Quarterly Consolidated Statements of Income and Comprehensive Income 7

    Quarterly Consolidated Statement of Income

    For the Nine-month Period 7

    Quarterly Consolidated Statement of Comprehensive Income

    For the Nine-month Period 8

32. Notes to Quarterly Consolidated Financial Statements 9

33. Going Concern Assumption 9

    Significant Changes in Shareholders' Equity 9

    Segment and Other Information 9

34. Supplementary Information 11

35. Orders and Sales 11

    1. Qualitative Information on Quarterly Consolidated Financial Performance
36. Explanation of Results of Operations

    Japan's economy continued to recover at a moderate pace during the first nine months of the current fiscal year. Growth in corporate earnings has stopped due to the yen's strength caused by uncertainties about overseas economies. However, after the November US presidential election, the yen has been weakening as the dollar appreciates because of the increasing difference between interest rates in Japan and the United States as US interest rates move up. This is a reflection of the outlook for higher US government spending by the Trump administration. As a result, the outlook is for corporate earnings in Japan to stop declining while remaining at a high level.

    The pharmaceutical industry, which is the primary source of demand for Freund Group products, has been growing more slowly, mainly in industrialized countries. Causes include more Japanese government actions to hold down healthcare expenditures, such as national health insurance drug price revisions and measures to increase the use of generic drugs, as well as the rising cost of R&D and higher risks associated with the development of new drugs. Consequently, the focus of attention in the pharmaceutical industry is shifting to emerging countries and to the expansion of the market for generic drugs.

    The Freund Group has developed innovative new products and worked on precisely targeting customers' needs. Group companies also aggressively pursued opportunities in new business fields.

    Net sales increased 12.9% year-over-year to 14,767 million yen, operating income increased 98.2% to 1,441 million yen, ordinary income was up 89.6% to 1,486 million yen, and profit attributable to owners of parent increased 93.1% to 815 million yen.

    Results by business segment were as follows.

    Machinery Business Segment

    In the machinery sector, where granulating and coating devices are the main products, sales and operating income increased as orders remained strong because of the large volume of capital expenditures in the generic drug industry.

    As a result, net sales rose 15.5% year-over-year to 10,003 million yen and operating income increased 99.6% to 1,154 million yen.

    Chemicals Business Segment

    Although sales and operating income of food preservative were down slightly because of heated competition, sales of functional excipients used in oral pharmaceuticals were strong primarily for use in generic drugs. Sales of dietary supplements that incorporate Freund's technologies were also strong.

    As a result, net sales rose 7.8% year-over-year to 4,763 million yen and operating income increased 48.7% to 602 million yen.

    Note: From the first quarter of the current fiscal year, the Company has modified the English term of the business segment formerly titled "Chemical and Food Business" to "Chemicals Business." The content and Japanese term of the business segment remain the same.

37. Explanation of Financial Position

Total assets increased 1,205 million yen from the end of the previous fiscal year to 18,411 million yen at the end of the third quarter under review. This mainly reflected increases in cash and deposits of 1,365 million yen and work in process of 137 million yen, while there was a decrease in notes and accounts receivable-trade of 376 million yen.

Total liabilities increased 1,011 million yen from the end of the previous fiscal year to 6,689 million yen at the end of the third quarter under review. This mainly reflected an increase in advances received of 808 million yen.