CMIC HOLDINGS Co., Ltd.

Consolidated Financial Statements
For the Year ended September 30,2023
Together with Independent
Auditors’ ReportIndependent Auditor’s Report

The Board of Directors
CMIC HOLDINGS Co., Ltd.
OpinionWe have audited the accompanying consolidated financial statements of CMIC HOLDINGS
Co., Ltd. and its consolidated subsidiaries (the Group), which comprise the consolidated balance
sheet as at September 30, 2023, and the consolidated statements of income, comprehensive
income, changes in net assets, and cash flows for the year then ended, and notes to theconsolidated financial statements.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at September 30, 2023, and its
consolidated financial performance and its consolidated cash flows for the year then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with the ethical requirements that are relevant to our audit of theconsolidated financial statements in Japan, and we have fulfilled our other ethicalresponsibilities in accordance with these requirements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significancein our audit of the consolidated financial statements of the current period. These matters wereaddressed in the context of the audit of the consolidated financial statements as a whole, and informing the auditor’s opinion thereon, and we do not provide a separate opinion on thesematters.

Impairment of non-current assets of CMIC Bio Co., Ltd. and harmo Co.,Ltd
Description of Key Audit Matter

Auditor’s Response

As at September 30, 2023, the Group
recorded property, plant and equipment andintangible assets of ¥8,189 million and¥1,579 million, respectively, in the
consolidated balance sheet, accounting for
14% of total assets. As at September 30,
2023, the book values of property, plant andequipment and intangible assets held by
CMIC Bio Co., Ltd. before impairment were¥298 million and ¥0 million, respectively.
Additionally, the book values of property,
plant and equipment, intangible assets, andinvestments and other assets held by harmo
Co.,Ltd before impairment were ¥2 million,¥506 million, and ¥2 million, respectively.

The audit procedures we performed to assess
the impairment of non-current assets of
CMIC Bio Co., Ltd. and harmo Co.,Ltd
include the following, among others:

As described in Note 12. Impairment loss on
non-current assets, in considering whether torecognize impairment loss on property, plantand equipment and intangible assets held by
CMIC Bio Co., Ltd., the Group determinedthat it would be difficult to recover its
investment due to factors such as its
suspension of the production of active
pharmaceutical ingredients forbiopharmaceuticals and, as a result,undiscounted estimated future cash flows
generated from the asset groups were lessthan their book values. Accordingly, theGroup reduced the book values of the asset
groups to their recoverable amounts andrecognized impairment loss of ¥299 million.
The Group measures the recoverable amounts
at value in use, and value in use is calculated
based on future cash flows.

・We performed trend analysis andsensitivity analysis for net sales to consider
the orders expected to be received, which is asignificant assumption used in calculations
and included in the business plan for thefollowing fiscal year and onwards.

In addition, in considering whether torecognize impairment loss on property, plantand equipment, intangible assets, andinvestments and other assets held by harmo
Co.,Ltd, the Group determined that it would
be difficult to recover its investment due todelays in the development of internallydeveloped software and, as a result,

・We compared the cash flows projection
period with the remaining economic useful
lives of the major assets.
・We considered the consistency between theestimated future cash flows and the businessplan approved by the Board of Directors.
・We compared the business plans for prioryears with actual results to evaluate theeffectiveness of management’s estimation
process.

undiscounted estimated future cash flows
generated from the asset groups were lessthan their book values. Accordingly, theGroup reduced the book values of the asset
groups to their recoverable amounts andrecognized impairment loss of ¥511 million.
The Group measures the recoverable amounts
at value in use, and value in use is calculated
based on future cash flows.
The estimated future cash flows generated
from the continued use of an asset or assets
group are based on future cash flows that are
in accordance with the business plan. The
significant assumption underlying thisbusiness plan is the orders expected to bereceived within the cash flow projection
period.
Given that the aforementioned significant
assumption used to estimate future cash flows
is subject to uncertainty and requires
management’s judgement, and considering
the quantitative materiality of property, plantand equipment and intangible assets to theconsolidated balance sheet, we determinedthat impairment of non-current assets of
CMIC Bio Co., Ltd. and harmo Co.,Ltd is a
key audit matter.

Other Information
Other information comprises the information included in disclosure documents that contain
audited consolidated financial statements, but does not include the consolidated financial
statements and our auditor’s report thereon.
We have concluded that other information does not exist. Accordingly, we have not performed
any work related to other information.

Responsibilities of Management, the Corporate Auditor and the Board of Corporate
Auditors for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in Japan, andfor such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern and disclosing, as required by accounting
principles generally accepted in Japan, matters related to going concern.
The Corporate Auditor and the Board of Corporate Auditors are responsible for overseeing theGroup’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor’s report that includes our opinion. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
・ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the consolidated financial statements is not expressing an opinion on the effectiveness of theGroup’s internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group to cease tocontinue as a going concern.

・ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentationin accordance with accounting principles generally accepted in Japan.
・ Obtain sufficient appropriate audit evidence regarding the financial information of theentities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance ofthe group audit. We remain solely responsible for our audit opinion.

We communicate with the Corporate Auditor and the Board of Corporate Auditors regarding,among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Corporate Auditor and the Board of Corporate Auditors with a statementthat we have complied with the ethical requirements regarding independence that are relevant toour audit of the consolidated financial statements in Japan, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.
From the matters communicated with the Corporate Auditor and the Board of Corporate
Auditors, we determine those matters that were of most significance in the audit of theconsolidated financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is
required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

Ernst & Young ShinNihon LLC
Tokyo, Japan
February 29, 2024

Seiichiro Suyama
Designated Engagement Partner
Certified Public Accountant

Mikio Shimizu
Designated Engagement Partner
Certified Public Accountant

CONSOLIDATED BALANCE SHEETCMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
As of September 30, 2022 and 2023

Millions of yen
ASSETS

2022

2023

Current assets:
Cash and deposits (Note 16)
Notes and accounts receivable-trade, and contract
assets (Note 3)￥

11,806￥

19,034

24,632

16,992526

414

Work in process(Note 9)

4,384

1,927

Raw materials and supplies(Note 9)

3,932

1,077

Other

2,786

2,997

(58)

(121)

48,01042,322

Buildings and structures

29,412

9,120

Machinery, equipment and vehicles

25,593

1,642

Tools, furniture and fixtures

8,026

4,984

Land

6,836

1,247

Leased assets

5,183

638

Construction in progress

4,335

91

(36,565)(9,536)42,822

8,189

Goodwill

32

337

Other

2,260

1,241

2,292

1,579

Investment securities (Notes 18 and 20)

3,039

9,369

Deferred tax assets (Note 24)

8,471

5,718

Lease and guarantee deposits

2,350

2,246

Other

1,321

789

Allowance for doubtful accounts

(719)

－

Total investments and other assets

14,464

18,123

Total non-current assets

59,58027,892Merchandise and finished goods(Note 9)

Allowance for doubtful accounts
Total current assets
Non-current assets:
Property, plant and equipment:

Less: accumulated depreciation
Total property, plant and equipment
Intangible assets:

Total intangible assets
Investments and other assets:￥

Total assets

107,590￥

70,215The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 1 -CONSOLIDATED BALANCE SHEET (continued)
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
As of September 30, 2022 and 2023
Millions of yen
LIABILITIES AND NET ASSETS

2022

2023

Current liabilities:
Notes and accounts payable-trade
Current portion of long-term borrowings(Notes 18 and 19)

￥

1,190
3,602

￥

85
1,123

Accounts payable-otherAccrued expenses
Income taxes payable

8,400
2,024
3,868

5,929
1,586
564

Contract liabilities
Provision for bonuses
Provision for bonuses for directors
Provision for loss on orders received

4,470
6,110
92
1,225

2,014
4,335
100
1,030

Other

4,888

3,901

35,872

20,670Long-term borrowings(Notes 18 and 19)
Lease obligations

13,534
3,627

1,677
127

Deferred tax liabilities (Note 24)
Retirement benefit liability（Note 22）1211,000
370
1,581

4
9,388
259
－

322

255

30,448

11,711

66,32032,382

Total current liabilities
Non-current liabilities:

Asset retirement obligations (Note 25)
Long-term unearned revenue
Other
Total non-current liabilities
Total liabilities
NET ASSETS (Note 15)
Shareholders' equity:
Share capital
Authorized-46,000,000 shares Issued-18,923,569 shares in 2022
Authorized-46,000,000 shares Issued-18,923,569 shares in 2023
Capital surplus
Retained earnings

3,087
6,093
24,4443,087
6,050
30,712

Treasury shares, at cost-1,367,340 shares in 2022
and 2,038,924 shares in 2023

(2,346)(3,580)31,27936,271

742
(432)

352
(557)

Total shareholders' equity
Accumulated other comprehensive income （Notes 14 and 22）:
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans

34

18

344

(186)

Non-controlling interests

9,645

1,748

Total net assets

41,26937,833

Total accumulated other comprehensive income￥

Total liabilities and net assets

107,590￥

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 2 -70,215CONSOLIDATED STATEMENT OF INCOME
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
Millions of yen
2022￥

Net sales (Note 8)2023

108,461￥

104,701

Costs and expenses:
Cost of sales(82,203)(79,999)

Gross profit

26,25824,702

Selling, general and administrative expenses （Notes 10 and 11）:

(14,412)(14,434)

Operating profit

11,845

10,267

Non-operating income (expenses):
Interest income
Foreign exchange gains
Subsidy income
Other income
Interest expenses
Share of loss of entities accounted for using equity method
Other expenses
Total Non-operating income (expenses)
Ordinary income
Extraordinary income (losses):Gain on change in equity
Gain on sales of investment securities
Gain on reversal of asset retirement obligations
Impairment losses(Note 12)
Loss on retirement of non-current assets(Note 13)
Loss on valuation of investment securities
Loss on liquidation of subsidiaries
Compensation for loss
Total extraordinary income (losses)
Profit before income taxes

3

22

1,720

135

23
83

37
57

(152)
－

(154)
(295)

(73)

(47)

1,604

(244)

13,45010,022

－
－
139

38
3,349
－

(1,386)
(155)
(8)
－

(1,090)
(233)
(62)
(49)

－

(100)

(1,410)1,852

12,03911,875

6,066(3,071)

4,163
421

2,994

4,585

9,045

7,289

657

137

Income taxes (Note 24):
Current
Deferred
Total income taxes
ProfitProfit attributable to non-controlling interests￥

Profit attributable to owners of parent

8,387

￥

7,152

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 3 -CONSOLIDATED STATEMENT OF INCOME (continued)
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
2022

2023

Yen

Yen

Amounts per share of common stock:￥

Profit attributable to owners of parent(Note 31)
Diluted net income
Cash dividends applicable to the year(Note 15)469.44￥416.25

－

－

50.00

50.00

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
Millions of yen
2022￥

Profit

9,045

2023
￥

7,289

Other comprehensive income （Notes 14 and 22）:
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans

99
(828)
(173)
－

Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income

(390)
4
(12)
(130)

(902)

Comprehensive income

(529)

￥

8,142

￥

6,760

￥

7,909

￥

6,622

Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

233

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 4 -

138

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETSCMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
Shares2022

2023

Balance at the beginning of the year

18,923,569

18,923,569

Balance at the end of the year

18,923,569

18,923,569

Number of shares of common stock:

Millions of yen
2022

2023

Capital stock:￥

Balance at the beginning of the year
Balance at the end of the year

3,087

￥

3,087

3,087

3,087

Balance at the beginning of the year
Disposal of treasury shares
Change in ownership interest of parent due to transactions with noncontrolling interests

6,100

6,093
2

(6)

(45)

Balance at the end of the year

6,093

6,050

Retained earnings:
Balance at the beginning of the year

16,60024,444－

Capital surplus:

Cumulative effects of changes in accounting policies

67

Restated balance
Profit attributable to owners of parent
Cash dividends paid - ￥33.50 per share in 2022

16,6678,387(610)

24,4447,152￥50.00 per share in 2023
(0)

(884)
－

Balance at the end of the year

24,44430,712

Treasury stock:
Balance at the beginning of the year

(1,546)(2,346)(800)－(1,269)(2,346)(3,580)Change in scope of consolidation

Acquisition of treasury stock
Disposal of treasury shares
Balance at the end of the year
- 1,367,340 shares in 2022 and 2,038,924 shares in 2023￥

Total shareholders' equity

31,27935￥

36,271

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 5 -CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (continued)
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
Millions of yen
2022
Valuation difference on available-for-sale securities:
Balance at the beginning of the year

￥

2023
642

￥

742

Net change in items other than those in shareholders' equity

100

(390)

Balance at the end of the year

742

352

(1)
(431)

(432)
(124)

(432)

(557)

Foreign currency translation adjustments:
Balance at the beginning of the year
Net change in items other than those in shareholders' equity
Balance at the end of the year
Remeasurements of defined benefit plans
Balance at the beginning of the year

182

34

(147)

(16)

Balance at the end of the year

34

18

Total accumulated other comprehensive income

344

(186)

Balance at the beginning of the year
Net change in items other than those in shareholders' equity

9,420
224

9,645
(7,896)

Balance at the end of the year

9,645

1,748

Net change in items other than those in shareholders' equity

Non-controlling interests￥

Total net assets

41,269￥37,833

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 6 -CONSOLIDATED STATEMENT OF CASH FLOWSCMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
Millions of yen
2022

2023

Cash flows from operating activities:￥

Profit before income taxes

12,039￥11,875

Depreciation

5,227

4,660

Impairment losses
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income

1,386
21
105
(3)

1,090
103
(619)
(22)

152

154

(1,646)－(444)

Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using equity method
Decrease (increase) in trade receivables(6,064)295
4,678

Decrease (increase) in inventories(1,398)(32)

Increase (decrease) in trade payables
Increase (decrease) in provision for bonuses

124
2,962

(23)
(1,559)

Increase (decrease) in provision for directors' bonuses
Increase (decrease) in retirement benefit liability

2
471

8
616

Increase (decrease) in provision for loss on orders received

(81)
－

(198)

Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Loss on retirement of non-current assets(3,349)62
233

Loss (gain) on change in equity

8
155
－

Gain on reversal of asset retirement obligations
Loss on liquidation of subsidiaries
Compensation for loss

(139)
－
－

Subsidy income

(23)

(37)

2,111
488
557
173

71
(91)
126
296

Interest and dividend received
Interest expenses paid

16,631
2(154)

18,00423(156)

Subsidies received
Income taxes paid

23
(5,289)37(7,458)

Increase (decrease) in contract liabilities
Increase (decrease) in accrued expenses
Increase (decrease) in deposits received
Other, net
Subtotal

Net cash provided by (used in) operating activities￥

11,213

(38)
－
49
100

￥

10,449The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 7 -CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
Years ended September 30, 2022 and 2023
Millions of yen
2022

2023

Cash flows from investing activities￥

Payments into time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment(99)(6,508)￥(41)(5,417)12

6Purchase of investment securities
Proceeds from sales of investment securities
Purchase of intangible assets
Proceeds from sale of intangible assets

(80)
30
(885)
－

Purchase of shares of subsidiaries

(136)

(486)
5,039
(826)
1
－

Payments for lease and guarantee deposits

(466)

(74)

Proceeds from refund of leasehold and guarantee deposits
Proceeds from collection of long-term loans receivable

98
－

187
3,907

Purchase of shares of subsidiaries resulting in change in scopeof consolidation

－

(160)

Other, net

(8)

(0)

(8,045)

2,136

(918)
4,700
(3,684)
(800)

(25)
3,500
(2,770)(1,260)

(610)

(883)

(8)

(5)

－

(210)

Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Purchase of shares of subsidiaries not resulting in change inscope of consolidation
Proceeds from share issuance to non-controlling shareholders
Repayments of lease liabilities
Proceeds from sale and leaseback transactions
Purchase of treasury shares of a subsidiary
Proceeds from disposal of treasury shares of a subsidiary
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents from newly consolidated
subsidiary
Decrease in cash and cash equivalents resulting from exclusionof subsidiaries from consolidation (Note 16)
Cash and cash equivalents at end of period (Note 16)

￥

－

250

(552)
643
－

(451)
－
(12,000)－

12,249(1,230)(1,606)

325

109

2,263
9,379

11,088
11,70360－－(3,760)11,703￥

19,032

The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 8 -NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CMIC HOLDINGS Co., Ltd. and consolidated subsidiaries
1 Basis of presenting consolidated financial statements

The accompanying consolidated financial statements have been prepared based on the accounts
maintained by CMIC HOLDINGS Co., Ltd. (the “Company”) and its domestic consolidated subsidiaries(the “Domestic Companies”) in accordance with the provisions set forth in the Financial Instruments andExchange Act and its related accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”) which are different in certain respects as to applicationand disclosure requirements from International Financial Reporting Standards.
The accounts of overseas subsidiaries have been prepared in accordance with either International
Financial Reporting Standards or accounting principles generally accepted in the United States, with thenecessary consolidation adjustments made based on materiality.
The accompanying consolidated financial statements have been restructured and translated into English
from the consolidated financial statements of the Company prepared in accordance with Japanese
GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Act. Certain supplementary information included in the statutory
Japanese language consolidated financial statements, but not required for fair presentation, is notpresented in the accompanying consolidated financial statements.
In preparing the accompanying consolidated financial statements, certain reclassifications have been
made in the consolidated financial statements issued domestically in order to present them in a form
which is more familiar to readers outside Japan.

- 9 -2 Significant accounting policies
Consolidation- As of September 30, 2023, the numbers of consolidated subsidiaries and affiliates
accounted for by the equity method are 22 and 4 (24 and 1 in 2022). The accompanying
consolidated financial statements for the years ended September 30, 2022 and 2023 include theaccounts of the Company and its subsidiaries (the “Companies”).
The Company acquired shares in “KNOCK ON THE DOOR Inc.” through a third-party allotment inwhich the Company subscribed to and received issued voting preferred shares, thereby resulting in
KNOCK ON THE DOOR Inc.’s inclusion within the scope of consolidation.
“CMIC CMO Co., Ltd.” and its subsidiaries, “CMIC CMO Korea Co., Ltd.,” and “CMIC CMO USA
Corporation”, have been excluded from the scope of consolidation and included within the scope ofequity method application due to a decrease in the percentage of shares owned by the Company.
This significant change is a result of the dissolution of the capital business alliance between the
Company and Development Bank of Japan Inc. in the CDMO (Contract Development andManufacturing Organization) business, as well as a disposal of treasury stock and implementationof third-party allotment by CMIC CMO Co., Ltd. to Dai Nippon Printing Co., Ltd. As a result ofchanges in the scope of consolidation and the application of the equity method, the total assets andtotal liabilities in the consolidated balance sheet have decreased as of the end of the current
consolidated fiscal year. Furthermore, these changes are deemed to have a significant impact on
the consolidated financial statements for the next consolidated fiscal year. The main impact is adecrease in net sales in the consolidated income statement, among other factors.
Investments in subsidiaries and affiliates which are not consolidated or accounted for by the equity
method are carried at cost or less. The Company has an affiliate as such at September 30, 2022
and 2023.
Non-consolidated subsidiary including animo Co., Ltd. was excluded from the scope of
consolidation because it is small-sized company and its total assets, net sales, and the Company’s
interests in their respective amounts of profit or loss and retained earnings in aggregate haveminimal impact on the consolidated financial statements and do not have importance as a whole.
The fiscal year-end of CMIC (Beijing) Co., Ltd. is December 31. This subsidiary provisionally closes
its books at September 30 for the purpose of consolidation of the Company. The fiscal year-end of
the other subsidiaries other than the above subsidiaries is September 30.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries,
including the portion attributable to non-controlling interests, are recorded based on the fair values
at the time the Company acquired the control of the respective subsidiaries.
Securities- Securities are classified into three categories: trading, held-to-maturity or available-for-sale.
The Companies have no securities categorized as trading securities or held-to-maturity securities.

Marketable securities classified as available-for-sale securities are stated at fair value.
Unrealized gains or losses on these securities are reported, net of applicable income taxes, as aseparate component of net assets. Realized gains and losses on sales of such securities arecomputed using the moving-average method. Non-marketable securities classified as available-forsale securities are stated at cost by the moving-average method.
Inventories- Inventories are valued at the lower of cost or net realizable value at the fiscal year end in thebalance sheet. Merchandise and finished goods are principally stated at cost determined by the
first-in first-out method. Work-in-process is principally stated at cost determined by the identified- 10 -

cost method, and by the first-in first-out method in certain consolidated subsidiaries. Raw materials

and supplies are principally stated at cost determined by the moving-average method.
Property, plant and equipment- Tangible fixed assets of the Companies are depreciated using thestraight-line method over the estimated useful lives.
The estimated useful lives of depreciable assets are as follows:
Buildings and structures: 2 years to 60 years

Machinery, equipment and vehicles: 2 years to 17 years
Tools, furniture and fixtures: 2 years to 20 years
Intangible assets- Intangible assets of the Companies are amortized using the straight-line method overthe estimated useful lives. Software for internal use is amortized using the straight-line method overthe estimated useful life (5 years).
Lease assets- The Companies use the same depreciation method that applies to self-owned fixed assets

for finance lease transactions that transfer ownership and use the straight-line method over thelease term with no residual value for finance lease transactions that do not transfer ownership.
Allowance for doubtful accounts- The Companies provide an allowance for doubtful accounts in amounts

sufficient to cover probable losses on collection. It comprises an estimated uncollectible amount for
certain receivables classified as “doubtful” or “bankrupt” and, for other receivables, an amountcalculated using the rate of actual defaults in a certain reference period.
Provision for bonuses- The Companies provide an allowance for employees’ bonuses based on theestimated amount of the bonus payments.
Provision for directors’ bonuses- The Companies provide an allowance for directors’ bonuses based on

the estimated amount of the bonus payments.
Provision for loss on orders received- To provide for future losses on orders received, the Companies

reasonably estimate and provide an allowance for the amount of future foreseeable losses at theend of the year.
Retirement benefits- The retirement benefits obligation for employees is attributed to each period by thebenefit formula method over estimated years of service of the eligible employees.
Prior service cost is being amortized as incurred by the straight-line method over the periods (6years), which are shorter than the average remaining years of the employees.

Actuarial gain or loss amortized in the year following the year in which the gain or loss isrecognized primarily by the straight-line method over period (1 year), which is shorter than the
average remaining years of service of the employees.
Certain consolidated subsidiaries adopt, in calculating their projected benefit obligation, thesimplified method which assumes retirement benefit obligation to be equal to the benefits payable if
all eligible employees voluntarily terminated their employment at fiscal year end.

- 11 -

Accounting standards for significant revenue and expenses- For the Companies’ revenue from contracts

with customers, the details of major performance obligations in their major businesses and a point
in time when the performance obligation is satisfied (a point in time when revenue is recognized)
are as follows:(1)Pharmaceutical Solutions
CRO(Contract Research Organization)-Main customers are pharmaceutical companies, and theCompanies carry out services related to pharmaceutical development support. The Companies
recognizes performance obligations to provide the services, which include consulting services
from development to application for approval and launch of pharmaceuticals, regenerative
medicine products, medical devices, analytical chemistry services related to quality assurance
and pharmacokinetics ,non-clinical and clinical studies to confirm the efficacy and safety ofcandidate substances, PMS (post-marketing surveillance) ,and clinical research , etc. The
Companies recognize that such performance obligations are satisfied primarily in accordancewith the provision of services in contracts with customers. When an invoiced amount (right toinvoice) directly corresponds to the consideration amount for the satisfied performanceobligation, the Companies recognize revenue by the amount in which the invoice is entitled.
CDMO(Contract Development Manufacturing Organization)-Main customers are pharmaceuticalcompanies, and the Companies carry out services related to pharmaceutical formulation
development and manufacturing support. Mainly the Companies have performance obligations
to provide customers with the products for commercial production, and recognize the revenue
at the time when the performance obligation is completed by customers’ acceptance of the
products, because control of the products is transferred to the customers and the performanceobligation is satisfied at that time.
Market Solutions-Main customers are pharmaceutical companies, and the Companies carry out
services related to CSO(Contract Sales Organization) and provide services on dispatching MR
to pharmaceutical companies and dispatching SR(Sales Representative) to medical device
manufacturers , mainly. The companies recognize that performance obligations of dispatching
service is to provide labor under contracts. The companies recognize that such performanceobligations are satisfied in accordance with the provision of labor to customers, and therevenue is recognized based on the amount stipulated in the temporary staffing contract
according to the utilization performance of the temporary staff during the dispatch period.
In addition, regarding the distribution business for orphan and other drugs, the companies
have performance obligations to deliver the product, and recognize the revenue at the time
when the performance obligation is completed by customers’ acceptance of the product,
because control of the products is transferred to the customer and the performance obligation
is satisfied at that time.

- 12 -

(2)Healthcare Solutions -Healthcare Solutions is constituted Site Support Solutions business and

Healthcare Revolution business, Site Support Solutions business provides comprehensive
support for healthcare-related facilities and healthcare professionals, and Healthcare
Revolution business provides solutions using a new ecosystem for healthcare to individuals
and local governments. In both business, the companies recognize the provision of services incontracts with customers as performance obligation. The Companies recognize that such
performance obligations are satisfied primarily in accordance with the provision of services incontracts with customers. When an invoiced amount (right to invoice) directly corresponds tothe consideration amount for the satisfied performance obligation, the Companies recognize
revenue by the amount in which the invoice is entitled.
In addition, regarding to provide the product for self-checking, the Companies have
performance obligations to provide it for customers and recognize the revenue at the time
when the performance obligation is completed by the customers’ acceptance of the product,
because control of the products is transferred to the customers and the performance obligation
is satisfied at that time.
Foreign currency translation- Receivables and payables of the Domestic Companies denominated inforeign currencies are translated into Japanese yen at the exchange rates prevailing at the balance
sheet date and Gaines and losses arising foreign currency transaction are presented as “Foreignexchange gains (losses)” in “CONSOLIDATED STATEMENT OF INCOME”, except forshareholders’ equity, which is translated at historical rates. The income and expenses of theoverseas subsidiaries are translated into Japanese yen at the average exchange rates of the year.
Differences arising from such translation are shown as “Foreign currency translation adjustments”
and “Non-controlling interests” in “Net assets”.
Hedge accounting(1) Hedge accounting method:

The Companies adopt the deferral method. The exceptional treatment is applied with respect tointerest rate swaps, in cases where criteria for the exceptional treatment are met.
(2) Hedging instruments and hedged items:
The derivatives designated as hedging instruments are interest rate swap contracts.
The hedged items are interest on borrowings.
(3) Hedging policy:
The Companies’ policy is to utilize the above hedging instruments in order to reduce theCompanies’ exposure to the risk of interest rate fluctuation.
(4) Methods for evaluating hedge effectiveness:
The Companies evaluate effectiveness of hedging transactions by reference to the accumulated
gains or losses on the hedging instruments and the related hedged for transactions from thecommencement of the hedges.
The Companies omit an evaluation of effectiveness to which the exceptional treatment is applied.
Goodwill- Goodwill represents the difference between the cost and the underlying net equity at fair valueof investments in consolidated subsidiaries and in affiliates accounted for by the equity method has
been amortized on a straight-line basis over the estimated useful life with the exception of minor
amounts which are charged to the consolidated statement of income in the year of acquisition.

- 13 -Cash and cash equivalents- In preparing the consolidated statements of cash flows, cash on hand,readily-available deposits and short-term highly liquid investments with a maturity not exceeding
three months at the time of purchase without significant risk of change in value are considered tobe cash and cash equivalents.
Japanese Group Relief System- The Company and certain domestic consolidated subsidiaries apply theJapanese Group Relief System.
Amounts per share of common stock- Computations of profit attributable to owners of parent per shareare based on the weighted-average number of shares outstanding during the respective years.
Diluted profit attributable to owners of parent per share is computed based on the weightedaverage number of shares of common stock and contingent issuance of common stock fromwarrants. Cash dividends per share represent the actual amount declared as applicable to therespective years.
Reclassification- Certain prior year amounts have been reclassified to conform to the current year
presentation.

- 14 -

(Significant accounting estimates)

For the year ended September 30, 2022
・Impairment loss on non-current assets(1) Amount recorded in the consolidated financial statements for the years ended September 30,
2022.
The Company determined that there was an indication of impairment for property, plant andequipment (tangible assets) and intangible assets of the asset group related to Ashikaga Plant(the new sterile injectable production facility) of CMIC CMO Co., Ltd. (CMIC CMO) (book value ¥4,999 million) However, the Company did not recognize an impairment loss on tangible assets
and intangible assets of CMIC CMO as the undiscounted estimated future cash flows generated
from the asset group exceeded the book value .
(2) Information on significant accounting estimates for the identified items① Calculation method
The Companies base their assets grouping into the smallest unit (asset group) that generates
identifiable cash flows that are largely independent of cash flows from other assets or asset
groups and determines whether there is an indication of impairment for each asset group.
Whenever there are indications of impairment for an asset or an asset group, the Company
determines whether recognition of impairment loss is necessary or not. When the Company
determines that an impairment loss should be recognized, the book value is reduced torecoverable amount and an impairment loss is recognized.
The estimated future cash flows generated from the continued use of an asset or asset group aredetermined based on the business plan approved by the Board of Directors or other organs.
② Major assumptions

The major assumptions in estimating future cash flows include sales unit price and order volume
which serve as the basis of the business plan.
③ Impact on consolidated financial statements for the next consolidated fiscal year
If major assumptions deviate from the actual results due to fluctuations in future economic

trends, the Companies may determine that there are indications of impairment for new assets orasset groups. If the recoverable amount is less than the book value, an impairment loss may
occur in the next consolidated fiscal year.
For the year ended September 30, 2023
The Companies have omitted this disclosure as no significant risks were identified in theaccounting estimates made in preparing the consolidated financial statements for the subsequentconsolidated fiscal year.

- 15 -

(Changes in accounting policies)(Application of “Implementation Guidance on Accounting Standard for Fair Value Measurement”)
The “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Statement
No.31, June17, 2021) is applied from the first quarter of the fiscal year ending September 30, 2023.
Based on the transitional treatment prescribed in Paragraph 27-2 of the “Implementation Guidance on
Accounting Standard for Fair Value Measurement”,the Companies have decided to apply the new
accounting policies set forth by the “Implementation Guidance on Accounting Standard for Fair Value
Measurement” in the future. These changes had no impact on the consolidated financial statements.
(Accounting Standards Issued but Not Yet Effective）
・Accounting Standard for Current Income Taxes（ASBJ Statement No.27, dated October 28, 2022）
・Accounting Standard for Presentation of Comprehensive Income（ASBJ Statement No.25, dated
October 28, 2022）
・Guidance on Accounting Standard for Tax Effect Accounting（ASBJ Guidance No.28, dated
October 28, 2022）(1) Overview
These accounting standards stipulate the accounting categories of corporate income taxes and soon that are imposed on other comprehensive income and the handling of tax effect accounting in
relation to the sale of the equities of subsidiaries when the group corporate tax system is applied.

(2) Scheduled application date
The Company plans to apply these accounting standards from the beginning of the fiscal year
ending on September 30, 2025.
(3) Impact of the application of these accounting standards
The Company is currently evaluating the financial impact of the application of the AccountingStandard for Current Income Taxes and others on its consolidated financial statements.
(Additional information)
Accounting for Employee Stock Ownership Plan (J-ESOP) - The Company introduced “the Stock
Granting Trust (J-ESOP)” as a mid- to long-term incentive program for employees of the Company

and its subsidiaries and affiliates, based on approval at the board of directors meeting held on
November 7, 2012.
(1) Overview of the transactions
J-ESOP is a program to grant the Company’s common stocks to the employees of thecompanies who fulfill requirements under the regulations of the Company. The Companies vest
points to each employee based on their contributions, and grant the Company’s common stocks
according to their total points at the time that fulfill requirements under the regulations of theCompany. Such stocks, including stocks to be granted in the future, are purchased by money
held in the J-ESOP trust, managed separately from book of the Company.
J-ESOP is an incentive program to motivate them to improve corporate value, and to securetalented people.
(2) While adopting “Practical Solution on Transactions of Delivering the Company’s Own Stock to
Employees etc. through Trusts” (PITF No.30, issued on March 26, 2015), the Company applies
the same accounting treatment as before.

(3) Information related to the stocks of the Company which the trusts hold
①Book value of the stocks of the Company within the trust for the years ended September 30,
2022 and 2023 were ¥184 million and ¥175 million.
②These stocks were recorded as the treasury stock in the total shareholders’ equity.
③The number of stocks within the trust at the year-end for the years ended September 30, 2022
- 16 -

and 2023 were 166 thousands shares and 158 thousands shares and the average number ofstocks within the trust for the years ended September 30, 2022 and 2023 were 166 thousands
shares and 161 thousands shares.
④The number of shares at the year-end and the average number of stocks were included in thetreasury stock, which is deducted when calculating amounts per share information.
Accounting estimates relating to the spread of the novel coronavirus (COVID-19)-The Company

prepared its accounting estimates based on the assumption that the impact of the spread of
COVID-19 on the companies’ business results would be limited as of September 30, 2023.

- 17 -

3 The amounts of receivables and contract assets arising from contracts with customers

Of notes and accounts receivable - trade and contract assets, the amounts of receivables andcontract assets arising from contracts with customers are as follows.
Millions of yen
2023

2022
Accounts receivable-trade¥

18,7795,852

Contract assets¥

4 Reduction entry

Reduction entry amounts have been deducted from the acquisition cost of fixed assets by thenational subsidies as of September 30, 2022 and 2023 are as follows:
Millions of yen
2022
Reduction entry

2023
276

¥

19

¥

(breakdown)
Property, plant and equipment
Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures

44

-

199
32

19

5 Shares of subsidiaries and affiliates

Shares of subsidiaries and affiliates as of September 30, 2022 and 2023 are as follows:
Millions of yen
2022
Investment securities¥“Other” investments and other assets

2023
129

¥

8,299

13

-

Total

143

8,299

(The investment amount for Jointly Controlled
Entities included in the above)13-- 18 -

13,3453,647

6 Commitment line

In order to efficiently finance business funds, the Company established commitment line contracts
with three banks.
Commitment lines as of September 30, 2022 and 2023 are as follows.
Millions of yen
2022
Commitment lines

¥

5,000

Used portion of Commitment lines
Unused portion of Commitment lines

2023
¥

5,000

－
¥

5,000

－
¥

5,000

In the commitment line contracts, there are Financial covenants based on “the net asset value in the
consolidated balance sheet”, “the operating profit / loss and the ordinary profit / loss in the
consolidated statements of income” and so on.
7 Guaranteed debt

The Companies provide debt guarantee for business transactions with the following affiliatedcompanies.
The amount guaranteed by the company as of September 30, 2022 and 2023 are as follows:
Millions of yen
2022
CMIC CMO Co., Ltd.

¥

2023
－
－

CMIC CMO USA Corporation

¥

263
141

8 Revenue from contracts with customers

Revenue from contracts with customers and other revenue are not separately presented at the net
sales. Amounts of revenue from contracts with customers are stated in Note 28 Revenue
Recognition - 1. Information on disaggregated revenue from contracts with customers.
9 Loss on Valuation of Inventories

The ending inventory balance is the amount after write-down of book value due to decline inprofitability, and the loss on valuation included in cost of sales ( Brackets are the gain on valuation ofincluded in cost of sales) for the years ended September 30, 2022 and 2023, are as follows:
Millions of yen
2022
Loss on valuation of inventories¥- 19 -

(477)

2023
¥

684

10 Selling, General and Administrative Expenses

The main components of “Selling, General and Administrative Expenses” for the years ended
September 30, 2022 and 2023, are as follows:
Millions of yen
2022
Provision for directors’ bonuses

¥

2023

Salaries and allowances
Bonuses and provision for bonuses
Retirement benefit expenses

92
4,652
1,904
221

Commission expenses
Provision for doubtful accounts

1,333
1

¥

100
5,004
1,552
263
1,653
97

11 Research and development expenses

The research and development expenses included in Selling, general and administrative expenses
for the year ended September 30, 2022 and 2023 are as follows:
Millions of yen
2022
Research and development expenses

¥

2023
304

¥

369

12 Impairment loss on non-current assets

Impairment loss on non-current assets for the year ended September 30, 2022, is as follows:
Company Name

Use

Location

Classification

Millions of yen
2022

Buildings and structures,
CMIC CMO USA CDMO
Cranberry,
Corporation
Business New Jersey ,facilities

USA

Machinery, equipment
and vehicles,
Tools, furniture andfixtures,
Construction in progress

¥

1,386

To calculate impairment loss on non-current assets, assets of the Companies are grouped into thesmallest unit that generates identifiable cash flows that are largely independent of cash flows fromother assets or groups of assets.
During the previous fiscal year, the start of operation of the new facility of CMIC CMO USA
Corporation has been significantly delayed from the original plan due to the novel coronavirus(COVID-19) and other factors, making it difficult to recover the amount in the current fiscal year
within the originally expected period.
As a result, the book value of the new facility of CMIC CMO USA Corporation has been reduced
to the fair value and the difference has been recognized as impairment loss on non-current
assets. The fair value is measured by net selling price.

- 20 -

Impairment loss on non-current assets for the year ended September 30, 2023, is as follows:
Company Name

Use

Location

Classification

Millions of yen
2023

Tools, furniture andfixtures,harmo Co., Ltd.

CMIC Bio Co.,Ltd.

CMIC Co., Ltd.

Minato,BusinessTokyo
facilities
Japan

Software
Software in progress¥
Investments and otherassets(Long-term prepaid
expenses)
Buildings and structures,
Machinery, equipment

Minato,BusinessTokyo
facilities
Japan

Businessfacilities

511

and vehicles,
Tools, furniture andfixtures,
Software299

Minato,
Tokyo
Japan

Software in progress279

To calculate impairment loss on non-current assets, assets of the Companies are grouped into thesmallest unit that generates identifiable cash flows that are largely independent of cash flows fromother assets or groups of assets.
harmo Co., Ltd. due to the impact of development delays in internally developed software, and
CMIC Bio Co., Ltd., due to the interruption of raw material manufacturing for bio pharmaceuticals,have determined that the recovery of investments has become difficult. As a result, therecoverable amount of the asset group has significantly decreased, leading to a reduction of thebook value of the asset group to the recoverable amount, and recognizing the corresponding
decrease as impairment loss. harmo Co., Ltd. has recognized an impairment loss totaling ¥511
million . This includes ¥2 million for tools, equipment, and fixtures, ¥345 million for software, ¥160
million for the software in progress, and ¥2 million for investments and other assets. Similarly,
CMIC Bio Co., Ltd. has recognized an impairment loss totaling ¥299 million, with ¥175 million forbuildings and structures, ¥26 million for machinery, equipment, and vehicles, ¥96 million for tools,
equipment, and fixtures, ¥0 million for software.
The recoverable amount is evaluated based on the value in use. The value in use is calculated
based on the future cash flows expected to be generated by the continued use of the asset group,
taking into account the business plan approved by the board of directors. As the future cash flows
are expected to be negative, the recoverable amount is assessed as zero.
CMIC Co., Ltd. has made a decision to reassess the development scope of the software it wasworking on. As a result, the book value of the software has been reduced to its recoverable
amount, and the corresponding decrease has been recognized as an impairment loss.
The recoverable amount was measured based on the value in use. However, since no future cash
flows are expected, the value in use has been assessed as zero for measuring the impairment
loss.

- 21 -

13 Loss on retirement of non-current assets

Loss on retirement of non-current assets for the years ended September 30, 2022 and 2023, are as
follows:
Millions of yen
2022
Buildings and structures¥

Machinery, equipment and vehicles
Tools, furniture and fixtures
Long-term prepaid expenses
Software in progress
Other
Total

¥

- 22 -

2023
74
50
5
－

79
5
1
36

－
25

99
10

155

¥

¥

233

14 Other comprehensive income

The components of other comprehensive income including reclassification adjustments and tax
effects income for the years ended September 30, 2022 and 2023, are as follows:
Millions of yen
2022
Valuation difference on available-for-salesecurities:
Amount arising during the year
Reclassification adjustments¥

Amount before tax effect

2023

(433)
577

¥

(325)
(237)

Tax effects

144
(44)

(562)
171

Sub-total, net of tax

99

(390)

(828)

4

Amount arising during the year

(101)

(12)

Reclassification adjustments

(156)

(6)

Amount before tax effectTax effects

(258)
84

(18)
6

Sub-total, net of tax

(173)

(12)

－

(130)

Foreign currency translation adjustments:
Amount arising during the year
Remeasurements of defined benefit plans:

Share of other comprehensive income ofentities accounted for using equity method
Amount arising during the year
Total other comprehensive income¥- 23 -

(902)

¥

(529)

15 Net assets

Information regarding changes in net assets for the years ended September 30, 2022 and 2023, areas follows:
1. Shares issued and outstanding / Treasury stock
For the year ended September 30, 2022
Type of Shares

Number ofshares at
October 1, 2021

Increase

Number ofshares at
September 30, 2022

Decrease

Shares issued:
Common Stock
Treasury stock
Common Stock(Notes 1 and 2 )18,923,569－－

18,923,569

833,290534,050－

1,367,340

Notes:1. Details of the increase are as follows:
Increase due to acquire of treasury stock by resolution of the Board of Directors
Increase due to free acquisition due to retirement of rights recipients(Restricted stock compensation plan)
Increase due to purchase of shares of less than one unit

532,500
1,320
230

2. The Stock Granting Trust (J-ESOP):The number of shares of treasury stock includes the number of stocks of the Stock Granting
Trust (J-ESOP)
Number of shares at October 1, 2021
166,000
Number of shares at September 30, 2022
166,000
For the year ended September 30, 2023
Type of Shares

Number ofshares at
October 1, 2022

Increase

Number ofshares at
September 30, 2023

Decrease

Shares issued:
Common Stock
Treasury stock
Common Stock(Notes 1 ,2 and 3 )18,923,569－－

18,923,569

1,367,340

694,124

22,5402,038,924

Notes:1. Details of the increase are as follows:
Increase due to acquire of treasury stock by resolution of the Board of Directors
Increase due to purchase of shares of less than one unit

2. Details of the decrease are as follows:
Decrease due to the issuance of restricted stock under a restricted stockcompensation plan
Decrease due to the issuance of shares through the Stock Granting Trust (J-ESOP)693,700
424

14,5408,000

3. The Stock Granting Trust (J-ESOP):The number of shares of treasury stock includes the number of stocks of the Stock Granting
Trust (J-ESOP)
Number of shares at October 1, 2022

166,000

Number of shares at September 30, 2023

158,000- 24 -

2. Dividends(1) Dividends paid
For the year ended September 30, 2022
Resolution

Type ofsharesMeeting of the Boardof Directors

Commonon November 15, 2021
Meeting of the Boardof Directors
on April 28, 2022

Total
dividends(millions of
yen)
*1

stock
Common

520

*2

stock

90

Dividends
per share
(yen)

28.50

5.00

Cut-off
date

Effective
date

September

December30, 2021

1, 2021

March

June

31, 2022

15, 2022*1 The total dividends includes dividends of ¥ 4 million for the Stock Granting Trust (J-ESOP).
*2 The total dividends includes dividends of ¥ 0 million for the Stock Granting Trust (J-ESOP).
For the year ended September 30, 2023
Resolution

Type ofsharesMeeting of the Boardof Directors

Commonon November 15, 2022
Meeting of the Boardof Directors
on April 28, 2023

stock
Commonstock

Total
dividends(millions of
yen)
*1

797

*2

86

Dividends
per share
(yen)

45.00

5.00

Cut-off
date

Effective
date

September

December30, 2022

1, 2022

March

June

31, 2023

15, 2023*1 The total dividends includes dividends of ¥ 7 million for the Stock Granting Trust (J-ESOP).
*2 The total dividends includes dividends of ¥ 0 million for the Stock Granting Trust (J-ESOP).

- 25 -

(2) Dividends with the cut-off date in the year ended September 30, 2022 and the effective date in
the year ended September 30, 2023
Resolution
Meeting of the Boardof Directors
on November 15, 2022

Type ofsharesCommonstock

Total
dividends(millions of
yen)
* 797

Source ofdividends

Retainedearnings

Dividends
per share
(yen)

45.00

Cut-off
date

Effective
date

September

December30, 2022

1, 2022* The total dividends includes dividends of ¥ 7 million for the Stock Granting Trust (J-ESOP).
Dividends with the cut-off date in the year ended September 30, 2023 and the effective date in
the year ended September 30, 2024
Resolution
Meeting of the Boardof Directors
on November 15, 2023

Type ofsharesCommonstock

Total
dividends(millions of
yen)
* 766

Source ofdividends

Retainedearnings

Dividends
per share
(yen)

45.00

Cut-off
date

Effective
date

September

December30, 2023

1, 2023* The total dividends includes dividends of ¥ 7 million for the Stock Granting Trust (J-ESOP).
The Corporation Law of Japan provides that an amount equal to 10% of the amount to be
disbursed as distributions of capital surplus (other than the capital reserve) and retained
earnings (other than the legal reserve) be transferred to the capital reserve and the legal
reserve respectively, until the sum of the capital reserve and the legal reserve equals 25% of
the capital stock account. Such distributions can be made any time by resolution of theshareholders or by the Board of Directors if certain conditions are met.

- 26 -

16 Supplemental cash flow information

The reconciliation between cash and deposits shown in the consolidated balance sheets and cash
and cash equivalents shown in the consolidated statements of cash flows as of September 30,
2022 and 2023 are as follows:
Millions of yen
2022
Cash and deposits

¥

Less:
Time deposits over three months

11,806

2023
¥

(103)

Cash and cash equivalents¥

11,703

19,034(2)¥

19,032

As a result of the disposal of treasury stock and the implementation of third-party allotment of sharesby our subsidiary, CMIC CMO Co., Ltd., to Dainippon Printing Co., Ltd., our ownership percentage
decreased, leading to the exclusion of CMIC CMO Co., Ltd., CMIC CMO Korea Co., Ltd., and CMICCMO USA Corporation from the scope of consolidation. The decreased amounts of assets andliabilities are as follows:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities

Millions of yen
12,95237,42550,377
9,802
23,41033,213- 27 -

17 Leases

Lessees’ accounting
1-1. Finance lease transactions that transfer ownership(1) Details of leased assets
Property, plant and equipment
Production facility and warehouse equipment(2) Depreciation method for leased assets
As described in “Lease assets” of “2. Significant accounting policies” forming the basis for
preparing consolidated financial statements.
1-2. Finance lease transactions that do not transfer ownership(1) Details of leased assets① Property, plant and equipment
Mainly manufacturing plant, test & measurement instrument and production facility② Intangible assets
Software(2) Depreciation method for leased assets

As described in “Lease assets” of “2. Significant accounting policies” forming the basis for
preparing consolidated financial statements.
Overseas subsidiaries that adopt IFRS or US GAAP have applied IFRS No. 16 “Leases” or US GAAP ASU2016-02 “Leases”
Details of "leased assets" recorded as assets and depreciation method for “leased assets” aredescribed in 1-2(1) and (2) above.
2. Operating leases
Obligations for future minimum payment under non-cancelable operating leases as of September
30, 2022 and 2023, are as follows:
Millions of yen
2022
Due within one year

¥

571
525

¥

311
235

¥

1,097

¥

546

Due after one year
Total

- 28 -

2023

18 Financial instruments

1. Overall status of financial instruments(1) Policy for financial instruments
The Companies manage temporary cash surpluses through low risk financial instruments. The
Companies obtain debt financing from banks and issuance of commercial papers.
The Companies use derivative transactions only for the purpose of hedging exchange andinterest rate fluctuation risks and do not engage in speculative derivative transactions.
(2) Type and risk of financial instruments
Notes and accounts receivable-trade, and contract assets are exposed to customer credit risk.
Notes and accounts receivable-trade, and contract assets denominated in foreign currencies
are exposed to risk from fluctuations in foreign exchange rates.
Investment securities are composed of shares of entities with which the Companies havebusiness relationships. Those securities are exposed to the business risk of the entities andthe risk from fluctuations in foreign exchange rates.
Almost all notes and accounts payable-trade are settled within one year. Notes and accounts
payable-trade denominated in foreign currencies are exposed to the risk from fluctuations inforeign exchange rates.
Short-term borrowings are used as financing mainly for operating activities and is exposed to
the risk from fluctuation in interest rates. Long-term debt is used as financing mainly for capital
investment and operating activities and is exposed to the risk from fluctuation in interest rates.
Derivative transactions include forward foreign exchange contracts to hedge the risk
associated with trade receivables and payables denominated in foreign currencies, andinterest rate swaps to hedge the interest rate risk for loans. Details on hedge accounting
related to hedging instruments, hedged items, hedging policy and assessment of hedge
effectiveness are outlined in Hedge Accounting in Note 2, Significant accounting policies.

- 29 -

(3) Risk management① Credit risk

The Companies examine credit information for new customers before entering into a newtransaction, periodically monitor the overdue balance, and take necessary actions such as
negotiation for the payment and assessment of the customer’s financial position so thatcredit risks can be minimized.
The counterparties to derivative transactions are limited to financial institutions with highcredit ratings, and the credit risk is minimal.
② Market risk
The Companies have a very small portion of trade receivables and payables denominated inforeign currencies.
Market risk of investment securities are periodically assessed by checking the financial
status of the issuers, and the merits of holding such securities are continuously reviewed,
taking into account the Companies’ relationship with respective issuers.
The finance division of the Company continually monitors the foreign exchange market tominimize the market risk. The Companies use interest-rate swaps for the purpose of
reducing risk from interest rate fluctuation for loans from banks.
Derivative transactions are executed and managed under the approval by the responsible
officer in the finance division of the Company in accordance with internal rules.
③ Liquidity risk in funding

In order to optimize capital efficiency, the Company promotes cash control through acentralized cash management way for each applicable subsidiary, and the company has
credit line for commercial paper, overdraft and commitment line to secure cash flexibility.
(4) Supplementary explanation on the fair value of financial instruments
The fair value of financial instruments is based on market price. In case no market price isavailable, the fair value is calculated based on the amount reasonably estimated. As a numberof variables are incorporated in such calculation, the estimated fair value may change if
different assumptions are used.

- 30 -

2. Fair value of financial instruments

The book value, fair value and the difference as of September 30, 2022, are as follows:
Millions of yen
Book value

Fair value

Difference

AssetsInvestment securities(*2)
Total assets

¥

671 ¥

671 ¥

－

¥

671 ¥

671 ¥

－

¥

17,136 ¥17,082 ¥(54)¥

17,136 ¥17,082 ¥(54)

Liabilities
Long-term debt (*3)
Total liabilities*1. Regarding cash and deposits, notes and accounts receivable - trade, and contract assets, notes andaccounts payable - trade, the disclosure is omitted because they are cash in nature and their carrying value
approximates fair value since they are settled in a short period of time.
*2. Non-marketable securities are not included in “Investment securities” in the above table. The book values ofthese financial instruments are as follows.

Millions of yen
Book value in consolidated balance sheet
Unlisted shares

¥

2,238

Stocks of shares of subsidiaries and affiliates

129

Total

¥

2,368

*3. Long-term debt includes the current portion of long-term debt.

The book value, fair value and the difference as of September 30, 2023, are as follows:
Millions of yen
Book value

Fair value

Difference

AssetsInvestment securities(*2)
Total assets

¥

519 ¥

519 ¥

－

¥

519 ¥

519 ¥

－

¥

2,800 ¥

2,787 ¥

(13)¥

2,800 ¥

2,787 ¥

(13)

Liabilities
Long-term debt (*3)
Total liabilities*1. Regarding cash and deposits, notes and accounts receivable-trade, and contract assets, notes andaccounts payable - trade, the disclosure is omitted because they are cash in nature and their carrying value
approximates fair value since they are settled in a short period of time.
*2. Non-marketable securities are not included in “Investment securities” in the above table. The book values ofthese financial instruments are as follows.

Millions of yen
Book value in consolidated balance sheet
Unlisted shares
Stocks of shares of subsidiaries and affiliates
Total*3. Long-term debt includes the current portion of long-term debt.

- 31 -

¥

551
8,299

¥

8,850

3. Redemption schedule for monetary claims and marketable securities with maturities
subsequent

September 30, 2022.
Millions of yen
Within one year
Cash and deposits¥

Notes and accounts receivable-trade, andcontract assets

11,804Over
one year¥－

24,632¥36,436－¥－

September 30, 2023.
Millions of yen
Within one year
Cash and deposits¥

Notes and accounts receivable-trade, and19,033Over
one year¥

16,992

contract assets¥

36,026－－¥－Note : Redemption schedule for long-term debt subsequent to September 30, 2023 .
Please refer to “19. Short-term borrowings and long-term debt”.
4. Regarding fair value hierarchy of financial instruments
The Companies classify the fair values of financial instruments into three categories depending onwhether inputs for their value measurements are observable or significant.
Level 1 fair value :Fair value measured by using quoted market prices of applicable assets or
liabilities formed in active markets as observable inputs for fair value
measurement.
Level 2 fair value:
Level 3 fair value:

Fair value measured by using observable inputs other than those for Level 1
Fair value measured by using unobservable inputs

When multiple inputs that have a significant influence on the fair value calculation are used, the fairvalue is classified into the lowest priority level in the fair value calculation among the levels to whichthose inputs belong.

- 32 -

(1) Financial instruments measured at fair value in the consolidated balance sheet
September 30, 2022
Fair value（Millions of yen）
Level 1

Level 2

Level 3

Total

Investment securities

¥

671 ¥

－ ¥

－ ¥

671

Total assets

¥

671 ¥

－ ¥

－ ¥

671

September 30, 2023
Fair value（Millions of yen）
Level 1

Level 2

Level 3

Total

Investment securities

¥

519 ¥

－ ¥

－ ¥

519

Total assets

¥

519 ¥

－ ¥

－ ¥

519

(2) Financial instruments other than those measured at fair value in the consolidated balance
sheet
September 30, 2022
Fair value（Millions of yen）
Level 1Long-term debt
Total liabilities

Level 2

Level 3

Total

¥

－ ¥

17,082 ¥－ ¥17,082¥－ ¥17,082 ¥－ ¥17,082September 30, 2023
Fair value（Millions of yen）
Level 1Long-term debt
Total liabilities

Level 2

Level 3

Total

¥

－ ¥

2,787 ¥

－ ¥

2,787

¥

－ ¥

2,787 ¥

－ ¥

2,787

Notes
Explanation of valuation techniques and inputs used for fair value measurement
Investment securities
The fair value of listed shares is measured based on quoted market price. Since they are traded in
active markets, the fair value is classified into Level 1.
Long-term debt
The fair value of long-term debt with fixed interest rates is calculated based on the total amount ofprincipal and interest discounted by the interest rate which would be applied if the debt wererefinanced at the year-end. The fair value of long-term debt with floating interest rates is measured

by using book value, as the fair value of such debt is almost identical to the book value because it
reflects the market interest rate for the short-term period. However, the fair value of certain long-term
debt with floating interest rates hedged by interest rate swaps to which the exceptional method isapplied is calculated by discounting the total amount of principal and interest that were treated as asingle transaction with the interest rate swap using the interest rate that is reasonably estimated tobe applicable to similar fixed rate loans debt. The fair value is classified into Level 2.

- 33 -

19 Short-term borrowings and long-term debt

(1) Short-term borrowings as of September 30, 2022 and 2023, are as follows:
There is no applicable matter.
(2) Long-term debt as of September 30, 2022 and 2023 are as follows:
Millions of yen
2022

2023

Long-term debt:
Due 2023 to 2032 with weighted average interest rate of
0.85% as of September 30,2022 and due 2024 to 2028

with weighted average interest rate of 0.75% as of
September 30,2023¥

17,136

¥

2,800

Less:
Current portion of long-term debt:
Weighted average interest rates of 0.69% and 0.65%

3,602

as of September 30, 2022 and 2023, respectively¥

13,534(3)Annual maturities of long-term debt as of September 30, 2022, are as follows:
Millions of
Yen

Years ending September 30,

2022
2023

¥

3,602

2024

3,563

2025
2026

2,665
2,105

2027
2028 and thereafter

1,214
3,985
¥

- 34 -

17,136

1,123
¥

1,677

(4) Annual maturities of long-term debt as of September 30, 2023, are as follows:
Millions of
Yen

Years ending September 30,

2023
2024

¥

2025
2026

1,123
772
323

2027
2028

295
286

2029 and thereafter

－
2,800

¥

(5) Lease obligations as of September 30, 2022 and 2023, are as follows:
Millions of yen
2022

2023

Lease obligations:Due 2023 to 2031 with weighted average interest rate of
1.61% as of September 30,2022 and due 2024 to 2028

with weighted average interest rate of 3.87% as of
September 30,2023
Less:
Current portion of long-term debt:
Weighted average interest rates of 1.60% and 6.27% asof September 30, 2022 and 2023, respectively

¥

4,157

530
¥

3,627

(6) Annual maturities of lease obligations as of September 30, 2023, are as follows:
Millions of
Yen

Years ending September 30,

2023
2024

¥

2025
2026
2027
2028

57
92
18
11
4

2029 and thereafter¥- 35 -

¥

184

184

57
¥

127

20 Securities(1) The Companies did not hold any trading securities as of September 30, 2022 and 2023.
(2) The Companies did not hold any held-to-maturity securities as of September 30, 2022 and 2023.
(3) The Companies held shares of available-for-sale securities as of September 30, 2022 and 2023.
The book value, the acquisition cost and the unrealized gain or loss as of September 30, 2022
and 2023, are as follows:
Millions of yen
2022
Book
value

2023

Acquisition Unrealizedcostgain(loss)

Book
value

Acquisition Unrealizedcostgain(loss)

Securities with book value exceeding acquisition cost:
Stock
Securities with book value not exceeding acquisition cost:
Stock
Total

¥

666

24

642

4

7

(2)

¥

671

31

639

¥

519

24

494

－

－

－

¥

519

24

494

Unlisted shares are not included in the above table because they have no market price. Their bookvalues are ¥ 2,238 million and ¥ 551 million as of September 30, 2022 and 2023, respectively.
(4) There is no applicable matter for the year ended September 30, 2022.
The Company had the gain on the sale of ¥ 3,349 million by selling available-for-sale securities in¥5,005 million for the year ended September 30, 2023.
(5) The amount of impairment loss recognized on the stock in available-for-sale securities was ¥8
million and ¥ 62 million for the year ended September 30, 2022 and 2023, respectively.
If the market value of securities with fair market value other than trading securities declines toless than 50% of the acquisition cost, the difference is recognized as impairment loss, inprinciple. If the market value drops by between 30% and 50%, the impairment loss is calculated
based on the possibility of recovery in market value. If the value of non-marketable securities
drops by over 50% of the acquisition cost, the amount considered to be impaired is recognized
as impairment loss unless the possibility of recovery is demonstrated by sufficient evidence.

- 36 -

21 Derivative financial instruments(1) There was no derivative transaction for which hedge accounting has not been applied on
September 30, 2022 and 2023.
(2) The following table summarizes the derivative transactions as of September 30, 2022 and 2023,
for which hedge accounting has been applied:Interest related:
Millions of yen

Hedge
accounting
methodClassification

Hedgeditem

Exceptional

Interest rate swap

method forcontracts:

Long-terminterest rate
swaps

Pay/fixed andreceive/floating

debt

2022

2023

Contract amountContract amount

Total

¥

64

Due after
one year

Fair value

－

－(*)

Total

¥

－

Due after
one year

Fair value－－* Interest-rate swaps for which the exceptional method is applied are valued at fair value and included in
the value of the underlying long-term debt as such swaps are treated as a single transaction with thehedged long-term debt.

- 37 -

22 Retirement benefits

1. Overview of the retirement benefit plan adopted
The Company and certain of its subsidiaries provide an unfunded lump-sum payment plan underwhich all eligible employees are entitled to benefits based on the level of salaries at the time ofretirement, length of service and certain other factors.
Two of the consolidated subsidiaries have defined contribution pension plan. Another has a risk
sharing pension plan. Another has an unfunded lump-sum payment plan and a defined benefit
pension plan. In the risk sharing pension plan, contributions by the “Companies” to the pension
fund are defined in advance in the constitution for the pension plan, and the risk of asset
management of the pension is shared between the “Companies” and their employees by increaseor decrease of the amount of benefits paid to the employees according to the financial status of
the corporate pension fund.
2. Defined benefit plans (except the plans to which the simplified method has been applied)(1) The changes in the retirement benefit obligation for the years ended September 30, 2022 and2023 are as follows:
Millions of yen
2022
Balance at the beginning of the year

¥

2023

10,037

10,781¥Service cost
Interest cost

1,037
28

1,007
27

Actuarial losses (gains) arising during the year
Retirement benefits paid

18
(432)

12
(499)

Prior service cost
Reduction amount associated with changing the

84

－

－

(2,178)7(9)

consolidation scope
Other
Balance at the end of the year¥

10,781¥9,141(2) Reconciliation between retirement benefit obligation and net defined benefit liability on theConsolidated balance sheets
Millions of yen
2022

2023

Retirement benefit obligation under the unfunded plans¥

10,781¥

9,141

Net defined benefit liability¥

10,781¥

9,141- 38 -

(3) Retirement benefit cost
Millions of yen
2022
Service cost

¥

2023

1,037

¥

1,007

Interest cost
Amortization of actuarial losses (gains)

28
(139)

27
22

Amortization of prior service cost

(16)

(16)

Total retirement benefit costs

¥

910

¥

1,041

(4) Remeasurements of defined benefit plans before tax effects
Millions of yen
2022
Prior service cost

¥

100
158

¥

23
(4)

¥

258

¥

18

Actuarial loss
Total

2023

(5) Accumulated remeasurements of defined benefit plans before tax effects
Millions of yen
2022
Unrecognized prior service cost

¥

(40)
27

¥

(87)
12

¥

(12)

¥

(75)

Unrecognized actuarial losses (gains)
Total

2023

(6) Actuarial assumptions
The principal actuarial assumption at September 30, 2022 and 2023 are as follows:

Weighted average discount rate

2022

2023

0.20%~0.70%

0.20%~1.30%

The Company uses the index of salary increases by age at September 30, 2022 and 2023, as
the expected rate of future salary increases.

- 39 -

3. Defined benefit plans to which the simplified method has been applied(1) Movement in net defined benefit liability
Millions of yen
2022
Balance at the beginning of the year

¥

2023
220

¥

218

Retirement benefit cost

123

112

Retirement benefit paid
Reduction amount associated with changing theconsolidation scope
Other

(127)

(39)

－

(76)

1

31

Balance at the end of the year

¥

218

¥

246

(2) Reconciliation between retirement benefit obligation and net defined benefit liability on the
consolidated balance sheets
Millions of yen
2022
Retirement benefit obligation under the funded plans¥

60

Plan assets
Retirement benefit obligation under the unfunded plans
Net defined benefit liability

2023
¥

－

(5)
163
¥

218

－
246
¥

246

(3) Retirement benefit cost
Millions of yen
2022
Retirement benefit cost

¥

2023
123

¥

112

4. Defined contribution plans
Contribution obligations to the defined contribution pension plans are ¥150 million as of
September 30, 2022, and ¥159 million as of September 30, 2023.
The total amount of future contribution in preparation for the shared risk of asset management
after the next fiscal year is ¥128 million and the remaining years for the payment are 14 years and
11 months.
The accumulated amount of contribution payable for the employees’ past services at the time oftransition is ¥120 million , and is recognized as accounts payable-other (current liabilities) andother long-term liabilities (non-current liabilities) as of September 30, 2023.

- 40 -

23 Stock options
1. The expense recognition amount and account names related to stock options are as follows:

There is no applicable matter.
2. Details, size, and changes in stock options(1)Details
Company NameKNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

Name of the stock
warrant

1st Stock acquisitionrights

2nd Stock acquisitionrights

3rd Stock acquisitionrights

4th Stock acquisitionrightsDate of Resolution

Jun. 30, 2020
Director 1
Employees 6
Others2

Jun. 30, 2020

Jun. 27, 2022日

Jun. 27, 2022

Employees 2
Others7

Employees 11
Others1

OthersCommon stock
1,050 shares

Common stock

Common stock

Common stock

560 shares

340 shares

205 shares

Grant dateJun. 30, 2020

Jun. 30, 2020

Jun. 30, 2022

Jun. 30, 2022

Conditions forentitlement

Notes 2 and 5

Notes 3 and 5

Notes 2 and 5

Notes 4 and 5

No specific period
From Jul. 22, 2022
to Jun. 30, 2030

No specific period
From Jul. 1, 2020
to Jun. 30, 2030

No specific period
From Jun. 28, 2024
to Jun. 27, 2032

No specific period
From Jun. 28, 2022
to Jun. 27, 2032

Company NameKNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

Name of the stock

5th Stock acquisition

6th Stock acquisition

5th Stock acquisition

6th Stock acquisition

Position and numberof grantees
Number of stock
options granted bytype of shares *1

15determination
Service period
Exercise period

warrant

rightsrightsrights (2)rights (2)Jun. 27, 2023

Jun. 27,2023

Sept. 19, 2023

Sept. 19, 2023

Employees 16

Others7

Directors 6
Employees 1

AuditorCommon stock
355 shares

Common stock
115 shares

Common stock
245 shares

Common stock
10 shares

Grant dateJul. 10, 2023

Jul. 10, 2023

Sept. 25, 2023

Sept. 25, 2023

Conditions for

Notes 2 and 5

Notes 4 and 5

Notes 2 and 5

Notes 4 and 5

Date of Resolution
Position and numberof grantees
Number of stock
options granted bytype of shares *1

1entitlement
determination
Service period

No specific period
No specific period
No specific period
From Jun. 25, 2025
From Jun. 28, 2025
From Sept. 20, 2025
Exercise period
to Jun. 27, 2033
to Jun. 27, 2033
to Sept. 19, 2033
（Notes）1. The number of stock options has been converted into the number of shares.

No specific period
From Sept. 20, 2025
to Sept. 19, 2033

2. In the event that a person exercises this warrant, the person is required to hold a position as a director,
auditor, or employee of the Company (excluding cases of retirement due to expiration of the term, retirementage, or other legitimate reasons as determined by the Company's board of directors).
3. In the event that a person exercises this warrant, the person is required to hold a position as a director,
auditor, employee, or a position recognized by the Company as a founding collaborator (if a corporate is awarrant holder, the corporate is required to have a capital relationship with the Company at the time of
exercise) (excluding cases of retirement due to expiration of the term, retirement age, or other legitimate
reasons as determined by the company's resolution of the board of directors).
4. In the event that a person exercises this warrant, the person is required to hold a position as a director,
auditor, employee, or a position recognized by the Company as a collaborator (if a corporate is a warrant
holder, the corporate is required to have a capital relationship with the Company at the time of exercise)- 41 -

(excluding cases of retirement due to expiration of the term, retirement age, or other legitimate reasons as
determined by the Company's the board of directors).
5. It is stipulated that the right to exercise the warrant cannot be exercised until KNOCK ON THE DOOR Inc. islisted on the Tokyo Stock Exchange or any other domestic or foreign stock exchange of a similar nature.

(2) Size, and changes in stock options
The number of stock options has been converted into the number of shares.
①Number of stock options
Company NameKNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

Name of the stock
warrant

1st Stock acquisitionrights

2nd Stock acquisitionrights

3rd Stock acquisitionrights

4th Stock acquisitionrightsDate of resolution

Jun. 30, 2020

Jun. 30, 2020

Jun. 27, 2022日

Jun. 27, 2022

Non-vested
Outstanding at
September 30,2022

-

-

-

-

Changes in the
consolidation scope

1,050

560

340

205

Granted

-

-

-

-

Forfeited

-

-

-

-

Vested

-

-

-

-

1,050

560

340

205

Outstanding of nonvested at September
30,2023

Company Name
Name of the stock
warrant
Date of resolution

KNOCK ON THE

KNOCK ON THE

KNOCK ON THE

KNOCK ON THE

DOOR Inc.

DOOR Inc.

DOOR Inc.

DOOR Inc.

5th Stock acquisition

6th Stock acquisition

5th Stock acquisition

6th Stock acquisitionrightsrightsrights (2)rights (2)Jun. 27, 2023

Jun. 27,2023

Sept. 19, 2023

Sept. 19, 2023

Non-vested
Outstanding at

-

-

-

-

Granted355

Forfeited-

VestedSeptember 30,2022
Changes in the
consolidation scope

Outstanding of nonvested at September
30,2023

-

-

-

-

115

245

10

-

-

-

-

-

-

-

355

115

245

10

- 42 -

②Price per unit information
Company Name
Name of the stock
warrant
Date of resolution
Exercise price(yen)KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

1st Stock acquisitionrights

2nd Stock acquisition

3rd Stock acquisition

4th Stock acquisitionrightsrightsrightsJun. 30, 2020

Jun. 30, 2020

Jun. 27, 2022日

Jun. 27, 2022

5,000

5,000

8,800

8,800

Exercise-time average
share price(yen)

-

-

-

-

Fair value per share at
the grant date(yen)

-

-

-

-

Company NameKNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

KNOCK ON THE
DOOR Inc.

Name of the stock
warrant

5th Stock acquisitionrights

6th Stock acquisitionrights

5th Stock acquisitionrights (2)6th Stock acquisitionrights (2)Date of resolution

Jun. 27, 2023

Jun. 27,2023

Sept. 19, 2023

Sept. 19, 2023

Exercise price(yen)Exercise-time average
share price(yen)Fair value per share at
the grant date(yen)

9,000

9,000

9,000

9,000

-

-

-

-

-

-

-

-

3. Method for estimating the fair value per share of the granted stock options
As KNOCK ON THE DOOR Inc. is a privately held company, the method used to estimate the fairvalue per share of the stock options is based on the estimation of intrinsic value per unit.
Additionally, the valuation method used for the company's shares, which serves as the basis forcalculating the intrinsic value per unit, is determined using the Discounted Cash Flow (DCF) method.
However, as a result of the calculation, the intrinsic value per unit at the time of grant is determined to
be zero, therefore the fair value per share is not disclosed.
4. Method used to estimate the number of vested rights
Due to the inherent difficulty in estimating future forfeitures, the companies primarily rely on the actual
number of forfeitures in our calculation of vested rights.
5.(1)Total intrinsic value at the end of the consolidated fiscal year¥－million(2)Total intrinsic value of stock options exercised during the consolidated fiscal year

- 43 -¥－million

24 Income taxes(1) Income taxes in the consolidated statements of income consist of corporation tax, inhabitanttaxes and enterprise tax. The aggregate statutory income tax rate was approximately 30.62% for
the year ended September 30, 2022 and 2023 respectively.
The reconciliation of the difference between the statutory income tax rates and the actual
effective income tax rates for the years ended September 30, 2022 and 2023 are as follows:
2022

2023

Statutory income tax rate

30.62 %

30.62 %

Permanently non-deductible expenses
Tax Credits for Salary Growth
Tax credits for wage increase and productivity improvement
Per capita inhabitants tax

0.56(2.11)

0.58

Amortization of goodwill
Equity in losses of affiliates
Change in valuation allowance

0.06

0.65

－
(3.67)
0.54－(12.94)

0.27
0.76
6.05

Statutory tax rate difference between the Company andcertain subsidiaries

5.30

3.88

Other

2.73

(0.42)

Actual effective income tax rates

24.87 %

38.61 %- 44 -

(2) Significant components of deferred tax assets and liabilities as of September 30, 2022 and 2023,
are as follows:
Millions of yen
2022

2023

Deferred tax assets:
Provision for bonuses

¥

2,393

¥

1,704

Provision for loss on orders received
Allowance for doubtful accounts
Enterprise tax payable
Loss on valuation of inventories

412
194
300
135

340
23
100
68

Asset retirement obligations
Accounts payable-other

78
13

82
5

Long-term accounts payable-other

105

87

Net operating loss carry-forwards
Loss on valuation of investment securities
Accumulated depreciation

3,697
681

3,132
496

109
1,318

145
321

Long-term unearned revenue

1,125
482

－
403

11,049

6,915

(681)

(495)

(1,048)(417)(1,729)

(912)

9,320

6,002

(79)

(2)

(37)

(33)

(314)

(142)

(358)
(70)

(52)
(57)

(860)

(288)

Net defined benefit liability
*2

Other
Total deferred tax assets
Valuation allowance for net operating loss carry-forwards
Valuation allowance for total deductible temporary*2differences
Total Valuation allowance
Net deferred tax assets*1

Deferred tax liabilities:
Gain on revaluation of fixed assets
Removal expenses associated with asset retirement
obligations
Unrealized gain ( loss ) on securities
Liability adjustment account
Other
Total deferred tax liabilities
Net deferred tax assets

¥

8,459

¥

5,713

*1 For the year ended September 30, 2023, the valuation allowance decreased by ¥816
million. This is mainly due to the impact of the exclusion of CMIC CMO Co.,Ltd. and CMICCMO USA Corporation from the scope of consolidation.

- 45 -

*2 A breakdown of net operating loss carry-forwards and valuation allowance by expiry date asof September 30, 2022 and 2023, are as follows:
As of September 30, 2022
(Millions of yen)
Within 1
year

Over 1 year
to 2 years

Over 2 years Over 3 years Over 4 years
Over 5 years
to 3 years
to 4 years
to 5 years

Total

Operating loss
carry-forward(a)

28

31

31

26

－

564

681

Valuation
allowance

(28)

(31)

(31)

(26)

－

(564)

(681)

Deferred tax
assets

－

－

－

－

－

－

－

(a) The amount is determined by multiplying the corresponding net operating loss carry-forwards by theeffective statutory tax rate.
As of September 30, 2023
(Millions of yen)
Within 1
year
Operating loss
carry-forward(a)Valuation
allowance
Deferred tax
assetsOver 1 year
to 2 years

Over 2 years Over 3 years Over 4 years
Over 5 years
to 3 years
to 4 years
to 5 years

Total

31

31

26

－

0

407

496

(31)

(31)

(26)

－

(0)

(406)

(495)

－

－

－

－

－

1

1

(a) The amount is determined by multiplying the corresponding net operating loss carry-forwards by theeffective statutory tax rate.

- 46 -

25 Asset retirement obligations

The asset retirement obligations are mainly the estimated future restoration obligations pursuant to
the office rental agreements and expenses for removing asbestos in accordance with the“Ordinance on Prevention of Asbestos Hazards”. The asset retirement obligations are calculated
based upon the estimated period of use ranging from 2 to 35 years and discounted by rates ranging
from 0.0% to 2.3%.
Movement of asset retirement obligations for the year ended September 30, 2022 and 2023, areas follows:
Millions of yen
2022
Balance at the beginning of the year

¥

2023
577

¥

370

Liabilities incurred due to the acquisition of property,
plant and equipment

37

12Accretion adjustment
Settlement of obligations

4
(8)

2
(0)

－

(110)

(266)

－
1

Reduction amount associated with changing theconsolidation scope
Decrease due to release from restoration obligations
Other

25

Balance at the end of the year

¥

370

¥

276

26 Investment and rental property

There is no material investment and rental property to be reported as of September 30, 2022 and2023 respectively.

- 47 -

27 Business Combinations(Change in consolidated subsidiaries)
At a meeting of the Board of Directors held on April 17, 2023, the Company resolved to dissolve thecapital and business alliance in the CDMO (Contract Development and Manufacturing Organization)business between the Company and Development Bank of Japan, Inc. In addition, the Company madedecisions on the conclusion of contract regarding a disposal of treasury shares and a third-party
allotment of new shares to Dai Nippon Printing Co., Ltd. (hereinafter referred to as "DNP") by its
consolidated subsidiary CMIC CMO Co., Ltd., and the conclusion of a basic agreement regarding astrategic business alliance in the medical and healthcare field between the Company and DNP(hereinafter referred to as "the Alliance"). The respective agreements were executed on the samedate and the transaction was executed on May 31, 2023.
As a result of this transaction, CMIC CMO Co., Ltd., and its affiliates CMIC CMO Korea Co., Ltd. and
CMIC CMO USA Corporation were transferred from our consolidated subsidiaries to affiliates
accounted for by the equity method.

(1) Outline of Business Divestiture
1．Name of the successor company
Dai Nippon Printing Co., Ltd.
2．Name and business of the divested consolidated subsidiaries
CMIC CMO Co., Ltd. (Manufacture, import, export and sales of pharmaceuticals)
CMIC CMO Korea Co., Ltd. (Manufacture, import, export and sales of pharmaceuticals)
CMIC CMO USA Corporation (Manufacture of investigational drugs and pharmaceuticals)
3．Main reason for business divestiture
The CMIC Group and DNP are collaborating on COVID-19 vaccination support services for local
governments, jointly developing injectable drugs by combining technologies for developing
formulations and packaging materials, and studying the expansion of bulk drug production. DNP'scapital participation in CMIC CMO Co., Ltd. as a long-term management partner through theAlliance and the disposal of treasury shares and a third-party allotment, will contribute to the
expansion and growth of CMIC CMO Co., Ltd. This will help the CMIC Group to maintain its
strategic policy of developing its unique PVC (Pharmaceutical Value Creator) business model,
while effectively utilizing its management resources to create healthcare business and achievesustainable growth.
Furthermore, synergistic effects are expected to be created by the addition of DNP's strong
management base and advanced technologies to the Group's broad knowledge in the medical andhealthcare field.
4．Date of business divestiture
May 31, 2023 (Deemed transfer date June 30, 2023)
5．Outline of other transactions including legal form
CMIC CMO Co., Ltd. disposed of 2,445 shares of treasury stock (49.6% shareholding ratio) to
DNP and issued 50 shares to DNP through a third-party allotment, resulting in DNP holding 2,495
shares of the company. CMIC CMO Co., Ltd. is a joint venture in which 49.9% is owned by theCompany and 50.1% is owned by DNP.

- 48 -

(2) Summary of accounting treatment performed
1．Amount of gain (loss) on transfer
CMIC CMO Co., Ltd., CMIC CMO Korea Co., Ltd. and CMIC CMO USA Corporation havechanged from consolidated subsidiaries to affiliates accounted for by the equity method, resulting
in a gain on change in equity of ¥38 million (extraordinary income).
2．Appropriate book value of assets and liabilities related to the business to be divested and theirhigh-level breakdown
Millions of yen
Current assets
12,952
Non-current assets
37,425
Total assets
50,377
Current liabilities
9,802
Non-current liabilities
23,410Total liabilities
33,213(3) Reportable segment that includes the business to be divested
Pharmaceutical Solutions(4) Amount of gain (loss) related to the business to be divested recognized in the quarterly
consolidated statements for the current consolidated fiscal year.

Net sales
Operating profit

Millions of yen
19,784707- 49 -

28 Revenue Recognition

1. Information on disaggregated revenue from contracts with customers
Millions of yen
2022

2023

Net Sales
CRO

¥

CDMO
Market Solutions

39,667

41,679¥24,672

19,913

13,594

15,603

Pharmaceutical Solutions¥

77,934¥

77,196

Healthcare Solutions¥

30,526¥27,471

Adjustment (Note)

¥

－

¥

32

¥

108,461¥

104,701

Revenue from contracts with customers
Revenue from others－

Sales to external customers¥

108,461－¥

104,701(Note)The adjustment amount of ¥32 million is the revenue attributable to the Company (holding company)and has not been allocated to individual segments.

2. Basic information for understanding revenue from contracts with customers
Basic information for understanding revenue from contracts with customers is stated in “2
Significant accounting policies”, Basis for recognition of significant revenue and expenses.

- 50 -

3. Information about the relationship between the satisfaction of performance obligations

under contracts with customers and cash flows from such contracts, and the amount andtiming of revenue expected to be recognized in subsequent periods from contracts withcustomers that existed at the end of the current fiscal year
(1) Balances of contract assets and contract liabilities
Millions of yen
2023

2022
Receivables from contracts with customers at beginning of period¥

14,558¥18,779Receivables from contracts with customers at end of period

18,77913,345Contract assets at beginning of period

3,506

5,852

Contract assets at end of period

5,852

3,647

Contract liabilities at beginning of period

1,944

4,470

Contract liabilities at end of period

4,470

2,014

"Contract assets" is mainly the rights of the Companies, under contracts with customers(pharmaceutical companies, etc.) for pharmaceutical development support, to the consideration forthe provision of services that have been completed but not yet invoiced as of the end of
consolidated fiscal year "Contract assets" is transferred to receivable-trade from contracts withcustomers when the Companies' rights to the consideration become unconditional. Consideration
for pharmaceutical development support, etc. with pharmaceutical companies, etc. is requested
within approximately three months and received within approximately five months, in accordancewith the contracts.
“Contract liabilities” is mainly equivalent to the portion of the amount received in advance which
does not satisfy performance obligations in contracts with customers for pharmaceuticaldevelopment support and pharmaceutical manufacturing support with pharmaceutical companies.
"Contract liabilities" is reversed with the recognition of revenue.
The revenues recognized in the ended year September 30, 2022, included in the contract liabilities
balance at the beginning of this period, are ¥1,158 million.
The revenues recognized in the ended year September 30, 2023, included in the contract liabilities
balance at the beginning of this period, are ¥1,399 million.
The decrease of ¥2,205 million in contract assets during the year ended September 30, 2023 wasmainly due to a decrease in demand for large-scale vaccination projects for local governments.
Further, the decrease of ¥2,455 million in contract liabilities was due to the transition of CMICCMO Co.,Ltd., CMIC CMO Korea Co., Ltd., and CMIC CMO USA Corporation from consolidated
subsidiaries to equity-method affiliates.
(2) Transaction prices allocated to remaining performance obligations
The total amount of transaction prices allocated to remaining performance obligations and theperiod in which revenues are expected be recognized are as follows.
Millions of yen
2022
Due within one year¥

51,203Due after one year
Total

2023
¥

46,21339,679¥90,882- 51 -

36,587¥82,80029 Segment information

1. General Information about Reportable Segments
CMIC Group has two reportable segments, “Pharmaceutical Solutions”, “Healthcare Solutions”,
which have been summarized business segments and classified under the similarity of the service
content and the customers who the services are provided for. "Pharmaceutical Solutions"develops the original business model, PVC (Pharmaceutical Value Creator), that contributes toincreasing the added value of pharmaceutical companies, and "Healthcare Solutions" contributes
to personal health through medical institutions and local governments.
Each reportable segment can provide its individual financial reports respectively, and theindividual financial reports can also be an object of the deliberation at Board Meeting when Board
Members decide the distribution of the business resources or evaluate the business performance
regularly.
Each segment consists of the companies and its affiliates as follows;
Segment
Pharmaceutical
Solutions

Products/Services

CMIC Group Companies (as of September 30, 2023)

Services related to pharmaceutical development CMIC HOLDINGS Co., Ltd.
support, analytical chemistry services,
CMIC Co., Ltd.
pharmaceutical formulation development, and
CMIC ShiftZero K.K.
manufacturing support.
CMIC Korea Co., Ltd.
Pharmaceutical sales support.
Development, manufacturing, sales and
CMIC ASIA-PACIFIC, PTE. LTD.
distribution of orphan drugs, etc.
CMIC ASIA PACIFIC (MALAYSIA) SDN. BHD.
CMIC Asia-Pacific (Hong Kong) Limited
CMIC Asia-Pacific (PHILIPPINES) , INC.
CMIC ASIA-PACIFIC (AUSTRALIA) PTY LTD
CMIC ASIA-PACIFIC (THAILAND) LIMITEDCMIC ASIA-PACIFIC (VIETNAM) COMPANY
LIMITED
CMIC (Beijing) Co., Ltd.
CMIC DATA SCIENCE VIETNAM COMPANY
LIMITED
CMIC Pharma Science Co., Ltd.
CMIC, INC.
CMIC BIO Co., Ltd.
CMIC Ashfield Co., Ltd.
OrphanPacific, Inc.

Healthcare
Solutions

Comprehensive support for healthcare-related
CMIC HOLDINGS Co., Ltd.
facilities and healthcare professionals.
CMIC Healthcare Institute Co., Ltd.
Provides solutions using a new ecosystem for
CMIC Solutions Co., Ltd.
healthcare to individuals and local governments.
CMIC Well Co., Ltd.
harmo Co.,LtdKNOCK ON THE DOOR Inc.

Notes 1.During the third quarter of the consolidated fiscal year, CMIC CMO Co.,Ltd., CMIC CMO Korea Co., Ltd., and
CMIC CMO USA Corporation, which belonged to the Pharmaceutical Solutions segment, transitioned fromconsolidated subsidiaries to equity-method affiliates. The results up until the end of the current third quarter
consolidated accounting period are included in the consolidated fiscal year.
2.CMIC ShiftZero K.K.was integrated into CMIC Co., Ltd. through an absorption-type merger effective October 1,
2023.
3.CMIC Ashfield Co., Ltd. changed its company name to CMIC Inizio Co., Ltd.effective October 1, 2023.

- 52 -

2. Method for calculating the amount of net sales, profit (loss), assets, liabilities and otheritems by segment

Accounting policies applied to reportable segments are the same as those described in“Significant accounting policies” except valuation bases of inventories. Segment profit is based on
operating income. Inter-segment sales and transfers between segments are based on market
prices.
3. Financial information by reportable segment
For the year ended September 30, 2022
(Millions of yen)Pharmaceutical
Solutions

Healthcare
Solutions

Total

Adjustment

Consolidated

Notes 1 and 3

Note 2

Net sales
External customers¥

Inter-segment

77,934¥30,526¥

108,461¥－¥

108,461

254

480

735

(735)

－

78,18831,007

109,196(735)

108,461

Segment profit (loss)

4,752

8,660

13,412(1,566)

11,845

Segment assets

97,81821,521

119,340(11,750)

107,590

Total

OthersDepreciation

¥

5,048

¥

178

¥

5,227

¥

－

¥

5,227

Amortization of goodwill

－

21

21

－

21

Increase in fixed assets

7,620

673

8,293

552

8,846

Notes: 1. The adjustment amount of ¥ (1,566) million in segment profit (loss) is unallocated corporate
expenses and expenses related to the Company (the holding company).
2. Segment profit corresponds with operating income in the consolidated statement of income.
3. The adjustment amount of ¥ (11,750) million in segment assets includes unallocated corporate
assets of ¥23,556 million and intersegment elimination and others of ¥ (35,306) million.
Depreciation and amortization included in corporate assets were allocated to each of thereporting segments.

- 53 -

For the year ended September 30, 2023
(Millions of yen)Pharmaceutical
Solutions

Healthcare
Solutions

Total

Adjustment

Consolidated

Notes 1 and 3

Note 2

Net sales
External customers¥

77,196¥27,471¥

104,668¥

32¥

104,701

863

450

1,314

(1,314)－78,06027,922

105,983(1,281)

104,701

Segment profit (loss)

5,184

7,029

12,214(1,946)

10,267

Segment assets

57,74318,03175,774(5,559)70,215Inter-segment
Total

OthersDepreciation

¥

4,359

¥

301

¥

4,660

¥

－

¥

4,660

Amortization of goodwill

－

103

103

－

103

Increase in fixed assets

3,607

474

4,082

869

4,951

Notes: 1. The adjustment amount of ¥ (1,946) million for segment profit (loss) includes the overall
company expenses of ¥(1,979) million attributable to the Company (holding company) thathave not been allocated to each reporting segment, as well as the revenue of ¥32 million
attributable to the Company (holding company) that has not been allocated to each reporting
segment.
2. Segment profit corresponds with operating income in the consolidated statement of income.
3. The adjustment amount of ¥ (5,559) million in segment assets includes unallocated corporate
assets of ¥27,322 million and intersegment elimination and others of ¥ (32,882) million.
Depreciation and amortization included in corporate assets were allocated to each of thereporting segments.
(Related Information)
1. Information by products and services
The disclosure of information by products and services is omitted because identical information isdisclosed as segment information.

- 54 -

2. Segment information by geographic areas(1) Net sales
For the year ended September 30, 2022
(Millions of yen)North
AmericaJapan
Net sales¥

97,032

Percentage of the consolidated net sales¥

Others

6,896

89.5%

¥

4,532

6.4%

Total
¥

108,4614.1%

100.0%For the year ended September 30, 2023
(Millions of yen)North
AmericaJapan¥

Net sales

92,512

¥

7,410

88.3%

Percentage of the consolidated net sales

Others

¥

4,778

7.1%

Total

¥

4.6%

104,701
100.0%(2) Tangible fixed assets
September 30, 2022
The disclosure of geographical segment information of property, plant and equipment isomitted as more than 90% of property, plant and equipment on the consolidated balance sheet
is located in Japan.
September 30, 2023
(Millions of yen)
North

Japan

OthersAmerica

¥

7,209

¥

899

Total

¥

80

¥

3. Information by major customers
There is no major unaffiliated customer which accounts for 10% or more of the net sales on
consolidated statements of income.
(Information about impairment loss for non-current assets)
For the year ended September 30, 2022
(Millions of yen)Pharmaceutical
Solutions
Impairment loss¥

Healthcare
Solutions

1,386 ¥

Total

－ ¥

1,386 ¥

Adjustment

Consolidated

－ ¥

1,386

For the year ended September 30, 2023
(Millions of yen)Pharmaceutical
Solutions
Impairment loss

¥

578 ¥

Healthcare
Solutions

Total

511 ¥

- 55 -

1,090 ¥

Adjustment

Consolidated

－ ¥

1,090

8,189

(Information about amortization of goodwill and unamortized balance)

For the year ended September 30, 2022
(Millions of yen)Pharmaceutical
Solutions
Amortization of goodwill¥

Unamortized balance－

Healthcare
Solutions
¥

－

Total

Adjustment

Consolidated

21 ¥

21 ¥

－ ¥

21

32

32

－

32

For the year ended September 30, 2023
(Millions of yen)Pharmaceutical
Solutions
Amortization of goodwill
Unamortized balance¥－

Healthcare
Solutions

¥

－

Total

Adjustment

Consolidated

103 ¥

103 ¥

－ ¥

103

337

337

－

337

(Information about amount of gain on negative goodwill)
For the year ended September 30, 2022
There was no gain on negative goodwill for the year ended September 30, 2022
For the year ended September 30, 2023
There was no gain on negative goodwill for the year ended September 30, 2023.

- 56 -

30 Transactions with related parties

1. Transactions between the Company and related parties for the years ended September 30, 2022
and 2023, are as follows:(1) Company directors, shareholders (Individual only), etc.
As of and for the year ended September 30, 2022

Type

Name

Company inwhich directors

Artemis Inc.
(Note 1)

Location

Shibuyaku,Tokyo

CapitalType of business(Millions of yen)

¥11

Asset
management

or close
relatives hold aManagement ofmajority of thevoting stock

the museum andaccommodation

Percentage ofvoting stock
owned by CMICHOLDINGS
Co., Ltd.
(owned in CMICHOLDINGS
Co., Ltd.) (%)

Transaction
details(22.7)
owned, directly

Administrative
service

Transaction
amount(Millions of yen)

Item

Balance at fiscal
year-end(Millions of yen)Accounts¥0¥31
receivable otherAccounts
payable-other¥12

Notes 1. Chairman & CEO of CMIC HOLDINGS Co., Ltd. Kazuo Nakamura, President & COO of CMICHOLDINGS Co., Ltd. Keiko Oishi and their family indirectly hold 100% of the voting rights.
2. Information on transaction terms and policy for determining the terms
Transactions with related parties are based on consideration of normal transaction conditions
and market prices.
As of and for the year ended September 30, 2023

Type

Name

Company inwhich directors
or close

Artemis Inc.
(Note 1)

Location

Shibuyaku,Tokyo

CapitalType of business(Millions of yen)

¥11

Asset
management

Percentage ofvoting stock
owned by CMICHOLDINGS
Co., Ltd.
(owned in CMICHOLDINGS
Co., Ltd.) (%)

Transaction
details(23.6)
owned, directly

Administrative
service

Transaction
amount(Millions of yen)

Item

Balance at fiscal
year-end(Millions of yen)

¥55
Accounts
receivable -relatives hold amajority of theManagement of
the museum andothervoting stock

accommodation

Accounts¥0¥5

payable-other
Keith Japan
Co., Ltd.
(Note 2)

Hokuto,Yamanashi¥10

Buying , selling
and rental of realestate(20.8)
owned, directly

Purchase of
land

¥69
Advances paid¥0

Notes 1. Chairman & CEO of CMIC HOLDINGS Co., Ltd. Kazuo Nakamura, President & COO of CMICHOLDINGS Co., Ltd. Keiko Oishi and their family indirectly hold 100% of the voting rights.
2. Chairman & CEO of CMIC HOLDINGS Co., Ltd. Kazuo Nakamura, and President & COO of
CMIC HOLDINGS Co., Ltd. Keiko Oishi indirectly hold 100% of the voting rights.
3. Information on transaction terms and policy for determining the terms
Transactions with related parties are based on consideration of normal transaction conditions
and market prices.
The purchase price of land is determined by referring to the appraisal of a real estate appraiser.

- 57 -

2. Transactions between consolidated subsidiaries of the Company and related parties for the years

ended September 30, 2022 and 2023, are as follows:
Company directors, shareholders (Individual only), etc.

As of and for the year ended September 30, 2022

Type

Name

Company inwhich directors

Artemis Inc.
(Note 1)

Location

Shibuyaku,Tokyo

CapitalType of business(Millions of yen)

¥11

Asset
management

Percentage ofvoting stock
owned by CMICHOLDINGS
Co., Ltd.
(owned in CMICHOLDINGS
Co., Ltd.) (%)

Transaction
details(22.7)
owned, directly

Administrative
service¥21¥18

Transaction
amount(Millions of yen)

Item

Balance at fiscal
year-end(Millions of yen)Accounts
receivable -or close
relatives hold aManagement ofRent ofmajority of thethe museum andaccommodation

Accounts

voting stock

accommodation

facilities fortraining

payable-other

¥0

other
¥2

Notes 1. Chairman & CEO of CMIC HOLDINGS Co., Ltd. Kazuo Nakamura, President & COO of CMICHOLDINGS Co., Ltd. Keiko Oishi and their family indirectly hold 100% of the voting rights.
2. Information on transaction terms and policy for determining the terms
Transactions with related parties are based on consideration of normal transaction conditions
and market prices.
As of and for the year ended September 30, 2023

Type

Name

Company inwhich directors
or close

Artemis Inc.
(Note 1)

Location

Shibuyaku,Tokyo

CapitalType of business(Millions of yen)

¥11

Asset
management

Percentage ofvoting stock
owned by CMICHOLDINGS
Co., Ltd.
(owned in CMICHOLDINGS
Co., Ltd.) (%)

Transaction
details(23.6)
owned, directly

Administrative
service¥32¥17

relatives hold aManagement ofRent ofmajority of thevoting stock

the museum andaccommodationaccommodation
facilities fortraining

Transaction
amount(Millions of yen)

Item

Balance at fiscal
year-end(Millions of yen)Accounts
receivable other¥0

Accounts
payable-other¥4

Notes 1. Chairman & CEO of CMIC HOLDINGS Co., Ltd. Kazuo Nakamura, President & COO of CMICHOLDINGS Co., Ltd. Keiko Oishi and their family indirectly hold 100% of the voting rights.
2. Information on transaction terms and policy for determining the terms
Transactions with related parties are based on consideration of normal transaction conditions
and market prices.

- 58 -

31 Amounts per share

Net assets and profit attributable to owners of parent per share as of and for the years ended
September 30, 2022 and 2023, are as follows:
Yen2022
Net assets per share¥

Profit attributable to owners of parent per share(Note)

2023

1,801.31¥

2,137.24
416.25469.44

Diluted profit attributable to owners of parent per share for the year ended September 30, 2022 is
not presented since no potential shares exist.
Diluted profit attributable to owners of parent per share for the year ended September 30, 2023 is
not presented since no potential shares that could have had a dilutive effect exist.
Note: The following is the basis for calculating the basic and diluted net income per share:
Millions of yen
2022
Profit attributable to owners of parent¥

Amount not attributable to common shareholders
Profit attributable to owners of parent of common stock

2023

8,387

¥

－
¥

Weighted average number of shares outstanding(thousands of shares)

8,387

7,152
－

¥

17,867

7,152

17,183

The following is an overview of the potential shares that were not included in the calculation of diluted profit
attributable to owners of parent per share, as they do not have a dilutive effect:
As of and for the year ended September 30, 2022
There is no applicable matter.
As of and for the year ended September 30, 2023
Consolidated subsidiary: KNOCK ON THE DOOR Inc.
1st Stock acquisition rights : Number of stock acquisition rights

1,050(common stock 1,050 shares)

2nd Stock acquisition rights : Number of stock acquisition rights

560(common stock 560 shares)

3rd Stock acquisition rights : Number of stock acquisition rights

340(common stock 340 shares)

4th Stock acquisition rights : Number of stock acquisition rights

205(common stock 205 shares)

5th Stock acquisition rights : Number of stock acquisition rights

355(common stock 355 shares)

6th Stock acquisition rights : Number of stock acquisition rights

115(common stock 115 shares)

5th Stock acquisition rights (2): Number of stock acquisition rights

245(common stock

245 shares)

6th Stock acquisition rights (2): Number of stock acquisition rights

10(common stock

10 shares)- 59 -

32 Subsequent events(Business Combination).
Business combination through acquisition
1. Overview of business combination(1) Name of the acquired company and details of its business
Name of acquired company: Hamamatsu Pharma Research, Inc.
Business Description:
Non-clinical drug efficacy pharmacology testing(2) Main reason for the business combination
Hamamatsu Pharma Research, Inc. conducts non-clinical pharmacology studies to evaluate
the efficacy of drug candidate substances, and supports the early stages of drug discovery
using their original monkey pathology models. In pharmacological testing of
biopharmaceuticals (antibody drugs), monkeys with antibodies similar to those of humans areused because of their high specificity to the target. As demand increases, securing technicalpersonnel has become an issue. At Hamamatsu Pharma Research, Inc., their skilled
technicians conduct pharmacological studies and diagnostic imaging such as MRI in various
disease areas such as the central nervous system, pain, and the cardiovascular system todevelop original pathological models.
Through the collaboration between CMIC Pharma Science Co., Ltd. and Hamamatsu Pharma
Research, Inc., the CMIC Group will grow its non-clinical contract research business, which
serves as a foundation for drug discovery, by strengthening and expanding drug discovery
support services to evaluate the efficacy (pharmacology) and safety of drugs and medical
devices using monkeys, for which needs are increasing in Japan and overseas, andstrengthen the CMIC Group's drug discovery platform.
(3) Business combination date
October 31, 2023 (stock acquisition date)
October 1, 2023 (deemed acquisition date)(4) Legal form of business combination
Stock acquisition for cash consideration(5) Name of the combined company
Hamamatsu Pharma Research, Inc.
(6) Percentage of voting rights acquired
100%(7) Main basis for determining the acquiring company
This is because the Company's consolidated subsidiary acquired shares for cash
consideration.
2. Cost of acquisition and details by type of consideration for acquisition
Consideration for acquisition: Cash and deposits¥1,500 million

Acquisition cost total:¥1,500 million

3. Details and amounts of major acquisition-related costs
Advisory Fees and Other Charges: ¥84 million
4. Goodwill Incurred, Reasons for Occurrence, Amortization Method and Period(1) Amount of Goodwill Incurred¥1,045 million
The amount of goodwill is a figure based on provisional calculation as the allocation of theacquisition cost has not been completed.

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(2) Reasons for Occurrence

It occurred due to the expected future excess earning power from future business expansion.
(3) Amortization Method and Period
Amortized evenly over a period of 8 years(Implementation of tender offer).
The Company resolved at its board of directors meeting held on November 7, 2023 to endorse thetender offer (the “Tender Offer”) for the common shares of the Company (the “Company Shares”)
conducted by Hokuto Management Co., Ltd. (the “Tender Offeror”) as follows as part of amanagement buyout (MBO – see Note), and to encourage the shareholders of the Company totender shares in the Tender Offer.
This resolution of the board of directors was adopted on the premise that the Company Shares will
be delisted following the Tender Offer and subsequent procedures.
Note: A “management buyout” (MBO) generally refers to a transaction in which the management of
the target company contributes all or part of the funds used to acquire shares of the target
company on the premise that the target company will continue to operate.
1. Outline of the Tender Offeror(1) Name
Hokuto Management Co., Ltd.
(2) Address
10060 Kobuchizawa-cho, Hokuto-shi, Yamanashi
Job title and name of(3)
Kazuo Nakamura, Representative Director
representative(4) Description of business
Acquisition and ownership of the Company Shares, etc.
(5) Stated capital¥100,000(6) Date of establishment
October 2, 2023
Major shareholders and(7)
SORA Corporation 100%
shareholding ratios(8) Relationship between the Company and the Tender Offeror
Not applicable.
Mr. Kazuo Nakamura (“Mr. Nakamura”), therepresentative director of the Tender Offeror, holds
565,638 Company Shares as of November 7,2023
Capital relationship(including 18 Company Shares held indirectly throughcumulative stock investment (rounded down to thenearest whole share) and 2,400 Company Shares
granted as restricted share awards; ownership ratio (seeNote): 3.32%).
Mr. Nakamura, the representative director of the Tender
Personnel relationshipOfferor, currently serves as representative director,
chairman and CEO of the Company.
Transactional relationship
Not applicable
Because Mr. Nakamura, the representative director,
chairman and CEO of the Company, holds all voting
Status as a related party
rights in the Tender Offeror, the Tender Offeror is arelated party of the Company.

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Note: “Ownership ratio” means the percentage (rounded to two decimal places) of the difference(17,042,645 shares) of the total number of issued shares of the Company (18,923,569 shares)
as of September 30, 2023, as stated in the “Consolidated Financial Results for the Fiscal YearEnding September 2023” published by the Company on November 7, 2023 (the “Financial
Results”), less the number of treasury shares held by the Company (1,880,924 shares) as ofthat date (the Company Shares owned by the Company’s employee stock ownership plan (JESOP) as of that date (158,000 shares) are recorded as treasury shares in the Company’s
financial results, but are not included in the number of treasury shares (1,880,924 shares)
because the Tender Offeror plans to acquire those shares through the Tender Offer).
2. Overview of the Public Tender Offer(1) Types of Securities to be Acquired
Common stock(2) Period of the Tender Offer
From Wednesday, November 8, 2023 to Thursday, January 4, 2024 (37 business days)(3) Offer Price¥2,650 per share of common stock(4) Number of Securities Intended to be Acquired
Type of stock
Predicted
Lower limit of predicted Upper limit of predictedcertificate
purchase quantity
purchase quantity
purchase quantity－
Common stock
12,722,645
7,037,500(Result of the Tender Offer by Hokuto Management Co., Ltd. and Changes in the Parent Company
and the largest major shareholder)
The Tender Offer for the common shares of the Company (the "Company Shares"), which had been
conducted by Hokuto Management Co., Ltd. (the "Tender Offeror") since November 8, 2023, wascompleted on January 4, 2024.
As a result of the Tender Offer, the Company’s parent company and the Company’s largest major
shareholder is expected to change as of January 12, 2024 (the commencement date of settlementof the Tender Offer).
The Company received a report on the results of the Tender Offer from the Tender Offeror on
January 5, 2024 stating that the Tender Offer has been completed, since the tender offer involved a
subscription for 10,487,063 shares of Company Shares that exceeded the minimum of the planned
number of shares to be purchased (7,037,500 shares) and, accordingly the Tender Offeror decided
to acquire all tendered shares.
As a result, upon settlement of the Tender Offer on January 12, 2024 (the commencement date of
the settlement of the Tender Offer), the ratio of the number of voting rights held by the Tender
Offeror to the number of voting rights held by all shareholders has exceeded 50%. Therefore, theTender Offeror became the parent company and the largest major shareholder of the Company. In
conjunction with this, SORA Co., Ltd. ("SORA"), the parent company of the Tender Offeror, also
indirectly owned Company Shares through the tender offer. As a result, it has been newly classified
as the Company’s parent company on January 12, 2024 (the commencement date of the settlementof the Tender Offer).
In addition, Artemis Inc. ("Artemis"), the largest major shareholder of the Company, was no longer
the largest major shareholder of the Company as of January 12, 2024 (the commencement date of
the settlement of the Tender Offer) because, as a result of the settlement of the Tender Offer, the- 62 -

Tender Offeror was newly classified as the Company's largest shareholder.

(Share Consolidation, Abolition of the Number of Shares Constituting One Unit of Shares, andPartial Amendments to the Articles of Incorporation)
The Board of Directors of the Company resolved at a meeting held on January 31, 2024 to convene
an extraordinary general meeting of shareholders (the "Extraordinary General Meeting of
Shareholders") to be held on March 4, 2024, and to submit Agenda Item 1 "Reverse Stock Split
Share Consolidation" and Agenda Item 2 “"Partial Amendment to the Articles of Incorporation" to theExtraordinary General Meeting of Shareholders.
In the course of the above procedures, the shares of common stock of the Company (the"Company's Shares") will fall under the delisting standards stipulated in the Securities Listing
Regulations of the Tokyo Stock Exchange, Inc. (the “"Tokyo Stock Exchange") in the course of theabove-mentioned procedures. As a result, the Company's shares will be designated as securities tobe delisted from March 4, 2024 to March 27, 2024, and then delisted as of March 28, 2024.
Ⅰ.Share Consolidation

1.Purpose and Reason for the Share Consolidation
Tender Offeror has decided to acquire all of the Company's shares (except for treasury stock
held by the Company and 2,160,000 shares of the Company's stock held by Artemis Inc.
("Artemis") (ownership ratio (Note): 12.67%) and 2,160,000 shares of the Company held by
Keith Japan Co., Ltd. ("Keith Japan")(ownership ratio 12.67%). Such shares of the Company
owned by Artemis and Keith Japan are hereinafter referred to as the "Non-Tendered Shares")in a series of transactions (the "Transactions") for the purpose of taking the Company's shares
private. As part of a series of transactions (the "Transaction") to acquire all of the Company's
shares and take the Company's shares private, the Tender Offeror conducted a tender offer for
the Company's shares with the Tender Offer Period from November 8, 2023 to January 4,
2024.
As a result of the completion of the Tender Offer, Tender Offeror acquired 10,487,063 shares of
the Company (ownership ratio: 61.53%) on January 12, 2024, the commencement date ofsettlement of the Tender Offer.
Note: “Ownership ratio” means the percentage (rounded to two decimal places) of thedifference (17,042,645 shares) of the total number of issued shares of the Company(18,923,569 shares) as of September 30, 2023, as stated in the “Consolidated Financial
Results for the Fiscal Year Ending September 2023” published by the Company on
November 7, 2023 (the “Financial Results”), less the number of treasury shares held by theCompany (1,880,924 shares) as of that date (the Company Shares owned by theCompany’s employee stock ownership plan (J-ESOP) as of that date (158,000 shares) arerecorded as treasury shares in the Company’s financial results, but are not included in thenumber of treasury shares (1,880,924 shares) because the Tender Offeror plans to acquire
those shares through the Tender Offer).
As described above, the Tender Offer was consummated, but Tender Offeror was unable toacquire all of the Company's shares (excluding the treasury stock held by the Company and thenon-tendered shares) through the Tender Offer. As announced in the Opinion Press Release,at the request of Tender Offeror and subject to shareholder approval at the Extraordinary- 63 -

General Meeting of Shareholders held on January 31, 2024, the Company's Board of Directors

has resolved that, in accordance with Tender Offeror's request, the Tender Offeror, Artemis andKeith Japan (collectively, the "Tender Offer Related Parties") will be the only shareholders of
the Company. In order to take the Company's shares private, the Company will conduct a
Share Consolidation (the "Share Consolidation") as described in "2.Summary of the Share
Consolidation", and resolved to submit a proposal for the Share Consolidation to theExtraordinary General Meeting of Shareholders. As a result of the Share Consolidation, thenumber of shares of the Company held by shareholders other than the Tender Offer Related
Parties will be reduced to fractions of less than one share.
2.Summary of Share Consolidation(1)Schedule of Share Consolidation
Date of Public Notice of the Record Date for thisExtraordinary General Meeting of Shareholders

January 5, 2024

Record date of this Extraordinary General
Meeting of Shareholders

January 20, 2024

Date of resolution by the Board of Directors

January 31, 2024

Date of the Extraordinary General Meeting of
Shareholders

March 4, 2024 (tentative)

Date of designation as Securities to Be Delisted

March 4, 2024 (tentative)

Last day of trading of the Company's shares

March 27, 2024 (tentative)

Delisting date of the Company's shares

March 28, 2024 (tentative)

Effective date of Share Consolidation

March 30, 2024 (tentative)(2)Details of the share consolidation
1. Type of shares to be consolidated
Common stock
2. Consolidation ratio
The Company's shares will be consolidated into one share at a ratio of 2,160,000 shares.
3. Total number of shares issued and outstanding to be reduced
17,279,992 shares(Note) The Company's Board of Directors resolved on January 31, 2024 to cancel
1,643,569 shares of treasury stock on March 29, 2024, so the "Total number ofshares issued and outstanding to be reduced" is based on the number ofshares issued and outstanding after such cancellation.
4. Total number of shares issued and outstanding before the effective date
17,280,000 shares(Note) Since the Company's Board of Directors resolved on January 31, 2024 tocancel 1,643,569 shares of treasury stock on March 29, 2024, the "Total
number of shares issued and outstanding before the effective date" is thenumber of shares after deducting the number of treasury stock (1,643,569
shares) that the Company plans to cancel on March 29, 2024.

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5. Total number of shares issued and outstanding after the effective date
8 shares6. Total number of shares authorized to be issued as of the effective date
32 shares
Ⅱ.Partial Amendments to the Articles of Incorporation
1.Aim of the Amendments to the Articles of Incorporation(1) If the proposal for the Share Consolidation is approved at this Extraordinary General
Meeting of Shareholders as originally proposed and the Share Consolidation takes effect,
the total number of authorized shares of the Company's stock will be reduced to 32 sharesin accordance with the provisions of Article 182, Paragraph 2 of the Companies Act. In orderto clarify this point, Article 6 (Total Number of Authorized Shares) of the Articles ofIncorporation is to be amended on the condition that the Share Consolidation takes effect.
(2) When the Share Consolidation takes effect, the total number of Company Shares will be 8
shares, and there will be no need to determine the number of shares per unit. Therefore, inorder to abolish the provisions regarding the number of shares per unit of our shares, which
is currently 1 unit of 100 shares, under the condition that the effect of this stock
consolidation occurs, the Company proposes to delete the entire text of Article 7 (Number of
Shares Constituting One Unit of Shares) and Article 8 (Additional Purchase of Shares Less
Than One Unit) of the Articles of Incorporation, and carry forward the numbering of thearticles in connection with such change.
(3) When the Share Consolidation takes effect, the only shareholders of the Company will be
the Tender Offer Related Parties, and since the Company's shares will be delisted, theprovisions relating to the electronic provision system for the materials of the General
Meeting of Shareholders will lose their necessity. Therefore, subject to the Share
Consolidation taking effect, the Company proposes to delete the entire text of Article 14(Measures for Electronic Provision, etc.) of the Articles of Incorporation and to carry forward
the number of articles in connection with such change.

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2.Amendments to be applied to the Articles of Incorporation
The details of the amendment are as follows. The amendments to the Articles of Incorporation
pertaining to this proposal will become effective on March 30, 2024, on the condition that the
proposal for the Share Consolidation is approved and passed as originally proposed at theExtraordinary General Meeting of Shareholders and the Share Consolidation takes effect.
(The sections underlined are the points of change)
Description in the current Articles of Incorporation

Proposed changes

Article 6 (Total Number of Authorized Shares)

Article 6 (Total Number of Authorized Shares)

The total number of authorized shares of the

The total number of authorized shares of theCompany shall be 46,000,000.

Company shall be 32.

Article 7 (Number of Shares Constituting One Unit

(To be deleted)of Shares)
The number of shares constituting one unit ofshares of the Company shall be 100 shares.
Article 8 (Additional Purchase of Shares Less

(To be deleted)Than One Unit)
Any shareholder of the Company may, in
accordance with the Share Handling Regulations,request the Company to sell to him the number ofshares that, together with the number of sharesless than one unit held by such shareholder, will
constitute one unit of shares.
Articles 9-13 (Omitted)

Articles 7-11 (no change)

Article 14 (Electronic Provision of Information,(To be deleted)etc.)(1) When convening a general meeting ofshareholders, the Company shall take measures
to provide electronically the information containedin the Reference Documents for the General
Meeting of Shareholders, etc.
(2)The Company shall not be required to include
all or part of the matters for which it takes
electronic provision of information as provided forin the applicable Ordinance of the Ministry ofJustice in the document to be delivered toshareholders who have made a written request by
the Record Date for Voting Rights.
Articles 15-39 (Omitted)

Articles 12-36 (no change)- 66 -

(Cancellation of treasury shares)
The Board of Directors of the Company resolved on January 31, 2024 to cancel its treasury sharespursuant to the provisions of Article 178 of the Companies Act. In addition, the cancellation oftreasury shares is subject to the approval of the proposal for the share consolidation with theeffective date of March 30, 2024 at the Company’s extraordinary shareholders' meeting scheduled
to be held on March 4, 2024.
1.Type of shares to be cancelled
Shares of the Company’s common stock
2.Number of shares to be cancelled
1,643,569 Shares (Percentage of total issued shares before cancellation 8.69%)(Note)Figures are rounded to three decimal places.
3.Scheduled date of the cancellation
March 29, 2024
4.Total number of issued shares after the cancellation
17,280,000 shares- 67 -