ANNUAL REPORT 2020
Year ended March 31, 2020

Profile
Since its establishment, the NLM Group has been Japan’s sole fully integrated aluminum manufacturer
offering varieties of products ranging from aluminum raw material to fabricated products.
Aluminum has properties that make it a superb industrial material: it is lightweight and has
excellent processability, corrosion resistance, thermal conductivity, and recyclability. Nippon Light
Metal applies its core strengths — a wealth of knowledge about aluminum and its characteristics andtechnological capabilities that have been developed over many years — to supply a highly diversified
range of products to a number of key industrial sectors, including the automotive, electrical andelectronics, information and telecommunication, environment, safety, energy,
construction, railroad, and food products industries.
By carrying on development of new applications for aluminum and aluminum materials, the
NLM Group is to continue to support customers in wide-ranging industrial sectors and contribute toimproving the quality of people’s lives and protection of the environment.

NLM Group
Nippon Light Metal Holdings Company, Ltd. and its consolidated subsidiaries Years ended March 31

2020

2019

2020
Thousands of
U.S. dollars

Millions of yen

For the year:
Net sales
Operating profit
Profit attributable to owners of parent¥500,451 ¥465,946 $4,281,411
30,052
24,607226,105
20,5607,476
68,694

At year-end:
Total assets
Net assets
Short-term borrowings and long-term debt,
including bonds and capital lease obligation
Net Sales

481,303
202,735

470,004
201,198

4,318,699
1,848,737

143,742

137,091

1,259,680

Operating Profit

Total Assets

500

35

500

400

28

400

300

21

300

200

14

200

100

7

100

0

2015

2016

Billions of yen

2017

2018

2019

2020

Years ended March 31

0

2015

2016

Billions of yen

2017

2018

2019

2020

Years ended March 31

0

2015

2016

Billions of yen

2017

2018

2019

2020

As of March 31

Corporate Data

Contents

Consolidated Financial Highlights ................................................................................. C2
To Our Shareholders........................................................................................................ 2
Special Feature ................................................................................................................ 6
NLM Group Topics ........................................................................................................... 8
Company Name
Major Shareholders
9
Our ESG Approach ...........................................................................................................
15
NLM Group........................................................................................................................
Nippon Light Metal Holdings Company,
Ltd.
(Ratio of Stock Holding)
Review Of Operations...................................................................................................... 16
https://www.nikkeikinholdings.co.jp
The Master Trust Bank of Japan, Ltd.
Consolidated Six-Year Summary ................................................................................... 20(trust accounts)(10.9%)
22
Financial Review ..............................................................................................................
Established
Consolidated Balance Sheets ....................................................................................... 24
26
Consolidated Statements Of IncomeJapan............................................................................
Trustee Services Bank, Ltd.
October 1. 2012
Consolidated Statements Of Comprehensive Income ............................................... 27(trust accounts)(7.5%)
Consolidated Statements Of Changes In Net Assets ................................................ 28
Paid-In Capital
Consolidated Statements Of Cash Flows ..................................................................... 29
The Dai-ichi
Life Insurance Co.,Ltd.
30
Notes To Consolidated Financial Statements.............................................................
¥46,525 million
56
Report Of Independent Auditors ...................................................................................
(3.2%)
Overseas Network ........................................................................................................... 59
Shares of Common Stock Directors And Officers .................................................................................................... 60
Nikkei-Keiyu-Kai(2.7%)
61
Corporate Data .................................................................................................................
Authorized: 2,000,000,000

Issued: 619,937,500

The Light Metal Educational Foundation, Inc.
(2.4%)

Number of Shareholders
60,100Japan Trustee Services Bank,Ltd(trust accounts
2019 9)(2.2%)
2020

Stock Exchange Listings

yen

2020
U.S. dollars

Tokyo
Per share data (yen and dollars):
Net profit —basic
Transfer Agent of Common Stock
Cash dividends
Net assets Sumitomo Mitsui Trust Bank, Ltd.

Asahi Mutual Life Insurance Co.
(2.1%) ¥ 33.20 ¥ 12.07$ 0.11
9.00
9.00
0.08
303.37300.83SSBTC CLIENT OMNIBUS ACCOUNT 2.76

Stock information (TSE) (yen and dollars):
Stock price:Last Shareholders’ Meeting
High June 24, 2020Low

(2.0%)¥ 305SACHS¥ TRUST
256 JASDEC$ 2.35
JPMC GOLDMANLENDING
200
141
1.30
ACCOUNT (2.0%)

Note: U.S. dollar amounts have been translated,for convenience only,at the exchange rate of ¥108.83=U.S.$1.00.See Note 2 of the Notes to the Consolidated Financial Statements.

Net profit per Share

JP MORGAN CHASE BANK 385151
Cash Dividends per Share(1.8%)Net Assets per Share

35.0

350.0

10.0

28.0

280.0

8.0

21.0

210.0

6.0

140.0

4.0

(As of March 31, 2020)

14.0

Cautionary Statement

This annual report contains various projections and estimates. Important factors that could alter these projections and estimates include changes in the
7.0

2.0
balance of aluminum supply and demand,70.0
fluctuations in the price of aluminum ingot and foreign exchange
rates, as well as shifts in Japanese government

policies and regulations. The Company cautions, therefore, that the projections and estimates contained herein involve risk and uncertainty, and that actual
0
Yen

2015

2016

0

results2018
could 2019differ materiallyfrom those expressed
2017
2020
2015or implied.
2016 2017
Years ended March 31

Net Income per Share = (Net Income - Amount
not attributable to common shareholders) /Average Number of Shares Outstanding

Yen

2018

2019

2020

Years ended March 31

0
Yen

2015

2016

2017

2018

2019

2020

As of March 31

Net Assets per Share = (Net Assets-Minority
interests in consolidated subsidiaries) /Number of Shares Outstanding at Year-end

1 61

To Our Shareholders

Ichiro Okamoto, President & CEO

I would like to take this opportunity to extend my sincere
gratitude to our shareholders for their continued support of ourbusiness operations.
I hereby report on the operating results for Nippon Light
Metal Holdings Company, Ltd. (“NLM Holdings”) for fiscal 2019(the year from April 1, 2019 to March 31, 2020).
2

Business Environment of Fiscal 2019
During the fiscal year under review, the global economy faced
growing concerns over its outlook, such as trade frictions
between the United States and China, Brexit, and geopoliticalrisk in the Middle East. Furthermore, as the novel coronavirus
infection started to spread this year, the global economy
sharply deteriorated. The Japanese economy also appeared to
be stuttering as a result of the increase of the consumption tax
rate and a series of natural disasters, in addition to overseas
economic trends, and it turned downward towards the end of
the fiscal year owing to the spread of the novel coronavirus
infection in Japan.
The aluminum industry saw demand for semiconductor
manufacturing equipment and cars decline, resulting in an
overall lack of strength. Furthermore, aluminum ingot prices
continued a downward trend.

Basic Policies in the Mid-Term Management
Plan and Initiatives in Fiscal 2019
Under such circumstances, the NLM Group (the “Group”)
strove to maximize consolidated net sales in accordancewith the basic policies in the Mid-Term Management Plan(“MTMP”), which commenced in the fiscal year under review
and covers fiscal 2019 through 2021.
Under the first basic policy in MTMP, “create new products
and businesses,” we strove to develop products and businesses,
taking advantage of the supply chain with manufacturing
at the core, to thoroughly pursue Group-wide cooperationand create new value for all customers. Specifically, we havecreated and provided high value-added products through acomprehensive process ranging from materials and design toprocessing, in the fields such as the heat device business forenvironmentally friendly vehicles.
Under the second basic policy in MTMP, “invest resources
for growth,” we vigorously invested resources into fields andregions where the Group’s strengths can be utilized. First, in
response to increasing demand for environmentally friendly
vehicles due to China’s new energy vehicle (NEV) regulations,
we expanded factory buildings to start local production ofrelated products. In the secondary alloy business, in order
to meet the growth of the Indian automobile market andhelp Japanese manufacturers entering the market, our joint
venture company with a local company commenced operationof the second factory
Furthermore, expecting demand for aluminum products
to increase in North America amid tightened environmental
regulations and increasing needs for automobile weight
reduction, we established a subsidiary in the United States todevelop, manufacture, and distribute automobile suspension
parts, which came after the establishment of our existing
marketing base there. Additionally, in the aluminum paste
business, a central lab (a key research and development center for
high-performance aluminum paste) started full-scale operationin Japan to meet the needs of new colors for automobile paint andsupport business development around the world.

Overview of Consolidated Financial Results
Despite various measures mentioned above, net sales
decreased 6.9% year on year to ¥465.9 billion, operating
profit decreased 18.1% year on year to ¥24.6 billion, andordinary profit decreased 24.5% year on year to ¥23.5 billion.
In addition, as a result of recording special losses for the costof dealing with sedimentation in Amehata Dam (Yamanashi
Prefecture), which is owned by Nippon Light Metal Co., Ltd.,
profit attributable to owners of parent decreased 63.6% year
on year to ¥7.5 billion.
Year-end dividend payment will be ¥5 per share, which,combined with the interim dividend of ¥4 already paid, willbring annual dividend payment to ¥9 per share (unchanged
from the previous year).

Overview by Business Segment
Net sales in the Aluminum Ingot and Chemicals segment
decreased 12.1% year on year to ¥102,833 million andoperating profit increased 13.4% year on year to ¥10,902
million. In the Alumina and Chemicals segment, althoughsales of mainstay aluminum hydroxide and aluminarelated products for refractories and semiconductor-related
products declined, profits increased year on year due to theeffect of improved product mix, solid sales of high valueadded products, and falling raw material prices. In the3

To Our Shareholders

Aluminum Ingot segment, regarding the mainstay secondary
alloy products for automotive applications, demand in North
America was firm, but a decline in demand in Japan, China
and Thailand and competition with general-purpose alloys
made in China dragged down sales and sales prices.
Net sales in the Aluminum Sheet and Extrusions segment
decreased 6.2% year on year to ¥101,193 million andoperating profit decreased 50.3% year on year to ¥3,556
million. In the Aluminum Sheet segment, there was a
decline in sales volumes of thick plates for semiconductor
and liquid crystal manufacturing equipment, materials
for environmentally friendly vehicles and for PC cases. In
the Aluminum Extrusions segment, in addition to sluggish
sales of truck-related products, sales volume decreased forsemiconductor manufacturing equipment and automobilerelated products. Both segments were affected by the decline
in sales prices, which reflected prices of aluminum ingots, inaddition to the decrease in sales volume.
Net sales in the Fabricated Products and Others segment
decreased 4.0% year on year to ¥172,975 million and operating
profit decreased 10.6% year on year to ¥10,440 million. In
the truck outfitting business, while demand for trailers wasstrong, there were impacts from a decline in sales for compact
trucks due to a reactionary fall following rush demand aheadof the tightening of exhaust gas regulations, as well as adecline in demand for temperature-controlled vehicles. Profits
increased year on year as a result of improved productivity andfalling material prices. In the heat exchanger business, salesof products related to environmentally friendly vehicles fell
sharply, despite robust sales of capacitors for air conditioners
mainly for mainstay mini vehicles. In the Electronic Materials
segment, demand for anodized aluminum foil for aluminumelectrolytic capacitors showed little growth, and both net
sales and operating profit fell significantly from the previous
year. In the Panel System segment, sales of panel systems forclean rooms at electronic parts factories as well as for medical
and pharmaceutical applications increased in response to
5G (the fifth generation mobile communication system)
infrastructure development. However, sales of panel systems
for food processing plants, particularly large-scale projects,
decreased, resulting in lower sales and profits for the segment.
In the Landscape Engineering segment, among products forroads and bridges, sales of new products for bridge inspections
remained robust from the previous year, and demand4

for products for structures such as sluice gates and water
purification plants increased, resulting in higher net sales
for the segment compared with the previous year. However,the segment’s operating profit fell below the previous year’slevel, owing to the amortization of goodwill incurred when
Sumikei-Nikkei Engineering Co., Ltd. (now known as Nikkei
Engineering Co., Ltd.) became a subsidiary in the previous
year. In the Carbon Product segment, both sales and profits
increased, reflecting strong sales of high value-added productsof mainstay carbon blocks for blast furnaces and electric
furnaces, and progress in the heat treatment business foranode materials in lithium-ion batteries.
Net sales in the Aluminum Foil, Powder and Paste segment
decreased 6.7% year on year to ¥88,945 million and operating
profit decreased 39.9% year on year to ¥3,074 million. In
the Aluminum Foil segment, there was increased demandfor plain foil for lithium-ion battery surfaces and cathodematerials, as well as foil for pharmaceutical packaging,but sales of foil for capacitors declined sharply due to lower
demand for electronic components and high-tech products,
resulting in decreased sales and profits for the segment. In
the Powder and Paste segment, sales of aluminum powder
in electronic material for heat dissipation performed well,and sales of aluminum nitride for thermal conductive fillers
increased, but overall sales of powder products were sluggish.
High value-added paste products were relatively buoyant,but sales volume of mainstay products for automobile paintdecreased due to lower automobile production and otherfactors. As a result, the segment’s sales and profits bothdecreased. In the Solar segment, sales volume of back sheets
for solar cells fell due to the Chinese government’s revisionof its measure for supporting introduction of solar power
generation systems, as well as price competition. Functional
ink products for solar cells also faced intensified competition
due to the market entry of competitors, while sales of new
products for next-generation cells remained sluggish. As aresult, both sales and profits of the Solar segment decreased.

Establishment of the Nomination andRemuneration Committee
In February 2020, the Company decided to set up a
“Nomination and Remuneration Committee” as an advisory

Countermeasures against sedimentationin the area around Amehata Dam owned
by Nippon Light Metal Co., Ltd.

body to the Board of Directors and the President and CEO.
In nominating and appointing or dismissing directors
and executive officers (“applicable officers”), and making
decisions on remuneration for applicable officers, theCompany has always provided explanations to independent
outside directors and made resolutions by the Board of
Directors based on the opinions of the independent outside
directors. We recently decided to establish the Nomination
and Remuneration Committee to further enhance theindependence, objectivity, and accountability of functions of
the Board of Directors regarding decisions on the nomination
and remuneration of applicable officers, as well as thecorporate governance structure. The roles of the committee
also include matters related to the succession plan for the
President and CEO.
Members of the committee are elected by the Board of
Directors. The committee shall consist of three or moremembers, including the President and CEO. The majorityof them shall be independent outside directors. In addition,
the chairman is elected by the Board of Directors from theindependent outside directors who are committee members.

On August 9, 2019, we received administrative guidancefrom the Kofu River and National Highway Office of the
Kanto Regional Development Bureau of the Ministry ofLand, Infrastructure, Transport and Tourism regarding theresults of periodic inspection of Amehata Dam (Hayakawa
Town, Minamikoma-gun, Yamanashi Prefecture), which
is owned by our subsidiary Nippon Light Metal Co., Ltd. In
addition, torrential rain from Typhoon Krosa (Typhoon No.
10) in August 2019 and Typhoon Hagibis (Typhoon No. 19) in
October 2019 caused the water level of the Amehata River
upstream from the dam to rise, resulting in floods in the areas
around the dam. We hereby extend our deepest apologies toresidents and other affected people for the great problems
and anxieties caused by the flood.
Nippon Light Metal Co., Ltd. set up the Amehata Area
Sediment Countermeasures Investigative Commission (the“Investigative Commission”) with the Ministry of Land,
Infrastructure, Transport and Tourism, the Yamanashi
prefectural government, and the municipal government of
Hayakawa Town in September 2019. As a result of repeated
investigations on emergency measures against flood
damage in the surrounding areas and drastic measuresagainst accumulated sediment, we obtained the consent of

Outlook for Fiscal 2020

the Ministry of Land, Infrastructure, Transport and Tourism,
the Yamanashi prefectural government, and the municipal

The uncertainty over overall economic activities around theworld is increasing due to the spread of the novel coronavirus
infection, and the future outlook is also unclear in Japan.
The forecast of the consolidated financial results for fiscal
2020 remains undetermined, because the impact of the
spread of the novel coronavirus infection is uncertain and it isdifficult at this point to reasonably forecast the consolidated
financial results of the Group.
I would like to ask for the continuous support ofshareholders in our efforts, just as we would do everything in
our power to further develop the Group.

government of Hayakawa Town regarding countermeasures
for sedimentation in the Amehata area. Following this,we submitted a compiled basic plan for addressing
sedimentation in Amehata Dam to the Kofu River andNational Highway Office of the Kanto Regional Development
Bureau of the Ministry of Land, Infrastructure, Transport andTourism.
Based on the plan, we will implement emergency
measures such as the installation of temporary dikes toensure the safety of the Honmura district, as well as drastic
measures such as the construction of haul roads with a view
to increasing the capacity to remove sediment and using

June 2020

them for disaster prevention in the local area with the aimof eliminating flood and earth flow damage to the Honmura
district, the area upstream from Amehata Dam. We will
also continue to work towards finding more potential areas
to move sediment to and solving issues related to removal

President & CEO
Ichiro Okamoto

methods.

5

Special Feature : Relocation of the NLM Group’s Head Office— NLM Group aims to become a corporate group that continues to create new value
for customers by facilitating group communication and collaboration —Nippon Light Metal Holdings moved its head office to Minato-ku, Tokyo in December 2019.
Approximately 1,000 employees from 18 group companies including Nippon Light Metal
and Toyo Aluminium gathered in the new office.

Promote the facilitation of group communication and collaboration
The NLM Group aims to further grow as a corporate group that continues to create new value for clients, under theslogan of “working as Team NLM to be a groundbreaking innovator of aluminum and beyond.” To that end, theCompany reached a conclusion that it was indispensable to work together beyond the boundaries of groups,
departments, and positions more than ever.
The office relocation is targeted at promoting the facilitation of group communication and collaboration.
To achieve the objective, a working team formed by young employees from each group company was involvedin the creation of the new office from the planning stage and solicited various ideas from group employees torealize an “office created by employees themselves.”
In addition, we conducted training called “Change Management” to address employees’ anxiety arising frommajor changes in their work styles and to help them adapt to those changes.

A space that allows employees to freely choose a place to work and tools to use according to the nature of work and situation

6

Advance work style reform based on the concept of “Activity Based Working”
In the new office, we introduced free address workspaces that allow each person to choose a place to work suited totheir work at the time. Our workspaces changed from fixed seats for each individual to the “Activity Based
Working” environment that takes advantage of the capabilities of each employee. We also enhanced our IT tools tofacilitate a quick switch to telework, which enables employees to work from home even if commuting is difficult
due to disasters.

Towards the future
The new office has become a space where flexible ideas can be generated more easily due to the new work styles of
employees.
Going forward, we will aim to become a stronger corporate group that can meet potential needs of clients,
while further promoting group collaboration, creating complex products, and enhancing added value of products
such as maintenance, services, and delivery.

Open-space cafeteria: Dining & Café/Bar “Isle”

7

NLM Group Topics

NLM Group establishes a joint venture company to produce automotive parts in North America— Five billion yen investment to grow the joint venture company into the Group’s main base —In November 2019, Nippon Light Metal North America, Inc.
(headquarters: Ohio, U.S.A.; hereinafter “NLMNA”), a whollyowned subsidiary of Nippon Light Metal, and ITOCHU Metals
Corporation (headquarters: Minato-ku, Tokyo) established Nippon
Light Metal Georgia, Inc. (“NLMGA”), a joint venture company to beengaged in development, manufacturing, and sale of aluminumparts for automobiles in the United States, the second largest
automobile producing country in the world.
NLMGA began construction of a new plant in November 2019 to
produce aluminum suspension parts in Georgia, U.S.A, against the
backdrop of the need for lighter-weight vehicles in light ofincreasingly tighter local environmental regulations. Local
production will start in 2022. The plan is to invest a total of 5.0
billion yen by 2024.
Within the NLM Group, Nikkeikin Aluminium Core Technology
has been driving the business of manufacturing and distribution ofaluminum parts for automobiles in Japan and China until now.
Nikkeikin Aluminium Core Technology will support the newcompany with the start-up of the business and operations.
Furthermore, we aim to grow the business by leveraging ITOCHU
Metals’ business experience and network in North America.

Ground-breaking ceremony of Nippon Light Metal Georgia, Inc.

With the establishment of NLMGA, the Company seeks to build aglobal supply system for aluminum parts for automobiles in Japan,
China and the United States. The NLM Group aims to grow andexpand its business as a group that continues to create new value
for clients.
Overview of the joint venture company
Company namePaid-in capital
Ownership ratio
Establishment
Location
Representative
Description ofbusiness
Capital investment
Business scale: Nippon Light Metal Georgia, Inc. (NLMGA): USD16.0 million (JPY1,760 million at JPY110 /USD1): NLMNA - 90%; ITOCHU Metals - 10%: November 2019
: Adairsville, Georgia, U.S.A.
: Katsu Nakajima, President
and sale of aluminum parts for: Manufacture
automobiles: JPY5.0 billion (aggregate for the period up to 2024): JPY8.0 billion (2027 plan)

Toyo Aluminium starts full-scale operation of a central lab in the Shinjo Works— Meet the needs for automobile paint around the world —In November 2019, Toyo Aluminium started full-scale operation of acentral lab on the premise of the Shinjo Works (Katsuragi City, Nara
Prefecture) as a core base for developing high functional aluminum
paste.
The Toyo Aluminium Group operates its aluminum paste businessin Japan, the United States, France, China, and India. The company
boasts an overwhelming market share of high-grade aluminum
paste for automobile paint, with about 80% in Japan and over 50%
in the world. In particular, the Shinjo Works, a specialized aluminum
paste plant established in 1968, is the world’s largest mother plant
for the aluminum paste business.
While tailored proposals for client domains are becoming more
important when developing new products, we have built a system atthe central lab to meet the global needs for automobile paint, by
8

installing the same coating equipment used by our customer paintmanufacturers and automobile manufacturers. With the new system
in place, in addition to accelerating the development of new
products and high functional
aluminum paste, we will press
ahead with local production
for local consumption bytransferring technology todomestic and overseas
manufacturing bases,
considering automation of
production equipment, andchecking the suitability ofCentral lab at the Shinjo Works
locally procured raw materials.

Our ESG Approacha Board of Auditors, which consists of six statutory auditors,
including three independent outside auditors (one of them is aforeign national). Twelve Board of Auditors meetings were held in
fiscal 2019. Also, there is an employee designated to exclusively
provide assistance for auditing duties.

GOVERNANCE
Introduction
Nippon Light Metal Holdings Company, Ltd. (the “Company”) is aholding company listed on the First Section of the Tokyo Stock
Exchange. It has formed the NLM Group (the “Group”) which
consists of 77 consolidated subsidiaries, with Nippon Light Metal
Company, Ltd. (“NLM”) and Toyo Aluminium K.K. as the corebusiness companies, and 15 affiliates accounted for by the equity
method. The Group engages in business revolving around the
manufacture and sale of aluminum products and related products.

Establishment of the Nomination and Remuneration
Committee
In February 2020, the Company set up a Nomination andRemuneration Committee as an advisory body to the Board of
Directors and the President and CEO with the aim of enhancing thegovernance of the Board of Directors. The committee will discussmatters regarding nomination policies such as responsibilities andqualities required of directors, matters regarding the succession planfor the President and CEO, matters regarding remuneration for
directors, and other relevant matters.
Members of the Nomination and Remuneration Committee
Chair
Masato Ono (independent director)
Member Ryoichi Hayashi (independent director)
Member Haruo Ito (independent director)
Member Toshihito Hayano (independent director)
Member Keiko Tsuchiya (independent director)
Member Ichiro Okamoto (representative director)

Governance Structure
Regarding the governance of the Group, while respecting theautonomy of each company, management is carried out based on
the Group regulations, etc. stipulated by the Company. For mattersthat affect the entire Group, the Group Executive Committee which
consists of members including the Company’s directors makes
decisions after examining an issue from multiple perspectives.
Matters of particular importance are deliberated and determined at
Board of Directors meetings.
The Board of Directors of the Company consists of 14 directors,
including five independent outside directors (one of them is female),which is an increase by one from the previous year. Thirteen Boardof Directors meetings were held in fiscal 2019. To ensure agile
management and sufficient deliberation by the Board of Directors,
an executive officer system has been adopted to separate the tasks ofmanagement and execution.
From the viewpoint of maintaining the institutional
independence of the auditing function, the Company has establishedFree Discussions with Outside Directors (Informal Meetings)
The Board of Directors of the Company provides a forum for free
discussions revolving around outside directors and outside auditors.
Free discussions are held on an informal and irregular basis toexchange opinions mainly on issues that require mid- to long-term
and wide-ranging perspectives. Outside officers give their candid

Figure 1 Governance Structure
NLM’s CORPORATE GOVERNANCE STRUCTURE
General Meeting of Shareholders
Appointment / removal
Audit reports

Appointment / removal

Appointment / removal
Audit reports

Directors
Outside directors

Board of Directors
Appointment Consultation/ removal

Recommendation

Consultation

Recommendation

Board ofauditors

Appointment / removal

Nomination andRemuneration Committee

Accounting Accounting
auditoraudit

President and CEO
Officers
Reports andproposals

Information exchange

Operations,subsidiaries and affiliates
Internal
audit

Central CSR and Audit OfficeGroup Executive
Committee

Statutory
auditoraudits• Compliance Committee• CSR Committee• Quality Committee• Environment Committee

Auditors
Outsideauditors

Information exchange

Audit reports / information exchange
9Our ESG Approach
opinions, which contributes to fostering more active communicationand trusting relationships among directors.
Main topics for free discussions• Human resource development of the Group• CSR issues for the Group
Communication with Stakeholders
The Group values sharing information and exchanging opinions
through communication with stakeholders, and opinions it receives
are reported to persons responsible for the respective businesses andbusiness managers, and handled so that such opinions are reflected
in management.
Stakeholder

Method of communication

Employees

Share issues and exchange opinions through the labor
union, etc. Make regular communication mainly
through individual personnel interviews, meetings, andvarious events.

Customers

Persons responsible for sales and businesses shareissues and exchange opinions through usual businessnegotiations.

Business
partners

Persons responsible for purchase and businesses
share issues and exchange opinions throughopportunities such as usual business negotiations andbriefings for business partners.

Regional
society

Each business location maintains communication
through participation in local events and businesslocation events to which local residents are invited, etc.
Further, shares issues and exchanges opinions byholding regular and irregular briefings for residents inregions with a relatively large environmental impact, etc.

Shareholders Share issues and exchange opinions mainly throughand Investors general meetings of shareholders, financial results
briefings, individual meetings, and tours of businesslocations.
Overall

Discloses this report, CSR report, and various
communication tools principally on the website, andshares information and exchanges opinions throughtelephone, e-mail and other means.

Internal Control System
The Company’s Board of Directors has resolved the Basic Policy on
the Implementation of Internal Control Systems, and strives toenforce it thoroughly. Each company and department in the Grouphas designated a person in charge of internal control promotion andan internal control facilitator, to encourage the appropriate
establishment and usage of controls. The status of internal control isreported to the Company’s Board of Directors every half-year, andguidance is provided as necessary.
Risk Management
The Company’s Board of Directors receives reports regarding thestatus of the Group’s risk management every half-year, evaluates it,
and issues necessary instructions. What provides the basis of this stepis audits of more than 250 cases a year conducted by the Company’srisk control department for all subsidiaries. Each specialized audit
team carries out audits based on audit plans for each field including
quality assurance, environmental conservation, labor management,
information systems, accounting and operations, and internal
10

control. Results of the audits, along with corrective measures, arereported to the Board of Directors, Board of Auditors, and President
and CEO of the Company.
Response to COVID-19 (as of June 30, 2020)
A COVID-19 response headquarters covering the whole Group wasformed, and the President and CEO himself acts as the head of the
response headquarters to give instructions on countermeasures. We
have found one coronavirus infection case in Thailand and twocases in the United States within the Group. Direct impact on thebusiness from the infection of employees and others is immaterial.
Main measures put in place (including those ongoing) are as
follows.
• Collection and analysis of accurate expert information andgovernment policy information and provision of such information
to employees (including officers, regular employees, temporary
employees, and contract employees; hereinafter the same applies)• Arrangement and encouragement of the use of soap, alcohol, facemasks, etc. to help employees prevent infections individually.
*Employees have the right to withdraw themselves from work thatmay pose an immediate risk to their lives and health at theirdiscretion.
• Arrangement of manuals, protective clothing, disinfection
equipment, etc. for disinfecting workplaces• To avoid close-contact settings, ban on business trips and groupdining, restrictions on visitors, encouragement of work fromhome and online meetings and arrangement of ICT tools toenable those measures• To avoid crowding, staggered work shifts, cancellation of eventsand conferences, shift system at cafeterias and resting areas,
usage restrictions such as time limits, and split operations• To avoid closed spaces, regular ventilation, forced ventilation
using fans, and time limits for meetings and other functions inclosed spaces• Arrangement of infection prevention tools, reduced service
options, shorter hours, and other measures to lighten the burden
on employees engaged in operations such as delivery and service
provision• Development of procedures and training for dealing withconfirmed and suspected infection cases (including all stages offeeling ill, having received PCR testing, and having tested positive;
hereinafter the same applies)• Preparation and training to continue or suspend operations/business in the event of confirmed and suspected infection cases• Stay-at-home arrangement for employees with confirmed andsuspected infection, consultation with medical institutions, publichealth centers, etc., and provision of necessary information• Consideration for employees who had confirmed and suspected
infection in returning to work (including ban on discrimination)• Information sharing and consultation with the labor union in
implementing these measures
Internal Control over Financial Reporting
To ensure financial reporting is conducted appropriately, aninternal control system related to financial reporting has been set up
and put into operation. These efforts are evaluated by an auditing
department with the necessary auditing capabilities and whoseindependence is secured. The status of design, operation andevaluation is shared with the statutory auditors, the accounting
auditor, and is reported to the Company’s Board of Directors, after
which correctives are made as necessary.
In fiscal 2019, it was confirmed that the Group’s internal control
continued to be effective.
Compliance Program
The Company’s Compliance Committee is made up of the Company’s
directors and chaired by the President and CEO. Policies for activities
aimed at enhancing compliance are embodied in the Compliance
Promotion Plan, and the implementation status of the plan isreported to the Committee every quarter.
The Group’s code of conduct is presented in the Group
Compliance Code, which has various requirements for all directors
and employees of the Group, including compliance with laws andregulations, corporate ethics and business etiquette, sensible
conduct, and active communication with stakeholders. To ensure
the thorough dissemination of this code, the Compliance Code ispublished as a handbook that is distributed to all directors andemployees, which allows them to carry it around with them at all
times. Furthermore, compliance meetings attended by all employees
and managers are held twice a year at each workplace, where
attendants repetitively learn the code of conduct. Discussion takes
place on topics including compliance problems at one’s workplaceand compliance violation cases in other workplaces. In fiscal 2019, a
total of 2,156 meetings were held, and a total of 21,404 people andothers (participation rate of 94%) participated in such meetings.
Besides setting up the Group’s whistle-blower system at eachmajor company, the “NLM Hotline” has also been established as acommon whistle-blowing channel for the Group. In fiscal 2019, a
universal platform was created, enabling whistle-blowing inJapanese, English, Chinese, Thai, and Vietnamese.
Under these systems, the Group’s NLM Hotline Rules stipulate theprotection of whistleblowers and the prohibition of unfair treatment
so that they can report any misconduct and illegal act without fearof retaliation, and the rules are thoroughly enforced. Apart from theCompany’s compliance department, multiple whistleblowing
channels are provided, such as statutory auditors, the humanresources department, the legal department, and an external
channel (operated by a specialized company).

Figure 2 Trend in Number of Cases Reported to
the NLM Hotline

CSR INITIATIVESIntroduction
The CSR activities of the Group are carried out based on the CSR
Promotional Plan adopted by the CSR Committee chaired by theCompany’s President and CEO, and the status of the activities isreported at the CSR Committee held twice a year and in the CSR
Report published every year, as well as published on the Company’s
website, etc.
The Group’s CSR initiatives have also been valued by investors,
and the Company has been selected as a constituent of the MSCIJapan ESG Select Leaders Index of the Government Pension
Investment Fund (GPIF) and as a constituent of the SNAM
Sustainable Investment of Sompo Japan Nipponkoa AssetManagement Co., Ltd.

ENVIRONMENT
Environmental Management System
The Group has established the Environment Committee, chaired by
the Company’s President and CEO. Besides formulating theenvironmental policy and plans to promote environmental
conservation activities, the Environment Committee also monitors
the implementation of these activities at each site.
Material Balance
The areas in which the Group’s business activities have the greatest
impact on the environment are greenhouse gases, recycling, water,and biodiversity.
The main inputs and outputs at sites are as shown in the tablebelow.
InputsFuel:
4.7 PJ
Electricity and steam: 7.0 PJ
Raw materials:
523 kilotons
Water:
22.0 million m3

case

28

30

29

20

13

14

15

10

0

2015

2016

2017

2018

Outputs
Greenhouse gases:
731 kilotons-CO2
SOx:
365 tons
NOx:
449 tons
Wastewater:
26.8 million m3
COD:
106 tons
Waste recycled/reduced: 41.6 kilotons
Landfill:
2.3 kilotons

2019 FY

Reduction in Greenhouse Gas Emissions
The Group’s greenhouse gas emissions in fiscal 2019 decreasedby 14% year on year to 2,511 tons-CO2 per million yen. The
11

Our ESG Approach
breakdown was 351 tons-CO2 per million yen (down 33% yoy) for
Scope 1, 376 tons-CO2 per million yen (up 7% yoy) for Scope 2, and
1,780 tons-CO2 per million yen (down 13% yoy) for Scope 3.
The Group’s initiatives to reduce greenhouse gas emissions aim to“reduce greenhouse gas emissions intensity per unit of sales to 1.82
tons-CO2 per million yen by fiscal 2030” at the Group’s sites in Japan.
The results for fiscal 2019 were 1.60 tons-CO2 per million yen.

Figure 3 Greenhouse Gas Emissions(Scope 1+ Scope 2 only)Japank ton-CO2
1000

802

796

768

employment of people with disabilities, and endeavor to reduce long
working hours. The status of these activities is monitored by the staffof the Company’s central supervisory department through labor
audits which cover 335 items. In fiscal 2019, the response status forthe legalization of harassment prevention measures (in Japan) was
the main focus of the investigation, and instructions were given asnecessary.

Figure 4 Trend in Rate of Annual Paid Leave Taken
Besides Japan

747

%
100
75

Male

74.3

73.4

71.6

606
50

500

127
0

2015

135
2016

136

125
2017

2018

125
2019 FY

Water
In fiscal 2019, the Group took in 22.0 million m3 of water(excluding seawater) and discharged 26.8 million m3 of water inJapan annually.

PEOPLE AND SOCIETY
Human Rights
The Group conducts human right protection activities within thescope of its influence. We conducted a fact-finding survey on all
Group employees again in fiscal 2019 based on the roster of workers,
and confirmed that children under the age of 15 did not work in anyof the Group businesses.
Each year, NLM also conducts research on its business partners
regarding CSR procurement, and confirms their support of the CSR
Procurement Policy including the Group Human Rights Policy. The
response rate of the 453 target companies in fiscal 2019 was 49.4%(down 2.4 percentage points yoy). Furthermore, we check forhuman rights violations through on-site visits and interviews at the
manufacturing and factory sites of partners. Also, we have obtained
the signature of consent to the Group’s Human Rights Policy fromeach of the smelting manufacturers who supplies aluminum virgin
ingots, the Group’s main raw material.
Labor Practices
As employees are our most important stakeholders, we strive tocreate a safe working environment where all employees can find joy
and meaning in their work. Such efforts revolve around realizing aworkplace with zero work accidents, that allows for good health andhealth improvement, and is free of discrimination and harassment.
To achieve goals including the promotion of diversity among
employees and realization of work-life balance of each employee, we
promote participation of women in the workplace, expand the
12

63.9

57.8

52.5

Female

25
0

2017

2018

2019

FY

Fair Operating Practices
The Group aims to conduct fair and transparent business activities
while adhering to laws and regulations of each country and region as
well as international laws and regulations. In fiscal 2019, there wereno fines or penalties in connection with legal and other violations.
Involvement with Regional Communities
The Group conducts its business activities in 179 regions of 11
countries. In each region, we aim to be a respectable corporation by
conducting fair and transparent business activities and harmonious
management while adhering to local as well as international laws
and regulations.
We are also actively involved in the development of regionalsocieties and make contributions in accordance with the Social
Contribution Policy of the Group. In fiscal 2019, the Groupparticipated in 353 community programs, and made community
investments of ¥179 million.

Figure 5 Trend in Amount of Expenditure forSocial Developments
Millions of yen
200

168

163
150

179

133

117
100

50

0

2015

2016

2017

2018

2019 FYData Section : ESG Related Data
Item
Environment
Amount of greenhouse gas emissions (Scope 1 and Scope 2)*1

Scope of Calculation

FY2017FY2018FY2019Consolidated (Japan only)*2

804
125
2.09
1,926
22
28
0
4
0
3
10.8
6.3
35.5
576
473
520
23.5
21.5
—
97
37.3
3.5
1,983
5,598
486
(1,440)
0
0
10

748
137
1.87
1,947
35
34
0
5
0
3
10.4
6.2
33.2
601
379
560
23.9
22.5
—
105
48.4
3.5
2,218
6,210
554
(982)
0
0
16

606
125
1.60
★1,690
42
34
0
4
0
4
8.1
6.0
30.3
523
365
449
22.6
21.3
1.3
106
48.4
3.4
1,580
6,248
370
1,027
0
3
10

190
0
1,540
90
8,992
2,233
12,855
8,058
1,198
2,243
1,089
231
36
—
—
—
—
—
—
—
—
—
—
—
—
—
—
596
7.1
197
401
3.5
88.4
8
100
39.1
36.9

208
0
1,640
95
9,087
2,494
13,316
8,399
1,271
2,282
1,095
229
40
0
0
108
15
2,153
559
3,150
833
2,878
671
1,975
276
646
52
692
7.8
211
490
5.6
83.8
8
100
39.9
37.4

216
1
1,666
96
9,345
2,504
13,611
8,568
1,323
2,221
1,239
222
38
0
0
108
21
2,124
600
3,164
894
2,919
741
2,010
284
686
60
617
6.2
210
490
5.0
89.1
12
100
36.9
35.3

Consolidated (besides Japan)*3

Greenhouse gas emission intensity per unit of sales*1 (Goal; 1.82 (FY2030)
Breakdown of Scope 3 emissions*4 Category 1: Purchased goods and services*5
Category 2: Capital goods

Consolidated (Japan only)
Consolidated
Consolidated

Category 3: Fuel not included in Scope 1 or 2
Consolidated
Category 4: Upstream transportation and distribution*6 Consolidated
Category 5: Waste generated in operation

Energy consumption

Consolidated

Category 6: Business travel

Consolidated

Category 7: Employee commuting
Electricity and SteamConsolidated
Consolidated

Fuels

Consolidated

Energy consumption intensity per unit of sales
Weight of raw materials used in production
Amount of SOx emissions
Amount of NOx emissions
Total volume of water intake*7
Total volume of water discharged*8
Water consumption volume*9
Amount of COD emissions
Recycled/Reduced
Amount of waste and byproducts
discharged
Disposed (landfill)
Environmental accounting Environmental conservation expenditure: Investment
Environmental conservation expenditure: Expenditure

Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated
Consolidated (Japan only)
Consolidated (Japan only)
Consolidated (Japan only)
Consolidated (Japan only)

Economic effect of environmental conservation activities: Earnings Consolidated (Japan only)
Economic effect of environmental conservation activities: Changes in expenditure*10,*11 Consolidated (Japan only)

Number of cases of lawsuits, penalties, or forfeitures concerning the environment Consolidated
Consolidated
Number of accidents concerning the environment*12
Consolidated
Number of complaints concerning the environment*13
Employees, etc.
Consolidated
Full-time directors and officers
Number of directors and officers
Breakdown by gender*14

FemaleConsolidated

Male

Consolidated

FemaleConsolidated

Male

Consolidated

FemaleEmployees

Consolidated

Total

Japan

Consolidated

Male

Consolidated

FemaleConsolidated

Male

Consolidated

FemaleConsolidated

Male

Consolidated

FemaleConsolidated

Male

Consolidated

FemaleFrom age 15 to 19

Consolidated

Male

Consolidated

FemaleFrom age 20 to 29

Consolidated

Male

Consolidated

FemaleFrom age 30 to 39

Consolidated

Male

Consolidated

FemaleConsolidated

Male

Consolidated

FemaleConsolidated

Male

Consolidated

FemaleAge 60 and above

Consolidated

Male

Consolidated

FemaleTotal

Consolidated (Japan only)

Percentage to employees

Consolidated (Japan only)

Managerial
Nonmanagerial

Number of employees
Breakdown by country/region

Asia
U.S. and Europe

Breakdown by age*15

Below age 15

From age 40 to 49
From age 50 to 59

Number of new hires

Male

Consolidated

Number of new graduates who were recruited
Number of those who left the company Total

Consolidated (Japan only)
Consolidated (Japan only)

Percentage to employees

Consolidated (Japan only)

Fixation rate at least 3 years in the company*16
Number of those who were re-employed after retirement
Labor Union participation rate
Average age

Consolidated (Japan only)
Non-consolidated (Nippon Light Metal Co., Ltd.)
Non-consolidated (Nippon Light Metal Co., Ltd.)
Consolidated

Male

Consolidated

Female★

Unit
Ktons-CO2
Ktons-CO2
tons-CO2/million yen
Ktons
Ktons
Ktons
Ktons
Ktons
Ktons
Ktons
PJ
PJ
GJ/million yen
Ktons
Tons
Tons
million m3
million m3
million m3
Tons
Ktons
Ktons
million yen
million yen
million yen
million yen
cases
cases
cases
peoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeoplepeople%peoplepeople%%people%years of age
years of age

13

Data Section : ESG Related Data
Item
Employees, etc.
Average years of service

Scope of Calculation
Consolidated

Male

Consolidated

FemaleConsolidated (Japan only)

Male

Consolidated (Japan only)

FemaleAverage number of overtime hours per year

Consolidated (Japan only)

Male

Consolidated (Japan only)

FemaleAverage number of days of annual leave taken

Consolidated

Male

Consolidated

FemaleAverage rate of annual leave taken

Consolidated

Male

Consolidated

FemaleNumber of employees who newly took childcare leave

Consolidated (Japan only)

Male

Consolidated (Japan only)

FemaleConsolidated (Japan only)

Male

Consolidated (Japan only)

FemaleConsolidated (Japan only)

Male

Average number of working hours per year

Number of employees who newly took nursing care leave

FY2017FY2018FY2019

11.5
7.7
2,146
1,974
324
161
9.9
9.7
52.5
71.6
1
55
2
1
0
61
34
2

11.8
8.0
2,157
1,871
302
150
9.9
9.6
57.8
73.4
6
66
4
2
1
66
59
9

11.1
7.2
2,226
1,922
334
175
10.3
9.1
63.9
74.3
12
52
0
2
3
83
51
8

Unit
years
years
hours/people
hours/people
hours/people
hours/people
days
days
%
%
peoplepeoplepeoplepeopleNumber of employees who used reduced working hour system due tochildcare or nursing care
Number of employees on leave due to mental health issues

Consolidated (Japan only)

FemaleConsolidated (Japan only)

Male

Consolidated (Japan only)

FemaleAverage education/training expenses per year

Consolidated

29.2

24.9

Non-consolidated (Nippon Light Metal Co., Ltd.)

2.59
2.03

2.63
1.93

2.57 %
2.55 %

12
9
66
5
0.56
0.27

23
16
64
5
1.05
0.54

19
16
56
6
0.91
0.27

Consolidated

15
2,102

28
2,066

29 cases
2,156 times

Consolidated

20,237

20,972

Consolidated

182
107

167
92

Consolidated

0
6
2

0
8
4

0 cases
7 cases
3 cases

Consolidated

133

168

179 million yen

Consolidated

8

9

Employment rate of people with disabilities*17

Non-consolidated (Toyo Aluminium K.K.)

SafetyNumber of workplace injuries*18

Lost-time injuries

Consolidated (Japan only)
Consolidated (besides Japan)

Non-lost-time injury

Consolidated (Japan only)
Consolidated (besides Japan)

Frequency rate of lost-time injuries*18*19

Consolidated
Non-consolidated (Nippon Light Metal Co., Ltd.)

Compliance, etc
Number of cases reported to the NLM Hotline*
Number of meetings held
Compliance meetings
Number of participants

Number of patent publications*18
Number of patent registrations*18
Quality assurance
Number of legal violations in the delivery of products/services
Number of reports of quality issues
Number of recalls
Community
Amount of expenditure for social contributions
GovernanceInterim and year-end dividend per share

Consolidated

Consolidated
Consolidated
Consolidated

peoplepeoplepeoplepeopleyen/
23.4 thousandpeople

cases
cases
cases
cases

number of
21,404 Total
participants

160 cases
81 cases

9 yen

The ★ mark indicates that a third party, KPMG AZSA Sustainability Co., Ltd., has provided independent assurance for the reliability of the data.
*1. From FY2018, GHG emissions from main offices have been calculated.
*2. The following CO2 emission factors were used for the calculations.
Domestic electricity: The CO2 emission factor with T&D losses of each previous fiscal year announced by the Electric Power Council for a Low Carbon Society
Domestic fuel: CO2 emission factors per unit of fuel, specified by the Ordinance of the Ministry of the Environment*3. The following CO2 emission factors were used for the calculations.
Overseas electricity: CO2 emission factors of the respective countries in CO2FCOMB 2017 released by the IEA.
Overseas fuel: Same as domestic fuel in *2*4. The emissions are calculated by multiplying the activity amount by the CO2 emission factor published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry.
*5. The Scope 3 Category 1 emissions are calculated based on the volume of purchase of the top three items in terms of volume purchased from outside of the group. Of the items, the aluminum ingots arethose purchased by Nippon Light Metal Group Metal Center.
*6. We revised the calculation criteria for Category 4 and amended FY2017 and FY2018 figures.
*7. The seawater intake quantity is not included.
*8. We revised the calculation criteria for the amount of discharged water and amended FY2017 and FY2018 figures.
*9. We started to compile data from FY2019.
*10. Changes in expenditure are calculated using the following formula: Changes in expenditure = expenditure incurred during a base period (FY2018) – expenditure incurred during the current year (FY2019)*11. - (minus) indicates an increase in expenditure.
*12. Environmental problems that affect external parties (such as the leakage of oil or chemicals)*13. Number of petitions from external parties (such as those regarding smell and noise)*14. Contract employees (full-time) are included.
*15. Consolidated values began to be reported in FY2018.
*16. Percentage of employees who are still at the company as of April 1 in the year that is three years after they joined the company.
*17. As of June 1 immediately after the end of each fiscal year. The statutory employment rate is 2.2% (2.0% on and before March 31, 2018).
*18. During the calendar year (from January to December).
The value for lost-time injuries (consolidated, besides Japan) and non-lost-time injuries (consolidated, Japan only) for 2017 were incorrect and were therefore corrected.
*19. Injuries that resulted in one or more days’ absence from work (excluding commuting injuries)

14

NLM Group
Nippon Light Metal Group consists of 80 subsidiaries and 22 affiliates (as of March 31, 2020).
The Group’s major operations and the business relations between the Company, major consolidated subsidiaries andaffiliates accounted for by the equity method are shown in the diagram below.
Nippon Light Metal Holdings Company, Ltd.

Aluminum
Ingot andChemicals(Manufacture and Sales)● Nippon Light Metal Co., Ltd.
● Aluminium Wire Rod Co., Ltd.
● Nikkei MC Aluminium Co., Ltd.
● Nikkei MC Aluminum America, Inc.
● Nikkei MC Aluminum (Thailand) Co., Ltd.
● Nikkei MC Aluminum (Kunshan) Co., Ltd.
● Iharanikkei Chemical Industry Co., Ltd.
● Guangxi Zhengrun Nikkei High Purity
Aluminium Technology Co., Ltd.
● CMR Nikkei India Pvt. Ltd.

(Sales and Others)(Manufacture and Sales)● Nikkeikin Kakoh Kaihatsu Holdings● Nippon Light Metal Co., Ltd.
● Toyo Rikagaku Kenkyusho Co., Ltd.
● Toyo Precision Appliance (Kunshan) Co., Ltd.

Aluminum
Sheet andExtrusions(Sales and Others)● Nikkei Sangyo Co., Ltd.
● Tamai Steamship Co., Ltd.

Co., Ltd.
● Nikkei Sangyo Co., Ltd.

● Nikkei Siam Aluminium Ltd.
● Nippon Light Metal Georgia, Inc.
● Nikkei Extrusions Co., Ltd.
● Nikkeikin Aluminium Core Technology Co., Ltd.
● Shandong Nikkei Conglin Automotive Parts Co., Ltd.
● Nikkei (Shanghai) Body Parts Co., Ltd.
● Riken Light Metal Industry Co., Ltd.
● Nonfemet International (China-Canada-Japan)

Aluminium Co., Ltd.
(Sales and Others)(Manufacture and Sales)● Sumikei-Nikkei Engineering Co., Ltd.

● Nippon Light Metal Co., Ltd.

● Nikkei Information System Co., Ltd.

● NLM ECAL Co., Ltd.

● Nikkei Logistics Co., Ltd.

● Nikkei Sangyo Co., Ltd.

FabricatedProducts
and Others● Toho Earthtech Inc.

● Nikkei Heat Exchanger Co., Ltd.
● Nikkei Panel System Co., Ltd.
● Nikkei Matsuo Co., Ltd.
● Nippon Electrode Co., Ltd.
● Nippon Light Metal North America, Inc.
● Nippon Fruehauf Co., Ltd.
● Fruehauf Mahajak Co., Ltd.
● Shandong Conglin Fruehauf Automobile Co., Ltd.

Aluminum
Foil, Powder
and Paste(Manufacture and Sales)● Toyo Aluminium K.K.
● Hunan Ningxiang JiWeiXin Metal Powder Co., Ltd.
● Toyal Zhaoqing Co., Ltd.
● Toyal America, Inc.
● Toyal MMP India Pvt. Ltd.
● Toyal Europe SASU
● Toyo Aluminium Ekco Products Co., Ltd.
● Sam-A Aluminium Co., Ltd.

C U S T O M E R● Consolidated subsidiaries: 77 companies● Affiliates accounted for by the equity method: 15 companies(As of March 31, 2020)15

Review of Operations
Consolidated
Net Sales

Aluminum Ingot and Chemicals
Profile Alumina and Chemicals segment produce aluminum hydroxide, alumina and chemicals
used in various fields. These products are used as raw materials for flame retardants, ceramics andother products and as industrial materials in paper and pulp manufacturing. Aluminum Ingot segment manufacture various kinds of aluminum alloys and enjoy an excellent
reputation for the development of high-performance alloys in response tocustomer requirements.

60,000

●

6,000

’18

’19

’20

0

’18

’19

10,902’20

Overview of results for fiscal 2019
In the Alumina and Chemicals segment, sales of coagulants

Millions of Yen• Aluminum• Aluminum hydroxide• Chemicals (chemical products)• Caustic soda
• Chlorinated chemical products• Aluminum ingot• Aluminum alloys

3,000

30,000
0

9,000

9,616

102,833

90,000117,008

12,000111,100

120,000%

102,833

Principal Products

Consolidated Operating Profit(Millionsof Yen)8,954

Net Sales(Millionsof Yen)22.1

In the Aluminum Ingot segment, regarding the coresecondary alloy products for automotive applications

and organic chlorides were brisk among chemicals, butbusiness, demand in North America was firm, but competition

mainstay aluminum hydroxide and alumina-related productswith general-purpose alloys made in China, in addition to asaw demand for refractories and semiconductor-related

decline in demand in Japan, China and Thailand, dragged

products slump. As a result, the segment’s net sales decreased

down sales and sales prices, resulting in lower net sales andyear on year. However, profits increased compared to the

profits for the segment compared to the previous year.

previous year due to the effect of improved product mix, solid

As a result, in the Aluminum Ingot and Chemicals segment,

sales of high value-added products, and falling raw material

net sales decreased 12.1% year on year to ¥102,833 million,

prices.

while operating profit increased 13.4% year on year to¥10,902 million.

Aluminum Billet

16

Review of Operations
Consolidated
Net Sales

Aluminum Sheet and Extrusions
Profile The NLM Group’s aluminum sheet and extrusions are used in a wide rangeof market sectors, for instance for automotive parts and railway cars in the transport industry
and for semiconductor and liquid crystal manufacturing equipment and photosensitive
drums in the electrical machinery and electronics industries. The Group applies technologies
and expertise accumulated over many years to actively develop products that meet userneeds and provides customers with high-performance sheets and extrusions.
Consolidated Operating Profit

30,000
0

●

5,000

3,556

60,000

7,500

2,500

’18

’19

’20

0

Applications

Millions of Yen

21.7%

Principal Products• Automobile

7,152

90,000101,193

10,000107,835

120,000

106,955(Millionsof Yen)9,767

Net Sales(Millionsof Yen)101,193

’18

’19

’20

• Automobile suspension parts • Lead-free cut aluminum alloy• Quick freezing coagulated powder extruded materials• High-intensity molded aluminum sheet• Transport• Large structural materials for railway rolling stock• Flap for trucks
Electronics•• Thick plate for semiconductor and LCD manufacturing
equipment • Foil stock • Photosensitive drum materials• Industrial• Printing roll • Industrial materials• Building materials and • Aluminum honeycomb panel • Scaffolding
infrastructure materials • Building materials

Overview of results for fiscal 2019

data centers increased, truck-related products were sluggish,

In the Aluminum Sheet segment, there was a decline in sales

and sales volume of products for semiconductor manufacturing

volumes of thick plates for semiconductor and liquid crystal

equipment and automobile-related products decreased. As

manufacturing equipment, materials for environmentallya result, net sales for the Aluminum Extrusions segment

friendly vehicles for PC cases, resulting in lower net sales for

decreased from the previous year. Profits also fell significantly

the segment compared with the previous year. Profits greatly

due to a decline in sales prices reflecting the price of aluminum

decreased mainly owing to a decline in sales prices reflecting

ingots, in addition to lower sales volume.

the price of aluminum ingots, in addition to a decrease in salesof high value-added products.
In the Aluminum Extrusions segment, although sales
volume of communications-related products such as those for

As a result, in the Aluminum Sheet and Extrusions segment,
net sales decreased 6.2% year on year to ¥101,193 million,
and operating profit decreased 50.3% year on year to ¥3,556
million.

Aluminum Sheet

17

Review of Operations
Consolidated
Net Sales

Fabricated Products and Others
Profile The NLM Group includes several companies that handle distinctive fabricated products.
In particular, Nippon Fruehauf’s truck bodies and Nikkei Panel
System’s commercial refrigerators and freezer panels enjoy an
excellent reputation for quality, and are market share leaders in their respective fields.
In addition, the Group provides familiar aluminum fabricated products, including anodized
aluminum foil for aluminum electrolytic capacitors, automotive parts, and carbon products.
Consolidated Operating Profit

100,000
50,0000

10,440

9,000

’19

’20

• Building materials
and infrastructurematerials

0

’18

’19

’20

Overview of results for fiscal 2019
In the Transport-Related segment, net sales of the truck
outfitting business decreased from the previous year, mainly
owning to lower sales for compact trucks as a result of areactionary fall following rush demand ahead of the tighteningof exhaust gas regulations, and a decline in demand fortemperature-controlled vehicles, despite firm demand fortrailers. However, profits increased from the previous year as aresult of improved productivity and falling material prices.
In the heat exchanger business, sales of products related toenvironmentally friendly vehicles fell sharply, despite brisk
sales of capacitors for air conditioners mainly for mainstay
mini vehicles. In August 2019, we acquired additional sharesof Nikkei Heat Exchanger Company, Ltd., which was an equitymethod affiliate, and made it a wholly-owned subsidiary.
The move is aimed at further strengthening the subsidiary’s
collaboration with the Group and accelerating the creation of
new products and businesses in the field of heat devices such as
materials related to environmentally friendly vehicles.
In the shaped parts business, both net sales and operating
profit greatly decreased from the previous year, due to a sharp
drop in demand for forgings for China and Thailand in addition
to lower sales of mainstay brake calipers among castings.
In the Electronic Materials segment, demand for anodized
aluminum foil for aluminum electrolytic capacitors showed
little growth in line with the deterioration of the market
environment for electric and electronic equipment, andboth net sales and operating profit fell significantly from theprevious year.
●

18• Transport• Electronics

6,000
3,000

’18

Applications• Automobile
11,681150,000

172,975

12,000180,259

200,000

169,019(Millionsof Yen)9,783

Net Sales(Millionsof Yen)• Food and lifestyle172,975
Millions of Yen

37.1%

Principal Products• Cast and forged parts for automobiles• Heat exchangers for automobiles• Van truck bodies and trailers• Anodized foil for electrolytic capacitors• Clean rooms• Landscape engineering products• Solid truss structural materials (Aluminum truss)• Plant package for communication base stations• Panels for commercial refrigerators and freezers

In the Panel System segment, sales of panel systems forclean rooms at electronic parts factories increased in response
to 5G (the fifth generation mobile communication system)
infrastructure development. There was also higher demand forpanel systems for clean rooms for medical and pharmaceuticalapplications, but products for industrial refrigerators andfreezers saw demand for panel systems for food processing
plants, particularly large-scale projects, decrease. As a result,both net sales and operating profit declined year on year.
In the Landscape Engineering segment, among products forroads and bridges, demand for railings declined, but sales of
new products for bridge inspections remained robust from theprevious year. Demand for products for structures such as sluicegates and water purification plants increased, resulting in higher
net sales for the Landscape Engineering segment year on year.
However, the segment’s operating profit fell below the previous
year’s level, owing to the amortization of goodwill incurred when
Sumikei-Nikkei Engineering Co., Ltd. (now known as Nikkei
Engineering Co., Ltd.) became a subsidiary in the previous year.
In the Carbon Product segment, both net sales and operating
profit increased from the previous year, reflecting strong salesof high value-added products of mainstay carbon blocks forblast furnaces and electric furnaces, and progress in the heat
treatment business for anode materials in lithium-ion batteries,
despite a slowdown of the steel industry, where our main
customers operated.
As a result, in the Fabricated Products and Others segment,
net sales decreased 4.0% year on year to ¥172,975 million andoperating profit decreased 10.6% year on year to ¥10,440 million.

Review of Operations
Consolidated
Net Sales

Aluminum Foil, Powder and Paste
Profile The core company in this segment is Toyo Aluminium K.K. The company has established its position as the leading manufacturer by using the features of aluminum to develop awide range of products beneficial to society, industry and daily life, including packaging forfood and pharmaceutical products, electronics, aluminum pastes, and materials for solar cells.
Expanding into new fields based on our own technology, we are marketing various kinds andtypes of materials and products of high functionality in both domestic and overseas markets.

4,500

50,0003,000

25,000

1,500

0

●

’18

’19

’20

0

’18

’19

3,074

88,94575,00095,3496,000

94,365100,000

5,114

Consolidated Operating Profit(Millionsof Yen)4,856

Net Sales(Millionsof Yen)Applications• Food and lifestyle• Electronics• Automobile• Environmental / Energy

19.1%

88,945

Millions of Yen

Principal Products• Aluminum foil
• Aluminum foil for electrolytic capacitors• Powder and paste• Back sheets for solar cells• Electrode ink for solar cells’20

Overview of results for fiscal 2019

In the Powder and Paste segment, sales of aluminum powder

In the Aluminum Foil segment, sales of plain foil for lithium-in electronic material for heat dissipation performed well,ion battery surfaces and cathode materials increased from theand sales of aluminum nitride for thermal conductive fillers

previous year’s figure as sales for smartphones and personalincreased, but overall sales of powder products were sluggish.

computers decreased but sales for automobiles increased.

With regards to paste products for inks, sales of high value-added

However, sales of foil for capacitors declined sharply due

products such as those for gravure printing were relatively

to lower demand for electronic components and high-techbuoyant, but sales volume of mainstay products for automobile

products. While sales of fabricated foil for pharmaceutical

paint decreased due to lower automobile production and weak

packaging increased, sales of water-repellent fabricated foil for

performance of silver-colored paste products. As a result, bothfood products and antenna circuit foil for IC cards decreased,

net sales and operating profit of the Powder and Paste segment

resulting in lower net sales and operating profit of thedecreased from the previous year.

Aluminum Foil segment compared with the previous year.

In the Solar segment, sales volume of back sheets for solar
cells fell due to the Chinese government’s revision of its
measure for supporting introduction of solar power generation
systems, as well as price competition. Functional ink products
for solar cells also faced intensified competition due to themarket entry of competitors, while sales of new products fornext-generation cells performed weakly. As a result, net sales of
the Solar segment greatly decreased from the previous year.
As a result, in the Aluminum Foil, Powder and Paste segment,
net sales decreased 6.7% year on year to ¥88,945 million andoperating profit decreased 39.9% year on year to ¥3,074 million.

Aluminum Foil

19

Consolidated Six-Year Summary
Nippon Light Metal Holdings Company, Ltd. and its consolidated subsidiaries Years ended March 31

Gross Profit and Gross Profit Margin2015
100,000

25

80,00020

60,00015

40,00010

20,000

5

0

2015
2016
2017
Gross Profit Margin
Gross Profit

2018

2019

2020

0

Years ended March 31 %Millions of yen

Interest-bearing Debt

200,000

160,000

120,000

80,00040,000

0

2015

2016

2017

2018

2019

2020

Years ended March 31

Millions of yen

Free Cash Flows

25,00020,00015,00010,000

5,000

0

2015

Millions of yen

20

2016

2017

2018

2019

2020

Years ended March 31

2016(Millions of yen)

Financial Results
Net Sales .................................................................................................
Gross Profit ............................................................................................
Gross Profit Margin (%) ........................................................................
Operating Profit (Loss) ..........................................................................
Ordinary Profit (Loss) ...........................................................................
Profit attributable to owners of parent .................................................
Segment Information
Net Sales:
Aluminum Ingot and Chemicals .....................................................
Aluminum Sheet and Extrusions.....................................................
Fabricated Products and Others ......................................................
Aluminum foil, powder and paste ...................................................
Total ..................................................................................................
Operating Profit (Loss):
Aluminum Ingot and Chemicals .....................................................
Aluminum Sheet and Extrusions.....................................................
Fabricated Products and Others ......................................................
Aluminum foil, powder and paste ...................................................
Elimination or corporate items .......................................................
Total ..................................................................................................
Financial Position
Current Assets.........................................................................................
Property, plant and equipment .............................................................
Intangible assets ....................................................................................
Investments and other assets ................................................................
Current liabilities ..................................................................................
Long-term liabilities ..............................................................................
Shareholders’ equity (Note 3) ...............................................................
Total accumulated other comprehensive income (Note 3) .................
Non-controlling interests (Note 3)........................................................
Interest-bearing Debt (Note 2) ..............................................................
Cash Flows
Cash Flows from Operating Activities....................................................
Depreciation and Amortization .......................................................
Cash Flows from Investing Activities .....................................................
Capital Expenditures ........................................................................
Cash Flows from Financing Activities ...................................................
Per Share Data (yen and dollars)
Net Profit (Loss) - basic .........................................................................
- diluted ....................................................................
Net Assets (Note 3) .................................................................................
Cash Dividends .......................................................................................
Indices
Return on Capital Employed (ROCE)(%)....................................................
Return on Equity (ROE)(%)..................................................................
Equity Ratio (%) ....................................................................................
OthersNumber of Shares Outstanding (thousands) ..................................................
R&D Expenditures .................................................................................
Number of Employees ............................................................................

¥431,477
76,98717.8
19,30520,6009,645¥464,405
89,23719.2
26,821
24,526
15,533

114,339
82,823138,088
96,227431,477

109,844
103,340
149,220
102,001
464,405

6,069
4,230
7,704
4,183)(2,881)
19,305

9,138
3,058
10,958
6,829(3,162)
26,821

248,906
153,235
4,543
50,593202,220
117,672
111,791
9,631
15,963
188,990

247,363
152,183
3,328
49,320186,881
120,894
124,884
5,300
14,235
182,207

11,78016,406(7,119)15,869(17,581

37,77016,356(19,419)
18,861(10,708)¥ 17.74
15.59
223.275.00¥ 28.5625.10
239.39
6.00

8.2
8.3
26.6

9.0
12.3
28.8

545,126
4,495
13,335545,126
4,794
12,961

Note 1: U.S. dollar amounts have been translated, for convenience only, at the exchange rate of ¥108.83 =U.S.$1.00. See Note 2 of the Notes to the Consolidated Financial Statements.
Note 2: Interest-bearing Debt = Long-term debt and Short-term borrowings, excluding capital lease obligations +Notes discounted + Notes endorsed
Note 3: Numbers used for the year ended March 2010 have been revised according to the current segmentcategories.

Return on Capital Employed (ROCE)
2017

2018

2019

2020

2020
(Thousands of
U.S. dollars)(Note 1)

(Millions of yen)12

9¥448,381
91,56420.430,22526,252
19,520¥481,439
94,03519.5
29,89329,53318,012¥500,451
97,25719.4
30,05231,084
20,560¥465,946
93,60920.1
24,60723,475
7,476$4,281,411
860,14020.1
226,105
215,703
68,694

101,840
98,165
154,684
93,692
448,381111,100
106,955
169,019
94,365
481,439

117,008
107,835
180,259
95,349500,451

102,833
101,193
172,975
88,945465,946944,895
929,827
1,589,405
817,284
4,281,411

10,126
7,775
10,245
5,478(3,399)30,225

8,954
9,767
9,783
4,856
(3,467)29,893

9,616
7,152
11,681
5,114(3,511)30,052

10,902
3,556
10,4403,074(3,365)24,607100,175
32,67595,92928,246(30,920)226,105

246,394
151,2313,190
47,808184,277
90,722
154,600
5,053
13,971
149,835

267,059
154,002
3,187
43,052
191,729
86,249167,115
6,842
15,365
139,997

267,238
164,568
5,554
43,943
184,364
94,204
183,163
4,691
14,881
139,570

246,374
173,757
5,867
44,006
162,341
106,465
184,547
1,728
14,923
132,6222,263,843
1,596,591
53,910404,355
1,491,693
978,269
1,695,736
15,878137,123
1,218,616

36,48816,602(11,887)
19,908(24,432)

25,86817,126(14,948)
21,077(17,040)

34,644
17,294(22,777)
29,926(8,904)

48,676
18,694(29,684)
29,978(15,745)447,266
171,772(272,756)
275,457(144,675)¥ 34.5831.46
257.828.00¥ 29.09—280.938.00¥ 33.20—303.37
9.00¥ 12.07—300.83
9

9.6
13.5
35.6

10.7
10.8
37.2

10.8
11.4
39.0

8.0
4.0
39.6

619,937
4,939
13,126

619,937
5,177
12,85557,185
5,447
13,316

60,1005,867
13,611

6

3

0

2015

2016

2017

2018

2019

2020

Years ended March 31%

Return on Equity (ROE)

15

12

9

6

3

0

2015

2016

2017

2018

2019

2020

Years ended March 31%

R&D Expenditures

6,000

$

0.11
—
2.76
0.08

5,000

4,000

3,000

2,000

1,000

53,9100

2015

Millions of yen

2016

2017

2018

2019

2020

Years ended March 31

21

Financial Review

Overview

Overview of Consolidated Business Performance

During fiscal year 2019 (the year ended March 31, 2020), theglobal economy faced growing concerns over its outlook, such as(Millions of yen)

Changes incomparison
Previous
Fiscal year
fiscal year (Decrease in parentheses)
under review
Changes
The year ended The year ended
March 31, 2020 March 31, 2019 [Percent changes]

trade frictions between the United States and China, Brexit, andgeopolitical risk in the Middle East. Furthermore, as the novel
coronavirus infection started to spread this year, the global economy
sharply deteriorated. The Japanese economy also appeared to be
stuttering as a result of the increase of the consumption tax rate anda series of natural disasters, and it turned downward towards the endof the fiscal year owing to the spread of the novel coronavirus
infection in Japan.
The aluminum industry saw demand for semiconductor

Net sales

465,946

500,451(34,505)[(6.9%)]

Operating profit

24,60730,052(5,445)[(18.1%)]

Ordinary profit

23,47531,084(7,609)[(24.5%)]

Profit attributable toowners of parent

7,476

20,560(13,084)[(63.6%)]

Net income per share (Yen)

12.07

33.20

(21.13)[(63.6%)]

manufacturing equipment and cars decline, resulting in an overall

advantage of the supply chain with manufacturing at the core, tolack of strength. Furthermore, aluminum ingot prices continued adownward trend.
Under such circumstances, the Group strove to maximize

thoroughly pursue Group-wide cooperation and create new value forall customers. Under the second basic policy in MTMP, “invest
resources for growth,” we vigorously invested resources into fields andconsolidated net sales in accordance with the basic policies in the
Mid-Term Management Plan (“MTMP”), which commenced in fiscal
year 2019 and covers fiscal 2019 through 2021.

regions where the Group’s strengths can be utilized.

Under the first basic policy in MTMP, “create new products andbusinesses,” we strove to develop products and businesses, taking

NLM Holdings’ consolidated net sales for the fiscal year underreview decreased 6.9% year on year to ¥465.9 billion ($4,281 million).

Net Sales By Segment

Earnings and Expenses

Total Net Assets

Equity Ratio

500

250

40

400

200

32

300

150

24

200

100

16

100

50

8

0

2015

Billions of yen

2016

2017

2018

2019

2020

Years ended March 31

0

2015

Billions of yen

2016

2017

2018

2019

0

2020

As of March 31

%

2015

2016

2017

2018

2019

2020

As of March 31

Aluminum Ingot and Chemicals
Aluminum Sheet and Extrusions
Fabricated Products and Others
Aluminum Foil, Powder and Paste

Note: Numbers used for the year ended March 2010 have been revised according to the current segment categories. Numbers used for the year ended March 2010 do notinclude numbers form the Building Materials segment.

22For sales and other aspects of financial performance by business

Assets, Liabilities and Shareholders’ Equity

segment, please see the Review of Operations on Pages 16 to 19.
The cost of sales decreased 7.7% year on year to ¥372.3 billion

Total assets as of March 31, 2020 decreased ¥11.3 billion year on yearto ¥470.0 billion ($4,319 million). This was mainly due to a decrease($3,421 million). Selling, general and administrative expenses werein notes and accounts receivable – trade. Total liabilities decreased¥69.0 billion ($634 million). As a result, operating profit decreased
18.1% year on year to ¥24.6 billion ($226 million).

¥9.8 billion year on year to ¥268.8 billion ($2,470 million). This was
mainly due to a decrease in notes and accounts payable – trade.

Non-operating income decreased 30.0% year on year to ¥3.4 billion

Interest-bearing debt decreased ¥6.9 billion year on year to ¥132.6($31 million). Equity in earnings of affiliates decreased 60.0% year on
year to ¥0.3 billion ($2 million) and dividend income increased 4.5%

billion.
Net assets decreased ¥1.5 billion year on year to ¥201.2 billion

year on year to ¥0.3 billion ($3 million), while other non-operating($1,849 million), primarily due to a decrease in foreign currency

income decreased 32.2% year on year to ¥1.6 billion ($14.7 million).
Non-operating expenses increased 18.3% year on year to ¥4.6

translation adjustments. Net assets per share decreased ¥2.54 year on
year to ¥300.83 ($2.76), while the equity ratio rose 0.6 percentage

billion ($42 million). As a result, ordinary profit fell 24.5% year on

points year on year to 39.6%.

year to ¥23.5 billion ($216 million).
Environmental expenses associated with Amehata Dam(Yamanashi Prefecture), which is owned by our subsidiary Nippon

Cash Flows
Cash and cash equivalents on a consolidated basis as of March 31,

Light Metal, were recorded as a special loss of ¥11.0 billion ($101
million). Please see Page 5 for details of countermeasures for
sedimentation around Amehata Dam.

2020 increased ¥3.0 billion year on year to ¥36.3 billion ($334
million).
Net cash provided by operating activities totaled ¥48.7 billion ($447

As a result, profit before income taxes during the fiscal year underreview was ¥12.5 billion ($115 million). Corporate, inhabitant andbusiness taxes amounted to ¥4.9 billion ($45 million) and deferred

million). This was because the amount of non-cash income andexpense items, including profit before income taxes and depreciation
and amortization, exceeded the amount of cash outflows such as

income taxes during the fiscal year under review were ¥(1.7) billion($(16) million). Profit was ¥9.3 billion ($85 million).
As a result of the above, profit attributable to owners of parent inincome taxes paid. Net cash used in investing activities was ¥29.7
billion ($273 million). This was mainly due to payments for purchaseof property, plant and equipment. Net cash used in financing

the fiscal year under review decreased 63.6% year on year to ¥7.5
billion ($69 million). The average number of shares outstanding
decreased from 619,221 thousand in the previous fiscal year to619,214 thousand. Accordingly, net income per share decreased from¥33.20 in the previous year to ¥12.07 ($0.11). The annual cash
dividend per share remained the same as the previous year at ¥9.0($0.08).

activities totaled ¥15.7 billion ($145 million). This was mainly due torepayments of long-term debt.

Overview of Consolidated Balance Sheets(Millions of yen)March 31, 2020 March 31, 2019

Changes incomparison

Total assets

470,004

481,303(11,299)

Total liabilities

268,806

278,568(9,762)

Net assets

201,198

202,735(1,537)

39.6

39.0

(0.6)

Equity ratio (%)

Outlook for Fiscal 2020
Under the basic policies in MTMP for fiscal 2019 to 2021, which hasentered the second year in the fiscal year ending March 31, 2021, theGroup strives to create new products and businesses, invest resources
for growth, and strengthen the management foundation, thereby
maximizing consolidated net sales.
The uncertainty over overall economic activities around the worldis increasing due to the spread of the novel coronavirus infection, andthe future outlook is also unclear in Japan.
The forecast of the consolidated financial results for fiscal 2020
remains undetermined, because the impact of the spread of the novel
coronavirus infection is uncertain and it is difficult at this point toreasonably forecast the consolidated financial results of the Group.

23Consolidated Balance Sheets
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

2019

2020

(Millions of yen)(Thousands of
U.S. dollars) (Note 3)

Current assets:
Cash and deposits (Notes 4 and 7)
Notes and accounts receivable – trade (Note 7)
Electronically recorded monetary claims – operating (Note 7)
Finished products
Work-in-progress, including costs related to construction-type contracts
Raw materials and supplies
Other current assets
Allowance for doubtful accounts
Total current assets¥ 33,417 ¥ 36,349
123,039
105,458
29,642
27,57530,45328,513
19,105
19,30922,231
18,788
9,848
10,767(497)(385)
267,238
246,374$ 333,998
969,016
253,377
261,996
177,424
172,636
98,934(3,538)2,263,843

Property, plant and equipment (Note 6):Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Construction-in-progress
Accumulated depreciation
Total property, plant and equipment

54,66354,587140,766
152,490
290,629298,133
34,31735,86915,0238,894(370,830) (376,216)
164,568
173,757

501,580
1,401,176
2,739,438
329,587
81,724(3,456,914)
1,596,591

AssetsIntangible assets:
Goodwill
Other intangible assets
Total intangible assets

1,999
3,555
5,554

1,555
4,312
5,867

14,28839,62253,910Investments and other assets:
Investment securities (Notes 5 and 7)
Deferred tax assets (Note 10)
Other assets
Allowance for doubtful accounts
Total investments and other assets

29,623
6,618
7,924
(222)
43,94327,560
8,981
7,732
(267)
44,006253,239
82,52371,047(2,454)404,355¥ 481,303 ¥ 470,004$ 4,318,699

Total assets

24

March 31,
2020

2019

March 31,
2020

(Millions of yen)

2020
(Thousands of
U.S. dollars) (Note 3)

Liabilities and net assets
Current liabilities:
Short-term borrowings (Notes 6 and 7)
Current portion of long-term debt (Notes 6 and 7)
Notes and accounts payable – trade (Note 7)
Income taxes payable
Other current liabilities
Total current liabilities¥ 55,411
15,05876,244
3,422
34,229184,364¥ 52,602
10,787
63,8262,654
32,472
162,341$ 483,341
99,118586,474
24,387298,373
1,491,693

Long-term liabilities:
Long-term debt (Notes 6 and 7)
Liabilities for retirement benefits (Note 9)
Provision for environmental measures
Other long-term liabilities (Notes 6, 7 and 10)
Total long-term liabilities
Total liabilities

73,273
19,741—
1,190
94,204
278,568

73,702
20,115
10,6092,039
106,465
268,806

677,221
184,830
97,482
18,736
978,269
2,469,962

46,525
19,500117,206(68)
183,163

46,52518,983
119,108(69)
184,547

427,502174,428
1,094,440(634)
1,695,736

3,322
(9)
145
2,434
(1,201)
4,691
14,881
202,735

2,230
(120)
145
1,084
(1,611)
1,728
14,923201,198

20,491(1,103)
1,332
9,961(14,803)
15,878137,123
1,848,737¥481,303¥470,004$4,318,699

Net assets:
Shareholders’ equity:
Common stock:
Authorized: 2,000,000,000 shares
Issued:619,937,500 shares
Additional paid-in capital
Retained earnings
Treasury stock, at cost (720,629 shares in 2019 and 725,769 sharesin 2020)
Total shareholders’ equity
Accumulated other comprehensive income:Net unrealized gains (losses) on securities (Note 5)
Net unrealized gains (losses) on hedges (Note 7 and 13)
Land revaluation surplus (Note 12)
Foreign currency translation adjustments
Remeasurements of defined benefits plans (Note 9)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Contingent liabilities (Note 16)
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

25

Consolidated Statements of Income
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

Years ended March 31,
2020

2019

(Thousands of
U.S. dollars) (Note 3)(Millions of yen)

Net sales
Cost of sales (Note 14)
Gross profit
Selling, general and administrative expenses (Note 14)
Operating profit
Non-operating income:Interest income
Dividend income
Equity in earnings of affiliates
Rental income
Technical support fee
OtherTotal non-operating profit
Non-operating expenses:
Interest expense
Loss on disposal of fixed assets
Rental expense
Other
Total non-operating expenses
Ordinary profit
Special gains:
Gain on step acquisitions
Total special gains
Special losses:
Loss on valuation of investment securities (Note 18)
Loss on impairment of fixed assets (Note 17)
Loss on valuation of investment securities (Note 5)
Total special losses
Profit before income taxes
Income taxes (Note 10):
Current
Deferred
Net profit
Profit attributable to non-controlling interests
Profit attributable to owners of parent
Per share of common stock (Note 19):
Net assets
Net profit
Cash dividends (Note 11)
The accompanying notes are an integral part of these financial statements.

26

2020

¥500,451
403,194
97,257
67,20530,052¥ 465,946
372,337
93,60969,002
24,607$ 4,281,411
3,421,271
860,140
634,035
226,105

81
289
680
804
666
2,354
4,874

85
302
268
760
403
1,596
3,414

781
2,775
2,463
6,983
3,703
14,66531,370

1,301
575
758
1,208
3,842
31,084

1,211
466
592
2,277
4,546
23,475

11,127
4,282
5,440
20,923
41,772
215,703

1,371
1,371

—
—

—
—

—
957
386
1,343
31,112

11,000——11,00012,475101,075——
101,075
114,628

7,342
1,764
9,106
22,006
1,446¥ 20,560

4,897(1,707)
3,190
9,285
1,809
¥ 7,476

44,997(15,685)
29,31285,316
16,622$ 68,694(U.S. dollars)(Note 3)(Yen)

¥ 303.37
33.20
9.00

¥ 300.83
12.07
9.00

$

2.76
0.11
0.08

Consolidated Statements of Comprehensive Income
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

Years ended March 31,
2020

2019

2020
(Thousands of
U.S. dollars) (Note 3)(Millions of yen)

¥22,006¥9,285$85,316

Net unrealized gains (losses) on securities(890)(1,088)(9,997)Net unrealized gains (losses) on hedges

135

(111)

(1,020)Foreign currency translation adjustments(413)(1,281)(11,771)

Remeasurements of defined benefit plans

(766)

(438)

(4,025)Equity of other comprehensive income (losses) of affiliates

(397)

(232)

(2,132)

Total other comprehensive income (losses) (Note 8)(2,331)(3,150)(28,945)¥19,675¥6,135$56,371¥18,409¥4,513$41,467

1,266

1,622

14,904¥19,675¥6,135$56,372

Net profit
Other comprehensive income (losses)

Comprehensive income
Attributable to:owners of parent
non-controlling interests

The accompanying notes are an integral part of these financial statements.

27

Consolidated Statements Of Changes In Net Assets
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

2019
Shareholders’ equity
Commonstock

Additional
paid-in
capitalAccumulated other comprehensive income
Treasurystock,
at costRetainedearnings

Net
Foreign
Net
Nonunrealized unrealized Revaluation currency Remeasurements
controllingtranslationof defined
gains (losses) gains (losses) surplus
interests(Note 12) adjustments benefits planson securities on hedges

Total
net assets(Millions of yen)

Balance at April 1, 2018
Cash dividends (Note 11)
Profit attributable to owners of parent
Purchase of treasury stock
Increase by merger
Capital increase of consolidated subsidiaries
Change in ownership interest of parent due totransactions with non-controlling interests
Net unrealized gains (losses) on securities
Net unrealized gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefits plans
Net increase in non-controlling interests
Balance at March 31, 2019

¥ 46,525¥ 19,064 ¥ 101,593(4,955)
20,560¥ (67)¥ 4,181¥ (144)¥ 145¥ 3,111¥ (451) ¥ 15,365

(1)
8
212
224
(859)
135
(677)

¥ 46,525¥ 19,500 ¥ 117,206¥ (68)¥ 3,322

¥

(9)

¥ 145

¥ 2,434¥ 189,322(4,955)
20,560
(1)
8
212

224
(859)
135
(677)
(750)
(750)
(484)
(484)
¥ (1,201) ¥ 14,881 ¥ 202,735

2020
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings

Accumulated other comprehensive income
Treasurystock,
at costNet
Foreign
Net
Nonunrealized unrealized Revaluation currency Remeasurements
controllingtranslationof defined
gains (losses) gains (losses) surplus
interests(Note 12) adjustments benefits planson securities on hedges

Total
net assets(Millions of yen)

Balance at April 1, 2019
Cash dividends (Note 11)
Profit attributable to owners of parent
Purchase of treasury stock
Increase by merger
Capital increase of consolidated subsidiaries
Change in ownership interest of parent due totransactions with non-controlling interests
Net unrealized gains (losses) on securities
Net unrealized gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefits plans
Net increase in non-controlling interests
Balance at March 31, 2020

¥ 46,525¥ 19,500 ¥ 117,206(5,574)7,476¥ (68)¥ 3,322

¥

(9)

¥ 145

¥ 2,434¥ (1,201) ¥ 14,881

(1)

(517)
(1,092)(111)(1,350)(410)¥ 46,525¥ 18,983 ¥ 119,108¥ (69)¥ 2,230¥ (120)¥145¥ 1,08442¥ (1,611) ¥ 14,923¥ 202,735(5,574)
7,476
(1)
—
—
(517)
(1,092)(111)(1,350)(410)
42¥ 201,198

2020
Shareholders’ equity
Commonstock

Additional
paid-in
capitalRetainedearnings

Accumulated other comprehensive income
Treasurystock,
at costNet
Foreign
Net
Nonunrealized unrealized Revaluation currency Remeasurements
controllingtranslationof defined
gains (losses) gains (losses) surplus
interests(Note 12) adjustments benefits planson securities on hedges

Total
net assets(Millions of yen)

Balance at April 1, 2019
Cash dividends (Note 11)
Profit attributable to owners of parent
Purchase of treasury stock
Increase by merger
Capital increase of consolidated subsidiaries
Change in ownership interest of parent due totransactions with non-controlling interests
Net unrealized gains (losses) on securities
Net unrealized gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefits plans
Net increase in non-controlling interests
Balance at March 31, 2020

$ 427,502 $ 179,179 $ 1,076,963(51,217)
68,694$(83)$ 1,332$ 22,366(9)(4,751)(10,034)(1,020)(12,405)$ 427,502 $ 174,428 $1,094,440

The accompanying notes are an integral part of these financial statements.

28$ (625) $ 30,525$ (634) $ 20,491$ (1,103)$ 1,332$ 9,961$ (11,036) $ 136,737 $ 1,862,860(51,217)
68,694(9)——(4,751)(10,034)(1,020)(12,405)(3,767)(3,767)386
386$ (14,803) $ 137,123 $1,848,737

Consolidated Statements of Cash Flows
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

2019Years ended March 31,
2020(Millions of yen)

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Amortization of goodwill
Loss (gain) on step acquisitions
Loss on impairment of fixed assets
Loss (gain) on valuation of investment securities
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for environmental measures
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable – trade
Other
SubtotalInterest and dividends received
Interest paid
Settlement package paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchase of intangible assets
Proceeds from purchase of shares of subsidiaries resulting in change inscope of consolidation (Note 4)
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term debt
Repayments of long-term debt
Cash dividends paid
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year (Note 4)

2020(Thousands of
U.S. dollars)(Note 3)

¥ 31,112 ¥ 12,475
17,294
18,694222
444(1,371)
56
957
—
386
—
(625)
(69)
(1,110)(242)—
10,609
(370)
(387)
1,301
1,211
(680)
(268)
3,812
18,854(4,186)
4,873(3,721) (10,359)(1,131)
750
41,89056,641658
633(1,345)(1,165)(2,029)—(4,530)(7,433)34,644
48,676$ 114,628
171,772
4,080
515
—
—
(634)
(2,224)
97,482(3,556)
11,127(2,463)
173,243
44,776(95,185)
6,893
520,4545,816(10,705)—(68,299)447,266(22,262)251(1,373)(28,269)
122(1,487)(259,754)
1,121(13,664)

1,201
(594)
(22,777)53(103)(29,684)487(946)(272,756)(852)
20,145(19,926)(4,971)(691)(2,918)
10,637(14,694)(5,586)(885)(26,812)97,740(135,018)(51,328)(8,132)(1,857)(1,382)(752)(917)(8,904) (15,745)
(135)
(296)
2,828
2,951
30,51733,345¥ 33,345 ¥ 36,296(12,699)(8,426)(144,675)(2,719)27,116306,395$ 333,511

The accompanying notes are an integral part of these financial statements.

29

Notes to Consolidated Financial Statements
Nippon Light Metal Holdings Company, Ltd. and consolidated subsidiaries

1. SIGNIFICANT ACCOUNTING POLICIES(a) Basis of presentation
The accompanying consolidated financial statements of Nippon Light Metal Holdings Company, Ltd. (the “Company”) and its consolidated
subsidiaries are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects, from theapplication and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated financial
statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan. The notes to the consolidated financial
statements include certain financial information which is not required under accounting principles generally accepted in Japan, but is presented
herein as additional information. The accompanying consolidated financial statements include certain reclassifications for the purpose ofpresenting them in a form familiar to readers outside Japan.
(b) Principles of consolidation and accounting for investments in affiliates
The accompanying consolidated financial statements include the accounts of the Company and, with minor exceptions, companies substantiallycontrolled by the Company. All significant intercompany transactions and accounts have been eliminated in consolidation.
Investments in equity securities issued by unconsolidated subsidiaries and affiliates are accounted for by the equity method, except thatinvestments in certain unconsolidated subsidiaries and affiliates are stated at cost because the effect of application of the equity method would be
immaterial.
As a result, the consolidated financial statements for the year ended March 31, 2020 include the accounts of the Company and its 79
significant subsidiaries, and its 16 affiliates are accounted for by the equity method (78 and 17, respectively, in the previous year).
The balance sheet date of certain consolidated subsidiaries is December 31. In principle, the financial statements of such subsidiaries weretentatively prepared to be consolidated in accordance with the fiscal year (ended March 31) of the Company, while those of some companies whose
closing date is December 31 are used upon consolidation, with the necessary adjustments made to those financial statements to reflect any
significant inter-group transactions made between December 31 and March 31.
The difference between the cost and the underlying net assets of investments in consolidated subsidiaries or affiliates accounted for by theequity method has been allocated to identifiable assets based on fair value at the respective dates of acquisition. Any unassigned residual amount isrecognized as goodwill and amortized by the straight-line method over an estimated useful life, with the exception of minor amounts which arecharged to income in the year of acquisition.
(c) Translation of foreign currencies
All monetary assets and liabilities denominated in foreign currencies, whether long-term or short-term, are translated into Japanese yen at theexchange rates prevailing at the balance sheet date. The resulting exchange gains and losses are included in income for the year.
Assets and liabilities of foreign subsidiaries and affiliates are translated into Japanese yen at the exchange rates prevailing at the balance sheet
date. Income statement accounts are translated into Japanese yen using the average exchange rates during the year. The resulting translation
adjustments are accounted for as foreign currency translation adjustments, except for the minority interest portion which is allocated to minority
interests in consolidated subsidiaries.
(d) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash flows comprise of cash in hand, bank deposits available for withdrawal on
demand and short-term investments with an original maturity of three months or less which are exposed to a minor risk of fluctuation in value.
(e) Inventories
Inventories are principally stated at cost, determined by the moving average method. In addition, the balance sheet amount is carried at the lowerof cost or market to reflect descent of profitability.
(f) Investment securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into held-to-maturity securities or available-for-salesecurities.
Held-to-maturity securities are stated at amortized cost. Available-for-sale securities for which market quotations are available are stated at fairvalue with net unrealized gains or losses being included in net assets, net of related taxes. Available-for-sale securities for which market quotations
30

are not available are stated at cost. Realized gains and losses on sales are determined using the moving average method and are included inincome for the year.
In cases where the fair value of held-to-maturity securities or available-for-sale securities has declined significantly and such impairment isother than temporary, such securities are written down to fair value and the resulting losses are charged to income for the year.
(g) Allowance for doubtful accounts
Allowance for doubtful accounts is estimated by applying the average percentage of actual bad debts in the past to the balance of receivables. In
addition, an amount deemed necessary to cover non-collectible receivables is provided on an individual account basis.
(h) Provision for environmental measures
Provision for environmental measures is estimated reasonably to the possible extent based on the plan for measures against reservoir
sedimentation in Amehata Dam in Hayakawa-cho, Minamikoma-gun, Yamanashi Prefecture which is possessed by the company’s consolidated
subsidiaries Nippon Light Metal Company, Ltd.
(i) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is computed principally using the straight-line method over the estimated useful
lives of the respective assets, ranging from 2 years to 60 years for buildings and structures, and from 2 years to 22 years for machinery andequipment.
(j) Intangible assets
Intangible assets are amortized by the straight-line method over their respective estimated useful lives. Expenditure relating to computer softwaredeveloped for internal use is charged to income as incurred, except in cases where it contributes to the generation of income or future cost savings.
In these cases, it is capitalized and amortized using the straight-line method over its estimated useful life, which is no longer than 5 years.
(k) Retirement benefits
1) The retirement benefit obligation for employees is attributed to each period by the benefit formula method over the estimated years ofservice of the eligible employees.
2) Prior service cost is amortized as incurred mainly by the straight-line method over the period of 15 years, which is shorter than the averageremaining years of service of the then employees. Unrecognized actuarial gain or loss is amortized by the declining-balance method over a
period of 12 years from the year following that in which it arises.
(l) Leased assets
Finance leases without options to transfer ownership of the leased assets to the lessee are accounted for as ordinary sale and purchase transactions.
These leased assets are depreciated to their respective salvage value of zero using the straight-line method over a period of leasing term. Financeleases with options to transfer ownership of the leased assets to the lessee are depreciated by the same method applied to the fixed assets owned by
the Company.
(m) Income taxes
The income taxes of the Company and its domestic consolidated subsidiaries consist of corporate income taxes, local inhabitants’ taxes andenterprise taxes. The Company and its wholly-owned domestic subsidiaries use the Japanese consolidated taxation system.
The Company and its consolidated subsidiaries apply the deferred tax accounting method. Deferred tax assets and liabilities are determinedusing the asset and liability approach, and recognized for temporary differences between the tax bases of assets and liabilities and those as reported
in the consolidated financial statements.
(n) Derivatives
All derivatives are stated at fair value with changes in fair value being included in net profit for the year in which they arise, except for derivatives
designated as hedging instruments.
The Company and its consolidated subsidiaries use derivatives to reduce their exposure to fluctuation in foreign exchange rates, interest rates,
and the prices of aluminum ingot and others in the market. Derivatives designated as hedging instruments are principally forward foreign31Notes to Consolidated Financial Statements

exchange contracts, interest rate swap contracts, interest rate and currency swap contracts, and aluminum ingot and others forward contracts. The
underlying hedged items are trade accounts receivable and payable, long-term bank loans, and sales or purchases of aluminum ingot and others.
Gains and losses arising from changes in fair value of derivatives designated as hedging instruments are deferred and included in net profit in
the same period in which the corresponding gains and losses on the underlying hedged items or transactions are recognized. The Company and its
consolidated subsidiaries use interest rate swaps, and interest rate and currency swaps to hedge their interest rate (and foreign exchange rate) risk
exposure. The related interest differentials paid or received under the interest rate swap agreements are recognized in interest expense over the termof the agreements.
The Company and its consolidated subsidiaries assess the effectiveness of their hedging activities by reference to the accumulated gains orlosses on the hedging instruments and the underlying hedged items from the commencement of the hedges.
(o) Research and development costs
Research and development costs are charged to income as incurred.
(p) Appropriation of retained earnings
Appropriation of retained earnings is reflected in the consolidated financial statements for the year in which the appropriation is approved at a
general meeting of shareholders.
The Company’s retained earnings consist of unappropriated retained earnings and a legal reserve as required by the Companies Act of Japan.
The Companies Act provides that an amount equal to 10% of distributions from unappropriated retained earnings paid by the Company and its
domestic subsidiaries be appropriated to the legal reserve. Such appropriations are no longer required when the total amount of statutory reserve(additional paid-in capital (other than the capital reserve) and the legal reserve) equals 25% of their respective stated capital.
(q) Net profit per share
Basic net profit per share of common stock, presented in the accompanying consolidated statements of income, is computed based on the weighted
average number of shares outstanding during each year.
Diluted net profit per share reflects the potential dilution that could occur if securities were converted into common stock. Diluted net profit
per share of common stock assumes full conversion of the outstanding convertible bonds at the time of issuance with an applicable adjustment for
the related interest expense on a net of tax basis.
(r) Reclassification
Certain reclassifications of previously reported amounts have been made to conform them to the current year’s presentations.
(s) Accounting standards issued but not yet effective
Accounting Standard and Implementation Guidance on Revenue Recognition
On March 31, 2020, the Accounting Standards Board of Japan (“ASBJ”) issued “Accounting Standard for Revenue Recognition” (ASBJ Statement
No. 29), “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30) and “Implementation Guidanceon Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.19).
(1) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, the accounting standard establishes the following fivestep model that will apply to revenue from contracts with customers:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognize revenue when (or as) the entity satisfies a performance obligation32

(2) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending March
31, 2022.
(3) Impact of the adoption of accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standard and implementation guidance on its
consolidated financial statements.
Accounting Standard for Fair Value Measurement and Related Implementation Guidance
On July 4, 2019, the Accounting Standards Board of Japan (“ASBJ”) issued “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.
30) and “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31), along with related updates to“Accounting Standard for Measurement of Inventories” (ASBJ Statement No.9 revised 2019), and “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10, revised 2019).
(1) Overview
The ASBJ has developed an “Accounting Standard for Fair Value Measurement” and “Implementation Guidance on Accounting Standard
for Fair Value Measurement” (hereinafter collectively, the “Fair Value Measurement Standard”), which provide guidance for fair value
measurement in order to improve comparability with internationally recognized accounting standards. The Fair Value Measurement
Standard is applied with respect to the fair value of the following items;•. Financial instruments defined in “Accounting Standard for Financial Instruments”•. Inventories held for trading purposes defined in “Accounting Standard for Measurement of Inventories”(2) Scheduled date of adoption
The Company expects to adopt the accounting standards and implementation guidance from the beginning of the fiscal year ending March
31, 2022.
(3) Impact of the adoption of revised accounting standard and implementation guidance
The Company is currently evaluating the effect of the adoption of this accounting standards and implementation guidance on its
consolidated financial statements.
2. ACCOUNTING CHANGES(a) Change in accounting policies
Adoption of IFRS 16 “Leases”
Certain consolidated subsidiaries which apply International Financial Reporting Standards (IFRS) have adopted IFRS 16 “Leases” ( January
13, 2016; hereinafter “IFRS 16”) from the beginning of the fiscal year ended March 31, 2020.
IFRS 16 requires lessees to recognize assets and liabilities for, in principle, all leases. A transition approach, cumulative effect of retrospectively
applying was recognized at the date of initial application.
It also has a small effect on consolidated financial statements for the fiscal year ended March 31, 2020.
(b) Change in presentation
Not applicable..
3. U.S. DOLLAR AMOUNTS
The rate of ¥108.83 = U.S.$1, the approximate exchange rate prevailing at March 31, 2020, has been used for the purpose of presenting the U.S.
dollar amounts in the accompanying consolidated financial statements. These amounts are presented solely for the convenience of the readers.
Accordingly, they should not be construed as representations that yen amounts actually represent, or have been or could be readily converted,
realized or settled in U.S. dollars at that rate.

33

Notes to Consolidated Financial Statements

4. CASH AND CASH EQUIVALENTS
A reconciliation of cash and cash equivalents in the accompanying consolidated statements of cash flows to cash and deposits disclosed in theaccompanying consolidated balance sheets at March 31, 2019 and 2020 is summarized as follows:
2019

2020
(Millions of yen)

Cash and deposits
Time deposits with maturities in excess of 3 months
Cash and cash equivalents¥¥

33,417(72)
33,345¥¥36,349(53)
36,296

2020(Thousands of
U.S. dollars)$ 333,998(487)$ 333,511

The following is the summary of assets acquired and liabilities assumed through the acquisition of shares of Sumikei-Nikkei Engineering Co., Ltd.
for the year ended March 31, 2019, related acquisition costs and net proceeds.
2019(Millions of yen)

¥ 7,894
319
2,221(3,942)(13)(809)(1,371)(2,129)2,170
3,371¥ 1,201

Current assets
Fixed assets
Goodwill
Current liabilities
Long-term liabilities
Non-controlling interests
Gain on step acquisitions
Carrying amount accounted for by the equity method immediately before gaining controls
Acquisition cost of shares
Cash and cash equivalents
Net: Proceeds from purchase of shares of subsidiaries

The following is the summary of assets acquired and liabilities assumed through the acquisition of shares of Nikkei-Heat-Exchanger Co., Ltd. forthe year ended March 31, 2020, related acquisition costs and net proceeds.
2020

Current assets
Fixed assets
Current liabilities
Gain on step acquisitions
Gain on bargain purchase
Carrying amount accounted for by the equity method immediately before gaining controls
Acquisition cost of shares
Cash and cash equivalents
Net: Proceeds from purchase of shares of subsidiaries(Millions of yen)

2020
(Thousands of
U.S. dollars)¥ 2,133422(1,646)
56
(107)
(457)
401
454
¥
53

$ 19,598
3,878(15,125)515(983)(4,199)
3,685
4,172
$
487

5. INVESTMENT SECURITIES(a) Available-for-sale securities with available market quotations
The acquisition cost, carrying amount, and gross unrealized gains and losses of available-for-sale securities with available market quotations at
March 31, 2019 and 2020 were as follows:2019

Equity securities
Cost
Unrealized gains
Unrealized losses
Carrying amount
34

2020

(Millions of yen)

¥ 3,8734,674(40)¥ 8,507¥ 3,916
3,494(305)¥ 7,105

2020(Thousands of
U.S. dollars)$ 35,983
32,105(2,803)$ 65,285

(b) Sales of available-for-sale securities
The proceeds and realized gains and losses on sales of available-for-sale securities for the years ended March 31, 2019 and 2020 were as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Sales proceeds
Realized gains on sales
Realized losses on sales

¥

0
—
—

¥

314
99
—

$

2,885
910
—

(c) Investments in non-consolidated subsidiaries and affiliates
Investments in non-consolidated subsidiaries and affiliates, included in the investment securities in the consolidated balance sheets, as of March
31, 2019 and 2020 are as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Investments in non-consolidated subsidiaries and affiliates(Investments in jointly controlled entities included in the above)¥ 14,883(2,597)¥ 14,235
1,888$ 130,800
17,348

6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Short-term borrowings at March 31, 2020 bore interests at annual rates 0.92% on average and mainly consist of bank loans and short-term notes
maturing at various dates within one year.
Long-term debt at March 31, 2019 and 2020 comprised the following:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Loans, principally from banks and insurance companies due from 2020 to 2029 withinterest rates 0.67% on average:
SecuredUnsecured
Unsecured 4.31% bonds due June 1, 2027, redeemable before due date
Capital lease obligations due from 2020 to 2034 with interest rates 0.45% on average
Less: portion due within one year
Total long-term debt¥

826
82,667666
4,172
88,331(15,058)¥ 73,273¥

314
79,053653
4,469
84,489(10,787)¥ 73,702$

2,885
726,390
6,000
41,064776,339(99,118)$ 677,221

A summary of assets pledged as collateral for short-term borrowings and long-term debt at March 31, 2019 and 2020 is as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Property, plant and equipment

¥

503

¥

484

$

4,447

The maturities of long-term debt outstanding at March 31, 2020 are summarized as follows:
Years ending March 31,
2021
2022
2023
2024
2025
Thereafter(Millions of yen)

¥ 10,787
6,909
10,3609,950
3,153
43,330¥ 84,489(Thousands of
U.S. dollars)$

99,11863,484
95,19491,42728,972
398,144$ 776,339
35

Notes to Consolidated Financial Statements

7. FINANCIAL INSTRUMENTS(a) Overview
1. Policy for financial instruments
The Company and its consolidated subsidiaries (the “Group”) invest temporary cash surpluses primarily on short-term deposits, and strive todiversify financing methods by raising funds through bank borrowings and corporate bonds. The Group utilizes various derivative financial
instruments such as interest rate swaps, forward foreign exchange contracts, forward trading in aluminum ingots and currency swap contracts forthe purpose of reducing risk, and does not enter into derivative transactions for speculative or trading purposes.
2. Types of financial instruments and related risk, and risk management for financial instruments
Notes and accounts receivable – trade and electronically recorded monetary claims –operating are exposed to credit risk in relation to customers.
The Group manages the risks by monitoring the due dates and outstanding balances by individual customers. Accounts receivable – tradedenominated in foreign currencies are exposed to risk of exchange rate fluctuations and are hedged by utilizing forward foreign exchange
contracts. Stocks of investment securities, which are exposed to market fluctuations, are mainly those of companies with which the Group hasbusiness relationships. The Group periodically reviews the fair values of such stocks and the financial position of the issuers.
Notes and accounts payable – trade have payment due dates approximately within one year.
Short-term borrowings are used mainly for operating activities, and long-term borrowings are used principally for the purpose of making
capital investments. Variable rate borrowings are exposed to risk of interest rate fluctuation and some of those denominated in foreign currencies
are exposed to risk of exchange rate fluctuations. However, in order to reduce such risks, the Group utilizes interest rate swap and interest rate andcurrency swap transactions as a hedging instrument for each individual contract for some of those long-term borrowings. Assessment of theeffectiveness of hedging activities is omitted, as the requirements for special treatment of interest rate swaps are met.
The execution and management of derivative transactions are performed based on the control procedure designated in management policy. In addition,
to reduce credit risk, counterparties of derivative instruments are restricted to only highly rated financial institutions and major trading companies.
For notes and accounts payable – trade and borrowings, the Group prepares its cash flow plans to manage liquidity risk (the risk that theGroup may not be able to meet its obligations on scheduled due dates).
3. Supplementary explanation of the estimated fair value of financial instruments
The notional amounts of derivatives in “(b) Estimated fair value of financial instruments and related information,” do not necessarily indicate theactual market risk involved in the derivative transactions.
(b) Estimated fair value of financial instruments and related information
The carrying value of financial instruments in the consolidated balance sheets, estimated fair value and the difference between them as of March
31, 2019 and 2020 are as follows:
2019
Carrying Value *1

Estimated Fair Value *1

Difference(Millions of yen)

(1) Cash and deposits(2) Notes and accounts receivable – trade(3) Electronically recorded monetary claims – operating(4) Investment securities
Stocks of subsidiaries and affiliates
Other securities(5) Notes and accounts payable – trade(6) Short-term borrowings(7) Bonds(8) Long-term borrowings *2(9) Derivative transactions
for which hedge accounting has not been applied
for which hedge accounting has been applied*1 Liabilities are shown in parenthesis.
*2 The current portion of long-term borrowings is included in long-term borrowings.
36¥ 33,417
123,039
29,642¥ 33,417
123,039
29,642

¥

—
—

4,097
8,507
(76,244)(55,411)(666)(83,493)

1,969
8,507
(76,244)(55,411)(666)(84,157)(2,128)
—
—
—
—
(664)

(1)
0

(1)
0

—
—

2020
Carrying Value *1

Estimated Fair Value *1

Difference(Millions of yen)

(1) Cash and deposits(2) Notes and accounts receivable – trade(3) Electronically recorded monetary claims – operating(4) Investment securities
Stocks of subsidiaries and affiliates
Other securities(5) Notes and accounts payable – trade(6) Short-term borrowings(7) Bonds(8) Long-term borrowings *2(9) Derivative transactions
for which hedge accounting has not been applied
for which hedge accounting has been applied¥ 36,349
105,458
27,575¥ 36,349
105,458
27,575

¥

—
—

4,190
7,105
(63,826)(52,602)(653)(79,367)

1,264
7,105
(63,826)(52,602)(653)(80,269)(2,926)
—
—
—
—
(902)

3
(154)

3
(154)

—
—

2020
Carrying Value *1

Estimated Fair Value *1

Difference(Thousands of U.S. dollars)(1) Cash and deposits(2) Notes and accounts receivable – trade(3) Electronically recorded monetary claims – operating(4) Investment securities
Stocks of subsidiaries and affiliates
Other securities(5) Notes and accounts payable – trade(6) Short-term borrowings(7) Bonds(8) Long-term borrowings *2(9) Derivative transactions
for which hedge accounting has not been applied
for which hedge accounting has been applied$

333,998
969,016
253,377$

333,998
969,016
253,377$——

38,50065,285(586,474)(483,341)(6,000)(729,275)

11,61465,285(586,474)(483,341)(6,000)(737,563)(26,886)————(8,288)(28)(1,415)(28)(1,415)——*1 Liabilities are shown in parenthesis.
*2 The current portion of long-term borrowings is included in long-term borrowings.
Notes
1. Method for determining the estimated fair value of financial instruments and other matters related to securities and derivative transactions(1) Cash and deposits, (2) Notes and accounts receivable – trade and (3) Electronically recorded monetary claims – operating
Since these items are settled in a short period of time, their carrying value approximates fair value.
(4) Investment securities
The fair value of stocks is based on quoted market prices. For information on securities classified by holding purpose, refer to Note 5“Investment Securities.”(5) Notes and accounts payable – trade and (6) Short-term borrowings
Since these items are settled in a short period of time, their carrying value approximates fair value.
(7) Bonds
The fair value of bonds is based on the present value of the sum of principal and interest discounted by an interest rate determined basedon the remaining period and current credit risk of each bond.
37

Notes to Consolidated Financial Statements(8) Long-term borrowings
The fair value of long-term borrowings is based on the present value of the sum of principal and interest discounted by an interest rate
which is expected to be required upon entering into similar new borrowings. Interest rate swaps subject to special treatment, and interest
rate and currency swaps subject to integral accounting method are used for some long-term floating rate borrowings. Principal andinterest in which these swaps are embedded, are discounted using a current interest rate which is expected to be required upon entering
into similar new borrowings.
(9) Derivatives
Refer to “Note 13. Derivatives.”
2. Unlisted stocks of ¥17,019 million and ¥16,265 million ($149,453 thousand) as of March 31, 2019 and 2020 are not included in “(4)Investment securities” because no quoted market prices are available and it is extremely difficult to measure the fair value.
3. The redemption schedule for receivables and marketable securities with maturities at March 31, 2019 and 2020 is as follows:2019
Due within
one year

Due after one year but
within five years

Due after five years but
within ten years

Due after
ten years(Millions of yen)

Cash and deposits
Notes and accounts receivable – trade
Electronically recorded monetary claims – operating
Investment securities
Held-to-maturity securities
Government and municipal bonds¥ 33,356
123,039
29,642

¥ —
—

¥ —
—

¥—
—

2
¥ 186,039

3
3

—
¥ —

—
¥—

Due after five years but
within ten years

Due after
ten years¥

2020
Due within
one year

Due after one year but
within five years(Millions of yen)

Cash and deposits
Notes and accounts receivable – trade
Electronically recorded monetary claims – operating
Investment securities
Held-to-maturity securities
Government and municipal bonds¥ 36,349
105,458
27,575

¥—
—

¥—
—

¥—
—

2
¥ 169,384

1
¥ 1

—
¥—

—
¥—

Due within
one year

Due after one year but
within five years

Due after five years but
within ten years

Due after
ten years

2020(Thousands of U.S. dollars)

Cash and deposits
Notes and accounts receivable – trade
Electronically recorded monetary claims – operating
Investment securities
Held-to-maturity securities
Government and municipal bonds

38$ 333,998
969,016
253,377

$—
—

$—
—

$—
—

18
$ 1,556,409

9
$ 9

—
$—

—
$—

4. The redemption schedule for bonds and long-term borrowings at March 31, 2019 and 2020 is as follows:2019
Due within
one year

Due after one year but
within five years

Due after
five years(Millions of yen)

¥

Bonds
Long-term borrowings—
14,496¥ 14,496¥—
30,977¥ 30,977

Due within
one year

Due after one year but
within five years¥

666
38,020¥ 38,686

2020
Due after
five years(Millions of yen)

¥

Bonds
Long-term borrowings—
10,068¥ 10,068¥—
28,499¥ 28,499

Due within
one year

Due after one year but
within five years¥

653
40,800¥ 41,453

2020
Due after
five years(Thousands of U.S. dollars)

Bonds
Long-term borrowings$—
92,511$ 92,511$— $ 6,000
261,867
374,897$ 261,867 $ 380,897

5. The fair value of derivatives at March 31, 2019 and 2020 is as follows:(1) Derivative transactions for which hedge accounting has not been applied
Currency-related transactions
2019
Notional amount

Maturity over 1 year

Fair value (*)(Millions of yen)

Currency swap contracts
U.S. dollars payment / Japanese yen receipt
Foreign exchange forwards

¥

444
70

¥

444
—

¥

1
(2)

Currency-related transactions
2020
Notional amount

Maturity over 1 year

Fair value (*)(Millions of yen)

Currency swap contracts
U.S. dollars payment / Japanese yen receipt
Foreign exchange forwards

¥ 435
67

¥ 435
—

Notional amount

Maturity over 1 year

¥

0
3

2020
Fair value (*)(Thousands of U.S. dollars)

Currency swap contracts
U.S. dollars payment / Japanese yen receipt
Foreign exchange forwards$ 3,997616$ 3,997—$0
28*1Method for calculating fair value
The fair value is based on prices quoted from counterparty financial institutions.
39Notes to Consolidated Financial Statements*2 Currency swap contracts and foreign exchange forwards are the hedging instruments for monetary receivables and payables
arising from transactions among consolidated subsidiaries, and designated accounting is applied in non-consolidated
financial statements.
(2) Derivative transactions for which hedge accounting has been applied
Currency-related transactions
2019
Hedge item

Notional amount Maturity over 1 year

Foreign exchange forwards
Deferred hedge method
Designated accounting for foreign exchange forward contracts

Fair value (*)(Millions of yen)Accounts receivable
Accounts payable
Accounts receivable
Accounts payable

¥

121
1,201
1,388
384

¥

—
—
—
—

¥ (1)
1
(*)
(*)

2020
Hedge item

Notional amount Maturity over 1 year

Foreign exchange forwards
Deferred hedge method
Designated accounting for foreign exchange forward contracts

Fair value (*)(Millions of yen)Accounts receivable
Accounts payable
Accounts receivable
Accounts payable

¥ 240
938
812
1,539

¥

—
—
—
—

¥ (2)
3
(*)
(*)

2020
Hedge item

Notional amount Maturity over 1 year

Foreign exchange forwards
Deferred hedge method
Designated accounting for foreign exchange forward contracts

Fair value (*)(Thousands of U.S. dollars)

Accounts receivable
Accounts payable
Accounts receivable
Accounts payable$ 2,205
8,619
7,461
14,141$————$ (18)
28(*)(*)(*) The fair value is based on prices quoted from counterparty financial institutions. Since forward foreign exchange contracts subject
to designated accounting (special treatment for forward foreign exchange contracts) are accounted for together with theunderlying trade receivable or trade payable subject to hedging, the fair value of such contracts is included in the fair value of
those hedged items.
Interest-related transactions
2019
Hedge item

Interest rate swaps
Fixed rate payment / Floating rate receipt
Deferred hedge method
Special treatment of interest rate swap transactions
Integral accounting method of interest rate and currency swap
transactions

40

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Long-term borrowings
Long-term borrowings
Long-term borrowings¥

695
19,926656¥

598
16,624
219

¥

2
(*)
(*)

2020
Hedge item

Interest rate swaps
Fixed rate payment / Floating rate receipt
Deferred hedge method
Special treatment of interest rate swap transactions
Integral accounting method of interest rate and currency swap
transactions

Notional amount Maturity over 1 year

Fair value (*)(Millions of yen)

Long-term borrowings
Long-term borrowings¥

98
16,730¥—15,200219

Long-term borrowings

¥

—

0
(*)
(*)

2020
Hedge item

Interest rate swaps
Fixed rate payment / Floating rate receipt
Deferred hedge method
Special treatment of interest rate swap transactions
Integral accounting method of interest rate and currency swap
transactions

Notional amount Maturity over 1 year

Fair value (*)(Thousands of U.S. dollars)Long-term borrowings
Long-term borrowings$
900
153,726$—
139,667

Long-term borrowings

2,012

—

$

0
(*)
(*)

(*) The fair value is based on prices quoted from counterparty financial institutions. Since interest rate swaps subject to special
treatment and interest rate and currency swaps subject to integral accounting method are accounted for together with thecorresponding long-term borrowings subject to hedging, the fair value of such contracts is included in the fair value of the thosehedged items.
Commodity-related transactions
2019
Hedge item

Notional amount Maturity over 1 year

Aluminum ingot and others forward contracts
Fair value hedge accounting

Fair value (*)(Millions of yen)Accounts receivable
Accounts payable

¥

413
1,890

¥

—
—

¥

(6)
4

2020
Hedge item

Notional amount Maturity over 1 year

Aluminum ingot and others forward contracts
Fair value hedge accounting

Fair value (*)(Millions of yen)Accounts receivable
Accounts payable

¥

396
1,841

¥

—
—

¥

31
(185)

2020
Hedge item

Fair value (*)(Thousands of U.S. dollars)

Aluminum ingot and others forward contracts
Fair value hedge accounting

Notional amount Maturity over 1 year

Accounts receivable
Accounts payable$ 3,639
16,916

$

—
—

$

285
(1,700)(*) The fair value is based on prices quoted from counterparty trading companies.

41

Notes to Consolidated Financial Statements

8. OTHER COMPREHENSIVE INCOME
Each component of other comprehensive income for the year ended March 31, 2019 and 2020 is as follows:
2019

2020

(Millions of yen)

Unrealized gains (losses) on securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax effectTax effectNet-of-tax amount
Unrealized gains (losses) on hedges:
Amount arising during the year
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax effectTax effectNet-of-tax amountForeign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax effectTax effectNet-of-tax amountRemeasurements of defined benefit plans:
Amount arising during the year
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax effectTax effectNet-of-tax amount
Equity of other comprehensive income (loss) of affiliates:
Amount arising during the year
Reclassification adjustments for gains and losses included in profit (loss) attributableto owners of parent
Before-tax amountTax benefit
Net-of-tax amount
Total other comprehensive income

42

2020
(Thousands of
U.S. dollars)¥ (1,219)¥ (1,439)$ (13,222)

8(1,211)
321
(890)

—
(1,439)351(1,088)—(13,222)3,225(9,997)

(99)

(299)

(2,748)

275
176
(41)
135

153
(146)
35
(111)

1,406
(1,342)322(1,020)(413)(1,281)(11,771)

—
(413)
—
(413)

—
(1,281)—(1,281)—(11,771)—(11,771)(1,106)(751)(6,900)15(1,091)
325
(766)

134
(617)
179
(438)

1,231
(5,669)1,644(4,025)

(397)

(232)

(2,132)

—
(397)
—
(397)
¥ (2,331)

—
(232)
—
(232)
¥ (3,150)—(2,132)—(2,132)$ (28,945)

9. RETIREMENT BENEFIT PLANS
The Company and its domestic consolidated subsidiaries have defined benefit corporate pension plans and a lump-sum payment retirement
benefit plans. Additional benefits may be granted to employees according to the conditions under which termination of employment occurs.
Certain consolidated subsidiaries use the simplified method for calculation of retirement benefit obligation. Certain subsidiaries have defined
contribution plans.
The changes in the retirement benefit obligation during the years ended March 31, 2019 and 2020 are as follows:
2019

2020

(Millions of yen)

Balance at the beginning of the year
Service cost
Interest cost
Actuarial gain or loss
Retirement benefits paid
OthersBalance at the end of the year

¥ 38,483
1,869
244
487
(1,185)(1)¥ 39,897¥ 39,897
2,056
251
(573)
(1,743)(1)¥ 39,887

2020(Thousands of
U.S. dollars)$ 366,599
18,892
2,306(5,265)(16,016)(9)$ 366,507

The changes in plan assets during the years ended March 31, 2019 and 2020 are as follows:
2019

2020

(Millions of yen)

Balance at the beginning of the year
Expected return on plan assets
Actuarial gain or loss
Employer contributions
Retirement benefits paid
OthersBalance at the end of the year

¥ 25,757
625
(619)
2,297
(648)
(3)
¥ 27,409¥ 27,409
545(1,324)
1,758(1,064)(7)¥ 27,317

2020(Thousands of
U.S. dollars)$ 251,852
5,008(12,166)
16,154(9,777)(65)$ 251,006

The changes in liability for retirement benefits accounted for by the simplified method during the years ended March 31, 2019 and 2020 are as follows:
2019

2020

(Millions of yen)

Balance at the beginning of the year
Retirement benefit expenses
Retirement benefits paid
Contributions for the plans
Balance at the end of the year

¥ 7,049
1,017
(542)
(271)
¥ 7,253¥ 7,253
1,114
(561)
(261)
¥ 7,545

2020(Thousands of
U.S. dollars)$ 66,645
10,236(5,155)(2,298)$ 69,328

43Notes to Consolidated Financial Statements

The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets as of March 31, 2019and 2020 for the defined benefit plans:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Unfunded retirement benefit obligation
Net liability for retirement benefits in the consolidated balance sheets¥ 48,134(31,075)
17,0592,682¥ 19,741¥ 48,257(31,081)
17,176
2,939¥ 20,115$ 443,417(285,592)
157,825
27,005$ 184,830

Liability for retirement benefits
Net liability for retirement benefits in the consolidated balance sheets¥ 19,741¥ 19,741¥ 20,115¥ 20,115$ 184,830$ 184,830

Funded retirement benefit obligation
Fair value of plan assets

The components of retirement benefit expenses for the years ended March 31, 2019 and 2020 are as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized actuarial gain or loss
Amortization of prior service cost
Retirement benefit expenses accounted for by the simplified method
Retirement benefit expenses on the defined benefit plan

¥ 1,869
244
(625)
53
(25)
1,017
¥ 2,533¥ 2,056
251
(545)
156
(23)
1,114
¥ 3,009$ 18,892
2,306(5,008)1,433(211)
10,237$ 27,649

The components of remeasurements of defined benefit plans included in other comprehensive income (before tax effect) for the years ended March
31, 2019 and 2020 are as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Prior service cost
Actuarial gain or loss
Total

¥

25
1,066
¥ 1,091

¥

23
594
617

¥

$
$

211
5,458
5,669

Remeasurements of defined benefits plans included in accumulated other comprehensive income (before tax effect) as of March 31, 2019 and2020 are as follows:
2019

2020

(Millions of yen)

Unrecognized prior service cost
Unrecognized actuarial gain or loss
Total

¥ (155)2,025¥ 1,870

¥

(132)
2,619
¥ 2,487

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2019 and 2020 is as follows:
General accountDomestic bonds
Foreign stocks
Domestic stocks
Foreign bonds
Others
Total

44

2020
(Thousands of
U.S. dollars)

2019

2020

33%
22%
15%
10%
8%
12%
100%

34%
22%
11%
7%
15%
11%
100%

$ (1,213)
24,065$ 22,852

The ratio of the retirement benefit trust, set to the corporate pension plan, in the total fair value of plan assets is 3% and 2% at March 31, 2019 and2020, respectively.
The expected return on assets is estimated based on the anticipated allocation to each asset category and the expected long-term returns on
assets held in each category.
The assumptions used in accounting for the above plans were as follows:
2019

2020

Discount rate

1.0%

1.0%

Expected rate of return on plan assets

1.0%

1.0%

Required contribution of the consolidated subsidiaries for the defined contribution plans for the years ended March 31, 2019 and 2020 is as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Required contribution

¥ 86

¥ 44

$ 790

10. INCOME TAXES
Significant components of deferred tax assets and liabilities at March 31, 2019 and 2020 are as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets:¥ 6,340¥ 5,660$ 52,008

Net defined benefit liabilities

5,987

6,005

55,178

Accrued bonuses

2,063

2,030

18,653

Unrealized intercompany loss

1,962

1,962

18,028

Allowance for doubtful accounts

1,417

202

1,856

Loss on disposal of fixed assets

94

64

588

7,179

9,919

91,142

25,042

25,842

237,453

Tax loss carry forwards

Other
Gross deferred tax assets
Valuation allowance for tax loss carry forwards(6,292)(5,631)(51,741)

Valuation allowance for deductible temporary differences(6,818)(6,295)(57,843)

Total Valuation allowance(13,110)(11,926)(109,584)

Total deferred tax assets, net of valuation allowance

11,932

13,916

127,869

Undistributed retained earnings of subsidiaries and associates(1,841)(1,851)(17,008)

Unrealized gain on securities(1,244)(888)(8,160)

Revaluation gain on subsidiaries

(974)

(974)

(8,950)

Unrealized intercompany gain

(907)

(902)

(8,288)

Other

(477)

(468)

(4,300)

Deferred tax liabilities:

Total deferred tax liabilities
Net deferred tax assets(5,443)(5,083)(46,706)¥ 6,489¥ 8,833$ 81,163

45

Notes to Consolidated Financial Statements

Notes: A breakdown of tax loss carry forwards and valuation allowance by expiry date as of March 31, 2019 and 2020 is as follows:
2019

Due
within1 yearDue after 1
year through2 years

Due after 2
years through3 years

Due after 3
years through4 years

Due after 4
years through5 yearsDue
after 5
years

Total

431

¥ 1,364¥ 6,340(431)(1,364)(6,292)(Millions of yen)Tax loss carry forwards¥

Valuation allowance
Deferred tax assets

233¥ 2,745(233)(2,697)

¥

—

¥

48

¥

¥

527

¥ 1,040(527)(1,040)

—

¥

¥

—

¥

—

¥

¥

—

48
(b)

2020

Due
within1 yearDue after 1
year through2 years

Due after 2
years through3 years

Due after 3
years through4 years

Due after 4
years through5 yearsDue
after 5
years

Total

164

¥ 1,160¥ 5,660(164)(1,160)(5,631)(Millions of yen)Tax loss carry forwards¥ 2,649

Valuation allowance(2,649)Deferred tax assets

¥

—

¥

378

¥

(349)
¥

29

911

¥

(911)
¥

—

398

¥

(398)
¥

—

¥

—

¥

¥

—

29
(b)

2020

Due
within1 yearDue after 1
year through2 years

Due after 2
years through3 years

Due after 3
years through4 years

Due after 4
years through5 yearsDue
after 5
years

Total

(Thousands of U.S. dollars)

Tax loss carry forwards$ 24,341$ 3,473$ 8,371$ 3,657$ 1,507$ 10,659$ 52,008

Valuation allowance(24,341)(3,206)(8,371)(3,657)(1,507)(10,659)(51,741)

Deferred tax assets

$

—

$

267

$

—

$

—

$

—

$

$

—

267
(b)

(a) The amount is determined by multiplying the corresponding tax loss carry forwards by the effective statutory tax rate.
(b) The Company considers these deferred tax assets recoverable based on the expected future taxable income.
Deferred tax assets and liabilities that comprise net deferred tax assets are included in the following accounts of the accompanying consolidatedbalance sheets:
2019

2020

(Thousands of
U.S. dollars)(Millions of yen)

Deferred tax assets (investments and other assets)
Other long-term liabilities

46

2020

¥ 6,618¥ 8,981$ 82,523

(129)

(148)

(1,360)A reconciliation of the differences between the effective statutory income tax rate and the effective income tax rate for the years ended March 31,
2019 and 2020 was summarized as follows:2019—

Effective statutory income tax rate
Increase (decrease) in taxes resulting from:
Effect of special tax exemption
Change in valuation allowance
Effect of tax rate difference of foreign subsidiaries
Foreign tax credit
Inhabitant taxes per capital
Permanently non-deductible expenses
Other
Effective income tax rate

2020

30.6
(3.0)
(2.2)
(1.3)
(1.0)
1.3
1.4
(0.2)
25.6

Since the difference between the effective statutory income tax rate and the effective income tax rate was equal or less than 5% of the effective
statutory income tax rate, the reconciliation for the year ended March 31, 2019 is not presented.
11. APPROPRIATIONS OF RETAINED EARNINGS(1) The following appropriation (cash dividends) was approved and recorded for the year ended March 31, 2019 and 2020, respectively:
2019

Resolution made at

Type ofsharesTotal dividends(Millions of yen)

Dividends per
share (yen)Source ofdividends

Cut-off date

Effective date

The ordinary general meeting ofshareholders on June 26, 2018

Commonstock¥2,478¥4.00

Retainedearnings

March 31,2018

June 27,2018

The meeting of the Board of
Directors on October 30, 2018

Commonstock¥2,478¥4.00

Retainedearnings

September
30, 2018

December 3,
2018

Source ofdividends

Cut-off date

Effective date

2020

Resolution made at

Type ofsharesTotal dividends Total dividends (Thou- Dividends per Dividends per share(Millions of yen)share (yen)(U.S. dollars)
sands of U.S. dollars)

The ordinary general meeting ofshareholders on June 25, 2019

Commonstock¥3,097$28,457

¥5.00

$0.05

Retainedearnings

March 31,2019

June 26,
2019

The meeting of the Board of
Directors on November 5, 2019

Commonstock¥2,477$22,760

¥4.00

$0.04

Retainedearnings

September
30, 2019

December2, 2019(2) Dividends with the cut-off date in the year ended March 31, 2020 and the effective date in the year ending March 31, 2021 are as follows:
2020

Resolution made at

Type ofsharesThe ordinary general meeting ofshareholders on June 24, 2020

Commonstock

Total dividends Total dividends (Thou- Dividends per Dividends per share(Millions of yen)share (yen)(U.S. dollars)
sands of U.S. dollars)¥3,097$28,457

¥5.00

$0.05

Source ofdividends

Cut-off date

Effective date

Retainedearnings

March 31,2020

June 25,
2020

The Company is required to obtain the approval of shareholders at an ordinary general meeting of shareholders for appropriations of retained
earnings in conformity with the Corporation Law. Appropriations of retained earnings are, therefore, not recorded in the consolidated financial
statements for the year which the cut-off date of dividend belongs to, but are recorded in the consolidated financial statements in the subsequent
year after shareholders’ approval has been obtained.

47

Notes to Consolidated Financial Statements

12. REVALUATION SURPLUS
A consolidated subsidiary of the Company revalued its land used for business purposes in accordance with the Land Revaluation Law. The
Company recognized its portion of consolidated subsidiary’s revaluation surplus in net assets.
13. DERIVATIVESIn the normal course of business, the Company and its consolidated subsidiaries utilize various derivative financial instruments in order tomanage the exposure to fluctuation in foreign currency exchange rates, interest rates and the prices of aluminum ingot in the market. The
Company and its consolidated subsidiaries do not hold or issue derivative financial instruments for trading purposes.
14. NOTES TO CONSOLIDATED STATEMENT OF INCOME
Inventories
The amount of inventories written down due to a decline in profitability for the years ended March 31, 2019 and 2020 was ¥(331) million and¥151 million ($1,387 thousand), respectively which is included in cost of sales.
Selling, general and administrative expenses
Main components of selling, general and administrative expenses for the year ended March 31, 2019 and 2020 were as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

Freight charges¥13,028¥12,773$117,367

Salaries, allowances and bonuses

20,433

20,463

188,027

Research and Development
Research and development costs charged to cost of sales and selling, general and administrative expenses for the years ended March 31, 2019 and2020 were ¥5,447 million and ¥5,867 million ($53,910 thousand), respectively.
15. LEASE TRANSACTIONSLessees’ accounting
Future minimum lease payments subsequent to March 31, 2020 for noncancelable operating leases are summarized as follows:
2019

2020

2020
(Thousands of
U.S. dollars)(Millions of yen)

2021

—

¥1,530$14,0592022 and thereafter

—

9,437

86,713

Total—

10,967100,772

16. CONTINGENT LIABILITIES
1) Guarantee obligations
Contingent liabilities at March 31, 2019 and 2020 are ¥1,391 and ¥1,970 million ($18,102 thousand), respectively, for loans guaranteedand other guarantees given in the ordinary course of business.

482) Contingent liabilities regarding environmental measures
Heavy rain from typhoon No. 10 and No.19 in August and October 2019 respectively caused the water level of the Amehata River, upstream of
the Amehata Dam in Hayakawa-cho, Minamikoma-gun, Yamanashi Prefecture which is possessed by the company’s consolidated subsidiaries
Nippon Light Metal Company, Ltd. to rise. As a result of that, the Amehata River overflowed its banks and flooded surrounding areas.
For residents’ safety, emergency response measures for area recovery and flood prevention have been prioritized and carried out withhelp from relevant parties. Furthermore, fundamental measures against reservoir sedimentation are also being developed under guidancefrom Ministry of Land, Infrastructure, Transport and Tourism.
Nippon Light Metal Company, Ltd. has taken the situation seriously and established a discussion group consisted of 4 parties: Nippon
Light Metal Company, Ltd., Ministry of Land, Infrastructure, Transport and Tourism, Yamanashi Prefecture and Hayakawa-cho. The group
has discussed and later on approved the measures regarding Amehata area mentioned above.
The plan for measures against reservoir sedimentation from fiscal year ending March 31, 2021 to March 31, 2022 can be estimated andrecorded in the consolidated balance sheet as provision for environmental measures. It should be noted that the plan after fiscal year
ending March 31, 2023 is not recorded in the consolidated financial statements since it still remains difficult to be estimated due to someissues about disposal methods of sediment released from the reservoir.
17. LOSS ON IMPAIRMENT OF FIXED ASSETS
The consolidated subsidiaries recognized ¥957 million of loss on impairment of fixed assets in the consolidated statements of income, and thesignificant items of such impairment loss for the year ended March 31, 2019 were as follows:
2019

Location
Guangdong, China

Total

Major use
Operating assets

Asset category
Buildings and structures(Millions of yen)

¥367

Machinery and equipment

450

Tools, furniture and fixtures

48

Others47¥912

Since the cash flows generated from operating activities resulting from the use of the groups of assets have become extremely worse, theconsolidated subsidiaries recognized an impairment loss of ¥912 million, measured by the net realizable value (mainly based on the real estateappraisal value), as a result of noting a sign of impairment and evaluating a necessity of the impairment loss recognition.
The consolidated subsidiaries have grouped the operating assets by independent operating divisions which generate cash flows, the rental
assets by administrative business divisions, and idle assets by individual asset itself.
18. ENVIRONMENTAL EXPENSES
To ensure safety in the area around the Amehata Dam in Hayakawa-cho, Minamikoma-gun, Yamanashi Prefecture which is possessed by thecompany’s consolidated subsidiaries Nippon Light Metal Company, Ltd., they have tackled and carried out the plan for fundamental measuresagainst reservoir sedimentation. The plan from fiscal year ending March 31, 2021 to March 31, 2022 can be estimated and recorded in the
consolidated statements of income as environmental expenses, special losses. Environmental expenses for the fiscal year ending March 31, 2020 is¥11,000 million ($101,075 thousand). ¥10,609 million ($97,482 thousand) of that is for provision for environmental measures.

49

Notes to Consolidated Financial Statements

19. AMOUNTS PER SHARE
Net profit and net assets per share as of March 31, 2019 and 2020 and for the years then ended were summarized as follows:
1. Number of shares
2019

2020

(Thousands of shares)

619,221619,214

Effect of convertible bonds——

Diluted number of shares619,221619,214

2019

2020

Weighted average number of shares

2. Net profit per share
2020(Millions of yen)

Net profit(Thousands of U.S. dollars)¥ 20,560¥ 7,476

2019

2020

$

68,6942020(yen)(U.S. dollars)

Net profit per share¥ 33.20¥ 12.07$

0.11

Diluted net profit per share

¥

¥

$

—

—

—

3. Net assets per share
2019

2020

(Millions of yen)

2020
(Thousands of
U.S. dollars)

Total net assets¥202,735¥ 201,198$ 1,848,736

Non-controlling interests(14,881)(14,923)(137,122)

Net assets attributable to shares of common stock¥187,854¥ 186,275$ 1,711,614

2019

2020

2020

(yen)

Net assets per share¥ 303.37(U.S. dollars)¥ 300.83$

2.76

20. SEGMENT INFORMATION(1) Outline of reportable segments
The reportable segments are components of the Company and its consolidated subsidiaries, for which their discrete financial information isavailable, and whose operating results are regularly reviewed by the Board of Directors to make decisions about resources to be allocated to thesegments and assess their performance.
The Company and its consolidated subsidiaries operate under four distinct business segments mainly in Japan: “Aluminum ingot andchemicals,” “Aluminum sheet and extrusions,” “Fabricated products and others” and “Aluminum foil, powder and paste.”
The “Aluminum ingot and chemicals” segment supplies aluminum remelted ingot used for various industrial materials, and produces awide spectrum of alumina and alumina hydrates ranging from raw materials to basic materials for ceramic compounds. The “Aluminum
sheet and extrusions” segment produces sheet, coil and extrusion products consisting primarily of shapes, tubes and rods. The “Fabricatedproducts and others” segment produces a variety of products which include wing bodies for transport vehicles, automobile components and50

electronic materials. The “Aluminum foil, powder and paste” segment produces aluminum foil and aluminum powder used for various fields,such as daily necessaries, energy, electronics and automobile. “Adjustment” includes unallocated operating expenses and corporate assets not
specifically related to reportable segments.
(2) Calculation method of net sales, profit or loss, assets and other items on each reportable segment
The accounting policies applied by each reportable segment are consistent with those described in “Note 1. Significant Accounting Policies.”
Segment profit or loss presented in segment information is calculated based on operating income in the consolidated statements of income.
Intersegment sales and transfer are determined based on market value.
(3) Information on net sales, profit or loss, assets and other items by each reportable segment
Reportable segment information for the years ended March 31, 2019 and 2020 were as follows:
2019

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts
and others

Aluminum
foil, powder
and paste

Adjustment(Note 1)

Consolidated—¥ 500,451(Millions of yen)

Net sales
Customers¥ 117,008¥ 107,835¥ 180,259¥ 95,349¥

Intersegment

48,27225,14913,685

522(87,628)—

Total

165,280

132,984

193,944

95,871(87,628)

500,451

Segment profit (Note2)

¥

9,616

¥ 7,152¥ 11,681¥

5,114¥ (3,511)¥ 30,052

Segment assets¥ 129,876¥ 114,630¥ 168,023¥ 100,110¥ (31,336)¥ 481,303

Depreciation and amortization

¥

3,631

¥ 5,109

¥

4,352

¥

3,997

¥

205

¥ 17,294

Amortization of goodwill

¥

—

¥

—

¥

222

¥

—

¥

—

¥

222

Loss on impairment of fixed assets

¥

—

¥

40

¥

—

¥

917

¥

—

¥

957

Investment in equity-method affiliates

¥

4,274

¥ 2,247

¥

3,746

¥

3,895

¥

—

¥ 14,162

Capital expenditures¥ 12,142¥ 5,037

¥

6,050

¥

6,484

¥

213

¥ 29,926(Note 1). Explanations of adjustments amounts are as follows.
1) Adjustments of ¥(3,511) million in segment profit are general corporate expenses.
2) Adjustments of ¥(31,336) million in segment assets include ¥(47,063) million in the elimination of transactions between segmentsand ¥15,727 million in corporate assets.
3) Adjustments of ¥205 million in depreciation and amortization expenses are mainly composed of those of corporate assets.
4) Adjustments of ¥213 million for capital expenditures are the increase in corporate assets.
(Note 2). Segment profits (losses) were reconciled to operating income (loss) in the consolidated statements of income.

51

Notes to Consolidated Financial Statements

2020

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts
and others

Aluminum
foil, powder
and paste

Adjustment(Note 1)

Consolidated—¥ 465,946(Millions of yen)

Net sales
Customers¥ 102,833¥ 101,193¥172,975¥ 88,945¥

Intersegment

36,581

23,051

14,396452(74,480)—

Total

139,414124,244

187,371

83,397(74,480)

465,946

Segment profit (Note2)¥ 10,902¥

3,556¥ 10,440¥

3,074¥ (3,365)¥ 24,607

Segment assets¥ 120,144¥ 107,904¥167,400¥ 95,027¥ (20,471)¥ 470,004

Depreciation and amortization

¥

3,942

¥

5,486

¥ 4,517

¥

4,420

¥

329

¥ 18,694

Amortization of goodwill

¥

—

¥

—

¥

444

¥

—

¥

—

¥

444

Loss on impairment of fixed assets

¥

—

¥

—

¥

—

¥

—

¥

—

¥

—

Investment in equity-method affiliates

¥

3,968

¥

2,184

¥ 3,168

¥

3,984

¥

—

¥ 13,304

Capital expenditures

¥

6,596

¥

7,246

¥ 7,781

¥

8,179

¥

176

¥ 29,978

Adjustment(Note 1)

Consolidated—$4,281,411

2020

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts andothers

Aluminum
foil, powder
and paste(Thousands of U.S. dollars)

Net sales
Customers$ 944,895$ 929,827$1,589,405$ 817,284

Intersegment

336,130

211,807132,280

4,153(684,370)

—

Total

1,281,025

1,141,634

1,721,685

821,437(684,370)

4,281,411

Segment profit (Note2)$ 100,175$$

Segment assets$1,103,961$ 991,491

Depreciation and amortization$

36,222$

Amortization of goodwill$—

Loss on impairment of fixed assets$

Investment in equity-method affiliates
Capital expenditures

32,67595,929$$28,246$ (30,920) $ 226,105$1,538,179$ 873,169$ (188,101) $4,318,699

50,408$41,505$40,614

$

3,023

$

—

$

4,080

$

—

$

—

$

4,080

—

$

—

$

—

$

—

$

—

$

—

$

36,461$

20,068$29,110$36,607$—$ 122,246$

60,608$66,581$

71,497$75,154$

1,617$ 275,457(Note 1).Explanations of adjustments amounts are as follows.
1) Adjustments of ¥(3,365) million ($(30,920) thousands) in segment profit are general corporate expenses.

52$ 171,772

2) Adjustments of ¥(20,471) million ($(188,101) thousands) in segment assets include ¥(42,065) million ($(386,521) thousands) in theelimination of transactions between segments and ¥21,594 million ($198,420 thousands) in corporate assets.
3) Adjustments of ¥329 million ($3,023 thousands) in depreciation and amortization expenses are mainly composed of those of corporate assets.
4) Adjustments of ¥176 million ($1,617 thousands) for capital expenditures are the increase in corporate assets.
(Note 2).Segment profits (losses) were reconciled to operating income (loss) in the consolidated statements of income.
Geographical sales for the years ended March 31, 2019 and 2020 were summarized as follows:
2019

Japan

Other

2020

Total

Japan

(Millions of yen)

¥400,889¥99,562

2020

Other

Total

Japan

(Millions of yen)

¥377,729¥500,451¥88,217

Other

Total

(Thousands of U.S. dollars)¥465,946$3,470,817$810,594$4,281,411

Geographical property, plant and equipment as of March 31, 2019 and 2020 were summarized as follows:
2019

Japan

Other

2020

Total

Japan

(Millions of yen)¥147,525¥17,043

2020

Other

Total

Japan

(Millions of yen)

¥157,287¥164,568¥16,470

Other

Total

(Thousands of U.S. dollars)¥173,757$1,445,254$151,337$1,596,591

Information on amortization of goodwill and unamortized balance by each reportable segment as of March 31, 2019 and 2020 for the years thenended were as follows:
2019

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts andothers

Aluminum
foil, powder
and paste

Adjustment

Consolidated(Millions of yen)Amortization of goodwill

¥

—

¥

—

¥

222

¥

—

¥

—

¥

222

Balance as of March 31

¥

—

¥

—

¥ 1,999

¥

—

¥

—

¥ 1,999

Adjustment

Consolidated

2020

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts andothers

Aluminum
foil, powder
and paste(Millions of yen)Amortization of goodwill

¥

—

¥

—

¥

444

¥

—

¥

—

¥

444

Balance as of March 31

¥

—

¥

—

¥ 1,555

¥

—

¥

—

¥ 1,555

53

Notes to Consolidated Financial Statements

2020

The reportable segments
Aluminumingot andchemicals

Aluminum
sheet andextrusions

Fabricatedproducts andothers

Aluminum
foil, powder
and paste

Adjustment

Consolidated(Thousands of U.S. dollars)

Amortization of goodwill

$

—

$

—

$ 4,080

$

—

$

—

$ 4,080

Balance as of March 31

$

—

$

—

$ 14,288

$

—

$

—

$ 14,288

21. ADDITIONAL INFORMATIONThe company isn’t affected by the COVID-19 spread immediately so the impact from COVID-19 was considered small to the group’s performance inthe year ended March 31, 2020. This is due to the fact that the group has a wide range of business sectors and as a material supplier, our business ismainly conducted between companies, rather than between individual customers.
Regarding to consolidated financial statements ended March 31, 2020, although forecasting the size of COVID-19 impact is extremely difficult,
we have made accounting estimates for impairment loss on fixed assets and deferred tax assets recoverability based on the assumption that most ofboth domestic and overseas business will recover in the second half of the next fiscal year ending March 2021. The result from this accounting
estimate is not significant to consolidated financial statements.

22. SIGNIFICANT EVENTS AFTER REPORTING PERIOD
Reverse stock split
At a meeting of the Board of Directors held on May 15, 2020, the Company resolved to propose to the 8th Annual General Meeting of Shareholders
on reverse stock split and a change in the articles of incorporation, and these were approved at the Annual General Meeting of Shareholders heldon June 24, 2020.
1. Reason for the reverse stock splits
The total number of issued shares increased to 619,937,500 shares as of March 31, 2020 through transfer to common shares due to theexercise of purchasing rights for preferred stock that had been issued previously.
The Company considers this number of shares large when taking into account the business scale. The current stock price level is also far
below the range per investment unit considered desirable by Tokyo Stock Exchange, Inc., which is equal to or greater than ¥50,000 and lessthan ¥500,000. In addition, the stock price volatility per ¥1 is relatively large and susceptible to sizable stock price fluctuations as a speculative
investment. Therefore, the Company recognizes that the impact on all of the general investors is not low.
Taking these circumstances into consideration, the Company proposes a one-for-ten reverse stock split.
2. Matter of the reverse stock split(1) Type of stock subject to the reverse
Common shares(2) Method and percentage of the reverse stock split
As of October 1, 2020, the Company will conduct a one-for-ten reverse split of common shares held by the shareholders listed on the lastshareholder register on September 30, 2020.

54

(3) Number of shares to be decreased due to the reverse stock split
Total number of issued shares before the reverse stock split (as of March 31, 2020)

619,937,500 shares

Number of shares to be decreased due to reverse stock split

557,943,750 shares

Total number of issued shares after the reverse stock split

61,993,750 shares

Note: “Number of shares to be decreased due to the reverse stock split” and “Total number of issued shares after the reverse stock split” arethe theoretical values. These are multiplied by the Total number of issued shares before the reverse stock split and the percentage ofreverse stock split.
(4) Total number of issuable shares after the reverse stock split
Total number of issuable shares before the reverse stock split (as of March 31, 2020)

2,000,000,000 shares

Total number of issuable shares after the reverse stock split

200,000,000 shares

3. Treatment in cases where fractions of less than one hare occur
If any fraction of less than one share occurs as a result of this share reverse stock split, it shall be disposed altogether under the provisions of
the Companies Act and the disposal fee will be distributed to shareholders who have fractions according to the percentage of the fraction.
4. Schedule of the reverse stock splitr
Date of resolution of the Board of Directors

May 15, 2020

Date of resolution of Shareholders meeting

June 24, 2020

Effective date of the reverse stock split

October 1, 2020

5. Effect on per share information
Assuming that the reverse stock split had taken place at the beginning of the year ended March 31, 2019, per share information for the years
ended March 31, 2019 and 2020 would be as follows:
March 31,
2019

2020

2020

(yen)

(U.S. dollars)

Per share of common stock
Net assets¥ 3,033.74¥ 3,008.26$ 27.64

Net profit

332.30120.73

1.11

—

—

—

Diluted net profit

55

Report Of Independent Auditors

56

57

Report Of Independent Auditors

58

Overseas Network

OVERSEAS SUBSIDIARIES AND AFFILIATES
North America
Nikkei MC Aluminum
America,Inc.
Indiana, U.S.A.
Aluminum alloys(60%)

Toyo Precision
Appliance(Kunshan)Co.,Ltd.
Jiangsu, China
IT related case(85%)

Toyal America,Inc.
Illinois, U.S.A.
Aluminum powder and paste(100%)

Shandong Nikkei Conglin
Automotive Parts Co.,Ltd.
Shandong, China
Automobiles components(55%)

Nippon Light Metal
Georgia,Inc.
Georgia,U.S.A.
Automobiles components(90%)

Nikkei(Shanghai)
Body Parts Co.,Ltd.
Jiangsu, China
Automobiles components(100%)

EuropeToyal Europe SASU
Accous, France
Aluminum powder and paste(100%)
East Asia
Nikkei MC Aluminum(Kunshan)Co.,Ltd.
Jiangsu, China
Aluminum alloys(85%)
Guangxi Zhengrun Nikkei High
Purity Aluminium Technology
Co.,Ltd.
Guangxi, China
Aluminum high purity metal(49%)
Nonfemet international(China-Canada-Japan)
Aluminium Co., Ltd.
Shenzhen,China
Aluminum extrusion(18%)

Shandong Conglin Fruehauf
Automobile Co.,Ltd.
Shandong, China
Trailers and trucks(50%)
Hunan Ningxiang JiWeiXin
Metal Powder Co.,Ltd.
Hunan, China
Aluminum powder(90%)

Southeast Asia
Nikkei MC Aluminum(Thailand)Co.,Ltd.
Chachengsao, Thailand
Aluminum alloys(79.4%)CMR Nikkeik India Pvt, Ltd.
Bawal, India
Aluminum alloys(26%)
Nikkei Siam Aluminium Ltd.
Pathumtani, Thailand
Aluminum sheet, foil
(100%)
Fruehauf Mahajak Co.,Ltd.
Bangkok, Thailand
Trailers and trucks(70%)
Toyal MMP India Pvt,Ltd.
Nagpur, India
Aluminum paste(74%)

Toyal Zhaoqing Co.,Ltd.
Guangdong, China
Aluminum paste(90%)
Sam-A Aluminium Co.,Ltd.
Seoul, Korea
Aluminum foil, paste(33.4%)(As of March 31, 2020)
59

Profile
Directors And Officers
Since its establishment, the NLM Group has been Japan’s sole fully integrated aluminum manufacturer
offering varieties of products ranging from aluminum raw material to fabricated products.
Aluminum has properties that make it a superb industrial material: it is lightweight and has
Directors
Audit & Supervisory Board Member
excellent processability, corrosion resistance, thermal conductivity, and recyclability. Nippon Light
President
Nobuo Matsumoto
Metalapplies its core strengths — a wealth of knowledge about aluminumand its characteristics andRepresentative Director

Kotarotechnological capabilities that have been developed over many years— toYasuda
supply a highly diversified
Ichiro Okamoto

Yoshidaelectrical andrange of products to a number of key industrial sectors, includingMasahiro
the automotive,
President and CEO of Nippon Light Metal Co., Ltd

YoshikiSato*2electronics, information and telecommunication, environment, safety,
energy,Shintaro Kawai*2
By carryingMurakami
on development of new applications for aluminum
and aluminum
Jinseki
Kim*2 materials, theToshihide
NLMYasunori
Group isOkamoto
to continue to support customers in wide-ranging industrial
sectors and contribute to*2 Outside Member
construction,
Directors railroad, and food products industries.

improvingthe quality of people’s lives and protection of the environment.
Kaoru Kusumoto
President and CEO of Toyo Aluminium K.K.

Hiroyasu Hiruma
President and CEO of Nippon Fruehauf Co., Ltd.

NLM
Group
Sho Adachi
NipponLight Metal
Holdings Company,
Ltd. andits consolidated
President
and Representative
Directorof Nikkeikin
Kakohsubsidiaries Years ended March 31

Kaihatsu Holdings Co., Ltd.

Officers

Yoshihiro Tomioka
Toshikazu Tanaka
For the year:
Masahito
Net sales Saotome
OperatingOno*
profit1
MasatoProfit attributable to owners of parent
Ryoichi Hayashi*1
At year-end: 1
Haruo
Ito*
Total assets
Net assets Hayano*1
Toshihito
Short-term borrowings
and long-term debt,
1
Keiko
Tsuchiya*
includingbonds and capital lease obligation*1 Outside Director¥500,451 ¥465,946 $4,281,411
Kazuto Sanada
24,607
7,476

226,105
68,694

Satoshi Aso 202,735 201,198

481,303

470,004

4,318,699
1,848,737

143,742

137,091

1,259,680

30,052
20,560
Masakazu Ichikawa

Kazuyoshi Sugiyama

Operating Profit

Total Assets

500

35

500

400

28

400

300

21

300

200

14

200

100

7

100

0

2015

2016

Billions of yen

2017

2018

2019

2020

Years ended March 31

0

2020
Thousands of
U.S. dollars

Minoru Sotoike Millions of yen

Net Sales

60

2020

2019

2015

2016

Billions of yen

2017

2018

2019

2020

Years ended March 31

0

2015

2016

Billions of yen

2017

2018

2019

2020

As of March 31(As of June 24 2020)

Corporate Data

Company Name

Major Shareholders

Nippon Light Metal Holdings Company, Ltd.
https://www.nikkeikinholdings.co.jp(Ratio of Stock Holding)
The Master Trust Bank of Japan, Ltd.
(trust accounts)(10.9%)

Established
October 1. 2012

Japan Trustee Services Bank, Ltd.
(trust accounts)(7.5%)

Paid-In Capital¥46,525 million
Shares of Common Stock
Authorized: 2,000,000,000
Issued: 619,937,500
Number of Shareholders
60,100Stock Exchange Listings
Tokyo
Transfer Agent of Common Stock
Sumitomo Mitsui Trust Bank, Ltd.
Last Shareholders’ Meeting
June 24, 2020

The Dai-ichi Life Insurance Co.,Ltd.
(3.2%)
Nikkei-Keiyu-Kai(2.7%)
The Light Metal Educational Foundation, Inc.
(2.4%)
Japan Trustee Services Bank,Ltd(trust accounts 9)(2.2%)
Asahi Mutual Life Insurance Co.
(2.1%)SSBTC CLIENT OMNIBUS ACCOUNT(2.0%)
JPMC GOLDMAN SACHS TRUST JASDEC LENDING
ACCOUNT (2.0%)
JP MORGAN CHASE BANK 385151(1.8%)(As of March 31, 2020)

Cautionary Statement
This annual report contains various projections and estimates. Important factors that could alter these projections and estimates include changes in thebalance of aluminum supply and demand, fluctuations in the price of aluminum ingot and foreign exchange rates, as well as shifts in Japanese government
policies and regulations. The Company cautions, therefore, that the projections and estimates contained herein involve risk and uncertainty, and that actual
results could differ materially from those expressed or implied.

61https://www.nikkeikinholdings.co.jp
Nippon Light Metal Holdings Company, Ltd.
1-1-13 Shimbashi, Minato-ku, Tokyo 105-8681 Japan
Urbannet Uchisaiwaicho Building
https://www.nikkeikinholdings.co.jp

Printed in Japan