Sumitomo Chemical : Detailed financial statements for FY2025 (2.1 MB)

About this update from Sumitomo Chemical Co., Ltd.

Consolidated Financial Statements Years ended March 31, 2026 and 2025 Consolidated Statement of Financial Position Millions of yen Note As of March 31, 2026 As of March 31, 2025 Assets Current assets: Cash and cash equivalents 8 ¥ 208,589 ¥ 209,838 Trade and other receivables 9 608,670 593,836 Other financial assets 10 47,551 45,015 Inventories 11 595,471 625,243 Other current assets 12 47,429 49,993 Subtotal 1,507,710 1,523,925 Assets held for sale 13 - 59,209 Total current assets 1,507,710 1,583,134 Non-current assets: Property, plant and equipment 14 770,688 759,266 Goodwill 15 275,711 257,811 Intangible assets 15 225,334 239,319 Investments accounted for using the equity method 17 203,862 287,977 Other financial assets 10 301,222 177,405 Retirement benefit assets 24 52,222 72,618 Deferred tax assets 18 39,227 34,608 Other non-current assets 12 29,065 27,646 Total non-current assets 1,897,331 1,856,650 Total assets ¥ 3,405,041 ¥ 3,439,784 Millions of yen Note As of March 31, 2026 As of March 31, 2025 Liabilities and equity Liabilities Current liabilities: Bonds and borrowings 19,21 ¥ 241,422 ¥ 252,892 Trade and other payables 23 464,422 488,132 Other financial liabilities 20,21,22 63,737 81,364 Income taxes payable 7,022 10,627 Provisions 25 110,408 89,711 Other current liabilities 26 114,335 109,360 Subtotal 1,001,346 1,032,086 Liabilities directly associated with assets held for sale 13 - 6,661 Total current liabilities 1,001,346 1,038,747 Non-current liabilities: Bonds and borrowings 19,21 910,033 1,033,236 Other financial liabilities 20,21,22 87,885 91,157 Retirement benefit liabilities 24 22,084 24,841 Provisions 25 26,383 25,974 Deferred tax liabilities 18 78,321 111,048 Other non-current liabilities 26 42,316 40,366 Total non-current liabilities 1,167,022 1,326,622 Total liabilities 2,168,368 2,365,369 Equity Share capital 27 90,179 90,059 Capital surplus 27 1,966 - Retained earnings 27 655,384 640,611 Treasury shares 27 (2,650) (8,361) Other components of equity 27 263,765 174,871 Other comprehensive income associated with assets held for sale - 3,610 Equity attributable to owners of the parent 1,008,644 900,790 Non-controlling interests 228,029 173,625 Total equity 1,236,673 1,074,415 Total liabilities and equity ¥ 3,405,041 ¥ 3,439,784 Consolidated Statement of Income Fiscal years ended March 31, 2026 and 2025 Millions of yen Note FY2025 FY2024 Sales revenue Cost of sales 6,29 ¥ 2,328,515 (1,660,247) ¥ 2,606,281 (1,880,805) Gross profit 668,268 725,476 Selling, general and administrative expenses 30 (565,505) (601,074) Other operating income 31 127,776 97,341 Other operating expenses 31 (35,524) (49,349) Share of profit (loss) of investments accounted for using the equity method 17 (43,271) 20,639 Operating income 151,744 193,033 Finance income 32 28,100 17,650 Finance expenses 32 (63,776) (152,590) Income before taxes 116,068 58,093 Income tax expenses 18 (666) (15,405) Net income 115,402 42,688 Net income attributable to: Owners of the parent 60,947 38,591 Non-controlling interests 54,455 4,097 Net income ¥ 115,402 ¥ 42,688 Yen FY2025 FY2024 Earnings per share: Basic earnings per share 34 37.16 23.59 Diluted earnings per share 37.15 23.58 Consolidated Statement of Comprehensive Income Fiscal years ended March 31, 2026 and 2025 Millions of yen Note FY2025 FY2024 Net income Other comprehensive income: Items that will not be reclassified to profit or loss Remeasurements of financial assets (equity instruments) 33 measured at fair value through other comprehensive income Remeasurements of defined benefit plans 24,33 Share of other comprehensive income of investments 17,33 accounted for using the equity method ¥ 115,402 ¥ 42,688 33,752 (32,471) (13,673) (20,432) 2,552 1,742 Total items that will not be reclassified to profit or loss 22,631 (51,161) Items that may be subsequently reclassified to profit or loss Remeasurements of financial assets (debt instruments) 33 measured at fair value through other comprehensive income 58 (58) Cash flow hedge 33,36 (370) (180) Exchange differences on conversion of 33 foreign operations 58,051 (49,682) Share of other comprehensive income of investments 17,33 accounted for using the equity method (7,891) 3,771 Total items that may be subsequently reclassified to profit or loss 49,848 (46,149) Other comprehensive income, net of taxes 72,479 (97,310) Total comprehensive income 187,881 (54,622) Total comprehensive income attributable to: Owners of the parent 119,702 (53,967) Non-controlling interests 68,179 (655) Total comprehensive income ¥ 187,881 ¥ (54,622) Consolidated Statement of Changes in Equity Fiscal year ended March 31, 2026 Equity attributable to owners of the parent Other components of equity Remeasurements Millions of yen Note Share capital Capital surplus Retained earnings Treasury shares of financial assets measured at fair value through other comprehensive income Remeasurements of defined benefit plans Balance as of April 1, 2025 Net income Other comprehensive 33 income ¥ 90,059 - - ¥ - - - ¥ 640,611 60,947 - ¥ (8,361) ¥ - - 1,186 - 31,356 ¥ - - (15,635) Total comprehensive income - - 60,947 - 31,356 (15,635) Issuance of new shares 27 Purchase of treasury shares 27 Disposal of treasury shares 27 Dividends 28 Changes resulting from additions to consolidation Changes resulting from loss of control of subsidiaries Change in interest due to transactions with 37 non-controlling interests Transfer from other components of equity to retained earnings Others, net Transfer to other comprehensive income associated with assets held for sale Transfer of negative balance of other capital surplus 120 - - - - - - - - - - 120 - (1) - - - 1,915 - (68) - - - - - (19,645) - 1,789 - (28,318) - - - - (6) 0 - - - 5,717 - - - - - - - - - (1,611) - 12,462 - - - - - - - - (221) - 15,856 - - - Total transactions with owners 120 1,966 (46,174) 5,711 10,851 15,635 Balance as of March 31, 2026 ¥ 90,179 ¥ 1,966 ¥ 655,384 ¥ (2,650) ¥ 43,393 ¥ - Equity attributable to owners of the parent Other components of equity Other Note Cash flow hedges Exchange differences on conversion of foreign operations Total comprehensive income associated with assets held for sale Equity attributable to owners of the parent Non-controlling interests Total equity Balance as of April 1, 2025 ¥ 87 ¥ 173,598 ¥ 174,871 ¥ 3,610 ¥ 900,790 ¥ 173,625 ¥ 1,074,415 Net income - - - - 60,947 54,455 115,402 Other comprehensive income 33 (301) 61,917 77,337 (18,582) 58,755 13,724 72,479 Total comprehensive income (301) 61,917 77,337 (18,582) 119,702 68,179 187,881 Issuance of new shares 27 - - - - 240 - 240 Purchase of treasury shares 27 - - - - (6) - (6) Disposal of treasury shares 27 - - - - (0) - (0) Dividends 28 - - - - (19,645) (1,660) (21,305) Changes resulting from additions to consolidation - - - - - - - Changes resulting from loss of control of subsidiaries - - (1,832) 43 - (3,176) (3,176) Change in interest due to transactions with 37 - - - - 7,631 (8,939) (1,308) non-controlling interests Transfer from other components of equity to - - 28,318 - - - - retained earnings Others, net - - - - (68) - (68) Transfer to other comprehensive income associated with - (14,929) (14,929) 14,929 - - - assets held for sale Transfer of negative balance of other capital surplus - - - - - - - Total transactions with owners - (14,929) 11,557 14,972 (11,848) (13,775) (25,623) Balance as of March 31, 2026 ¥ (214) ¥ 220,586 ¥ 263,765 ¥ － ¥1,008,644 ¥ 228,029 ¥ 1,236,673 Fiscal year ended March 31, 2025 Equity attributable to owners of the parent Other components of equity Remeasurements of Millions of yen Note Share capital Capital surplus Retained earnings Treasury shares financial assets measured at fair value through other comprehensive income Remeasurements of defined benefit plans Balance as of April 1, 2024 ¥ 89,938 ¥ 237 ¥ 578,175 ¥ (8,355) ¥ 83,448 ¥ - Net income - - 38,591 - - - Other comprehensive income 33 - - - - (25,304) (22,303) Total comprehensive income - - 38,591 - (25,304) (22,303) Issuance of new shares 27 120 120 - - - - Purchase of treasury shares 27 - - - (6) - - Disposal of treasury shares 27 - (0) - 0 - - Dividends 28 - - (9,818) - - - Changes resulting from additions to consolidation - - - - - - Changes resulting from loss of control of subsidiaries - - 115 - - - Change in interest due to transactions with 37 - (1,413) - - - - non-controlling interests Transfer from other components of equity to - - 34,604 - (56,907) 22,303 retained earnings Others, net Transfer to other comprehensive income associated with - - - - - - - - - (51) - - assets held for sale Transfer of negative balance of other capital surplus - 1,056 (1,056) - - - Total transactions with owners 120 (237) 23,845 (6) (56,958) 22,303 Balance as of March 31, 2025 ¥ 90,059 ¥ - ¥ 640,611 ¥ (8,361) ¥ 1,186 ¥ - Equity attributable to owners of the parent Other components of equity Other Note Cash flow hedges Exchange differences on conversion of foreign operations Total comprehensive income associated with assets held for sale Equity attributable to owners of the parent Non-controlling interests Total equity income Balance as of April 1, 2024 ¥ 319 ¥ 220,266 ¥ 304,033 ¥ 1,725 ¥ 965,753 ¥ 198,613 ¥1,164,366 Net income - - - - 38,591 4,097 42,688 Other comprehensive 33 (232) (40,803) (88,642) (3,916) (92,558) (4,752) (97,310) Total comprehensive income (232) (40,803) (88,642) (3,916) (53,967) (655) (54,622) Issuance of new shares 27 - - - - 240 - 240 Purchase of treasury shares 27 - - - - (6) - (6) Disposal of treasury shares 27 - - - - 0 - 0 Dividends 28 - - - - (9,818) (11,695) (21,513) Changes resulting from additions to consolidation - - - - - (154) (154) Changes resulting from loss of control of subsidiaries - - - (115) - (7,869) (7,869) Change in interest due to transactions with 37 - - - - (1,413) (4,615) (6,028) non-controlling interests Transfer from other components of equity to - - (34,604) - - - - retained earnings Others, net - - - - - - - Transfer to other comprehensive income associated with - (5,865) (5,916) 5,916 - - - assets held for sale Transfer of negative balance of other capital surplus - - - - - - - Total transactions with owners - (5,865) (40,520) 5,801 (10,996) (24,333) (35,329) Balance as of March 31, 2025 ¥ 87 ¥ 173,598 ¥ 174,871 ¥ 3,610 ¥ 900,790 ¥ 173,625 ¥1,074,415 Consolidated Statement of Cash Flows Fiscal years ended March 31, 2026 and 2025 Millions of yen Note FY2025 FY2024 Cash flows from operating activities: Income before taxes ¥ 116,068 ¥ 58,093 Depreciation and amortization 121,069 131,597 Gains on business transfers (96,559) (56,653) Impairment losses 16 34,607 26,312 Share of (profit) loss of investments accounted for using the equity method 43,271 (20,639) Interest and dividend income (11,728) (15,831) Interest expenses 33,454 28,704 Restructuring costs 26,627 23,583 Changes in fair value of contingent consideration (1,153) (2,427) (Gain) loss on sale of property, plant and equipment, and intangible assets (1,207) (14,339) (Increase) decrease in trade receivables (3,624) (21,964) (Increase) decrease in inventories 38,564 56,532 Increase (decrease) in trade payables (71,947) (6,113) Increase (decrease) in unearned revenue (9,235) (23,064) Increase (decrease) in provisions 8,897 (326) Others, net 53,093 110,069 Subtotal 280,197 273,534 Interest and dividends received 15,873 20,659 Interest paid (29,833) (27,478) Income taxes paid (27,379) (10,090) Restructuring costs paid (4,099) (23,598) Net cash provided by (used in) operating activities 234,759 233,027 Cash flows from investing activities: Net (increase) decrease in time deposits (2,963) (6,968) Net (increase) decrease in securities (9,875) 2,910 Purchase of property, plant and equipment, and intangible assets (121,566) (130,465) Proceeds from sales of property, plant and equipment, and intangible assets 4,243 16,816 Purchase of investments in subsidiaries (6,985) (196) Purchase of other financial assets (115,409) (4,117) Proceeds from sales and redemption of other financial assets 121,426 179,970 Proceeds from sale of subsidiaries 55,731 39,671 Payments for sale of subsidiaries (20) (11,614) Others, net 597 (778) Net cash provided by (used in) investing activities (74,821) 85,229 Cash flows from financing activities: Net increase (decrease) in short-term borrowings 21 5,996 (226,165) Net increase (decrease) in commercial paper 21 (40,423) (37,000) Proceeds from long-term borrowings 21 37,570 153,978 Repayments of long-term borrowings 21 (155,889) (132,253) Proceeds from issuance of bonds 21 - 99,161 Redemption of bonds 21 - (120,000) Repayments of finance lease liabilities 21,22 (20,643) (19,201) Proceeds from sale and leaseback transactions - 6,700 Cash dividends paid 28 (19,680) (9,866) Cash dividends paid to non-controlling interests (1,662) (11,698) Payments for acquisition of subsidiaries' interests from non-controlling interests (2,245) (5,330) Others, net (2,092) 896 Net cash provided by (used in) financing activities (199,068) (300,778) Effect of exchange rate changes on cash and cash equivalents 15,657 (6,823) Increase (decrease) in cash and cash equivalents (23,473) 10,655 Cash and cash equivalents at the beginning of the year 8 209,838 217,449 Net increase (decrease) in cash and cash equivalents resulting from transfer to assets held for sale 13 22,224 (18,266) Cash and cash equivalents at the end of the period 8 ¥ 208,589 ¥ 209,838 Notes to Consolidated Financial Statements Sumitomo Chemical Company, Limited and Consolidated Subsidiaries For the Years ended March 31, 2026 and 2025 (Fiscal year 2025 and Fiscal year 2024) Reporting Entity Sumitomo Chemical Company, Limited (hereinafter, the "Company") is a company domiciled in Japan. The address of the Company's registered head office and main places of business are presented on the Company's website (URL https://www.sumitomo-chem.co.jp/english/ ). The consolidated financial statements of the Company and its subsidiaries (hereinafter, the "Group") have a closing date as of March 31 and comprise the financial statements of the Group and the interests in associates and jointly controlled entities of the Group. The Group is primarily involved in the manufacturing and sale of "Agro & Life Solutions", "ICT & Mobility Solutions", "Advanced Medical Solutions", "Essential & Green Materials", and "Sumitomo Pharma" products. Details of these businesses are presented in Note 6 Segment Information. Basis of Preparation Compliance with IFRS The Group's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (hereinafter, "IFRS") issued by the International Accounting Standards Board. The provision of Article 312 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements applies, as the Company meets the requirements for a "Specified Company Applying Designated International Financial Reporting Standards" prescribed in Article 1-2-1 of said ordinance. The Group's consolidated financial statements were approved on June 22, 2026 by Nobuaki Mito, Representative Director & President. Basis of measurement As presented in 3. Material Accounting Policies, except for certain financial instruments measured at fair value, the Group's consolidated financial statements have been prepared on the historical cost basis. Functional currency and presentation currency The Group's consolidated financial statements are presented in Japanese yen, which is the Company's functional currency, rounded to the nearest million yen. Material Accounting Policies Basis of consolidation ➀ Subsidiaries Subsidiaries are entities controlled by the Group. The Group has control over an entity if it has exposure or rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Accordingly, even in cases where the Group does not own the majority of voting rights of an entity, if the Group is deemed to effectively control its decision-making body, the entity is treated as a subsidiary. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which it is lost. Subsidiaries' financial statements are adjusted, if necessary, when their accounting policies differ from those of the Group. All intra-group balances, transactions and unrealized gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. Differences between adjusted non-controlling interest amounts and fair value of the considerations are recognized directly as equity attributed to owners of the parent. In the event of a loss of control, any gain or loss arising from a loss of control is recognized in profit or loss. In the case when the closing date of a subsidiary is different from that of the Group, financial statements that are prepared provisionally as of the consolidated closing date are used for such subsidiaries. ② Associates and joint control arrangements Associates are those entities in which the Group has significant influence over the financial and operating policies but does not have control or joint control. The Group is presumed to have significant influence over another entity when it holds at least 20% of the voting rights of that entity. In assessing whether the Group has significant influence, other factors are also considered, including representation on the Board of Directors. In such cases, the Group may be deemed to have significant influence over an entity even if it holds less than 20% of the voting rights of that entity. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Investments in joint control arrangements are classified as joint operations or joint ventures depending on the rights and obligations of the parties to the arrangement. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Investments in associates and equity interests in joint ventures are initially recognized at acquisition cost, and subsequently accounted for using the equity method. Investments in associates and joint ventures include goodwill identified on acquisition. If the Group holds an interest in a joint operation, the Group recognizes its share of the assets, liabilities, income and expenses generated from the joint operation. Financial statements of associates, joint ventures and joint operations are adjusted, if necessary, when their accounting policies differ from those of the Group. When it is impracticable to unify the closing date of associates, joint ventures and joint operations due to certain reasons, such as relationships with other shareholders, significant transactions or events between the closing date of the Group and that of the said entities' financial statements are reflected in the consolidated financial statements. The Company assesses whether there is any indication that investments in associates and joint ventures may be impaired, and if there is an indication of impairment, the Company performs an impairment test. The recoverable amount is calculated using fair value, for which market price is used. Business combinations The Group uses the acquisition method to account for business combinations. The consideration of acquisition is measured as the aggregate of the acquisition-date fair value of the assets transferred, liabilities assumed and equity securities issued by the Group in exchange for control of the acquiree. Identifiable assets and liabilities of the acquiree, excluding the following items, are measured at their acquisition-date fair values. ・Deferred tax assets/liabilities, and assets/liabilities related to employee benefits; ・Share-based payment contracts of the acquiree; and ・Non-current assets and disposal groups classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Goodwill is recognized as the excess of the sum 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 of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed. Conversely, any shortfall is immediately recognized as gain in profit or loss. Non-controlling interests are initially measured either at fair value or at a proportionate share of the recognized amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Acquisition-related costs associated with business combinations, such as advisory fees, attorney fees and due diligence costs, are expensed as incurred. If the initial accounting for business combination has not been completed by the reporting date in which the business combination occurs, the Company reports provisional amounts for the incomplete items. Those provisional amounts recognized at the acquisition date are retrospectively adjusted if new information obtained within one year from the acquisition date (hereinafter, "measurement period") would have affected the measurement of the amounts recognized on the acquisition date. If a business combination is achieved in stages, the Group remeasures its previously held equity interest in the acquiree at its acquisition-date fair value, and recognizes any resulting gain or loss in profit or loss or other comprehensive income. Some changes in the fair value of contingent consideration after the acquisition are adjusted against the recognized consideration if it is regarded as the above-mentioned measurement period adjustment; otherwise, it is recognized as a change in fair value in profit or loss. Additional acquisition of non-controlling interests is accounted for as an equity transaction, and therefore goodwill is not recognized with respect to such a transaction. Foreign currency conversions ➀ Foreign currency transactions Foreign currency transactions are converted into the respective functional currencies at the spot exchange rate at the date of transaction. Foreign currency monetary assets and liabilities at the reporting date are converted into the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are converted into the functional currency using the spot exchange rate at the date of transaction. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are converted into the functional currency using the exchange rate at the date when the fair value is determined. Exchange differences arising from conversions and settlements are recognized in profit or loss. However, exchange differences arising from equity instruments measured at fair value through other comprehensive income and cash flow hedges to the extent that the hedge is effective are recognized in other comprehensive income. ② Financial statements of foreign operations Assets and liabilities of foreign operations are converted into Japanese yen at the spot exchange rate at the reporting date. Income and expenses are converted into Japanese yen at the average exchange rate, except when the exchange rate fluctuates significantly. Exchange differences arising from conversion of financial statements of the foreign operations are recognized in other comprehensive income. In the case of disposal of foreign operations, the cumulative amount of the exchange differences related to that foreign operation, which is recognized in other comprehensive income and accumulated in equity, is reclassified from equity to profit or loss when the gains or losses on disposal are recognized. Financial instruments ➀ Non-derivative financial assets Initial recognition and measurement The Group initially recognizes trade receivables and other receivables at the date of occurrence. All other financial assets are recognized initially on the transaction date on which the Group becomes a party to the contractual provisions of the instrument. The Group classifies its financial assets as follows upon initial recognition: Financial assets measured at amortized cost A financial asset is classified as a financial asset measured at amortized cost if both of the following conditions are met: ・The financial asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and ・Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets measured at fair value through other comprehensive income (financial assets measured at FVTOCI) ・Debt instruments measured at fair value through other comprehensive income A debt instrument meeting both of the following conditions is classified as a financial asset measured at fair value through other comprehensive income. The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and 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 measured at fair value through other comprehensive income For certain equity instruments held primarily for the purpose of maintaining or strengthening the business relationships with investees, the Group elects these instruments as fair value through other comprehensive income at initial recognition. Financial assets measured at fair value through profit or loss (financial assets measured at FVTPL) Financial assets designated as measured at fair value through profit or loss and other than financial assets mentioned in (a) and (b), are classified as financial assets measured at fair value through profit or loss. Except for financial assets measured at fair value through profit or loss, financial assets are initially measured at fair value plus transaction costs. Subsequent measurement After initial recognition, financial assets are measured based on the following classifications: Financial assets measured at amortized cost These financial assets are measured at amortized cost using the effective interest method. Interest income from these financial assets measured at amortized cost is included in finance income in the consolidated statement of income. Financial assets measured at fair value through other comprehensive income Financial assets measured at fair value through other comprehensive income are measured at fair value, and subsequent changes in fair value are recognized in other comprehensive income. However, dividends from the equity instruments that are designated as measured at fair value through other comprehensive income are recognized in finance income when the Group's right to receive payment of the dividends is established. Also, accumulated other comprehensive income in "Other components of equity" is transferred to retained earnings when the fair value of financial assets declines significantly or when financial assets are derecognized. Interests accrued on debt instruments are recognized in finance income in the consolidated statement of income. Also, accumulated other comprehensive income in "Other components of equity" is transferred to profit or loss as reclassification adjustments when such instruments are derecognized. Financial assets measured at fair value through profit or loss Financial assets measured at fair value through profit or loss are measured at fair value, and subsequent changes in fair value are recognized in profit or loss. Derecognition of financial assets The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Group transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Impairment At each reporting date, the Group assesses whether the credit risk on a financial asset measured at amortized cost, a debt instrument measured at fair value through other comprehensive income or a financial guarantee contract has increased significantly since the initial recognition. The Group measures an allowance for doubtful accounts for financial assets at an amount equal to the lifetime expected credit losses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk on the financial assets has not significantly increased since the initial recognition, the Group measures an allowance for doubtful accounts for financial assets at an amount equal to 12-month expected credit losses. However, the Group always measures an allowance for doubtful accounts at an amount equal to lifetime expected credit losses for trade and other receivables without a significant financial component. When determining whether the credit risk of the financial asset has significantly increased since initial recognition, the Group evaluates by comparing the risk of a default occurring on the financial assets at each reporting date with the risk of a default occurring on the financial assets at the date of initial recognition. The Group makes judgement based on reasonable and supportable information about past events, current conditions and forecasts of future economic conditions as far as it is available without excessive cost or effort, such as the following. Internal credit rating External credit rating (if available) Actual or expected significant change in the results of the borrower's performance Actual or expected significant adverse change in the regulatory environment, economic environment or technological environment that causes a significant change in the borrower's ability to fulfill its obligation Significant increase in credit risk of the other financial instruments of the same borrower Significant change in the value of collateral underlying debt, third-party guarantee or credit enhancement The Group measures a credit loss using the difference between the discounted present value of the contractual amount receivable and the estimated amount receivable, and recognizes it in profit or loss. ② Non-derivative financial liabilities Initial recognition and measurement The Group initially recognizes financial liabilities when the Group becomes a contractual party. Financial liabilities, excluding the following items, are classified as financial liabilities measured at amortized cost at the initial recognition. Financial liabilities measured at fair value through profit or loss (financial liabilities measured at FVTPL) Financial guarantee contracts Contingent consideration associated with business combination All financial liabilities are initially measured at fair value. Financial liabilities measured at amortized cost are measured at fair value after deducting transaction costs that are directly attributable to the financial liabilities. Subsequent measurement After initial recognition, financial liabilities are measured based on the following classifications: Financial liabilities measured at fair value through profit or loss These financial liabilities are measured at fair value and their changes are recognized in profit or loss. Financial guarantee contracts Financial guarantee contracts are measured at the higher of the following. ・The amount of allowance for doubtful accounts calculated based on the above (iv) Impairment ・The amount initially recognized less accumulated amortization Contingent consideration associated with business combination Contingent consideration associated with business combination is measured at fair value and its changes are recognized in profit or loss. Financial liabilities measured at amortized cost These financial liabilities are measured at amortized cost using the effective interest method. Interest expenses from these financial liabilities measured at amortized cost are included in finance expenses in the consolidated statement of income. Derecognition The Group derecognizes financial liabilities when they are extinguished; i.e. when the obligation specified in the contract is discharged, canceled, or expires. ③ Derivative financial instruments and hedge accounting The Group uses derivatives, such as forword exchange contracts, to hedge foreign currency risk, etc. For certain forward sales transactions, the Group makes an irrevocable designation as financial instruments to be measured at fair value through profit or loss at the inception of contracts only when it removes or significantly reduces accounting mismatch; they are included in financial instruments as derivatives. Derivatives are initially measured at fair value when contracts are entered into and are subsequently remeasured at fair value. Changes in fair value of derivatives are recognized in profit or loss. However, gains or losses on cash flow hedges to the extent that the hedges are effective are recognized in other comprehensive income. At the inception of the hedge, the Group formally designates and documents hedging relationships to which hedge accounting applies and the risk management objectives and strategies for undertaking the hedges. The documentation includes identifying hedging instruments, the hedged items or transaction, the nature of the risk being hedged, and how the effectiveness of hedging instruments is assessed in offsetting the exposures to the changes in fair value or cash flows of hedged items attributable to hedged risks. The Group evaluates whether a derivative used to hedge a transaction is effective to offset the change in fair value or cash flows of a hedged item at the inception of the hedge and on an ongoing basis. Fair value hedges Changes in fair value of hedging instruments are recognized in profit or loss. Changes in fair value of hedged items attributable to the hedged risks adjust carrying amounts of hedged items and are recognized in profit or loss. Cash flow hedges The effective portion of gains or losses on hedging instruments is recognized in other comprehensive income as cash flow hedges and the ineffective portion is recognized in profit or loss. After that, accumulated gains and losses recognized in other comprehensive income are reclassified to profit or loss as reclassification adjustments in the same period when cash flows arising from the hedged items affect profit or loss. When the hedged items result in recognition of a non-financial asset, the accumulated gains and losses through other comprehensive income are reclassified and included directly in the initial cost of the non-financial asset. Hedge accounting is discontinued when a forecast transaction is not highly probable to occur. Furthermore, if a forecast transaction is no longer expected to occur, the accumulated amount recognized in other comprehensive income is transferred to profit or loss. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits, and short-term investments that are readily convertible to cash and are subjected to insignificant risks of changes in value, and whose maturities are three months or less from the date of acquisition. Inventories Inventories are measured at the lower of acquisition 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 cost necessary to make a sale. Acquisition cost is mainly calculated by the periodic average method and comprises purchase costs, processing costs, and all other costs incurred in bringing the inventories to their present location and condition. Property, plant and equipment (except for right-of-use assets) Property, plant and equipment are measured at acquisition cost less accumulated depreciation and accumulated impairment losses. The acquisition cost includes direct costs of acquisition, estimated costs of dismantlement, land removal and restoration, and borrowing costs that must be capitalized. Depreciation of assets other than land and construction in progress is calculated on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives of major categories of assets are as follows: ・Buildings and structures 5-60 years ・Machinery, equipment and vehicles 4-12 years Estimated useful lives, residual values and depreciation method are reviewed at each fiscal year-end, and any revisions are applied prospectively as changes in accounting estimate. Goodwill and intangible assets ➀ Goodwill Goodwill arising on the acquisition of business is recognized and initially measured as stated in (2) Business combinations. Goodwill is not amortized and is tested for impairment at every reporting period and whenever there is an indication that it may be impaired. An impairment loss on goodwill is recognized in the consolidated statement of income and is not reversed in subsequent periods. Goodwill is presented in the consolidated statement of financial position at the amount calculated by deducting accumulated impairment losses from acquisition cost. As for investee accounted for by using the equity method, goodwill is included in the carrying amount of the investment. ② Intangible assets Intangible assets are measured at acquisition cost less accumulated amortization and accumulated impairment losses. Individually acquired intangible assets are initially recognized at acquisition cost. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Research expenses of an internal project are recognized as cost when they are incurred. Development expenses of an internal project are recognized as intangible assets only when they satisfy all the recognition criteria. Intangible assets are amortized on a straight-line basis over their useful lives. Intangible assets recorded as in-process research and development that are not yet available for use are not amortized, and are tested for impairment at every reporting period or whenever there is an indication of impairment. They are reclassified to patent, marketing rights, or other related accounts when marketing approval from regulatory authorities is obtained and are amortized when they become available for use. Estimated useful lives of major categories of assets are as follows; ・Patents 3-20 years ・Software 3-10 years Estimated useful lives, residual values and amortization method are reviewed at each fiscal year-end, and any revisions are applied prospectively as changes in accounting estimate. Leases The Group determines whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group recognizes a right-of-use asset and a corresponding lease liability at the commencement date of the lease, when it has determined whether a contract is, or contains, a lease. ➀ Right-of-use assets Right-of-use assets are measured at acquisition cost, less accumulated depreciation and accumulated impairment losses. The acquisition cost comprises the amount of the initial measurement of the lease liabilities adjusted for initial direct costs, plus any costs including restoration obligations of the underlying assets. Right-of-use assets are depreciated over the shorter of their useful lives and lease terms. Right-of-use assets are included in "Property, plant and equipment" in the consolidated statement of financial position. ② Lease liabilities Lease liabilities are measured at the present value of the lease payments that are not paid as of the lease commencement date. The lease payments are discounted using the interest rate implicit in the lease. If interest rate implicit in the lease cannot be readily determined, the Group's incremental borrowing rate is used. After the commencement date, lease liabilities are measured by increasing the carrying amounts to reflect interests on the lease liabilities and by reducing the carrying amounts to reflect lease payment made. The lease liabilities are included in "Other financial liabilities" in the consolidated statement of financial position. In addition, the Group has applied IFRS 16 paragraph 6 for short-term leases and leases of low-value assets, and recognized these lease payments as expenses using the straight-line basis over the lease terms. Impairment of non-financial assets The Group assesses whether there is any indication that a non-financial asset may be impaired at the end of each reporting date. If there is an indication of impairment, the recoverable amount of the asset is estimated. For goodwill, intangible assets with indefinite useful lives, and intangible assets not yet available for use, the recoverable amount is estimated annually at a consistent time in each year, irrespective of whether there is any indication of impairment. The recoverable amount of an asset or its cash-generating unit (hereinafter, "CGU") is the higher of its value in use or its fair value less disposal costs. In determining 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. If it is not possible to estimate the recoverable amount of each asset individually for the impairment test, such assets are integrated into the smallest CGU that generates cash inflows from continuing use that are largely independent of cash inflows from other assets or groups of assets. For the purposes of goodwill impairment testing, CGUs to which goodwill would be allocated are aggregated when necessary so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored. Goodwill acquired in a business combination is allocated to the (group of) CGU(s) that is expected to benefit from the synergies of the business combination. Group corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, the recoverable amount of the (group of) CGU(s) to which the corporate assets belong is measured. If the carrying amount of assets or the (group of) CGU(s) exceeds the recoverable amount, an impairment loss is recognized in profit or loss for the period. The impairment loss recognized for the (group of) CGU(s) is first allocated to reduce the carrying amount of any goodwill allocated to the unit, and subsequently to other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill cannot be reversed. In respect of assets other than goodwill, impairment losses recognized in prior periods are assessed at the end of each reporting date as to whether there is any indication that the losses may no longer exist or may have decreased. If any such indication exists, the recoverable amount of the asset or the (group of) CGU(s) is estimated. In cases in which the recoverable amount exceeds the carrying amount of the asset or the (group of) CGU(s), the impairment loss is reversed up to the carrying amount less depreciation or amortization that would have been determined if no impairment losses had been recognized in prior periods. Employee benefits ➀ Post-retirement benefits The Group sponsors defined benefit plans and defined contribution plans as post-retirement benefits. The Group uses the projected unit credit method to determine the present value of its defined benefit obligation and the related current and past service costs. The discount rates are determined by referring to the market yield at the fiscal year-end on high-quality corporate bonds for the corresponding periods in which the retirement benefits are to be paid. The amount of the net defined benefit liability/asset is calculated by deducting the fair value of plan assets from the present value of defined benefit obligation. However, if the defined benefit plans are overfunded, net defined benefit assets are capped at the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Remeasurements of defined benefit plans are recognized in other comprehensive income and immediately reclassified to retained earnings in the periods in which they occur. Past service costs are recognized in profit or loss for the periods in which they are incurred. Payments to defined contribution plans are recognized as expenses in the periods that employees render services. ② Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis, and are recognized as expenses when the related service is rendered. For bonuses and paid absence expenses, when there is a legal or constructive obligation to make payments, and a reliable estimate of the obligation can be made, the estimated amount to be paid based on these plans is accounted for as a liability. ③ Other long-term employee benefits Long-term benefit obligations other than post-retirement benefit plans include special paid leaves and bonuses granted conditional on a certain period of employment. Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future benefits that are expected to be paid by the Group in exchange for the services rendered by employees up to the reporting date. Provisions Provisions are recognized when the Group has a present legal obligation or constructive obligation arising as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation, and a reliable estimate can be made. Provisions are stated at the present value of the estimated future cash flows that are discounted using a pre-tax discount rate reflecting the time value of money and the specific risks of the liability. Where discounting is used, the increase in the provision to reflect the passage of time is recognized as finance expenses. ➀ Provisions for sales rebates Provisions for sales rebates mainly related to public programs and contracts with wholesalers are provided based on the amounts expected to be paid subsequent to the fiscal year-end date. ② Provisions for asset retirement obligations Provisions for asset retirement obligations are provided based on estimated future expenditures when the Group has a legal, contractual or similar obligation associated with the retirement of property, plant and equipment. ③ Provisions for sales returns Provisions for sales returns are provided based on estimated amounts of sales returns of merchandise and finished goods. ④ Provisions for removal cost of property, plant and equipment Provisions for removal cost of property, plant and equipment for which removal policy has been determined are provided based on the estimated amount of removal expenditures. Revenue ➀ Revenue from contracts with customers The Group recognizes revenue when the Group transfers promised goods or services to a customer and the customer obtains control of those goods or services based on the following five-step model. 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 entity satisfies a performance obligation The Group mainly engages in businesses of such segments as "Agro & Life Solutions", "ICT & Mobility Solutions" , "Advanced Medical Solutions", "Essential & Green Materials", and "Sumitomo Pharma". For sales of products, the performance obligation is judged to have been satisfied and revenue is recognized upon delivery of the products, because the customer obtains control over the products upon delivery. Revenue is measured at the consideration promised in a contract with a customer, less product returns, discounts, rebates and other items to the extent that it is highly probable that a significant reversal will not occur. ② Interest income Interest income is recognized using the effective interest method. ③ Dividends Dividends are recognized when a right to receive dividend payments is established. Income taxes Income taxes consist of current taxes and deferred taxes. They are recognized as income or expenses and included in profit or loss, except for those related to business combinations and items that are recognized directly in equity or in other comprehensive income. Current taxes are measured in the amount of the expected tax payable to or receivable from the tax authorities. Calculation of the tax amount is based on the tax rates and tax laws enacted or substantively enacted by the reporting date in countries where the Group conducts business and earns taxable income. Deferred taxes are recognized for temporary differences between the carrying amount of assets or liabilities and their tax bases, tax loss carryforwards and tax credits at the reporting date. Deferred tax assets and liabilities are not recognized for the following temporary differences: ・Temporary differences arising from initial recognition of goodwill. ・Temporary differences arising from initial recognition of assets and liabilities from transactions other than business combinations that affect neither accounting income nor taxable income, and do not give rise to equal taxable and deductible temporary differences at the time of the transaction. ・Taxable temporary differences on investments in subsidiaries and associates, and interests in joint control arrangements, when the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax liabilities are recognized, in principle, for all taxable temporary differences. Deferred tax assets are recognized for deductible temporary differences, the carryforwards of unused net operating losses and the carryforwards of unused tax credits to the extent that it is probable that they will be utilized against future taxable income. The carrying amount of deferred tax assets is reviewed each period and reduced to the extent that it is no longer probable that sufficient future taxable income will be available to realize benefits from all or part of the assets. Unrecognized deferred tax assets are reassessed at each reporting period and are recognized to the extent that it has become probable that future taxable income will allow the deferred tax assets to be recovered. Deferred tax assets and liabilities are measured at the tax rates and tax laws that are expected to apply to the period when the assets are realized or the liabilities are settled based on the statutory tax rates and tax laws enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to set off current tax assets against current tax liabilities and income taxes are levied by the same taxation authority and on the same taxable entity. The Company and certain consolidated subsidiaries have adopted the group tax sharing system. The Group has applied the temporary relief of the "International Tax Reform-Pillar Two Model Rules (Amendments to IAS12)" announced in May 2023, and does not recognize or disclose deferred tax assets and deferred tax liabilities related to income taxes arising from tax laws enacted or substantively enacted to implement the Pillar Two model rules announced by the Organization for Economic Co-operation and Development (OECD). Earnings per share Basic earnings per share are calculated by dividing net income attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the period, adjusted for treasury shares held. Diluted earnings per share are calculated by adjusting the effects of all dilutive potential shares. When there are potential shares that have an antidilutive effect, such potential shares are not included in the calculation of diluted earnings per share. Capital Ordinary shares are classified as capital. Treasury shares are recognized at acquisition cost and deducted from equity. No gains or losses are recognized on the purchase, sale or retirement of the Company's treasury shares. Any differences between the carrying amount and consideration received on the sale of treasury shares are recognized in capital surplus. Share-based payment The Company has introduced a restricted stock compensation plan as a system of incentives for the Company's Board of Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors) and executive officers not concurrently serving as members of the Board of Directors (excluding non-residents of Japan). Compensation under the restricted stock compensation plan is measured with reference to the fair value of the Company's common shares granted as of the grant date, and is expensed from the day when the shares are granted through the vesting period, with the same amount recognized as an increase in equity. Assets held for sale The Group classifies a non-current asset or disposal group that will be recovered principally through a sales transaction rather than through continuing use as assets held for sale only when it is highly probable that the sale will occur and the asset or asset group is available for immediate sale in its present condition. Non-current assets or asset group classified as assets held for sale are measured at the lower of its carrying amount and the fair value less costs to sell. Fixed assets and intangible assets classified assets held for sale are not depreciated or amortized. Assets and liabilities held for sale are presented separately from other assets and liabilities as current items in the consolidated statement of financial position. Changes in presentation (Consolidated statement of cash flows) "Gains on business transfers," which was included in "Others, net" under "Cash flows from operating activities" in the previous fiscal year, is presented separately in this fiscal year due to increased quantitative materiality. "Increase in loan receivables" under "Cash flows from investing activities," which was presented separately in the previous fiscal year, is included in "Others, net" in this fiscal year due to decreased quantitative materiality. As a result, "Others, net" of ¥53,416 million under "Cash flows from operating activities" has been reclassified as "Gains on business transfers" of ¥(56,653) million and "Others, net" of ¥110,069 million. In addition, "Increase in loan receivables" of ¥(86) million and "Others, net" of ¥(692) million under "Cash flows from investing activities" have been reclassified as "Others, net" of ¥(778) million. Significant Accounting Estimates and Judgments Management has made a number of judgments, estimates and assumptions relating to the application of accounting policies, and reporting of income, expenses, assets and liabilities in the preparation of these consolidated financial statements in accordance with IFRS. Actual results may materially affect the Company's consolidated financial statements for FY2026 due to the uncertainties in these estimates and judgments. Estimates and underlying assumptions are continually evaluated. The effect of changes to accounting estimates is recognized in the reporting period in which the changes are made and in future periods. Judgments, estimates and assumptions made by the management that could materially affect the Company's consolidated financial statements are included in the following notes: ・Impairment of non-financial assets (Note 16 Impairment of Non-financial Assets); ・Assessment of investments in associates (Note 17 Investments Accounted for Using the Equity Method); ・Recoverability of deferred tax assets (Note 18 Income Taxes); ・Measurement of provisions (Note 25 Provisions); and ・Fair value of financial instruments (Note 36 Financial Instruments). New Standards and Interpretations Not Yet Applied Standards Name of standards Effective date (Fiscal year starting on or after) Timing of application by the Group Description of new standards and amendments IFRS 7 IFRS 9 Financial Instruments: Disclosures Financial Instruments January 1, 2026 FY2026 ・Clarifying the classification of financial assets (clarifying elements for assessing whether the contractual cash flows meet the solely payments of principal and interest (SPPI) criterion) ・Clarifying the date of derecognition of financial liabilities settled through electronic cash transfer systems ・Amendments to the disclosures for investments in equity instruments designated to be measured at fair value through other comprehensive income (FVTOCI) and financial instruments with contingent features that can change cash flows IFRS 18 Presentation and Disclosure in Financial Statements January 1, 2027 FY2027 ・Improved comparability in the statement of profit or loss (income statement) ・Enhanced transparency of management-defined performance measures ・More useful grouping of information in the financial statements Major new and amended accounting standards and interpretations that the Group had not yet applied in FY2025, which were issued by the approval date of the consolidated financial statements, are as follows. The impact of applying the new IFRS standards on the Group is currently being assessed and cannot be estimated at this time. Segment Information Summary (or outline / overview) of reportable segments The reportable segments of the Group refer to business units for which separate financial information is available and that are reviewed regularly at the Board of Directors meeting in order to determine the allocation of management resources and evaluate the business performance of each business unit. The Group divides its operations into business sectors identified by products and services, which manage manufacturing, sales, and research in an integrated manner. Each business sector is responsible for developing comprehensive domestic and overseas strategies with respect to its products and services, and operates its business activities. Principally in accordance with the business sectors, the Group consists of the five reportable segments based on its products and services: "Agro & Life Solutions", "ICT & Mobility Solutions", "Advanced Medical Solutions", "Essential & Green Materials", and "Sumitomo Pharma". The major products and services of each reportable segment are as follows: Reportable Segment Major Products and Services Agro & Life Solutions Crop protection chemicals, fertilizers, agricultural materials, household insecticides, products for control of infectious diseases, feed additives, etc. Optical products, semiconductor processing materials, compound semiconductor ICT & Mobility Solutions Advanced Medical Solutions Essential & Green Materials materials, touch screen sensor panels, high-purity aluminum and alumina, specialty chemicals, additives, engineering plastics, battery materials, etc. Contract development and manufacturing organization business for advanced small-molecule drug, oligonucleotides, and regenerative medicine and cell therapy products, etc. Synthetic resins, raw materials for synthetic fibers, various industrial chemicals, methyl methacrylate products, synthetic resin processed products, industrial alumina, synthetic rubber, etc. Sumitomo Pharma Small molecule pharmaceuticals Reportable segments information The accounting methods for each reportable segment are, in principle, identical to those set forth in Note 3 Material Accounting Policies. The segment profit or loss is core operating income, which is calculated from operating income after excluding effects from non-recurring factors. Inter-segment sales revenue is based on market prices. Fiscal year 2025 Reportable segments Millions of yen Agro & Life ICT & Mobility Solutions Solutions Advanced Medical Solutions Essential& Green Materials Sumitomo Pharma Total Others (Note 3) Adjustments Consolidated (Note 4) Sales revenue: Sales revenues from external customers Inter-segment sales revenues ¥ 519,256 1,094 ¥ 574,162 968 ¥ 58,601 13,812 ¥ 678,800 4,576 ¥ 451,933 1,361 ¥ 2,282,752 21,811 ¥ 45,763 ¥ 49,001 - (70,812) ¥ 2,328,515 - Total sales revenue 520,350 575,130 72,413 683,376 453,294 2,304,563 94,764 (70,812) 2,328,515 Segment profit : core operating income (Note 1,2) ¥ 56,334 ¥ 53,041 ¥ 2,818 ¥ 14,446 ¥ 108,444 ¥ 235,083 ¥ 4,394 ¥ (31,101) ¥ 208,376 Segment assets 819,631 722,571 125,225 639,853 785,884 3,093,164 231,026 80,851 3,405,041 Other items: Depreciation and amortization 21,152 33,735 7,844 19,217 20,771 102,719 7,045 11,305 121,069 Share of profit (loss) of investments accounted for using the equity method 350 - - (49,544) 4,821 (44,373) 1,192 (90) (43,271) Impairment losses 1,274 2,830 3,766 23,016 2,073 32,959 - 1,648 34,607 Reversal of impairment losses - - - - 1,086 1,086 - - 1,086 Investments accounted for using the equity method 9,031 569 - 116,065 29,311 154,976 49,929 (1,043) 203,862 Capital expenditures 15,846 52,970 9,575 18,176 8,115 104,682 7,261 9,617 121,560 Note 1: ¥14,446 million for segment profit (core operating income) in "Essential & Green Materials" includes ¥55,807 million for gains related to business transfers. Note 2: ¥108,444 million for segment profit (core operating income) in "Sumitomo Pharma" includes ¥50,024 million for gains related to business transfers. Note 3: "Others" represents businesses such as supplying electrical power and steam, and providing transport and warehousing, which are not included in reportable segments. Note 4: Amounts in "Adjustments" are as follows: ¥(31,101) million for segment profit (loss) in "Adjustments" includes inter-segment elimination of ¥586 million and corporate expenses of ¥(31,687) million unallocated to each reportable segment. Corporate expenses are mainly research and development expenses for company-wide research, which are not treated as attributable to specific reportable segments. Segment assets in "Adjustments" are ¥80,851 million, which includes ¥(135,817) million in eliminations of inter-segment receivables and other assets, and ¥216,668 million of corporate assets unallocated to each reportable segment. Corporate assets mainly consist of cash and cash equivalents, investment securities, and the assets related to research and development activities for company-wide research. Depreciation and amortization in "Adjustments" is ¥11,305 million, mainly related to the assets arising from research and development activities for company-wide research unallocated to each reportable segment. Impairment losses in "Adjustments" are ¥1,648 million, mainly related to the assets arising from research and development activities for company-wide research unallocated to each reportable segment. Investments accounted for using the equity method in "Adjustments" is ¥(1,043) million, which is mainly eliminations of inter-segment transactions. Capital expenditures in "Adjustments" amounting to ¥9,617 million is mainly contributed by company-wide research activities that are not allocated to each reportable segment. Fiscal year 2024 Reportable segments Millions of yen Sales revenue: Agro & Life ICT & Mobility Solutions Solutions Advanced Medical Solutions Essential & Green Materials Sumitomo Pharma Total Others (Note 2) Adjustments Consolidated (Note 3) Sales revenues from ¥ 540,221 ¥ 606,995 ¥ 62,145 ¥ 899,029 ¥ 398,001 ¥ 2,506,391 ¥ 99,890 ¥ - ¥ 2,606,281 Inter-segment sales revenues 1,114 3,258 10,388 4,874 529 20,163 65,195 (85,358) - Total sales revenue 541,335 610,253 72,533 903,903 398,530 2,526,554 165,085 (85,358) 2,606,281 Segment profit (loss) : core operating income ¥ (Note 1) 54,978 ¥ 70,555 ¥ 3,966 ¥ (58,471) ¥ 35,337 ¥ 106,365 ¥ 66,855 ¥ (32,701) ¥ 140,519 Segment assets 771,293 635,736 125,339 791,922 728,688 3,052,978 284,587 102,219 3,439,784 Other items: Depreciation and amortization 21,046 34,154 7,701 22,764 24,862 110,527 9,763 11,307 131,597 Share of profit (loss) of investments accounted for 322 3 - 13,191 (355) 13,161 6,383 1,095 20,639 using the equity method Impairment losses 6,066 2,724 7,895 2,802 5,463 24,950 1,340 22 26,312 Reversal of impairment losses - - - - 274 274 - - 274 Investments accounted for using the equity method 8,765 507 - 233,959 - 243,231 45,699 (953) 287,977 Capital expenditures 20,102 49,230 12,998 26,300 11,453 120,083 4,398 7,244 131,725 external customers Note 1: ¥66,855 million for segment profit (core operating income) in "Others" included ¥48,879 million for gains on business transfers. Note 2: "Others" represented businesses such as radiopharmaceuticals, supplying electrical power and steam, providing services for the design, engineering, and construction management of chemical plants, and providing transport and warehousing, which were not included in reportable segments. Note 3: Amounts in "Adjustments" were as follows: ¥(32,701) million for segment profit (loss) in "Adjustments" included inter-segment elimination of ¥2,324 million and corporate expenses of ¥(35,025) million unallocated to each reportable segment. Corporate expenses were mainly research and development expenses for company-wide research, which are not treated as attributable to specific reportable segments. Segment assets in "Adjustments" were ¥102,219 million, which included ¥(96,460) million in eliminations of inter-segment receivables and other assets, and ¥198,679 million of corporate assets unallocated to each reportable segment. Corporate assets mainly consist of cash and cash equivalents, investment securities, and the assets related to research and development activities for company-wide research. Depreciation and amortization in "Adjustments" was ¥11,307 million, mainly related to the assets arising from research and development activities for company-wide research unallocated to each reportable segment. Investments accounted for using the equity method in "Adjustments" was ¥(953) million, which was eliminations of inter-segment transactions. Capital expenditures in "Adjustments" amounting to ¥7,244 million was mainly contributed by company-wide research activities that were not allocated to each reportable segment. Adjustments to income before taxes from core operating income were as follows: Millions of yen FY2025 FY2024 Core operating income ¥ 208,376 ¥ 140,519 Impairment losses (34,607) (26,312) Restructuring costs (26,627) (23,583) Gains on sales of property, plant and equipment, and intangible assets 1,207 14,339 Share of profit (loss) of investments accounted for using the equity method (non-recurring factors) - 83,569 Gains (losses) on fair value measurement of the residual interest - 9,449 Others, net 3,395 (4,948) Operating income 151,744 193,033 Finance income 28,100 17,650 Finance expenses (63,776) (152,590) Income before taxes ¥ 116,068 ¥ 58,093 Note: Breakdown of share of profit (loss) of investments accounted for using the equity method included in operating income was as follows: Millions of yen FY2025 FY2024 Share of profit (loss) of investments accounted for using the equity method Of which resulting from recurring factors Of which resulting from non-recurring factors ¥ (43,271) ¥ 20,639 (43,271) - (62,930) 83,569 (Changes in presentation) "Changes in fair value of contingent consideration," which was presented separately in the previous fiscal year, is included in "Others, net" in the current fiscal year due to decreased quantitative materiality. As a result, "Changes in fair value of contingent consideration" of ¥2,427 million has been reclassified as "Others, net" of ¥(4,948) million. Geographic information The breakdown of sales revenues and non-current assets is as follows: Sales revenues from external customers Fiscal year 2025 Millions of yen North America Japan China Of which: the U.S. Southeast Asia Others Total ¥ ¥ 675,899 ¥ 304,923 490,399 474,795 ¥ 220,815 ¥ 636,479 ¥ 2,328,515 Note: Sales revenues are classified by country and region based on the location of customers. Fiscal year 2024 Japan China ¥ 784,907 ¥ 394,545 Millions of yen North America Of which: the U.S. Southeast Asia Others Total ¥ 419,075 403,098 ¥ 265,423 ¥ 742,331 ¥ 2,606,281 Note: Sales revenues are classified by country and region based on the location of customers. Non-current assets As of March 31, 2026 North America Millions of yen Japan Of which: the U.S. Others Total ¥ ¥ 496,090 521,333 521,279 ¥ 283,375 ¥ 1,300,798 Note: Classification of non-current assets is based on the location of the assets. Financial instruments, deferred tax assets and retirement benefit assets are not included in non-current assets. As of March 31, 2025 North America Millions of yen Japan ¥ 516,145 Of which: the U.S. Others Total ¥ 497,543 497,473 ¥ 270,354 ¥ 1,284,042 Note: Classification of non-current assets is based on the location of the assets. Financial instruments, deferred tax assets and retirement benefit assets are not included in non-current assets. Information about major customers No information is shown because no customer accounts for over 10% of the amount of consolidated sales revenues from external customers. Business Combinations Significant business combinations Fiscal year 2025 There are no significant business combinations in FY2025. Fiscal year 2024 There are no significant business combinations in FY2024. Contingent consideration As for the acquisitions of Tolero Pharmaceuticals, Inc. (hereinafter, "Tolero", currently known as Sumitomo Pharma America, Inc.), contingent considerations are to be additionally paid to former shareholders upon the achievement of predetermined milestones. As for the acquisition of Tolero, consideration for the acquisition amounting to $205 million (¥23,272 million) has been paid through FY2025, and a maximum amount of $90 million (¥14,391 million) may possibly be paid before considering the time value of the money upon the achievement of the development milestones for chemical compounds under development by Tolero. In addition, a maximum amount of $150 million (¥23,985 million) may possibly be paid, before considering time value of money, upon the achievement of commercial milestones determined based on sales revenue earned after commencement of sales. The Group recognizes these contingent considerations in other financial liabilities in the consolidated statement of financial position after considering the time value of the money. The fair value hierarchy of contingent consideration and its sensitivity analysis are disclosed in Note 36 Financial Instruments. The total amounts of future payments that the Group may be required to make are ¥38,376 million (undiscounted) and ¥35,888 million (undiscounted) as of March 31, 2026 and 2025, respectively. The amounts payable by the due dates of the contingent consideration are not presented because of the uncertainty. Cash and Cash Equivalents The breakdown of cash and cash equivalents is as follows: Millions of yen March 31, 2026 March 31, 2025 Cash and deposits ¥ 208,589 ¥ 209,838 Total ¥ 208,589 ¥ 209,838 Trade and Other Receivables The breakdown of trade and other receivables is as follows: Millions of yen March 31, 2026 March 31, 2025 Trade notes and accounts receivable ¥ 548,038 ¥ 513,070 Other receivables 58,237 77,249 Others 2,395 3,517 Total ¥ 608,670 ¥ 593,836 Trade and other receivables are classified as financial assets measured at amortized cost. Among accounts receivable, receivables held for collection and sale are classified as debt financial instruments measured at fair value through other comprehensive income. Also, contract assets are included in "Others." Other Financial Assets The breakdown of other financial assets is as follows: Millions of yen March 31, 2026 March 31, 2025 Financial assets measured at fair value through OCI： Shares and investments ¥ 293,738 ¥ 173,708 Financial assets measured at fair value through profit or loss： Derivative assets 580 1,025 Others 26,474 13,856 Financial assets measured at amortized cost： Loan receivables 997 988 Others 26,984 32,843 Total ¥ 348,773 ¥ 222,420 Current assets 47,551 45,015 Non-current assets 301,222 177,405 Total ¥ 348,773 ¥ 222,420 The fair value of the investment in equity instruments measured at fair value through other comprehensive income is as follows: Millions of yen March 31, 2026 March 31, 2025 Marketable ¥ 121,179 ¥ 101,283 Non-marketable 172,559 72,425 Total ¥ 293,738 ¥ 173,708 The fair value of the major issues included in the above are as follows: Millions of yen Issue March 31, 2026 March 31, 2025 Class B Ordinary Shares of Petro Rabigh ¥ 99,192 ¥ - Sumitomo Bakelite Co., Ltd. 44,668 30,818 Inabata & Co., Ltd. 22,086 17,725 Nippon Shokubai Co., Ltd. - 9,504 Information on the Class B ordinary shares of Petro Rabigh is presented in Note 36 Financial Instruments. Investments held for the purpose of expanding its revenue base by maintaining and strengthening business relationships with the investees are designated as financial assets measured at fair value through other comprehensive income. The Group disposed and derecognized some investments in equity instruments measured at fair value through other comprehensive income to improve the efficiency of assets and reassess the business relationships. FY2025 Their fair value and accumulated gains or losses (before tax) at the time of disposal in FY2025 and FY2024 are as follows: Millions of yen FY2024 Fair Value Cumulative gains (losses) Fair Value Cumulative gains (losses) ¥ 153,242 ¥ 83,116 11,399 13,517 ¥ ¥ Accumulated gains or losses recorded as other components of equity are reclassified to retained earnings when the fair value is significantly declined or derecognized. Accumulated gains or losses (after tax) reclassified to retained earnings are ¥(12,462) million and ¥56,907 million for FY2025 and FY2024, respectively. Inventories The breakdown of Inventories is as follows: Millions of yen March 31, 2026 March 31, 2025 Merchandise and finished goods ¥ 372,322 ¥ 382,022 Raw materials and supplies 192,841 216,768 Work in process 30,308 26,453 Total ¥ 595,471 ¥ 625,243 Write-downs of inventories recognized as expenses are ¥21,314 million and ¥20,519 million for FY2025 and FY2024, respectively. Other Assets The breakdown of other assets is as follows: Millions of yen March 31, 2026 March 31, 2025 Prepaid expenses ¥ 24,474 ¥ 25,361 Income taxes receivable 10,089 10,323 Advance payment 5,365 3,210 Others 36,566 38,745 Total ¥ 76,494 ¥ 77,639 Current assets 47,429 49,993 Non-current assets 29,065 27,646 Total ¥ 76,494 ¥ 77,639 Assets Held for Sale The breakdown of assets held for sale and liabilities directly associated with assets held for sale is as follows: Millions of yen March 31, 2026 March 31, 2025 Assets held for sale: Cash and cash equivalents ¥ - ¥ 22,224 Trade and other receivables - 16,872 Inventories - 7,426 Property, plant and equipment - 5,276 Others - 7,411 Total ¥ - ¥ 59,209 Liabilities directly associated with assets held for sale: Trade and other payables ¥ - ¥ 4,041 Other current liabilities - 1,185 Others - 1,435 Total ¥ - ¥ 6,661 The major assets held for sale and liabilities directly associated with assets held for sale as of March 31, 2025 are as follows. On April 1, 2025, Sumitomo Pharma Co., Ltd., a subsidiary of the Company, resolved to transfer the Asian business of Sumitomo Pharma's wholly owned subsidiaries, Sumitomo Pharma (China) Co., Ltd. and Sumitomo Pharma Asia Pacific Pte. Ltd., along with their subsidiaries, to Marubeni Global Pharma Corporation. As a result, the Company classified the relevant assets and liabilities directly associated with the assets held for sale as assets held for sales group as of March 31, 2025. The disposal group held for sale belongs to the Sumitomo Pharma segment. The transfer of shares was completed in July 2025. In December 2024, the Company decided to transfer all of the equity interests that the Group holds in XUYOU Electronic Materials (Wuxi) Co., Ltd. and Sumika Huabei Electronic Materials (Beijing) Co.,Ltd. to Hubei Sunnytomo Optoelectronics Co., Ltd. and concluded an equity interests transfer agreement. It is highly probable that XUYOU Electronic Materials (Wuxi) Co., Ltd. and Sumika Huabei Electronic Materials (Beijing) Co.,Ltd. will cease to be the Company's group companies as a result of this transfer. Therefore, the assets associated with XUYOU Electronic Materials (Wuxi) Co., Ltd. and Sumika Huabei Electronic Materials (Beijing) Co.,Ltd. and the liabilities directly associated with these assets have been classified as a disposal group held for sale as of March 31, 2025. The disposal group held for sale belongs to the ICT & Mobility Solutions segment. The transfer of the equity interests of XUYOU Electronic Materials (Wuxi) Co., Ltd. was completed in April 2025. In addition, in February 2025, the Company decided to transfer all of shares in Sumitomo Chemical Garden Products Inc. to Dainihon Jochugiku Co., Ltd. and concluded a share transfer agreement. It is highly probable that Sumitomo Chemical Garden Products Inc. will cease to be a subsidiary of the Company as a result of this transfer. Therefore, the assets associated with Sumitomo Chemical Garden Products Inc. and the liabilities directly associated with these assets have been classified as a disposal group held for sale as of March 31, 2025. The disposal group held for sale belongs to the Agro & Life Solutions segment. The transfer of shares was completed in July 2025. Property, Plant and Equipment Changes in property, plant and equipment Changes in the carrying amounts, balances of acquisition cost, accumulated depreciation and impairment losses of property, plant and equipment are as follows: Carrying amount Land Buildings and structures Machinery and vehicles Millions of yen Tools, furniture and fixtures Right-of-use assets Construction in Total progress April 1, 2024 ¥ 91,842 ¥ 242,112 ¥ 237,018 ¥ 29,423 ¥ 100,314 ¥ 95,817 ¥ 796,526 Additions - - - - 11,284 131,048 142,332 Acquisitions through business combinations - - - - - - - Sales and disposals (4,343) (633) (840) (238) (782) (1,824) (8,660) Transfer to assets held for sale (491) (1,413) (2,289) (276) (657) (150) (5,276) Changes resulting from loss of control of subsidiaries (6,005) (7,756) (3,361) (778) (1,449) 137 (19,212) Reclassification 2,238 37,669 57,203 11,938 - (109,048) - Depreciation - (18,949) (53,841) (11,163) (17,793) - (101,746) Impairment losses - (5,696) (9,545) (148) (1,101) (1,628) (18,118) Exchange differences on conversion of foreign operations (1,641) (5,138) (3,166) (318) (808) (3,452) (14,523) Others 21 (2,518) (2,715) 776 (58) (7,563) (12,057) March 31, 2025 ¥ 81,621 ¥ 237,678 ¥ 218,464 ¥ 29,216 ¥ 88,950 ¥ 103,337 ¥ 759,266 Additions - - - - 8,472 124,021 132,493 Acquisitions through business combinations - 357 10,147 125 1,713 2,003 14,345 Sales and disposals (175) (965) (907) (263) (3,117) (352) (5,779) Transfer to assets held for sale - - - - - - - Changes resulting from loss of control of subsidiaries - (3,090) (4,568) (345) (427) (547) (8,977) Reclassification 71 28,810 67,371 10,552 - (106,804) - Depreciation - (18,140) (50,100) (10,490) (17,128) - (95,858) Impairment losses - (9,091) (17,712) (349) (963) (3,429) (31,544) Exchange differences on conversion of foreign operations 1,171 6,530 4,378 641 3,126 4,120 19,966 Others 85 508 (3,304) 46 (457) (10,102) (13,224) March 31, 2026 ¥ 82,773 242,597 223,769 29,133 80,169 112,247 770,688 Note: The depreciation of property, plant and equipment is included in "Cost of sales" and "Selling, general and administrative expenses" in the consolidated statement of income. Acquisition Cost Land Buildings and structures Machinery and vehicles Millions of yen Tools, furniture and fixtures Right-of-use assets Construction in Total progress April 1, 2024 ¥ 93,178 ¥ 775,468 ¥2,022,185 ¥ 211,416 ¥ 156,922 ¥ 116,308 ¥3,375,477 March 31, 2025 81,804 744,152 1,889,592 204,953 156,702 118,420 3,195,623 March 31, 2026 ¥ 82,965 ¥ 776,014 ¥1,949,538 ¥ 210,397 ¥ 156,583 ¥ 130,115 ¥3,305,612 Accumulated Depreciation and impairment losses Buildings and Machinery and Millions of yen Tools, Right-of-use Construction in Land structures vehicles furniture and fixtures assets progress Total April 1, 2024 ¥ 1,336 ¥ 533,356 ¥1,785,167 ¥ 181,993 ¥ 56,608 ¥ 20,491 ¥2,578,951 March 31, 2025 183 506,474 1,671,128 175,737 67,752 15,083 2,436,357 March 31, 2026 ¥ 192 ¥ 533,417 ¥1,725,769 ¥ 181,264 ¥ 76,414 ¥ 17,868 ¥2,534,924 Right-of-use Assets The carrying amounts of right-of-use assets included in property, plant and equipment are as follows: Millions of yen Land Buildings and structures Machinery and vehicles Tools, furniture and fixtures Total April 1, 2024 ¥ 31,733 ¥ 52,191 ¥ 16,226 ¥ 164 ¥ 100,314 March 31, 2025 29,840 45,016 13,972 122 88,950 March 31, 2026 ¥ 30,885 ¥ 37,992 ¥ 10,991 ¥ 301 ¥ 80,169 Goodwill and Intangible Assets Changes in goodwill and intangible assets Changes in the carrying amounts, balances of acquisition cost, accumulated amortization and impairment losses of goodwill and intangible assets are as follows: Carrying amount Millions of yen Intangible assets Research and Goodwill development Patents Software Others Total costs April 1, 2024 ¥ 263,757 ¥ 5,727 ¥ 185,655 ¥ 26,401 ¥ 55,138 ¥ 272,921 Additions - 376 3,323 6,576 292 10,567 Acquisitions through business combinations 779 - - 305 - 305 Sales and disposals - - - (405) (35) (440) Transfer to assets held for sale - (2,774) - (826) (797) (4,397) Changes resulting from loss of control of subsidiaries - - (710) (255) (11) (976) Amortization - (133) (14,619) (7,616) (5,437) (27,805) Impairment losses (1,321) - (4,712) (460) (518) (5,690) Exchange differences on conversion of (5,825) (367) (1,910) (151) (3,506) (5,934) Additions - 1,242 839 4,156 1,824 8,061 Acquisitions through business combinations - - 13 - - 13 Sales and disposals - (150) (1,465) (78) (646) (2,339) Transfer to assets held for sale - - - - - - Changes resulting from loss of control of subsidiaries - - (57) (128) (26) (211) Amortization - (112) (12,143) (6,748) (4,930) (23,933) Impairment losses (766) - - (80) (844) (924) Exchange differences on conversion of foreign operations 18,446 454 1,338 388 4,128 6,308 Others 220 22 (32) (236) (714) (960) March 31, 2026 ¥ 275,711 4,284 156,137 20,032 44,881 225,334 foreign operations Others 421 (1) 617 (811) 963 768 March 31, 2025 ¥ 257,811 ¥ 2,828 ¥ 167,644 ¥ 22,758 ¥ 46,089 ¥ 239,319 Note 1: The amortization of intangible assets is included in "Cost of sales" and "Selling, general and administrative expenses" in the consolidated statement of income. Note 2: The assets that are at the research and development stage and have yet to obtain marketing approval from regulatory authorities are not able to be used and the period in which they could deliver economic benefit is unforeseeable, therefore, the assets are classified as intangible assets of which amortization has not started. In addition, there exists a risk of impairment losses to be incurred due to failure in product commercialization due to the inherent uncertainties in the research and development processes, and due to a decrease in the profitability associated with changes in market environment and other factors. The carrying amounts of the intangible assets with indefinite useful lives are ¥710 million and ¥463 million as of March 31, 2026 and 2025, respectively. Note 3: "Others" includes customer-related assets for Agro & Life Solutions segment, marketing rights for Sumitomo Pharma segment and others. Acquisition cost Millions of yen Intangible assets Research and Goodwill development Patents Software Others Total costs April 1, 2024 ¥ 319,249 ¥ 115,619 ¥ 572,109 ¥ 107,735 ¥ 136,198 ¥ 931,661 March 31, 2025 315,973 110,754 567,772 104,377 130,619 913,522 March 31, 2026 ¥ 335,742 ¥ 120,153 ¥ 569,257 ¥ 104,861 ¥ 137,132 ¥ 931,403 Accumulated amortization and impairment losses Millions of yen Intangible assets Research and Goodwill development Patents Software Others Total costs April 1, 2024 ¥ 55,492 ¥ 109,892 ¥ 386,454 ¥ 81,334 ¥ 81,060 ¥ 658,740 March 31, 2025 58,162 107,926 400,128 81,619 84,530 674,203 March 31, 2026 ¥ 60,031 ¥ 115,869 ¥ 413,120 ¥ 84,829 ¥ 92,251 ¥ 706,069 Material intangible assets Material intangible assets recorded in the consolidated statement of financial position are patents. They are acquired through the acquisition of Myovant Sciences Ltd., and Urovant Sciences Ltd. by Sumitomo Pharma and its subsidiaries. The carrying amounts and remaining periods of amortization of material intangible assets are as follows: Millions of yen Year Remaining period Carrying amount of amortization March 31, 2026 March 31, 2025 March 31, 2026 Sumitomo Pharma Co., Ltd. MYFEMBREE ® Patents ORGOVYX ® Patents GEMTESA ® Patents ¥ 8,944 58,604 86,887 ¥ 9,734 63,782 92,246 12 12 15 Research and development costs Research and development costs recognized in the consolidated statement of income are ¥144,661 million and ¥145,192 million for FY2025 and FY2024, respectively. Impairment of Non-financial Assets Impairment losses Fiscal year 2025 Impairment losses recognized for FY2025 are ¥34,607 million. Impairment losses are recognized in "Cost of sales," "Selling, general and administrative expenses" and "Other operating expenses" in the consolidated statement of income. Details of the impairment losses by reportable segments are presented in Note 6 Segment Information. The major CGU for which impairment losses are recognized is as follows: Millions of yen Location Usage Class of assets Reportable segment Impairment losses Essential & Green Materials Chiba, Japan production facilities and common facilities Machinery and vehicles, etc. Essential & Green Materials, etc. ¥ 17,600 Details of the impairment losses ・Essential & Green Materials production facilities and common facilities ¥17,600 million (Buildings and structures ¥4,100 million; Machinery and vehicles ¥10,252 million; Others ¥3,248 million) In the Essential & Green Materials segment, etc., the entire carrying amount of Essential & Green Materials production facilities at Chiba Works was impaired mainly because of a decline in profitability due to a deterioration in the business environment. The recoverable amount in the impairment test was measured at value in use, and the disclosure of discount rate is omitted because the future cash flows are negative. Additionally, for common facilities at Chiba Works, because the recoverable amount was less than the carrying amount, the carrying amount was impaired to the recoverable amount of ¥3,515 million. The recoverable amount in the impairment test uses value in use, which was calculated by discounting future cash flows at a discount rate of 10.6% (before taxes). The major items of individually immaterial impairment losses are related to tangible assets such as machinery, equipment, and vehicles, and intangible assets, such as goodwill, in the Company's business. Impairment losses are recorded because the recoverable amount was less than the carrying amount due to factors including a decline in forecasted revenue. At impairment tests for property, plant and equipment, goodwill, and intangible assets, the recoverable amount is measured as the higher of its value in use or its fair value less costs of disposal after CGUs are determined. The assumptions used to measure the fair value less costs of disposal, or the assumptions, discount rates, and other factors used to estimate future cash flows expected during the period in use and upon their disposal after use for CGUs, which are the basis for measuring the value in use, might be affected by uncertain future changes in economic conditions. Fiscal year 2024 Impairment losses recognized for FY2024 are ¥26,312 million. Impairment losses are recognized in "Cost of sales," "Selling, general and administrative expenses" and "Other operating expenses" in the consolidated statement of income. Details of the impairment losses by reportable segments are presented in Note 6 Segment Information. The major CGUs for which impairment losses are recognized are as follows: Millions of yen Location Usage Class of assets Reportable segment Impairment losses China Chiba, Japan Osaka, Crop protection chemicals intermediate production facilities Multi-plant structure for producing fine chemicals Patent of pharmaceuticals Machinery and vehicles, etc. Buildings and structures, machinery and vehicles, etc. Agro & Life Solutions Advanced Medical Solutions ¥ 5,137 4,529 Japan Ehime, (TWYMEEG ® ) Essential & Green Materials Patent Sumitomo Pharma 4,175 Essential & Green Japan production facilities, etc. Machinery and vehicles, etc. Materials, etc. 3,248 Details of the impairment losses ・Crop protection chemicals intermediate production facilities ¥5,137 million (Buildings and structures ¥1,869 million; Machinery and vehicles ¥2,042 million; Others ¥1,225 million) ・Multi-plant structure for producing fine chemicals ¥4,529 million (Buildings and structures ¥2,415 million; Machinery and vehicles ¥2,085 million; Others ¥29 million) ・Patent of pharmaceuticals (TWYMEEG ® ) ¥4,175 million (Patent ¥4,175 million) ・Essential & Green Materials production facilities, etc. ¥3,248 million (Buildings and structures ¥810 million; Machinery and vehicles ¥2,359 million; Others ¥78 million) In the Agro & Life Solutions segment, in accordance with the sale of shares in Chinese subsidiaries, the entire carrying amount of the property, plant, and equipment was impaired because the sales price was expected to be lower than the carrying amount. In the impairment test, the recoverable amount was measured based on the fair value less costs of disposal, and the fair value less costs of disposal was based on the sales price. Because the valuation technique uses inputs that are not observable market data, the fair value less costs of disposal is classified as Level 3 in the fair value hierarchy. In the Advanced Medical Solutions segment, regarding the multi-plant structure for producing fine chemicals, because of an anticipated deterioration in the business environment and decline in profitability, an impairment test was performed. As a result, because the recoverable amount was less than the carrying amount, the carrying amount was impaired to the recoverable amount of ¥6,909 million. The recoverable amount of the assets was measured by their value in use, and the value in use was calculated by discounting future cash flows at a discount rate of 10.3% (before taxes). In the Sumitomo Pharma segment, the profitability of patent right associated with TWYMEEG ® (therapeutic agent for type 2 diabetes) was no longer expected. As a result, the entire carrying amount was impaired. The recoverable amount was measured based on the fair value less costs of disposal, and the fair value less costs of disposal was determined by the present value of estimated future cash flows based on the past experience and external information. Because the valuation technique uses inputs that are not observable market data, the fair value less costs of disposal is classified as Level 3 in the fair value hierarchy. In the Essential & Green Materials segment, etc., regarding the production facilities of Ehime Works, because the profitability of the business declined due to weak demand and lower market prices, the entire carrying amount was impaired. The recoverable amount in the impairment test uses value in use, and the disclosure of discount rate is omitted because the future cash flows are negative. The major items of individually immaterial impairment losses are related to tangible assets such as machinery, equipment, and vehicles, and intangible assets, such as patent, in the Company's business. Impairment losses are recorded because the recoverable amount was less than the carrying amount due to a decline in forecasted revenue. At impairment tests for property, plant and equipment, goodwill, and intangible assets, the recoverable amount is measured as the higher of its value in use or its fair value less costs of disposal after CGUs are determined. The assumptions used to measure the fair value less costs of disposal, or the assumptions, discount rates, and other factors used to estimate future cash flows expected during the period in use and upon their disposal after use for CGUs, which are the basis for measuring the value in use, might be affected by uncertain future changes in economic conditions. Reversal of impairment losses Fiscal year 2025 There is no material reversal of impairment losses in FY2025. Details of reversal of impairment losses by reportable segments are presented in Note 6 Segment information. Fiscal year 2024 There is no material reversal of impairment losses in FY2024. Details of reversal of impairment losses by reportable segments are presented in Note 6 Segment information. Impairment test of goodwill Goodwill arising from business combination is allocated at the acquisition to CGUs benefitting from the business combination, and the carrying amounts are ¥275,711 million and ¥257,811 million as of March 31, 2026 and 2025, respectively. The carrying amounts of goodwill associated with the Sumitomo Pharma segment are as follows: Millions of yen March 31, 2026 March 31, 2025 North America ¥ 211,098 ¥ 197,406 Total ¥ 211,098 ¥ 197,406 An impairment loss of goodwill is recognized when the recoverable amount is less than its carrying amount. The carrying amount of goodwill is reduced to its recoverable amount, which is calculated based on the fair value less costs of disposal measured based on the approved business plan. The fair value less costs of disposal is measured using estimates of the future cash flows, based on historical experience and external information, discounted to present value. This measurement includes, for products that are already on the market, forecasts of profits and fixed costs based on the sales prices of the products, the market size of the disease area to which the products belong, the market share of the products, and other factors, and for major products under development, forecasts of profits and fixed costs, etc. for the products taking into account the probability of success of research and development activities, and other factors. For impairment tests of goodwill for North America in FY2024, fair value less costs of disposal was measured by discounting estimates of the future cash flows, based on forecasts for the next 17 years considering a perpetual growth rate of 2.2%, to present value, then deducting estimated disposal costs. For impairment tests of goodwill for North America in FY2025, fair value less costs of disposal was measured by discounting estimates of the future cash flows, based on forecasts for the next 16 years considering a perpetual growth rate of 2.3%, to present value, then deducting estimated disposal costs. Because this valuation technique uses inputs that are not observable market data, the fair value less costs of disposal is classified as Level 3 in the fair value hierarchy. Impairment tests for goodwill use a discount rate based on factors such as the weighted average cost of capital established separately for each CGU. The discount rates used for impairment tests were 10.9% and 12.4% for FY2025 and FY2024, respectively. As a result of impairment tests as of March 31, 2025, an impairment loss was not recognized for goodwill in the North America CGU as the fair value less costs of disposal was above the carrying amount of this CGU, including goodwill. As a result of impairment tests as of March 31, 2026, an impairment loss was not recognized for goodwill in the North America CGU as the fair value less costs of disposal was above the carrying amount of this CGU, including goodwill. For the North America CGU, fair value less costs of disposal substantially exceeds the carrying amount, and management considers it unlikely that an impairment loss would be recognized even if the key assumptions used in the calculation of fair value less costs of disposal fluctuated within a reasonable range. Investments Accounted for Using the Equity Method Investments in associates ➀ Material associates The associate that is material to the Group is as follows: Proportion of ownership interest Company name Core business Location March 31, 2026 March 31, 2025 Rabigh Refining and Petrochemical Company Manufacturing and sales of refined petroleum products and petrochemicals Rabigh, Saudi Arabia 15.00% 37.50% The Company sold part of its Class A Ordinary Shares(Note 1) in Rabigh Refining and Petrochemical Company (hereinafter, "Petro Rabigh"), representing an equity interest of approximately 22.5%, to Saudi Arabian Oil Company (hereinafter, "Saudi Aramco") for approximately $702 million and contributed to Petro Rabigh the proceeds from the sale by subscribing to a new class of the Class B Ordinary Shares(Note 2). Although it holds less than 20% of the voting rights in Petro Rabigh, the Company accounts for Petro Rabigh as an associate, considering the Company's significant influence over Petro Rabigh through representation on the Board of Directors and the provision of technical and financial support. In the previous fiscal year, Petro Rabigh was presented under "(2) Investments in joint ventures" ; however, to enhance comparability, it has been reclassified and is presented under "(1) Investments in associates." Summarized financial information of Petro Rabigh is as follows. The Company applies the equity method to financial statements of Petro Rabigh on a three-month time lag, as it is impracticable to unify the reporting period of Petro Rabigh. The summarized financial information of Petro Rabigh disclosed in this Note is therefore for the period ended three months before the Group's reporting date, and adjustments have been made for material differences between the accounting policies applied by Petro Rabigh and the Group as well as for material transactions or events that occurred between the closing date of Petro Rabigh and the closing date of the Group. Millions of yen March 31, 2026 March 31, 2025 Current assets ¥ 388,784 ¥ 468,566 Non-current assets 2,060,364 2,081,248 Total assets ¥ 2,449,148 ¥ 2,549,814 Current liabilities 963,140 920,088 Non-current liabilities (Note 3) 940,970 1,135,571 Total liabilities ¥ 1,904,111 ¥ 2,055,659 Equity (Note 3) 545,037 494,155 Total equity attributable to Group's share of equity 81,756 185,308 Consolidation adjustment (Note 4) (32,034) (9,379) Carrying amount of investments (Note 5) 49,722 175,929 Fair value of investments (Notes 5, 6) 112,674 196,124 The material items included in the above: Cash and cash equi...

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