Consolidated Financial Results for the Fiscal Year Ended March 31, 2023 [JGAAP]
Company Name:

May 15, 2023
Stock Exchange Listing: Tokyo

Kanto Denka Kogyo Co., Ltd.

Code Number: 4047 https://www.kantodenka.co.jp/english/
Representative: Jun’ichi Hasegawa, President
Contact: Masanobu Shirokura, General Manager, Legal & General Affairs Dept.
Phone: +81-3-4236-8801
Scheduled date of Ordinary General Shareholders’ Meeting:
Scheduled date to commence dividend payments:
June 29, 2023
June 30, 2023
Scheduled date for submitting the Annual Securities Report:
June 29, 2023
Availability of supplementary briefing material on financial results: Yes
Financial results briefing session: Yes (For institutional investors and analysts)

1. Consolidated financial results for the fiscal year ended March 31, 2023 (April 1, 2022–March 31, 2023)(Amounts are rounded down to the nearest million yen)

(1) Consolidated operating results(% figures are the rate of year-on-year increase or decrease)

Net sales

Operating profit

Millions of yen

Profit attributable toowners of parent

Ordinary profit%

Millions of yen%

Millions of yen%

Millions of yen

%

26.3
19.9

12,947
11,16416.0
97.0

13,679
11,145

22.7
99.6

9,382
7,762

20.9
115.3

Fiscal year ended March 31, 2023
78,675
Fiscal year ended March 31, 2022
62,286(Note) Comprehensive income:Fiscal year ended March 31, 2023: ¥10,704 million (27.8%)
Fiscal year ended March 31, 2022: ¥8,374 million (39.5%)

Diluted basic
Ordinary profit to Operating profit to
Basic earnings per
Return on equity
earnings
persharetotal assets ratio
net sales ratio
share
Yen

Fiscal year ended March 31, 2023
163.32
Fiscal year ended March 31, 2022
135.12(Reference) Equity gains (losses) of affiliated companies:
Fiscal year ended March 31, 2023: ¥― million
Fiscal year ended March 31, 2022: ¥― million(2) Consolidated financial position

Total assets

%

%

%

—
—

Yen

14.9
14.2

11.4
11.0

16.5
17.9

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

As of March 31, 2023
130,762
As of March 31, 2022
109,902(Reference) Equity capital:
As of March 31, 2023: ¥67,480 million
As of March 31, 2022: ¥58,254 million

68,77459,90851.6
53.0

1,174.54
1,014.01

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period(3) Consolidated cash flows
Cash flows fromoperating activities
Millions of yen

Millions of yen

Millions of yen

Millions of yen

7,291
11,176(16,627)(11,120)

4,424
2,416

21,987
26,372

Fiscal year ended March 31, 2023
Fiscal year ended March 31, 2022

2. Dividends
Annual dividends per share
End of 1Q End of 2Q End of 3Q Year-end
Yen

Fiscal year ended March 31, 2022
Fiscal year ended March 31, 2023

—
—

Yen

Yen

8.00
10.00

—
—

Total

Total dividend
amountYen

YenMillions of yen

14.00
23.00

22.00
33.00

1,265
1,898

Ratio of
Dividend
dividends to net
payout ratio
assets(Consolidated) (Consolidated)
%

%

16.3
20.2

2.3
3.0

Fiscal year ending March 31, 2024
—
7.00
—
7.00
14.00
20.6
(Forecast)(Note) The year-end dividend for the fiscal year ended March 31, 2023 was increased by ¥1 per share from ¥22 to ¥23 per share. For details, pleaserefer to “Notice of Revised Dividend Forecast” (in Japanese only) announced today.

3. Forecast of consolidated financial results for the fiscal year ending March 31, 2024 (April 1, 2023–March 31, 2024)(% figures are the rate of year-on-year increase or decrease)

Net salesFirst half
Full year

Operating profit

Profit attributable toowners of parent

Ordinary profit

Basic earnings
per share

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

36,30078,300

–2.7
–0.5

1,500
6,000

–77.2
–53.7

1,500
5,700

–79.6
–58.3

1,000
3,900

–80.7
–58.4

17.41
67.88

Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation):
Not applicable
New: ― companies (company names); Removed: ― companies (company names)(2) Changes in accounting policies, changes in accounting estimates and retrospective restatementi. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i.: Noneiii. Changes in accounting estimates: None
iv. Retrospective restatement: None
(3) Number of shares issued (common stock)i. Number of shares issued at the end of the period(including treasury shares)
ii. Number of treasury shares at the end of the periodiii. Average number of shares during the period

As of March 31, 2023

57,546,050 shares As of March 31, 2022

57,546,050 shares

As of March 31, 2023

93,137 shares As of March 31, 2022

96,900 shares

As of March 31, 2023

57,451,484 shares As of March 31, 2022

57,448,551 shares(Reference) Summary of non-consolidated financial results
Non-consolidated financial results for the fiscal year ended March 31, 2023 (April 1, 2022–March 31, 2023)(1) Non-consolidated operating results(% figures are the rate of year-on-year increase or decrease)
Net sales
Operating profit
Ordinary profit
ProfitMillions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

72,04455,75029.2
18.4

11,211
9,020

24.3
101.8

12,217
9,400

30.0
108.7

8,404
6,652

26.3
129.7

Fiscal year ended March 31, 2023
Fiscal year ended March 31, 2022

Basic earnings per share

Diluted basic earnings per share
Yen

Fiscal year ended March 31, 2023
Fiscal year ended March 31, 2022
(2) Non-consolidated financial position
Total assets
As of March 31, 2023
As of March 31, 2022

Yen

146.28115.81——

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen%

Yen

110,267
93,41058,241
51,21952.8
54.8

1,013.73
891.57(Reference) Equity capital:
Fiscal year ended March 31, 2023: ¥58,241 million
Fiscal year ended March 31, 2022: ¥51,219 million
Notes:- Summary of financial results are not subject to audit by a certified public accountant or an auditing firm.
- Proper use of performance forecasts, and other special matters(Notes to performance forecasts and other forward-looking statements)
The performance outlooks and other forward-looking statements in this document are based on information currently available to the Company and certain
assumptions that the Company deems reasonable, and are not intended to be a promise by the Company that they will be realized. Actual results may differ
significantly due to various factors. Please refer to "1. Overview of operating results, etc., (4) Future outlook" on page 4 of the attached materials for information on
the performance forecasts.
(How to obtain supplementary financial results briefing materials)
The Company plans to hold a financial results briefing for institutional investors and securities analysts on Tuesday, May 23, 2023. Supplementary financial results
briefing materials to be used at this briefing will be posted on the Company's website after the session.

Contents

1. Overview of operating results, etc. ............................................................................................................ 2(1) Operating results ...............................................................................................................................2(2) Financial position .............................................................................................................................3(3) Cash flows .........................................................................................................................................3(4) Future outlook ................................................................................................................................... 4(5) Basic policy on profit distribution and dividends for the current and next fiscal years ....................5
2. Basic approach to the selection of accounting standards ........................................................................... 5
3. Consolidated financial statements and notes.............................................................................................. 6(1) Consolidated balance sheet ............................................................................................................... 6(2) Consolidated statement of income and consolidated statement of comprehensive income ..............8
Consolidated statement of income ...................................................................................................... 8
Consolidated statement of comprehensive income ............................................................................. 9(3) Consolidated statement of changes in equity .................................................................................. 10(4) Consolidated statement of cash flows ............................................................................................. 12(5) Notes to the consolidated financial statements ................................................................................13(Notes on premise of going concern) ................................................................................................ 13(Significant matters forming the basis for preparation of the consolidated financial statements) .... 13(Segment information, etc.) .............................................................................................................. 15(Per share information) ..................................................................................................................... 19(Significant subsequent events) ........................................................................................................ 20

1

1． Overview of operating results, etc.
(1) Operating results
i. Operating results for the fiscal year under review
In the consolidated fiscal year ended March 31, 2023, while the Japanese economy showed signs of amoderate recovery due to the effects of various government policies, severe conditions continued toprevail amid factors such as rising raw material and fuel prices, and sharp fluctuations in exchange rates.
Overseas, outlooks remained uncertain due to the need for caution amid downside risks from such factors
as the prolonged situation in Ukraine and fluctuations in financial and capital markets.
The chemical industry also continued to face a challenging business environment, with rising raw
material, fuel and logistics prices coupled with the impact of production adjustments in thesemiconductor and electronic materials industries.
Amid these circumstances, the Kanto Denka Group worked to strengthen the earning power of its
fundamental chemicals, fine chemicals, and ferrochemicals businesses, while striving to develop new
products that leverage its competitive fluorochemical technologies.
Net sales for the fiscal year under review amounted to ¥78,675 million, up ¥16,388 million or 26.3%
year on year, mainly due to higher sales in the Fine Chemicals Division. For profit and loss, ordinary
profit amounted to ¥13,679 million, up ¥2,534 million or 22.7% year on year, and profit attributable toowners of parent amounted to ¥9,382 million, up ¥1,620 million or 20.9% year on year, mainly due tohigher sales in the Fine Chemicals Division, despite increases in raw material and fuel prices anddepreciation.
ii. Overview by reporting segment
a. Fundamental Chemicals Division
For inorganic products, sales of caustic soda and hydrochloric acid were up year on year due to effects
from price revisions, despite lower sales volumes.
For organic products, sales of trichloroethylene and perchloroethylene were up due to effects fromprice revisions, despite lower sales volumes.
As a result of the above, net sales in the Fundamental Chemicals Division amounted to ¥9,409 million,up ¥1,442 million or 18.1%. Operating profit amounted to ¥325 million (versus operating loss of ¥69
million in the previous fiscal year).
b. Fine Chemicals Division
For fluorochemicals for semiconductors, sales of nitrogen trifluoride were up year on year due to effects
from price revisions, despite lower sales volumes. Sales of tungsten hexafluoride and hexafluoro-1,3butadiene were up due to higher sales volumes.
Sales of lithium hexafluorophosphate, a battery material, were up due to effects from price revisions.
As a result of the above, net sales in the Fine Chemicals Division amounted to ¥63,943 million, up¥14,943 million or 30.5%. Operating profit amounted to ¥11,450 million, up ¥1,407 million or 14.0%.

2

c. Ferrochemicals Division
Sales of reprographic carriers, used in developers for copiers and printers, were up year on year amid acontinued shift to new products. Sales of iron oxide were down due to lower sales of colorants.
As a result of the above, net sales in the Ferrochemicals Division amounted to ¥2,666 million, up ¥86
million or 3.4%. Operating profit amounted to ¥685 million, up ¥145 million or 27.0%.
d. Commercial Business Division
Commercial business sales were down due to lower sales of chemical products. As a result of the above,
net sales in the Commercial Business Division amounted to ¥746 million, down ¥91 million or 10.9%.
Operating profit amounted to ¥199 million, up ¥4 million or 2.6%.
e. Facilities Division
Net sales in chemical facility plant and general industrial plant construction were up year on year due toan increase in contract work.
As a result of the above, net sales in the Facilities Division amounted to ¥1,908 million, up ¥6 million
or 0.4%. Operating profit amounted to ¥602 million, up ¥222 million or 58.7%.

(2) Financial position
Total assets at the end of the consolidated fiscal year under review amounted to ¥130,762 million, up¥20,860 million from the end of the previous consolidated fiscal year.
Current assets amounted to ¥72,919 million, up ¥11,214 million from the end of the previous fiscal
year. The main factors were a ¥10,779 million increase in inventories and a ¥3,639 million increase innotes and accounts receivable—trade, and contract assets, which offset a ¥4,372 million decrease in cash
and deposits.
Non-current assets amounted to ¥57,842 million, up ¥9,646 million from the end of the previous fiscal
year. The main factor was a ¥9,182 million increase in property, plant and equipment.
Current liabilities amounted to ¥33,680 million, up ¥6,414 million from the end of the previous fiscal
year. The main factors were a ¥3,194 million increase in other current liabilities and a ¥1,552 million
increase in notes and accounts payable—trade.
Non-current liabilities amounted to ¥28,308 million, up ¥5,580 million from the end of the previous
fiscal year. The main factor was a ¥5,425 million increase in long-term borrowings. The balance ofinterest-bearing debt, including discounted notes receivable—trade and bonds payable, totaled ¥37,794
million, up ¥6,882 million from the end of the previous fiscal year.
Total net assets amounted to ¥68,774 million, up ¥8,865 million from the end of the previous fiscal
year. The main factor was a ¥8,002 million increase in retained earnings due to profit attributable toowners of parent.
(3) Cash flows
Cash and cash equivalents at the end of the consolidated fiscal year under review amounted to ¥21,987
million, down ¥4,385 million from the end of the previous fiscal year.
a. Cash flows from operating activities
Net cash provided by operating activities amounted to ¥7,291 million (compared with net cash of ¥11,176
million provided in the previous fiscal year). This was mainly due to cash inflows such as ¥13,425 million
in profit before income taxes and ¥7,697 million in depreciation, while recording cash outflows such as¥10,555 million in inventories, ¥4,106 million in income taxes payable, and ¥3,479 million in increase3

in trade receivables.
b. Cash flows from investing activities
Net cash used in investing activities amounted to ¥16,627 million (compared with net cash of ¥11,120
million used in the previous fiscal year). This was mainly due to the acquisition of property, plant andequipment.
c. Cash flows from financing activities
Net cash provided by financing activities amounted to ¥4,424 million (compared with net cash of ¥2,416
million provided in the previous fiscal year). This was mainly due to repayments of long-term borrowingsof ¥5,911 million, while proceeds from long-term borrowings amounted to ¥12,080 million.
(Cash flow indicators)
Fiscal year
Fiscal year
Fiscal year
Fiscal year
Fiscal year
ended March ended March ended March ended March ended March
31, 2019
31, 2020
31, 2021
31, 2022
31, 2023
Equity ratio
52.7%
54.8%
55.2%
53.0%
51.6%
Equity ratio on a market
52.6%
53.0%
55.7%
56.5%
45.3%
value basis
Ratio of interest2.3
2.4
2.3
2.8
5.2
bearing debt to cash
flows
Interest coverage ratio
83.6
51.7
61.1
36.3
22.6
(Notes) Equity ratio: Equity capital / Total assets
Equity ratio on a market value basis: Market capitalization / Total assets
Ratio of interest-bearing debt to cash flows: Interest-bearing debt / Cash flow
Interest coverage ratio: Cash flow / Interest payments
All calculations are based on consolidated financial figures.
Market capitalization is calculated based on the number of shares issued, minus treasury shares.
Operating cash flows are used for cash flows.
Interest-bearing debt is all debt on the consolidated balance sheet for which interest is paid.

(4) Future outlook
Looking ahead, the economy is expected to rebound moderately on the back of various governmental
policies amid an uptick in social and economic activity. Nonetheless, attention must be paid to the risk of
downward pressure on the Japanese economy caused by the slowdown in the global economy, worldwide
geopolitical risks, and the risk of fluctuations in financial and capital markets. As such, the future remains
highly uncertain, and the business environment is expected to remain a challenging one.
Against this backdrop, the Group launched its new medium-term management plan, “Dominate 1000,”
starting in fiscal 2022, ended March 31, 2022. In this plan, we will strive to achieve our target of ¥100
billion in consolidated net sales in fiscal 2024 through the core strategies of "promote expansion of thefine chemicals business," "raise the level of the production technology," "enhance human resource
development," and "increase social value."
Furthermore, we have established the prime initiatives of our business activity as "giving the highest
priority to safety," "being a profitable company," and "development by and for everyone." With this, astable management foundation, and an eye on where we want to be in 2030, we will provide a safe work
environment with job satisfaction, support technologies that are cutting-edge on a global stage with our
superior, original products, and aim to be an innovative, development-driven company to contribute to asustainable society.
In our full-year consolidated earnings outlook for the fiscal year ending March 31, 2024, we forecast4net sales to remain roughly on par with the fiscal year ended March 31, 2023, mainly due to the impact of
production adjustments in the semiconductor and electronics industries. For profit and loss, we forecast
operating profit of ¥6,000 million and ordinary profit of ¥5,700 million after factoring in increases in
depreciation and other fixed costs and the lingering impact of high raw material prices in the first half, as
in the fiscal year ended March 31, 2023.
(5) Basic policy on profit distribution and dividends for the current and next fiscal years
In determining dividends from surplus, the Company’s basic policy is to provide consistent, proper
dividends while securing funds for capital investment, an indispensable driver of greater earnings, andstrengthening its financial position. These actions are founded in its business plans over the medium tolong term and take into consideration trends in business performance.
The target dividend payout ratio is 20% pursuant to the medium-term management plan, “Dominate
1000,” introduced in April 2022.
In accordance with the above policy, the Company plans to pay a year-end dividend of 23 yen per sharefor the fiscal year ended March 31, 2023 at the Board of Directors meeting to be held on May 26, 2023.
This makes the annual dividend per share ¥33, including the interim dividend of ¥10 already paid.
For the fiscal year ending March 31, 2024, the Company plans to pay an annual dividend of ¥14 pershare (interim: ¥7, year-end: ¥7), taking into consideration the above policy, trends in businessperformance and other factors.

2. Basic approach to the selection of accounting standards
The Group has adopted Japanese generally accepted accounting principles due to the lack of need to raise
funds from overseas, and has no immediate plans to change this policy.

5

3. Consolidated financial statements and notes(1) Consolidated balance sheet(Millions of yen)
As of March 31,2022

As of March 31,
2023

Assets:Current assets
Cash and deposits

26,72822,355

Notes and accounts receivable—trade, and contract
assetsElectronically recorded monetary claims—
operatingMerchandise and finished goods

16,921

20,560

1,101

1,130

5,182

7,055

Work in process
Raw materials and supplies

4,416
3,526

9,332
7,516

Other
Allowance for doubtful accounts

3,896
(68)

5,030
(62)

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery and equipment, net

61,70572,9198,872
11,655

10,93019,291

Land
Lease assets, net
Construction in progress

2,633
351
11,001

2,657
266
10,512Other, net

3,707

3,745

Total property, plant and equipment

38,22147,404

728

676

Total intangible assets

728

676

Investments and other assets
Investment securities
Retirement benefit assets

7,464
—

7,399
14

1,165
621

1,404
950

Intangible assets
Other

Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

6

(4)

(7)

9,246

9,762

48,196109,90257,842
130,762(Millions of yen)
As of March 31,2022

As of March 31,
2023

Liabilities:
Current liabilities
Notes and accounts payable—trade
Electronically recorded obligations—operating

8,068
835

9,620
1,022

Short-term borrowings
Current portion of long-term borrowings

4,200
5,886

4,516
6,914

Lease obligations
Income taxes payable

100
2,600

135
2,701

134

134

Provision for bonuses for directors (and otherofficers)
Other

5,439

8,634

Total current liabilities

27,26533,680Non-current liabilities
Long-term borrowings

20,16625,591

Lease obligations
Deferred tax liabilities

558
23

635
36

Provision for retirement benefits for directors (andother officers)
Provision for share awards for directors (and otherofficers)
Retirement benefit liability
Other

137

143

11

18

1,754
75

1,805
75

Total non-current liabilities

22,72728,30849,993

61,988

CapitalCapital surplus

2,877
1,829

2,877
1,859

Retained earnings
Treasury shares

50,483(68)

58,486(65)

Total shareholders' equity

55,122

63,157

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans

2,527
413

2,512
1,534

191

275

Total accumulated other comprehensive income
Non-controlling interests

3,132
1,654

4,323
1,293

59,908109,902

68,774
130,762

Total liabilities
Net assets:
Shareholders' equity

Total net assets
Total liabilities and net assets

7

(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income(Millions of yen)
From April 1, 2021
to March 31, 2022

From April 1, 2022
to March 31, 2023

Net sales
Cost of sales
Gross profit

62,28642,421

78,675
56,107

19,86422,567

Selling, general and administrative expenses
Operating profit

8,700
11,164

9,619
12,947

10
204

20
248

243
—

112
515

Non-operating profit
Interest income
Dividend income
Foreign exchange gains
Gain on sale of trial products
Miscellaneous income
Total non-operating profit

235

268

694

1,164

Non-operating expenses
Interest expenses
Loss on valuation of derivatives

313
84

318
59

Loss on sale of trial products
Miscellaneous loss

204
110

—
53

Total non-operating expenses
Ordinary profit

713
11,145432
13,679

131

—

131

—

116

242

Extraordinary income
Gain on sale of investment securities
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on valuation of investment securities—

11

Total extraordinary losses
Profit before income taxes

116
11,160254
13,425

Income taxes—current
Income taxes—deferred

3,234
(36)

4,166
(244)

Total income taxes
Profit

3,198
7,961

3,921
9,503

Profit attributable to non-controlling interests
Profit attributable to owners of parent

198
7,762

121
9,382

8

Consolidated Statement of Comprehensive Income(Millions of yen)
From April 1, 2021
to March 31, 2022

From April 1, 2022
to March 31, 2023

Profit7,961

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

(271)

(45)

649
35

1,162
84

Total other comprehensive income
Comprehensive income

413
8,374

1,200
10,704Comprehensive income attributable to:
Owners of parent
Non-controlling interests

8,135
239

10,574130

Foreign currency translation adjustment
Remeasurements of defined benefit plans

9

9,503

(3) Consolidated Statement of Changes in Equity
From April 1, 2021 to March 31, 2022
(Millions of yen)
Shareholders’ equity
CapitalBalance at beginning of period

2,877

Capital surplus

Retained earnings

Treasury shares

Total shareholders'equity1,829

43,584(70)

48,221

Changes during period
Dividends of surplus

(862)

(862)

Profit attributable to owners ofparent

7,762

7,762

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares

1

1

Increase (decrease) in capitalsurplus due to changes inownership interests inconsolidated subsidiaries
Net changes in items otherthan shareholders' equity
Total changes during period
Balance at end of period

—

—

—

6,899

1

6,901

2,877

1,829

50,483(68)

55,122

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets

2,759

1,443

52,423

Accumulated other comprehensive income
Valuation difference Foreign currency Remeasurements ofon available-for-saledefined benefit
translation
securities
plans
adjustment
Balance at beginning of period

2,817

(214)

156

Changes during period
Dividends of surplus(862)

Profit attributable to owners ofparent

7,762

Purchase of treasury shares(0)

Disposal of treasury shares
Increase (decrease) in capitalsurplus due to changes inownership interests inconsolidated subsidiaries
Net changes in items otherthan shareholders' equity

1
—
(289)

627

35

372

211

584

Total changes during period

(289)

627

35

372

211

7,485

Balance at end of period

2,527

413

191

3,132

1,654

59,90810

From April 1, 2022 to March 31, 2023
(Millions of yen)
Shareholders’ equity
CapitalBalance at beginning of period

2,877

Capital surplus

Retained earnings

Treasury shares

Total shareholders’equity1,829

50,483(68)

55,122

Changes during period
Dividends of surplus(1,380)(1,380)

Profit attributable to owners ofparent

9,382

9,382

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares
Increase (decrease) in capitalsurplus due to changes inownership interests inconsolidated subsidiaries
Net changes in items otherthan shareholders' equity

2

2

Total changes during period
Balance at end of period

30

30

—

30

8,002

2

8,035

2,877

1,859

58,486(65)

63,157

Total accumulated
othercomprehensive
incomeNon-controllinginterests

Total net assets

3,132

1,654

59,908

Accumulated other comprehensive income
Valuation difference Foreign currency Remeasurements ofon available-for-saledefined benefit
translation
securities
plans
adjustment
Balance at beginning of period

2,527

413

191

Changes during period
Dividends of surplus(1,380)

Profit attributable to owners ofparent9,382

Purchase of treasury shares(0)

Disposal of treasury shares

2

Increase (decrease) in capitalsurplus due to changes inownership interests inconsolidated subsidiaries
Net changes in items otherthan shareholders' equity

30
(14)

1,121

84

1,191

(360)

830

Total changes during period

(14)

1,121

84

1,191

(360)

8,865

Balance at end of period

2,512

1,534

275

4,323

1,293

68,77411

(4) Consolidated Statement of Cash Flows(Millions of yen)
From April 1, 2021
to March 31, 2022

From April 1, 2022
to March 31, 2023

Cash flows from operating activities
Profit before income taxes
Depreciation

11,1606,680

13,425
7,697Interest and dividend income
Interest expenses

(215)
313

(268)
318

Loss on retirement of non-current assets
Loss (gain) on sale of investment securities

116
(131)

242
0

Loss (gain) on valuation of investment securities
Decrease (increase) in trade receivables—(3,286)

11(3,479)Decrease (increase) in inventories
Increase (decrease) in trade payables(2,417)
2,070(10,555)
1,533

Decrease (increase) in other current assets
Increase (decrease) in other current liabilities
Other
Subtotal(2,155)231
147(1,091)
2,912
694

12,516

11,441

Interest and dividends received
Interest paid
Income taxes paid

218
(308)
(1,250)278(322)(4,106)

Net cash provided by operating activities

11,176

7,291(10,906)
167(15,799)
10

Purchase of investment securities
Other

(19)
(362)

(20)
(817)

Net cash used in investing activities(11,120)(16,627)

Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings

(194)
8,988

316
12,080

Repayments of long-term borrowings
Dividends paid

(5,309)(862)(5,911)(1,380)

(22)
(0)

(22)
(0)

—

(438)

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of investment securities

Cash flows from financing activities

Dividends paid to non-controlling interests
Purchase of treasury shares
Purchase of shares of subsidiaries not resulting inchanges in scope of consolidation
Other
Net cash provided by financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

12

(183)

(218)

2,416

4,424

561

526

3,033
23,339(4,385)26,372

26,372

21,987

(5) Notes to the consolidated financial statements(Notes on premise of going concern)
Not applicable.
(Significant matters forming the basis for preparation of the consolidated financial statements)
1. Matters concerning scope of consolidation(1) Number of consolidated subsidiaries: 7 companies
Name of consolidated subsidiaries
Kanden Kosan Co., Ltd.
Jobi Engineering Co., Ltd.
Morishita Bengara Kogyo Co., Ltd.
Kanto Denka Korea Co., Ltd.
Taiwan Kanto Denka Co., Ltd.
Kanto Denka Fine Products Korea Co., Ltd.
Xuancheng KDK Technology Co., Ltd.
Morishita Bengara Kogyo Co., Ltd. was renamed Kanto Denka Finetech Co., Ltd. on April 1, 2023.
(2) Name of non-consolidated subsidiaries
Kanto Denka Sangyo Co., Ltd.
Gunma Tekkojo Co., Ltd.
Kanden Mizushima Sangyo Co., Ltd.
Kanden Shibukawa Sangyo Co., Ltd.
Kanto Denka Kogyo (Shanghai) Co., Ltd.
Reason for exclusion from scope of consolidation
All non-consolidated subsidiaries are small companies, with none of total assets, net sales, net profit (commensurate with equity
holdings), or retained earnings (commensurate with equity holdings) exerting any important influence on consolidated financial
statements.
2. Matters concerning the application of the equity method
There are no non-consolidated subsidiaries for which the equity method is applied. There are also no affiliated companies.
Non-consolidated subsidiaries for which the equity method is not applied
Kanto Denka Sangyo Co., Ltd.
Gunma Tekkojo Co., Ltd.
Kanden Mizushima Sangyo Co., Ltd.
Kanden Shibukawa Sangyo Co., Ltd.
Kanto Denka Kogyo (Shanghai) Co., Ltd.
Reason for non-application of the equity method
Non-consolidated subsidiaries for which the equity method is not applied do not have a material impact on net profit or retained
earnings and are not significant as a whole, and therefore the equity method is not applied.
3. Matters concerning the fiscal year of consolidated subsidiaries
The fiscal year end of Kanto Denka Korea Co. Ltd., Taiwan Kanto Denka Co., Ltd., Kanto Denka Fine Products Korea Co., Ltd.,and Xuancheng KDK Technology Co., Ltd. is December 31. In preparing consolidated financial statements, financial statements
as of this day are used, making necessary adjustments for important transactions occurring between this day and the consolidated
closing date.

13

4. Matters concerning accounting policies(1) Valuation standards and valuation methods for significant assets
i. Securities
Available-for-sale securities
Securities other than stocks, etc. with no market priceStated at market value.
(All valuation differences are processed by the direct net assets method, and selling cost is calculated by the moving averagemethod.)Stocks, etc. with no market priceStated at cost determined by the moving average method.
ii. Inventories
Merchandise and finished goods, work in process, and raw materials and supplies
Mainly stated at cost determined by the monthly moving average method (the balance sheet amount is calculated by the method of
writing down book value based on decline in profitability).
(2) Method of depreciation and amortization of significant depreciable assets
i. Property, plant and equipment (excluding lease assets)
While the Company and its domestic consolidated subsidiaries mainly use the straight-line method, the declining-balance method isused for "Machinery" within the Fine Chemicals Division. Overseas consolidated subsidiaries mainly use the straight-line method.
ii. Intangible assets (excluding lease assets)
The straight-line method is used.
Software for internal use is amortized over the estimated internal useful life (five years).
iii. Lease assets
Lease assets related to finance lease transactions with transfer of ownership
The same depreciation method is used as that applied to internally held non-current assets.
Lease assets related to finance lease transactions without transfer of ownership
The straight-line method is used, with useful life set as the leasing term and the remaining value set at zero.
(3) Standards for recognition of significant allowances and provisions
i. Allowance for doubtful accounts
To provide for bad debt expenses on receivables such as trade receivable and loans receivable, an allowance for doubtful accounts isprovided based on the historical write-off rate for ordinary receivables, and the estimated amount of irrecoverable debt is booked
based on the recoverability of individual cases for specified receivables such as debt with a possibility of default.
ii. Provision for bonuses for directors (and other officers)
To provide for the payment of bonuses to officers, an amount is recorded based on the estimated amount to be paid in the fiscal year
under review.
iii. Provision for retirement benefits for directors (and other officers)
To provide for the payment of retirement benefits to directors and other officers of consolidated subsidiaries, a standard amount isrecorded based on internal regulations.
iv. Provision for share awards for directors (and other officers)
To provide for the award of the Company shares to directors (excluding outside directors) in accordance with the rules on shareissuance, an amount is recorded based on the estimated share award as of the end of the consolidated fiscal year under review.
(4) Accounting treatment for defined benefits
i. Method for period attribution of expected defined benefit amount
When calculating defined benefit obligations, the method of attributing expected defined benefit amounts to the period up to the endof the current consolidated fiscal year shall be based on the benefit formula.
ii. Method for amortization of actuarial variances and expenses for past service
Actuarial variances are amortized by the straight-line method over a fixed number of years (15 years） within the average remaining
service period of employees at the time of occurrence of each consolidated fiscal year, starting from the consolidated fiscal year
following each occurrence.
Expenses for past service are amortized by the straight-line method over a fixed number of years (15 years) within the averageremaining service period of employees at the time of occurrence.

14

(5) Standards for recognition of significant revenue and expenses
i. Sales of finished goods and merchandise
In the fundamental chemicals, fine chemicals, and ferrochemicals businesses, the Company manufactures and sells finishedgoods, and its primary performance obligation is to deliver these finished goods to the customer. For domestic transactions,control of finished products is deemed to be transferred to the customer upon delivery. However, revenue is recognized at thetime of shipment, in principle, since the period between shipment and delivery is typically within a normal timeframe and analternative treatment for materiality, etc. is applied. For export sales, performance obligations are deemed satisfied when risk
is transferred to the customer based on trade terms set forth in Incoterms and other trade rules. Revenue is recognized whenthese performance obligations are satisfied.
In the commercial business, the Company mainly sells merchandise. Its primary performance obligation is to deliver thismerchandise to the customer and this obligation is deemed to be satisfied upon delivery pursuant to the contract with thecustomer. Revenue is recognized when this obligation is satisfied. For sales of merchandise for which the Group is deemed
to be an agent, revenue is recognized at the net amount received from the customer less the amount paid to the supplier.
ii. Work contracts, etc.
For work contracts, etc. in the facilities business, the Company undertakes construction pursuant to the contract with thecustomer and has an obligation to deliver completed facilities, etc. to the customer. Revenue is recognized over a specified
period of time as control of the goods or services is transferred to the customer over the contract period. Costs incurred are
deemed to be proportional to the degree of progress toward satisfying the performance obligation, and the ratio of actual costs
to total estimated costs is used to determine the degree of progress (input method).
When the degree of progress toward satisfying the performance obligation in question cannot be reasonably estimated, but
it is probable that the costs incurred in satisfying the obligation will be recovered, revenue is recognized on a cost recovery
basis for performance obligations that will be satisfied over a specified period of time.
(6) Standards for translating significant foreign currency denominated assets or liabilities into Japanese currency
The assets and liabilities of overseas subsidiaries are converted to yen at the spot exchange rate on the day of the overseas
subsidiaries' fiscal year end, while related revenues and expenses are converted to yen at the average rate during the period.
These translation differences are posted as foreign currency translation adjustments and non-controlling interests under net assets.
(7) Scope of funds in the consolidated statement of cash flows
The funds (cash and cash equivalents) in the consolidated statement of cash flows consist of cash on hand, deposits that can bewithdrawn at any time, and short-term investments with a maturity of three months or less from the date of acquisition, which
are readily convertible to cash and bear only an insignificant risk of price fluctuation.
(Segment information, etc.)[Segment information]
1. Overview of reportable segments
The Company's reportable segments are those for which separate financial information is available and are subject to periodic review
by the Board of Directors to determine the allocation of management resources and evaluate their performance.
The Company's reportable segments are the Fundamental Chemicals Division, Fine Chemicals Division, Ferrochemicals Division,
Commercial Business Division, and Facilities Division.
In the Fundamental Chemicals Division, the Company manufactures and sells fundamental chemicals such as inorganic and organic
chemicals. In the Fine Chemicals Division, the Company manufactures and sells fine chemicals including fluorinated gases andbattery materials. In the Ferrochemicals Division, the Company manufactures and sells ferrochemical products. In the Commercial
Business Division, the Company sells fundamental chemicals and fine chemicals, and provides maintenance for containers and otherservices. In the Facilities Division, the Company engages in facility-related construction work.
2. Calculation method of net sales, profit or loss, assets, liabilities, and other items by reportable segment
Accounting treatment methods for reported business segments are the same as those described in "Significant matters forming thebasis for preparation of the consolidated financial statements."
Profit by reportable segment is based on operating profit.
Inter-segment revenues and transfers are based on prevailing market prices.

15

3. Information on net sales, profit or loss, assets, liabilities, and other items by reportable segment
I. From April 1, 2021 to March 31, 2022
(Millions of yen)
Reportable segment

Adjustment(Note 1)

Amount on
consolidated
financialstatements

Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

Commercial
Business

Facilities

Net sales to externalcustomers

7,966

49,000

2,580

837

1,901

62,286—62,286

Inter-segment net
sales or transfers

—

—

—

1,329

2,979

4,309

(4,309)—7,966

49,000

2,580

2,166

4,881

66,595(4,309)62,286(69)

10,042

539

194

379

11,086

77

11,164

10,86496,426

3,789

3,150

6,173

120,404(10,502)

109,902

877

5,870

87

42

32

6,910

(229)

6,680

Total

(Note 2)

Net sales

Total
Segment profit (loss)
Segment assets
Other items
Depreciation

Increase in property,
plant and equipment and640
11,63385
14
38
12,412(128)
12,284
intangible assets(Notes) 1. The segment profit (loss) adjustment of ¥77 million is elimination of inter-segment transactions.
The segment assets adjustment of ¥10,502 million includes inter-segment eliminations of ¥12,881 million and corporate assetsof ¥2,379 million that are not allocated to any reportable segment.
The adjustment of ¥229 million for depreciation under other items is inter-segment elimination.
The adjustment of ¥128 million for increase in property, plant and equipment and intangible assets under other items is intersegment elimination.
2. Segment profit (loss) is adjusted with operating profit in the consolidated statement of income.

16

II. From April 1, 2022 to March 31, 2023

(Millions of yen)
Reportable segment

Adjustment(Note 1)

Amount on
consolidated
financialstatements

Fundamental
Chemicals

Fine
Chemicals

Ferrochemicals

Commercial
Business

Facilities

Net sales to externalcustomers

9,409

63,943

2,666

746

1,908

78,675—78,675Inter-segment net
sales or transfers

—

—

0

1,444

3,831

5,275

(5,275)

—

Total

9,409

63,943

2,667

2,190

5,740

83,950(5,275)78,675

Segment profit

325

11,450

685

199

602

13,262(315)

12,947

Segment assets

11,247

116,846

3,744

3,731

7,006

142,576(11,814)130,762

863

6,931

90

40

31

7,957

(259)

7,697

Total

(Note 2)

Net sales

Other items
Depreciation

Increase in property,
plant and equipment and
1,515
15,429180
16
34
17,176(552)
16,624
intangible assets(Notes) 1. The segment profit adjustment of ¥315 million is elimination of inter-segment transactions.
The segment assets adjustment of ¥11,814 million includes inter-segment eliminations of ¥14,540 million and corporate assetsof ¥2,726 million that are not allocated to any reportable segment.
The adjustment of ¥259 million for depreciation under other items is inter-segment elimination.
The adjustment of ¥552 million for increase in property, plant and equipment and intangible assets under other items is intersegment elimination.
2. Segment profit is adjusted with operating profit in the consolidated statement of income.

17

[Related information]
From April 1, 2021 to March 31, 2022
1. Information by product and service
This information is omitted because the same information is disclosed in "Segment information."
2. Information by region(1) Net sales
Japan

Europe and North
AmericaAsia
29,53429,384(Millions of yen)
Other

3,368

Total
—

62,286(Notes) 1. Net sales are based on customer location and are classified by country or region.
2. Net sales to the Asia region include net sales of ¥14,125 million in South Korea and net sales of ¥8,995 million in China,
which account for more than 10% of the net sales on the consolidated statement of income.
(2) Property, plant and equipment
Japan(Millions of yen)Asia
26,676

Total
11,544

38,221(Note) Property, plant and equipment in the Asia region includes property, plant and equipment of ¥7,829 million in South Korea, which
accounts for more than 10% of the property, plant and equipment on the consolidated balance sheet.
3. Information by major customer(Millions of yen)

Name of customer

Net sales

Samsung Electronics Co., Ltd.

Related segment

12,144

Fine Chemicals

From April 1, 2022 to March 31, 2023
1. Information by product and service
This information is omitted because the same information is disclosed in "Segment information."
2. Information by region(1) Net sales
Japan

Europe and North
AmericaAsia
35,261

32,828

10,584(Millions of yen)
Other

Total
—

78,675(Notes) 1. Net sales are based on customer location and are classified by country or region.
2. Net sales to the Asia region include net sales of ¥15,252 million in South Korea and net sales of ¥9,435 million in China,
which account for more than 10% of the net sales on the consolidated statement of income.
(2) Property, plant and equipment
Japan(Millions of yen)Asia
29,834

Total
17,56947,404(Note) Property, plant and equipment in the Asia region includes property, plant and equipment of ¥9,863 million in South Korea, and ¥7,300
million in China, which each account for more than 10% of the property, plant and equipment on the consolidated balance sheet.

18

3. Information by major customer
Name of customer(Millions of yen)
Net sales

Related segment

Mitsubishi Chemical Corporation

14,072Fine Chemicals
Fundamental Chemicals

Samsung Electronics Co., Ltd.

14,035Fine Chemicals

KIOXIA Corporation

7,888

Fine Chemicals[Information about impairment loss of non-current assets by reportable segment]
From April 1, 2021 to March 31, 2022
Not applicable.
From April 1, 2022 to March 31, 2023
Not applicable.
[Information about amortization and unamortized balance of goodwill by reportable segment]
From April 1, 2021 to March 31, 2022
Not applicable.
From April 1, 2022 to March 31, 2023
Not applicable.
[Information about gain on bargain purchase by reportable segment]
From April 1, 2021 to March 31, 2022
Not applicable.
From April 1, 2022 to March 31, 2023
Not applicable.
(Per share information)(Yen)
From April 1, 2021
to March 31, 2022
Net assets per share
Basic earnings per share

From April 1, 2022
to March 31, 2023

1,014.01

1,174.54

135.12163.32(Notes) 1. Diluted basic earnings per share is not shown in the above table, as there are no dilutive shares.
2. Calculation of net assets per share includes the Company's shares held in its stock benefit trust in the treasury sharesdeducted from the total number of shares issued at the end of the period. Also, calculation of basic earnings per shareincludes treasury shares deducted from the average number of shares during the period.
3. The basis for calculation of basic earnings per share is as follows:
From April 1, 2021
to March 31, 2022
Profit attributable to owners of parent (Millions of yen)Amount not attributable to common shareholders(Millions of yen)
Profit attributable to owners of parent for common shares(Millions of yen)
Average number of common shares during the period(Shares)
19

From April 1, 2022
to March 31, 2023

7,762

9,382

—

—

7,762

9,382

57,448,551

57,451,484

(Significant subsequent events)
Not applicable.

20