Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail.

Consolidated Financial Results for the Three Months Ended June 30, 2024
[Under IFRS]

August 7, 2024
Company name: Dexerials Corporation
Tokyo Stock Exchange
Listing:
Security code:4980
https://www.dexerials.jp/en
URL:
Representative: Yoshihisa Shinya, Representative Director and President
Contact:
Shinji Tomita, General Manager, PR&IR Department, Business Management Division Phone: +81-285-39-7950
Scheduled date to commence dividend payments:–
Preparation of supplementary material on financial results:
Yes
Holding of financial results briefing:
Yes (for securities analysts and institutional investors)(Note) Amounts less than one million yen have been omitted.
1. Consolidated financial results for the three months ended June 30, 2024 (from April 1, 2024 to June 30, 2024)(1) Consolidated operating results (cumulative)(Percentage indicates year-on-year changes.)
Net sales
Three months ended

June 30, 2024
June 30, 2023

Business profit (Note)

Millions of yen%

Millions of yen

27,176 30.3
20,858–

EBITDA (Note)% Millions of yen

9,595 78.4
5,378–

11,204
6,709

Operating profit% Millions of yen

67.0–

Profit before tax%

Millions of yen

9,773 81.5
5,385
–

%

9,538 84.7
5,165–

Note: For details of business profit and EBITDA, please refer to “* Proper use of earnings forecast, and other special notes, (Business profit and EBITDA)” on
the next page.

Profit attributable to Total comprehensive
incomeowners of parent

ProfitThree months ended

Millions of yen

June 30, 2024
June 30, 2023%

6,689 82.1
3,672–

Millions of yen% Millions of yen

Basic earnings
per share

Diluted earnings
per share

%

Yen

Yen

7,251 123.8
3,239–

116.9563.54

116.7263.25

Equity attributableto owners of parent

Ratio of equity
attributable toowners of parent tototal assets

Equity attributableto owners of parent
per share

6,689 81.5
3,684–(2) Consolidated financial position
Total assets
As ofTotal equity

Millions of yen

Millions of yen

Millions of yen%

Yen

140,760
140,373

89,325
85,12289,325
85,12263.5
60.6

1,561.57
1,488.91

June 30, 2024
March 31, 2024
2. Cash dividends

Annual dividends per shareFirst quarter-end

Second quarter-end

Third quarter-end

Yen

Yen

Yen

Fiscal year-end
Yen

Total
Yen

Fiscal year ended March 31, 2024

–

35.00

–

65.00

100.00Fiscal year ending March 31, 2025
Fiscal year ending March 31, 2025
(forecast)

–
78.00

–

26.00

–

Notes: 1. Revisions to dividend forecast published most recently: None
2. Effective October 1, 2024, the Company plans to conduct a 3-for-1 split of common shares. Accordingly, as for the dividends for the fiscal year ending
March 31, 2025 (forecast), the amount of the second quarter-end dividend is that before the stock split and the amount of the fiscal year-end dividend isthat after the stock split. Without considering the stock split, the fiscal year-end dividend per share for the fiscal year ending March 31, 2025 (forecast)would be 78.0 yen, and the annual dividend per share would be 156.0 yen.

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2025 (from April 1, 2024 to March 31, 2025)(Percentages indicate year-on-year changes.)
Net sales
Millions of yen

Fiscal year

107,000

Business profit% Millions of yen

1.7

33,500

Profit attributable toowners of parent

Profit before tax% Millions of yen

(1.7)

-1-

32,000% Millions of yen

3.6

23,000

Basic earnings
per share

%

Yen

1.9

132.20Notes: 1. Revisions to earnings forecast published most recently: None
2. For the purpose of calculating the amount of basic earnings per share, the number of shares of the Company held by the Trust
as of the end of the fiscal year ended March 31, 2024 was included in the number of treasury shares, which was to be deductedfrom the calculation of the average number of common shares during the period.
3. Effective October 1, 2024, the Company plans to conduct a 3-for-1 split of common shares. Accordingly, basic earnings per
share for the fiscal year ending March 31, 2025 was calculated on the assumption that the stock split had been conducted at
the beginning of the fiscal year ending March 31, 2025. Without considering the stock split, basic earnings per share would
be 396.60 yen.
[Notes](1) Significant changes in the scope of consolidation during the period: None
(2) Changes in accounting policies and changes in accounting estimates(i) Changes in accounting policies required by IFRS: None(ii) Changes in accounting policies due to reasons other than (i) above: None(iii) Changes in accounting estimates: None
(3) Number of shares of common shares issued(a) Number of shares issued (including treasury shares)
As of June 30, 2024:
60,214,200 shares
As of March 31, 2024:
60,192,200 shares(b) Number of treasury shares
As of June 30, 2024:
As of March 31, 2024:

3,012,045 shares
3,021,311 shares(c) Average number of common shares during the period
Three months ended June 30, 2024: 57,195,565 shares
Three months ended June 30, 2023: 57,987,315 shares
Notes: 1. The number of shares issued as of June 30, 2024 has increased by 22,000 shares as the number of shares issued increased
by 22,000 shares upon the exercise of stock options during the three months ended June 30, 2024.
2. As the Company has introduced a stock compensation plan which delivers shares with restrictions on transfer, theCompany’s shares are included in the number of treasury shares at the end of the period (293,800 shares as of June 30,2024 and 293,800 shares as of March 31, 2024) mainly for the purpose of allotting them as restricted shares.
3. As the Company has introduced an Employee Stock Ownership Plan (“J-ESOP”) and a Board Benefit Trust (BBT), thenumber of shares of the Company held by the Trust is included in the number of treasury shares as of the end of theperiod. In addition, the number of shares of the Company held by the Trust (an average of 3,014,854 shares for the threemonths ended June 30, 2024 and an average of 5,105,983 shares for the three months ended June 30, 2023) was includedin the number of treasury shares to be deducted in the calculation of the average number of common shares during theperiod.
* Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants
or an audit firm: Yes (voluntary)* Proper use of earnings forecast, and other special notes(Application of International Financial Reporting Standards (IFRS))The Group has adopted IFRS from the fiscal year ending March 31, 2025. The consolidated financial statements most recently
prepared in accordance with Japanese GAAP are those for the fiscal year ended March 31, 2024, and the date of transition to IFRS is
April 1, 2023. For differences between IFRS and Japanese GAAP with respect to consolidated financial figures, please refer to “2.
Quarterly Consolidated Financial Statements and Notes, (3) Notes to quarterly consolidated financial statements (First-time adoptionof IFRS)” on page 20 of the attached materials.
(Business profit and EBITDA)
Although business profit and EBITDA are not disclosures under IFRS, the Company believes that these disclosures provide useful
information to investors. The details of business profit and EBITDA are as follows.
Business profit: A profit indicator that measures the Company’s recurring operating results, which are determined by deducting costof sales and selling, general and administrative expenses from net sales
EBITDA: A profit indictor that is determined by adding back depreciation, which is recorded as cost of sales and selling, general andadministrative expenses, to business profit(Method of obtaining supplementary materials on financial results)
Supplementary materials on financial results will be posted on our website at https://www.dexerials.jp/en/ir/library/index.html.
(Disclaimer with respect to earnings and other forecasts)
The forward-looking statements including results forecasts contained in this document are based on information currently available
to the Company and certain assumptions that the Company deems reasonable. Accordingly, the Company does not intend to promise
their achievement. Actual results may differ from these forecasts and forward-looking statements due to various factors.

-2-

Contents for Attached Materials
1. Overview of Consolidated Financial Results …….……………….…………………………………………………………

2(1) Operating results …………………………………………………………………………………………………………

2(2) Financial position …………………………………………………………………….………………………………….

2(3) Forward-looking statements including consolidated earnings forecast …………………………………………….……

2

2. Quarterly Consolidated Financial Statements and Notes ………………………………………………………………….…

3(1) Quarterly consolidated statement of financial position ………………………………………………………………….

3(2) Quarterly consolidated statement of profit or loss and quarterly consolidated statement of comprehensive income …...

5(3) Notes to quarterly consolidated financial statements……………………………………………………………….……

7(Going concern assumption) ……………………………………………………………………………………………

7(Reporting entity) ……………………………………………………………………………………………………….

7(Material accounting policies) ……………………………………………………………………………………….…

7(Quarterly consolidated statement of cash flows) ………………………………………………………………………

16(Significant changes in the amount of equity attributable to owners of parent) ……………………………………….

16(Segment information) ………………………………………………………………………………………….………

17(Assets held for sale) ……………………………………………………………………………………………………

19(First-time adoption of IFRS) …………………………………………………………………………………..….…...

20

-1-

1. Overview of Consolidated Financial Results
The Group has adopted International Financial Reporting Standards (hereinafter, “IFRS”) from the fiscal year ending March 31, 2025.
In addition, financial figures for the first quarter of the previous fiscal year and the previous fiscal year have been reclassified to conformto IFRS for purposes of comparative analysis.
For differences between IFRS and Japanese GAAP with respect to financial figures, please refer to “2. Quarterly Consolidated Financial
Statements and Notes, (3) Notes to quarterly consolidated financial statements (First-time adoption of IFRS)” on page 20 of the attachedmaterials.
(1) Operating results
The Group’s operating results for the first quarter of the fiscal year ending March 31, 2025 were as follows: net sales were ¥27,176
million (up 30.3% year-on-year), business profit was ¥9,595 million (up 78.4% year-on-year), operating profit was ¥9,773 yen (up81.5% year-on-year), and profit attributable to owners of parent was ¥6,689 million (up 81.5% year-on-year). Such a strong businessperformance was attributable mainly to the recovery from the supply chain inventory adjustment in the consumer IT product market in
the previous fiscal year and the solid performance of business for automotive applications.
Operating results by segment and sales by product category are presented as follows.
a. Optical Materials and Components Business
During the period under review, the Optical films product category reported a year-on-year increase in sales thanks to the volume growthof anti-reflection films resulting from the recovery from the previous fiscal year’s inventory adjustment of the laptop PC and othermarkets and an increase in the number of models adopted for automotive applications.
The Optical resin materials product category also reported a year-on-year increase in sales mainly due to an increase in quantity of
products sold for smartphones for major customers in smart precision adhesives (SA).
As a result, the business segment reported net sales of ¥12,573 million (up 36.9% year-on-year) and business profit of ¥3,641 million(up 85.6% year-on-year).
b. Electronic Materials and Components Business
During the period under review, the Anisotropic conductive films (ACF) product category reported a year-on-year increase in sales
thanks to an increase in particle-arrayed ACFs for smartphones in the greater China market on top of the recovery from customers’
production adjustments in the previous fiscal year.
The Surface mounted type fuses product category performed at about the same level a year ago in terms of sales due to customers’
inventory adjustment continuing from the previous fiscal year for high-current products such as power tools.
The Photonics product category as a whole reported a year-on-year increase in sales. Specifically, sales of micro devices increased
thanks to the recovery of the supply chain inventory adjustment, whereas sales of optical semiconductors for both telecommunicationand sensor applications decreased due to the delayed recovery of demand in China.
As a result, the business segment reported net sales of ¥14,765 million (up 25.0% year-on-year) and business profit of ¥5,953 million(up 74.2% year-on-year)
Note: Segment sales include inter-segment transactions.
(2) Financial position
Total assets at the end of the period under review amounted to ¥140,760 million, an increase of ¥386 million from the end of the previous
fiscal year, due to increases in cash and cash equivalents and trade and other receivables, which were partially offset by decreases inother current assets and assets held for sale. Total liabilities amounted to ¥51,434 million, a decrease of ¥3,816 million from the end of
the previous fiscal year, due to decreases in income taxes payable, employee benefits accruals, and interest-bearing liabilities (noncurrent), which were partially offset by an increase in other financial liabilities. Total equity amounted to ¥89,325 million, an increaseof ¥4,203 million due to increases in retained earnings, other components of equity, and capital surplus.
(3) Forward-looking statements including consolidated earnings forecast
The full-year earnings forecast for the fiscal year ending March 31, 2025 remains unchanged from that announced in the “Consolidated
Financial Results for the Fiscal Year Ended March 31, 2024” disclosed on May 13, 2024.
-2-2. Quarterly Consolidated Financial Statements and Notes(1) Quarterly consolidated statement of financial position(Millions of yen)
Date of transition(As of April 1, 2023)

Previous fiscal year
(As of March 31, 2024)

Current quarter(As of June 30, 2024)

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other financial assets
Other current assets

29,454
14,09911,281
122
4,469

35,32815,588
9,916
60
3,025

38,311
17,056
9,577
39
1,208

Subtotal
Assets held for sale

59,427–

63,9195,522

66,193
3,760

59,42769,442

69,95334,30821,288
5,973

37,39021,288
5,807

37,57921,288
5,925

121
1,294
4,164
218

140
1,245
4,861
197

145
1,561
4,100
205

Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Investments accounted for using equity method
Other financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets-3-67,36870,93170,806

126,795

140,373

140,760

(Millions of yen)
Date of transition(As of April 1, 2023)
Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Interest-bearing liabilities
Income taxes payable
Employee benefits accruals
Other financial liabilities
Other current liabilities

Previous fiscal year
(As of March 31, 2024)

Current quarter(As of June 30, 2024)

11,259
9,546
4,706
4,222
6,648
1,425

13,378
7,444
4,378
4,138
2,547
1,539

12,614
7,129
2,153
2,676
4,570
1,704

37,80833,42630,849

–

266

274

37,80833,692

31,123

12,032
4,346
253
1,276
2,459
9

15,754
4,059
275
1,444
–
23

14,841
3,771
283
1,387
–
26

20,37921,55820,311

58,18755,251

51,434

16,194
14,582
52,895(15,908)(26)

16,251
17,70054,777(5,085)
1,478

16,257
18,35257,553(5,075)
2,236

Total equity attributable to owners of parent
Non-controlling interests

67,737
870

85,122–89,325–

Total equity

68,60885,12289,325

126,795

140,373

140,760

Subtotal
Liabilities directly associated with assets held forsale
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Retirement benefit liability
Provisions
Deferred tax liabilities
Other financial liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Capital surplus
Retained earnings
Treasury shares
Other components of equity

Total liabilities and equity-4-(2) Quarterly consolidated statement of profit or loss and quarterly consolidated statement of comprehensive income
Quarterly consolidated statement of profit or loss
(Millions of yen, except for per share data)
Three months ended
Three months ended
June 30, 2023
June 30, 2024
(From April 1, 2023
(From April 1, 2024
to June 30, 2023)
to June 30, 2024)
Net sales
20,85827,176
Cost of sales(10,493)(11,838)
Gross profit
Selling, general and administrative expenses
Other income
Other expenses

10,365(4,986)69(62)

15,338(5,742)200(22)

Operating profit
Finance income
Finance costs
Share of profit of investments accounted for using equity
methodProfit before tax
Income tax expense

5,385
32
(256)

9,773
49
(289)

3

5

5,165
(1,492)9,538(2,849)Profit

3,672

6,689

Profit attributable to:
Owners of parent
Non-controlling interests

3,684
(12)

6,689
–

3,672

6,689

63.54
63.25

116.95116.72

ProfitEarnings per share
Basic earnings per share (Yen)
Diluted earnings per share (Yen)-5-

Quarterly consolidated statement of comprehensive income

ProfitThree months ended
June 30, 2023
(from April 1, 2023
to June 30, 2023)
3,672

Other comprehensive income, net of tax:
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit plans
Net change in fair value of equity instruments
designated as measured at fair value through othercomprehensive income
Share of other comprehensive income of investments
accounted for using equity method
Total of items that will not be reclassified to profit orloss
Items that may be reclassified to profit or loss:
Cash flow hedges
Hedging costs
Exchange differences on translation of foreign
operations
Items that may be reclassified to profit or loss

(Millions of yen)Three months ended
June 30, 2024
(from April 1, 2024
to June 30, 2024)
6,689

(11)

(196)

–

(1)

10

–

(0)

(197)

(1,426)
(68)

(133)
(14)

1,061

907

(432)

759

(433)

561

Comprehensive income

3,239

7,251

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

3,248
(9)

7,251
–

3,239

7,251

Total other comprehensive income (after tax effect)

Comprehensive income-6-(3) Notes to quarterly consolidated financial statements(Going concern assumption)
Not applicable.
(Reporting entity)
Dexerials Corporation (the “Company”) is a joint-stock company incorporated in Japan. The address of its registered head office
is Shimotsuke City, Tochigi Prefecture. The Company’s quarterly consolidated financial statements comprise the financial
statements of the Company and its consolidated subsidiaries (collectively, the “Group”) as well as its interests in associates.
The Group is principally engaged in the manufacturing and distribution of optical materials and electronic materials. It is divided
into two operating segments: Optical Materials and Components Business and Electronic Materials and Components Business.
(Material accounting policies)
The Group applies the following accounting policies to all periods presented in the consolidated financial statements for the period
under review (including the consolidated statement of financial position at the date of transition to IFRS), unless otherwise
provided.
(1) Basis of consolidation(i) Subsidiaries
A subsidiary refers to an entity controlled by the Group. The Group determines that it controls an entity when the Group hasvariable exposures, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity.
Financial statements of a subsidiary are included in the consolidated financial statements from the date on which the Group obtains
control of the subsidiary until the date on which it loses control of the subsidiary. If any accounting policies applied by a subsidiarydiffer from those applied by the Group, adjustments are made to the subsidiary’s financial statements as necessary. The balancesof receivables and payables and transactions between Group companies, and unrealized gains or losses arising from transactions
between Group companies are eliminated in the preparation of the quarterly consolidated financial statements. Comprehensive
income of a subsidiary is attributed to owners of the parent and non-controlling interests, even if this results in a negative balance
in non-controlling interests.
When the Company makes a partial disposal of an interest in a subsidiary and continues controlling it, the disposal is accounted
for as equity transactions. Any difference between the adjustment to non-controlling interests and the fair value of consideration
is directly recognized in equity as interests attributable to owners of the parent. If the Group loses control of a subsidiary, it
recognizes gains or losses resulting from the loss of control in profit or loss.
(ii) Associates
An associate refers to an investee over which the Group has significant influence in terms of the finance and business policies but
does not have control or joint control. If the Group holds 20% or more but no more than 50% of the voting rights of the entity, it
is presumed that the Group has significant influence over the entity.
An investment in an associate is accounted for using the equity method from the date the investee is determined to be an associate
until the date the investee is determined not to be an associate.
If any accounting policies adopted by an associate differ from those adopted by the Group, adjustments are made to the associate’s financial statements as necessary. When an entity ceases to be an associate and is no longer accounted for by the equity method,
gains or losses resulting from the cessation of applying the equity method is recognized as profit or loss.

-7-

(2) Business combinations
Business combinations are accounted for using the acquisition method. The consideration of acquisition is measured as theaggregate of assets transferred in exchange for control of an acquiree, assumed liabilities and the acquisition-date fair value ofequity interests issued by the Company. If the aggregate of the consideration transferred, the amount of any non-controllinginterests in an acquiree, and the fair value of any equity interests in the acquiree previously held by the acquirer exceeds the net
value of the identifiable assets and liabilities acquired, goodwill is measured as the excess.
The Company selects whether to measure non-controlling interests at fair value or at their proportionate share of the recognizedamount of identifiable net assets for each business combination.
The Company accounts for acquisition-related costs incurred, including brokerage fees, legal fees, and due diligence costs, when
they are incurred.
If initial accounting for the business combination was not completed by the end of the consolidated fiscal year in which an businesscombination occurred, items that were not completed are reported at their provisional amounts. If the Company obtained facts andcircumstances that had existed at the acquisition date in the period that would have affected the measurement of the amount to berecognized had they been known at an initial acquisition date (the “measurement period”), the provisional amounts recognized at
the acquisition date are retrospectively adjusted to reflect that information. When newly obtained information results in a newrecognition of assets and liabilities, additional assets and liabilities are recognized. The maximum measurement period is one year.
Additional acquisitions of non-controlling interests after control has been obtained are accounted for as equity transactions;
therefore, goodwill is not recognized because of the transactions.
The identifiable assets and liabilities of the acquiree are measured at the acquisition-date fair value, except for the following:






Deferred tax assets or deferred tax liabilities;
Assets and liabilities related to employee benefit arrangements, initial;
Share-based payment arrangement of the acquiree;
Right-of-use assets and lease liabilities associated with leases in which the acquiree is the lessee
Assets or a disposal group classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations.

In the case of a business combination achieved in stages, the interest in the acquiree previously held by the Group is remeasured
at fair value on the date that control is acquired, and gains or losses incurred is recognized in profit or loss.
The Group has adopted the exemption provisions of IFRS 1, and does not apply IFRS 3 Business Combination retrospectively tothe business combinations that took place before the date of transition to IFRS (April 1, 2023). Consequently, the amount of
goodwill arising from acquisitions before the date of transition is recorded based on the carrying amount as of the date of transitionin accordance with the previous accounting standard (Japanese GAAP).
(3) Foreign currency translation(i) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of each Group company using the exchange rates at thedates of the transactions.
Foreign currency monetary assets and liabilities at the closing date are translated into the functional currency at the exchange rate
prevailing at the closing date. Foreign currency non-monetary assets and liabilities measured at fair value are translated into thefunctional currency at the exchange rate prevailing at the date of the fair value calculation.
Translation differences arising from translation or settlement are recognized in profit or loss. However, translation differences
arising from cash flow hedges are recognized in other comprehensive income.
(ii) Financial statements of foreign operations
Assets and liabilities of foreign operations are translated into the Japanese yen using the exchange rates at the closing date.
Revenue and expenses of the foreign operations are translated into the Japanese yen using the average exchange rates during theperiod unless the exchange rates fluctuate significantly. Translation differences arising from translating the financial statementsof the foreign operations are recognized in other comprehensive income, and are recognized in profit or loss in the period in which
the foreign operations are disposed of.

-8-The Group has adopted the exemption provisions of IFRS 1, and the cumulative exchange differences on translating foreign
operations before the date of transition to IFRS are considered to be zero and all of them are transferred to “Retained earnings”
from “Other components of equity”.
(4) Financial Instruments(i) Financial assets (excluding derivatives)
A. Initial recognition and measurement
The Group classifies financial assets into financial assets measured at fair value through profit or loss, financial assets measured
at fair value through other comprehensive income, or financial assets measured at amortized cost. This classification is madeat initial recognition. The Group also initially recognizes financial assets at the transaction date on which it becomes a party to
the contract of the financial instrument.
All financial assets are measured at fair value plus transaction costs directly attributable to the acquisition, unless the assets areclassified as those measured at fair value through profit or loss. However, trade receivables that do not contain a significant
financing component are measured at their transaction price.
The Group classifies financial assets as those measured at amortized cost if both of the following conditions are met: the financial assets are held based on a business model whose objective is to hold assets in order to collect contractual cash
flows; and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets other than those measured at amortized cost are classified as those measured at fair value.
B. Subsequent measurement
After initial recognition, financial assets are measured as follows in accordance with their classification.
(a) Financial assets measured at amortized cost
Financial assets are measured at amortized cost using the effective interest method. Interest is recognized in profit or loss
as part of finance income.
(b) Financial assets measured at fair value
Changes in the fair value of financial assets measured at fair value are recognized in profit or loss.
However, changes in the fair value of equity instruments designated as those measured at fair value through othercomprehensive income are recognized in other comprehensive income. Dividends from those instruments are recognizedin profit or loss as part of finance income.
C. Impairment of financial assets
The Group recognizes an allowance for doubtful accounts for expected credit losses on financial assets measured at amortizedcost.
At the closing date of each reporting period, the Group assesses whether credit risk on each financial asset has increased
significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Group
recognizes 12-month expected credit losses as a loss allowance. Meanwhile, if the credit risk has increased significantly sinceinitial recognition, the Group recognizes an amount equal to lifetime expected credit losses as a loss allowance. However, theGroup always recognizes lifetime expected credit losses as a loss allowance on trade receivables and lease receivables that do
not contain a significant financing component.
D. Derecognition of financial assets
The Group derecognizes financial assets if the contractual rights to the cash flows from the financial assets expire, or the Grouptransfers substantially all the risks and rewards of ownership of the financial assets. If the Group has retained control of thefinancial assets transferred, it recognizes the assets and related liabilities to the extent of its continuing involvement in thefinancial assets.

-9-

(ii) Financial liabilities (excluding derivatives)
A. Initial recognition and measurement
The Group initially recognizes all financial liabilities at the date on which it becomes a party to the contract of the financial
instrument and measures them at amortized cost. The Group also measures them at fair value less transaction costs directly
attributable to their issuance upon initial recognition.
B. Subsequent measurement
After initial recognition, financial liabilities are measured at amortized cost using the effective interest method with interest
recognized in profit or loss as part of finance costs.
C. Derecognition of financial liabilities
The Group derecognizes financial liabilities when they are extinguished—i.e. when the obligation specified in the contract isdischarged or cancelled or expires.
(iii) Presentation of financial assets and financial liabilities
Financial assets and financial liabilities are offset and presented net in the quarterly consolidated statement of financial position
only when the Group have the legal right to offset the balances and have the intention to settle on a net basis or to realize the asset
and settle the liability simultaneously.
(iv) Derivatives and hedge accounting
The Group uses derivatives, including foreign currency forward contracts and foreign exchange options, to hedge foreign currency
risk. These derivatives are initially recognized at fair value when the contracts are entered into, and are subsequently measured atfair value. Changes in the fair value of the derivatives are recognized in profit or loss.
When applying the hedge accounting, the Group formally designates and documents, at the inception of a hedge, the hedging
relationship to which it plans to apply hedging accounting and its risk management objective and strategy for undertaking the hedge.
The documentation includes the specific hedging instrument, the hedged item or transaction, the nature of the risk being hedged,
and the method of assessing the effectiveness of the hedging instrument in offsetting the exposure to changes in the hedged item’sfair value or cash flows attributable to the hedged risk. Specifically, the Group determines that the hedge is effective if all of thefollowing requirements are met: there is an economic relationship between the hedged item and the hedging instrument; the effect of credit risk does not dominate the value changes that result from the economic relationship; and the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Groupactually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The Group assesses on an ongoing basis whether the hedging relationship is effective prospectively.
The Group has appropriately established the hedge ratio in light of an economic relationship between the hedged item and thehedging instrument and its risk management strategy.
The Group readjusts the hedge ratio to make the hedging relationship effective again if the hedging relationship is deemed to be nolonger effective, but its risk management objective remains unchanged. If the risk management objective for the hedging
relationship has changed, hedge accounting for the hedging relationship is discontinued.

- 10 -

The Group accounted for hedges meeting criteria for hedge as follows:
Cash flow hedges
The effective portion of gains or losses on the hedging instrument is recognized in other comprehensive income, and the ineffective
portion of them is immediately recognized in profit or loss.
If the hedging instrument is a forward exchange contract, the forward exchange contract is classified into a forward element and aspot element, and only changes in the value of the spot element are designated as the hedging instrument. Changes in the fair valueof the forward element are separately accounted for as hedging costs.
When a currency option is used as the hedging instrument, the Company classifies the currency option into intrinsic value and timevalue and designates only changes in the intrinsic value element as the hedging instrument. Changes in the fair value of the timevalue element are separately accounted for as hedging costs.
The amount recorded in other comprehensive income is transferred to profit or loss at the time when the transaction for a hedged
item affects profit or loss.
When a hedging instrument expires, is sold, terminated or exercised, the hedge accounting is discontinued prospectively if thehedge does not qualify for the hedge accounting. If a forecast transaction or a firm commitment is no longer expected to occur, thecumulative gains or losses recognized in equity through other comprehensive income are transferred to profit or loss. If the hedged
future cash flows are still expected to occur, the amount previously recognized in equity through other comprehensive income
remains in equity until the future cash flows occur.
Derivatives that do not qualify for hedge accounting are recognized at fair value, with changes in fair value recognized in net income
or loss.
(v) Liabilities arising from put options written on non-controlling interests
For written put options on shares of subsidiaries granted by the Group to owners of non-controlling interests, the Group recognizes
a financial liability as an obligation to purchase the non-controlling interests, and accordingly, the put option to the non-controllingshareholders is recorded as “Other financial liabilities (non-current)” and “Capital surplus” is reduced. When the non-controllingshareholders exercise their rights, “Other financial liabilities (non-current)” and “Non-controlling interests” are reversed and thedifference between the amount of the reversal and the amount paid is recorded in “Capital surplus.”(5) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments with maturities of three months
or less from the date of acquisition that are readily convertible into cash and which are subject to an insignificant risk of changes
in value.
(6) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost includes purchase costs, processing costs, and all
costs incurred until the inventories reach the current location and condition and is calculated based on the moving average method.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and theestimated costs of sale.
(7) Property, plant and equipment
Property, plant and equipment are measured using the cost model and stated at cost less any accumulated depreciation and any
accumulated impairment losses. The cost includes any costs directly attributable to the acquisition of the asset and the initial
estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Property, plant and equipment other than land and construction in progress are depreciated using the straight-line method over theirrespective estimated useful lives. The estimated useful lives of major property, plant and equipment are as follows.
 Buildings and structures: 2 to 60 years Machinery and vehicles: 2 to 15 years
Estimated useful lives, residual values, and depreciation methods are reviewed at each financial year-end, and any changes areapplied prospectively as changes in accounting estimates.
- 11 -

(8) Goodwill and intangible assets(i) Goodwill
The Group initially measures goodwill as the fair value of the consideration for transfer, including the recognized amount of any
non-controlling interests in the acquiree measured as of the acquisition date, less the net recognized amount of identifiable assets
acquired and liabilities assumed as of the acquisition date (usually at fair value).
Goodwill is not amortized but is allocated to a cash-generating unit or group of cash-generating units and tested for impairment
once a year or whenever an indication of impairment exists. Goodwill impairment losses are recognized in the quarterly
consolidated statement of profit or loss and are not subsequently reversed. Goodwill is stated at cost less any accumulated
impairment losses in the quarterly consolidated statement of financial position.
(ii) Intangible assets
Intangible assets are measured using the cost model and stated at cost less any accumulated amortization and any accumulated
impairment losses.
Separately acquired intangible assets are measured at cost upon initial recognition. The cost of intangible assets acquired in abusiness combination is measured at fair value at the date control is obtained.
Intangible assets with finite useful lives are amortized using the straight-line method over the estimated useful lives. The estimateduseful lives of major intangible assets are as follows: Software: 5 years
 Patents: 8 to 15 years
 Customer-related intangible assets (identifiable intangible assets): 17 years
Estimated useful lives and depreciation methods are reviewed at each financial year-end, and any changes are applied prospectively
as changes in accounting estimates.
(9) Leases(i) As lessee
The Group assesses contracts to determine whether a contract is, or contains, a lease. If the contract is, or contains, a lease, a rightof-use asset and a lease liability are recognized at the commencement date of the lease. The lease liability is measured at the present
value of total lease payments yet to be paid. The right-of-use asset is measured at cost, adjusted to the amount of the initial
measurement of the lease liability for any lease payments made at or before the commencement date, etc., any initial direct costs
incurred by the lessee, and the costs to be incurred as the obligation for restoration, etc. required by the terms and conditions of thelease.
Right-of-use assets are stated at cost less any accumulated depreciation and any accumulated impairment losses and are included
in property, plant and equipment in the quarterly consolidated statement of financial position. Right-of-use assets are depreciatedusing the straight-line method over the shorter of their estimated useful life and the lease term.
Lease liabilities are measured subsequently at an amount that reflects the interest expense on the lease liability, lease payments
made and, if applicable, any reassessment of the lease liability or lease modifications. Lease liabilities are included in “Interestbearing liabilities” in the quarterly consolidated statement of financial position.
Lease payments are allocated between finance costs and repayments of lease liabilities, with finance costs recognized in thequarterly consolidated statement of profit or loss. The lease term is the non-cancellable period of the lease plus the period coveredby the extension option that the lessee is reasonably certain to exercise and the period covered by the termination option that thelessee is reasonably certain not to exercise.
However, for short-term leases with a lease term of 12 months or less and leases for which the underlying asset is of low value, theright-of-use assets and lease liabilities are not recognized, but the lease payments are recognized as expenses over the lease termon a systematic basis.
(ii) As lessor
The Group classifies leases as either finance leases or operating leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying
asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership- 12 -

of an underlying asset.
In finance lease transactions, the underlying asset is derecognized and net investment in the lease is recognized as a receivable. In
operating lease transactions, the underlying asset continues to be recognized and the lease payments to be received are recognized
as revenue on a straight-line basis over the lease term.
(10) Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets, excluding inventories and deferred tax assets, are reviewed at eachbalance sheet date for indications of impairment. If an indication of impairment exists, the recoverable amount of the asset isestimated.
The recoverable amount of goodwill is estimated annually and whenever an indication of impairment exists.
The recoverable amount of an asset or cash-generating unit is defined as the higher of its value in use and its fair value less costsof disposal. In calculating value in use, estimated future cash flows are discounted to present value using a pre-tax discount ratethat reflects the time value of money and the risks inherent in the asset.
Assets that are not tested individually in impairment testing are integrated into the smallest cash-generating unit that, throughcontinued use, generates cash inflows that are largely independent of the cash inflows of other assets or asset groups. When testing
goodwill for impairment, the cash-generating units to which goodwill is allocated are integrated so that impairment is tested toreflect the smallest unit to which the goodwill relates. Goodwill acquired through a business combination is allocated to the cashgenerating unit that is expected to benefit from the synergies of the combination.
The Group’s corporate assets do not generate independent cash inflows. When there is an indication that a corporate asset may be
impaired, the impairment test is performed by determining the recoverable amount of the cash-generating unit to which thecorporate asset belongs.
An impairment loss is recognized in profit or loss when the carrying amount of an asset or cash-generating unit exceeds its estimatedrecoverable amount. Impairment losses recognized in relation to a cash-generating unit are allocated first to reduce the carrying
amount of goodwill allocated to that unit and then allocated to reduce the carrying amounts of other assets within the cashgenerating unit in proportion to their carrying amounts.
No impairment losses related to goodwill are reversed. For assets other than goodwill, impairment losses recognized in priorperiods are assessed at each balance sheet date to determine whether there is any indication that the impairment loss will decreaseor disappear. If such an indication exists, the recoverable amount of the asset or cash-generating unit is estimated, and if therecoverable amount exceeds the carrying amount of the asset or cash-generating unit, the impairment loss is reversed up to thelower of the recoverable amount determined or the carrying amount (net of depreciation or amortization) that would have been
determined if no impairment loss had been recognized in prior periods.
(11) Employee benefits(i) Post-employment benefit plans
A. Defined contribution pension plans
The Company and certain consolidated subsidiaries have defined contribution pension plans. A defined contribution pension
plan is a post-employment benefit plan under which the employer makes a fixed amount of contribution to another independent
entity and has no legal or constructive obligation to pay more than the amount contributed. Contribution obligations for defined
contribution pension plans are recognized in profit or loss as employee benefit expenses in the period in which the employees
render the related services.
B. Defined benefit pension plans
The present value of defined benefit plan obligations and service cost are calculated for each plan using the projected unit credit
method.
The discount rate is based on the market yield of high-quality corporate bonds at the end of the period corresponding to thediscount period, which is established based on the period up to the expected date of benefit payments each year in the future.
The liability or asset for a defined benefit pension plan is calculated as the present value of the defined benefit pension plan
obligation less the fair value of plan assets. The remeasurement amount arising from a defined benefit pension plan consists ofactuarial gains and losses, return on plan assets (excluding interest), and changes in the effect of the asset ceiling. It is recognizedin other comprehensive income in a lump sum for the period in which they arise and immediately reclassified from “Other- 13 -

components of equity” to “Retained earnings.” Past service cost is recognized in profit or loss in the period in which it isincurred.
(ii) Other employee benefit plans
Short-term employee benefits are not discounted, but are charged to expense when the related services are rendered. Bonuses arerecognized as a liability at the amount estimated to be payable under the plan when the Group has a legal or constructive obligation
to pay as a result of services provided by the employee in the past and when a reliable estimate of the obligation can be made.
The liability for long-term employee benefits other than post-employment benefit plans is recorded at the present value of theestimated future benefits earned by employees for services rendered in prior and current years.
Paid leave is recognized as a liability at the time the employee provides service that increases the right to future paid leave.
(12) Share-based payment(i) Stock options
The Company has adopted a stock option plan as an equity-settled, share-based compensation plan. Stock options are estimatedbased on their fair value at the grant date and recognized as an expense in the quarterly consolidated statement of profit or loss
over the vesting period, considering the number of stock options expected to ultimately vest, and the same amount is recognized
as an increase in equity in the quarterly consolidated statement of financial position. The fair value of options granted is determined,
considering the terms and conditions of the options. The terms and conditions are periodically reviewed and the estimate of thenumber of units to vest is revised.
The Group has adopted the exemption of IFRS 1 and has not applied IFRS 2 Share-based Payment retrospectively to stock options
that vested prior to the date of transition to IFRS.
(ii) Stock benefit trusts (J-ESOP and BBT)The Group has established two stock benefit trusts: an Employee Stock Ownership Plan (“J-ESOP”) for employees and a Board
Benefit Trust (BBT) for directors and executive officers (excluding directors who are Audit and Supervisory Committee members
and outside directors). The Company’s shares held by each trust are deducted at cost from equity. As these share-based payment
plans fall into equity-settled, share-based payments, the services received and the corresponding increase in equity are measured
at the fair value of the equity instrument at the grant date, expensed over the vesting period, and the same amount is recognized as
an increase in capital surplus. The fair value of the Company’s shares granted is determined by adjusting the market price of theshares to take into account the contractual conditions under which the shares were granted. The terms and conditions are
periodically reviewed and the estimate of the number of units to vest is revised.
Since the Group meets the requirements for control over the trust, the trust is included in the scope of consolidation and deposits
held by the trust are recorded as “Cash and cash equivalents.”(13) Provisions
A provisions is recognized when the Group has a present legal or constructive obligation as a result of a past event; it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can bemade of the amount of the obligation.
When the effect of the time value of money is material, the estimated future cash flows are discounted to the present value using a
pre-tax interest rate that reflects the time value of money and the risks specific to the liability. The unwinding of the discount overtime is recognized as finance costs.

- 14 -

(14) Revenue
By applying the following steps, the Group recognizes revenue, except for interest income and other income under IFRS 9
Financial Instruments, when it determines, based on the terms and conditions of the contract with the customer, that the customer
has obtained control over products or others sold by the Group and that the performance obligation has been satisfied.
Step 1: Identify the contract with the customer.
Step 2: Identify performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the performance obligation is satisfied.
(15) Finance income and costs
Finnance income consists primarily of interest income, dividend income, foreign exchange gain, and changes in the fair value offinancial assets measured at fair value through profit or loss such as gain on investments in investment partnerships. Interest income
is recognized as incurred using the effective interest method.
Finance expenses consist primarily of interest expenses, foreign exchange loss, and changes in the fair value of financial assets
measured at fair value through profit or loss such as loss on investments in investment partnerships. Interest expenses arerecognized as incurred using the effective interest method.
(16) Government grants
Government grants are recognized at fair value when there is reasonable assurance that the Group will comply with the conditions
attaching to them and that the grants will be received. Government grants related to assets are recognized by deducting the grants
from the cost of the assets, whereas government grants related to expenses are recognized as income on a systematic basis over theperiods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.
(17) Income taxes
Income tax expense consists of current tax expense and deferred tax expense, both of which are recognized in profit or loss, except
when they arise from items recognized directly in equity or other comprehensive income, or from business combinations.
Current tax expense is measured by the amount expected to be paid to, or refunded from, the tax authorities based on tax rates andtax laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax expense is recognized for temporary differences, which are differences between the tax base of an asset or liability
and its carrying amount at the balance sheet date. A deferred tax asset is recognized for deductible temporary differences to theextent that it is probable that future taxable profit will be available against which the deductible temporary difference can beutilized, whereas a deferred tax liability is generally recognized for all taxable temporary differences.
Deferred tax assets and liabilities are not recognized for the following temporary differences: Taxable temporary differences arising from the initial recognition of goodwill; Temporary differences arising from the initial recognition of an asset and a liability arising from a transaction which is not abusiness combination; at the time of the transaction, affects neither accounting profit nor taxable income (tax loss); and at thetime of the transaction, does not give rise to equal taxable and deductible temporary difference; Deductible temporary differences associated with investments in subsidiaries and associates, for which it is not probable thatthe temporary differences will reverse in the foreseeable future, or for which it is not probable that the future taxable profit fromthe investments will be available against which the temporary difference can be utilized;
 Taxable temporary differences associated with investments in subsidiaries and associates, for which it is probable that the Groupis able to control the timing of the reversal of temporary differences; and it is probable that the temporary difference will notreverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow the benefit or part of all of those deferred tax assets to be utilized.
Unrecognized deferred tax assets are also reviewed at each balance sheet date and recognized to the extent that it has become
probable that future taxable profit will allow the deferred tax assets to be recovered.

- 15 -

Deferred tax assets and liabilities are measured based on tax rates expected to apply in the period in which the deferred tax assets
are expected to be recovered or the deferred tax liabilities are expected to be settled based on tax laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax
liabilities and they are levied by the same taxation authority on the same taxable entity.
(18) Earnings per share
Basic earnings per share is calculated by dividing profit attributable to owners of parent by the weighted average number ofcommon shares issued adjusted for treasury shares during the period. Diluted earnings per share is calculated after adjusting forthe effect of all dilutive potential shares.
(19) Segment information
An operating segment is a component of business activities from which revenues are earned and expenses are incurred includingtransactions with other operating segments. The business results of all operating segments, for which discrete financial information
is available, are regularly reviewed by the Company’s Board of Directors to make decisions about resources to be allocated to eachsegment and assess its performance.
(20) Assets held for saleNon-current assets or disposal groups are classified as held for sale if their carrying amount will be recovered primarily throughsale transactions rather than through continuing use, and if it is highly probable that they will be sold within one year, they areavailable for immediate sale in their present condition, and the Group’s management is committed to a plan to sell them.
Non-current assets or disposal groups classified as held for sale are measured at the lower of their carrying amount and fair valueless costs to sell and are not depreciated or amortized after they are classified as held for sale.
(21) Equity(i) Common shares
The common shares issued by the Company are credited to share capital and capital surplus at the issue price.
(ii) Treasury shares
Treasury shares are carried at cost and deducted from equity. No gain or loss is recognized on repurchase, sale, or retirement oftreasury shares. The difference between the carrying amount and the consideration upon sale is recognized as equity.
(Quarterly consolidated statements of cash flows)
While quarterly consolidated statement of cash flows for the first quarter of the current fiscal year is not prepared, depreciation andamortization for the first quarter of the current fiscal year is as follows.
(Millions of yen)Three months ended June 30, 2023
(From April 1, 2023 to June 30, 2023)

Three months ended June 30, 2024
(From April 1, 2024 to June 30, 2024)

1,379

1,623

Depreciation and amortization(Significant changes in the amount of equity attributable to owners of parent)
Not applicable.

- 16 -

(Segment information)
I Three months ended June 30, 2023 (from April 1, 2023 to June 30, 2023)
Information on net sales and profit (loss) by reportable segment
Reportable Segment
Electronic
Optical Materials
Materials andand Components
Components(Millions of yen)
Total

Adjustment

Consolidated

Net sales
Sales to external customers

9,086

11,771

20,858–20,858Intersegment sales and transfers

100

39

139

(139)

–

Total

9,186

11,81020,997(139)

20,858

1,961

3,416

5,378

–

5,378

Business profit (Note)
Other income

69

Other expenses(62)

Operating profit

5,385

Finance income

32

Finance costs(256)

Share of profit of investments accounted for using equity method
Profit before tax

3
5,165

(Note) Business profit is a profit indicator that measures the Group’s recurring operating results, which are determined by deducting
cost of sales and selling, general and administrative expenses from net sales.
Reference) Net sales by regionJapan¥5,029 million
China¥7,450 million
South Korea¥2,521 million
Taiwan¥3,157 million
Other¥2,698 million- 17 -

II Three months ended June 30, 2024 (from April 1, 2024 to June 30, 2024)
Information on sales and profit or loss by reportable segment(Millions of yen)

Reportable segment
Optical Materials
and Components

Electronic
Materials andComponents

12,43814,738Intersegment sales and transfers

134

Total

Adjustment

Consolidated

27,176–27,176

27

162

(162)

–

12,573

14,76527,339(162)

27,176

3,641

5,953

9,595

–

9,595

Total

Net sales
Sales to external customers

Business profit (Note)
Other income

200

Other expenses(22)

Operating profit

9,773

Finance income

49

Finance costs(289)

Share of profit of investments accounted for using equity method
Profit before tax

5
9,538

(Note) Business profit is a profit indicator that measures the Group’s recurring operating results, which are determined by deducting
cost of sales and selling, general and administrative expenses from net sales.
(Reference) Net sales by regionJapan¥5,773 million
China¥8,849 million
South Korea¥3,561 million
Taiwan¥5,110 million
Other¥3,880 million- 18 -

(Assets held for sale)
The breakdown of assets held for sale and liabilities directly associated with assets held for sale is as follows:
Previous fiscal year
(As of March 31, 2024)(Millions of yen)
Current quarter(As of June 30, 2024)

Assets held for sale
Cash and cash equivalents

2,396

2,029

Trade and other receivables

2,869

1,482

187

175

Other current assets
Other

68

73

Total

5,522

3,760

Income taxes payable

177

200

Other current liabilities

65

8

Liabilities directly associated with assets held for sale

Other

22

65

Total

266

274

Assets held for sale and liabilities directly associated with assets held for sale at June 30, 2024 consist of the assets and liabilities ofDexerials Hong Kong Limited that meet the requirements to be classified as held for sale, and such assets and liabilities are included in
the Optical Materials and Components segment and the Electronic Materials and Components segment.
At the Board of Directors meeting held on February 5, 2024, the Company resolved to enter into a share transfer agreement and ashareholders agreement to make Dexerials Hong Kong Limited a joint venture, and entered into such agreements with Restar Holdings
Corporation (currently Restar Corporation). Dexerials Hong Kong Limited will be excluded from our consolidated subsidiaries andbecome an equity method associate as a result of the share transfer under these agreements on July 1, 2024.
Other components of equity associated with assets held for sale amounted to ¥475 million and ¥831 million at March 31, 2024 and June30, 2024, respectively.

- 19 -

(First-time adoption of IFRS)The Group has adopted IFRS from the fiscal year ending March 31, 2025. The most recent consolidated financial statements
prepared in accordance with Japanese GAAP are for the fiscal year ended March 31, 2024, and the date of transition to IFRS is
April 1, 2023.
(1) Exemptions from IFRS 1
IFRS, in principle, requires an entity applying IFRS for the first time (hereinafter, the “first-time adopter”) to retrospectively apply
the standards required by IFRS. However, IFRS 1 First-time Adoption of International Financial Reporting Standards (hereinafter,“IFRS 1”) specifies optional exemptions for certain requirement in IFRS. The effect of the application of such exemptions isadjusted in retained earnings or other components of equity at the date of transition to IFRS. The exemptions applied by the Groupin transitioning from Japanese GAAP to IFRS are as follows.
(i) Business combinations
The first-time adopter may choose not to apply IFRS 3 Business Combinations (hereinafter, “IFRS 3”) retrospectively to businesscombinations that were entered into prior the date of transition to IFRS. Accordingly, the Group has applied this exemption andelected not to apply IFRS 3 retrospectively to business combinations that were entered into prior to the date of transition to IFRS.
As a result, the amount of goodwill arising from business combinations prior to the date of transition to IFRS is based on the
carrying amount as of the date of transition to IFRS in accordance with Japanese GAAP.
Goodwill was tested for impairment as of the date of transition to IFRS, regardless of whether there is any indication of impairment.
(ii) Translation differences of foreign operations
IFRS 1 permits the first-time adopter to elect to treat the cumulative translation differences for foreign operations as zero at thedate of transition to IFRS. Accordingly, the Group has elected to treat the accumulated translation differences of foreign operations
as zero as of the date of transition to IFRS.
(iii) Share-based compensation
IFRS 1 permits the first-time adopter to elect not to apply IFRS 2 Share-Based Payment (hereinafter, “IFRS 2”) for share-based
payments granted on or after November 7, 2002 and vested prior to the later of the date of transition to IFRS or January 1, 2005.
Accordingly, the Group has elected not to apply IFRS 2 for share-based payments that vested prior to the date of transition to
IFRS.
(iv) Leases
IFRS 1 permits the first-time adopter to assess at the date of transition to IFRS whether a contract contains a lease. Accordingly,
the Group has applied this exemption and determines whether a contract contains a lease based on the facts and circumstances thatexisted at the date of transition to IFRS.
The Group measured the lease liability as of the date of transition to IFRS, which is the present value of the remaining lease
payments discounted at the lessee’s incremental borrowing rate as of the date of transition to IFRS. The carrying amount of rightof-use assets is measured on a lease-by-lease basis as if IFRS 16 Leases had been applied from the inception of each lease at an
amount discounted at the lessee’s incremental borrowing rate as of the date of transition to IFRS.
(2) Mandatory exceptions under IFRS 1IFRS 1 prohibits the retrospective application of IFRS concerning “estimates,” “derecognition of financial assets and financial
liabilities,” “hedge accounting,” “non-controlling interests,” “classification and measurement of financial instruments,” and others.
The Group has applied IFRS prospectively from the date of transition to IFRS for these items.
(3) Reconciliations
Reconciliations required to be disclosed on first-time adoption of IFRS are as follows.
In these reconciliations, the amounts under “Reclassification” include those of items that do not affect retained earnings orcomprehensive income, while the amounts under “Difference in recognition and measurement” include those of items that affectretained earnings and comprehensive income.

- 20 -

Reconciliation of equity as of April 1, 2023 (date of transition)(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

AssetsCurrent assets:

Line item under IFRS
AssetsCurrent assets

Cash and deposits

29,286

Notes and accounts receivable - trade
Electronically recorded monetaryclaims - operating
Allowance for doubtful accounts

13,126

Subtotal

13,466Merchandise and finished goods
Work in process
Raw materials and supplies–

167

29,454

H

Cash and cash equivalents

474

158

14,099A, I

Trade and other receivables

11,352–(70)

11,281

5,133(5,010)

–

122

4,585

(116)

4,469

49

138

59,427

342
(2)

4,111
2,883
4,358

Subtotal
Other

Total current assets

59,238Inventories
Other financial assets
H

Total current assets

Non-current assets:
Property, plant and equipment:

Non-current assets

Buildings and structures
Machinery, equipment and vehicles

13,732
7,167

LandConstruction in progress

2,524
6,646

Other

Other current assets

2,214
Subtotal

32,284–2,023

34,308J, K, L

Property, plant and equipment

Goodwill

21,444–(156)

21,288

M.

Patent right
Customer-related intangible assets

695
2,884

Other

2,295
5,875

–

97

5,973

117

(10)

13

121

1,703

(409)

1,294

E, N

Other financial assets

–

1,775

4,164

O

Deferred tax assets

5,028(1,678)(3,132)

218

P

Other non-current assets

67,14115

211

67,368126,37965

350

126,795

Intangible assets:

Subtotal

Goodwill

Intangible assets

Investments and other assets:
Shares of subsidiaries and associates

Deferred tax assets

2,389

Retirement benefit asset

3,242

Other
Allowance for doubtful accounts

1,799
(13)

Subtotal
Total non-current assets
Total assets- 21 -

Investments accounted for using
equity method

Total non-current assets
Total assets

(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Liabilities
Current liabilities:

Liabilities
Current liabilities

Notes and accounts payable - trade
Electronically recorded obligations operating

5,972

Subtotal

8,541

Short-term borrowings
Current portion of long-termborrowings

2,569
2,726

(8)

11,259B

Trade and other payables

90

894

9,546

C, L

Interest-bearing liabilities

6,647

0

6,648

F

Other financial liabilities

4,706

2,000
6,560
Subtotal

8,560

Income taxes payable

4,705

–

1

Provision for bonuses

2,558(2,558)

–

2,558

1,664

(7,817)–

2,891(1,198)35,074Long-term borrowings
Retirement benefit liability

Accounts payable - other

Income taxes payable
D

4,222

D, Q, S

(266)

1,425

T

448

2,285

37,808

11,152

132

748

12,032

C, L

Interest-bearing liabilities

4,273

–

73

4,346

P

Retirement benefit liability

256

(2)

253

D

Provisions

1,323

–

(46)

1,276

O

Deferred tax liabilities

780

(771)

0

9

–

2,459

2,459

17,530

(382)

3,231

20,37952,60565

5,517

58,187

7,817

Accrued expenses

Employee benefits

856

Other

2,034
Subtotal

Total current liabilities

Deferred tax liabilities
Other

Total non-current liabilities

Other current liabilities
Total current liabilities

Non-current liabilities:

Total liabilities

Line item under IFRS

Non-current liabilities- 22 -

Other non-current liabilities
U

Other financial liabilities
Total non-current liabilities
Total liabilities

(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Net assets
Shareholders’ equity:Line item under IFRS
EquityShare capital
Capital surplus

16,194
16,147–––(1,565)

16,194
14,582Retained earnings
Treasury shares

52,663(15,908)

–
–

231
–

52,895(15,908)

Total shareholders’ equity

69,097–(1,333)67,763–(3,825)

(26)

R, U

Share capital
Capital surplus

W

Retained earnings
Treasury shares

V

Other components of equity

Accumulated other comprehensive
income:Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income

(26)
3,278
547
3,799

67,737
Non-controlling interests

878

–

(7)

870

Equity attributable to owners of parent
Non-controlling interests

Total net assets

73,774–(5,166)

68,608

Total equity

Total liabilities and net assets

126,37965

350

126,795

Total liabilities and equity- 23 -

Reconciliation of equity as of June 30, 2023 (end of the first quarter of the previous fiscal year)(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

AssetsCurrent assets:

Line item under IFRS
AssetsCurrent assets

Cash and deposits

28,617

Notes and accounts receivable - trade
Electronically recorded monetaryclaims - operating

14,214

Allowance for doubtful accounts
Subtotal–

253

28,871H

Cash and cash equivalents

183

142

14,866A, I

Trade and other receivables

12,173–(48)

12,1242,364(2,364)

–

0

2,363

(372)

1,990

182

(25)

57,852329(3)14,540

Merchandise and finished goods

4,175Work in process
Raw materials and supplies

3,115
4,882
Subtotal

Other

Total current assets

57,696Inventories

Other financial assets
H

Other current assets
Total current assets

Non-current assets:

Non-current assets

Property, plant and equipment:
Buildings and structures

13,608

Machinery, equipment and vehicles
Land

6,985
2,524

Construction in progress
Other

7,196
2,249
Subtotal

Intangible assets:
Goodwill
Patent right

32,564–

1,871

34,435J, K, L

20,873–414

21,288M

Property, plant and equipment

Goodwill

656

Customer-related intangible assets
Other

2,839
2,390

Subtotal

5,886

–

105

5,992

122

(10)

27

139

1,733

(409)

1,324

E, N

Other financial assets

–

1,798

4,230

O

Deferred tax assets(1,723)(3,176)213

P

Other non-current assets

66,992–632

67,624

124,688182606

125,477

Intangible assets

Investments and other assets:
Shares of subsidiaries and associates

Deferred tax assets

2,431

Retirement benefit asset
Other

3,281
1,846

Allowance for doubtful accounts
Subtotal
Total non-current assets
Total assets

Investments accounted for using
equity method

(14)
5,113

- 24 -

Total non-current assets
Total assets

(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Liabilities
Current liabilities:

Liabilities
Current liabilities

Notes and accounts payable - trade
Electronically recorded obligations operating

6,844

Subtotal

9,125

Short-term borrowings
Current portion of long-termborrowings

2,280
2,858

(25)

11,958B

Trade and other payables

87

900

9,549

C, L

Interest-bearing liabilities

9,639

0

9,640

F

Other financial liabilities

962

2,000
6,561
Subtotal

8,561

Income taxes payable

962

–

–

Provision for bonuses

1,058(1,058)

–

1,058

1,659

(6,145)–

8,076(5,830)Total current liabilities

33,929Non-current liabilities:
Long-term borrowings

(719)

1,526

T

609

1,814

36,353

9,955

131

606

10,693

C, L

Non-current liabilities
Interest-bearing liabilities

4,184

–

91

4,276

P

Retirement benefit liability

257

(1)

256

D

Provisions

1,395

–

(54)

1,341

O

Deferred tax liabilities

827

(815)

0

11

–

2,461

2,461

16,362

(426)

3,104

19,04050,292

182

4,919

55,394

Accrued expenses
Other

1,212
6,864

Retirement benefit liability

Deferred tax liabilities
Other

Total non-current liabilities

D
D, Q, S

6,145

Subtotal

Income taxes payable

2,717

Accounts payable - otherTotal liabilities

Line item under IFRS

- 25 -

Employee benefits

Other current liabilities
Total current liabilities

Other non-current liabilities
U

Other financial liabilities
Total non-current liabilities
Total liabilities

(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Net assets
Shareholders’ equity:Line item under IFRS
EquityShare capital
Capital surplus

16,19616,148–––(1,303)

16,196
14,844Retained earnings
Treasury shares

42,380(4,525)

–
–

776
–

43,156(4,525)

Total shareholders’ equity

70,199–(527)

69,672–(3,780)

(451)

R, U

Share capital
Capital surplus

W

Retained earnings
Treasury shares

V

Other components of equity

Accumulated other comprehensive
income:Deferred gains or losses on hedges(1,538)Foreign currency translation
adjustment

4,338

Remeasurements of defined benefit
plans
Total accumulated othercomprehensive income

527
3,328

69,220Equity attributable to owners of parent0
Non-controlling interests

867

–

(5)

861

Non-controlling interests

Total net assets

74,395–(4,312)70,082

Total equity

Total liabilities and net assets

124,688182606

125,477

Total liabilities and equity- 26 -

Reconciliation of equity as of March 31, 2024 (end of the previous fiscal year)(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

AssetsCurrent assets:

Line item under IFRS
AssetsCurrent assets

Cash and deposits

37,410(2,396)315

35,328H

Cash and cash equivalents

Notes and accounts receivable - trade
Electronically recorded monetaryclaims - operating
Allowance for doubtful accounts

17,436

Subtotal

18,019(2,580)149

15,588A, I

Trade and other receivables

10,040

(60)

(63)

9,916

3,593

(3,533)

–

60

3,279

(254)

3,025

H

Other current assets

5,522

–

5,522

G

Assets held for sale

231

146

69,442589(7)

Merchandise and finished goods

3,691Work in process
Raw materials and supplies

2,688
3,661
Subtotal

Other

Total current assets

69,063Inventories

Other financial assets

Total current assets

Non-current assets:

Non-current assets

Property, plant and equipment:
Buildings and structures

13,969Machinery, equipment and vehicles
Land

7,897
3,984

Construction in progress
Other

7,425
2,427
Subtotal

35,703(7)

1,694

37,390J, K, L

Property, plant and equipment

Goodwill

19,161–

2,126

21,288

M

Patent right
Customer-related intangible assets

538
2,704

Other

2,435
5,679

–

128

5,807

140

(10)

9

140

1,580

(334)

1,245

E, N

Other financial assets

–

2,573

4,861

O

Deferred tax assets(1,570)(4,211)

197

P

Other non-current assets

68,952(7)

1,987

70,931138,016

223

2,133

140,373

Intangible assets:

Subtotal

Goodwill

Intangible assets

Investments and other assets:
Shares of subsidiaries and associates

Deferred tax assets

2,287

Retirement benefit asset

4,287

Other
Allowance for doubtful accounts

1,707
(15)

Subtotal
Total non-current assets
Total assets

5,979- 27 -

Investments accounted for using
equity method

Total non-current assets
Total assets

(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Liabilities
Current liabilities:

Line item under IFRS
Liabilities
Current liabilities

Notes and accounts payable - trade
Electronically recorded obligations operating

8,658

Subtotal

10,531

Short-term borrowings
Current portion of long-termborrowings

1,872
2,868

(21)

13,378B

Trade and other payables

85

898

7,444

C, L

Interest-bearing liabilities

2,546

0

2,547

F

Other financial liabilities

4,378

4,000
2,459
Subtotal

6,459

Income taxes payable

4,555

(177)

0

Provision for bonuses

2,513(2,513)

–

2,503

1,635

(4,387)–(248)

Accounts payable - other

4,387

Accrued expenses
Other

924
1,626

Subtotal

2,550

Total current liabilities

30,996

Income taxes payable
D

4,138

D, Q, S

Employee benefits

(761)

1,539

T

Other current liabilities

266

–

266

G

Liabilities directly associated withassets held for sale

943

1,752

33,692

Total current liabilities

Non-current liabilities:

Non-current liabilities

Long-term borrowings

15,276124354

15,754

C, L

Interest-bearing liabilities

Retirement benefit liability

4,081

0

(20)

4,059

P

Retirement benefit liability

274

1

275

D

Provisions

O

Deferred tax liabilities

Deferred tax liabilities

1,566

–

(122)

1,444

Other

1,141

(1,117)

0

23

–

–

–

Total non-current liabilities
Total liabilities

22,065(720)

213

21,55853,062

223

1,965

55,251- 28 -

Other non-current liabilities
U

Other financial liabilities
Total non-current liabilities
Total liabilities

(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Net assets
Shareholders’ equity:Line item under IFRS
EquityShare capital
Capital surplus

16,251
14,873

–
–

–
2,827

16,251
17,700Retained earnings
Treasury shares

53,023(5,085)

–
–

1,753
–

54,777(5,085)

Total shareholders’ equity

79,063–

4,580

83,644–(4,412)

1,478

R, U

Share capital
Capital surplus

W

Retained earnings
Treasury shares

V

Other components of equity

Accumulated other comprehensive
income:Deferred gains or losses on hedges(78)

Foreign currency translation
adjustment

4,827

Remeasurements of defined benefit
plans

1,141

Total accumulated othercomprehensive income

5,890

85,112
Non-controlling interests

–

–

–

–

Equity attributable to owners of parent
Non-controlling interests

Total net assets

84,953–

168

85,122

Total equity

Total liabilities and net assets

138,016

223

2,133

140,373

Total liabilities and equity- 29 -

Notes on reconciliation of equity
The major accounting differences associated with the transition from Japanese GAAP to IFRS are as follows:(1) Reclassification
We have performed reconciliations to conform to IFRS. The major items of reconciliations are as follows.
A. Trade and other receivables
Accounts receivable-other, which was included in “Other (current assets)” under Japanese GAAP, has been reclassified to andpresented as “Trade and other receivables” under IFRS.
B. Trade and other payables
Certain items of “Accounts payable - other,” which were separately presented as current liabilities under Japanese GAAP, havebeen reclassified to and presented as “Trade and other payables” under IFRS.
C. Interest-bearing liabilities“Short-term borrowings” and “Current portion of long-term borrowings,” which were separately presented as current liabilities
under Japanese GAAP, have been reclassified to and presented as “Interest-bearing liabilities (current liabilities)” under IFRS.
“Long-term borrowings,” which was separately presented as non-current liabilities under Japanese GAAP, have been
reclassified to and presented as “Interest-bearing liabilities (non-current liabilities)” under IFRS.
Lease obligations included in “Other (current liabilities)” or “Other (non-current liabilities)” under Japanese GAAP have been
reclassified to and presented as “Interest-bearing liabilities (current liabilities)” or “Interest-bearing liabilities (non-current
liabilities)” under IFRS, respectively.
D. Provisions“Provision for bonuses,” which was separately presented as current liabilities under Japanese GAAP, has been included in“Employee benefits accruals” under IFRS. Asset retirement obligations, which were included in “Other (non-current
liabilities)” under Japanese GAAP, have been reclassified to and presented as “Provisions” under IFRS.
E. Other financial assets
Investments in limited liability investment partnerships, which were included in “Other (investments and other assets)” underJapanese GAAP, have been reclassified to and presented as “Other financial assets (non-current assets)” under IFRS.
F. Other financial liabilities
Short-term derivative liabilities included in “Other (current liabilities)” under Japanese GAAP have been reclassified to andpresented as “Other financial liabilities (current liabilities)” under IFRS.
Certain items of “Accounts payable - other,” which were separately presented as current liabilities under Japanese GAAP, havebeen reclassified to and presented as “Other financial liabilities (current liabilities)” under IFRS.
G. Assets held for sale and liabilities
Assets held for sale and liabilities directly associated with assets held for sale are separately presented under IFRS. For details,
please refer to “Notes to quarterly consolidated financial statements, (Assets held for sale).”(2) Difference in recognition and measurement
H. Scope or consolidation
The Group excluded immaterial subsidiaries from the scope of consolidation and recorded them as “Shares of subsidiaries andassociates” under Japanese GAAP. However, under IFRS, such subsidiaries are included in the scope of consolidation.
Under Japanese GAAP, the Employee Stock Ownership Plan (“J-ESOP”) and the Board Benefit Trust (BBT) (excluding
Directors serving as Audit and Supervisory Committee Members and Outside Directors) were not included in the scope of
consolidation. Deposits held by these trusts were recorded under “Other (current assets).” The net amount of dividends related
to the Company’s shares held by the trusts, as well as any expenses related to the trusts, were recorded under “Other (current
liabilities).” In contrast, under IFRS, these trusts are included in the scope of consolidation because the Group meets therequirements for control over them. Deposits held by the trusts are recorded as “Cash and cash equivalents,” and income andexpenses related to the trusts are recorded under “Finance income” and “Finance costs,” respectively.

- 30 -

I. Sublease
Under Japanese GAAP, the company expensed the rent for the contracted leased company housing as rental expenses. Under
IFRS, however, the head lease from an external party is recorded as a right-of-use asset. The lease to the employees is treatedas a sublease transaction. In this case, sublease transactions are transferred from the right-of-use asset. The employee’s shareof the rent is recorded under “Trade and other receivables,” while the company’s share of the rent is recorded as an expense.
J. Government grants
Government grants related to assets were collectively recorded in extraordinary income as grant income under Japanese GAAP,
whereas under IFRS, such grants are deducted from the cost of “Property, plant and equipment.”
K. Low-value assets
According to the Group’s policy, tools, furniture, and supplies with a low-value were expensed under Japanese GAAP.
However, under IFRS, items expected to be useful for more than one year have been reclassified to “Property, plant andequipment.”
L. Leases
Under Japanese GAAP, lessee leases were classified as either finance leases or operating leases, and operating leases were
accounted for as ordinary rental transactions. Whereas under IFRS, basically all leases are accounted for as “Property, plantand equipment” and “Interest-bearing liabilities (current liabilities and non-current liablities),” since there is no distinction
between finance leases and operating leases for leases as lessee.
M. Impairment on non-financial assets
Under Japanese GAAP, goodwill and shared assets were, in principle, not allocated to each asset group but were grouped intolarger units. When there was an indication of a possible impairment of a fixed asset, the carrying amount of the fixed asset wascompared with its estimated undiscounted future cash flows, and only if the carrying amount of the fixed asset exceeded its
estimated undiscounted future cash flows, an impairment loss was recognized in the amount by which the carrying amount of
the fixed asset exceeded its recoverable amount. Under IFRS, however, goodwill is allocated to each cash-generating unit as
the unit that is expected to benefit from the synergies of the business combination, and corporate assets are allocated, inprinciple, to each cash-generating unit, and when there is an indication that a fixed asset may be impaired, the amount by which
the carrying amount of the fixed asset exceeds its recoverable amount (the higher of value in use and fair value less costs ofdisposal) is recognized as an impairment loss on the fixed asset.
Accordingly, goodwill and corporate assets allocated to cash-generating units that were discontinued by the date of transition
to IFRS were subject to retrospectively recognizing impairment losses in full, which were transferred to “Retained earnings”
as of the date of transition to IFRS.
In addition, under Japanese GAAP, goodwill was amortized on a straight-line basis over the period during which thereasonably estimated effect of goodwill is expected to be realized. Under IFRS, however, goodwill is not amortized after thedate of transition to IFRS.
N. Investment in limited liability investment partnerships
Under Japanese GAAP, investments in limited liability investment partnerships (the “Partnerships”) were carried at each period
end at an amount equal to our share of the net gain or loss based on the Partnerships’ results plus the acquisition cost. Under
IFRS, however, investments in the Partnerships are valued as financial assets measured at fair value through profit or loss.
Accordingly, the difference between the Japanese GAAP and the IFRS valuations as of the date of transition to IFRS has beentransferred to “Retained earnings.”
O. Deferred taxes
With the adoption of IFRS, the Company has reassessed the recoverability of all deferred tax assets. “Deferred tax assets” and“Deferred tax liabilities” are recognized for temporary differences arising from the transition from Japanese GAAP to IFRS.
P. Retirement benefits
Under Japanese GAAP, when a defined benefit plan was overfunded, the entire excess was recorded as an “Retirement benefit
asset,” whereas under IFRS, the amount that can be recorded is the asset ceiling, which is the present value of available future
economic benefits in the form of a cash refund or a reduction in future contributions. Accordingly, “Retirement benefit asset”- 31 -

has been fully reversed as of the date of transition to IFRS.
Under Japanese GAAP, actuarial gains and losses and past service costs were recognized as “Accumulated other comprehensive
income” when incurred and expensed over a period of time calculated based on employees’ average remaining service period.
Under IFRS, actuarial gains and losses are recognized as “Other components of equity” when incurred and immediatelytransferred to “Retained earnings,” and past service costs are recognized as profit or loss when incurred.
Q. Unused paid leave
Unused paid leave, which was not recognized as a liability under Japanese GAAP, is recognized as a liability and included in“Employee benefits accruals” under IFRS.
R. Share-based payment
Under Japanese GAAP, the amount of shares or other benefits expected to be paid was recorded as a liability for stock benefit
trusts (“J-ESOP” and BBT). Under IFRS, however, both J-ESOP and BBT are classified as equity-settled share-based payment
plans, and therefore, they are measured at their fair value on the grant date and recognized as equity.
Accordingly, as of the date of transition to IFRS, “Other (current liabilities)” or “Other (non-current liabilities)” related to sharebased payment recorded under Japanese GAAP was reversed. The balance measured at fair value was then recorded in “Capitalsurplus,” and the difference was recorded in “Retained earnings.”
S. Long-term employee benefits
The Company and some of its consolidated subsidiaries have an accumulated leave system that allows employees to accumulate
expired annual paid leave for specific purposes, such as injury, illness, or nursing care. This leave does not expire until theirretirement. Such accrued paid leave was not recognized as a liability under Japanese GAAP. Under IFRS, however, sinceaccumulated unused annual paid leave is classified as long-term employee benefits, it is recognized as a liability in “Employee
benefits accruals.”
Under IFRS, however, accumulated unused annual paid leave is recognized as a liability and included in “Employee benefits
accruals” by applying the provisions for defined benefit plans because such accumulated unused annual paid leave falls into
long-term employee benefits under IFRS and the Company does not have the right as of the end of the reporting period to defer
the settlement of the liability for at least 12 months after the end of the reporting period.
T. Levies
Under Japanese GAAP, property tax was recognized as “Other (current liabilities)” upon receipt of the payment and expensed
pro rata over the months throughout the year. Under IFRS, however, the full amount is recognized as “Other current liabilities”
and expensed in a lump sum on January 1, the date of imposition.
U. Liability for put option contracts to non-controlling interests
Under Japanese GAAP, no liability was recognized for written put options granted to owners of non-controlling interests. Under
IFRS, however, a financial liability is recognized for these put options as an obligation to purchase non-controlling interests.
Therefore, as of the date of transition to IFRS, the put option to the non-controlling shareholder is recorded as “Other financial
liabilities (non-current liabilities)” and “Capital surplus” is concurrently reduced. When the non-controlling shareholders
exercise their rights, “Other financial liabilities (non-current liabilities)” and “Non-controlling interests” are reversed and thedifference between the amount of the reversal and the amount paid is recorded in “Capital surplus.”
V. Reclassification of cumulative translation differences for foreign subsidiaries
The Company elected to adopt the exemption provided in IFRS 1 and transferred all cumulative translation differences included
in “Accumulated other comprehensive income” to “Retained earnings” at the date of transition to IFRS.

- 32 -

W. Adjustments to retained earnings
The effect of reconciliation from Japanese GAAP to IFRS on retained earnings (after tax effect adjustment) is as follows:(Millions of yen)
As of April 1, 2023
(Date of transition)

As of June 30, 2023

As of March 31, 2024

3,278

3,278

3,278

(1,735)(1,794)(1,802)

Low-value assets

551

558

570

Share-based compensation

(168)

(270)

(1,476)

Unused paid leave

(970)

(970)

(962)

Transfer of cumulative translation differences forforeign operations
Post-employment benefits

Amortization of goodwill
Other
Total

- 33 -

–

570

2,283

(724)

(596)

(138)

231

776

1,753

Reconciliation of profit or loss and comprehensive income for the three months ended June 30, 2023 (end of the firstquarter of the previous fiscal year)(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Line item under IFRSNet sales

20,858–0

20,858

Cost of sales

10,446–46

10,493Gross profit

10,411–(46)

10,365

Selling, general and administrative
expenses

5,546

(67)

(493)

4,986

C, D, E, F

69

0

69

A

Other income

62

(0)

62

A

Other expenses

446

5,385

Operating profit

4,864

74

Non-operating income
Interest income
Share of profit of entities accounted forusing equity method
Compensation income
Rental income

106
32

(32)

4

(4)

35
4

(35)
(4)

Other
Non-operating expenses

29
305

(29)

Interest expenses
Foreign exchange losses

15
235

(15)
(235)

Depreciation
Other

48
5

(48)
(5)

Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Extraordinary losses
Loss on retirement of property, plantand equipment

Profit before income taxes
Income taxes-current
Income taxes-deferred

Net sales
C, D, E

Cost of sales
Gross profit
Selling, general and administrative
expenses

Operating profit

4,665
0
0
8

0

8

(8)
32

–

32

A

Finance income

251

5

256

A
A

Finance costs
Share of profit of investments accounted
for using equity method

4

(0)

3

4,657

67

440

5,165

736
709

67
–

(0)
(21)

67

(21)

1,492

ProfitProfit (loss) attributable to non-controllinginterests

3,211

–

461

3,672

(13)

–

1

(12)

Profit attributable to owners of parent

3,224

–

460

3,684

- 34 -

Profit before tax

B, G

Income tax expense
ProfitNon-controlling interests
Profit (attributable to owners of parent)(Millions of yen)Line item under Japanese GAAP
ProfitJapanese
GAAP
3,211

Difference inrecognition
Reclassificationandmeasurement
–
461

IFRS

Notes

3,672

Line item under IFRSProfitOther comprehensive income

Other comprehensive income, net of tax
Items that will not be reclassified to
profit or loss:

Remeasurements of defined benefit
plans

(19)

–

H

Remeasurements of defined benefit
plans

8

(11)

10

10

Share of other comprehensive
income of investments accounted forusing equity method(0)

Total of items that will not bereclassified to profit or loss
Items that may be reclassified to profit
or loss:

Deferred gains or losses on hedges(1,511)

–

85
(68)

(1,426)(68)

Cash flow hedges
Hedging costs

Foreign currency translation adjustment

1,062

–

(1)

1,061

Translation differences on foreign
operations(432)

Total of items that may bereclassified to profit or loss

Total other comprehensive income

(468)

–

34

(433)

Comprehensive income

2,743

–

496

3,239

2,753
(10)

–
–

494
1

3,248
(9)

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

Total other comprehensive income, netof taxComprehensive income
Comprehensive income attributable to:- 35 -

Owners of parent
Non-controlling interests

Reconciliation of profit or loss and comprehensive income for the fiscal year ended March 31, 2024
(Millions of yen)Line item under Japanese GAAP

Japanese
GAAP

Difference inrecognition
Reclassificationandmeasurement

IFRS

Notes

Line item under IFRSNet sales

105,198–0

105,198

Cost of sales

47,930–758

48,688Gross profit

57,268–(757)

56,510

Selling, general and administrative
expenses

23,846

(424)

(998)

22,423C, D, E, F

369

(22)

346

A

Other income

714

(37)

677

A

Other expenses

33,42179

255

33,756

521
273

(273)

Share of profit of entities accounted forusing equity method

11

(11)

Compensation income
Rental income

37
16

(37)
(16)

Other
Non-operating expenses

183
3,914

(183)

67
3,357

(67)
(3,357)

Loss on investments in investment
partnerships

166

(166)

Depreciation
Other

191
131

(191)
(131)

Operating profit
Non-operating income
Interest income

Interest expenses
Foreign exchange losses

Ordinary profit
Extraordinary income

C, D, E

Cost of sales
Gross profit
Selling, general and administrative
expenses

Operating profit

30,028131

Gain on sale of non-current assets

18

(18)

Gain on sale of shares of subsidiaries
and associates

112

(112)

Extraordinary losses

Net sales

225

Loss on sale of property, plant andequipment2(2)

Loss on retirement of property, plantand equipment

215

(215)

7

(7)
273

304

577

A

Finance income

3,425

20

3,445

A

Finance costs

11

(6)

4

A

Share of profit of investments accounted
for using equity method

531

30,891

Impairment loss

Profit before income taxes

29,935424

Income taxes-current

8,635

424

(9)

Income taxes-deferred

(35)

–

(651)

ProfitProfit (loss) attributable to non-controllinginterests
Profit attributable to owners of parent

424

(661)

8,363

21,334–

1,193

22,527

(47)

–

(0)

(47)

21,382–

1,193

22,575- 36 -

Profit before tax

B, G

Income tax expense
ProfitNon-controlling interests
Profit (attributable to owners of parent)(Millions of yen)Line item under Japanese GAAP
ProfitJapanese
GAAP
21,334

Difference inrecognition
Reclassificationandmeasurement
–
1,193

IFRS

Notes

22,527

Line item under IFRSProfitOther comprehensive income

Other comprehensive income, net of tax
Items that will not be reclassified to
profit or loss:

Remeasurements of defined benefit
plans

593

–

H

Remeasurements of defined benefit
plans

(482)

110

11

11

Share of other comprehensive
income of investments accounted forusing equity method

122

Total of items that will not bereclassified to profit or loss
Items that may be reclassified to profit
or loss:

Deferred gains or losses on hedges
Foreign currency translation adjustment

(51)
1,548

–

(161)
161

(213)
161

8

1,557

Translation differences on foreign
operations

1,506

Total of items that may bereclassified to profit or loss–

Total other comprehensive income

2,090

–

(462)

1,628

Comprehensive income

23,425–731

24,156Comprehensive income attributable to:
Owners of parent
Non-controlling interests

23,473
(47)

–
–

729
1

24,202(45)- 37 -Cash flow hedges
Hedging costs

Total other comprehensive income, netof taxComprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Notes on reconciliation of profit and loss and comprehensive income
The major accounting differences associated with the transition from Japanese GAAP to IFRS are as follows:(1) Reclassification
We have reclassified line items to conform to IFRS Standards. The major items that were reclassified are as follows:
A. Reclassification of line items
Among the items that were included in “Non-operating income,” “Non-operating expenses,” “Extraordinary income,” and“Extraordinary losses” under Japanese GAAP, finance-related gains and losses have been included in “Finance income” and“Finance costs,” while the other items have been included in “Other income,” “Other expenses,” and “Share of profit ofinvestments accounted for using equity method” under IFRS.
B. Income tax expense
Under Japanese GAAP, corporate enterprise tax (on value-added basis) was recorded in “Selling, general and administrative
expenses” and corporate residents’ tax (on a per capita basis) was recorded in “Income taxes-current.” Under IFRS, sizebased business tax (on value-added basis) has been recorded in “Income tax expense” and corporate residents’ tax (on a percapita basis) in “Selling, general and administrative expenses.”(2) Difference in recognition and measurement
C. Unused paid leave
Unused paid leave, which was not recognized as a liability under Japanese GAAP, has been recorded in “Cost of sales” and“Selling, general and administrative expenses” under IFRS.
D. Share-based payment
Under Japanese GAAP, the amount of shares or other benefits expected to be paid was recorded as a liability for stock
benefit trusts (“J-ESOP” and BBT). Under IFRS, however, both J-ESOP and BBT have been classified as equity-settled
share-based payment plans, and therefore, they have been recognized as equity and measured at their fair value on the grantdate.
Accordingly, the liability recorded under Japanese GAAP was reversed and the balance measured at fair value was recorded
as “Capital surplus” and the difference was recorded in “Cost of sales” and “Selling, general and administrative expenses”
for the current period.
E. Levies
Under Japanese GAAP, property tax was recognized as a liability upon receipt of the tax payment notification and theamount prorated for each month was recorded in “Cost of sales” or “Selling, general and administrative expenses” on amonthly basis. Under IFRS, however, the full amount in a lump sum has been recorded as a liability and “Cost of sales” and“Selling, general and administrative expenses” on January 1, the date of assessment.
F. Amortization of goodwill
Under Japanese GAAP, goodwill was amortized as “Selling, general and administrative expenses” on a straight-line basis
over the period during which the reasonably estimated effect of goodwill is expected to be realized. Under IFRS, however,goodwill was not amortized after the date of transition to IFRS.
G. Income tax expense
The amounts of income tax expense has been adjusted due to temporary differences arising from the reconciliation ofJapanese GAAP to IFRS. The tax effect of the elimination of unrealized gains and losses was calculated using the tax rate of
the seller under Japanese GAAP, while the tax rate of the buyer has been used under IFRS.
H. Employee benefits
Under Japanese GAAP, actuarial gains and losses and past service costs were recognized as “Accumulated other comprehensive
income” when incurred and expensed over a period of time calculated based on employees’ average remaining service period.
Under IFRS, actuarial gains and losses are recognized as “Other components of equity” when incurred and immediatelytransferred to “Retained earnings,” and past service costs are recognized as profit or loss when incurred.

- 38 -