Fuji Oil : Financial Results 2Q （July 1, 2025 - September 30, 2025）

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. November 11, 2025 Consolidated Financial Results for the Six Months Ended September 30, 2025 (Q2 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: December 10, 2025 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 six months ended September 30, 2025 (April 1, 2025 - September 30, 2025) Consolidated operating results (cumulative) (Percentages indicate year-on-year changes.) Net sales Business profit Operating profit Profit before tax Profit Six months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % Millions of yen % September 30, 2025 375,696 18.9 15,369 131.6 13,886 132.5 11,179 198.0 8,653 203.7 September 30, 2024 315,957 - 6,635 - 5,971 - 3,751 - 2,849 - Profit attributable to owners of parent Total comprehensive income Basic earnings per share Diluted earnings per share Six months ended Millions of yen % Millions of yen % - - Yen Yen September 30, 2025 8,539 325.0 14,529 99.32 - September 30, 2024 2,009 - △8,262 23.37 - (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 % September 30, 2025 650,437 223,187 219,320 33.7 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 Fiscal year ended March 31, 2025 Fiscal year ending March 31, 2026 Yen - - Yen 26.00 26.00 Yen - Yen 26.00 Yen 52.00 Fiscal year ending March 31, 2026 (Forecast) - 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 800,000 % 19.2 Millions of yen 29,500 % 122.5 Millions of yen 16,500 % 327.0 Yen 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 September 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 September 30, 2025 1,586,816 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) Six months ended September 30, 2025 85,976,007 shares Six months ended September 30, 2024 85,967,386 shares Semi-annual financial results reports are exempt from review conducted by certified public accountants or an audit firm. 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. Semi-annual 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 supplementary material on financial results Supplementary material on financial results is disclosed in Investor Relation on our company's website on the same day. Accompanying Materials - Contents Qualitative Information on Results for the Six Months Ended September 30, 2025 2 Details of Operating Results 2 Details of Financial Position 3 Information on the Future Outlook, Including Consolidated Business Results Forecasts 4 Semi-annual Consolidated Financial Statements 5 Semi-annual Consolidated Statements of Financial Position 5 Semi-annual Consolidated Statements of Income and Comprehensive Income 7 Semi-annual Consolidated Statements of Income 7 Semi-annual Consolidated Statements of Comprehensive Income 8 Semi-annual Consolidated Statements of Changes in Equity 9 Semi-annual Consolidated Statements of Cash flows 10 Notes to Semi-annual Consolidated Financial Statements 12 (Notes Relating to Assumptions for the Going Concern) 12 (Segment Information) 12 (First-Time Adoption of IFRS) 14 Qualitative Information on Results for the Six Months Ended September 30, 2025 Details of Operating Results Operating results for the first six months of the current consolidated fiscal year were as follows. Net sales Business profit Profit before tax Profit attributable to owners of parent Six months ended September 30, 2025 September 30, 2024 Millions of yen 375,696 315,957 Millions of yen 15,369 6,635 Millions of yen 11,179 3,751 Millions of yen 8,539 2,009 Change +59,739 +8,734 +7,428 +6,530 +18.9% +131.6% +198.0% +325.0% 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 increased due to steady sales of vegetable fats for chocolate in the Vegetable Oils and Fats segment and a decline in cocoa beans related costs at Blommer Chocolate Company, LLC (USA, hereinafter "Blommer"). Profit attributable to owners of parent increased due to an increase in business profit despite an increase in interest expenses. 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 131,905 +35,174 +36.4% 18,650 +7,251 +63.6% Industrial Chocolate 180,341 +24,432 +15.7% △3,537 +2,322 - Emulsified and Fermented Ingredients 46,932 +1,619 +3.6% 421 △583 △58.1% Soy-based Ingredients 16,515 △1,487 △8.3% 35 △142 △80.0％ Adjustment - - - △200 △113 - Total 375,696 +59,739 +18.9% 15,369 +8,734 +131.6% (Vegetable Oils and Fats) Net sales increased due to higher sales prices to reflect rising raw material prices and expansion of demand. Business profit increased mainly due to steady sales of vegetable fats for chocolate and frying oils and fats. (Industrial Chocolate) Net sales increased due to higher sales prices to reflect rising raw material prices. Business profit increased due to a decline in cocoa beans related costs at Blommer despite a decrease in sales volume at Blommer. (Emulsified and Fermented Ingredients) Net sales increased due to higher sales prices to reflect rising raw material prices. Business profit decreased due to a decline in profitability resulting from higher procurement prices. (Soy-based Ingredients) Net sales and 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 six months of the fiscal year is as follows. (Millions of yen) As of March 31, 2025 As of September 30, 2025 Change Current assets Non-current assets 363,997 233,079 383,585 266,852 +19,588 +33,772 Assets 597,076 650,437 +53,360 Interest-bearing debt Other 283,721 102,428 309,490 117,760 +25,768 +15,332 Liabilities 386,150 427,250 +41,100 Equity 210,926 223,187 +12,260 (Assets) Current assets increased due to an increase in trade receivables and inventories attributable to rising raw material prices, increase in inventory levels ahead of the peak season and a newly consolidated company despite a decrease in cash and cash equivalents. 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 53,360 million yen from the end of the previous consolidated fiscal year to 650,437 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 the acquisition of shares of a newly consolidated company and an increase in working capital. As a result, liabilities increased by 41,100 million yen from the end of the previous consolidated fiscal year to 427,250 million yen. (Equity) Equity increased by 12,260 million yen from the end of the previous year to 223,187 million yen mainly due to an increase in other components of equity resulting from growth in retained earnings and the yen depreciation against real and euro. Details of Consolidated Cash Flows The cash flows for the first six months of the consolidated fiscal year are as follows. (Millions of yen) Six months ended September 30, 2024 Six months ended September 30, 2025 Change Cash flows from operating activities △25,794 △9,515 +16,279 Cash flows from investing activities △8,930 △33,123 △24,193 Free Cash flows △34,725 △42,638 △7,913 Cash flows from financing activities 42,899 17,374 △25,525 Cash and cash equivalents at end of period 34,917 45,382 +10,464 (Cash flows from operating activities) Cash flows from operating activities for the first six months of the current consolidated fiscal year resulted in expenditures of 9,515 million yen. Expenditures decreased by 16,279 million yen compared to the first six months of the previous consolidated fiscal year mainly due to improvement in working capital requirements. (Cash flows from investing activities) Cash flows from investing activities for the first six months of the current consolidated fiscal year resulted in expenditures of 33,123 million yen. Expenditures increased by 24,193 million yen compared to the first six 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 six months of the current consolidated fiscal year resulted in income of 17,374 million yen. Income decreased by 25,525 million yen compared to the first six 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 Semi-annual Consolidated Financial Statements Semi-annual Consolidated Statements of Financial Position (Millions of yen) Transition Date (As of April 1, 2024) As of March 31, 2025 As of September 30, 2025 Assets Current assets Cash and cash equivalents 28,499 70,840 45,382 Trade receivables 92,399 112,298 123,412 Inventories 109,349 160,718 183,813 Other financial assets 2,888 1,304 1,911 Other current assets 13,427 10,197 29,064 Assets held for sale - 8,637 - Total current assets 246,565 363,997 383,585 Non-current assets Property, plant and equipment 141,344 138,081 154,679 Right-of-use assets 10,048 9,257 11,409 Intangible assets 33,605 32,572 32,792 Goodwill 21,907 20,763 33,989 Investments accounted for using equity method 11,134 13,426 15,141 Retirement benefit asset 39 39 - Deferred tax assets 2,496 10,218 9,822 Other financial assets 9,426 8,400 8,729 Other non-current assets 624 319 286 Total non-current assets 230,628 233,079 266,852 Total assets 477,193 597,076 650,437 (Millions of yen) Transition Date (As of April 1, 2024) As of March 31, 2025 As of September 30, 2025 Liabilities Current liabilities Trade payables 41,013 46,538 65,438 Borrowings 64,373 195,284 197,779 Current portion of bonds payable 34,989 - - Lease liabilities 2,410 2,062 2,462 Income taxes payable 4,316 7,566 6,211 Other financial liabilities 6,148 10,093 8,246 Other current liabilities 15,589 14,063 13,667 Liabilities directly associated with assets held for sale - 259 - Total current liabilities 168,842 275,867 293,805 Non-current liabilities Bonds payable 5,978 30,811 30,835 Long-term borrowings 43,496 57,625 80,874 Lease liabilities 7,168 6,668 8,720 Deferred tax liabilities 14,627 10,777 8,368 Retirement benefit liability 1,985 1,784 1,933 Other non-current liabilities 2,526 2,613 2,712 Total non-current liabilities 75,781 110,282 133,445 Total liabilities 244,624 386,150 427,250 Equity Share capital 13,208 13,208 13,208 Capital surplus 15,323 8,443 8,676 Retained earnings 151,046 150,944 157,269 Treasury shares △1,947 △1,919 △2,154 Other components of equity 42,846 36,245 42,320 Equity attributable to owners of parent 220,477 206,923 219,320 Non-controlling interests 12,091 4,003 3,866 Total equity 232,569 210,926 223,187 Total liabilities and equity 477,193 597,076 650,437 Semi-annual Consolidated Statements of Income and Comprehensive Income Semi-annual Consolidated Statements of Income (First six months period) (Millions of yen) Six months ended September 30, 2024 Six months ended September 30, 2025 Net sales 315,957 375,696 Cost of sales 275,679 323,385 Gross profit 40,277 52,310 Selling, general and administrative expenses 35,067 38,156 Other income 1,195 651 Other expenses 433 920 Operating profit 5,971 13,886 Finance income 618 597 Finance costs 3,719 3,899 Share of profit (loss) of investments accounted for using equity method 880 596 Profit before tax 3,751 11,179 Income tax expense 901 2,525 Profit 2,849 8,653 Profit attributable to Owners of parent 2,009 8,539 Non-controlling interests 840 114 Earnings per share Basic earnings per share (yen) Diluted earnings per share (yen) 23.37 - 99.32 - Quarterly Consolidated Statements of Comprehensive Income (First six months period) (Millions of yen) Six months ended September 30, 2024 Six months ended September 30, 2025 Profit 2,849 8,653 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 Remeasurements of defined benefit plans 79 △7 326 △47 Total of items that will not be reclassified to profit or loss 71 279 Items that may be reclassified to profit or loss Cash flow hedges △721 696 Exchange differences on translation of foreign operations △10,455 5,274 Share of other comprehensive income of investments accounted for using equity method △7 △374 Total of items that may be reclassified to profit or loss △11,184 5,596 Total other comprehensive income △11,112 5,875 Comprehensive income △8,262 14,529 Comprehensive income attributable to Owners of parent △8,737 14,444 Non-controlling interests 474 84 Semi-annual Consolidated Statements of Changes in Equity 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 - - 2,009 - - 2,009 840 2,849 Other comprehensive income - - - - △10,746 △10,746 △366 △11,112 Comprehensive income - - 2,009 - △10,746 △8,737 474 △8,262 Dividends of surplus - - △2,237 - - △2,237 △2,699 △4,937 Purchase of treasury shares - - - △0 - △0 - △0 Disposal of treasury shares - - - 28 - 28 - 28 Transfer from other components of equity to retained earnings - - △77 - 77 - - - Share-based payment transactions - △28 - - - △28 - △28 Other - - - - △1,254 △1,254 - △1,254 Total transactions with owners - △28 △2,315 28 △1,177 △3,493 △2,699 △6,193 Balance at end of period 13,208 15,294 150,740 △1,919 30,922 208,247 9,865 218,112 For the six months ended Septemper 30, 2024 For the six months ended September 30, 2025 (Millions of yen) (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 - - 8,539 - - 8,539 114 8,653 Other comprehensive income - - - - 5,904 5,904 △29 5,875 Comprehensive income - - 8,539 - 5,904 14,444 84 14,529 Dividends of surplus - - △2,237 - - △2,237 △319 △2,557 Purchase of treasury shares - - - △421 - △421 - △421 Disposal of treasury shares - 259 - 186 - 446 - 446 Transfer from other components of equity to retained earnings - - 22 - △22 - - - Share-based payment transactions - △26 - - - △26 - △26 Other - - - - 192 192 97 289 Total transactions with owners - 233 △2,215 △234 169 △2,047 △221 △2,268 Balance at end of period 13,208 8,676 157,269 △2,154 42,320 219,320 3,866 223,187 Semi-annual Consolidated Statements of Cash flows (First six months period) (Millions of yen) Six months ended September 30, 2024 Six months ended September 30, 2025 Cash flows from operating activities Profit before tax 3,751 11,179 Depreciation and amortization 9,713 10,144 Decrease (increase) in retirement benefit asset 0 39 Increase (decrease) in retirement benefit liability 26 1 Interest and dividend income △542 △557 Interest expenses 3,299 3,676 Impairment losses - 686 Share of loss (profit) of investments accounted for using equity method △880 △596 Loss (gain) on disposal of non-current assets 74 163 Loss (gain) on sale of shares of subsidiaries and associates △291 - Decrease (increase) in trade receivables △7,780 △6,389 Decrease (increase) in inventories △20,818 △15,364 Increase (decrease) in trade payables △1,302 15,358 Decrease (increase) in advance payments to suppliers △919 △15,904 Other △3,720 △1,948 Subtotal △19,389 490 Interest and dividends received 879 549 Interest paid △2,638 △3,832 Income taxes refund (paid) △4,646 △6,722 Net cash provided by (used in) operating activities △25,794 △9,515 Cash flows from investing activities Purchase of property, plant and equipment △8,911 △13,482 Proceeds from sale of property, plant and equipment 83 76 Purchase of intangible assets △1,494 △1,576 Payments for acquisition of subsidiaries - △16,726 Proceeds from sale of shares of subsidiaries 1,819 - Purchase of shares of associates △326 △1,461 Payments for investments in capital △36 △13 Other △66 59 Net cash provided by (used in) investing activities △8,930 △33,123 (Millions of yen) Six months ended September 30, 2024 Six months ended September 30, 2025 Cash flows from financing activities Net increase (decrease) in short-term borrowings 34,881 △37,635 Net increase (decrease) in commercial papers 10,000 - Proceeds from long-term borrowings 17,631 59,921 Repayments of long-term borrowings △2,757 △812 Proceeds from issuance of bonds 25,000 - Redemption of bonds △35,000 - Dividends paid △2,237 △2,237 Dividends paid to non-controlling interests △2,699 △319 Other △1,918 △1,542 Net cash provided by (used in) financing activities 42,899 17,374 Effect of exchange rate changes on cash and cash equivalents △1,756 △193 Net increase (decrease) in cash and cash equivalents 6,418 △25,457 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 34,917 45,382 Notes to Semi-annual Consolidated Financial Statements (Notes Relating to Assumptions for the Going Concern) Not applicable. (Segment Information) From the first six months period of the current fiscal year, the Company has allocated corporate expenses which were not allocated to each reported segment and were included in "Adjustment". The segment information for the first six months period of the previous fiscal year has been presented in accordance with the changed allocation method. First six months period of the previous fiscal year (April 1, 2024 - September 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 96,730 155,908 45,313 18,003 315,957 - 315,957 Transactions with other segments 12,056 1,766 2,185 107 16,116 △16,116 - Total 108,787 157,675 47,499 18,111 332,073 △16,116 315,957 Business profit (loss) (Note 2) 11,398 △5,859 1,004 178 6,722 △86 6,635 (Note) 1. Adjustment of business profit △86 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 six months period of the previous fiscal year (April 1, 2025 - September 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 131,905 180,341 46,932 16,515 375,696 - 375,696 Transactions with other segments 17,296 2,013 3,312 59 22,682 △22,682 - Total 149,202 182,355 50,245 16,575 398,378 △22,682 375,696 Business profit (loss) (Note 2) 18,650 △3,537 421 35 15,569 △200 15,369 (Note) 1. Adjustment of business profit △200 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: Six months ended September 30, 2024 (Millions of yen) Six months ended September 30, 2025 Business profit 6,635 15,369 Gain on sale of fixed assets 40 28 Loss on disposal of fixed assets △115 △192 Gain on sale of shares of associates 291 － Impairment losses － △686 Share of loss (profit) of investments accounted for using the equity method △880 △596 Other - △37 Operating profit 5,971 13,886 Finance income 618 597 Finance costs △3,719 △3,899 Share of profit (loss) of investments accounted for using equity method 880 596 Profit before tax 3,751 11,179 (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 a b c Assets Current assets Cash and cash equivalents Trade receivables Inventories Other financial assets Other current assets Current assets Cash and deposits 27,490 829 △10 189 28,499 Notes and accounts receivable - trade 90,024 2,614 △238 △1 92,399 Merchandise and finished goods 51,724 509 57,277 △161 109,349 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 - 4,260 9,006 160 13,427 Total current assets 236,858 9,307 38 360 246,565 Total current assets Non-current assets Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Goodwill Investments accounted for using equity method Retirement benefit asset Deferred tax assets Other financial assets Other non-current assets Property, plant and equipment - - 143,868 △2,524 141,344 e, E 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 Construction in progress 9,273 571 △9,844 - - Other, net 3,131 34 △3,165 - - Intangible assets - - 33,605 - 33,605 f Goodwill 21,840 67 - - 21,907 B Customer-related assets 19,035 174 △19,209 - - Other 14,345 53 △14,398 - - Investments and other assets - - 11,224 △89 11,134 g Investment securities 16,002 - △16,002 - - Retirement benefit asset 7,064 - - △7,024 39 D Deferred tax assets 669 - - 1,827 2,496 C Other 3,683 - △3,683 - - Allowance for doubtful accounts △60 - 60 - - - 18 7,873 1,533 9,426 h, A - - 527 96 624 i Total non-current assets 233,332 1,103 - △3,806 230,628 Total non-current assets Deferred assets Bond issuance costs 30 - - △30 - 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 Trade payables Borrowings Current portion of bonds payable Lease liabilities Income taxes payable Other financial liabilities Other current liabilities Current liabilities Notes and accounts payable - trade 42,321 △1,441 - 134 41,013 Short-term borrowings 33,151 21,222 10,000 - 64,373 k Current portion of bonds payable 35,000 - - △10 34,989 Commercial papers 10,000 - △10,000 - - - △5 1,721 693 2,410 j, F Income taxes payable 4,310 - - 6 4,316 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 - △659 14,573 1,675 15,589 m, G, H Total current liabilities 146,936 19,412 △12 2,506 168,842 Total current liabilities Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Deferred tax liabilities Retirement benefit liability Other 6,000 46,135 5,110 17,223 2,022 2,500 - - △2,639 △57 △1,327 - - 25 - - - - - △2,500 2,500 △21 - 2,115 △1,268 △37 - - 5,978 43,496 7,168 14,627 1,985 - 2,526 F C n Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Deferred tax liabilities Retirement benefit liability 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 Equity Share capital Capital surplus Retained earnings Treasury shares Other components of equity Equity attributable to owners of parent Non-controlling interests Shareholders' equity Share capital 13,208 - - - 13,208 Capital surplus 14,757 - 51 514 15,323 Retained earnings 163,810 △6,359 - △6,403 151,046 L Treasury shares △1,947 - - - △1,947 Accumulated other comprehensive income - - 43,714 △867 42,846 o, A 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 Non-controlling interests 12,105 - - △14 12,091 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 September 30, 2024 (First six months period of the previous fiscal year) (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Assets a b c d Assets Current assets Cash and cash equivalents Trade receivables Inventories Other financial assets Other current assets Assets held for sale Current assets Cash and deposits 34,851 △10 77 34,917 Notes and accounts receivable - trade 96,344 △207 15 96,152 Merchandise and finished goods 56,635 69,445 △293 125,788 Raw materials and supplies 69,445 △69,445 - - Other 17,143 △17,143 - - Allowance for doubtful accounts △225 225 - - - 3,394 115 3,509 - 13,635 209 13,844 - 9,129 - 9,129 Total current assets 274,194 9,023 123 283,341 Total current assets Non-current assets Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Goodwill Investments accounted for using equity method Retirement benefit asset Deferred tax assets Other financial assets Other non-current assets Property, plant and equipment - 133,275 △2,525 130,749 e, E Buildings and structures, net 45,668 △45,668 - - Machinery, equipment and vehicles, net 58,891 △58,891 - - Land 19,033 △19,033 - - Right-of-use assets, net 6,756 27 2,159 8,942 F Construction in progress 15,609 △15,609 - - Other, net 3,070 △3,070 - - Intangible assets - 31,366 - 31,366 f Goodwill 19,135 - 1,053 20,189 B Customer-related assets 17,262 △17,262 - - Other 14,114 △14,114 - - Investments and other assets - 11,864 89 11,954 g Investment securities 16,691 △16,691 - - Retirement benefit asset 7,355 - △7,315 39 D Deferred tax assets 682 - 2,816 3,498 C Other 3,191 △3,191 - - Allowance for doubtful accounts △48 48 - - - 7,590 1,544 9,134 h, A - 379 76 456 i Total non-current assets 227,415 △8,981 △2,100 216,333 Total non-current assets Deferred assets Bond issuance costs 207 - △207 - Total deferred assets 207 - △207 - Total assets 501,818 41 △2,184 499,674 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 Trade payables Borrowings Lease liabilities Income taxes payable Other financial liabilities Other current liabilities Liabilities directly associated with assets held for sale Current liabilities Notes and accounts payable - trade 37,884 △104 34 37,813 Short-term borrowings 83,509 20,000 - 103,509 k Commercial papers 20,000 △20,000 - - - 1,267 693 1,961 j, F Income taxes payable 4,235 - 358 4,594 Provision for bonuses 3,224 △3,224 - - Other 20,188 △20,188 - - - 10,832 27 10,859 l - 10,830 1,278 12,109 m, G, H - 644 - 644 d Total current liabilities 169,042 58 2,392 171,492 Total current liabilities Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Deferred tax liabilities Retirement benefit liability Other 31,000 58,434 4,408 10,562 2,002 2,546 - - - △38 - - △2,546 2,546 △211 △72 1,948 △471 △38 - - 30,788 58,361 6,319 10,090 1,964 - 2,546 F C n Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Deferred tax liabilities Retirement benefit liability Other non-current liabilities Total non-current liabilities 108,954 △38 1,153 110,069 Total non-current liabilities Total liabilities 277,997 19 3,545 281,562 Total liabilities Net assets Equity Share capital Capital surplus Retained earnings Treasury shares Other components of equity Equity attributable to owners of parent Non-controlling interests Shareholders' equity Share capital 13,208 - - 13,208 Capital surplus 14,757 22 514 15,294 Retained earnings 156,219 - △5,479 150,740 L Treasury shares △1,919 - - △1,919 Accumulated other comprehensive income - 31,670 △747 30,922 o, A Valuation difference on available- for-sale securities 1,916 △1,916 - - Deferred gains or losses on hedges △1,253 1,253 - - Foreign currency translation adjustment 30,413 △30,413 - - Remeasurements of defined benefit plans 594 △594 - - - - - 208,247 Non-controlling interests 9,883 - △17 9,865 Total net assets 223,821 22 △5,730 218,112 Total equity Total liabilities and net assets 501,818 41 △2,184 499,674 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 a b c d Assets Current assets Cash and cash equivalents Trade receivables Inventories Other financial assets Other current assets Assets held for sale Current assets Cash and deposits 70,616 △10 234 70,840 Notes and accounts receivable - trade 112,520 △222 0 112,298 Merchandise and finished goods 72,946 88,081 △309 160,718 Raw materials and supplies 88,081 △88,081 - - Other 10,871 △10,871 - - Allowance for doubtful accounts △206 206 - - - 1,169 134 1,304 - 9,924 273 10,197 - 8,637 - 8,637 Total current assets 354,830 8,833 333 363,997 Total current assets Non-current assets Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Goodwill Investments accounted for using equity method Retirement benefit asset Deferred tax assets Other financial assets Other non-current assets Property, plant and equipment - 140,606 △2,525 138,081 e, E 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 Construction in progress 21,334 △21,334 - - Other, net 3,200 △3,200 - - Intangible assets - 32,572 - 32,572 f Goodwill 18,602 - 2,161 20,763 B Customer-related assets 17,287 △17,287 - - Other 15,295 △15,295 - - Investments and other assets - 13,112 313 13,426 g Investment securities 16,631 △16,631 - - Retirement benefit asset 6,638 - △6,598 39 D Deferred tax assets 7,336 - 2,881 10,218 C Other 3,299 △3,299 - - Allowance for doubtful accounts △47 47 - - - 6,547 1,853 8,400 h, A - 224 95 319 i Total non-current assets 241,550 △8,588 117 233,079 Total non-current assets Deferred assets Bond issuance costs 183 - △183 - 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 Trade payables Borrowings Lease liabilities Income taxes payable Other financial liabilities Other current liabilities Liabilities directly associated with assets held for sale Current liabilities Notes and accounts payable - trade 46,075 △74 537 46,538 Short-term borrowings 175,284 20,000 - 195,284 k Commercial papers 20,000 △20,000 - - - 1,376 685 2,062 j, F Income taxes payable 7,571 - △5 7,566 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 - 12,718 1,345 14,063 m, G, H - 259 - 259 d Total current liabilities 273,204 220 2,443 275,867 Total current liabilities Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Deferred tax liabilities Retirement benefit liability Other 31,000 57,691 4,805 10,873 1,851 2,613 - - - △5 - - △2,613 2,613 △188 △65 1,868 △96 △66 - - 30,811 57,625 6,668 10,777 1,784 - 2,613 F C n Non-current liabilities Bonds payable Long-term borrowings Lease liabilities Deferred tax liabilities Retirement benefit liability 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 Equity Share capital Capital surplus Retained earnings Treasury shares Other components of equity Equity attributable to owners of parent Non-controlling interests Shareholders' equity Share capital 13,208 - - 13,208 Capital surplus 8,503 30 △91 8,443 Retained earnings 155,205 - △4,260 150,944 L Treasury shares △1,919 - - △1,919 Accumulated other comprehensive income Valuation difference on available- for-sale securities - 1,305 35,499 △1,305 746 - 36,245 - o, A Deferred gains or losses on hedges △560 560 - - Foreign currency translation adjustment Remeasurements of defined benefit plans 34,898 △143 △34,898 143 - - - - - - - 206,923 Non-controlling interests 4,025 - △22 4,003 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 Reconciliations of profit or loss and comprehensive income for the first six months period of the previous fiscal year (April 1, 2024 - September 30, 2024) (Millions of yen) Accounts under Japanese GAAP Japanese GAAP Reclassification Difference in recognition and measurement IFRS Key Notes Accounts under IFRS Net sales 315,959 - △2 315,957 Net sales Cost of sales 277,200 112 △1,633 275,679 p, I Cost of sales Gross profit 38,759 △112 1,631 40,277 Gross profit Selling, general and administrative expenses 34,104 160 803 35,067 B, I Selling, general and administrative expenses - 877 317 1,195 p Other income - 287 146 433 p Other expenses Operating profit 4,655 316 998 5,971 Operating profit Non-operating income 1,611 △1,611 - - Non-operating expenses 3,898 △3,898 - - Extraordinary income 332 △332 - - Extraordinary losses 142 △142 - - - 618 0 618 p Finance income - 3,736 △17 3,719 p Finance costs - 703 177 880 p, B Share of profit (loss) of investments accounted for using equity method Profit before income taxes 2,557 - 1,193 3,751 Profit before tax Income taxes - current Income taxes - deferred 1,230 △524 △524 524 195 - 901 - q Income tax expense Total income taxes 1,851 - 998 2,849 Profit Other comprehensive income 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 Remeasurements of defined benefit plans Items that may be reclassified to profit or loss Cash flow hedges Exchange differences on translation of foreign operations Share of other comprehensive income of investments accounted for using equity method Valuation difference on available-for-sale securities 48 - 31 79 A Remeasurements of defined benefit plans, net of tax △45 - 38 △7 D Deferred gains or losses on hedges △1,976 - 1,254 △721 J Foreign currency translation adjustment Share of other comprehensive income of entities accounted for using equity method △10,410 △24 - - △44 17 △10,455 △7 Total other comprehensive income △12,409 - 1,297 △11,112 Total other comprehensive income Comprehensive income △10,558 - 2,295 △8,262 Comprehensive income 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 Net sales Cost of sales 591,984 446 △2,858 589,572 p, I 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 A D J 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 Remeasurements of defined benefit plans Share of other comprehensive income of investments accounted for using equity method Items that may be reclassified to profit or loss Cash flow hedges Exchange differences on translation of foreign operations Share of other comprehensive income of investments accounted for using equity method Valuation difference on available-for-sale securities △563 - 709 145 Remeasurements of defined benefit plans, net of tax △783 - 901 118 - - 0 0 Deferred gains or losses on hedges △1,283 - 1,290 6 Foreign currency translation adjustment Share of other comprehensive income of entities accounted for using equity method △6,254 420 - - △117 45 △6,372 465 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. Borrowings Commercial paper separately presented under Japanese GAAP are reclassified to "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 September 30, 2024 As of March 31, 2025 Non-marketable equity instruments (see Note A) 193 108 115 Goodwill (see Note B) - 1,152 2,285 Deferred tax assets and liabilities (see Note C) 368 394 608 Employee benefits (see Note D) △4,207 △4,564 △4,621 Deemed cost (see Note E) △1,908 △1,908 △1,908 Lease liabilities and right-of-use assets (see Note F) △60 △67 △46 Provision for paid absence (see Note G) △789 △789 △862 Levies (see Note H) △388 △127 △381 Inventories (see Note I) △253 △291 △309 Financial instrument (Foreign exchange forward contracts) (see Note J) - 48 13 Change in Scope of Consolidation (see Note K) 37 136 239 Other 604 429 606 Reconciliation of retained earnings △6,403 △5,479 △4,260 Reconciliation of cash flows for the six months ended September 30, 2024 (from 4/1/2024 to 9/30/2024) 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.

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