Nitori Holdings Co. Ltd.TSE: 9843

Consolidated Financial Statements

Aug 20, 2025 at 7:26 AM UTC · MarketScreener

Section 5 Financial Information

Basis for Preparation of Consolidated and Non-consolidated Financial Statements
1. The consolidated financial statements of Nitori Holdings Co., Ltd. (hereinafter the "Company) are prepared in accordance with the International Financial Reporting Standards (hereinafter "IFRS" or "IFRS Accounting Standards") pursuant to the provisions of Article 312 of the Regulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements (Ministry of Finance Order No. 28 of 1976; hereinafter the "Regulation on Consolidated Financial Statements").
2. The non-financial statements of the Company are prepared based on the Regulation on Terminology, Forms, and Preparation Methods of Financial Statements (Ministry of Finance Order No. 59 of 1963; hereinafter the "Regulation on Financial Statements").
  In addition, the Company is a special company submitting financial statements and prepares non-consolidated financial statements pursuant to the provisions of Article 127 of the Regulation on Financial Statements.
Audit Certificate
The Company has undergone an audit by Deloitte Touche Tohmatsu LLC for its consolidated and non-consolidated financial statements for the fiscal year (from April 1, 2024 to March 31, 2025), based on the provisions of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act.
Special Efforts to Ensure the Appropriateness of Consolidated Financial Statements, etc., and Establishment of a System to Properly Prepare Consolidated Financial Statements, etc., under IFRS
The Company has made special efforts to ensure the appropriateness of its consolidated financial statements, etc., and has established a system to properly prepare consolidated financial statements, etc., under IFRS. The details are as follows:
1. To appropriately understand the details of the accounting standards, etc., and to establish a system that can accurately respond to changes in the accounting standards, etc., the Company has assigned employees with sufficient knowledge of IFRS Accounting Standards, joined the Financial Accounting Standards Foundation, and obtains information on accounting standards, etc. The Company also participates in training sessions sponsored by audit firms and others.
2. Regarding the application of IFRS Accounting Standards, the Company obtains press releases and standards published by the International Accounting Standards Board as needed to keep abreast of the latest standards. In addition, to prepare appropriate consolidated financial statements under IFRS, the Company has prepared group accounting policies and accounting guidelines in accordance with IFRS Accounting Standards and performs accounting treatment based on these.

Consolidated Financial Statements, etc.

Consolidated Financial Statements

Consolidated statement of financial position

Note As of April 1, 2023

(Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Assets

Current assets

Cash and cash equivalents	6	123,881		117,978		136,001
Trade and other receivables	7	66,700		91,152		80,515
Other financial assets	8, 34, 35	12,773		23,733		25,515
Inventories	9	117,456		105,500		112,750
Income taxes receivable		59		-		19
Other current assets	10	11,137		7,528		9,888
Total current assets		332,009		345,893		364,690
Non-current assets Property, plant and equipment	11,13,16	756,182	814,087		905,121
Intangible assets	12	7,105	7,693		9,324
Investment property	14	82,404	96,189		96,051
Investments accounted for using equity method	15	22,291	22,979		24,772
Other financial assets	8, 34, 35	74,367		77,304		79,151
Deferred tax assets	17	42,338		45,239		48,870
Retirement benefit asset	21	363		38		15
Other non-current assets	10	2,295		1,866		1,423
Total non-current assets		987,349		1,065,398		1,164,730
Total assets		1,319,358		1,411,292		1,529,421

Liabilities and equity Liabilities

Current liabilities

Notes As of April 1, 2023

(Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Trade and other payables	18	71,365		100,784		75,459
Borrowings	19	83,068		107,557		173,138
Other financial liabilities	20, 34, 35	39,341		36,077		36,218
Income taxes payable	17	26,052		18,177		19,954
Contract liabilities	26	23,818		29,223		30,506
Provisions	22	814		502		720
Other current liabilities	23	18,856		22,257		17,666
Total current liabilities		263,317		314,581		353,664
Non-current liabilities
Borrowings	19	57,330		30,000		20,000
Other financial liabilities	20, 34, 35	219,013		203,066		220,476
Deferred tax liabilities	17	132		370		86
Retirement benefit liability	21	6,645		6,446		6,421
Provisions	22	14,818		14,803		22,172
Other non-current liabilities	23	1,263		1,319		862
Total non-current liabilities		299,204		256,005		270,019
Total liabilities		562,521		570,587		623,684
Equity Share capital	24	13,370	13,370		13,370
Capital surplus	24	30,711	30,715		30,715
Treasury shares	24	(10,111)	(10,113)		(10,118)
Retained earnings	24	722,408	795,584		861,634
Other components of equity	24	458	11,143		10,127
Total equity attributable to owners		756,837		840,700		905,729
of parent
Non-controlling interests		-		4		6
Total equity		756,837		840,704		905,736
Total liabilities and equity		1,319,358		1,411,292		1,529,421

Consolidated statement of profit or loss

(Millions of yen, unless otherwise stated)

Notes For the fiscal year ended

March 31, 2024

For the fiscal year ended March 31, 2025

Revenue	5, 13, 26	896,667		928,828
Cost of sales	27	439,264		454,904
Gross profit		457,403		473,923
Selling, general and administrative expenses	27	322,760		348,576
Other income	28	4,108		4,051
Other expenses	16,28	16,554		14,998
Share of profit of investments accounted for using equity method	15	2,078		3,265
Operating profit		124,274		117,665
Finance income	29	3,057		3,019
Finance costs	29	2,492		3,236
Profit before tax		124,838		117,448
Income tax expense	17	34,680		34,899
Profit		90,158		82,548
Profit attributable to:
Owners of parent		90,158		82,546
Non-controlling interests		-		2
Profit		90,158		82,548
Earnings per share
Basic earnings per share (Yen)	31	797.78	730.42
Diluted earnings per share (Yen)	31	797.78	730.42

Consolidated statement of comprehensive income

Notes For the fiscal year ended

March 31, 2024

(Millions of yen) For the fiscal year ended

March 31, 2025

Profit 90,158 82,548

Other comprehensive income

Items that will not be reclassified to profit or loss

Financial assets measured at fair value through other comprehensive income

30 2,979 2,252

Remeasurements of defined benefit plans 30 (255) 229

Total of items that will not be reclassified to profit or loss

2,723 2,482

Items that may be reclassified to profit or loss

30	6,364	(2,098)
30	(17)	(999)
	6,347	(3,097)
	9,071	(614)
	99,229	81,933

Exchange differences on translation of foreign operations

Cash flow hedges

Total of items that may be reclassified to profit or loss

Total other comprehensive income Comprehensive income

Comprehensive income attributable to:
Owners of parent	99,229	81,930
Non-controlling interests	0	2
Comprehensive income	99,229	81,933

(Note) The items in the above statement are presented after tax.

Income taxes related to each component of other comprehensive income are disclosed in Note "30. Other Comprehensive Income."

Consolidated statement of changes in equity
Equity attributable to owners of parent
(Millions of yen)
Other components of equity Financial
Notes Share capital
Capital surplus
Treasury shares
Retained earnings
Remeasurements of defined benefit plans
assets
measured at fair value through other comprehen-
Exchange
differences on translation of foreign operations
sive income
Balance at April 1, 2023 13,370 30,711 (10,111) 722,408 - 1,798 -Profit - - - 90,158 - - -
Other comprehensive
30 - - - - (255) 2,979 6,364
income
Comprehensive income - - - 90,158 (255) 2,979 6,364
Purchase of treasury 24 - - (2) - - - -shares
Disposal of treasury 24 - 3 0 - - - -shares
Dividends 25 - - - (16,725) - - -Transfer from other
components of equity
to retained earnings
Transfer to hedged
- - - (256) 255 0 -
non-financial assets - - - - - - -
Other - - - - - - -
Total transactions with
- 3 (1) (16,982) 255 0 -
owners
Balance at March 31, 2024 13,370 30,715 (10,113) 795,584 - 4,778 6,364
Profit - - - 82,546 - - -
Other comprehensive
30 - - - - 229 2,252 (2,098)
income
Comprehensive income - - - 82,546 229 2,252 (2,098)
Purchase of treasury 24 - - (5) - - - -shares
Disposal of treasury 24 - 0 0 - - - -shares
Dividends 25 - - - (16,725) - - -Transfer from other
components of equity
to retained earnings
Transfer to hedged
- - - 229 (229) - -
non-financial assets - - - - - - -
Total transactions with
- 0 (5) (16,495) (229) - -
owners
Balance at March 31, 2025 13,370 30,715 (10,118) 861,634 - 7,031 4,266
Equity attributable to owners of parent Other components of equity
Share of
other comprehen-
Non-
(Millions of yen)
Notes
Cash flow hedges
sive income of investments accounted for using equity
Total
Total
controlling interests
Total equity
method
Balance at April 1, 2023 (1,340) - 458 756,837 - 756,837 Profit - - - 90,158 - 90,158
Other comprehensive
30 (17) - 9,071 9,071 0 9,071
income
Comprehensive income (17) - 9,071 99,229 0 99,229
Purchase of treasury 24 - - - (2) - (2) shares
Disposal of treasury 24 - - - 4 - 4
shares
Dividends 25 - - - (16,725) - (16,725)
Transfer from other
components of equity to retained earnings
Transfer to hedged
- - 256 - - -
non-financial assets 1,357 - 1,357 1,357 - 1,357 Other - - - - 4 4
Total transactions with
1,357 - 1,613 (15,366) 4 (15,361)
owners
Balance at March 31, 2024 - - 11,143 840,700 4 840,704
Profit - - - 82,546 2 82,548
Other comprehensive
30 (999) - (615) (615) 0 (614)
income
Comprehensive income (999) - (615) 81,930 2 81,933
Purchase of treasury 24 - - - (5) - (5) shares
Disposal of treasury 24 - - - 0 - 0
shares
Dividends 25 - - - (16,725) - (16,725)
Transfer from other
components of equity to retained earnings
Transfer to hedged
- - (229) - - -
non-financial assets (170) - (170) (170) - (170)
Total transactions with
(170) - (400) (16,901) - (16,901)
owners
Balance at March 31, 2025 (1,169) - 10,127 905,729 6 905,736

Consolidated statement of cash flows

Notes For the fiscal year ended

March 31, 2024

(Millions of yen) For the fiscal year ended

March 31, 2025

Net cash provided by (used in) operating activities
Profit before tax		124,838	117,448
Depreciation and amortization		61,082	66,143
Impairment losses	16	16,309	13,994
Interest and dividend income		(2,169)	(2,104)
Interest expenses		2,463	3,234

Share of loss (profit) of investments accounted for using equity method	(2,078)	(3,265)
Loss (gain) on sale of property, plant and	(1,842)	(95)
Decrease (increase) in trade and other	(23,891)	10,205
receivables
Decrease (increase) in inventories	12,941		(7,095)
Increase (decrease) in trade and other payables	18,385		(4,423)
Increase (decrease) in contract liabilities	5,312		1,269
Other	16,099		(13,016)
Subtotal	227,451		182,293
Dividends received	1,910		2,024
Interest received	1,766		1,471
Interest paid	(2,502)		(3,119)
Income taxes paid	(48,109)		(38,619)
Income taxes refund	647		334

equipment

Net cash provided by (used in) operating activities

181,164 144,384

Net cash provided by (used in) investing activities

Payments into time deposits	(23,147)	(58,264)
Proceeds from withdrawal of time deposits	13,320	55,512

Purchase of property, plant and equipment, and (124,056) (121,432) investment property

Proceeds from sale of property, plant and 3,263 324

equipment, and investment property

Purchase of intangible assets (3,284) (3,876)

Purchase of securities - (42)

Proceeds from sale of securities 2 -

Payments of leasehold and guarantee deposits (1,921) (2,276)

Proceeds from refund of leasehold and guarantee deposits

Proceeds from deposits and guarantee deposits received

2,453 2,773

436 899

Repayments of deposits received and refund of guarantee deposits received Purchase of long-term prepaid expenses	(350) (72)	(599) (106)
Payments for loans receivable	(0)	-
Collection of loans receivable	248	114
Other	-	(883)

Net cash provided by (used in) investing activities

(133,107) (127,856)

Notes For the fiscal year ended

March 31, 2024

(Millions of yen)

For the fiscal year ended March 31, 2025

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term	32	40,222		82,665
borrowings
Repayments of long-term borrowings	32	(43,068)	(27,330)
Repayments of lease liabilities	32	(35,816)	(37,319)
Purchase of treasury shares		(2)	(5)
Dividends paid	25	(16,713)	(16,715)

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

(55,378) 1,295

1,419 199

Net increase (decrease) in cash and cash equivalents		(5,902)	18,022
Cash and cash equivalents at beginning of period	6	123,881	117,978
Cash and cash equivalents at end of period	6	117,978	136,001

Notes on Consolidated Financial Statements

Reporting Entity
Nitori Holdings Co., Ltd. (hereinafter "the Company") is a company located in Japan. The address of its registered head office and principal places of business is disclosed on the Company's website (https://www.nitorihd.co.jp/).
The consolidated financial statements of the Company and its subsidiaries (hereinafter collectively "the Group") are composed of the Group and its interests in associates as of March 31, 2025, the fiscal year-end.
The Group's main businesses are divided into the NITORI Business and the SHIMACHU Business. Details of each business are described in Note "5. Segment Information."
Basis of Preparation
1. Statement of compliance with IFRS Accounting Standards and matters concerning first-time adoption
  As the Group meets the requirements of a Specified Company Complying with Designated International Accounting Standards under Article 1-2 of the Regulation on Consolidated Financial Statements, the Group's consolidated financial statements are prepared in accordance with IFRS Accounting Standards pursuant to Article 312 of the said Regulation. The Group first adopted IFRS Accounting Standards for the fiscal year ended March 31, 2025, with the date of transition to IFRS Accounting Standards (hereinafter the "transition date") being April 1, 2023.
  The impact of the transition to IFRS Accounting Standards on the Group's financial position, operating results, and cash flows at the transition date and in the comparative period is described in Note "41. First-time Adoption."
  With the exception of IFRS Accounting Standards that have not been early adopted and mandatory exceptions and optional exemptions under IFRS 1 First-time Adoption of International Financial Reporting Standards (hereinafter "IFRS 1"), the Group's accounting policies comply with IFRS Accounting Standards effective as of March 31, 2025.
  These consolidated financial statements were approved by Akio Nitori, Chairman and Chief Executive Officer, on June 24, 2025.
2. Basis of measurement
  The Group's consolidated financial statements have been prepared on a historical cost basis, with the exception of certain assets, liabilities, and financial instruments measured at fair value, as described in Note "3. Material Accounting Policies."
3. Functional and presentation currency
  The Group's consolidated financial statements are presented in Japanese yen, which is the Company's functional currency, with amounts rounded down to the nearest million yen.
4. New standards and interpretations issued but not yet adopted
Among the new standards and interpretations issued or amended by the approval date of the consolidated financial statements, the main ones that the Group has not early adopted in the fiscal year ended March 31, 2025 (hereinafter the "current fiscal year") are as follows. The impact on the Group from the application of new IFRS Accounting Standards is under review and cannot be estimated at this time. The impact of the application of IFRS 19 on the Company's consolidated financial statements is judged not to be material.
IFRS Accounting Standards
Mandatory effective date (Fiscal year beginning on or
The Group's first year of application
Summary of new standards and amendments
after)
IFRS 9
IFRS 7
Financial InstrumentsFin ancial Instruments: Disclosures
January 1, 2026 Fiscal year ending
March 31, 2027
Amendments to standards for classification and measurement of financial instruments
(IFRS 9 and IFRS 7)
- Clarification of classification of financial assets containing environmental, social and corporate governance (ESG) elements and similar elements
- Derecognition of financial liabilities settled through electronic payment systems
- Disclosures related to investments in equity instruments elected to be measured at fair value through other comprehensive income
  IFRS 18 Presentation
  and Disclosure in Financial Statements
  IFRS 19 Subsidiaries
  without Public Accountability: Disclosures
  January 1, 2027 Fiscal year ending
  March 31, 2028
  January 1, 2027 Fiscal year ending
  March 31, 2028
  New standard to replace IAS 1 Presentation of Financial Statements, the current accounting standard for presentation and disclosure in financial statements
- Permits eligible subsidiaries to apply reduced IFRS disclosure requirements
Significant Accounting Policies
1. Basis of consolidation
  1. Subsidiaries
    Subsidiaries are entities controlled by the Group.
    The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
    The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control is obtained until the date on which control is lost.
    When the accounting policies adopted by a subsidiary differ from those adopted by the Group, adjustments are made to the subsidiary's financial statements as necessary. When a subsidiary's fiscal year-end differs from that of the Company, the subsidiary's financial figures based on provisional closing as of the fiscal year-end are used.
    Intragroup balances and transactions, and unrealized gains and losses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements.
    Changes in the Group's ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
    When the Group loses control of a subsidiary, the assets and liabilities of the subsidiary and the non-controlling interests related to the subsidiary are derecognized, and any retained interest that continues to be held after the loss of control is remeasured at its fair value at the date when control is lost, with any resulting gain or loss recognized in profit or loss.
  2. Associates
    Associates are entities over which the Group has significant influence over the financial and operating policies, but not control or joint control.
    The Group is presumed to have significant influence over another entity when the Group holds 20% or more but 50% or less of the voting rights of the other entity.
    Investments in associates are accounted for using the equity method from the date on which the Group obtains significant influence until the date on which the Group loses significant influence. The fiscal year-end of associates coincides with that of the Company. When the accounting policies adopted by an associate differ from those of the Group, adjustments are made to the financial statements of the associate as necessary.
    Under the equity method, investments are initially measured at cost and subsequently adjusted to reflect the Group's share of the post-acquisition changes in the associate's net assets. The Group's share of the associate's profit or loss is recognized in the Group's profit or loss. The Group's share of the associate's other comprehensive income is recognized in the Group's other comprehensive income. Profits from significant internal transactions are eliminated in proportion to the Group's ownership interest in the associate.
    Goodwill arising from the acquisition of interests in associates is included in the carrying amount of the investment and is tested
    for impairment on the investment accounted for using the equity method as a whole. When there is an indication that an investment may be impaired, an impairment test is performed by comparing the carrying amount of the entire investment with its recoverable amount (the higher of value in use and fair value less costs of disposal). Reversals of such impairment losses are recognized to the extent that the recoverable amount of the investment subsequently increases.
  3. Structured entities
    Structured entities are entities that have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Structured entities that the Group controls and consolidates include share-based payment trusts established under the share-based payment trust system for officers and employees.
2. Business combinations
  Business combinations are accounted for using the acquisition method. The consideration transferred is measured as the aggregate of the fair values at the acquisition date of assets transferred, liabilities assumed and equity instruments issued by the Company in exchange for control of the acquiree. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are initially measured, in principle, at their fair values at the acquisition date.
  Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree over the net amount of the identifiable assets and liabilities at the acquisition date. If this difference is negative, it is immediately recognized in profit or loss.
  Transaction costs incurred in connection with a business combination, such as intermediary fees, legal fees, and due diligence costs, are expensed as incurred.
  If the initial accounting for a business combination is incomplete by the end of the fiscal year in which the business combination occurs, the items for which the accounting is incomplete are reported at provisional amounts. If information is obtained during the measurement period that would have affected the measurement of amounts recognized as of the acquisition date had it been known at that time, the provisional amounts recognized at the acquisition date are adjusted retrospectively. When new information results in the recognition of additional assets and liabilities, the additional assets and liabilities are recognized. The measurement period is a maximum of one year.
3. Foreign currency translation
  1. Foreign currency transactions
    The financial statements of each Group company are prepared in the functional currency, which is the currency of the primary economic environment in which the entity operates.
    Foreign currency transactions are translated into the functional currency of each Group company at the exchange rate prevailing on the transaction date or at a rate that approximates it. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated into the functional currency at the exchange rate prevailing at the end of the reporting period.
    Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at the exchange rate prevailing on the date when the fair value was determined. Exchange differences arising from such translation or settlement are recognized in profit or loss. However, exchange differences arising from equity financial assets measured through other comprehensive income and cash flow hedges are recognized in other comprehensive income.
  2. Foreign operations
    Assets and liabilities of foreign operations (including goodwill and fair value adjustments arising from acquisition) are translated at the closing rate, and income and expenses are translated at exchange rates approximating those at the transaction dates, with exchange differences on translation of foreign operations recognized in other comprehensive income.
    Upon disposal of a foreign operation, the exchange differences on translation of the foreign operation that were recognized in other comprehensive income and accumulated in equity are reclassified from equity to profit or loss when the gain or loss on disposal is recognized.
4. Financial instruments
  1. Non-derivative financial assets
    1. Initial recognition and measurement
      The Group initially recognizes financial assets when it becomes a party to the contract and classifies them as either: (a) financial assets measured at amortized cost, (b) debt financial assets measured at fair value through other comprehensive income, (c) equity financial assets measured at fair value through other comprehensive income, or (d) financial assets measured at fair value through profit or loss. This classification is determined at initial recognition.
      At initial recognition, all financial assets are measured at fair value plus, in the case of a financial asset not classified as measured at fair value through profit or loss, transaction costs directly attributable to the acquisition of the financial asset. Transaction costs related to financial assets measured at fair value through profit or loss are recognized in profit or loss.
      1. Financial assets measured at amortized cost
        Assets that meet both of the following conditions are classified as financial assets measured at amortized cost.
        The financial asset is held within a business model whose objective is to hold 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.
      2. Debt financial assets measured at fair value through other comprehensive income
        Debt financial assets are classified as financial assets measured at fair value through other comprehensive income when both of the following conditions are met:
        The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
        The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
      3. Equity financial assets measured at fair value through other comprehensive income
        Equity financial assets such as shares held primarily for the purpose of maintaining or strengthening business relationships with investees and enhancing corporate value are designated at initial recognition as financial assets measured at fair value through other comprehensive income, and this designation is applied consistently.
      4. Financial assets measured at fair value Through Profit or Loss
        Financial assets other than those in (a), (b), and (c) above are classified as financial assets measured at fair value through profit or loss.
    2. Subsequent measurement
      Financial assets are subsequently measured after initial recognition according to their classification as follows:
      1. Financial assets measured at amortized cost
        Financial assets measured at amortized cost are measured at the gross carrying amount determined using the effective interest method, less any loss allowance.
      2. Debt financial assets measured at fair value through other comprehensive income
        After initial recognition, they are measured at fair value. Among the subsequent changes, foreign exchange gains and losses, impairment gains or losses, and interest income based on the effective interest method are recognized in profit or loss, while other changes are recognized in other comprehensive income. When derecognized, the cumulative amount of gains or losses recognized through other comprehensive income is reclassified from other components of equity to profit or loss as a reclassification adjustment.
      3. Equity financial assets measured at fair value through other comprehensive income
        Subsequent changes in the fair value of equity financial assets such as shares are recognized in other comprehensive income. When such financial assets are disposed of, the cumulative amount of gains or losses recognized through other comprehensive income is transferred from other components of equity to retained earnings.
        Note that dividends from such financial assets are recognized as profit or loss for the period and included in "Finance income."
      4. Financial assets measured at fair value through profit or loss
        Subsequent changes in the fair value of the relevant financial assets are recognized in profit or loss.
    3. Impairment of Financial Assets
      Loss allowances are recognized for expected credit losses on financial assets measured at amortized cost.
      Loss allowances are measured based on an assessment of whether the credit risk on the financial asset has increased significantly since initial recognition at each reporting date.
      If the credit risk on a financial asset has not increased significantly since initial recognition, the loss allowance for that financial asset is measured at an amount equal to 12-month expected credit losses. On the other hand, if the credit risk on a financial asset has increased significantly since initial recognition, the loss allowance for that financial asset is measured at an amount equal to lifetime expected credit losses. Whether the credit risk on a financial asset has increased significantly since initial recognition is determined by comparing the risk of default at initial recognition with the risk of default at each quarter-end. This takes into consideration available reasonable and supportable forward-looking information, including information on past due status.
      A default is deemed to have occurred when events that adversely affect the estimated cash flows of a financial asset arise, such as significant financial difficulty of the issuer or borrower, or contractual payments being more than 90 days past due.
      When a default is identified, it is determined that objective evidence of credit impairment exists and the asset is classified as a credit-impaired financial asset.
      However, for trade and other receivables, the loss allowance is always measured at an amount equal to lifetime expected credit losses.
      Expected credit losses on financial instruments are estimated using methods that reflect historical credit loss experience. The amount of such measurement is recognized in profit or loss. When a bad debt is legally confirmed, the expected credit loss is written off directly from the carrying amount. If an event occurs after the recognition of an impairment loss that reduces the impairment loss, the decrease in the impairment loss is reversed through profit or loss.
    4. Derecognition of financial assets
      The Group derecognizes a financial asset when the contractual rights to the cash flows expire, or when it transfers the contractual rights to receive the cash flows of the financial asset and substantially all the risks and rewards of ownership of the financial asset have been transferred. If the Group retains control of the transferred financial asset, it recognizes the asset and associated liability to the extent of its continuing involvement.
  2. Non-derivative financial liabilities
    1. Initial recognition and measurement
      The Group classifies financial liabilities as either: (a) financial liabilities measured at amortized cost or (b) financial liabilities measured at fair value through profit or loss. This classification is determined at initial recognition.
      Financial liabilities measured at amortized cost are measured at fair value, less transaction costs directly attributable to the liability, while financial liabilities measured at fair value through profit or loss are initially measured at fair value.
    2. Subsequent measurement
      Financial liabilities are subsequently measured after initial recognition according to their classification as follows:
      1. Financial liabilities measured at amortized cost
        Financial liabilities measured at amortized cost are measured at amortized cost using the effective interest method.
        Amortization using the effective interest method and gains and losses when derecognized are recognized as part of finance costs in profit or loss for the period.
      2. Financial liabilities measured at fair value through profit or loss
        Financial liabilities measured at fair value through profit or loss are measured at fair value, and subsequent changes are recognized in profit or loss for the period.
    3. Derecognition of financial liabilities
      The Group derecognizes a financial liability when it is extinguished, i.e., when the obligation specified in the contract is discharged, cancelled, or expires.
  3. Hedge accounting and derivatives
    1. Qualifying hedging instruments and hedged items
      The Company engages in foreign exchange forward contracts as derivative transactions for the purpose of managing foreign exchange risk. At the inception of the hedge, the relationship between hedging instruments and hedged items, as well as the risk management objective and strategy, are documented. In addition, the Company continuously evaluates whether the hedging instrument is expected to be highly effective in offsetting changes in cash flows of the related hedged item during the hedged period. When a hedging relationship no longer meets the hedge effectiveness requirements relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the hedge ratio of the hedging relationship is adjusted so that it meets the qualifying criteria again, and hedge accounting is discontinued prospectively only when the hedging relationship no longer meets the qualifying criteria.
      Derivatives to which hedge accounting is not applied are classified as "financial assets measured at fair value through profit or loss" or "financial liabilities measured at fair value through profit or loss" and are accounted for based on such classification.
    2. Cash flow hedges
    For cash flow hedges, the effective portion of gains or losses on the hedging instrument is recognized in other comprehensive income as cash flow hedges, and the cumulative amount is included in other components of equity. The ineffective portion of gains or losses is recognized immediately in profit or loss.
    Amounts accumulated in other components of equity are reclassified from other components of equity to profit or loss as reclassification adjustments in the same period when the hedged item affects profit or loss. However, when the hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, the amount accumulated in other components of equity is treated as an adjustment to the initial carrying amount of the non-financial asset or non-financial liability.
5. Cash and cash equivalents
  Cash and cash equivalents comprise cash on hand, demand deposits, and short-term investments that are readily convertible to cash, subject to insignificant risk of changes in value, and have maturities of three months or less from the date of acquisition.
6. Inventories
  Inventories are measured at the lower of cost and net realizable value. 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. Inventories include purchase costs, conversion costs, and all other costs incurred in bringing the inventories to their present location and condition. The cost of inventories and work in process manufactured by the Group includes an allocation of manufacturing overheads based on the normal operating capacity. In determining cost, inventories are measured primarily using the weighted average method.
7. Property, plant and equipment
  Property, plant and equipment are measured using the cost model and are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to the acquisition of the asset, dismantling and removal costs, land restoration costs, and borrowing costs required to be capitalized.
  When the useful lives of major components of an item of property, plant and equipment differ, each major component is accounted for separately as a distinct item of property, plant and equipment.
  Subsequent expenditures are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed as incurred.
  Property, plant and equipment are derecognized upon disposal or when no future economic benefits are expected from their use or disposal. Gains or losses arising from the derecognition of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized. The Group recognizes gains or losses arising from the derecognition of property, plant and equipment in "Other income" or "Other expenses" in the consolidated statement of profit or loss.
  Depreciation of each asset other than land and construction in progress is calculated primarily using the straight-line method over the estimated useful lives.
  The estimated useful lives of major asset categories are as follows:
  Buildings and structures 5-47 years
  
  Machinery and vehicles 4-12 years
  
  Tools, furniture and fixtures 2-10 years
  
  The residual values, useful lives and depreciation methods of property, plant and equipment are reviewed at the end of each fiscal year, and any changes are applied prospectively as changes in accounting estimates.
8. Goodwill and intangible assets
  1. Goodwill
    Goodwill arising from the acquisition of subsidiaries is stated in the consolidated statement of financial position at cost less accumulated impairment losses.
    Goodwill is measured as the excess amount when the consideration transferred exceeds the net amount of identifiable assets and liabilities at the acquisition date. If this difference is negative, it is immediately recognized in profit or loss.
    Goodwill is not amortized and is tested for impairment annually at the same time each year or whenever there is an indication of impairment. Impairment losses on goodwill are recognized in the consolidated statement of profit or loss and are not subsequently reversed.
  2. Intangible assets
    Intangible assets are measured using the cost model and stated at cost less accumulated amortization and accumulated impairment losses.
    Intangible assets acquired separately are measured at cost on initial recognition, and intangible assets recognized from business combinations are initially recognized at fair value at the acquisition date. The cost of intangible assets acquired in business combinations is measured at fair value as of the acquisition date. Internally generated intangible assets are recognized as assets only when they meet the criteria for capitalization, with all other expenditures being expensed when incurred.
    Intangible assets are derecognized upon disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of intangible assets are calculated as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in profit or loss upon derecognition. The Group recognizes gains or losses arising from the derecognition of property, plant and equipment in "Other income" or "Other expenses" in the consolidated statement of profit or loss.
    Intangible assets with finite useful lives are amortized using the straight-line method over the useful life of the asset and tested for impairment whenever there is an indication of impairment. Amortization commences when the asset becomes available for use.
    The estimated useful lives of major intangible assets are as follows:
    Software 5 years
    
    The useful lives and amortization methods of intangible assets with finite useful lives are reviewed at the end of each fiscal year, and any changes are applied prospectively as changes in accounting estimates.
    Intangible assets with indefinite useful lives and intangible assets not yet available for use are not amortized but are tested for impairment annually or whenever there is an indication of impairment.
9. Leases
  The Group determines at contract inception whether a contract is or contains a lease. A contract is or contains a lease if the contract conveys 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 right-of-use assets and lease liabilities at the commencement date of the lease. Right-of-use assets are measured at cost at the commencement date, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
    Right-of-use assets are depreciated using the straight-line method over the shorter of their useful life or the lease term, and are measured at cost less accumulated depreciation and accumulated impairment losses. The lease term is determined as the non-cancellable period of a lease, adjusted for any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease if it is reasonably certain not to be exercised.
    Lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date. The present value is calculated using the interest rate implicit in the lease if that rate can be readily determined; otherwise, the lessee's incremental borrowing rate is used. After the commencement date, the carrying amount of lease liabilities is adjusted to reflect interest on the lease liability and lease payments made. When a lease is reassessed or the lease terms are modified, the lease liability is remeasured, and the right-of-use asset is adjusted accordingly.
    The Group applies IFRS 16 Leases paragraph 6 to short-term leases and leases of low-value assets, recognizing lease payments as an expense on a straight-line basis over the lease term. In addition, as a practical expedient, the Group has elected not to separate non-lease components from lease components and to account for lease components and related non-lease components as a single lease component.
  2. Leases as lessor
    Leases are classified as either operating leases or finance leases. When substantially all the risks and rewards incidental to ownership of the underlying asset are transferred, the lease is classified as a finance lease; when substantially all the risks and rewards incidental to ownership of the underlying asset are not transferred, the lease is classified as an operating lease. Whether a lease is a finance lease or an operating lease is determined based on the substance of the transaction rather than the form of the contract.
    When the Group is a party to a sublease, the head lease (as lessee) and the sublease (as lessor) are accounted for separately. Classification of a sublease is determined by reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease accounted for applying the above exemption, the sublease is classified as an operating lease.
    For finance leases, the net investment in the lease is recorded as a receivable at the amount of the unrecovered net lease investment through maturity at the time the lease is determined. Lease payments received are apportioned between finance income and repayment of principal. Lease receivables are measured at amortized cost using the effective interest method, and interest income using the effective interest method is recognized in profit or loss.
    Lease payments from operating leases are recognized as income on a straight-line basis.
10. Investment property
  Investment property is property held to earn rental income or for capital appreciation or both. Investment property is stated at cost less accumulated depreciation and accumulated impairment losses, applying the cost model.
  Investment property is depreciated principally using the straight-line method over the useful life of the depreciable amount, which is the cost of investment property less the residual value. The estimated useful lives of major investment property items are as follows:
  Buildings and structures 6-39 years Land is not depreciated.
  
  The residual values, useful lives and depreciation methods of investment property are reviewed at the end of each fiscal year, and any
  changes are applied prospectively as changes in accounting estimates.
11. Impairment of non-financial assets
  The carrying amount of the Group's non-financial assets, other than inventories, deferred tax assets and retirement benefit assets, are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated for each individual asset or cash-generating unit. A cash-generating unit is the smallest group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets through continuing use.
  For goodwill and intangible assets with indefinite useful lives, or those not yet available for use, the recoverable amount is estimated whenever there is an indication of impairment and at the same time each year. When performing impairment tests for goodwill, goodwill is allocated to the cash-generating unit or group of cash-generating units that is expected to benefit from the synergies of the business combination, and impairment testing is then performed.
  The recoverable amount is the higher of value in use and fair value less costs of disposal. In calculating value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the time value of money and the risks specific to the asset.
  Corporate assets do not generate independent cash inflows; therefore, if there is an indication of impairment of corporate assets, the recoverable amount of the cash-generating unit to which the corporate assets belong is calculated for assessment.
  Impairment losses are recognized in profit or loss when the carrying amount of an asset or cash-generating unit exceeds the estimated recoverable amount. Impairment losses recognized in relation to a cash-generating unit are allocated first to reduce the carrying amount of any goodwill allocated to the unit, and then to reduce the carrying amounts of the other assets in the unit on a pro rata basis.
  Impairment losses related to goodwill are not reversed. For non-financial assets other than goodwill, previously recognized impairment losses are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. If there has been a change in the estimates used to determine the recoverable amount, the impairment loss is reversed. The reversal of impairment loss is limited to the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized in prior years.
12. Provisions
  Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of economic resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, provisions are discounted using a pre-tax rate that reflects the time value of money and the risks specific to the liability.
  The main provisions of the Group are as follows:
  1. Asset retirement obligations
    For stores and other facilities with restoration obligations at the end of lease contracts, the estimated restoration costs are recognized as provisions for asset retirement obligations and are added to the cost of the relevant asset. Future estimated costs and the discount rate applied are reviewed annually, and if adjustments are deemed necessary, they are added to or deducted from the carrying amount of the asset and treated as changes in accounting estimates.
  2. Provision for shareholder benefit program costs
    Provision for shareholder benefit program costs is recognized to cover future expenses expected to arise from the use of shareholder benefit coupons. The provision is calculated based on the estimated utilization rate of the coupons and reflects the amount expected to be incurred after the end of the fiscal year.
13. Employee benefits
  1. Short-term employee benefits
    Short-term employee benefits are recognized as an expense when the related service is provided by employees, without discounting.
    For bonuses and paid leave expenses, when the Group has a present legal or constructive obligation to pay as a result of past service provided by employees and a reliable estimate is possible, the amounts estimated under those plans are recognized as liabilities.
  2. Post-employment benefits
    The Company and certain consolidated subsidiaries have adopted defined contribution plans and defined benefit plans as retirement benefit plans.
    1. Defined contribution plans
      Contributions payable to defined contribution plans are expensed when employees have rendered the related services.
    2. Defined benefit plans
    The net defined benefit liability (asset) is the present value of the defined benefit obligation less the fair value of plan assets (including adjustments for the asset ceiling and minimum funding requirements, if necessary), and is recognized as retirement benefit asset or liability in the consolidated statement of financial position. The defined benefit obligation is calculated using the projected unit credit method, and its present value is calculated by applying a discount rate to expected future payments. The discount rate is determined by reference to market yields on high quality corporate bonds that have maturity dates approximating the terms of the benefit payments. Contributions to pension plans are calculated through periodic actuarial calculations and are usually paid to funds managed by insurance companies or trust companies.
    Service costs and net interest on the net defined benefit liability (asset) are recognized in profit or loss. Actuarial gains and losses, return on plan assets excluding amounts included in net interest expense, and changes in the effect of the asset ceiling are recognized in other comprehensive income as remeasurements of defined benefit plans in the period in which they occur and are immediately reclassified from other components of equity to retained earnings. In addition, past service costs are recognized in profit or loss in the period of plan amendment or curtailment.
14. Share-based payment
  1. Performance-linked share-based remuneration plan
    The Company has adopted a performance-linked share-based remuneration plan to enhance awareness among the Company's directors of their contribution to the sustainable improvement of corporate value and shareholder value through improved medium- to long-term performance, and applies accounting treatment for equity-settled share-based payment transactions. Under the performance-linked share-based remuneration plan, the consideration for services received is measured at the fair value of the Company's shares on the grant date, recognized as an expense over the vesting period from the grant date, with a corresponding increase in equity. The conditions are reviewed periodically and estimates of the number of shares expected to vest are revised as necessary.
  2. Employee share grant plan
    The Group has adopted a share grant plan as an incentive plan for Group employees, and applies accounting treatment for equity-settled share-based payment transactions. Under the share grant plan, the consideration for services received is measured at the fair value of the Company's shares on the grant date, recognized as an expense over the vesting period from the grant date, with a corresponding increase in equity. The conditions are reviewed periodically and estimates of the number of shares expected to vest are revised as necessary.
  3. Share-based payment trust (J-ESOP)
    The Group has introduced a share-based payment trust (J-ESOP) as an incentive plan for Group employees, and applies accounting treatment for equity-settled share-based payment transactions.
    Under the share-based payment trust (J-ESOP), services received are measured at the fair value of the Company's shares on the grant date, and recognized as an expense over the vesting period, with a corresponding increase in equity. The conditions are reviewed periodically and estimates of the number of shares expected to vest are revised as necessary.
15. Equity
  1. Share capital and capital surplus
    Equity instruments issued by the Company are recorded in share capital and capital surplus at the issue price. Transaction costs directly attributable to the issuance (net of tax) are deducted from equity.
  2. Treasury shares
    When treasury shares are acquired, they are recognized at cost and presented as a deduction from equity. No gain or loss is recognized on the purchase, sale or cancellation of the Company's treasury shares. The difference between the carrying amount and the consideration on sale is recognized as equity.
16. Revenue
  The Group recognizes revenue from contracts with customers, excluding interest and dividend income based on IFRS 9 Financial Instruments, at an amount that reflects the consideration to which it expects to be entitled in exchange for transferring goods or services to customers by applying the following steps: When consideration in a contract with a customer includes variable consideration, it is included in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The amount of variable consideration in the transaction price is not material.
  Transaction consideration is received primarily within one year of satisfying performance obligations and does not include significant financing components.
  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 (or as) the performance obligation is satisfied.
  The Group is primarily engaged in the development, manufacture and sale of furniture, interior goods and home center products, and its performance obligation is to sell products to customers. For these products, the Group determines that control of the products is transferred to customers and performance obligations are satisfied upon delivery of the products; therefore, revenue is recognized primarily upon delivery of the products. The Group also operates a loyalty program for member customers. Points granted to customers in connection with product sales are identified as performance obligations, and the amount of contract liabilities is calculated by allocating the transaction price based on the stand-alone selling price of the points calculated considering expected future forfeitures. Contract liabilities are reversed and revenue is recognized when points are used or forfeited.
17. Borrowing costs
  Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalized as part of the cost of those assets. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
18. Income taxes
  Income taxes comprise current tax and deferred tax. These are recognized in profit or loss, except for those related to business combinations and items recognized directly in equity or other comprehensive income.
  1. Current tax
    Current tax is measured at the amount expected to be paid to or recovered from the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting period.
  2. Deferred tax
    Deferred tax is calculated based on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of the reporting period. Deferred tax assets are recognized for deductible temporary differences, unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which they can be utilized, and deferred tax liabilities are recognized for taxable temporary differences in principle.
    However, deferred tax assets and liabilities are not recognized for the following temporary differences:
    Temporary differences arising from the initial recognition of goodwill
    
    Temporary differences arising from the initial recognition of assets or liabilities in a transaction other than a business combination that affects neither accounting profit nor taxable profit at the time of the transaction and does not give rise to equal taxable and deductible temporary differences
    
    Taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future
    
    Deductible temporary differences associated with investments in subsidiaries and associates, where it is not probable that the temporary differences will reverse in the foreseeable future or it is not probable that taxable profit will be available against which the temporary differences can be utilized
    
    The carrying amount of deferred tax assets is reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be made available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting period and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
    Deferred tax assets and liabilities are measured at the tax rates (and based on tax laws) that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
    Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when:
    The income taxes are levied by the same taxation authority on the same taxable entity
    
    They are levied on different taxable entities, but these entities intend to settle current tax assets and current tax liabilities on a net basis, or to realize the assets and settle the liabilities simultaneously
    
    The Group applies the temporary exception in IAS 12 Income Taxes amended on May 23, 2023, and does not recognize or disclose 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 Co-operation and Development (OECD).
19. Earnings per share
  Basic earnings per share is calculated by dividing profit or loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period, adjusted for treasury shares. Diluted earnings per share is calculated by adjusting for the effects of all dilutive potential ordinary shares.
20. Segment information
  An operating segment is a component of a business that engages in business activities from which it may earn revenues and incur expenses, including transactions with other operating segments. The operating results of all operating segments are reviewed regularly by the Company's Board of Directors to make decisions about resources to be allocated to the segments and assess their performance, and for which discrete financial information is available.
21. Assets held for sale and discontinued operations
  1. Assets held for sale
    The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For an asset (or disposal group) to be classified as held for sale, the sale must be highly probable, and the asset must be available for immediate sale in its present condition, and Group management must be committed to the plan to sell the asset, which should be expected to be completed within one year.
    Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, and depreciation or amortization on property, plant and equipment or intangible assets classified as such ceases.
  2. Discontinued operations
A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale and represents any of the following, in which case it is recognized as a discontinued operation:
A separate major line of business or geographical area of operations

Part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations

A subsidiary acquired exclusively with a view to resale

When an operation is classified as a discontinued operation, the Consolidated Statement of Profit or Loss is re-presented as if the operation had been discontinued from the start of the comparative period.
Significant accounting estimates and judgments
In preparing the consolidated financial statements in accordance with IFRS, management is required to make judgments, estimates and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. These estimates and assumptions are based on management's best judgment, which is based on historical experience and various factors that are believed to be reasonable under the circumstances as of the reporting date, including available information. However, by their nature, actual results may differ from these estimates and assumptions. Estimates and underlying assumptions are reviewed on an ongoing basis, and the effects of changes in accounting estimates are recognized in the accounting period in which the estimate is revised and in future accounting periods.
The following items involve estimates that carry a risk of material adjustment to the carrying amounts of assets and liabilities in the next fiscal year:
1. Impairment of non-financial assets
  The Group tests property, plant and equipment (including right-of-use assets) and intangible assets for impairment when there is an indication of impairment for each asset or cash-generating unit. However, goodwill is tested for impairment annually and whenever indicators of impairment are identified, and impairment losses are recognized when the recoverable amount is less than the carrying amount. The recoverable amount is measured at the higher of value in use or fair value less costs of disposal.
  The Group determines the recoverable amount for property, plant and equipment (including right-of-use assets) and intangible assets principally by store as the cash-generating unit.
  The above estimates of recoverable amounts are determined based on management's best estimates and judgment, but may be affected by changes in uncertain future economic conditions, and if revisions are necessary, they may have a material impact on the amounts recognized in the consolidated financial statements for the following fiscal year and thereafter.
  The assets of subsidiaries belonging to the Mainland China business as a whole were judged to have indicators of impairment due to declining profitability of stores in China resulting from the stagnation of the real estate market and other factors, and impairment tests were performed. As a result of the review, no impairment loss was recognized as the value in use exceeded the carrying amount. The business plan for the Mainland China business incorporates significant assumptions including future increases in the number of stores and growth in sales per store. Regarding these estimates, store development and operations in the Mainland China business are more novel compared to the domestic business, and if estimates need to be revised due to changes in uncertain future economic conditions, impairment losses may occur in the consolidated financial statements for the following fiscal year and thereafter.
  The Mainland China business includes property, plant and equipment of ¥11,725 million and intangible assets of ¥54 million.
  For details and amounts related to impairment of property, plant and equipment (including right-of-use assets) and intangible assets, refer to Note "12. Goodwill and intangible assets (2) Impairment testing of cash-generating units and groups of cash-generating units, including goodwill," and Note "16. Impairment of non-financial assets."
2. Determination of lease term
  The Group determines lease term by adding to the non-cancellable period of a lease any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease if it is reasonably certain not to be exercised. Specifically, the Group estimates lease terms considering the existence of options to extend or terminate leases and the
  likelihood of their exercise, the existence of termination penalties, and other factors. These may result in material adjustments to the amounts of right-of-use assets and lease liabilities due to changes in uncertain future economic conditions or the business environment upon contract renewal.
  For details on the determination of lease terms, refer to Note "3. Significant Accounting Policies (9) Leases," and for details and amounts related to right-of-use assets and lease liabilities, refer to Note "13. Leases."
3. Recoverability of deferred tax assets
  Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. In recognizing deferred tax assets, the Group reasonably estimates the timing and amount of future taxable profit that can be obtained in determining the probability of taxable profit arising, and calculates the amount.
  The timing and amount of taxable profit underlying these estimates may differ from the actual timing and amount of taxable profit due to changes in uncertain future economic conditions, which may result in different assessments of the recoverability of deferred tax assets.
  For details and amounts related to deferred tax assets, refer to Note "17. Income tax."
4. Measurement of defined benefit obligations
The present value of defined benefit obligations and related service costs are calculated based on actuarial assumptions. Actuarial assumptions require estimates and judgments regarding various variables, including discount rates and expected salary increase rates. Actuarial assumptions are determined based on management's best estimates and judgment, but may be affected by changes in uncertain future economic conditions or amendments to or promulgation of related laws and regulations, and if revisions are necessary, they may have a material impact on the amounts recognized in the consolidated financial statements for the following fiscal year and thereafter.
For details and amounts related to defined benefit obligations, refer to Note "21. Employee benefits."

Segment information

Overview of reportable segments

The Group's reportable segments are those units of the Group for which discrete financial information is available, and which are subject to periodic review by the Company's Board of Directors for the purpose of determining the allocation of management resources and evaluating their performance.

The Group consists of two reportable segments based on two core operating companies: NITORI Business and SHIMACHU Business.

Description of reportable segments

Reportable segment	Business description
NITORI Business	Development, manufacturing, and sales of furniture and interior goods, as well as real estate leasing, advertising services, and logistics services.
SHIMACHU Business	Sales of furniture, interior goods, and home improvement products, etc.

Information on reportable segments

Accounting policies for the reported business segments are generally the same as those used to prepare the consolidated financial statements.

The following shows information for each of the Group's reportable segments. Profits of reportable segments are calculated on an operating profit basis. Inter-segment transactions are based on the prevailing market prices.

As of April 1, 2023 (Transition date)

Reportable segment Adjustments

(Millions of yen)

Segment assets

Investments in equity-method entities

NITORI

1,049,940		289,032		1,338,973		(19,614)		1,319,358
22,291		-		22,291		-		22,291

Business

SHIMACHU

Business

Total

(Note) Consolidated

Note: Adjustments to segment assets are based on the elimination of inter-segment transactions.

For the fiscal year ended March 31, 2024

Reportable segment Adjustments

(Millions of yen)

NITORI

Business

SHIMACHU

Business

Total

(Notes 1&2) Consolidated

Revenue
Retail store sales	658,950	109,514		768,465		-		768,465
E-commerce sales	88,535	778		89,314		-		89,314
Other	22,261	261		22,522		-		22,522
Revenue from contracts with customers	769,747	110,554		880,302		-		880,302
Other revenue (Note 3)	7,955	8,409		16,365		-		16,365
Revenue from sales to external	777,703	118,964		896,667		-		896,667
customers
Intersegment revenue	8,603		299		8,902		(8,902)		-
Total	786,306		119,263		905,570		(8,902)		896,667
Segment profit (loss)	128,638		(4,376)		124,261		13		124,274
Finance income									3,057
Finance costs									2,492
Profit before tax									124,838
Segment assets	1,145,080		280,287		1,425,367		(14,075)		1,411,292
Other items
Depreciation and amortization	51,446		9,635		61,082		-		61,082
Impairment losses (Note 4)	5,256		11,053		16,309		-		16,309
Investments in equity-method	22,979		-		22,979		-		22,979
entities
Capital expenditures	124,531	12,994		137,525		-		137,525
Notes: 1. Adjustments to segment revenue and segment profit are due to elimination of intersegment transactions.

Adjustments to segment assets represent the elimination of inter-segment transactions.
Other revenue consists primarily of operating lease revenue, which is broken down in Note 13, "Leases (2) Leases as lessor," and Note 14, "Investment property."
Details regarding impairment losses are provided in Note 16, "Impairment of non-financial assets."

For the fiscal year ended March 31, 2025

Reportable segment Adjustments

(Millions of yen)

NITORI

SHIMACHU

(Notes 1&2) Consolidated

Business Business Total

Revenue
Retail store sales	678,817	109,400		788,217		-		788,217
E-commerce sales	96,823	782		97,606		-		97,606
Other	26,012	238		26,250		-		26,250
Revenue from contracts with customers	801,652	110,421		912,073		-		912,073
Other revenue (Note 3)	8,031	8,722		16,754		-		16,754
Revenue from sales to external	809,684	119,143		928,828		-		928,828
customers
Intersegment revenue	11,202		452		11,654		(11,654)		-
Total	820,886		119,596		940,483		(11,654)		928,828
Segment profit (loss)	118,975		(1,288)		117,686		(21)		117,665
Finance income									3,019
Finance costs									3,236
Profit before tax									117,448
Segment assets	1,268,711		279,085		1,547,796		(18,375)		1,529,421
Other items
Depreciation and amortization	56,915		9,227		66,143		-		66,143
Impairment losses (Note 4)	5,423		8,571		13,994		-		13,994
Investments in equity-method	24,772		-		24,772		-		24,772
entities
Capital expenditures	122,565	1,319		123,885		-		123,885
Notes: 1. Adjustments to segment revenues and segment profits are due to elimination of intersegment transactions.

Adjustments to segment assets represent the elimination of inter-segment transactions.
Other revenue consists primarily of operating lease revenue, which is broken down in Note "13. Leases (2) Leases as lessor," and Note "14. Investment property."
Details regarding impairment losses are provided in Note "16. Impairment of non-financial assets."

Information on products and services
Since the classification of products and services is the same as that of the reportable segments, information on products and services is omitted.
Information regarding geographic areas
1. Sales revenue from external customers
  Since revenue from external customers in Japan account for most of the Group's net sales, this information is omitted.
2. Non-current assets
  Since the amount of non-current assets located in Japan accounts for most of the non-current assets in the consolidated statement of financial position, this information is omitted.
Information about major customers

Since there is no customer that accounts for 10% or more of net sales from external customers in the consolidated statements of profit or loss, this information has been omitted.

Cash and cash equivalents
Cash and cash equivalents consist of the following.
As of April 1, 2023 (Transition date)
(Millions of yen) As of March 31, 2024 As of March 31, 2025
Cash and deposits 110,894 111,611 125,907
Time deposits with maturities of
12,987 6,367 10,093
three months or less
Total 123,881 117,978 136,001
Notes: 1. The balances of "Cash and cash equivalents" presented in the consolidated statements of financial position as of April 1, 2023 (transition date), March 31, 2024, and March 31, 2025 are consistent with the corresponding balances of "Cash and cash equivalents" presented in the consolidated statements of cash flows.
1. The Company did not have significant cash and cash equivalents subject to withdrawal restrictions in the previous and current fiscal years.
2. Cash and cash equivalents are classified as financial assets measured at amortized cost.

Trade and other receivables

The breakdown of trade and other receivables is as follows.

As of April 1, 2023 (Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Notes and accounts receivable - trade	56,717	78,788	71,006
Accounts receivable - other	9,360	11,736	8,876
Lease receivables	622	627	632
Total	66,700	91,152	80,515

Note: Trade and other receivables, excluding lease receivables, are classified as financial assets measured at amortized cost.

Other financial assets

Breakdown of other financial assets

The breakdown of other financial assets is as follows.

As of April 1, 2023 (Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Other financial assets (current):

Financial assets measured at amortized cost

Time deposits	12,520	23,602	25,421
Other	253	130	93
Total	12,773	23,733	25,515

Other financial assets (non-current):

Financial assets measured at fair

value through profit or loss Investments in capital	430	427	365
Other	158	169	157
Financial assets measured at amortized cost Lease and security deposits	45,248	46,166	44,931
Other	5,114	3,480	3,861

Financial assets measured at fair value through other comprehensive income

Shares	17,012	21,291	24,701
Other	7	-	-
Lease receivables	6,395	5,768	5,136
Total	74,367	77,304	79,151

Financial assets measured at fair value through other comprehensive income

Stocks and other securities are equity financial assets, and are classified as financial assets measured at fair value through other comprehensive income because they are held for the purpose of expanding the Company's revenue base by maintaining and strengthening relationships with business partners.

Principal equity securities and fair value

The major equity securities and fair values of equity financial assets measured at fair value through other comprehensive income are as follows.

EDION Corporation	13,109	15,829	19,183
Sumitomo Realty & Development Co., Ltd.	1,145	2,226	2,147
AIN Holdings Inc.	1,110	1,105	1,007
Other	1,648	2,131	2,362
Total	17,012	21,291	24,701

Equity securities As of April 1, 2023 (Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Dividend income
The breakdown of dividend income related to equity financial assets measured at fair value through other comprehensive income is as follows.
For the fiscal year ended March 31, 2024
(Millions of yen)
For the fiscal year ended March 31, 2025
Financial assets derecognized during the period 0 -
Financial assets held as of the closing date 521 555
Total 521 555
Equity financial assets measured at fair value through other comprehensive income that have been derecognized
The fair value upon derecognition of equity financial assets measured at fair value through other comprehensive income that were derecognized during the period, and the cumulative gain or loss (before tax), are as follows.
These were derecognized in the previous and current fiscal years when a portion of the equity financial assets measured at fair value through other comprehensive income were disposed of by sale, mainly for the purpose of reassessing business relationships.
(Millions of yen)
For the fiscal year ended March 31, 2024
For the fiscal year ended March 31, 2025
Fair value upon derecognition 2 -
Cumulative gain or loss upon derecognition 0 -
Transfer to retained earnings

The Group transfers the cumulative profit or loss from changes in the fair value of equity financial assets measured at fair value through other comprehensive income to retained earnings when the assets are derecognized. Accumulated losses in other comprehensive income transferred to retained earnings (after tax) amounted to ¥(0) million for the previous fiscal year. There is no applicable information for the current fiscal year.

Inventories

The breakdown of inventories is as follows.

As of April 1, 2023 (Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Merchandise and products	110,502	98,825	106,235
Work in progress	642	728	766
Raw materials and supplies	6,311	5,946	5,748
Total	117,456	105,500	112,750

Notes: 1. The amounts of inventories recognized as expenses for the previous and current fiscal years are ¥429,590 million and

¥446,050 million, respectively.

Inventory write-downs recognized as expenses for the previous and current fiscal years were ¥704 million and ¥612 million, respectively.
There were no inventories pledged as collateral for liabilities or inventories expected to be recovered beyond 12 months during the previous and current fiscal years.

Other assets

The breakdown of other assets is as follows.

As of April 1, 2023 (Transition date)

(Millions of yen) As of March 31, 2024 As of March 31, 2025

Current assets:
Prepaid expenses	4,807	5,082	5,592
Consumption taxes refund receivable	4,154	771	1,826
Other	2,175	1,675	2,469
Total	11,137	7,528	9,888
Non-current assets:
Long-term prepaid expenses	2,295	1,866	1,423
Total	2,295	1,866	1,423

Property, plant and equipment

Schedule of changes

Changes in the carrying amount, cost, accumulated depreciation, and accumulated impairment loss of property, plant and equipment are as follows.

Carrying amount

Land

Buildings and structures

Machinery, equipment, and

Tools, furniture, and

(Millions of yen)

Construction in

progress Total

Balance at

vehicles

fixtures

April 1, 2023 390,309 307,030 8,185 12,552 38,104 756,182

Acquisition 21,134 20,681 980 4,435 97,445 144,677

Depreciation (11,153) (41,710) (2,364) (2,010) - (57,238)

Impairment losses (11,225) (4,880) (6) (162) - (16,273)

Sale or disposal (3,108) (625) (31) (28) - (3,794)

Transfer of accounts 6,706 71,398 3,773 311 (90,365) (8,174)

Foreign currency 736 1,676 410 57 119 3,000 exchange differences

Other (249) (3,166) 5 118 (998) (4,291)

Balance at 393,150 350,403 10,953 15,274 44,306 814,087

March 31, 2024

Acquisition 71,615 42,245 2,444 3,048 46,604 165,958

Depreciation (11,358) (46,377) (2,792) (2,327) - (62,855)

Impairment losses (7,098) (6,341) (6) (504) - (13,951)

Sale or disposal (189) (802) (91) (120) - (1,203)

Transfer of accounts 12,752 37,938 8,338 153 (62,831) (3,649)

Foreign currency (120) 88 (58) 101 (146) (134) exchange differences

Other (627) 7,699 148 11 (360) 6,870

Balance at

458,123 384,852 18,935 15,637 27,571 905,121

March 31, 2025

Notes: 1. Construction in progress includes expenses related to property, plant and equipment under construction.

Depreciation of property, plant and equipment is included in the consolidated statement of profit or loss under "Cost of sales" and "Selling, general and administrative expenses."

Impairment losses are included in "Other expenses" in the consolidated statement of profit or loss. For details regarding impairment losses, see Note "16. Impairment of non-financial assets."

Cost

Land

Buildings and structures

Machinery, equipment, and

Tools, furniture, and

(Millions of yen)

Construction in

progress Total

vehicles fixtures

Balance at April 1, 2023	403,675	511,321	22,177	29,070	38,104	1,005,340
Balance at March 31, 2024	428,797	598,675	27,658	33,601	44,306	1,133,038
Balance at March 31, 2025	509,471	667,430	38,100	35,798	27,571	1,278,372

Accumulated depreciation and accumulated impairment losses

Buildings and

Machinery,

Tools,

Construction in

(Millions of yen)

Land

structures

equipment, and vehicles

furniture, and fixtures

progress Total

Balance at April 1, 2023	(13,366)	(205,280)	(13,992)	(16,518)	-	(249,157)
Balance at March 31, 2024	(35,646)	(248,271)	(16,704)	(18,326)	-	(318,950)
Balance at March 31, 2025	(51,347)	(282,577)	(19,165)	(20,161)	-	(373,251)

Property, plant and equipment pledged as collateral

Property, plant and equipment pledged as collateral for borrowings and other debts, and corresponding liabilities are as follows.

(Millions of yen)

As of April 1, 2023

As of March 31, 2024 As of March 31, 2025

(Transition date)

Assets pledged as collateral Property, plant and equipment
Buildings and structures	3,388	3,163		3,000
Other financial assets
Lease and security deposits	39		38		34
Total	3,428		3,202		3,034
Corresponding liabilities
Trade and other payables	41		40		36
Other financial liabilities
Leasehold and guarantee deposits received	1,266		1,168		1,089
Total	1,307		1,208		1,125

Breakdown of carrying amount of right-of-use assets

The breakdown of the carrying amount of right-of-use assets included in the carrying amount of property, plant and equipment is as follows.

(Millions of yen)

Classification of underlying assets

Land

Buildings and structures

Machinery, equipment, and

Tools, furniture, Total

and fixtures

vehicles

Balance at April 1, 2023	119,063	120,407	1,213	372	241,057
Balance at March 31, 2024	115,617	107,848	941	263	224,671
Balance at March 31, 2025	119,290	124,686	632	358	244,967

Note: The increase in right-of-use assets was ¥26,043 million in the previous fiscal year and ¥54,589 million in the current fiscal year.

Borrowing costs

Borrowing costs capitalized as a component of the cost of qualifying assets totaled ¥106 million for the current fiscal year. The capitalization rate applied for this calculation was 0.67% for the current fiscal year.

Goodwill and intangible assets

(1) Schedule of changes

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