FINANCIAL
SECTION
2024
Year Ended March 31, 2024

FINANCIAL REVIEWKANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIESSALESFINANCIAL CONDITION

The Kaneka Group’s business performance for the
consolidated fiscal year from April 1, 2023 toMarch 31, 2024 (FY 2024) was marked consolidated net sales of ¥762,302 million (up 0.9% year
on year).

As of March 31, 2024, total assets were ¥870,205
million, up ¥87,565 million from March 31, 2023,
this is due to an increase in property, plant andequipment resulting from expanded capital investment, an increase in investment securities due toan increase in the fair value of shares held, and anincrease in overseas group companies’ assets
denominated in yen resulting from the weakeningof yen. The ratio of net income attributable toowners of parent to total assets (ROA) was 2.8%,
down 0.2% from the previous consolidated fiscal
year. Interest-bearing debt stood at ¥174,833
million, up ¥15,498 million from March 31, 2023.
Net assets increased ¥37,960 million to ¥474,383
million, reflecting an increase in retained earnings
and foreign currency translation adjustments. As
a result, the equity ratio came to 52.1%. The D/E
ratio (ratio of interest-bearing debt to equity capital)
was 0.39.

OPERATING EXPENSES AND OPERATING INCOME
During FY2024, the cost of sales increased by
0.2% to ¥558,087 million. The cost of sales ratio
decreased from 73.7% to 73.2%. SG&A expenses
increased by 4.8% to ¥171,635 million, and theratio of SG&A expenses to sales increased from
21.7% to 22.5%. Operating income during FY2024
decreased by 7.1% to ¥32,579 million.

NET INCOME
For the year, the Group recorded net income attributable to owners of parent of ¥23,220 million, up
0.9% from the previous consolidated fiscal year.

Net sales

Operating income(Millions of yen)

(Millions of yen)

800,000

755,821 762,302

50,00043,562

691,530
600,000

601,51440,000577,426

35,08732,57930,00026,01427,544400,000
20,000200,000
10,000
0

0
2020

1

KANEKA CORPORATION

2021

2022

2023

2024

2020

2021

2022

2023

2024

CASH FLOWS

Financial Index Trends

Cash and cash equivalents at March 31, 2024
were ¥43,278 million, ¥2,579 million more than at
March 31, 2023.
Net cash provided by operating activities was¥61,911 million, ¥33,201 million more than in theprevious consolidated fiscal year. The main contributors to the increase were income before
income taxes and non-controlling interests of¥36,808 million and depreciation and amortizationof ¥40,779 million.
Net cash used in investing activities amounted
to ¥58,771 million, ¥16,801 million more than in
the previous consolidated fiscal year. The principal
use of cash was ¥61,315 million for the purchaseof property, plant and equipment.
Net cash provided by financing activities of¥1,519 million, ¥13,871 million less than in the­previous consolidated fiscal year. This was due todividends paid and purchase of treasury stock
which were offset by the proceeds from issuanceof bonds.

Year ended
Year ended
Year ended
Year ended
Year ended
March 31, 2020 March 31, 2021 March 31, 2022 March 31, 2023 March 31, 2024

Shareholders’equity ratio

50.7%

53.5%

53.3%

53.3%

52.1%

Shareholders’equity ratio basedon market value

25.9%

44.5%

31.8%

28.6%

28.1%

Interest-bearing
debt coverage ratio

3.3

1.6

3.7

5.6

2.8

Interest coverage
ratio

23.2

55.9

31.4

14.7

18.7

Shareholders’ equity ratio: equity capital/total assets
Shareholders’ equity ratio based on market value: total market
value of stock/total assets
Interest-bearing debt coverage ratio: interest-bearing debt/operating
cash flows
Interest coverage ratio: operating cash flows/interest expenses paid
Notes:
1. All items were calculated according to financial figures on
a consolidated basis.
2. The calculation of the total market value of stock was based on
the total number of issued shares excluding treasury stock.
3. “Operating cash flows” refers to cash flows from operations.
4. The scope of interest-bearing debt is all liabilities in the Consolidated Balance Sheets for which interest is payable.
5. Interest expenses paid are based on the amount in the Consolidated Statements of Cash Flows.

Net income attributable to the owners of the parent

Total assets(Millions of yen)

(Millions of yen)

30,0001,000,000
26,487870,205
23,00823,220782,640

800,000

726,959
653,262 667,429

20,000600,000

15,831
14,003400,000
10,000200,000

0

0
2020

2021

2022

2023

2024

2020

2021

2022

2023

2024

FINANCIAL SECTION 2024

2

FINANCIAL REVIEW

BUSINESS RISKS AND UNCERTAINTIES(1) Basic Risk Management Policy
The Group has formulated a basic risk management policy to respond to potential risks in business operations, aiming for the goal of “Wellness
First” to make the world healthy.
Our basic risk management policy is that eachdivision identifies operational risks and other typesof risks that it may face, takes appropriate pre­ventive measures and responds appropriately incooperation with other relevant divisions if a risk
manifests itself.
For preventive measures against potential risks,
including those related to ethics and legal compliance, the Compliance Subcommittee of the ESG
Committee oversees the development and implementation of the company-wide plans.
When a risk occurs or is likely to occur, the ESG
Committee handles the risk in cooperation with therelevant divisions.
We regularly check whether the above-mentioned activities are implemented properly toprevent our risk management system from falling
into mere formality and strive to maintain andimprove its effectiveness.

3

KANEKA CORPORATION(2) Business-Related Risks
The following are examples of items that could
have a material impact on the Group’s financial
situation, business performance and status of cash
flows among the items related to the status ofoperations and financial information listed in theannual securities report. The items described here
are deemed by the Group to be risks as of the endof the consolidated fiscal year under review;
however, they do not cover all of the risks related
to the Group.
① Risks related to the Group’s ability to maintain

operational advantages and trends in theJapanese and overseas economic environment
The Group licenses or merges advanced technologies
from outside with its internally developed technologies
to develop and commercialize high-value-added products in a wide range of fields, continuously opening
new markets to ensure the competitive advantage ofits business while working to strengthen its management foundation by advancing business structurereforms. However, the occurrence of sudden changes
in the economic environment, rapid advances in­technological innovation or the occurrence of natural
disasters or Large-scale infectious disease (pan­demics) could have a negative impact on the Group’s
financial situation, business performance and status ofcash flows.

② Risks associated with the globalization of ourbusiness (fluctuations in foreign exchange rates
and overseas business development)
The Group has always maintained a global visionand promoted the development of its businessahead of other companies. Currently, it has
adopted “glocal” (locally originated business development) as a central concept and is accelerating
the development of technologies and materials
tailored to local characteristics around the world.
Business activities overseas are subject to risks
such as unforeseeable changes in laws, regulations
and taxation systems, the application of taxes
under transfer pricing systems, sudden fluctuations
in exchange rates and social and political unrest
driven by terrorism, conflict and so forth. To
prevent these risks form materializing, or to mitigate their impacts, we have strengthened the governance of Group companies, established a systemof experts, strengthened exchange-rate resilience,purchased damage insurance and taken measuresfor employee safety. Despite these efforts, thematerialization of these risks could have a negative
impact on the Group’s financial situation, businessperformance, and status of cash flows.

③ Risks of price fluctuations of raw materials

and fuel
The Group has built and implemented a system forprocurement of raw materials and fuels at the mostfavorable terms by combining global purchasing
with purchasing through medium- to long-term
contracts and spot markets. Since most of these
items are international market commodities, unanticipated market fluctuations could have a negative
impact on the Group’s financial situation, businessperformance and status of cash flows.
④ Risks associated with product liability, industrial

accidents and large scale disasters
The Group has built and implemented strong
quality and distribution systems for the productsthat it supplies to customers, and it has purchased
liability insurance to cover the entire Group in theunlikely event of an accident. Moreover, the Groupprioritizes safety in all areas and follows laws andregulations in its business activities. However, there
is a risk that an unexpected accident or large scale
natural disaster, such as an earthquake, could
damage our main production facilities and cause
a business interruption due to system failure andopportunity loss. We have the necessary insurance
to cover these risks, but there is a risk that loss
could exceed the scope of property insurance­coverage. The occurrence of such a situation could
have a negative impact on the Group’s financial
situation, business performance and status ofcash flows.

FINANCIAL SECTION 2024

4

FINANCIAL REVIEW⑤ Risks associated with the protection of

intellectual property rights
The Group makes certain to obtain patents andother intellectual property rights to protect theresult of its research and development, aiming to
responsive provide solutions that can contribute toresolve social issues. We also respect other companies’ intellectual property and work to avoid­contention by conducting patent surveys at eachstage of business development, such as withtheme proposals, commercialization and specification changes, thereby ensuring that we havesecured patent clearance. However, due to globalization, advances in information technology andother factors, there is a risk that the technologicalexpertise developed by the Group could be subject
to leaks, unauthorized use or legal contention
regarding usage licenses and so forth. The occurrence of such a situation could have a negative
impact on the Group’s financial situation, businessperformance and status of cash flows.
⑥ Impact of environment related regulations

In accordance with the ESG Charter, the Group aims
to realize the sustainable development of an abundantsociety by working to protect the earth’s environment,
preserving resources and reducing the environmental
impact at each stage of the product life cycle. In addition, the Group has announced that it supports therecommendations of the Task Force on Climaterelated Financial Disclosures (referred to below as
TCFD) in March 2021 and is endeavoring to realize
carbon neutrality. However, environmental regulations
are becoming stricter each year and in some cases,
they could restrict activities in the business supply
chain and so forth have a negative impact on theGroup’s financial situation, business performance andstatus of cash flows.

5

KANEKA CORPORATION⑦ Risks associated with legal action

The Group emphasizes compliance in management
and works to ensure compliance with laws, regulations and social norms. However, in the process ofconducting business in Japan and overseas, there
is a risk that the Group could be subject to unforeseeable lawsuits, administrative measures and soforth. The occurrence of a serious lawsuit or othersuch event could have a negative impact on theGroup’s financial situation, business performanceand status of cash flows.
⑧ Risks associated with information security

For the Group, information systems play an important role in all aspects of our business activities.
Unfortunately, there is an increasing risk of system
failures, information leaks, loss, etc., due to cyberattacks, unauthorized access, disasters, etc. Asa countermeasure, we will build a risk management
system based on the “Information Management
Basic Policy,” incorporate the knowledge of­external experts, strengthen the security system,
educate information security employees, etc., to try
to avoid and manage risks. However, unanticipatedsituations could have a negative impact on theGroup’s financial situation, business performanceand status of cash flows.

⑨ Other risks

The Group holds shares of its business partners andfinancial institutions with the goal of building, maintaining and strengthening medium- to long-termbusiness relationships. A significant fall in the market
value, etc., of these shares at the consolidated fiscal
year end could cause the Group to recognize
impairment loss pursuant to the adoption of the
Accounting Standards for Financial Instruments.
With regard to noncurrent assets, a dramatic
deterioration in the business environment or
a decline in the fair value of idle land held by theGroup and so forth could oblige the Group to­recognize impairment loss pursuant to the adoptionof the Accounting Standard for Impairment of
Fixed Assets.
With regard to inventories, since the Groupwill carry out make-to-stock production based on
future demand forecasts, the salability is uncertain
and can be affected by future fluctuations in economic conditions.
With regard to retirement benefit obligations,a marked decrease in the underlying discount rate
assumed for actuarial calculations or a sharp deterioration in the operation of pension assets could
cause a significant shortfall in funds.
With regard to deferred tax assets, recoverability
is calculated based on forecasts for future taxable
income and so forth against future temporary
deductible differences. However, a difference
between actual taxable income and the forecast
could necessitate a reversal of deferred tax assets.
The occurrence of any of the above situations
could have a negative impact on the Group’s financial situation, business performance and status ofcash flows.

FINANCIAL SECTION 2024

6

CONSOLIDATED BALANCE SHEETSKANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2024 and 2023

Assets2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2023

2024

Current assets:
Cash and cash equivalents (Note 5)¥

43,278¥40,699$285,837

Notes and accounts receivable – trade, and contract assets (Note 5)

186,371

170,154

1,230,904

Inventories (Note 8)

177,296

168,115

1,170,972

Short-term loans receivable from unconsolidated subsidiaries and affiliates

1,140

1,304

7,532

Other current assets

22,67318,193

149,746

Allowance for doubtful accounts(1,898)(1,502)(12,540)

428,861

396,964

2,832,451

34,47533,079227,695

Total current assets

Property, plant and equipment (Note 14):Land
Buildings and structures

253,716

240,711

1,675,690

Machinery, equipment and vehicles

698,025

665,388

4,610,167

Construction in progress

63,70732,062

420,763

Leased assets

20,85917,963

137,767

1,070,784

989,205

7,072,083

Less accumulated depreciation(739,464)(696,590)(4,883,858)

Property, plant and equipment, net

331,319292,615

2,188,225

20,832

16,189137,593

Intangible assets:

Investments and other assets:
Investment securities (Notes 5, 6 and 14):
Unconsolidated subsidiaries and affiliates

4,140

3,641

27,345

Other66,47953,913439,067

Long-term loans receivable

529

597

3,493

Deferred tax assets (Note 12)

2,766

4,450

18,274Other

15,566

14,550102,812

(290)

(283)

(1,917)

Allowance for doubtful accounts
Total investments and other assets

See notes to consolidated financial statements.
7

KANEKA CORPORATION

76,87089,191¥

870,205¥

782,640

589,075$

5,747,345

Liabilities and net assets

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2023

2024

Current liabilities:
Short-term loans payable (Notes 5 and 14)¥

110,171¥

108,070$

727,636

Current portion of long-term loans payable (Notes 5 and 14)

6,361

8,420

42,012Current portion of bonds payable (Notes 5 and 14)

5,000

—

33,022

940

1,037

6,214
688,278

Lease liabilities
Notes and accounts payable:Trade104,21288,663

Construction

11,4477,610

75,607

Other

23,86518,785

157,618

Income taxes payable

4,963

5,055

32,783

Accrued expenses

16,011

14,828105,746

Other current liabilities

8,692

5,770

57,410Total current liabilities

291,666

258,242

1,926,332

15,00010,00099,068Non-current liabilities:
Bonds payable (Notes 5 and 14)
Long-term loans payable (Notes 5 and 14)

40,391

33,706

266,771

Lease liabilities

17,232

14,709113,813Net defined benefit liability (Note 15)

12,58520,82983,124

346

318

2,288

Provision for director’ retirement benefits
Deferred tax liabilities (Note 12)

9,493

1,705

62,702

Provision for product warranties

1,808

2,057

11,943

Other non-current liabilities

7,296

4,648

48,193

Total non-current liabilities

104,156

87,974

687,907

33,04633,046218,260

Contingent liabilities (Note 16)
Net assets (Note 17):
Shareholders’ equity:
Capital stock
Authorized — 150,000,000 shares
Issued—	  66,000,000 shares

Capital surplus

29,17332,245

192,678

Retained earnings

331,933

323,213

2,192,281

Less treasury stock, at cost — 1,851,007 shares in 2024
		 3,106,293 shares in 2023

(6,797)(11,407)(44,896)387,355

377,098

2,558,324

32,632

22,204

215,520

(0)

(3)

(1)

Foreign currency translation adjustments

22,037

11,543

145,547

Remeasurements of defined benefit plans

11,4386,529

75,545

Total accumulated other comprehensive income

66,10740,273436,612

648

622

4,285

20,271

18,427

133,884

Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Subscription rights to shares (Note 18)
Non-controlling interests
Total net assets

436,422474,383¥

870,205¥

782,640

3,133,105$

5,747,345

See notes to consolidated financial statements.
FINANCIAL SECTION 2024

8

CONSOLIDATED STATEMENTS OF INCOME
KANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years Ended March 31, 2024, 2023 and 2022

Millions of yen

2023

2024

Net sales (Note 13)¥

Cost of sales

762,302¥755,8212022¥

556,895

558,087

Thousands of
U.S. dollars (Note 1)

691,530

2024$

494,880

5,034,689
3,685,937

Gross profit

204,214198,926

196,649

1,348,751

Selling, general and administrative expenses

171,635

163,838

153,086

1,133,577

Operating income

32,57935,08743,562

215,173

Other income (expenses):
Interest and dividend income

2,031

1,917

1,648

13,417

Interest expenses(3,361)(1,965)(1,064)(22,201)

Gain on sales of investment securities

7,060

1,410

19

46,632

525

—

—

3,470

Depreciation of inactive non-current assets(1,171)(1,147)(628)(7,738)Loss on disposal of property, plant and equipment(1,722)(1,839)(1,638)(11,375)—(1,448)——Foreign exchange gains (losses), net

2,544

1,888

1,159

16,808Equity in earnings of affiliates, net

177

137

132

1,173

Gain on sales of businesses

Loss on valuation of investment securities

Restructuring charges (Notes 9 and 10)——(2,692)—

Impairment losses (Note 10)——(1,059)—Product warranty expenses (Note 11)——(2,331)—Other, net(1,855)(1,666)(703)(12,252)

Income before income taxes and non-controlling interests

36,80832,37336,405

243,107
69,846

Income taxes (Note 12)
Current

10,575

9,010

10,075

Deferred

1,458

(711)

(1,398)

9,631

Net income

24,77524,07427,728

163,630

Net income attributable to non-controlling interests

1,554

1,066

1,240

10,269Net income attributable to owners of parent¥

23,220¥23,008¥26,487Yen

Net income per share—basic (Note 2)¥

357.90¥349.59¥406.01$

153,360

U.S. dollars (Note 1)

$

2.36

Net income per share—diluted (Note 2)

356.87348.66404.95

2.35

Cash dividends applicable to the year (Note 17)110.00110.00110.000.72

See notes to consolidated financial statements.

9

KANEKA CORPORATIONCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
KANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years Ended March 31, 2024, 2023 and 2022

Millions of yen

2023

2024

Net income¥

24,775¥24,074

Thousands of
U.S. dollars (Note 1)

2022

¥

27,7282024$

163,630

Other comprehensive income:
Valuation difference on available-for-sale securities

10,476

882

455

3

0

5

23

Foreign currency translation adjustments

11,133

7,594

8,495

73,534Remeasurements of defined benefit plans

4,909

7,509

1,179

32,423

1

1

(7)

11

Deferred gains or losses on hedges

Share of other comprehensive income of associates accounted forusing equity method
Total other comprehensive income (Note 3)
Comprehensive income

15,98926,52569,195

10,128

175,188¥

51,300¥40,064¥37,856$

338,818¥

49,054¥38,549¥36,280$323,981Comprehensive income attributable to:Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

2,246

1,515

1,575

14,836

See notes to consolidated financial statements.

FINANCIAL SECTION 2024

10

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSKANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years Ended March 31, 2024, 2023 and 2022

2023

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2022

2024

Shareholders’ equity
Capital stock
Balance at beginning of year¥

33,046¥33,046¥33,046$218,260

Changes of items during the period
Total changes of items during the period
Balance at the end of current period

—

—

—

—

33,04633,04633,046218,260

32,24531,392

31,103212,968

—

789

—

—

(269)

63

289

(1,778)

Capital surplus
Balance at beginning of year
Changes of items during the period
Increase by share exchange
Change in treasury shares of parent arising from transactions
with non-controlling interests
Changes in liabilities for written put options over non-controlling interests(2,802)——(18,511)

Total changes of items during the period(3,072)853

289(20,289)

Balance at the end of current period

29,17332,24531,392

192,678

323,213309,507289,544

2,134,692(7,139)(7,599)(6,523)(47,153)

(12)

—

—

(84)

23,22023,00826,487

153,360

(3)

(5)

(1)

(22)
(48,510)Retained earnings
Balance at beginning of year
Changes of items during the period
Dividends from surplus—¥110.00 per share
Change of scope of consolidation
Net income attributable to owners of parent
Disposal of treasury stock
Cancellation of treasury stock(7,344)———(1,696)

—

—

8,719

13,706

19,96357,589331,933

323,213309,5072,192,281(11,407)(11,528)(11,535)(75,340)

Purchase of treasury stock(2,814)(8,051)(4)(18,585)

Disposal of treasury stock

78

30

10

519

7,344

—

—

48,510

Increase by share exchange
Total changes of items during the period
Balance at the end of current period
Treasury stock
Balance at beginning of year
Changes of items during the period

Cancellation of treasury stock

—

8,142

—

—

Total changes of items during the period

Increase by share exchange

4,609

121

6

30,444

Balance at the end of current period(6,797)(11,407)(11,528)(44,896)

22,204

21,331

20,863

146,651

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Balance at beginning of year
Changes of items during the period
Net changes of items other than shareholders’ equity

10,427873

468

68,869Total changes of items during the period

10,427873

468

68,869Balance at the end of current period

32,632

22,204

21,331

215,52011KANEKA CORPORATION

2024

2023

(3)

¥(4)

Millions of yen

Thousands of
U.S. dollars (Note 1)

2022

2024

Deferred gains or losses on hedges
Balance at beginning of year

¥

¥

(9)

$

(24)

Changes of items during the period
Net changes of items other than shareholders’ equity

3

0

5

23

Total changes of items during the period

3

0

5

23

Balance at the end of current period

(0)

(3)

(4)

(1)

11,5434,381(3,753)76,241

Foreign currency translation adjustments
Balance at beginning of year
Changes of items during the period
Net changes of items other than shareholders’ equity

10,493

7,162

8,135

69,306

Total changes of items during the period

10,493

7,162

8,135

69,306

Balance at the end of current period

22,037

11,543

4,381

145,547

6,529

(975)

(2,160)43,123Remeasurements of defined benefit plans
Balance at beginning of year
Changes of items during the period
Net changes of items other than shareholders’ equity

4,908

7,504

1,184

32,421

Total changes of items during the period

4,908

7,504

1,184

32,421

Balance at the end of current period

11,438

6,529

(975)

75,545

622

619

516

4,111

26

3

102

173

Subscription rights to shares
Balance at beginning of year
Changes of items during the period
Net changes of items other than shareholders’ equity
Total changes of items during the period

26

3

102

173

Balance at the end of current period

648

622

619

4,285

18,427

24,43523,424

121,707

Non-controlling interests
Balance at beginning of year
Changes of items during the period
Net changes of items other than shareholders’ equity

1,843(6,007)1,010

12,176

Total changes of items during the period

1,843(6,007)1,010

12,176

Balance at the end of current period

20,271

18,427

24,435

133,884

436,422412,204

381,040

2,882,390(7,139)(7,599)(6,523)(47,153)

(12)

—

—

(84)

Net income attributable to owners of parent

23,22023,00826,487

153,360

Total net assets
Balance at beginning of year
Changes of items during the period
Dividends from surplus—¥110.00 per share
Change of scope of consolidation
Purchase of treasury stock(2,814)(8,051)(4)(18,585)

Disposal of treasury stock

75

25

9

496

Increase by share exchange

—

7,235

—

—

(269)

63

289

(1,778)(2,802)——(18,511)

Change in treasury shares of parent arising from transactions
with non-controlling interests
Changes in liabilities for written put options over non-controlling interests
Net changes of items other than shareholders’ equity

27,703

9,537

10,905

182,971

Total changes of items during the period

37,96024,21831,163

250,714

Balance at the end of current period¥

474,383¥

436,422¥412,204$

3,133,105

See notes to consolidated financial statements.

FINANCIAL SECTION 2024

12

CONSOLIDATED STATEMENTS OF CASH FLOWSKANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years Ended March 31, 2024, 2023 and 2022

2023

2024

Cash Flows from Operating Activities
Income before income taxes and non-controlling interests
Depreciation and amortization
Restructuring charges
Impairment losses
Product warranty expense
Insurance claim income
Increase (decrease) in net defined benefit liability
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Equity in earnings of affiliates, net
Loss (gain) on disposal of property, plant and equipment
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Gain on sales of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
OthersSubtotalInterest and dividend income received
Interest expenses paid
Proceeds from insurance income
Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales and distributions of investment securities
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Payments of loans receivableCollection of loans receivable
OthersNet cash used in investing activities
Cash Flows from Financing Activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Repayments of lease obligations
Purchase of treasury stock
Proceeds from sales of treasury stock
Cash dividends paid
Proceeds from share issuance to non-controlling shareholders
Cash dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from change ofscope of consolidation
Cash and cash equivalents at end of period
See notes to consolidated financial statements.
13

KANEKA CORPORATION¥¥

36,80840,779————(1,527)315(2,031)
3,361
(177)
531
(7,060)——(12,450)(4,070)13,112
6,344
73,9352,057(3,308)—(10,771)
61,911¥

32,37339,456
—
—
—
—
(139)
(110)
(1,917)
1,965
(137)
630
(1,410)1,448—(3,474)(24,875)(4,785)(4,620)34,402
1,942(1,955)
1,177(6,856)28,710¥Millions of yen

Thousands of
U.S. dollars (Note 1)

2022

2024

36,40537,953
2,692
1,059
2,331
(1,671)879
162(1,648)
1,064
(132)
498
—
—
(19)
(25,608)(27,541)
14,6283,328
44,381
1,717(1,085)
512(11,419)
34,106$

243,107269,333————(10,091)
2,082(13,417)
22,201(1,173)
3,508(46,632)——(82,232)(26,882)
86,602
41,904
488,310
13,587(21,853)—(71,143)
408,901(61,315)—(3,951)
(120)
9,856

(39,628)87(2,363)
(909)
2,509

(37,329)—(2,601)(77)877(404,962)—(26,096)(793)
65,096(1,132)—(336)(7,479)(1,061)282(1,328)(58,771)(99)
336(1,902)(41,970)

(398)
632
(362)
(39,595)(7,011)
1,862(8,776)(388,161)(2,378)
11,299(8,565)
10,000(1,270)(2,814)0(7,139)—(279)

21,814
13,541(6,198)—(863)(8,051)
0(7,599)
0
(284)

6,606
9,119
(9,390)
—
(618)
(4)
0
(6,523)0(231)(15,711)74,626(56,569)
66,045(8,388)(18,585)0(47,153)—(1,843)(372)(1,519)926
2,547
40,699(6)
12,352894(13)40,712(63)(1,105)946(5,647)46,360(2,457)(10,035)
6,120
16,824
268,800

32
43,278¥—40,699¥—40,712$

212
285,837

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KANEKA CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Kaneka Corporation (the “Company”) and its consolidated do­mes­
tic subsidiaries maintain their official accounting records in Japanese yen and in accordance with the provisions set forth in the
Financial Instruments and Exchange Law in Japan and its related
accounting regulations and accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accompanying consolidated financial statements havebeen restructured and translated into English with some expanded
descriptions from the consolidated financial statements of theCompany prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Financial Instruments and Exchange
Law in Japan. Some supplementary information included in thestatutory Japanese language consolidated financial statements, but
not required for fair presentation, is not presented in the accompanying consolidated financial statements.

The accounts of consolidated overseas subsidiaries wereprepared for consolidation purposes in accordance with either
International Financial Reporting Standards or U.S. Generally
Accepted Accounting Principles, with adjustments for the specified
items as applicable in compliance with ASBJ Practical Solution
No. 18, “Tentative Treatment of Accounting for Foreign Subsidiaries
in Preparing Consolidated Financial Statements.”
The translation of the Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate on March 31, 2024
which was ¥151.41 to U.S.$1.00. The translations should not be
construed as representations that the Japanese yen amounts havebeen, could have been or could in the future be converted into U.S.
dollars at this or any other rate of exchange.
The disclosed amounts have been rounded down under one
million yen. Therefore, total or subtotal amounts don’t necessarily
correspond with the aggregate of the account balances.

2. SIGNIFICANT ACCOUNTING POLICIESConsolidation

Allowance for doubtful accounts

The accompanying consolidated financial statements include theaccounts of the Company and significant companies over which
the Company has power of control through majority voting rights orexistence of certain other conditions evidencing control (together,
the “Companies”). Investments in nonconsolidated subsidiaries andaffiliates over which the Company has the ability to exercise significant influence over operating and financial policies are accounted
for by the equity method, except for insignificant investments which
are recorded at cost.
The Company has 91 consolidated subsidiaries (89 in FY2023
and 90 in FY2022) and 3 affiliates accounted for by the equity
method (3 in FY2023 and FY2022). For the year ended March 31,
2024, the accounts of 14 consolidated subsidiaries were included
based on a fiscal year that ended on December 31. When significant transactions occur at those subsidiaries between the end of
their fiscal year and that of the Company, the transactions areincluded in consolidation. Intercompany transactions and accounts
have been eliminated. In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the
portion attributable to non-controlling shareholders, are evaluatedbased on the fair value at the time the Company acquired controlof the respective subsidiary.

The allowance for doubtful accounts is provided to cover possible
losses on collection. With respect to normal trade accounts
receivable, it is based on the actual rate of historical bad debts,
and for certain doubtful receivables, the uncollectible amount is
individually estimated.

Cash and cash equivalents
Cash on hand, readily available deposits and short-term highly liquid
investments with maturities not exceeding three months at the timeof purchase are considered to be cash and cash equivalents.

Securities
The Companies hold equity securities issued by subsidiaries andaffiliated companies and available-for-sale securities. Equity securities issued by subsidiaries and affiliated companies which are notconsolidated or accounted for using the equity method are statedat moving average cost. Investments in securities other than equity
securities without market prices are stated at fair value. Unrealized
gains and losses on these securities are reported, net of applicable
income taxes, as a separate component of net assets. Realized
gains and losses on the sale of such securities are computed using
moving average cost. Investments in equity securities withoutmarket prices are stated at moving average cost.

Derivatives and hedge accounting
Derivative financial instruments are stated at fair value, andchanges in the fair value are recognized as gain or loss unless thederivative financial instruments are used for hedging purposes. If
derivative financial instruments are used as hedges and meetcertain hedging criteria, the Companies defer recognition of gain orloss resulting from a change in the fair value of the derivative financial instrument until the related loss or gain on the hedged item isrecognized. Also, if interest rate swap contracts are used ashedges and meet certain hedging criteria, the net amount to be
paid or received under the interest rate swap contract is added toor deducted from the interest on the assets or liabilities for which
the swap contract was executed.

FINANCIAL SECTION 2024

14

Inventories

Provision for directors’ retirement benefits

Inventories are valued at cost as determined principally by theaverage cost method. The balance sheet amount is calculated at
the lower of either the acquisition cost or the net selling price at theend of the fiscal year.

Directors and statutory auditors terminating their service withcertain consolidated domestic subsidiaries are entitled to receive
retirement benefits based on compensation and years of service,subject to the approval of shareholders. Certain consolidated
domestic subsidiaries accrue the liability for their plans in amounts
sufficient to provide for benefits arising from services performed
through the balance sheet date.

Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated loss from impairment. Cumulative amounts of recognizedimpairment loss are deducted from acquisition costs. Depreciationis computed over the estimated useful life of the asset mainly by
the straight-line method. Repairs, maintenance and minor renewals
are charged to expenses as incurred. Property, plant and equipment capitalized under finance lease arrangements are depreciatedover the estimated useful life as measured by the lease term of therespective asset by the straight-line method. The residual value iszero or the guaranteed residual value.

Intangible assets
Intangible assets are stated at cost, net of accumulated loss from
impairment. Cumulative amounts of recognized impairment loss
are deducted from acquisition costs. Depreciation is computed
over the estimated useful life of the asset mainly by the straightline method.

Goodwill
Goodwill, except for minor goodwill, is amortized by the straight-line
method within 20 years. Minor goodwill is expensed as incurred.

Liability (asset) for retirement benefits
The Company has an unfunded lump-sum benefit plan generally
covering all employees. Under the terms of the plan, eligible
employees are entitled upon mandatory retirement at age 60 or
earlier voluntary termination to a lump-sum severance payment
based on compensation at the time of severance and yearsof service.
In addition to the unfunded lump-sum plan, the Company
participates in a noncontributory funded pension plan, which
covers substantially all employees. Consolidated domestic subsidiaries have similar lump-sum benefit plans and pension plans.
Certain overseas consolidated subsidiaries have defined contri­
bution plans.
The Companies provide employees’ severance and retirement
benefits based on the estimated amounts of projected benefit
obligation, actuarially calculated using certain assumptions, and thefair value of the plan assets. The estimated benefit is attributed toeach period based on the plan’s benefit formula. Prior service costs
are recognized as expense using the straight-line method overmainly 5 years, a term within the average of the estimated remaining service years of the current employees. Actuarial gains andlosses are recognized using the straight-line method over mainly 10
years, a term also within the average of the estimated remaining
service years of employees, commencing with the following period.

15

KANEKA CORPORATION

Provision for product warranties
Provision for product warranties is estimated and recorded for thecost of replacement and repair that may be incurred after the saleof products.

Research and development expenses
Expenses related to research and development activities arecharged to income as incurred. Research and development
expenses for the years ended March 31, 2024, 2023 and 2022
were ¥35,397 million ($233,784 thousand), ¥32,669 million and¥30,894 million, respectively.

Income taxes
The tax effects of temporary differences between the carrying
amounts of assets and liabilities for tax and financial reporting arerecognized as deferred income taxes. The asset-liability approach isused to recognize deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

Revenue recognition
The business operations in the Group are mainly selling merchandise and finished goods to customers under the four domains
known as “Solutions Units” (Hereinafter “SU”), which are “Material
SU,” “Quality of Life SU,” “Health Care SU” and “Nutrition SU.”In principle, the Group recognizes revenue when control ofmerchandise and finished goods is transferred to the customer as
the performance obligations are satisfied. However, the Company
and its domestic subsidiaries recognize domestic sales at the pointof shipment in cases in which control of such goods or services istransferred to the customer within a reasonable period.
In addition, transaction price is measured at the amount ofconsideration received less any volume discounts, etc., as variableconsideration according to the contracts with some customers.

Net income per share
The computations of net income per share of common stock arebased on the weighted average number of shares outstanding
during each period.

Application of group tax sharing system
The Company and certain domestic consolidated subsidiaries
apply a group tax sharing system.

Reclassifications
Certain prior year amounts have been reclassified to conform to the2024 presentation. These changes had no impact on previously
reported results of operations or shareholders’ equity.
(Significant accounting estimates)
Impairment of fixed assets(1) Carrying amounts of fixed assets in the consolidated financial
statement in the current consolidated fiscal year
Millions of yen

2024
Property, plant and equipment
Intangible assets¥

331,319
20,832Thousands of
U.S. dollars (Note 1)

2024

2023
¥

292,615
16,189$2,188,225
137,593(2) Significant accounting estimates for identified items
For fixed assets, an impairment indicator is determined for assets
or asset groups that make business management and investment
decisions based on a Solution Vehicle. If any indicator of impairment is identified for such assets or asset groups, the Groupassesses whether an impairment loss should be recognized byusing the future cash flow method based on the medium-term
management plan, which was formulated by comprehensively
considering economic trends, changes in the business environmentand other factors.
The business activities of the Group have been operated in fourbusiness segments known as “Solutions Units,” which consist of“Material Solutions Unit,” “Quality of Life Solutions Unit,” “HealthCare Solutions Unit” and “Nutrition Solutions Unit.” Each unit’s
business is centered on solving issues by means of creating newvalue through the break-thorough technology, and the Group isdeveloping a wide variety of businesses globally while networking
the supply chain around the world.
The supply chain may be affected by unexpected events suchas pandemics, natural disasters, wars and terrorism, economic
crises, shortages of raw materials and sudden price fluctuations.
This may affect the assumptions of the medium-term management
plan regarding the estimates of future cash flows.

(Accounting standards and guidance not yet adopted)
Following accounting standards and guidance are those issued but
not yet adopted.
• Accounting Standard for Current Income Taxes (ASBJ Statement
No.27, October 28, 2022, ASBJ)• Accounting Standard for Presentation of Comprehensive Income(ASBJ Statement No.25, October 28, 2022, ASBJ)• Guidance on Accounting Standard for Tax Effect Accounting(ASBJ Guidance No.28, October 28, 2022, ASBJ)(1) Overview
Transfer of JICPA’s practical guidelines on tax effect accounting to
ASBJ was completed with the issuance of standards and guidance including ASBJ Statement No.28, Partial Amendments to
Accounting Standard for Tax Effect Accounting (hereinafter collectively referred to as “ASBJ Statement No.28, etc.”) in February
2018. During their deliberations, it had been determined that thefollowing two issues would be further discussed subsequent to theissuance of ASBJ Statement No. 28, etc. The above standards
and guidance were issued as a result of the discussions on thetwo issues below:• Categories in which income tax expense should be recorded(taxes on other comprehensive income)• Tax effects associated with sales of shares of subsidiaries, etc.
(i.e., shares of subsidiaries or affiliates) when the group taxation
regime is applied(2) Effective date
The standards and guidance will be effective from the beginning of
the fiscal year ending March 31, 2025.
(3) Effects of application of the standards and guidance
The effects of application of Accounting Standard for Current
Income Taxes, etc. on the consolidated financial statements are
currently under evaluation.

FINANCIAL SECTION 2024

16

3. COMPREHENSIVE INCOME
2023

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2022

2024

Valuation difference on available-for-sale securities
Increase (decrease) during the year¥

22,091

¥

2,258

¥

468

$

145,906

Reclassification adjustments(7,054)(1,099)(19)

Subtotal, before tax

15,037

1,158

449

99,315

Tax expense(4,560)(275)

6(30,120)

Subtotal, net of tax

10,476882

455

69,195(46,590)

Deferred gains or losses on hedges
Increase (decrease) during the year

(0)

(4)

(6)

(2)

Reclassification adjustments

4

6

11

32

Subtotal, before tax

4

1

5

30

Tax expense

(1)

(0)

(0)

(7)

Subtotal, net of tax

3

0

5

23

11,133

7,594

8,495

73,534————

11,133

7,594

8,495

73,534————

11,133

7,594

8,495

73,534

Increase (decrease) during the year

7,621

10,244

470

50,339Reclassification adjustments

(552)

569

1,190

(3,648)Foreign currency translation adjustment
Increase (decrease) during the year
Reclassification adjustments
Subtotal, before tax
Tax expense
Subtotal, net of tax
Remeasurements of defined benefit plans

Subtotal, before tax

7,069

10,813

1,660

46,690Tax expense(2,160)(3,304)(480)(14,267)

Subtotal, net of tax

4,909

7,509

1,179

32,423

11

Share of other comprehensive income of associates accounted forusing equity method
Increase (decrease) during the year

1

1

(7)

Reclassification adjustments

—

—

—

—

Subtotal, net of tax

1

1

(7)

11

Total other comprehensive income¥

26,525¥

15,989¥10,128$

175,188

4. CASH FLOWS
Significant non-cash transactions
Millions of yen

2023

2024

Increase in capital surplus due to share exchange

¥

—

¥

789

Thousands of
U.S. dollars (Note 1)

2022

¥

—

2024

$

—

Decrease in retained earnings due to share exchange

—

1,696

—

—

Decrease in treasury stock due to share exchange

—

8,142

—

—

7,344

—

—

48,510Cancellation of treasury stock
17

KANEKA CORPORATION

5. FINANCIAL INSTRUMENTS
1. Matters regarding financial instruments(1) Policy for handling financial instruments
The Companies procure funds necessary for the manufacturing
and sales business primarily through borrowings from financial
institutions or by issuing corporate bonds based upon the plan andbudget for capital investments. In principle, temporary surplus
funds are centralized by the Cash Management System (CMS) andinvested in highly safe financial assets. Derivative transactions areused to hedge against risks described below, but never for speculative purposes.
(2) Description of financial instruments and inherent risks
Notes and accounts receivable - trade, which are operating receivables, are exposed to customer credit risk. Operating receivables
denominated in foreign currencies generated from global business
operations are exposed to foreign exchange fluctuation risk. Marketable securities and investment securities, primarily shares ofcompanies with which the Companies maintain business relations,are exposed to the risk of market price fluctuations.
Notes and accounts payable, which are operating payables,
are basically settled in the short-term with a deadline set within ayear. Operating payables include payables denominated in foreign
currencies for importing materials and are exposed to foreignexchange fluctuation risk. However, they remain within the range ofthe balance of operating receivables denominated in the same
foreign currencies. Short-term borrowings are primarily for procuring operating capital and long-term debt, and bonds are issued toobtain necessary funds mainly for capital expenditures. A portion of
the short-term debt and the long-term debt is exposed to interest
rate fluctuation risk, but the effect is limited.
Derivative transactions such as foreign exchange forward­contracts, currency swaps and interest rate swaps are used tohedge against the foreign currency fluctuation risk and interest
rate fluctuation risk associated with operating receivables andpayables denominated in foreign currencies, investment assets,loans receivable, etc. Since all derivative transactions correspondto assets and liabilities on the balance sheets, foreign exchange
fluctuation risk is hedged and the fluctuation risk of market interest
rates is rendered insignificant.
(3) Risk management system related to financial instruments(a) Credit risk management (risk pertaining to breach of contract
on the part of business partners)
The Company aims to mitigate credit risk by quickly identifying any
concerns about the collection of operating receivables resulting
from the deterioration of a business partner’s financial position orother factors. Also, each business division periodically reviews thestatus of our main business partners and regularly monitors deadlines, balances and credit status for each partner. The consolidated
subsidiaries also manage operating receivables in accordance withthe practices of the Company.

As for debt securities, the credit risk is insignificant since theCompany only handles those with high ratings or issued by companies with existing business relations with the Company and whose
creditability is verifiable. Furthermore, the Company periodicallyverifies the financial position of issuers to mitigate risk. Since thecounterparties to the derivative transactions are highly creditworthy
financial institutions, the Company considers the risk of theirbreach of contract as almost nil.
The maximum credit risk exposure of financial assets is represented by their carrying amounts on the balance sheet as of March
31, 2024.
(b) Market risk management (foreign exchange and interest rate
fluctuation risk)
The Company and some consolidated subsidiaries identify foreignexchange fluctuation risk associated with operating receivables oroperating payables denominated in foreign currencies by currency
and by month. Such risk is hedged by using foreign exchange
forward contracts, principally up to the amounts to be settled after
netting operating payables or operating receivables denominated inforeign currencies. Note that the Company defines the monthly
execution limit and the operating standard based upon its Procedures for Foreign Exchange Management and enters into foreignexchange forward contracts within the scope provided by theprocedures. Also, the Companies utilize interest rate swaps mainly
to hedge against the fluctuation risk of market interest rates.
For marketable securities and investment securities, theCompany periodically identifies fair values and the financial positions of the issuers (business partner companies). For securities
other than held-to-maturity bonds, the Company continuously
revises the holding status taking into consideration the business
relationship with the business partner companies.
The Financial Department of the Company executes derivativetransactions based upon its Transaction Regulations for Derivative
Financial Products, which defines the basic policy, the scope ofoperations, the personnel responsible for execution, the basis for
decision making and the management system. Consolidated subsidiaries enter into derivative transactions based upon resolutions
passed by their respective bodies upon the Company’s approval.
The Company ensures an effective internal checking system bysegregating the execution function from the monitoring and managing function. Also, the Director of the Company’s Financial Department performs evaluations for hedge effectiveness of all derivativetransactions entered into by the Companies and reports the results
together with a description of the underlying assets and liabilities to
the President and the CFO on a monthly basis.
(c) Liquidity risk management relating to fund procurement(risk of non-execution of payments by deadlines)
The Company manages liquidity risk by timely preparing andupdating cash flow plans by the Financial Department and by maintaining a liquidity facility, which is the sum of liquidity on hand andcommitment lines, in the approximate amount of one month’s
consolidated net sales. In addition, the Companies mitigate liquidity
risk in principle by centralizing the Companies’ funds using CMS.
Accordingly, the Companies consider that no significant liquidity
risk exists.

FINANCIAL SECTION 202418

(4) S upplementary explanation for matters regarding fair value offinancial instruments
The fair value of financial instruments is based on market price.
If a market price is not available, another valuation method is used.
Such methods include variable factors and assumptions, and theresults of a valuation may differ depending on which factors andassumptions are used.
The contract amounts related to the derivative transactions
shown in “Derivative Transactions” do not indicate the market risks
associated with the derivative transactions themselves.

2. Matters regarding the fair value of financial instruments
The table below shows the amounts of financial instruments
recorded in the consolidated balance sheets as of March 31, 2024
(the consolidated accounts settlement date of the year ended
March 31, 2024), their fair values and any differences between thebalance sheet amounts and the fair values.

* “Cash and cash equivalents,” “Notes and accounts receivable – trade,” “Notes andaccounts payable – trade,” “Short-term loans payable” and “Accounts payable – other”
are omitted as the fair values approximate their book values because they are cash or
settled in a short period of time.
( 2)* Financial instruments whose fair values are deemed extremely difficult to assess:( 1)

Millions of yen
TypeUnlisted equity securities

Available-for-sale securities¥

Bonds payable
Long-term loans payable
Total liabilities

63,37563,37520,00046,75366,753

The table below shows the amounts as of March 31, 2024 calculated into U.S. dollars.
Thousands of U.S. dollars (Note 1)

Fair value

Difference¥

63,37563,375
20,35746,50566,862

¥

—
—
357
(247)
109

Available-for-sale securities
Total assets
Bonds payable
Long-term loans payable

(48)
(195)

— Hedge accounting applied

(48)
(195)

—
—

* “Cash and cash equivalents,” “Notes and accounts receivable – trade,” “Notes andaccounts payable – trade,” “Short-term loans payable” and “Accounts payable – other”
are omitted as the fair values approximate their book values because they are cash or
settled in a short period of time.
( 2)* Equity securities without market prices are not included in “Marketable and investment
securities.” The carrying amount of those financial instruments are as follows:( 1)

Total liabilities

Unlisted equity securities$ 418,571
418,571132,091
308,784
440,875$ 418,571
418,571
134,451
307,147
441,599(317)(1,288)(317)(1,288)— Hedge accounting applied

The table below shows the amounts of financial instruments
recorded in the consolidated balance sheets as of March 31, 2023
(the consolidated accounts settlement date for the year ended
March 31, 2023), their fair values and any differences between thebalance sheet amounts and the fair values.
Millions of yen

Consolidatedbalance sheet
amount$45,621* 	Long-term loans payable include current portion of long-term loans payable.
( 4)* Assets and liabilities arising from derivative transactions are stated as a net amount.
The figures in parenthesis indicate net liabilities.

Note 1.
Redemption schedules after the consolidated balance sheet date formonetary receivables
Millions of yen

2024
Withinone year

Cash and cash equivalents
Notes and accounts receivable – trade

Consolidatedbalance sheet
amountFair value

Difference

Total¥ 43,278
185,527¥ 228,806

Over one year Over five years
to five years
to ten years

¥
¥

—
—
—

¥
¥

—
—
—

Marketable and investment securities
Total assets
Bonds payable
Long-term loans payable
Total liabilities

50,86250,862
10,00042,127
52,127¥50,86250,862
10,64041,732
52,372

¥

—
—
640
(395)
245

Derivative transactions (*4)
— Hedge accounting not applied— Hedge accounting applied

19

KANEKA CORPORATION

(17)
(133)

—
—

Over
ten years

¥
¥

—
—
—

Millions of yen

2023
Withinone year

Cash and cash equivalents
Notes and accounts receivable – trade
Total

(17)
(133)

—
—

( 3)

* 	Bonds payable and long-term loans payable include the current portion of bonds
payable and the current portion of long-term loans payable.
( 4)* Assets and liabilities arising from derivative transactions are stated as a net amount.
The figures in parenthesis indicate net liabilities.

¥

—
—
2,360
(1,636)
723

Thousands of
U.S. dollars (Note 1)

Unlisted equity securities

6,907

$

* “Cash and cash equivalents,” “Notes and accounts receivable – trade,” “Notes andaccounts payable – trade,” “Short-term loans payable” and “Accounts payable – other”
are omitted as the fair values approximate their book values because they are cash or
settled in a short period of time.
( 2)* Equity securities without market prices are not included in “Marketable and investment
securities.” The carrying amount of those financial instruments are as follows:

Type

( 3)

Available-for-sale securities

Difference( 1)

Consolidatedbalance sheet
amount¥Fair value— Hedge accounting not applied

Millions of yen
TypeConsolidatedbalance sheet
amountDerivative transactions (*4)

Derivative transactions (*4)
— Hedge accounting not applied

6,787

Marketable and investment securities

Marketable and investment securities
Total assets¥

The financial instruments shown above are not included in the tables in “Marketable
and investment securities” because their market prices were not available and their fairvalues were deemed extremely difficult to assess.
( 3)* Long-term loans payable include current portion of long-term loans payable.
( 4)* Assets and liabilities arising from derivative transactions are stated as a net amount.
The figures in parenthesis indicate net liabilities.

Millions of yen
Consolidatedbalance sheet
amountConsolidatedbalance sheet
amount¥ 40,699
168,860¥ 209,559

Over one year Over five years
to five years
to ten years

¥
¥

—
—
—

¥
¥

—
—
—

Over
ten years

¥
¥

—
—
—

Thousands of U.S. dollars (Note 1)

2024
Withinone yearOver one year Over five years
to five years
to ten years$ 285,837 $Notes and accounts receivable – trade 1,225,334
Total$1,511,172 $———Cash and cash equivalents

$

—
—
—

$

(2) Financial instruments other than those measured atfair values in the consolidated balance sheetsOver
ten years$$

Millions of yen
Fair value

—
—
—

¥

Bonds payable

Note 2.
Maturity schedules after the consolidated balance sheet date for bonds
and long-term debt refer to Note 14, “Short-term loans payable andlong-term debt.”

3. Fair value information of financial instruments
by level of inputs(1) Financial instruments measured at fair values in
the consolidated balance sheets
Millions of yen
Fair value

2024

Type
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities¥ 63,375

¥

—

¥

—

¥ 63,375—(243)

Derivative transactions
Currency related contracts

—

(243)

Millions of yen
Fair value

2023

Type
Level 1

Level 2Long-term loans payable

Level 3Total—

¥ 50,862—(151)

Level 1

Level 2——

¥ 20,357
46,505¥

Level 3

Total

—
—

¥ 20,357
46,505
Millions of yen
Fair value

2023

Type

¥

Bonds payable

Based on the observability and the significance of the inputs used
to determine fair values, fair value information of financial instruments is presented by categorizing measurements into the following three levels:
Level 1 fair value: fair values measured by quoted prices ofidentical assets or liabilities in active markets.
Level 2 fair value: fair values measured by using observable
inputs other than Level 1.
Level 3 fair value: fair values measured by using unobservable
inputs.
When multiple inputs of different categories are used in measuring fair value, the Company and its subsidiaries classified fairvalues into a category to which the lowest priority is assigned.

2024

Type

Long-term loans payable

Level 1

Level 2——

¥ 10,640
41,732¥

Level 3

Total

—
—

¥ 10,640
41,732Thousands of U.S. dollars (Note 1)
Fair value

2024

Type

Bonds payable
Long-term loans payable$

Level 1

Level 2——

$ 134,451
307,147$

Level 3

Total

—
—

$ 134,451
307,147

Note. Valuation techniques and inputs used in measuring fair values
AssetsInvestment securities
	Listed equity securities are measured by using quoted prices. Fairvalues of listed equity securities are classified as Level 1, because
they are exchanged in active markets.
Liabilities
Bonds payable	Fair values of bonds payable issued by the Company are measured
based on the market price. Bonds payable are classified as Level 2,
because their fair values are the market price, but they are nottraded in active markets.
Long-term loans payable	Long-term loans payable is classified as Level 2, because their fairvalues of long-term loans payable are measured at the present
value calculated by discounting the total amount of principal andinterest at an interest rate for similar new borrowings.
Derivative transactions
	Currency related contracts are classified as Level 2, because theirfair values are measured by using the discounted cash flow methodwith observable inputs, such as interests and foreign exchange rates.

Investment securities
Available-for-sale securities
Equity securities¥ 50,862¥—¥

Derivative transactions
Currency related contracts

—

(151)

Thousands of U.S. dollars (Note 1)
Fair value

2024

Type
Level 1

Level 2

Level 3Total—

$ 418,571—(1,605)Investment securities
Available-for-sale securities
Equity securities$ 418,571$—$

Derivative transactions
Currency related contracts—(1,605)FINANCIAL SECTION 2024

20

6. SECURITIESThe following tables summarize acquisition costs and book values (fair values) of available-for-sale securities with available fair values as ofMarch 31, 2024:

Securities with book value exceeding acquisition cost:
Millions of yen

Thousands of U.S. dollars (Note 1)

2024
Acquisition cost

Equity securities
Bonds

¥
¥

14,074—
14,074

Book value¥¥

61,577—
61,577

Difference¥¥

47,503—47,5032024
Acquisition cost$$

92,956—
92,956

Book value

Difference$ 406,696—$ 406,696$ 313,740—$ 313,740

Securities with book value not exceeding acquisition cost:
Millions of yen

Thousands of U.S. dollars (Note 1)

2024
Acquisition cost

Equity securities
Bonds

¥
¥

2,449
—
2,449

Book value

¥
¥

1,798
—
1,798

Difference

¥
¥

(651)
—
(651)

2024
Acquisition cost$$

16,175—
16,175

Book value$$

11,875—
11,875Difference$$(4,300)—(4,300)The following table summarizes sales of available-for-sale securities as of March 31, 2024:
Millions of yen

Thousands of U.S. dollars (Note 1)

2024
Sales

Equity securities
Bonds

¥
¥

9,604
—
9,604

Gain on sales

Loss on sales

¥

¥

¥

7,060
—
7,060

—
—
—

¥

2024
Sales

$
$

63,430—63,430Gain on sales

Loss on sales

$

$

$

46,632—
46,632$———

The following tables summarize acquisition costs and book values (fair values) of available-for-sale securities with available fair values as ofMarch 31, 2023:

Securities with book value exceeding acquisition cost:
Millions of yen

2023
Acquisition cost

Equity securities
Bonds

¥
¥

16,153—
16,153

Book value¥¥

48,699—48,699Difference¥¥

32,546—32,546

Securities with book value not exceeding acquisition cost:
Millions of yen

2023
Acquisition cost

Equity securities
Bonds

¥
¥

2,883
—
2,883

Book value

¥
¥

2,162
—
2,162

Difference

¥
¥

(721)
—
(721)

The following table summarizes sales of available-for-sale securities as of March 31, 2023:
Millions of yen

2023
Sales

Equity securities
Bonds

¥
¥

21

KANEKA CORPORATION

2,405
—
2,405

Gain on sales

Loss on sales

¥

¥

¥

1,410
—
1,410

¥

14
—
14

7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS
Derivative transactions to which hedge accounting was not applied as of March 31, 2024 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen
Contract amount

Fair value

Contract amount

Fair value

Foreign exchange forward contracts
Sell contracts
U.S. dollar

¥

5,062

¥

(46)

$

33,434

$

(306)

Euro

148

(1)

978

(12)

British pound

104

(0)

691

(1)

1,677

13

11,078

87

306

(12)

2,027

(84)

Buy contract
U.S. dollar
Japanese Yen

Derivative transactions to which hedge accounting was applied as of March 31, 2024 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen
Contract amount

Fair value

Contract amount

Fair value

Interest rate and currency swaps transactions
Pay Japanese Yen and receive Malaysia Ringgit

¥

925

¥

(195)

$

6,110

$

(1,288)Derivative transactions to which hedge accounting was not applied as of March 31, 2023 were as follows:
Millions of yen
Contract amount

Fair value

Foreign exchange forward contracts
Sell contracts
U.S. dollar

¥

4,778

¥

5

Euro

173

(1)

British pound

115

(0)

Buy contract
1,757

(5)

Japanese Yen

U.S. dollar

559

(14)

Singapore dollar

100

(0)

Derivative transactions to which hedge accounting was applied as of March 31, 2023 were as follows:
Millions of yen
Contract amount

Fair value

Interest rate and currency swaps transactions
Pay Japanese Yen and receive Malaysia Ringgit

¥

925

¥

(133)

FINANCIAL SECTION 2024

22

8. INVENTORIESInventories at March 31, 2024 and 2023 consisted of the following:
Millions of yen

2023

2024

Merchandise and finished goods¥

Work-in-process

94,734¥

177,296

2024

$

¥

168,115625,684
77,13465,57470,883¥89,223
13,317

11,678Raw materials and supplies

Thousands of
U.S. dollars (Note 1)

468,152$

1,170,972

9. RESTRUCTURING CHARGESIn 2022, the Group radically reinvented the production processes for Graphite sheets. The new processes are expected to increase further
strengthen our competitiveness in the future.
Following these structural reforms, losses were recorded as restructuring costs for obsolete manufacturing facilities and inventories.
The main component of these losses was inventory valuation loss of ¥346 million.
With regard to machinery and equipment for which there was no prospect of the future use due to the business restructuring, the bookvalue was reduced to the recoverable value, and the reduction of ¥2,346 million was included in Restructuring charges as other expenses.

10. IMPAIRMENT LOSSESThe Companies recognized impairment loss in other expenses for the year ended March 31, 2022.
Location

Use

Type

Mooka, Tochigi, Japan

Business assets(Manufacturing equipment for electronic materials, etc.)

Machinery, equipment and vehicles, etc.

Kaneka Apical Malaysia Sdn. Bhd.
(Pahang, Malaysia)

Business assets(Manufacturing equipment for electronic materials, etc.)

Machinery, equipment and vehicles, etc.

Kaneka Eperan (Suzhou) Co. Ltd.
(Jiangsu Province, China)

Business assets(Manufacturing equipment for
expandable polystyrene resin products, etc.)

Machinery, equipment and vehicles, etc.

Shinka-Shokuhin Co. Ltd.
(Kazuno, Akita), Japan

Business assets(Manufacturing equipment for food products, etc.)

Machinery, equipment and vehicles, etc.

The Companies group their assets mainly by the Solutions Vehicles of the Company and market similarity, and the businesses of con­solidated subsidiaries were grouped by the relevant subsidiary unit. Idle assets were grouped by individual assets. In FY2021, the bookvalue of machinery and equipment for electronic materials in Kaneka Corporation, Tochigi Kaneka Corporation, and Kaneka Apical Malaysia
Sdn. Bhd. the use of which was no longer expected due to business structural reform, was reduced to the recoverable value, and a reduction of ¥2,346 million was included in Restructuring charges as other expenses. The major component was machinery and equipment,¥2,125 million.
The recoverable value of machinery and equipment for expandable polystyrene resin products in Kaneka Eperan (Suzhou) Co. Ltd wasless than the book value because of lower profitability. Therefore, the book value was reduced to the recoverable value, and the reduced
amount, ¥557 million, was recorded in other expenses. The major component was machinery, equipment and vehicles, ¥482 million.
The recoverable value of machinery and equipment for food products in Shinka-Shokuhin Co. Ltd. was less than the book value
because of expectation about lower profitability due to soaring prices of the main raw materials. Therefore, the book value was reduced
to the recoverable value, and the reduced amount, ¥501 million, was recorded in other expenses. The major component was machinery,equipment and vehicles, ¥323 million. The recoverable value was measured by the net selling price and evaluated by the estimatedsales price.

23

KANEKA CORPORATION

11. PRODUCT WARRANTY EXPENSES
The Companies recognized product warranty expenses for the cost of replacement and repair related to the discolorationin appearance after the sales of solar cell products in other expenses for the year ended March 31, 2022.

12. INCOME TAXESThe Company and its consolidated domestic subsidiaries are subject to a number of taxes based on income, which, in the aggregate, indicate astatutory rate in Japan of approximately 30.58% for the years ended March 31, 2024, 2023 and 2022.
1. The significant differences between the statutory and effective tax rate for the years ended March 31, 2024, 2023 and 2022 were as follows:

Statutory tax rate

2024

2023

2022

30.58%

30.58%

30.58%

Permanently non-deductible expense

1.55%

0.54%

0.29%

Permanently non-taxable income(8.07)%(9.45)%(17.06)%

Elimination of dividends on consolidation

7.72%

9.21%

18.40%Tax credits primarily for research and development expenses(8.52)%(16.24)%(6.52)%

Change in valuation allowance

10.70%

10.57%

0.69%

Tax rate differences of foreign subsidiaries(0.81)%(0.41)%(1.79)%

Amortization of goodwill

0.46%

0.51%

0.41%

Other

(0.92)%

0.30%(1.18)%

Effective tax rate

32.69%

25.63%

23.83%

2. Significant components of deferred tax assets and liabilities as of March 31, 2024 and 2023 were as follows:

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2023

2024

Deferred tax assets:
Net defined benefit liability¥

Tax loss carryforwards

3,558

¥

Loss on valuation of investment securities
Excess bonuses accrued

6,244

$

3,379

4,225

23,502
27,910

8

141

54

2,129

1,935

14,066

Impairment loss on non-current assets

2,555

2,545

16,878

Unrealized gain

2,281

1,922

15,068

Tax credit carryforwards

9,935

8,560

65,617

Other
Subtotal
Valuation allowance
Total deferred tax assets

8,087

6,298

53,41532,782

31,029216,513(16,880)(12,900)(111,489)

15,901

18,128105,024(13,790)(9,241)(91,078)

Deferred tax liabilities:
Valuation difference on available-for-sale securities
Depreciation of foreign subsidiaries(4,188)(3,862)(27,665)

Other(4,649)(2,280)(30,708)(22,628)(15,383)(149,453)

Total deferred tax liabilities
Net deferred tax assets (liabilities)¥

(6,726)

¥

2,745

$

(44,428)

FINANCIAL SECTION 2024

24

3. Accounting for corporation tax and local corporation tax and tax effect accounting
The Company and certain domestic consolidated subsidiaries have adopted the group tax sharing system from the fiscal year ended March
31, 2023. In addition, corporation tax and local corporation tax, as well as their tax effects, are accounted for and disclosed under Practical
Solution on the Accounting and Disclosure under the Group Tax Sharing System (PITF No.42, August 12, 2021).

13. REVENUE RECOGNITION
1. Information regarding disaggregated revenue from­contracts with customers
Information regarding disaggregated revenue from contracts withcustomers is explained in Note 20, “Segment information.”­Revenues from other sources are not material.

2. Information that is the basis for understanding revenue
from contracts with customers
Information that is the basis for understanding revenue from contracts with customers is explained in “Revenue recognition” inNote 2.

3. Information based on the relationship between the satisfaction of performance obligations under contracts withcustomers and cash flow arising from the contracts, aswell as the amount and timing of revenue expected to berecognized after the next consolidated fiscal year fromthe contracts with customers that existed at the end of
this consolidated fiscal year.

(1) Balance of contract assets and contract liabilities
Information regarding the balance of contract assets and contract
liabilities of the Group in the current consolidated fiscal year isomitted because there was no significant balance and fluctuation.
In addition, in this consolidated fiscal year, the amount of recognized revenue from the satisfaction of performance obligations in
the prior was not significant.
(2) Transaction price allocated to the remaining performanceobligations
Information regarding transaction price allocated to remaining
performance obligations of the Group is omitted because theGroup have no significant contracts in which the expected initial
term was more than one year.
In addition, there was no significant variable consideration
which was not included in the transaction price among the consideration arising from contracts with customers.

14. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT
Short-term loans payable are generally unsecured notes for three months with average interest rates of 2.40% and 1.74% at March 31,
2024 and 2023, respectively. Such borrowings are generally renewable at maturity.
Long-term loans payable and bonds payable at March 31, 2024 and 2023 consisted of the following:

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2023

2024

Secured:Loans principally from banks and insurance companies at interest rates 0.00%
in 2023, matured in 2024

¥

—

¥

185

$

—

Unsecured:
Loans from banks and insurance companies at interest rates from 0.00% to 10.02%
in 2024 and 2023, maturing serially through 2039

41,942

46,753308,784

Bonds at interest rate of 0.11%, due September 12, 2024

5,000

5,000

33,022

Bonds at interest rate of 0.24%, due September 12, 2029

5,000

5,000

33,022

Bonds at interest rate of 0.724%, due December 7, 2028
Less amounts due within one year

KANEKA CORPORATION—

66,04552,127440,875(8,420)(11,361)¥25

10,00066,75355,391¥

43,706(75,035)$

365,840

At March 31, 2024 and 2023, assets pledged as collateral for secured long-term loans payable, short-term loans payable and notes andaccounts payable - trade totaling ¥185 million ($1,223 thousand) and ¥354 million were as follows:
Millions of yen

2023

2024

Property, plant and equipment, net¥

Investment securities

4,708

¥

4,708

4,557

2024

$

31,098

1,887—¥

Thousands of
U.S. dollars (Note 1)

¥

6,445

—
$

31,098The aggregate annual maturities of long-term loans payable and bonds payable were as follows:

Years ending March 31,
2025

¥

2026

Millions of yen

Thousands of
U.S. dollars (Note 1)

2024

2024

11,361$

7,915

75,03552,278

2027

4,671

30,851

2028

8,674

57,2902029

14,66596,8612030 and thereafter

19,464

128,557¥

66,753$440,875

Millions of yen

Years ending March 31,
2024

2023

¥

8,420

2025

10,125

2026

6,742

2027

2,734

2028

7,075

2029 and thereafter

17,028¥52,127

FINANCIAL SECTION 202426

15. PROVISION FOR RETIREMENT BENEFITSDefined benefit plans(1) Movement in retirement benefit obligations, except plan applying simplified method
Millions of yen

2023

2024

Balance at beginning of year¥

110,154

Thousands of
U.S. dollars (Note 1)¥

122,9962024$

727,521

Service cost

3,627

4,183

23,955Interest cost

1,578

927

10,426

Actuarial loss (gain)(1,383)(13,453)(9,137)

Benefits paid

(5,144)(4,668)(33,980)

Other
Balance at the end of year

168

300
¥

109,131¥

110,154

1,983$

720,769(2) Movements in plan assets, except plan applying simplified method
Millions of yen

2023

2024

Balance at beginning of year¥

Expected return on plan asset

93,400Thousands of
U.S. dollars (Note 1)¥

95,318

2,229

2,272

2024

$

616,870
14,722

Actuarial gain (loss)

6,238(3,209)41,201

Contributions paid by the employer

1,783

1,793

11,777

Benefits paid

(2,801)(2,775)(18,499)

Balance at the end of year¥

100,849¥

93,400$666,071(3) Movement in liability for retirement benefits of defined benefit plan applying the simplified method
Millions of yen

Thousands of
U.S. dollars (Note 1)

2023

2024

2024

Balance at beginning of year

¥

4,075

¥

3,881

$

26,918Retirement benefit cost

555

492

3,669

Benefits paid

(331)

(299)

(2,187)

3

1

26

Other
Balance at the end of year

¥

4,304

¥

4,075

$

28,426(4) Reconciliation from retirement benefit obligations and plan assets to liability and asset for retirement benefits
Millions of yen

2023

2024

Funded retirement benefit obligation¥

Plan asset

104,994

Thousands of
U.S. dollars (Note 1)¥

106,0702024$

693,442(100,849)(93,403)(666,071)

4,144

12,667

27,371

Unfunded retirement benefit obligations

8,441

8,162

55,753

Total net liability (asset) for retirement benefits

12,58520,82983,124

Liability for retirement benefits

12,58520,82983,124

Total net liability (asset) for retirement benefits

27

KANEKA CORPORATION¥

12,585¥20,829$83,124

(5) Retirement benefit costs
Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2024

Service cost

¥

3,627

¥

2022

4,183

¥

2024

4,383

$

23,955Interest cost

1,578

927

908

10,426

Expected return on plan assets(2,229)(2,272)(2,238)(14,722)

Net actuarial loss amortization

(552)

569

1,190

(3,648)Retirement benefit expenses calculated by simplified method

555

492

456

3,669

¥

2,979

¥

3,899

¥

4,700

$

19,681(6) Remeasurements for retirement benefits
Thousands of
U.S. dollars (Note 1)

Millions of yen

2023

2024

Actuarial gains and losses

¥

7,069

¥

2022

10,813

¥

2024

1,660

$

46,690(7) Accumulated remeasurements for retirement benefits
Thousands of
U.S. dollars (Note 1)

Millions of yen

2024

Actuarial gains and losses that are yet to be recognized¥ (16,390)

¥

2023

2024

9,320

$ (108,250)(8) Plan assets
1. Plan assets comprise:
2023

2024

Bonds

49%

50%

Equity securities

29%

27%

General account

12%

13%

Other

10%

9%

100%

100%

2. Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining the long-term expected rate of return.
(9) Actuarial assumptions
The principal actuarial assumptions
2024

2023

2022

Discount rate

Mainly 1.42%

Mainly 1.42%

Mainly 0.72%

Long-term expected rate of return

Mainly 2.50%

Mainly 2.50%

Mainly 2.50%

Defined contribution plans
Millions of yen

2023

2024

The amount of contributions to the defined contribution plan

¥

769

¥

621

Thousands of
U.S. dollars (Note 1)

2022

¥

547

2024

$

5,081

FINANCIAL SECTION 202428

16. CONTINGENT LIABILITIESAt March 31, 2024 and 2023, contingent liabilities were as follows:
Millions of yen

2023

2024

Notes discounted¥

Notes endorsed

10

¥

159

2024

$

¥

179

66
136

140

129
¥

5
33

20

Guarantees

Thousands of
U.S. dollars (Note 1)

853
$

1,056

17. NET ASSETS
Under the Japanese Corporate Law (“the Law”), the entire amount
paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital, which is included incapital surplus.
Under the Law, in cases in which a dividend distribution of
surplus is made, the smaller of an amount equal to 10% of thedividend or the excess, if any, of 25% of common stock over the
total of legal earnings reserve and additional paid-in capital must
be set aside as legal earnings reserve or additional paid-in capital.
Legal earnings reserve is included in retained earnings in theaccompanying consolidated balance sheets.
Legal earnings reserve and additional paid-in capital may not
be distributed as dividends. By resolution of the shareholders’meeting, legal earnings reserve and additional paid-in capital may
be transferred to other retained earnings and capital surplus,
respectively, which are potentially available for dividends.
On May 14, 2024, the Board of Directors authorized cash
dividends to shareholders of record at March 31, 2024 on theshares of stock then outstanding at the rate of ¥55.0 ($0.36) per
share or a total of ¥3,528 million ($23,302 thousand).

29

KANEKA CORPORATION

The appropriations had not been accrued in the consolidated
financial statements as of March 31, 2024.
Such appropriations are recognized in the period in which they
are approved by the Board of Directors.
Cash dividends per share applicable to the fiscal year ended
March 31, 2024, comprise interim dividends of ¥55.0 ($0.36) and
year-end dividends of ¥55.0 ($0.36).
Changes in liabilities for written put options over non-controllinginterests
The Group has granted written put options over shares of consolidated subsidiaries that apply the International Financial ReportingStandards (IFRS) to non-controlling interests of these consolidated
subsidiaries. The amount of expected future payment is recorded inother liabilities, and the same amount is deducted from capitalsurplus. Any fluctuations that occur after the initial recognition isrecognized through an increase or decrease in capital surplus.

18. STOCK OPTIONS(1) The Company
The Company has implemented a stock option plan by which subscription rights to shares were granted to directors of the Company.
The Company conducted a consolidation of shares of common stock at the ratio of five shares to one share on October 1, 2018.
The figures after conducting the consolidation of shares are shown as following in the table below.
The following table summarizes the Company’s stock option plan.
Stock options granted on
August 10, 2023

Stock options granted on
August 12, 2022

Stock options granted on
August 12, 2021

Stock options granted on
August 13, 2020

Category and number of people granted
stock options

Company directors, 8
Executive officers, 29

Company directors, 8
Executive officers, 27

Company directors, 8
Executive officers, 26

Company directors, 8
Executive officers, 25

Number of stock options granted bycategory of stock

31,000 shares of common stock

30,000 shares of common stock

29,200 shares of common stock

29,000 shares of common stock

Vesting conditions

No provision

No provision

No provision

No provision

Exercise period

From August 11, 2023
through August 10, 2048 (*)

From August 13, 2022
through August 12, 2047 (*)

From August 13, 2021
through August 12, 2046 (*)

From August 14, 2020
through August 13, 2045 (*)

Stock options granted on
August 9, 2019

Stock options granted on
August 9, 2018

Stock options granted on
August 9, 2017

Stock options granted on
August 9, 2016

Category and number of people granted
stock options

Company directors, 10
Executive officers, 22Company directors, 9
Executive officers, 20

Company directors, 9
Executive officers, 16Company directors, 10

Number of stock options granted bycategory of stock

26,200 shares of common stock

24,400 shares of common stock

22,600 shares of common stock

14,800 shares of common stock

Vesting conditions

No provision

No provision

No provision

No provision

Exercise period

From August 10, 2019
through August 9, 2044 (*)

From August 10, 2018
through August 9, 2043 (*)

From August 10, 2017
through August 9, 2042 (*)

From August 10, 2016
through August 9, 2041 (*)

Stock options granted on
August 11, 2015

Stock options granted on
August 11, 2014

Stock options granted on
August 9, 2013

Stock options granted on
August 9, 2012

Category and number of people granted
stock options

Company directors, 10Company directors, 10Company directors, 10Company directors, 12

Number of stock options granted bycategory of stock

14,800 shares of common stock

15,000 shares of common stock

13,000 shares of common stock

15,000 shares of common stock

Vesting conditions

No provision

No provision

No provision

No provision

Exercise period

From August 12, 2015
through August 11, 2040 (*)

From August 12, 2014
through August 11, 2039 (*)

From August 10, 2013
through August 9, 2038 (*)

From August 10, 2012
through August 9, 2037 (*)

Stock options granted on
August 10, 2011

Stock options granted on
August 10, 2010

Stock options granted on
August 11, 2009

Stock options granted on
August 11, 2008

Category and number of people granted
stock options

Company directors, 12Company directors, 13Company directors, 12Company directors, 13

Number of stock options granted bycategory of stock

15,000 shares of common stock

15,000 shares of common stock

15,000 shares of common stock

15,000 shares of common stock

Vesting conditions

No provision

No provision

No provision

No provision

Exercise period

From August 11, 2011
through August 10, 2036 (*)

From August 11, 2010
through August 10, 2035 (*)

From August 12, 2009
through August 11, 2034 (*)

From August 12, 2008
through August 11, 2033 (*)

Stock options granted on
September 10, 2007

Category and number of people granted
stock options

Company directors, 13

Number of stock options granted bycategory of stock

11,400 shares of common stock

Vesting conditions

No provision

Exercise period

From September 11, 2007
through September 10, 2032 (*)(*) If a holder of subscription rights to shares loses his/her position as a Company director during the above stated exercise period, the holder may exercise those rights only within the
10-day period beginning the day after losing such position.

FINANCIAL SECTION 2024

30

The following table summarizes the movements and prices of subscription rights to shares.
Stock options grantedon August 10, 2023

Stock options grantedon August 12, 2022

Stock options grantedon August 12, 2021

Stock options grantedon August 13, 2020

Stock options grantedon August 9, 2019

Unvested stock options
Beginning of term
GrantedExpired or forfeited
VestedUnvested balance

—

—

—

—

—

31,000

—

—

—

—

—

—

—

—

—

31,000

—

—

—

—

—

—

—

—

—
21,600

Vested stock options
Beginning of term
VestedExercised—

30,00027,40026,60031,000

—

—

—

—

—

3,800

3,400

3,400

3,200

Expired or forfeited

—

—

—

—

—

Unexercised balance

31,00026,20024,00023,20018,400Exercise price (yen)

1

1

1

1

1

Weighted average market value per stock at the dates exercised (yen)

—

3,699

3,735

3,735

3,711
2,957

Fair value per stock at the date granted (yen)

3,270

3,060

3,997

2,138

Exercise price (USD)

0.01

0.01

0.01

0.01

0.01

Weighted average market value per stock at the dates exercised (USD)

—

24.43

24.67

24.67

24.51

21.60

20.21

26.40

14.12

19.53

Stock options grantedon August 9, 2018

Stock options grantedon August 9, 2017

Stock options grantedon August 9, 2016

Stock options grantedon August 11, 2015

Stock options grantedon August 11, 2014

Fair value per stock at the date granted (USD)

Unvested stock options
Beginning of term
Granted

—

—

—

—

—

—

—

—

—

—

Expired or forfeited

—

—

—

—

—

Vested

—

—

—

—

—

—

—

—

—

—
7,400

Unvested balance
Vested stock options
Beginning of term

19,00017,600

9,600

8,200

Vested

—

—

—

—

—

Exercised

3,000

2,600

1,000

1,000

—

Expired or forfeited

—

—

—

—

—

Unexercised balance

16,00015,000

8,600

7,200

7,400

1

1

1

1

1

Weighted average market value per stock at the dates exercised (yen)Exercise price (yen)

3,732

3,728

4,112

4,112

—

Fair value per stock at the date granted (yen)

4,900

3,880

3,605

4,735

2,510

Exercise price (USD)

0.01

0.01

0.01

0.01

0.01

Weighted average market value per stock at the dates exercised (USD)

24.65

24.62

27.16

27.16

—

Fair value per stock at the date granted (USD)

32.36

25.63

23.81

31.27

16.58

31

KANEKA CORPORATION

Stock options grantedon August 9, 2013

Stock options grantedon August 9, 2012

Stock options grantedon August 10, 2011

Stock options grantedon August 10, 2010

Stock options grantedon August 11, 2009

Unvested stock options
Beginning of term
Granted

—

—

—

—

—

—

—

—

—

—

Expired or forfeited

—

—

—

—

—

Vested

—

—

—

—

—

—

—

—

—

—
2,200

Unvested balance
Vested stock options
Beginning of term

4,200

3,600

3,000

2,600

Vested

—

—

—

—

—

Exercised

—

—

—

—

—

Expired or forfeited

—

—

—

—

—

Unexercised balance

4,200

3,600

3,000

2,600

2,200

Exercise price (yen)

1

1

1

1

1

Weighted average market value per stock at the dates exercised (yen)

—

—

—

—

—

Fair value per stock at the date granted (yen)

2,790

1,815

2,060

2,280

3,110

Exercise price (USD)

0.01

0.01

0.01

0.01

0.01

Weighted average market value per stock at the dates exercised (USD)

—

—

—

—

—

18.43

11.99

13.61

15.06

20.54

Stock options grantedon August 11, 2008

Stock options granted
on September 10, 2007

Fair value per stock at the date granted (USD)

Unvested stock options
Beginning of term——

Granted——Expired or forfeited——

Vested————Unvested balance
Vested stock options
Beginning of term

2,400

600

Vested——Exercised——

Expired or forfeited——

Unexercised balance

2.400

600

Exercise price (yen)11Weighted average market value per stock at the dates exercised (yen)——Fair value per stock at the date granted (yen)

3,000

4,415

Exercise price (USD)

0.01

0.01

Weighted average market value per stock at the dates exercised (USD)

—

—

19.81

29.16

Fair value per stock at the date granted (USD)

Expenses related to stock options were included in selling, general and administrative expenses and amounted to ¥101 million ($669
thousand), ¥91 million and ¥116 million for the years ended March 31, 2024, 2023 and 2022, respectively.
The fair value of options granted was estimated based on the Black-Scholes model with the following assumptions.
Stock options granted on August 10, 2023

Stock options granted on August 12, 2022

Expected volatility

27.50%

28.68%

Expected holding period

7 years

6 years

Expected dividend

110 yen

110 yen

Risk free interest rate

0.346%

0.013%FINANCIAL SECTION 202432

19. BUSINESS COMBINATION DUE TO ACQUISITION
Transaction under common control(Share Exchange resulting in CEMEDINE becoming a wholly
owned subsidiary)

1. Summary of the business combination(1) Name and business lines of the combined company
Name of the combined company
CEMEDINE Co., Ltd.
Business
Manufacture and sales of functional plastics(2) Date of the business combination
August 1, 2022
(3) Legal form of the business combination
	Share exchange through which the Company will become
a wholly owning parent company and CEMEDINE will become
a wholly owned subsidiary (the “Share Exchange”)(4) Name after the business combination
No change(5) Purposes of the Share Exchange	The Company decided to conduct a share exchange with
CEMEDINE because the Share Exchange can create closer
coordination between the Company and CEMEDINE to speed
up management decisions and utilize the assets, technologies,
know-how, overseas networks and other management
resources of both companies’ groups, and both companies’
group realize the management strategy planned from mediumand long-term perspectives of both companies’ groups.

2. Summary of accounting treatment implemented
The Share Exchange has been treated as a transaction undercommon control, etc. in accordance with the “Accounting Standard
for Business Combinations” (ASBJ Statement No. 21, January 16,2019) and the “Implementation Guidance on Accounting Standard
for Business Combinations and Accounting Standard for Business
Divestitures” (ASBJ Guidance No. 10, January 16, 2019).

33

KANEKA CORPORATION

3. Matters related to additional acquisition of shares ofsubsidiarya) Acquisition cost of the acquired company and breakdown by
type of consideration:
Millions of yen

Consideration for the acquisition (Common stock of the Company)

¥

6,445
6,445

Acquisition costb) Exchange ratio by type of shares and number of sharesdelivered:
The Company(wholly owning parent
company resulting fromthe Share Exchange)

CEMEDINE(wholly owned
subsidiary resulting fromthe Share Exchange)

Allotment ratio in the Share Exchange

1

0.282

Number of shares delivered throughthe Share Exchange

Common stock of the Company:
1,950,265 shares(Note 1) Allotment ratio pertaining to the Share Exchange	For each share of the CEMEDINE stock, 0.282 shares of the Company’scommon stock was allotted and delivered. However, no shares were allottedin the Share Exchange for 8,218,700 shares of the CEMEDINE Shares held by
the Company.
(Note 2) The Company’s shares delivered through the Share Exchange	All shares delivered were allotted from the treasury shares held by the Company.

c) Calculation method of the Share Exchange ratio:
The Company and CEMEDINE determined the above ratio based on
the results of calculations of the Share Exchange ratio that bothcompanies received from their respective third-party valuation agents.

4. Matters related to changes in the Company’s interest
associated with transactions with non-controllingshareholdersa) Main reasons for changes in capital surplus
Additional acquisition of shares of subsidiaryb)	Amount of capital surplus increased due to transactions with
non-controlling shareholders¥789 million

20. SEGMENT INFORMATION(Segment Information)
1. Overview of Reporting Segments

The Solutions Vehicles and main products that belong to eachreporting segment are as follows:

Kaneka’s reporting segments aim to gather financial information fromthe Company’s separate business units to facilitate decisions by the
Board of Directors on the allocation of management resources andallow for the Board’s regular review of business performance.
The Company has established the “Solutions Vehicle” as organizations for executing its growth strategies from a solutions perspective. There are ten Solutions Vehicles grouped into four
solution domains called “Solutions Unit.” Each Solutions Unit hasestablished a global Group strategy for its products and services,bringing together subsidiaries in Japan and overseas to develop its
business activities.
The Company, therefore, has four reporting segments categorized by Solution Unit: the “Material Solutions Unit,” “Quality ofLife Solutions Unit,” “Health Care Solutions Unit” and “Nutrition
Solutions Unit.”
The Material Solutions Unit contributes to environmental protection and comfortable living by providing solutions in the form of
high-performance materials to support the development of social
infrastructure and mobility (i.e. weight reduction and improved fueleconomy), and cutting-edge materials such as biopolymers thatassist directly with the realization of environmental societies. The
Quality of Life Solutions Unit contributes to energy conservationand the creation of high quality lifestyles by providing solutions in
the form of high performance materials and unique services thatmeet the needs for energy conservation and adoption of smart
technologies in housing and daily infrastructure. The unit is also
responding to innovation in information driven societies, such as
the advance of the IoT and AI. The Health Care Solutions Unit
contributes to a society with greater longevity and more sophisticated medical care by providing valuable solutions that combine
devices and pharmaceuticals in fields such as medicine, health andnursing care. The unit is also developing a unique healthcare business based on advanced medical technologies such as biopharmaceuticals and regenerative and cellular medicine. The Nutrition
Solutions Unit contributes to health and high-quality food by providing a wide range of solutions in the form of distinctive materials
and supplements that meet the needs in food diversification andhealth promotion. The unit also provides solutions that contributeto food production support in the fields of agriculture, livestockand fishery.

Solutions Unit
(Reporting Segments)

Material
Solutions Unit

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Solutions Vehicle

Main products

Vinyls and Chlor-Alkali

General PVC resins, Caustic soda,
Specialty PVC resins

Performance Polymers (MOD)Modifiers, Epoxy masterbatch,
Biodegradable polymers

Performance Polymers (MS)Modified silicone polymers

Foam & Residential Techs

Expandable polystyrene resins andproducts, Extruded polystyrene foamboards, Bead-method polyolefin foam,
Solar circuit construction method(external insulation and double ventilation
construction) products

E & I Technology

Polyimide films, Optical materials,
Graphite sheets

PV & Energy management

Photovoltaic modules,
Energy storage batteries for residences

Performance Fibers

Acrylic synthetic fibers

Medical

Medical devices

Pharma & Supplemental Nutrition Low-molecular pharmaceutical materials,(Pharma)API, Biopharmaceuticals
Pharma & Supplemental Nutrition
Functional foodstuffs(Supplemental Nutrition)
Foods & Agris

Margarine, Shortening, Bakery yeast,
Spices, Antifreeze materials, Dairy products,
Functional fertilizers and feeds

2. Basis of Calculation of Monetary Amounts for Net Sales,
Profit or Loss, Assets, Liabilities, and Other Items by
Reporting Segment
Accounting treatment and procedures for reporting segments are
the same as those shown in the “Notes to Consolidated Financial
Statements.” Intersegment transactions are based on prevailingmarket prices.
As described in “Changes in accounting policies,” theCompany and its domestic subsidiaries changed accounting treatment for revenue recognition by adopting the Revenue Recognition
Standards from the consolidated financial statements of the current
consolidated fiscal year, and accordingly changed the measurement methods for profits or losses of operating segments in thesame manner.

FINANCIAL SECTION 2024

34

3. Segment Information by Business Category and Information of disaggregated revenue
Millions of yen
Reporting Segment
Material
Solutions Unit

2024

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Others(Note 1)

Total

Total

Consolidated(Note 2)Adjustments

Sales
Customers¥

Intersegment

322,902¥

176,182

225

47

¥

74,856¥

187,182¥

761,123

¥

1,178

¥

762,302

—

47

320

1,147

1,467

¥

—

¥

762,302(1,467)—762,302323,127

176,230

74,856

187,229

761,4442,325

763,769(1,467)

Segment profit (loss)

27,495

15,361

12,941

12,07667,875667

68,542(35,963)

32,579Segment assets

318,282

222,946

108,205

127,832

777,267

521

777,789

92,416870,205

Total

Other Items
14,388

11,562

4,397

5,300

35,64816

35,664

4,841

40,505

Amortization of goodwill

—

—

402

153

556

—

556

119

675

Investment in equity method
affiliates

72

2,742

—

—

2,814

—

2,814

—

2,814

20,513

12,282

11,073

5,451

49,32018

49,33924,06273,401

Depreciation

Increase in assets(Notes 1): “Others” is a business segment that is not included in the reporting segments and includes property and life insurance agency business.
(Notes 2): Segment profit (loss) is reconciled with operating income in the consolidated financial statements.
Millions of yen
Reporting Segment
Material
Solutions Unit

2023

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Others(Note 1)

Total

Total

Consolidated(Note 2)Adjustments

Sales
Customers¥

Intersegment
Total

333,854¥

172,766¥

70,786¥

177,339¥754,747

¥

1,074

¥

755,821¥—¥755,821

384

33

—

51

469

1,135

1,605

(1,605)—334,238

172,800

70,786

177,391755,2162,210

757,426(1,605)755,821

Segment profit (loss)

27,44916,131

15,682

7,585

66,849554

67,404(32,316)35,087

Segment assets

293,447

212,030

86,846

119,893712,218

462

712,681

69,958782,640

Other Items
13,818

11,661

3,963

5,093

34,53619

34,556

4,624

39,180

Amortization of goodwill

Depreciation

—

—

367

172

540

—

540

110

650

Investment in equity method
affiliates

69

2,584

—

—

2,654

—

2,654

—

2,654

10,642

9,885

5,229

3,718

29,476

101

29,577

14,77044,348

Increase in assets(Notes 1): “Others” is a business segment that is not included in the reporting segments and includes property and life insurance agency business.
(Notes 2): Segment profit (loss) is reconciled with operating income in the consolidated financial statements.
Millions of yen
Reporting Segment
Material
Solutions Unit

2022

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Others(Note 1)

Total

Total

Consolidated(Note 2)Adjustments

Sales
Customers
Intersegment
Total

¥

299,908¥

169,067

799

41

¥

58,936¥

162,554¥

690,467

¥

1,062

¥

691,530

0

45

886

1,091

1,977

¥

—

¥

691,530(1,977)—
691,530

300,708

169,10958,936

162,599

691,353

2,154

693,508(1,977)

Segment profit (loss)

36,385

16,942

12,662

5,084

71,075501

71,577(28,014)43,562

Segment assets

276,403

191,881

82,254112,633

663,173855

664,02962,930726,959

Other Items
12,69812,367

3,816

4,899

33,78119

33,801

3,888

37,690

Amortization of goodwill

Depreciation

11

—

336

117

465

—

465

91

557

Investment in equity method
affiliates

57

2,469

—

—

2,527

—

2,527

—

2,527

9,395

11,198

4,570

4,290

29,45441

29,496

8,486

37,982

Increase in assets(Notes 1): “Others” is a business segment that is not included in the reporting segments and includes property and life insurance agency business.
(Notes 2): Segment profit (loss) is reconciled with operating income in the consolidated financial statements.

35

KANEKA CORPORATION

Thousands of U.S. dollars (Note 1)
Reporting Segment
Material
Solutions Unit

Quality of Life
Solutions Unit

$ 2,132,635$ 1,163,614

1,488

315

2,134,124

1,163,929

2024

Health Care
Solutions Unit

Nutrition
Solutions Unit

Total

Others(Note 1)

Total

494,394$ 1,236,262$ 5,026,906

—

312

2,116

494,394

1,236,574

5,029,022

15,358Adjustments

Consolidated(Note 2)

7,783

$ 5,034,689

7,575

9,691

(9,691)—$ 5,034,689—

5,044,381(9,691)

5,034,689

Sales
Customers
Intersegment
Total

$

$

$

181,594

101,459

85,47479,758448,286

4,410

452,696(237,522)

215,173

2,102,120

1,472,471

714,653844,280

5,133,526

3,446

5,136,972

610,373

5,747,345

95,02876,36529,04135,005

235,441

107

235,548

31,974

267,523

Amortization of goodwill

—

—

2,657

1,014

3,672

—

3,672

788

4,461

Investment in equity method
affiliates

476

18,111——

18,588—18,588—18,588135,481

81,11973,13536,004

325,740

124

325,865

158,921484,787

Segment profit (loss)
Segment assets
Other Items
Depreciation

Increase in assets(Notes 1): “Others” is a business segment that is not included in the reporting segments and includes property and life insurance agency business.
(Notes 2): Segment profit (loss) is reconciled with operating income in the consolidated financial statements.

4. Reconciliation Between Segment Total and Consolidated Statements of Income (Adjustments)

2023

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2022

2024

IncomeSegment total¥

Income classified under “others”

67,875Companywide expenses (Note)
Operating income in the consolidated statements of income¥

66,849¥71,075$448,286

554

501

4,410

1

1

7

11

(36,053)(32,422)(28,005)(238,117)

88

103

(17)

Elimination of intersegment transactions
Other adjustments¥

667

32,579¥35,087¥43,562

582$

215,173

Note: Companywide expenses are primarily expenses for basic R&D that are not allocable to any reporting segments.

2023

2024

Millions of yen

Thousands of
U.S. dollars (Note 1)

2022

2024

AssetsSegment total¥

Assets classified under “others”

777,267¥

712,218¥

663,173$

5,133,526

521

462

855

3,446

Elimination of intersegment transactions(12,929)(11,171)(15,401)(85,395)

Companywide assets (Note)

106,416

81,162

78,627

702,834

Other adjustments(32)(1,069)Total assets in the consolidated statements of income¥

870,205¥

782,640(295)¥

726,959(7,065)$5,747,345

Note: Companywide assets are working capital, investment securities and land that are not allocable to any reporting segments.
Millions of yen
Segment total

2024

2023

Others

2022

2024

2023

Adjustments (Note)

2022

2024

2023

2022

Consolidated

2024

2023

2022

Other Items
Depreciation
Increase in assets¥ 35,648 ¥ 34,536 ¥ 33,781
49,32029,47629,454

¥

16 ¥

19 ¥

19

18

101

41

¥ 4,841 ¥ 4,624 ¥ 3,888
24,062

14,7708,486¥ 40,505 ¥ 39,180 ¥ 37,690
73,401

44,34837,982

Note: “Adjustments” is primarily expenses for basic R&D that are not allocable to any reporting segments.

FINANCIAL SECTION 2024

36

Thousands of U.S. dollars (Note 1)
Segment total

OthersAdjustments(Note)

Consolidated

2024

2024

2024

2024

Other Items
Depreciation$

Increase in assets

235,441$

325,740

107
124

$

31,974
158,921$267,523484,787

Note: “Adjustments” is primarily expenses for basic R&D that are not allocable to any reporting segments.

(Related Information)
Related information at March 31, 2024, 2023 and 2022 consisted of the following.

1. Information by Product and Service
No information is reported because product and service classifications are the same as the reporting segment classifications.

2. Geographic Area
(1) Sales
2024

Millions of yen
Japan

  ¥

Asia

427,433   ¥

149,390   ¥

North America

69,318   ¥EuropeOther areas

81,811   ¥34,348   ¥

2023

Total

762,302
Millions of yen

Japan

  ¥

Asia

414,250   ¥

152,059   ¥

North America

74,625   ¥EuropeOther areas

77,903   ¥

36,983   ¥

2022

Total

755,821
Millions of yen

Japan

  ¥

Asia

379,317   ¥141,981   ¥

North America

62,655   ¥EuropeOther areas

73,571   ¥

2024

34,003   ¥

Total

691,530

Thousands of U.S. dollars (Note 1)

  $

Japan

Asia

2,823,019   $

986,663   $

North America

457,818   $EuropeOther areas

540,332   $

226,856   $

Total

5,034,689

Note: Sales are classified into countries or regions based on the geographic location of customers.

(2) Property, plant and equipment
2024

Millions of yen
Japan

  ¥

234,562   ¥

Asia38,423   ¥

North America

Europe and others

19,852   ¥

38,480   ¥

2023

Total

331,319
Millions of yen

Japan

  ¥

211,434   ¥Asia37,278   ¥

North America

Europe and others

16,598   ¥

2024

27,303   ¥

Total

292,615

Thousands of U.S. dollars (Note 1)

  $

Japan

Asia

1,549,186   $

253,774   $

North America

Europe and others

131,115   $

254,149   $

Total

2,188,225

3. Information on Major Customers
No information is reported because no sales to any external customer represented more than 10% of net sales on the consolidated statements of income.

37

KANEKA CORPORATION

(Information on Impairment Loss on Fixed Assets by Reporting Segment)
Information on impairment loss on fixed assets by reporting segment at March 31, 2024, 2023 and 2022 consisted of the following.
The figures in FY2024 are omitted because it is not significant in terms of monetary amount.
The figures in FY2023 are omitted because it is not significant in terms of monetary amount.
Millions of yen
Segment Information

2022(Impairment loss)

Material
Solutions Unit  ¥

Quality of Life
Solutions Unit

Health Care
Solutions Unit

—   ¥ 2,903   ¥

Nutrition
Solutions Unit

—   ¥

Total

501   ¥ 3,405   ¥

OthersAdjustments—   ¥Consolidated—   ¥ 3,405(Information on Amortization of Goodwill and Unamortized Balances by Reporting Segment)
Information on amortization of goodwill and unamortized balances by reporting segment at March 31, 2024 and 2023 consisted of
the following.
Millions of yen
Segment Information

2024

Material
Solutions Unit

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Total

OthersAdjustments(Note)

Consolidated(Goodwill)
Amortization  ¥

Balance

—   ¥

—   ¥

402   ¥

153   ¥

—

—

532

784

556   ¥
1,317

—   ¥

119   ¥

—

542

675
1,859

Millions of yen
Segment Information

2023

Material
Solutions Unit

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Total

OthersAdjustments(Note)

Consolidated(Goodwill)
Amortization  ¥

Balance

—   ¥

—   ¥

367   ¥

172   ¥

—

—

853

857

540   ¥
1,710

—   ¥

110   ¥

—

491

650
2,201

Thousands of U.S. dollars (Note 1)
Segment Information

2024

Material
Solutions Unit

Quality of Life
Solutions Unit

Health Care
Solutions Unit

Nutrition
Solutions Unit

Total

OthersAdjustments(Note)

Consolidated(Goodwill)
Amortization
Balance

  $

—   $

—   $ 2,657   $ 1,014   $ 3,672   $

—   $

—

—

—

3,515

5,184

8,699

788   $ 4,461
3,582

12,282

Note: “Adjustments” includes amortization expense mainly related to basic research and development activities that is not attributed to any specific reporting segment.

FINANCIAL SECTION 2024

38

Independent auditor’s report
To the Board of Directors of Kaneka Corporation:
Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the accompanying consolidated financial statements of Kaneka Corporation (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprisethe consolidated balance sheets as at March 31, 2024 and 2023, the consolidated statements of income
and statements of comprehensive income, statements of changes in net assets and statements of cash
flows for each of the three years in the period ended March 31, 2024 and notes, comprising a summaryof significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2024 and 2023, and its
consolidated financial performance and its consolidated cash flows for the each of the three years in the
period ended March 31, 2024 in accordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the Company’s judgment on impairment of fixed assets

39

The key audit matter

How the matter was addressed in our audit

In the consolidated balance sheets of theGroup, property, plant and equipment of¥331,319 million and intangible assets of¥20,832 million were recognized as of March

The primary procedures we performed to assess theappropriateness of the Company’s judgment on
impairment of fixed assets included the following.

KANEKA CORPORATION

31, 2024, which represented 40% of total assets
on a consolidated basis.
The Company operates various businesses
globally and generally assesses whether an
impairment indicator exists for assets or asset
groups based on Solutions Vehicle, as
described in Note 2,“Significant accounting
policies, Significant accounting estimates,
Impairment of fixed assets” If any impairment
indicator is identified for such assets or asset
groups, the Company assesses whether an
impairment loss should be recognized by using
the future cash flows based on the mediumterm management plan. If the Company
determines that an impairment loss is required
to be recognized, the carrying amount isreduced to the recoverable amount, and theresulting decrease in the carrying amount isrecognized as an impairment loss.
The assessment of whether an impairment
indicator exists involves management
judgement since it is identified based on certain
cases where operating losses or net cash
outflows arising from operating activities
continue, or where a change in the scope or
method of use of the assets or asset groups
significantly lowers their recoverable amounts.
The estimates of future cash flows used in the
impairment testing are subject to uncertainty
since they are based on the medium-term
management plan approved by management,
which contains key assumptions of future
economic trends, changes in businessenvironment and other factors.
We, therefore, determined that our assessmentof the appropriateness of the Company’s
judgment on impairment of fixed assets was of
most significance in our audit of theconsolidated financial statements for thecurrent fiscal year, and accordingly, a key audit
matter.

We also requested the component auditors of certain
consolidated subsidiaries to perform audit procedures,
received reports on the results of audit procedures they
performed, including the following, and evaluated theirreports as to whether sufficient and appropriate audit
evidence was obtained.
(1) Internal control testing
We tested the design and operating effectiveness ofcertain of the Company’s internal controls relevant to theapplication of impairment accounting to fixed assets.
(2) Assessment of the appropriateness of theapplication of impairment accounting to fixed
assetsIn order to assess the appropriateness of the application of
impairment accounting to fixed assets, we:inspected the Company’s internal rules related tothe impairment of fixed assets and materials of
application of impairment accounting to assess theasset grouping, as well as inquired of theappropriate manager and inspected relevantmaterials to consider the necessity of revising asset
grouping;

assessed the reliability of the profit and loss
performance of the asset grouping unit, which was
the basis for determining whether operating
activities generate losses continuously, bycomparing it with relevant data;

assessed the consistency of the estimates of future
cash flows related to assets or asset groups with
impairment indicator with the medium-term
management plan; and

assessed the reasonableness of the feasibility of themedium-term management plan by inquiring of theappropriate manager and comparing the actual
performance with the past management plans.

Other Information
The other information comprises the information included in the Financial Section of Integrated Report,
but does not include the consolidated financial statements, the financial statements, and our auditor’sreports thereon. Management is responsible for the preparation and presentation of the otherinformation. Corporate auditors and the board of corporate auditors are responsible for overseeing thedirectors’ performance of their duties with regard to the design, implementation and maintenance of the
FINANCIAL SECTION 202440

reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:41



Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

KANEKA CORPORATION

estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with corporate auditors and the board of corporate auditors, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Fee-related Information
Fees paid or payable to our firm and to other firms within the same network as our firm for audit andnon-audit services provided to the Company and its subsidiaries for the current year are 401 million yen
and 115 million yen, respectively.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2024 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note １ to the consolidated financial statements.

FINANCIAL SECTION 2024

42

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Koji Narumoto
Designated Engagement Partner
Certified Public Accountant

Masato Tateishi
Designated Engagement Partner
Certified Public Accountant

Junichi Morimoto
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Osaka Office, Japan
July 31, 2024
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

43

KANEKA CORPORATION

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