Lion : Matters Subject to Measures for Electronic Provision When Convening the 165th Annual General Meeting of Shareholders for the Year Ended December 31, 2025（March 27,2026）NEW

To Shareholders:

Matters Subject to Measures for Electronic Provision When Convening the 165th Annual General Meeting of Shareholders

for the Year Ended December 31, 2025

Business Report

Matters Related to Subscription Rights to Shares Basic Policy Regarding Control over the Company Internal Control Systems

• Consolidated Financial Statements Consolidated Statement of Changes in Equity Consolidated Notes

• Non-consolidated Financial Statements Non-consolidated Balance Sheet

Non-consolidated Statement of Income

Non-consolidated Statement of Changes in Shareholders’ Equity

Individual Notes

●

Pursuant to the provisions of applicable laws and regulations and Article 14 of the Company’s Articles of Incorporation, the items listed above shall be omitted from the paper copy(paper copy stating matters subject to measures for electronic provision)sent to shareholders who have requested it.

February 26, 2026

Matters Related to Subscription Rights to Shares

Not applicable.

Basic Policy Regarding Control over the Company

Lion believes that persons who control the Company’s decision making over financial matters and business policies should fully understand Lion’s corporate philosophy, sources of corporate value and the relationship of trust it has with stakeholders who support the Company in order to secure and improve corporate value and to act in the common interests of shareholders in a continuous and sustainable manner.

At the same time, Lion holds that final decisions concerning any proposal of acquisition that would involve a transfer of control of the Company must ultimately be based on the collective will of its shareholders. This is not meant to imply opposition to a large-scale acquisition of Lion’s shares if such acquisition is to be to the benefit of corporate value and the common interests of shareholders.

Nevertheless, in some cases large-scale acquisitions are undertaken clearly for the purpose of undermining Lion’s corporate value and the common interests of shareholders; are intended to force shareholders to sell their shares; or are pushed forward without provision of sufficient time and/or information to Lion’s Board of Directors and shareholders so that they may examine suggestions regarding the acquisition proposal and alternatives. Thus, such cases can impair Lion’s corporate value and the common interests of shareholders.

The Company resolved not to continue the anti-takeover measures against large-scale purchases of the Company’s shares (anti-takeover measures) at the Board of Directors held on January 29, 2021. However, in the event of the emergence of a large-scale purchaser who may damage the corporate value or the common interests of shareholders, the Company will consult with the Corporate Governance Committee, which is composed solely of external directors and external Audit & Supervisory Board members, in order to eliminate any arbitrariness and to enhance the objectivity and rationality of the Board of Directors. The Board of Directors will respect the recommendations of the Committee to the maximum extent possible and, after thorough deliberation, will take necessary and appropriate measures in accordance with the Companies Act, Financial Instruments and Exchange Act, and other relevant laws and regulations. If a decision by the shareholders is necessary to ensure the corporate value of the Company and the common interests of the shareholders, the Company will hold a Shareholders Meeting as soon as possible.

To contribute to the implementation of the above Basic Policy, the Company will vigorously execute strategies aimed at achieving the management vision outlined in “I. Current Conditions of the Lion Group 5. Management Issues” of the Business Report, and will endeavor to enhance the corporate value and the common interests of shareholders.

Internal Control Systems

Matters that Lion resolved as the internal control system are as follows.

1. Basic Approach to and Status of the Internal Control System
   1. Structure to Ensure that the Execution of Duties of the Lion Group’s Directors and Employees Complies with Legal Requirements and the Company’s Articles of Incorporation

      1. Basic Stance

         1. The Lion Group Charter for Corporate Behavior and Behavioral Guidelines shall provide the platform for the Company’s compliance structure.

         2. The president shall provide constant reinforcement regarding the basic spirit and essence of the Lion Group Charter for Corporate Behavior among directors, executive officers, Audit & Supervisory Board members and employees with the aim of increasing awareness and understanding of corporate ethics. Each and every member of the Lion Group shall adopt and pursue the credo that compliance underpins every facet of the Group’s business activities.

      2. Compliance Structure

         1. The Company shall maintain a Corporate Ethics Committee chaired by the director responsible for corporate ethics, an appointee from the Board of Directors. Covering the entire Group, this committee shall formulate and implement specific initiatives to ensure greater awareness of and compliance with corporate ethics. In the event of a violation of the Lion Group Charter for Corporate Behavior or Behavioral Guidelines, if deemed necessary by the Corporate Ethics Committee, an Ethics Investigation Committee shall be established to work toward the resolution of the issue. The Ethics Investigation Committee shall comprise specialists from outside the Group, including lawyers and certified public accountants.

         2. The Group shall designate a general manager responsible for corporate ethics who reports to the director responsible for corporate ethics. The general manager responsible for corporate ethics shall enhance and maintain the Group’s compliance structure and collaborate with the Human Resources Department to implement necessary education and training for the Group. Each department shall also formulate its own rules and manuals in line with relevant laws and regulations and operate in accordance with said rules and manuals.

         3. In an effort to reinforce the supervisory function of Lion’s Board of Directors, external directors who do not engage in any executive function within the Group shall be appointed to the Board.

         4. The Group shall maintain an Auditing Department as its internal auditing division.

         5. Lion’s Auditing Department shall conduct internal audits of Group companies.

         6. Lion shall dispatch Audit & Supervisory Board members to Group companies. Audit & Supervisory Board members shall conduct audits in accordance with regulatory requirements.

         7. Members of the Auditing Department, the general manager responsible for corporate ethics, members of the Corporate Planning Department, Legal and Intellectual Property Department, and the Audit & Supervisory Board members shall maintain close communications with each other. In this manner, Lion shall promptly identify issues and problems relating to compliance and the compliance structure.

         8. Lion shall refer to its work regulations to determine the course of action in the event an employee contravenes any law or the Company’s Articles of Incorporation. The Corporate Ethics Committee shall prepare and submit its final decision to the Board of Directors in the event a director contravenes any law or the Company’s Articles of Incorporation.

         9. Besides items (2) (i) through (viii) above, a “AL Heart Hotline” has been established to provide direct contact with the general manager responsible for corporate ethics and external lawyers. This hotline forms a part of the Group’s internal reporting system designed to address any legal breach or matter concerning compliance. In addition, the “Quality Information Hotline” has been established. In cases of doubt about product quality, personnel responsible for product development may utilize this internal reporting system to report directly to the general manager of the Reliability Assurance Department. These hotlines shall be managed based on separately prepared guidelines.

         10. In the event Audit & Supervisory Board members uncover an issue relating to the Group’s compliance structure or the management of its internal reporting system (identified in item (2) (ix) above), they shall provide opinions to the director responsible for corporate ethics and call for the necessary corrective measures to be formulated.

      3. Response in the Event of Emergency

         1. The Emergency Response System shall apply to any emergency relating to legal requirements and corporate social responsibility (CSR). Under the system, the manager of the Corporate Support Department General Affairs Office shall report such incident to the president, the director responsible for corporate ethics, and the Audit & Supervisory Board members. The director of the relevant department or the Emergency Response Headquarters, chaired by the president, shall implement appropriate measures to resolve the situation, formulate measures to prevent recurrences and submit a report to the Executive Committee and the Board of Directors.

         2. The procedures outlined above in item (3) (i) shall be adopted in the event a director or employee of a Group company uncovers a serious breach of any legal requirement or any significant matter relating to compliance by a Group company.

         3. In the event that Group companies recognize that management guidelines or instructions from Lion contravene the law or raise issues relating to compliance, the matter shall be immediately reported to the Company’s president, director responsible for corporate ethics and Audit & Supervisory Board members. The director responsible for corporate ethics, in collaboration with the Audit & Supervisory Board members, shall resolve the situation and formulate measures to prevent recurrences.

   2. Management Structure for Maintenance and Storage of Information Concerning the Execution of the Duties of Lion’s Directors

      1. Representative directors and executive directors shall report on the status of their own executive duties to the Board of Directors in accordance with legal requirements.

      2. The representative director shall formulate information preparation, maintenance and storage rules relating to the execution of directors’ duties as a part of the Company’s information management rules.

      3. Directors shall maintain and store information pertaining to the execution of their duties in accordance with the information management rules.

      4. Directors and Audit & Supervisory Board members may view and copy this information at any time.

   3. The Lion Group’s Rules and Other Structures Relating to the Management of Risk

      1. Response under Normal Conditions

         1. For the Group’s risk management, the Executive Management Board shall oversee the management, and the director responsible for the Corporate Planning Department shall have overall responsibility for risk management for the Group (officer responsible for Risk Management). The AL Risk Management Committee, chaired by the said director responsible, shall exhaustively and comprehensively manage the Group’s risk.

         2. To control risks in executing business strategies, the Executive Management Board shall deliberate on the degree of such risks, the control policies, and residual risks (the Group’s risk-taking portion).

         3. The Executive Management Board shall, following the deliberation by the AL Risk Management Committee, strive to assess and identify management risks with the potential to significantly impact business activities and the whole Group shall work to implement risk reduction measures in line with the determined policies.

         4. Among management risks, to control risks associated with the environment, quality assurance, accidents and disasters, and compliance, that require management from a cross-functional and specialized perspective, appropriate countermeasures shall be formulated in advance by the Sustainability Promotion Council, Customer Satisfaction/Product Liability Committee, Safety, Hygiene and Disaster Prevention Meeting, and Corporate Ethics Committee, and, when necessary, deliberated by the Executive Management Board or the Executive Committee.

         5. Each department, subsidiary and associate shall strive to identify its own risks and implement appropriate risk reduction measures. In addition, each plant shall acquire ISO 9001 and ISO 14001 accreditation, implement OSHMS (ISO 45001-compliant), and actively pursue measures to promote quality assurance, environmental protection, and health and safety management.

         6. For risks that newly arise during the period (emerging risks) due to environmental changes or other factors, the AL Risk Management Committee, Executive Committee, etc., shall identify and share any such signs. Should any of them materialize during the period and increase the possibility of a significant impact on the business, the risk owner, designated by the chair of the AL Risk Management Committee, shall study countermeasures. The Executive Management Board shall then deliberate on the countermeasures to manage risks.

         7. The director responsible for risk management shall report on the progress of risk management to the Executive Committee (Executive Management Board) and the Board of Directors. The Auditing Department shall audit whether the Group’s series of risk

            management processes is functioning effectively, report its findings to the Board of Directors, and further commit to overseeing the Board of Directors.

      2. Response in the Event of Emergency

      In the event of an incident occurring due to a natural disaster or accident, in accordance with the Emergency Response System (the respective manuals for countermeasures against earthquakes or influenza and other infectious diseases), the manager of the Corporate Support Department General Affairs Office shall report the details of said incident to the president, chair of the AL Risk Management Committee, and Audit & Supervisory Board members. At the same time, members of the AL Risk Management Committee responding in the event of emergency shall collect all relevant information, formulate response measures, clarify causes and determine countermeasures, submitting a report on these actions to the Executive Committee and the Board of Directors.

   4. Structure to Ensure that Directors’ Duties Are Executed Efficiently

      1. Decision-Making Rules

         1. Board of Directors’ meetings shall be held regularly once a month, with extraordinary meetings convened as and when necessary, as the foundation for ensuring the efficient execution of directors’ duties. With the exception of the regular Board of Directors meetings, the written approval of each director shall be deemed to constitute a resolution of the Board of Directors, pursuant to regulatory requirements.

         2. Executive Management Board meetings shall be held three times a month, and Executive Committee meetings shall be held once a month. At each meeting the Executive Management Board and the Executive Committee shall make decisions on fundamental and other important matters related to business operations in an agile manner. Through these means, Lion shall strive to promote speedy operations and strengthen the Board of Directors’ functions.

         3. Matters of importance relating to the management policies and strategies of the overall Group shall be deliberated on in advance by the Executive Management Board. Thereafter, recommendations shall be ratified by the Board of Directors.

         4. The autonomy of each company within the Group shall be respected; however, each Group company shall regularly report on its business activities to Lion and discuss important matters with Lion before taking action. In addition, matters of significance that may substantially impact the assets and earnings of Group companies are subject to approval by Lion’s Board of Directors or Executive Management Board.

      2. The Board of Directors

         1. The Board of Directors shall determine Companywide objectives and targets common to all directors and employees and promote understanding and awareness of and formulate management plans based on said objectives and targets.

         2. In order to make management plans more concrete, the Board of Directors shall establish business plans and set operating budgets on the basis of said management plans. Investments for marketing, research and development, capital expenditure and new businesses are also allocated on the basis of management plans.

         3. The Board of Directors shall determine the delegation of authority regarding important matters to organizations, the President, COOs of business units, directors and general managers of each division or department.

         4. The Board of Directors shall review monthly business results. In the event of a discrepancy between established targets and actual performance, the director responsible for each division shall provide an analysis of the discrepancy and recommend measures to reduce or eliminate negative factors to the Board of Directors. When necessary, targets may be revised.

      3. Business Operation Structure

         1. The directors responsible for each department shall establish efficient business operation structures for their departments, including concrete measures to be implemented.

         2. Monthly business results shall be collated for management accounting purposes in a timely fashion utilizing the Group’s IT systems and submitted to the director responsible for the relevant department and the Board of Directors.

         3. Subject to item (2) (iv) above, each director responsible for a department shall implement improvements to increase the efficiency of the department’s business operation structure as needed.

   5. Matters Relating to Employees Assigned to Support Audit & Supervisory Board Members and the Independence of Such Employees from Directors in the Case that Audit & Supervisory Board Members Request Such Employees (Including Items Related to Ensuring the Effectiveness of Audit & Supervisory Board Members’ Directions)

      1. At least one employee shall be allocated to the Audit & Supervisory Board Office to support the duties and functions of the Audit & Supervisory Board.

      2. Employees allocated for this purpose to the Auditing Office are subject to the instructions of the Audit & Supervisory Board and not to the instructions of directors of the Board.

      3. The aforementioned employees are independent of directors of the Board. The personnel evaluation, transfer and disciplining of these employees are determined after agreement by the Audit & Supervisory Board.

   6. Structure for Reporting to Audit & Supervisory Board Members by Directors and Employees and Other Matters Relating to Procedures for Reporting to Audit & Supervisory Board Members as well as Structure for Ensuring that Such Reporting Will Not Result in Disadvantage to the Reporter

      1. Lion Group Directors and employees shall quickly report to the Audit & Supervisory Board members any matters that may significantly impact the Group as well as any significant violations of legal statutes or the Articles of Incorporation. In addition, the directors shall report the following matters to the Audit & Supervisory Board.

         1. Significant breaches of the law and other important compliance matters.

         2. Emergencies relating to natural disasters or accidents as well as emergencies concerning legal requirements or corporate social responsibility.

         3. The implementation status of Group internal audits.

         4. The status and details of communications reported through the Group’s internal reporting hotline.

         5. Matters determined by the Executive Management Board and the Executive Committee.

         6. Matters determined by directors and executive officers based on designated delegated authorities.

         7. The status of Group company activities and the status of Group company Audit & Supervisory Board member activities.

         8. The details and impact of any change in important accounting policies or standards adopted by the Company and its Group companies.

      2. The reporting methods for the matters described above in (1) (i) through (viii) (the reporter, recipient, timing and other matters) are determined through deliberations involving directors and Audit & Supervisory Board members.

      3. Notwithstanding item 6. (1) above, Audit & Supervisory Board members may request information from directors and employees as and when necessary.

      4. The Lion Group shall establish Behavioral Guidelines such that those who report to the Audit & Supervisory Board Members shall not suffer any disadvantage as a result of such reporting and organizationally ensure that this is enforced.

   7. Procedure for Pre-Payment and Reimbursement of Costs Arising in the Execution of Audit & Supervisory Board Members’ Duties and Policy for Processing Other Costs or Liabilities Arising from the Execution of Such Duties

      1. Costs and liabilities necessary for the execution of Audit & Supervisory Board members’ duties shall be promptly paid or otherwise processed in accordance with the request of the Audit & Supervisory Board member.

      2. In addition, Audit & Supervisory Board members may receive the advice of outside specialists as required to execute their duties. Related payments or other processing shall be handled in accordance with 7. (1) above.

   8. Structure to Ensure Effective Auditing by Lion’s Audit & Supervisory Board Members

      1. At the request of the Audit & Supervisory Board, the Board of Directors shall ensure that the Audit & Supervisory Board is able to appoint legal, accounting or taxation specialists to receive advice relating to audit activities.

      2. Audit & Supervisory Board members may attend management meetings and discussions of the Company and Group companies as necessary.

      3. Audit & Supervisory Board members may review and copy important information concerning Group companies as necessary.

      4. Audit & Supervisory Board members may conduct individual interviews with the directors responsible for business execution and important employees regarding the status of the execution of their duties in accordance with audit plans formulated by the Audit & Supervisory Board.

      5. The Audit & Supervisory Board shall periodically convene meetings with the representative directors and accounting auditors to promote the exchange of information, opinions and views.

   9. Structure to Ensure the Reliability and Appropriateness of Financial Reporting

      1. For the purpose of ensuring the reliability of the financial reporting of Lion, its subsidiaries and affiliated companies that forms the Group’s consolidated financial statements, the president shall develop, operate and evaluate internal control regarding financial reporting based on the “Internal Control Policies Regarding Financial Reporting” set forth by the Board of Directors. The president shall also report the status of internal control and submit an internal control report to the Board of Directors on a regular basis.

      2. The Auditing Department shall, through its internal auditing, understand and evaluate the status of the development and operation of the Company’s internal control system (including any problems and the status of improvements made to address problems) regarding the financial reporting and report its findings to the president and Audit & Supervisory Board members.

      3. As a part of their performance audits, Audit & Supervisory Board members shall audit the execution of directors’ duties related to the development and operation of internal control regarding financial reporting. In addition, Audit & Supervisory Board members shall audit the status of development and operation of internal control regarding financial reporting through audits of the appropriateness of the methods and results of accounting audits conducted by accounting auditors.

      Lion has established the Lion Group Charter for Corporate Behavior and Behavioral Guidelines, centered on the reinforcement of legal compliance and a sense of ethics. To ensure strict compliance with the charter and guidelines on the part of all directors, Audit & Supervisory Board members and employees, the Group has established a Corporate Ethics Committee chaired by the director responsible for corporate ethics. The committee promotes concrete initiatives to ensure the penetration and entrenchment of corporate ethics awareness. In the event of a violation of the Lion Group Charter for Corporate Behavior or Behavioral Guidelines, the committee develops proposals to resolve the issue and prevent recurrences. The committee also works to strengthen the Group’s compliance structure, including the internal reporting systems. In addition, the Group maintains various rules and procedures to ensure the efficiency and effectiveness of operations, including standards for delegating decision-making authority to the president or the responsible executive, operating processes for each stage of product development, and product management systems that specify quality assurance procedures.

      The Audit & Supervisory Board members and Auditing Department conduct regular audits to monitor whether these systems are functioning appropriately.

      Regarding the timely disclosure of corporate information, Lion seeks out the opinions of the standing Audit & Supervisory Board members regarding the necessity of disclosure, endeavoring to ensure appropriate disclosure.

      With regard to the development status of internal control related to financial reporting, Lion has established the “Internal Control Policies Regarding Financial Reporting” and standards for determining the scope of evaluation and targets of evaluations. Furthermore, the Group has assigned responsible staff to take charge of each operational process.

      Lion holds a meeting of the Corporate Ethics Committee periodically and develops a plan to promote concrete initiatives for the reinforcement of legal compliance and a sense of ethics for the entire Group. In addition, Lion ensures the penetration of the Lion Group Charter for Corporate Behavior and strict compliance with the charter through provision of training and e-learning experience in accordance with the plan. Moreover, Lion regularly conducts a questionnaire survey to examine to what extent compliance awareness has taken hold and been entrenched among employees and others, and endeavors to recognize problems in the workplace.

      With regard to risk management, the Executive Management Board assesses and identifies risks with the potential to significantly impact business activities as “management risks” and the whole Group works to implement risk reduction measures. Furthermore, each department periodically identifies and measures (probability of occurrence, influence on the business management) risks and assesses ways of dealing with such risks. The director responsible for risk management compiles these risk management measures and reports their progress to the Board of Directors annually.

      Each Group company periodically reports operating results, business plan and other matters to Lion’s Board of Directors, and any matters that have significant impact on the entire Group’s assets and earnings are discussed by Lion’s Board of Directors and Executive Management Board.

      With regard to internal audit of the Group, the Auditing Department conducts audit for internal control on “legality, appropriateness, efficiency, etc.” and audit of the status of promoting compliance in accordance with the annual internal audit plan.

      Audit & Supervisory Board members attend meetings of the Board of Directors and other important meetings and conduct audits of Lion’s headquarters, other important operating sites and subsidiaries, and other works, in accordance with auditing standards for Audit & Supervisory Board members, standards for performing audits for the internal control system and other standards established by the Audit & Supervisory Board.

2. Basic Approach to Eliminating Antisocial Forces and Status of Related Efforts

   In accordance with the Lion Group Charter for Corporate Behavior, the Company shall maintain a stance of staunch opposition to any antisocial forces that pose a threat to public order and safety.

   Having positioned its Corporate Support Department as its office for handling issues relating to antisocial forces, Lion has appointed a person responsible for the prevention of undue claims against the Company and strives to coordinate efforts between each operational site of the Group as well as external institutions. To facilitate coordination with the police and relevant authorities, Lion participates in and shares information through specialized outside institutions, such as the Federation for Prevention of Special Violence.

   To define and ensure compliance with procedures for handling antisocial forces, Lion has established an Undue Claim Prevention Manual.

   The person responsible for the prevention of undue claims implements the necessary training at each operating site of the Group. The person responsible for the prevention of undue claims and the persons in charge of the prevention of undue claims at each operating site shall execute their duties in accordance with the Undue Claim Prevention Manual.

   Consolidated Statement of Changes in Equity (Year ended December 31, 2025)

   (Millions of yen)

   	Equity attributable to owners of the parent
   	Share capital	Capital surplus	Treasury stock	Other components of equity
   				Subscription rights to shares	Net gain (loss) on revaluation of financial assets measured at fair value through other comprehensive income	Remeasurements of defined benefit plans
   Balance at January 1, 2025	34,433	31,327	(8,730)	50	10,687	-
   Changes during the period Comprehensive income Profit for the period Other comprehensive income					756	4,561
   Total comprehensive income for the period	-	-	-	-	756	4,561
   Transactions with owners
   Dividends
   Acquisition of treasury stock			(2)
   Disposal of treasury stock		(39)	194	(47)
   Cancellation of treasury stock		(5,234)	5,234
   Transfer from retained earnings to capital surplus		5,274
   Share-based payments		92
   Changes in ownership interest in subsidiaries
   Transfer from other
   components of equity to					(396)	(4,561)
   retained earnings
   Total transactions with owners	-	92	5,426	(47)	(396)	(4,561)
   Balance at December 31, 2025	34,433	31,419	(3,304)	2	11,047	-

   (Millions of yen)

   	Equity attributable to owners of the parent					Non-controlling interests	Total equity
   	Other components of equity			Retained earnings	Total
   	Net gain (loss) on derivatives designated as cash flow hedges	Exchange differences on translation of foreign operations	Total
   Balance at January 1, 2025	1	13,009	23,749	212,938	293,717	21,976	315,694
   Changes during the period Comprehensive income Profit for the period Other comprehensive income			-	27,587	27,587	3,461	31,049
   	(1)	3,927	9,244		9,244	1,785	11,030
   Total comprehensive income for the period	(1)	3,927	9,244	27,587	36,831	5,247	42,079
   Transactions with owners			- -(47) - - - - (4,958)
   Dividends				(8,019)	(8,019)	(1,626)	(9,645)
   Acquisition of treasury stock					(2)		(2)
   Disposal of treasury stock					106		106
   Cancellation of treasury stock					-		-
   Transfer from retained earnings to capital surplus				(5,274)	-		-
   Share-based payments					92		92
   Changes in ownership interest in subsidiaries					-	95	95
   Transfer from other components of equity to retained earnings				4,958	-		-
   Total transactions with owners	-	-	(5,006)	(8,335)	(7,823)	(1,531)	(9,354)
   Balance at December 31, 2025	-	16,937	27,987	232,190	322,726	25,692	348,419

   Notes to Consolidated Financial Statements(Basis of Preparation of Consolidated Financial Statements)

   1. Basis of Presenting Consolidated Financial Statements

      The consolidated financial statements of Lion Corporation (the “Company”) and its subsidiaries (collectively, the “Group”) are prepared in accordance with International Financial Reporting Standards (hereinafter “IFRS”) under the provision of Article 120, Paragraph 1 of the Regulations on Corporate Accounting. In these consolidated financial statements, some items required to be disclosed in IFRS are omitted under the provision of the second sentence of the same Paragraph.

   2. Scope of Consolidation

      Number of consolidated subsidiaries: 25 Names of major consolidated subsidiaries:

      Lion Chemical Co., Ltd.

      Lion Expert Business Co., Ltd. Lion Specialty Chemicals Co., Ltd. Lion Hygiene Co., Ltd.

      Lion Pet Co., Ltd.

      Lion Engineering Co., Ltd. Kyuzitu Hack Co., Ltd.

      Lion Dental Products Co., Ltd.

      Lion Daily Necessities Chemicals (Qingdao) Co., Ltd. Lion Home Products (Taiwan) Co., Ltd.

      Lion Corporation (Korea)

      Merap Lion Holding Limited Liability Company Lion Corporation (Singapore) Pte Ltd

      Lion Innovation Center (Shanghai) Co., Ltd. Lion Corporation (Hong Kong) Ltd.

      Lion Kallol Limited

      Lion Corporation (Thailand) Ltd. Southern Lion Sdn. Bhd.

   3. Application of Equity Method

      Number of associates accounted for using equity method: 4

      Names of major associates accounted for using equity method PLANET,INC.

      PT. Lion Wings

      Yihai Kerry Lion (Shanghai) Clean Technology Co., Ltd.

   4. Changes in Scope of Consolidation and Application of Equity Method

      During the fiscal year under review, the Company acquired all shares of Merap Lion Holding Corporation, which had been its equity-method associate, and included it in the scope of consolidation. Accordingly, Merap Lion Holding Corporation changed its company name to Merap Lion Holding Limited Liability Company. The Company also transferred all shares held in Japan Retail Innovation Co., Ltd. during the fiscal year under review and excluded it from the scope of equity method.

   5. Accounting Policies

The Group’s accounting policies are prepared in accordance with IFRS for which application are mandatory as of December 31, 2025.

1. Basis of consolidation

   1. Subsidiaries

      Subsidiaries are all entities controlled by the Group. The Group is deemed to control an entity when, through its involvement with the entity, it has exposure to or holds rights to variable returns from the entity and has the authority to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements of the Group from the date that the Group’s control commences until the date that said control ceases. Balances of receivables and payables and internal transactions existing between the Company and subsidiaries or between subsidiaries as well as any unrealized income and expenses arising from such transactions are eliminated when preparing the consolidated financial statements. Non-controlling interests in subsidiaries are identified separately from the Group’s interests.

      The comprehensive income of subsidiaries is attributed to the owners of the parent and any non-controlling interests even if doing so results in a negative non-controlling interest balance.

   2. Associates

      Associates are companies over whose financial and operating policies decisions the Group has significant influence but neither control nor joint control. The Group is assumed to have significant influence over a company if it directly or indirectly owns between 20% and 50% of said company’s voting rights. Investments in associates are initially recognized at cost and accounted for by the equity method from the date that the Group’s significant influence commences until the date that said significant influence ceases.

2. Business combinations

   Business combinations are accounted for using the acquisition method.

   The identifiable assets and liabilities of acquirees are measured at fair value on the acquisition date.

   In the event that the total of the consideration transferred for the business combination (including contingent consideration), the non-controlling interests in the acquiree and the fair value of the equity in the acquiree already held by the acquirer exceeds the net amount of the acquiree’s identifiable assets and liabilities on the acquisition date as measured in accordance with IFRS 3 “Business Combinations” (hereinafter “IFRS 3”), this excess is recognized as goodwill. The consideration transferred for the business combination is calculated as the sum of the fair value at the acquisition date of assets transferred by the acquirer, liabilities to the acquiree’s former owners incurred by the acquirer and equity interests issued by the acquirer. If a business combination is achieved in stages, the Group’s previously held equity in the acquiree is remeasured at fair value at the acquisition date. The resulting gain or loss is recognized as profit or loss.

   Whether the Group measures non-controlling interests at fair value or as the amount of the acquiree’s identifiable net assets proportionate to the non-controlling interests is determined individually for each business combination.

   If the initial accounting treatment for a business combination is not completed by the end of the reporting period in which the combination occurred, items for which the accounting treatment is not completed are measured at provisional amounts. If new information obtained during the measurement period within one year after the acquisition date affects the measurement of the amount recognized as of the acquisition date, the provisional amount recognized as of the acquisition date is retrospectively adjusted.

   Acquisition-related costs are accounted for as expenses in the period in which they are incurred.

   Additional acquisitions of non-controlling interests after the acquisition of control are

   accounted for as equity transactions, and the Group does not recognize goodwill from such transactions.

3. Foreign currency translation

   1. Foreign currency transactions

      Transactions denominated in foreign currencies are translated into the Group’s relevant functional currencies using the exchange rates at the date of each transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rates at the fiscal year-end, and exchange differences resulting from such translation are recognized as profit or loss. However, if gains or losses associated with such assets and liabilities are recognized as other comprehensive income, exchange differences on such gains or losses are recognized as other comprehensive income.

      Non-monetary assets and liabilities measured at cost and denominated in foreign currencies are translated using the exchange rates at the date of transaction.

   2. Foreign operations

      The assets and liabilities of foreign operations, including goodwill and fair value adjustments resulting from the acquisition of foreign operations, are translated at the exchange rates at the fiscal year-end. Income and expenses recorded by foreign operations are translated using the average exchange rate during the fiscal year, except for cases of significant exchange rate movements during the fiscal year.

4. Cash and cash equivalents

   Cash and cash equivalents consist of cash on hand, demand deposits and short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

5. Inventories

   Inventories are measured at the lower of cost or net realizable value. Cost is calculated based on the moving-average method and includes purchase cost, processing costs and other expenses incurred in bringing the inventories to their present location and state. Net realizable value represents the estimated selling price in the ordinary course of business, less all estimated costs of completion and estimated costs necessary to make the sale.

6. Property, plant and equipment

   The Group applies the cost model to measure property, plant and equipment.

   Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

   Such acquisition cost includes expenses directly attributable to the acquisition of assets; the costs of dismantling and removing such assets as well as restoring the site on which they are located; and borrowing costs that meet the requirements for capitalization.

   For all items of property, plant and equipment other than land, the depreciable amount, which is the cost of the asset less its residual value at the end of its useful life, is allocated on a systematic basis over the useful life of the asset using the straight-line method.

   The useful life, residual value and depreciation method of items of property, plant and equipment are reviewed at the fiscal year-end, and if expectations differ from previous estimates, the change(s) shall be prospectively accounted for as a change in an accounting estimate.

   The useful lives of the main categories of property, plant and equipment are as follows:

   • Buildings and structures 3–50 years

   • Machinery and equipment 5–15 years

7. Goodwill

   Goodwill arising from business combinations is measured at cost less accumulated impairment losses.

   Goodwill is not amortized. It is allocated to a cash-generating unit or group of cash-generating units that are tested for impairment annually or whenever there is an indication of

   impairment. Impairment losses on goodwill are recognized in profit or loss, and are not reversed in a subsequent period.

   The measurement of goodwill on initial recognition is described in (2) Business combinations.

8. Intangible assets

   The Group applies the cost model to measure intangible assets.

   Intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.

   A separately acquired intangible asset is measured initially at cost. The cost of intangible assets acquired in a business combination is measured at its fair value at the acquisition date.

   Expenditures on internally generated intangible assets are recognized as expenses when they are incurred, except for development expenditure that satisfies the criteria for recognition as an intangible asset.

   Intangible assets with finite useful lives are amortized over their respective estimated useful lives using the straight-line method and tested for impairment whenever there is an indication of impairment.

   Estimated useful lives and amortization methods of intangible assets with finite useful lives are reviewed at the fiscal year-end, and any changes are accounted for as changes in accounting estimates prospectively.

   The estimated useful lives of the main categories of intangible assets are as follows:

   • Software 5-10 years

   • Trademark rights 6-20 years

   Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually and whenever there is an indication of impairment individually or as part of their respective cash-generating units.

9. Leases

   At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract transfers the right to control the use of an identified asset for a period of time in exchange for consideration.

   1. Leases as lessee

      The Group recognizes a right-of-use asset and a lease liability at the commencement date of the lease. At the commencement date, the right-of-use asset is measured at cost comprising the amount of the initial measurement of the lease liability adjusted for any initial direct costs, and costs to be incurred in restoration and other obligations required by the lease contract. After the commencement date, the right-of-use asset is measured by applying a cost model, and measures the cost less any accumulated depreciation and any accumulated impairment losses. The right-of-use asset is depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term, unless the Group is reasonably certain to acquire ownership of the leased asset at the end of the lease term. The Group determines the lease term as the non-cancellable period of the lease, together with periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option, and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option.

      At the commencement date, lease liability is measured at the present value of the lease payments that are not paid at that date. The lease payments shall be discounted using the lessee’s incremental borrowing rate. After the commencement date, the carrying amount of the lease liability is adjusted to reflect the interest on the lease liability and lease payments made. When a lease is modified, the lease liability is remeasured. Furthermore, for lease modifications that are not treated as a separate lease and that decrease the scope of the lease, the carrying amount of the right-of-use asset is decreased to reflect the partial or full termination of the lease, and any gain or

      loss relating to the termination is recognized in profit or loss. For all other lease modifications, the Group makes a corresponding adjustment to the right-of-use asset.

      The Group recognizes the lease payments associated with short-term leases or leases for which the underlying asset is of low value as an expense on a straight-line basis over the lease term.

   2. Leases as lessor

      The Group classifies leases into operating leases or finance leases. If the lease transfers substantially all the risks and rewards incidental to ownership of an underlying asset, it is classified as a finance lease; otherwise, it is classified as an operating lease. The Group assesses whether a lease is a finance lease or an operating lease depending on the substance of the transaction rather than the form of the contract.

      1. Finance leases

         At the commencement date, assets held under finance leases are presented as receivables at an amount equal to the net investment in the lease.

      2. Subleases

   Subleases are classified by the intermediate lessor with reference to the right-of-use asset that arises from the head lease.

10. Impairment of assets

    1. Impairment of non-financial assets

       The Group assesses whether there is any indication that assets may be impaired at the fiscal year-end. If any such indication is found and the asset requires an annual impairment test, the Group estimates the asset’s recoverable amount. The recoverable amount of an asset is estimated as the higher of fair value less disposal cost or value in use. If the recoverable amount of an individual asset cannot be determined, the recoverable amount of the cash-generating unit or group of cash-generating units to which the asset belongs is estimated. If the carrying amount of a cash-generating unit or group of cash-generating units exceeds its recoverable amount, impairment of the corresponding assets is recognized, and their value is written down to the recoverable amount. In determining the value in use, estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

       In principle, the business plans used to estimate future cash flows extend no longer than five years. Projections of cash flows beyond the period covered by the business plans are in principle measured using steady or declining growth rates.

       The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value less costs of disposal.

    2. Reversal of impairment losses

       The Company assesses whether there is any indication that impairment losses recognized in prior years for assets other than goodwill have decreased or are extinguished at the fiscal year-end. If there is an indication that an impairment loss has reversed, then the Group estimates the recoverable amount of the previously impaired asset, cash-generating unit or group of cash-generating units. If the recoverable amount exceeds the carrying amount of the asset, cash-generating unit or group of cash-generating units, impairment losses are reversed up to the lower of the recoverable amount or the book value less the accumulated depreciation that would have been recognized had no impairment loss been recognized in prior years. The reversal of impairment losses is recognized in profit or loss.

11. Post-retirement benefits

    The Group operates defined benefit plans and defined contribution plans as retirement plans for its employees.

    1. Defined benefit plans

       The Group measures the present value of its defined benefit obligations and the related current and prior service costs for each plan individually using the projected unit credit method.

       The rate used to discount post-employment benefit obligations is determined by reference to market yields at the fiscal year-end on high quality corporate bonds. The term of the corporate bonds are consistent with the estimated term of the post-employment benefit obligations.

       Assets and liabilities related to defined benefit plans are measured at the present value of the defined benefit obligation less the fair value of plan assets.

       Remeasurements of assets and liabilities related to defined benefit plans are recognized in their entirety in other comprehensive income for the period in which they arise and are immediately reflected in retained earnings.

       Prior service costs are recognized as expenses for the period in which they are incurred.

    2. Defined contribution plans

    Costs related to defined contribution plans are recognized as expenses in the period in which the contributions are made.

12. Provisions

    Provisions are recognized when the Group has a present obligation (legal or constructive) arising from past events, the settlement of which is expected to result in an outflow from the Group of resources embodying economic benefits, and a reliable estimate can be made of the amount of the obligation.

    Where the effect of the time value of money is material, the amount of a provision is measured at the present value of expenditures expected to be required to settle the obligation.

    Present value is calculated using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the liability.

13. Financial instruments

    1. Financial assets (excluding derivatives)

       1. Initial recognition and measurement

          The Group initially recognizes trade and other receivables on the date that they arise. The Group initially recognizes all other financial assets at the trade date on which the Group becomes a party to the relevant contract of such financial asset.

          Financial assets are classified as either (a) financial assets measured at fair value through profit or loss or other comprehensive income; or (b) financial assets measured at amortized cost. This classification is made upon initial recognition.

          Financial assets are classified as financial assets measured at amortized cost when both of the following conditions are met:

          • The financial asset is held based on a business model that has the objective of holding 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.

            Equity instruments are individually classified as either measured at fair value through profit or loss or measured at fair value through other comprehensive income, and this classification is continuously applied.

            Debt instruments that meet the following conditions are classified as financial assets measured at fair value through other comprehensive income, and those that do not meet the conditions are classified as financial assets measured at fair value through profit or loss.

          • The asset is held based on a business model business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

          • 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 are measured at fair value plus transaction costs that are directly attributable to the financial assets, except for financial assets measured at fair value through profit or loss.

       2. Subsequent measurement

          After their initial recognition, financial assets are measured using the following methods in accordance with the measurement category.

          1. Financial assets measured at amortized cost

             Assets in this category are measured at amortized cost using the effective interest method.

          2. Other financial assets

          Financial assets other than those measured at amortized cost are measured at fair value.

          Changes in the fair value of assets in this category are recognized either in profit of loss or in other comprehensive income.

          Changes in the fair value of equity instruments that are designated as measured at fair value through other comprehensive income are recognized in other comprehensive income. In cases where the Group derecognizes the assets or the fair value of the assets drops significantly, such changes are reclassified to retained earnings.

          Changes in the fair value of debt instruments that are classified as measured at fair value through other comprehensive income are recognized in other comprehensive income except for impairment gains or losses and foreign exchange gains or losses, until the financial asset is derecognized or reclassified. When these financial assets are derecognized, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss.

       3. Derecognition

          The Group derecognizes financial assets when the contractual rights to the cash flows from the financial assets expire or when the Group transfers the financial assets and substantially all the risks and rewards of ownership of the financial assets. When the Group retains control of the transferred financial assets, it recognizes assets and associated liabilities to the extent of its continuing involvement.

       4. Impairment

          At the fiscal year-end, the Group evaluates whether the credit risk of financial assets measured at amortized cost has increased significantly since initial recognition. If the risk has not increased significantly, the Group recognizes an allowance for doubtful accounts for that financial instrument at an amount equal to 12-month expected credit losses. If the credit risk on a financial instrument has increased significantly, the Group measures an allowance for doubtful accounts for that financial instrument at an amount equal to the lifetime expected credit losses. However, for trade receivables, the Group recognizes lifetime expected credit losses since initial recognition as an allowance for doubtful accounts.

          When determining whether credit risk has increased significantly, the Group refers to past due information and other reasonable and supportable information that is available without undue cost or effort, such as internal and external ratings.

          The Group measures the expected credit losses of financial instruments in a way that reflects the following factors.

          • An unbiased and probability-weighted amount determined by evaluating a range of possible outcomes

          • The time value of money

          • Reasonable and supportable information that is available without undue cost or

            effort at the reporting date about past events, current conditions and forecasts of future economic conditions

            Provisions to the allowance for doubtful accounts related to financial assets are recognized in profit or loss. When an event calls for a decrease in the allowance for doubtful accounts, reversals are recognized in profit or loss.

    2. Financial liabilities (excluding derivatives)

       1. Initial recognition and measurement

          Financial liabilities other than derivatives are classified as financial liabilities measured at amortized cost.

          The Group initially measures all financial liabilities at fair value, but financial liabilities measured at amortized cost are measured at fair value less transaction costs that are directly attributable to the financial liabilities.

       2. Subsequent measurement

          After initial recognition, financial liabilities measured at amortized cost are measured at amortized cost using the effective interest method. Amortization determined by the effective interest method and gains or losses due to derecognition are recognized in profit and loss.

       3. Derecognition

          Financial liabilities are derecognized when extinguished—ie when the obligation specified in the contract is discharged or cancelled or expire and exchanged with substantially different terms or the terms of an existing financial liability are substantially modified.

    3. Offsetting of financial instruments

       Financial assets and liabilities are offset and recorded on a net basis in the consolidated statement of financial position only when the Group currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis or to realize the financial assets and settle the financial liabilities simultaneously.

    4. Fair value of financial instruments

       The fair value of financial instruments traded in active markets as of the fiscal year-end is determined with reference to quoted market prices or dealer prices.

       If a market for a financial instrument is not active, the Group establishes fair value by using an appropriate valuation technique or reference to prices presented by counterparty financial institutions.

    5. Derivatives and hedge accounting

       The Group designates some derivative transactions as hedging instruments, which are accounted for as cash flow hedges.

       At the inception of the hedge there is formal designation and documentation of the hedging relationship and the Group’s risk management objective and strategy for undertaking the hedge.

       That documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Group will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk (including analysis of the sources of the ineffective portion and the method of determining the hedge ratio).

       The Group evaluates whether the derivative instruments used in hedge transactions are effective in offsetting changes in the fair value or cash flows of a hedged item, at the time when the hedging relationship is designated and thereafter on an ongoing basis.

       These derivatives are initially recognized at fair value at the inception of the contract, and remeasured at fair value thereafter. Subsequent changes in their value are accounted for as follows.

       1. Cash flow hedges

          The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in other comprehensive income, while the ineffective portion is recognized immediately in profit or loss.

          The associated gains or losses that were recognized in other comprehensive income are reclassified to profit or loss when the hedged forecast cash flows affect profit or loss.

          If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the Group removes the associated gains and losses that were recognized in other comprehensive income and includes them in the initial carrying amount of the asset or liability.

          If the forecast transaction is no longer expected to occur, any related cumulative gain or loss that has been recognized in other comprehensive income shall be reclassified from equity to profit or loss.

          When a hedging instrument expires, is sold, terminated or exercised without a replacement or rollover of the hedging instrument into another hedging instrument, or when hedge accounting is discontinued due to changes made for risk management purposes, the cumulative gain or loss that has been recognized in other comprehensive income remains separately in equity until the forecast transaction occurs.

       2. Derivatives not designated as hedging instruments

       Changes in fair value of these derivatives are recognized in profit or loss.

14. Stock-based compensation system

    1. Stock option system

       Stock options are measured at fair value estimated at the grant date and recognized in profit or loss over the vesting period, with an equal amount recognized as equity.

    2. Performance-linked stock-based compensation system

       Consideration for services received is estimated based on the fair value of the Company’s shares at the grant date and recognized in profit or loss over the vesting period, with an equal amount recognized as equity.

15. Revenue

    The Group applies the following steps to recognize revenue. Step 1: Identify the contract 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 the Group satisfies a performance obligation

    Revenue is recognized at a point in time or over a period of time when a performance obligation in a contract with a customer is satisfied. Revenues from the sale of goods in the course of normal business activities are recorded when said goods are delivered, as the performance obligation is satisfied upon the transfer of control of the goods to the customer. Specifically, at a point in time when the goods are provided to the customer, the legal title to and physical possession of the goods and the significant risks and rewards of ownership associated with the possession of the goods are transferred to the customer and the Group therefore recognizes the revenue at this point in time.

    The Group has in place a distribution system in which, in principle, products are delivered to customers on the day they are shipped, and there is no significant time lag between shipping and delivery.

    Revenue is measured at an amount that reflects the consideration to which the Group expects to be entitled in exchange for the transfer of the promised goods to the customer adjusted for discounts, rebates and product returns. The expected amount of refunds to customers is recorded as refund liabilities. The amount of refund liabilities is estimated using the most likely amount method based on contract terms and past transactions. Contract

    liabilities are recognized for advances received from the customer.

    Consideration for goods under sales contracts is mainly collected within one year of the transfer of control over said goods to the customer. This consideration includes no significant financing components.

    For performance obligations satisfied over time, the Group recognizes revenue by measuring progress toward complete satisfaction of the performance obligation.

16. Income taxes

    Current income taxes for the current period and prior periods are calculated at the amount expected to be paid to or recovered from the taxation authorities using the tax rates and tax laws that have been enacted or substantively enacted as of the fiscal year-end.

    Deferred taxes are recognized using the balance sheet liability approach (or ‘temporary difference approach’) where deferred tax liabilities and deferred tax assets are recognized for temporary differences between the carrying amount of an asset or liability and its tax base at the fiscal year-end.

    In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized for deductible temporary differences and tax loss carryforwards to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and tax loss carryforwards can be utilized.

    However, as exceptions to the above, the following temporary differences are not recorded as deferred tax assets or liabilities.

    • Temporary differences arising from the initial recognition of goodwill

    • Temporary differences arising from the initial recognition of assets and liabilities in transactions other than business combinations that affect neither the accounting profit/loss nor the taxable profit/loss, and that arise neither taxable temporary differences nor deductible temporary differences of the same amount at the time of transaction.

    • Deductible temporary differences associated with investments in subsidiaries and associates when it is probable that such differences will not reverse in the foreseeable future, or it is improbable that taxable profits against which the differences can be utilized will be earned

    • Taxable temporary differences associated with investments in subsidiaries and associates when the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future

    The carrying amounts of deferred tax assets and liabilities (including unrecognized deferred tax assets) are reviewed at the fiscal year-end.

    Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates that have been enacted or substantively enacted by the fiscal year-end.

    Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to set off a current tax asset against a current tax liability and the same taxation authority levies income taxes either on the same taxable entity or different entities that intend to realize the asset and settle the liability simultaneously.

    The Group has applied the temporary exception under IAS 12 “Income Taxes” as amended on May 23, 2023 and neither recognizes nor discloses deferred tax assets and liabilities related to income taxes arising from tax laws enacted or substantively enacted to implement the Pillar Two model rules published by the Organization for Economic Cooperation and Development (OECD).

17. Assets held for sale

    A non-current asset or disposal group whose carrying amount or fair value is expected to be recovered through sale and not continuing use are classified as assets held for sale, provided it is available for immediate sale in its present condition and the sale is highly probable, to be completed within one year. Assets held for sale are measured at the lower of the carrying amount and fair value less costs to sell, and depreciation of an asset ceases when it is held for sale.

18. Equity

    1. Share capital and capital surplus

       The issue price of equity instruments issued by the Company is recognized in share capital and capital surplus. Transaction costs directly attributable to the issue are deducted from capital surplus.

    2. Treasury stock

Share buybacks are recognized at cost and accounted for as a deduction from equity. In addition, transaction costs directly attributable to the buybacks are deducted from equity. Sale of treasury stock is recognized as an increase in equity to the extent of consideration received, and the difference between the consideration received and the carrying amounts are included in capital surplus.

1. Assessment of refund liabilities and sales-related provisions

   1. Amounts recorded in consolidated financial statements for the fiscal year under review Based on contracts with customers, the Company offers rebates and sales discounts. Trade and other payables of ¥114,139 million are recorded in the consolidated financial statements, which includes refund liabilities of ¥7,631 million to be paid to customers mainly in the form of discounts and rebates. Furthermore, provisions (current liabilities) of ¥2,724 million include sales-related provisions of ¥2,685 million.

   2. Other information to aid in understanding of estimates

      Refund liabilities and sales-related provisions are estimated using the most likely amount method based on contract terms and past transactions. If the estimated amount of sales ultimately differs from the actual amount due to unforeseeable events, it may materially affect the consolidated financial statements for the following fiscal year.

2. Allocation of acquisition cost in connection with the share acquisition of Merap Lion Holding Limited Liability Company

   1. Amounts recorded in consolidated financial statements for the fiscal year under review The Company made Merap Lion Holding Limited Liability Company a consolidated subsidiary during the fiscal year under review. As a result, it has recorded intangible assets of ¥11,284 million (including trademark rights of ¥5,124 million and other intangible assets of ¥6,160 million), etc., and goodwill of ¥17,908 million at the time of acquisition.

   2. Other Information to aid in understanding of estimates

      The share acquisition price is determined following negotiations, taking into account the share value calculated based on the discounted present value of future cash flows, with the business plan serving as the basis. Furthermore, the price is allocated to identifiable acquired assets and liabilities (Purchase Price Allocation, hereinafter “PPA”). Identifiable intangible assets are measured at the present value of the future cash flows they are expected to generate, as assets that will generate future economic benefits for the company. Goodwill is calculated as the difference between the acquisition cost and the amount allocated to identifiable assets and liabilities at the time of the share acquisition.

      These fair value measurement utilize external experts. Of the identifiable intangible assets, trademark rights are measured using the relief from royalty method and other intangible assets are measured using valuation methods appropriate to each nature. In the measurement of trademark rights, future sales projections, royalty rates, and discount rates are used as key assumptions. Although these assumptions are determined by the best estimates and judgment by management, they may be impacted by future unpredictable changes in the business environment and other factors, which, may materially affect the consolidated financial statements for the following fiscal year if these assumptions need to be reviewed.

3. Assessment of intangible assets with an indefinite useful life

   1. Amounts recorded in consolidated financial statements for the fiscal year under review Intangible assets recorded in the consolidated financial statements include trademark rights worth ¥6,560 million for brands such as BUFFERIN, an antipyretic analgesics, in the Asia/Oceania region (excluding China and certain other countries/territories).

   2. Other Information to aid in understanding of estimates

These trademark rights are classified as intangible assets with an indefinite useful life, and therefore are tested for impairment annually.

The pharmaceutical business is a single cash-generating unit, and the recoverable amount of this asset group is measured based on the value in use. Value in use is expected future cash flows, which are based on business plans approved by management, discounted to present value using a discount rate of 5.6%, which is based on the pretax weighted average cost of capital of the cash-generating unit. Projections of

future cash flow are based on the three-year business plans approved by management and those beyond the business plans are assumed using the terminal value, which is calculated using the growth rate of 2.0%. The business plans are based on past experience and external information, and are prepared to reflect management’s assessment of the future prospects for the businesses. Key assumptions used for the measurement of the value in use are sales projections included in the business plans, growth rates beyond the period of the future prospects for the businesses, and discount rates. The Group determines that the cash-generating unit has a low sensitivity to change even in the event of a reasonably possible change in a key assumption used in impairment testing.

1. Allowance for doubtful accounts directly deducted from assets

   Trade and other receivables ¥260 million

   Other financial assets ¥29 million

2. Accumulated depreciation of property, plant and equipment (including accumulated impairment losses)

   ¥254,821 million

3. Accumulated amortization of intangible assets (including accumulated impairment losses)

   ¥51,241 million

4. Guarantee obligations ¥614million

Guarantee obligations cover the borrowings of the guaranteed party.

Of the total, ¥187 million of the Company’s guarantee obligations are reassured by other parties.

1. Number of shares issued

   Share class	As of December 31, 2025
   Common stock	279,782,746 shares

2. Dividends

1. Dividends paid to shareholders

   Resolution	Share class	Total dividends (Millions of yen)	Dividend per share (Yen)	Record date	Effective date
   Board of Directors’ meeting February 13, 2025	Common stock	3,877	14.00	December 31, 2024	March 6, 2025
   Board of Directors’ meeting August 7, 2025	Common stock	4,159	15.00	June 30, 2025	September 2, 2025

   (Note) Total dividends resolved by the Board of Directors’ meeting on February 13, 2025 includes ¥8 million of dividends for the Company’s shares held in the executive compensation Board Incentive Plan (BIP) trust. Total dividends resolved by the Board of Directors’ meeting on August 7, 2025 includes ¥9 million of dividends for the Company’s shares held in the executive compensation BIP trust.

2. Dividends for which the record date is in the fiscal year under review, and the effective date is in the following fiscal year

(Note) Total dividends resolved by the Board of Directors’ meeting on February 12, 2026 includes ¥9 million of dividends for the Company’s shares held in the executive compensation BIP trust.

The Group comprises three reportable segments divided by product and service type and by region, which are in turn based on business divisions and companies: namely, Consumer Products Business, Industrial Products Business and Overseas Business. The reportable segments are components of the Group for which discrete financial information is available and that are regularly reviewed by the Board of Directors to make decisions about the allocation of management resources and assess their business performance. As such, the Group presents revenues earned from the reportable segments as well as businesses related to each business of the reportable segments as net sales. Net sales are classified by country/region based on customer location.

1. Disaggregation of revenue

   The relationship between the disaggregated sales and segment sales is as follows. Year ended December 31, 2025

   (Millions of yen)

   	Japan			Other	Total
   		Asia	Thailand
   Consumer Products	223,691	52	-	-	223,743
   Industrial Products	36,216	2,666	703	424	39,307
   Overseas	28	156,761	62,269	1,335	158,125
   Other	915	-	-	-	915
   Subtotal	260,851	159,480	62,972	1,759	422,092
   Adjustment	-	-	-	-	-
   Consolidated	260,851	159,480	62,972	1,759	422,092

   The Consumer Products Business engages in the manufacture, marketing and trading of commodities and over-the-counter drugs primarily in Japan chiefly for domestic customers including firms engaging in retailing and wholesaling and individuals.

   The Industrial Products Business engages in the manufacture, marketing and trading of chemical raw materials, industrial and commercial products and others primarily in Japan mainly for domestic customers including chemicals manufacturers, hotels, restaurants, hospitals, nursing care facilities, schools, government agencies, food processing plants, linen supply plants, and dry cleaners. The scope of such manufacture, marketing and trading operation extends to various overseas territories.

   The Overseas Business engages mainly in the manufacture, marketing and trading of commodities undertaken by our overseas subsidiaries and associates primarily for overseas customers including firms engaging retailing and wholesaling overseas.

   In the Other Business, the Company’s subsidiaries engage in construction contracting and other operations related primarily to the Group’s businesses in Japan.

   The Group’s performance obligation based on contracts with customers and the timing of revenue recognition thereabout in the Group’s major businesses are described in 5.

   Accounting Policies, (15) Revenue above.

2. Contract balances

   The major components of contract balances from contracts with customers are as follows.

   (Millions of yen)

   	As of December 31, 2025
   Receivables from contracts with customers Notes and accounts receivable - trade Contract assets	79,604 25
   Total	79,630
   Contract liabilities	690

   Revenue recognized in the fiscal year under review that was included in the contract liability balance at the beginning of the period is immaterial. Also, revenue recognized in the fiscal year under review from performance obligations satisfied (or partially satisfied) in previous periods is immaterial.

   In the consolidated statement of financial position, receivables and contract assets from contracts with customers are included in “Trade and other receivables,” whereas contract liabilities are included in “Trade and other payables.”

3. Transaction price allocated to the remaining performance obligations

The aggregate amount of the transaction price allocated to the unsatisfied performance obligations is as follows.

(Millions of yen)

The Group applies the practical expedient that allows an entity to omit disclosure of information on performance obligations with an original expected duration of one year or less. The Group recognizes revenue pertaining to the transaction price of construction contracts allocated to the remaining performance obligations as performance obligations are satisfied. For the fiscal year under review, the time frame the Company expects to recognize the total transaction price allocated to the remaining performance obligations as revenue is no more than two years.

1. Financial instruments

1. Capital management

   The Group uses return on equity (ROE) and return on invested capital (ROIC) as key metrics, under its basic policy of ensuring investment funds to sustain medium- to long-term growth and maintaining financial soundness.

   	Year ended December 31, 2025
   ROE	9.0%
   ROIC	6.7%

   ROIC is an indicator calculated from net operating profit after tax (NOPAT) divided by the average invested capital (total equity plus interest bearing liabilities) during the period, and measures the efficiency and profitability of the invested equity.

2. Credit risk

   Credit risk refers to the risk of the Group incurring financial losses as a result of the counterparty not being able to perform its obligation.

   Notes and accounts receivable - trade, which are trade receivables, are exposed to credit risk deriving from customers. Measures are taken against the risk such as rigid internal deliberation and approval processes over credit status of the customers at the time of initiating a new transaction, and securing guarantee money or collateral if necessary. The Group also performs due date and credit balance management for each customer, while endeavoring to ensure early detection and mitigation of default risk resulting from factors such as deteriorating financial condition.

   The Group enters into derivative transactions within the range of non-speculative operational demand in accordance with internal control standards, using financial institutions with superior credit ratings to minimize credit risk.

   In the event that these financial assets are deemed as default, including cases where the assets are still significantly past due, they are considered to be credit-impaired financial assets.

   In the event that all or part of the financial assets are evaluated as uncollectable and the Group considers it is appropriate to write off the assets based on the results of credit checks, the Group directly writes off the carrying amount of the financial assets.

   The maximum exposure to credit risk as of the fiscal year-end is the carrying amount in the consolidated statement of financial position.

3. Liquidity risk

   Liquidity risk refers to the risk of the Group not being able to fulfill obligations associated with financial liabilities such as trade payables and borrowings. The Group grasps liquidity on hand through preparing cash flow plans, and mitigates liquidity risk by ensuring cash on hand as required at all times through efficient fund management, such as intra-Group adjustment of any surplus funds generated at a subsidiary.

4. Foreign exchange risk

   The Group engages in business activities worldwide, and therefore its transactions denominated in foreign currencies are exposed to foreign exchange risk. The Group mitigates the impact of such risks on its earnings by carrying out foreign currency denominated transactions settled in foreign currency accounts and using derivatives including forward exchange contracts.

5. Interest rate risk

While the Group’s interest-bearing liabilities using variable interest rates are exposed to interest rate risk, the impact of interest payments on the Group is immaterial as the Group