Consolidated Financial Results for the Year Ended March 31, 2025 PDF

Consolidated Financial Results for the Year Ended March 31, 2025

[Japanese GAAP]

May 13, 2025

Company name: EIKEN CHEMICAL CO.,LTD. Listing: Tokyo Stock Exchange

Securities code: 4549

URL: https://www.eiken.co.jp

Representative: Tsugunori Notomi President & CEO

Inquiries: Tomohiro Kudo Executive Officer Telephone: +81-3-5846-3379

Scheduled date of annual general meeting of shareholders: June 24, 2025 Scheduled date to commence dividend payments: June 6, 2025

Scheduled date to file annual securities report: June 25, 2025 Preparation of supplementary material on financial results: Yes Holding of financial results briefing: Yes

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

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2025 (April 1, 2024 to March 31, 2025)

   1. Consolidated Operating Results (Percentages indicate year-on-year changes.)

      	Net sales		Operating profit		Ordinary profit		Profit attributable to owners of parent
      Fiscal year ended March 31, 2025 March 31, 2024	Millions of yen 40,539 40,052	% 1.2 (7.4)	Millions of yen 2,999 3,377	% (11.2) (54.7)	Millions of yen 3,198 3,568	% (10.4) (52.8)	Millions of yen 2,228 2,634	% (15.4) (54.1)

      (Note) Comprehensive income:	Fiscal year ended March 31, 2025:	¥	2,025 million	[	(30.9) %]
      	Fiscal year ended March 31, 2024:	¥	2,931 million	[	(47.6) %]

      	Basic earnings per share	Diluted earnings per share	Rate of return on equity	Ordinary profit to total assets ratio	Operating profit to net sales ratio
      Fiscal year ended	Yen	Yen	%	%	%
      March 31, 2025	64.82	64.27	5.0	5.2	7.4
      March 31, 2024	71.69	71.10	5.6	5.6	8.4

      (Reference) Equity in earnings (losses) of affiliated companies:	Fiscal year ended March 31, 2025:	¥	- million
      (2) Consolidated Financial Position	Fiscal year ended March 31, 2024:	¥	- million

      	Total assets	Net assets	Capital adequacy ratio	Net assets per share
      As of March 31, 2025 March 31, 2024	Millions of yen 62,372 61,651	Millions of yen 43,598 45,971	% 69.3 74.0	Yen 1,294.08 1,318.38

      (Reference) Equity: As of March 31, 2025:	¥	43,240 million
      As of March 31, 2024:	¥	45,613 million

      (3) Consolidated Cash Flows

      	Cash flows from operating activities	Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents at the end of period
      Fiscal year ended March 31, 2025 March 31, 2024	Millions of yen 6,033 3,806	Millions of yen (4,499) (2,216)	Millions of yen (4,857) (6,694)	Millions of yen 7,640 10,966

2. Dividends

   	Annual dividends					Total dividends	Payout ratio (consolidated)	Dividends to net assets (consolidated)
   	1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total
   Fiscal year ended March 31, 2024 March 31, 2025	Yen - -	Yen 25.00 26.00	Yen - -	Yen 26.00 27.00	Yen 51.00 53.00	Millions of yen 1,826 1,802	% 71.1 81.8	% 3.9 4.1
   Fiscal year ending March 31, 2026 (Forecast)	-	29.00	-	29.00	58.00		49.8

   (Note) Breakdown of the year-end dividend for the fiscal year ended March 31, 2025 : Commemorative dividend - yen

   Special dividend - yen

3. Consolidated Financial Results Forecast for the Fiscal Year Ending March 31, 2026 (April 1, 2025 to March 31, 2026)

(Percentages indicate year-on-year changes.)

1. Changes in accounting policies, changes in accounting estimates, and restatement

   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: Yes

   4. Restatement: None

2. Number of issued shares (common shares)

   1. Total number of issued shares at the end of the period (including treasury shares): March 31, 2025: 38,541,438 shares

      March 31, 2024: 40,041,438 shares

   2. Number of treasury shares at the end of the period:

      March 31, 2025: 5,127,632 shares

      March 31, 2024: 5,443,508 shares

   3. Average number of shares outstanding during the period:

Fiscal Year ended March 31, 2025: 34,370,613 shares

Fiscal Year ended March 31, 2024: 36,744,670 shares

(Reference) Overview of Non-consolidated Financial Results

1. Non-consolidated Financial Results for the Fiscal Year Ended March 31, 2025 (April 1, 2024 to March 31, 2025)

1. Non-consolidated Operating Results (Percentages indicate year-on-year changes.)

   	Net sales		Operating profit		Ordinary profit		Net income
   Fiscal year ended March 31, 2025 March 31, 2024	Millions of yen 40,483 39,962	% 1.3 (7.5)	Millions of yen 3,048 3,422	% (10.9) (54.5)	Millions of yen 3,233 3,581	% (9.7) (53.0)	Millions of yen 2,514 2,648	% (5.0) (54.2)

   	Basic earnings per share	Diluted earnings per share
   Fiscal year ended	Yen	Yen
   March 31, 2025	73.17	72.54
   March 31, 2024	72.07	71.48

2. Non-consolidated Financial Position

• Financial results reports are exempt from audit conducted by certified public accountants or an audit firm.

• Proper use of earnings forecasts, and other special matters

Table of Contents - Attachments

1. Overview of Consolidated Business Performance 2

   1. Summary of Consolidated Business Performance for This Term 2

   2. Summary of Consolidated Financial Position for This Term 2

   3. Summary of Cash Flows for This Term 3

   4. Future Prospects 4

   5. Policy on the Determination of Dividends from Surplus, etc. 5

2. Basic Stance Concerning Choice of Accounting Standards 5

3. Consolidated Financial Statements and Principal Notes 6

   1. Consolidated Balance Sheets 6

   2. Consolidated Statements of Income and Comprehensive Income 8

   3. Consolidated Statements of Changes in Equity 10

   4. Consolidated Statements of Cash Flows 12

   5. Notes to Consolidated Financial Statements 14

      (Notes on going concern assumption) 14

      (Material basis for the preparation of consolidated financial statements) 14

      (Changes in presentation) 17

      (Changes in accounting estimates) 17

      (Notes to Consolidated Balance Sheets) 17

      (Notes to Consolidated Statements of Income) 18

      (Notes to Consolidated Statements of Comprehensive Income) 20

      (Notes to Consolidated Statements of Changes in Net Assets) 20

      (Notes to Consolidated Statements of Cash Flows) 23

      (Lease transactions) 23

      (Segment information) 26

      (Per share information) 26

      (Significant subsequent events) 26

4. Non-consolidated Financial Statements and Principal Notes 27

   1. Non-consolidated Balance Sheets 27

   2. Non-consolidated Statements of Income 30

   3. Non-consolidated Statements of Changes in Equity 31

   4. Notes to Non-consolidated Financial Statements 35

      (Notes on going concern assumption) 35

      (Significant accounting policies) 35

      (Changes in presentation) 37

      (Changes in accounting estimates) 38

      (Notes to Non-consolidated Balance Sheets) 38

      (Notes to Non-consolidated Statements of Income) 39

      (Significant subsequent events) 39

5. Others 40

   1. Changes in Officers 40

   2. Sales 41

1. Overview of Consolidated Business Performance

   1. Summary of Consolidated Business Performance for This Term

      During the consolidated fiscal year under review, the domestic and overseas economies remained uncertain due to downside risks affected by surging resource prices, geopolitical risks and monetary policy of major countries.The business environment became increasingly severe in the clinical diagnostics industry due to measures to cap medical expenses and rising costs such as for logistics and raw material procurement, on account of yen depreciation and high crude oil prices. Corporations were obliged to focus on cost competitiveness and to actively expand overseas.

      In the context of this business environment, the Eiken Group is implementing key measures focused on the three key business fields of "Contribution to cancer prevention and treatment," "Contribution to the eradication and control of infectious diseases," and "Provision of products and services useful for health care" and striving to achieve sustainable growth and steadily enhance profitability for the Group as a whole, in accordance with the Medium-term Management Plan established based on the Group's management framework "Eiken Road Map 2030."

      In addition, as a Group with a mission to protect the health of people worldwide, the Eiken Group is addressing issues not only in "Medical" but also in the "Environment," "Society," and "Governance." Through these efforts, we strive to further enhance our corporate value and achieve a sustainable society.

      The net sales for the consolidated fiscal year under review increased to 40,539 million yen (up 1.2% year-on-year) amid sales in domestic remained at the same level as the previous year, and sales in overseas remained strong growth. This was a 0.8% increase over our company's forecast. Overall, sales in domestic and overseas remained stable.

      For net sales by product class and type, sales of microbiological testing reagents increased to 4,501 million yen (up 4.4% year-on-year) amid increased sales of the rapid diagnostic kits. Sales of urinalysis reagents were 4,620 million yen (up 5.0% year-on-year), amid strong growth in sales of urine test strips for both domestic and overseas markets. For sales of immunological and serological reagents were 22,540 million yen (up 3.8% year-on-year) amid sales of fecal immunochemical test reagents increased in overseas markets, and products introduced and sold from Tosoh Corporation were strong growth. Sales for clinical chemistry reagents were 573 million yen (down 0.4% year-on-year) and sales of the equipment and culture medium for food and environment related category were 1,960 million yen (down 0.1% year-on-year). Sales in other categories (medical devices, genetic-related products, etc.) were 6,342 million yen (down 10.5% year-on-year) amid a significant decrease in sales for medical devices, COVID-19 detection reagents and royalty revenue for the LAMP method. And overseas sales were 10,710 million yen (up 5.9% year-on-year) amid an increase in sales of urinalysis reagents and fecal immunochemical test reagents.

      Regarding profit, amid changes in the sales mix, including a decrease in sales for high-profit products including COVID-19 detection reagents and royalty revenue for the LAMP method, operating profit was 2,999 million yen (down 11.2% year-on-year), ordinary profit was 3,198 million yen (down 10.4% year-on-year) and profit attributable to owners of parent was 2,228 million yen (down 15.4% year-on-year).

   2. Summary of Consolidated Financial Position for This Term

      The financial position at the end of the consolidated fiscal year under review was as follows.

      When compared to the end of the previous consolidated fiscal year, total assets increased by 720 million yen, liabilities increased by 3,093 million yen, and net assets decreased by 2,373 million yen.

      Major increases and decreases in the category of assets include a decrease of 6,434 million yen in cash and deposits amid the payment of deposits paid for purchase of treasury shares and a decrease of 750 million yen in notes and accounts receivable - trade, and contract assets. In addition, property, plant and equipment increased by 5,116 million yen amid the recording of construction in progress accompanying the payment of construction expenses for the new manufacturing building at Nogi Division. In addition, shares of associated company increased by 900 million yen and long-term deposits increased by 1,100 million yen.

      In the category of liabilities, electronically recorded obligations - operating increased by 478 million yen,

      and income taxes payable increased by 401 million yen. In the category of net assets, despite having recorded profit attributable to owners of parent, shareholders' equity decreased by 2,170 million yen amid the payment of dividends and purchase of treasury shares.

      As a result of the above, the equity ratio decreased to 74.0% from 69.3% at the end of the previous consolidated fiscal year.

   3. Summary of Cash Flows for This Term

      Cash and cash equivalents for the consolidated fiscal year under review (hereinafter referred to as "net cash") decreased by 3,326 million yen compared to the end of the previous consolidated fiscal year to 7,640 million yen on March 31, 2025.

      The following is a summary of cash flows and related causes for the consolidated fiscal year under review.

      Cash flows from operating activities

      Net cash provided by operating activities was 6,033 million yen (compared to the net cash proceed of 3,806 million yen in the previous consolidated fiscal year). This was mainly due to 740 million yen expenditure due to decreased trade receivables, 403 million yen proceed caused by an increase in inventories, 1,081 million yen expenditure caused by an increase in trade payables, and 2,991 million yen in profit before income taxes.

      Depreciation totaled 2,554 million yen.

      Cash flows from investing activities

      Net cash used in investing activities was an expenditure of 4,499 million yen (compared to the net cash expenditure of 2,216 million yen in the previous consolidated fiscal year). This was mainly due to 5,214 million yen in purchase of property, plant and equipment, 900 million yen in payments into shares of associated company, 3,467 million yen in payments into time deposits and 5,470 million yen in proceeds from withdrawal of time deposits.

      Cash flows from financing activities

      Net cash used in financing activities was 4,857 million yen (compared to the net cash expenditure of 6,694 million yen in the previous consolidated fiscal year). This was mainly due to 2,675 million yen expenditure due to purchase of treasury shares and dividends paid of 1,799 million yen.

      (Reference) Change in cash flow related indicators

      	Fiscal year ended March 31, 2021	Fiscal year ended March 31, 2022	Fiscal year ended March 31, 2023	Fiscal year ended March 31, 2024	Fiscal year ended March 31, 2025
      Equity ratio (%)	74.3	72.8	74.2	74.0	69.3
      Equity ratio based on fair value (%)	143.5	102.1	87.3	112.2	121.4
      Years of debt redemption (Years)	0.1	0.2	0.4	0.9	0.6
      Interest coverage ratio (Times)	1,908.2	983.3	468.5	222.9	344.0

      Equity ratio: Shareholders' equity / Total assets

      Equity ratio based on fair value: Total market value of shares / Total assets Years of debt redemption: Interest-bearing debts / Cash flow

      Interest coverage ratio: Cash flow / Interest paid

      (Note 1) The indicators were calculated using consolidated financial figures.

      (Note 2) The total market value of shares was calculated based on the total number of issued shares (excluding treasury shares).

      (Note 3) Operating cash flow is used in Cash Flows.

      (Note 4) Interest-bearing debts include all debts recorded on the Consolidated Balance Sheets for which interest is paid.

   4. Future Prospects

      Regarding future prospects, difficult conditions will likely continue due to the unstable global situation in Ukraine, the Middle East, etc., soaring resource and raw material prices and the intensification of protectionist trade policies in the U.S.

      In addition to responding to the unfolding changes in its business environment, the Eiken Group will identify existing business domains as its core businesses and implement key measures focused on the three key business fields of "Contribution to cancer prevention and treatment," "Contribution to the eradication and control of infectious diseases," and "Provision of products and services useful for health care," based on the Group's management framework "Eiken Road Map 2030." In the field of "cancer," we will focus on areas that are more directly related to treatment, while in the field of "infectious diseases," we will focus on establishing simpler testing technologies. In the field of "healthcare," the Group will expand its products and services to serve the needs of remote diagnosis and home testing. Under the new medium-term management plan (fiscal year ending March 2026 to fiscal year ending March 2028), which begins in April 2025, we will develop and expand overseas markets, restructure our product portfolio, and develop new products as our basic policies, and expand priority measures.

      With a view to establishing a sustainable society, the Group has identified 11 materialities (key issues) for priority response and is deploying detailed action plans for each. The Group sets key performance indicators (KPIs) For each materiality and proceeds with each materiality while monitoring progress toward achievement. As a Group with a mission to protect the health of people worldwide, the Group is addressing issues not only in "Medical" but also in the "Environment," "Society," and "Governance." We believe that contributing solutions to social issues in this way will further bolster our corporate value and lead to achieving a sustainable society.

      Regarding our performance forecast for the next fiscal year, we forecast sales of 42,200 million yen (up 4.1% year-on-year) amid increased sales of fecal immunochemical test reagents and Mycobacterium tuberculosis complex detection reagent kits overseas. Overseas, we forecast net sales of 12,050 million yen (up 12.5% year-on-year) and a sales ratio of 28.6%. Regarding profit, we forecast operating profit of 3,250 million yen (up 8.3% year-on-year), ordinary profit of 3,100 million yen (up 3.1% year-on-year), and profit attributable to owners of parent of 3,770 million yen (up 69.2% year-on-year).

   5. Policy on the Determination of Dividends from Surplus, etc.

   The Company has positioned the return of profits to shareholders as one of its most important management issues, and its basic policy has been to implement a stable dividend policy, taking into account the internal reserves necessary to strengthen its financial position and actively develop its business. Specifically, the Company has set a target of a consolidated dividend payout ratio of 30% or more.

   In order to further strengthen shareholder returns to shareholders, instead of the target of a consolidated dividend payout ratio of 30% or more, we have decided to aim for a total return ratio of 50% or more, using the total return ratio including dividends and repurchases of treasury stock as an index for shareholder returns.

   The Company regards distribution of profits to its shareholders as one of the most important management issues. Our Company's basic policies are to implement a stable dividend policy based on consideration for internal reserves required for reinforcement of our financial base and active business development, and to distribute profits by paying stable dividends twice annually in the form of an interim dividend and a year-end dividend. Specifically, based on the above-mentioned policies, the Company endeavors to achieve a total return ratio of 50% or more. In its Articles of Incorporation, the Company has set the decision-making body regarding dividends from surplus as follows: "Dividends from surplus, etc., can be distributed by a resolution of the Board of Directors in accordance with regulations of Article 459, Paragraph 1 of the Companies Act."

   The year-end dividend for the current fiscal year has been set at 27 yen per share. As we have already paid an interim dividend of 26 yen on December 2, 2024, dividends on an annual basis will amount to 53 yen per share.

   In regard to per share dividends for the next fiscal year, we forecast ordinary dividends consisting of an interim dividend of 29 yen and a year-end dividend of 29 yen. Internal reserves will be used effectively from a mid to long-term perspective in investment for R&D aimed at strengthening our business structure, facilities investment, and efforts to improve business efficiency.

2. Basic Stance Concerning Choice of Accounting Standards

Taking into consideration the comparability of consolidated financial statements across periods and among companies, the Group prepares its consolidated financial statements using Japanese GAAP.

Regarding application of International Financial Reporting Standards, the Group's policy is to deliberate in consideration of the future situation in Japan and overseas.

Consolidated Financial Statements

Consolidated Balance Sheets

(Millions of yen)

As of March 31, 2024 As of March 31, 2025

Assets

Current assets

Notes and accounts receivable - trade, and contract

assets

11,679 10,928

(Millions of yen)

As of March 31, 2024 As of March 31, 2025

Liabilities

Current liabilities

Consolidated Statements of Income and Comprehensive Income Consolidated Statements of Income

For the fiscal year ended March 31, 2024

(Millions of yen)

For the fiscal year ended March 31, 2025

Comprehensive income attributable to non-controlling

interests - -

Consolidated Statements of Changes in Equity

For the fiscal year ended March 31, 2024

(Millions of yen)

For the fiscal year ended March 31, 2025

(Millions of yen)

Consolidated Statements of Cash Flows

Cash flows from operating activities

For the fiscal year ended March 31, 2024

(Millions of yen)

For the fiscal year ended March 31, 2025

Profit before income taxes 3,503 2,991

Depreciation 2,326 2,554

Increase (decrease) in allowance for doubtful accounts (9) (0)

Increase (decrease) in provision for bonuses (92) (3)

Decrease (increase) in retirement benefit asset (57) (125)

Share-based payment expenses 15 -

Interest and dividend income (12) (17)

Interest expenses 17 17

Foreign exchange losses (gains) 0 0

Compensation income (5) (12)

Subsidy income (155) (31)

Loss (gain) on sale and retirement of property, plant and equipment

61

6

Loss (gain) on sale of investment securities - (49)

Decrease (increase) in trade receivables (1,355) 740

Decrease (increase) in inventories 322 (403)

Decrease (increase) in other current assets 510 90

Decrease (increase) in other investments (1) (1)

Increase (decrease) in trade payables (212) 1,081

Increase (decrease) in other current liabilities 343 (585)

Other, net 220 39

Subtotal 5,417 6,292

Interest and dividends received 12 13

Interest paid (17) (17)

Proceeds from insurance income 4 7

Income taxes paid (1,610) (417)

Income taxes refund - 155

Net cash provided by (used in) operating activities 3,806 6,033 Cash flows from investing activities

Purchase of property, plant and equipment (1,976) (5,214)

Proceeds from sale of property, plant and equipment 8 14

Purchase of intangible assets (114) (164)

Payments for retirement of non-current assets (63) (7)

Purchase of investment securities - (83)

Proceeds from sale of investment securities - 71

Proceeds from redemption of investment securities - 200

Payments into time deposits (2,341) (3,467)

Proceeds from withdrawal of time deposits 2,279 5,470

Purchase of shares of subsidiaries and associates - (900)

Purchase of insurance funds (31) (142)

Proceeds from cancellation of insurance funds 31 -

Other payments (6) (276)

Net cash provided by (used in) investing activities (2,216) (4,499)

(5) Notes to Consolidated Financial Statements (Notes on going concern assumption)

Not applicable.

(Material basis for the preparation of consolidated financial statements)

1. The scope of consolidation

   1. Number and name of consolidated subsidiaries: 2 EIKEN CHINA CO., LTD.

      EIKEN MEDICAL AMERICA INC.

   2. Number and name of the principal non-consolidated subsidiary Not applicable.

2. Equity method

   1. Number and Name of associated company: 1 Nanotis Corporation

      As a result of the acquisition of new shares, the Company is included in the scope of equity method application from the current consolidated fiscal year.

   2. Names of major companies, etc. among non-consolidated subsidiaries and associated companies to which the equity method is not applied

      Not applicable.

   3. Matters that are found to be particularly necessary to be stated regarding the procedures for application of the equity method

      For companies that are accounted for by the equity method and have different closing dates, the financial statements for the respective fiscal years are used.

3. Accounting period of consolidated subsidiaries

   Of the consolidated subsidiaries, the fiscal closing date of EIKEN CHINA CO., LTD. is December 31.

   Consolidated financial statements are prepared by implementing closing (provisional closing) in accordance with reasonable procedures based on formal closing.

   The fiscal closing date of the other consolidated subsidiary is in line with the consolidated fiscal closing date.

4. Accounting policies

   1. Valuation standards and methods for significant assets

      1. Securities

         1. Held-to-maturity debt securities

            Stated at amortized cost (straight-line method)

         2. Available-for-sale securities

            Securities other than shares, etc., which do not have a market price Market value method

            (The valuation difference is directly included in net assets, and cost of sales is determined by the moving-average method.)

            Shares, etc., which do not have a market price

            Principally the cost method by the moving-average method

      2. Derivative financial instruments Market value method

      3. Inventories

         Merchandise and finished goods, raw materials, and work in process

         Cost method by the moving-average method (carrying amount on the consolidated balance sheet

         calculated by writing down values based on decreased profitability) is adopted. Supplies

         Cost method by the last purchase price method (carrying amount on the consolidated balance sheet calculated by writing down values based on decreased profitability) is adopted.

   2. Depreciation method of significant depreciable assets

      1. Property, plant and equipment (excluding leased assets)

         The Company and its domestic consolidated subsidiaries adopt the declining-balance method, and overseas consolidated subsidiaries adopt the straight-line method.

         However, the straight-line method is adopted for buildings purchased on or after April 1, 1998 (excluding facilities attached to buildings), and for facilities attached to buildings and structures purchased on or after April 1, 2016.

         Major useful lives are as follows:

         Buildings and structures: 7-40 years

         Machinery, equipment, and vehicles: 4-10 years Tools, furniture and fixtures 2-15 years

      2. Intangible assets (excluding leased assets) Straight-line method

         For internal use software, the straight-line method based on amortization over the internally estimated useful lives (5 years) is adopted.

      3. Leased assets

Leased assets are depreciated over the lease terms as useful lives using the straight-line method without any residual value.

1. Accounting standards for significant reserves and allowances

   1. Allowance for doubtful accounts

      In order to prepare for possible credit losses on trade receivables, etc., the estimated amount of non-recoverable receivables based on the historical loss rate for general receivables and specific collectability for specific doubtful receivables are recorded.

   2. Provision for bonuses

      In order to prepare for payments of bonuses to the employees, the estimated payable amount to be used in the future attributable to the consolidated fiscal year under review is recorded as provision for bonuses.

2. Accounting method for retirement benefits

   1. Period attribution method for estimated retirement benefits

      In calculating retirement benefit obligations, the method of attributing the estimated amount of retirement benefits to the periods up to the end of the consolidated fiscal year under review is based on the benefit formula basis.

   2. Accounting method for actuarial difference and past service cost

      Past service cost is expensed using the straight-line method over a period of definite years (3 years) within the employees' average remaining service years at the time when it is incurred.

      Actuarial differences are accounted for as expenses over a certain number of years within the average remaining years of service of the corresponding employees (12 years) using the straight-line method, commencing with the consolidated fiscal year following the one in which they were incurred.

   3. The accounting methods of unrecognized actuarial gain and loss and unrecognized past service cost

      For the accounting methods of unrecognized actuarial gain and loss and unrecognized past service cost, after adjusting tax effect, they are recorded as remeasurements of defined benefit plans under accumulated other comprehensive income in net assets.

3. Significant revenue and expense recognition standards

   1. Sales of merchandise and finished goods

      Sales of merchandise and finished goods include the manufacture and sale of clinical diagnostic reagents and clinical diagnostic equipment. The Company principally recognizes revenue from sales of merchandise and finished goods when making delivery of the goods to a customer as it satisfies a performance obligation by transferring control of the goods to a customer based on receipt of the goods. For clinical diagnostic equipment which requires installation at the time of sale, the Company recognizes revenue at inspection of installed equipment as it satisfies a performance obligation by transferring control of the goods to a customer based on inspection by a customer.

   2. Royalty revenue

      Royalty revenue includes upfront payment based on license agreement etc., milestone revenues, and running royalty calculated based on net sales etc. For upfront payment, the Company recognizes revenue at customers' receipt of the right which the Company promised to transfer to a customer based on the contract. For milestone revenues, the Company recognizes revenue at achievement of the milestone defined in the contract. For running royalty calculated based on net sales etc., the Company recognizes revenue when sales or usage occur, or it satisfies a performance obligation for which sales-based or usage-based royalty is allocated, whichever is later.

4. Translation of significant foreign currency denominated assets and liabilities into Japanese yen

   Foreign currency denominated monetary receivables and payables are translated into Japanese yen using the spot exchange rate on the closing date and the translation difference is charged or credited to income. The assets, liabilities, income, and expenses of overseas subsidiaries and affiliates are translated into yen at the year-end spot exchange rate, and translation adjustments are included in foreign currency translation adjustments in net assets.

5. Significant hedge accounting method

   1. Hedge accounting method

      The appropriation procedure is adopted to foreign exchange fluctuation risk hedging that satisfies the relevant requirements.

   2. Hedging instruments and hedged items, hedging policy

      The risks of foreign exchange fluctuation are hedged in accordance with the Company's rules.

      Hedging instruments and hedged items where hedge accounting was applied for the consolidated fiscal year under review are as follows.

      Hedging instruments: Forward exchange contracts

      Hedged items: Foreign currency denominated accounts payable, foreign currency denominated accounts payable - other

   3. Assessment of hedge effectiveness

      For forward exchange contracts, hedged items with the same date and amount and denominated in the same currency are allocated to each account payable, accounts payable - other. Therefore, the correlation by foreign exchange fluctuation thereafter is ensured completely, and the assessment of hedge effectiveness is omitted.

6. Funds covered by consolidated statements of cash flows

Funds (cash and cash equivalents) as used in the consolidated statements of cash flows comprises cash on hand, deposits available for withdrawal as needed, and short-term investments due for redemption within three months from the date of acquisition, which are easily cashable and are subject to minimal risk of fluctuation in value.

(Changes in presentation) (Consolidated Balance Sheets)

"Electronically recorded monetary claims - operating", which were included in " Notes and accounts receivable - trade, and contract assets " of "Current assets" in the previous consolidated fiscal year, are presented independently from the current consolidated fiscal year to enhance clarity. To reflect this change in presentation, the Company has reclassified the consolidated financial statements for the previous fiscal year. As a result, 12,482 million yen presented in " Notes and accounts receivable - trade, and contract assets " in the consolidated balance sheet for the previous fiscal year has been reclassified to 11,679 million yen in " Notes and accounts receivable - trade, and contract assets " and 802 million yen in "Electronically recorded monetary claims - operating".

(Changes in accounting estimates)

（Change in estimates of asset retirement obligations）

During the current fiscal year, as a result of the acquisition of the recent information on restoration costs, the Company changed its estimates for expected restoration costs and expected usage period with respect to asset retirement obligations which it had recognized as restoration obligations arising from the Company's real estate lease agreements.

This change in the estimate increases the balance of asset retirement obligations by 101 million yen.

As a result of this change in estimates, operating profit, ordinary profit and profit before income taxes decreased by 65 million yen each for the current fiscal year.

(Notes to Consolidated Balance Sheets)

*1. Receivables from contracts with customers in notes and accounts receivable - trade and contract assets are as follows.

(Million yen)

Electronically recorded monetary claims - operating

800 810

*2. Contract liabilities in other is as follows.

(Million yen)

As of March 31, 2024 As of March 31, 2025

Contract liability 62 97

*3. Regarding accounting policies for notes maturing on the last day of the consolidated fiscal year, although the last day of the consolidated fiscal year under review was a holiday for financial institutions, the notes are treated as if the settlement was made on the maturity date.

Notes maturing on the last day of the consolidated fiscal year under review are as follows.

Electronically recorded monetary claims - operating

(Million yen)

As of March 31, 2024 As of March 31, 2025

17 -

4. Overdraft contracts and commitment lines are concluded for efficient procurement of working capital. The balance of unexecuted loans based on these contracts is as follows.

Total of overdraft maximum amount and commitment lines

(Million yen)

As of March 31, 2024 As of March 31, 2025

4,600 8,600

Outstanding borrowings - -

Difference 4,600 8,600

(Notes to Consolidated Statements of Income)

*1. Revenue from contracts with customers is not presented independently. Revenue from contracts with customers is as follows.

For the fiscal year ended March 31, 2024

(Million yen)

For the fiscal year ended March 31, 2025

39,767 40,300

*2. Ending inventory is the amount after being written down due to decreased profitability, and the following loss on valuation of inventory (the amount after offset of reversal with reversal method), is included in total cost of sales.

For the fiscal year ended March 31, 2024

(Million yen)

For the fiscal year ended March 31, 2025

114 40

*3. The main expense items and amounts of selling, general and administrative expenses are as follows.

(Million yen)

Provision of allowance for doubtful accounts

(1) (0)

*4. Research and development expenses included in general and administrative expenses, and manufacturing costs incurred during the period are as follows.

For the fiscal year ended March 31, 2024

(Million yen)

For the fiscal year ended March 31, 2025

3,939 4,386

*5. Description of loss on sale and retirement of non-current assets is as follows.

For the fiscal year ended March 31, 2024

(Million yen)

For the fiscal year ended March 31, 2025

Buildings and structures 15 0

Machinery, equipment and vehicles 1 0

Tools, furniture and fixtures 0 5

Software 3 0

Dismantlement cost 46 -

Total 66 6

*6 Business structure improvement expenses of subsidiaries

This was amid the restructuring of manufacturing facilities and inventories with the review of business activities of subsidiaries in China and economic compensation for employees.

(Notes to Consolidated Statements of Comprehensive Income)

*1. Reclassification adjustment and tax effect relating to other comprehensive income

(Million yen)

Valuation difference on available-for-sale securities

Foreign currency translation adjustment:

7 (35)

Amount incurred during the period 84 (15) Remeasurements of defined benefit plans, net

Remeasurements of defined benefit

plans, net of tax

204 (152)

Total other comprehensive income 296 (202)

(Notes to Consolidated Statements of Changes in Net Assets) For the fiscal year ended March 31, 2024

1. Class and total number of issued shares and class and total number of treasury shares

   (Shares)

   	Number of shares at beginning of period	Increase during period	Decrease during period	Number of shares at end of period
   Issued shares
   Common shares (Note) 1.	43,541,438	-	3,500,000	40,041,438
   Total	43,541,438	-	3,500,000	40,041,438
   Treasury shares
   Common shares (Note) 2.3.	6,512,625	2,500,000	3,569,117	5,443,508
   Total	6,512,625	2,500,000	3,569,117	5,443,508

   (Notes) 1. The decrease in total number of issued shares by 3,500,000 shares of common shares is due to the cancellation of treasury shares based on a resolution of the Board of Directors.

2. The increase in treasury shares by 2,500,000 shares of common shares is due to the purchase of treasury shares based on a resolution of the Board of Directors.

3. The decrease in treasury shares by 3,569,117 shares of common shares is due to the 3,500,000 shares decrease caused by the cancellation of treasury shares based on a resolution of the Board of Directors, the 35,417 shares decrease caused by the disposal of treasury shares as restricted stock units, and the 33,700 shares decrease caused by the exercise of stock options.

1. Share acquisition rights and treasury share acquisition rights

   (Share)

2. Dividends

   1. Cash dividends paid

      (Resolution)	Class of shares	Total cash dividends (Million yen)	Dividend per share (Yen)	Record date	Effective date
      April 28, 2023 Board of Directors meeting	Common shares	999	27	March 31, 2023	June 8, 2023
      October 26, 2023 Board of Directors meeting	Common shares	927	25	September 30, 2023	December 1, 2023

   2. Dividends for which the record date falls in the current period, but the effective date falls in the following period

For the fiscal year ended March 31, 2025

1. Class and total number of issued shares and class and total number of treasury shares

   (Shares)

   	Number of shares at beginning of period	Increase during period	Decrease during period	Number of shares at end of period
   Issued shares
   Common shares (Note) 1.	40,041,438	-	1,500,000	38,541,438
   Total	40,041,438	-	1,500,000	38,541,438
   Treasury shares
   Common shares (Notes) 2. 3.	5,443,508	1,217,919	1,533,795	5,127,632
   Total	5,443,508	1,217,919	1,533,795	5,127,632

   (Notes) 1. The decrease in total number of issued shares by 1,500,000 shares of common shares is due to the cancellation of treasury shares based on a resolution of the Board of Directors.

2. The increase in treasury shares by 1,217,919 shares of common shares is due to the 1,217,200 shares increase caused by the purchase of treasury shares based on a resolution of the Board of Directors, the 110 shares increase caused by the purchase of odd-lot shares, the 609 shares increase caused by the free acquisition of restricted stock compensation.

3. The decrease in treasury shares by 1,533,795 shares of common shares is due to the 1,500,000 shares decrease caused by the cancellation of treasury shares based on a resolution of the Board of Directors, the 33,795 shares decrease caused by the disposal of treasury shares as restricted stock units.

1. Share acquisition rights and treasury share acquisition rights

   (Share)

2. Dividends

   1. Cash dividends paid

      (Resolution)	Class of shares	Total cash dividends (Million yen)	Dividend per share (Yen)	Record date	Effective date
      May 9, 2024 Board of Directors meeting	Common shares	899	26	March 31, 2024	June 7, 2024
      October 31, 2024 Board of Directors meeting	Common shares	900	26	September 30, 2024	December 2, 2024

   2. Dividends for which the record date falls in the current period, but the effective date falls in the following period

(Notes to Consolidated Statements of Cash Flows)

*1. Relationship between cash and cash equivalents at end of year and account items listed in the consolidated balance sheets

For the fiscal year ended March 31, 2024

(Million yen)

For the fiscal year ended March 31, 2025

Cash and deposits 16,308 9,873

Time deposits with deposit terms of more than three months

(5,341) (2,233)

Cash and cash equivalents 10,966 7,640

(Lease transactions) (Lessee)

1. Finance lease transactions

   Finance leases wherein ownership of the leased asset does not transfer to the lessee

   1. Description of leased assets Property, plant and equipment

      Research and development facility, tools, furniture and fixtures, and machinery, equipment and vehicles

   2. Depreciation method of leased assets

      As described in "(2) Depreciation method of significant depreciable assets under 4. Accounting policies" of (Material basis for the preparation of consolidated financial statements).

2. Operating lease transactions

Future lease payments under non-cancelable operating lease transactions

(Million yen)

(Lessor)

Finance lease transactions

1. Description of investments in leases

   1. Current assets

      (Million yen)

      	As of March 31, 2024	As of March 31, 2025
      Lease receivables	359	402
      Interest income equivalents	(21)	(24)
      Investments in leases	337	377

   2. Investments and other assets

      (Million yen)

      	As of March 31, 2024	As of March 31, 2025
      Lease receivables	867	906
      Interest income equivalents	(35)	(40)
      Investments in leases	832	865

2. Scheduled amount of debt recovery after the closing date for lease receivables associated with investments in leases

   1. Current assets

      (Million yen)

      	As of March 31, 2024
      		Due after	Due after	Due after	Due after
      	Due in one	one year	two years	three years	four years	Due after
      	year or less	through two years	through three years	through four years	through five years	five years
      Lease receivables	-	-	-	-	-	-
      Investments in leases	359	-	-	-	-	-

      (Million yen)

      	As of March 31, 2025
      		Due after	Due after	Due after	Due after
      	Due in one	one year	two years	three years	four years	Due after
      	year or less	through two years	through three years	through four years	through five years	five years
      Lease receivables	-	-	-	-	-	-
      Investments in leases	402	-	-	-	-	-

   2. Investments and other assets

(Million yen)

(Million yen)

(Segment information) Segment information

Fiscal year ended March 31, 2024 and fiscal year ended March 31, 2025

Omitted since the Group's business is a single segment in the clinical diagnostics business.

(Per share information)

(Yen)

(Note) The basis for the calculation of basic earnings per share and diluted earnings per share is as follows.

(Significant subsequent events)

At a meeting of the Board of Directors held on May 13, 2025, the Company resolved to transfer all equity interests in our company's consolidated subsidiary, EIKEN CHINA CO., LTD. (Eiken China) For details, please refer to "Notice Concerning Transfer of Equity Interests of Consolidated Subsidiaries" announced on May 13, 2025.

Non-consolidated Financial Statements

Non-consolidated Balance Sheets

(Millions of yen)

As of March 31, 2024 As of March 31, 2025

Assets

Current assets