Japan Lifeline : OTHER MATTERS SUBJECT TO MEASURES FOR ELECTRONIC PROVISION OF THE 44TH ORDINARY GENERAL MEETING OF SHAREHOLDERS(174KB)

These documents have been translated from Japanese originals for reference purposes only.

In the event of any discrepancy between these translated documents and the Japanese originals, the originals shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translations.

OTHER MATTERS SUBJECT TO MEASURES FOR ELECTRONIC PROVISION OF

THE 44TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

(Matters Excluded From the Paper-Based Documents Delivered Upon Request)

Consolidated Statement of Changes in Equity

Notes to Consolidated Financial Statements

Non-Consolidated Statement of Changes in Equity

Notes to Non-Consolidated Financial Statements

(April 1, 2023 - March 31, 2024)

Japan Lifeline Co., Ltd.

(Securities Code: 7575)

In accordance with the provisions of laws and regulations and the Company's Articles of Incorporation, the above items are excluded from the paper-based documents delivered to shareholders who have made a request for delivery of such documents.

Note that, for this general meeting of shareholders, paper-based documents stating items for which measures for providing information in electronic format are to be taken, excluding the above items, will be delivered to all shareholders regardless of whether they have made a request for delivery of such documents.

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Consolidated Statement of Changes in Equity

(April 1, 2023 - March 31, 2024)

							(Millions of yen)
				Shareholders' equity
							Total
		Share capital	Capital surplus	Retained earnings		Treasury stock	shareholders'
							equity
Balance at beginning of period	2,115	13,774	42,741		(2,365)	56,265
Changes during period
Dividends of surplus			(2,965)			(2,965)
Purchase of treasury stock					(3,319)	(3,319)
Disposal of treasury stock		28			(7)	20
Cancellation of treasury stock		(4,936)			4,936	-
Profit attributable to owners of			7,515			7,515
parent
Net changes in items other than						-
shareholders' equity
Total changes during period	-	(4,908)	4,550		1,609	1,251
Balance at end of period	2,115	8,866	47,291		(756)	57,516
							(Millions of yen)
		Accumulated other comprehensive income
		Net unrealized	Foreign currency	Remeasurements of	Total accumulated	Total net assets
		holding gains or	translation	defined benefit	other comprehensive
		losses on securities	adjustment	plans	income
Balance at beginning of period	(312)	299	(56)		(69)	56,195
Changes during period
Dividends of surplus						(2,965)
Purchase of treasury stock						(3,319)
Disposal of treasury stock						20
Cancellation of treasury stock						-
Profit attributable to owners of						7,515
parent
Net changes in items other than	278	49	327		655	655
shareholders' equity
Total changes during period	278	49	327		655	1,906
Balance at end of period	(34)	348	271		585	58,102

(Note) Figures presented in the financial statements are rounded down to the nearest million yen.

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Notes to Consolidated Financial Statements

[Notes on Significant Matters Forming the Basis for Preparation of Consolidated Financial Statements]

1. Matters regarding the scope of consolidation
(1) Number of consolidated subsidiaries	1
Names of consolidated subsidiaries
JLL Malaysia Sdn. Bhd.

1. 1. Major non-consolidated subsidiaries
      There are no non-consolidated subsidiaries of note.
2. Matters regarding the scope of the equity method
   Name of non-consolidated subsidiaries excluded from the scope of the equity method JLL Korea Co., Ltd.
   Reason for exclusion from the scope of the equity method
   The non-consolidated subsidiaries to which the equity method is not applied are excluded because net profit or loss and retained earnings (both corresponding to equity interest) are both of small scale, and their material significance is too limited to have any substantial impact on the consolidated financial statements.
3. Matters regarding the fiscal years of consolidated subsidiaries, etc.
   JLL Malaysia Sdn. Bhd., a consolidated subsidiary, has a balance sheet date of December 31, and as the difference with the consolidated balance sheet date does not exceed three months, financial statements pertaining to the fiscal years of this consolidated subsidiary are used.
   Furthermore, necessary adjustments are made in consolidated financial statements for material transactions occurring between this subsidiary's balance sheet date and the consolidated balance sheet date.
4. Matters concerning accounting policies
5. 1. Standards and methods for valuation of securities Available-for-sale securities
   2. 1. Securities other than shares with no market price, etc.
         Stated at fair value. The total amount of the valuation difference calculated as a result is reported as a component of net assets, based on the reversal method. Furthermore, the valuation method used for the calculation of the cost of sales is the moving average method.
      2. Shares with no market price, etc.
         Stated at cost using the moving average method.
         Investments in investment partnerships, etc., are recorded at the net amount of the share of equity based on available financial reports, etc., in accordance with financial reporting dates stipulated in partnership agreements.
   3. Methods for valuation of inventories are as follows.
      Stated at cost using the moving average method (book values are calculated by writing down based on declines in profitability).
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1. The depreciation or amortization methods for fixed assets are as follows.

1. Property, plant and equipment

1. Property, plant and equipment (excluding leased assets)
   The Company and consolidated subsidiaries are subject to the straight-line method.

Major useful lives are as follows:
Buildings and structures	3 to 50 years
Machinery, equipment and vehicles	3 to 15 years

1. Leased assets
   Finance leases that are not deemed to transfer the ownership of the leased assets to the lessee
   The straight-line method with no residual value is applied, regarding the lease term as the useful life.

1. Intangible assets
   Software, etc. for internal use is amortized on a straight-line basis over the estimated useful life (within ten years), etc.
2. Long-termprepaid expenses
   Amortized on a straight-line basis over the contract period, etc.

1. The methods of reporting for reserves are as follows.

1. Allowance for doubtful accounts
   As provisions for losses on receivables, loans and other credits, allowances for doubtful accounts are reported based on the following standards.

1. Ordinary receivables
   Reported based on the historical write-off rate.
2. Receivables for doubtful accounts and distressed receivables
   Reported using the estimated amount of irrecoverable debt based on the recoverability of individual cases.

1. Provision for bonuses
   To provide for the payment of bonuses to employees, the estimated amount to be borne in the fiscal year under review is posted.
2. Provision for bonuses for directors
   A reserve for bonuses to directors is reported based on the estimated amount at the end of the fiscal year under review.
3. Provision for director's stock based compensation
   To provide for granting of Company shares by the Board Incentive Plan (BIP) trust, a sum is reported that is the anticipated cost of payment for shares corresponding to points allocated to directors, based on the regulations for granting of shares.

1. Accounting policy for revenues and expenses
   The Group handles merchandise and products in four product categories, namely Cardiac Rhythm Management, EP/Ablation, Cardiovascular and Gastrointestinal (hereinafter, such merchandise and products are referred to as "products"), and main businesses of the Group are manufacture and sale of products. Sales forms in the four product categories are the following three forms, and consignment sales account for 90% or more of the total.

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1. Consignment sales
   The major sales method is consignment sales in which products are stored at agencies or hospitals and sold by the Company to hospitals via agencies at the time of surgery. Because the Company has judged that a customer obtains control of a product and performance obligations are satisfied at the time of using the product, revenue is recognized at the time of using the product.
2. Sales of the products held by the Company
   As for sales of the products held by the Company, since a period from shipment to acceptance inspection by customers is short in sales to domestic customers, the Company recognizes revenue by receiving an order sheet from agencies and shipping products. When a period from shipment to the time when control of the product is transferred to a customer is a normal term, revenue is recognized at the time of shipment of the product as a transaction in which the customer obtains control of the product and performance obligations are satisfied at a point in time, which is the time of transfer of the product.
3. Other sales
   Other sales are mainly for rental of medical devices, maintenance, repair, sales support, etc. Based on contracts, for performance obligations that are satisfied at a point in time, revenue is recognized at the time of provision. On the other hand, for performance obligations that are satisfied by providing services, etc. over a certain period of time stipulated in contracts, revenue is principally recognized according to the elapsed period.
   For consignment sales and sales of the products held by the Company, the Company has obligations to allow discounts, rebates, sales returns, etc. depending on terms and conditions of a contract. In this case, the transaction price is determined at the amount calculated by deducting the amount of the discounts, rebates, sales returns, etc. from consideration promised under contracts with customers.
   In any transaction, consideration is received within one year after performance obligations are satisfied, and does not contain any significant financial component.

1. Accounting treatment of retirement benefits

1. Method of attributing the estimated benefit obligation to periods
   When calculating the retirement benefit obligation, the estimated benefit obligation is attributed to the period up until the end of the fiscal year under review on a straight-line basis.
2. Amortization method of actuarial calculation differences and past service costs
   Past service costs are amortized and treated as expenses using the straight-line method for a certain number of years (five years) during the average remaining service period for employees when they occur.
   Actuarial calculation differences are amortized using the straight-line method for a certain number of years (five years) during the average remaining service period for employees in each fiscal year when they occur, and the amounts allocated are treated as expenses from the fiscal year following the year in which they occur.
3. Accounting method of unrecognized actuarial calculation differences and unrecognized past service liabilities
   Unrecognized actuarial calculation differences and unrecognized past service liabilities are reported as remeasurements of defined benefit plans under accumulated other comprehensive income in the net assets section after adjusting tax effects.

1. Other important matters forming the basis for the preparation of consolidated financial statements
   (Standard for conversion of significant foreign currency-denominated assets into Japanese currency)
   Foreign currency-denominated monetary claims and obligations are converted to yen at the spot market exchange rate on the consolidated financial closing date and exchange differences are
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treated as gains or losses. Assets and liabilities of overseas consolidated subsidiaries are converted to yen at the spot market exchange rate on the consolidated financial closing date, while revenues and expenses are converted to yen at the average rate for the period, with the amounts of conversion differences recorded within foreign currency translation adjustment under net assets.

[Notes to Change in Accounting Policies]

(Changes in Accounting Policies that are difficult to distinguish from changes in accounting estimates) (Changes in depreciation method for property, plant, and equipment)

In the fiscal year under review, the Company adopted the straight-line method for calculating the depreciation of Property, plant, and equipment (excluding leased assets). Previously, the Company used the declining balance method (However, buildings (excluding Facilities attached to buildings) acquired after April 1, 1998, and buildings and structures acquired after April 1, 2016 are depreciated using the straight-line method), and the overseas consolidated subsidiary has mainly adopted the straight-line method.

With the termination of the intervention business, the Group's business structure and manufacturing system changed significantly, and the formulation of the new mid-term plan based on these changes led us to reconsider the depreciation method with consideration of the actual use of fixed assets. As a result, it was judged that changing to the straight-line method of calculating depreciation would more appropriately reflect the consumption pattern of the Property, plant, and equipment, as they are expected to operate stably over a long period of time, rapid technological obsolescence is not expected, and future investments are expected to have an average effect.

Therefore, operating profit increased by 175 million yen, ordinary profit and profit before income taxes each increased by 172 million yen, compared to the existing methods.

[Notes on Accounting Estimates]

The items in the consolidated financial statements for the fiscal year under review for which an amount has been recorded due to accounting estimates and that could have a material impact on the consolidated financial statements for the following fiscal year are as follows.

1. Assessment of recoverability of investment securities and loans to product developers, business partners, etc.

(1) Amounts recorded in the consolidated financial statements for the fiscal year under review

Investment securities	1,480 million yen
Long-term loans receivable	2,652 million yen
Allowance for doubtful accounts	(1,274) million yen

The Group makes an overall determination of investment securities and loans to product developers and business partners, etc. and determines impairment losses and recoverability.

1. Information about the contents of significant accounting estimates related to the identified items

1. Method of calculating the amounts recorded in the consolidated financial statements for the fiscal year under review
   For investment securities and loans to product developers, business partners, etc., the Company assesses the actual value of the investment securities and the recoverability of loans based on the financial information, business plans, etc. received regularly from the investee. For investment securities of product developers, business partners, etc., the Company may obtain a share valuation report from a third-party valuation institution and reflect excess earning power, etc. in the assessment of actual value. If there is objective evidence of impairment due to a marked decrease in real value caused by a deterioration in the financial condition of the investee based on financial information, business plan, etc. received regularly from the investee, the carrying value of the investment securities is written down to the actual value and loss on valuation of
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investment securities is recognized. If there is a reasonable expectation for an improvement in the financial position of an investee after a certain period based on its submitted business plan, and if there is no significant delay in the business plan or significant shortfall in earnings, then the Company may not subject the investee to impairment. With regard to loans to product developers and business partners, etc., depending on the financial position and operating performance of the debtor, after classifying the receivable, the Company calculates the expected loan loss and if the recoverability is deemed to be low, an amount calculated by subtracting the recoverable amount from the carrying amount is recorded as allowance for doubtful accounts.

1. Key assumptions used for calculating the amounts recorded in the consolidated financial statements for the fiscal year under review
   The estimate for the actual value of investment securities is based mainly on business partners' estimated sales volumes, estimated selling prices and business plans created based on market growth rates. For the investment securities on which a loss on valuation of investment securities was recorded in the fiscal year under review, because the investee has made significant changes to their business plans, the amount recorded is based on net assets per share.
   In addition, the estimate for the recoverability of loans is based mainly on business partners' status of clinical trials and business plans created based on obtaining approval from regulatory authorities for manufacture and sale.
2. Impact on the consolidated financial statements for the following fiscal year
   The business plan may need to be revised with regard to these key assumptions in light of changes in the business strategy or market environment, delay in clinical trials, and cases where approval from regulatory authorities cannot be obtained, etc. Accordingly, the Company may record a loss on valuation of investment securities and a provision of allowance for doubtful accounts.

2. Recoverability of deferred tax assets

1. Amount recorded in the consolidated financial statements for the fiscal year under review

Net deferred tax assets

2,733 million yen

1. Information about the contents of significant accounting estimates related to the identified item

1. Method of calculating the amount recorded in the consolidated financial statements for the fiscal year under review
   The Group determines the recoverability of deferred tax assets based on taxable income, which is based on future earning power according to deductible temporary differences, and tax planning.
2. Key assumptions used for calculating the amount recorded in the consolidated financial statements for the fiscal year under review
   Estimates for taxable income are based on the medium-term management plan and budgets, which mainly take into account the market environment, National Health Insurance (NHI) reimbursement prices, etc.
3. Impact on the consolidated financial statements for the following fiscal year
   Because the recoverability of deferred tax assets depends on estimated taxable income based on the medium-term management plan and budgets, the key assumptions are highly uncertain. If changes occur in the assumed conditions or other assumptions, the estimated amount of taxable income may vary and there could be a material impact on the judgment of the recoverability of deferred tax assets. Accordingly, the Company may reverse deferred tax assets.

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[Additional information]

(Transactions involving the BIP trust share-based compensation)

In the fiscal year under review, the Company introduced the BIP trust. As with the performance-linked (Performance Share) and restricted-stockshare-based compensation systems used in the United States and Europe, monetary payments are made to directors under the BIP trust system reflecting their degree of achievement in meeting performance targets and ranks, the grants and payments being made in the form of Company shares and monetary compensation based on the share exchange price at disposal. The Company has established the trust after allocating funds for acquisition of Company shares for such compensation, the beneficiaries being those among the directors who meet certain requirements. The trust has acquired from the Company the total of Company shares (through disposal of treasury stock) it anticipates needing for compensation of directors, based on previously drawn-upshare-grant regulations. Subsequently, and based on the share-grant regulations, the Company awards points to the directors reflecting their degree of target achievement and rank for each fiscal year on a consolidated basis. After their retirement or after the end of the evaluation fiscal year, a number of shares (with fractional units rounded down) equivalent to 70% of their accumulated points is granted by the trust, and the remainder of the Company shares are translated into monetary sums by conversion under the trust and this sum is paid out. Related accounting treatment is based on "Practical treatment of transactions relating to granting of own shares to employees, etc. through a trust" (Practical Issues Task Force No. 30, March 26, 2015). The Company shares owned by the trust at the end of the fiscal year, consolidated basis, are reported in the net assets section of the consolidated balance sheet as treasury stock, at their book value under the trust (excluding sums for incidental expenses). The reported amount is 301 million yen and the reported number of shares is 169,612.

[Notes to Consolidated Balance Sheet]

1. The amount of receivables arising from contacts with customers within notes and accounts receivable - trade is as shown in "[Notes to Revenue Recognition] (3) Information for understanding the amount of revenue in the fiscal year under review and the following fiscal years" in the consolidated financial statements.

2.	Accumulated depreciation of property, plant and equipment	9,496 million yen
3.	Contingent liabilities
	There are no contingent liabilities to report.

[Notes to Consolidated Statement of Changes in Equity]

1.	Shares issued
		Beginning of the			End of the fiscal
	Type of shares	fiscal year under	Increase	Decrease
	year under review
		review
Common stock (shares)	82,919,976	-	7,161,506	75,758,470
2.	Treasury stock

	Beginning of the
Type of shares	fiscal year under	Increase
	review
Common stock (shares)	4,999,561	3,000,133

Decrease

7,170,494

End of the fiscal year under review

829,200

(Note) The total of shares of treasury stock at the end of the fiscal year under review includes 169,612 shares of the Company held by the BIP trust.

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(Reasons for differences)

An increase of 3,000,000 shares due to purchase in market Increase due to purchase of fractional stock: 133 shares Decrease due to cancellation of treasury stock: 7,161,506 shares A decrease of 8,988 shares due to benefits from BIP trust

3. Dividends

1. Dividend amount

Resolution	Type of shares	Total dividends	Dividend per
(Millions of yen)	share (yen)
Ordinary General
Meeting of	Common shares	2,965	38.00
Shareholders on June
28, 2023

Record date

March 31, 2023

Effective date

June 29, 2023

(Note) The dividend amount relating to shares of the Company held by the BIP trust to be included in the total dividends is 4 million yen.

1. Dividends whose record date is during the fiscal year under review, but whose effective date is during the following fiscal year

			Total	Dividend per
Planned date of	Type of shares	Source of	dividends	Record date	Effective date
resolution	dividends	(Millions	share (yen)
			of yen)
Ordinary General
Meeting of	Common	Retained	3,154	42.00	March 31,	June 27, 2024
Shareholders on	shares	earnings	2024
June 26, 2024

(Note) The dividend amount relating to shares of the Company held by the BIP trust to be included in the total dividends is 7 million yen.

[Notes on Financial Instruments]

1. Status of Financial Instruments

1. Policy on financial instruments
   The Group procures necessary funding based on its capital investment plan, research and development plan, etc. The Group's policy is to conduct asset management with high-security financial instruments, and to raise funds for short-term by borrowing from banks. The Group uses derivatives to avoid the risk of fluctuations in exchange and interest rates, and does not engage in speculative trading.
2. Details of financial instruments, related risks, and risk management system
   Notes and accounts receivable - trade, which are operating receivables, are exposed to customer credit risk. Regarding these risks, in accordance with the Credit Management Regulations of the Group, the Company has created a system for managing payment dates and the amounts outstanding for each customer, in addition to periodically identifying the credit status of its main customers.
   Shares and other investment securities are exposed to the risk of fluctuations in market price and the risk of worsening business conditions at investees leading to the recording of impairment
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losses. The Company has established an Investment and Credit Committee that monitors at regular intervals such factors as the market value, business conditions, and financial position, and deliberates on evaluation and continuation of investments and loans, etc. Based on the results of these deliberations, and the status of dealings, etc. with the companies whose shares are held, the Board of Directors verifies the reasonableness of such holdings every year by confirming the advantages conferred by the holdings in terms of the medium- to long-term business strategy of the Company. Shares for which the rationale for holding is deemed to be weak are sold as appropriate, and the size of the position is reduced.

Long-term loans receivable represents loans to overseas medical device manufacturers that are suppliers or preparing for the introduction of products, and also includes in-house loans for employee benefits. These loans are exposed to the risk of fluctuations in foreign currency exchange rates and recording of an allowance for doubtful accounts accompanying worsening business conditions of the debtors. The Company uses currency swaps, etc. to hedge against foreign exchange risk as necessary, and regarding the risk leading to the recording of an allowance for doubtful accounts, the Company closely monitors the business situation of business partners and works to reduce that risk.

Notes and accounts payable - trade, which are operating payables, and accounts payable - other are all due for payment within one year.

Among borrowings, short-term borrowings are mainly raising funds for working capital, and long- term borrowings are mainly raising funds for capital investment, etc. Furthermore, certain long- term borrowings use a variable interest rate, but the Company hedges the risk of fluctuations in interest rates for these borrowings using interest rate swaps as needed.

Long-term account payable - other is the closing payment of directors' retirement benefits due to the abolishment of directors' retirement benefits.

In addition, operating payables and borrowings are exposed to liquidity risk, but the Group manages this liquidity risk by creating and updating funding plans for each company as needed, as well as through the maintenance of liquidity and other methods.

1. Supplementary explanation regarding fair value, etc., of financial instruments
   As the calculation of fair value of financial instruments includes variable factors, these values may fluctuate if different assumptions are used, etc.

2. Fair value, etc., of financial instruments

The amounts posted on the consolidated balance sheet, the fair values, and the differences thereof as of the end of the fiscal year under review (March 31, 2024) are as follows.

Information on "cash and deposits," "notes and accounts receivable - trade," "notes and accounts payable -trade,""short-term borrowings," and "accounts payable - other" is omitted, since these accounts are settled or repaid in cash and in a short period of time, and therefore, their fair value approximates the book value. Shares with no market price and shares that are not material are not included in (See Note. 1).

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