Eliminated on the Other Side

Chugai Pharmaceutical's consolidated results for the year to 31 December 2025 carry a short table headed major customers. The first line is F. Hoffmann-La Roche Ltd, ¥724,053 million (US$4,420.3 million), against ¥652,725 million (US$3,984.9 million) a year earlier. The second is Alfresa Holdings and its group companies, ¥152,292 million (US$929.7 million). Consolidated revenue for the year was ¥1,257,941 million (US$7,679.7 million). The first name is 57.6% of that (724,053 ÷ 1,257,941); the second is 12.1%.

The same amount returns in the related-party note. Revenue from Roche, ¥724,053 million. Purchases from Roche, ¥258,731 million (US$1,579.6 million). Trade receivables outstanding, ¥247,468 million (US$1,510.8 million). Trade payables, ¥35,177 million (US$214.8 million). Dividends paid to Roche during the year, ¥183,032 million (US$1,117.4 million). The note gives the holding as 59.89%, and 61.10% on the basis that excludes treasury shares. The counterparty in that note is written as Roche; whether that word covers the same set of companies as the customer table's F. Hoffmann-La Roche Ltd is not something these statements settle, and matching amounts are not proof that it does.

Netting the two trading flows leaves ¥465,322 million (US$2,840.8 million) moving one way. Purchases are 20.6% of consolidated revenue (258,731 ÷ 1,257,941). The more natural denominator would be cost of sales, ¥351.5 billion (US$2,146 million), rounded to the nearest ¥100 million in the Core breakdown, but that figure belongs to the company's Core presentation while the ¥258,731 million comes from the IFRS statements, and the two bases agree on revenue and not on cost, so the division is left undone here. The balances can be set against their own flows: receivables are 34.2% of the year's sales to Roche, payables 13.6% of the year's purchases. Both are year-end stocks against twelve months of flow, and payment terms are not recorded in the material reviewed here, so they size the relationship rather than time it.

Where the ¥724,053 million sits geographically is a separate question with a separate answer. The segment note splits product sales into Japan, ¥472,365 million (US$2,883.8 million), and overseas, ¥605,437 million (US$3,696.2 million), and splits other revenue into ¥1,426 million (US$8.7 million) and ¥178,712 million (US$1,091.0 million). Within overseas it names Switzerland: ¥573,130 million (US$3,499.0 million) of product sales and ¥175,461 million (US$1,071.2 million) of other revenue, ¥748,591 million (US$4,570.2 million) together. That is ¥24,538 million (US$149.8 million) more than the named customer, which is enough to say on the arithmetic that the geographic line and the customer line are not the same set of companies. The note does not say whether the split follows the customer's location or the destination of the goods; on the split as printed, 97.4% of the year's other revenue sits in one country.

The top lines foot. Product sales of ¥1,077,803 million (US$6,580.0 million) plus other revenue of ¥180,138 million (US$1,099.7 million) equal ¥1,257,941 million exactly. The geographic components of product sales as printed come to ¥1,077,802 million, one million yen (US$6,105) below that subtotal; the difference is noted here rather than smoothed. The English annual report prints a product table totalling ¥1,077.8 billion (US$6,580.0 million) beside revenue of ¥1,257.9 billion (US$7,679.5 million), and the line that bridges them is the other-revenue figure in the Japanese note.

Overseas product sales can be decomposed further, though not from the same document. The English report's product table, stated in billions, gives Hemlibra overseas at ¥344.5 billion (US$2,103 million), Actemra overseas at ¥158.2 billion (US$965.8 million) and Alecensa overseas at ¥59.2 billion (US$361 million). Those three lines alone are ¥561.9 billion (US$3,430 million), or 92.8% of overseas product sales. What cannot be decomposed is the customer figure itself: ¥724,053 million is one number, and the split within it between goods and royalties does not appear in these statements.

Overseas product sales rose 12.8% and Japanese product sales 2.5%, and the company attributes the overseas increase principally to exports to Roche, led by Hemlibra and Actemra. The overseas line is not the same thing as those exports: of ¥605,437 million (US$3,696.2 million) of overseas product sales, ¥573,130 million (US$3,499.0 million) is booked to Switzerland. Roche's own report describes the same year from the other end: sales from Chugai into Roche's pharmaceuticals division of CHF 3,106 million, up 11% at constant exchange rates, led by Hemlibra and Actemra/RoActemra. Two currencies, two perimeters, the same two products.

Roche's Finance Report 2025 sets out summarised financials for Chugai on its own consolidation basis: sales of CHF 5,988 million, being CHF 2,882 million to external customers and CHF 3,106 million to the division, plus other revenue of CHF 1,036 million, for total revenue of CHF 7,024 million. Intra-group is therefore 51.9% of sales, or 44.2% of total revenue. Chugai's own counterparty figure is 57.6% of revenue. The gap has at least three sources: currency, consolidation entries that Roche says produce minor differences from Chugai's published IFRS results, and the fact that one number counts division sales while the other counts all revenue from the counterparty. Neither report provides the bridge, and none is built here.

In Roche's related-party note there are no Chugai amounts. The note says transactions between the parent and its subsidiaries are eliminated on consolidation, and its subject is related parties, among which a fully consolidated subsidiary does not sit. The parties it does quantify are the Hoffmann and Oeri voting pool, 69,318,000 shares or 64.97% of those issued, and key management, at CHF 43 million. The report's royalty discussion names Venclexta, Tepezza and Mircera on the income side and attributes higher royalty expense to products including Ocrevus. What Roche does quantify about Chugai sits in the non-controlling-interest note: CHF 3,936 million of the group's CHF 4,078 million of such interests, 96.5%; CHF 913 million of CHF 919 million of profit attributed to them, 99.3%; and CHF 647 million of dividends paid to Chugai's other shareholders, against CHF 301 million the year before.

The holding itself is published as four numbers. The English release says Roche Holding Ltd owns 59.89% of issued shares and 61.12% of voting rights at the end of December 2025. The governance report's top-ten table shows 1,005,670,935 shares at 61.10%, with 33,344,248 treasury shares held outside the table. Roche's own report says 61.1%, and states in its parent-company accounts, under investments, that ownership interests equal voting rights; the subsidiary listing itself carries share capital and equity interest, with no separate voting-rights column. The arithmetic: 1,005,670,935 ÷ 1,679,057,667 issued shares is 59.89%; the same numerator over issued less treasury, 1,645,713,419, is 61.11%. The documents do not state how the 61.12% is computed.

The register says the same thing from a third direction. In the ownership table as of 31 December 2025, foreign corporations and other foreign entities hold 13,075,983 of the 16,787,211 trading units, and foreign individuals a further 440 — together 77.90 percent, on our own arithmetic from the two lines the table prints, 77.89 and 0.00. The statutory form has no cell for their sum, so the total is the reader's. Roche's stake sits inside the first of those lines, which is why the foreign share and the controlling stake are not the same number and neither is a measure of the other. Against the 3,167 companies whose shareholder tables we reconciled from EDINET, whose median is 7.31 percent, this is the highest reading in the set outside a handful of subsidiaries of foreign parents.

There is a fifth version, and it is in cash. Dividends paid to Roche during the year were ¥183,032 million; the cash-flow statement shows total dividends paid of ¥299,419 million (US$1,828.0 million). That is 61.1% (183,032 ÷ 299,419), which lands with the ex-treasury figures rather than the issued-share one, which is what happens when treasury shares are excluded from a dividend. Record dates blur it: dividends declared for the year total ¥447,633 million (US$2,732.8 million), and the statement of changes in equity shows ¥299,508 million (US$1,828.5 million) — three amounts on three timing conventions for one year.

The 2025 dividend was ¥272.00 per share (US$1.66), being ¥122.00 (US$0.74) ordinary and ¥150.00 (US$0.92) marked as a centenary commemorative. Payout was 103.1% of IFRS earnings per share and 99.3% of Core earnings per share, two ratios on two denominators. Guidance for 2026 is ¥132.00 (US$0.81) with no commemorative element, a 44.7% Core payout, against a stated policy of about 45% of Core earnings on average. On the other side, Roche's payment to Chugai's other shareholders more than doubled in the same year, from CHF 301 million to CHF 647 million; the report gives no reason for the change. The two series do not line up in time either: of the ¥272.00, the ¥147.00 (US$0.90) year-end portion takes effect on 27 March 2026, and so falls outside Roche's 2025 figure.

Core is the company's own measure, and its reconciliation to IFRS is itemised. Core operating profit was ¥623,213 million (US$3,804.7 million); IFRS operating profit was ¥598,833 million (US$3,655.9 million); the difference is ¥24,380 million (US$148.8 million). The five excluded items, disclosed in units of ¥100 million, are intangible amortisation ¥1,400 million (US$8.5 million), an intangible impairment ¥1,700 million (US$10.4 million), business restructuring ¥13,300 million (US$81.2 million), ¥16,400 million (US$100.1 million) for in-house development discontinued by management decision, and ¥8,400 million (US$51.3 million) of income from site reorganisation, summing to ¥24,400 million (US$149.0 million). The ¥20 million (US$0.1 million) is rounding. The company notes that what it treats as non-recurring may differ from what Roche treats as non-recurring.

Guidance for 2026 is given on the Core basis only. Revenue of ¥1,345,000 million (US$8,211.2 million), up 6.9%; Core operating profit of ¥670,000 million (US$4,090.4 million), up 7.5%. Inside that, product sales rise 2.1% with the overseas component down 0.6%, and other revenue rises 36.0%, with royalties and profit share at ¥217,200 million (US$1,326.0 million), up 25.8%. In 2025 that other-revenue line was 97.4% booked to Switzerland; the guidance is not split by geography. Planning assumptions are ¥184 to the Swiss franc, ¥179 to the euro, ¥151 to the dollar.

The franc is where the same year reads differently. In Roche's report Chugai's external sales are CHF 2,882 million against CHF 2,874 million, which is 0.3% in francs, while the same line is described as up 5% at constant exchange rates; the report puts the currency effect on Chugai's core results at about four percentage points. Chugai's guidance leads with the franc assumption. The dollar comes third.

The exchange's governance form has a field for how a company protects minority shareholders when it deals with its controlling shareholder. Chugai's answer is a standing special committee of at least three members drawn from independent outside directors and independent outside auditors, currently two and one, chaired by an outside director, which examines transactions where Roche's interests and minority interests may conflict, reports to the board, and pre-deliberates matters going to a board resolution. It met three times in 2025 and reported no transaction found to harm minority interests. The field also gives each meeting's length, which the form does not ask for: five minutes in March, 25 in June, one hour and five minutes in December. What counts as important enough to reach the committee is described in words rather than by a threshold. The phrase controlling shareholder appears in the field's heading; the text beneath it says Roche, and the English annual report says parent company.

The board is nine: three executive directors, three independent outside directors, and three non-executive directors counted as neither outside nor independent — Thomas Schinecker, Teresa A. Graham and Boris L. Zaïtra. The English release Chugai published on the day of its results names Thomas Schinecker as chief executive of F. Hoffmann-La Roche Ltd. Five statutory auditors, three of them independent outside, bring independent officers to six. The independence criteria run to twelve items; the clause covering the parent and its sibling companies reaches executives, current and within the past five years, while the equivalent clause for Chugai's own group reaches back ten.

The rights themselves are described on a page in the corporate-strategy section rather than the investor-relations section. Chugai has first refusal on Roche products in Japan; Roche has first refusal on Chugai products everywhere except Japan, Korea and Taiwan; Chugai keeps co-promotion rights in the United Kingdom, Germany and France; every candidate is offered to Roche at early proof of concept, an arrangement amended in August 2014. Roche's permitted holding was capped at 50.1% until September 2007 and 59.9% until September 2012, after which the entry becomes an agreement to cooperate with maintaining the Tokyo listing, following the October 2002 merger with Nippon Roche. The page also sets revenue of ¥165.1 billion (US$1,008 million) for the year to March 2002 beside the current year, across a change of fiscal year-end and a change of accounting standard. Royalty, milestone and consideration terms, and contract term and termination, are not among the words in its text.

Below Roche the register is mostly nominee names: Master Trust Bank of Japan at 8.62%, Custody Bank of Japan at 3.53%, State Street at 1.39% — each a voting-rights ratio, computed after the 33,344,248 treasury shares come out of the denominator — with 58,967 shareholders in total. The English report's donut chart, Classification of Shareholders, covers every holder and carries a seven-part legend: Roche, other foreign corporations, financial institutions, individuals and others, securities firms, treasury stock, other corporations. No percentages are attached to it. The governance report puts foreign shareholding on the exchange's form as a band, 30% or more. The named holders are the ones the documents quantify.

The English annual report is an integrated report prepared under the IIRC framework: a definition box for the Core basis, with the itemised reconciliation sitting in the Japanese release instead, revenue and product lines with the primary financial statements left to the website, and the Roche relationship described as conducted at arm's-length prices. The amounts used above are from the Japanese release filed through TDnet on 29 January 2026, which states that it is not subject to audit. The annual securities report for the 115th term is listed on the company's own index page. The 57.6% is arithmetic on the major-customer table in that release — ¥724,053 million of ¥1,257,941 million — a revenue concentration, not a holding. The same release gives the holding two ways: 59.89% of shares issued, 61.10% excluding treasury stock.

On conversion: yen amounts are translated at ¥163.8 = US$1, the rate on 24 July 2026, applied to every period regardless of when the amount arose, so the dollar figures are not the rates the company used and measure nothing about translation effects. Chugai's own 2026 planning assumptions are ¥184 to the Swiss franc, ¥179 to the euro and ¥151 to the dollar. Each yen figure is converted and rounded on its own, at the significant figures of the yen amount as printed, so dollar figures do not always add or subtract to the dollar totals shown. Swiss franc amounts taken from Roche's report are left in francs.