Electronic Provision Measures Commencement Date: February 26, 2026
Other Electronic Provision Measures Matters
of the 187thOrdinary General Meeting of Shareholders (Matters Omitted from the Convocation Notice
of the Ordinary General Meeting of Shareholders)
Business Report
Accounting Auditor ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 1 Systems to ensure appropriate operation and the status of its implementation ꞏꞏꞏꞏꞏꞏꞏ 2
Consolidated Financial Statements
Consolidated Statement of Changes in Equityꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 8 Notes to Consolidated Financial Statementsꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 10
Financial Statements
Statement of Changes in Net Assets ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 31 Notes to Financial Statements ꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏꞏ 32
(Notes)
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 Japanese original shall prevail.
"Audit & Supervisory Board Member(s)" and "Audit & Supervisory Board" described herein mean "Kansayaku" and "Kansayaku-kai" stipulated in the Japanese Companies Act, respectively.
Kirin Holdings Company, Limited
Business ReportAccounting Auditor
-
Name of Accounting Auditor
KPMG AZSA LLC
-
Remuneration to the Accounting Auditor
1)
Amount of remuneration paid for services as the Accounting Auditor during this fiscal year
¥249 million
2)
Total amount of money and other property benefits to be paid by the Company and its subsidiaries for services during this
fiscal year
¥727 million
(Notes) 1. The Company's Audit & Supervisory Board has made the agreement mentioned in Article 399, paragraph 1 of the Japanese Companies Act regarding remuneration to the Accounting Auditor. In agreeing to such remuneration, the Company's Audit & Supervisory Board has, in light of the "Guidance on Cooperation with Accounting Auditor" announced by the Japan Audit & Supervisory Board Members Association, deliberated the adequacy of the scheduled audit hours and amount of remuneration proposed for this fiscal year, by comparing the audit plans and the performance of the Accounting Auditor for the previous fiscal year and by confirming the progression of the hours of audits and the amount of remunerations.
The audit agreement between the Accounting Auditor and the Company does not separately stipulate audit remuneration for audit under the Japanese Companies Act or audit under the Financial Instruments and Exchange Act. Furthermore, such remuneration is practically indivisible. Hence, the remuneration referred to at 1) above does not separate these two payments.
The Company and its subsidiary pay the Accounting Auditor for advisory services mainly regarding disclosure of non-financial information, which are beyond the scope of operations stipulated in Article 2, paragraph 1 of the Certified Public Accountants Act (non-audit operations).
Among the significant subsidiaries of the Company, the financial statements of LION PTY LTD, Coca-Cola Beverages Northeast, Inc. and Blackmores Limited are audited (limited to audits stipulated in the Japanese Companies Act or the Financial Instruments and Exchange Act (including similar foreign laws)) by a certified public accountant or an auditing firm (including overseas auditors possessing similar qualifications) other than the Accounting Auditor of the Company.
- Policy regarding decisions to dismiss or deny reappointment of Accounting Auditor
If the Company's Audit & Supervisory Board determines that any of the items of Article 340, paragraph 1 of the Japanese Companies Act apply with respect to the Accounting Auditor, the Audit & Supervisory Board shall dismiss the Accounting Auditor. Such dismissal shall require the unanimous agreement of all the Audit & Supervisory Board Members.
The Company's Audit & Supervisory Board will determine the content of proposals calling for the dismissal or denial of reappointment of the Accounting Auditor, which shall be submitted to the General Meeting of Shareholders if it is determined that a change of Accounting Auditor is necessary for reasons such as having difficulty in execution of duties by the Accounting Auditor as a result of a comprehensive evaluation from a perspective of qualification, expertise, independence from the Company, and other assessment standards.
Systems to ensure appropriate operation and the status of its implementation
Basic policies for the internal control system
The Company resolved at the Board Meeting to adopt the following basic systems (the internal control system) to ensure the appropriate operation of the Company:
-
System to ensure compliance of performance of duties by the Directors, etc.* and employees of Kirin Group companies with laws and the articles of incorporation (Compliance System)
* Directors, etc., refers to Directors of the Board, Executive Officers and other business administrators. Also hereinafter.
The Directors of the Board of the Company shall decide upon the basic compliance policy for the Kirin Group and promote the policy by developing effective structures and provisions to execute the policy and by integrating it with the activities in each Kirin Group company. In addition, the Directors of the Board shall carry out educational programs on compliance, clarify procedures concerning responses to breaches of compliance, and disseminate those procedures throughout the Kirin Group companies. The Internal Audit Department of the Company (including the internal audit divisions of each Kirin Group company) shall carry out internal auditing to ensure that these systems are properly developed and applied.
Also, the Directors of the Board shall establish internal control reporting system to ensure reliability of the financial reports and conduct their operation and evaluation effectively and efficiently.
-
System to ensure the proper preservation and maintenance of information regarding the performance of duties by the Directors of the Board of the Company (System of Information Preservation and Maintenance)
The Directors of the Board of the Company shall preserve the following documents (including electromagnetic record) together with the related materials for at least ten years and make them available for inspection as necessary.
Minutes of General Meeting of Shareholders
Minutes of Board Meetings
Minutes of the Group Executive Committee and other significant meetings
Approval applications (approval authority of General Managers and above)
Financial statements, business reports, and their detailed statements
-
Regulations and other systems related to the control of the risk of loss of the Kirin Group (Risk Management System)
The Directors of the Board of the Company shall establish basic policy on the risk management of the Kirin Group and promote the policy by developing effective structures and provisions to execute the policy and by integrating it with activities in each Kirin Group company. In addition, the Directors of the Board shall implement educational programs on risk management, clarify procedures concerning the disclosure of risks and responses to the occurrence of crises, and disseminate those procedures throughout the Kirin Group companies. The Internal Audit Department of the Company (including the internal audit divisions of each Kirin Group company)
shall carry out internal auditing to ensure that these systems are properly developed and applied in each Kirin Group company.
-
System to ensure the efficient performance of duties by the Directors, etc. of Kirin Group companies (Efficient Performance System)
The Directors of the Board of the Company shall develop a management control system mainly comprising the following items to ensure the efficient performance of duties by Directors, etc. of the Kirin Group companies.
In addition to Board Meetings, organizing the Group Executive Committee to deliberate significant matters affecting the entire Kirin Group, thereby ensuring that decisions are reached carefully based on considerations of multi-dimensional aspects;
Appointing the Executive Officers, who are responsible for business administration, and also dispatching directors to each Kirin Group company to oversee appropriate performance of duties and decision making when necessary;
Ensuring appropriate and efficient performance of duties according to the authority and decision-making rules based on the regulations on work authority of the Company; and
Establishing quantitative and qualitative targets in the annual plan at each Kirin Group company and monitoring their performance by way of quarterly monitoring, etc.
-
System for reporting performance of duties by the Directors, etc. of Kirin Group companies and other systems to ensure appropriate operations (System for Reporting Performance of Duties and Other Group Internal Control System)
In order to report performance of duties by the Directors, etc. of Kirin Group companies and to ensure other appropriate operations, the Directors of the Board of the Company shall develop rules and standards to be applied to each Kirin Group company, including the following items, and carry out operations in compliance with these rules and standards.
Items related to the governance and monitoring of each Kirin Group company
Items related to guidance and management concerning the maintenance of the internal control system for each Kirin Group company
Items related to the communication system* within the Kirin Group companies
Items related to the Group internal auditing system operated by the Internal Audit Department of the Company
* The system to share information within the Kirin Group, the compliance hotline system, and other related items.
-
Items regarding assignment of employees as support staff for Audit & Supervisory Board Members of the Company when they request support staff (Audit & Supervisory Board Member Related System)
The Directors of the Board of the Company shall assign its employees as support staff for Audit & Supervisory Board Members of the Company.
-
Items related to the assurance that the employees assigned as support staff as in the preceding provision remain independent from the Directors of the Board of the Company
and to secure the effective implementation of directions by Audit & Supervisory Board Members of the Company to these employees
In order to ensure the independence of the employees assigned as support staff from the Directors of the Board of the Company, the consent of the Audit & Supervisory Board Members of the Company shall be required for any decision related to personnel affairs, including the appointment, transfer and assessment of such employees. Such employees shall not simultaneously assume any other assignment related to the operation of business and shall only follow instructions of the Audit & Supervisory Board Members of the Company.
-
System to ensure reporting to Audit & Supervisory Board Members of the Company by Directors, Audit & Supervisory Members and employees of the Kirin Group companies
The Directors of the Board of the Company shall report to the Audit & Supervisory Board Members of the Company on matters specified by such members in advance in accordance with the provisions of the Audit & Supervisory Board Members' audit standard of the Company. Principal items are as follows.
Any matter that may impose material damage to any Kirin Group company, upon discovery
Matters that require the consent of Audit & Supervisory Board Members of the Company under the applicable laws
The status of maintenance and implementation of internal control system of the Kirin Group companies
The Audit & Supervisory Board Member of the Company may request the Directors of the Board, Audit & Supervisory Board Members, and employees of each Kirin Group company to report on other matters any time as necessary.
The Directors of the Board, Audit & Supervisory Board Members, and employees of each Kirin Group company (including those who receive reports from these Directors of the Board, Audit & Supervisory Board Members and employees) may directly report matters that they judge to be appropriate to the Audit & Supervisory Board Members of the Company in order to ensure the appropriate operation of each Kirin Group company.
Audit & Supervisory Board Members of the Company shall receive a quarterly update on the operation of the compliance hotline system. Further, when necessary, they may request the immediate report on the operation of the said system.
-
System to ensure that anyone who reports to the Audit & Supervisory Board Members as outlined in the preceding provision are not treated unfairly
The Directors of the Board of the Company shall prepare common regulations for the Kirin Group companies to ensure that anyone who reports to the Audit & Supervisory Board Members as outlined in the preceding provision are not treated unfairly for this reason, and shall disseminate those regulations throughout the Kirin Group companies and implement them appropriately.
-
Policy for the pre-payment or reimbursement of expenses incurred in the performance of duties of the Audit & Supervisory Board Members of the Company
After discussions with Audit & Supervisory Board Members of the Company, the Directors of the Board of the Company shall set the policy for the pre-payment or reimbursement of expenses incurred in the performance of duties of the Audit & Supervisory Board Members of the Company.
- Other systems to ensure effective auditing by Audit & Supervisory Board Members of the Company
Audit & Supervisory Board Members of the Company shall hold a regular meeting with the Representative Directors and Outside Directors of the Company for the exchange of opinions.
Further, the Directors of the Board of the Company shall establish systems to ensure effective auditing by Audit & Supervisory Board Members of the Company. This will include ensuring that Audit & Supervisory Board Members of the Company have the opportunity to attend the meetings of each Kirin Group company, at the request from the Audit & Supervisory Board Members of the Company.
-
System to ensure compliance of performance of duties by the Directors, etc.* and employees of Kirin Group companies with laws and the articles of incorporation (Compliance System)
* Directors, etc., refers to Directors of the Board, Executive Officers and other business administrators. Also hereinafter.
Implementation of internal control system
-
System to ensure compliance of performance of duties by the Directors, etc. and employees of Kirin Group companies with laws and regulations, and the articles of incorporation (Compliance System)
The Kirin Group has established "Passion. Integrity. Diversity." as "One KIRIN" Values, the common values of the Kirin Group. Based on the spirit of these values, the Kirin Group has developed "Kirin Group Compliance Policy". The Kirin Group is taking steps to ensure publicizing and promoting proper understanding of compliance requirements throughout the Kirin Group.
Furthermore, the Kirin Group has formulated internal regulations on the compliance hotline system in accordance with the revised Whistleblower Protection Act and reporting desks have been set up and are operated by each Kirin Group company. In addition to this, the Kirin Group is working to make the reporting system more functional by establishing "Kirin Group Direct Hotline to the Executive Officer in Charge of Compliance (Risk Management)" as a direct hotline system for officers in charge and "Global Hotlines for Kirin Holdings" which enables employees of overseas Kirin Group companies to report to the Company in their local language. These regulations on the compliance hotline system prohibit unfair treatment against whistleblowers for the reason of reporting to the hotline.
-
System to ensure the proper preservation and maintenance of information regarding the performance of duties by the Directors of the Board of the Company (System of Information Preservation and Maintenance)
The Company appropriately establishes retention periods for and stores Minutes of Meetings of Shareholders, Minutes of Board Meetings and financial statements, etc., for the number of years pursuant to laws and regulations.
-
Regulations and other systems related to the control of the risk of loss of the Kirin Group (Risk Management System)
The Kirin Group has established the "Group Risk Management Policy", which set out the purpose,
system and methods of risk management, and to further clarify and implement thereof, the "Group Risk Management Regulations" and the "Group Risk Management System Manual" and the "Group Crisis Management Manual", which sets forth procedures to be taken in the event of a crisis, and publicizes and applies these rules to each of the Kirin Group companies.
Additionally, at Board meetings and Group Risk and Compliance Committee meetings, activities conducted regarding risk management are reviewed and future activity plans are deliberated or reported.
-
System to ensure the efficient performance of duties by the Directors, etc. of Kirin Group companies (Efficient Performance System)
The Company has clarified its decision-making rules, including the rules on matters to be resolved at the Board Meetings, based on the Rules of the Board. In this fiscal year, in addition to holding Board Meetings, the Group Executive Committee Meetings were held to deliberate prescribed matters. Additionally, the Company has adopted the executive officer system, in an effort to flexibly execute the strategies for each business and function, as well as to clarify the responsibility, and has been improving the efficiency of its decision-making.
The Company conducts performance management on the entire Kirin Group and each Kirin Group company through quarterly monitoring, etc., based on annual plans.
-
System for reporting performance of duties by the Directors, etc. of Kirin Group companies and other systems to ensure appropriate operations (System for Reporting Performance of Duties and Other Group Internal Control System)
The Company's Board confirmed the status of development and operation of the internal control system for this fiscal year.
Additionally, the Company has developed rules and standards related to the monitoring of each Kirin Group company and each function based on the delegation policy, etc. of the Company and conducts monitoring on a quarterly basis.
-
Items regarding employees as support staff for Audit & Supervisory Board Members of the Company when they request assignment of such support staff (Audit & Supervisory Board Member Related System)
The Company has established the Audit & Supervisory Board Support Section as a structure to assist duties of Audit & Supervisory Board Members in order to enhance the audit function of the Audit & Supervisory Board Members.
-
Items related to the assurance that the employees assigned as support staff under section
(6) remain independent from the Directors of the Board of the Company and to secure the effective implementation of instructions by Audit & Supervisory Board Members of the Company to such employees
Dedicated employees who are assigned as support staff for the Company's Audit & Supervisory Board Members are independent from the performance of their duties of the Company, and do not report to, or take instructions from, anyone other than the Company's Audit & Supervisory Board Members.
-
System to ensure reporting to Audit & Supervisory Board Members of the Company by Directors, Audit & Supervisory Members and employees of Kirin Group companies
Each Kirin Group company has developed a compliance hotline system, and regularly reports on the status of its implementation to the Company's Audit & Supervisory Board Members.
The Company has also established and is operating an appropriate compliance hotline system for the entire Kirin Group, through the implementation of the "Kirin Group Direct Hotlines to Audit & Supervisory Board Members".
-
System to ensure that persons who make reports to the Audit & Supervisory Board Members as outlined in the preceding provision are not treated unfairly
The Kirin Group has established rules related to the development and operation of the "Kirin Group Direct Hotlines to Audit & Supervisory Board Members", in order to ensure this system protects the anonymity of ones making reports as mentioned in the preceding provision and which prohibits unfair treatment of such persons, and has implemented and publicized such rules throughout each of the Kirin Group companies.
-
Policy for the pre-payment or reimbursement of expenses incurred in the performance of duties of the Audit & Supervisory Board Members of the Company
The Company has determined and appropriately implements policies related to prepayment or reimbursement procedures for expenses incurred in the performance of duties of the Audit & Supervisory Board Members of the Company.
-
Other systems to ensure efficient auditing by Audit & Supervisory Board Members of the Company
During this fiscal year, the Company's Audit & Supervisory Board Members had interviews with our Representative Director of the Board & CEO and Representative Director of the Board, President & COO and exchanged information with Outside Directors, as well as participated in all of the Group Executive Committee Meetings held in this fiscal year.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(From January 1, 2025 to December 31, 2025)
(¥ millions)
Equity attributable to owners of the Company
Share capital
Share premium
Retained earnings
Treasury shares
Reserves
Net change in equity instruments measured
at fair value through other
comprehensive income
Remeasurements of defined benefit plans
Balance at January 1,
2025
102,046
9,497
1,130,931
(251,376)
19,676
-
Effect of changes in
accounting policies
(10,731)
Balance at January 1, 2025 reflecting changes
in accounting policies
102,046
9,497
1,120,200
(251,376)
19,676
-
Profit
147,542
Other comprehensive income
3,739
2,789
Comprehensive income
-
-
147,542
-
3,739
2,789
Dividends from surplus
(58,730)
Acquisition of treasury shares
(19)
Disposal of treasury
shares
7
1
Share-based payments
56
(61)
392
Changes in ownership interest in a subsidiary without loss of control
(19,790)
Transfer from reserves to
retained earnings
2,368
420
(2,789)
Transfer from retained
earnings to share premium
10,229
(10,229)
Total transactions with
owners of the Company
-
(9,497)
(66,653)
374
420
(2,789)
Balance at December
31, 2025
102,046
-
1,201,090
(251,002)
23,836
-
Equity attributable to owners of the Company
Non-controlling interests
Total equity
Reserves
Total
Foreign currency translation differences on
foreign operations
Cash flow hedges
Total
Balance at January 1,
2025
169,311
1,440
190,427
1,181,525
352,189
1,533,714
Effect of changes in
accounting policies
(10,731)
(10,731)
Balance at January 1, 2025 reflecting changes in accounting policies
169,311
1,440
190,427
1,170,794
352,189
1,522,984
Profit
147,542
30,631
178,173
Other comprehensive income
41,474
(1,202)
46,799
46,799
2,706
49,505
Comprehensive income
41,474
(1,202)
46,799
194,341
33,337
227,678
Dividends from surplus
(58,730)
(14,815)
(73,545)
Acquisition of treasury shares
(19)
(19)
Disposal of treasury shares
8
8
Share-based payments
387
(27)
360
Changes in ownership
interest in a subsidiary without loss of control
(19,790)
(62,528)
(82,317)
Transfer from reserves to retained earnings
(2,368)
-
-
Transfer from retained
earnings to share premium
-
-
Total transactions with owners of the Company
-
-
(2,368)
(78,144)
(77,370)
(155,514)
Balance at December
31, 2025
210,785
238
234,858
1,286,991
308,156
1,595,148
*Amounts are rounded to the nearest ¥1 million.
Notes to Consolidated Financial Statements Material Accounting PoliciesAccounting standards of consolidated financial statements
The consolidated financial statements of Kirin Holdings Company, Limited (the "Company") and its consolidated subsidiaries (collectively, the "Group") are prepared in accordance with International Financial Reporting Standards ("IFRS"), pursuant to Article 120, Paragraph 1 of the Regulations on Corporate Accounting. Certain disclosure items required by IFRS are omitted pursuant to the latter part of that paragraph.
Consolidation
Consolidated subsidiaries: 164 companies
Major consolidated subsidiaries: Kirin Brewery Company, Limited, Lion Pty Ltd, Kirin Beverage Company, Limited, Coca-Cola Beverages Northeast, Inc., Kyowa Kirin Co., Ltd., FANCL CORPORATION, Blackmores Limited
Equity method
Companies accounted for by the equity method: 26 companies Major equity-accounted investees: San Miguel Brewery Inc.
Accounting policies
Measurement of financial assets
Non-derivative financial assets
Initial recognition and measurement
Financial assets are classified into financial assets measured at amortized cost, at fair value through profit or loss, and at fair value through other comprehensive income. The Group determines the classification at initial recognition of the financial assets. A regular way purchase or sale of financial assets is recognized or derecognized at the transaction date.
Financial assets measured at amortized cost
Financial assets are classified as financial assets measured at amortized cost if both of the following conditions are met:
The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows.
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets other than those measured at amortized cost are classified as financial assets measured at fair value.
As to equity instruments that are financial assets measured at fair value and not held for trading, each equity instrument may be irrevocably designated to be measured at fair value through other comprehensive income. Equity instruments which are not irrevocably designated to be measured at fair value through other comprehensive income are classified as financial assets measured at fair value through profit or loss.
All financial assets, except for those classified into the category as measured at fair value through profit or loss, are measured at fair value plus transaction costs that are directly attributable to the financial assets. However, trade receivables are measured at their transaction price if the trade receivables do not contain a significant financing component.
Subsequent measurement
After initial recognition, financial assets are measured based on classification as
follows:
Financial assets measured at amortized cost
Financial assets measured at amortized cost are measured at amortized cost using the effective interest method.
Financial assets measured at fair value
Financial assets other than those measured at amortized cost are measured at fair value. Changes in their fair value are recognized in profit or loss or in other comprehensive income based on the classification of the financial assets. Dividends on equity instruments designated as measured at fair value through other comprehensive income are recognized in profit or loss. When the decline in the fair value of the financial assets is significant or when they are derecognized, the cumulative gain recognized as capital through other comprehensive income is transferred to retained earnings.
Derecognition
Financial assets are derecognized when the contractual rights to the cash flows expire, or when they are transferred and substantially all the risks and rewards of ownership are transferred.
Impairment of financial assets
An allowance for doubtful accounts is recognized for expected credit losses on financial assets measured at amortized cost.
Expected credit losses are measured as the present value of the difference between contractual cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive. Changes in allowance for doubtful accounts are recorded in profit or loss.
After initial recognition, financial assets are classified into the following three stages at the reporting date to measure their expected credit losses:
Explanation
Measurement method of
expected credit losses
Stage 1
Financial instruments for which credit risk has not increased significantly since initial recognition
12-month expected credit loss
Stage 2
Financial instruments for which credit risk has increased significantly since initial recognition
Lifetime expected credit loss
Stage 3
Financial instruments for which there is evidence of credit impairment
Lifetime expected credit loss
The Group, in principle, determines that the credit risk on a financial asset has increased significantly since initial recognition if it is more than 30 days past due on the contract, and that a financial asset is in default if it is more than 90 days past due. When a financial asset is in default or when there is evidence of impairment including significant financial difficulty of the issuer or borrower, the Group determines that the financial asset is credit-impaired.
However, regardless of the above, for certain financial assets such as trade receivables without a significant financing component, the allowance for doubtful accounts is measured at an amount equal to lifetime credit expected losses (the simplified approach).
Expected credit losses are measured using reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.
If the Group reasonably considers that there are no prospects of the full or partial recovery of financial assets, the carrying amount of the financial assets is written off.
Derivatives and hedge accounting
The Group utilizes derivatives, including forward foreign exchange contracts, currency swaps, interest rate swaps and commodity swaps, to hedge foreign exchange risk, interest rate risk and commodity price. These derivatives are initially measured at fair value at inception, and are subsequently remeasured at fair value.
Changes in the fair value of derivatives are recognized in profit or loss. However, the effective portion of cash flow hedges and hedges of net investment in foreign operations are recognized in other comprehensive income.
At the inception of the hedge, the Group formally designates and documents the hedging relationship to which hedge accounting is applied and the objectives and strategies of risk management for undertaking the hedge. The documentation includes specific hedging instruments, the hedged items or transactions, the nature of the risks being hedged and how the effectiveness of changes in the fair value of hedging instruments is assessed in offsetting the exposure to changes in the hedged item's cash flows attributable to the hedged risks. Even though these hedges are expected to be effective in offsetting changes in cash flows, they are assessed on an ongoing basis to determine whether they have actually been effective throughout the financial reporting periods for which they were designated.
Hedges that meet the requirements for hedge accounting are classified in the following categories and accounted for in accordance with IFRS 9:
Cash flow hedge
The effective portion of gains or losses on hedging instruments is recognized in other comprehensive income, while the ineffective portion is recognized immediately in profit or loss.
The amounts of hedging instruments recorded in other comprehensive income are reclassified to profit or loss when the transactions of the hedged items affect profit or loss. In cases where hedged items are forecast transactions that result in the recognition of non-financial assets or liabilities, the amounts recognized in other comprehensive income are accounted for as adjustments to the original carrying amount of non-financial assets or liabilities.
When forecast transactions are no longer expected to occur, any related cumulative gain or loss that has been recognized in equity through other comprehensive income is reclassified to profit or loss. When hedging instruments expire, are sold, terminated or exercised without the replacement or rollover of other hedging instruments, the amounts that have been recognized in equity through other comprehensive income continue to be recorded in equity until the forecast transactions occur.
Hedge of net investment in foreign operations
Exchange differences resulting from net investments in foreign operations are accounted for similarly to cash flow hedges. The effective portion of gains or losses on hedging instruments is recognized in other comprehensive income, while the ineffective portion is recognized in profit or loss. At the time of the disposal of the foreign operations, any related cumulative gain or loss that has been recognized in equity through other comprehensive income is reclassified to profit or loss.
Measurement of inventories
Inventories are recorded at the lower of cost and net realizable value. The cost of inventories is determined primarily based on the periodic average method and includes costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Measurement and depreciation or amortization of property, plant and equipment and intangible assets
Property, plant and equipment
Property, plant and equipment is measured using the cost model after initial recognition and is stated at cost less accumulated depreciation and accumulated impairment losses. The cost includes any costs directly attributable to the acquisition of the asset and the initial estimate of the costs of dismantling, removal and restoration.
The depreciation of assets other than land and construction in progress is recorded using the straight-line method over their estimated useful lives.
The estimated useful lives of major assets by category are as follows: Buildings and structures: 2-57 years
Machinery, equipment and vehicles: 2-30 years Tools, fixtures and fittings: 2-20 years
Depreciation methods, useful lives and residual values are reviewed at each year-end, and if any changes are required, such changes are applied prospectively as changes in accounting estimates.
Goodwill
Goodwill arising from a business combination is stated at cost less accumulated impairment losses.
Goodwill is not amortized. It is allocated to cash-generating units or groups of cash-generating units and is tested for impairment annually and whenever there is any indication of impairment. Impairment losses on goodwill are recognized in profit or loss and no subsequent reversal is made.
When the units for internal management purposes are revised, goodwill is reallocated to each cash-generating unit or group of cash-generating units based on the revised units for internal management purposes.
Goodwill is measured at initial recognition as the excess of (a) over (b) below:
the aggregate of:
the consideration transferred in the business combination;
the amount of any non-controlling interest in the acquiree; and
the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree.
the net amount of the identifiable assets acquired and the liabilities assumed at the acquisition date.
The consideration transferred in a business combination is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred, and the equity interests issued by the Group.
Intangible assets
Intangible assets are measured using the cost model after initial recognition and are stated at cost less any accumulated amortization and accumulated impairment losses. The cost includes costs directly attributable to the acquisition of an asset and preparing it for its intended use, and employee benefit expenses incurred and costs related to services consumed in internally generating an intangible asset.
Intangible assets acquired separately
Intangible assets acquired separately are measured at cost at initial recognition.
Intangible assets acquired through business combinations
Intangible assets acquired through business combinations are measured at fair value at the date of acquisition.
Internally generated intangible assets (development costs)
The Group's research and development expenses are expensed when incurred, except for expenditures on development activities for which the Group can demonstrate all of the following requirements for capitalization:
The technical feasibility of completing the intangible asset so that it will be available for use or sale.
Its intention to complete the intangible asset and use or sell it.
Its ability to use or sell the intangible asset.
How the intangible asset will generate probable future economic benefits.
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
Its ability to measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are not amortized. Instead, they are tested for impairment annually and whenever there is any indication of impairment. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives from the point at which the assets become available for use. They are tested for impairment whenever there is any indication of impairment.
The estimated useful lives of major intangible assets are as follows: Customer relationships: 20-41 years
Marketing rights: 5-20 years
Software: 2-10 years
Amortization methods, useful lives and residual values are reviewed at each year-end, and if any changes are required, such changes are applied prospectively as changes in accounting estimates.
Leases
Leases are recognized as right-of-use assets and lease liabilities at the lease commencement date.
Right-of-use assets
Right-of-use assets are initially measured at cost, which mainly comprises the amount of the initial measurement of the lease liability, initial direct costs and the initial estimate of the costs of dismantling, removing and restoring the underlying asset.
Right-of-use assets are measured using the cost model after initial recognition and are stated at cost less accumulated depreciation and accumulated impairment losses, and are included within the same line item in the consolidated statement of financial position as that within which the corresponding underlying assets would be presented if they were owned by the Group.
After initial recognition, the right-of-use assets are depreciated using the straight-line method over the estimated useful lives of the underlying assets if the lease transfers ownership of the underlying asset to the Group by the end of the lease term or when the cost of the right-of-use assets reflect that it is reasonably certain that the Group will exercise a purchase option; otherwise, the right-of-use assets are depreciated based on the straight-line method over the earlier of the lease term or the estimated useful lives of the right-of-use assets.
Lease liabilities
Lease liabilities are initially recognized at the present value of the lease payments that are not paid at the lease commencement date. The lease payments are discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, the Group's incremental borrowing rate is used. In general, the Group uses the incremental borrowing rate as the discount rate. Lease liabilities are subsequently measured by increasing the carrying amounts to reflect interest on the lease liabilities and by reducing the carrying amounts to reflect lease payments made, and are included in the line item "other financial liabilities"
in the consolidated statement of financial position.
For short-term leases or leases for which the underlying asset is of low value, the Group recognizes the lease payments associated with those leases as an expense on a straight-line basis over the lease term unless another systematic basis is more representative of the pattern of the Group's benefit.
Impairment of non-financial assets
The Group tests goodwill, intangible assets with indefinite useful lives, and intangible assets not yet available for use for impairment at least annually, as well as whenever there is any indication of impairment.
At the reporting date, the Group determines whether there is any indication of impairment for non-financial assets other than inventories, deferred tax assets, defined benefit assets, and assets held for sale. Since goodwill that forms part of the carrying amount of equity-accounted investees is not separately recognized, it is not tested for impairment separately. Instead, the entire carrying amount of equity-accounted investees is assessed for any indication of impairment and is tested for impairment as a single asset.
If there is any indication that an asset may be impaired, or in cases where an impairment test is required to be performed annually, the recoverable amount of the asset is determined. In cases where the recoverable amount cannot be estimated for an individual asset, it is estimated for the cash-generating unit to which the asset belongs. The recoverable amount of an asset or cash-generating unit is measured at the higher of its fair value less costs of disposal and its value in use. Value in use is determined by discounting estimated future cash flows to their present value using a discount rate that reflects the time value of money and the risks specific to the asset.
An impairment loss is recognized in profit or loss for an asset or a cash-generating unit only where its recoverable amount is less than its carrying amount and the carrying amount is reduced to the recoverable amount.
The Group assesses at the reporting date whether there is any indication that an impairment loss recognized in prior years for an asset other than goodwill may have decreased or may no longer exist. If any such indication exists, the recoverable amount of the asset or cash-generating unit is estimated. In cases where the recoverable amount exceeds the carrying amount, the impairment loss is reversed up to the lower of the recoverable amount determined and the carrying amount (net of accumulated depreciation or accumulated amortization) that would have been determined if no impairment loss had been recognized in prior years. The reversal of the impairment loss is immediately recognized in profit or loss.
Income taxes
Income taxes are the sum of current taxes and deferred taxes.
Current taxes are measured at the amount that is expected to be paid to or refunded from the taxation authorities. In determining the tax amount, the Group uses the tax rates and tax laws that have been enacted or substantively enacted by the reporting date. Current taxes are recognized in profit or loss, except for taxes arising from items that are recognized directly in other comprehensive income or in equity and taxes arising from business combinations.
Deferred taxes are determined based on the temporary differences between the tax base for assets and liabilities and their carrying amount for accounting purposes at the reporting date. Deferred tax assets are recognized for deductible temporary differences, unused tax credits and unused tax losses to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax liabilities are recognized, in principle, for all taxable temporary differences. However, deferred tax assets or liabilities are not recorded for:
temporary differences arising from the initial recognition of goodwill;
temporary differences arising from the initial recognition of assets or liabilities in a transaction that:
is not a business combination;
at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and
at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
deductible temporary differences related to investments in subsidiaries and associates, and interests in joint arrangements to the extent that it is probable that the temporary differences will not reverse in the foreseeable future or it is not probable that future taxable profits will be available against which the temporary differences can be utilized; and
taxable temporary differences related to investments in subsidiaries and associates, and interests in joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.
In addition, the Group applies the temporary exception in the amendments to IAS 12 Income Taxes issued on May 23, 2023 and does not recognize or disclose information about deferred tax assets and liabilities related to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules published by the OECD (Organisation for Economic Co-operation and Development).
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax rates and tax laws that have been enacted or substantively enacted by the reporting date. The deferred taxes are recognized in profit or loss, except for taxes arising from items that are recognized directly in other comprehensive income or in equity and taxes arising from business combinations.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities, and income taxes are levied by the same taxation authority on the same taxable entity.
If it is probable that the tax authority will not accept uncertain tax treatments based under interpretation of tax laws, the Group recognizes reasonably estimated amounts as assets or liabilities.
The group tax sharing system is applied by the Company and certain subsidiaries.
Provisions
Provisions are recognized when present legal or constructive obligations exist as a result of past events; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations; and a reliable estimate can be made of the amount of the obligations.
Employee benefits
Post-employment benefits
The Group has defined benefit-type and defined contribution-type pension plans and provides lump-sum severance payment plans, defined benefit corporate pension plans and employees' pension fund plans as defined benefit-type plans.
For each defined benefit plan, the Group determines the present value of its defined benefit obligations and the related current service cost and past service cost using the projected unit credit method. The discount rate applied is determined by reference to market yields on high-quality corporate bonds at the year-end. The net defined benefit liability (asset) is determined by deducting the fair value of any plan assets (adjusted for the minimum funding requirements, if necessary) from the present value of the defined benefit obligations. When there is a surplus in a defined benefit plan, the present value of any future economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan is considered the asset ceiling.
Remeasurements of the net defined benefit asset or liability are recognized collectively in other comprehensive income and reclassified to retained earnings for the period during which they were incurred.
Retirement benefit costs for defined contribution-type plans are expensed for the period during which employees render services.
Termination benefits
The Group provides termination benefits when the Group terminates an employee's employment before the normal retirement date or an employee voluntarily retires in exchange for the benefits. Termination benefits are expensed when the Group commits to terminating the employment; provided that the Group has detailed official plans related to the termination of the employee's employment and can no longer withdraw the offer of the benefits.
Short-term employee benefits
Short-term employee benefits are expensed on an undiscounted basis when the related service is provided. Bonuses are recorded as liabilities for the amount estimated to be paid in accordance with the applicable plans when the Group has present legal or constructive obligations to pay as a result of past service rendered by employees, and the obligations can be reliably estimated.
Revenue from contracts with customers
Revenue is recognized based on the following five-step approach: Step 1: Identify the contracts with a customer
Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
If the Group executes sales transactions as an agent of the tax authority, consumption taxes, value added taxes, liquor taxes and other similar taxes are excluded from consideration, taking into account laws and regulations of each jurisdiction and the actual conditions of the transactions.
Alcoholic Beverages Business, Non-alcoholic Beverages Business and Health Science Business
The Group conducts sales of alcoholic beverages, non-alcoholic beverages and health food products, among others, in the Alcoholic Beverages Business, Non-alcoholic Beverages Business and Health Science Business.
Revenue from such sales is recognized when merchandise and finished goods are delivered to customers since control over the merchandise and finished goods is transferred to the customers and performance obligations are satisfied at that point in time.
Revenue generated from sale of merchandise and finished goods is measured by deducting rebates and discounts based on sales volumes and amounts from consideration under sales contracts, and consideration which is expected to be refunded to customers is stated as refund liabilities. The refund liabilities are estimated by using the most likely amount method based on terms and conditions, past transactions and other factors.
Consideration under sales contracts for merchandise and finished goods is recovered mainly within a month or two from the delivery of the merchandise and finished goods to customers and includes no significant financing components.
Pharmaceuticals Business
The Group conducts sale of merchandise and finished goods and technology licensing
to customers in relation to pharmaceuticals in the Pharmaceuticals Business.
If the consideration from contracts with customers includes a variable amount, the variable consideration is included in the transaction price only to the extent that it is highly probable that a significant reversal of the cumulative amount of revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Revenue from sale of merchandise and finished goods
Revenue from contracts with customers for the sale of merchandise and finished goods, and the assignment of rights and licenses for marketing of merchandise and finished goods is recognized when the merchandise, finished goods, or rights or licenses for marketing (collectively, the "merchandise and finished goods") are delivered to the customers. This is because control over the merchandise and finished goods is transferred to the customer and performance obligations are satisfied at that point in time.
Revenue generated from sale of merchandise and finished goods is measured at the amount of consideration after deducting items including rebates and discounts mainly provided to wholesalers, medical institutions, medical insurance companies, and government agencies. The most significant deductions include rebates to customers, chargebacks to wholesalers, rebates under U.S. public health insurance programs, and provisions for returns of expired products. The amounts of these deductions are determined based on contract terms, past experience, and other factors, but as they are based on estimates, they may differ from the actual amounts incurred and may vary depending on factors including the type of purchasing entity, end consumers, and the sales mix of products, etc.
Consideration which is expected to be refunded to customers is recorded as refund liabilities. The refund liabilities are estimated based on the most likely amount considering the terms and conditions, past transactions and other factors.
Consideration under sales contracts for merchandise and finished goods is received mainly within one year from the delivery of the merchandise and finished goods to customers and includes no significant financing components.
Licensing revenue
The Group obtains up-front income, milestone revenue and running royalty revenue as licensing revenue based on license agreements, such as granting third parties the right to develop, produce and sell the Group's developed products.
In some cases, the license agreements do not involve the provision of goods or services by the Group other than granting a license, while in other cases, the Group provides goods or services such as provision of manufacturing technology and pharmaceuticals in relation to development cooperation, regulatory authority approval, and joint sales promotion.
When the Group does not provide significant goods or services other than granting a license, up-front income is recognized as revenue at the time of granting the license since all of the performance obligations are usually satisfied at this time. Milestone revenue, which is mainly received upon successful completion of development activities and regulatory approval, is recognized as revenue when it is highly probable that the milestones agreed between the relevant parties will be achieved, after assessing the probability of a significant reversal of revenue.
When the Group provides multiple goods or services, including granting a license, the Group identifies one or more performance obligations, allocates the transaction prices comprised of up-front income and milestone revenue to each of the performance obligations, records consideration received as contract liabilities, and recognizes revenue over a period of time as the performance obligations are satisfied. For license agreements in relation to development cooperation, the Group applies the input method as an appropriate method for measuring progress for each licensing agreement.
Running royalty revenue and sales achievement milestone income received when total pharmaceutical sales exceed a certain agreed amount are sales-based or usage-based royalties, and are measured based on the sales recorded by the contract counterparty. The Group recognizes revenue at the later of when the sale or usage occurs and when the performance obligations to which the sales-based or usage-based royalty has been allocated have been satisfied.
Consideration under license agreements is received mainly within one year from the time of granting the license and the time agreed upon in the agreement such as the achievement of a specified milestone. Such contracts do not contain any significant financing components.
Foreign currency translation
Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency using the exchange rate at the date of the transaction or a rate that approximates the actual rate. At the end of the reporting period, foreign currency monetary items are retranslated into the functional currency at the closing rate, and non-monetary items that are measured at fair value in a foreign currency are retranslated using the exchange rates at the date when the fair value was measured.
Exchange differences arising from the translation and settlement are recognized in profit or loss. However, exchange differences arising from financial assets measured at fair value through other comprehensive income and cash flow hedges are recognized in other comprehensive income.
Foreign operations
The assets and liabilities in the statement of financial position of foreign operations are translated using the exchange rate at the date of their respective statement of financial position. Revenue and expenses in the statements of profit or loss and other comprehensive income of foreign operations are translated using the average exchange rates, unless exchange rates fluctuate significantly.
Exchange differences arising from the translation are recognized in other comprehensive income. In cases where a foreign operation is disposed of, the cumulative amount of exchange differences related to the foreign operation is transferred to profit or loss in the period of disposal.
Notes on Changes in Accounting Policies
Revision of IAS 21 "The Effects of Changes in Foreign Exchange Rates"
From the current fiscal year, the Group implemented IAS 21 "The Effects of Changes in Foreign Exchange Rates" (revised in August 2023).
The amendment clarifies a consistent approach in assessing whether a currency can be exchanged for another currency, and in determining the exchange rate to be used and disclosures to be provided if it cannot be exchanged. In accordance with this clarified approach, changes have been made to the foreign exchange rates used for the translation of cash and cash equivalents for the following transactions.
Currency in question and the reason why the currency is no longer exchangeable
Kirin Holdings Singapore Pte, Ltd., a consolidated subsidiary of the Company, holds Myanmar Kyat deposit balances in the Myanmar branch of a bank in Japan. The subsidiary is subject to restrictions which requires approval to be obtained from the relevant authority in order to exchange Myanmar Kyat ("MMK") for another currency and to remit overseas due to foreign currency convertibility regulations issued by the Central Bank of Myanmar in April 2022.
Carrying amount of affected assets and liabilities
(Thousands of kyats)
Balance at
January 1, 2025
Balance at
December 31, 2025
Cash and cash equivalents
343,431,695
343,706,074
Spot exchange rate used
Previously, the official exchange rate set by the Central Bank of Myanmar was used to convert such cash and cash equivalents, but this has been changed to the market trading rate offered by the Central Bank of Myanmar for currency conversion. The exchange rate used at the beginning of the current fiscal year was 3,588 MMK/USD.
In accordance with the required transitional approach, the Group recognized the effect of the change at the start of application as an adjustment to the balance of retained earnings at the beginning of the current fiscal year. As a result, the balance of retained earnings at January 1, 2025 in the consolidated statement of changes in equity was reduced by ¥10,731 million as "effect of changes in accounting policies."
Notes on Accounting Estimates
The following are items that have been recorded in the consolidated financial statements for the current fiscal year based on accounting estimates and that may have a material impact on the consolidated financial statements for the following and subsequent fiscal years:
Measurement of property, plant and equipment, goodwill and intangible assets
Amount recorded in the consolidated financial statements for the current fiscal year Property, plant and equipment: ¥738,987 million
Goodwill: ¥533,321 million
Intangible assets: ¥694,668 million
Details of accounting estimates
If there is any indication of impairment of property, plant and equipment, goodwill, and intangible assets, or in cases where an annual impairment test is required, the Group estimates the recoverable amount of the assets or the cash-generating unit to which the assets belong.
The recoverable amount of the assets or the cash-generating unit to which the assets belong is measured at the higher of its fair value less costs of disposal and its value in use.
In measuring the recoverable amount, the Group makes certain assumptions about variables such as:
future cash flows based on the business plan approved by management, discount rates and long-term growth rates; and
future plans for the business subject to valuation based on market valuations for comparable businesses (market approach)
These assumptions are determined based on management's estimates and decisions. In the event that assumed circumstances change, the actual recoverable amount may differ from the estimate. This may have a material impact on the amount of property, plant and equipment, goodwill and intangible assets in the consolidated statement of financial position for the following and subsequent fiscal years.
Recoverability of deferred tax assets
Amount recorded in the consolidated financial statements for the current fiscal year Deferred tax assets: ¥83,092 million
Details of accounting estimates
The Group recognizes deferred tax assets for deductible temporary differences and unused tax losses in consideration of the planned reversal of deferred tax liabilities, estimated future taxable profits, and tax planning.
The Group considers deferred tax assets that have been recognized are likely to be recovered based on past taxable profit levels and estimated future taxable profits for the period when deferred tax assets are deductible.
If these estimates are affected by future changes in uncertain economic conditions, amendments to tax laws, or other factors, they may differ from the actual future taxable profits. This may have a material impact on the amount of deferred tax assets in the consolidated financial statements for the following and subsequent fiscal years.
Notes to the Consolidated Statement of Financial Position
Accumulated depreciation of property, plant and equipment ¥1,309,216 million
Pledged assets
Buildings and structures ¥676 million
Land ¥592 million
Other financial assets ¥300 million
Allowance for doubtful accounts directly deducted from assets
Other financial assets ¥1,510 million
Trade and other receivables ¥2,040 million
Guarantee obligations
Guarantees for loan obligations of employees ¥31 million
Notes to the Consolidated Statement of Changes in Equity
Type and number of shares outstanding and treasury shares
Shares outstanding
Type of shares outstanding Common stock
Number of shares at January 1, 2025 914,000,000 shares Increase in number of shares during the year ended
December 31, 2025 -
Decrease in number of shares during the year ended
December 31, 2025 -
Number of shares at December 31, 2025 914,000,000 shares
Treasury shares
Type of treasury shares Common stock
Number of shares at January 1, 2025 104,005,638 shares
Increase in number of shares during the year ended December 31, 2025 (Note 1)
Decrease in number of shares during the year ended December 31, 2025 (Note 2)
8,963 shares
162,720 shares
Number of shares at December 31, 2025 (Note 3) 103,851,881 shares
Notes: 1. Increase in the number of shares was due to purchases of 8,963 odd-lot shares.
Decrease in the number of shares was due to sale of 315 odd-lot shares and disposal of 162,405 shares held in the Board Incentive Plan (BIP) Trust.
Number of shares at December 31, 2025 includes 1,599,007 shares held in the BIP Trust.
2. Dividends
Dividend payments
Approval by the Ordinary General Meeting of Shareholders held on March 28, 2025 was as follows:
Dividend on Common Stock
Total amount of dividend (Note 1) ¥28,817 million
Dividend per share ¥35.50
Record date December 31, 2024
Effective date March 31, 2025
Approval by the Board of Directors' Meeting held on August 7, 2025 was as follows: Dividend on Common Stock
Total amount of dividend (Note 2) ¥30,035 million
Dividend per share ¥37.00
Record date June 30, 2025
Effective date September 4, 2025
Notes: 1. The total amount of dividend includes ¥63 million of dividend for the Company's shares held by the BIP Trust.
2. The total amount of dividend includes ¥59 million of dividend for the Company's shares held by the BIP Trust.
Dividends for which the record date is attributable to, but to be effective after, the year ended December 31, 2025
Proposal at the Ordinary General Meeting of Shareholders to be held on March 30, 2026 will be as follows:
Dividend on Common Stock
Total amount of dividend (Note) ¥30,035 million
Source of dividends Retained earnings
Dividend per share 37.00
Record date December 31, 2025
Effective date March 30, 2026
Note: The total amount of dividend includes ¥59 million of dividend for the Company's shares held by the BIP Trust.
Notes on Financial Instruments
Overview of financial instruments
Capital management
The Group's basic policy for capital management is to maintain an optimum capital structure with a focus on providing shareholders with returns and securing a sound, flexible financial footing towards the objective of maximizing corporate value. Aiming to improve profitability and efficiency, the Group utilizes cash flows which are provided by activities such as generating Group synergies, promoting CSV management and reducing assets, in order to conduct business investments and capital investments, provide shareholder returns, and repay interest-bearing liabilities.
Risk management
The Group is exposed to financial risks, including credit risk, liquidity risk and market risk, in its business activities. To reduce such risks, the Group practices risk management based on established policies and procedures.
The Group limits the use of derivatives only to hedge financial risks, and does not use derivatives for speculative purposes.
Credit risk
In accordance with the internal policies for managing credit risk arising from trade receivables, the Company and some of its subsidiaries have each of their sales divisions monitor the credit worthiness of their main customers and counterparties on a periodical basis and manage due dates and outstanding balances by individual customer. In addition, efforts are made to early identify and mitigate risks of bad debts from customers who are having financial difficulties.
The Group believes that the credit risk of derivatives is immaterial as it enters into derivatives only with financial institutions that have a high credit rating.
Liquidity risk
In accordance with the internal policies for managing financial risks, the Group formulates fund procurement plans based on the business plan for each year to address liquidity risk. The Group also manages such risk by, for example, entering into commitment lines with several financial institutions and achieving an appropriate balance between direct and indirect fund procurement as well as short-term and long-term fund procurement.
Market risk
Foreign exchange risk
The Group operates businesses globally and, therefore, is exposed to foreign exchange risk. The risk arises when the Group's equity is affected by foreign exchange fluctuations as a result of transactions in currencies other than the functional currency and when financial statements of foreign operations are consolidated upon translation into Japanese yen. To manage foreign exchange risk, the Group hedges such risk mainly using foreign exchange contracts and currency swaps.
Interest rate risk
The Group is not exposed to interest rate risk since the Group does not hold any financial instruments with floating interest rates at the reporting date.
Price fluctuation risk
The Group is exposed to share price fluctuation risk arising from equity instruments (shares). For the equity instruments, the Group regularly assesses the fair values, the financial conditions of the issuers and other relevant factors, and continuously reviews the holding status of such instruments by taking into account the relationship with the issuer when the issuer is a customer of the Group.
Fair values of financial instruments
The following table shows the amounts of financial instruments recorded in the consolidated statement of financial position at December 31, 2025 and their fair value. The fair value of financial instruments measured at fair value on a recurring basis is equal to their carrying amount, and the carrying amount of short-term financial assets and liabilities measured at amortized cost approximates their fair value. Therefore, they are not included in the table.
(¥ millions)
Amount recorded in the consolidated statement of financial position
Fair value
Bonds (Notes 1 and 3)
332,190
320,475
Long-term borrowings
(Notes 2 and 3)
575,227
553,154
Notes: 1. The fair value of bonds is determined as the present value calculated by discounting the combined total of principal and interest with an interest rate that reflects the remaining maturity and credit risk of the bonds.
The fair value of long-term borrowings is determined as the present value calculated by discounting the combined total of principal and interest with an assumed interest rate for similar new borrowings.
The amount includes the current portion of long-term borrowings.
Breakdown of financial instruments by fair value level
The fair value hierarchy categorizes financial instruments into the following levels 1 to 3:
Level 1: Fair values measured at quoted prices in active markets
Level 2: Fair values determined, either directly or indirectly, using other observable inputs other than Level 1
Level 3: Fair values measured using valuation techniques, including inputs not based on observable market data
In the event multiple inputs that have a significant impact on fair value measurement are used, the fair value measurement is categorized in its entirety into the same level of the fair value hierarchy as the lowest level input.
Financial instruments measured at fair value
(¥ millions)
Fair value
Level 1
Level 2
Level 3
Total
Assets:
Derivative assets (Note 1)
-
1,062
-
1,062
Shares (Note 2)
36,050
-
29,130
65,180
Other
-
-
2,027
2,027
Total
36,050
1,062
31,157
68,269
Liabilities:
Derivative liabilities (Note 1)
Other
-
603
4,795
5,398
-
-
18,043
18,043
Total
-
603
22,838
23,441
Notes: 1. The fair value of derivatives is based on prices determined by counterparty financial institutions and other parties calculated from market data, such as exchange rates and interest rates.
2. The fair value of listed shares is determined based on quoted market prices. The fair value of unlisted shares is determined using valuation techniques based on market prices of similar entities.
Financial instruments measured at amortized cost
(¥ millions)
Fair value | ||||
Level 1 | Level 2 | Level 3 | Total | |
Long-term borrowings (Note) | - | - | 553,154 | 553,154 |
Bonds | - | 320,475 | - | 320,475 |
Note: Includes the current portion.
The carrying amount of short-term financial assets and liabilities measured at amortized cost approximates their fair value.
Notes on Revenue Recognition
Disaggregation of revenue arising from contracts with customers
The following table shows the breakdown of revenue for the current fiscal year. Note that amounts for Kirin Brewery Company, Limited and Coca-Cola Beverages Northeast, Inc. are shown on a non-consolidated basis, while figures for other companies are shown on a consolidated basis.
(¥ millions)
Amount recorded in
the consolidated statement of profit or loss
Alcoholic Beverages
Kirin Brewery Company, Limited
659,525
Lion Pty Ltd
283,338
Australia and New Zealand
195,494
North America
(mainly craft beer business)
87,844
Other
132,398
Total
1,075,261
Non-alcoholic Beverages
Kirin Beverage Company, Limited
266,453
Coca-Cola Beverages Northeast, Inc.
299,884
Other
11,852
Total
578,190
Pharmaceuticals
496,514
Health Science
FANCL CORPORATION
Blackmores Limited Other
111,447
70,167
69,753
Total
251,366
Others
32,031
Consolidated
2,433,363
Basic information for understanding revenue
See "Material Accounting Policies, 4. Accounting policies, (7) Revenue from contracts with customers."
Information for understanding the revenue amounts for the current fiscal year and subsequent fiscal years
Balances of trade receivables and contract liabilities
(¥ millions)
Amount recorded in
the consolidated statement of financial position
Beginning balance
Ending balance
Notes and accounts receivable, trade (trade receivables)
482,994
518,335
Contract liabilities
25,368
28,382
Timing of satisfaction of performance obligations
The following table shows the total transaction price which is allocated to residual performance obligations and periods when the revenue is expected to be recognized under agreements and other arrangements related to licensing revenue. The transactions with initial expected remaining periods not exceeding one year are excluded since a practical expedient is applied.
(¥ millions)
Amount recorded in the consolidated statement of financial position | |
Due within 1 year | 24,293 |
Between 1 and 2 years | 3,939 |
Between 2 and 3 years | 119 |
More than 3 years | 32 |
Total | 28,382 |
Notes on Per Share Information
Equity per share attributable to owners of the Company: ¥1,588.59
Basic earnings per share: ¥182.13
Notes on Business Combinations
Changes in the ownership interest of a subsidiary
The Company acquired additional shares in FANCL Corporation, a consolidated subsidiary, during the current fiscal year. The sale to the Company of the fractional shares resulting from the share consolidation that took effect on December 20, 2024 was completed on March 14, 2025, and the Company's ownership interest in FANCL Corporation was increased from 75.62% to 100% when the share transfer agreement came into effect on the same date.
The consideration for the acquisition was ¥82,573 million in cash (including non-trade accounts payable). In addition, non-controlling interests and share premium decreased by
¥62,814 million and ¥19,814 million, respectively, as a result of the additional acquisition.
Notes on Significant subsequent Events
1. Sale of a consolidated subsidiary
As of February 6, 2026 (Japan Standard Time) , the Company has entered into the a sale and purchase agreement with E. & J. Gallo Winery （hereafter "Gallo") whereby all the membership interests in its wholly owned subsidiary, Four Roses Distillery, LLC (hereafter "Four Roses") are to be transferred to Gallo (hereafter the "transfer").
Background of the transfer
Since our acquisition of Four Roses in 2002, the business have achieved strong growth, primarily in the U.S. market, and contributed to the growth of the Company's enterprise value. Meanwhile, the Group regularly reviews its balance sheet and business portfolio from a medium to long term perspective. After careful consideration as part of this review, the Company decided to enter into an agreement to transfer the business to Gallo.
Counterparty of the agreement
E. & J. Gallo Winery
Date of the transfer
The second quarter of 2026 (Planned)
Overview of the subsidiary
Company Name
Four Roses Distillery, LLC
Business
Sale and manufacture of bourbon whiskey
Membership interests to be transferred, membership interests held after the transfer, transfer price, and gain on sale
Membership interests to be transferred | 100% |
Membership interests held after the transfer | - |
Transfer price | Up to approximately 120.0 billion JPY (USD 775 million)* |
Gain on sale | Currently under review |
* Of this amount, approximately 8.0 billion JPY (USD 50 million) represents consideration that may become receivable contingent upon Four Roses achieving certain net sales revenue targets following the completion of the transfer. In addition, the actual transfer price is expected to be the amount determined after applying the price adjustment at the time of execution consummation of the transfer, as provided for in the transfer agreement.