Application of the Revenue Recognition Accounting Standard and Related Standards

「Following the application of the revenue recognition standard and other relevant standards, the Company has changed its method of accounting for certain fees paid to business partners. Amounts previously recorded in cost of sales, selling, general and administrative expenses are now deducted from net sales from the beginning of the current consolidated fiscal year.」

「The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, 31 March 2020) and other relevant standards from the beginning of the first quarter of the current consolidated fiscal year. Accordingly, the Group has changed its method of recognizing revenue from the previous realization basis to a method under which revenue is recognized at the amount expected to be received in exchange for the promised goods or services when control of those goods or services is transferred to the customer. As a result, for the cumulative first quarter of the current fiscal year, net sales decreased by ¥15 million, selling, general and administrative expenses decreased by ¥13 million, and operating income, ordinary income and profit before income taxes decreased by ¥1 million each.」