Summary of Non-Consolidated Financial Results for the Year Ended March 31, 2025

Translation

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Non-Consolidated Financial Results

for the Year Ended March 31, 2025

(Based on Japanese GAAP)

April 25, 2025

Company name: JAPAN PURE CHEMICAL CO.,LTD.

Stock exchange listing: Tokyo

Stock code: Representative:

4973 URL https://www.netjpc.comRepresentative Director and President Tomoyuki Kojima

Senior Director, General Manager of Corporate

Inquiries:

Motoki Watanabe

TEL 03-3550-1048

Planning Division and Finance Division

1. Non-consolidated financial results for the year ended March 31, 2025 (April 1, 2024 to March 31, 2025)

(1) Non-consolidated Operating results (Percentage figures represent changes from the same period of the previous year.)

(2) Non-consolidated financial position

2. Cash dividends

3. Forecast for the fiscal year ending March 31, 2026 (April 1, 2025 - March 31, 2026)

(Percentage figures are changes from the previous year)

Notes

• (1) Changes in accounting policies, changes in accounting estimates, and restatements

  Changes in accounting policies due to revisions to accounting standards and other regulations: Changes in accounting policies due to other reasons:

  Changes in accounting estimates:

  Restatement of prior period financial statements:

  No No No No

• (2) Number of shares issued and outstanding (Common Stock)

  • (a) Number of shares issued and outstanding at the end of the period (including Treasury Shares) As of March 31, 2025

As of March 31, 2024

6,067,200

Shares

• (b) Number of Treasury Shares at end of period

  As of March 31, 2025

  290,707

  Shares As of March 31, 2024

  310,133

  Shares

• (c) Average number of shares during the period

  Year ended March 31, 2025

5,771,132

Year ended March 31, 2024

5,755,116

Shares Review of the accompanying interim financial statements by a certified public accountant or auditing firm: No

Explanation of appropriate use of earnings forecasts and other special notes:

- The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable. Please refer to "Overview of Operating Results" on page 2 of the attached materials for assumptions underlying the forecasts and precautions regarding their use.

- The Company plans to hold a briefing on its full-year financial results and medium-term management plan for institutional investors and analysts on Monday, April 28, 2025. Financial results presentation materials are scheduled to be posted on the Company's website on Friday, April 25, 2025. The medium-term management plan document is scheduled to be posted on the Company's website on Monday, April 28, 2025.

Table of Contents of Attachments

1. Summary of Business Results ........................... .............................. .............................. ...........................2

(1) Overview of operating results and others ........................... .............................. .............................. ...2

(2) Summary of financial position for the year ........................... .............................. ................................3

(3) Basic Policy on Profit Distribution and Dividends for the Current and Next Fiscal Years ....................4

(4) Policy on Specfied Investment Shares: ........................ .............................. .............................. ............5

(5) Business and other risks ........................... .............................. .............................. ................................5

2. Basic approach to the selection of accounting standards ........................ .............................. ....................7

3. Financial statements and major notes ........................... .............................. .............................. .................8

(1) Non-consolidated Balance Sheet ........................... .............................. .............................. ..................8

(2) Non-consolidated Statements of Income ........................... .............................. .............................. .......10

(3) Non-consolidated Statement of Changes in Equity ........................... .............................. ...............11

(4) Non-consolidated Statement of Cash Flows ........................ .............................. .............................. ....13

(5) Notes to Financial Statements ........................ .............................. .............................. ..........................14

(Notes on Going Concern Assumption) ........................ .............................. .............................. .........14

(Change in Accounting Policy) ........................... .............................. .............................. ....................14

(Equity in earnings (losses) of affiliated companies, etc.) ........................... .............................. ..........14

(Per share information) ........................... .............................. .............................. ................................15

(Significant subsequent events ........................... .............................. ........................... ..........................15

1. Overview of operating results and others

(1) Overview of operating Results for the fiscal year

During the period under review, the global economy showed a gradual recovery, but the outlook remained uncertain due to the trade and monetary policies of various countries and heightened geopolitical risks. Rising resource and energy prices and logistical delays affected inflation, which in turn affected the monetary policies of various countries, causing fluctuations in interest rates, exchange rates, and stock markets. In the U.S., the economy remained strong due to increased consumer spending supported by a solid employment and income environment. Although policy interest rates have been lowered, they remain at a relatively high level, and there are concerns about further inflation due to tariffs, making the situation unpredictable. In Europe, consumer spending remained strong and the gradual recovery trend continued, but growth slowed due to a prolonged slump in the manufacturing sector. In China, the economy recovered due to stimulus measures and an increase in rush exports before the implementation of sanctions against China, but conditions remained weak due to sluggish real estate investment and consumer spending. In the Japanese economy, a moderate recovery is underway on the back of firm consumer spending and inbound demand, but prices continue to rise and the manufacturing sector lacks strength.

In the electronic components industry, sales of products for AI servers/data centers remained strong, driven by robust demand for generative AI, but the recovery in demand for consumer products such as smartphones and PCs appeared to have stalled, and sales of products for industrial equipment such as factory automation equipment were sluggish due to prolonged inventory adjustments. As for in-vehicle electronic components, although there was a continuous increase in demand due to the electrification of electronic components such as advanced driver assistance systems, there was a sense of stagnation due to inventory adjustments caused by slowing growth of electric vehicles and other factors.

With regard to sales of plating chemicals for printed circuit boards and semiconductor substrates, sales for consumer applications such as smartphones and PCs were affected by the market slowdown in the second half but recovered moderately, while those for semiconductor packages and modules related to generation AI remained strong. Sales of plating chemicals for connectors remained strong for smartphones due to the superiority of our products (gold-saving effect). Sales for automotive applications slowed down due to inventory adjustments, and the market for industrial equipment continued to be sluggish. Sales of plating chemicals for lead frames remained firm for smartphones and PCs due to the stable quality of our products. As a result, net sales were 12,611 million yen (up 10.4% year-on-year), Operating profit was 502 million yen (up 41.8%), Ordinary profit was 657 million yen (up 18.8%), and net profit was 1,579 million yen (up 188.1%).

Sales by end-use item were as follows: (Printed circuit boards and semiconductor substrates) (For printed circuit boards and semiconductor substrates)

Sales of noble metal plating chemicals applied to printed circuit boards and semiconductor package substrates increased 22.3% year-on-year to 5,708 million yen as a result of a gradual recovery in the consumer market for smartphones and PCs, which was affected by the market slowdown in the second half, and strong sales for AI-related semiconductor packages and modules. As a result, net sales increased 22.3% year on year to 5,708 million yen.

(For connectors and micro-switches)

In sales of plating chemicals for connectors, sales for smartphones remained strong due to the superiority of our products (gold-saving effect). Sales for automotive applications slowed down due to inventory adjustments, and the market continued to be sluggish for industrial equipment applications. As a result, net sales totaled 1,848 million yen, down 14.7% from the previous fiscal year.

(For lead frames)

Sales of plating chemicals for lead frames increased to 4,740 million yen, up 9.6% from the previous term, due to steady sales for smartphones and PCs, reflecting the stable quality of our products.

(Others)

Net sales totaled 313 million yen, up 21.5% from the previous fiscal year.

Although the economic outlook remains uncertain due to factors such as U.S. trade policies, the prolonged economic slowdown in China, and rising geopolitical risks, the continued growth prospects of the generative AI market are expected to drive steady demand in the server and data center sectors. This is also likely to have a positive spillover effect on smartphones and personal computers, supporting a recovery in demand for plating chemicals used in printed circuit boards, semiconductor substrate boards, connectors, and lead frames. On the other hand, for automotive electronic components, prolonged inventory adjustments related to electric vehicles remain a concern. As for industrial equipment, the timing of a full-scale recovery remains unclear.

For the next fiscal year, we expect a delay in the recovery of sales volume for automotive and industrial machinery applications due to inventory adjustments. However, we anticipate firm sales volume for plating chemicals used in data center-related and smartphone applications. Net sales are projected to increase from the current fiscal year, driven by elevated prices of gold, palladium, and other noble metals, as well as higher shipment volumes. Although sales volume is expected to rise, profit is forecast to increase only slightly due to higher expenses from upfront investments. This outlook does not incorporate any gains from the sale of policy shareholdings.

As a result, for the next fiscal year, we expect net sales of 14,000 million yen (up 11.0% from the previous year), Operating profit of 510 million yen (up 1.5%), Ordinary profit of 670 million yen (up 1.9%), and net profit of 500 million yen (down 68.3%).

(2) Summary of Financial Position a. Description of financial position

(Million yen)

b Analysis of cash flows

(Million yen)

(Reference) Trends in cash flow indicators

Equity ratio: shareholders' equity/total assets

Equity ratio based on market value: Market capitalization / Total assets

(Note) Market capitalization is calculated by multiplying the closing stock price at the end of the fiscal year by the total number of shares issued and outstanding (less treasury shares) at the end of the fiscal year.

(3) Basic Policy on Profit Distribution and Dividends for the Current and Next Fiscal Years

The Company's basic policy on profit distribution is to flexibly return profits to shareholders in accordance with earnings conditions while securing internal reserves necessary for future business development, strengthening of the management base, and investment for growth.

In addition to the dividend payout ratio, the Company has introduced a dividend on equity ratio (DOE) with a minimum limit of 5% starting with the year-end dividend for the fiscal year ending March 31, 2024, in order to proactively provide a certain level of shareholder return that is not greatly influenced by the Company's immediate performance as a prime market listed company, while maintaining a balance between capital efficiency and financial soundness for the purpose of achieving long-term growth. The Company has introduced a dividend on equity ratio (DOE) with a minimum limit of 5% in addition to the dividend payout ratio, effective from the fiscal year ending March 31, 2024.

Based on this policy, the Board of Directors is scheduled to approve an ordinary dividend of 63 yen at its May 2025 meeting with respect to the year-end dividend for the current fiscal year. As a result, the annual dividend per share, including the interim dividend, will be 126 yen.

For the next fiscal year, we plan to pay an annual dividend of 126 yen per share.

(4) Policy on Specified Investment Shares

In terms of business strategy and business relationships with business partners, the Company hold shares only of companies that are expected to provide feedback on our product development and problem-solving. The Company have set a policy to reduce such strategic shareholdings to less than 20% of net assets.

The appropriateness of these holdings is regularly reviewed through discussions at the CX Progress Committee—which includes both members of the Board of Directors and external experts—as well as at Board meetings, and shares that do not meet the above conditions are subject to sale in line with this policy.

*Sales during the relevant quarter

(5) Business and Other Risks

The following is a list of items that we consider to be potential risk factors in the development of our business. Even though we do not necessarily consider them to be business risks, we have included them in this section for the purpose of disclosing information to investors if they are considered important for investment decisions or for understanding our business activities.

Forward-looking statements are based on the Company's management judgment and forecasts based on information available as of the date of the announcement of this financial report.

a. High dependence on the electronics industry

Our products are mainly used in semiconductor substrates, printed circuit boards, connectors, lead frames, and other electronic components, and our sales destinations are mainly in the electronics industry. The Company's business performance is greatly affected by trends in the electronics industry, particularly the smartphone and PC markets.

b. Influence of product and raw material market conditions

The raw materials used in the Company's main products can be broadly divided into precious metals and chemicals, with precious metals accounting for the majority in terms of value.

Prices of chemicals are relatively stable, but prices of precious metals (gold, silver, and palladium) are greatly influenced by international commodity markets. The Company's business activities may be affected in the event of price hikes or supply restrictions of raw materials due to the emergence of geopolitical risks such as the invasion of Ukraine and the Taiwan contingency, as well as accidents at mines.

Since contracts with customers for precious metals are basically determined based on the quotation of the day for both purchases and sales, and orders for precious metals are placed at the same time orders are received, the amount of profit is largely unaffected by fluctuations in precious metal prices. However, since there is a risk of price fluctuations due to keeping a revolving inventory, the Company strives to minimize the impact by shortening delivery times and minimizing the amount of inventory.

c. Impact of Exchange Fluctuations

The Company's export ratio for the fiscal years ending March 31, 2024 and 2025 was 55.6% and 48.8%, respectively. Our overseas transactions are basically settled in yen, but recently the transaction amount in U.S. dollars has been increasing. Although the Company hedges risks by means of forward exchange contracts, etc., there is no guarantee that such risks can be completely avoided, and business performance may be affected by exchange rate fluctuations.

d. Research and Development

Technological innovation in the electronics industry is remarkable, and R&D are extremely important in order to provide products that better meet customer needs and maintain and expand our market share. The Company will continue to engage in R&D activities for plating chemicals for cutting-edge devices, plating chemicals that contribute to further performance improvement and cost reduction for users, and environmentally friendly plating chemicals, etc. However, if such R&D activities are not carried out smoothly as planned, our business performance may be affected.

e. Intellectual Property Rights

Since the complexity of the composition of the noble metal plating chemicals that are the Company’s main products, it is difficult to analyze their components, and it is generally not easy to enter the market as an equivalent product. In addition to this, information on the composition of the plating chemicals will be disclosed to the public if the Company’s patent application is unsuccessful. Therefore, the Company has not been actively seeking patent rights for noble metal plating chemicals.

However, in response to recent advances in organic analysis technology, the Company intends to emphasize technological preservation in future research and development of new technologies by filling parameter patent applications, which are defined by physicochemical constants, rather than patent applications based on composition information. Yet not all of the patents the Company applies for will be registered, and in the case that superior research and development by outside of our company was found, it may affect our business strategy.

f. Unauthorized Distribution or Leak of Technological Know-how

The Company’s technological information includes development processes, the composition of plating chemicals, and technological data exchanged between the Company’s clients and us. Such technological information is stored in designated secure cabinets that are checked daily. The Company prohibits taking such data off the premises or copying it. Data on the composition of plating chemicals, in particular, is kept using the Company’s special annotation system, thereby preventing leaks.

However, recently there has been an increase in the use of communication tools such as e-mail, flash memory and projectors. In the unlikely event that such information is leaked to outside parties, it is believed that matching the results of component analysis of the plating chemicals with the leaked information would enable the manufacture of similar products, which could affect our business performance.

Although the Company explains and emphasizes the Company’s policy to employees at the time of employment, including their obligation to maintain confidentiality, once they retire there is no guarantee that they will continue to be loyal, despite a contractual obligation to do so for a certain period after retirement. A partial leak of information might affect our operations.

g. Securing and Fostering Human Resources

In addition to each employee performing their own role, each of them always promotes business operations with a holistic view. The Company is in a situation where they are able to secure excellent human resources through measures such as increasing name recognition, strengthening recruitment activities, and expanding education and training programs. However, the Company faces many issues, such as further strengthening of our R&D systems, further overseas expansion or entry into new business fields, which may have an impact on our future business development. If the Company cannot fully secure and foster human resources who can live up to expectations, its future progress might be affected.

h. Legal Restrictions

The Company uses raw materials to manufacture plating chemicals that are controlled by the Poisonous and Deleterious Substances Control Act, which restricts the sale, manufacture, export and other areas concerning our products.

The Company is legally registered as a distributor, manufacturer and importer of poisonous and deleterious substances. Through the Company’s thorough internal management system, the Company strives for legal compliance. Despite all our efforts, however, any use of such substances that happen to breach the relevant laws or regulations might affect the Company’s business results.

i. Management of Waste

Through the Company’s manufacturing and experimental processes, liquid waste and exhaust gas are discharged. Such waste must be appropriately treated in an environmentally friendly manner. Depending on the concentration, the Company treats liquid waste using special equipment, or uses subcontractors to do.

Using the appropriate equipment, the Company treats exhaust gas collected through ventilation systems installed in laboratories and the various areas where manufacturing processes are conducted. As a result of our efforts, the Company has never received orders or guidance from government, or complaints from local residents. However, should issues arise in the future concerning the Company’s waste control, its business results might be affected.

j. Disaster Measures

Until now, the Company has concentrated all divisions in a single location to speed up decision-making and improve production efficiency and customer satisfaction. On the other hand, following the Great East Japan Earthquake, the importance of business continuity planning (BCP) has been attracting attention, and our major clients are increasingly requesting us to formulate BCPs.

The Company has been holding inventories of its main products and operating an external warehouse for its main customers. In addition, the Company has completed preparations for the installation of manufacturing space and equipment for our main products in our office building, which the Company has secured as an emergency manufacturing base. However, in the event of a large-scale earthquake or other disaster in the Tokyo metropolitan area, product manufacturing and shipments may be temporarily delayed, which may affect our business performance.

3. Financial Statements and Notes

(1) Non-consolidated Balance Sheet