Toray Industries : Materials for the 144th Ordinary General Meeting of Stockholders (Matters omitted from the delivered documents)

Materials for the 144th Ordinary General Meeting of Stockholders

(Matters omitted from the delivered documents)

Consolidated Statement of Changes in Equity Notes to Consolidated Financial Statements

Non-consolidated Statement of Changes in Net Assets Notes to Non-consolidated Financial Statements

(From April 1, 2024 to March 31, 2025)

Toray Industries, Inc.

Toray Industries, Inc. and Subsidiaries April 1, 2024 - March 31, 2025

Millions of yen

Equity attributable to owners of parent Share capital Capital surplus Retained earnings Treasury shares

Exercise of share acquisition rights

Share-based payment transactions

Equity attributable to owners of parent Other components of equity

Millions of yen

Investments in equity instruments

Cash flow hedges

Deferred costs of hedging

Exchange differences on translation

Remeasurements of defined benefit plans

Total other components of equity

Total equity attributable to owners of parent

Non-controlling interests

Total equity

income

acquisition rights transactions shares

owners and other

Note: Figures are shown rounded to the nearest ¥1 million.

1. Basis of Preparation of Consolidated Financial Statements The consolidated financial statements of Toray Industries, Inc. (the "Company") and its subsidiaries (the "Group") have been prepared in accordance with International Financial Reporting Standards ("IFRS") pursuant to the provisions of Article 120, Paragraph 1 of the Regulation on Corporate Accounting. Certain disclosure items required by IFRS are omitted pursuant to the provisions in the latter part of the said paragraph.

2. Scope of Consolidation

   1. Number of consolidated subsidiaries: 194

   2. Names of major consolidated subsidiaries

   Please see "(4) Major Subsidiaries" of "1. Review of Operations of Toray Group, Business Report."

3. Application of Equity Method

   1. Number of companies accounted for using equity method: 88

   2. Names of major companies accounted for using equity method Dow Toray Co., Ltd. and Du Pont-Toray Co., Ltd.

   3. Change in the number of companies accounted for using equity method

   Increase: 2 (due to acquisition of shares and other reasons)

4. Material Accounting Policy Information

1. Financial assets

   1. Financial assets measured at amortized cost

      The Group's major financial assets, except for equity instruments and derivatives, are classified as financial assets measured at amortized cost because they are held to collect contractual cash flows that are solely payments of principal and interest that arise on specified dates.

      These financial assets are initially measured at the transaction price or other relevant value and are subsequently measured at amortized cost using the effective interest method.

   2. Equity instruments measured at fair value through other comprehensive income

      Equity instruments such as shares held primarily for the purposes of strengthening business relationships with customers and expanding businesses are designated as financial assets measured at fair value through other comprehensive income. This designation is applied consistently. These financial assets are initially measured at fair value plus transaction costs on the trade date, and subsequent changes in the fair value are recognized in other comprehensive income. The cumulative amount of the changes is included in other components of equity and reclassified to retained earnings at the time of sale.

      Dividends from these financial assets are recognized in profit or loss and included in finance income.

   3. Impairment of financial assets

      Loss allowance for financial assets measured at amortized cost is measured at an amount equal to the 12-

      month expected credit losses if the credit risk has not increased significantly since initial recognition or at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. However, loss allowance for trade receivables without any significant financing components is always measured at an amount equal to the lifetime expected credit losses. Whether the credit risk has increased significantly or not is determined mainly based on past due information and credit ratings. A financial asset is considered credit-impaired primarily when there is a substantial delay in payment or a significant financial difficulty of the borrower.

   4. Hedge accounting and derivatives

      The Group enters into derivative transactions, including forward exchange contracts and cross-currency swaps, to hedge currency risk and interest rate risk. Hedging relationships that meet the qualifying criteria for hedge accounting are accounted for as cash flow hedges in which these derivatives are designated as hedging instruments, and the portions of the gains or losses on the hedging instruments that are determined to be effective hedges are recognized in other comprehensive income. These effective portions are accumulated in other components of equity and reclassified to profit or loss as a reclassification adjustment in the same period during which the hedged items affect profit or loss. However, if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability, the amount is accounted for as an adjustment to the initial carrying amount of the asset or liability.

2. Inventories

   Inventories are measured at the lower of cost and net realizable value. Costs of inventories are mainly determined using the moving-average cost method. Net realizable value is determined by the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

3. Property, plant and equipment

   The Group applies the cost model for measurement of property, plant and equipment. Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

   Property, plant and equipment, except for land and construction in progress, are depreciated mainly using the straight-line method over the estimated useful lives. The estimated useful lives of major items of property, plant and equipment are as follows:

   • Buildings and structures: 3-60 years

   • Machinery and vehicles: 2-20 years

4. Leases

   For a lease for which the Group is a lessee, the Group recognizes a right-of-use asset and a lease liability at the commencement date of the lease. Right-of-use assets are initially measured at the amount of initial measurement of lease liabilities plus prepaid lease payments and other related costs and are depreciated mainly over the lease term. Lease liabilities are initially measured at the present value of the portion of lease payments that are not paid, discounted mainly by an incremental borrowing rate. Lease payments associated with short-term leases and leases of low-value assets are recognized as expenses over the lease term mainly on a straight-line basis.

5. Goodwill and intangible assets

   Goodwill is not amortized and is stated at cost less accumulated impairment losses.

   Intangible assets mainly comprise intangible assets acquired through business combinations and software acquired separately. The Group applies the cost model for measurement of intangible assets. Intangible assets are stated at cost less accumulated amortization and accumulated impairment losses.

   Intangible assets with finite useful lives are amortized using the straight-line method over the estimated useful lives. The estimated useful lives of major intangible assets are as follows:

   • Customer-related intangible assets: 9-21 years

   • Technology-based intangible assets: 24 years

   • Software: Mainly 5 years

6. Provisions

   Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

7. Impairment of non-financial assets

   If any indication that non-financial assets, including property, plant and equipment, intangible assets and goodwill, may be impaired exists at the end of the reporting period, the Group estimates the recoverable amount of the asset. In addition, each cash-generating unit or group of cash-generating units to which goodwill is allocated is tested for impairment annually, irrespective of whether there is any indication of impairment.

   The recoverable amount is the higher of the asset's fair value less costs of disposal or its value in use. When the recoverable amount of an individual asset cannot be estimated, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Generally, the Group identifies a

   cash-generating unit on the basis of management accounting segmentation.

   The value in use is determined as the discounted present value of future cash flows to be derived from continuing use of the asset and from its ultimate disposal. The discount rate

   is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the asset.

   If the recoverable amount of an asset or a cash-generating unit (group of units) is less than its carrying amount, an

   impairment loss is recognized. The impairment loss is recognized in profit or loss and included in other expenses. An

   impairment loss recognized for a cash-generating unit (group of units) is first allocated to reduce the carrying amount of

   any goodwill allocated to the cash-generating unit (group of units) and is then allocated to the other assets pro rata on the basis of the carrying amount of each asset.

   If there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased, the recoverable amount is estimated. If the recoverable amount exceeds the carrying amount of the asset, the impairment loss is reversed.

8. Post-employment benefits

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

   Contributions to defined contribution plans are recognized as expenses when services are rendered by employees.

   The present value of defined benefit obligations and current service cost, as well as past service costs are determined using the projected unit credit method. The discount rate is determined by reference to the market yields of high-quality corporate bonds.

   The net defined benefit liability (asset) is recognized at the present value of defined benefit obligations net of the fair value of plan assets.

   Actuarial gains and losses on defined benefit obligations and fair value changes related to plan assets are recognized in other comprehensive income as the remeasurements of defined benefit plans in the period when they arise and transferred immediately to retained earnings.

9. Revenue recognition

   The Group operates Fibers & Textiles, Performance Chemicals, Carbon Fiber Composite Materials, Environment & Engineering, Life Science and other businesses and, with regard to sales of products of these businesses, the Group determines that its performance obligation is satisfied typically when a customer obtains control of the product upon the delivery. Accordingly, revenue is mainly recognized when the product is delivered. For construction and other contracts at certain subsidiaries operating the Environment & Engineering business, revenue is recognized over time based on the progress in satisfying the performance obligation because control of a product or service is transferred over time. The progress is measured by a ratio of the actual cost to

   the total estimated cost, because the Group determines that the incurrence of cost is proportional to the progress of performance obligations.

   Revenue is measured at the consideration promised in a contract with a customer, less discounts, rebates, returned products and other items. In addition, contracts do not contain a significant financing component because consideration is normally collected about within one year from the time when the performance obligation is satisfied.

10. Foreign currency translation

    1. Foreign currency transactions

       Foreign currency transactions are translated into the functional currency at the spot exchange rate at the date of the transaction or at the rate that approximates the spot exchange rate. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated into the functional currency at the exchange rate at the end of the reporting period.

       Exchange differences arising from the translation or settlement are recognized in profit or loss and included in finance income and finance costs. However, exchange differences arising from equity instruments measured at fair value through other comprehensive income and cash flow hedges are recognized in other comprehensive income.

    2. Foreign operations

The assets and liabilities of foreign operations are translated into Japanese yen using the exchange rate at the end of the reporting period. The income and expenses are translated into Japanese yen using the average exchange rate for the reporting period, except in cases where the exchange rate fluctuates significantly. Exchange differences arising from the translation of a foreign operation's financial statements are recognized in other comprehensive income. These exchange differences are accumulated in other components of equity and reclassified to profit or loss upon disposal of the related foreign operation.

1. Impairment of non-financial assets

   If any indication that non-financial assets, including property, plant and equipment (¥1,109,588 million), intangible assets (¥99,299 million) and goodwill (¥94,643 million), may be impaired exists at the end of the reporting period, the Group estimates the recoverable amount of the asset. In addition, each cash-generating unit or group of cash-generating units to which goodwill is allocated is tested for impairment annually, irrespective of whether there is any indication of impairment.

   In determining the recoverable amount, certain assumptions are established for future cash flows, discount rates and other items. These assumptions are determined by management's

   best estimates and judgements but may be affected by changes in future economic conditions and business plans. If it becomes necessary to review the assumptions, the consolidated financial statements may be materially affected.

2. Recoverability of deferred tax assets

   Deferred tax assets (¥25,162 million) are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences and carryforwards can be utilized, and their recoverability is reviewed every period. In determining the recoverability, the amount and timing of taxable profit generated are estimated based on business plans. These assumptions are determined by management's best estimates and judgements but may be affected by changes in future economic conditions and other events. If it becomes necessary to review the assumptions, the consolidated financial statements may be materially affected.

3. Measurement of defined benefit obligations

The net defined benefit liability (asset) is recognized at the present value of defined benefit obligations net of the fair value of plan assets (retirement benefit asset of ¥59,888 million and liability of ¥80,254 million). Defined benefit obligations are calculated based on actuarial assumptions, which include estimates of discount rates, employee turnover, mortality and future increases in salaries. These actuarial assumptions may be affected by changes in future economic climates or social conditions. If it becomes necessary to review the assumptions, the consolidated financial statements may be materially affected.