Change to the straight-line depreciation method for property, plant and equipment and revision of the useful lives of machinery and equipment

「The Group previously depreciated machinery and equipment primarily over useful lives of 7–20 years. However, in light of its policy of making carefully selected capital investments in 2026, the first year of the medium-term management plan "Vision 2030," to improve capital efficiency, and following a review based on the actual use of existing assets, the Group decided to utilize machinery and equipment used in manufacturing more effectively over longer periods. As a result, beginning with the current interim consolidated accounting period, the principal useful lives of machinery and equipment used in manufacturing have been revised to 15–20 years, and the change has been applied prospectively.」

「Previously, the Company and certain consolidated subsidiaries primarily used the declining-balance method to depreciate property, plant and equipment, excluding sales equipment and leased assets, but beginning with the current consolidated fiscal year, we have changed to the straight-line method.」

「As a result of these changes, compared with the previous methods, operating income for the third quarter cumulative period increased by ¥558 million, ordinary income by ¥532 million, and income before income taxes for the third quarter by ¥532 million.」

「As a result of these changes, compared with the previous methods, operating income for the second quarter cumulative period decreased by ¥284 million, ordinary income by ¥301 million, and income before income taxes for the second quarter by ¥300 million.」

「Previously, the Company and certain consolidated subsidiaries primarily used the declining-balance method to depreciate property, plant and equipment, excluding sales equipment and leased assets. Beginning with the first quarter of the current consolidated fiscal year, we changed to the straight-line method. Following the management integration with Coca-Cola East Japan Co., Ltd. implemented on 1 April 2017, a stronger management foundation was established, and the integration of the two companies' expertise in sales and manufacturing is expected to enable the establishment of an optimal production system across a broad region. As the property, plant and equipment, excluding sales equipment and leased assets, are expected to be used stably over the long term, allocating costs evenly over their useful lives under the straight-line method more appropriately reflects the pattern in which their economic benefits are consumed. We therefore changed the depreciation method. In addition, after reviewing actual usage in connection with considering the change in depreciation method, the Company and certain consolidated subsidiaries revised the useful lives of machinery and equipment used in manufacturing from the previous principal useful life of 10 years to 7–20 years, effective from the first quarter of the current consolidated fiscal year, and applied the change prospectively. Furthermore, in connection with the change in depreciation method for property, plant and equipment and other related changes, we reduced the residual value of property, plant and equipment after the end of their useful lives to a memorandum value of ¥1, effective from the first quarter of the current consolidated fiscal year.」