2022
FINANCIALREPORT

Corporate Philosophy
The Origin of

ResonacPurposeThe name Resonac is derived fromthe word resonate and the letter Cfrom chemistry.
It represents our strong will to bring
together our broad and agile
cutting-edge material technology
and our customers’ technology andinspiration, sending a strong waveof resonance toward a shared future
and meeting new partners as thewave extends its reach, in this way
creating a major movement that
could change society.

Change society throughthe power of chemistry
Contribute to the sustainable development of global
society by creating functions required of the times as anadvanced material partner

ValuesPassionate & Results Driven
By taking pride and passion to our work,
By focusing our strengths and performance,
We will became a globally recognized top player.

Agile & Flexible
By learning through trial-and-error,
By thinking flexibly and acting swiftly,
We will transform into a dynamic organization.

Our corporate color, Resonac Blue, isa combination of blue and green,
which stands for the ocean and thesky as well as trees and forests.
These two precious colors provided
by the earth mix together andresonate in harmony, representing
our commitment to contribute to
the future of the global
environment.

Open Minds & Open Connections
By showing mutual trust and respect,
By collaborating openly beyond boundaries,
We will co-create new value with all stakeholders.

Solid Vision & Solid Integrity
We truly recognize the power and potential of chemistry,
We prioritize sustainability for future generations,
We commit to upholding our values of integrity to all stakeholders andethics in developing chemical technologies.

Contents
1
Our Strengths

2ProfileConsolidated 11-Year Summary

4
Message from CEO

5
At a Glance

6
Management’s Discussion
and Analysis

8
Risk Factors

13
Financial Data

48
Corporate Data

In January 2023, Showa Denko K.K. (SDK) and Showa Denko Materials Corporation, theformer Hitachi Chemical Company, Ltd. (SDMC), integrated to make a new start as theResonac Group.
SDK, the forerunner of Resonac Holdings Corporation (Resonac), was founded in
1939. Today, ranked as one of Japan’s leading chemical companies, Resonac operates infour major segments for information disclosure: semiconductor and electronicmaterials, mobility, innovation-enabling materials, and chemicals.
In 2020, the SDK Group brought SDMC into the Group as a member. Following the
integration, SDK and SDMC formulated Long-Term Vision (2021–2030) for the Newly
Integrated Company (Long-Term Vision).
The Resonac Group is committed to providing new functionality and value as anintegrated company in the chemicals industry, where global competition and changes
in the market structure are expected to intensify. In this way, we will contribute therealization of a sustainable society.

Please Visit Our Website
Sustainability Site

https://www.resonac.com/sustainability

Integrated Reports

https://www.resonac.com/sustainability/report/report.html

Our Strengths

Resonac has many products maintaining
high world market shares.
Here we introduce semiconductor materials where the Resonac Group has a special advantage. The semiconductor materials
market is expected to continue growing rapidly due partly to the spread of 5G, IoT, an increase the xEVs’ share of the car market,
and more investment in data centers. The Resonac Group is one of the world’s leading manufacturers of semiconductor materials
and our annual sales of semiconductor materials comes to about ¥200 billion. The Group manufactures and sells a wide range ofsemiconductor materials used in wafer processes to packaging processes, including high-purity gases and solvents for electronics,
CMP slurries, copper clad laminates, photosensitive films, and epoxy molding compounds.
The Group will continue developing leading-edge products by making the most of our technological strengths which havegrown through the integration of former Showa Denko and former Showa Denko Materials, and responding to customers’
expectations by providing one-stop solutions, in this way achieving growth of our semiconductor materials business that exceeds
the growth of the market.

Manufacturing process forsemiconductors

Film formation
Photoresist application
Exposure

Key products of the Resonac Group

High-purity gases
and solventsfor electronics

85% of sales of semiconductor materials are earned
from products with a top-three global market share
World No. 1

Wafer Process

High-purity gases
Etching
Photoresist removal

CMP
Cleaning

Substrate

Packaging Process

Rewiring layer formation
DicingHigh-purity gases
for electronics

CMP slurries

Copper clad laminates
Photosensitive films
Solder resist

High-purity solvents

Ceria slurry World No. 1

CMP slurries

Packaging substrate materials
World No. 1

Copper clad laminates
World No. 1

Die bonding
Wire bonding

Photosensitive films
Die bonding
materials

World No. 1

Die bonding materials
Molding

Epoxy molding
compounds

World No. 2

Epoxy molding compounds

Note: The global market positions shown on this page are Resonac estimates.

1Consolidated 11-Year Summary
Financial Highlights
Resonac Holdings Corporation and Consolidated Subsidiaries
December 31

Millions of yen

2012

2013

2014

2015

2016

2017 (Note 2)¥739,675¥847,803¥ 872,785¥775,732¥671,159¥ 780,387

28,10825,953

20,55133,50842,05377,708For the year
Net sales
Operating income (loss)
Net income (loss) attributable to owners of the parent

9,368

9,065

2,929

921

12,30537,404

Net cash provided by operating activities

53,31063,56566,996

61,17068,94967,235

Net cash provided by (used in) investing activities(41,741)(55,203)(46,876)(42,497)(53,754)(29,866)

Free cash flow

11,5698,362

20,12018,674

15,19537,369R&D expenditures

20,633

20,43520,362

20,28917,313

18,539

Capital expenditures

42,50344,37047,31844,05939,276

41,787

Depreciation and amortization

46,232

39,77940,67342,137

38,761

38,565

Total assets

933,162

985,771

1,009,843

940,494

932,698

1,026,999

Total net assets

314,966

345,811

319,087

308,142

311,231368,994

Interest-bearing debt

342,262353,686

383,124

368,835

359,929

346,726

1.09

1.02

1.20

1.20

1.16

0.94

At year-end

Debt/equity ratio (to FY2018, gross; from FY2019, net) (times) (Note 4)

Yen

Per share (Note 5)
Net income (loss)—primary (Note 6)¥ 6.26¥ 6.06¥ 1.9986.27¥ 262.44

6.26

6.06

1.99

6.45

86.27

262.44182.24201.27209.76

2,076.05

2,080.85

2,473.06

Cash dividends (applicable to the period) (Note 7)

3.00

3.00

3.00

3.00

—

80.00

Number of employees at year-end

9,890

10,234

10,577

10,561

10,146

10,864

Net income (loss)—fully diluted (Note 6)
Net assets

¥

6.45

¥

Notes: 1. Yen amounts have been translated into U.S. dollars, for convenience only, at the rate of ¥132.70 to US$1.00, the approximate rate of exchange at December 31, 2022.
2. ‌The tentative accounting policy applied to calculation of 2017 financial results due to consolidation of former SGL GE Holding GmbH was finalized when the Company settled accounts for the third quarterof 2018. Accordingly, the amounts of depreciation and amortization and some other costs for the year ending December 2017 were changed. The amount in the above table includes those retroactively
changed numbers for the year ending December 2017.
3. The former Showa Denko K.K. (SDK) started on July 1, 2020 to incorporate Showa Denko Materials’ sales figures and incomes/losses into its financial statements.
4. ‌In accordance with the consolidation of the former Showa Denko Materials Co., Ltd. (SDMC), SDK calculated the D/E ratio with an assumption as follows, starting from the third quarter of the fiscal year
ended December 31, 2020. For the preferred shares issued by HC Holdings K.K., which was a subsidiary of SDK, we added the amount equivalent to 50% of the value of issued preferred shares to interestbearing debts and the remaining 50% of it to the equity capital of SDK. SDK also added lease liability to the equity capital of SDK, and used the net interest-bearing debt (interest-bearing debt minus cash
and deposits) in calculation of D/E ratio. The assumption that we consider 50% of the total value of issued preferred stocks as equity capital is based on the credit rating given by Japan Credit Rating Agency, Ltd.

Net Sales

Operating Income (loss)

Net Income (loss) Attributable to
Owners of the Parent(Billions of yen)
1,500(Billions of yen)
200

(Billions of yen)
120

1,200

150

900

100

600

50

300

0

0

2

2018

2019

2020

2021

2022

Resonac Holdings Corporation Financial Report 2022

(50)

80
40
0

2018

2019

2020

2021

2022

(80)

2018

2019

2020

2021

2022

Resonac Holdings Corporation and Consolidated Subsidiaries

December 31

Thousands of
U.S. dollars (Note 1)

Millions of yen

2022

2018

2019

2020 (Note 3)

2021¥ 992,136¥ 906,454¥ 973,700¥ 1,419,635¥1,392,621$10,494,509

Operating income (loss)

180,003

120,798(19,449)

87,19859,371

447,410Net income (loss) attributable to owners of the parent

111,50373,088(76,304)(12,094)

30,793232,051

Net cash provided by operating activities

149,785

78,554109,286

115,283

100,349

756,207

Net cash provided by (used in) investing activities(49,338)(48,156)(930,047)

28,606(54,667)(411,962)

Free cash flow

100,447

30,397(820,761)

143,889

45,681

344,246

R&D expenditures

19,73520,60534,37946,75047,135355,203

Capital expenditures

41,72750,216

69,05278,647

107,074

806,890

Depreciation and amortization

39,45937,704

68,64397,726

92,716698,690

1,074,983

1,076,381

2,203,606

2,142,390

2,100,421

15,828,342

Total net assets

465,340

519,433

718,080

818,452

574,677

4,330,649

Interest-bearing debt

287,968

298,524

1,060,146

850,603

1,066,119

8,034,054

0.62

0.36

1.84

1.15

1.08

For the year
Net sales

At year-end
Total assets

Debt/equity ratio (to FY2018, gross; from FY2019, net) (times) (Note 4)

Yen

U.S. dollars (Note 1)

Per share (Note 5)¥ 758.15¥ 501.03¥ (523.06)

170.03$ 1.28758.15501.03(523.06)(77.40)170.031.28

3,057.16

3,423.25

2,782.79

2,838.51

3,038.12

22.89

Cash dividends (applicable to the period) (Note 7)

120.00130.00

65.00

65.00

65.00

0.49

Number of employees at year-end

10,476

10,81333,684

26,05425,803

Net income (loss)—primary (Note 6)
Net income (loss)—fully diluted (Note 6)
Net assets¥¥(77.40)on April 21, 2020. Futhermore, D/E ratio for 2019 was adjusted in the same way. In addition, 50% of the subordinated loans raised during 2022 to purchase preferred stock were deducted from interest-bearing
debt and added to equity capital. The 50% equity recogniton for subordinated loans is based on the rating by Japan Credit Rating Agency, Ltd., dated October 4, 2022.
5. ‌SDK consolidated every ten shares of common stock into one share on July 1, 2016. “Per share” indicators for 2015 and 2016 (except for cash dividends) are calculated on the basis of the number of outstanding
shares after this consolidation.
6. ‌Net income per share has been computed based on the average number of shares of common stock outstanding during the respective fiscal year. Fully diluted net income per share additionally assumes theconversion of the convertible bonds.
7. ‌SDK resolved payment of dividends of ¥30.00 per share based on the record date of May 11, 2017 at the extraordinary general meeting of shareholders held in June 2017. Cash dividends applicable to 2017
includes this amount.

Interest-Bearing Debt
Debt/Equity Ratio

Capital Expenditures
Depreciation and Amortization(Billions of yen)
1,200

Cash Flows(Times)2.0(Billions of yen)(Billions of yen)

100

150

900

1.5

75

100

600

1.0

50

50

300

0.5

25

0

0

0

0

2018

2019

2020

Interest-bearing debt (left axis)
Debt/Equity ratio (right axis, gross)
Debt/Equity ratio (right axis, net)

2021

2022

2018

2019

2020

Capital expenditures
Depreciation and amortization

2021

2022

(1,000)

2018

2019

2020

2021

Cash flows from operating activities
Cash flows from investing activities

2022

Free cash flow3

Message from CEO

Change society through thepower of chemistry
Following integration of Showa Denko K.K. and Showa Denko Materials Co., Ltd., the newly integrated company “Resonac” wasestablished effective on January 1, 2023. The launch of the new corporation means “the second inauguration” for the twocompanies. We will now make a big step forward, aiming to become a global top-level functional chemicals manufacturer thatcan compete on the world stage.
Our business model has changed substantially following the integration. The semiconductor business accounts for 30% of our
total sales, making us a world-leading materials supplier in scale. At the same time, we have established an integrated systemof production from designing of materials to assembly/blending into product.
Meanwhile, the global business environment has seen drastic changes, including accelerated digitalization, efforts toward
carbon neutrality, and a sharp rise in energy prices. We have also experienced heightened geopolitical tensions and supply
chain disruptions in recent years with trade frictions and conflict among nations as background. Furthermore, our lifestyle andway of working have changed considerably because of COVID-19.
Amid these changes in the world situation, chemical manufacturers now need to consider their impacts on the global environmentand contribute to sustainable society, in addition to contributing to enrichment of people’s lives. Resonac has defined its Purpose
as “Change society through the power of chemistry,” and set four Values for its employees, namely, “Passionate & Results-Driven,”“Agile & Flexible,” “Open Minds & Open Connections,” and “Solid Vision and Solid Integrity.” Our corporate philosophy is comprisedof this Purpose and Values. We are working to solve social issues through business activities under the corporate philosophy.
The Resonac Group is continuing to reform its business portfolio based on its Long-term Vision upgraded in February 2022.
According to this management strategy, we have classified our businesses into several categories, such as the Semiconductorand Electronic Materials business and the Mobility business (serving growth markets), the Chemicals business (providing
stable earnings), and the Innovation Enabling Materials business (supporting technological development in respective
businesses). We will work to achieve sustainable growth by ensuring that each business will appropriately play its role andmeet its EBITDA goal.
For Resonac, sustainability forms the basis of its management strategy. We are proceeding with our business strategies byconducting sustainable business activities. To contribute to sustainable society by solving technical issues as a chemical
manufacturer, in addition to our own efforts, we need collaboration and partnership with various stakeholders beyond theboundary of business types and industry segments. The Resonac Group aims at becoming a “Co-Creative Chemical Company,”
striving to create new synergy through co-creative efforts inside and outside the company.
To carry out such transformation and business strategies, each employee is essential. We will develop a corporate culturethat fosters autonomous and creative human resources as well as an organizational culture that helps each employee
flourish as a professional.
The Resonac Group will create functions that meet the needs of the times as an advanced material partner and contribute tosustainable development of global society through co-creative efforts with all stakeholders, including employees, shareholders,customers, and local communities. We hope you will have high expectations of the Resonac Group, which has just made a new start.
January 2023

Hidehito Takahashi
President and CEO

4

Resonac Holdings Corporation Financial Report 2022

At a Glance
Rearrangement of Segments
Prior Segments

New Segments
Semiconductor Materials(front-end/back-end)

Information and Communication
Showa Denko
Materials

Mobility

Device Solutions (HD)Life Science

Device Solutions (SiC)

Olefins

Automotive Products

Petrochemicals
Organic Chemicals

Functional Chemicals

Basic Chemicals

Resin Materials

Electronic Chemicals

Coating Materials

Functional Chemicals

Innovation
Enabling
Materials

Ceramics

Coating Materials

Aluminum Specialty Components

Device Solutions (HD, SiC)
Electronics

Mobility

Lithium-ion Battery Materials

Industrial Gases

Chemicals

Semiconductorand Electronic
Materials

The Company’s reportable segments were revised(effective from 2022) to more accurately display
the benefits of the strategic allocation ofmanagement resources and ongoing revision andasset replacement of business portfolios. The
defined Core Growth businesses, Fundamental
Technologies/Materials businesses, Stable Earnings
businesses, and Next-Generation businesses all
have a distinctive role within our portfolio. By
fulfilling this role with a high degree ofcompetitiveness, these businesses will help us tocontinue to supply the market with new functions
and in this way achieve continual growth.

8.3 %Petrochemicals

Electronic Materials (LED)

Basic Chemicals and Industrial Gases

Advanced Battery Materials

Net sales
2022

Carbon37.9 % ¥1,392.6

Inorganics
Ceramics
Aluminum

30.7%

Chemicals

Graphite Electrodes

billionAluminum Specialty Components

Life Science

Building Materials, etc.

Building Materials, etc.

Headquarters

Headquarters

13.0 %

Others10.1 %

OthersCore Growth: Invests massively in businesses with huge growth potential
Fundamental Technologies/Materials: Technology platform business to support innovation of other businesses
Stable Earnings: Earns a stable profit and generates investment capital for the entire Group
Next-Generation: Promotes investment while verifying viability to develop next-generation pillar businesses

Semiconductor and Electronic Materials(Millions of yen)2022

Difference

Rate

1.0 %

2021

Sales

¥ 427,171 ¥ 422,941¥ 4,230

Operating Income¥ 44,228 ¥ 49,563¥ (5,334) (10.8 %)Note: ‌The ratios of respective segments have been calculated basedon sales to external customers.

Mobility(Millions of yen)

2022

2021

Difference

Rate

Sales

¥ 180,626 ¥ 173,804¥ 6,822

3.9 %Operating Income¥ (1,489) ¥ (2,021)

¥

—

532

Front-end Semiconductor Materials (electronic chemicals (high purity gases forelectronics), CMP slurries), Back-end Semiconductor Materials (epoxy molding
compounds, die bonding materials, copper clad laminates, photosensitive dry
films, photosensitive solder resists), Device Solutions (Hard disk media, SiC
epitaxial wafers for power devices, compound semiconductors (LED chips))

Automotive Products (plastic molded products, friction materials, powder
metal products), Lithium-ion Battery Materials (Aluminum laminated film
SPALF, additive to cathodes and anodes, carbon anodes materials)

Innovation Enabling Materials

Chemicals

2022

2021

(Millions of yen)

DifferenceRate(1.6 %)

Sales¥ 141,081 ¥ 143,319¥ (2,238)

Operating Income¥¥ (3,799) (27.9 %)9,838 ¥ 13,636

Functional chemicals (polymer emulsion and unsaturated polyester resin),
Functional resins, Coating Materials, Ceramics (Alumina, abrasives, and fineceramics), Aluminum Specialty Components (cylinders for laser beam
printers [LBPs], extrusions, forged products, and heat exchangers)(Millions of yen)

2022

2021

Difference

Rate

Sales

¥ 527,825 ¥ 431,018 ¥ 96,806

22.5 %

Operating Income¥ 24,910 ¥ 37,907 ¥ (12,997) (34.3 %)Petrochemicals (Olefins (ethylene and propylene), Organic chemicals (vinyl
acetate monomer, ethyl acetate, and allyl alcohol)), Chemicals (Industrial gases(liquified carbon dioxide, dry ice, oxygen, nitrogen, and hydrogen), Basic chemicals(liquified ammonia, acrylonitrile, and chloroprene rubber)), Graphite Electrodes5Management’s Discussion and Analysis
Results of Operations
Consolidated sales for 2022 decreased to ¥1,392,621 million (US$10,495
million), down 1.9% from the fiscal year ended December 31, 2021 (“2021”).
Although strong demand for semiconductors, a recovery in automobile
production, and higher selling prices contributed to more sales, there
was a decline of approximately ¥160,000 million yen in sales in divestment,
which was implemented in the previous fiscal year. The previous fiscal
year figures for the Energy Storage Devices and Systems business,
Aluminum Can business, Aluminum Rolled Products business, whichwere divested, and SHOKO CO., LTD. which was excluded fromconsolidated accounting due to a reduction in our stake, are included in
the Others segment.
Cost of sales rose by ¥7,997 million (US$60 million) from 2021 to¥1,089,639 million (US$8,211 million) due to higher raw material prices.
Selling, general and administrative expenses (SG&A) decreased by¥7,184 million (US$54 million) to ¥243,611 million (US$1,836 million)
due to the divestment that was implemented in the previous fiscal year.
R&D expenditures increased by ¥386 million, or 0.8%, to ¥47,135
million (US$355 million).
Consolidated operating income for 2022, decreased to ¥59,371 million(US$447million), down 31.9% from 2021. The delay in raising productprices after the rise in raw material prices and the divestments had anegative impact.

Innovation Enabling Materials
In the Innovation Enabling Materials segment, sales decreased due to alower sales volume, although selling prices were up due to higher raw
material prices.
As a result, the segment posted sales of ¥141,081 million (US$1,063
million), up 1.6% from 2021, and operating income was ¥9,838 million(US$74 million), down 27.9% from 2021.

Chemicals Segment
In the Chemicals segment, sales in the Petrochemicals subsegment
increased, mainly due to higher selling prices caused by the sharp rise innaphtha prices, despite once-in-four-year largescale maintenance with a
shutdown. On the other hand, operating income decreased due to alower sales volume caused by a largescale maintenance shutdown andan inventory valuation difference. Sales in the Basic Chemicals subsegmentrose due to higher selling prices affected by higher raw material prices.
However, operating income declined due to an increase in costs mainly
caused by higher fuel prices. Sales and operating income in the Graphite
Electrodes subsegment increased due mainly to higher selling prices.
As a result, the segment posted sales of ¥527,825 million (US$3,978
million), up 22.5% from 2021, and operating income of ¥24,910 million(US$188 million), down 34.3% from 2021.

Information by Geographic Area
Information by Business Segment
A breakdown of net sales and operating income by business segment
follows.

The table shows sales by region. In each business segment, sales increased
due to higher selling prices caused by higher raw material prices. However,sales in Asia, including Japan and China, decreased significantly due tothe divestment of the business, and overall sales decreased.
Millions of yen

Semiconductor and Electronic Materials
In the Semiconductor and Electronic Materials segment, sales of both
the Front-end Semiconductor Materials and Back-end Semiconductor
Materials subsegments increased due to strong demand for semiconductors
since the beginning of the year, despite recent adjustments insemiconductor back-end production. In the Device Solutions subsegment,
sales remained unchanged as HD media volume decreased by aslowdown in demand for data centers from the fourth quarter whilesales of SiC epitaxial wafers increased. Sales and operating income forthe previous fiscal year include the Printed Wiring Board business, which
was divested in the fourth quarter of the previous fiscal year, 2021.
As a result, the segment posted sales of ¥427,171 million (US$3,219
million), up 1.0% from 2021, and operating income of ¥44,228 million(US$333 million), down 10.8% from 2021, due to the impact of rising raw
material prices.

MobilityIn the Mobility segment, sales in the Automotive Products subsegment
increased due to a recovery in automobile production from the second
half of the year and the increase in demand from some customers. Salesof the Lithium-ion Battery Materials subsegment decreased due to a
decline in consumer demand.
As a result, this segment posted sales of ¥180,626 million (US$1,361
million), up 3.9% from 2021, and there was an operating loss of ¥1,489
million (US$11 million), up ¥532 million from 2021, due in part to theimpact of rising raw material prices.

6

Resonac Holdings Corporation Financial Report 2022

Sales in Japan

2022

2021

DifferenceRate¥ 617,309¥ 657,369¥ (40,060)(6.1%)

Sales in China

190,346

202,936(12,590)(6.2%)

Sales in Asia exd. Jpn, Chn

340,418

346,069(5,651)(1.6%)

Sales in rest of the worldTotal

244,548

213,261

31,287

14.7%¥ 1,392,621¥ 1,419,635¥ (27,014)(1.9%)

Other Income (Expenses) and Net Incomes
The financial account balance increased by ¥6,171 million from 2021 to¥13,910 million (US$105 million), mainly due to an increase in interest
expenses resulting from financing the acquisition of preferred stock.
Equity in earnings of affiliates decreased by ¥1,622 million to ¥3,630
million (US$27 million), mainly due to the delay of price adjustments at asynthetic resin production company.
Foreign exchange gains amounted to ¥10,632 million (US$80 million),
an increase of ¥6,351 million from 2021, due to the depreciation of the
yen against the US dollar.
Gains or losses on sale and retirement of non-current assets increasedby ¥11,158 million to ¥7,424 million (US$56 million) on a net basis.
Gain on sales of investment securities decreased by ¥1,082 million to¥4,731 million (US$36 million).
Impairment loss decreased by ¥1,474 million from 2021 to ¥10,091

million (US$76 million), caused by the impairment of assets whose
recoverable amount was less than their book value due to a significant
deterioration in the operating environment, operations being idle, andother factors.
Business restructuring expenses were not recorded in the current
fiscal year, an improvement of ¥32,767 million from 2021, when
expenses related to the transfer of the Energy Storage Devices andSystems business were recorded.
Overall, other income/loss (non-operating and extraordinary income/loss) decreased by ¥53,483 million from 2021 to a net loss of ¥10,788 million(US$81 million).
As a result, net income before income taxes increased by ¥25,657 million
from 2021 to ¥48,583 million (US$366 million).
And net income attributable to owners of the parent improved by¥42,887 million from 2021 to ¥30,793 million (US$232 million).

Financial Position

was mainly due to an increase in expenditures of ¥20,115 million fromthe acquisition of property, plant and equipment, an increase in incomeof ¥18,737 million for the sale of property, plant and equipment, and theimpact of expenditures of 84,133 million yen for the sale of subsidiaryshares accompanying a change in the scope of consolidation in theprevious fiscal year.
As a result, free cash flow was ¥45,681 million (US$344 million), a
decrease of ¥98,208 million from the previous fiscal year.
Net cash used in financing activities was ¥103,964 million (US$783
million), a decrease of ¥17,777 million, including an increase of ¥409,600
million income from long-term borrowings, ¥287,635 million yen used
for the acquisition of shares of subsidiaries without changes in the scopeof consolidation, and the effect of ¥82,405 million in proceeds from theissuance of shares in the previous fiscal year.
As a result, cash and cash equivalents at the end of the fiscal year,
including the impact of currency fluctuations, decreased by ¥48,255
million from the end of the previous fiscal year to ¥186,683 million(US$1,407 million).

Total Assets
Total assets at the end of the current fiscal year, 2022, decreased by¥41,969 million from the end of the previous fiscal year, 2021, to¥2,100,421 million (US$15,828 million) due to decreases in cash anddeposits, and intangible fixed assets including goodwill, despite increases
in inventories as well as property, plant and equipment.
Cash and deposits decreased by ¥49,111 million from the end of 2021
to ¥187,126 million (US$1,410 million).
Net property, plant and equipment increased by ¥22,397 million to¥681,918 million (US$5,139 million).
Total investments and other assets decreased by ¥54,019 million to¥630,320 million (US$4,750 million), including goodwill which decreasedby ¥16,411 million to ¥295,355 million (US$2,226 million).

Liabilities
Total liabilities increased by ¥201,806 million to ¥1,525,744 million(US$11,498 million), as a result of loans for financing the acquisition ofpreferred stocks issued by a subsidiary which increased interest-bearing
debts by ¥215,516 million to ¥1,066,119 million (US$8,034 million).

Net Assets
Net assets decreased by ¥243,775 million, to ¥574,677 million (US$4,331
million), due to a decrease in non-controlling interests resulting from therepurchase of preferred stock held by financial institutions, despite anincrease in the foreign currency translation adjustments account.

Capital Expenditures
Capital expenditures increased by ¥28,427 million from 2021 to¥107,074 million (US$807 million), mainly in the Semiconductor andElectronic Materials segment.

Cash FlowsNet cash provided by operating activities during the current fiscal year,
2022, was ¥100,349 million (US$756 million), a decrease of ¥14,934
million from the previous fiscal year, mainly due to an increase inworking capital and income taxes paid.
Net cash used in investing activities decreased by ¥83,273 million
from the previous fiscal year to ¥54,667 million (US$412 million). This

7

Risk Factors
The Resonac Group faces risks that could adversely affect our future
performance, financial position, and cash flows, and we are working to
put in place an improved risk management system to minimize theserisks. The details will be explained in the next paragraphs.
The following covers those risks considered material as of March 30,
2023. This list is not exhaustive.
The Group will continue to monitor the impact on our operations of
the novel coronavirus (COVID-19) and the situation in Ukraine.

(2) Definition of risk
Risk can be divided into strategic, operational, and hazard risk. And
strategic risk can be further divided into two categories: the risk ofchanges in planning assumptions and the risk that the strategy developed
will not be implemented. In order to achieve sustainable growth incorporate value, we need not only traditional defensive risk management,
which emphasizes safety and compliance, but also aggressive risk
management, which encourages appropriate risk-taking.

(3) Risk identification and assessment

1 Risk management initiatives(1) Risk management system
The Group has established a risk management system following the ISO
31000 guidelines to clarify the risks and their impact on business
management and for the effective allocation of management resources.
The Risk Management Committee, chaired by the CEO, was established
to conduct cross-functional deliberations by top management, including
the risk management system and the Group’s important risks andcountermeasures. The items discussed by the Risk Management Committee
are deliberated on and approved by the Management Committee, andthen reported to the Board of Directors, where directors assess theappropriateness and effectiveness of the risk management system andsupervise the progress of its implementation.
Risk owners, risk officers, and risk managers who are responsible for
identifying risks in each division as well as for promoting our response torisk are assigned to domestic business divisions, business offices, andmajor group companies. At the same time, each organization under a CXO(Chief X Officer) reviews and supports risk assessment and response
measures for each division from a bird’s-eye view across the entire
company, and has established a system to promote integrated risk
management through collaboration between management andemployees in the field.

Reporting line
Board ofDirectors

Management
Committee
Risk Mgt. Committee

HD

CSO/CFOCRO

Strategic risks

Operational/
hazard risks

CSO/CFO units

Collaboration

Risk Management
Department

CXO units (corporate)
CFO
units

Business
Units

8

CSO
units

CRO
units

CHRO
units

CTO
units

CMEO/
CQO
units

BUs

CDO
units

CMO
units

(Business headquarters, business divisions, plants, subsidiaries)

Resonac Holdings Corporation Financial Report 2022

Once a year, organizational units, such as divisions and groups, conduct
comprehensive risk identification and assessment, including potential
risks from business activities. The results are reviewed by the top
management at each business unit, office, and group company, thenregistered in the system. We classify the registered risks based on
frequency of occurrence and degree of impact, then rank highly
significant and high-priority risks as important risks, report these to the
Risk Management Committee, and discuss the important risks for theGroup and their countermeasures.

Substantial fluctuations in the performances

2 of individual businesses

The Group manufactures and sells a range of products in these categories:
electronics, device solutions, mobility, ceramics, functional chemicals,aluminum specialty components, coating materials, petrochemicals,
graphite, basic chemicals, and life sciences.

(1) Semiconductor and Electronic Materials
The Group’s products in the Semiconductor and Electronic Materials
segment are used in mobile devices, data centers, power modules, IT
infrastructure, electric vehicles and vehicles with advanced driverassistance systems. The demand for these products is significantly
affected by changes in demand for end-products based on global
macroeconomic and industry trends. Moreover, these markets havehighly competitive businesses that are affected by rapid technologicalchanges and price declines due to the deteriorating functionality of
products. Further, the global supply chain network has been prepared
to develop and provide products that meet market needs quickly andeffectively but there is a possibility that the cost of raw materials, energy,
and logistics will rise due to geopolitical risks, etc., and that the supply
chain will be disrupted.
As a consequence, the Group’s operating results and financial
condition could be affected by significant variations in demand andcompetitive conditions, fluctuations in foreign exchange rates, or theoccurrence of significant risks in the supply chain.
For this reason, we strive to identify customer needs and market
trends, develop new products and technologies, and improve
manufacturing processes, while continually working to strengthen our
supply chain management system to detect risks early on and to ensurea stable supply of products to our customers.

(2) ‌Mobility
The Group is influenced by trends in the global mobility market, such as
stricter regulations on fuel economy and CO2 emissions to protect theglobal environment as well as technological advances for CASE
(Connected, Autonomous, Shared and Service, and Electric) vehicles.
This market is promising and is expected to grow over the medium tolong term because the realization of carbon neutrality and theadvancement of CASE vehicles require the development of products forelectrification, weight reduction, and improvements in safety andcomfort. On the other hand, the business environment with competitorsand new entrants is also intensifying. Other risks include the risk of delay
in responding to changes in the level and needs of customers—such as
the development of new technologies and products and the shorteningof development lead times—so new technologies and products could
make existing businesses obsolete, impact market competitiveness, andcould require lower sales prices. There is also a risk that the profitabilityof existing businesses will decline as the internal combustion engine
vehicle market shrinks due to the shift to EVs. In addition, the decline inautomobile production caused by the global shortage ofsemiconductors and other components is having an impact, forcing theGroup to adjust production.
Consequently, the Group’s operating results and financial condition
could be affected by significant fluctuations in demand and by thecompetitive environment.
Therefore, in order to capture new technological needs coming fromthe progress of CASE, the Group will further promote the growth ofadoption of new models among existing customers and the developmentof new customers by providing solutions related to materials andmodularization, such as weight reduction and miniaturization, batteries
related to electrification, as well as the control of heat, sound, andelectromagnetic waves.

(3) Innovation enabling materials
Aluminum
The Group imports a large amount of aluminum metal from overseas
sources. When the aluminum ingot price rises due to higher London
Metal Exchange (LME) prices, a rise in the premiums on aluminum, or aweaker yen, and when we cannot absorb the manufacturing cost increasein the form of higher product prices, the Group’s performance andfinancial position can be affected. Furthermore, most of our products are
sold as materials and components for the automobile, electric appliance,and electronics sectors. Trends in those industries, which are beyond ourcontrol, can substantially affect our businesses.
In response, the Group hedges against the risk of fluctuations inaluminum raw material prices by hedging on the LME and other currency
exchanges, and we are working to build a more stable revenue structure
by reducing costs and by taking other steps.

(4) Chemicals
Petrochemicals
The Group purchases and imports a large amount of feedstock, including
naphtha. When the price of naphtha or other types of feedstock fluctuates
due to a change in crude oil prices, a change in the supply-demandbalance, or a currency fluctuation, and when we cannot secure sufficientspreads between the manufacturing cost and selling prices of products,
the Group’s performance and financial position can be affected.
Furthermore, earnings from petrochemicals largely depend on the
supply-demand balance. Construction of large plants by competitors
and the resultant oversupply as well as a sharp decrease in demand due

to unfavorable changes in the Japanese or world economies can affect
the Group’s performance and financial position. In addition, the amountof investment and expenditure necessary for the Group to cope with
global movement toward carbon neutrality that aims to mitigate climatechange could be affected if there is any change in the schedule for
implementation of countermeasures.
To deal with these risks, the Group is stabilizing revenue, including
by reviewing sales methods and by working to reduce costs.
Graphite
The Group produces graphite electrodes in Asia, North America, andEurope, and sells those products globally. When the demand forgraphite electrodes suddenly decreases due to unfavorable changes in
the Japanese or world economies, deterioration in the supply-demandbalance may not allow us to secure sufficient spreads between the
manufacturing cost and selling prices of products, and can affect theGroup’s performance and financial position.
In response to these risks, the Group is working to strengthen therevenue base through such initiatives as maintaining inventory at levels
appropriate to market conditions and by further reducing costs.

(5) Global operations
The Group is producing and selling in Asia, North America, and Europe.
Operations overseas involve such special risks as unexpected changes inlaws and regulations, deterioration in political/economic situations, andsocial disorder due to war and terrorism.
As the impact of the situation in Ukraine becomes more apparent
there is a risk that the impact will stretch out into the future, and spreadto other regions, leading to further increases in raw fuel prices andlogistics costs, as well as the possibility of supply chain disruptions due
to changes in the international situation surrounding economic security.
These risks can become real and affect our overseas operations, resulting
in an adverse impact on the Group’s performance and financial position.

(6) Mergers,‌acquisitions, capital tie-ups, businessreorganization and restructuring
The Group implements mergers, acquisitions, capital tie-ups, businessreorganization and restructuring at home and overseas to expand thescope of businesses and improve profitability. The Group undertakes
careful due diligence for companies being considered as acquisition
targets, and scrupulously verifies post-merger plans to mitigate risk.
However, if changes in the business environment for the Group orcompanies that the Group invests in effectively prevent the desired resultsfrom being achieved, this could have a negative impact on the Group’s
performance and financial position. The Group’s performance and financial
position could also be affected if the Group restructures businesses,
such as withdrawing from unprofitable businesses or reorganizing
affiliated companies.

Unexpected fluctuations in financial position

3 and cash flows(1) Substantial fluctuations in exchange rates
For foreign-currency-based transactions centered on exports/imports,
the Group makes best efforts to minimize exchange rate fluctuation risks,

9

Risk Factors
mainly through exchange contracts. In particular, a sharp appreciationof the yen against the US dollar and other currencies could weaken theprice competitiveness of products exported from Japan to overseas
markets, while a weaker yen could increase the price of raw materials
that are imported. Both of these currency fluctuations could have anegative impact on the Group’s business performance.
Exchange rate fluctuations can also affect the Group’s performanceand financial position through the conversion of overseas subsidiaries’
financial statements into yen.

(2) ‌Trends in financial markets and changes in the fund-raising
environment
The trends in the financial markets and deterioration in the Group’s financial
indexes can affect the Group’s fund-raising and interest expenses: forexample, in the form of prompt repayment of a loan owing to the termsof financial covenants. In that event, the Group’s performance andfinancial position could be affected.
In the event that the financial results, financial position, and financial
indicators, etc. originally expected are not achieved, credit ratings could
be reduced, which could in turn negatively affect the refinancing ofexisting debt and the terms for new borrowing.
In response to these risks, we are working to strengthen the Group’s
financial standing, as well as to secure liquidity through commitment
lines and other agreements with financial institutions, to smooth out
fluctuations in repayments and redemptions, and to take an effective
approach to fundraising that balances fixed and variable interest rates,
among other factors.

(3) Employees’ severance indemnities
The Group’s employees’ severance indemnities and expenses are calculated
based on various basic rates and the yield of pension assets used inpension calculations. Fluctuations in the current price of pension assets,
trends in interest rates, and changes in the retirement benefit/pension
systems can affect the Group’s performance and financial position.

(4) Accounting for impairment of fixed assets
The Group could incur additional losses from the impairment of fixed
assets including goodwill, intangible assets, and land, due to lower
profitability resulting from aggravation in the business environment,
due to a considerable reduction in the current prices of land and otherfixed assets. These losses can affect the Group’s performance andfinancial position.
Further, the takeover of Hitachi Chemical Company, Ltd. led to anincrease in the amount of goodwill and intangible assets. When theGroup’s performance deteriorates, an impairment loss could occur and
the Group’s operating results and financial condition could be affected.
Looking at the impact of COVID-19, in the event that the spread of
infection is prolonged, some businesses could incur impairment losses,
which could negatively affect the business performance and financial
position of the Group.

(5) Deferred tax assets
The Group’s financial statements include deferred tax assets in relation
to temporary differences (differences between the assets/liabilities on
the consolidated financial statements and the assets/liabilities incalculation of taxable income). The calculation of deferred tax assets is

10

Resonac Holdings Corporation Financial Report 2022

based on various projections for future taxable income. Thus, when actual
taxable income differs from the projections or in case of a revision of thetaxation system (including tax rates), it becomes necessary to revise
deferred tax assets. That situation could affect the Group’s performanceand financial position.
Also, regarding the impact of COVID-19, in the event that the spreadof infection is prolonged, some businesses might need to revise theirassumptions in relation to the recoverability of these deferred tax assets,
which could negatively affect the business performance and financial
position of the Group.

4 Specific regulations
The Group’s businesses are subject to various restrictions as required bylaws and regulations. These restrictions relate to industrial safety (suchas the Law for Prevention of Disasters at Petroleum Complexes, Etc.;
the Fire Service Law; and the High Pressure Gas Safety Law) and theenvironment and chemical substances (such as the Basic Environment
Law; the Air Pollution Control Law; and the Law concerning the
Examination and Regulation of Manufacture, Etc. of Chemical
Substances). The Group observes these laws and regulations when
conducting business. The Group shares information on laws andregulations that relate to manufacturing plants, and confirms the stateof compliance when updating existing plants or building new ones.
Nevertheless, in the event that the Group fails to observe any of the laws
and regulations, the Group’s activities could be restricted. In case stricter
regulations are introduced, resulting in higher costs, the Group’s
performance and financial position can be affected.

5 Important lawsuits
While the Group makes best efforts to observe laws and agreements,
the Group may be sued when conducting a wide range of businesses.

6 Others(1) R&D
As a hybrid advanced material company combining midstream
materials technology and downstream application technology, the Groupfocuses on achieving innovation through integration. The Group willcontinue to provide a broad range of solutions to the market, while
focusing on research and development that strengthens existing businesses
and creates new businesses. This will be accomplished by integrating
three specific technologies: chemistry to synthesize for midstream
materials, chemistry to formulate for downstream applications, andchemistry to think for evaluation/simulation, structural analysis, andcomputational science.
However, in case the actual results differ materially from the originalplans, the Group’s performance and financial position could be affected.

(2) Intellectual property
The Group is making best efforts to obtain, use, and protect intellectual
property, such as industrial property rights and know-how, in recognitionof the ability to make the Group’s businesses more competitive. The Groupalso respects other companies’ rights. However, in the event of failure to
duly obtain or use the rights, infringement by a third party, or if theGroup is considered to have infringed a third party’s intellectual property,
or in the event that know-how, etc. owned by the Group is leaked
unlawfully to a third party, the Group’s operations can be hindered andthe Group’s performance and financial position could be affected.

(3) Quality assurance and product liability
The Group has established internal rules on quality assurance and quality
control, as well as organizations for managing and promoting quality
assurance. Furthermore, the Group has obtained certification under ISO
9001 standards to ensure strict quality control. However, in the event ofa serious quality defect or being sued for product liability, the Group’s
reputation could be damaged and the Group may be forced to pay
compensation to customers. This could affect the Group’s performanceand financial position.
In response to these risks, the Group implements procedures, suchas maintaining facilities for reliable process management, installingmeasuring equipment, providing operating manuals, and training
employees. In addition to building a system to prevent defective goods
from being shipped, the Group maintains manufactured goods liability
insurance policies both in Japan and overseas.

(4) Accidents and disasters
The Group is committed to securing steady and safe operations. The Group
conducts regular inspections of all manufacturing facilities in an effort tominimize any risk factors pertaining to the suspension of operations or
accidents due to problems with manufacturing facilities. In the event of
injury or damage to property due to an accident, a large-scale natural
disaster, a cyberattack, etc., the Group’s reputation could be damaged.
The Group may incur substantial costs in dealing with the situation andmay lose business opportunities due to the suspension of production.
This could affect the Group’s performance and financial position.
To mitigate these risks, effective risk management, including risk
assessment, is implemented to prevent and minimize damage froman accident.

(5) Impact on the environment
The Group is committed to the principles of Responsible Care, whichmeans that we are working to ensure the health and safety of everyone
and to protect the environment from harm caused by chemical substances
throughout their life cycles, namely, the development, production,
distribution, use, and disposal. In the event of causing impact on theenvironment, the Group’s reputation can be damaged. The Group could
incur costs, including compensation, lose business opportunities due tothe suspension of production, and/or pay compensation to customers.
These factors can affect the Group’s performance and financial position.
In response to these risks, the Group has implemented environmental
risk evaluations after performing exhaustive risk assessments at every
business location, and we are promoting safety at environmentalsites. In addition, we have implemented a systematic program ofinspections and repairs to prevent environmental pollution caused byage-related deterioration.
Moreover, the need to respond to the demands of society in relation
to environmental issues, which has been increasing steadily in recent
years, as well as strengthened environmental laws and regulations could
have a negative impact on the Group’s results of operations andfinancial position.

(6) Infectious disease pandemics
If another global pandemic occurs, such as the one caused by the novel
coronavirus, the operating results and financial position of the Group
could be affected by suspended production at manufacturing plants
and suspended activity at sales offices, etc.
In response to the spread of COVID-19, the Group has established a
COVID-19 Countermeasures Headquarters to review information fromJapan and overseas, deliver regular alerts to employees, and provide
instruction on ways to counter infection. The Group CEO sent thismessage to all Group employees: (1) We have assigned the highest
priority to the health of employees and of all employees at cooperatingcompanies; (2) We will fulfill our social responsibility to provide goods
that are indispensable to life in society; and (3) We are preparing for thegrowth of the Group after we have conquered COVID-19.
In addition, a business continuity plan (BCP) has been drawn up,
and measures are being taken to minimize the impact of risks on ourbusiness operations.

(7) Impact of climate change
The Group is making every effort to become carbon neutral by 2050.
The Group uses petrochemical materials and fuels to make products,
and production emits greenhouse gases (GHGs), so we are taking
appropriate measures to reduce our 2030 GHG emissions by 30% fromthe 2013 level (Scope 1 and 2). Achieving carbon neutrality throughco-creation with customers is also becoming increasingly important inbusiness transactions, so we are incorporating into our business andtechnology strategies more efficiency improvements and thedevelopment of products that contribute to energy conservation andthe carbon cycle. As well, we are calculating the carbon footprint of
every major product at the technology development stage. In terms ofrisks, there are risks during a shift toward carbon neutrality, such as the
response to increasingly severe laws and regulations in each country inaddition to customer requirements as well as associated capital
investment and external purchases of renewable energy. Also, we are
expecting more assessments of physical risk responses, including
preparedness for large natural disasters, and our costs for responding
are expected to rise. In 2019, we agreed to the guidelines set by the Task
Force on Climate-related Financial Disclosures (TCFD), especially the
response to climate change, as an important management issue for bothrisk and opportunity. Through scenario analyses, we assess the risks andopportunities to our company from addressing climate change. We thenconsider and implement countermeasures, and, in order to boost
resilience, we are working in sequence through every business, and wethen disclose information.
For climate change initiatives, company-wide carbon neutrality
projects are regularly discussed by the Sustainability Promotion Council,
comprising the Chief X Officers (CXOs), including the CEO, and the headof each business unit. Important issues are discussed and decided on by
the Management Council and reported to the Board of Directors.

11

Risk Factors(8) Respect for human rights
In 2021, the Group formulated our Human Rights Policy based oninternational norms, declaring respect for human rights as the foundation
for business activities in all countries and regions where we operate.
Understanding that the business of the Group and all of our business
partners, including suppliers, can directly or indirectly affect human rights
for each “link” in the value chain—from product development throughpurchasing, manufacturing, distribution, use and final consumption todisposal—the Group has incorporated this policy into our Code of
Conduct (revised in 2022). We are making our Code of Conduct thestandard for all employees and have begun to lobby all business partners,
including suppliers, to comply with this policy through Sustainable
Procurement Guidelines (revised in 2022). Recognizing the need toreexamine the human rights risks associated with the new organizational
operations (after our company’s integration), we are continuing anddeepening human rights due diligence within our own group and in our
supply chain. Further, we are working to identify risks and provide
remedial measures by establishing a reporting channel that is available
not only to employees but also to all stakeholders, among all business
partners, including suppliers and local communities.
For human rights initiatives, company-wide human rights projects
are regularly discussed by the Sustainability Promotion Council, which
includes the Chief X Officers (CXOs), among them the CEO, and the headsof every business unit. Important issues are discussed and decided on by
the Management Council and reported to the Board of Directors.

(9) Human resources
One of our company’s material issues, with an eye on 2030, is to foster a
corporate culture that nurtures autonomy and creativity. The developmentof talented employees to carry out reforms of our portfolio is essential as
we change into a top-level global functional chemical company. To achievethese developments, sustainable growth of people and organizations is
the key component, and we believe it is important to recruit, retain, anddevelop co-creative human resources with excellent management or
technical skills while the competition is intensifying.
In order to recruit, retain, and develop professional human resources,
we will focus on diversifying recruitment methods, expanding educationand training programs, and improving talent management and fast trackprograms, as well as enhancing engagement, providing workplaces withhigh psychological safety, and fostering a culture of co-creation.

(10) Supply chain
A good business relationship with suppliers is essential for the Group toachieve stable purchasing in order to continue doing business. However,
due to illegal and antisocial activities, including a lack of respect for humanrights and environmental protection, etc., at suppliers, it is anticipatedthat unfavorable situations could arise not only in our company but also
in society. With the aim of reducing the occurrence of these situations
and fulfilling our social responsibilities with others, we have preparedand published the Sustainable Procurement Guidelines, and we areasking suppliers to comply with these guidelines and use regularquestionnaires and door-to-door surveys to assess their compliance.
In addition, our company’s business activities could be affected by
the suspension of suppliers’ operations or a disruption of distribution
networks due to natural disasters, accidents, infectious diseases, etc. To
minimize these impacts, the Procurement Division has developed a

12

Resonac Holdings Corporation Financial Report 2022

manual that specifies procedures for gathering information on the stateof supplier damage in the event of an emergency and grasping the impact
on our company’s business activities. Training for BCPs (business continuity
plans) is based on this manual.

(11) Cybersecurity
If there were damage or information leaks due to cyberattacks on theGroup’s internal systems or manufacturing facilities, the Group’s
operating results and financial condition could be affected due to a decline
in social credibility, the cost of countermeasures, and any suspension of
production.
To help prevent and mitigate these risks, we have implemented
global standard security solutions that provide a defense network against
cyber risks, which are becoming more sophisticated. At the same time,
we have established the Group’s global standard operations for information
security and have implemented improvements through education andmonitoring to ensure complete information management and to takeactions that minimize the impact of any incident.

Financial Data

13

Consolidated Balance Sheets
Resonac Holdings Corporation and Consolidated Subsidiaries
As at December 31, 2022 and 2021

Thousands of
U.S. dollars (Note 6)

Millions of yen

2022

ASSETS

2021

2022

Current assets
Cash and deposits (Notes 7, 8, and 12)
Notes and accounts receivable (Notes 8, 11, and 29)
Allowance for doubtful accounts
Inventories
Other current assets (Notes 8 and 10)
Total current assets¥

187,126
297,681¥236,237$ 1,410,140

319,546

2,243,262(1,254)(1,426)(9,449)250,574

203,879

1,888,273

54,05740,295407,363788,183

798,5315,939,588

234,425

242,556

1,766,577

Property, plant and equipment (Notes 12 and 15)
Land (Note 20)
Buildings and structures
Machinery, equipment and vehicles
Leased assets (Note 17)361,289

343,574

2,722,599

1,039,169

955,138

7,830,963

28,74030,429216,580

50,86638,782

383,313

1,714,488

1,610,479

12,920,032(1,032,570)(950,958)(7,781,238)

681,918

659,521

5,138,794

Goodwill

295,355

311,766

2,225,735

Customer related assets

133,639

141,141

1,007,079

Investment securities (Notes 8 and 9)

84,041

103,798

633,318

777

674

5,853

Net defined benefit asset (Note 13)

18,04633,088135,990

Deferred tax assets (Note 14)

17,16915,207

129,379

Other (Notes 8, 10, and 15)

81,915

79,131

617,291

(622)

(466)

(4,687)630,320684,338

4,749,959¥ 2,100,421¥ 2,142,390$ 15,828,342

Construction in progress
Less : Accumulated depreciation
Net property, plant and equipment

Investments and other assets

Long-term loans

Allowance for doubtful accounts
Total investments and other assets

Total assets
See notes to financial statements.

14

Resonac Holdings Corporation Financial Report 2022

Thousands of
U.S. dollars (Note 6)

Millions of yen

2022

LIABILITIES AND NET ASSETS

2022

2021

Current liabilities
Short-term debt (Notes 8 and 12)¥

72,419¥74,451$

545,734

Current portion of long-term debt (Notes 8, 12, and 21)

42,67772,857

321,603

Notes and accounts payable (Note 8)

263,402239,897

1,984,947

Income taxes payable

5,983

17,18045,083

Provision for repairs

19

4,848

143

Provision for bonuses

9,489

8,815

71,505

47

71

356

Provision for bonuses for directors
Provision for stock payments (Note 4)
Other current liabilities (Notes 8, 10, 12, 21, and 29)
Total current liabilities

21

39

155

68,49570,492

516,167

462,551488,650

3,485,693

Noncurrent liabilities
Long-term debt less current portion (Notes 8, 12, and 21)

932,400

683,448

7,026,372

Deferred tax liabilities (Note 14)

51,41660,144387,457

Provision for repairs

1,260

96

9,495

Provision for stock payments (Note 4)

302

196

2,272

Provision for business structure improvement

772

812

5,819

Net defined benefit liability (Note 13)

9,981

17,52375,212

Deferred tax liabilities for land revaluation (Note 20)

29,52530,128222,497

Other noncurrent liabilities (Notes 8 and 10, and 29)
Total noncurrent liabilities

37,53842,941

282,877

1,063,192

835,287

8,011,999

1,372,616

Contingent liabilities (Note 18)
Net assets (Note 19)
Shareholders' equity
Capital stock
Authorized, 330,000,000 shares
Issued (2022): 184,901,292 shares

182,146—

Issued (2021): 184,901,292 shares—

182,146—

Capital surplus

108,140

119,772

814,922

Retained earnings

163,425

143,335

1,231,540

Less: Treasury stock at cost (2022): 3,784,720 shares(11,612)—(87,505)

Less: Treasury stock at cost (2021): 3,824,243 shares
Total shareholders' equity—(11,655)—

442,100

433,598

3,331,573

Accumulated other comprehensive income
559

2,838

4,214

Deferred gains or losses on hedges

1,461

1,167

11,007

Revaluation reserve for land (Note 20)

27,91528,928210,362

Foreign currency translation adjustments

72,00838,421

542,638

Remeasurements of defined benefit plans (Note 13)

6,211

9,036

46,804

Total accumulated other comprehensive income

108,154

80,391

815,026

24,423

304,463

184,050

Valuation difference on available-for-sale securities

Non-controlling interests
Total net assets
Total liabilities and net assets

574,677

818,452

4,330,649¥ 2,100,421¥ 2,142,390$ 15,828,342

15

Consolidated Statements of Operations
Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021

Thousands of
U.S. dollars (Note 6)

Millions of yen

Net sales (Note 29)

2022

2021

2022

¥ 1,392,621¥ 1,419,635$ 10,494,509

1,089,639

1,081,642

8,211,295

302,983

337,994

2,283,214

243,611

250,796

1,835,805

59,37187,198447,410

Cost of sales (Notes 23 and 24)
Gross profit
Selling, general and administrative expenses (Notes 22 and 23)
Operating income
Other income (expenses)
Interest and dividends income

1,834

2,267

13,821Equity in earnings of unconsolidated subsidiaries and affiliates

3,630

5,251

27,352Gain on sales of investment securities, net (Note 9)

4,731

5,814

35,654Foreign exchange gain

10,632

4,281

80,124Gain on sales of noncurrent assets, net

13,470

1,104

101,505

Interest expenses(15,744)(10,006)(118,642)

Loss on retirement of noncurrent assets(6,045)(4,838)(45,555)

Impairment loss (Note 15)(10,091)(11,564)(76,042)—(32,767)—

Loss on sale of businesses (Note 25)(3,504)(12,078)(26,405)

Loss related to the Antimonopoly Act (Note 27)(5,579)—(42,042)

Other, net(4,123)(11,737)(31,068)

Total(10,788)(64,272)(81,299)

48,58322,926366,111

Current

18,617

26,957140,291

Deferred(8,092)(6,688)(60,976)

Net income

38,0582,657

286,796

Business structuring expenses (Note 26)

Income before income taxes
Income taxes (Note 14)

Net income attributable to non-controlling interests
Net income (loss) attributable to owners of the parent

7,265
¥

54,746

14,75130,793¥(12,094)

Yen$

232,051

U.S. dollars (Note 6)

Per share amounts
Net income (loss) attributable to owners of the parent: Basic¥ 170.03¥ (77.40)$ 1.28Net income (loss) attributable to owners of the parent: Diluted

170.03(77.40)1.28

Cash dividends (applicable to the period)

65.00

65.00

0.49

Notes: Net income per share has been computed based on the average number of shares of common stock outstanding during the respective fiscal year.
See notes to financial statements.

16

Resonac Holdings Corporation Financial Report 2022

Consolidated Statements of Comprehensive Income
Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021

Thousands of
U.S. dollars (Note 6)

Millions of yen

Net income

2022

2021

¥ 38,058

¥

2022

2,657

$ 286,796(949)(16,925)

Other comprehensive income:
Valuation difference on available-for-sale securities, net of tax(2,246)
294

259

2,213

Foreign currency translation adjustments

32,932

39,074

248,170

Remeasurements of defined benefit plans, net of tax(2,805)

8,927(21,140)

Share of other comprehensive income of unconsolidated subsidiaries
and affiliates accounted for using equity method

1,763

958

13,285

Deferred gains or losses on hedges, net of tax¥ 29,937¥ 48,268$ 225,602¥ 67,995¥ 50,925$ 512,399

Owners of the parent

59,56935,111

448,899

Non-controlling interests

8,426

15,814

63,499Total other comprehensive income (Note 16)
Comprehensive income
Comprehensive income attributable to:

See notes to financial statements.

17

Consolidated Statements of Changes in Net Assets
Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021

Thousands

Millions of yen

Number ofshares ofcapital stock

Capitalstock

CapitalsurplusRetainedearnings

Valuation
Foreign
RemeasureDeferred
Nondifference
Revaluationments
currency
Treasury
gains
controllingon availablereserve fortranslation of definedstock
or losses
interests
for-salelandadjustments benefit planson hedges
securities

Total
net assets

149,711¥ 140,564¥ 78,190¥ 165,572¥ (11,657)¥ 3,728

Issuance of new shares

35,19041,583

41,583——

Dividends from surplus

—

—

—

(9,500)—Net loss attributable to owners of the parent

—

—

—

(12,094)

Purchase of treasury stock

—

—

—

Disposal of treasury stock

—

—

0

Increase by increase of consolidated subsidiaries

—

—

—

Increase by decrease of consolidated subsidiaries——

Decrease by decrease of consolidated subsidiaries——

Change in treasury shares of the parent arising fromtransactions with non-controlling shareholders—

Changes in liabilities for written put options
over non-controlling interests—

Balance as at December 31, 2020

908

¥ 29,034

—

—

—

—

—

—

—

—

—

—

(6)

—

—

7

—

45

—

—

—

—

(690)

—

—

—

—

¥

(506)

¥

128

¥ 312,119¥ 718,080———

83,165———(9,500)

—

—

—

—

(12,094)

—

—

—

—

—

(6)

—

—

—

—

—

7

—

—

—

—

—

—

45

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(690)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Reversal of revaluation reserve for land

—

—

—

1

—

—

—

—

—

—

—

1

Net changes of items other than shareholders' equity

—

—

—

—

—

(890)

259

(106)

38,928

8,909(7,656)39,443

184,901¥ 182,146¥ 119,772¥ 143,335¥ (11,655)¥ 2,838¥ 1,167¥ 28,928¥ 38,421¥ 9,036¥ 304,463¥ 818,452

Issuance of new shares

—

—

—

—

—

—

—

—

—

—

—

—

Dividends from surplus

—

—

—

(11,788)

—

—

—

—

—

—

—

(11,788)

Net income attributable to owners of the parent

—

—

—

30,793

—

—

—

—

—

—

—

30,793Purchase of treasury stock

—

—

—

—

(3)

—

—

—

—

—

—

(3)

Disposal of treasury stock

—

—

(0)

—

46

—

—

—

—

—

—

46

Increase by increase of consolidated subsidiaries

—

—

—

—

—

—

—

—

—

—

—

—

Increase by decrease of consolidated subsidiaries

—

—

—

72

—

—

—

—

—

—

—

72

Decrease by decrease of consolidated subsidiaries

—

—

—

—

—

—

—

—

—

—

—

—

Change in treasury shares of the parent arising fromtransactions with non-controlling shareholders

—

—

(29)

—

—

—

—

—

—

—

—

(29)

Changes in liabilities for written put options
over non-controlling interests——(11,603)

—

—

—

—

—

—

—

—

(11,603)

Balance as at December 31, 2021

Reversal of revaluation reserve for land

—

—

—

1,013

—

—

—

—

—

—

—

1,013

Net changes of items other than shareholders' equity

—

—

—

—

—

(2,279)294(1,013)33,587(2,826)(280,040)(252,277)

184,901¥ 182,146¥ 108,140¥ 163,425¥ (11,612)¥ 1,461¥ 27,915¥ 72,008¥ 6,211¥ 24,423¥ 574,677

Retainedearnings

Valuation
Foreign
RemeasureDeferred
Nondifference
Revaluationments
currency
Treasury
gains
controllingon availablereserve fortranslation of definedstock
or losses
interests
for-salelandadjustments benefit planson hedges
securities

Total
net assets

Balance as at December 31, 2022

Thousands
Number ofshares ofcapital stock
Balance as at December 31, 2021¥

559

Thousands of U.S. dollars (Note 6)

Capitalstock

184,901 $ 1,372,616 $Capitalsurplus902,579 $ 1,080,141 $(87,830)$ 21,390$

8,794$ 217,996$ 289,535$ 68,097 $ 2,294,372 $ 6,167,688

Issuance of new shares

—

—

—

—

—

—

—

—

—

—

—

—

Dividends from surplus

—

—

—

(88,829)

—

—

—

—

—

—

—

(88,829)

Net loss attributable to owners of the parent

—

—

—

232,051

—

—

—

—

—

—

—

232,051

Purchase of treasury stock

—

—

—

—

(23)

—

—

—

—

—

—

(23)

Disposal of treasury stock

—

—

(1)

—

349

—

—

—

—

—

—

347

Increase by increase of consolidated subsidiaries

—

—

—

—

—

—

—

—

—

—

—

—

Increase by decrease of consolidated subsidiaries

—

—

—

544

—

—

—

—

—

—

—

544

Decrease by decrease of consolidated subsidiaries

—

—

—

—

—

—

—

—

—

—

—

—

Change in treasury shares of the parent arising fromtransactions with non-controlling shareholders

—

—

(218)

—

—

—

—

—

—

—

—

(218)

Changes in liabilities for written put options
over non-controlling interests——(87,438)

—

—

—

—

—

—

—

—

(87,438)

Change due to merger

—

—

—

—

—

—

—

—

—

—

—

—

Reversal of revaluation reserve for land

—

—

—

7,634

—

—

—

—

—

—

—

7,634

Net changes of items other than shareholders' equity

—

—

—

—

—

(17,175)

2,213(7,634)

253,103(21,292) (2,110,322) (1,901,107)

184,901 $1,372,616 $ 814,922 $1,231,540 $ (87,505)$ 4,214$ 11,007$ 210,362$ 542,638$ 46,804 $ 184,050 $ 4,330,649

Balance as at December 31, 2022

See notes to financial statements.

18¥

Resonac Holdings Corporation Financial Report 2022

Consolidated Statements of Cash Flows
Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021

Thousands of
U.S. dollars (Note 6)

Millions of yen

2022
Cash flows from operating activities
Income before income taxes
Adjustments for:
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in net defined benefit liability
Interest and dividends income
Interest expenses
Equity in (earnings) losses of unconsolidated subsidiaries and affiliates
Loss (gain) on sales and valuation of investment securities
Loss on retirement of noncurrent assets
Loss (gain) on sales of noncurrent assets
Loss (gain) on sales of businesses
Business structuring expenses
Loss related to the Antimonopoly Act
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities¥ 48,583

2021

2022

22,926$ 366,111

92,716
10,091
16,843(2,383)(1,834)
15,744(3,630)(4,952)
6,045(13,470)
3,504
—
5,579
23,653(40,083)(18,592)
1,157
138,9718,686(15,641)(31,667)
100,349

97,726
11,564
17,7204,038(2,267)
10,006(5,251)(5,101)
4,838(1,104)(3,045)32,767—(51,628)(43,739)
72,694(34,230)
127,9147,266(9,999)(9,898)115,283

698,690
76,042
126,923(17,960)(13,821)
118,642(27,352)(37,318)
45,555(101,505)
26,405—42,042
178,242(302,058)(140,106)
8,721
1,047,260
65,454(117,865)(238,635)
756,207

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from sales of investments in subsidiaries resulting in change in scope of consolidation (Note 7)
Net decrease (increase) in short-term loans receivable
Payments of long-term loans receivableCollection of long-term loans receivable
Other, net
Net cash provided by (used in) investing activities(1,606)
2,570(87,857)
20,960(1,667)22,019
—
774
(410)
251
(9,701)(54,667)(1,666)
1,507(67,741)
2,223(3,270)9,318
84,133(1,230)(246)
14,271(8,693)28,606(12,105)
19,368(662,069)
157,947(12,561)
165,929—
5,830(3,088)
1,893(73,106)(411,962)

Cash flows from financing activities
Net increase (decrease) in short-term debt
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from share issuance of bonds
Redemption of bonds
Proceeds from issuance of preferred stock
Purchase of treasury stock
Cash dividends paid
Proceeds from stock issuance to non-controlling shareholders
Cash dividends paid to non-controlling shareholders
Purchase of investments in subsidiaries without change in scope of consolidation
Other, net
Net cash provided by (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 the beginning of the year

(3,162)409,600(285,642)
112,536(20,000)—(3)(11,758)—(13,025)(287,635)(4,875)(103,964)
10,027(48,255)
234,938

11,352
24,300(307,247)
99,539(25,000)
82,405(7)(9,479)29,766(16,117)(5,293)(5,960)(121,741)
14,63436,782
197,928(23,832)
3,086,662(2,152,536)
848,045(150,716)—(23)(88,609)—(98,152)(2,167,558)(36,745)(783,451)
75,565(363,641)
1,770,446

Increase in cash and cash equivalents resulting from newly consolidated subsidiaries
Cash and cash equivalents at the end of the year (Note 7)—¥ 186,683

229¥ 234,938—$ 1,406,805¥

See notes to financial statements.

19

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

1. B‌ ASIS OF REPORTING AND FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared in accordance with accounting principles and practices generally
accepted in Japan, which are different in certain respects as to theapplication and disclosure requirements from International Financial
Reporting Standards ("IFRS"), and restructured and translated into
English from the consolidated financial statements which have been
filed with the Kanto Local Finance Bureau as required by the Financial
Instruments and Exchange Law of Japan.

2. S‌ UMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Principles of Consolidation
The consolidated financial statements for the years ended December 31,
2022 and 2021 include the accounts of Showa Denko K.K. ("the Company")
and its 108 and 124 significant subsidiaries, respectively (collectively “theCompanies”).
For the purposes of the consolidated financial statements, allsignificant intercompany transactions, account balances and unrealized
profits among the Companies are eliminated and the portions thereof
attributable to non-controlling interests are credited or charged to noncontrolling interests.
The Company applies the “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries, etc. for
Consolidated Financial Statements” (ASBJ Practical Issues Task Force[PITF] No. 18, June 28, 2019) and makes necessary adjustments for the
consolidated settlement of accounts of its foreign subsidiaries.
Of the consolidated subsidiaries, GMM Coatings Private Limited and6 subsidiaries of Showa Denko Materials Co., Ltd. have business year
ends on March 31. For these companies, financial statements based on
the provisional settlement of accounts implemented on the date of
consolidated settlement of accounts are used in the preparation of theconsolidated financial statements.
The business year ends of all other consolidated subsidiaries are on
December 31. From the fiscal year ended December 31, 2022, thebusiness year ends of Showa Denko Singapore (Pte.) Ltd. have beenchanged from September 30 to December 31, the same date as the dateof consolidated settlement of accounts. Accordingly, the performancefor the fifteen-month period from October 1, 2021 to December 31, 2022
for this company has been included in the consolidated financial
statements for the fiscal year ended December 31, 2022.
In the initial consolidation, assets and liabilities of subsidiaries including
those attributable to non-controlling interests are recorded based onfair value in the accompanying consolidated financial statements.
Goodwill is amortized on a straight-line basis over a period during
which the effect of such goodwill lasts but does not exceed 20 years
from recognition. In addition, negative goodwill arising from businesscombinations prior to April 1, 2010 is amortized on a straight-line basis
over a period during which the effect of such negative goodwill lasts but
does not exceed 20 years from recognition.
(b) Investments in Unconsolidated Subsidiaries and Affiliates
The Company applied the equity method of accounting for investments
in 1 unconsolidated subsidiary in 2022 and 1 in 2021, as well as 12 affiliates
in 2022 and 12 in 2021.
All underlying intercompany profits obtained from transactions
among the Companies and unconsolidated subsidiaries and affiliates towhich the equity method is applied are eliminated in the consolidated
financial statements.

20

Resonac Holdings Corporation Financial Report 2022(c) Translation of Foreign Currency Accounts
All receivables and payables denominated in foreign currencies at thebalance sheet date are translated into Japanese yen at the current
exchange rates.
The resulting exchange gains or losses are credited or charged to income.
The financial statements of certain consolidated foreign subsidiaries
are translated into Japanese yen at the year-end rate for assets andliabilities, at historical rates for the other balance sheet accounts
exclusive of the current year’s net income, and at the average annual
rate for revenue and expense accounts and net income.
Translation adjustments resulting from the process of translating thefinancial statements of foreign subsidiaries into Japanese yen are
accumulated and reported as a component of net assets on the
consolidated balance sheets.
(d) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statements of cash flows
are composed of cash on hand, bank deposits available for withdrawal
on demand, and short-term investments with original maturities of threemonths or less and minor risk of value fluctuation.
(e) Securities
Debt securities that are intended to be held to maturity (“held-tomaturity debt securities”) are stated at amortized cost on the balance
sheets. Available-for-sale securities with available fair market values arestated at fair market values. Unrealized gains and unrealized losses onthese available-for-sale securities are reported, net of applicable income
taxes, as a separate component of the net assets.
Realized gains or losses on the sale of the available-for-sale securities
are computed using primarily the moving-average cost.
Available-for-sale securities with no available fair market values arestated primarily at the moving-average cost.
(f) Allowance for Doubtful Accounts
To provide for losses from bad debts, the allowance is provided
according to the actual rate of default for ordinary receivables and inview of the probability of recovery for specific doubtful receivables.
(g) Inventories
Inventories are stated at the lower of cost or market, using principally
the gross-average cost method. The carrying value on the consolidatedbalance sheets is stated by the devaluation method based on declines
in profitability.
(h) Property, Plant and Equipment
Property, plant and equipment is stated at cost, in principle. Property,
plant and equipment is depreciated using the straight-line method.
(i) Intangible Assets
The Company and some of the consolidated subsidiaries principally apply
the straight-line method over 5 years to amortize intangible assets.
(j) Leased Assets
Leased assets in finance lease transactions that do not transfer
ownership to the lessee are depreciated using the straight-line methodon the assumption that the useful life is equal to the lease term and theresidual value is equal to zero. For leases with a residual value guarantee,
the contracted residual value is considered to be the residual value forfinancial accounting purposes.
Subsidiaries that have adopted IFRS have applied IFRS 16 “Leases.”
With the application of IFRS 16, lessees record all leases as assets andliabilities on their balance sheets, in principle. Capitalized right-of-use
assets are depreciated using the straight-line method.

(k) Provision for Business Structure Improvement
The Company and some of the consolidated subsidiaries record theprovision for business structure improvement on an accrual basis to provide
for expenses and losses resulting from their restructuring programs.
(l) Provision for Bonuses
A provision for bonuses is provided at an amount estimated based on
the bonus to be paid subsequent to the balance sheet date.
(m) Provision for bonuses for directors
A provision for bonuses for directors is provided at an amount estimatedbased on the bonus to be paid subsequent to the balance sheet date.
(n) Provision for Repairs
The Company and some of the consolidated subsidiaries provide a
provision for repairs in an amount estimated to be necessary for thescheduled maintenance for certain production equipment.
(o) Provision for Stock Payments
To provide for the Company’s share payments to its Directors (excluding
outside Directors), Corporate Officers, and Councilors, the provision isbased on the Director Share Payment Regulations.
(p) Accounting Policy for Retirement Benefits(1) Method of attributing expected benefits to periods
The attribution of expected benefits to periods up to the current
consolidated fiscal year, upon calculating the retirement benefit
obligations, is done on the benefit formula basis.
(2) M‌ ethod of amortization of actuarial gain or loss and past service costs
The actuarial gain or loss is amortized starting from the year after suchan actuarial loss is determined on a straight-line basis over certain
periods (mainly 10 years) within the average remaining service periods.
Past service costs are amortized on a straight-line basis over certain
periods (mainly 10 years) within the average remaining service periods.
(3) Application of a simplified method to small businesses
For the calculation of liabilities concerning retirement benefits andretirement benefit expenses, some consolidated subsidiaries haveadopted a simplified method, which deems term-end amounts payablefor voluntary retirement related to retirement benefits as retirement
benefit obligations.
(q) Significant Revenue and Expense Recognition Standards
The Group’s main business is the manufacturing and sales of products:
semiconductor and electronic materials, mobility, innovation enablingmaterials, and chemicals. For the sales of these products, revenue isrecognized when control of the goods is transferred, since the performanceobligation is satisfied primarily at the time an acceptance inspection iscompleted during the sale of products to customers, based on a contract.
However, in domestic sales, if the time period between the shipment
and the transfer of control of the products to the customers is within anormal range, revenue is recognized at the time of shipment.
The transaction price is recorded as the amount of consideration that
the Company expects to receive in exchange for the transfer of thepromised goods or services to the customer. The consideration set out
under the sales contract for products is received usually within one year
from the delivery of the products when the performance obligations are
satisfied and does not include a significant financial component.

pretax income of the Company and each of its consolidated subsidiaries
with certain adjustments required for consolidation and tax purposes.
The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets
and liabilities. (Valuation allowances are recorded to reduce deferred tax
assets based on the assessment of the realizability of the tax benefits.)
Application of the Consolidated Taxation System
The Company and certain domestic subsidiaries adopt theconsolidated taxation system.
Application of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System
The Company and certain domestic subsidiaries will transition fromthe consolidated taxation system to the group tax sharing systemfrom the following fiscal year. However, with regard to the items
subject to the transition to the group tax sharing system createdunder the “Act on Partial Revision of the Income Tax Act, etc.” (ActNo. 8 of 2020) and a review of the non-consolidated taxation system
in line with the transition to the group tax sharing system, the Company
and certain domestic subsidiaries have not applied the provisions ofParagraph 44 of the “Implementation Guidance on Tax EffectAccounting” (ASBJ Guidance No. 28, February 16, 2018) and haverecorded the amounts of deferred tax assets and deferred tax liabilities
based on the provisions of the tax laws before the revision, as allowedin the treatment of Paragraph 3 of the “Treatment of Tax EffectAccounting for the Transition from the Consolidated Taxation System
to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31, 2020).
In addition, from the beginning of the following fiscal year, theCompany and certain domestic subsidiaries plan to apply the“Practical Solution on the Accounting and Disclosure under theGroup Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021), whichsets out the treatment of the accounting and disclosure for corporate
taxes and local corporate taxes as well as tax effect accounting when
the group tax sharing system is applied.
(s) Derivative Financial Instruments and Hedge Accounting
The Company and certain subsidiaries state all derivative financial
instruments at fair value and recognize changes in fair value as gains orlosses unless the derivative financial instruments are used for hedging
purposes.
If the derivative financial instruments meet certain hedging criteria,
the Company and certain subsidiaries defer the recognition of gains orlosses resulting from changes in the fair value of derivative financial
instruments until the related gains or losses on hedged items arerecognized.
However, when forward exchange contracts meet certain hedging
criteria, the hedged items are stated by the forward exchange contract
rate. If interest rate swap contracts meet certain hedging criteria, the net
amount to be paid or received under the interest rate swap contracts isadded to or deducted from the interest on the assets or liabilities forwhich the interest rate swap contracts were executed.
Subsidiaries that have adopted IFRS use fair value hedges and cash
flow hedges.
(t) Reclassifications
Certain reclassifications have been made in the 2021 financial statements
to conform to the presentation of 2022.

(r) Income Taxes
Income taxes consist of taxes on corporation, enterprises, andinhabitants. The provision for income taxes is computed based on the21Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

3. ‌SIGNIFICANT ACCOUNTING ESTIMATES

4. ADDITIONAL INFORMATION

Appropriateness of the Company's judgment concerning theidentification of an impairment indicator for intangible fixed assets
including goodwill recognized as a result of acquiring Showa Denko
Materials Co., Ltd. as a consolidated subsidiary(a) Board Benefit Trust (BBT)
Based on the resolution at the 107th ordinary general meeting ofshareholders on March 30, 2016, the Company introduced on May 11, 2016a performance-linked stock compensation plan, the “Board Benefit Trust(BBT)” (hereinafter the “Scheme”) for Directors (excluding outside Directors)
and Corporate Officers, which was revised by the resolution at the 113th
ordinary general meeting of shareholders held on March 30, 2022.

(a) Amounts Recorded in the Consolidated Financial Statements for
the Current Consolidated Fiscal YearIn the consolidated balance sheets for the current consolidated fiscal
year, goodwill related to making Showa Denko Materials Co., Ltd.
(hereinafter referred to as “SDMC”) a consolidated subsidiary of ¥296,184
million (US$2,231,982 thousand), customer related assets of ¥133,461
million (US$1,005,733 thousand), and other intangible fixed assets of¥36,760 million (US$277,016 thousand) have been recorded.
(b) Information on the Contents of Significant Accounting Estimates
Related to Identified Items
The Companies use a larger unit that includes goodwill allocated to theasset group related to the business (hereinafter referred to as the “Asset
Group Including Goodwill”) to identify an indication of impairment of goodwill,
decide whether to recognize impairment losses, and measure them.
Intangible fixed assets including goodwill recognized as the excess
earnings potential of SDMC are amortized on a systematic basis.
However, it is determined that an impairment indicator exists, if thebusiness performance set forth in the original business plan developed
when the Company acquired SDMC as its consolidated subsidiary has
not been achieved, and therefore there have been, or are expected tobe, events such as operating losses or continuous negative cash flows, asignificant deterioration of the business environment and a change that
may significantly decrease the recoverable amount. Whenever there is
an impairment indicator for these intangible fixed assets including
goodwill, they need to be tested for impairment by comparing theundiscounted future cash flows that are expected to be generated fromthe related Asset Group Including Goodwill with their carrying amounts.
If the recognition of an impairment loss is deemed necessary, thecarrying amount is reduced to the recoverable amount, and the resulting
decrease in the carrying amount is measured as an impairment loss.
The Group considered the business results particularly of the Asset
Group Including Goodwill through this fiscal year and the businessplans for the subsequent fiscal years, in terms of whether the
aforementioned events had occurred or are expected to occur, anddetermined that there was an impairment indicator for this fiscal year.
The business plan used in decisions on indication of impairment
includes key assumptions such as sales increase associated with growthof the markets related to the Asset Group Including Goodwill. This
assumption, which is affected by factors such as changes in the market
environment, involves uncertainties and is likely to have a significant
impact on the evaluation of intangible fixed assets including goodwill in
the consolidated financial statements for the following consolidated fiscal
year. The Group assesses that there is little possibility of the occurrenceof impairment losses in relation to the Asset Group Including Goodwill
as long as the above assumption changes within a reasonable range.

22

Resonac Holdings Corporation Financial Report 2022

(1) Outline of the transaction
In the Scheme, shares of the Company are granted to Directors andCorporate Officers who meet certain requirements, based on the
Director Share Grant Regulations set out by the Company.
The Company grants performance-linked points to Directors andCorporate Officers each year, then grants shares of the Company tothem based on the number of points granted when they resign fromthe Company. The Company’s shares that are granted to Directors andCorporate Officers are acquired by the trust using the assigned funds
and separately managed as trusted assets. For the accounting
treatment related to this trust agreement, the Company applied thegross method where the assets and liabilities of the trust are recorded
as assets and liabilities on the balance sheet by referring to thePractical Solution on Transactions of Delivering the Company’s Own
Stock to Employees etc. through Trusts (ASBJ PITF No. 30, issued on
March 26, 2015), by applying the provisions conversely for Directors
and Corporate Officers in place of employees.
(2) Residual shares of the company in the trust
Residual shares of the Company in the trust have been recorded astreasury stock under net assets at the book value in the trust (excluding
the amount of ancillary expenses). The book value and the number ofsuch treasury stock were ¥259 million (US$1,951 thousand) and 230,300
shares at the end of the fiscal year ended December 31, 2022, and ¥305
million and 271,000 shares at the end of the fiscal year ended December
31, 2021, respectively.
(b) Accounting Estimates in Conjunction with the Spread of the
COVID-19 pandemic
While uncertainty is expected to remain on how the pandemic willcontinue to spread and when it will come to an end, accounting
estimates are made for the valuation of noncurrent assets, such as
goodwill and the recoverability of deferred tax assets, based on theassumption that the pandemic will have a limited impact on thebusiness performance of the Group from the next fiscal year onward.

5. ‌‌CHANGES IN ACCOUNTING POLICIESApplication of the Accounting Standard for Revenue
Recognition, etc.
The Company has applied the “Accounting Standard for Revenue
Recognition” (ASBJ Statement No. 29, March 31, 2020; hereinafterreferred to as “Revenue Recognition Standard”) and others from the
beginning of the current consolidated fiscal year. For this reason, theCompany now recognizes revenue when control over promised goods
or services is transferred to the customer in an amount equal to that
expected to be received for these goods or services.
The cumulative effect of retroactively applying the new accounting
policies prior to the beginning of the current consolidated fiscal year
has been added to or subtracted from the retained earnings at the
beginning of the current consolidated fiscal year. This action follows theapplication of the Revenue Recognition Standard and others, in line withthe transitional treatment set out in paragraph 84 of the Revenue
Recognition Standard. In addition, the new accounting policies havebeen applied to the opening balance at the start of the period. The
impact of this application on the profit and loss for the current
consolidated fiscal year is considered immaterial, so there is no impact
on the beginning balance of retained earnings.
Notes on ”Revenue Recognition” for the previous fiscal year are notprovided, following the transitional treatment set out in Paragraph 89-3of the Revenue Recognition Standard.
Application of the Accounting Standard for Fair Value Measurement, etc.
The Company has applied the “Accounting Standard for Fair Value
Measurement” (ASBJ Statement No. 30, July 4, 2019; hereinafter referred
to as the “Fair Value Measurement Standard”) and others from the
beginning of the current consolidated fiscal year. As a result, the new
accounting policies set out under the Fair Value Measurement Standard
and others have been applied. This move follows the transitionalguidelines set out in Paragraph 19 of the Fair Value Measurement
Standard, as well as Paragraph 44-2 of the “Accounting Standard for
Financial Instruments” (ASBJ Statement No. 10, July 4, 2019). There is no
impact from this application of the new standard on the consolidated
financial statements.
In addition, in the notes on “Financial Instruments,” the Company has
decided to provide notes on some items, such as the breakdown by levelof the fair value of financial instruments. However, notes for the previous
fiscal year are not included, following the transitional treatment set out
in Paragraph 7-4 of the “Implementation Guidance on Disclosure about
Fair Value of Financial Instruments” (ASBJ Guidance No. 19, July 4, 2019).
Change in the Period for Amortizing Actuarial Gains and Losses, as
Well as Past Service Costs in Accounting for Retirement Benefits
To account for retirement benefits, actuarial gains and losses and past
service costs were previously amortized over a fixed period of 12 years,
while not exceeding the average remaining service periods of
employees. This period has been changed to 10 years from the current
consolidated fiscal year.
Given the transition into a holding company structure on January 1,
2023, where Showa Denko K.K. became the holding company andShowa Denko Materials Co., Ltd. became the operating company, theCompany has decided that the unification of the amortization periods
that had been used by the two companies would more closely matchthe actual situation, given the integration of retirement benefits andpension plans as part of this transition.
As the impact from this change is immaterial, it has not been applied
retroactively.

6. J‌ APANESE YEN AND TRANSLATION INTO U.S. DOLLARSThe Companies’ accounting records are maintained in yen. Yen amounts
included in the financial statements are rounded to the nearest one
million unit. Therefore, the total and subtotal amounts presented in thefinancial statements may not equal the exact sum of the individual
balances. The U.S. dollar amounts appearing in the accompanying
financial statements and notes thereto represent the arithmetical resultsof translating yen into U.S. dollars at the rate of ¥132.70 to US$1.00, theapproximate rate of exchange as at December 31, 2022. The inclusion ofsuch U.S. dollar amounts is solely for the convenience of readers; it does
not carry with it any implication that yen amounts have been or could
be converted into U.S. dollars at that rate.

7. CASH FLOW STATEMENTS(a) Cash and Cash Equivalents
Cash and deposits as of December 31, 2022 and 2021 on the consolidatedbalance sheets and cash equivalents as at December 31, 2022 and 2021
on the consolidated statements of cash flows were reconciled as follows:
Millions of yen

Cash and deposits

2022

2021

2022

¥ 187,126¥ 236,237$ 1,410,140(442)(1,299)(3,334)¥ 186,683¥ 234,938$ 1,406,805

Original maturities more than three months
Cash and cash equivalents

Thousands of
U.S. dollars(b) Assets and Liabilities of Companies that Ceased to be
Consolidated Subsidiaries of the Company due to Sale of Shares
As of December 31, 2022
Not applicable.
As of December 31, 2021
(1) Transfer of investments in subsidiaries
A breakdown of the assets and liabilities at the time of the sale of sharesin SHOKO CO., LTD. and its 4 subsidiaries, when they ceased to beconsolidated subsidiaries due to the sale, the sale price of the shares,
and proceeds from the sale were as follows:
Millions of yen

Current assets¥ 42,918

Noncurrent assets

6,344

Current liabilities(21,179)

Noncurrent liabilities(15,935)

Non-controlling interests(7,155)Investment accounts after sales of shares(1,168)Decrease in retained earnings due to exclusion from consolidation(690)

Loss on sales of shares in subsidiaries and associates

(332)

Other
Sale price of shares in the sold company(287)¥ 2,515

Cash and cash equivalents of the sold company
Less: Proceeds from sale of the sold company(2,297)¥

218(2) Transfer of aluminum can businessA breakdown of assets and liabilities at the time of the sale due to thetransfer of the aluminum can business, the sale price of the shares, andproceeds from the sale were as follows:
Millions of yen

Current assets¥ 27,135

Noncurrent assets

26,385Current liabilities(14,317)

Noncurrent liabilities(584)

Non-controlling interests(29,766)

Gain on sale of businesses

9,061

Other
Sale price of shares in the sold company

184¥ 18,099

Cash and cash equivalents of the sold company(4,200)Less: Proceeds from sale of the sold company¥ 13,89823

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries(3) Transfer of aluminum rolling businessA breakdown of assets and liabilities at the time of the sale due to thetransfer of the aluminum rolling business, the sale price of the shares,
and proceeds from the sale were as follows:
Millions of yen

Current assets

¥

8,999

Noncurrent assets

9,514

Current liabilities(978)Noncurrent liabilities(101)

Loss on sale of businesses(10,345)

Other
Sale price of shares in the sold company

(559)
¥

Securities received as consideration
Cash and cash equivalents of the sold company
Less: Proceeds from sale of the sold company

6,531(2,312)(1,944)¥2,275(4) Transfer of printed wiring board businessA breakdown of assets and liabilities at the time of the sale due to thetransfer of the printed wiring board business, the sale price of the shares,
and proceeds from the sale were as follows:
Millions of yen

Current assets¥ 19,316

Noncurrent assets

19,465Current liabilities(7,555)

Noncurrent liabilities(2,787)

Accumulated other comprehensive income

2,466

Loss on sale of businesses(1,733)

Other
Sale price of shares in the sold company(17)¥ 29,155

Cash and cash equivalents of the sold company(6,103)

Less: Proceeds from sale of the sold company¥ 23,052(5) Transfer of energy storage devices and systems businessA breakdown of assets and liabilities at the time of the sale due to thetransfer of the energy storage devices and systems business, the saleprice of the shares, and proceeds from the sale were as follows:
Millions of yen

Current assets

31,698Current liabilities(36,280)

Noncurrent liabilities(4,619)

Accumulated other comprehensive income(3,650)Gain on sale of businesses

4,289

Other
Sale price of shares in the sold company

24¥ 57,524

Noncurrent assets(198)¥ 48,764

Cash and cash equivalents of the sold company(7,707)

Less: Proceeds from sale of the sold company¥ 41,057

Resonac Holdings Corporation Financial Report 2022

8. FINANCIAL INSTRUMENTS(a) Overview(1) Management policy relating to financial instruments
The Companies finance necessary long-term funds by bank loans andbond issues following the capital investment plans and finance shortterm operating funds by bank loans and commercial paper. Temporary
excess funds are invested exclusively in financial instruments which have
fixed returns and low risk of falling below par values. The Companies use
derivative transactions to hedge the following risks and do not enter
into derivative transactions for speculative purposes.
(2) Types of financial instruments and related risks
Operating receivables, such as notes and accounts receivable, areexposed to credit risk. Foreign-currency-denominated accounts receivable
incurred through exports are exposed to foreign currency fluctuation risk.
However, the Companies hedge the risk by utilizing forward exchange
contracts, currency options, and currency swaps based on internal
policies that set out foreign currency risk management principles.
Marketable securities and investment securities mainly consist of thestocks of partner companies to maintain and strengthen their business
relationships and are exposed to market fluctuation risk.
Operating payables, such as notes and accounts payable-trade andother, are due within one year. Foreign-currency-denominated accounts
payable incurred through imports of raw materials are exposed toforeign currency fluctuation risk. The Companies hedge the risk by
utilizing forward exchange contracts following internal policies that set
out the foreign currency risk management principles. Short-term debt
and commercial paper are mainly used to finance short-term operating
funds, and long-term debts and bonds are mainly used to financeequipment funds. Since some loans have financial covenants attached,
they may affect liquidity risk related to financing. Variable interest rateloans are exposed to interest rate fluctuation risk. However, certain loans
use interest rate swaps to hedge the risk.
The Companies utilize derivative transactions, such as forward
exchange contracts, currency options, and currency swaps, to hedge theforeign currency fluctuation risk of operating receivables and payables
denominated in foreign currencies and financing transactions
denominated in foreign currencies. Interest rate swaps are utilized tohedge the interest rate fluctuation risk, and forward contracts andcommodity swaps are utilized to hedge the market fluctuation risk.
(3) Risk management relating to financial instruments(i) Credit risk management (risk of default by the counterparties)
The Company follows internal policies that set out accounts receivable
management principles. The compliance department works with thesales division in each sector and monitors the customers’ credit
conditions periodically and reviews the sales policy checking the sales
volume and balances. The Company takes measures to obtain
information on and minimize the credit risk that may arise due to thedeterioration in the financial condition of their customers. Consolidated
subsidiaries monitor their customers’ financial and credit conditions
based on their internal policies.
The held-to-maturity debts are limited to only highly rated securities.
The Companies utilize derivative transactions only with creditworthy
financial institutions and trading companies to minimize credit risk.
The maximum credit risk as of December 31, 2022 is disclosed as thebalance sheet amount of financial instruments exposed to credit risk.

(ii) Market risk management (risk of fluctuations in foreign currency
and interest rates)
For operating receivables and payables and loans denominated inforeign currencies, the Company and certain consolidated subsidiaries
utilize forward exchange contracts, currency options, and currency
swaps to hedge some of the foreign currency fluctuation risk, which iscategorized by currency and maturity date. The Company and certain
consolidated subsidiaries utilize currency swaps to hedge the interest
rate fluctuation risk of loans.
For marketable securities and investment securities, the Companies
regularly review the fair value and issuers’ financial conditions, andreview the Companies’ portfolio on an ongoing basis, except for held-tomaturity debt securities, according to market conditions and thebusiness relationships with counterparties.
The Company has internal management policies that set out theapproval authorities and procedures of the derivative transactions.
The derivative transactions are carried out based on the appropriate
approver set out in the internal policies. For currency-related derivativetransactions, each division and the treasury department perform andmanage transactions and report to the director in charge periodically.
For interest-related derivative transactions, the treasury department
performs and manages the transactions and reports to the director in
charge periodically. For commodity-related derivative transactions,each division performs and manages the transactions, and reports to thedirector in charge periodically. Consolidated subsidiaries perform andmanage derivative transactions based on their internal management
standards.

(b) Fair Value of Financial Instruments
As at December 31, 2022 and 2021, book value, fair value, and difference
were as follows.
Year ended December 31, 2022

Millions of yen

Book value

Fair value

Difference(1) Marketable securities and investment securities ¥

3,336

¥

3,336

¥

—

¥

3,336

¥

3,336

¥

—

42,677¥42,656¥

Total assets(1) Current portion of long-term debt¥

921,029(11,371)

Total liabilities¥ 975,076¥ 963,685¥ (11,391)

Derivative transactions*

¥

¥

¥

2,480

Book value(1) Marketable securities and investment securities ¥Total assets(1) Current portion of long-term debt

2,480

—

Millions of yen

Year ended December 31, 2021

19,738Fair value

Difference¥

19,738¥—¥19,738¥19,738¥—¥72,857¥

72,907¥50(2) Long-term debt less current portion

683,448

682,953

Total liabilities¥ 756,304¥ 755,860

¥

(444)

Derivative transactions*

¥

¥

¥

—

1,160

Year ended December 31, 2022

1,160

(495)

Thousands of U.S. dollars

Book value(iii) Liquidity risk management (risk of default on payment due dates)
The Company manages liquidity risk by requiring the treasury
department to prepare and update cash plans, based on the schedule
for cash inflows and disbursements in each division. In addition, theCompany signs commitment line contracts and makes otherarrangements with financial institutions to secure the necessary
liquidity. Consolidated subsidiaries manage their liquidity risk throughsimilar procedures.

(21)

932,400(2) Long-term debt less current portion

Fair value

Difference(1) Marketable securities and investment securities $25,138$25,138$—$25,138$25,138$—$

Total assets(1) Current portion of long-term debt

$ 321,603$ 321,445(2) Long-term debt less current portion

7,026,372

6,940,684

Total liabilities$ 7,347,975$ 7,262,129$(85,846)

Derivative transactions*

$

$

$

—

18,686

18,686(158)(85,688)*Derivative assets and liabilities are on a net basis.

(4) ‌Supplemental explanation on fair value of financial instruments
As the calculation of fair value of financial instruments uses certain
assumptions, those values may vary in the case of different assumptions
being applied. Also, for the contract amount and others regarding
derivative transactions described in Note 10. DERIVATIVE FINANCIAL
INSTRUMENTS, the contract amount itself does not indicate market risk
related to derivative transactions.

Notes: 1. ‌"Cash and deposits," "Notes and accounts-receivable trade," "Notes andaccounts-payable trade," "Short-term debt," "Accounts payable-other," areomitted because their fair values approximate their book values due totheir short maturities.
2. ‌Shares, etc. that have no market price are not included in “(1) Marketablesecurities and investment securities.” Financial instruments of this type arestated on the consolidated balance sheet as:Millions of yen

Non-listed equity securities

Thousands of
U.S. dollars

2022

2021

2022

¥ 80,709¥ 84,063$ 608,20325

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

Notes: 3. Redemption schedule for financial assets and securities with maturities
Year ended December 31, 2022

Cash and deposits
Notes and accounts receivable-trade
Total

Millions of yen

Due in 1 year or lessDue after 1 year
through 5 years

Due after 5 years
through 10 years

Due after 10 years¥ 187,126

¥—

¥—

¥—

265,466———¥ 452,592

¥—

¥—

¥—

Due in 1 year or lessDue after 1 year
through 5 years

Due after 5 years
through 10 years

Due after 10 years¥ 236,237

¥—

¥—

¥—

278,641———¥ 514,877

¥—

¥—

¥—

Due in 1 year or lessDue after 1 year
through 5 years

Due after 5 years
through 10 years

Due after 10 years$ 1,410,140

$—

$—

$—

Millions of yen

Year ended December 31, 2021

Cash and deposits
Notes and accounts receivable-trade
Total
Year ended December 31, 2022

Cash and deposits
Notes and accounts receivable-trade
Total

Thousands of U.S. dollars

2,000,500———$ 3,410,639

$—

$—

$—

Notes: 4. Scheduled maturities of bonds and long-term debt after December 31, 2022 and 2021
Year ended December 31, 2022

Millions of yen

Due in 1 year or lessDue after 1 year
through 2 years—¥

Due after 3 years
through 4 years—¥

Due after 4 years
through 5 years—¥

Due after 5 years(1) Short-term debt

¥ 72,419(2) Long-term debt

42,677

63,406

84,64582,470251,879

450,000¥ 115,096¥ 63,406¥ 84,645¥ 82,470¥ 251,879¥ 450,000

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years

Total

¥

Due after 2 years
through 3 years

—

¥

—

Millions of yen

Year ended December 31, 2021

Due in 1 year or lessDue after 1 year
through 2 years(1) Short-term debt

¥ 74,451(2) Long-term debt

72,85854,46180,488185,284

68,770294,500¥ 147,308¥ 54,461¥ 80,488¥ 185,284¥ 68,770¥ 294,500

Due in 1 year or lessDue after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 4 years
through 5 years

Due after 5 years

Total

¥

Due after 2 years
through 3 years—¥

Year ended December 31, 2022

—

¥

—

¥

—

¥

—

Thousands of U.S. dollars(1) Short-term debt

$ 594,679(2) Long-term debt

321,603477,811

637,867

621,477

1,898,109

3,391,108$ 916,282$ 477,811$ 637,867$ 621,477$ 1,898,109$ 3,391,108

Total

$

—

$

—

Due after 3 years
through 4 years
$

—

$

—

$

—

(c) Breakdown by Level of Fair Values of Financial Instruments
The fair values of financial instruments are classified into the following three levels according to the observability and importance of the inputs used formeasuring fair value.
Level 1 fair value: Fair value measured by using quoted prices for assets or liabilities that are subject to the fair value measurement that is made in active
markets using observable inputs for fair value measurement
Level 2 fair value: Fair value measured by using inputs for fair value measurement other than Level 1 inputs using observable inputs for fair value measurement
Level 3 fair value: Fair value measured by using unobservable inputs for fair value measurement
If multiple inputs that have a material impact on fair value measurement are used, the fair value is classified into the lowest priority level in the fair value
measurement, among the levels that each input belongs to.

26

Resonac Holdings Corporation Financial Report 2022

(1) Financial instruments recorded at fair value in the consolidated balance sheet
Year ended December 31, 2022

Millions of yen

Level 1

Level 2

Level 3Total

(1) Marketable securities and investment securities
¥

3,336

¥

3,336

¥

2,517

¥

—

¥

5,853

Commodity-related

¥

—

¥

37

¥

—

¥

37

Total liabilities

¥

—

¥

37

¥

—

¥

37

Other marketable securities

¥

—

¥

—

¥

3,336

(2) Derivative transactions—

Currency-related
Total assets

2,517

—

2,517

(1) Derivative transactions

Year ended December 31, 2022

Thousands of U.S. dollars

Level 1

Level 2

Level 3Total

(1) Marketable securities and investment securities$

25,138$25,138$18,968$—$44,106

Commodity-related

$

—

$

279

$

—

$

279

Total liabilities

$

—

$

279

$

—

$

279

Other marketable securities

$

—

$

—

$

25,138(2) Derivative transactions—

Currency-related
Total assets

18,968—18,968(1) Derivative transactions(2) Financial instruments other than financial instruments recorded at fair value in the consolidated balance sheet
Year ended December 31, 2022

Millions of yen

Level 1
(1) Current portion of long-term debt¥

(2) Long-term debt less current portion
Total liabilities¥—

42,656
921,029—¥ 963,685

Level 3
¥

—

¥

Total
¥

42,656—

921,029—¥ 963,685

Thousands of U.S. dollars

Level 1$

(2) Long-term debt less current portion
Total liabilities¥—

Year ended December 31, 2022

(1) Current portion of long-term debt

Level 2$—

Level 2$ 321,445—

6,940,684—$ 7,262,129

Level 3
$
$

—

Total
$ 321,445—

6,940,684—$ 7,262,129

Note: Description of the valuation methods and inputs used in the fair value measurement
Marketable securities and investment securities:
Measured based on the quoted prices in active markets, and classified into Level 1 fair value
Derivative transactions:
Measured using the prices quoted by the concerned financial institutions and other factors, and classified into Level 2 fair value.
(refer to Note 10. DERIVATIVE FINANCIAL INSTRUMENTS)
Current portion of long-term debt and long-term debt less current portion
These fair values of current portion of long-term loans payable and long-term loans payable less current portion are measured by discounting the sum of the loans payable andinterest, by using the interest rate assumed to be applicable to similar new loans taken out, and are classified into Level 2 fair value. The fair value of some of the variable rate
long-term loans payable that are eligible for the interest-rate swap special provisions (refer to Note 10. DERIVATIVE FINANCIAL INSTRUMENTS) is measured by discounting thesum of the loans payable and interest treated on a combined basis with the relevant interest rate swap, by using the interest rate assumed to be applicable to similar newloans taken out. The fair value of bonds is measured based on market price (Reference Statistical Prices for OTC Bond Transactions), and classified into Level 2 fair value.

27

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

9. SECURITIES(b) Available-for-sale Securities Sold in the Years Ended December 31,
2022 and 2021:(a) Available-for-sale Securities
Year ended December 31, 2022

Year ended December 31, 2022

Millions of yen

Book value

Acquisition
cost

Difference

Millions of yen

Equity securities

Available-for-sale securities whose bookvalue exceeds their acquisition cost

Total

Equity securities¥ 3,157¥ 1,632¥ 1,525

179

177

1

Other

—

—

Total

¥ 3,336¥ 1,809¥ 1,527

Gross loss

¥ 5,192¥(456)¥ 21,677¥ 5,192¥(456)

Millions of yen

Sales
Equity securities—

Gross gain

¥ 21,677

Year ended December 31, 2021

Available-for-sale securities whose bookvalue is less than their acquisition cost
Equity securities

Sales

Total

Gross gain

Gross loss

¥

7,402

¥

4,727

¥

(154)

¥

7,402

¥

4,727

¥

(154)

Year ended December 31, 2022

Thousands of U.S. dollars

Millions of yen

Year ended December 31, 2021

Book value

Acquisition
cost

Difference¥ 14,962¥ 10,050¥ 4,912

183

164

20

Equity securities
Total

Available-for-sale securities whose bookvalue exceeds their acquisition cost
Equity securities
Other

Total

4,593

5,243

(650)

¥ 19,738¥ 15,456¥ 4,283

Year ended December 31, 2022

Thousands of U.S. dollars

Book value

Acquisition
cost

Difference$ 23,792$ 12,296$ 11,496

1,346

1,336

11

Gross gain

$ 163,354$ 39,125

Gross loss
$ (3,434)$ 163,354$ 39,125$ (3,434)(c) Impairment of securities
For the years ended December 31, 2022 and 2021, the Companies
recorded an impairment loss of ¥203 million (US$1,531 thousand) on
available-for-sale securities and ¥713 million on available-for-salesecurities with fair market values, respectively.
Securities are deemed to have “substantially declined” when their fairvalues have declined 30% or more. When their fair values have declined
50% or more, the impairment losses are recorded on those securities.
When their fair values have declined between 30% and 50%, theimpairment losses are recorded on those securities unless such values
are considered to be recoverable on an individual basis.

Available-for-sale securities whose bookvalue is less than their acquisition cost
Equity securities

Sales

Available-for-sale securities whose bookvalue exceeds their acquisition cost
Equity securities
Other
Available-for-sale securities whose bookvalue is less than their acquisition cost———

$ 25,138$ 13,632$ 11,506

Equity securities
Total

10. DERIVATIVE FINANCIAL INSTRUMENTS(a) Derivative Transactions to Which Hedge Accounting is Not Applied
Millions of yen

Currency related:
Forward exchange contracts:
Selling
U.S. Dollar
Euro
Swiss Franc
Yuan Renminbi
Currency options:
Buying and selling
U.S. Dollar

Thousands of U.S. dollars

2022

2021

2022

Contract Contract
Valuationamount Fair value gain
amount over(loss)
1 yearContract Contract
Valuationamount Fair value gain
amount over(loss)
1 yearContract Contract
Valuationamount Fair value gain
amount over(loss)
1 year

¥ 475
5,709
—
—

¥

—
—
—
—

¥

71
114
—
—

¥

71
114
—
—

¥ 9,099
5,670
—
19

¥

—
—
—
—

¥

(102)
(69)
—
(0)

¥

(102)
(69)
—
(0)

$ 3,580
43,020
—
—

$

—
—
—
—

$

535
861
—
—

$

535
861
—
—

¥

¥

—

¥

—

¥

—

¥ 12,206

¥

—

¥

(151)

¥

(151)

$

$

—

$

—

$

—

—

—

Notes: Fair value calculation method:
1. Fair values of forward exchange contracts are stated by the forward exchange rates.
2. Fair values of currency options are measured at the quoted price obtained from the financial institutions.
3. Currency options are zero-cost option contracts, and call options and put options are shown as a lump sum because they are included in the integrated contract.

28

Resonac Holdings Corporation Financial Report 2022

(b) Derivative Transactions to Which Hedge Accounting is Applied
Millions of yen

Contract
amount(1) Currency related:
Principle method
Forward exchange contracts:
BuyingU.S. Dollar
Euro
Selling
U.S. Dollar
Euro
Allocation method
Forward exchange contracts:
BuyingU.S. Dollar
Euro
Selling
U.S. Dollar
Euro
Yuan Renminbi
Currency swaps:
Receipt U.S. Dollar
Payment Yen
Cash flow hedge
Forward exchange contracts:
Selling
U.S. Dollar
Fair value hedge
Forward exchange contracts:
Selling
U.S. Dollar
Euro
Mexican Peso(2) Interest rate related:
Special method
Interest rate swaps:
Receipt-variable rate/Payment-fixed rate(3) Commodity related:
Principle method
Aluminum forward contracts:
BuyingSelling
Cash flow hedge
Commodity swaps:
BuyingCommodity future contracts:
BuyingSelling¥ 1,915
—

2021

2022

Contract
amountover 1 year

Contract
amountover 1 year

¥

1,787
—

¥ 2,985
221

¥

1,714
704
—

¥

Thousands of U.S. dollars

2022
Fair value

Contract
amount——¥ 2,011—¥ 11,329
—

—
—

72
—

7,643
—

—
—

¥ 1,553
32

—
—
—

8,167
754
38

—
—

¥

—
—
—

¥

¥

Fair value

Contract
amountContract
amountover 1 year

—
—

¥ 309
—

$ 14,432
—

$

—
—

(82)
—

13,467———$ 22,496
1,668

—
—
—

12,916
5,304
—

—
—

¥

—
—
—

$

Fair value——$ 15,155
—

—
—

540
—

—
—

$

—
—
—

—
—
—
—
—

—

¥

—

¥

—

¥ 2,000

¥

—

¥

—

$

—

$

—

$

¥ 3,731

¥

—

¥

170

¥ 3,419

¥

—

¥

(24)

$ 28,116$—$ 1,281¥991
13,956
2,453

¥

—
—
—

¥

67
12
—

¥ 2,269
10,142
2,053

¥

—
—
—

¥

(31)
(90)
(38)

$ 7,468
105,170
18,485

$

—
—
—

$

505
90
—

¥ 2,550¥ 2,550¥—¥ 2,600¥ 2,600¥—$ 19,216$ 19,216$—¥ 6,100
2,245

¥

—
—

¥ (115)(8)¥ 5,953
1,235

¥

—
—

¥ 1,469(80)$ 45,965
16,919

$

—
—

$

(869)
(61)

¥

—

¥

—

¥

—

¥

—

¥

—

¥

—

$

—

$

—

$

—

¥ 1,369
14

¥

—
—

¥

86
—

¥ 1,012
267

¥

—
—

¥

37
(2)

$ 10,317
106

$

—
—

$

648
—

—

Notes: 1. ‌The main items hedged by forward exchange contracts are accounts payable for buying, accounts receivable for selling and long-term debt by interest rate swaps.
The main items hedged by aluminum forward transactions are aluminum metal transactions.
The main items hedged by commodity swaps and commodity future contracts are copper and lead purchase transactions.
2. ‌Fair value calculation method:
The fair values of forward exchange contracts are stated by the forward exchange rates. The fair values of currency swaps are measured at the quoted price obtained
from the financial institutions. The fair values of aluminum forward transactions are stated by forward quotations of the London Metal Exchange.
The fair values of commodity swaps and commodity future contracts are measured at the quoted price obtained from the financial institutions.
3. The fair values of forward exchange contracts and currency swaps that meet the allocation method criteria are reflected in the fair values of accounts receivable,accounts payable and debts of their hedged items.
4. The fair values of interest rate swaps that meet the special treatment criteria are reflected in the fair values of long-term debt of their hedged item.

29

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

The aggregate annual maturities of the noncurrent portion of long-term
debt were as follows:

11. ‌EFFECT OF YEAR-END DATE ON FINANCIAL
STATEMENTS
The year-end date of 2022, December 31, 2022, was a bank holiday.
Although notes receivable and payable maturing on this date wereaccordingly settled on January 4, 2023, the Companies accounted for
those notes in their financial statements as if they had been settled on
the maturity date.
Notes outstanding as at December 31, 2022 and 2021 dealt with in
the above-mentioned manner were as follows:
Thousands of
U.S. dollars

Millions of yen

2022

2022

2021

¥ 627

Notes receivable$ 4,725¥ 351

Years ending December 31

ofMillions of yen Thousands
U.S. dollars

2023¥ 63,406 $ 477,811

2024

84,6452025

82,470621,4772026

251,879

1,898,109

450,000

3,391,1082027 and thereafter¥ 932,400 $ 7,026,372

Total

As at December 31, 2022 and 2021, the assets pledged as collateral for
long-term debt were as follows:
Thousands of
U.S. dollars

Millions of yen

2022

12. SHORT-TERM DEBT AND LONG-TERM DEBT

2022
Bank loans at the average interest rateof 0.81%

Cash and deposits

Total

Thousands of
U.S. dollars

2022¥ 72,419¥ 59,451$ 545,734—

15,000—¥ 72,419¥ 74,451$ 545,734

2022
0.734% bonds due 2022 (*1)¥

Thousands of
U.S. dollars

2022¥ 10,000 $—0.190% bonds due 2024 (*1)

10,00010,00075,3580.430% bonds due 2029 (*1)

10,00010,00075,3580.040% bonds due 2024 (*1)

30,00030,000226,0740.200% bonds due 2026 (*1)

20,00020,000150,716Long-term debt

0.300% bonds due 2028 (*1)

5,000

5,000

37,679Other debt

0.550% bonds due 2031 (*1)

45,00045,000339,111Total

0.210% bonds due 2025 (*1)

60,000—452,1480.510% bonds due 2027 (*1)

45,000—339,1110.740% bonds due 2032 (*1)

8,000

—

60,286

—

9,999

—

19,954

19,945150,369

Total

Thousands of
U.S. dollars

¥

2021
—

¥ 983,957—

141,6252022

589,360

5,389,015

756,304

7,347,975

Long-term debt

(42,677)(72,857)(321,603)

Other debt

Resonac Holdings Corporation Financial Report 2022

—

2021

2022

¥

1,000

¥ 209,951$ 7,536

—

121

¥

—

1,000

¥ 210,072$ 7,536

As at December 31, 2022 and 2021, the non-recourse liabilities were as
follows.
The following amounts are included in the amounts stated as collateral
assets and secured liabilities above:

715,122¥ 683,448 $ 7,026,372—

Secured short-term debt and longterm debt

975,076¥ 932,400

2022$

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen*1 Showa Denko K.K.
*2 Showa Denko Materials Co., Ltd.
*3 The balance of long-term debt as at December 31, 2022 includes ¥275,000 million
in a subordinated loan. The maturities indicate the maturities of long-term debt
excluding the subordinated loan.

30

60,927$ 60,927

As at December 31, 2022 and 2021, the liabilities with collateral were as
follows:

52,751

Less: current portion

114,013¥ 119,484

2022

7,000

Loans principally from banks andinsurance companies due 2023 to 2030
at the average interest rate of 1.52% (*3)

8,085
8,085

5,471

Millions of yen

7,000

0.375% bonds due 2027 (*2)

—

¥

¥

In addition to the above, the following assets that have been eliminatedas intercompany transactions have been pledged as collateral.

0.500% bonds due 2026 (*1)

1.191% bonds due 2022 (*2)$—

Loans receivable from subsidiaries
and affiliates

2021
—

Total

Investments in subsidiaries

As at December 31, 2022 and 2021, the long-term debt of theCompanies consisted of the following:
Millions of yen

2022

¥

Property, plant and equipment, lessaccumulated depreciation

2021

Commercial paper

2021

Assets pledged as collateral

As at December 31, 2022 and 2021, the short-term debt of theCompanies consisted of the following:
Millions of yen

637,867

2022

Total

¥
¥

2021
—

¥ 209,700

—

121

—

¥ 209,821

2022
$

—

$

—

—

As at December 31, 2022 and 2021, the assets corresponding to the
non-recourse liabilities were as follows:
Thousands of
U.S. dollars

Millions of yen

2022
Cash and deposits

¥

2022

2021
—

¥

(3) Reconciliation of the ending balance of retirement benefit
obligations and plan assets, and the net defined benefit liability
and the net defined benefit asset for the years ended December
31, 2022 and 2021 was as follows:

5,471

$

2022

In addition to the above, the following assets that have been
eliminated as intercompany transactions have been pledged as collateral.
Thousands of
U.S. dollars

Millions of yen

2022
Investments in subsidiaries¥

Loans receivable from subsidiaries
and affiliates

2022

2021
—

¥ 983,957—

141,625$——

13. RETIREMENT BENEFITS(a) Defined benefit pension plan, including the plans using thesimplified method(1) Reconciliation of opening and closing balance of retirement
benefit obligation for the years ended December 31, 2022 and2021 was as follows:
Millions of yen

2022

2021

Balance of retirement benefit obligation
at the beginning of the year
¥ 167,155

2022

2021

Funded retirement benefit obligations¥ 153,859¥ 164,088 $ 1,159,447

Plan assets(165,681)(182,719) (1,248,535)(11,822)(18,631)(89,088)

Unfunded retirement benefit obligations

3,757

3,067

28,309Net amount of relevant liabilities and assets
on the consolidated balance sheets(8,065)(15,565)(60,779)

Net defined benefit liability

9,981

17,52375,212

Net defined benefit asset(18,046)(33,088)(135,990)

Net amount of relevant liabilities and assets
on the consolidated balance sheets(8,065)(15,565)(60,779)(4) Retirement benefit expenses and the components of theamounts thereof for the years ended December 31, 2022 and2021 were as follows:
Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Service cost2022

Interest cost
Expected return on plan assets¥ 192,099 $ 1,259,646

Thousands of
U.S. dollars

Millions of yen

—

2022

2021

2022

¥ 5,808¥ 6,768$ 43,766

712

932

5,367

(1,773)(2,257)(13,363)

Amortization of actuarial gain and loss

(853)

29

(6,430)Service cost

5,808

6,768

43,766

Amortization of past service cost

124

108

933

Interest cost

712

932

5,367

Retirement benefit expenses related tothe defined benefit pension plan

¥ 4,017¥ 5,581$ 30,273

Actuarial gain and loss

(5,066)(4,285)(38,178)

Retirement benefits paid

(11,221)(12,444)(84,557)

(594)

115

(4,473)

Past service cost
Increase from changes in scope of
consolidation
Decrease from changes in scope of
consolidation
Other
Balance of the retirement benefit
obligation at the end of the year

—

112

—

(542)

(16,627)(4,084)

1,362

484

10,266¥ 157,615¥ 167,155 $ 1,187,753(2) Reconciliation of opening and closing balance of plan assets forthe years ended December 31, 2022 and 2021 was as follows:

2022

1,773

2,257

13,363

Actuarial gain and loss

(8,982)

8,205(67,687)

Contribution from employer

4,057

6,330

30,573Retirement benefits paid

(9,923)(11,233)(74,781)

—

—

—

Other
Balance of plan assets
at the end of the year—
(3,963)¥ 165,681

Actuarial gain and loss
Total

¥ (717)

2022

2021
¥

7

$ (5,407)

4,997(12,852)

37,655¥ 4,279¥ (12,845)$ 32,248¥ 188,533 $ 1,376,933

Expected return on plan assets

Increase from changes in scope of
consolidation
Decrease from changes in scope of
consolidation

2022
Past service cost

2022

2021

¥ 182,719

Thousands of
U.S. dollars

Millions of yen

Thousands of
U.S. dollars

Millions of yen

Balance of plan assets
at the beginning of the year(5) Remeasurements of defined benefit plans
The components of items (before tax) reported under remeasurementsof defined benefit plans for the years ended December 31, 2022 and2021 were as follows:(11,895)
522—(29,866)¥ 182,719 $ 1,248,535

31

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries(6) Accumulated remeasurements of defined benefit plans
The components of items (before tax) reported under accumulated
remeasurements of defined benefit plans for the years ended December
31, 2022 and 2021 were as follows:2022¥$ (5,468)(8)(7,810)(12,806)(58,851)¥ (8,535)¥ (12,815)$ (64,320)

Unrecognized actuarial gain and loss
Total

¥

2022

2021

2022

Deferred tax assets:¥ 34,062¥ 24,589$ 256,683

Impairment loss

17,835

16,674

134,401

Depreciation and amortization

6,983

9,542

52,622

Write-down of marketable andinvestment securities

4,665

12,50935,155Net defined benefit liability

4,255

6,977

32,065

Tax loss carryforwards (Note 2)(7) Matters regarding plan assets(i) Major content of the plan assets
The percentages of major asset types that account for the total plan
assets as of December 31, 2022 and 2021 were as follows:
Ratio

2022

Thousands of
U.S. dollars

Millions of yen

2022

2021

(726)

(a) As at December 31, 2022 and 2021, significant components ofdeferred tax assets and liabilities were as follows:

Thousands of
U.S. dollars

Millions of yen

Unrecognized past service cost

14. INCOME TAXES

2021

Deduction of foreign corporation tax
carried forward

3,911

481

29,471

Loss on valuation of inventories

2,465

2,466

18,577

2,170

2,070

16,355
12,371

Bonds

43 %

48 %

Provision for bonuses

Stocks29

28

Undetermined accrued liabilities

1,642

1,946

General accounts of life insurance company

109

Allowance for doubtful accounts

629

694

4,742

Cash and deposits

12

7

Other

11,94615,99290,0236

8

Subtotal of deferred tax assets

90,563

93,940682,466

100 %

100 %

Valuation allowance related to tax loss
carryforwards (Note 2)(16,945)(14,464)(127,697)(ii) Method for setting the long-term rate of expected return on plan
assetsTo determine the long-term rate of expected return on plan assets, thecurrent and anticipated long-term yield rates of various assets that
constitute the plan assets as well as the current and projecteddistribution of plan assets, have been taken into account.

Valuation allowance related to the totalof deductible temporary differences(32,107)(39,555)(241,949)

Total valuation allowance (Note 1)(49,052)(54,019)(369,646)

Total deferred tax assets

41,511

39,921

312,820

Other
Total

Deferred tax liabilities:(8) Matters regarding the assumptions for actuarial calculations
Key assumptions for actuarial calculations as of December 31, 2022 and2021 were as follows:
Ratio

2022

2021

Discount rate

Mainly 0.6% Mainly 0.4%

Long-term rate of expected return on plan assets

Mainly 1.8% Mainly 1.8%(b) Defined contribution pension plan
The amounts required to be contributed by consolidated subsidiaries forthe years ended December 31, 2022 and 2021 were ¥1,482 million(US$11,166 thousand), and ¥1,819 million, respectively.

Year ended December 31, 2022

Amount of revaluation from the book value(54,500)(58,505)(410,700)

Special depreciation reserve(7,169)(7,880)(54,021)

Net defined benefit asset(6,419)(9,608)(48,369)

Foreign subsidiaries' undistributed
retained earnings(5,315)(4,333)(40,052)

Valuation difference on available-forsale securities(926)(1,658)(6,975)

Deferred gains or losses on hedges

(621)

(508)

(4,680)

Other

(810)

(2,368)(6,101)(84,859)(570,898)

Total deferred tax liabilities(75,758)

Net deferred tax assets (liabilities)¥ (34,247)¥ (44,938) $ (258,078)

Notes: 1. ‌Valuation allowance decreased by ¥4,967 million (US$37,429 thousand).
The main reason for this decrease was the decrease in valuation allowanceand others related to the amount of deductible temporary differences, asa result of the sales of available-for-sale securities held by the Company etc.
2. ‌A breakdown of tax loss carryforwards and valuation allowance by expiry
date as of December 31, 2022 and 2021 were as follows.
Millions of yen

Due in 1
year or lessDue after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Tax loss carryforwards*

¥ 422

¥ 863

¥ 661

¥ 1,000¥ 1,044¥ 30,070¥ 34,062

Valuation allowance

(82)

(363)

(152)

(189)

(330)

(15,829)(16,945)

Deferred tax assets

340

501

509

811

714

14,241

17,118 *2

1

Due after
5 years

Total*1. Tax loss carryforwards are multiplied by the statutory effective tax rate.
*2. ‌For the tax loss carryforwards of ¥34,062 million (US$256,683 thousand), the amount obtained by multiplying by the statutory tax rate, ¥17,118 million (US$128,986 thousand)was booked as deferred tax assets.
The Company does not recognize valuation allowances for the portion of the tax loss carryforwards deemed to be recoverable due to the prospect of future taxable income.

32

Resonac Holdings Corporation Financial Report 2022

Millions of yen

Year ended December 31, 2021

Due in 1
year or lessDue after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after
5 years

Tax loss carryforwards*1

¥ 367

¥ 298

¥ 378

¥ 536

¥ 814

¥ 19,405¥ 24,589

Valuation allowance

(210)

(141)

(221)

(380)

(90)

(10,101)(14,464)

Deferred tax assets

157

157

157

157

724

9,304

10,126*2

Total*1. Tax loss carryforwards are multiplied by the statutory effective tax rate.
*2. ‌For the tax loss carryforwards of ¥24,589 million, the amount obtained by multiplying by the statutory tax rate, ¥10,126 million was booked as deferred tax assets.
The Company does not recognize valuation allowances for the portion of the tax loss carryforwards deemed to be recoverable due to the prospect of future taxable income.
Year ended December 31, 2022

Thousands of U.S. dollars

Due in 1
year or lessDue after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after
5 years

Total$ 3,180$ 6,506$ 4,985$ 7,533$ 7,870$ 226,598$ 256,686

Valuation allowance(616)(2,733)(1,147)(1,424)(2,490)(119,282)(127,699)

Deferred tax assets

2,564

3,773

3,838

6,108

5,380

107,316

128,987

Tax loss carryforwards(b) Significant items in the reconciliation of the statutory tax rate with theeffective tax rate as at December 31, 2022 and 2021 were as follows:
2022

2021

30.6%

30.6%

Amortization of goodwill

10.6

23.7

Effect on the reexamination of recoverability(10.2)

20.6

Differences of statutory tax rate in subsidiaries(8.8)(11.0)

Statutory tax rate

16. ‌CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME
Reclassification adjustments and tax effects for components of othercomprehensive income for the year ended December 31, 2022, wereas follows:ofMillions of yen Thousands
U.S. dollars

Permanently non-taxable dividends received

6.2

(3.6)

Effect on the restructuring of the organization

(5.6)

—

Increase during the year

¥ 1,676$ 12,631

Foreign taxes

1.9

1.9

Reclassification adjustments(5,207)(39,242)

Tax credit

0.5(10.2)

Amount before income tax effect(3,531)(26,611)

Unrealized income on inventories

0.5

(4.0)

Income tax effect

1,285

9,686

Transfer of business

—

38.3

¥ (2,246)$ (16,925)¥ 2,454$ 18,493

Other
Effective tax rate

(4.0)

2.2

21.7%

88.4%

Valuation difference on available-for-sale securities

Total
Deferred gains or losses on hedges
Increase during the year

26

196

(2,062)(15,538)

Amount before income tax effect

418

3,151

Income tax effect(124)

Reclassification adjustments
Adjustments of acquisition cost of assets

15. IMPAIRMENT LOSS
As at December 31, 2022, major impairment losses on fixed assets wereas follows:
Location

Major use

Production
Yokohama City,
facilities for
Kanagawa Prefecture regenerative
medicine, etc.
Zhengzhou, China

Production
facilities formolded resins,
etc.

Asset
category

Buildings andstructures,etc.
Machineryandequipment,
etc.

ofMillions of yen Thousands
U.S. dollars¥ 4,112$ 30,987

12,027

1,332

Minato Ward, Tokyo
Prefecture

Welfare facilities Land, etc.

1,010

7,611

Omachi City, Nagano
Prefecture

Welfare facilities Land, etc.

906

6,827

1,135

8,551

¥ 10,091$ 76,042

Other
Total

Increase during the year

10,038

294

(938)
$

2,213

¥ 35,594$ 268,233

Reclassification adjustments(2,662)(20,063)

Amount before income tax effect

32,932

248,170

Total
1,596

¥

Foreign currency translation adjustments

Income tax effectProduction
Machinery
facilities forandpowdered metal
equipment
products, etc.

Indiana, America

Total

—

—

¥ 32,932$ 248,170¥ (3,279)$ (24,711)

Remeasurements of defined benefit plans, net of tax
Increase during the year
Reclassification adjustments(1,000)(7,537)

Amount before income tax effect(4,279)(32,248)

Income tax effect
Total

1,474

11,108¥ (2,805)$ (21,140)¥ 1,763$ 13,285

Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using the equity method
Increase during the year
Reclassification adjustments
Total
Total other comprehensive income——¥ 1,763$ 13,285¥ 29,937$ 225,602

33

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

17. LEASES(a) Finance Leases as a Lessee
Finance lease transactions other than those involving transfer ofownership to the lessee and right-of-use assets of subsidiaries that haveapplied IFRS 16(1) Type of leased assetsa) Tangible fixed assets: Principally office buildingsb) Intangible fixed assets: Principally software(2) Method of depreciation
The depreciation method of leased assets is described in Note 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (j) Leased Assets.
(b) Operating Leases as a Lessee
As at December 31, 2022 and 2021, assets leased under non-capitalized
operating leases were as follows:
Future minimum lease payments for the remaining lease periods:
Thousands of
U.S. dollars

Millions of yen

Due within 1 year

2022

2021

2022

¥

114

¥ 215

$

2,282

2,425

17,194¥ 2,396¥ 2,640$ 18,056

Due over 1 year
Total

861

(c) Operating Leases as a Lessor
As at December 31, 2022 and 2021, non-cancelable operating leasereceivables for the remaining lease periods were as follows:
Future minimum lease receivables for the remaining lease periods:
Thousands of
U.S. dollars

Millions of yen

2022

2022

2021

Due within 1 year

¥ 2

¥1

Due over 1 year

53

1

$ 14
400

¥ 55

¥1

$ 415

ordinary general meeting of shareholders. All additional paid-in capitaland the legal earnings reserve may be transferred to other capital surplus
and retained earnings, respectively, which are potentially available fordividends. Additional paid-in capital and the legal earnings reserve areincluded in capital surplus and retained earnings, respectively.
The Law does not have a definition about the classification of paid-in
capital between common stock and preferred stock. Accordingly, theCompany states its capital in the total amount paid by issuing common
stock and preferred stock.
The maximum amount that the Company can distribute as dividends
is calculated based on the unconsolidated financial statements of theCompany in accordance with Japanese laws and regulations.

20. REVALUATION RESERVE FOR LANDThe Company and some of its consolidated subsidiaries revalued theland they own for business in accordance with the Law concerning the
Revaluation of Land. The difference between the revalued amount andthe book value, after the deduction of applicable tax, is stated as a land
revaluation reserve. The revaluation was conducted using methods
stipulated in the ordinance for enforcement of the law, specifically, themethod in Item 4 of Article 2 (Reasonable Adjustment of the Appraised
Value Relating to Land Price Tax), and the method in Item 5 of Article 2(Estimation by Experts). The excess of the carrying amount of therevalued land over the market value as at December 31, 2022 was¥48,565 million (US$365,976 thousand).

21. FINANCIAL COVENANTS
As of December 31, 2022
Part of debt for the fiscal year ended December 31, 2022 contains certain
financial covenants such as the maintenance of profits. There is no debt
that is in contravention of the financial covenants as of the end of the
fiscal year ended December 31, 2022.

18. CONTINGENT LIABILITIESAs of December 31, 2021
Part of debt for the fiscal year ended December 31, 2021 contains certain
financial covenants, mainly the maintenance of net assets and themaintenance of profits. There is no debt that is in contravention of thefinancial covenants as of the end of the fiscal year ended December 31, 2021.

As at December 31, 2022 and 2021, the Companies were guarantors forthe borrowings below. The guarantees were principally for
unconsolidated subsidiaries, affiliates and others.

22. S‌ ELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Total

Millions of yen

Guarantees

Thousands of
U.S. dollars

2022

2021

2022

¥ 1,741¥ 1,006$ 13,119

Selling, general and administrative expenses for the years ended
December 31, 2022 and 2021 were summarized as follows:
Millions of yen

Freight

34

Thousands of
U.S. dollars

2022

2021

2022

¥ 50,161¥ 51,106$ 378,006

19. NET ASSETS

Employees' compensation

51,07849,834384,911

The Corporation Law of Japan (the "Law") provides that the entire
amount paid for new shares may be credited to the stated capital, withthe provision that, by resolution of the Board of Directors, up to one-halfof such amount paid for new shares may be credited to additional
paid-in capital, which is included in capital surplus.
The Law provides that an amount equal to 10% of cash
appropriations of retained earnings shall be set aside as additional
paid-in capital or a legal earnings reserve until the total of such reserve
and additional paid-in capital equals 25% of the stated capital.
Additional paid-in capital and the legal earnings reserve may be used toeliminate or reduce a deficit, if any, or be capitalized by resolution at theExperiment and research expenses

26,07928,619196,530

Depreciation

25,957

27,616

195,608

Outsourcing expenses

24,36922,042

183,642

Other

65,966

71,579497,108¥ 243,611¥ 250,796$1,835,805

Resonac Holdings Corporation Financial Report 2022

Total

Research and development expenses included in selling, general andadministrative expenses for the years ended December 31, 2022 and2021 were ¥36,247 million (US$273,153 thousand) and ¥35,385 million,
respectively.

23. RESEARCH AND DEVELOPMENT

26. BUSINESS STRUCTURING EXPENSES

Research and development costs included in manufacturing costs,
selling, general and administrative expenses for the years ended
December 31, 2022 and 2021 were ¥47,135 million (US$355,203
thousand) and ¥46,750 million, respectively.

Year ended December 31, 2022
Not applicable.
Year ended December 31, 2021
Business structuring expenses principally consist of impairment loss on
goodwill, etc., due to decisions made to transfer the energy storage
devices and systems business of Showa Denko Materials Co., Ltd.

24. INVENTORY WRITE-DOWNS
As at December 31, 2022 and 2021, inventory write-downs of ¥1,418
million (US$10,689 thousand) and ¥(19,941) million, respectively, basedon the lower of the cost or market method were deducted from thecarrying value of inventories.

27. LOSS RELATED TO THE ANTIMONOPOLY ACTYear ended December 31, 2022
The loss is related to the civil litigation seeking damages for violations of
the Antimonopoly Act relating to transactions of aluminum electrolytic
and other capacitors by the Company’s consolidated subsidiary in the
United States.

25. LOSS ON SALE OF BUSINESSYear ended December 31, 2022
Loss on transfer of business relates to the transfer of ISOLITE GmbH.

Year ended December 31, 2021
Not applicable.

Year ended December 31, 2021
Loss on transfer of business relates to the transfer of the aluminum
rolling business of the Companies.

28. SEGMENT INFORMATIONIn the current consolidated fiscal year, we accelerated the integration of the Company with Showa Denko Materials Co., Ltd., while implementing a
restructuring of the organization with a view toward enabling the speedy management of the Showa Denko Group as a whole. In line with these developments,
we have reclassified reportable segments from the current consolidated fiscal year from the seven previous reportable segments of “Petrochemicals,”“Chemicals,” “Electronics,” “Inorganics,” “Aluminum,” “Showa Denko Materials,” and “Others,” to four reportable segments of “Semiconductor and Electronic
Materials,” “Mobility,” “Innovation Enabling Materials,” and “Chemicals.” The segment information for the year ended December 2021 was prepared basedon the segmentation after the change.
(a) Information about sales, operating income, assets, and other items by reportable segment
Year ended December 31, 2022

Millions of yen

Reportable segments
Semiconductor andElectronic Materials

Mobility

Innovation
Enabling
Materials

Chemicals

Total¥ 427,171¥ 180,626¥ 141,081¥ 527,825¥ 1,276,702¥ 115,919

5,358

209

6,432

14,31826,317

3,831

432,529

180,835

147,513542,143

1,303,020

119,751(30,149)

1,392,621(292)¥ (17,823)¥¥¥ 2,100,421

OthersAdjustments

Consolidated¥—¥ 1,392,621(30,149)—

Sales
Outside customers
Inter-segment
Total
Operating income (loss)¥

Assets¥ 870,401

44,228¥¥ 227,970(1,489)¥¥ 185,892

9,838

¥

¥ 469,236

24,910¥77,486¥¥ 1,753,499¥ 303,488

43,43559,371

Depreciation and amortization

37,777

17,296

7,880

17,27780,231

11,391

1,094

92,716

Amortization of goodwill

13,261

2,135

819

8

16,223620—

16,843

Investments in unconsolidated
subsidiaries and affiliates

51,893—

3,184

11,846

66,923421—

67,344

Increase in property, plant andequipment and intangible assets

44,336

8,900

7,550

19,51080,296

15,87010,909107,074

Notes: 1. The “Others” is the business segment that is not included in the reportable segments and covers businesses involving life science products.
2. Adjustments are as follows:(1) ‌Elimination of inter-segment transactions of ¥655 million (US$4,935 thousand) and total corporate expenses of ¥(18,478) million (US$(139,243) thousand) that were
not allocated to any reportable segment were included in “Adjustments” for “Operating income” of ¥(17,823) million (US$(134,308) thousand). The total corporate
expenses principally consist of the total corporate common research expenses that are not attributable to any reportable segment.

35

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries(2) ‌Elimination of inter-segment receivables and payables and assets of ¥(81,688) million (US$(615,584) thousand) and total corporate assets of ¥125,123 million(US$942,898 thousand) that were not allocated to any reportable segment were included in “Adjustments” for “Assets” of ¥43,435 million (US$327,314 thousand).
The total corporate assets principally consist of surplus funds under management (in the form of cash and deposits), deferred tax assets and assets related to thetotal corporate common research and development expenses.
3. Amortization of negative goodwill was included in “Amortization of goodwill.”Year ended December 31, 2021

Millions of yen

Reportable segments
Semiconductor andElectronic Materials

Mobility

Innovation
Enabling
Materials

Chemicals

Total¥ 422,941¥ 173,804¥ 143,319¥ 431,018¥ 1,171,082

OthersAdjustments

Consolidated

Sales
Outside customers
Inter-segment
Total¥ 248,553¥—¥ 1,419,635

3,864

87

12,702

14,13430,787

5,445(36,232)—

426,805

173,891

156,021445,152

1,201,869

253,998(36,232)

1,419,635

7,361¥ (19,248)¥

Operating income (loss)¥ 49,563¥(2,021)¥ 13,636¥ 37,907¥

Assets

99,085¥87,198¥ 873,111¥ 234,586¥ 184,158¥ 424,226¥ 1,716,081¥ 358,835¥ 67,473¥ 2,142,390

Depreciation and amortization

37,15917,176

7,410

16,221

77,966

18,601

1,159

97,726

Amortization of goodwill

13,557

2,135

722

8

16,422

1,298—

17,720Investments in unconsolidated
subsidiaries and affiliates

51,598—3,356

12,824

67,777393—

68,170

Increase in property, plant andequipment and intangible assets

33,280

9,530

7,887

14,10864,805

13,078764

78,647

Notes: 1. The “Others” is the business segment that is not included in the reportable segments and covers businesses involving energy storage devices and systems and life
science products.
2. Adjustments are as follows:(1) ‌Elimination of inter-segment transactions of ¥(420) million and total corporate expenses of ¥(18,828) million that were not allocated to any reportable segment
were included in “Adjustments” for “Operating income” of ¥(19,248) million. The total corporate expenses principally consist of the total corporate common researchexpenses that are not attributable to any reportable segment.
(2) ‌Elimination of inter-segment receivables and payables and assets of ¥(90,531) million and total corporate assets of ¥158,005 million that were not allocated to any
reportable segment were included in “Adjustments” for “Assets” of ¥67,473 million. The total corporate assets principally consist of surplus funds under management(in the form of cash and deposits), deferred tax assets and assets related to the total corporate common research and development expenses.
3. Amortization of negative goodwill was included in “Amortization of goodwill.”Year ended December 31, 2022

Thousands of U.S. dollars

Reportable segments
Semiconductor andElectronic Materials

Mobility

Innovation
Enabling
Materials

Chemicals

Total$ 3,219,070$ 1,361,158$ 1,063,160$ 3,977,578$ 9,620,967

40,378

1,575

48,470107,899

198,323

1,111,630

4,085,477

74,133$ 187,714

OthersAdjustments

Consolidated

873,543$—$ 10,494,509(227,195)—

Sales
Outside customers
Inter-segment

3,259,449

Total

36

Operating income (loss)$

Assets333,296

1,362,733$(11,222)$$

28,8739,819,289$

583,922$

902,415(227,195)(2,204)$ (134,308)$

10,494,509$

447,410$ 6,559,162$ 1,717,936$ 1,400,842$ 3,536,068$ 13,214,007$ 2,287,020

327,314$ 15,828,342

Depreciation and amortization

284,678

130,341

59,385130,197604,601

85,843

8,246

698,690

Amortization of goodwill

99,93316,085

6,169

63

122,251

4,672—

126,923

Investments in unconsolidated
subsidiaries and affiliates

391,054—

23,99489,266504,3153,175—

507,489

Increase in property, plant andequipment and intangible assets

334,107

67,06556,896

147,021605,090

119,592

82,208806,890

Resonac Holdings Corporation Financial Report 2022

(b) Information about geographical areas
Year ended December 31, 2022

Millions of yen

Sales

Japan

China

Asia
(exc. China)

OthersTotal¥ 617,309¥ 190,346¥ 340,418¥ 244,548¥ 1,392,621

Millions of yen

Year ended December 31, 2021

Sales

Japan

China

Asia
(exc. China)

OthersTotal¥ 657,369¥ 202,936¥ 346,069¥ 213,261¥ 1,419,635

Year ended December 31, 2022

Thousands of U.S. dollars

Sales

Japan

China

Asia
(exc. China)

OthersTotal$ 4,651,912$ 1,434,410$ 2,565,322$ 1,842,865$ 10,494,509

Japan

Asia

OthersTotal¥ 453,863¥ 135,588¥ 92,467¥ 681,918

Japan

Asia

OthersTotal¥ 456,825¥ 120,624¥ 82,071¥ 659,521

Year ended December 31, 2022

Millions of yen

Property, plant and equipment

Millions of yen

Year ended December 31, 2021

Property, plant and equipment

Year ended December 31, 2022

Thousands of U.S. dollars

Property, plant and equipment

Japan

Asia

OthersTotal$ 3,420,217$ 1,021,765$ 696,813$ 5,138,794(c) Information about impairment loss on property, plant and equipment by reportable segment
Year ended December 31, 2022

Millions of yen

Reportable segments
Semiconductorand Electronic
Materials
Impairment loss on assets¥ 121

Mobility

Innovation
Enabling
Materials

Chemicals

Total¥ 3,357

¥ 385

¥ 953

¥ 4,816

OthersAdjustments¥ 5,275¥—

OthersAdjustments¥ 30,328¥—

OthersAdjustments$ 39,748$—

Consolidated¥ 10,091

Millions of yen

Year ended December 31, 2021

Reportable segments

Impairment loss on assets

Semiconductorand Electronic
Materials

Mobility

Innovation
Enabling
Materials

Chemicals

Total¥ 1,576¥ 9,524¥ 205¥—¥ 11,305

Year ended December 31, 2022

Consolidated¥ 41,633

Thousands of U.S. dollars

Reportable segments
Semiconductorand Electronic
Materials
Impairment loss on assets$ 911

Mobility

Innovation
Enabling
Materials

Chemicals

Total$ 25,298$ 2,902$ 7,182$ 36,293

Consolidated$ 76,042

37

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries(d) Information about amortization of goodwill and unamortized balance by reportable segment
Year ended December 31, 2022

Millions of yen

Reportable segments
Semiconductorand Electronic
Materials¥

Amortization

Mobility

13,294¥

231,930

Unamortized balance

2,135

Innovation
Enabling
Materials

Chemicals¥¥

37,3541,002

8

16,054

OthersTotal¥

416,439¥285,342

Adjustments

Consolidated

¥

¥

624

—

10,912

17,062—296,255

Adjustments

Consolidated¥¥

Millions of yen

Year ended December 31, 2021

Reportable segments
Semiconductorand Electronic
Materials
Amortization¥

Unamortized balance

Mobility

13,590¥245,224

2,135

Innovation
Enabling
Materials

Chemicals¥¥

39,489968
16,625

8¥

13

Year ended December 31, 2022

OthersTotal
16,701¥

301,350

1,328—

11,53618,028—

312,886

Adjustments

Consolidated$

Thousands of U.S. dollars

Reportable segments
Semiconductorand Electronic
Materials
Amortization$ 100,178

Unamortized balance

1,747,777

Innovation
Enabling
Materials

Chemicals$$

Mobility$

16,085
281,493

7,553
120,979

OthersTotal

63$ 123,880

32

2,150,280

$

4,699

—

$ 128,579—

2,232,514

Adjustments

Consolidated¥¥

82,234

Amortization of negative goodwill arose from business combinations prior to April 1, 2010 and its unamortized balance are as follows:Year ended December 31, 2022

Millions of yen

Reportable segments
Semiconductorand Electronic
Materials¥

Amortization

Mobility

33

¥

—

163

Unamortized balance

Innovation
Enabling
Materials

Chemicals

¥

¥

—

184
735

Others

Total

—

¥

—

216

¥

4

897

2

—

220

—

900

Adjustments

Consolidated¥¥

Millions of yen

Year ended December 31, 2021

Reportable segments
Semiconductorand Electronic
Materials
Amortization¥

Unamortized balance

Mobility

33

¥

—

195

—

Innovation
Enabling
Materials

Chemicals

¥

¥

246
918

—

¥

—

Year ended December 31, 2022

Others

Total
278

¥

30

1,113

6

—

309

—

1,119

Adjustments

Consolidated$$

Thousands of U.S. dollars

Reportable segments
Semiconductorand Electronic
Materials
Amortization
Unamortized balance

38

$

245

Innovation
Enabling
Materials

Mobility$

1,225

Resonac Holdings Corporation Financial Report 2022

—
—

$

1,384
5,537

Chemicals$——

Others

Total
$

1,629
6,762

$

27
17

—
—

1,656
6,779

29. REVENUE RECOGNITION(a) Disaggregating Revenue Arising from Contracts with Customers
Year ended December 31, 2022

Millions of yen

Reportable segments
Semiconductor andElectronic Materials

Mobility

Innovation
Enabling Materials

Chemicals

Total

OthersConsolidated¥

By regionJapan¥ 91,206¥ 43,183¥ 88,228¥ 372,672

595,288¥ 22,020

China

107,072

33,112

24,02623,973

188,183

2,163

Asia (excluding China)

211,298

68,23917,79534,778332,1108,309

340,418

Others

17,59436,092

11,033

96,402

161,12283,427

244,548¥ 427,171¥ 180,626¥ 141,081¥ 527,825¥ 1,276,702¥ 115,919¥ 1,392,621

Total

¥

617,309
190,346

Notes: 1. The “Others” is the business segment that is not included in the reportable segments and covers businesses involving life science products.
2. Net sales consist primarily of revenue from contracts with clients. The amount of revenue from other sources is immaterial.
3. Geographical segments are determined based on the country/region of domicile of customers.

Year ended December 31, 2022

Thousands of U.S. dollars

Reportable segments
Semiconductor andElectronic Materials

Mobility

Innovation
Enabling Materials

Chemicals

Total

OthersConsolidated

By region
Japan
China
Asia (excluding China)
OthersTotal$

687,312664,865$ 2,808,378$ 4,485,971$ 165,941$ 4,651,912

249,525

181,056

180,652

1,418,107

16,303

1,434,410

1,592,298

514,235

134,096

262,0812,502,711

62,6122,565,322

132,587

271,982

83,143

726,467

1,214,179

628,687

1,842,865$ 3,219,070$ 1,361,158$ 1,063,160$ 3,977,578$ 9,620,967$ 873,543$ 10,494,509

806,874$

325,416$(b) Relationship between the Satisfaction of Performance Obligations Based on contracts with customers and the cash flows generated fromthese contracts, as well as the amount and timing of revenue expected to be recognized from the next fiscal year onward, from contracts
with customers existing as of the end of the current consolidated fiscal year
(1) Balances of receivables and contract liabilities arising from contracts with customers, etc.
Millions of yen

U.S. dollars

2022

2022

Receivables arising from contracts with customers (beginning balance)¥ 278,641$ 2,099,778

Receivables arising from contracts with customers (ending balance)

265,466

2,000,500

Contract liabilities (beginning balance)

3,414

25,726

Contract liabilities (ending balance)

3,459

26,068Contract liabilities relate mainly to advance consideration received from customers. For the amount of revenue recognized in the current consolidated
fiscal year, the amount included in the beginning balance of contract liabilities is immaterial. The amount of revenue recognized after performanceobligations are satisfied in the past periods is immaterial for the current consolidated fiscal year.
(2) Transaction price allocated to the remaining performance obligations
Since the main performance obligations of the Group are expected to be satisfied within one year, using the practical expedient method this information
is not included in this disclosure. In addition, the consideration arising from contracts with customers does not contain any financially significant elementthat is not included in the transaction price.

39

Notes to Financial Statements
Resonac Holdings Corporation and Consolidated Subsidiaries

30. Significant Subsequent Events(3) Schedules for Absorption-type Company Split Agreement

Absorption-type Merger and Company Split as part of theTransformation into a Holding Company Structure
The Company decided at a Board of Directors’ meeting on August 4,
2022 to conclude the following three agreements. All three agreements
were implemented with an effective date of January 1, 2023:(i) An absorption-type merger agreement (Absorption-type Merger
Agreement) between HC Holdings K.K. (HCHD, a wholly owned
subsidiary of the Company: the Company Disappearing) and Showa
Denko Materials Co., Ltd. (SDMC, a wholly owned subsidiary of HCHD:
the Company Surviving)(ii) An absorption-type company split agreement (Absorption-type
Company Split Agreement ①) in which SDMC (the Company
Succeeding) will succeed to all businesses of the Company (theCompany Splitting)(iii) An absorption-type company split agreement (Absorption-type
Company Split Agreement ②) in which the Company (the Company
Succeeding) will succeed to partial functions of SDMC (theCompany Splitting)

Record date for the Company’s extraordinary
shareholders’ meeting

June 30, 2022

Board of Directors’ meetings at the Company and SDMC
for approval of Absorption-type Company Split Agreement

Aug. 4, 2022

Conclusion of Absorption-type Company Split
Agreements ① and ②

Aug. 4, 2022

Extraordinary shareholders’ meeting of the Company
for approval of Absorption-type Company Split ①

Sep. 29, 2022

Effective dateJan. 1, 2023

Absorption-type Company Split ① and Absorption-type Company Split② together are referred to here as “Absorption-type Company Split.”(1) Objectives
The Showa Denko Group’s defined purpose is to “Change society throughthe power of chemistry.” As a cocreation-style chemical company, we
intend to be a world-class supplier of advanced functional materials. To
reach this goal, we are not only engaged in business within the boundariesof the Group and the chemical industry, but are also promoting ourtransformation, in order to contribute to the development of a sustainableglobal society, while working together with our stakeholders and local
communities that share the same ambition.
To create the scale and profitability appropriate for a company
competing in the world market, we will focus on portfolio management
through the prioritized allocation of resources, innovation for improving
our competitive strengths, and human resource development. Throughthese initiatives, we will maximize our corporate value with the aim ofachieving sustainable management. We will therefore implement an
Absorption-type Merger and Absorption-type Company Split toestablish an optimum organizational structure.
(2) Schedules for Absorption-type Merger Agreement

40

Board of Directors’ meetings at the Company and SDMC
for approval of Absorption-type Merger Agreement

Aug. 4, 2022

Decision by HCHD director to approve Absorption-typeMerger Agreement

Aug. 4, 2022

Conclusion of the agreement

Aug. 4, 2022

Extraordinary shareholders’ meetings for approval(HCHD, SDMC)

Sep. 29, 2022

Effective dateJan. 1, 2023

Resonac Holdings Corporation Financial Report 2022

Note: Absorption-type Company Split ② meets the requirements of Simplified
Absorption-type Company Split prescribed in Article 796, paragraph (2), of
the Companies Act for the Company, and meets the requirements of a
Summary Absorption-type Company Split prescribed in Article 784,
paragraph (1), of the Companies Act for SDMC. So, the Absorption-type Split② will be carried out without obtaining the approval of the general
meetings of shareholders of the Company and SDMC.

(4) Outline of the business sector to be split (Absorption-type
Company Split ①)
All of the Company’s businesses (except Group management and thegraphite electrode business that Shinshu Showa K.K. is to take over fromthe Company through an absorption-type company split).
(5) Outline of the business sector to be split (Absorption-type
Company Split ②)This does not involve a transfer of business.
Transfer of Graphite Electrode Business
The Company decided at a Board of Directors’ meeting on August 4, 2022
to conclude an agreement on an absorption-type company split(Absorption-type Company Split (Shinshu)) with the wholly owned
subsidiary, Shinshu Showa K.K. (Shinshu Showa), concerning the graphite
electrode business. This Absorption-type Company Split was conductedwith an effective date of January 1, 2023.
(1) Objectives
The Company’s graphite electrode business is conducted through a virtualglobal-scale controlling organization as well as a regional control system
involving North/South America, Europe/Middle East/Africa, and Asia. Eachregional unit assumes responsibility for earnings. Furthermore, theCompany is working to establish common ground for global operations.
Shinshu Showa is an important subsidiary playing a central role in ourgraphite electrode manufacturing. Through the company split (Shinshu)
and use of common ground for global operations, Shinshu Showa willserve as a globalized controlling company. This will enable us to increase
the speed of decision-making, stabilize, optimize, and further strengthen
our graphite electrode business.
(2) Schedules for Absorption-type Company Split Agreement (Shinshu)
Board of Directors’ meetings at the Company andShinshu Showa for approval of Absorption-type
Company Split Agreement (Shinshu)

Aug. 4, 2022

Conclusion of the agreement

Aug. 4, 2022

Shareholders’ meeting for approval(Company Succeeding)Sep. 29, 2022

Effective dateJan. 1, 2023

Note: Absorption-type Company Split (Shinshu) falls into the category of
Simplified Absorption-type Company Split prescribed in Article 784,
paragraph (2), of the Companies Act. So, the Absorption-type Split ② will be
carried out without obtaining the approval of the general meetings ofshareholders of the Company and SDMC.

(3) Business scope of the sector to be split
The Company’s graphite electrode business.
Transfer of investments in subsidiaries
On March 31, 2023, Resonac Corporation (hereinafter called “REC”, a wholly
owned subsidiary of the Company), concluded a stock transfer agreementwith Canon Medical Systems Corporation (hereinafter called “Canon
Medical Systems”) to transfer all of issued shares in Minaris Medical Co., Ltd.
(hereinafter called “MMC”) and Minaris Medical America, Inc. (hereinafter
called “MMA”, and MMC , MMA and Minaris Medical (Shanghai) Co., Ltd.
collectively called “Minaris Medical”), which are currently held by REC directly
or indirectly, to Canon Medical Systems (hereinafter called “this deal”).
(1) Objectives
REC is a manufacturing company organized through integration of theCompany and Showa Denko Materials Co., Ltd. In 2018, former Hitachi
Chemical Company, Ltd. (hereinafter called “former Hitachi Chemical”),
which is the predecessor of Showa Denko Materials Co., Ltd., acquired
Kyowa Medex Co., Ltd. (hereinafter called “former Kyowa Medex”, which
is current Minaris Medical Co., Ltd.), which had firm position in the market
for lipids tests, aiming to strengthen the company’s foundation for in-vitro
diagnostics (IVD) business. At the time of the acquisition, former Hitachi
Chemical’s key products consisted of diagnostic reagents and instruments
for allergy testing. Former Kyowa Medex had a complementary productportfolio consisting of in-vitro diagnostics reagent for use in the fields ofclinical chemistry and immunology. The acquisition of former Kyowa
Medex contributed to the expansion of former Hitachi Chemical’s
product lineup. The acquisition made it possible for former Kyowa
Medex to utilize former Hitachi Chemical’s global sales network andpromote marketing of its products worldwide. The acquisition broughtsynergies to MMC business overall. The domestic market for clinicaltesting had reached maturity, and some of other global IVD
manufacturers had expanded their market shares. It had becomechallenging for Minaris Medical to formulate growth strategies based on
the current product lines to achieve rapid growth through theunfavorable macroeconomic environment. Thus, it has become difficult
for the Resonac Group to expect further synergies between Minaris
Medical’s business and other Group companies’ businesses.
As we have stated in the “Long-term Vision for Newly Integrated
Company (2021~2030)”, the Resonac Group aims to contribute to therealization of sustainable society as a whole by becoming a “A worldclass manufacturer of functional chemical materials”. To achieve thistarget, the Group aims to realize steadfast growth by continuously
reworking its business portfolio. The Group considered carefully all
alternatives concerning Minaris Medical’s future, while simultaneously
reworking allocation of management resources and managing thebusiness portfolio in an effort to optimize them. As a result, themanagement of REC concluded that it is in the best interest of all
stakeholders of Minaris Medical, including its business partners,
employees, and end-users of Minaris Medical’s products, to transfer
ownership of Minaris Medical from REC to Canon Medical Systems, aleading medical equipment manufacturer. Canon Medical Systems is
expected to support Minaris Medical’s growth as the best owner due tosynergies in business strategy. Thus, the management of REC decided topromote this deal with Canon Medical Systems.
The IVD market is now facing drastic changes in the competitiveenvironment inside and outside of Japan. The management of REC
concluded that Canon Medical Systems, a leading medical equipment

manufacturer in Japan, can produce synergies between their automatedanalysis equipment technologies and Minaris Medical’s products lineupof diagnostic reagents, thereby creating added value. Canon Medical
Systems has placed a high value on Minaris Medical’s technical capabilities,
product appeal, and customer base, all of which have been amassed
through many years of operation.
(2) Outline of Minaris Medical Co., Ltd.
Name

Minaris Medical Co., Ltd.

Address

X-4F Harumi Triton Square, 1-8-10 Harumi,
Chuo-ku Tokyo, Japan

Title and name of the representative

President and Managing Director /Naoki Kanenari

Business description

Development, manufacturing, and sale ofin-vitro diagnostic reagent
Development, manufacturing, and sale ofautomatic analysis equipment(3) Outline of Minaris Medical America, Inc.
Name

Minaris Medical America, Inc.

Address

630 Clyde Ct., Mountain View, CA, US

Title and name of the representative

President and Chief Executive Officer /Mitsutaka Shimabe

Business description

Development, manufacturing, and sale ofin-vitro diagnostic reagent
Manufacturing and sale of automatic
analysis equipment(4) Outline of Minaris Medical (Shanghai) Co., Ltd.
Name

Minaris Medical (Shanghai) Co., Ltd.

Address

Suite 30 E1, Junyao International Plaza 789,
Shanghai, China

Title and name of the representative

Managing Director / Kamon Matsuzawa

Business description

Import and sale of in-vitro diagnostic
reagent(5) Outline of Canon Medical Systems Corporation
Name

Canon Medical Systems Corporation

Address1385 Shimoishigami, Otawara-shi,
Tochigi, Japan

Title and name of the representative

President / Toshio Takiguchi

Business description

Development, manufacturing, and sale ofmedical equipment, and provision oftechnical services for medical equipment(6) Future outlook
The Company anticipates recognizing some amount of extraordinary
income in fiscal year 2023 as a gain on business transfer resulting from theexecution of this deal. The details are yet to be determined.

41

Report of Independent Certified Public Accountants

Independent auditor’s report
To the Board of Directors of Resonac Holdings Corporation（formerly Showa Denko K.K.）:
OpinionWe have audited the accompanying consolidated financial statements of Resonac Holdings Corporation（formerly Showa Denko K.K.） (“the Company”) and its consolidated subsidiaries (collectively
referred to as “the Group”), which comprise the consolidated balance sheets as at December 31, 2022
and 2021, the consolidated statements of operations, statements of comprehensive income, statementsof changes in net assets and statements of cash flows for the years then ended, and notes, comprising asummary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2022 and 2021, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the Company’s judgment concerning the identification of an impairment
indicator for intangible fixed assets including goodwill recognized as a result of acquiring Showa
Denko Materials Co., Ltd. as a consolidated subsidiary42

The key audit matter

How the matter was addressed in our audit

In the consolidated balance sheets of Showa
Denko K.K. (hereinafter, the “Company”),
intangible fixed assets of ¥494,346 million wererecognized. As described in Note 3, “Significant
accounting estimates, Judgment concerning the

The primary procedures we performed to assess
the appropriateness of the Company’s judgment
as to whether there was an impairment indicator
for intangible fixed assets including goodwill

Resonac Holdings Corporation Financial Report 2022

identification of an impairment indicator for
intangible fixed assets including goodwill
recognized as a result of acquiring Showa Denko
Materials Co., Ltd. as a consolidated subsidiary,”
included therein were goodwill of ¥296,184
million, customer related assets of ¥133,461
million, and other intangible fixed assets of¥36,760 million related to the acquisition ofShowa Denko Materials Co., Ltd. (hereinafter,“SDMC”) as a consolidated subsidiary, which
represented approximately 22.2% of total assets.
The judgment concerning the identification of an
impairment indicator for intangible fixed assets
including goodwill was made in consideration of alarger unit where intangible fixed assets including
goodwill were added to the asset groups related to
the Company’s businesses (hereinafter, the “Asset
Group Including Goodwill”).
Intangible fixed assets including goodwill
recognized as the excess earnings potential of
SDMC are amortized on a systematic basis.
However, it is determined that an impairment
indicator exists, if the business performance set
forth in the business plans has not been achieved,
and therefore there have been, or are expected tobe, events such as operating losses or continuous
negative cash flows, a significant deterioration of
the business environment and a change that may
significantly decrease the recoverable amount.
Whenever there is an impairment indicator forthese intangible fixed assets including goodwill,
they need to be tested for impairment bycomparing the undiscounted future cash flows thatare expected to be generated from the related
Asset Group Including Goodwill with theircarrying amounts. If the recognition of an
impairment loss is deemed necessary, the carrying
amount is reduced to the recoverable amount, andthe resulting decrease in the carrying amount ismeasured as an impairment loss.
The Company assessed the business results of theAsset Group Including Goodwill through thisfiscal year and examined the business plans for thesubsequent fiscal years, considering whether the
aforementioned events had occurred or are

recognized as a result of acquiring SDMC as aconsolidated subsidiary included the following:(1) Internal control testing
We tested the design and operating effectivenessof certain of the Company’s internal controls
relevant to judging whether there was an
impairment indicator for intangible fixed assets
including goodwill. In this assessment, we
focused our testing on whether internal controls
have been established and operate to examine thereliability of the business plans used for
determining whether an impairment indicator
exists.
(2) Assessment of the appropriateness of thejudgment concerning the identification of an
impairment indicator
In order to assess the appropriateness of theCompany’s judgment as to whether there was an
impairment indicator for the Asset Group
Including Goodwill, we inquired of management
and the personnel responsible for the respective
businesses. In addition, we:inspected the minutes of the board of
directors and the documents for
management meetings to understand
SDMC’s business environment;assessed the precision of management’s
estimates by analyzing the business plan
including the causes of variances withactual results;assessed the consistency of the sales
increase of the asset groups consideredas key assumptions in the business plans
with the growth forecast data publishedby external organizations for the key
markets to which the asset groups
belong; and

assessed the reasonableness of thebusiness plans for the subsequent fiscal
years by making inquiries about thedetails and implementation status ofvarious measures and inspecting relevant
documents to assess the consistency.

43

Report of Independent Certified Public Accountants

expected to occur, to determine whether there wasan impairment indicator for this fiscal year.
Key assumptions, such as sales increase associatedwith growth of the markets related to the Asset
Group Including Goodwill, were included in thebusiness plans used by the Company for assessing
whether an impairment indicator existed andinvolved uncertainty as management’s significant
judgment was required.
We, therefore, determined that our assessment of
the appropriateness of the judgment concerning
the identification of an impairment indicator for
intangible fixed assets including goodwill
recognized as a result of acquiring SDMC as aconsolidated subsidiary was the most significant
in our audit of the consolidated financial
statements for this fiscal year, and accordingly, a
key audit matter.

Other Information
The other information comprises the information included in the Annual Report, but does not include
the consolidated financial statements, the financial statements, and our auditor’s reports thereon.
Management is responsible for the preparation and presentation of the other information. Corporate
auditors and the Audit and Supervisory board are responsible for overseeing the directors’ performanceof their duties with regard to the design, implementation and maintenance of the reporting process forthe other information.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Corporate Auditors and the Audit and Supervisory Boardfor the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

44

Resonac Holdings Corporation Financial Report 2022

In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the Audit and Supervisory board are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

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



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

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

45

Report of Independent Certified Public Accountants

We communicate with corporate auditors and the Audit and Supervisory board regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the Audit and Supervisory board with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with corporate auditors and the Audit and Supervisory board, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended December 31, 2022 are presented solely for convenience. Our audit also included the translationof yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on thebasis described in Note 6 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Noriaki Sakurai
Designated Engagement Partner
Certified Public Accountant

Shingo Iwamiya
Designated Engagement Partner
Certified Public Accountant

46

Resonac Holdings Corporation Financial Report 2022

Daio Aida
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
April 19, 2023

47

Corporate Data
Investor Information
Head Office
Resonac Holdings Corporation

Number of Shares Outstanding
184,901,292 as of December 31, 2022

Current address:
13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, Japan
New address from July 2023:
24-26F, Tokyo Shiodome Building, 9-1, Higashi-shimbashi 1-chome,
Minato-ku, Tokyo 105-7325, Japan
URL: https://www.resonac.com/
Contact: https://www.resonac.com/inquiry

Number of Shareholders
90,689 as of December 31, 2022

Classification of Stock
All stock issued by Resonac Holdings Corporation is common stock.

Ordinary General Meeting

Stock Transfer AgentThe Ordinary General Meeting of Shareholders was held on
March 30, 2023.

Mizuho Trust & Banking Co., Ltd.
3-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8241, Japan

Shareholders (Top 10) 

Shareholders by Sector (As of December 31, 2022)

Shareholder(As of December 31, 2022)

Japanese corporate
entities

Number of
Shareholding
shares held(%)
(in thousands)

Treasury shares
3,554 thousand

1.92%

5,188 thousand

2.81%

The Master Trust Bank of Japan, Ltd. (T)28,13015.51

KOREA SECURITIES DEPOSITORY - SAMSUNG

9,062

5.00

Custody Bank of Japan, Ltd. (T)

7,667

4.23

STATE STREET BANK AND TRUST COMPANY 510312

4,905

2.70

STATE STREET BANK AND TRUST COMPANY 505223

4,850

2.67

Overseas
corporate
entities, etc.

Fukoku Mutual Life Insurance Company

4,517

2.49

61,317 thousand

JPMorgan Securities Japan Co., Ltd.

4,474

2.47

STATE STREET BANK AND TRUST COMPANY 510311

4,135

2.28

SMBC Nikko Securities Inc.

3,051

1.68

HSBC BANK PLC A/C M AND G (ACS)

2,854

1.57

Security firms
14,293 thousand

33.16%

Note: ‌Shareholding percentages were calculated after deducting the number oftreasury shares (3,554 thousand) from the number of shares outstanding.

7.73%
Total numberof shares held

184,901
thousandIndividuals

Financial firms

41,998 thousand

58,550 thousand

31.67%

22.71%

Stock Price and Trading Volume
Stock price (JPY)
4,000

2,000
Volume(shares)
120,000,000

060,000,000

2020
Jan

48

2020
Apr

2020
Jul

2020
Oct

2021
Jan

Resonac Holdings Corporation Financial Report 2022

2021
Apr

2021
Jul

2021
Oct

2022
Jan

2022
Apr

2022
Jul

2022
Oct

0

49

Resonac Holdings Corporation
Current address:
13-9, Shiba Daimon 1-chome, Minato-ku, Tokyo 105-8518, Japan
New address from July 2023:
24-26F, Tokyo Shiodome Building, 9-1, Higashi-shimbashi 1-chome, Minato-ku, Tokyo 105-7325, Japan
Website:https://www.resonac.com/