Quick View
| Metric | Current Period | Previous Year Period | YoY |
|---|---|---|---|
| Revenue | ¥12.81B | ¥11.38B | +12.5% |
| Operating Income | ¥1.61B | ¥0.98B | +63.4% |
| Ordinary Income | ¥1.88B | ¥1.24B | +50.5% |
| Net Income | ¥1.53B | ¥1.01B | +52.1% |
| ROE | 2.3% | 1.6% | - |
Executive Summary
The Company achieved higher revenue and higher earnings in the quarter, with improved profitability in the Functional Colorants business being the key driver of the increase in the overall profit margin. Revenue was ¥12.81B (¥11.38B in the previous year, +12.5%), Operating Income was ¥1.61B (¥0.98B in the previous year, +63.4%), and Ordinary Income was ¥1.88B (¥1.24B in the previous year, +50.5%). Net Income attributable to owners of the parent was ¥1.01B (¥0.62B in the previous year, +64.9%), while consolidated Net Income was ¥1.53B (¥1.01B in the previous year, +52.1%); it should be noted that the latter includes ¥0.52B attributable to non-controlling interests. The primary drivers of revenue growth were the expansion of the core Functional Colorants and Specialty Polymers businesses, while the main driver of earnings growth was a 300bp improvement in the gross profit margin due to improved pricing and product mix.
Factors Affecting Business Performance
【Revenue】Revenue of ¥12.81B (+12.5%) reflected broad-based revenue growth across the core segments. Functional Colorants, which accounted for 53.7% of the revenue mix, increased to ¥6.87B (+14.3%) and was the largest contributor to growth, while Specialty Polymers, at ¥2.04B (+20.0%), recorded the highest growth rate. Basic Chemicals at ¥1.99B (+9.2%), Agro Science at ¥1.56B (+7.4%), and Logistics at ¥0.88B (+9.0%) also posted higher revenue, confirming broad-based demand growth.
【Profit and Loss】Operating Income of ¥1.61B (+63.4%) was primarily driven by the gross profit margin of 43.5%, an improvement of +300bp from 40.5% in the previous year. Operating Income from Functional Colorants was ¥1.33B (+76.4%, margin of 19.3%), accounting for more than 80% of total Company Operating Income of ¥1.61B and serving as the core source of profit improvement. Meanwhile, Specialty Polymers continued to report an Operating Loss of ¥0.12B, diluting the overall Company margin. Ordinary Income was ¥1.88B (+50.5%), with dividend income of ¥0.21B and foreign exchange gains of ¥0.04B contributing to operating non-income, which totaled ¥0.32B. Extraordinary gains and losses were limited, with gains of ¥0.01B and losses of ¥0.02B, indicating that temporary factors had a limited impact. Net Income attributable to owners of the parent was ¥1.01B, equivalent to only approximately 54% of Ordinary Income, primarily due to ¥0.52B attributable to non-controlling interests in group companies. In conclusion, the Company is in a phase of earnings-led improvement characterized by higher revenue and earnings, with earnings growth substantially outpacing revenue growth.
Segment Analysis
Functional Colorants is the core business, generating revenue of ¥6.87B (53.7% of the mix, +14.3%) and Operating Income of ¥1.33B (+76.4%, margin of 19.3%), and contributing more than 80% of total Company Operating Income. Basic Chemicals reported revenue of ¥1.99B (+9.2%) and Operating Income of ¥0.21B (+66.9%, margin of 10.7%), representing substantial earnings growth and suggesting the effects of price revisions. Logistics delivered steady earnings growth, with revenue of ¥0.88B (+9.0%) and Operating Income of ¥0.11B (+36.9%, margin of 13.0%). Agro Science achieved higher revenue of ¥1.56B (+7.4%), but Operating Income declined to ¥0.09B (-30.4%, margin of 5.6%), indicating the impact of higher costs. Specialty Polymers recorded the highest revenue growth rate at ¥2.04B (+20.0%), but continued to report an Operating Loss of ¥0.12B (margin of -6.0%), indicating that revenue growth has not translated into improved profitability. Company-wide revenue and earnings are highly concentrated in Functional Colorants, creating a structure in which supply-demand conditions in this business are likely to have a significant impact on overall performance.
Key Financial Indicators
【Profitability】The Operating Margin was 12.6%, an improvement of +390bp from 8.7% in the previous year, while the gross profit margin remained high at 43.5%. The Net Profit Margin based on Net Income attributable to owners of the parent improved to approximately 7.9% from 5.4% in the previous year. 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥1.91B, equivalent to 1.25 times consolidated Net Income of ¥1.53B and 1.89 times Net Income attributable to owners of the parent of ¥1.01B. The Company has a low reliance on operating non-income, and earnings are well supported by cash generation. 【Investment Efficiency】ROE was 2.3%, relatively low because it is calculated using the substantial net assets represented by an Equity Ratio of 72.9% as the denominator. Total asset turnover is low, indicating room to improve capital efficiency. Capital expenditures of ¥0.40B were below depreciation and amortization expense of ¥0.73B, indicating a conservative level of investment. 【Financial Soundness】The Equity Ratio was 72.9% and net assets were ¥65.75B, demonstrating a strong financial base. Liquidity was also sufficient, with current assets of ¥37.85B versus current liabilities of ¥14.72B.
Cash Flow Analysis
Operating Cash Flow was ¥1.91B, a substantial increase of +127.6% year on year, exceeding consolidated Net Income of ¥1.53B and demonstrating strong cash-generation capacity. In terms of working capital, a decrease in trade receivables, which contributed ¥1.15B in cash, supported the increase, while an increase in inventories (-¥0.70B) and a decrease in trade payables (-¥0.19B) partially offset it. Investing Cash Flow was -¥0.40B, primarily due to capital expenditures, but remained below depreciation and amortization expense of ¥0.73B, indicating selective investment. Financing Cash Flow was -¥0.26B, apparently centered on debt repayments. Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was positive at ¥1.51B, a level sufficient to fund investment and shareholder returns from internal funds.
Earnings Quality
Current-period earnings were primarily generated by recurring business activities, with extraordinary gains and losses (gain of ¥0.01B and loss of ¥0.02B) having an extremely limited impact and no evidence of a temporary boost. Of operating non-income of ¥0.32B, equivalent to 2.5% of revenue, dividend income of ¥0.21B and foreign exchange gains of ¥0.04B were the principal components. Both represent earnings with a certain degree of repeatability and are not at an excessive level of dependence. Operating Cash Flow of ¥1.91B exceeded consolidated Net Income of ¥1.53B, indicating limited accruals, or divergence between accounting earnings and cash flows, and therefore good earnings quality. Comprehensive Income of ¥2.75B exceeded consolidated Net Income of ¥1.53B, primarily due to an ¥1.17B increase in valuation differences on securities. It should be noted that this includes valuation movements distinct from business earnings.
Earnings Forecast and Guidance
Against the full-year plan of revenue of ¥52.00B, Operating Income of ¥3.40B, and Ordinary Income of ¥3.30B, progress in Q1 was 24.6% for revenue, 47.3% for Operating Income, and 56.8% for Ordinary Income. Using 25% as a simple benchmark for quarterly progress, Operating Income and Ordinary Income are tracking significantly ahead of that pace, suggesting that earnings may be weighted toward the first half. The Company has made no revisions to either its earnings forecast or dividend forecast, and the full-year plan appears to have been set conservatively. The full-year plan calls for year-on-year declines of -8.4% in Operating Income and -22.0% in Ordinary Income, which differs from the substantial earnings growth in Q1 and will be an important point to monitor as progress develops.
Shareholder Returns
The Company's full-year dividend forecast is ¥60 per share, representing a planned increase from the previous year's results (the interim dividend was ¥25 as the previous year's interim dividend information). Based on forecast EPS of ¥81.75, the Payout Ratio is approximately 73% (¥60 ÷ ¥81.75), a somewhat high level. However, Q1 Free Cash Flow was ¥1.51B and cash and deposits were ¥10.54B, providing ample funds and sufficient capacity to pay dividends. No share repurchases have been identified, and the Company's current shareholder return policy appears to be centered on dividends.
Risk Factors
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Segment concentration risk: The Functional Colorants segment accounts for 53.7% of the revenue mix and more than 80% of Operating Income, creating a structure in which supply-demand and pricing trends in this business have a significant impact on Company-wide performance.
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Profitability deterioration in Specialty Polymers: While revenue grew by +20.0%, the Operating Loss of ¥0.12B (margin of -6.0%) continued, indicating that revenue growth has not translated into improved profitability. Absorption of fixed costs and raw material cost burdens remain challenges.
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Working capital efficiency: Inventories increased (approximately +3.4% year on year), partially offsetting Operating Cash Flow. If inventory accumulation continues, monitoring of cash conversion and the risk of valuation losses will be necessary.
Industry Benchmark (Reference; Company Research)
Industry Benchmark (manufacturing)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 12.6% | 8.7% (4.2%–14.2%) | +3.9pt |
| Net Profit Margin | 12.0% | 7.0% (3.2%–10.6%) | +4.9pt |
Both the Operating Margin and Net Profit Margin exceed the industry median, placing profitability in the upper tier of the industry.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 12.5% | 6.2% (-1.1%–14.6%) | +6.2pt |
The Revenue Growth Rate is approximately twice the industry median, placing growth also at an upper-tier level within the industry.
※Source: Company research
Key Points from the Earnings Report
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The increased profitability of the Functional Colorants segment drove the improvement in the Company-wide Operating Margin (+390bp). The sustainability of the segment's margin of 19.3% is a key structural point of focus that will determine the Company's future overall profitability.
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Operating Cash Flow exceeded consolidated Net Income, indicating good earnings quality, but the increase in inventories partially offset this benefit. Inventory turnover trends will be an important point to monitor when assessing cash flow levels from the next quarter onward.
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While the full-year plan anticipates year-on-year earnings declines, Q1 delivered substantial earnings growth and a high progress rate, with Operating Income at 47.3% of the full-year plan. The Company has not revised its earnings forecast, and the allocation of earnings between the first and second halves will be an important point to watch as future results are announced.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly available earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional adviser as necessary.
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AI Financial Analysis
Executive Summary
FY2027 Q1 was a strong start, with revenue growth, substantial margin expansion and cash generation materially ahead of the prior-year quarter. Revenue increased 12.5% YoY to ¥12.81bn. Operating income rose 63.4% YoY to ¥1.61bn, outpacing sales growth by a wide margin. Operating margin expanded 390bp to 12.6% from 8.7% in FY2026 Q1. Gross margin improved about 300bp to 43.5%, indicating a favorable mix and/or improved pricing and production economics. SG&A increased 9.6% YoY to ¥3.97bn, slower than revenue growth, producing positive operating leverage. Ordinary income increased 50.5% to ¥1.88bn, supported by ¥0.21bn of dividend income and ¥0.04bn of foreign-exchange gains within non-operating income. Profit attributable to owners of parent increased 64.9% to ¥1.01bn, or ¥63.72 per share. The core Functional Pigments segment accounted for 82.5% of reported segment operating profit and drove the consolidated earnings acceleration. Basic Chemicals and Logistics also increased segment profit, while Functional Resins remained loss-making. Operating cash flow was ¥1.91bn and exceeded profit attributable to owners by 1.89x, indicating sound cash realization in the quarter. Free cash flow was positive at ¥1.51bn after ¥1.16bn of purchases of property, plant and equipment and intangibles. The balance sheet remains conservatively financed, with a 257.2% current ratio, 0.37x debt-to-equity ratio and cash exceeding interest-bearing debt by ¥1.52bn. The principal operational watchpoint is working-capital intensity, as reported receivable, inventory and cash-conversion-cycle alerts remain elevated for a manufacturing business. FY2027 guidance implies an unusually front-loaded first quarter: Q1 revenue is broadly in line with the annual run-rate, but operating profit and profit attributable to owners have already reached 47.3% and 78.0%, respectively, of full-year forecasts. This raises the importance of demand continuity, segment mix, working-capital discipline and the degree of conservatism embedded in the unchanged forecast.
Profitability Analysis
The reported annualized DuPont ROE is 6.2%, decomposed into a 7.9% net profit margin, 0.568x annualized asset turnover and 1.37x financial leverage. The earnings improvement was led primarily by margin expansion rather than leverage, as the capital structure remains conservative and financial leverage is modest. Operating margin rose to 12.6% from 8.7% a year earlier, while gross margin increased to 43.5% from approximately 40.5%. The 390bp operating-margin expansion exceeded the roughly 300bp gross-margin improvement because SG&A grew 9.6%, below the 12.5% sales increase. This positive operating leverage suggests that higher sales were absorbed efficiently through the fixed-cost base. Functional Pigments was the core business, with external revenue up 12.8% YoY to ¥6.76bn and segment operating profit up 76.4% to ¥1.33bn; its segment margin improved to 19.6% from 12.6%. Functional Resins increased revenue 19.4% to ¥1.97bn but recorded a ¥0.12bn operating loss, slightly wider than the prior-year ¥0.11bn loss, leaving it the principal drag on segment profitability. Basic Chemicals increased revenue 11.9% to ¥1.99bn and segment profit 66.9% to ¥0.21bn, with margin expanding to 10.7% from 7.1%. AgroScience revenue rose 7.4% to ¥1.56bn, but segment profit fell 30.4% to ¥0.09bn and margin compressed to 5.6% from 8.6%. Logistics revenue rose 2.3% to ¥0.48bn and operating profit increased 36.9% to ¥0.12bn, lifting margin to 23.9%. The 7.9% net margin is solid but trails the 12.6% EBIT margin because profit attributable to owners is reduced by non-controlling interests as well as tax and non-operating effects. The annualized ROE remains below an 8% threshold despite the strong quarter, reflecting the large equity base and moderate asset turnover. Sustained ROE improvement therefore requires continuation of the higher operating margin, a turnaround in Functional Resins, and more productive use of the asset base rather than additional balance-sheet leverage.
Growth Assessment
Revenue growth was broad-based across all five reportable segments, led by Functional Resins at 19.4%, Functional Pigments at 12.8% and Basic Chemicals at 11.9%. The quality of growth was strongest in Functional Pigments, where profit growth of 76.4% substantially exceeded revenue growth and generated the majority of segment profit. Basic Chemicals also showed favorable conversion of sales growth into earnings. AgroScience demonstrates that revenue growth alone is not sufficient, as its 7.4% sales expansion coincided with a 30.4% decline in segment profit. Functional Resins remains the central earnings-recovery opportunity because higher sales have not yet restored positive operating profit. Full-year guidance calls for revenue of ¥52.00bn, up 8.2% YoY, operating income of ¥3.40bn, down 8.4% YoY, and ordinary income of ¥3.30bn, down 22.0% YoY. Q1 revenue progress is 24.6% versus a standard 25% first-quarter pace, consistent with the annual sales forecast. Q1 operating-income progress is 47.3%, 22.3 percentage points above the standard pace, while ordinary-income progress is 56.8%, 31.8 percentage points above standard. Profit attributable to owners has reached 78.0% of the ¥1.30bn full-year forecast, which signals either material expected second-half normalization, forecast conservatism, or earnings volatility outside core operations. The unchanged forecast should therefore be evaluated against subsequent demand trends in Functional Pigments and the persistence of Q1 gross-margin gains.
Financial Health
Liquidity is strong, with current assets of ¥37.85bn against current liabilities of ¥14.72bn, resulting in a 257.2% current ratio and ¥23.13bn of working capital. The 195.7% quick ratio indicates that short-term obligations can be met without relying on inventory liquidation. Cash and deposits of ¥10.54bn exceed short-term loans of ¥5.03bn by 2.10x, providing meaningful refinancing flexibility. Total interest-bearing debt is ¥9.03bn, while cash exceeds this balance by ¥1.52bn, leaving the group in a net-cash position. Debt-to-equity is conservative at 0.37x and debt-to-capital is only 12.1%. Interest coverage is very strong at 44.69x on EBIT and 64.94x on EBITDA. Debt/EBITDA is 3.86x on the reported annualized metric, below the 4.0x high-yield warning level but above a 2.5x investment-grade reference point; this ratio should be read alongside the net-cash position and strong interest coverage. The refinancing-risk alert arises because 55.7% of interest-bearing debt is short-term. This maturity concentration is a potential risk because a significant portion of borrowings requires regular rollover, although cash of ¥10.54bn and current assets of ¥37.85bn substantially mitigate near-term maturity mismatch. Total assets increased ¥3.81bn YoY to ¥90.22bn and total equity increased ¥2.14bn to ¥65.75bn, maintaining a 72.9% equity ratio. Asset retirement obligations total ¥0.16bn, equivalent to roughly 0.6% of liabilities, a limited recorded balance-sheet environmental obligation for a chemical manufacturer.
Notable B/S Changes
Total assets: +¥3.81bn (+4.4% YoY) to ¥90.22bn, driven by growth in property, plant and equipment and investment securities. Property, plant and equipment: +¥2.28bn (+7.0% YoY) to ¥33.67bn; buildings increased ¥3.87bn to ¥14.09bn, indicating a higher fixed-asset commitment. Investment securities: +¥2.73bn (+14.5% YoY) to ¥13.64bn; valuation gains contributed to other comprehensive income and create greater equity sensitivity to market movements. Trade receivables: -¥1.13bn (-8.9% YoY) to ¥11.62bn, supporting Q1 operating cash flow, although reported receivable days remain elevated. Total equity: +¥2.14bn (+3.4% YoY) to ¥65.75bn, supported by Q1 comprehensive income of ¥2.75bn and preserving a strong capital base. Long-term loans: -¥0.22bn (-5.2% YoY) to ¥3.99bn, while short-term loans were broadly unchanged at ¥5.03bn; the debt profile remains weighted toward short-term maturities.
Cash Flow Quality
Cash-flow quality was favorable in FY2027 Q1, with operating cash flow of ¥1.91bn equal to 1.89x profit attributable to owners of parent and 1.25x consolidated net income. The accruals ratio of -1.0% is also consistent with earnings being supported by cash generation rather than aggressive accrual recognition. EBITDA was ¥2.34bn and cash conversion, defined as operating cash flow divided by EBITDA, was 0.82x. This is below a 0.9x excellent benchmark but remains healthy and does not indicate a material cash-conversion problem. Free cash flow was ¥1.51bn after investing cash outflow of ¥0.40bn. Capital expenditure on property, plant and equipment and intangibles was ¥1.16bn, equal to 1.59x depreciation and amortization of ¥0.73bn, indicating investment above the depreciation run-rate. Working-capital movements were mixed: trade receivables declined by ¥1.15bn and supported operating cash flow, whereas inventories increased by ¥0.70bn and trade payables declined by ¥0.19bn. The elevated-receivable-days alert, at 83 days under one reported calculation, identifies potentially slow customer collections for a manufacturing business. The elevated-inventory-days alerts of 179 days and 114 days, both above their relevant benchmarks, indicate that inventory remains capital intensive under alternative reported calculation methodologies. The reported cash-conversion-cycle alert of 197 days is materially above the 120-day warning threshold, showing that cash remains tied up in the operating cycle despite the favorable Q1 cash flow. The root cause is the combination of comparatively long collection and inventory-holding periods, not a lack of short-term liquidity. For a chemical manufacturer, high inventory can also increase exposure to demand shifts, feedstock-price movements, aging stock and valuation risk. The investment implication is that sustained free-cash-flow conversion should be assessed through the full year, particularly if receivable reductions do not recur and inventory continues to build.
Dividend Sustainability
The FY2027 full-year dividend forecast is ¥60 per share, unchanged from the disclosed forecast. Against forecast EPS of ¥81.75, the implied dividend payout ratio is 73.4%. This is above a 60% sustainability reference point, but remains below 100% and is supported by a net-cash balance sheet. Using approximately 15.92 million average shares, the indicated annual cash dividend is about ¥0.96bn. Q1 free cash flow of ¥1.51bn exceeds this indicated annual dividend amount, although quarterly cash flow should not be treated as a full-year run-rate. The ability to maintain the dividend will depend principally on delivery of the ¥1.30bn full-year profit attributable to owners forecast and on preventing working capital from absorbing cash in later quarters. No share repurchases were reported, so the relevant distribution measure is the dividend payout ratio rather than a total return ratio. The relatively high forecast payout means that dividends are more exposed to a material earnings shortfall than under a lower-payout policy, but current liquidity and low leverage provide an important buffer.
Risk Assessment
Business risks include Functional Pigments generated ¥1.33bn of operating profit, or 82.5% of aggregate segment profit; this concentration makes group earnings sensitive to demand, pricing and product mix in toner, organic photoconductor, OLED and related materials., Functional Resins remained loss-making at ¥0.12bn despite 19.4% revenue growth, creating execution risk around pricing, input-cost recovery, manufacturing efficiency and the timing of profitability restoration., AgroScience segment profit declined 30.4% YoY to ¥0.09bn despite sales growth, demonstrating exposure to adverse mix, seasonal demand, competitive pricing or cost pressure., As a chemical manufacturer, the company is exposed to feedstock and energy-cost volatility, environmental and safety regulation, product-quality events, and inventory valuation risk when end-market demand changes., Reported inventory days of 179 days and 114 days under alternative calculations, plus a 197-day cash conversion cycle, indicate capital tied up in the operating cycle and increase exposure to slow-moving inventory..
Financial risks include Short-term debt represents 55.7% of interest-bearing debt. The refinancing-risk alert is rooted in borrowing maturity concentration, although cash of ¥10.54bn, a 257.2% current ratio and 2.10x cash-to-short-term-debt provide substantial mitigation., Debt/EBITDA of 3.86x is below the 4.0x high-yield warning point but above a 2.5x investment-grade reference; the ratio should be monitored if EBITDA normalizes from the strong Q1 level., The quality-alert tax burden of 0.545 is below the 0.60 reference point. Its root cause is that the metric uses profit attributable to owners of ¥1.01bn relative to profit before tax of ¥1.86bn, with ¥0.52bn of earnings attributable to non-controlling interests; it should not be interpreted as the statutory cash-tax rate, because the reported consolidated effective tax rate is 17.6%. The impact is primarily on parent-shareholder earnings conversion and comparability rather than a current excessive-tax cash burden., Investment securities of ¥13.64bn represent 15.1% of total assets, exposing comprehensive income and equity to market-value movements; valuation gains on securities contributed ¥1.17bn to other comprehensive income in Q1..
Key concerns include The full-year outlook implies substantial deceleration after Q1: Q1 operating income already represents 47.3% of full-year guidance, while Q1 profit attributable to owners represents 78.0%., Receivable days of 83 and the long cash conversion cycle warrant close monitoring even though Q1 operating cash flow was strong, because the quarter benefited from a ¥1.15bn reduction in receivables., The company has strong liquidity and a net-cash position, so the main risk is operational earnings normalization and working-capital absorption rather than immediate solvency pressure..
Investment Implications
Key takeaways include Q1 delivered a material earnings inflection: sales rose 12.5%, operating income rose 63.4%, and operating margin expanded 390bp to 12.6%., Functional Pigments is the central profit engine, with a 19.6% segment margin and ¥1.33bn of segment operating profit., Operating cash flow of ¥1.91bn and free cash flow of ¥1.51bn support the quality of reported earnings., Liquidity is robust, with cash exceeding interest-bearing debt and a 257.2% current ratio., Elevated working-capital metrics and the loss-making Functional Resins business remain the primary operating issues to monitor., The full-year forecast embeds significant earnings normalization after a very strong Q1, making forecast delivery and management commentary on subsequent-quarter demand particularly important..
Metrics to watch include Functional Pigments revenue growth and segment operating margin, Functional Resins path from a ¥0.12bn segment loss toward profitability, AgroScience margin recovery from 5.6%, Receivable days, inventory days and cash conversion cycle, Inventory balance, which increased ¥0.70bn in Q1, Operating cash flow conversion after the Q1 receivables reduction, Short-term debt rollover and the short-term debt ratio, Progress against FY2027 operating-income guidance of ¥3.40bn and profit-attributable-to-owners guidance of ¥1.30bn.
Regarding relative positioning, The company combines above-good operating profitability in Q1, strong liquidity, low balance-sheet leverage and positive free cash flow. Relative to manufacturing benchmarks, its principal weakness is working-capital efficiency rather than funding capacity. Relative profitability is highly dependent on the Functional Pigments franchise, while sustained improvement in Functional Resins would broaden the earnings base.