Interim report
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Consolidated Financial Results (Japanese Accounting Standards) for the Fiscal Year Ended December 31, 2025 February 13, 2026 Name of Listed Company: artience Co., Ltd. Listings: Tokyo Stock Exchange Code: 4634 URL: https://www.artiencegroup.com Representative: Satoru Takashima, President and Representative Director, Group CEO Contact: Takeshi Arimura, Operating Officer in charge of IR and General Manager of Finance & Accounting Dept. Tel: +81-3-3272-6002 Scheduled date of ordinary shareholders’ meeting: March 24, 2026 Scheduled date of commencement of dividend payments: March 25, 2026 Scheduled date of submission of financial report: March 19, 2026 Supplementary documents for financial results: Yes Financial results briefing: Yes (for institutional investors and securities analysts) (Amounts of less than million yen are omitted) 1. Consolidated financial results for the year ended December 31, 2025 (from January 1, 2025 to December 31, 2025) (1) Consolidated business results (Percentages indicate year-on-year changes) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Million yen % Million yen % Million yen % Million yen % Fiscal 2025 349,979 -0.3 20,765 1.7 20,888 -0.6 10,340 -44.2 Fiscal 2024 351,064 9.0 20,414 52.7 21,008 63.1 18,540 90.4 (Note) Comprehensive income: Fiscal 2025: 18,957 million yen (-36.7%) Fiscal 2024: 29,959 million yen (-6.1%) Profit per share (Basic) Profit per share (Diluted) Return on equity Ordinary profit/ Total assets Operating profit/ Net sales Yen Yen % % % Fiscal 2025 210.50 210.47 3.9 4.5 5.9 Fiscal 2024 352.53 352.41 7.3 4.6 5.8 (Note) Equity in earnings of associated companies: Fiscal 2025: 78 million yen Fiscal 2024: -74 million yen (2) Consolidated financial position Total assets Net assets Capital Adequacy Ratio Net assets per share Million yen Million yen % Yen Fiscal 2025 462,600 277,220 57.5 5,609.42 Fiscal 2024 472,787 273,754 55.4 5,164.85 (Note) Shareholders’ equity: Fiscal 2025: 266,021 million yen Fiscal 2024: 262,113 million yen (3) Consolidated cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Balance of cash and cash equivalents Million yen Million yen Million yen Million yen Fiscal 2025 27,554 -11,162 -31,716 45,792 Fiscal 2024 26,964 -10,172 -14,975 60,052 2. Dividends Dividends per share Dividends total (annual) Dividend payout ratio (consolidated) Dividends/ Net assets (consolidated) End of Q1 End of Q2 End of Q3 Year-end Total Yen Yen Yen Yen Yen Million yen % % Fiscal 2024 － 50.00 － 50.00 100.00 5,189 28.4 2.0 Fiscal 2025 － 50.00 － 50.00 100.00 4,840 47.5 1.9 Fiscal 2026 (Forecast) － 60.00 － 60.00 120.00 27.1 3. Consolidated business forecasts for the year ending December 31, 2026 (from January 1, 2026 to December 31, 2026) (Percentages indicate year-on-year changes) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Profit per share (Basic) Million yen % Million yen % Million yen % Million yen % Yen Full-year 360,000 2.9 23,000 10.8 22,500 7.7 21,000 103.1 442.81 TRANSLATION: This is an English translation of Consolidated Financial Results (Japanese Accounting Standards) for the Fiscal Year Ended December 31, 2025. This is an English translation of the Japanese original, prepared only for the convenience of shareholders residing outside Japan. The original Japanese version will prevail should there be any difference in the meaning between the English version and the Japanese version.
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* Notes: (1) Important changes in the scope of consolidation during the term: No (2) Changes in accounting policies and changes or restatement of accounting estimates (i) Changes in accounting policies due to the amendments to accounting standards: Yes (ii) Changes in accounting policies other than (i): No (iii) Changes in accounting estimates: No (iv) Restatement: No (3) Numbers of shares issued (ordinary shares) (i) Numbers of shares issued at the end of the terms (including treasury shares): Fiscal 2025: 50,286,544 shares Fiscal 2024: 53,286,544 shares (ii) Number of treasury shares at the end of the terms: Fiscal 2025: 2,862,378 shares Fiscal 2024: 2,537,112 shares (iii) Average numbers of shares issued during the terms (consolidated accumulation periods): Fiscal 2025: 49,121,980 shares Fiscal 2024: 52,591,629 shares Reference: Financial summary (non-consolidated) Non-consolidated financial results for the year ended December 31, 2025 (from January 1, 2025 to December 31, 2025) (1) Business Results (Percentages indicate year-on-year changes) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Million yen % Million yen % Million yen % Million yen % Fiscal 2025 17,474 11.7 6,700 30.2 7,834 26.9 9,020 20.1 Fiscal 2024 15,637 9.9 5,144 27.8 6,173 17.4 7,510 12.0 Profit per share (Basic) Profit per share (Diluted) Yen Yen Fiscal 2025 183.63 183.60 Fiscal 2024 142.81 142.76 (2) Financial position Total assets Net assets Capital Adequacy Ratio Net assets per share Million yen Million yen % Yen Fiscal 2025 270,014 177,433 65.7 3,741.22 Fiscal 2024 277,816 180,518 65.0 3,556.47 (Note) Shareholders’ equity: Fiscal 2025: 177,424 million yen Fiscal 2024: 180,488 million yen * These financial results are not subject to audits by certified public accountants or audit corporations. * Explanations about the proper use of financial forecasts and other important notes 1. The earnings forecasts and other forward-looking statements in this document are based on the information available to the Company at the time of its announcement and on certain assumptions deemed to be reasonable. However, the Company makes no guarantee t hat these forecasts will be achieved. Actual results may differ significantly due to various factors. Please refer to “(4) Future prospects” of “1. Overview of Operating Results, etc.” on page 5 of the attached materials for the assumptions underlying the earnings forecasts and precautions regarding the use thereof. 2. Supplementary documents for financial results will be posted on the Company’s website on February 1 3, 2026 (Friday). 3. The Company will hold a financial results briefing for institutional investors and securities analysts on February 20, 2026 (Friday). Reference materials for financial results and forecasts used in the briefing will be posted on the Company’s website before the opening of the briefing.
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1 Accompanying Materials – Contents 1. Overview of Operating Results, etc. ......................................................................................................................... 2 (1) Overview of operating results for the fiscal year ended December 31, 2025 ............................................ 2 (2) Overview of financial position during the fiscal year ended December 31, 2025 ..................................... 4 (3) Overview of cash flow during the fiscal year ended December 31, 2025 ................................................. 4 (4) Future prospects ........................................................................................................................................ 5 2. Group Overview ........................................................................................................................................................ 6 3. Management Policy ................................................................................................................................................... 8 (1) Basic management policy .......................................................................................................................... 8 (2) Medium- to long-term management strategy ............................................................................................ 8 (3) Our challenges ........................................................................................................................................... 8 4. Basic Position on the Selection of Accounting Standards ......................................................................................... 9 5. Consolidated Financial Statements and Primary Notes........................................................................................... 10 (1) Consolidated balance sheet...................................................................................................................... 10 (2) Consolidated statements of income and consolidated statements of comprehensive income .................. 12 (3) Consolidated statements of changes in equity ......................................................................................... 14 (4) Consolidated statements of cash flows .................................................................................................... 16 (5) Explanatory notes to consolidated financial statements .......................................................................... 17 (Notes on assumption of going concern)..................................................................................................... 17 (Basic and important matters in preparing the consolidated financial statements) ..................................... 17 (Changes in accounting policies) ................................................................................................................ 20 (Notes to consolidated balance sheet) ......................................................................................................... 21 (Notes to consolidated statements of income) ............................................................................................. 23 (Notes to consolidated statements of comprehensive income) .................................................................... 25 (Notes to consolidated statements of changes in equity)............................................................................. 26 (Notes to consolidated statements of cash flows) ....................................................................................... 28 (Segment information, etc.) ........................................................................................................................ 28 (Per share information) ............................................................................................................................... 30 (Important subsequent events) .................................................................................................................... 30
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2 1. Overview of Operating Results, etc. (1) Overview of operating results for the fiscal year ended December 31, 2025 (Million yen) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Fiscal 2025 349,979 20,765 20,888 10,340 Growth rate (%) -0.3 1.7 -0.6 -44.2 Fiscal 2024 351,064 20,414 21,008 18,540 During the consolidated fiscal year under review, the global economy faced the impacts of US trade policies. Although certain regions such as China showed signs of faltering, the Japanese and Southeast Asian economies improved moderately and India continued to achieve economic growth. In the battery related business, which the Group is focusing on developing, the Group's strategies were also significantly impacted by the global slowdown in growth momentum in the EV market. Amid this business environment, the Group operated its business activities in line with the following three management policies. The first policy is to shift to highly-profitable existing businesses. In the overseas packaging materials related business, which the Group identifies as a growing business, a new plant for liquid ink products and adhesives began operating in Turkey, and the Group also decided to expand production capacity for liquid ink products in India and reorganized its production network in China. In Thailand, can coatings remained strong due to the maximization of synergies through management integration. Driven by expansion in the digital printing market, growth of inkjet inks was m ostly unchanged year on year, despite signs of stagnation in some areas due to customer inventory adjustments. As environmental awareness increases, functional coatings that help to reduce plastic usage performed strongly. However, sales of energy-saving UV and LED curable inks were affected by the deterioration in the sales mix caused by rising demand for affordable items amid the slump in the publishing market. In the plastic colorants business, which the Group considers a profitable core business, overseas sales fell due to inventory adjustments affecting colorants for solar cell applications. In Japan, meanwhile, the Group reduced costs and revised prices. Adhesives and liquid ink products were affected by rising raw material and transportation costs in Japan. The Group secured a profit by improving efficiency through product integration, cost cutting and reorganizing the sales structure, and also decid ed to invest in increasing production efficiency at its core Saitama Factory. As the information -related printing market continued to contract, the Group improved profitability in the domestic offset ink business by furthering production and logistics alliances and promoting supply chain efficiency. The second policy is the creation of strategic priority business es. In the Display & Advanced Electronics Related Businesses, the shift of LCD display market to China accelerated rapidly. In this environment, the Group established a joint venture with a local partner in China and began the local supply of materials for color filters. The Group also expanded its sales of optical semiconductor materials, including CMOS image sensors . In addition, sales of pressure sensitive adhesives for displays in the Chine se market grew significantly, and the Group also started to reorganize the supply chain. In semiconductor related products, insulation protective sheet for encapsulating semiconductor chips grew, and the Group also began providing low dielectric resin materials to the semiconductor industry. In the Mobility & Battery Related Businesses, shipments of materials for lithium-ion batteries for automotive applications from all production facilities were slow due to a global downturn in the EV market. The Group postponed the start of operation at a new plant that will produce materials for lithium -ion batteries used in automotive applications in Kentucky, the Group's second production base in North America. Meanwhile, the Group completed expansion of its facilities in Hungary, with a view to supplying a second company, but revised the business plan to reflect the recent market trend. This situation required the Group to recognize impairment losses on both facilities. In addition, the Group continued to develop products for new applications, particularly for anode materials and all -solid-state batteries. However, it reviewed the amounts and timing of investments across the board and decided to use funds for strategic investments such as M&A. The third policy is the reform of business foundation. The Group sought to strengthen its management resources with an emphasis on environmental, social and corporate governance (ESG) criteria and sought to raise awareness internally and externally of t he new materiality developed based on the artience asv2050/2030 Sustainability Vision. The Group also steadily implemented sustainability management, promoting the adoption of electricity derived from renewable energy and the additional installation of solar power generation facilities both in Japan and overseas. To enhance its human resources, the Group expanded the scope of the engagement survey conducted for the first time last year to include all Southeast Asian companies and increased dialogue with them for the resolution of any issues. The Group also implemented initiatives focusing on diversity, equity and inclusion (DE&I). In addition, the Group introduced artience HR CANVAS, a new personnel system where each employee's potential is maximized through proactive career autonomy and growth, and challenge is encouraged. Moreover, as corporate identity (CI) activities following the change of its business name and corporate philosophy system, the Group continued to organize sessions where the CEO visits sites to exchange opinions with employees in the form of a roundtable discussion. The Group also opened Incubation CANVAS TOKYO, a global co -creation hub specialized in the materials field established within head office to encourage employees to take on challenge and achieve personal growth , foster a challenging culture, and generate innovation. The Group promoted the use of digital transformation technologies, including artificial intelligence, to drive the development of technology and production innovation. Under the Generative AI Native 500 project, the Group also promoted the development of human resources, with the aim of securing 500 employees who are digital core talent by 2027. It also improved operational efficiency across many functions and expanded global sourcing by utilizing the Enterprise Resource Planning system, while also strengthening measures to address cybersecurity and other risks.
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3 To enhance capital efficiency and adopt management practices that consider share prices, the Group raised the ROE target to 8% by the end of 2026, and made progress in introducing return on invested capital (ROIC) throughout the organization, improving the cash conversion cycle (CCC) and reducing working capital, decreasing the shares held and repurchasing treasury shares. To enhance governance, the Group increased the number of independent outside directors with management experience, continued engaging in dialogue with shareholders through investor relations (IR) and shareholder relations (SR) activities, and incorporating their feedback into management initiatives. As a result, net sales for the fiscal year under review fell to 349,979 million yen (down 0.3% year on year) , but operating profit rose to 20,765 million yen (up 1.7% year on year). Ordinary profit decreased to 20,888 million yen (down 0.6% year on year), and profit attributable to owners of parent dropped to 10,340 million yen (down 44.2% year on year) due in part to impairment losses. Operating results by segment are as follows. (Million yen) Net sales Operating profit Previous term Term under review Change (%) Previous term Term under review Change (%) Colorants and Functional Materials Related Business 86,089 84,304 -2.1 3,367 2,254 -33.1 Polymers and Coatings Related Business 88,518 90,305 2.0 7,151 8,292 15.9 Packaging Materials Related Business 91,527 92,499 1.1 5,413 5,464 0.9 Printing and Information Related Business 83,325 80,994 -2.8 4,885 4,528 -7.3 Other 5,805 5,712 -1.6 -381 313 － Subtotal 355,267 353,818 -0.4 20,436 20,853 2.0 Adjustment -4,202 -3,838 － -22 -87 － Total consolidated 351,064 349,979 -0.3 20,414 20,765 1.7 (i) Colorants and Functional Materials Related Business Sales of materials for LCD color filters fell, with increased demand for materials used in large panels during the first half in China, due in part to the effect of government subsidies, offset by continued weak shipments of materials for small and midsize panels used in applications such as personal computers in Taiwan as well as the withdrawal of a domestic panel manufacturer. Sales o f optical semiconductor materials for smartphones in China expanded. The profitability of plastic colorants improved on the solid performance of products for beverage caps in Japan as well as the effects of cost cutting and price revisions. Overseas, sales of plastic colorants for solar cells and automotive applications rem ained weak in contrast to the strong performance of the previous fiscal year. Sales of lithium-ion battery materials for automotive applications were lackluster, reflecting a slowdown in the growth of the EV market. The Group continued to develop customers and next-generation products, although this could not offset increased expenses for the start of operation of the Chinese plant and product development. Sales of inkjet inks were mostly unchanged year on y ear, despite being severely impacted by customer inventory adjustments and intensifying competition. As a result, net sales for this segment as a whole slipped to 84,304 million yen (down 2.1% year on year), and operating profit fell to 2,254 million yen (down 33.1% year on year). (ii) Polymers and Coatings Related Business Among functional films and tapes, functional films, including conductive adhesive sheets sold well due to an increase in sale s for new smartphone models and expansion of sales in China. Meanwhile, in the area of semiconductor -related materials, developed products were more widely used. Among pressure sensitive adhesives, those for automotive and other industrial applications performed strongly in Japan. In China, the Group met growing demand for pressure sensitive adhesives for displays and achieved significant growth. In India, sales grew through market development. Among adhesives, products for packaging generally performed strongly in Japan and overseas but were affected by sluggish markets in some regions. As for products for industrial applications, sales for lithium-iron batteries were slow, reflecting a slowdown in the growth of the EV market. Sales of can coatings grew in Japan, partly due to sales expansion efforts. Overseas, especially in Thailand, demand for can coatings for processed food remained strong and progress was also made expanding sales of can coatings for beverage cans. The Group also achieved growth in Turkey through increased sales to major customers. As a result, net sales for this segment as a whole increased to 90,305 million yen ( up 2.0% year on year), and operating profit increased to 8,292 million yen (up 15.9% year on year). (iii) Packaging Materials Related Business In Japan, demand for liquid inks for packed rice, frozen food, and refill packaging materials, among other applications, rema ined firm. In addition, among inks for cardboard boxes, those related to beverages performed strongly partly due to the effects of the intense heat in summer. In addition, net sales increased due in part to progress with the sales promotion for environmentally friendly products and the effect of price revisions. Overseas sales were affected by weak consumption in China and the slowdown of the housing market in North America but
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4 remained firm in Southeast Asia and India, underpinned by market conditions. In Turkey, sales promotion targeting new customers and surrounding countries made robust progress due to the start of operation of a new plant, while the depreciation expenses increased. In the gravure cylinder platemaking business, sales were strong due to the capturing of demand for new printing plates for packaging and the gradual recovery of precision platemaking related to electronics. As a result, net sales for this segment as a whole increased to 92,499 million yen ( up 1.1% year on year), and operating profit increased to 5,464 million yen (up 0.9% year on year). (iv) Printing and Information Related Business While domestic sales of products for advertising and publishing remained sluggish due to the continued structural contraction of the information-related printing market, demand for cards increased and sales of functional coatings and functional inks such a s energy-saving highly sensitive UV-curable inks expanded, reflecting progress on business portfolio reforms. In overseas markets, sales of products for publishing, newspapers, etc. were weak in China, Europe, and North America as a result of the stagnation of the information -related printing market. Sales of products for paper packaging materials also showed slow growth in Southeast Asia and other regions. These resulted in intensified competition. As a result, net sales for this segment as a whole slipped to 80,994 million yen (down 2.8% year on year), and operating profit fell to 4,528 million yen (down 7.3% year on year). (v) Other This Other segment includes businesses not included in the above segments, services provided by artience as the holding company, and other businesses. In the fiscal year under review, net sales fell to 5,712 million yen (down 1.6% year on year) and operating profit was 313 million yen (operating loss of 381 million yen in the previous fiscal year). (2) Overview of financial position during the fiscal year ended December 31, 2025 (Million yen) End of previous fiscal year End of fiscal year under review Change Total assets 472,787 462,600 -10,187 Liabilities 199,033 185,379 -13,653 Net assets 273,754 277,220 3,466 Total assets at the end of the fiscal year under review stood at 462,600 million yen, down 10,187 million yen from the end of the previous consolidated fiscal year. Liabilities were 185,379 million yen, down 13,653 million yen from the end of the previous consolidated fiscal year. Net assets came to 277,220 million yen, up 3,466 million yen from the end of the previous consolidated fiscal year. On the last day of the fiscal year under review, the exchange rate changed in the direction of weaker yen and stronger foreign currencies compared to the last day of the previous consolidated fiscal year. As a result, assets and liabilities held by overseas subsidiaries and foreign currency translation adjustments increased respectively. As a result of the completion of new plant overseas, buildings and structures as well as machinery, equipment and vehicles increased, while construction in progress decreas ed. Furthermore, investment securities and valuation difference on available -for-sale securities each increased, reflecting the rising stock prices of stocks held. The Company issued the Third Series of Unsecured Straight Bonds and refinanced part of its borrowings, which resulted in an increase in long -term borrowings and a significant decrease in short -term borrowings. In addition, cash and deposits decreased significantly due to the purchase of treasury shares and the payment of income taxes and dividends. (3) Overview of cash flow during the fiscal year ended December 31, 2025 (Million yen) Previous term Term under review Change Cash flows from operating activities 26,964 27,554 589 Cash flows from investing activities -10,172 -11,162 -989 Cash flows from financing activities -14,975 -31,716 -16,741 Cash and cash equivalents at end of period 60,052 45,792 -14,260 Cash and cash equivalents (“cash”) at the end of the fiscal year under review stood at 45,792 million yen, down 14,260 million yen from the end of the previous fiscal year. Cash provided by operating activities was 27,554 million yen, up 589 million yen from the previous fiscal year. This mainly reflects an increase in cash due to the posting of profit before income taxes and depreciation and a decrease in cash due to a decrease in notes and accounts payable - trade, and income taxes paid. Cash used in investment activities was 11,162 million yen, up 989 million yen from the previous fiscal year. This mainly reflects a decrease in cash due to purchase of property, plant and equipment and an increase in cash due to proceeds from sale and redemption of short-term and long-term investment securities. Cash used for financing activities was 31,716 million yen, up 16,741 million yen from the previous fiscal year. This mainly reflects
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5 a decrease in cash due to repayments of long-term borrowings, purchase of treasury shares and dividends paid, as well as an increase in cash due to proceeds from long-term borrowings. Trends in Group cash flows are as follows: Term ended December 2022 Term ended December 2023 Term ended December 2024 Term ended December 2025 Capital adequacy ratio (%) 53.3 54.9 55.4 57.5 Market value-based capital adequacy ratio (%) 23.2 31.1 33.9 37.5 Ratio of interest-bearing debt to cash flows (years) 20.3 3.8 3.1 2.4 Interest coverage ratio (times) 3.5 12.8 11.2 21.0 Capital adequacy ratio: Shareholders’ equity / total assets Market value-based capital adequacy ratio: Market capitalization / total assets Ratio of interest-bearing debt to cash flows: Interest-bearing debt / cash flows Interest coverage ratio: Cash flows / Interest payments (Notes) 1. Each indicator is calculated using consolidated financial data. 2. Market capitalization is computed based on the number of shares issued excluding treasury shares. 3. Cash flows denote cash flows from operating activities. 4. Interest-bearing debt denotes all debts recorded in consolidated balance sheets that pay interest. (4) Future prospects (Million yen) Net sales Operating profit Ordinary profit Profit attributable to owners of parent Term ending December 2026 (Forecast) 360,000 23,000 22,500 21,000 Term ended December 2025 349,979 20,765 20,888 10,340 Growth rate (%) 2.9 10.8 7.7 103.1 In the next fiscal year, the economy is expected to continue its moderate recovery. However, there are still downside risks t o the economy, such as the impact of persistent price increases on personal consumption. The Group's business environment remains uncertain, with challenges such as the impacts of US policies and China's economic stagnation. This notwithstanding, the Group forecasts net sales of 360,000 million yen (growth rate of 2.9％), operating profit of 23,000 million yen (growth rate of 10.8％), ordinary profit of 22,500 million yen (growth rate of 7.7％), and profit attributable to owners of parent of 21,000 million yen (growth rate of 103.1％) as a result of the measures to address the issues described on page 8.
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6 2. Group Overview The Group is constituted of the Company, 56 consolidated subsidiaries and 5 equity method affiliate companies. Business lines of the Group are as follows: Business Line Major Business Major Company Colorants and Functional Materials Related Business Organic pigments, processed pigments, plastic colorants, color filter materials, inkjet materials, lithium-ion battery materials and others Domestic Toyocolor Co., Ltd., Toyo Visual Solutions Co., Ltd. Overseas Toyo Ink Compounds Vietnam Co., Ltd., Zhuhai Toyocolor Co., Ltd., Toyo Advanced Science Taiwan Co., Ltd, Toyo Ink Europe Specialty Chemicals S.A.S, LioChem Inc., LioChem e- Materials LLC, Hanil Toyo Co., Ltd., and others Polymers and Coatings Related Business Can coatings, resins, adhesives, pressure sensitive adhesives, functional films and tapes, natural materials, medical products and others Domestic Toyochem Co., Ltd., Toyo-Morton, Ltd., and others Overseas Toyo Ink (Thailand) Co., Ltd., Shanghai Toyo Ink Mfg. Co., Ltd., Sam Young Ink & Paint Mfg. Co., Ltd., Toyo Ink Korea Co., Ltd., and others Packaging Materials Related Business Gravure inks, flexographic inks, gravure cylinders and others Domestic Toyo Ink Co., Ltd., and others Overseas Toyochem Specialty Chemical Sdn. Bhd., PT. Toyo Ink Indonesia, Toyo Ink Vietnam Co., Ltd., Jiangmen Toyo Ink Co., Ltd., Toyo Printing Inks Inc., and others Printing and Information Related Business Offset inks, metal printing inks, printing machines, printing equipment, prepress systems, printing supplies and others Domestic Toyo Ink Co., Ltd., Matsui Chemical Co., Ltd. Overseas Toyo Ink India Pvt. Ltd., Tianjin Toyo Ink Co., Ltd, Toyo Ink Europe N.V., Toyo Ink America, LLC, Toyo Ink Brasil Ltda., and others Other Business Sale of raw materials, service provision, real estate rental business management, holding company for subsidiaries and others Domestic artience Co., Ltd., Toyo B-Net Co., Ltd., and others Overseas TIPPS Pte. Ltd., Toyo Ink Far East Ltd., Toyo Ink International Corp., and others Sales Business Sales of products handled by the Group companies Overseas Toyo Ink Asia Ltd., Shenzhen Toyo Ink Co., Ltd., and others The artience Group deals with Toppan Inc., a subsidiary of other affiliated company, in finished goods and merchandise.
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7 The organization chart is as follows: (Organization Chart) Toyo FPP Co., Ltd. Toyochem Specialty Chemical Sdn. Bhd. PT. Toyo Ink Indonesia Toyo Ink Vietnam Co., Ltd. Customer Toppan Inc. 7 other consolidated subsidiaries Total: 10 consolidated subsidiaries Toyo Ink Asia Ltd. Shenzhen Toyo Ink Co., Ltd. Jiangsu Toyo Shen Lan Hua Pigment Co., Ltd. Toyo B-Net Co., Ltd. Toyo Ink Engineering Co, Ltd. Toyo Management Service Co., Ltd. TIPPS Pte. Ltd. Toyo Ink Far East Ltd. TIE International NV Consolidated subsidiary * Equity method affiliated company Toyo Ink International Corp. * Logi Co-Net Co., Ltd. 3 other consolidated subsidiaries Total: 10 consolidated subsidiaries and 1 equity method affiliated company Toyochem Co., Ltd. Business Lines Polymers and Coatings Related Business Colorants and Functional Materials Related Business Other Business Management guidance Products Raw materials Services Printing and Information Related Business Packaging Materials Related Business Sales Company artience (Holding Company) Toyo Visual Solutions Co., Ltd. Toyo Ink Compounds Vietnam Co., Ltd. Zhuhai Toyocolor Co., Ltd. Toyo Advanced Science Taiwan Co., Ltd. Toyo Ink Europe Specialty Chemicals S.A.S. Toyo Ink Hungary LioChem, Inc. LioChem e-Materials Toyo Ink Mexico, S.A. de C.V . Hanil Toyo Co., Ltd. * Sumika Polymer Compounds (Thailand) Co., Ltd. 1 other consolidated subsidiary and 2 other equity method affiliated companies Total: 11 consolidated subsidiaries and 3 equity method affiliated companies Toyocolor Co., Ltd. Toyo-Morton, Ltd. Toyo Ink (Thailand) Co., Ltd. Thai Eurocoat Ltd. Shanghai Toyo Ink Mfg. Co., Ltd. Sam Young Ink & Paint Mfg. Co., Ltd. Toyo Ink Korea Co., Ltd. * Nippon Polymer Ind. Co., Ltd. Total: 6 consolidated subsidiaries and 1 equity method affiliated company Jiangmen Toyo Ink Co., Ltd. Toyo Printing Inks Inc. 2 other consolidated subsidiaries Total: 8 consolidated subsidiaries Toyo Ink Co., Ltd. Toyo Ink America, LLC Toyo Ink Brasil LTDA 2 other consolidated subsidiaries Total: 8 consolidated subsidiaries Matsui Chemical Co., Ltd. Toyo Ink India Pvt. Ltd. Tianjin Toyo Ink Co., Ltd. Toyo Ink Europe S.A.
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8 3. Management Policy (1) Basic management policy From 2024, the Group changed the name of its business and its corporate philosophy system. The new business name, "artience," is a portmanteau of the words "art" and "science." The "art" expresses the stimulation of the five senses and the mind, inclu ding the application of color as well as a liberal arts perspective; while the "science" represents the application of technology, materials and a rational approach to discovery. The new corporate philosophy system consists of: "People -oriented management", the Corporate Philosophy describing the basic approach to management; the Brand Promise & Slogan as its promise to its stakeholders, which says "Create value that resonate s with the senses and building a future where all people can live enriched lives" and "Empowering Feeling"; as well as Our Principles that serve as the cornerstone for employees' activities. With this system, the Group clarifies the "reason for its existence, " that is, building a society where people can live spiritually enriching lives to create a future that remains sustainably brilliant, a s well as "our role," that is, to deliver beauty, comfort and peace of mind that fills people's hearts by collaborating and joining forces with its partners instead of going it alone, for the purpose of connecting technologies and ideas to achieve solutions to the issu es faced by society. The Group defined the value that it should deliver to the world in the future as "value that resonates with the senses." Under this new corporate philosophy system, the Group will combine and refine art and science as its strengths and create val ue that resonates with people's senses, from the things they see, the objects they touch, and the things that they feel through the quality of products, thus contributing to building a spiritually wealthy future. (2) Medium- to long-term management strategy The Group formulated artience2027/2030 GROWTH, a new management plan targeting 2030. Under the plan, the Group will implement transformation based on artience's new corporate philosophy system. Throughout this period, the Group is working on business portfolio transformation, maximization of capital efficiency and cash flow s, and establishment of corporate foundations and sustainability management practices . The Group has named the three years beginning with 2024 artience2027(2024 -2026). During this period, the Group is advancing transformation initiatives under the three basic policies: the shift to highly-profitable existing businesses, the creation of strategic priority businesses and the reform of business foundation. To shift to highly-profitable existing businesses, the Group has classified its existing businesses into growing businesses, profitable core businesses, and restructuring and strategy-rebuilding businesses, and will transform the business portfolio by implementing strategies according to the positioning of each. While concentrating on the expansion of grow ing businesses, the Group will seek to strengthen profitability by improving efficiency and productivity in profitable core businesses. In restructuring and strategy- rebuilding businesses, the Group will take bold measures to implement structural reforms, and for businesses with a potential growth trajectory, the Group will formulate new strategies to bring about transformation. To create strategic priority business, the Group will concentrate its resources in two fields: mobility and battery related businesses, which includes lithium -ion battery materials and laminating adhesives, and display and advanced electronics related businesses, including color resists for LCD, optical pressure sensitive adhesives and semiconductor related materials including materials for image sensors. By doing this, the Group aims to create new key profit-generating businesses. Looking ahead to 2030 and beyond, the Group positions the environmental, biotechnology and energy businesses as next -generation businesses, and will undertake initiatives to create and expand business domains. To reform business foundation , the Group will strengthen its management resources based on the environmental, social and governance (ESG) perspective. The Group will focus on enhancing human capital, fostering a good corporate culture and strengthening the foundations for management conscious of the cost of capital, viewing them as the starting point for its transformation. In terms of digital transformation, the Group will strengthen information security alongside the rollout of A I. In addition to the above, the Group aims to fulfill its responsibilities to society, especially on environmental issues, and will transform its management foundation to realize its vision. (3) Our challenges In the next fiscal year, which is the third fiscal year under the "artience2027," the new medium-term management plan, the Group will move forward with each business as described below. In the Colorants and Functional Materials Related Business, the Group will work to increase market share for materials used i n LCD color filters by leveraging the production system established through its joint venture with a Chinese company to better meet market needs. In the area of optical semiconductor materials, the Group will keep expanding steadily and use the knowledge it has accumulated in this business to develop next generation technologies and expand applications by bringing together optical semiconductor materials and the Group's other related materials. In the area of materials for automotive lithium -ion batteries, the Group will steadily build up a track record through activities such as scaling up production for major Chinese companies and supplying new customers in Hungary, while maintaining appropriate production systems by adapting flexibly to changes in the business environment. The Group will also seek to diversify its profit opportunities through expansion of product lines, incl uding branching out into conductive agents for negative electrodes and LMFP batteries and considering ESS applications in addition to automotive applications. At the same time, the Group will push ahead with the development of next -generation technologies, including all-solid-state batteries. In the Polymers and Coatings Related Business, the Group plans to improve the profitability of pressure sensitive adhesives b y developing products to meet customer needs and transforming production. Especially in the area of optical pressure sensitive adhesives for displays, the Group will seek further business expansion through increase in production capacity and optimization of the supply chain. As for can coatings, the Group will enhance its global network to accelerate the generation of synergy. Regarding materials related to advanced electronics, the Group aims to steadily expand semiconductor -related products on the back of its
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9 growing track record, and to also expand functional product groups that meet market requirements. In the Packaging Materials Related Business, the Group aims to capture growth in overseas markets, and to strengthen the prof it base in the domestic market. Positioning the new plant that commenced operation in Turkey as its core production site in the region, the Group will pursue business expansion not only for liquid ink products but also for laminating adhesives. In India, the Gr oup will steadily tap into market growth and also push ahead with investment to expand production capacity. In China, the Group will accelerate business growth under a new system that integrates the production, sales and technologies of multiple sites . In the domestic market, the Group will seek to strengthen the profit base through investments in labor-saving and automation to increase efficiency. In addition, the Group will develop and enhance environmentally friendly products and conduct marketing a ctivities that anticipate customer needs. In the Printing and Information Related Business, the Group will pursue overseas sales expansion of functional inks (UV curab le inks, metal decorating inks and screen inks). Especially in the area of UV curable inks, the Group will focus on the global expansion of differentiated products using its own materials and on the sales expansion of UV and LED inks that meet energy saving need s. Additionally, the Group will pursue further expansion of functional coatings for high-grade paper containers. Meanwhile, in Japan, the Group will seek to further improve efficiency through expansion of joint logistics and other means, based on the assumption of a continued contraction in Japan's information-related printing market. In addition to undertaking these business activities, the Group will strengthen the management foundation to help implement sustainable management practices. In particular, the Group will work to further strengthen human capital, which is the cornerstone of management, implementing a range of measures that will help secure and develop talent linked to global business strategies and improve productivity. The Group aims to enhance employee engagement and foster a corporate culture that encourages employees to embrace challenges by implementing DE&I initiatives and conducting business idea contests and other related efforts. At the same time, the Group will implement initiatives to improve capital efficiency, including allocating resources to growing businesses based on indicators such as ROIC and focusing on activities to improve existing businesses. Additionally, the Group will continue actions to address the demands of society, including addressing environmental issues, in accordance with the asv2050/2030 artience Sustainability Vision and the newly established materiality. The Group will accelerate the use of AI across all areas of its business activities and management foundations to drive product development and the transformation of operations. To ensure improvement in productivity and production sustainability, the Gro up will promote creating smart factories using digital transformation, while also stepping up information security initiatives. The Group will also work to further increase penetration of its new brand based on its new CI and corporate philosophy system. 4. Basic Position on the Selection of Accounting Standards The Group utilizes the Japanese accounting standards due to the possibility of comparing the terms of financial statements an d performance between the companies. We are moving ahead with the necessary preparations for the future adoption of International Financial Reporting Standards (IFRS). We intend to make a decision on suitable timing for its implementation, factoring in the situations in Japan and abroad.
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10 5. Consolidated Financial Statements and Primary Notes (1) Consolidated balance sheet (Million yen) As of December 31, 2024 As of December 31, 2025 (Assets) Current assets Cash and deposits 62,855 47,625 Notes and accounts receivable - trade *1, *6 109,412 *1, *6 106,769 Securities 99 291 Merchandise and finished goods 39,004 40,377 Work in process 622 599 Raw materials and supplies 28,608 27,675 Other 5,833 5,681 Allowance for doubtful accounts -1,154 -1,347 Total current assets 245,282 227,672 Non-current assets Property, plant and equipment Buildings and structures *3, *7 124,648 *3, *7 133,334 Accumulated depreciation -78,813 -83,133 Buildings and structures, net 45,834 50,200 Machinery, equipment and vehicles 183,215 197,682 Accumulated depreciation -150,695 -157,033 Machinery, equipment and vehicles, net 32,519 40,649 Tools, furniture and fixtures 29,479 30,664 Accumulated depreciation -24,406 -24,867 Tools, furniture and fixtures, net 5,072 5,796 Land *3, *7 31,084 *3, *7 31,311 Leased assets 8,810 9,153 Accumulated depreciation -3,006 -3,378 Leased assets, net 5,803 5,774 Construction in progress 28,022 14,192 Total property, plant and equipment 148,338 147,926 Intangible assets 5,964 6,028 Investments and other assets Investment securities *2 57,610 *2 61,997 Retirement benefit asset 9,427 11,461 Deferred tax assets 4,828 5,019 Other 1,673 2,859 Allowance for doubtful accounts -338 -365 Total investments and other assets 73,202 80,972 Total non-current assets 227,504 234,927 Total assets 472,787 462,600
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11 (Million yen) As of December 31, 2024 As of December 31, 2025 (Liabilities) Current liabilities Notes and accounts payable - trade *3, *6 70,747 *3, *6 67,913 Short-term loans payable *3 45,825 *3 14,336 Income taxes payable 2,972 2,983 Other *8 19,923 *8 20,837 Total current liabilities 139,469 106,070 Non-current liabilities Bonds payable 10,000 15,000 Long-term loans payable *3 24,914 34,100 Deferred tax liabilities 13,968 17,066 Provision for environmental measures 80 79 Retirement benefit liability 3,254 3,747 Asset retirement obligations 35 35 Other *9 7,310 *9 9,279 Total non-current liabilities 59,564 79,309 Total liabilities 199,033 185,379 (Net assets) Shareholders’ equity Capital stock 31,733 31,733 Capital surplus 32,466 32,513 Retained earnings 159,807 155,804 Treasury shares -7,992 -9,049 Total shareholders’ equity 216,015 211,002 Accumulated other comprehensive income Valuation difference on available-for-sale securities 20,645 24,483 Foreign currency translation adjustment 25,147 29,516 Remeasurements of defined benefit plans 304 1,020 Total accumulated other comprehensive income 46,097 55,019 Subscription rights to shares 29 8 Non-controlling interests 11,611 11,189 Total net assets 273,754 277,220 Total liabilities and net assets 472,787 462,600
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12 (2) Consolidated statements of income and consolidated statements of comprehensive income Consolidated statements of income (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Net sales *1 351,064 *1 349,979 Cost of sales *2 276,445 *2 273,964 Gross profit 74,618 76,015 Selling, general and administrative expenses Packing and transportation costs 8,195 8,217 Salaries and allowances 13,803 14,129 Bonuses 2,561 2,517 Welfare expenses 3,365 3,468 Depreciation 1,997 2,147 Research and development expenses *2 3,951 *2 4,312 Other 20,331 20,457 Total selling, general and administrative expenses 54,204 55,249 Operating profit 20,414 20,765 Non-operating income Interest income 594 473 Dividend income 1,346 1,411 Foreign exchange gains 384 － Share of profit of entities accounted for using equity method － 78 Gain on net monetary position 1,373 2,251 Other 767 704 Total non-operating income 4,466 4,919 Non-operating expenses Interest expenses 2,762 1,232 Foreign exchange losses － 2,307 Share of loss of entities accounted for using equity method 74 － Other *5 1,034 *5 1,256 Total non-operating expenses 3,872 4,796 Ordinary profit 21,008 20,888 Extraordinary profit Gain on sales of non-current assets *3 22 *3 336 Gain on sales of investment securities 4,238 2,846 Other 3 6 Total extraordinary profit 4,264 3,189 Extraordinary losses Loss on sales and retirement of non-current assets *4 336 *4 574 Impairment loss *6 401 *6 7,267 Loss on sales of investment securities 556 － Loss on valuation of investment securities 839 － Other 234 250 Total extraordinary loss 2,368 8,092 Profit before income taxes 22,904 15,984 Income taxes - current 5,370 6,175 Income taxes - deferred -1,214 33 Total income taxes 4,156 6,208 Profit 18,748 9,776 Profit or loss attributable to non-controlling interests 207 -564 Profit attributable to owners of parent 18,540 10,340
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13 Consolidated statements of comprehensive income (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Profit 18,748 9,776 Other comprehensive income Valuation difference on available-for-sale securities 799 3,837 Foreign currency translation adjustment 11,639 4,607 Remeasurements of defined benefit plans, net of tax -834 715 Share of other comprehensive income of entities accounted for using equity method -394 19 Total other comprehensive income *1 11,211 *1 9,181 Comprehensive income 29,959 18,957 Comprehensive income attributable to Comprehensive income attributable to owners of parent 28,843 19,262 Comprehensive income attributable to non-controlling interests 1,115 -304
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14 (3) Consolidated statements of changes in equity From January 1, 2024 to December 31, 2024 (Million yen) Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’ equity Balance at beginning of current period 31,733 32,468 156,381 -10,615 209,967 Changes of items during period Dividends of surplus -5,038 -5,038 Profit attributable to owners of parent 18,540 18,540 Purchase of treasury shares -7,505 -7,505 Disposal of treasury shares 8 42 50 Cancellation of treasury shares -10,086 10,086 － Transfer from retained earnings to capital surplus 10,076 -10,076 － Change in ownership interest of parent due to transactions with non- controlling interests － Net changes of items other than shareholders’ equity Total changes of items during period － -2 3,425 2,623 6,047 Balance at end of current period 31,733 32,466 159,807 -7,992 216,015 Accumulated other comprehensive income Subscription rights to shares Non- controlling interests Total net assets Valuation difference on available-for- sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Balance at beginning of current period 19,845 14,809 1,139 35,794 45 9,845 255,653 Changes of items during period Dividends of surplus -5,038 Profit attributable to owners of parent 18,540 Purchase of treasury shares -7,505 Disposal of treasury shares 50 Cancellation of treasury shares － Transfer from retained earnings to capital surplus － Change in ownership interest of parent due to transactions with non- controlling interests － Net changes of items other than shareholders’ equity 799 10,337 -834 10,303 -16 1,765 12,053 Total changes of items during period 799 10,337 -834 10,303 -16 1,765 18,100 Balance at end of current period 20,645 25,147 304 46,097 29 11,611 273,754
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15 From January 1, 2025 to December 31, 2025 (Million yen) Shareholders’ equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders’ equity Balance at beginning of current period 31,733 32,466 159,807 -7,992 216,015 Changes of items during period Dividends of surplus -5,006 -5,006 Profit attributable to owners of parent 10,340 10,340 Purchase of treasury shares -10,450 -10,450 Disposal of treasury shares -12 69 57 Cancellation of treasury shares -9,323 9,323 － Transfer from retained earnings to capital surplus 9,336 -9,336 － Change in ownership interest of parent due to transactions with non- controlling interests 46 46 Net changes of items other than shareholders’ equity Total changes of items during period － 46 -4,002 -1,057 -5,013 Balance at end of current period 31,733 32,513 155,804 -9,049 211,002 Accumulated other comprehensive income Subscription rights to shares Non- controlling interests Total net assets Valuation difference on available-for- sale securities Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Balance at beginning of current period 20,645 25,147 304 46,097 29 11,611 273,754 Changes of items during period Dividends of surplus -5,006 Profit attributable to owners of parent 10,340 Purchase of treasury shares -10,450 Disposal of treasury shares 57 Cancellation of treasury shares － Transfer from retained earnings to capital surplus － Change in ownership interest of parent due to transactions with non- controlling interests 46 Net changes of items other than shareholders’ equity 3,837 4,368 715 8,921 -20 -421 8,479 Total changes of items during period 3,837 4,368 715 8,921 -20 -421 3,466 Balance at end of current period 24,483 29,516 1,020 55,019 8 11,189 277,220
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16 (4) Consolidated statements of cash flows (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Cash flows from operating activities Profit before income taxes 22,904 15,984 Depreciation 12,083 13,308 Gain on net monetary position -1,373 -2,251 Impairment loss 401 7,267 Interest and dividend income -1,940 -1,885 Interest expenses 2,762 1,232 Share of (profit) loss of entities accounted for using equity method 74 -78 Loss (gain) on sales of property, plant and equipment 2 -325 Loss on retirement of property, plant and equipment 65 124 Loss (gain) on sales of investment securities -3,681 -2,846 Loss (gain) on valuation of investment securities 839 － Decrease (increase) in notes and accounts receivable - trade -3,211 3,624 Decrease (increase) in inventories -1,121 320 Increase (decrease) in notes and accounts payable - trade 1,700 -3,471 Other 695 2,304 Subtotal 30,200 33,308 Interest and dividend income received 2,219 1,945 Interest expenses paid -2,408 -1,310 Income taxes paid -3,046 -6,389 Net cash provided by (used in) operating activities 26,964 27,554 Cash flows from investing activities Net decrease (increase) in time deposits -591 -19 Purchase of property, plant and equipment -18,033 -14,728 Proceeds from sales of property, plant and equipment 60 483 Purchase of intangible assets -863 -692 Purchase of short-term and long-term investment securities -90 -265 Proceeds from sales and redemption of short-term and long- term investment securities 9,599 4,587 Other -255 -526 Net cash provided by (used in) investing activities -10,172 -11,162 Cash flows from financing activities Net increase (decrease) in short-term loans payable -3,331 -5,021 Proceeds from long-term loans payable 12,370 11,300 Repayments of long-term loans payable -16,174 -28,661 Proceeds from issuance of bonds － 5,000 Proceeds from agreement to set the right to demand earnings distribution 4,639 1,906 Purchase of treasury shares -7,505 -10,450 Cash dividends paid -5,035 -5,003 Proceeds from share issuance to non-controlling shareholders 770 － Repayments of lease obligations -593 -619 Other -114 -166 Net cash provided by (used in) financing activities -14,975 -31,716 Effect of exchange rate change on cash and cash equivalents 2,195 1,064 Net increase (decrease) in cash and cash equivalents 4,012 -14,260 Cash and cash equivalents at beginning of period 56,040 60,052 Cash and cash equivalents at end of period *1 60,052 *1 45,792
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17 (5) Explanatory notes to consolidated financial statements (Notes on assumption of going concern) Not applicable. (Basic and important matters in preparing the consolidated financial statements) 1. Scope of consolidation The Company had 56 consolidated subsidiaries; all of the subsidiaries were consolidated. Names of major consolidated subsidiaries: Toyocolor Co., Ltd.; Toyochem Co., Ltd.; Toyo Ink Co., Ltd.; Matsui Chemical Co., Ltd.; Toyo Visual Solutions Co., Ltd.; Toyo-Morton, Ltd.; Toyo B-Net Co., Ltd.; Toyo Ink (Thailand) Co., Ltd.; Tianjin Toyo Ink Co., Ltd.; Toyo Printing Inks Inc.; LioChem, Inc.; Toyo Ink India Pvt. Ltd.; Shanghai Toyo Ink Mfg. Co., Ltd.; Jiangmen Toyo Ink Co., Ltd.; Toyochem Specialty Chemical Sdn. Bhd.; TIPPS Pte. Ltd.; Toyo Advanced Science Taiwan Co., Ltd.; LioChem e-Materials LLC; Sam Young Ink & Paint Mfg. Co., Ltd.; Zhuhai Toyocolor Co., Ltd.; Toyo Ink Europe NV; Toyo Ink Hungary Kft; Toyo Ink America, LLC; Toyo Ink Europe Specialty Chemicals SAS; PT. Toyo Ink Indonesia 2. Application of the equity method The equity method is applied to investments in 5 affiliates. Names of major affiliates: Nippon Polymer Ind. Co., Ltd.; Sumika Polymer Compounds (Thailand) Co., Ltd. In the fiscal year under review, one company was added as an entity accounted for using the equity method. - In the fiscal year under review, Shenzhen Rongda Color Science and Technology Co., Ltd. was established and included as an entity accounted for using the equity method. 3. Fiscal year-end of consolidated subsidiaries The fiscal year-end date of consolidated subsidiaries is the same as the consolidated closing date.
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18 4. Accounting standards (1) Appraisal standards and appraisal method for important assets 1) Securities Available-for-sale securities Securities other than shares, etc. without market prices: Market value method (Unrealized valuation gains or losses are reported in the shareholders’ equity, and sales costs are determined by the moving average method.) Shares, etc. without market prices: Stated at cost as determined using the moving average method. 2) Derivatives Market value method 3) Inventories Merchandise: In principle, the cost method based on the gross average method is applied. (The value in the balance sheet is calculated by the method of book value devaluation based on lowering of profitability) However, merchandise held by overseas consolidated subsidiaries is valued primarily at the lower -of-cost-or-market method using the moving average method. Finished goods, work-in-process and raw material: In principle, the cost method based on the gross average method is applied. (The value in the balance sheet is calculated by the method of book value devaluation based on lowering of profitability) However, finished goods, work-in-process and raw material held by overseas consolidated subsidiaries are valued primarily at the lower-of-cost-or-market method using the gross average method. Supplies: In principle, the last cost method is applied. (The value in the balance sheet is calculated by the method of book value devaluation based on lowering of profitability) However, supplies held by overseas consolidated subsidiaries is valued primarily at the lower-of-cost-or-market method using the moving average method. (2) Depreciation method of important depreciable fixed assets 1) Property, plant and equipment (excluding leased assets) Straight-line method Major useful lives: Buildings and structures 8 to 50 years Machinery, equipment and vehicles 4 to 15 years Tools, furniture and fixtures 3 to 15 years 2) Leased assets Financing lease transactions that do not involve a transfer of ownership Straight-line method is applied. The depreciation method for leased assets is to use the lease period as useful lives, calculating the residual value of such assets as zero. (3) Appropriation standards for important allowances 1) Allowance for doubtful receivables We record an allowance based on historical bad debt rate for ordinary receivables and an estimated amount of loss for specific doubtful receivables. 2) Provision for environmental measures To prepare for spending on environmental measures, we recorded the estimated amount of spending at the end of the consolidated fiscal year under review. (4) Important standards for reporting revenues and expenses The Group handles organic pigments, processed pigments, plastic colorants, color filter materials, inkjet materials, lithium -ion battery materials and other products or merchandise in the Colorants and Functional Materials Related Business, can coatings, resins, adhesives, pressure sensitive adhesives, functional films and tapes, natural materials, medical products and other products or merchandise in the Polymers and Coatings Related Business, gravure inks, flexographic inks, gravure cylinders and other products or merchandise in the Packaging Materials Related Business and offset inks, metal printing inks, printing presses, printing equipment, prepress systems, printing supplies and other products or merchandise in the Printing and Information Related Business. The Group’s main business is the manufacturing and sale of products and the sale of merchandise in the four businesses above. In each business, the Group has an obligation to deliver products or merchandise under sales agreements with customers. In the domestic sale of products or merchandise, the customer is deemed to gain control of products or merchandise when they are delivered to them and the performance obligation is deemed to be fulfilled. Revenue is recognized when the products or merchandise arrive at the customer location. In the export sale of products or merchandise, the performance obligation is deemed to be fulfilled and revenue is recognized when the risk borne is transferred to the customer under the terms of trade set out according to the Incoterms rules. The transaction price is an amount based on the consideration promised under an agreement with the customer and reflects any discount, etc. In a transaction where raw materials are bought from the customer and a product made from them are sold to the customer, the revenue recognized is the price of the product less the cost of the raw materials purchased. On average, the Group receives the consideration of a transaction about four months after the fulfillment of the performance obligation. No important financial elements are included in the agreement.
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19 (5) Accounting treatment for retirement benefits To provide for employees’ retirement benefits, the amount remaining after deduction of pension plan assets from retirement benefit obligations based on estimated amounts as of the end of the consolidated fiscal year is recorded as a net defined ben efit liability. If the amount of pension plan assets exceeds the amount of retirement benefit obligations, the excess amount is accounted for as a net defined benefit asset. Some consolidated subsidiaries use the simplified method for the calculation of retirement benefit obligations. 1) Attribution of estimated retirement benefits To calculate benefit liabilities, the estimated amount of retirement benefits is attributed to the period until the end of th e consolidated fiscal year under review based on the benefit formula. 2) Treatment of unrecognized actuarial differences and past service costs Past service costs are posted in expenses based on the straight -line method for a fixed period of years ( mainly 13 years) within the average remaining service years of employees when costs accrue from their service. Actuarial differences are posted in expenses from the consolidated fiscal year following their accruals based on proportional division through the straight-line method for a fixed period of years (mainly 13 years) within the average remaining service years of employees. (6) Standards for translating significant foreign currency-denominated assets or liabilities into Japanese yen Foreign currency-denominated monetary receivables and payables are translated into Japanese yen at the spot exchange rates on the consolidated settlement day. The effect of exchange rate changes is posted as a translation gain or loss. In connection w ith this, assets and liabilities of overseas consolidated subsidiaries are translated into Japanese yen at the spot exchange rates on their settlement day. Revenues and expenses are translated into Japanese yen at the average rate during the year. The effect of exchange rate changes is posted in foreign currency translation adjustments and non-controlling interests in the section of net assets. However, income and expenses of subsidiaries in a hyperinflationary economy are translated into yen at the spot exchange rate on the consolidated balance sheet date in order to apply hyperinflationary accounting. (7) Significant hedge accounting 1) Hedge accounting Among interest swap transactions, for those that satisfy the requirements for special treatment, special hedge accounting is applied. 2) Hedging method and hedging target Hedging method: Interest swap transactions Hedging target: Long-term borrowings 3) Hedging policy The Company engages in interest swap transactions to prevent the risk of payable interest rate fluctuations and to fix payabl e interest cash flow. 4) Assessing hedging effectiveness Assessing hedging effectiveness is omitted because interest swap transactions have satisfied requirements for special treatment. (8) Amortization of goodwill and amortization period Goodwill is amortized individually and equally over a reasonable period of up to 20 years. (9) Cash and cash equivalents in the consolidated cash flow statements In preparing the consolidated cash flow statements, cash on hand, readily available deposits, and short -term liquid investments with maturities not exceeding three months at the time of purchase and little risk of changing value are considered to be cash and cash equivalents. (10) Other important matters for production of the consolidated financial statements 1) Application of the group tax sharing system The group tax sharing system is applied. 2) Financial reporting in hyperinflationary economies The cumulative inflation rate in Turkey over three years exceeded 100 percent. Accordingly, the Group has restated the financial statements of its subsidiary in Turkey, whose functional currency is the Turkish lira, following the requirements set out in IAS 29: financial reporting in hyperinflationary economies. IAS 29 requires that the financial statements of the subsidiary in a hyperinflationary economy be prepared and presented in terms of the measurement unit on the last day of the reporting period and be included in the consolidated financial statements. The Group used a conversion factor calculated using the consumer price index (CPI) published by the Turkish Statistical Institute (TURKSTAT) to restate the financial statements of the subsidiary in Turkey. Nonmonetary accounts, such as property, plant and equipment, stated at acquisition cost at the subsidiary in Turkey are restated using the conversion factor based on the acquisition date. Monetary accounts and nonmonetary accounts stated at current cost are deemed to be presented in terms of the measurement unit on the last day of the reporting period and are thus not restated. The effect of inflation on the net monetary position is presented in non-operating income in the consolidated statement of income. The financial statements of the subsidiary in Turkey are translated into Japanese yen at the spot exchange rate prevailing at the date of the consolidated fiscal year end under review and are reflected in the Group’s consolidated financial statements.
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20 (Changes in accounting policies) (Application of the Accounting Standard for Current Income Taxes, etc.) The Group has applied Accounting Standard for Current Income Taxes (Accounting Standards Board of Japan (ASBJ) Statement No. 27, October 28, 2022; hereinafter referred to as the “Revised Accounting Standard 2022”) since the beginning of the current fiscal year. The amendment to categories in which current income taxes should be recorded (taxes on other comprehensive income) follows the transitional treatment prescribed in the proviso of paragraph 20-3 of the Revised Accounting Standard 2022 and the transitional treatment prescribed in the proviso (2) of paragraph 65 -2 of the Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022; hereinafter referred to as the “Revised Implementation Guidance 2022”). The application has no effect on consolidated financial statements. For the amendment related to the revised accounting treatment for consolidated financial statements when gains or losses on s ale of shares in subsidiaries resulting from transactions between consolidated companies were deferred for tax purposes, the Revi sed Implementation Guidance 2022 has been applied since the beginning of the fiscal year under review. The impact of this change is insignificant and it has not been applied retroactively. (Application of the Practical Solution on the Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules, etc.) The Practical Solution on the Accounting for and Disclosure of Current Taxes Related to the Global Minimum Tax Rules (ASBJ PITF No. 46, March 22, 2024), etc. has been applied since the beginning of the consolidated fiscal year under review. The impact of this change on consolidated financial statements is insignificant.
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21 (Notes to consolidated balance sheet) *1. Of notes and accounts receivable - trade, receivables generated from agreements with customers are as follows. (Million yen) As of December 31, 2024 As of December 31, 2025 Notes and accounts receivable - trade 109,376 106,764 *2. Shares of affiliates (Million yen) As of December 31, 2024 As of December 31, 2025 Investment securities (shares) 1,910 2,158 *3. Assets pledged as collateral and secured debt Assets pledged as collateral are as follows. (Million yen) As of December 31, 2024 As of December 31, 2025 Buildings and structures 208 186 Land 453 52 Total 661 238 Secured debt is as follows. (Million yen) As of December 31, 2024 As of December 31, 2025 Notes and accounts payable - trade 114 124 Short-term loans payable 161 54 Long-term loans payable 2,160 － Total 2,435 179 4. Liabilities on guarantee The Company extends a guarantee over borrowings from financial institutions, etc. The foreign currency-denominated conversion amount of the yen is based on the exchange rate on the consolidated settlement date. (Million yen) As of December 31, 2024 As of December 31, 2025 Sumika Polymer Compounds (Thailand) Co., Ltd. (THB 108,000 thousand) 501 Sumika Polymer Compounds (Thailand) Co., Ltd. (THB 90,000 thousand) 447 Employees (housing loans) 2 Employees (housing loans) 0 Total 503 Total 447 5. Discounts on notes receivable and endorsement of notes receivable (Million yen) As of December 31, 2024 As of December 31, 2025 Discounts on notes receivable 19 31 Endorsement of notes receivable 169 179 *6. Treatment of notes maturing on the last day of the fiscal year Although the last day of the fiscal year under review fell on a bank holiday, notes that matured on the last day of the fiscal year are treated in accounting as having settled on the maturity date. The values of notes that matured on the last day of the fiscal year under review are as follows. (Million yen) As of December 31, 2024 As of December 31, 2025 Notes receivable - trade 1,514 2,899 Notes payable - trade 321 435
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22 *7. Reduction entry Reduction entry reflecting direct write -down of cost of property, plant and equipment in connection with exchange of rights accompanying execution of Type I Urban Redevelopment Project pursuant to Urban Renewal Act is as follows. (Million yen) As of December 31, 2024 As of December 31, 2025 Buildings and structures 1,924 1,924 Land 6,763 6,763 Total 8,687 8,687 *8. Of other in current liabilities, contract liabilities are as follows. (Million yen) As of December 31, 2024 As of December 31, 2025 Contract liabilities 335 300 *9. Financing through the conclusion of agreement to set the right to demand earnings distribution As of December 31, 2024 On February 14, 2024, the Company concluded an agreement to set the right to demand earnings distribution with the Development Bank of Japan Inc. (hereinafter “DBJ”) to raise funds for capital investments to enhance the production capacity of the Group’s carbon nanotube (CNT) dispersion business. Under the agreement, the Company granted DBJ the right to demand a distribution of earnings. In return, the Company received from DBJ an amount equivalent to 30.6% of the funds for capital investments in the CNT di spersion business. This arrangement is contingent on certain conditions. The maximum amount the Company could receive is 15,000 million yen. The Company plans to allocate 30.6% of the cash flows generated by the subsidiary operating the CNT dispersion business to DBJ, calculated under specific conditions, based on the right to demand a distribution of earnings. The Company has the right to purchase the right to demand a distribution of earnings granted to DBJ in certain conditions. In the consolidated fiscal year under review, the Company recorded 4,639 million yen in other in non-current liabilities under the agreement. As of December 31, 2025 On February 14, 2024, the Company concluded an agreement to set the right to demand earnings distribution with the Development Bank of Japan Inc. (hereinafter “DBJ”) to raise funds for capital investments to enhance the production capacity of the Group’s carbon nanotube (CNT) dispersion business. Under the agreement, the Company granted DBJ the right to demand a distribution of earnings. In return, the Company received from DBJ an amount equivalent to 30.6% of the funds for capital investments in the CNT di spersion business. This arrangement is contingent on certain conditions. The maximum amount the Company could receive is 15,000 million yen. The Company plans to allocate 30.6% of the cash flows generated by the subsidiary operating the CNT dispersion business to DBJ, calculated under specific conditions, based on the right to demand a distribution of earnings. The Company has the right to purchase the right to demand a distribution of earnings granted to DBJ in certain conditions. In the consolidated fiscal year under review, the Company recorded 6,919 million yen in other in non-current liabilities under the agreement.
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23 (Notes to consolidated statements of income) *1. Revenue from contracts with customers is as follows. (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 350,632 349,525 *2. Research and development expenses included in selling, general and administrative expenses and manufacturing cost (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 10,109 10,159 *3. Details of gain on sale of non-current assets (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Buildings and structures 2 40 Machinery, equipment and vehicles 17 19 Land － 244 Other 2 31 Total 22 336 *4. Details of loss on sales and retirement of non-current assets (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Buildings and structures 107 261 Machinery, equipment and vehicles 211 242 Other 17 70 Total 336 574 *5. Financing through the conclusion of agreement to set the right to demand earnings distribution From January 1, 2024 to December 31, 2024 On February 14, 2024, the Company concluded an agreement to set the right to demand earnings distribution with the Development Bank of Japan Inc. (hereinafter “DBJ”). As described in the Notes to consolidated balance sheet, the Company plans to distrib ute earnings to DBJ. The Company posted expenses for the distribution of earnings of 286 million yen in other of non -operating expenses for the consolidated fiscal year under review. The Company has estimated the amount that it will allocate to DBJ und er the agreement, based on the cash flows generated by the subsidiary operating the CNT dispersion business. Based on the Company’s estimates, it has determined that expenses of 286 million yen would be recognized for the consolidated fiscal year under review. From January 1, 2025 to December 31, 2025 On February 14, 2024, the Company concluded an agreement to set the right to demand earnings distribution with the Development Bank of Japan Inc. (hereinafter “DBJ”). As described in the Notes to consolidated balance sheet, the Company plans to distrib ute earnings to DBJ. The Company posted expenses for the distribution of earnings of 88 million yen in other of non-operating expenses for the consolidated fiscal year under review. The Company has estimated the amount that it will allocate to DBJ under the agreement, based on the cash flows generated by the subsidiary operating the CNT dispersion business. Based on the Company’s estimates, it has determined that expenses of 88 million yen would be recognized for the consolidated fiscal year under review. *6. Impairment loss The Group recorded an impairment loss for the following asset group. From January 1, 2024 to December 31, 2024 Location Use Type Fushimi-ku, Kyoto, Kyoto Parking lot Land The Group classifies its assets based on the categories of management accounting and classifies idle assets and assets for le ase by individual property. The usage of a parking lot owned by the Group in Fushimi -ku, in the city of Kyoto in Kyoto prefecture h as changed and is now available for rent. The Group has thus reduced the book value of the property to its recoverable amount, recording an impairment loss of 401 million yen as an extraordinary loss. The Group determines the recoverable amount using the net selling price. The net selling price is derived by subtracting the expected disposal cost from the rationally calculated a mount based on indicators considered to reflect the market price.
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24 From January 1, 2025 to December 31, 2025 Location Use Type Kentucky, USA Factory assets, etc. Construction in progress Pest, Hungary Factory assets, etc. Construction in progress, machinery, equipment and vehicles, land, tools, furniture and fixtures Guangdong, China Factory assets, etc. Buildings and structures, machinery, equipment and vehicles, tools, furniture and fixtures Fuji, Shizuoka Manufacturing plant assets, etc. Buildings and structures, machinery, equipment and vehicles, etc. The Group classifies its assets based on the categories of management accounting and classifies idle assets and assets for le ase by individual property. The Group reduced the book value of factory assets, etc. owned in Kentucky, USA to their recoverable amount because plans in the business of materials for automotive lithium-ion batteries at the Kentucky factory were delayed due to a significant slowdown in EV market growth in North America and the forecast of its profitability was changed. The amount of the reduction (4,951 million yen) is recorded as an impairment loss in extraordinary losses. The breakdown of the impairment loss is construction in progr ess of 4,951 million yen. The Group determines the recoverable amount as the fair value less costs of disposal, based on the evaluation from the extern al expert. In addition, the Group reduced the book value of factory assets, etc. owned in Pest, Hungary because plans in the business of materials for automotive lithium-ion batteries at the Pest factory were changed due to a significant slowdown in EV market growth in Europe and reviewed the forecast of its profitability. The amount of the reduction (1,257 million yen) is recorded as an impairment loss in extraordinary losses. The breakdown of the impairment loss is construction in progress of 892 million yen, machinery, equipment, and vehicles of 313 million yen, land of 49 million yen, and tools, furniture and fixtures of 3 million yen. The recoverable amount of the asset group is measured by the value in use and determined by discounting future cash flow at 14.6%. Furthermore, the Group reduced the book value of factory assets owned in Guangdong, China because, in the pressure sensitive adhesives business in China, sales growth was slow as the shift from solvent-based to water-based adhesives had not progressed in the market as expected in line with VOC regulations and, despite efforts to manage this through product development and customer development, the business continued to post an operating loss. The amount of the reduction (972 million yen) is recorded as a n impairment loss in extraordinary losses. The breakdown of the impairment loss is buildings and structures of 570 million yen, machinery, equipment and vehicles of 387 million yen, and tools, furniture and fixtures of 14 million yen. As the sale of this asset group on an individual basis is not feasible, the Group has determined that its fair value less cos ts of disposal is zero. The recoverable amount is measured based on value in use. However, no future cash flows are expected, the entire carrying amount has been recognized as an impairment loss. In addition, the Group reduced the book value of factory assets, etc. owned in Fuji, Shizuoka Prefecture to their recoverable amount because a review of the cost benefits of a co-generation system in operation as a energy system at the factory resulted in a decision to shut the system down before the end of the year due to the increased maintenance and management costs associated with aging. The amount of the reduction (85 million yen) is recorded as an impairment loss in extraordinary losses. The breakdown of the impairment loss is buildings and structures of 43 million yen, machinery, equipment and vehicles of 39 million yen, and other of 2 million yen. As the sale of this asset group on an individual basis is not expected to be feasible, the Group has determined that its net selling price is zero. The recoverable amount is measured based on value in use. However, no future cash flows are expected, the en tire carrying amount has been recognized as an impairment loss.
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25 (Notes to consolidated statements of comprehensive income) *1 The amount of recycling and the amount of tax effect associated with other comprehensive income (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Valuation difference on available-for-sale securities Amount arisen in the fiscal year under review 5,374 8,710 Amount of recycling -4,235 -2,688 Before tax adjustment 1,139 6,021 Amount of the tax effect equivalent -339 -2,183 Valuation difference on available-for-sale securities 799 3,837 Foreign currency translation adjustment Amount arisen in the fiscal year under review 11,612 4,607 Amount of recycling 27 － Before tax adjustment 11,639 4,607 Foreign currency translation adjustment 11,639 4,607 Remeasurements of defined benefit plans, net of tax Amount arisen in the fiscal year under review -642 1,377 Amount of recycling -560 -326 Before tax adjustment -1,202 1,050 Amount of the tax effect equivalent 368 -335 Remeasurements of defined benefit plans, net of tax -834 715 Share of other comprehensive income of entities accounted for using equity method Amount arisen in the fiscal year under review 188 19 Amount of recycling -582 － Share of other comprehensive income of entities accounted for using equity method -394 19 Total other comprehensive income 11,211 9,181
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26 (Notes to consolidated statements of changes in equity) From January 1, 2024 to December 31, 2024 1. Matters concerning the type and the number of shares issued and treasury shares (Thousand shares) At the beginning of this period Increase Decrease At the end of this period Shares issued Ordinary shares (Notes 1) 58,286 － 5,000 53,286 Total 58,286 － 5,000 53,286 Treasury shares Ordinary shares (Notes 2, 3) 5,262 2,294 5,019 2,537 Total 5,262 2,294 5,019 2,537 (Notes) 1. The decrease of 5,000 thousand shares in the number of shares issued of ordinary shares is a decrease of 5,000 thousand shares due to the retirement of treasury shares by resolution of the Board of Directors. 2. The increase of 2,294 thousand shares in the number of ordinary shares held as treasury shares consists of an increase due to the purchase of 2,291 thousand treasury shares and an increase of 2 thousand shares due to the purchase of odd- lot shares by resolution of the Board of Directors. 3. The decrease of 5,019 thousand shares in the number of shares of ordinary shares held as treasury shares consists of a decrease of 5,000 thousand shares due to the retirement of treasury shares by resolution of the Board of Directors, a decrease of 8 thousand shares due to the exercise of stock options and a decrease of 11 thousand shares due to disposal of treasury shares as restricted stock compensation. 2. Matters concerning subscription rights to shares Company Breakdown Type of shares purchased Number of applicable shares (in thousands) Balance at the end of this period (million yen) At the beginning of this period Increase Decrease At the end of this period Reporting company Subscription rights to shares as stock option － － － － － 29 Total － － － － 29 3. Matters concerning dividend (1) Cash dividends paid Resolution Type of shares Total amount of dividends (million yen) Dividend per share (yen) Record date Effective date Ordinary meeting of shareholders on March 26, 2024 Ordinary shares 2,386 45.00 December 31, 2023 March 27, 2024 Board of directors’ meeting on August 9, 2024 Ordinary shares 2,652 50.00 June 30, 2024 September 9, 2024 (2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year. Resolution Type of shares Total amount of dividends (million yen) Source of dividends Dividend per share (yen) Record date Effective date Ordinary meeting of shareholders on March 26, 2025 Ordinary shares 2,537 Retained earnings 50.00 December 31, 2024 March 27, 2025
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27 From January 1, 2025 to December 31, 2025 1. Matters concerning the type and the number of shares issued and treasury shares (Thousand shares) At the beginning of this period Increase Decrease At the end of this period Shares issued Ordinary shares (Notes 1) 53,286 － 3,000 50,286 Total 53,286 － 3,000 50,286 Treasury shares Ordinary shares (Notes 2, 3) 2,537 3,347 3,022 2,862 Total 2,537 3,347 3,022 2,862 (Notes) 1. The decrease of 3,000 thousand shares in the number of shares issued of ordinary shares is a decrease of 3,000 thousand shares due to the retirement of treasury shares by resolution of the Board of Directors. 2. The increase of 3,347 thousand shares in the number of ordinary shares held as treasury shares consists of an increase due to the purchase of 3,346 thousand treasury shares and an increase of 1 thousand shares due to the purchase of odd- lot shares by resolution of the Board of Directors. 3. The decrease of 3,022 thousand shares in the number of shares of ordinary shares held as treasury shares consists of a decrease of 3,000 thousand shares due to the retirement of treasury shares by resolution of the Board of Directors, a decrease of 7 thousand shares due to the exercise of stock options and a decrease of 15 thousand shares due to disposal of treasury shares as restricted stock compensation. 2. Matters concerning subscription rights to shares Company Breakdown Type of shares purchased Number of applicable shares (in thousands) Balance at the end of this period (million yen) At the beginning of this period Increase Decrease At the end of this period Reporting company Subscription rights to shares as stock option － － － － － 8 Total － － － － 8 3. Matters concerning dividend (1) Cash dividends paid Resolution Type of shares Total amount of dividends (million yen) Dividend per share (yen) Record date Effective date Ordinary meeting of shareholders on March 26, 2025 Ordinary shares 2,537 50.00 December 31, 2024 March 27, 2025 Board of directors’ meeting on August 8, 2025 Ordinary shares 2,469 50.00 June 30, 2025 September 8, 2025 (2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year. Resolution Type of shares Total amount of dividends (million yen) Source of dividends Dividend per share (yen) Record date Effective date Ordinary meeting of shareholders on March 24, 2026 Ordinary shares 2,371 Retained earnings 50.00 December 31, 2025 March 25, 2026
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28 (Notes to consolidated statements of cash flows) *1. Reconciliation of the consolidated balance sheet items to cash and cash equivalents in the consolidated cash flows statements (Million yen) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Cash and deposits 62,855 47,625 Securities 99 291 Total 62,955 47,917 Time deposits with maturity of more than 3 months -2,902 -1,926 Bonds, etc. with redemption period of more than 3 months -0 -198 Cash and cash equivalents 60,052 45,792 (Segment information, etc.) a. Segment information 1. Overview of reportable segments The reportable segments of the Group are those units for which separate financial statements can be obtained among the constituent units of the Group and which are regularly examined by the Board of Directors for decisions on the allocation of management resources and for assessing business performance. Based on factors such as the type and similarity of operations, the Group has categorized its operations into four groups, which are the reportable segments. They are the Colorants and Functional Materials Related Business, the Polymers and Coatings Related Business, the Packaging Materials Related Business, the Printing and In formation Related Business. Each business unit operates by establishing comprehensive domestic and overseas strategies for each product and service. The Colorants and Functional Materials Related Business mainly manufactures and sells organic pigments, processed pigments, plastic colorants, color filter materials, inkjet ink materials, and lithium-ion battery materials etc. The Polymers and Coatings Related Business mainly manufactures and sells can coatings, resins, adhesives, pressure sensitive adhesives, functional films and tapes, natural materials and medical products. The Packaging Materials Rela ted Business mainly manufactures and sells gravure inks, flexographic inks and gravure cylinders. The Printing and Information Related Business mainly manufactures and sells offset inks, metal printing inks, printing presses, printing equipment, prepress systems and printing supplies. 2. Method of calculation for net sales, profits or losses by reportable segment Accounting procedures for reported business segments are generally the same as those stated in “Basic and important matters i n preparing the consolidated financial statements.” Intersegment earnings and transfer prices are based on current market prices. 3. Information on net sales, profits or losses by reportable segment From January 1, 2024 to December 31, 2024 (Million yen) Reportable segments Other (Note) 1 Adjustment (Note) 2 Amounts recorded in Consolidated Financial Statements (Note) 3 Colorants and Functional Materials Related Business Polymers and Coatings Related Business Packaging Materials Related Business Printing and Information Related Business Total Net sales Sales to customers 83,959 88,256 90,407 83,297 345,920 5,143 － 351,064 Intersegment sales 2,130 262 1,120 27 3,540 661 -4,202 － Total 86,089 88,518 91,527 83,325 349,461 5,805 -4,202 351,064 Segment profits and losses (-) 3,367 7,151 5,413 4,885 20,818 -381 -22 20,414 (Notes) 1. The “Other” segment comprises business segments that are not included in the reportable segments, which include sales of raw materials, other profit-earning business activities carried out by the Company as a parent, and delivery of services. 2. An adjustment of -22 million yen in segment profits and losses ( -) mainly represents the deduction of intersegment transactions. 3. Segment profits and losses (-) have been adjusted with operating profit recorded in the consolidated financial statements.
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29 From January 1, 2025 to December 31, 2025 (Million yen) Reportable segments Other (Note) 1 Adjustment (Note) 2 Amounts recorded in Consolidated Financial Statements (Note) 3 Colorants and Functional Materials Related Business Polymers and Coatings Related Business Packaging Materials Related Business Printing and Information Related Business Total Net sales Sales to customers 82,062 90,060 91,751 80,974 344,847 5,132 － 349,979 Intersegment sales 2,242 245 748 20 3,257 580 -3,838 － Total 84,304 90,305 92,499 80,994 348,105 5,712 -3,838 349,979 Segment profits 2,254 8,292 5,464 4,528 20,540 313 -87 20,765 (Notes) 1. The “Other” segment comprises business segments that are not included in the reportable segments, which include sales of raw materials, other profit-earning business activities carried out by the Company as a parent, and delivery of services. 2. An adjustment of -87 million yen in segment profits mainly represents the deduction of intersegment transactions. 3. Segment profits have been adjusted with operating profit recorded in the consolidated financial statements. b. Relevant information Information by region Net sales From January 1, 2024 to December 31, 2024 (Million yen) Japan China Other Total 156,650 53,434 140,980 351,064 (Note) Net sales are based on the geographical area of the customers and categorized by country or region. From January 1, 2025 to December 31, 2025 (Million yen) Japan China Other Total 157,313 54,607 138,059 349,979 (Note) Net sales are based on the geographical area of the customers and categorized by country or region. c. Information concerning impairment loss on non-current assets by reportable segment From January 1, 2024 to December 31, 2024 (Million yen) Reportable segments Other Adjustment Total Colorants and Functional Materials Related Business Polymers and Coatings Related Business Packaging Materials Related Business Printing and Information Related Business Total Impairment loss － － － 401 401 － － 401 From January 1, 2025 to December 31, 2025 (Million yen) Reportable segments Other Adjustment Total Colorants and Functional Materials Related Business Polymers and Coatings Related Business Packaging Materials Related Business Printing and Information Related Business Total Impairment loss 6,294 972 － － 7,267 － － 7,267
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30 (Per share information) From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Net assets per share 5,164.85 yen 5,609.42 yen Profit per share 352.53 yen 210.50 yen Profit per share (Diluted) 352.41 yen 210.47 yen (Notes) 1. The basis of calculating profit per share and fully diluted profit per share is as follows: From January 1, 2024 to December 31, 2024 From January 1, 2025 to December 31, 2025 Profit per share Profit attributable to owners of parent (million yen) 18,540 10,340 Amount not belonging to ordinary shareholders (million yen) － － Profit attributable to owners of parent concerning ordinary shares (million yen) 18,540 10,340 Weighted average number of ordinary shares issued and outstanding during the period (thousand shares) 52,591 49,121 Profit per share (Diluted) Adjustments to profit attributable to owners of parent (million yen) － － Increase in the number of ordinary shares (thousand shares) 18 7 (Subscription rights to shares included (thousand shares)) 18 7 Overview of dilutive shares not included in the calculation of the amount of fully diluted profit per share due to absence of dilutive effect － － 2. The grounds for the calculation of net assets per share As of December 31, 2024 As of December 31, 2025 Net assets on the consolidated balance sheet (million yen) 273,754 277,220 Amount deducted from total net assets (million yen) 11,641 11,198 (Subscription rights to shares included (million yen)) (29) (8) (Non-controlling interests included (million yen)) (11,611) (11,189) Year-end net assets concerning ordinary shares (million yen) 262,113 266,021 Ordinary shares used for calculation of net assets per share (thousand shares) 50,749 47,424 (Important subsequent events) Not applicable.