Business
Fuji Oil : Financial Results 1Q （April 1, 2025 - June 30, 2025）
Fuji Oil : Financial Results 1Q （April 1, 2025 - June 30,
About this update from Fuji Oil Co. Ltd.
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. August 8, 2025 Consolidated Financial Results for the Three Months Ended June 30, 2025 (Q1 FY2025) (Under IFRS) Company name: FUJI OIL CO., LTD. Listing: Tokyo Stock Exchange Securities code: 2607 URL: https://www.fujioil.co.jp/en/ Representative: Tatsuji Omori, President and CEO Inquiries: Masaaki Nakanishi, Deputy General Manager, Finance and Accounting Headquarters Telephone: +81-(0)3-4477-5416 Scheduled date to commence dividend payments: － Preparation of supplementary material on financial results: Yes Holding of financial results briefing: Yes (for institutional investors and analysts) (Yen amounts are rounded down to millions, unless otherwise noted.) Consolidated financial results for the three months ended June 30, 2025 (April 1, 2025 - June 30, 2025) Consolidated operating results (cumulative) (Percentages indicate year-on-year changes.) Net sales Business profit Operating profit Profit before tax Profit Three months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % Millions of yen % June 30, 2025 181,831 19.3 5,663 △ 32.1 4,841 △ 39.0 3,350 △ 52.7 3,296 △ 42.1 June 30, 2024 152,366 - 8,346 - 7,932 - 7,091 - 5,694 - Profit attributable to owners of parent Total comprehensive income Basic earnings per share Diluted earnings per share Three months ended Millions of yen % Millions of yen % Yen Yen June 30, 2025 3,248 △ 38.2 929 △ 94.7 37.78 - June 30, 2024 5,258 - 17,444 - 61.18 - (Note) Business Profit is calculated by adding share of profit (loss) of investments accounted for using equity method to operating profit and excluding gains and losses due to non-recurring factors. Consolidated financial position Total assets Total equity Equity attributable to owners of parent Ratio of equity attributable to owners of parent to total assets As of Millions of yen Millions of yen Millions of yen % June 30, 2025 607,969 210,088 205,986 33.9 March 31, 2025 597,076 210,926 206,923 34.7 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 March 31, 2025 - 26.00 - 26.00 52.00 Fiscal year ending March 31, 2026 - Fiscal year ending March 31, 2026 (Forecast) 26.00 - 26.00 52.00 (Note) Revisions to the forecast of cash dividends most recently announced: None Consolidated forecasts for the fiscal year ending March 31, 2026 (April 1, 2025 - March 31, 2026) (Percentages indicate year-on-year changes.) Net sales Business profit Profit attributable to owners of parent Profit per share Fiscal year ending March 31, 2026 Millions of yen % Millions of yen % Millions of yen % Yen 800,000 19.2 29,500 122.5 16,500 327.0 191.92 (Note) Revisions to the consolidated forecast most recently announced: None * Notes Significant changes in the scope of consolidation during the period: Yes New company: 2 companies (PROVENCE HUILES S.A.S, etc.) Excluded company: 1 company (The former FUJI OIL CO., LTD.) Changes in accounting policies, changes in accounting estimates, and restatement Changes in accounting policies required by IFRS: None Changes in accounting policies due to other reasons: None Changes in accounting estimates: None Number of issued shares (common shares) Total number of issued shares at the end of the period (including treasury shares) As of June 30, 2025 87,569,383 shares As of March 31, 2025 87,569,383 shares Number of treasury shares at the end of the period As of June 30, 2025 1,595,456 shares As of March 31, 2025 1,595,432 shares Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) Three months ended June 30, 2025 85,973,943 shares Three months ended June 30, 2024 85,965,217 shares Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: None Explanations and other special notes concerning the appropriate use of business results forecasts The forward-looking statements included in this document are based on the information available at the time of this announcement. The actual results may differ from the forecasts in this report due to various factors. The Group has voluntarily adopted International Financial Reporting Standards (IFRS) from the first quarter of the fiscal year ending March 31, 2026, and figures for the previous fiscal year have been reclassified to IFRS basis. Please refer to "2. Quarterly Consolidated Financial Statements (First-Time Adoption of IFRS) (Accompanying Materials)" for the differences of the consolidated financial figures between Japanese Generally Accepted Accounting Principles (hereinafter, "Japanese GAAP") and IFRS. How to access quarterly supplementary material on financial results Quarterly supplementary material on financial results is disclosed in Investor Relation on our company's website on the same day. Accompanying Materials - Contents 1. Qualitative Information on Results for the Three Months Ended June 30, 2025…………………………………………….. 2 (1) Details of Operating Results……………………………………………………………………………………………… 2 (2) Details of Financial Position……………………………………………………………………………………………… 3 (3) Information on the Future Outlook, Including Consolidated Business Results Forecasts.………………………………. 3 2. Quarterly Consolidated Financial Statements………………………………………………………………………………... 4 (1) Quarterly Consolidated Statements of Financial Position………………………………………………………………... 4 (2) Quarterly Consolidated Statements of Income and Comprehensive Income.…………………………………………….. 6 Quarterly Consolidated Statements of Income…………………………………..……………………..……..………… 6 Quarterly Consolidated Statements of Comprehensive Income …………………………………..……………………. 7 (3) Quarterly Consolidated Statements of Changes in Equity…………………………………………..……………………. 8 (4) Quarterly Consolidated Statements of Cash flows………………………………………………………………………... 9 (5) Notes to Quarterly Consolidated Financial Statements…………………………………………………………………… 11 (Notes Relating to Assumptions for the Going Concern) …………………………………………………….………… 11 (Segment Information) ………………………………………………………………………………………….………. 11 (First-Time Adoption of IFRS) …………………………………………………………………………………………. 13 Qualitative Information on Results for the Three Months Ended June 30, 2025 Details of Operating Results Operating results for the first three months of the current consolidated fiscal year were as follows. Net sales Business profit Profit before tax Profit attributable to owners of parent Three months ended Millions of yen Millions of yen Millions of yen Millions of yen June 30, 2025 181,831 5,663 3,350 3,248 June 30, 2024 152,366 8,346 7,091 5,258 Change +29,465 +19.3% △ 2,682 △ 32.1% △ 3,740 △ 52.7% △ 2,010 △ 38.2% Net sales increased due to higher sales prices to reflect rising key raw material prices, driven by an increase in palm oil prices compared to the same period last year, as well as sustained high cocoa beans prices following the soaring in 2024. Business profit decreased due to a decline in profitability at Blommer Chocolate Company, LLC (USA, hereinafter "Blommer") resulting from higher procurement prices for cocoa beans and increased related costs, despite steady sales of vegetable fats for chocolate in the Vegetable Oils and Fats segment and compound chocolate in the Industrial Chocolate segment. Profit attributable to owners of parent decreased due to impairment losses on non-current asset held for employee benefit purposes and an increase in interest expenses resulting from higher financing costs in addition to the decrease in business profit. From the current fiscal year, the Company has allocated corporate expenses which were not allocated to each reported segment and were included in "Adjustment". Therefore, segment information for the previous fiscal year has been analyzed comparatively by allocating corporate expenses to each reported segment. The operating results by reported segment are shown below. Net sales Business profit Year-on-year change Year-on-year change Millions of yen Millions of yen % Millions of yen Millions of yen % Vegetable Oils and Fats 63,197 +15,509 +32.5% 9,014 +4,437 +97.0% Industrial Chocolate 87,641 +14,068 +19.1% △ 3,302 △ 6,562 - Emulsified and Fermented Ingredients 22,486 +320 +1.4% 70 △ 456 △ 86.6% Soy-based Ingredients 8,504 △ 433 △ 4.9% △ 27 △ 25 - Adjustment - - - △ 91 △ 76 - Total 181,831 +29,465 +19.3% 5,663 △ 2,682 △ 32.1% (Vegetable Oils and Fats) Net sales increased due to higher sales prices to reflect rising raw material prices. Business profit increased mainly due to steady sales of vegetable fats for chocolate. (Industrial Chocolate) Net sales increased due to higher sales prices to reflect rising raw material prices. Business profit decreased due to a decline in profitability at Blommer resulting from higher procurement prices for cocoa beans and increased related costs and the rebound of recognition of gain on valuation of futures contracts for the first three months of the previous consolidated fiscal year. (Emulsified and Fermented Ingredients) Net sales were at approximately the same level as the first three months of the previous consolidated fiscal year due to higher sales prices to reflect rising raw material prices, despite a decrease in sales volume. Business profit decreased due to the decrease in sales volume and a decline in profitability resulting from higher procurement prices. (Soy-based Ingredients) Net sales decreased mainly due to a decrease in sales volume of soy protein foods and functional ingredients. Business profit decreased mainly due to the decrease in sales volume of functional ingredients. Details of Financial Position Details of Consolidated Financial Position The consolidated financial position at the end of the three months of the fiscal year is as follows. ( Millions of yen ) As of March 31, 2025 As of June 30, 2025 Change Current assets 363,997 358,252 △ 5,744 Non-current assets 233,079 249,716 +16,637 Assets 597,076 607,969 +10,892 Interest-bearing debt 283,721 288,536 +4,815 Other 102,428 109,343 +6,915 Liabilities 386,150 397,880 +11,730 Equity 210,926 210,088 △ 838 (Assets) Current assets decreased due to a decrease in cash and cash equivalents despite an increase in inventories attributable to rising raw material price and a newly consolidated company. Non-current assets increased due to an increase in goodwill resulting from the acquisition of shares of a newly consolidated company and purchase of property, plant and equipment. As a result, assets increased by 10,892 million yen from the end of the previous consolidated fiscal year to 607,969 million yen. (Liabilities) Liabilities increased due to an increase in trade payables which are included in other, as well as an increase in interest-bearing debt such as short-term borrowings along with the acquisition of shares of a newly consolidated company and an increase in working capital. As a result, liabilities increased by 11,730 million yen from the end of the previous consolidated fiscal year to 397,880 million yen. (Equity) Equity decreased by 838 million yen from the end of the previous year to 210,088 million yen mainly due to a decrease in other components of equity associated with the yen appreciation against the US dollar. Details of Consolidated Cash Flows The cash flows for the first three months of the consolidated fiscal year are as follows. ( Millions of yen ) Three months ended June 30, 2024 Three months ended June 30, 2025 Change Cash flows from operating activities △ 38,184 △ 12,606 +25,577 Cash flows from investing activities △ 4,374 △ 23,411 △ 19,037 Free Cash flows △ 42,558 △ 36,018 6,540 Cash flows from financing activities 47,095 469 △ 46,626 Cash and cash equivalents at end of period 33,432 34,296 +864 (Cash flows from operating activities) Cash flows from operating activities for the first three months of the current consolidated fiscal year resulted in expenditures of 12,606 million yen. Expenditures decreased by 25,577 million yen compared to the first three months of the previous consolidated fiscal year mainly due to calming down of working capital requirements. (Cash flows from investing activities) Cash flows from investing activities for the first three months of the current consolidated fiscal year resulted in expenditures of 23,411 million yen. Expenditures increased by 19,037 million yen compared to the first three months of the previous consolidated fiscal year mainly due to the acquisition of shares of a newly consolidated company and purchase of property, plant and equipment. (Cash flows from financing activities) Cash flows from financing activities for the first three months of the current consolidated fiscal year resulted in income of 469 million yen. Income decreased by 46,626 million yen compared to the first three months of the previous consolidated fiscal year mainly due to the rebound of the previous year and using of funds in hand. Information on the Future Outlook, Including Consolidated Business Results Forecasts The consolidated business results forecasts for the full year remain unchanged from the business performance forecast announced on May 12, 2025 Quarterly Consolidated Financial Statements Quarterly Consolidated Statements of Financial Position (Millions of yen) Transition Date (As of April 1, 2024) As of March 31, 2025 As of June 30, 2025 Assets Current assets Cash and cash equivalents 28,499 70,840 34,296 Trade receivables 92,399 112,298 114,118 Inventories 109,349 160,718 177,848 Other financial assets 2,888 1,304 1,745 Other current assets 13,427 10,197 21,892 Assets held for sale - 8,637 8,351 Total current assets 246,565 363,997 358,252 Non-current assets Property, plant and equipment 141,344 138,081 141,976 Right-of-use assets 10,048 9,257 11,589 Intangible assets 33,605 32,572 32,013 Goodwill 21,907 20,763 32,900 Investments accounted for using equity method 11,134 13,426 12,991 Retirement benefit asset 39 39 - Deferred tax assets 2,496 10,218 9,338 Other financial assets 9,426 8,400 8,616 Other non-current assets 624 319 289 Total non-current assets 230,628 233,079 249,716 Total assets 477,193 597,076 607,969 (Millions of yen) Transition Date (As of April 1, 2024) As of March 31, 2025 As of June 30, 2025 Liabilities Current liabilities Trade payables 41,013 46,538 56,784 Short-term borrowings 64,373 195,284 215,515 Current portion of bonds payable 34,989 - - Lease liabilities 2,410 2,062 2,483 Income taxes payable 4,316 7,566 3,842 Other financial liabilities 6,148 10,093 10,701 Other current liabilities 15,589 14,063 13,778 Liabilities directly associated with assets held for sale - 259 265 Total current liabilities 168,842 275,867 303,372 Non-current liabilities Bonds payable 5,978 30,811 30,823 Long-term borrowings 43,496 57,625 42,197 Lease liabilities 7,168 6,668 8,857 Deferred tax liabilities 14,627 10,777 8,089 Retirement benefit liability 1,985 1,784 1,877 Other non-current liabilities 2,526 2,613 2,663 Total non-current liabilities 75,781 110,282 94,508 Total liabilities 244,624 386,150 397,880 Equity Share capital 13,208 13,208 13,208 Capital surplus 15,323 8,443 8,442 Retained earnings 151,046 150,944 151,917 Treasury shares △ 1,947 △ 1,919 △ 1,919 Other components of equity 42,846 36,245 34,338 Equity attributable to owners of parent 220,477 206,923 205,986 Non-controlling interests 12,091 4,003 4,101 Total equity 232,569 210,926 210,088 Total liabilities and equity 477,193 597,076 607,969 Quarterly Consolidated Statements of Income and Comprehensive Income Quarterly Consolidated Statements of Income (First three months period) (Millions of yen) Three months ended June 30, 2024 Three months ended June 30, 2025 Net sales 152,366 181,831 Cost of sales 126,883 158,389 Gross profit 25,483 23,442 Selling, general and administrative expenses 17,747 19,354 Other income 435 934 Other expenses 239 181 Operating profit 7,932 4,841 Finance income 423 508 Finance costs 1,645 2,120 Share of profit (loss) of investments accounted for using equity method 381 120 Profit before tax 7,091 3,350 Income tax expense 1,397 54 Profit 5,694 3,296 Profit attributable to Owners of parent 5,258 3,248 Non-controlling interests 435 47 Earnings per share Basic earnings per share (yen) 61.18 37.78 Diluted earnings per share (yen) - - Quarterly Consolidated Statements of Comprehensive Income (First three months period) (Millions of yen) Three months ended June 30, 2024 Three months ended June 30, 2025 Profit 5,694 3,296 Other comprehensive income Items that will not be reclassified to profit or loss Net change in fair value of equity instruments measured through other comprehensive income 52 132 Remeasurements of defined benefit plans △ 3 △ 37 Total of items that will not be reclassified to profit or loss 48 94 Items that may be reclassified to profit or loss Cash flow hedges 2,096 △ 275 Exchange differences on translation of foreign operations 9,005 △ 1,604 Share of other comprehensive income of investments accounted for using equity method 599 △ 581 Total of items that may be reclassified to profit or loss 11,701 △ 2,461 Total other comprehensive income 11,749 △ 2,366 Comprehensive income 17,444 929 Comprehensive income attributable to Owners of parent 16,357 915 Non-controlling interests 1,086 14 Quarterly Consolidated Statements of Changes in Equity For the three months ended June 30, 2024 (Millions of yen) Share capital Capital surplus Retained earnings Treasury shares Other components of equity Equity attributable to owners of parent Non-controlling interests Total equity Balance at beginning of period 13,208 15,323 151,046 △ 1,947 42,846 220,477 12,091 232,569 Profit - - 5,258 - - 5,258 435 5,694 Other comprehensive income - - - - 11,098 11,098 650 11,749 Comprehensive income - - 5,258 - 11,098 16,357 1,086 17,444 Dividends of surplus - - △ 2,237 - - △ 2,237 △ 13 △ 2,251 Purchase of treasury shares - - - △ 0 - △ 0 - △ 0 Disposal of treasury shares - - - 3 - 3 - 3 Transfer from other components of equity to retained earnings - - △ 73 - 73 - - - Share-based payment transactions - △ 3 - - - △ 3 - △ 3 Other - - - - △ 965 △ 965 - △ 965 Total transactions with owners - △ 3 △ 2,311 3 △ 891 △ 3,203 △ 13 △ 3,217 Balance at end of period 13,208 15,319 153,994 △ 1,944 53,054 233,632 13,163 246,796 For the three months ended June 30, 2025 (Millions of yen) Share capital Capital surplus Retained earnings Treasury shares Other components of equity Equity attributable to owners of parent Non-controlling interests Total equity Balance at beginning of period 13,208 8,443 150,944 △ 1,919 36,245 206,923 4,003 210,926 Profit - - 3,248 - - 3,248 47 3,296 Other comprehensive income - - - - △ 2,332 △ 2,332 △ 33 △ 2,366 Comprehensive income - - 3,248 - △ 2,332 915 14 929 Dividends of surplus - - △ 2,237 - - △ 2,237 △ 12 △ 2,250 Purchase of treasury shares - - - △ 0 - △ 0 - △ 0 Disposal of treasury shares - - - - - - - - Transfer from other components of equity to retained earnings - - △ 37 - 37 - - - Share-based payment transactions - △ 1 - - - △ 1 - △ 1 Other - - - - 387 387 96 483 Total transactions with owners - △ 1 △ 2,275 △ 0 425 △ 1,851 84 △ 1,767 Balance at end of period 13,208 8,442 151,917 △ 1,919 34,338 205,986 4,101 210,088 Quarterly Consolidated Statements of Cash flows (First three months period) (Millions of yen) Three months ended June 30, 2024 Three months ended June 30, 2025 Cash flows from operating activities Profit before tax 7,091 3,350 Depreciation and amortization 4,947 4,718 Decrease (increase) in retirement benefit asset 0 △ 14 Increase (decrease) in retirement benefit liability 18 32 Interest and dividend income △ 257 △ 339 Interest expenses 1,565 1,793 Impairment losses - 686 Share of loss (profit) of investments accounted for using equity method △ 381 △ 120 Loss (gain) on disposal of non-current assets 33 15 Decrease (increase) in trade receivables △ 10,605 97 Decrease (increase) in inventories △ 24,170 △ 12,787 Increase (decrease) in trade payables △ 1,040 8,150 Decrease (increase) in advance payments to suppliers △ 6,626 △ 9,996 Other △ 4,503 △ 615 Subtotal △ 33,927 △ 5,030 Interest and dividends received 458 99 Interest paid △ 1,522 △ 1,995 Income taxes refund (paid) △ 3,192 △ 5,680 Net cash provided by (used in) operating activities △ 38,184 △ 12,606 Cash flows from investing activities Purchase of property, plant and equipment △ 3,516 △ 5,877 Proceeds from sale of property, plant and equipment 8 31 Purchase of intangible assets △ 823 △ 784 Payments for acquisition of subsidiaries - △ 16,726 Payments for investments in capital △ 13 △ 6 Payments for loans receivable △ 0 △ 18 Other △ 28 △ 30 Net cash provided by (used in) investing activities △ 4,374 △ 23,411 (Millions of yen) Three months ended June 30, 2024 Three months ended June 30, 2025 Cash flows from financing activities Net increase (decrease) in short-term borrowings 41,642 3,819 Net increase (decrease) in commercial papers 10,000 - Proceeds from long-term borrowings 10,000 - Repayments of long-term borrowings △ 1,003 △ 440 Proceeds from issuance of bonds 25,000 - Redemption of bonds △ 35,000 - Dividends paid △ 2,237 △ 2,237 Dividends paid to non-controlling interests △ 13 △ 12 Other △ 1,292 △ 660 Net cash provided by (used in) financing activities 47,095 469 Effect of exchange rate changes on cash and cash equivalents 395 △ 995 Net increase (decrease) in cash and cash equivalents 4,932 △ 36,544 Cash and cash equivalents at beginning of period 28,499 70,840 Increase or decrease in cash and cash equivalents resulting from transferring to assets held for sale △ 0 - Cash and cash equivalents at end of period 33,432 34,296 Notes to Quarterly Consolidated Financial Statements (Notes Relating to Assumptions for the Going Concern) Not applicable. (Segment Information) From the current fiscal year, the Company has allocated corporate expenses which were not allocated to each reported segment and were included in "Adjustment". Therefore, in the segment information for the previous fiscal year, corporate expenses have been allocated to each reported segment. First three months period of the previous fiscal year (April 1, 2024 - June 30, 2024) (Millions of yen) Reported segments Adjustment (Note 1) Consolidated total Vegetable Oils and Fats Industrial Chocolate Emulsified and Fermented Ingredients Soy-based Ingredients Total Net sales Sales to external customers 47,688 73,573 22,166 8,938 152,366 - 152,366 Transactions with other segments 5,864 961 1,066 57 7,950 △ 7,950 - Total 53,552 74,534 23,232 8,996 160,316 △ 7,950 152,366 Business profit (loss) (Note 2) 4,576 3,259 527 △ 2 8,361 △ 14 8,346 (Note) 1. Adjustment of business profit △ 14 million yen includes the elimination of intersegment transactions. 2. Business profit is calculated by adding share of profit (loss) of investments accounted for using equity method to operating profit and excluding gains and losses arising from non-recurring factors. First three months period of the current fiscal year (April 1, 2025 - June 30, 2025) (Millions of yen) Reported segments Adjustment (Note 1) Consolidated total Vegetable Oils and Fats Industrial Chocolate Emulsified and Fermented Ingredients Soy-based Ingredients Total Net Sales Sales to external customers 63,197 87,641 22,486 8,504 181,831 - 181,831 Transactions with other segments 8,759 986 1,583 31 11,360 △ 11,360 - Total 71,956 88,628 24,070 8,535 193,191 △ 11,360 181,831 Business profit (loss) (Note 2) 9,014 △ 3,302 70 △ 27 5,755 △ 91 5,663 (Note) 1. Adjustment of business profit △ 91 million yen includes the elimination of intersegment transactions. 2. Business profit is calculated by adding share of profit (loss) of investments accounted for using equity method to operating profit and excluding gains and losses arising from non-recurring factors. The adjustment from business profit to profit before tax is as follows: (Millions of yen) Three months ended June 30, 2024 Three months ended June 30, 2025 Business profit 8,346 5,663 Gain on sale of fixed assets 4 22 Loss on disposal of fixed assets △ 38 △ 37 Impairment losses - △ 686 Share of loss (profit) of investments accounted for using the equity method △ 381 △ 120 Other 0 0 Operating profit 7,932 4,841 Finance income 423 508 Finance costs △ 1,645 △ 2,120 Share of profit (loss) of investments accounted for using equity method 381 120 Profit before tax 7,091 3,350 (First-Time Adoption of IFRS) The Group prepared its consolidated financial statements in compliance with IFRS from the current fiscal year. The most recent consolidated financial statements prepared in accordance with Japanese GAAP are those for the fiscal year ended March 31, 2025, and the transition date to IFRS is April 1, 2024. Exemptions and mandatory exceptions under IFRS 1 In principle, IFRS requires that companies adopting IFRS for the first time (hereinafter, "First-time Adopter") apply the standards required under IFRS retrospectively. However, for some of the standards required under IFRS, IFRS 1 First-Time Adoption of International Financial Reporting Standards (hereinafter, "IFRS 1") specifies standards for which the exemption is applied mandatorily and those for which the exemption is applied voluntarily. The impact based on the application of these exemptions is adjusted in retained earnings and other components of equity at the transition date. The exemptions that the Group applies in connection with the transition from Japanese GAAP to IFRS are as follows: Business combinations IFRS 1 permits a First-time Adopter to elect not to apply IFRS 3 Business Combinations (hereinafter, " IFRS 3") retrospectively to business combinations that occurred before the transition date to IFRS. If any business combination is restated upon retrospective application, all later business combinations shall be restated to comply with IFRS 3. The Group has elected not to apply IFRS 3 retrospectively to business combinations that occurred before the transition date. Accordingly, goodwill and equivalent to goodwill in equity method affiliates arising from business combinations that occurred before the transition date were recorded at the carrying amount under Japanese GAAP at the transition date. However, goodwill was tested for impairment as of the transition date irrespective of whether there was any indication of impairment. Use of deemed cost Under IFRS 1, the fair value of property, plant and equipment at the transition date can be used as deemed cost. The Group uses the fair value at the transition date as the deemed cost for certain items of property, plant and equipment. Designation of financial instruments recognized before the transition date IFRS 1 permits First-time Adopter to designate financial assets in accordance with IFRS 9 Financial Instruments (hereinafter, " IFRS 9") on the basis of the facts and circumstances that exist as at the transition date. The Group has designated equity instruments that were held as at the transition date as financial instruments measured at fair value through other comprehensive income (equity instruments) on the basis of the circumstances that existed as at the transition date. Leases (as lessee) IFRS 1 permits First-time Adopter to determine whether or not an arrangement contains a lease on the basis of facts and circumstances existing at the transition date. When First-time Adopter that is a lessee recognizes lease liabilities and right-of-use assets, it may measure lease liabilities and right-of-use assets for all of its leases at the transition date. The Group measured lease liabilities at the transition date at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate at the transition date. The Group measured right-of-use assets at the transition date at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to the leases recognized in the statement of financial position immediately before the transition date. Share-based payments IFRS 1 permits First-time Adopter to elect not to apply IFRS 2 Share-based Payment (hereinafter, "IFRS 2") to share-based payments vested before the transition date. The Group elected not to apply IFRS 2 to share-based payments vested before the transition date. Mandatory exceptions to retrospective application under IFRS 1 IFRS 1 prohibits the retrospective application of IFRS for certain items including "estimates," "derecognition of financial assets and financial liabilities," "hedge accounting," "non-controlling interests," and "classification and measurement of financial assets." The Group has applied IFRS to these items prospectively from the transition date. Reconciliations The reconciliations required to be disclosed under IFRS 1 are as follows. "Change in FYE" includes reconciliations that reflect the alignment of subsidiaries' fiscal year ending with the Group's as part of the transition to IFRS. " Reclassification" includes reconciliations that do not affect retained earnings and comprehensive income. "Difference in recognition and measurement" includes reconciliations that affect retained earnings and comprehensive income. Reconciliation of equity as of April 1, 2024 (The transition date) (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Change in FYE Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Assets Assets Current assets Current assets Cash and deposits 27,490 829 △ 10 189 28,499 Cash and cash equivalents Notes and accounts receivable - trade 90,024 2,614 △ 238 △ 1 92,399 Trade receivables Merchandise and finished goods 51,724 509 57,277 △ 161 109,349 a Inventories Raw materials and supplies 57,277 - △ 57,277 - - Other 10,579 - △ 10,579 - - Allowance for doubtful accounts △ 238 - 238 - - - 1,092 1,621 173 2,888 b Other financial assets - 4,260 9,006 160 13,427 c Other current assets Total current assets 236,858 9,307 38 360 246,565 Total current assets Non-current assets Non-current assets Property, plant and equipment - - 143,868 △ 2,524 141,344 e, E Property, plant and equipment Buildings and structures, net 47,780 28 △ 47,809 - - Machinery, equipment and vehicles, net 62,851 93 △ 62,945 - - Land 20,057 124 △ 20,182 - - Right-of-use assets, net 7,655 △ 63 82 2,374 10,048 F Right-of-use assets Construction in progress 9,273 571 △ 9,844 - - Other, net 3,131 34 △ 3,165 - - Intangible assets - - 33,605 - 33,605 f Intangible assets Goodwill 21,840 67 - - 21,907 B Goodwill Customer-related assets 19,035 174 △ 19,209 - - Other 14,345 53 △ 14,398 - - Investments and other assets - - 11,224 △ 89 11,134 g Investments accounted for using equity method Investment securities 16,002 - △ 16,002 - - Retirement benefit asset 7,064 - - △ 7,024 39 D Retirement benefit asset Deferred tax assets 669 - - 1,827 2,496 C Deferred tax assets Other 3,683 - △ 3,683 - - Allowance for doubtful accounts △ 60 - 60 - - - 18 7,873 1,533 9,426 h, A Other financial assets - - 527 96 624 i Other non-current assets Total non-current assets 233,332 1,103 - △ 3,806 230,628 Total non-current assets Deferred assets 30 - - △ 30 - Bond issuance costs Total deferred assets 30 - - △ 30 - Total assets 470,221 10,410 38 △ 3,476 477,193 Total assets (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Change in FYE Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Liabilities Liabilities Current liabilities Current liabilities Notes and accounts payable - trade 42,321 △ 1,441 - 134 41,013 Trade payables Short-term borrowings 33,151 21,222 10,000 - 64,373 k Short-term borrowings Current portion of bonds payable 35,000 - - △ 10 34,989 Current portion of bonds payable Commercial papers 10,000 - △ 10,000 - - - △ 5 1,721 693 2,410 j, F Lease liabilities Income taxes payable 4,310 - - 6 4,316 Income taxes payable Provision for bonuses 3,354 58 △ 3,412 - - Provision for bonuses for directors (and other officers) 40 - △ 40 - - Other 18,758 - △ 18,758 - - - 237 5,904 7 6,148 l Other financial liabilities - △ 659 14,573 1,675 15,589 m,G,H Other current liabilities Total current liabilities 146,936 19,412 △ 12 2,506 168,842 Total current liabilities Non-current liabilities Non-current liabilities Bonds payable 6,000 - - △ 21 5,978 Bonds payable Long-term borrowings 46,135 △ 2,639 - - 43,496 Long-term borrowings Lease liabilities 5,110 △ 57 - 2,115 7,168 F Lease liabilities Deferred tax liabilities 17,223 △ 1,327 - △ 1,268 14,627 C Deferred tax liabilities Retirement benefit liability 2,022 - - △ 37 1,985 Retirement benefit liability Other 2,500 - △ 2,500 - - - 25 2,500 - 2,526 n Other non-current liabilities Total non-current liabilities 78,993 △ 3,998 - 787 75,781 Total non-current liabilities Total liabilities 225,929 15,413 △ 12 3,294 244,624 Total liabilities Net assets Shareholders' equity Equity Share capital 13,208 - - - 13,208 Share capital Capital surplus 14,757 - 51 514 15,323 Capital surplus Retained earnings 163,810 △ 6,359 - △ 6,403 151,046 L Retained earnings Treasury shares △ 1,947 - - - △ 1,947 Treasury shares Accumulated other comprehensive income - - 43,714 △ 867 42,846 o, A Other components of equity Valuation difference on available-for-sale securities 1,868 - △ 1,868 - - Deferred gains or losses on hedges 726 - △ 726 - - Foreign currency translation adjustment 39,122 1,356 △ 40,479 - - Remeasurements of defined benefit plans 639 - △ 639 - - - - - - 220,477 Equity attributable to owners of parent Non-controlling interests 12,105 - - △ 14 12,091 Non-controlling interests Total net assets 244,291 △ 5,002 51 △ 6,770 232,569 Total equity Total liabilities and net assets 470,221 10,410 38 △ 3,476 477,193 Total liabilities and equity Reconciliations of equity as of the end of the first quarter of the previous fiscal year (June 30, 2024) (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Assets Assets Current assets Current assets Cash and deposits 33,261 △ 10 181 33,432 Cash and cash equivalents Notes and accounts receivable - trade 106,055 △ 1,167 17 104,905 Trade receivables Merchandise and finished goods 61,929 76,983 △ 232 138,681 a Inventories Raw materials and supplies 76,983 △ 76,983 - - Other 27,372 △ 27,372 - - Allowance for doubtful accounts △ 244 244 - - - 6,031 430 6,462 b Other financial assets - 21,189 201 21,391 c Other current assets - 11,666 - 11,666 d Assets held for sale Total current assets 305,358 10,581 598 316,538 Total current assets Non-current assets Non-current assets Property, plant and equipment - 137,505 △ 2,524 134,980 e, E Property, plant and equipment Buildings and structures, net 48,499 △ 48,499 - - Machinery, equipment and vehicles, net 64,594 △ 64,594 - - Land 20,590 △ 20,590 - - Right-of-use assets, net 7,897 △ 386 2,273 9,785 F Right-of-use assets Construction in progress 10,754 △ 10,754 - - Other, net 3,229 △ 3,229 - - Intangible assets - 34,732 - 34,732 f Intangible assets Goodwill 22,029 - 589 22,618 B Goodwill Customer-related assets 19,827 △ 19,827 - - Other 14,913 △ 14,913 - - Investments and other assets - 11,958 △ 8 11,950 g Investments accounted for using equity method Investment securities 16,758 △ 16,758 - - Retirement benefit asset 7,209 - △ 7,170 39 D Retirement benefit asset Deferred tax assets 705 - 1,345 2,050 C Deferred tax assets Other 3,755 △ 3,755 - - Allowance for doubtful accounts △ 60 60 - - - 8,038 1,555 9,593 h, A Other financial assets - 456 96 553 i Other non-current assets Total non-current assets 240,703 △ 10,556 △ 3,842 226,304 Total non-current assets Deferred assets 220 - △ 220 - Bond issuance costs Total deferred assets 220 - △ 220 - Total assets 546,282 25 △ 3,464 542,843 Total assets (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Liabilities Liabilities Current liabilities Current liabilities Notes and accounts payable -trade 40,550 △ 122 574 41,002 Trade payables Short-term borrowings 98,298 20,000 - 118,298 k Short-term borrowings Commercial papers 20,000 △ 20,000 - - - 1,399 727 2,127 j, F Lease liabilities Income taxes payable 3,391 - △ 153 3,238 Income taxes payable Provision for bonuses 3,930 △ 3,930 - - Other 16,350 △ 16,350 - - - 5,712 66 5,778 l Other financial liabilities - 12,610 1,279 13,890 m,G,H Other current liabilities - 911 - 911 d Liabilities directly associated with assets held for sale Total current liabilities 182,521 230 2,495 185,247 Total current liabilities Non-current liabilities Non-current liabilities Bonds payable 31,000 - △ 223 30,776 Bonds payable Long-term borrowings 53,756 - △ 76 53,680 Long-term borrowings Lease liabilities 5,049 △ 253 2,045 6,841 F Lease liabilities Deferred tax liabilities 16,215 - △ 1,445 14,769 C Deferred tax liabilities Retirement benefit liability 2,095 - △ 38 2,057 Retirement benefit liability Other 2,674 △ 2,674 - - - 2,674 - 2,674 n Other non-current liabilities Total non-current liabilities 110,792 △ 253 260 110,800 Total non-current liabilities Total liabilities 293,313 △ 22 2,756 296,047 Total liabilities Net assets Shareholders' equity Equity Share capital 13,208 - - 13,208 Share capital Capital surplus 14,757 47 514 15,319 Capital surplus Retained earnings 159,881 - △ 5,887 153,994 L Retained earnings Treasury shares △ 1,944 - - △ 1,944 Treasury shares Accumulated other comprehensive income - 53,882 △ 827 53,054 o, A Other components of equity Valuation difference on available-for-sale securities 1,889 △ 1,889 - - Deferred gains or losses on hedges 1,858 △ 1,858 - - Foreign currency translation adjustment 49,517 △ 49,517 - - Remeasurements of defined benefit plans 617 △ 617 - - - - - 233,632 Equity attributable to owners of parent Non-controlling interests 13,183 - △ 19 13,163 Non-controlling interests Total net assets 252,968 47 △ 6,220 246,796 Total equity Total liabilities and net assets 546,282 25 △ 3,464 542,843 Total liabilities and equity Reconciliations of equity as of March 31, 2025 (The previous fiscal year consolidated financial statements) (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Assets Assets Current assets Current assets Cash and deposits 70,616 △ 10 234 70,840 Cash and cash equivalents Notes and accounts receivable -trade 112,520 △ 222 0 112,298 Trade receivables Merchandise and finished goods 72,946 88,081 △ 309 160,718 a Inventories Raw materials and supplies 88,081 △ 88,081 - - Other 10,871 △ 10,871 - - Allowance for doubtful accounts △ 206 206 - - - 1,169 134 1,304 b Other financial assets - 9,924 273 10,197 c Other current assets - 8,637 - 8,637 d Assets held for sale Total current assets 354,830 8,833 333 363,997 Total current assets Non-current assets Non-current assets Property, plant and equipment - 140,606 △ 2,525 138,081 e, E Property, plant and equipment Buildings and structures, net 45,349 △ 45,349 - - Machinery, equipment and vehicles, net 59,628 △ 59,628 - - Land 19,705 △ 19,705 - - Right-of-use assets, net 7,287 33 1,936 9,257 F Right-of-use assets Construction in progress 21,334 △ 21,334 - - Other, net 3,200 △ 3,200 - - Intangible assets - 32,572 - 32,572 f Intangible assets Goodwill 18,602 - 2,161 20,763 B Goodwill Customer-related assets 17,287 △ 17,287 - - Other 15,295 △ 15,295 - - Investments and other assets - 13,112 313 13,426 g Investments accounted for using equity method Investment securities 16,631 △ 16,631 - - Retirement benefit asset 6,638 - △ 6,598 39 D Retirement benefit asset Deferred tax assets 7,336 - 2,881 10,218 C Deferred tax assets Other 3,299 △ 3,299 - - Allowance for doubtful accounts △ 47 47 - - - 6,547 1,853 8,400 h, A Other financial assets - 224 95 319 i Other non-current assets Total non-current assets 241,550 △ 8,588 117 233,079 Total non-current assets Deferred assets 183 - △ 183 - Bond issuance costs Total deferred assets 183 - △ 183 - Total assets 596,564 245 267 597,076 Total assets (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Liabilities Liabilities Current liabilities Current liabilities Notes and accounts payable -trade 46,075 △ 74 537 46,538 Trade payables Short-term borrowings 175,284 20,000 - 195,284 k Short-term borrowings Commercial papers 20,000 △ 20,000 - - - 1,376 685 2,062 j, F Lease liabilities Income taxes payable 7,571 - △ 5 7,566 Income taxes payable Provision for bonuses 3,941 △ 3,941 - - Provision for bonuses for directors (and other officers) 47 △ 47 - - Other 20,284 △ 20,284 - - - 10,213 △ 120 10,093 l Other financial liabilities - 12,718 1,345 14,063 m,G,H Other current liabilities - 259 - 259 d Liabilities directly associated with assets held for sale Total current liabilities 273,204 220 2,443 275,867 Total current liabilities Non-current liabilities Non-current liabilities Bonds payable 31,000 - △ 188 30,811 Bonds payable Long-term borrowings 57,691 - △ 65 57,625 Long-term borrowings Lease liabilities 4,805 △ 5 1,868 6,668 F Lease liabilities Deferred tax liabilities 10,873 - △ 96 10,777 C Deferred tax liabilities Retirement benefit liability 1,851 - △ 66 1,784 Retirement benefit liability Other 2,613 △ 2,613 - - - 2,613 - 2,613 n Other non-current liabilities Total non-current liabilities 108,835 △ 5 1,452 110,282 Total non-current liabilities Total liabilities 382,040 214 3,895 386,150 Total liabilities Net assets Shareholders' equity Equity Share capital 13,208 - - 13,208 Share capital Capital surplus 8,503 30 △ 91 8,443 Capital surplus Retained earnings 155,205 - △ 4,260 150,944 L Retained earnings Treasury shares △ 1,919 - - △ 1,919 Treasury shares Accumulated other comprehensive income - 35,499 746 36,245 o, A Other components of equity Valuation difference on available-for-sale securities 1,305 △ 1,305 - - Deferred gains or losses on hedges △ 560 560 - - Foreign currency translation adjustment 34,898 △ 34,898 - - Remeasurements of defined benefit plans △ 143 143 - - - - - 206,923 Equity attributable to owners of parent Non-controlling interests 4,025 - △ 22 4,003 Non-controlling interests Total net assets 214,524 30 △ 3,628 210,926 Total equity Total liabilities and net assets 596,564 245 267 597,076 Total liabilities and equity (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Net sales 152,375 - △ 8 152,366 p, I Net sales Cost of sales 127,653 37 △ 807 126,883 Cost of sales Gross profit 24,721 △ 37 799 25,483 Gross profit Selling, general and administrative expenses 17,281 2 463 17,747 B, I Selling, general and administrative expenses - 281 154 435 p Other income - 252 △ 12 239 p Other expenses Operating profit 7,440 △ 10 502 7,932 Operating profit Non-operating income 925 △ 925 - - Non-operating expenses 1,851 △ 1,851 - - Extraordinary income 5 △ 5 - - Extraordinary losses 65 △ 65 - - - 423 0 423 p Finance income - 1,690 △ 45 1,645 p Finance costs - 292 88 381 p, B Share of profit (loss) of investments accounted for using equity method Profit before income taxes 6,454 - 637 7,091 Profit before tax Income taxes - current 2,247 △ 902 51 1,397 q Income tax expense Income taxes - deferred △ 902 902 - - Total income taxes 5,109 - 585 5,694 Profit Other comprehensive income Other comprehensive income Items that will not be reclassified to profit or loss Valuation difference on available-for-sale securities 21 - 31 52 A Net change in fair value of equity instruments measured through other comprehensive income Remeasurements of defined benefit plans, net of tax △ 22 - 19 △ 3 D Remeasurements of defined benefit plans Deferred gains or losses on hedges Items that may be reclassified to profit or loss 1,130 - 965 2,096 J Cash flow hedges Foreign currency translation adjustment 9,092 - △ 87 9,005 Exchange differences on translation of foreign operations Share of other comprehensive income of entities accounted for using equity method 597 - 1 599 Share of other comprehensive income of investments accounted for using equity method Total other comprehensive income 10,818 - 930 11,749 Total other comprehensive income Comprehensive income 15,927 - 1,516 17,444 Comprehensive income Reconciliations of profit or loss and comprehensive income for the first three months period of the previous fiscal year (April 1, 2024 - June 30, 2024) Reconciliation of profit or loss and comprehensive income for the previous fiscal year (From April 1, 2024 to March 31, 2025) (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Net sales 671,211 - △ 3 671,207 p, I Net sales Cost of sales 591,984 446 △ 2,858 589,572 Cost of sales Gross profit 79,227 △ 446 2,855 81,635 Gross profit Selling, general and administrative expenses 69,332 171 1,969 71,473 B, I Selling, general and administrative expenses - 1,398 609 2,008 p Other income - 523 138 662 p Other expenses Operating profit 9,895 256 1,356 11,508 Operating profit Non-operating income 3,267 △ 3,267 - - Non-operating expenses 7,858 △ 7,858 - - Extraordinary income 990 △ 990 - - Extraordinary losses 443 △ 443 - - - 1,914 △ 633 1,280 p Finance income - 7,530 48 7,579 p Finance costs - 1,315 375 1,690 p, B Share of profit (loss) of investments accounted for using equity method Profit before income taxes 5,850 - 1,049 6,900 Profit before tax Income taxes - current 12,654 △ 10,586 △ 554 1,512 q Income tax expense Income taxes - deferred △ 10,586 10,586 - - Total income taxes 3,783 - 1,604 5,387 Profit Other comprehensive income Other comprehensive income Items that will not be reclassified to profit or loss Valuation difference on available-for-sale securities △ 563 - 709 145 A Net change in fair value of equity instruments measured through other comprehensive income Remeasurements of defined benefit plans, net of tax △ 783 - 901 118 D Remeasurements of defined benefit plans - - 0 0 Share of other comprehensive income of investments accounted for using equity method Deferred gains or losses on hedges Items that may be reclassified to profit or loss △ 1,283 - 1,290 6 J Cash flow hedges Foreign currency translation adjustment △ 6,254 - △ 117 △ 6,372 Exchange differences on translation of foreign operations Share of other comprehensive income of entities accounted for using equity method 420 - 45 465 Share of other comprehensive income of investments accounted for using equity method Total other comprehensive income △ 8,464 - 2,828 △ 5,636 Total other comprehensive income Comprehensive income △ 4,681 - 4,432 △ 248 Comprehensive income Notes on reconciliations Reclassification Inventories Merchandise, finished goods, raw materials, and supplies, which were separately presented under Japanese GAAP are reclassified to "Inventories" under IFRS. Other financial assets (current assets) Foreign exchange forward contracts, etc., included in other (current assets) under Japanese GAAP are reclassified to "Other financial assets" (current assets) under IFRS. Other current assets Advance payment, suspense paid income tax and income taxes receivable, etc., which were included in other (current assets) under Japanese GAAP are reclassified to "Other current assets" under IFRS. Assets held for sale, Liabilities directly associated with assets held for sale Assets or asset group held for sale are reclassified to "Assets held for sale" and "Liabilities directly associated with assets held for sale" under IFRS. Property, plant and equipment Buildings and structures, machinery equipment and vehicles, and land, etc., which were separately presented under Japanese GAAP are reclassified to "Property, plant and equipment" under IFRS. Intangible assets Customer-related intangible assets which were separately presented under Japanese GAAP and right of trademark and software, etc., included in other (intangible assets) under Japanese GAAP are reclassified to "Intangible assets" under IFRS. Investments accounted for using equity method Investments accounted for using equity method included in investment securities under Japanese GAAP, are reclassified to "Investments accounted for using equity method" under IFRS. Other financial assets (non-current assets) Listed shares and unlisted shares included in investment securities under Japanese GAAP, and guarantee deposits and investment in capital, etc., included in other (investments and other assets) under Japanese GAAP, are reclassified to "Other financial assets" (non-current assets) under IFRS. Other non-current assets Long-term prepaid expenses, etc., included in other (investments and other assets) under Japanese GAAP, are reclassified to "Other non-current assets" under IFRS. Lease liabilities Lease liabilities included in other (current liabilities) under Japanese GAAP are reclassified to "Lease liabilities (current liabilities)" under IFRS. Short-term borrowings Commercial paper separately presented under Japanese GAAP are reclassified to "Short-term borrowings" under IFRS. Other financial liabilities (current liabilities) Construction accounts payable and accounts payable, etc., included in other (current liabilities) under Japanese GAAP are reclassified to "Other financial liabilities" (current liabilities) under IFRS. Other current liabilities Provision for bonuses which were separately presented under Japanese GAAP and accrued expenses, etc., included in other (current liabilities) under Japanese GAAP are reclassified to "Other current liabilities" under IFRS. Other non-current liabilities Deposits Received - Long Term, etc., included in other (non-current liabilities) under Japanese GAAP are reclassified to "Other non-current liabilities" under IFRS. Other components of equity Foreign currency translation adjustment, remeasurements of defined benefit plans, valuation difference on available-for-sale securities, and deferred gains or losses on hedges, which were separately presented under Japanese GAAP are reclassified to "Other components of equity" under IFRS. Non-operating income (losses), Extraordinary income (losses) Income and expenses, which were presented as non-operating income, non-operating expenses, extraordinary income, and extraordinary losses under Japanese GAAP, are included in "Finance income" and "Finance costs" for finance-related items, "Cost of sales" for impairment losses, etc., and "Other operating income", "Other operating expenses" and "Share of profit (loss) of investments accounted for using equity method" for the other items under IFRS. Income tax expense Income taxes - current and income taxes - deferred, which were separately presented under Japanese GAAP are reclassified in total as "Income tax expense" under IFRS. Differences in recognition and measurement Non-marketable equity instruments Under Japanese GAAP, non-marketable equity instruments were carried at cost. Under IFRS, they are designated as equity instruments measured at fair value through other comprehensive income in accordance with IFRS 9, and accordingly, equity instruments are measured at fair value, regardless of whether they are marketable or not, with the changes in fair value recognized through other comprehensive income. Goodwill Under Japanese GAAP, goodwill was amortized on a straight-line basis over a reasonably estimated period during which its effect is expected to continue. Under IFRS, goodwill arising from business combinations is not amortized but tested for impairment each fiscal year. Deferred tax assets and liabilities Under Japanese GAAP, deferred tax assets on unrealized profits from intercompany inventories transactions were measured using the seller's effective tax rate. Under IFRS, they are measured using the buyer's effective tax rate. As a result of the transition to IFRS, adjustments were made to deferred tax assets and liabilities due to temporary differences and the reassessment of the recoverability of deferred tax assets. Employee benefits Under Japanese GAAP, service cost, interest expense, and expected return on plan assets for retirement benefits under defined benefit plans were recognized in profit or loss. Actuarial gains and losses and past service cost arising from the plans were also recognized in profit or loss in the fiscal year in which they were incurred. Under IFRS, on the other hand, current service cost and past service cost for retirement benefits under defined benefit plans are recognized in profit or loss, and interest expense is recognized in profit or loss at an amount calculated by multiplying the net defined benefit liability (asset) by the discount rate. Remeasurement of the net defined benefit liability (asset) is recognized in other comprehensive income, and directly reclassified to retained earnings from other components of equity when incurred without being recognized through profit or loss. Remeasurement consists of actuarial gains and losses on defined benefit obligations and return on plan assets (excluding interest income on plan assets). In addition, if defined benefit assets exceed obligation, the asset ceiling is determined as the present value of the future economic benefits available in the form of refunds from the plan or reductions in future contributions. Deemed cost In applying IFRS, the Group elected to use the deemed cost exemption under IFRS 1 and measured certain items of property, plant and equipment at fair value as of the transition date. Lease liabilities and right-of-use assets Under Japanese GAAP, leases as a lessee were classified as either finance leases or operating leases, and operating leases were accounted for in a similar manner to ordinary rental transactions. Under IFRS, leases as a lessee are not classified as finance leases or operating leases, and right-of-use assets and lease liabilities are recognized for lease transactions. Provision for paid absence Unused paid absences, which were not required to be recognized under Japanese GAAP, are recognized as a provision under IFRS. Levies Under Japanese GAAP, levies such as fixed asset taxes were expensed over the fiscal year in which the payment obligation arose. Under IFRS, the full amount is expensed when the obligating event occurs. Inventories Under Japanese GAAP, some subsidiaries included transportation costs to deliver products to customers in the cost of inventories. Under IFRS, all costs except for those incurred in bringing the inventories to their present location or condition are recognized as "Selling, general and administrative expenses" when they are incurred. Financial instruments (Foreign exchange forward contracts) Under Japanese GAAP, some subsidiaries designated allocation method for foreign exchange forward contracts. Under IFRS, these transactions are subject to cash flow hedge accounting. Change in Scope of Consolidation Under Japanese GAAP, subsidiaries and affiliates of insignificant materiality were accounted for using the cost method. Under IFRS, such entities are included in the scope of consolidation as subsidiaries or equity-method associates. Reconciliation of retained earnings The impact of the reconciliations on retained earnings is as follows (figures in parentheses represent loss). ( Millions of yen ) As of April 1, 2024 (Transition Date) As of June 30, 2024 As of March 31, 2025 Non-marketable equity instruments (see Note A) 193 108 115 Goodwill (see Note B) - 590 2,285 Deferred tax assets and liabilities (see Note C) 368 420 608 Employee benefits (see Note D) △ 4,207 △ 4,387 △ 4,621 Deemed cost (see Note E) △ 1,908 △ 1,908 △ 1,908 Lease liabilities and right-of-use assets (see Note F) △ 60 △ 62 △ 46 Provision for paid absence (see Note G) △ 789 △ 789 △ 862 Levies (see Note H) △ 388 △ 257 △ 381 Inventories (see Note I) △ 253 △ 219 △ 309 Financial instrument (Foreign exchange forward contracts) (see Note J) - 42 13 Change in Scope of Consolidation (see Note K) 37 79 239 Other 604 497 606 Reconciliation of retained earnings △ 6,403 △ 5,887 △ 4,260 Reconciliation of cash flows for the three months ended June 30, 2024 (from 4/1/2024 to 6/30/2024) and the fiscal year ended March 31, 2025 (from 4/1/2024 to 3/31/2025) There are no significant differences between the consolidated cash flows statements based on Japanese GAAP and the consolidated cash flows statements based on IFRS.