1

2

Return to Origin
In October 2009 we formulated SEKISUI KASEI Group’s 100th Year Vision.
Six years later, in October 2015, we revised some of its content to reflect changes in
the operating environment.
We are currently living in an era of uncertainty, where significant modifications aretaking place simultaneously in multiple domains at a rapid rate.
For this very reason, we had once again returned to origin to engage in discussions
that take us back to our Founding spirit and Group culture as part of the process ofrevising our 100th Year Vision.

3

SEKISUI KASEICONTENTSIn Publishing Integrated Report 2023
We are deeply grateful to all stakeholders for their valuable opinions regarding ourIntegrated Report.

5

SEKISUI KASEI Group’s Principles

7

Message from the President

13

SEKISUI KASEI’s Accomplishments

15

Value Creation Model

17

Earnings Model

19

Materiality (Key Management Issues)

inflationary pressures remain due chiefly to the prolonged crisis in Ukraine and21

Materiality and Medium- to Long-term Risks and Opportunities

soaring energy prices, and it is evident that we have entered an era of considerable

23

Our Business Direction for 2030 “Target 2030”

25

Medium-Term Management Plan “Spiral-up 2024”

27

Financial and Non-Financial Highlights

29

Business Overview

As a leading company in the foamed plastics industry, SEKISUI KASEI Group offers
SEKISUIKASEI’s
Value
Creationa wide variety of products and services that support people’s daily lives. From ourIndustry segment that supports the electronics, mobility, and medical/healthcare
fields, to our Human Life segment, which supports the food, housing, and energy
fields, we contribute to the creation of solutions for society by leveraging thematerial development and molding technologies honed since our founding and bypracticing our Group culture of “Zen-in Keiei.”
In FY2022, COVID-19 control measures and lockdowns were eased worldwide,paving the way for the resumption of economic activity. On the other hand,

uncertainty, characterized by significant changes that are occurring faster than everbefore. It is precisely because of these times of uncertainty that we feel we need togo back to basics, which is why we have partially revised SEKISUI KASEI Group’s
100th Year Vision and established the “Target 2030” as our business direction.
Our Integrated Report serves as a means to communicate how we are working
to improve corporate value, and as a management matter, it is produced with the

Katsumi Sasaki
Publication Officer
Director and Senior Managing Executive Officer
Head of Corporate Strategic Headquarters,
In charge of Administration Headquarters

involvement of the entire organization. We will continue to value dialogue with all

Strategies for
Value
Creation		29		 Industry Segment		31		 Human Life Segment

stakeholders in an effort to reflect their requests and feedback in order to improve
the production of future reports. We therefore warmly welcome the honest opinionsof all readers.

Editorial Policy
For the purpose of communicating the sustainable growth potential of SEKISUI KASEI to all readers, this report presents
company information, including from an ESG perspective, with a focus on medium- to long-term value creation.
Scope of the Report
Applicable Period:
April 1, 2022 – March 31, 2023 (some activities from after April 2023 are also included)
Organizations Covered: SEKISUI KASEI CO., LTD. and its 39 consolidated subsidiaries (as of March 31, 2023)

Research & Development Strategy

35

Human Resources Strategy

37

DX Strategy

39

SEKISUI KASEI’s ESG		39		 Environment

Foundation of		

47		 Social

Value
Creation		

Guidelines Referenced• International Integrated Reporting Council (IIRC): International Integrated Reporting Framework• Ministry of Economy, Trade and Industry: Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue
for Collaborative Value Creation 2.0• Ministry of the Environment: Environmental Reporting Guidelines 2018
• ISO 26000 (guidance on social responsibility)
Cautionary Note on Forward-looking Statements
Results forecasts, plans, business strategies, awareness and assessments of facts, and other forward-looking statements
concerning the Company, or the Group are assumptions that the Company’s management believes to be reasonable
based on currently available information. Actual outcomes may differ materially from those expressed in these forwardlooking statements due to various factors. The Company undertakes no obligation to publish revised forward-looking
statements to reflect new events, conditions, or circumstances.

33

Other
Information

51		 Governance55

Directors & Auditors

57

Discussion between Three Outside Directors

61

Consolidated Financial Statements

69

Notes to Consolidated Financial Statements

95

11 Years Summary

97

Company Information

		97		 Our Group Network		97		 Company Profile		

98		 Stock Information

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SEKISUI KASEI Group’s Principles

We have partially revised our “Vision of 100th Year” of where we want to be in 2059, the 100th year of our founding.
Our management philosophy system has been defined, and we have established Target 2030 as our business direction for the year 2030 ( P23).

Philosophy System

Revision Points
Revised Corporate Vision

Our reason for existence as a company
The highest-level concept that is basically immutable

We, SEKISUI KASEI, practice “Zen-in Keiei” basedon respect for people and mutual trust. We arealways innovating in our aim of “new happiness.”

Management
Philosophy

Corporate Vision

A new chemical solutions company that cares forpeople and the planet as it creates new value

Corporate ideal and goal,based on our philosophy(Corporate ideal and goal for our 100th year)

Corporate Vision(SEKISUI KASEI Group Visionof the 100th Year)

Actions to take and awarenessto have in order to realize ourphilosophy and vision

Important values
that support thepractice of ourphilosophy

A new chemical solutions company thatcares for people and the planet as it creates
new value*Scale goal : Consolidated Sales of ¥500 Billion or more

Based on the “spirit of respect for people” that has been in our DNA since our founding, as wellas the “consideration for the global environment” that we have always focused on, we take on thechallenge of realizing a sustainable society by creating “new value” and “solving environmental andsocial issues through chemical technologies.” The Corporate Vision reflects our strong determination
to create a virtuous cycle of this challenge and the sustainable growth of the Group

Entrepreneurship

Code of Conduct

Harmony

Basis that supports the practice of our philosophy
Founding spiritGroup culture“For happiness of people
working for the company”“Zen-in Keiei”

Revised Code of Conduct

Honesty

Code of Conduct
Entrepreneurship

Honesty

Harmony

We va l u e h i g h m oti vati o n, o r i g i n a lthinking, a desire to create, a high degreeof independence, and a bold attitude
toward risk, in pursuit of new growth
opportunities such as innovative businessmodels and materials development.

We not only ensure that ever yone is

We value har mony with pe ople,
harmony with society, and harmony
with the environment.

honest, but also comply with laws andregulations, fulfill our social responsibility,
and adhere to business ethics.

Based on the existing Code of Conduct, we have revised the Code of Conduct to make it clearer
and easier to understand in a single word as a new Code of Conduct to realize our management
philosophy and corporate vision, with a strong awareness of the widespread understanding among
our global Group employees.

Management Philosophy

We, SEKISUI KASEI, practice “Zen-in Keiei” based on respect
for people and mutual trust. We are always innovating in our
aim of “new happiness.”
We have valued the philosophy of “respect for people and mutual trust,” which are based on respect for the diversityof people and for the positions of others, and on the idea that deepening understanding forms bonds of mutual trust,and the Group culture of “Zen-in Keiei” since our foundation.
In addition, we will continue to take on the challenge of driving all kinds of innovation and working to provide newvalue for the global environment, society, and people’s lives, so that we can bring happiness to people aroundthe world.

Clearly defined our Founding spirit and Group culture
as a basis that support the practice of our philosophy.

Founding SpiritGroup Culture“For happiness of people working
for the company”

Zen-in Keiei

The value we create makes ever yone in society happy,
including ourselves, our families, customers, and relatedparties, which leads to the “happiness of workers.”

Each individual fully recognizes the goal of the entire Groupand achieves goals by joining forces as a team and cooperateeach other while optimizing personality and strength ofindividuals. Mutual Improvement will bring more success to theGroup.

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Message from the President

Revising SEKISUI KASEI Group's 100th Year Vision,
setting “Target 2030” as our business direction
towards 2030, and targeting sustainable growthover the medium- to long-term.

President and Chief Executive Officer

Revise to our 100th Year Vision and set of “Target 2030”
We have partially revised SEKISUI KASEI Group's 100th Year
Vision that was formulated back in 2009 as our corporate goal
for the 100th year in 2059. This vision was established on theoccasion of our 50th year and we revised it once in 2015 toreflect some changes in the operating environment.
The decision to revisit our vision is due to dramatic changes inthe business and social environment. We believe that now is thetime to reconsider the future of SEKISUI KASEI Group, given theincreasing uncertainty of these times marked by the disruption
and fragmentation of global supply chains caused by the
prolonged and widespread impact of the COVID-19 pandemic,
as well as changes in, and diversification of, people’s values,
often referred to as the new normal.
In discussing the revision of our vision, we made sure to involve
not only the management team, but also our junior and midlevel employees. Over a project period of more than one year,
the high degree of uncertainty in these times was what madeus realize that we need to return to our origins, and we also
reexamined our founding spirit and Group culture.
We have defined our philosophy system. The management
philosophy is at the top, followed by our corporate vision, which
represents the corporate goal we want to achieve based on the
management philosophy. Then we have the code of conduct,
which outlines the actions to take and awareness to have inorder to realize our management philosophy and corporate
vision. At the bottom, we defined founding spirit and group
culture “Zen-in Keiei ” as the basis that supports the practice ofour philosophy.
SEKISUI K ASEI Group has long been committed to theconservation of resources, energy efficiency, and the recyclingof resources, thereby pursuing sustainable manufacturing
practices that coexist with the natural environment. In fact, weare delving deeper into this field by positioning the environment
as a key point in our new corporate vision.

Understanding of external environment
We want to embrace our founding spirit of valuing people andour ongoing commitment to environmental stewardship which
has always been our focus, and our corporate vision reflects ouraspiration of being a company that solves environmental andsocial issues by leveraging the unique chemical technologies of
SEKISUI KASEI Group to create new value.
At the same time, as part of the journey towards our 100th year
in 2059, we have established “Target 2030” as our businessdirection to aim for in the nearer future, specifically the year2030.
We are currently pressing ahead with our medium-term
management plan “Spiral-up 2024,” which we have positioned
as the first step in achieving “Target 2030.”

To achieve our corporate goal, I believe it is crucial not only tomeet annual earnings targets, but also to engage in mediumto long-term thinking by forecasting changes in the external
environment. We also understand the importance of being able
to respond swiftly when unforeseen events do occur.
The COVID-19 pandemic was one such change in the external
environment. When the first cases were reported, it wasseen to be a localized epidemic. However, it quickly spreadworldwide and made us realize how interconnected the world
had become. Also, the Russian invasion of Ukraine in 2022
pushed up fuel prices and caused havoc in supply chains,which further accelerated inflation. Not just global affairs, but
news of events and occurrences happening overseas, whether
positive or negative, reach other countries, including Japan,
instantaneously.
This, in other words, highlights the need to anticipate bothpotential risks and opportunities. It has made us realize the9

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Message from the President

growing impor tance of being able to respond quickly tounexpected changes.
As for environmental issues, in addition to climate change
measures, concepts related to the recycling of resources are
gaining traction and taking root worldwide. Various policies,
strategies, and practices have been adopted by internationalorganizations like the United Nations and at international
conferences, while progress is also being made on enacting
relevant legislation.

I believe that the fundamental problem with plastic in the global
environment lies in their ease of use and disposal as single-use
items.
Is the elimination of plastic, which supports prosperous societies
and livelihoods, the fundamental solution to this problem? I
believe that the proper course of action to take is to build awell-organized mechanism for recycling resources to deal with
the negative aspects of plastic, like the depletion of resources
and waste, while still enjoying their positive aspects, such asnecessity and convenience.
In fact, expandable polystyrene (EPS) foam, which supports
people’s lives, has a recycling rate of over 90% in Japan,
because of industry-wide efforts. This resource recycling system
for EPS is robust and stands up well when compared to othermaterials that form the foundation of people’s daily lives.
SEKISUI KASEI Group is shifting to businesses that solve
environmental and social issues, and by leveraging the chemical
technologies we have long honed and continuing to provide
products that harness the excellent properties of plastics,
I believe we can realize co-existence of “Contribution to asustainable society” and “Sustainable enhancement of ourcorporate value.”

Progress on our medium-term management plan “Spiral-up 2024”
In FY2022, the first year of the plan, we recorded net sales of¥124.7 billion, operating income of ¥0.79 billion, and net incomeof ¥0.45 billion. ROE remained at 0.8%, and even though net
sales were in line with our initial forecasts, profits were well
below plan. Accordingly, the first year of the first step towards
2030 did not yield the results we had hoped for. While we wereable to pass on the higher costs of raw materials as planned,
the increase in energy costs exceeded our forecasts, and wewere unable to respond adequately.
In addition, there were some unforeseen developments in thesemiconductor industry where an improvement in the supplydemand environment had been anticipated, and as a result,
our earnings were impacted considerably. Earnings were also
negatively affected by the fire at Sekisui Kasei Oita in April
2022. We have investigated the causes of the accident andtaken steps to prevent a recurrence, and we are also carryingout checks at other plants to ensure that safety and quality
standards are being met.
As such, the first year of “Spiral-up 2024,” our medium-term
management plan, did not go so smoothly. However, we remain
confident in our approach to generating stronger earnings in the

5 designated priority areas through to 2030, as well as in thecompetitiveness of our products in each business area.
Considering into account market forecasts for the next few
years and the slower-than-expected recovery in Proseat Groupearnings, we have lowered our profit targets for FY2024, thefinal year of the plan. Moving forward, however, we will look tostrengthen our earnings capabilities and improve safety, whilst
also preparing to accelerate the pace of growth when the
demand environment begins to recover.

Circumstances in Proseat business
Based on FY2022 earnings and an analysis of the current
external environment, we are conducting a drastic review ofProseat business.
Proseat, which mainly operates in Europe, was the businessmost affected by the COVID-19 pandemic, with some of its
facilities suspending operations for several months at a time.
Automobile production volume also plummeted to around 70%of the pre-pandemic level. Currently, automobile production
volume in Western Europe is recovering, but remains sluggish
and is unlikely to return to levels seen in 2019 when we acquired
Proseat business, during the period of the current medium-term
management plan.
In response, we are implementing a wide range of measures.
These include across-the-board improvement measures insales, production, procurement, and labor costs, businessstructure reforms centering on withdrawals from low-profitability
businesses and a management structure transformation,and decisive measures for each of the LWC, Trim, and Foam
divisions. By boosting profitability with these measures, we aretargeting a return to operating profitability in Proseat business in
FY2024.

Meanwhile, we are taking steps to ensure growth for the
future. The aim of Proseat business acquisition was to leverage
the mutual strengths of SEKISUI K ASEI Group’s material
development capability and Proseat Group’s development
proposal capability in a bid to accelerate development activities
with the leading European EV manufacturers and develop
light weight components (LWC) that will become the de facto
standard for next-generation mobility.
Even though earnings have been stagnant primarily becauseof COVID-19 lockdowns, semiconductor supply shortages,
and the Ukraine crisis, the development of new materials andapplications in the mobility sector supported by synergies
between SEKISUI KASEI Group and the Proseat Group isprogressing steadily. In the automotive components business, acertain amount of time is usually required for development with
automakers before sales commence, which is why it will takea bit more time for earnings to materialize, but given that some
contracts have already been confirmed, I believe we will start tosee concrete results in the next medium-term management planthat kicks off in FY2025.

Environmental initiatives centering on Sustainable Star Product
Since its founding, SEKISUI KASEI Group has always sought tohelp bring about a low-carbon and recycling-based society andhas long practiced sustainable manufacturing in harmony with
the natural environment, mainly by conserving energy use andrecycling resources. We are currently implementing the 5Rs,
which include the traditional 3Rs (Reduce, Reuse and Recycle)
and the Group's own 2Rs (Replace and Re-create), as part of our
SKG-5R promotion to help solve problems on a global scale.

To make social and environmental contributions through ourbusiness activities, we have set our sights on achieving thefollowing three targets by fiscal year 2030: (1) create Sustainable
Star Product and expand their business; (2) increase recycled/biomass raw material usage ratio of 50% or higher; and (3)reduce CO2 emissions.
In terms of creating Sustainable Star Product and expanding
their business, we are currently tracking ahead of the initial plan

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Message from the President

after making solid progress in FY2022, with the weighting of
Sustainable Star Product as a percentage of net sales reaching
17%, while the number of registered products climbed to 48.
These results primarily owed to a higher production ratio forrecycled products, such as ESLEN sheet.
In FY2023, we plan to expand sales of ESLEN beads and
PIOCELAN, both of which are recycled products. We feel weare making steady progress towards our FY2030 targets of a
50% net sales weighting for Sustainable Star Product and 100
registered products.
With regard to the target of a recycling/biomass raw materials ratio of

50% or higher, the ratio stood at 16% in FY2022, and we are currently
pushing forward with activities to increase it to 20% by FY2024.
As for reducing CO 2 emissions, we have made better-thanexpected progress owing mainly to the achievement of higher
production efficiency and installation of solar power generationequipment and other forms of renewable energy. This resultin FY2022 translates to a 23% reduction in CO 2 emissions
compared to the base year of FY2018. By continuing to makefurther improvements in production efficiency and adopting
sources of renewable energy, we are confident of achieving ourgoal of a 27% reduction by FY2030.

Society—human resource initiatives
As defined in SEKISUI KASEI Group’s management philosophy,
we seek happiness of people working for the Company basedon respect and mutual trust, and we have long focused on
initiatives related to human resources as part of our approach tosustainability.
This fiscal year we established a new Human Resources
Policy, and we are engaging in the practice of human capitalmanagement. More specifically, we are promoting diversity
initiatives through the active participation of women and senior

employees, and the development of global management
personnel, as well as health management, work-life balance,
and workstyle reforms geared towards flexible ways of working.
In recognition of our health management initiatives in FY2022,
we were selected in the 2023 Certified Health and Productivity
Management Organizations Recognition Program (Large
Enterprise Category) as an organization having outstanding
health and productivity management.

Digitalization initiatives
We are keenly aware that digitalization is progressing worldwide.
For SEKISUI K ASEI Group’s R&D, we are making use ofsimulations for the building of Materials Informatics (MI), as well
as Artificial Intelligence (AI) that incorporates machine learning.
Although it was a few years ago when we launched ST-gel,
we have since brought to market cosmetic masks and otherproducts made from these materials by using AI technology toderive the formulations required.

As we go about incorporating digital technology into our R&D,
we are also currently introducing IT tools to digitally transform
our operations, starting with the visualization of the supply chain.
Our previous activities have enabled us to digitalize data related
to orders and all the processes that follow, including production,
inventory, shipment, distribution, and sales. As a result, we havegained a better understanding of how one problem occurring
somewhere might have a ripple effect on preceding andsubsequent processes.
Up ahead, we will not only focus on how to deal with problems
after they occur, but also carry out a series of operational
reviews pertaining to the supply chain. This includes considering
how to minimize the impact of problems when they do occur
and how to prevent them from happening in the first place. At
the same time, we plan to make improvements to production
methods and the way employees work as par t of theserevisions.
During the period of the current medium-term management
plan, we aim to build model cases. In the next plan, we will rollout the systems and initiatives and establish a framework forevaluation. After that, we will continue to develop them to thepoint that they contribute to earnings improvements by the year
2030.

Shareholder returns
SEKISUI KASEI Group regards the distribution of profits toshareholders as an important management issue. Accordingly,
our basic policy is to return profits to shareholders by providing
stable dividends while securing a certain level of internal
reserves for growth.
Even though earnings moved into positive territory in FY2022,

profits remained well short of plan, which is why we paid anannual dividend of 12 yen per share, the same as in FY2021
when we recorded a net loss. We believe a bit more time isneeded for a full-fledged earnings recovery, so for FY2023 wewill most likely pay the same dividend amount as in FY2022.

To our stakeholders
In these highly uncertain times, to make our corporate goal evenclearer, we have partially revised SEKISUI KASEI Group's 100thYear Vision and established the “Target 2030” business direction
for 2030. Even though we managed to get our bottom line backinto the black in the first year of the “Spiral-up 2024” plan, thelevel of profit remains extremely low.
That said, I believe we have made steady progress in laying the
groundwork for future growth, including measures aimed ata radical improvement in profitability in the Proseat business,
which has been a major contributor to earnings deterioration.
Businesses with a connection to plastics are facing challenging
conditions, or headwinds, but I believe in the future of plastics,
and I think their true contributions to society have not been fullycommunicated.

We will do our utmost to achieve the targets in our mediumterm management plan “Spiral-up 2024,” mainly by actively
expanding into high-value-added businesses, solving issues inthe environment and society, and reinforcing our managementfoundation. At the same time, we hope to broadly communicate
the social value of plastics and the value we can provide in thisintegrated report and other similar publications.

Masato Kashiwabara
President and Chief Executive Officer

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Integrated Report 2023

SEKISUI KASEI’s Accomplishments

Over 60 years have passed since 1959, when we started the production and sale of Japan’s first expandable polystyrene (EPS) beads
made with domestic technology. As a pioneer in the foaming business, we have provided a wide variety of products and services thatenrich people’s lives, ranging from food packaging to cushioning, housing-related materials, and lightweight automotive components. Goingforward, we will be committed to pursuing state-of-the-art technology to help solve environmental and social challenges.

Business Results
Net Sales (left)

Whole company (1959-2009)

Industry segment (2010-2022)

Human Life segment (2010-2022)

Net Income (right)
Note: Non-consolidated results until FY1998, consolidated results from FY1999 onward listed.

1991

2007

2012

2019

Opened the Central ResearchLaboratory

Sekisui Kasei Europe B.V. establishedEstablished PT. Sekisui Kasei
Indonesia

Acquired the Proseat Group as aconsolidated subsidiary(Billions of yen)(Billions of yen)

140.0

3.5
3.0

120.0
100.0

1959

1969

1978

Established

Changed company name to thecurrent one in Japan

Listed on the first section both of theTokyo Stock Exchange and Osaka
Securities Exchange

80.0

1963

60.0

Listed on the second
section of the Osaka
Securities Exchange

1973

2.5
2.0

Listed on the second
section of the Tokyo
Stock Exchange

1.5

40.0

1.0

20.0

0.5

0

0
-10.0

1959

History of
Challenges and
Growth

1970

1980

2000

1990

2010

2022 (FY)

1959– Foundation

1980– Development

1990– Resurgence

2000– Growth

2010– New Challenges

Established and started the productionof Japan’s first EPS beads made withdomestic technology

Expanding production sites and business
operations

Restructuring business vision

Branching out into the mobility
field and accelerated globalization

Restructuring our business portfolios
and shifting to businesses that solve
environmental and social issues

Background
Rapid Economic GrowthFirst Oil Crisis
In 1960, we started the production and sale of Japan’s
first EPS beads “ESLEN Beads” made with domestic
technology. In 1962, we developed our own manufacturingmethod for ESLEN Sheets, an expanded polystyrene sheet
product, and started the production of the sheets.
By providing useful products such as fish boxes, farm
produce boxes, food trays, packaging, and cushioning,
we contributed to improving people’s lives. Overcoming
campaigns to ban EPS foam through recycling initiatives
and public outreach, we were successfully listed on thefirst section of the Tokyo Stock Exchange in 1978.

Background
Steady Economic Growth
Bubble Economy
The 1980s saw the rapid expansion of the convenience store
network, which led to a significant increase in demand forour products, particularly in the food field. In response, weestablished production sites in Nara, Ibaraki, Okayama, andother locations, and innovated our production facilities.
As a new business venture, we brought to market the EDOEPS construction system, which uses ESLEN Blocks as fillingmaterials for housing and energy applications. Expanding ourbusiness in the medical and health fields, we started the salesof our TECHPOLYMER organic polymer microparticles, which
are added to base makeup and color cosmetics.

Background
Collapse of the Bubble Economy
In 1992, the Japanese economy entered arecession. We have had two consecutive periodsof consolidated losses since 1998. We had been
pursuing business opportunities in a variety of areas
but decided to implement a policy of selection andconcentration. Aiming to rebuild, we worked to
streamline our organization.
At the same time, we not only strove to improve
revenue, but also proceeded with R&D, improving ourlineup of highly functional materials in the medical andhealth fields by releasing our ST-gel, which is highfunctionality gel material and other products. These
efforts enabled us to resume dividend payments in2000.

Background
The Lehman Shock
Since the 1970s, our overseas activities havefocused on technology exports to a wide rangeof customers, including the US, India, South
Korea, Hong Kong, and France. After that, inthe 1990s, our foray into overseas markets took
shape. Although it was yet to be a full-fledged
global operation, we began establishing sites
in Taiwan, Thailand, and other parts of Asia.
In 2000, we have made our overseas strategy
as one of our priority policies. Our products,
especially PIOCELAN, were subsequently
adopted for use in automobile components
and packaging, which led to the opening of ourplants in the US and Europe.

Background
The Great East Japan Earthquake
COVID-19 Pandemic
In 2009, we formulated SEKISUI KASEI Group’s 100thYear Vision, our corporate goal for 2059, the 100th year of
our founding. We restructured our business into industry
and human life segments and achieved a record operating
income in FY2017.
In 2019, we acquired European automobile component
maker Proseat Group as a consolidated subsidiary andworked to expand our business in the mobility field.
In January 2023, we revised part of the 100th Year Vision inorder to ensure steady future progress. We also established
Target 2030, our new business direction for 2030.

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Value Creation Model

We leverage the unique management resources of SEKISUI KASEI Group to provide sustainable value to society through our twobusiness segments and the business activities that support them.

BUSINESSACTIVITIES& OUTPUTINPUT

OUTCOMES

Resources for Value Creation

Value Back to Society

Human Capital
Diverse human resources practicing “Zen-in Keiei”
Number of employees: 3,505 (as of the end of March 2023)

Intellectual Capital
Our technological strength as a pioneer in foam resins
Extensive knowledge and experience in polymerization, extrusion,
impregnation foaming, molding, and processing

Products and Services
in Two Business Segments
INDUSTRY SEGMENT▶P29

models, and designs): 1,210
		Number of industrial property rights globally held (patent families): 184(as of March 31, 2023)

Medical/Healthcare
高Automotive structural materials
Transporting automotive parts
packaging materials

Providing materials that reduce food loss
Example: Food containers

Developed materials with improved strength and thermal resistance• Improved safety

MobilityHome appliance packaging
materials
Industrial components

Medical/health care materials

Pursuit of shock absorbency and improved thermal insulation• In addition to protecting food from impact during transport, it also
helps to reduce food loss by keeping food fresh and preserving it for along period of time
Contributed to food safety and security• Thorough compliance with laws and regulations and efforts toward
quality lead to improvements in food hygiene「サステナブル・スタープロダクト(SSP)」
Eco-friendly「サステナブル・プロダクト」の中でも、特に環境貢献において優れた効果を発揮する製品・商品・システム
and comfortable
Reusable containers「サステナブル・プロダクト」＊環境対応製品
automobiles
発泡プラスチックスをはじめとする、人々の暮らしに役立ち
for food delivery
環境にやさしい製品・商品・システム＊環境貢献製品

環境貢献度

R&D costs: ¥2.7 billion (FY2022 results)

R&D Costs Chart ▶P27
R&D Strategy ▶P33

		Development of eco-friendly and comfortable mobility
components
Example: Automobile components
Reduced thickness and weight without compromising functionality• Improved fuel economy results in reduced CO2 emissions

Electronics

Number of industrial property rights held in Japan (patents, utility

Social & Relationship
Contributing to the development of society by proposing business solutions

低(Strengthen new materials development & competitiveness)

Manufactured Capital
Production management system that provides safety andquality that satisfies the customer
Capital expenditures: ¥3.7 billion (FY2022 results)

PIOCELANTECHPOLYMER
Bumper cores LCD film additive

ELASTIL
Shoe midsoles

Capital Expenditure Chart ▶P27

Marine Pollution, Marine Plastic Problem

Social & Relationship Capital
Stable product supply capability

40 locations across 16 countries and regions

HUMAN LIFE SEGMENT

Financial Capital
Equity ratio: 39.8% (as of the end of March 2023)

Food

▶P31

(as of the end of March 2023)

Natural Capital
Energy consumption: 2,465,330 GJ (FY2022 results)

Housing/Energy
Agricultural and marine
product containers
Food containers

Distribution materials
Construction materials
Civil engineering materials

Management Philosophy

Founding Spirit“For happiness of people working for the company”

		Contributing to the realization of a circular
economy by creating Sustainable Star Productand expanding their market
Example: Environmental strategy

Energy Consumption Chart ▶P27

We, SEKISUI KASEI, practice “Zen-in Keiei” based on
respect for people and mutual trust. We are always
innovating in our aim of “new happiness.”

NaturalExisting in harmony with the global environment ▶P39

ESLEN Sheets

ESLEN Blocks

Businesses That Solve Environmental
and Social Issues

Challenge to achieve carbon neutrality in 2050
Example: Business activities
Worked to minimize CO2 emissions• Utilization of renewable energy

Promoted SKG-5R• Contributing to achieving a sustainable society by creating
Sustainable Star Product and expanding their market

Intellectual
Future value creation through ourtechnology
Utilizing RX to improve output ▶P33

ESLEN Beads

Climate change and higher energy consumption

Manufactured
Establishment of a system to ensure stablesupply of production
Increased productivity through DX promotion ▶P37

Human
Build an organization trusted by society
Promoting diversity and implementing work stylereforms to foster respect for people and mutual高trust ▶P35

Financial
Enhancing corporate value in the medium tolong term
Strengthening our financial position and implementing capital「サステナブル・スタープロダクト(SSP)」 ＊環境貢献製品
efficiency-oriented
management「サステナブル・プロダクト」の中でも、特に環境貢献において
環
境
貢
献
度

優れた効果を発揮する製品・商品・システム(The “「サステナブル・プロダクト」 ＊環境対応製品” signs here indicate a negative impact on the capital.)

発泡プラスチックスをはじめとする、人々の暮らしに役立ち

低環境にやさしい製品・商品・システム

17

SEKISUI KASEISEKISUIKASEI’s
Value
Creation

Integrated Report 2023

18

Earnings Model

SEKISUI KASEI Group generates stable earnings through an integrated business that extends from the production of foam resin as anintermediate material to the manufacture and sale of finished products for a variety of applications in various markets.

Major Raw Materials

Business Segment and Field

Industry Segment

Major Products

12.8
%

12.8
%

12.8

• Polystyrene/polyolefin hybrid foam
• Polymer particles (additive)

41.2
%
12
41.8
.2
12
.8
41
.2
%

styrene, MMA,
acrylamide, etc.

%

Medical/Healthcare

3.1
%
41
3.1.2
41
3%.1.2%37.8
3%.1.837

Variouspolymers
polystyrene,
polyethylene,elastomer, etc.

Food

Industrial and telecommunications
equipment manufacturers

Electronics andtelecommunications devices

Optical film and paint manufacturers

LCDs

Automotive manufacturers

Automobiles

Automotive parts manufacturers

Packaging

Medical equipment manufacturers

Biosensing

Cosmetics and skincare productcompanies

Face masks, etc.

Footwear manufacturers

Shoe sole materials

Food container manufacturers

Food trays, noodle cups,delivery containers, etc.

Fisheries associations,
化粧品メーカー
agricultural cooperatives, etc.

Fish and agricultural produce boxes

Civil engineering, construction,and landscaping contractors

Government activities(infrastructure development anddisaster prevention and mitigation)

Floating solar power systemmanufacturers

Floating solar power systems

Contribute to the diffusion
and advancement ofdigital technologies• Hydrogel electrode pads
• Hydrogel masks• Elastomer bead foamContribute to next-generation
mobility technology
innovation

Contribute to comfortable
lives and a healthy society%

Share of Sales%by Business Field

3.1.8
37
%
%

5.2
%
37
5.2.8
%
%

37
5%.2.8%

Housing/Energy

Packaging• Polystyrene/polyolefin hybrid foam
• Polystyrene bead foam%%

Human Life Segment

Electric and electronic component
manufacturers

Value Offered%%%

Variousmonomers

End UseShare of Sales by Business Field

Electronics

Mobility

Major Customer• EPS sheet• EPS beads

5.2
%

5.2
%

• EPS foam blocks for lightweight
embankment method• Underground stormwater sank system• EPS foam floats/pontoons

Assist in providing foodsafety and security andreducing food loss

Contribute to sustainable
society by launchingproducts for disasterprevention and mitigationand infrastructuredevelopment

19

SEKISUI KASEIStrategies for
Value
Creation

Integrated Report 2023

20

Materiality (Key Management Issues)

SEKISUI KASEI conducts business with the goal of becoming “a new chemical solutions company that cares for people and the planet
as it creates new value,” as stated in its corporate vision. We believe that this vision can be achieved by pursuing “contribution to asustainable society” and “sustainable enhancement of corporate value” and creating a virtuous cycle between the two, as described inour basic policy of Target 2030, and have identified and are addressing Materiality (key management issues) to this end.

Materiality Identification Process
The Group has identified Materiality (Key Management Issues) that should be addressed as priority business issues through theprocess outlined below. These issues are periodically reviewed in order to better focus on solving environmental and social issues
while growing our corporate value.

SEKISUI KASEI’s Sustainability Goals

STEP 1

We are working to go beyond traditional corporate social responsibility (CSR) and shifting to businesses that solve environmental andsocial issues with the aim of “enhancing environmental value, social value, and economic value for sustainable development.” Weformulated a Sustainability Policy in January 2023 and are accelerating efforts to bring about a sustainable society.

Extracting Issues
We extracted issues based on international guidelines on sustainability, various issues emphasized by ESG rating agencies, andthe SDGs.

Non-financial information disclosure standards andother sources consulted

Sustainability Policy

ESG evaluation indicators• DJSI, FTSE, MSCI

Global standards

SEKISUI KASEI Group is committed to fulfilling our social
responsibility to all stakeholders, including the global
environment, by putting our management philosophy
into practice. We strive to contribute to the sustainable
development of society globally and to enhance thesustainable corporate value.

Local
communities

Group
members

Business
partners

Realizinga sustainable society
Customers• “The International Integrated Reporting Framework,” International Integrated
Reporting Council (IIRC)• United Nations Global Compact• ISO 26000 (Guidelines for Corporate Social Responsibility)• “GRI Standards,” Global Reporting Initiative• “SASB Standards,” Sustainability Accounting Standards Board

SDGs
Benchmarks for leading CSR companies

Shareholders

Globalenvironment

STEP 2

Sustainability Basis
Manufacturing with the consideration of environment, safety and quality
Sincere management activities focusing on compliance
Practice of “Zen-in Keiei”

Rate Their Importance
We evaluated the importance of the extracted issues along
two axes: “importance to stakeholders (expected value)” and“importance to SEKISUI KASEI Group management.”

Sustainable Growthof SEKISUI KASEI Group

Responsibility to Stakeholders

Importance to stakeholders

Practice of corporate philosophy
Business activities

Key issues

Importance to SEKISUI KASEI Group management

Business issues ●Environment ●Social ●Governance

Examples of Extracting Issues★ Business expansion to solve environmental and social issues, business model resilience, DX, and Developmental innovation (AI, Materials Informatics, and Open innovation)

Stakeholder

Responsibility of SEKISUI KASEI Group

Customers

At SEKISUI KASEI, we not only supply safe/reliable products but also bring comfort and convenience to the lives of people
by always creating new functions/value and proposing materials/services as solutions for customers.

Group Members

At SEKISUI KASEI, we place emphasis on respect for people and mutual trust and pursues the happiness of people
working for the company. For the purpose, we will improve fairness to skill development and rating, and make efforts tocreate a healthy/safe work environment, and a good balance between work and family.

Local Communities

At SEKISUI KASEI, we believe being a safe workplace is the most important to communities. In addition, as a member of
local communities, we aim to be a company trusted and loved by the whole community.

Shareholders

At SEKISUI KASEI, we meet expectations from shareholders with returns by improving its corporate value. Furthermore,
we focus on the active disclosure of our management information and dialogue with shareholders.

Business Partners

At SEKISUI KASEI, we build trust in relationships with business partners through fair, honest business practices withsincerity as our motto. Also, we aim at co-existence and co-prosperity as a better partner for the partners.

● Climate change action, Resource recycling, Resource and energy conservation, More efficient resource and energy use, Waste/hazardous material
management, and Water resource conservation● Work style reform, Work-life balance, HR management, Diversity inclusion, Work engagement, Human rights, Product quality and safety, Security anddisaster prevention, and Contribution to society● Internal controls, The effectiveness of the Board of Directors, Compliance, Risk management, BCP, Dialogue, and disclosure.

STEP 3

Authorizing Key Management Issues of the Board of Directors
The identified Key Management Issues have been approved by the Board of Directors after a review by the Sustainable
Committee through consultation between relevant departments and the committee.

Process for Authorizing Materiality

Relevant Departments
Global Environment

At SEKISUI KASEI, we actively endeavor to improve environment to protect our precious earth. In particular, we contributeto develop the recycling-based society and the low-carbon level centering on foam plastics which are eco materials.

Consult

Sustainability Committee

Board of Directors

Deliberate

Deliberate and Authorize

21

SEKISUI KASEIIntegrated Report 2023

Materiality and Medium- to Long-term
Risks and Opportunities

Strategies for
Value
Creation

Categories

Materiality

Action Items

Creating Sustainable Star
SKG-5R promotion (Increasing
Product and expanding their
Sustainable Star Product)business
P39-44

E

22

Environment

Responding to climatechangeSKG-5R promotion (Achieve carbon
neutrality by energy saving and utilizationof renewable energy)

Opportunities

Risks• Increased business demand and business field expansion
due to priority use of Sustainable Star Product (products andsystems that contribute to the environment)• Reduced demand for single-use plastic products due to increased awareness ofenvironmental issues such as marine pollution, ocean plastic problems, and theaccelerating transition to a circular economy and sustainable society.

• Increased corporate value by implementing environmental
initiatives such as development of new products using
biomass, regenerated materials, or other similar resources• Supply chain disruptions and factory shutdowns due to the impact of extreme
weather events caused by climate change• Increased costs due to introduction of carbon tax• Increased collaboration with corporate customers on efforts to
reduce GHG emissions• Tighter regulations on CO2 emissions

Reduction of environmental
impactProper management of air, water, waste,and hazardous substances

P39-44

Business model resilience

Open innovation, external cooperation/
collaboration

P33-34• Increased opportunities for innovation creation by leveraging
diverse perspectives and external resources• Lost opportunities for innovation due to ineffective use of external resources

DX promotion

Production innovation, business
innovation, marketing innovation,
R&D innovation

P37-38• Creation of new value for society through production,
operational, marketing, R&D, and other business innovation
efforts• Reduced competitivity, higher running costs, and greater security risks due todelayed DX promotion

Diversity

Diverse workforce(women, seniors, non-Japanese)• Built corporate culture of creating new technology and value
by fostering diversity and inclusion• Possible loss of value creation opportunities and damage to corporate brandimage due to a lack of promotion of diversity and inclusion• Improved health, motivation, and work productivity of theGroup members by creating a rewarding work environment.

• Human rights risks, including human rights violations, forced labor, child labor,
and more throughout the supply chain• Improved organizational strength through increased work
engagement• Drop in motivation of the Group members due to lack of engagement surveys
and efforts to improve work engagement

Innovation

S

SocialHuman
resources

Workstyle reform

Promotion of health management,
various systems for work-life balance,and diverse and flexible workstyles

P35-36, 50• Reduced labor productivity and loss of human resources

Quality /Securityand disasterprevention

Work engagement

Personnel system design that promotes
the growth of workers

Providing safety andsecurity

Promote zero accidents and zero quality
complaints

Enhancing corporate
governanceG

GovernanceComplianceP47-49• Increased corporate customer satisfaction as a result ofGroup-wide quality improvement initiatives• Creation of systems to maintain safety and accumulation of
preventive maintenance technologies• Increased disaster prevention costs at business locations• Quality assurance for product defects and failures• Possible ineffectiveness of internal controls

Strengthen internal controls, improve theeffectiveness of the Board of Directors,
and enhance group governancePrevent problems and improve reporting
system• Events that affect society and the environment, such as chemical leaks or accidents• Damage to corporate value and decline in external reputation due to insufficientdialogues and information disclosures• Established a management foundation by improving decisiontransparency and responding appropriately to changing times
P51-60• Improved corporate image by earning social trust• Sluggish business activities and loss of public trust due to non-compliance• Increased stakeholders’ trust

Risk Management

Promote BCP initiatives• Business interruption due to larger-than-expected earthquakes, typhoons, orother natural disasters; fires, explosions, or other disasters at business locations;or supply chain disruptions or system failures• Potential pandemics threatening humanity

23

SEKISUI KASEIStrategies for
Value
Creation

Integrated Report 2023

24

Our Business Direction for 2030 “Target 2030”

Given that the world we live in is changing drastically, we have established “Target 2030” as our business direction to aim for in thenearer future, specifically the year 2030, with a view to realizing SEKISUI KASEI Group’s 100th Year Vision which was partially revised
recently. “Target 2030” will be implemented over a period of nine years with three separate medium-term management plan steps. The
current medium-term management plan, “Spiral-up 2024 (FY2022-FY2024),” has been positioned as the first step.

Envisioned business development in 5 priority fields
Electronics
Business Mission

rget 2030
Ta
20
Spiral-up

24

1st Step
FY2022

3rd Step

2nd Step

FY2028-2030

Propose solutions in the fieldsof advanced telecommunications equipment and electronic

FY2059Goal

FY2030Goal

components and contribute toindustrial development

FY2025-2027

Components• Strengthen the customized development of fine particles to drive technological innovation in the display/lighting field• Expand globally to meet growth in demand for new fine particles and structural components owing toadvancements in high-speed telecommunications technology

Packaging• Accelerate the proposal of total solutions tailored to the needs of component distribution, such as precision

FY2022-2024

equipment packaging
Sustaina

ble corpora

te growth• Contribute to global logistics with Sustainable Star Product that comply with environmental regulations in

SEKISUI KASEI Group
Vision of the 100th Yeareach country

Industry Segment

Basic Policy
Realize co-existence of “Contribution to a Sustainable Society” and“Sustainable Enhancement of Corporate Value.”

Mobility
Business Mission
Enhance environmental value
through technological innovationin next-generation mobility andthe optimization of structuralcomponent logistics efficiency

Business Domains

Components• Strengthen proposals at all global locations to meet growing demand for lightweight components with theshift to EVs• Accelerate product development to contribute to the creation of comfortable mobility spaces

Component Logistics• Give shape to highly profitable businesses with proposals for material and design solutions geared towards
distribution efficiency and the establishment of resource recycling systems

Medical/Healthcare
Technologies
With unique and original technology

Business Mission

Transformation

Materials

DX/RX/GX/
Production/Operations

And chemical potential

Provide products and services
that leverage our technologicalTransforming our business model

Medical• Pursue external partnerships in the fields of advanced medicine, telehealth, and in-vitro diagnostic reagentsand strengthen development and product differentiation for high-performance gel materials

advantage and contribute to the

Healthcare

promotion of people’s health
Food

Housing/Energy

Contribute to
the global environment

Electronics

Mobility

Contribute tosolving social issues• Globally expand high value-added products for sports materials, such as shoes, by addressing wearable

Medical/Healthcare

and personal needs

Food

Contribute to
the happiness of people

Business Mission
Develop products and sustain-

Basic Strategy

able resource-recycling businessmodels to ensure food safety
and reduce food waste

1 Enhancement of corporate value by pursuing a highly profitable structure2030 Quantitative Goals

Financial Targets(Billions of yen)
200.0(Billions of yen)
20.0

Operating Income Ratio

160.0
150.0

135.0

15.0

13.0

ROE

110.0
100.0

50.0

0

10.0

3.7

2019

Net Sales (LHS)

5.0

2024 (Plan)

Operating Income (RHS)* Benchmark is FY2019 earnings prior to the COVID-19 pandemic

5.02030 (Plan)

(FY)

0

8% or more
(3% in 2019)

8% or more
(3% in 2019)

Human Life Segment

2 Promotion of ESG management that supports sustainable growth

Sustainable Star Product aspercentage of net sales

50% or more

Percentage of reductions in
CO2 emissions

27% or more

(11% in 2019)((versus 2018)

portation• Provide distribution materials to ensure that all kinds of food reach people’s tables safely

Food Containers• Aim to conserve resources with the use of foaming technology and promote the recycling of resources• Launch products made with biodegradable or biomass-derived plastics in global markets

Housing/Energy
Business Mission

Disaster Prevention/Mitigation

Provide products to the renew-• Develop products to prevent road flooding caused by torrential rain and to help emergency response efforts

able energy sector and contribute to sustainable and comfortable living

Environmental Targets

Food Logistics• Contribute to reducing food loss with temperature-controlled designs that maintain freshness during trans-

Infrastructure Development• Contribute to the replacement of aging social infrastructure and the development of green infrastructure inurban areas

Housing Equipment• Develop thermal insulation products with added functionality with the use of composites and contribute to
greater energy efficiency in homes

Energy• Develop composite materials that are both light and durable for use in renewable energy equipment

25

SEKISUI KASEIStrategies for
Value
Creation

Integrated Report 2023

26

Medium-Term Management Plan “Spiral-up 2024”

Covering the three years from FY2022 to FY2024, “Spiral-up 2024” is the first step towards achieving the “Target 2030,” our businessdirection for fiscal year 2030. In addition to implementing the PDCA cycle, we are committed to creating a virtuous cycle between thechallenge of realizing a sustainable society and the sustainable enhancement of our corporate value.

Net Sales/ Operating Income

Basic Policy(Billions of yen)

To contribute to a sustainable society, and to achieve the sustainable enhancement of our corporate value, we will establish a
resilient earnings base based on ESG management(Billions of yen)

20.0

200.0

Make Innovations
Stage-Ⅱ
150.0

136.2
118.9

Review of FY2022

100.0

We continued to help bring about a sustainable society mainly by expanding our product category brands BIO Cellular and ReNew+.
We also endeavored to strengthen the Group’s management foundation by promoting human capital management. Accordingly, wewere selected as one of the companies in the 2023 Certified Health & Productivity Management Outstanding Organization Recognition
Program (Large Enterprise Category).
However, our efforts to reduce production costs, cut fixed costs, and pass on to prices of products in response to sluggish market
conditions caused by supply chain disruptions and sharp increases in raw material and fuel prices were not enough to offset thenegative factors. As a result, net sales increased but profit declined year on year.

Spiral-up 2024

117.6

124.6

49.5

52.6

58.1
53.5

130.0

54.0

3.7

65.4
2.1

0

135.0

56.0

15.0

67.0
13.0

10.0

79.0

78.1
50.0

160.0

2019

2020

Net Sales (LHS)

Industry Segment

68.0
1.5

2021
Human Life Segment

72.1

76.0
2.0

4.0

93.0

2024 (target)

2030 (target)

5.0

0.7

2022

2023 (target)

(FY)

0

Operating Income (RHS)

Key Issues
FY2022 Results

Challenges for Next Fiscal Year

1 Restructuring the business portfolio (5 priority fields as our targeted fields)
Strengthened business expansion centering on environmental contributions and carried out organizational restructuringwith a focus on the 5 priority fields

2 Constructing a highly profitable structure in the Proseat business

Strengthen the earnings
structure

P30

Combined the two production sites in Poland into a single location and streamlined fixed costs in production to copewith fluctuations in demand

3 Strengthening cost competitiveness through innovations in production

P37

Promoted production process innovation and the development of recycling technology, and pushed ahead with digitaltechnology-driven SCM

4 Rapidly generating profits from developed products

P33

FY2022 Results
5 Expanding Sustainable Star Product through recycling-based business

P41

P43

Made steady progress towards target for CO2 emission reduction, disclosed information in line with the TCFD
recommendations, and endorsed the GX League

FY2022 Results
7 Strengthening efforts to address Materiality (key management issues)

Reinforce our managementfoundations

Implemented cash flow management measures geared towards capital efficiency• Establish closed-loop recycling systems with users and engage in co-creation with other industries• Continuously promote more effective measures and further enhance TCFD disclosures
Challenges for Next Fiscal Year

P19

Set KPIs in each category, assigned an officer in charge, and established a framework to facilitate oversight by the
Board of Directors

8 Enhancing financial health• Drastically reform production technology by adopting innovative technology and driving Digital Transformation

Challenges for Next Fiscal Year

Made steady progress towards targets for net sales weighting for Sustainable Star Product and number of such products
registered

6 Striving to achieve carbon neutrality• Make all-out improvements to production, sales, procurement, and labor costs, withdraw from low-profit businesses,
and overhaul the management structure• Improve development efficiency with Materials Informatics

Enhanced pre-marketing (combining real and digital means)

Shift to businesses that solve
environmental and social
issues• Further reassess low-profit businesses and inject management resources into medium- to long-term growth businesses• Examine and review items of Materiality in response to changes in social circumstances• Execute various measures to boost profitability and improve capital efficiency, and accelerate initiatives aimed at
improving ROE

27

SEKISUI KASEIStrategies for
Value
Creation

Financial and Non-Financial Highlights

Net Sales/Overseas Sales Ratio

Operating Income/Operating Income Ratio

At least ¥160.0 billion in net sales in FY2030 has been set as one of the quantitative
targets for Target 2030. The Spiral-up 2024 medium-term management plan (FY2022–2024)—positioned as the first step towards achieving Target 2030—calls for net sales of¥135.0 billion. Also, with a view to global expansion over the long term, we are working
to increase our weighting of overseas sales.

(%) 50150.0 (Billions of yen)

39.7

120.0
90.0

Number of Sustainable Star Product Registered/Ratio of Net Sales

Operating income in FY2022, the first year of Spiral-up 2024 (FY2022–2024), was dented
mainly by the impact of lower sales volumes owing to flagging market conditions andthe fire at Sekisui Kasei Oita. We have lowered our FY2024 profit targets to reflect future
market forecasts and the slower-than-expected recovery in Proseat Group earnings,
but we will continue to strengthen our earnings structure and management foundation inorder to establish a resilient earnings base underpinned by ESG management.

We designate products with particularly high environmental contributions as Sustainable
Star Product and we set benchmarks for their creation and expansion. For FY2023
we are targeting 100 registered and a net sales weighting of 50%. To that end, we aretackling the practical application of new materials and the evolution of existing products.

6.0 (Billions of yen)

120 (products)(%) 12

40

124.7

30

75.2

4.0

8

P39 Environment

20

30.0

10

49.5

2018

2019

2020

2021

2022

0

(FY)

2.0

0

■ Overseas Sales (LHS) ■ Japan Sales (LHS) ● Overseas Sales Ratio (RHS)

(%) 6

0.8

0.45

2018

2019

2020

2021

2022

(FY)

0

0

-6

-8.0

2018

2019

2020

2021

2022

(FY)

-12

90

60

P33 R&D Strategy

3.0 (Billions of yen)

2.7

0

2019

2020

2021

2022

(FY)

2019

2020

2021

2022

15

2024

2030

(target)(target)

(FY)

2019

2020

2021

2022

0

(27%)

CarbonNeutrality
Target

0

0

2018

2019

2020

2021

2022

(baseline)

We recognize the importance of conserving resources and energy during the production
and use of our products in connection with our business activities. We therefore aim to
reduce the amount of energy we consume.

(FY)

(23%)

60,000

0

2030

2050

(target)(target)172,429

74,104

To drive the creation of new value and the transformation of our business model, we
require a diverse workforce that is capable of delivering solutions and thriving in various
settings worldwide. With a view to our global expansion over the long term, we areworking to bolster the number of Group employees who can work outside of Japan. We
also aim to foster mutual growth between people and the Company.
（％）100

4,000

3,505

80

3,000

1,852

60

52.8

2,000

40

1,000

2018

2019

■ Japan ■ Overseas(FY)*FY2018 baseline includes emissions at Proseat from April 2018 to March 2019

5,000

50,0002018

120,000

Number of Employees

100,000

-2.5

2020

2021

2022

0

(FY)

*All Group companies excluding the Proseat Group

20

1,653

2018

2019

2020

2021

2022

(FY)

0

■ Number of Employees in Japan (LHS) ■ Number of Employees Outside Japan (LHS)● Ratio of Employees Outside Japan (RHS)

Number of Paid Vacation Days Taken

Ratio of Female Employees

During the period of Spiral-up 2024 (FY2022–2024), we plan to actively carry out
capital investments in medium- to long-term growth, including initiatives related to DX,
production capacity expansion, and other measures for reinforcing our managementfoundations. We have plans to invest ¥22.0 billion over the three-year period, which is
80% more than the previous medium-term management plan, however, the amount weinvested in FY2022 was roughly the same as the year-earlier level because of earnings
and changes in the market environment.

We are pressing ahead with workstyle reforms to give tangible form to the words of our
founding spirit: “For happiness of people working for the Company.” We believe thatcreating an environment that respects diversity, where every individual can work creatively
and enthusiastically whilst striving to achieve a work-life balance, will contribute to thesustainable enhancement of our corporate value.

As part of our initiatives in the area of diversity & inclusion, we are endeavoring to improve
the ratio of female employees with the aim of advancing the active participation of
women throughout the Group. Also, an action plan (2022–2024) on promoting women’s
participation and advancement in the workplace and supporting the development of thenext generation has been established at SEKISUI KASEI (non-consolidated) and initiatives
are being implemented to improve the ratio of female managers, the ratio of female
employees, and the ratio of female recruits.

8.0 (Billions of yen)

12 (days)

40 (%)

5.7
3.7

2.0

2018

2018

20

150,000

4.0
1.0

0

200,000

2.1

2.5

6.0

2.0

17

250,000 (10GJ)

5.0 (Billions of yen)

Capital Expenditure/Depreciation and Amortization

In order to strike the right balance between contributing to a sustainable society andachieving the sustainable enhancement of our corporate value in a sustained manner, ourfocus is on shifting to businesses that solve environmental and social issues. Our R&D
costs in FY2022 were flat year on year in light of changes in the market environment,
but we plan to ramp up our R&D investments in order to progress toward 2030 target of
creating Sustainable Star Product and expanding their business.

30

FY2018FY2018comparison comparison

30

48

P44 Environment■ Net Income Attributable to Owners of the Parent (LHS) ● ROE (RHS)

Research and Development Costs

45

50

180,000 (t-CO2)

Energy Consumption

We aim to improve free cash flow, the ability to earn cash, as an indicator for judging
corporate performance in addition to accounting profits.

-5.0

FY2030 target: Milestone of 27% reduction in Scope 1+2 CO2 emissions comparedto FY2018 on the way to achieving carbon neutrality by 2050. We made better-thanexpected progress in FY2022 by virtue of achieving higher production efficiency andadopting renewable energy sources. Going forward, we will strive to further reduce ourCO2 emissions.

■□ Number of Sustainable Star Product Registered (LHS) ● Ratio of Net Sales (RHS)0-4.0(%) 60100(baseline)

Free Cash Flow

An ROE of 8.0% or more in FY2030 has been set as one of the quantitative targets forTarget 2030. One of the Key Issues in Spiral-up 2024 (FY2022–2024) is to reinforce ourmanagement foundations. With the goal of strengthening our current financial position,
we are aiming to improve ROE by not only focusing on P/L, but by engaging in capitalefficiency-oriented management and emphasizing improvements in cash flow andworking capital efficiency.

0

0.79
0.6%
■ Operating Income (LHS) ● Operating Income Ratio (RHS)

Net Income Attributable to Owners of the Parent/ROE

4.0 (Billions of yen)

4

CO2 Emissions (Scope 1+2)

P39 Environment

60
60.0

0

28

Integrated Report 2023

0

2018

2019

2020

2021

2022

■ Capital Expenditure ■ Depreciation and Amortization

(FY)

10.6

9

30

6

20

3

10

0

2018

2019

2020

2021

2022

(FY)

*SEKISUI KASEI (non-consolidated) and all Group companies in Japan

0

28.4

2018

2019

2020

2021

2022

(FY)

*All companies excluding some Group companies

29

SEKISUI KASEIStrategies for
Value
Creation

30

Integrated Report 2023

Business Overview: Industry Segment
Actual Results vs. Plan

We contribute to technological innovation in the fields
of electronics, mobility, and medical/healthcare.
We also aim to create new value by developing
materials and applications that combine sustainability
and functionality.

Net Sales

Operating Income

Automotive demand was sluggish due to the impact of decreased
production by automakers as a result of lockdowns in multiple locations in
China and semiconductor shortages. We will focus on expanding products
to meet an anticipated recovery in demand.

Despite our efforts to improve productivity and lower fixed costs, we still recorded
an operating loss because of the time lag in passing along costs to counter therising prices of raw materials, fuel, and energy.
In the Proseat business, we are pressing ahead with mainly business restructuring
and streamlining efforts. We therefore forecast a return to profitability in thisbusiness in FY2024.

Industry segment(Billions of yen)

net sales weighting

Consolidated
net sales
93.0

57.8%
76.0

72.1

Young Soo, Han

STRENGTHS• Solution proposals that combine sustainability and functionality• Integrated systems and technological capabilities, from raw material resins todesign, molding, and processing•		Highly functional materials of competitive superiority (fine polymer particles,
functional gels, etc.)

SWOT Analysis• Increasing complexity of manufacturing, such as the shift to high-mix, low-volume
production owing to the diversification of needs and shorter lifecycles• Risk of alternatives stemming from groundbreaking new materials and new
production processes• Sharp fluctuations in raw materials and fuel prices caused by geopolitical risks
and other factors• Uneven global distribution of production sites and weak market presence•		Commoditization and low margins in some existing applications

WEAKNESSESTHREATSFY2023 Growth Strategies（Plan）（Plan）（Plan）

Contribute to the development of industries by
providing solutions encompassing functional
materials, structural components, and packaging
materials for advanced telecommunications
equipment and electronic component applications

Growth Strategies
PIOCELANTECHPOLYMER

・Maintain and strengthen competitive advantage in optical applications for LCD displays
・Expand into new business areas, such as electronic materials

Mobility
Strategic Areas
Contribute to lightweight vehicle bodies andpassenger comfort in the mobility field, as well as
greater environmental value by providing packaging
materials that facilitate increased efficiency in the
distribution of automobile components

Growth Strategies
PIOCELANST-Eleveat

Components: Contribute to lighter automobile components with our further evolved
PIOCELAN 2.0
Packaging materials: Provide distribution materials that guarantee the quality of components
in the global logistics industry(FY)（Plan）（Plan）（Plan）

Proseat
Proseat business is one of our medium- to long-term growth strategies in Mobility field. Since we acquired this business in 2019, we have continued to implement
initiatives aimed at generating synergies between SEKISUI KASEI Group’s material development capabilities and Proseat Group’s development proposal capabilities
targeting the European automotive manufacturers. The adoption of our products by European automakers, who are leading the global race to develop EVs, will have asignificant impact on other brands, and we think they could become the de facto standard in EVs in the future. Some contracts have already been confirmed and webelieve we have gained a solid foothold for further growth in Mobility field.
(Million Euro)FY2023 Growth Strategy■ Implement across-the-board improvement measures in sales, production, procurement, labor costs,
and other aspects
16,000■ Reform business structure by withdrawing from low-profitability businesses and transforming
Consolidated
management structure(Billions of yen)
12,000 net sales■ Implement decisive measures for each of the LWC*, Trim, and Foam divisions(Thousand units)

20,000350
300
250(Billions of yen)200

Human Life segment150

net sales weighting

0

Packaging materials: Provide solutions with materials that deliver exceptional cushioning, andby leveraging our accumulated design know-how
Launch ReNew+, begin shift to resource-recycling business model2017 2018 2019 2020 2021 2022 2023 2024 2030

■Electronics ■Mobility ■Medical/Healthcare

50Strategic Areas(FY)

Note: The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) was applied to net sales from FY2021 onwards.

100

Electronics-0.1

2017 2018 2019 2020 2021 2022 2023 2024 2030

OPPORTUNITIES• Emergence of new needs, such as lighter vehicle bodies and improved interior
comfort by the market growth of electric vehicles (EVs)• Growing demand for carbon neutrality and reduced environmental footprint• Creation of new business models involving the recovery of used products and therecycling of resources• Increase in health awareness, including prevention of lifestyle-related diseases

1.5
5.0

4.0

3.7

3.8

55.0

52.7

49.8

Managing Executive Officer
Head of the 2nd Business Headquarters

18.0

16.9

15.5

(Billions of yen)

79.0

42.28,000
%

52.6

67.0

Goal

56.0
54.0 4,000
02018 2019 2020 2021 2022 2023 2024 (FY)（Plan）（Plan）
47.0
45.7

Net sales (LHS)

48.5

Automobile production volume in Western
and Central Europe (RHS)
6.3(Competitive
advantage)

Respond to increasingly sophisticated requirements of European OEMs by providing
solutions differentiated by using both SEKISUI KASEI’s material development capabilities
and Proseat’s development proposal capabilities

GrowthStrategy

2.7used around the battery,Enter the market for weight-saving components and2.6
materials
mostly for BEVs, to escape from commoditized areas and transform into a high-profitability
business

3.1* LWC: Light Weight Component
6.9

7.5

2017 2018 2019 2020 2021 2022 2023 2024 2030

(FY)
Expansion of Mobility Field（Plan）（Plan）（Plan）

2017 2018 2019 2020 2021 2022 2023 2024 2030

（Plan）（Plan）（Plan）■Food ■Housing/Energy

Materials
and products

Packaging materials
for transporting
automobile partMaterial development
capabilities

Seat Core・Address different development needs with novel and highly functional foam materials and by
expanding Sustainable Star Products
・Accelerate the development of new applications by leveraging Proseat’s wide range ofchannels as a Tier 1 supplier(FY)

Development proposal
capabilities

Vision for the European automobile industry

Full EV transition

Floor Spacer
Door Pad

Medical/Healthcare
Strategic Areas
Develop and provide high value-added materials
and finished products to address social issues andchanges in demand in the medical/healthcare field
and realize the creation of new value on a global
scale

Growth Strategies
ST-gel・Capitalize on open innovation to develop new materials for biosensors and wearables

ELASTIL・Expand sales for shoe material applications and ramp up development of new applications

Bumper Core（億円）

Market launch ofpolystyrene/polyolefin
hybrid foam
(PIOCELAN)

1974
160

162

485

Tool Box
Tire Spacer

Market launch of high thermal（億円）
resistant and lightweight foam
(ST-Eleveat)

Environmental solutions

Light, returnable, and recyclable

180 Tibia Pad
Present

500

4402030 (FY)

450

500

31

SEKISUI KASEI

55.0

52.7

49.8

2017 2018 2019 2020 2021 2022 2023 2024 2030

（Plan）（Plan）（Plan）

Strategies for
Value
Creation

Business Overview: Human Life Segment-0.1Integrated Report 2023

32

2017 2018 2019 2020 2021 2022 2023 2024 2030

(FY)

5.0

4.0

3.7

1.5

(FY)

（Plan）（Plan）（Plan）■Electronics ■Mobility ■Medical/Healthcare

Actual Results vs. Plan

As we look to shift to businesses that solve environmental
and social issues, we will continue to support different
lifestyles by actively developing products to meet theneeds of the times and materials suitable for a circular
economy.

Net Sales

Operating Income

In terms of food container applications, demand for eating at home and readymade meals has weakened slightly, but net sales overall increased year on year
by virtue of price revisions. We will endeavor to expand the market by capitalizing
on demand for materials related to excursions and travel, which is set to increaseon the back of an anticipated recovery in inbound tourism.

Operating income declined primarily as a result of the impact of lower sales
volumes stemming from sluggish market conditions, despite passing along
costs to offset repeated increases in raw materials, fuel, and energy prices.
We will aim to strengthen our earnings structure by continuing to expand salesof high value-added materials and Sustainable Star Products.

(Billions of yen)

Human Life segment

net sales weighting
52.6

42.2%
54.0

Yasunobu Furubayashi
Director and Managing Executive Officer
Head of the 1st Business Headquarters

STRENGTHSOPPORTUNITIES• Growing demand for the conservation of resources (foam products) driven by theneed to reduce plastic consumption• Growth in demand for environmentally-friendly products (recycled and bioplastics)• Creation of new business models involving the recovery of used items and therecycling of resources• Heightening demand for infrastructure to stave off (or limit) the growing number ofdisasters caused by climate change• Leading share of the domestic market for foamed polystyrene sheets• Polymerization, extrusion, impregnation foaming technology, molding andprocessing technology• Product designs that take advantage of the lightweight, thermal insulation, andcushioning properties of foam products• An integrated system that can handle everything from material development tomolding to the supply of final products

SWOT Analysis

WEAKNESSESTHREATSFY2023 Growth Strategies
Food
Strategic Areas

Provide products that help ensure food safety
and reduce food waste to support people’s daily
meals, and contribute to a sustainable society byoperating recycling-based businesses through thedevelopment of Sustainable Star Product

Growth Strategies

SheetsBeads• Expand sales of foam products to accommodate customers’ need to reduce their use of plastic
and CO2 emissions• Expand business in Sustainable Star Products, such as ESLEN Sheet RNW and INTERFORM BIO• Propose materials tailored to the needs of new markets such as take-out, delivery, ande-commerce• Increase supply chain resilience (SCM, expansions in production capacity to support growth insales)• Expand sales of ESLEN Beads RNW• Roll out recycled products using our proprietary technology and handle related materials• Expand into aquaculture applications and applications for exports of agricultural produce

Ensure the safety of people’s lives and contributeto the creation of sustainable and attractive living
spacesContribute to carbon neutrality by providing
products to the renewable energy sector

Energy6.3

6.9■Food ■Housing/Energy

2.7

2.6

48.5

3.1

7.5

2017 2018 2019 2020 2021 2022 2023 2024 2030

（Plan）（Plan）（Plan）

2017 2018 2019 2020 2021 2022 2023 2024 2030

(FY)

（Plan）（Plan）（Plan）(FY)

Note: The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) was applied to net sales from FY2021 onwards.

TOPICS

Roll out unique products mainly for developing infrastructure and preventing/mitigating
disasters(E.g. measures to address torrential rain = Aquaroad; disaster recovery = EPS method/EPS
slope)

Roll out and expand sales of materials for renewable energy facilities(floating solar panels and projects under development)

Virgin raw
materials—For Our Transition to Circular Economy Business Activities.—

ESLEN Beads RNW derived
from fish boxes
Recycled
raw material ratio

Conversion to

raw materials
Japan’s recycling rate for EPS foam reached 92.3% in FY2022, but challenges remain
Up to 50%for the materials used to hold food (fish boxes, etc.), which account for roughly 50%
（億円）
（億円）
of ESP foam applications. This meant the material recycling applications were limited.
Recycling
MoldedWe addressed one of the challenges—the identification and removal of odorousofmaterials
Used EPS foamcomponents in fish boxes—and
180subsequently established recycling technology for
162
these used fish boxes. We have since commenced mass production as a recycled
Foam molded
products
160 of ESLEN Beads RNW.
raw material
To further strengthen the recycling of these resources, we intend to explore ways toCollection
500
achieve horizontal recycling of EPS foam that minimizes, as much as possible, the 440Used fish boxes
450
use of virgin raw materials. 500

485

430

80

60
40
Expansionof 47
Food Field
2021実績

2022

2021実績

2024 （年度）Materials■エレクトロニクス
and products■モビリティ

892022■住環境・エネルギー

Fresh Keeper

Farm Product Box
Fish Box

Thermal insulation
High-strength/Lightweight
Production of foaming
polystyrene beads
startedProduction of foamed
polystyrene sheets
started

1960

1962

Food Tray

FoamedPolystyrene
Board

100
2024 （年度）■食Growth Strategies

Housing

47.0

56.0

■医療・健康Housing/Energy
Strategic Areas

45.7(Billions of yen)

Strengthening EPS foam Material Recycling• Sharp fluctuations in raw materials and fuel prices caused by geopolitical risks andother factors• Negative impacts of climate change on fisheries and agricultural produce• Tighter restrictions on the use of plastics owing to environmental problems• Consumer perception that plastics are bad for the environment• Low general recognition that EPS foam can be recycled

Consolidated
net sales
67.0

High-value-added materials
Compounding
Recycling of resources

Foamed PET
Food Container
Thermal resistance

Recycled products and products
made from biodegradable/biomass
materials

ESLEN Beads RNW
ESLEN Sheet Laminate RNW
Food Container

Bento Box

Oven-safe Container

Present

2030 (FY)33

SEKISUI KASEIStrategies for
Value
Creation

Integrated Report 2023

34

Research & Development Strategy

We are undertaking R&D unique to SEKISUI KASEI witha view to achieving “Target 2030.”

Research & Development Policy

We believe that coming up with various proposals centering on SKG-5R and thentesting and nurturing them into new businesses will lead to the coexistence ofenvironmental and social contributions and economic value.
Our researchers will contribute to the achievement of Target 2030 by always keeping
an eye on the market, sensing what is going on in the world, imagining how potential
customers will be impressed with our offerings, and driving profit-generating
development with a passion. To that end, we will enhance the technology we havecultivated thus far with digital tools and external knowledge and harness our humancapabilities to drive SEKISUI KASEI’s unique research and development.

Develop new products that contribute to the growth of SEKISUI KASEI

Hideyuki Asada

Foster the development of creative personnel who think about and experiment with the businessDirector and Managing Executive Officer
Head of Research & Development Center, General Manager of GX Development Department

Be self-motivated to take action to achieve something

Sharpen marketing thinking and promote development based on hypothetical needs and actively utilize andpromote interaction with other industries
Engage in technological development that leads to enhancement and expansion of existing businesses
Promote solution development and technological innovation that will help enhance existing businesses from thethree perspectives of “economic value,” “social value,” and “environmental value”

SEKISUI KASEI’s R&D Process

Strengthening the Framework Behind RX

In today’s highly uncertain and unpredictable world, it is easy to focus on the negative aspects. On the hand, it can also be said thatconventional wisdom is being overturned, and that there is plenty of potential for the emergence of new businesses and services.
As the pace of change continues to accelerate, we are pressing ahead with the following initiatives in order to draw up a roadmap forquickly turning research and development into practical applications.

Centering on the R&D Planning Dept. within the Research &Development Center, we provide opportunities for all Group
companies to participate in discussions about development
topics. We select and promote topics with an eye on future
value and lead approaches to market viability and potential
customers from various angles.
In promoting R&D, the Basic Research Laboratory is focused on

Embodying the Research
Transformation (RX) Mindset
Target for earnings generated by developed
products:
10% or more of operating income in FY2024

Embodying RX
We actively incorporate RX into our series of R&D processes. We aim to improve our
output by making use of simulations for the building of Materials Informatics (MI) and
Artificial Intelligence (AI) that incorporates machine learning, and also by conducting
pre-marketing linked to Marketing Automation (MA) and Sales Force Automation (SFA).

Fusion of real and digital
Materials Informatics (MI)• Machine learning• Simulation• Experimental database

Commercialization Study
Prototyping
Research and Development

Prior Art Search

Embodying RX

Pre-Marketing

Expanding the biodegradable plastics market

Feasibility Verification• Utilization of chemical substance database• Utilization of AI

Open Innovation
Idea Creation• Universities• NEDO• Cross-industry collaboration

Issue Setting

External Technologies

Social Value
Future value creation

Core Technologies

TOPIC

Fusion of real and digital• MA, CRM, SFA• Hypothesis proposal• Digital exhibition

Priority Areas

Problem-Setting Process

Marketing Process

To perform highly accurate problem identification, the first step is to formulate a“hypothesis,” which involves setting the problem and generating ideas for solving it.
We then proceed with feasibility verification and make improvements on a smallstart basis. We also partner with universities and companies in other industries toaccelerate the pace of R&D.

We focus on marketing as well as prior art search.
We aim to be an R&D organization that envisions whatkind of value we can contribute to society in the future
and then implements a verification cycle in a hypotheticalmarket up to the point of commercialization.

MI initiatives and is working to not only speed up development,
but also strengthen the talent and organizational structure that
contributes to solving technical challenges across the entire
Company. The Intellectual Property Dept. undertakes activities
whereby intangible assets are leveraged for new developments
under the concept of intellectual property DX. These activities
also include AI-powered prior art searches.

Partnership with the HighChem

In 2022 we entered into a basic strategic par tnershipagreement with the HighChem Co., Ltd. to mutually cooperate
on developing and expanding sales of biodegradable materials.
We are currently working together to chart a course from R&D
to practical application.
HighChem was an early mover in opening up the market forbiodegradable plastics. It currently boasts a sales structure forseven types of biodegradable plastics, including Poly-Lactic
Acid resin (PLA) and PHBV. The latter can break down even in
the ocean.
Under this partnership, we aim to collaborate in the field of
biodegradable materials by combining our expertise in resin
modification and our long-standing experience in developing
recycled products with the HighChem’s capabilities inimporting and market development. In doing so, we will look tocreate new value and accelerate the path towards achieving asustainable society.

Creating new value
Create Sustainable Star Productsand expand their businessRealizing asustainable society

New product RETONA FOAM BIO showcased at the
HighChem’s booth at EcoPro 2022
RETONA FOAM BIO is the collective term for our biodegradable
plastic foams derived from resins such as PL A or PBS anddeveloped with our proprietary resin modification technology.
At EcoPro 2022, held at Tokyo Big Sight from December 7 to 9,
it was showcased as a material for display applications at the
HighChem’s exhibition booth.

Exhibition Booth(design, construction, and production
handled by NHK Art, Inc.)

The material can be applied to flexible andcurved surfaces. It can also be formed into
3D shapes.

The enormous amount of waste generated by booth decorations
at events like exhibitions and trade shows is currently an issue thatneeds solving.
RETONA FOAM BIO can be used in such displays, but with less ofan impact on the environment. After it is disposed, it breaks down towater and carbon dioxide under the right environmental conditions.

35

SEKISUI KASEIStrategies for
Value
Creation

Integrated Report 2023

Human Resources Strategy

By practicing human capital management, we aim tooffer opportunities and environments in which a diverse
workforce can thrive, thereby creating new value.
We consider human resources to be indispensable to the execution of strategies if weare to achieve a balance between contributing to a sustainable society and achieving thesustainable enhancement of our corporate value. Given that “human resources” is oneof the categories in our materiality (key management issues), we are focused on putting
human capital management into practice in line with our Human Resources Policy.
We will create new value by respecting the diversity of every individual and providing
opportunities and work environments where their capabilities can be fully unleashed.

Toshie Amaki
Managing Executive Officer
Head of Administration Headquarters

Human Resources Policy
SEKISUI KASEI Group considers the inherent potential in each and every employee to be invaluable “capital.” That is why we practicehuman capital management to continuously create opportunities and environments conducive to sustained growth. To achieve this, wehave established the following items as part of our HR policy. We also ensure that Group employees conduct themselves in accordancewith our Code of Conduct so that we can develop an environment where their capabilities can be fully maximized.
Human Resources development

Supporting self-driven career formation and realizing growth of both individuals and the Group

Health and productivity management

Creating a workplace environment where employees can work energetically and are physically and mentally healthy

Evaluation/Compensation/Recruitment/Placement

Providing fair evaluations and compensation and hiring/appointing the right person for the right job

Engagement improvement

Providing a rewarding workplace and growth opportunities so that employees can be self-motivated to serve the Group

Diversity

Respecting the diversity of every individual and providing opportunities and environments where they can actively participate

Workstyle reforms

Pursuing highly productive ways of working and flexible working styles

SEKISUI KASEI’s Human Capital Management

Diversity & Inclusion Initiatives

Having established a Human Resources Policy, SEKISUI KASEI Group is focused on practicing human capital management. One suchinitiative in this area is supporting the self-driven career formation efforts of employees and the nurturing of human resources that leads togrowth for both individuals and the Group.

SEKISUI K ASEI Group believes that an understanding ofdiversity centering on respect and mutual trust is crucial if weare to respond swiftly and flexibly in these times of uncertainty
and enhance corporate value. We are therefore implementing
numerous initiatives in line with our HR policy.
The entire Group is committed to increasing the proportion of
female employees by establishing systems under which women
can actively participate with greater enthusiasm. At SEKISUI KASEI(non-consolidated), a three-year “Action Plan on the Promotion of
Women’s Participation and Advancement in the Workplace andAdvancement of Measures to Support Raising Next Generation
Children” was formulated and launched in April 2022 wasformulated and launched in April 2022, and the Company ispressing ahead with the development of talent and the creation ofsuitable environments to drive the active recruitment of women andincrease the pool of female candidates for managerial positions.
At the same time, we recognize that supporting families withchildren in society as a whole and making it easier for employees

Training system to promote Human Resources development
Our personnel systems and education and training programs clearly define the knowledge and experience needed by employees, fromthe time they join the Company as a new recruit, through to their appointment to a management position. We have established job-classspecific training programs for each of the entry, managerial, and management positions. Also, with the specialist system that we introduced
in 2019, we have established a multi-track career path that allows not only management personnel but also specialists to further theircareers. In this way we have expanded the system to allow all kinds of employees to develop their identity and play an active role in theorganization. We are also focused on supporting the self-development efforts of employees, mainly with the use of external seminars,
distance learning, and language training, so they have the opportunity to acquire the skills required for their self-driven career formation.

Training Program (SEKISUI KASEI non-consolidated)
Role classiﬁcation and specialist system
Advisory Senior Manager
Senior Manager

Managers
Manager

SeniorRegular Employee

Chief

Appointment tospecialized position

Management

Job-class-speciﬁc training programs

Career development support training

Director training

Career development training for 53-year-olds

Screening for promotion to
management role

Career development training for 45-year-olds

SK Juku course A

Training for newly appointed managers
SK Juku course B

Supervisor training

Screening for promotion to
managerial position

New Employee

Career development training for 35-year-olds

Career development training
Screening for promotion to senior regular employee

Regular Employee

36

Career development training for 30-year-olds

Self-development support

External seminars
Distance learning

FY2021

FY2022

FY2024(target)Ratio of women in
management positions

4.7%

5.8%

7.0% orhigherRatio of female employees

16.1%

16.8%

18.0% orhigherRatio of women to total hires

23.1%

22.2%

25.0%

Ratio of paternity leave taken

37.5%

83.3%

100%

Note: All data above is for SEKISUI KASEI (non-consolidated).

e-Learning
Language training
Various other self-development
support programs

Basic training*SK Juku is a ﬁxed-term, hands-on, and screening-type training program designed to develop next-generation leaders.

Promotion of Health Management
Guided by SEKISUI KASEI Group’s founding spirit—For happiness of people working for the Company—we aim to create aworkplace environment in which all Group employees can work
energetically. Having made a declaration to engage in health andproductivity management, we have appointed a person in chargeof health promotion at each business site and in each Group
company. Together with the Health Committee and the Company
Business Promotion Committee (Shasui Kai), we are implementing initiatives geared towards maintaining and improving thephysical and mental well-being of Group employees.

to raise their children is one challenge companies should address.
We are therefore putting various personnel systems in place andencouraging a workplace understanding of male employees taking
parental leave. In FY2024 we aim to achieve a paternity leave ratioof 100% (83.3% in FY2022).
The employment rate for people with disabilities across the entire
Group stood at 1.8% in FY2022. Going forward, we will continue
to share recruitment experiences throughout the Group in aneffort to promote the hiring of people with disabilities.

In re c o g n i ti o n of o u r in i ti ati ve si n 2 0 2 2, w e w e r e s e l e c t e d b y
the Ministr y of Economy, Tradeand Industr y and Nippon Kenko
Kaigi in the 2023 Certified Health& Productivity Management
Outstanding Organization
Recognition Program (Large Enterprise Category). Going forward,
we will continue to engage in health and productivity management through various activities.

TOPIC

Practicing “Zen-in Keiei”: SKG* Kaizen Activities Tournament
Based on the concept that “monozukuri”
be gins with the deve lopme nt of humanresources, and with the aim of nur turing
Group employees and strengthening the
manufacturing capabilities of the Group asa whole, we are pursuing improvements in
productivity and workability in all aspectsof our operations. Every year we hold the
SKG Kaizen Activities Tournament so that
employees have an opportunity to present toeveryone their ideas and actions for improving
operations.
This year, 188 teams worldwide entered thecompetition. The 11 teams that passed thequalifying round at each business site thenparticipated in the Group-wide tournament.
Following the presentations, the best teams
are recognized, and the details of theirinitiatives are shared mainly via the Group’s
intranet portal and newsletter.
This kind of setting for showcasing how
operations can be improved is one example
of our initiatives to practice “Zen-in Keiei”
that drives the growth of people and SEKISUIKASEI Group.
*SKG: SEKISUI KASEI Group37

SEKISUI KASEIStrategies for
Value
Creation

Integrated Report 2023

38

DX Strategy

Driven by IT, we leverage DX to create new value.
One of our Materiality (Key management issues) is innovation through DX. By viewingof digital technology as a tool and promoting the adoption of Information Technology,
we aim to construct a framework that maximizes the technological capabilities andmanufacturing expertise that we have cultivated since our founding, and ultimatelytransform people’s lives for the better.
With an eye on business optimization, we will implement manufacturing andoperational innovations to create new value through IT-enabled proposing solutions
and services.

Overview of DX Roadmap
2020
2021

FY2022–2024

1st Step

2nd Step

3rd StepPreparation stage

Implementation stage

Deployment stage

DX promotion stage• Operational concept aimed
at Group-wide optimization

Building of model cases

Widespread rollout ofmodel cases

Business modeltransformation

1) Modelling of operations• Building of digital
infrastructure

Tetsuharu Hirota

FY2025–2027

2) Modelling of data utilization

FY2028–2030

Director and Managing Executive Officer
In charge of PX Development Department and Information System Department,
Supervising the 2nd Business Headquarters

SEKISUI KASEI’s DX Process

DX Promotion Framework

To maximize the use of our technological capabilities and manufacturing expertise as a pioneer of foamed resins, we are embracing
the use of digital technology as a means of transformation.
Accordingly, in our pursuit of DX, we formulated a roadmap. While we designated the period up until 2021 as the preparation stage,
we will execute a three-step process involving implementation, deployment, and DX promotion for each three-year plan from FY2022
through to FY2030. In the first step, which corresponds to the period of the “Spiral-up 2024” medium-term management plan
(FY2022–2024), we are moving away from legacy systems and transforming our corporate culture. At the same time, strengtheningof our cost competitiveness has been identified as a priority issue, and we have kicked off some initiatives that aim to reinforce
production innovation and manufacturing capabilities, including the utilization of technology.

The primary driver of DX promotion is the DX Council, an
organization that conceives the grand designs for creating
new value with the use of digital technology. Of the three
DX pillars (strengthening business management, reinforcing
production management, and optimizing indirect operations)recommended by the IT Promotion Committee, the DX Council
makes decisions with the specific aim of establishing thoseprojects which contribute to the provision of services and new
businesses at an early stage.
The Information System Dept. collaborates with the Production
Technology Center and the Mechanical & Engineering Dept.
across the entire organization to carry out the series of tasks to
implement the digital technology required to drive DX.

TOPIC
Customers

Suppliers

Business
partners

Other
stakeholders

Providing value
Solutions and service offerings
Operational innovation

Production innovation

DX promotion (DX Council)• Focus on creating new value with the use of digital technology.
• W ith an eye on enhancing usability from the perspective of Groupwide optimization, take on the role of creating a framework for providing
solutions and services, including those of suppliers, Group companies,
and relevant departments.

Case Example of DX
Focus on building model cases utilizing digital technology
Against the backdrop of ongoing globalization and these times of
uncertainty, centralized management of corporate resources that
underpins more accurate and agile business decisions, along with
Supply Chain Management (SCM) capable of generating added value
from a customer perspective, is growing increasingly important.
We are implementing SCM with the use of IoT, and by “visualizing” all of
the processes related to our products, we believe it not only optimizes
production and inventory linked to sales, but it also leads to the creationof new value and the provision of services through digital means.
Thus, with a view to the Group’s expansion in the future, we kicked
off a project aimed at realizing DX, starting with the SCM for ESLEN
Sheet, for which operations can be easily standardized. In the
preparation stage from 2020 to 2021, we commenced in earnest thedevelopment of infrastructure for digitizing information pertaining to
production sites and set about gathering real-time information andanalyzing data.
In FY2022, the first year of the implementation stage, we selected theGroup company Sekisui Kasei Omi to be the standard model case.
We employed a trial-and-error approach to designing a Group-wide
optimization process, mainly by introducing a PSI system (production,
sales, inventory management), utilizing product-specific profit data,and streamlining indirect operations.
By concentrating investments in DX-related resources to build thisstandard model, we aim to uncover problems in the implementationand operation of SCM. We are also targeting a rapid transition to thedeployment stage from FY2025 onwards and the acceleration of DX
promotion.
Up ahead, we intend to develop digital-savvy employees and establish
a cross-department organization in the lead up to the deployment andDX promotion stages.

IT Promotion Committee• Set about building an IoT platform to use IT as a driver.
• Make improvements in operations with the aim of centrally managing
the installation of systems and accounting data for orders, production,
inventory, sales, and distribution.

SCM (supply chain management)
OrdersSEKISUI KASEI DEGITAL PLATFORM

DX

Production process reform

Production

Inventory

Distribution

Visualization and standardization of data

Sales

Operational process reform
Establishing operational processes thatfacilitate Group-wide optimization

39

SEKISUI KASEIIntegrated Report 2023

40

SEKISUI KASEI’s ESG:
E Environment

Foundation of
Value
Creation

The starting point is monozukuri in harmony with the natural environment

SKG-5R

Since its founding, SEKISUI KASEI Group has advanced its
foaming and polymerization technologies while also working on
monozukuri in harmony with the natural environment, including
energy conservation and recycling, with the aim of creating a
low-carbon and recycling-based society.
For instance, we utilize foam product features, including
lightweight and high thermal insulation, to enhance automobile
fuel efficiency and reduce CO2 emissions, contributing towards

For the creation of a sustainable society, we have set targets
to be achieved by FY2030. Toward the achievement, we will
apply the SKG-5Rs (SEKISUI KASEI Group-5R) comprised of
the 2Rs (Replace, Re-create) using the unique technologies ofdecreasing food waste.
But given the severity of climate change, ocean pollution, andother global challenges, we must explore new possibilities andcreate solutions to our environmental problems.
For the realization of our corporate message “Our planet. Our
tomorrow.” we are promoting SKG-5R and working to innovate
not only our products and services but also our businessactivities.

the SEKISUI KASEI Group added to the 3Rs (Reduce, Reuse,
Recycle) we have been focusing our efforts on for some time,
thereby contributing to the solution of global issues as listed in
the SDGs.

Corporate Vision

A new chemical solutions company that cares
for people and the planet as it creates new value

Environmental Policy

Business Direction for 2030

Basic Policy
SEKISUI KASEI Group, through its business activities, contributes to realizing a sustainable society where people and ourplanet continue to live harmoniously.

Target 2030

Basic Policy: Realize co-existence of “Contribution to a Sustainable Society” and “Sustainable
Enhancement of Corporate Value.”

1 Addressing Climate Change

In our business activities and throughout the life-cycle of our products and services, we aim to achieve carbon neutrality throughreductions in energy usage and effective utilization of resources.

SKG-5R

2 Resource Circulation

With the aim of building a society with material circulation, we pursue innovations that lead to “Reduce, Reuse, Recycle” and “Replace,
Re-Create” based on our unique technologies.

3Rs for the creation of a recycling-based society

3 Ecosystems Conservation

By making efforts for the secure management, treatment and reuse of the chemical substances used and the waste generated, we willcontribute to the conservation of rich ecosystems.
4 Compliance and Information Disclosure

We comply with laws, regulations, ordinances and international rules and we disclose the information relating to the environment timely
for the communication and mutual understanding with society.
We make efforts for the continuous education and enlightenment to improve the knowledge of our employees and promote the activities
to mitigate environmental impacts through management by all members’ participation (Zen-in Keiei).

The material itself accounts
for only 2% of the volume

We make our foam products by inflating
material beads derived from oil to several
dozen times their original size, so that air
accounts for most of the product volume.
A real resource saver.

Energy saving effectThermal insulation effect & lightweight
Our foam products are excellent atthermal insulation, enabling energy
saving temperature control. They are
utilized as food containers to maintainfreshness in food and to manufacture
lightweight components for automobiles.

We started recycling EPS in 1971. Today,
used PET is recycled through various
methods.

* Data source: JEPSADevelop recycling
technologies and systems
to promote recycling

Promote replacementwith sustainable
materials and energy

Core measures

Core measures

Core measures

Core measures 高「サステナブル・スタープロダクト(SSP)」＊環境貢献製品

Expand the lineup of
reusable products

Reduce raw material
consumption via higher
foam expansion rates, lighter
weights, and thinner walls

Reuse distribution materials

2%

TargetI

TargetJapan,2022

Core measures

Commercialize and promotesales of products madefrom regenerated materials

Switch from petroleumbased to biomass and 低
biodegradable materials

Develop recycling
technologies (material,chemical, thermal)

Switch to renewable energy「サステナブル・プロダクト」の中でも、特に環境貢献において優れた効果を発揮する製品・商品・システム「サステナブル
プロダクト」＊環境対応製品
Create ・next-generation

発泡プラスチックスをはじめとする、人々の暮らしに役立ち
環境にやさしい製品・商品・システム

products and businessmodels with new value
and functions that
contribute to an improved
environment

Targets for FY2030

Target92.3%

Re-create

Reuse waste materials
and energy

Create Sustainable Star Product and expand their businessTotal number of registrations

100

III

Share of net sales

50%

Recycling and biomass materials usage ratio

II

When the expansion ratio
is 50 times...

Replace

Reduce the use ofresources and energy

Resource circulation
The recycling rate is
92.3%

RecycleRe-create value andfunctions to contributeto environmental
improvement

Promote energy savings in
production and logistics(CO2 reduction)

Features of foam products
Saving Resource

Reuse

環境貢献度

5 Education and Enlightenment

Reduce2Rs based on SEKISUI KASEI Group’s unique technologies

50% or higher
Reduction of CO2 emissions

Scope1+2-27%(Compared to FY2018)

Targets for FY2050
Carbon neutrality achieved

高「サステナブル・スタープロダクト(SSP)」

高

環境貢献度

41

「サステナブル・スタープロダクト(SSP)」＊環境貢献製品
サステナブル・プロダクトの中でも、特に環境貢献において優れた効果を発揮する製品・商品・システム

SEKISUI KASEIIntegrated Report 2023

42

「サステナブル・プロダクト」＊環境対応製品
発泡プラスチックスをはじめとする、人々の暮らしに役立ち
環境にやさしい製品・商品・システム

Foundation of
Value
Creation

E Environment

FY2022 Results

I

TargetCreate Sustainable Star Product and expand their business
In SKG-5R, we have set the targets of expanding the numberof Sustainable Star Product (environmentally friendly products)
registered to a cumulative total of 100 and their ratio of net sales
to 50% by FY2030. Furthermore, as a target by FY2024, whichis the final fiscal year of the medium-term management plan
“Spiral-up 2024,” we have stipulated a cumulative total number

100

100
80

of registrations of 60 and a ratio of net sales of 20%.
In FY2022 the cumulative total number of registrations was 48
and the ratio of net sales accounted for by Sustainable Star
Product was 17%, 1.0 percentage points up compared to theprevious fiscal year, so both the number of registrations and theratio of net sales are largely as planned.

Plan
60

40

（%）
50
低

Result16 17

232021 2022

2030 （FY）

2024

0

2018

2021 2022

50%

50「サステナブル・プロダクト」＊環境対応製品
発泡プラスチックスをはじめとする、人々の暮らしに役立ち
環境にやさしい製品・商品・システム

Baseline

FY2022
actual results

16%

Plan

20%

Plan
20

2018

2024

2022

2024

2030

2030 （FY）■Baseline ■Result ●Target■Baseline ■Result ●Target

Sustainable Star ProductWe develop and design products that consider the limited
resources they use and their environmental impact throughout
the life cycle, starting from the procurement of raw materials
and use stages, up to disposal and recycling. In SKG-5R, weHigh

Total Production Volume「サステナブル・プロダクト」の中でも、特に環境貢献において優れた効果を発揮する製品・商品・システム

10

10

2018

raw materials from virgin raw materials in all of the products
manufactured by the SEKISUI KASEI Group by FY2030.

Targets and actual results of raw material usage ratio to the total production volume

11%

20

20

In order to realize the creation and expansion of Sustainable
Star Product (environmentally friendly product), we have set
a target of replacing 50% of the raw materials we use withraw materials recycled or biodegradable/biomass-derived

高30

Result 48
42

Recycled and biomass material usage ratio「サステナブル・スタープロダクト(SSP)」＊環境貢献製品
Targets and actual results for the share of net sales

40

60

0

II

環境貢献度

Targets and actual results for the number of registrations

Level of environmental
contribution

Targetcertify those products that make even greater contributions to
the environment as “Sustainable Star Product” (environmentallyfriendly product), aiming to create and expand their businessin line with the indicators set to this end.

Sustainable Star Product (SSP)* Environmentally friendly productProducts and systems that make greater contributions
to the environment among our “Sustainable Product”

We recover used products and theoffcuts from manufacturing processes,
carry out regenerative treatment so thatthey are easy to use, and use them as
raw materials in new products.
In development materials that use
recycled raw materials, it’s essential tosolve a variety of technical challenges toachieve the same level of performanceas conventional products, but webelieve this is one important initiativefrom the perspective of the reduction ofwaste.

Recycled
materials

Molding/
Processing

Collection

Used products

Material
recycling

Products

EPS (expandable polystyrene) beads
We collect the polystyrene (PS) components of discarded
household appliances* and polystyrene foam molded
products using our original recycling system and then turnthem into raw materials.

Use*Discarded household appliances: discarded home appliancessuch as TVs and refrigerators

Sustainable ProductProducts and systems that are useful in daily life and friendly
to the environment, such as foam plastics

Examination/Certification/Registration
The process of registering a Sustainable Star Product is asfollows. After receiving the application from the department
in charge, the Environment Committee examines it, andthose that meet the criteria as a result of the examination

are certified and registered after approval at a management
meeting. A third par t y evaluates the validit y of thecertification and registration process.

Bioplastic is the collective team forbiomass plastic and biodegradable
plastic.
Biomass plastic is made fromrecyclable organic materials such as
plants, while biodegradable plastic
is eventually broken down by CO 2
and water through the action of
microorganisms, etc.

Biomass
PlantsOil

Products

ST-Eleveat BIO
High Heat-Resistant Lightweight Foam

Biodegradable
Products

Microorganisms

Decomposition

Flow for examination, certification, and registration
Water

Development/Design

ESLEN (EPS) beads RNWApplication by
the business dept.

Examination by
the Environment Committee

Approval ata management meeting

Certification/Registration

CO 2

These are foamed plastics with a biomass ratio of 25% ormore by replacing conventional raw materials with plantderived materials. We also offer a range of High Flameretardant grade with a biomass content of 15% or more.

(FY)

43

SEKISUI KASEIFoundation of
Value
CreationTargetIII

Integrated Report 2023

44

E Environment

Inputs/Outputs (FY2022 Results)

Reduction of CO2 emissions
In SKG-5R, we have set a target to reduce our Scope 1 + 2 CO2emissions in our business activities by 27% by FY2030 from
FY2018 levels, that was based on the criteria set by the Science
Based Targets (SBT) initiative. We are proactively implementing
measures across the Group in accordance with the reduction
plan, including promoting more energy-saving production andreviewing our energy procurement method, and we are aiming

for zero substantial CO2 emissions by FY2050 with the 2030
reduction target as a milestone.
In FY2022 the actual results progressed at a higher level thanthe plan due to the higher efficiency of production and theintroduction of renewable energy, among other factors, and we
reduced CO2 emissions by 23% from FY2018 levels.

SEKISUI KASEI Group manages the environmental impact arising from business activities in “output/unit consumption,” which
expresses environmental loadings per production volume.

Japan

Overseas

Inputs

InputsCO2 emissions (Scope 1+ 2) reduction targets and actual results
Energy consumption(thousand t - CO2)

150,000

Baseline

Water consumption

Electric：114,521 MWh

3,068 thousand m

Non-electric：15,654 kl

Result(23)%

120,000

1,724,290 GJ

インプット

FY2018 BM

140,000
130,000

Energy consumption
Water consumption

172 thousand m

Electric：36,588MWh
Non-electric：9,685kl(Crude oil equivalent)3(Crude oil equivalent)

FY2030Plan

741,040 GJ

3

(27)%

110,000
100,000
90,000FY2050Carbon neutrality
achieved

80,000SEKISUI KASEI Group

Recycling 9,324 t• Sales• Production• R&D

Materials Recycling： 6,585 t

70,000

Thermal Recycling： 2,739 t

0
2018

2021

2022

2024

2030

2050

Recycling 2,324 t
Materials Recycling：2,133 t
Thermal Recycling： 191 t(FY)* The FY2018 baseline includes the contribution from Proseat for the period between April 2018 and March 2019

Outputs

TOPICS

Atmospheric environmental load

Initiatives for achievement of the targets

Atmospheric environmental load

CO2 emissions : 79,416 t-CO2 (Production)

We are promoting the introduction of solar power generation systems as needed
across the GroupIn order to achieve our targets for CO 2 emissions reduction, SEKISUI KASEI Group is
promoting the introduction of facilities to switch the energy used in our production activities
from fossil energy to renewable energy.
We have introduced solar power generation systems in the five locations of Sekisui Kasei
Tenri (Head Office), Sekisui Kasei Kanto (Shimodate), Sekisui Kasei Saitama, Sekisui Kasei
Toubu (Head Office, Kanuma) to date, and the systems are providing a part of the electricity
used in the production activities at each location. Going forward, we will continue to promote
their introduction in locations across the Group, to not only reduce the emissions of ourcompany but also to contribute to the strengthening of electricity supply stability in the plants
and regions and the realization of carbon neutral.

Outputs

CO2 emissions : 29,901 t-CO2 (Production)

CO2 emissions : 10,314 t-CO2 (Logistics)

NOx emissions : 12.0 t

NOx emissions : 21.8 t

SOx emissions : 1.3 t

SOx emissions : 14.3 t
Sekisui Kasei Kanto (Shimodate)Aquatic environmental load
Total effluent : 			

Aquatic environmental load

2,708 thousand m

3

Amount of COD discharge : 13.2 t

Total effluent : 			

132 thousand m3

Amount of COD discharge : 15.8 t

Industrial waste

Industrial waste

9,618 t2,921 tSekisui Kasei Toubu (Head Office)We support the Task Force on Climate-related Financial Disclosure(TCFD) recommendations
We are encouraging the enhancement of information disclosure for the realizationof a decarbonized society
We support the recommendations of the Task Force on Climate-related Financial Disclosuresand are carrying out information disclosure as needed.

Information disclosure through the website

Final landfill disposal and simple incineration:

294 t

Final landfill disposal and simple incineration:

597 t

45

SEKISUI KASEIFoundation of
Value
Creation

46

Integrated Report 2023

E Environment

Inputs/Outputs (FY2021 Results)

Environmental Accounting (Japan)

Fiscal Year

2018

2019

2020

Environmental Conservation Costs

2022

2021

(Millions of yen)

Number of production sites

39
19

Japan
Overseas

39
19

39
19

38
18

38
19

Category

FY2022

FY2021

Major activities

Investment

Costs

Investment

Costs

6

114

26

116

1) Costs in business area

Inputs (Japan)
Energy consumption (GJ)
Unit consumption/output (GJ/sales in millions of yen)
Water consumption (thousand m )3Unit consumption/output (thousand m3/sales in millions of yen)

1,935,760
21.0
3,401
36.9

1,930,170
22.2
3,457
39.8

1,866,910
23.8
3,252
41.4

1,875,160
26.3
3,302
46.4

1,724,290
22.9
3,068
40.8

101,909
1,105
8,304
36.3
264
25.5
3,269
35.4
17.0
8,780
97.2

95,760
1,103
8,180
36.3
234
22.6
3,272
37.7
15.8
10,436
95.4

89,571
1,140
7,634
33.7
249
22.6
2,962
37.7
14.0
9,764
95.6

92,140
1,294
9,086
39.9
267
24.2
2,975
41.8
12.8
10,09896.2

79,416
1,056
10,314
48.0
284
21.3
2,708
36.0
13.2
9,618
96.9

Outputs (Japan)
CO2 emissions (Production) (t-CO2)
Unit consumption/output (kg-CO2/sales in millions of yen)
CO2 emissions (Logistics) (t-CO2)
Unit consumption/output (kg-CO2/t)
CO2 emissions (Office) (t-CO2)
Unit consumption/output (kg-CO2/m2)
Effluent (thousand m3)
Unit consumption/output (thousand m /sales in millions of yen)
3

COD discharge (t)Industrial waste (t)Recycling rate (%)(1) Pollution control

Control measures for air/water quality(2) Global environment

Energy saving

125

14

126

6

(3) Recycling

Recycling, industrial waste treatment

0.2

353

4.0

281

131

481

156

403

Subtotal2) Up-/down-steam

Product recycling

0

43

0

81

3) Management costs

Departmental costs associated with introducing
environment management system

3

72

3

72

4) R&D costs

R&D for environmental conservation products5) Social Activity cost

Greening, social supports

6) Environmental damage fixing cost Nature restoration
Total

Energy consumption (GJ)
Unit consumption/output (GJ/sales in millions of yen)
Water consumption (thousand m3)
Unit consumption/output (thousand m3/sales in millions of yen)

539,150
26.5
163
8.0

890,200
18.0
253
5.1

834,620
20.7
221
5.5

741,040
15.0
172
3.5

810,170
17.5
194
4.2

Outputs (Overseas)

COD discharge (t)25,178
1,236
81
4.0
7.5

41,883
848
214
4.3
13.6

38,503
956
166
4.1
16.0

33,847
730
144
3.1
14.1

29,901
605
132
2.7
15.8

Industrial waste (t)

1,494

3,511

2,958

2,886

2,921

80.7

78.8

81.8

79.4

79.6

CO2 emissions (Production) (t-CO2
Unit consumption/output (kg-CO2/sales in millions of yen)Effluent (thousand m )3Unit consumption/output (thousand m3/sales in millions of yen)

Recycling rate (%)

Note 1: SEKISUI KASEI Group ascertains and manages the environmental impact that arises in various aspects of its business activities in terms of “unit consumption/ output,” which expresses
environmental loadings per production volume.

FY2021

FY2022

1) Effects on costs in business area
(1) Electricity consumption (MWh)122,351

114,521(2) Crude oil consumption (kl)

17,235

16,159(3) Total effluent (thousand m3)

3,272

2,708

(4) Amount of COD discharge (t)

16

13.2

201

203

0

45

1

0

1

0

0

0

0

134

641

159

602

(Millions of yen)

Details of effects

FY2021

FY2022

1) Cost reduction through energy-saving activities

(11)

15

2) Income from recycling

280

224

269

239

Total

Cost Effectiveness of Environmental Conservation Activities

2) Effects on Up-/down-steam costs
Amount of recycled polystyrene foam (t)44Economic Effects Related toEnvironmental Conservation Measures

Environmental Conservation Effects (in terms of volume)
Details of effects (Unit)

Inputs (Overseas)

00.1

FY2021

FY202242.0%

39.7 %

Investment figures are for construction completed during the period. Expense figures do notinclude depreciation and amortization.

Compliance with the Chemical Substances Management Act

Note 2: The Group-wide total including Proseat Group, which became a consolidated subsidiary in FY2018 (January 2019).

Recycling of Expandable Polystyrene Foam (EPS)
100 (%)

80.3

80

30.3

60

51.5

40

20.3

20

12.6

31.2

1991

1998

85.4

85.7

88.3

90.2

90.2

90.4

90.8

89.5

90.8

92.0

92.3

28.6

30.7

31.9

34.0

34.5

36.0

38.0

38.1

37.9

38.2

40.5

50.0

56.8

55.0

56.4

56.2

55.7

54.4

52.8

51.4

52.9

53.8

51.8

2007

2009

■ Material recycling rate ■ Energy recovery rate

2011

2013

2015

2016

2017

2018

2019

2020

2021

2022 (FY)

Chemical Substances in the Environment and Promotion of
Improvements to the Management Thereof).
* PRTR: Pollutant Release and Transfer Register

Emissions of Chemical Substances (PRTR substances: Rounded to one decimal place)
Substance0* Data source: JEPSAWe promote improvements in compliance with the PRTR*
system under the Chemical Substances Management Act(the Act on Confirmation, etc. of Release Amounts of SpecificStyreneToluene(t)

Methyl methacrylate

Ethyl benzene

Fiscal Year

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

2018

2019

2020

2021

2022

Air

4.7

6.7

5.0

5.4

5.1

0.4

0.5

0.3

0.4

0.3

1.4

1.4

1.2

1.3

1.0

0.1

0.1

0.1

0.1

0.1

Emission Water

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Soil

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

3.4

3.1

1.6

3.2

1.7

0.0

0.0

0.0

0.0

0.0

0.0

1.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

移動量

47

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

48

SEKISUI KASEI’s ESG:
S Social

SafetySafety Management System

Based on its Corporate Vision of “a new chemical solutions
company that cares for people and the planet as it creates
new value,” SEKISUI KASEI Group is giving priority to safety
and health and implementing safety activities in all its businessactivities. In FY2022 we revised the “Management Policies
Related to the Environment, Safety, and Quality” into new “Safety
Policy,” and we are promoting initiatives in this area under the
Safety Management System.

Sustainability Committee(Chair: President)

Going forward we will continue to comply with laws andregulations, take measures to meet new challenges to carry out
continuous improvements, endeavor to release information, andmake efforts to ensure that we can gain the understanding andtrust of society.

Safety Committee

Oversees and promotes safety
and health management within SEKISUI KASEI Group

Kanto Safety Committee
Group companies in the East Japan region

All Group offices(38 in Japan)

Kansai Safety Committee
Group companies in the Tokai and Kansai regions

West Japan Safety Committee
Group companies in the West Japan region

Safety and
Health Committee(Safety Committee)

Production Section Safety Meeting (5 sections)
Safety meetings grouped by similar facilities and similar work

Safety Policy

Lost Time Injury Frequency Rates*

Accident Severity Rates*

1.50 1.50

Basic Policy
SEKISUI KASEI Group prioritizes health and safety above all else, promotes safety activities with the objective of achieving zeroaccidents and zero disasters, and seeks to become a safe and secure company that is trusted by employees and society.

0.15 0.15

1.31 1.31 1.25 1.25
1.20 1.20 1.20 1.20 1.21 1.21
1.00 1.00

1.02 1.02

1.14 1.14

0.1300.130
0.10 0.10

1 Creating a Safe and Secure Workplace

We promote the creation of a comfortable workplace environment in which all employees are healthy in both body and mind and feelthat their work is worthwhile.

0.08 0.08

3 Evolution of Safety Activities

0.05 0.05

0.28 0.28

0.20 0.20
0

0

0

0

0

0

SEKISUISEKISUIKASEIKASEIGroupGroup Manufacturers
Manufacturers(100 or(100
more
or moreemployees)
employees)* Lost Time Injury Frequency Rate: The number of absent employees due to industrial
accidents per 1 million working hours

4 Communication with Society

We aim good communication with authorities and local communities, and timely information disclosure.
5 Education and Enlightenment

0.08 0.08

0.07 0.07
0.06 0.06

0.50 0.50

201720172018201820192019202020202021202120222022（FY）（FY）

Investigating danger and hazards in the working environment and reducing the risks with new perspectives without been obsessed withcurrent condition, we continue to evolve our safety activities.

0.10 0.10

0.62 0.62

2 Compliance

We comply with laws, regulations and ordinances related to health and safety, and security and disaster prevention, aiming a company
trusted by society.

0.10 0.10

Lost Time Injury Frequency Rates of Manufacturers (100 or more employees): Excerpted
from statistics in the Ministry of Health, Labour and Welfare’s Survey on Industrial Accidents

00.0050.005 0000.0100.010
000.0040.004

201720172018201820192019202020202021202120222022（FY）（FY）
SEKISUISEKISUIKASEIKASEIGroupGroup Manufacturers
Manufacturers(100 or(100
more
or moreemployees)
employees)* Accident Severity Rate: The number of lost workdays per 1,000 working hours
Accident Severity Rates of Manufacturers (100 or more employees): Excerpted fromstatistics in the Ministry of Health, Labour and Welfare’s Survey on Industrial Accidents

We aim rising awareness for the health and safety through enhancing educational and enlightenment activities and work on leveling up
of every individual.

TOPICSSEKISUI KASEI Group has set the basic policy to realize co-existence of “Contribution to a
Sustainable Society” and “Sustainable Enhancement of Corporate Value” in Target 2030,
the business direction we are aiming for by 2030, which we established in January 2023.
Therefore, the Group has identified “providing safety and security” as one of its Materialitythat are key management issues and is focusing its energies on initiatives to this end. In
April 2022, a fire accident occurred in Sekisui Kasei Oita, a group company. We perceive
the occurrence of this kind of accident to be a serious risk, so we are taking improvement
measures for the prevention of recurrence to evolve the safety activities by the Group as awhole and we are working hard on enlightenment activities to raise awareness of safety.

Holding the SKG safety convention and safety
lecture meetings
We are regularly holding the SKG safety convention andsafety lecture meetings with the aim of spreading bestpractices by sharing disaster prevention and safety activities
independently implemented by each business site with theentire Group.
We implemented the SKG safety convention in the current

Distribution of safety information
Key safety-related activities and initiatives are sent out every Monday
as the “Safety Activity of the Week.” Regarding the contents which issent out, in addition to introducing safety activities at each businesssite, the bulletin provides a wide range of information which willraise safety and health awareness, from lessons learned from past
accidents to information on the government’s “National Safety Week”
and “Disaster Prevention Week.”

fiscal year comprised of two parts, a lecture titled “Safety
communication for worksites” by a visiting lecturer anda workshop concerning fire prevention, and we mutuallyconfirmed once again the importance of safety.
We plan to hold these tournaments on a regular basis toraise safety awareness throughout the organization.

Yasumasa AsanoManaging Executive Officer
Head of Production Technology Center,In charge of Quality & Safety Control Center

The scene at a SKG safety tournament lecture

49

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

50

S Social

Quality

Human Rights/Labor Practices

The Group pursues quality from the customer’s perspective andpromotes quality management activities in accordance with its
management philosophy and quality policy. In order to manage thequality of our products and services, we have established a quality
assurance system for each product according to its characteristics.
Star ting from the R&D phase, we clarif y the customer’s
specifications and focus on improving product quality from thedevelopment stage.

We have also developed internal regulations to deal withproduct accidents. In the unlikely event of a product accident,
responsible departments take the lead in promptly respondingin line with regulations, with full consideration of the customer’s
perspective, and related departments cooperate in finding asolution as necessary. In the event of a particularly serious
product accident, the situation is immediately reported to top
management for prompt and appropriate action.

Quality Policy

SEKISUI KASEI Group respects fundamental human rights
and is committed to ensuring that all individuals are free fromdiscrimination based on any factors, including but not limited tobirth, nationality, race, ethnicity, creed, religion, gender, or age.
Our management philosophy states that “we, SEKISUI KASEIGroup, practice “Zen-in Keiei” based on respect for people
and mutual trust. We are always innovating in our aim of “newTOPICS

Basic Policy

Training and Education

SEKISUI KASEI Group pursue the quality with customer perspective and provides valuable products and services that satisfy
our customers and society.

We publish a Compliance Manual regarding infringements ofhuman rights and the prohibition of discrimination, and theseideas are widely entrenched among the Group’s employees.
In addition, we implement e-learning programs for all Group
employees once a year, and we continue to remind them that theissues of human rights and harassment can occur in a varietyof circumstances around us. We are aiming to foster awarenessby continuously carrying out appropriate enlightenment andeducation through various training programs.

1 Providing Satisfactory Quality

Building in the quality which satisfies customers requirements, we provide safe and secure products and services that satisfy thecustomers.
2 Thorough Quality Control

By thorough quality control from procurement of raw materials to delivery of products, we work on prevention and recurrence preventionof defects by all the Group members in pursuit of higher-quality manufacturing.
3 Perform Quality Assurance

We take the opinions and assessments of the customer seriously and use them for the improvements and we aim appropriate information
disclosure and quick resolution with customer perspective for the complaints and requests for improvements from the customers.

happiness.”” To implement this philosophy, we respect thehuman rights of all those involved in our business activities.

Human Rights Reporting and Consultation Contact Point
The internal reporting system “SKG Clean Network” is receiving
all reporting and consultations, including about human rights.

4 Compliance

We comply with laws, regulations and ordinances relating to the quality, and we work to maintain and enhance thorough quality management.
5 Education and Enlightenment

Through continuous educational and enlightenment programs, we promote improvement quality awareness and strengthen management
capabilities.

Shasui Kai, Carried Forward the Founding Spirit of “For Happiness of People Working
for the Company” to the Present

TOPICS
Chemical Substance Initiatives
In order to provide information swiftly to our customers, we use
ChemSHERPA that is a scheme for standardizing information
handling in Japan to manage the chemical substances contained in
our products. SEKISUI KASEI Group has also established a green
procurement standard for raw materials and strives not only tothoroughly comply with laws and regulations, but also to develop
products that take into account the environment, safety, and health.

Response to Food Sanitation Act Revisions
The revision of the Food Sanitation Act introduced a “Positive List”
system for food utensils, containers, and packaging. The Group has
filed notifications at applicable manufacturing sites and complies

with the revised Food Sanitation Act for all products that fall under
the category of food utensils, containers, and packaging.

Quality Training and Awareness-raising Activity
As quality enlightenment, we conducted the Group-widee-learning session on quality management, quality control
techniques, and management of measuring equipment in
October, to further raise awareness of product quality. In addition,
to improve the level of quality knowledge throughout the Group,
we promote the acquisition of QC certification*, which tests
knowledge of quality management.
* The exams are certified by The Japanese Society for Quality Control, and areadministered by the Japanese Standards Association (JSA) Group and the Union ofJapanese Scientists and Engineers.

About “Shasui Kai”
The Committee was launched in 1961 as an organization pursuing the “happiness ofpeople working for the Company” and as a committee participated in by all the Group
employees, including the managers.
We are striving to realize our founding spirit of “For happiness of people working forthe company” and to contribute to society through our business activities based on
the concepts of “Respect for People” and “Mutual Trust,” which state that mutual
understanding is deepened and trust is established when we respect each other's
positions and talk to each other thoroughly.

Stone monument inscribed with the Founding spirit

51

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

52

SEKISUI KASEI’s ESG:
G Governance

Our Basic Approach to Corporate Governance

Skill Matrix of Directors

To fulfill its social responsibility to all stakeholders, SEKISUIKASEI Group aims to make its corporate governance function
effectively, ensure management transparency, and establish amanagement structure capable of promptly adapting to changes
in the business environment.
To realize these goals, we are working to enhance corporate

The Board of Directors ensures that its roles and responsibilities
are effectively fulfilled by having a well-balanced mix of directors
with a wide range of knowledge and experience, to accurately
assess the business situation and make appropriate decisions.
With regard to our policy for selecting director candidates
and specific candidate selection proposals, the Nominating
and Remuneration Advisor y Committee prepares a skill
matrix of each director’s knowledge, experience, and abilities,
and then comprehensively deliberates and prepares a draft

governance. We believe that the essence of corporate governanceis ensuring the transparency and fairness of decision-making fromthe perspective of working to enhance sustainable growth and longterm corporate value, and utilizing the management resources wepossess sufficiently effectively to increase management dynamism
through prompt and decisive decision making.

Corporate Governance System
auditing function and ensure the rationality, transparency, andfairness of management decisions.
Further, we established Nominating and Remuneration Advisory
Committee of which a majority of members are independent
outside officers, which deliberates matters including candidates
to succeed the president, director candidates, and director
remuneration.
Through this current system, we have put in place a structurethat functions both to ensure the rationality, transparency,
and fairness of management decisions and to super visemanagement from an objective and neutral perspectives.

We adopt a corporate auditor system, with supervision andaudits of business execution conducted by the Board of
Directors and Audit & Supervisory Board.
Of the eight directors, three are outside directors, who supervise
management from an objective perspective while ensuring theappropriateness and transparency of the Board of Directors’decision making.
Of the five members of the Audit & Supervisory Board, three
are outside members. By establishing a system of timely andappropriate reporting of significant matters to the Audit &Supervisory Board and its members, we have strengthened theChart of SEKISUI KASEI Corporate Governance System (As of June 26, 2023)
Shareholders Meeting
Appointment/Dismissal

Nominating and Remuneration Advisory Committee Consultation
Total Members: 5(Inside Board Member: 1) (Outside Board Members: 4)

AdviceAppointment/
Dismissal

Board of Directors
8 Directors

Executive Committee
Sustainability Promotion Committee

Appointment/
Dismissal

ReportAudit

President

ReportExecutive Officers: 13
Audit

Corporate
Management/
Management
Strategy

Financial/
Accounting

Legal Affairs/
Governance

HRInternationality/
Overseas
Business

MasatoKashiwabara

Representative Director
President and Chief
Executive Officer

○

○

○

○

KatsumiSasaki

Director
Senior Managing Executive
Officer

○

○

○

○

Tetsuharu
HirotaDirector
Managing Executive Officer○○

Hideyuki
Asada

Director
Managing Executive Officer○○

Yasunobu
Furubayashi

Director
Managing Executive Officer

○

○

Morio
KubotaIndependent Outside Director○○

Michiko
UeharaIndependent Outside Director

IchiroWakabayashi

Independent Outside Director

Men

Audit & Supervisory Board
Total Audit & Supervisory
Board Members: 5○○○

Sales/
Marketing○

Development/
Production/
Quality

Environment/
Energy

○

○

○
○

○

○

○

○

○

○

○

○

Woman

Cooperation

Internal Directors

Outside Directors

Ratio of Women Directors

Ratio of Outside Directors

5

3

12.5%

37.5%

Independent
Accounting Auditor
Outside 3
Woman 1

Woman 1

Internal Audit

Headquarters, Departments, Subsidiaries

Nominating and Remuneration Advisory Committee

Board of Directors

As an advisor y body to the Board of Directors, the Nominating andRemuneration Advisory Committee is comprised of the President and six
outside officers. It strengthens the fairness and objectivity of procedures
concerning the nomination and remuneration of directors and advances
discussions in order to fulfil its accountability to stakeholders. The chair iselected from among the independent outside officers by an internal vote.
(FY2022: held 5 times)

The Board of Directors consists of eight directors with the President serving
as its chairperson, and in addition all five Audit & Supervisory Board members,
including the three outside members, attend the meeting and express theiropinions as appropriate. In order to clarify the management responsibilities
Menof directors, we have set their term of office at one year and to build amanagement structure that can quickly respond to changes in the businessenvironment, we have introduced an executive officer system.
(FY2022: held 16 times)

As an advisory body to the President, the Executive Committee deliberates onmatters pertaining to basic management measures and management policies
and the important execution cases of the departments in order to makedecision making faster and streamline business operation and to respond toimportant business execution. (FY2022: held 16 times)○○

Internal Audit Department

Executive Committee

Insight
into Other
Industries

Composition of Board of Directors(Internal Members: 2)(Outside Members: 3)

Compliance andRisk Management Committee

Gender* The “ ” above does not indicate all insights held by each Director(Inside Board Members: 5) (Outside Board Members: 3)
Appointment/Dismissal
Audit

Position and Duties
at the Company

Nameproposal, taking into consideration the balance, qualifications,and diversity of each director in relation to each function andbusiness of the Company, as well as management experience atother companies in the case of independent outside directors,
and submits the draft proposal to the Board of Directors. The
Board of Directors then takes the proposal into consideration
when making its decision.
Going forward, we will revise the items in the skill matrix inaccordance with the business environment and other factors.

Audit & Supervisory Board
The Audit & Supervisory Board has stipulated an auditing policy and auditing
plan, etc. for auditing of the execution of duties by the directors and thebusiness and financial position of the Group companies. Furthermore, it fulfillsMena management supervision function. (FY2022: held 12 times)

Men

Woman

Inside 5
Men 7

Woman 1

Inside 5

Men

Woman

Men 7

Woman 1

Inside 5

Improving the Effectiveness ofMenthe Board of Directors
Men Woman

Men 7

Woman 1

Inside 5

Men

Men
Men

Men 7

Woman

Men
Outside 3

Woman 1

Men

Woman

MenMen7

InsideMen 5 Woman

Outside 3

Woman 1

Men 7

Inside 5

Men
As a structure for the transmission of information
to outside
directors, the secretariat of the Board of Directors sends out
Menand explains in advance the materials regarding the mattersfor deliberation by the Board of DirectorsWoman
and a sufficientMen 1
explanation is given by the internal directors regarding
particularly
important proposals.
Men 7
Inside 5
Men Woman
As a structure for the transmission of information to outside
Men

Woman 1

Men 7
Woman
Audit &Men
Supervisory
Board members,
the full-time Audit & Inside 5
Supervisory Board members give explanations to the outside
Woman 1
Men 7
Inside 5
Men Woman
Audit & Supervisory Board members about the matters fordeliberation
by3 the Board of Managing
Directors. Moreover, Inside 5
Outside
Men 7
Men
Woman
the outside Audit & Supervisory Board members implement
Woman 1Audit &on-site audits of each business site with the full-time
Supervisory Board members as necessary.
Men

Woman

Men 7

Inside 5

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

54

G Governance

In SEKISUI KASEI Group, the departments, and committees
in charge of each type of risk formulate response plans andtake specific countermeasures under the basic policy onrisk management established by the Compliance and Risk
Management Committee, which manages all risks.
Further, the Compliance and Risk Management Committee
evaluates and deliberates on the response status based onreports from the departments in charge of each risk about thedegree of severity of currently assumed risks. The committee
then operates on a system of reviewing the risk response
measures and repeating the PDCA cycle depending on the
results of their evaluations and deliberations.
In addition, the management status of each risk is reported andshared with the Board of Directors and Executive Committee.

Subsequently, it has been evaluated that the Board of Directors
is generally functioning, and efforts to improve effectiveness,such as management, deliberation, and setting of proposals,
were also evaluated. On the other hand, some issues werepointed out, so we have formulated the next action plan tofurther improve the effectiveness of the Board of Directors.

Review of the FY2022 action plan

FY2023 action plan1 		 Enhance discussions on medium to long term businessdirections and management strategies

1 		 Enhance the supervision function from a medium to longterm perspective• Monitor the steady execution of the medium-term management plan
"Spiral-up 2024"• We held off-site meetings (a total of three times), implemented
environmental efforts, and held discussions concerning profitability
improvement.

• Hold discussions concerning ESG efforts• We debated important medium to long term themes such asorganization of the Management Philosophy System, partial revisions of
the 100th Year Vision and other documents, and the strengthening ofefforts for Sustainable Star Product (environmentally-friendly product).

2 		 Discuss and consider non-financial agenda items• We consulted on agenda items concerning non-financial aspects suchas the Report on ESG Materiality, Personnel Policies Based on Human
Capital Management, Risk Incident Progress Reports, and Mattersrelated to Digital Transformation (DX).

2 		 Share information among the members of the Board of
Directors

Plan

Do

Compliance and Risk Management
Committee

Departments in charge of risk

Implement risk response
measures

Formulates risk management policy↓
Departments in charge of
risk

AN
PL

Formulate risk
response plans

Compliance and Risk
Management CommitteeDO

To analyze and evaluate the overall effectiveness of the Boardof Directors, we conducted a survey of all the directors as wellas Audit & Supervisory Board members based on the advice
and guidance of a third party, with the results of the survey
discussed at a Board meeting.

N

IO

Risk Management System

ACT

Evaluation of the Effectiveness of the Board of Directors

Reviews risk additions
and changes

EC

K

53

CH

Departments incharge of risk

Report on status ofrisk response↓

Compliance and Risk Management
Committee

Departments in charge of risk

Review risk response measures

Evaluates/deliberates status ofrisk response• Hold off-site meetings• Encourage understanding of the financial and non-financial situationin SEKISUI KASEI Group

Compliance Promotion
SEKISUI K ASEI Group defines compliance as not only
complying with laws and regulations, but also ensuring that
operations within SEKISUI KASEI Group are carried out inan appropriate manner by complying with related rules andregulations while acting with integrity based on the values,
personal ethics, and corporate ethics required by the society inwhich we operate. SEKISUI KASEI Group Compliance Action
Guidelines define how we should act as a corporate entity.
With the goal of strengthening and promoting compliancethroughout the Group, we established the Compliance and• We continuously raised agenda items with respect to the environment,
starting with the Response based on the TCFD Recommendations.

3 		 Conduct executive training• We held executive training on the themes of "decarbonization andthe plastics problem," "consideration of the 100th Year Vision,""human capital management" and "compliance" (a total of four times),
expanded the knowledge of the executives, and held discussions
concerning a variety of management problems.

Officer Remuneration

Risk Management Committee to ensure ongoing compliancewith all laws and regulations. The Compliance and Risk
Management Committee meets in principle once every six
months to discuss compliance issues within SEKISUI KASEIGroup and to report any items for attention to the Executive
Committee.
We have also e sta blishe d C omplia nc e Commit te e s orCompliance officers at Group companies, depending on theirsize, with the goal of further promoting cooperation with theCompliance and Risk Management Committee.

The status of officer remuneration in FY2022
The amounts of remuneration, etc. for Directors and Audit & Supervisory Board members in FY2022(Millions of yen)Classification

Eligible Personnel

Basic Remuneration

Performance-based
Remuneration

Restricted StockRemuneration

Total

Directors (excluding outside directors)

5

83

14

17

116

Audit & Supervisory Board members(excluding outside members)

2

43

—

—

43

Outside officers

8

43

—

—

43

SKG Clean Network
To fulfill its corporate social responsibilities, SEKISUI KASEIGroup set up the “SKG Clean Net work ” as an internalreporting system in line with our effort to build a fair and active
organization.

Notes: 1. The above includes one outside director and one outside Audit & Supervisory Board member who stepped down at the conclusion of the 78th Ordinary General Meeting of
Shareholders held June 23, 2022.

Internal contact point

2. Director remuneration amounts do not include employee salaries for directors concurrently serving as company employees.

Users can choose between an internal or external contact
points and can issue their report either anonymously or under
their own name.

Request for investigation

External contact point• General Manager of the Legal & Compliance Department• Office of the Compliance and Risk Management Committee

Director remuneration
The Board of Directors has resolved as follows regarding the policy for determining the individual remuneration of directors and otherdetails based on the report from the Nominating and Remuneraiton Advisory Committee.

Selection

Reply

Basic policy
The link between director remuneration and the Company’s shareholder
value shall be clarified to further promote value sharing with shareholders inorder to contribute to improved medium to long term business performanceand increased corporate value. In addition, the remuneration systemshall emphasize the propor tion of remuneration determined through acomprehensive analysis, including in regard to the degree to contribution
toward performance and progress in achieving targets.

ReportSpecifically, remuneration of directors responsible for business execution
shall consist of basic remuneration, performance-based remuneration,and stock-based remuneration, while remuneration of outside directors
responsible for supervisory functions shall consist only of basic remuneration.
Furthermore, the policy for determining director remuneration shall bebased on the discussions of the Nominating and Remuneration Advisory
Committee, of which independent outside officers comprise the majority.

• Lawyers

Reply
Report

Reply

Person reporting55

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

Directors & Auditors

Osamu Matsumoto

Michinori Nawa

Mamoru Akashi

Yasunobu Furubayashi

Hideyuki Asada

Keizo Kousaka

Kojiro Takekoshi

Audit & Supervisory Board Member

Outside Audit & Supervisory Board
MemberOutside Audit & Supervisory Board
MemberDirector
Managing Executive Officer

Director
Managing Executive Officer

Outside Audit & Supervisory Board
MemberAudit & Supervisory Board Member

1985 Joined the Company
2021 Audit & Supervisory Board Member of theCompany[incumbent]

1983 Joined Tohmatsu Awoki & Co. *1987 Registered as certified public accountant
and certified tax accountant
2023 Audit & Supervisory Board Member of theCompany[incumbent]

1988 Joined The Dai-ichi Mutual Life Insurance
Company*
2013 Director of The Dai-ichi Frontier Life
Insurance Co., Ltd.
2015 Director, Managing Executive Officer of The
Dai-ichi Frontier Life Insurance Co., Ltd.
2016 Vice President and Representative Director,
Vice-chief Executive Officer of The Dai-ichi
Frontier Life Insurance Co., Ltd.
2020 Managing Executive Officer of Dai-ichi Life
Holdings, Inc.
Director, Managing Executive Officer of
The Dai-ichi Life Insurance Company
2021 Director, Managing Executive Officer of
Dai-ichi Life Holdings, Inc.
2022 Outside Audit & Supervisory Board
Member of the Company [incumbent]
2023 Representative Director, President of The
Dai-ichi Frontier Life Insurance Co., Ltd.
[incumbent]
Managing Executive Officer of Dai-ichi Life
Holdings, Inc. [incumbent]

Head of the 1st Business Headquarters
1992 Joined the Company
2021 Director, Managing Executive Officer of
the Company [incumbent]

Head of Research & Development Center, General
Manager of GX Development Department
1989 Joined the Company
2020 Director, Managing Executive Officer of
the Company [incumbent]

1970 Admitted to the bar
Joined Irokawa Law Office
2001 Chairman of Irokawa Law Office2009 Outside Director of Sumitomo Rubber
Industries, Ltd. [incumbent]
2012 Outside Audit & Supervisory Board
Member of the Company [incumbent]
2016 Outside Audit & Supervisory Board
Member of Techno Associe Co., Ltd.
2020 C h a i r m a n o f I r o k a w a L a w O f f i c e[incumbent]
Outside Audit & Supervisory Board
Member of Seiren Co., Ltd. [incumbent]* Now Deloitte Touche Tohmatsu LLC

1978 Joined the Company
2020 Audit & Supervisory Board Member of theCompany[incumbent]*Currently The Daiichi Life Insurance Company, Limited

Tetsuharu Hirota

Ichiro Wakabayashi

Michiko Uehara

Masato KashiwabaraMorio Kubota

Katsumi Sasaki

Director
Managing Executive Officer

Outside Director

Outside Director

Outside Director

Please refer to page 60 for detailed profile.

Please refer to page 60 for detailed profile.

President and Representative Director
Chief Executive Officer

Director
Senior Managing Executive Officer

In charge of PX Development Department andInformation System Department, Supervising the
2nd Business Headquarters
1984 Joined the Company
2016 Director, Managing Executive Officer of
the Company [incumbent]

1983 Joined the Company
2014 Representative Director,
President and Chief Executive Officer of
the Company [incumbent]

Please refer to page 60 for detailed profile.

Head of Corporate Strategic Headquarters,
In charge of Administration Headquarters
1983 Joined the Company
2021 Director, Senior Managing Executive
Officer of the Company [incumbent]

56

57

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

58

Discussion between Three Outside Directors
Announcement of “Target 2030” and progress of “Spiral-up 2024”
What are your thoughts on the “Target 2030,” which

Ichiro Wakabayashi

Michiko Uehara

Morio Kubota

Outside Director

Outside Director

Outside Director

was announced in January 2023, and its relationship

Mr. Wakabayashi, you were appointed to the position

with the medium-term management plan “Spiral-upof outside director in June 2023. What is your view of2024” that kicked off last year?

SEKISUI KASEI’s management?

Kubota SEKISUI K ASEI Group's 100th Year Vision wasestablished at the time of the Company’s 50th anniversary
in 2009, but the target year for the Vision is 2059, when the
Company will celebrate its 100th anniversary, which is still a longway off. The thinking, therefore, was to consider management
strategy with a focus on the near-term future. This approachaligned with the considerations undertaken for the current
medium-term management plan “Spiral-up 2024” and fitted inwith the process for drawing up a plan by back casting from
where we want to be in the future.
“Target 2030” outlines the business direction SEKISUI KASEI isaiming to achieve by 2030 and “Spiral-up 2024” is positioned as
the first step towards achieving it. Going forward, the Group will
look to achieve “Target 2030” by completing the second stepof three-year period from FY2025 to FY2027 and third steps of
FY2028 to FY2030.

Wakabayashi The results of the first year of the medium-term
management plan were from the time before my appointment
to the board, but in terms of progress made towards achieving
the FY2024 targets set out in the plan, I do not feel that things
have been progressing very smoothly. SEKISUI KASEI will needto shift up a gear to achieve its targets, but in the context of
discussing what has been lacking and what needs to be done, I
hope to be able to provide some suggestions based on my own
experience and insight that I gained from my previous positionin the chemical field.

One year has passed since the commencement of
the medium-term management plan “Spiral-up 2024.”
How would you rate the progress made so far?

Aiming to become businesses thatsolves environmental and social issues
SEKISUI KASEI is working to enhance corporate governance with the aim ofachieving sustainable growth and improving corporate value over the mediumto long-term. We invited outside directors Morio Kubota, Michiko Uehara, andIchiro Wakabayashi to share their views on the announcement of the “Target
2030” as our business direction for 2030 and the first-year progress of our
medium-term management plan “Spiral-up 2024.”

Uehara After I assumed the role of outside director in June
2022, I was brought up to speed about “Spiral-up 2024,”
including factors related to the external environment. I got
the impression that it was a plan that thoroughly reflects thebusiness environment of SEKISUI KASEI Group.
Net sales were more or less on target in the first year of the plan,but profits were lackluster mainly as a result of higher-thanexpected prices for raw materials and fuel and sky-high utility
costs. Nevertheless, in an operating environment characterized
by instability in market prices and demand, I openly appreciate
the dedicated efforts of the Group’s execution side to passon costs to prices of products and promote streamline ofoperations.

What aspects of the Proseat business in Europe overthe past year can you evaluate positively, and what issues still need to be addressed?
Kubota Regarding to Proseat Group, which operates primarilyin Europe, not only is automobile production in the European
market currently sluggish, but some of the planned production
and business customs considered standard practice in theautomotive business have been disrupted to some extent in
the European region, which is greatly hampering an earnings
recovery. Over the past year, a whole host of initiatives havebeen under taken, including a change in leadership, thewithdrawal from unprofitable businesses, and organizational
restructuring. Also, Proseat Group’s earnings and measures
aimed at improving profitability are reported and discussed at
the meetings of the Board of Directors every month.
It is said that the downturn in automobile production in theEuropean market has bottomed out, but it will be some time
before production returns to the pre-pandemic demand level.
Various other issues are also piling up, such as surging inflation
and an energy crisis. To address the most pressing issue athand—earnings structure improvement—the Board is discussing
not only the implementation of product price revisions, but also
productivity enhancements and margin improvements from afinancial perspective.
The recovery of the European automotive market has been
weak, and management will most likely face some challenges inthe short term, however it appears a new development project
leveraging synergies between SEKISUI K ASEI Group andProseat Group is underway. Balancing profitability improvementsin the near term with synergy-driven business growth over the
medium- to long-term will be key, in my opinion.

59

SEKISUI KASEIFoundation of
Value
Creation

Integrated Report 2023

60

Discussion between Three Outside Directors

SEKISUI KASEI Group’s sustainability
How would you rate the progress over the past year

Uehara As Mr. Wakabayashi just said, I also agree with the ideaof further enhancing the information communicated externally.
I have been emphasizing the importance of disseminating
information at offsite meetings and Board meetings, but it would
be better if there is more of a focus on PR activities that reachthe Group’s intended audience.

regarding the strengthening of efforts to address
Materiality that are key management issues?
Uehara Given the growing impor tance of human capitalmanagement, SEKISUI K ASEI is engaged in management
practices with human resources as one of Materiality. One suchinitiative is the promotion of diversity, and in particular, the active
participation of women. Management has established numericaltargets for this item of Materiality, and we regularly receive
progress reports.
I also believe the promotion of diversity was a key factor in
my appointment as an outside director last year. I think oneof the topics that has been assigned to me in this context is
how to develop future female leaders and officers, particularly
in terms of utilizing their talent. A progress report came out in
April of this year, which indicated that the current level is still far
from satisfactory. Going forward, I am eager to see what kindof scheme will be used to propel the appointment of female
employees who can contribute to the growth and development
of SEKISUI KASEI Group.

Wakabayashi The Group is also implementing numerous
activities concerning the environment, another categor yof Materiality. The world often portrays plastics as being
detrimental to the global environment. I wonder what the realsituation is. The practical application of cars, smartphones, andcomputers—all of which are essential to people’s lives—would
not be possible without plastics. Even in the food industry, theexistence of functional plastic food packaging materials means
safe food is easily available and food loss is reduced.
SEK ISUI K ASEI G roup ne e ds to b e more for thr ight incommunicating the convenience of plastics and thecontributions they make to people’s social life. It should also
continue to promote the development of products that savenatural resources, improvements in recycling and reuse, and thedevelopment of plant-based products that can replace thosederived from petroleum.
The Group is focusing its resources on the development andsales expansion of such environmentally friendly products under“Sustainable Star Product” brand, so I have high expectationsfor SEKISUI KASEI in this area.
That said, it might be worthwhile to be more open about
conveying the convenience of its products and materials and thecontributions they make to social life. On this point, I think there
is certainly room for improvement.

Kubota I think what Mr. Wakabayashi said perfectly sums up
the risks and opportunities for SEKISUI KASEI Group when it
comes to the topic of the environment.
From a somewhat different, external perspective, I feel that
SEKISUI KASEI tends to be slightly conservative because of its
earnest and sincere nature.
I think it should adopt a bit more of an aggressive approach to
the key issues of shifting to businesses that solve environmental
and social issues and strengthening the earnings structure.
For example, in shifting to businesses that solve environmental
and social issues, I would like to see management embrace
more ambitious challenges that extend beyond its traditional
playing field, such as creating new businesses and opening up
new markets.

PROFILE
Morio Kubota

Michiko Uehara

Ichiro Wakabayashi

Apr. 1977 Joined Okura & Co., Ltd. (until
August 1998)
Mar. 1996 Director of ORBCOMM Japan
Planning Limited(now ORBCOMM Japan Limited)
Jun. 2002 Representative Director andManaging Director of ORBCOMM
Japan Limited
Oct. 2007 Resigned from post of Managing
Director of ORBCOMM Japan
Limited
Sep. 2017 Resigned from post of Representative
Director of ORBCOMM Japan
Limited
Oct. 2017 Counselor of ORBCOMM Japan
Limited (until August 2018)
Jun. 2018 Outside Director of SEKISUI KASEICO., LTD. [incumbent]

Apr. 1976 Assistant Judge at Kobe District
Court
Apr. 1979 Assistant Judge at Kobe District
Court Amagasaki Branch
Apr. 1982 Assistant Judge at Osaka District
Court
Apr. 1986 Judge at Fukuoka District Court(until March 1989)
May 1989 Admitted to the bar
Joined The Miyake Joint Partnership
Law Office (currently Miyake &Partners)
Mar. 1992 Established The Uehara Joint
Partnership Law OfficeJun. 2016 Outside Audit & Supervisory
Board Member, Sumitomo ElectricIndustries, Ltd. [incumbent]
Feb. 2017 Outside Audit & Supervisory Board
Member, The Japan Wool Textile
Co., Ltd. [incumbent]
Jun. 2022 Outside Director of SEKISUI KASEICO., LTD. [incumbent]

Apr. 1981 Joined NAGASE & CO., LTD.
Apr. 2010 Executive Officer of NAGASE &CO., LTD.
Jun. 2015 Director, Executive Officer of NAGASE& CO., LTD.
Apr. 2016 Director, Managing Executive Officer of
NAGASE & CO., LTD.
Apr. 2019 Representative Director, Managing
Executive Officer of NAGASE & CO.,LTD.
Jun. 2021 Resigned from post of Representative
Director, Managing Executive Officerof NAGASE & CO., LTD., Advisor at
NAGASE & CO., LTD. (until June 2022)
Jun. 2023 Outside Director of SEKISUI KASEICO., LTD. [incumbent]

61

SEKISUI KASEIIntegrated Report 2023

62

Consolidated Financial Statements
Other
Information

Consolidated Financial Statements

Other
Information

Consolidated Balance SheetSEKISUI KASEI Co., Ltd. and Consolidated Subsidiaries
March 31, 2022 and 2023
Millions of yen

Financial information
1. Methods of preparing consolidated and non-consolidated financial statements(1)	Consolidated financial statements of the Company are prepared in accordance with the “Regulation on Terminology, Forms andPreparation Methods of Consolidated Financial Statements” (Ministry of Finance Order No. 28 of 1976).
(2)	Non-consolidated financial statements of the Company are prepared in accordance with the “Regulation on Terminology, Forms andPreparation Methods of Financial Statements” (Ministry of Finance Order No. 59 of 1963; hereinafter referred to as the “Regulation on
Financial Statements”).
In addition, the Company falls under the category of a special company submitting financial statements and prepares its nonconsolidated financial statements pursuant to the provisions of Article 127 of the Regulation on Financial Statements.

2. Audit certification
Based on the provisions of Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, the consolidated financial statements for the fiscal year (from April 1, 2022 to March 31, 2023) and non-consolidated financial statements for the fiscal year (from April 1,
2022 to March 31, 2023) of the Company have been audited by Ernst & Young ShinNihon LLC.

3. Special measures to ensure appropriateness of consolidated financial statements, etc.

Thousands of U.S. dollars

2023

2022

2023

AssetsCurrent assets¥ 10,510¥ 11,080

Notes receivable

4,335

3,085

23,103

Cash and deposits$

82,977

Accounts receivable

23,56523,727

177,690

Contract assets

1,092

1,575

11,795

Electronically recorded monetary claims - operating

6,526

7,930

59,387

Merchandise and finished goods

8,633

9,253

69,295Work in process

1,785

1,909

14,296

Raw materials and supplies

4,756

5,127

38,395

Other

2,617

3,227

24,166

(52)

(42)

(314)

63,771

66,874500,816*3 48,614*3 49,140*3 368,007

Accumulated depreciation(33,165)(34,336)(257,140)

Buildings and structures, net

15,44814,804

110,866

Allowance for doubtful accounts
Total current assets

The Company has made special measures to ensure the appropriateness of its consolidated financial statements, etc. Specifically, theCompany has joined the Financial Accounting Standards Foundation and participated in seminars in order to develop a system that canproperly understand the details of accounting standards, etc. and appropriately respond to changes in such standards, etc.
Non-current assets
Property, plant and equipment
Buildings and structures

Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation

89,83990,482

677,615(76,102)(77,729)(582,108)

13,737

12,753

95,506*2, *3 21,413*2, *3 21,492*2, *3 160,952

1,743

1,472

11,023

18,664

19,815

148,393(15,354)(16,635)(124,578)

3,309

3,180

23,81455,65253,702

402,171

Software

665

1,277

9,563

Other

465

486

3,639

1,131

1,763

13,203*1 14,849*1 14,041*1 105,152

822

851

6,373

6,155

6,936

51,943

Other

973

1,053

7,885

Allowance for doubtful accounts

(47)

(47)

(351)

22,752

22,834

171,00279,53678,301

586,392¥ 143,308¥ 145,175$ 1,087,208

Other, net
Total property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets
Investments in securities
Deferred income taxes
Assets for retirement benefits

Total investments and other assets
Total non-current assets
Total assets

63

SEKISUI KASEI

64

Integrated Report 2023

Consolidated Financial Statements
Other
Information

Consolidated Balance Sheet

Other
Information

Consolidated Statement of Income
SEKISUI KASEI Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022 and 2023

Millions of yen

Thousands of U.S. dollars

2023

2022

Millions of yen

2023

Liabilities

2023

2023

¥ 117,567¥ 124,683$ 933,745

Cost of sales

92,831

100,072

749,434

Gross profit

24,735

24,611

184,310*1, *2 23,271*1, *2 23,818*1, *2 178,371

1,463

793

5,938

Interest income

13

19

142

2022
Net sales

Current liabilities¥ 16,065¥ 17,026

9,145

8,263

61,881*3 16,252*3 13,026*3 97,551

3,357

3,420

25,612

Accrued income and enterprise taxes

767

1,338

10,020Contract liabilities

405

684

5,122

Accrued consumption taxes

259

265

1,984

1,046

1,010

7,563

Provision for bonuses to directors and audit andsupervisory board members

Dividend income

328

349

2,613

6

42

314

Foreign exchange gain, net

288

143

1,070

Notes payable - facilities

71

46

344

Subsidy income

58

29

217

Notes and accounts payable
Electronically recorded obligations - operating
Short-term loans
Accrued expenses

Provision for bonuses to employees$

127,506

Thousands of U.S. dollars

Selling, general and administrative expenses
Operating income
Non-operating income

691

724

5,422

Compensation income

—

210

1,572

Other

2,646

2,246

16,820

Other

330

273

2,044

Total current liabilities

50,71548,096360,188

1,019

1,025

7,676

Interest expense

386

538

4,029

Loss on sales and retirement of non-current assets

214

31

232

Commission fee

57

14

104

Compensation expenses

114

12

89

Loss on fire

—

228

1,707

Other

309

289

2,164

1,082

1,114

8,342

1,401

704

5,272

Gain on sales of investments in securities

445

1,632

12,221

Total extraordinary income

445

1,632

12,221*3 6,407*3 50*3 374

6,407

50

374

Net income (loss) before income taxes(4,560)2,287

17,127

Income taxes - current

1,436

1,846

13,824

Electronically recorded obligations - non-operating

Total non-operating income
Non-operating expenses

Long-term liabilities
Bonds payable

7,000

7,000

52,422Long-term loans*3 13,863*3 18,094*3 135,505

4,410

4,593

34,396*2 1,596*2 1,596*2 11,952

Deferred income taxes
Deferred income taxes for land revaluation
Provision for product warranty

108

82

614

Liabilities for retirement benefits

3,608

3,728

27,918

Other

3,763

3,521

26,368

Total long-term liabilities

34,34938,614

289,178

85,06586,711

649,374

Total liabilities

Total non-operating expenses
Ordinary income
Extraordinary income

Net assets
Shareholders’ equity
Common stock

16,533

16,533

123,814

Capital surplus

16,503

16,445

123,155

Extraordinary loss

Retained earnings

16,602

16,602

124,331

Impairment loss

Treasury stock(1,448)(1,382)(10,349)

Total extraordinary losses

Total shareholders’ equity

48,19048,199360,960

Net unrealized gains on securities

7,442

7,440

55,717

Surplus arising from land revaluation*2 1,479*2 1,479*2 11,076

Translation adjustments

745

562

4,208

Retirement benefits liability adjustments

(332)

41

307

Total accumulated other comprehensive income

9,334

9,524

71,324

717

740

5,541

Accumulated other comprehensive income

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

58,242

58,464

437,834¥ 143,308¥ 145,175$ 1,087,208

Income taxes - deferred

(120)

(13)

(97)

Total income taxes

1,316

1,833

13,727

Net income (loss)(5,876)

453

3,392

41

0

0

Net income (loss) attributable to non-controlling interests
Net income (loss) attributable to owners of the parent¥(5,917)

¥

452

$

3,385

65

SEKISUI KASEIIntegrated Report 2023

Consolidated Financial Statements
Other
Information

Consolidated Statement of Comprehensive Income
SEKISUI KASEI Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022 and 2023¥

Thousands of U.S. dollars

2023

2022

Translation adjustments
Retirement benefits liability adjustments
Total other comprehensive income
Comprehensive income

Non-controlling interests

Consolidated Statement of Changes in Net Assets

From April 1, 2021 to March 31, 2022
Millions of yen
Shareholders’ equity(5,876)¥ 453$ 3,392(4,417)

(1)

(7)

720

(183)

(1,370)(1,860)

374

2,800

*1 (5,557)*1 189*1 1,415(11,433)

642

4,807

Comprehensive income attributable to:
Owners of parent

Other
Information

2023

Other comprehensive income
Net unrealized gains on securities

Consolidated Financial Statements

SEKISUI KASEI Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022 and 2023
Millions of yen

Net income (loss)

66¥ (11,460)¥ 641$ 4,800

27

00Common stock

Balance at April 1, 2021
Changes during the period
Dividends of surplus
Net income (loss) attributable to owners of the parent
Purchase of shares of consolidated subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at March 31, 2022

Capital surplus¥ 16,533

Retained earnings¥ 16,515¥ 23,523

Total shareholders’equityTreasury stock¥ (1,493)¥ 55,077(0)45(1,002)(5,917)
—
(0)
33

45
¥ (1,448)(6,886)¥ 48,190(1,002)(5,917)(12)—¥ 16,533(12)¥ 16,503(6,920)¥ 16,602
Millions of yen

Accumulated other comprehensive income

Net unrealized Surplus arising
gains onfrom land
securities
revaluation

Balance at April 1, 2021
Changes during the period
Dividends of surplus
Net income (loss) attributable to owners of the parent
Purchase of shares of consolidated subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at March 31, 2022

¥ 11,859¥ 1,479(4,417)(4,417)¥ 7,442

Translation
adjustments

¥ 11

—
—
¥ 1,479

734
734
¥ 745

Total
accumulated
Retirement
other
benefits liability comprehensive
adjustments
income¥ 1,527(1,860)(1,860)¥ (332)

Noncontrollinginterests

Total net assets¥ 702¥ 70,657

14
14
¥ 717

(1,002)(5,917)—(0)
33(5,528)(12,415)¥ 58,242¥ 14,877(5,543)(5,543)¥ 9,334

From April 1, 2022 to March 31, 2023
Millions of yen
Shareholders’ equity
Common stock

Balance at April 1, 2022
Changes during the period
Dividends of surplus
Net income attributable to owners of the parent
Purchase of shares of consolidated subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at March 31, 2023

Capital surplus¥ 16,533¥ 16,503

Retained earnings¥ 16,602

Total shareholders’equityTreasury stock¥ (1,448)¥ 48,190

(0)
65

(452)
452
(24)
(0)
33

65
¥ (1,382)8¥ 48,199

(452)
452
(24)
(32)
—
¥ 16,533(57)¥ 16,4450¥ 16,602
Millions of yen

Accumulated other comprehensive income

Net unrealized Surplus arising
gains onfrom land
securities
revaluation

Balance at April 1, 2022
Changes during the period
Dividends of surplus
Net income attributable to owners of the parent
Purchase of shares of consolidated subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at March 31, 2023

¥ 7,442(1)(1)¥ 7,440¥ 1,479——¥ 1,479

Translation
adjustments

¥ 745

(183)
(183)
¥ 562

Total
accumulated
Retirement
other
benefits liability comprehensive
adjustments
income¥ (332)

374
374
¥ 41

¥ 9,334

189
189¥ 9,524

Noncontrollinginterests

Total net assets¥ 717¥ 58,242

23
23
¥ 740

(452)
452
(24)
(0)
33
212
221
¥ 58,464

67

SEKISUI KASEIIntegrated Report 2023

68

Consolidated Financial Statements
Other
Information

Consolidated Statement of Changes in Net Assets

Other
Information

Consolidated Statement of Cash FlowsSEKISUI KASEI Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2022 and 2023

From April 1, 2022 to March 31, 2023

Millions of yen
Thousands of U.S. dollars
Shareholders’ equity
Common stock

Balance at April 1, 2022
Changes during the period
Dividends of surplus
Net income attributable to owners of the parent
Purchase of shares of consolidated subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at March 31, 2023

$ 123,814

Capital surplus

Retained earnings$ 123,590

Treasury stock$ 124,331

Total shareholders’equity$ (10,844)$ 360,892

0
486(3,385)
3,385
(179)
0
247

486
$ (10,349)

59$ 360,960(3,385)
3,385
(179)
(239)
—
$ 123,814(426)$ 123,1550$ 124,331

Thousands of U.S. dollars
Accumulated other comprehensive income

Balance at April 1, 2022
Changes during the period
Dividends of surplus
Net income attributable to owners of the parent
Purchase of shares of consolidated subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes of items other than shareholders’ equity
Total changes during the period
Balance at March 31, 2023

Net unrealized Surplus arising
gains onfrom land
securities
revaluation

Translation
adjustments$ 55,732$ 5,579(7)(7)$ 55,717$ 11,076——$ 11,076(1,370)(1,370)$ 4,208

Total
accumulated
Retirement
other
benefits liability comprehensive
adjustments
income$ (2,486)

2,800
2,800
$ 307

Noncontrollinginterests

Total net assets$ 69,901$ 5,369 $ 436,171

1,415
1,415
$ 71,324(3,385)
3,385
(179)
0
247
172
1,587
172
1,655
$ 5,541 $ 437,834

Cash flows from operating activities
Net income (loss) before income taxes
Depreciation and amortization
Amortization of goodwill
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Interest expenses
Increase (decrease) in provision for bonuses to employees
Increase (decrease) in provision for product warranty
Increase (decrease) in net liabilities for retirement benefits
Loss (gain) on sales of investments in securities
Loss (gain) on sales and retirement of property, plant and equipment
Subsidy income
Loss on fire
Decrease (increase) in notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable
Other, net
SubtotalInterest and dividends received
Interest paid
Proceeds from casualty insurance claims
Proceeds from subsidy income
Income taxes (paid) refunded
Net cash provided by (used in) operating activities

Thousands of U.S. dollars

2022

2023

2023

¥ (4,560)
6,176
128
6,407
(11)
(342)
386
(9)
(23)
(1,058)
(445)
210
(58)
—
(892)
(1,544)2,209(1,041)
5,530
342
(357)
157
58
(1,899)
3,831

¥

2,287
5,650
—
50
(12)
(369)
538
(36)
(26)
(142)
(1,632)
24
(29)
228
108
(788)
(170)
(1,417)
4,262
369
(458)
174
29
(1,266)
3,110$ 17,127
42,312—374(89)(2,763)
4,029
(269)
(194)
(1,063)(12,221)
179
(217)
1,707
808
(5,901)(1,273)(10,611)31,917
2,763(3,429)1,303
217(9,481)
23,290Cash flows from investing activities
Proceeds from withdrawal of time deposits
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investments in securities
Proceeds from sales of investments in securities
Increase in short-term and long-term loans receivableCollection of short-term and long-term loans receivable
Other, net
Net cash provided by (used in) investing activities

26(3,700)
37
(4)
581
(7)
17
(137)
(3,186)—(3,070)
75
(4)
2,444
(18)
5
(424)
(993)

—
(22,991)
561(29)
18,303(134)
37(3,175)(7,436)

Cash flows from financing activities
Net increase (decrease) in short-term loans
Proceeds from long-term loans
Repayment of long-term loans
Dividends paid
Dividends paid to non-controlling shareholders
Other, net
Net cash provided by (used in) financing activities

2,243
2,751
(5,570)(993)(2)(1,002)(2,573)

1,342
8,807
(10,278)
(453)
(1)
(959)
(1,542)

10,05065,955(76,971)(3,392)(7)(7181)(11,547)(67)(1,995)
12,498(4)569
10,503(29)
4,261
78,656*1 ¥ 10,503*1 ¥ 11,072*1 $ 82,917

Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

69

SEKISUI KASEIOtherInformation

Integrated Report 2023

70

Notes to Consolidated Financial Statements
SEKISUI KASEI Co., Ltd. and Consolidated Subsidiaries
March 31, 2023(ii) Hedging instruments and hedged items

Basis of preparation of consolidated financial statements
1. Scope of consolidation
Number of consolidated subsidiaries: 39
The names of major consolidated subsidiaries are omitted since they
are listed in “I. Overview of company, 4. Subsidiaries and affiliates” inthe annual securities report prepared in Japanese.”
Number of unconsolidated subsidiaries: 0

2. Application of the equity method(1) Number of affiliates accounted for by the equity method: 0(2) The five affiliates not accounted for by the equity method (the principal company is Yusui Kasei Kogyo Co., Ltd.) are excluded fromthe scope of application of the equity method since their impact
on profit or loss (amount corresponding to the equity interest) andretained earnings (amount corresponding to the equity interest),
etc. is insignificant and they are not material as a whole.

3. Fiscal year of consolidated subsidiaries
The fiscal-year end of 14 of the overseas subsidiaries is December
31. The preparation of consolidated financial statements of five overseas subsidiaries is based on financial statements that were provisionally prepared as of March 31, which is the consolidated balance sheet
date. For the nine overseas subsidiaries, the financial statements as of
their respective closing dates are used as the basis for the consolidated
financial statements. However, for important transactions that occurred
between the consolidated balance sheet date and their respective closing dates, necessary adjustments are made on a consolidated basis.

4. Accounting policies(1) Valuation basis and methods for significant assets
Marketable securities
Other securities
Securities other than shares etc. without market priceMarket value method (Valuation difference is booked
directly to net assets. Cost of securities sold is calculatedusing the moving-average method.)
Shares, etc. without market priceStated at cost using the moving-average method
Derivatives
Market value method
Inventories
Mainly stated at cost using the moving-average method (balance
sheet values are calculated by reducing the book value based on
decreased profitability).
(2) Depreciation method for significant depreciable assets
Property, plant and equipment (excluding leased assets)
Buildings, facilities attached to buildings and structures
The straight-line method is applied.
Other
The Company and consolidated subsidiaries mainly apply
the straight-line method, and some consolidated subsidiaries
apply the declining-balance method.
The estimated useful lives of major equipment are as follows.
Building
Machinery and equipment

Mainly 31-38 years
Mainly 8 years

Intangible assets (excluding leased assets)
Software (for internal use)
The straight-line method is applied based on the internal
usable period (5 years).
Other
The straight-line method is applied.
Leased assets
Leased assets related to finance lease transactions that do nottransfer ownership
The straight-line method is applied with the lease period as
the useful life and the residual value as zero.

(3) Accounting policy for significant provisions
Allowance for doubtful accounts
To prepare for credit losses on receivables, an estimated uncollectible amount is provided in the amount estimated either byusing historical bad debt ratio for general receivables, or basedon individual consideration of collectability for specific receivables such as highly doubtful receivables.
Provision for bonuses to employees
To provide for bonuses to employees, the expected amountof payment corresponding to the fiscal year under review isrecorded.
Provision for bonuses to directors and audit and supervisory board
members
To provide for bonuses to directors and audit and supervisoryboard members, the expected amount of payment corresponding to the fiscal year under review is recorded.
Provision for product warranty
In order to provide for the payment of compensation expenses
related to product quality, the reporting company records theamount expected to be necessary in the future.
(4) Accounting method for retirement benefits(i) Method of attributing expected retirement benefits to periods
In calculating the retirement benefit obligations, the benefit formulabasis is used to attribute the estimated amount of retirement benefits to the period until the end of fiscal year under review.
(ii) Accounting method for actuarial gains and losses
Actuarial gains and losses are amortized on a straight-line method
over a certain number of years (five years) within the average remaining years of service of the employees at the time of accrual in eachfiscal year, starting from the fiscal year following the year in which thegains and losses are accrued.
(5) Recognition of significant revenues and expenses
The Group’s main business is the manufacture and sale of products in
the Human Life and Industry segments. With respect to the sale of theseproducts, the Group recognizes revenue at the time of delivery of the
products because the Group determines that the customer acquires
control over the products at the time of delivery and the performanceobligations are satisfied. Revenue is measured at the amount of consideration promised in the contract with the customer, less returns, discounts and rebates.
The consideration for the transaction is received within one year after
the fulfillment of the performance obligation and does not include any
significant financial elements.
(6) Standards for translation of significant assets or liabilities denominated in foreign currencies into Japanese currency
All monetary assets and liabilities denominated in foreign currencies aretranslated into Japanese yen at the spot exchange rate at the balance
sheet date, and the resulting translation gains or losses are recognizedin the consolidated statements of income. Assets and liabilities of overseas subsidiaries are translated into Japanese yen at the spot exchange
rate at the balance sheet date, and revenue and expenses are translated at the average exchange rate during the fiscal year. Translation
gains or losses are included in foreign currency translation adjustments
and non-controlling interests in net assets.
(7) Significant hedge accounting methods(i) Hedge accounting method
The Group adopts the integral treatment (special treatment) forinterest-rate swaps since they satisfy the requirements for suchtreatment.

Hedging instrument
Interest-rate swaps

Hedged item
Long-term loans denominated inforeign currencies(iii) Hedging policy
The Group hedges the risk of interest-rate fluctuation based on therisk management policy specified in the internal control regulations.
(iv) Assessing hedge effectivenessWith regard to interest-rate currency swaps accounted for by the
special treatment, evaluation of hedge effectiveness is omitted.
(8) Scope of cash and cash equivalents in the consolidated statementsof cash flows
Cash and cash equivalents include cash on hand, bank deposits thatcan be withdrawn at any time, and short-term investments with maturities of three months or less at the time of acquisition that are readily
convertible to cash and that are exposed to insignificant risk of changes
in value.

Significant accounting estimates(Impairment of non-current assets)
The Group determined that there were indications of impairment
of non-current assets held by Proseat Europe GmbH, a European
automotive parts manufacturing company acquired in February 2019,and its subsidiaries due to a decline in profitability in line with recentchanges in the business environment. The determination was made as
follows.
(1) Amount recorded in the consolidated financial statements for the
fiscal year under review
Thousands of
U.S. dollars

Millions of yen

Previous
fiscal year

Impairment loss
Property, plant andequipment
Intangible assets
Investments andother assets¥ 6,407

Fiscal year
under review¥

50

Fiscal year
under review
$

374

3,320

3,396

25,432

177

270

2,022

—

77

576

An impairment loss was recorded due to a decline in profitability
resulting from changes in the business environment.
(2) Other information that contributes to the understanding of usersof consolidated financial statements(i) Calculation method
The assets are grouped by business segment, and future cash flows
by business segment are estimated based on the business plan for
the following fiscal year approved by the Board of Directors and themarket growth rate thereafter.
(ii) Major assumptions
The major assumptions used in the calculation of future cash flows
are i) forecasts of product sales volume, ii) changes in selling prices,iii) growth rate after the business plan, iv) changes in gross profit
margin, and v) the impact of COVID-19 and the situation in Ukraine,
which are the basis of the business plan. The growth rate is examinedby referring to the market growth rate using external data.
(iii) Impact on the consolidated financial statements for the following fiscal year
The growth rate, which is one of the major assumptions, is highly
uncertain, and there is a possibility of additional impairment loss on
non-current assets depending on fluctuations in these assumptions.
(Changes in accounting policies)
Not applicable.

(Accounting Standards issued but not yet effective)• “Accounting Standard for Current Income Taxes” AccountingStandards Board of Japan (“ASBJ”) Statement No. 27, October 28,
2022.
• “Accounting Standard for Presentation of Comprehensive Income”(ASBJ Statement No. 25, October 28, 2022.
• “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ
Guidance No. 28, October 28, 2022.
(1) Outline
In February 2018, ASBJ Statement No. 28, “Partial Amendments to
Accounting Standard for Tax Effect Accounting” (“ASBJ Statement
No. 28”) was released, and the transfer of the Practical Guidelines on
Tax Effect Accounting by the Japanese Institute of Certified Public
Accountants to the Accounting Standards Board of Japan was completed. In the process of the deliberation, the following two points,
which had been to be reconsidered after the publication of ASBJ
Statement No. 28, were deliberated and released.
• Classification of tax expenses (taxation on other comprehensive
income)• Tax effects on sales of shares of subsidiaries, etc. (shares of subsidiaries or shares of affiliates) in cases where the group corporation tax
system is applied(2) Scheduled date of adoption
The Company expects to adopt the accounting standards and related
implementation guidance from the beginning of the fiscal year ending
March 31, 2025.
(3) Impact of adoption of revised accounting standard and related
implementation guidance.
The Company is currently evaluating the effect of the adoption of the“Accounting Standard for Current Income Taxes and related implementation guidance on its consolidated financial statements.

Change in presentation method(Consolidated balance sheets)“Provision for loss on business withdrawal of a subsidiary” in “Current
liabilities,” which was presented separately in the previous fiscal year,
is included in “Other” in the fiscal year under review because the was
immaterial. To reflect this change in presentation method, the consolidated financial statements for the previous fiscal year have been
reclassified.
As a result, the amount of 446 million yen presented in “Provision forloss on business withdrawal of a subsidiary” under “Current liabilities”
in the consolidated balance sheet for the previous fiscal year has been
reclassified as “Other.”(Consolidated statements of cash flows)“Purchases of treasury stock” in “Cash flows from financing activities,”
which was presented separately in the previous fiscal year, is included in“Other” in the fiscal year under review because the amount was immaterial. To reflect this change in presentation method, the consolidated
financial statements for the previous fiscal year have been reclassified.
As a result, (0) million yen presented in “Purchases of treasury stock”
under “Cash flows from financing activities,” in the Consolidated
Statements of Cash Flows for the previous fiscal year has been reclassified as “Other.”

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72

Notes to Consolidated Financial Statements(Notes to consolidated balance sheet)*1 Investments in unconsolidated subsidiaries and affiliates are as follows.
Millions of yen

Previous fiscal year
(March 31, 2022)

Investments in securities (stocks)

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)

¥ 35

¥ 35

Fiscal year under review(March 31, 2023)$ 262*2 In accordance with the Law Concerning Revaluation of Land (Act No. 34 promulgated on March 31, 1998 and partially amended by Act No. 19
promulgated on March 31, 2001), the Company revalued land for business use. Of the valuation difference, the amount equivalent to taxes on thevaluation difference is recorded as deferred income taxes for land revaluation in the liabilities section, and the amount obtained by deducting suchamount is recorded as surplus arising from land revaluation in the net assets section.
• Method of revaluation: Calculated by the method based on the assessed value of fixed asset tax specified in Article 2, Item 3 of the Order for
Enforcement of the Act on Revaluation of Land (Cabinet Order No. 119 of March 31, 1998).
• Date of revaluation: March 31, 2002
Millions of yen

Previous fiscal year
(March 31, 2022)

Difference between the market value of the revalued land at the end of
the period and the book value after the revaluation

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)¥ (3,573)¥ (3,552)

Fiscal year under review(March 31, 2023)$ (26,758)*3 Collateralized assets and secured liabilities
Assets pledged as collateral are as follows.
Millions of yen

Previous fiscal year
(March 31, 2022)

Land
Building
Total

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)

Fiscal year under review(March 31, 2023)

¥ 166

¥ 166

$ 1,243

47

45

337

¥ 213

¥ 211

$ 1,580

Secured liabilities are as follows.
Millions of yen

Previous fiscal year
(March 31, 2022)

Short-term loans
Long-term loans
Total

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)

Fiscal year under review(March 31, 2023)

¥ 7

¥ 1

$ 7

1

—

—

¥ 9

¥ 1

$ 7

(Notes to consolidated statement of income)*1 The major expense items and their amount included in selling, general and administrative expenses are as follows.
Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Storage and transportation costs
Salaries, allowances and bonuses
Provision for bonuses
Provision of allowance for doubtful accounts
Provision for directors’ bonuses
Retirement benefit expenses

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ 5,621¥ 5,680$ 42,537

6,518

6,565

49,164

429

380

2,845

(0)

14

104

2

37

277

(510)

(34)

(254)

*2 Total research and development expenses included in general and administrative expenses
Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)¥ 2,784

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ 2,707

Fiscal year under review(From April 1, 2022
to March 31, 2023)$ 20,272*3 Impairment loss
In the previous fiscal year, the Group recorded impairment loss on the following asset groups.
(1) Overview of asset group for which impairment loss was recognizedMillions of yen
Use

Business assets (Form)Business assets (Trim)Business assets(Foamed molding)
Other

Location

Asset category

Impairment loss

Czech Republic and other
Poland and other
Germany

Machinery and tangible leased assets
Machinery and tangible leased assets
Machinery and tangible leased assets¥—

Goodwill and intangible assets(2) Background of recognition of impairment loss
The Proseat Group, one of the Company’s consolidated subsidiaries in
Europe, has been affected by a significant decrease in orders due to theimpact of the price hike of raw materials used for its mainstay of automotive parts and materials since the end of the previous year, as wellas the impact of reduced production by European-based automobile
manufacturers due to a shortage of semiconductors.
As a result of a review of the timing of market recovery in Europe and

895
1,922
1,416
2,173

other factors in light of these circumstances, the Company determinedthe carrying amount of the asset groups was not recoverable over theestimated period of future cash flows. Therefore, the Company reduced
the carrying amount of the goodwill recorded when it acquired theProseat Group in February 2019 and the carrying amount of non-current assets held by the Proseat Group to the recoverable amount, andrecorded the amount of the reduction as an impairment loss in extraordinary loss.

(3) Amount of impairment loss and breakdown by type of assets
An impairment loss of 6,407 million yen was recorded as “Impairment loss” under extraordinary loss, and the breakdown is as follows.
Millions of yen

Building
Machinery
Land
Tangible leased assets
Other tangible assets
Goodwill
Other intangible assets
Total(4) Grouping method of assets
As a general rule, the Group categorizes assets for business use basedon the classification for management accounting units. When there
is an indication of impairment in goodwill or shared assets, etc., theGroup considers recognition of impairment loss by grouping in a larger
unit, such as including goodwill or shared assets, etc. to multiple assets
or asset groups to which goodwill or shared assets, etc. are related.

¥

234

Thousands of U.S. dollars

$

1,297

1,752
9,713

16

119

2,432

18,213

185

1,385

1,137

8,514

1,103
¥ 6,407

8,260$

47,981(5) Calculation method of recoverable amountThe recoverable amount is calculated based on the value in use and is
calculated based on the future cash flows discounted by the rates from
10.8% to 14.3%. However, the carrying amount is reduced to the memorandum value if the value in use was negative.

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74

Notes to Consolidated Financial Statements

In the current fiscal year, the Group recorded impairment loss on the following asset groups.
(1) Overview of asset group for which impairment loss was recognized
Use

Business assets(Foamed molding)

Location

Germany

Asset category(Notes to consolidated statements of changes in net assets)
Previous Fiscal Year (from April 1, 2021 to March 31, 2022)
Millions of yen

Thousands of U.S. dollars

Impairment loss

Impairment loss

Machinery(2) Background of recognition of impairment loss
The Proseat Group, one of the Company’s consolidated subsidiaries
in Europe, has been affected by a significant decrease in orders dueto the impact of the price hike of raw materials used for its mainstay
of automotive parts and materials, the impact of energy costs, as wellas the impact of reduced production by European-based automobile
manufacturers due to a shortage of semiconductors.
As a result of a review of the timing of market recovery in Europe and

¥ 50

$ 374

other factors in light of these circumstances, the Company determinedthe carrying amount of the asset groups was not recoverable over theestimated period of future cash flows. Therefore, the carrying amountof non-current assets held by the Proseat Group that were impaired in
the previous fiscal year was reduced to the recoverable amount, andthe amount of the reduction was recorded as an impairment loss in
extraordinary loss.

Building
Machinery
Construction in progress
Other tangible assets
Other intangible assets
Other investments and other assets
Total(4) Grouping method of assets
As a general rule, the Group categorizes assets for business use basedon the classification for management accounting units. When there isan indication of impairment in shared assets, etc., the Group considers
recognition of impairment loss by grouping in a larger unit, such as
including shared assets, etc. to multiple assets or asset groups to whichshared assets, etc. are related.

¥ 0

Issued stock
Common stock
Total
Treasury stock
Common stock (Notes 1,2).
Total

Thousand shares
Increase in number of shares
Decrease in number of
Number of shares at the end
during the fiscal year
shares during the fiscal yearof the fiscal year

46,988——46,98846,988——46,988

1,850

0

56

1,794

1,850

0

56

1,794

(Notes) 1. The increase of 0 thousand of treasury stock of common stock is due to the purchase of shares less than one unit.
2. The decrease of 56 thousand shares in the number of treasury stock of common stock is due to 56 thousand shares allocated under the restricted stock-linked remuneration
system.

(1) Dividends paid

Class of shares

Millions of yen
Total amountof dividends

Yen
Dividends per
share

Record date

Effective dateCommon stock¥ 767¥ 17.00

March 31, 2021

June 25, 2021

Common stock¥ 225¥ 5.00

September 30, 2021

December 2, 2021

Yen
Dividends per
share

Record date

Effective date

¥ 7.00March 31, 2022

June 24, 2022

Thousands of U.S. dollars

$

0

24

179

1

7

22

164

1

7

0

0

¥ 50

$ 374

(5) Calculation method of recoverable amountThe recoverable amount is calculated based on the value in use. If thevalue in use is negative, the recoverable amount is assessed as zero.

(Resolution)

Ordinary General Meeting of Shareholders held on
June 24, 2021
Board of Directors meeting held on November 2, 2021

(2) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date

(Resolution)

Ordinary General Meeting of Shareholders
held on June 23, 2022

Millions of yen
Total amountof dividends

Class of shares

Common stock¥ 316

Source ofdividends

Retainedearnings

Fiscal year under review (from April 1, 2022 to March 31, 2023)

1. Class and total number of issued shares, and class and number of treasury shares
Number of shares at the
beginning of the fiscal year

(Notes to consolidated statement of comprehensive income)* 1 Reclassification adjustments and tax effects on other comprehensive income
Millions of yen

Previous fiscal year
(From April 1, 2021
To March 31, 2022)

Valuation difference on available-for-sale securities:
Amount incurred for the fiscal year
Reclassification adjustment
Before-tax-effect adjustment
Tax effect amount
Valuation difference on available-for-sale securities
Foreign currency translation adjustment:
Amount incurred for the fiscal year
Reclassification adjustment
Before-tax-effect adjustment
Tax effect amountForeign currency translation adjustment
Remeasurements of defined benefit plans
Amount incurred for the fiscal year
Reclassification adjustment
Before-tax-effect adjustment
Tax effect amountRemeasurements of defined benefit plans
Total other comprehensive income

Number of shares at the
beginning of the fiscal year

2. Dividends(3) Amount of impairment loss and breakdown by type of assets
An impairment loss of 50 million yen was recorded as “Impairment loss” under extraordinary loss and the breakdown is as follows.
Millions of yen

1. Class and total number of issued shares, and class and number of treasury shares

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
To March 31, 2023)

Fiscal year under review(From April 1, 2022
To March 31, 2023)¥ (5,965)¥ 1,112$ 8,327(404)(1,113)(8,335)(6,369)

(0)

(0)

1,952

(0)

(0)

(4,417)

(1)

(7)

720

(183)

(1,370)

—

—

—

720

(183)

(1,370)

—

—

—

720

(183)

(1,370)(2,065)

654

4,897

(616)

(115)

(861)

(2,681)

538

4,029

821

(164)

(1,228)(1,860)

374

2,800

189

$ 1,415¥ (5,557)¥

Issued stock
Common stock
Total
Treasury stock
Common stock (Notes 1,2)
Total

Thousand shares
Increase in number of shares
Decrease in number of
Number of shares at the end
during the fiscal year
shares during the fiscal yearof the fiscal year

46,988——46,98846,988——46,988

1,794

1

81

1,714

1,794

1

81

1,714

(Notes) 1. The increase in the number of treasury stock of common stock of 1 thousand shares is due to the purchase request for shares less than one unit and the acquisition of
restricted stock without consideration.
2. The decrease of 81 thousand shares in the number of treasury stock of common stock is due to 81 thousand shares allocated under the restricted stock-linked remuneration
system.

2. Dividends(1) Dividends paid

Class of shares

Millions of yen
Total amountof dividends

Yen
Dividends per
share

Record date

Effective dateCommon stock¥ 316¥ 7.00March 31, 2022

June 24, 2022

Common stock¥ 135¥ 3.00

September 30, 2022

December 2, 2022

Yen
Dividends per
share

Record date

Effective date

9.00

March 31, 2023

June 26, 2023

(Resolution)

Ordinary General Meeting of Shareholders held on
June 23, 2022
Board of Directors meeting held on October 31, 2022

(2) Dividends whose effective date falls in the fiscal year following the fiscal year of the record date

(Resolution)

Ordinary General Meeting of Shareholders
held on June 23, 2023

Class of shares

Common stock

Millions of yen
Total amountof dividends

407

Source ofdividends

Retainedearnings

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Integrated Report 2023

Notes to Consolidated Financial Statements(Notes to consolidated statements of cash flows)

Fiscal year ended March 31, 2023

* 1 Reconciliation of cash and cash equivalents at the end of the period and related account on the consolidated balance sheet
Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Cash and deposits
Time deposits with maturity over 3 months
Cash and cash equivalents¥ 10,510

Millions of yen

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ 11,080

Fiscal year under review(From April 1, 2022
to March 31, 2023)$ 82,977

(7)

(7)

(52)

¥ 10,503¥ 11,072$ 82,917(Leases)
Information is omitted due to a lack of materiality.

Financial instruments
1. Status of financial instruments(1) Policy on financial instruments
The Group raises funds through bank borrowings and bonds, limiting
its management of funds to short-term deposits and others.
(2) Types of financial instruments and their risks, and risk management
With respect to trade receivables, such as notes and accounts receivable and electronically recorded monetary claims, the Company’s business section and sales supervisory department respond to customer
credit risks by regularly monitoring the credit status of customers andmanaging the collection status, due dates, and outstanding balance
for each customer in accordance with the Company’s internal business
management rules. In addition, each group company of the Company
also manages the credit risk in accordance with the Company’s internalbusiness management rules.
Investments in securities are mainly stocks of companies with which
the Company has business relationships, and although these are subject to the risk of market price fluctuations, the Company’s finance andaccounting department monitors their market values on a quarterly
basis.
All notes and accounts payable and electronically recorded obligations - operating are due within one year.
Of the loans, short-term loans are mainly for financing related tooperating activities, and long-term loans are mainly for financing
related to capital investment. For some long-term loans, the Company
enters into interest-rate swaps to hedge the risk of interest rate andforeign currency exchange rate fluctuations.
Bonds are funds for repayment of loans and for working capital.
Derivative transactions are conducted only for the purpose of
appropriately managing market risks that may be involved in conducting transactions of financial instruments in the course of business andreducing such risks, and speculative transactions are not conducted.
In addition, although trade payables and loans are accompanied byliquidity risk, the Company strives to facilitate and diversify fund procurement, and each company of the Group also avoid such risk by preparing cash flow plans on a monthly basis.

2. Fair value of financial instruments
The carrying amount in the consolidated balance sheet, the fair value and the difference between them are as follows. “Cash and deposits” areomitted as fair value of cash is the same as the carrying amount, and deposits are settled within a short term and their fair value approximates the
carrying amount.
Fiscal year ended March 31, 2022
Millions of yen
Carrying amount in the
consolidated balance sheet(1) Notes receivable(2) Accounts receivable(3) Electronically recorded monetary claims(4) Investments in securities
Other securities (*1)
Total assets(1) Notes and accounts payable(2) Electronically recorded obligations - operating(3) Short-term loans(4) Bond(5) Long-term loans (*2)
Total liabilities

Millions of yen
Category

Unlisted stocks

Previous fiscal year
(March 31, 2022)¥ 69(*2) Includes the current portion of long-term loans of 10,166 million yen.

Fair value

Difference¥ 4,335¥ 4,335

23,56523,565

—

6,526

6,526

—

14,77914,779—¥ 49,207¥ 49,207¥ —16,065

16,065

—

9,145

9,145

—

6,086

6,086

—

7,000

6,953

(46)

¥ —

24,03024,12393¥ 62,328¥ 62,374¥ 46(*1) Stocks, etc. without market price are not included in “(4) Investments in securities and other securities.”
The carrying amount of financial instruments on the consolidated balance sheet is as follows.

Carrying amount in the
consolidated balance sheet

Thousands of U.S. dollars(1) Notes receivable(2) Accounts receivable(3) Electronically recorded monetary claims(4) Investments in securities
Other securities (*1)
Total assets(1) Notes and accounts payable(2) Electronically recorded obligations - operating(3) Short-term loans(4) Bond(5) Long-term loans (*2)
Total liabilities
Derivative transactions (*3)

Fair value

Difference¥ 3,085¥ 3,085

23,727

23,727

¥

—
—

7,930

7,930

—

13,972

13,972—¥ 48,715¥ 48,715

17,026

17,026

—

8,263

8,263

—

7,878

7,878

—

7,000

6,941

(58)

¥

—

23,242

23,476233¥ 63,411¥ 63,586

¥ 175

(49)

(49)

—

(*1) Stocks, etc. without market price are not included in “(4) Investments in securities and other securities.”
The carrying amount of financial instruments on the consolidated balance sheet is as follows.
Millions of yen
Category

Current fiscal year
(March 31, 2023)

Unlisted stocks¥ 69(*2) Includes the current portion of long-term loans of 5,148 million yen.
(*3) Net receivables and payables arising from derivative transactions are shown as net amounts with total net liabilities shown in parentheses.

Fiscal year ended March 31, 2023
Thousands of U.S. dollars
Carrying amount in the
consolidated balance sheet(1) Notes receivable(2) Accounts receivable(3) Electronically recorded monetary claims(4) Investments in securities
Other securities (*1)
Total assets(1) Notes and accounts payable(2) Electronically recorded obligations - operating(3) Short-term loans(4) Bond(5) Long-term loans (*2)
Total liabilities
Derivative transactions (*3)

Fair value

Difference$ 23,103$ 23,103

177,690

177,690$—

59,38759,387—

104,635

104,635—$ 364,824$ 364,824

127,506

127,506—

61,881

61,881—

58,99758,997—52,422

51,980

(434)

—

$

—

174,058

175,8101,744$ 474,882$ 476,192$ 1,310

(366)

(366)

—

76

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78

Notes to Consolidated Financial Statements
3. Breakdown of fair value of financial instruments by level(Note) 1. Redemption schedule for monetary receivables after the consolidated balance sheet dateFiscal year ended March 31, 2022
Millions of yen
Over 1 year within 5 years
Over 5 years within 10 years

Within 1 year

Bank deposits
Notes receivable
Accounts receivable
Electronically recorded monetary claims
Total

Over 10 years¥ 10,490

¥ —

¥ —

¥ —

4,335

—

—

—

23,565

—

—

—

6,526

—

—

—

¥ 44,918

¥ —

¥ —

¥ —

Fiscal year ended March 31, 2023
Millions of yen
Over 1 year within 5 years
Over 5 years within 10 years

Within 1 year

Bank deposits
Notes receivable
Accounts receivable
Electronically recorded monetary claims
Total

The fair value of financial instruments is classified into the following three levels according to the observability and materiality of the inputs used to
calculate the fair value.
Level 1: Fair value calculated by (unadjusted) quoted price in an active market for an identical asset or liability.
Level 2: Fair value calculated using directly or indirectly observable inputs other than Level 1 inputs.
Level 3: Fair value calculated using significant unobservable inputs.
If more than one input that has a significant impact on the calculation of fair value is used, the fair value is classified into the lowest priority level in thecalculation of fair value among the levels to which each of those inputs belongs.
(1) Financial instruments recorded in the consolidated balance sheet at fair value
Fiscal year as of March 31, 2022
Millions of yen
Fair valueOver 10 years¥ 11,060

¥ —

¥ —

¥ —

3,085

—

—

—

23,727

—

—

—

7,930

—

—

—

¥ 45,803

¥ —

¥ —

¥ —

Category

Investments in securities
Other securities
Total assets

Level 1

Level 2

Bank deposits
Notes receivable
Accounts receivable
Electronically recorded monetary claims
Total

Total

¥ 14,779¥—¥—¥ 14,779¥ 14,779¥—¥—¥ 14,779

Fiscal year as of March 31, 2023
Millions of yen
Fair value

Fiscal year ended March 31, 2023
Thousands of U.S. dollars
Over 1 year within 5 years
Over 5 years within 10 years

Within 1 year

Level 3Category

Over 10 years$ 82,827$ —$ —23,103

—

—

$ —
—

177,690———

59,387———$ 343,016

$ —

$ —

$ —

Investments in securities
Other securities
Total assets
Derivative transactions
Currency-related (*)

Level 1

Level 2

Level 3

Total

¥ 13,972¥—¥—¥ 13,972¥ 13,972¥—¥—¥ 13,972

—

(49)

—

(49)

(*) Net receivables and payables arising from derivative transactions are shown as net amounts with total net liabilities shown in parentheses.
(Note) 2. Repayment schedule for short-term loans, bond and long-term loans after the consolidated balance sheet dateFiscal year ended March 31, 2022

Within 1 year

Short-term loans
BondLong-term loans
Total

Over 1 year
within 2 years¥ 6,086¥

Fiscal year as of March 31, 2023

Millions of yen
Over 2 years
Over 3 years
within 3 years
within 4 years

—

¥

—

¥

—

Over 4 years
within 5 years¥—

Over 5 years

¥

—

—

—

—

—

7,000

—

10,166

5,040

4,603

1,185

1,988

1,045

¥ 16,252¥ 5,040¥ 4,603¥ 1,185¥ 8,988¥ 1,045

Fiscal year ended March 31, 2023

Within 1 year

Short-term loans
BondLong-term loans
Total¥ 7,878

Over 1 year
within 2 years¥—

Millions of yen
Over 2 years
Over 3 years
within 3 years
within 4 years

¥

—

¥

—

Over 4 years
within 5 years¥

Over 5 years

—

¥

—

—

—

—

7,000

—

—

5,148

5,790

8,243

2,188

1,128

743

¥ 13,026¥ 5,790¥ 8,243¥ 9,188¥ 1,128¥ 743

Within 1 year

Over 1 year
within 2 years

Thousands of U.S. dollars
Over 2 years
Over 3 years
within 3 years
within 4 years

Over 4 years
within 5 years

Over 5 years

Fiscal year ended March 31, 2023

Short-term loans
BondLong-term loans
Total$ 58,997

$

—

$

—

$

—

$

—

$

—

—

—

—

52,422——38,55343,361

61,731

16,385

8,447

5,564

$ 97,551$ 43,361$ 61,731$ 68,808$ 8,447$ 5,564

Thousands of U.S. dollars
Fair value
Category

Investments in securities
Other securities
Total assets
Derivative transactions
Currency-related (*)

Level 1

Level 2

Level 3Total

$ 104,635$—$—$ 104,635$ 104,635$—$—$ 104,635

—

(366)

—

(366)

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Integrated Report 2023

Notes to Consolidated Financial Statements(2) Financial instruments other than those recorded in the consolidated balance sheet at fair value
Fiscal year as of March 31, 2022

Securities
1. Other securities

Millions of yen
Fair value
Category

Level 1

Notes receivable
Accounts receivable
Electronically recorded monetary claims
Total assets
Notes and accounts payable
Electronically recorded obligations
Short-term loans
BondLong-term loans
Total liabilities

Level 2

Fiscal year as of March 31, 2022
Level 3

Total

Millions of yen¥—¥ 4,335¥—¥ 4,335—

23,565—23,565

—

6,526

—

6,526

¥—

¥ 34,427¥—¥ 34,427—

16,065—

16,065

—

9,145

—

9,145

—

6,086

—

6,086

—

6,953

—

6,953

—

24,123—24,123¥—¥ 62,374¥—¥ 62,374

Type

Securities whose carrying amount exceeds
their acquisition cost

Securities whose carrying amount does notexceed their acquisition cost

Millions of yen
Fair value
Level 1

Notes receivable
Accounts receivable
Electronically recorded monetary claims
Total assets
Notes and accounts payable
Electronically recorded obligations
Short-term loans
BondLong-term loans
Total liabilities

Level 2

Total

Difference¥ 4,073¥ 10,706———

14,7794,073

10,706

0

0

0

—

—

—

—

—

—

0

0

0

¥ 14,779¥ 4,073¥ 10,706

—

Total

¥—

¥ 3,085¥—¥ 3,085—

23,727—

23,727

—

7,930

—

7,930

¥—

¥ 34,743¥—¥ 34,743—

17,026—

17,026

—

8,263

—

8,263

—

7,878

—

7,878

—

6,941

—

6,941

—

23,476—23,476¥—¥ 63,586¥—¥ 63,586

Millions of yen

Derivative transactions
The fair value of forward exchange contracts is calculated based on the price provided by the correspondent financial institution and is classified as Level 2.

Type

Securities whose carrying amount exceeds
their acquisition cost

Securities whose carrying amount does notexceed their acquisition cost

Acquisition cost

Difference¥ 13,971¥ 3,265¥ 10,706

—

—

—

—

—

—

13,971

3,265

10,706

0

0

(0)

—

—

—

—

—

—

0

0

(0)

¥ 13,972¥ 3,266¥ 10,706

Fiscal year as of March 31, 2023

Notes and accounts payable, electronically recorded obligations, and short-term loans
The fair value is calculated by the discounted present value method based on its future cash flows, period to maturity, and interest rate that takes in account the credit riskfor each liability classified by certain period, and is classified as Level 2.
Bond
The fair value of bond is calculated based on prices and yield information published by industry associations and is classified as Level 2.
Long-term loans (including the current portion of long-term loans)
The fair value is calculated using the discounted present value method based on the total amount of principal and interests that takes into account the remaining term of
the loans and credit risk, and is classified as Level 2.

Thousands of U.S. dollars
Carrying amount recorded in
the consolidated balance sheet

Type

Securities whose carrying amount exceeds
their acquisition cost

Securities whose carrying amount does notexceed their acquisition cost

Fiscal year as of March 31, 2023

Stock
Bond
Other
Subtotal
Stock
Bond
Other
Subtotal

Total

Thousands of U.S. dollars
Fair value
Level 2

Stock
Bond
Other
Subtotal
Stock
Bond
Other
Subtotal

Total

Notes receivable, accounts receivable, and electronically recorded monetary claims
The fair value is calculated by the discounted present value method based on the amount of receivables, period to maturity and interest rate that takes into account thecredit risk for each asset classified by certain period, and is classified as Level 2.

Level 1

Carrying amount recorded in
the consolidated balance sheet(Note) Since unlisted stocks (carrying amount on the consolidated balance sheet: 33 million yen) do not have market prices, they are not included in “Other securities” in theabove table.

Investments in securities
Listed shares are valued using quoted prices. Since listed shares are traded on active markets, the fair value is classified as Level 1.

Category

Acquisition cost

¥ 14,779

Fiscal year as of March 31, 2023
Level 3(Note)	Valuation methodology used in the calculation of fair value and explanation of inputs relating to the calculation of fair value

Notes receivable
Accounts receivable
Electronically recorded monetary claims
Total assets
Notes and accounts payable
Electronically recorded obligations
Short-term loans
BondLong-term loans
Total liabilities

Stock
Bond
Other
Subtotal
Stock
Bond
Other
Subtotal(Note) Since unlisted stocks (carrying amount on the consolidated balance sheet: 33 million yen) do not have market prices, they are not included in “Other securities” in theabove table.

Fiscal year as of March 31, 2023

Category

Carrying amount recorded in
the consolidated balance sheet

Level 3

Total$—

$ 23,103$—$ 23,103—

177,690—

177,690—

59,387—59,387$—$ 260,188$—$ 260,188—

127,506—

127,506—

61,881—

61,881—

58,997—58,997—51,980—51,980—175,810—

175,810$—$ 476,192$—$ 476,192

Acquisition cost

Difference$ 104,628$ 24,451$ 80,176

—

—

—

—

—

—

104,628

24,45180,176

0

0

(0)

—

—

—

—

—

—

0

0

(0)

$ 104,635$ 24,458$ 80,176

Sales proceeds

Millions of yen
Total gain on sales

Total loss on sales

¥ 581

¥ 445

¥—

—

—

—

—

—

—

¥ 581

¥ 445

¥—

2. Other securities soldFiscal year ended March 31, 2022 (from April 1, 2021 to March 31, 2022)
Type

Stock
Bond
Other
Total

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Notes to Consolidated Financial Statements

Fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)
Type

Retirement benefits

Sales proceeds

Millions of yen
Total gain on sales

Total loss on sales¥ 2,444¥ 1,632

¥—

—

—

—

Stock
Bond
Other
Total

—

—

—

2,444

¥ 1,632¥—

Fiscal year ended March 31, 2023 (from April 1, 2022 to March 31, 2023)
Type

Sales proceeds

Stock
Bond
Other
Total

Thousands of U.S. dollars
Total gain on sales$ 18,303$ 12,221

$—

—

—

—

—

—

—

$ 18,303$ 12,221$—

Currency-related
Fiscal year ended March 31, 2022
Not applicable.
Fiscal year ended March 31, 2023

Transactions other thanmarket transactions

Forward exchange contracts
Short position
Euro

Total

Contract amount, etc.

Millions of yen
Contract amount, etc.,
over 1 year
Fair value

Transactions other thanmarket transactions

Transaction typeForward exchange contracts
Short position
Euro

¥—

¥ (49)¥ (49)¥ 1,660¥—¥ (49)¥ (49)

Total

Thousands of U.S. dollars
Contract amount, etc.,
over 1 year
Fair value

Integral treatment (special Interest-rate swaps
treatment) for interFloating interest rate for receipt/
est-rate swaps
Fixed interest rate for payment$ 12,431$—$ (366)$ (366)$ 12,431$—$ (366)$ (366)

Major hedged items

Long-term loans

Contract amount, etc.

¥ 1,030

Millions of yen
Contract amount, etc.,
over 1 year

¥ 128

Fair value(Note)(Note) Since interest-rate swaps that are accounted for by an integral treatment are accounted for by applying swap rates to hedged long-term loans, their fair value is included in thefair value of the relevant long-term loans.

Fiscal year ended March 31, 2023
Not applicable.

¥ 8,772¥ 8,596$ 64,375

262

228

1,707

31

39

292

114

(361)

(2,703)

(617)

(731)

(5,474)

33

68

509

¥ 8,596¥ 7,840$ 58,713

Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Balance of plan assets at beginning of year
Expected return on plan assets
Actuarial gains and losses
Contributions by the employer
Retirement benefit paid
Balance of plan assets at end of year

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ 16,341¥ 14,438$ 108,125

253

254

1,902

(1,937)

292

2,186

383

235

1,759

(602)

(720)

(5,392)¥ 14,438¥ 14,501$ 108,597(3) Changes in liabilities for retirement benefits under the plan for which the simplified method is applied

Interest rate currency-related
Fiscal year ended March 31, 2022
Transaction type

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Valuation loss

2. Derivative transactions for which hedge accounting is applied

Accounting methods for hedging

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Millions of yen
Valuation loss

¥ 1,660

Contract amount, etc.

Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)(2) Changes in plan assets (excluding plans for which the simplified method is applied)Fiscal year ended March 31, 2023
Category(1) Changes in retirement benefit obligation (excluding plans for which the simplified method is applied)

Balance of retirement benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gains and losses accrued
Retirement benefits paid
Other
Balance of retirement benefit obligation at end of year

1. Derivative transactions for which hedge accounting is not applied

Transaction type

The Company and its consolidated subsidiaries have established plans similar to cash balance pension plans, corporate pension plans (contract-type)and retirement lump-sum payment plans as defined benefit plans. In addition, when an employee retires, the Company may pay premium benefits
that are not subject to retirement benefit obligations based on actuarial calculations in accordance with retirement benefit accounting.
The Company has established retirement benefit trusts.
Certain consolidated subsidiaries have defined contribution plans and certain consolidated subsidiaries have defined benefit plans and retirement
lump-sum payment plans for which liabilities for retirement benefits and retirement benefit expenses are calculated using the simplified method.

2. Defined benefit plans
Total loss on sales

Derivative transactions

Category

1. Outline of retirement benefit system adopted

Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Balance of liabilities for retirement benefits at beginning of year
Retirement benefit expense
Retirement benefit paid
Contributions to the plan
Other
Balance of liabilities for retirement benefits at end of year

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ 3,386¥ 3,295

257

406$ 24,676
3,040

(292)

(163)

(1,220)

(16)

(22)

(164)

(39)

(62)

(464)

¥ 3,295¥ 3,452$ 25,851

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84

Notes to Consolidated Financial Statements(4) Reconciliation between the ending balance of retirement benefit obligations and plan assets, and retirement benefit liabilities and assets
recorded in the consolidated balance sheet
Millions of yen

Previous fiscal year
(March 31, 2022)

Funded retirement benefit obligation
Plan assets
Unfunded retirement benefit obligation
Net amount of liabilities and assets recorded in
the consolidated balance sheet
Liabilities for retirement benefits
Assets for retirement benefits
Net amount of liabilities and assets recorded in
the consolidated balance sheet¥

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)
¥

8,794

8,036

$

60,181(14,687)(109,990)(5,829)(6,651)(49,809)

3,282

3,442

25,776(2,547)(3,208)(24,024)

3,608

3,728

27,918(6,155)(6,936)(51,943)(2,547)(3,208)(24,024)(Note) Includes plans for which the simplified method is applied.

(5) Retirement benefit expense and their components
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gains and losses
Retirement benefit expenses calculated by the simplified method
Retirement benefit expense relating to defined benefit plans

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)
¥ 228

¥ 262

Fiscal year under review(From April 1, 2022
to March 31, 2023)$ 1,707

31

39

292

(253)

(254)

(1,902)

(616)

(115)

(861)

257

406

3,040

(318)

304

2,276

(6) Remeasurements of defined benefit plans
The components of remeasurements of defined benefit plans (before tax effects) are as follows.
Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Actuarial gains and losses
Total

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Millions of yen

Fiscal year under review(March 31, 2023)(14,623)

Previous fiscal year
(From April 1, 2021
to March 31, 2022)(7) Remeasurements of defined benefit plans included in accumulated other comprehensive income
The components of remeasurements of defined benefit plans (before tax effects) are as follows.

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ (2,681)¥ 538$ 4,029¥ (2,681)¥ 538$ 4,029

Previous fiscal year
(March 31, 2022)

Unrecognized actuarial gains and losses
Total

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)

Fiscal year under review(March 31, 2023)¥ (479)

¥ 59

$ 441

¥ (479)

¥ 59

$ 441

(8) Plan assets(i) Major category of plan assets
The ratio of each major category to total plan assets is as follows.
Previous fiscal year
(March 31, 2022)

Bond
Equities
General accounts at life insurance companies
Cash and deposits
Other
Total

Fiscal year under review(March 31, 2023)

20%

20%

46%

47%

13%

13%

6%

5%

15%

15%

100%

100%

(Note) The total pension plan assets include 27% and 31% of the retirement benefits trust for the corporate pension fund plans as of March 31, 2022 and 2023, respectively.

(ii) Method for setting the expected long-term rates of return on plan assets
To determine the expected long-term rates of return on plan assets, the Company considers the current and expected allocation of plan assets andthe current and expected long-term rates of return on the various assets comprising the plan assets.
(9) Actuarial assumptions
Major actuarial assumptions (expressed as a weighted average)
Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Discount rate
Expected long-term rates of return on plan assets
Expected rate of salary increase

Fiscal year under review(From April 1, 2022
to March 31, 2023)

0.4%

0.8%

1.6%

1.7%

2.6%

2.6%

3. Defined contribution plans
The amounts of required contributions to the defined contribution plans of the consolidated subsidiaries are 20 million yen for the previous fiscal year
(from April 1, 2021 to March 31, 2022) and 11 million yen for the fiscal year under review (from April 1, 2022 to March 31, 2023).

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Notes to Consolidated Financial Statements
Fiscal year as of March 31, 2023

Tax effect accounting
1. Major components of deferred tax assets and liabilities
Millions of yen

Previous fiscal year
(March 31, 2022)

Deferred tax assets
Tax loss carryforwards (Note 1)
Provision for bonuses to employees
Unrealized profit on intercompany transactions
Impairment loss
Loss on devaluation of inventories
Acquisition related cost of acquired companies
Other
Gross deferred tax assets
Valuation allowance for tax loss carryforwards (Note 1)
Valuation allowance for temporary differences
Valuation allowance
Total deferred tax assets
Deferred tax liabilities
Differences on land revaluation
Net unrealized holding gain on securities
Gain on marketable securities contributed to employees’ retirement
benefit trust
Assets for retirement benefits
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)

Fiscal year under review(March 31, 2023)¥ 3,907¥ 4,794$ 35,902

338

326

2,441

532

546

4,088

1,074

1,036

7,758

98

81

606

93

93

696

578

640

4,792

6,622

7,519

56,309(3,733)(4,600)(34,449)(1,344)(1,302)(9,750)(5,078)(5,903)(44,207)

1,544

1,615

12,094

(999)

(957)

(7,166)(3,264)(3,265)(24,451)

(146)

(145)

(1,085)

(148)

(335)

(2,508)Over 2 years
within 3 years

¥ 41

¥ 50

¥ 113

(22)

(23)

18

26

Millions of yen
Over 3 years
within 4 years

Over 4 years
within 5 years

Over 5 years

Total

¥ 276

¥ 277

¥ 4,034¥ 4,794

(84)

(274)

(270)

(3,924)(4,600)

28

2

7

110

193

Thousands of U.S. dollars
Over 3 years
Over 4 years
within 4 years
within 5 years(*) The amount of tax loss carryforwards is calculated by multiplying the statutory tax rate.
Fiscal year as of March 31, 2023

Tax loss carryforwards (*)
Valuation allowance
Deferred tax assets

Within 1 year

Over 1 year
within 2 years

Over 2 years
within 3 years

Over 5 years

Total

$ 307

$ 374

$ 846

$ 2,066$ 2,074$ 30,210$ 35,902

(164)

(172)

(629)

(2,051)(2,022)(29,386)(34,449)

134

194

209

14

52

823

1,445

(Note) 2. Net deferred tax assets (liabilities) for the previous fiscal year and the fiscal year under review are included in the following items on the consolidated balance sheet.
Millions of yen

Non-current assets - Deferred income taxes
Long-term liabilities - Deferred income taxes

Thousands of U.S. dollars

Previous fiscal year
(March 31, 2022)

Fiscal year under review(March 31, 2023)

¥

¥

822

851

Fiscal year under review(March 31, 2023)$(4,593)(4,410)

6,373(34,396)(Note) 3. In addition to the above, the amount equivalent to taxes on land revaluation is recorded as “Deferred income taxes for land revaluation” as follows.

(573)

(653)

(4,890)(5,132)(5,357)(40,118)¥ (3,587)¥ (3,741)$ (28,016)

Millions of yen

Previous fiscal year
(March 31, 2022)

Deferred income taxes for land revaluation¥ (1,596)

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)¥ (1,596)

Fiscal year under review(March 31, 2023)$ (11,952)

2. Major factors underlying the differences between the statutory tax rate and the effective tax rate after the application of tax
effect accounting.

(Note) 1. Tax loss carryforwards and their deferred tax assets by expiration dateFiscal year as of March 31, 2022

Tax loss carryforwards (*)
Valuation allowance
Deferred tax assets

Tax loss carryforwards (*)
Valuation allowance
Deferred tax assets

Within 1 year

Over 1 year
within 2 years

Within 1 year

Over 1 year
within 2 years

Over 2 years
within 3 years

¥ 20

¥ 110

¥ 98

(14)

(101)

(87)

5

8

11

Millions of yen
Over 3 years
within 4 years

Over 4 years
within 5 years

Over 5 years

Total

¥ 42

¥ 102

¥ 3,532¥ 3,907

(29)

(80)

(3,419)(3,733)

13

21

112

173

Previous fiscal year
(March 31, 2022)

Statutory tax rate
(Adjustment)
Non-deductible expenses such as entertainment expenses
Per capita portion of inhabitants’ tax
Tax credit of research and development costs
Loss carryforwards of overseas subsidiaries for which tax effects are
not recognized
Tax rate differences of overseas subsidiaries
Denial of impairment loss
Other
Effective tax rate after application of tax effect accounting

Fiscal year under review(March 31, 2023)

—

30.6%

—

4.0

—

1.5

—

(5.5)

—

53.3

—

(5.2)

—

0.7

—

0.8

—

80.2

(Note) Presentation for the previous fiscal year is omitted because the Group recorded a loss before income taxes.

3. Accounting treatment for corporation tax and local corporation tax, and accounting treatment for tax effect accounting related
these taxes
The Company and certain domestic consolidated subsidiaries have adopted the group tax sharing system from the fiscal year under review. In accordance with the “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System” (ASBJ PITF No. 42, August 12, 2021), theCompany and certain domestic consolidated subsidiaries account for and disclose corporation tax, local corporation tax as well as related tax effectaccounting.

87

SEKISUI KASEIOtherInformation

Integrated Report 2023

88

Notes to Consolidated Financial Statements

Business combinations(Acquisition of additional shares of subsidiaries)
At Board of Directors held on April 28, 2022, the Company resolvedto acquire additional shares of Proseat Europe GmbH, one of theCompany’s consolidated subsidiaries, and made it a wholly-owned subsidiary on May 20, 2022.

1. Name and business description of the company in businesscombination(1) Name of the company: Proseat Europe GmbHBusiness description: Management of Proseat Group policies andadministration(2) Date of business combination
May 20, 2022
(3) Legal form of business combination
Share acquisition from non-controlling shareholders(4) Company name after business combination
Unchanged(5) Other matters related to the outline of the transaction.
As a result of the exercise of the put option from Recticel NA/SA, a
non-controlling shareholder of Proseat Europe GmbH, the ratio of voting rights of the additionally acquired shares is 25%, and the ratio ofvoting rights of Proseat Europe GmbH of the Company is 100%.

Revenue recognition
2. Outline of the accounting treatment to be applied

1. Disaggregation of revenue from contracts with customers

In accordance with the “Accounting Standard for Business
Combinations” (ASBJ Statement No. 21, January 16, 2019) and the“Guidance on the Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ GuidanceNo. 10, January 16, 2019), the Company accounted for the transaction as a transaction with non-controlling interests among transactions
under common control.

Previous fiscal year (from April 1, 2021 to March 31, 2022)

3. Matters concerning the acquisition of additional shares ofsubsidiary
Acquisition cost of the acquired company and breakdown by consideration for acquisition
Consideration for acquisition: Cash and deposits of 1 EuroAcquisition cost: 1 EuroMillions of yen
Reportable segments
Human LifeJapan
EuropeAsia
Other
Revenue from contracts with customers
Other revenue
Total(2) Amount of decrease in capital surplus due to transactions with
non-controlling shareholders
24 million yen(Asset retirement obligations)
Information is omitted due to a lack of materiality.
(Real estate such as rentals)
Information is omitted due to a lack of materiality.

Total¥ 21,801¥ 71,193—

30,25430,254137

13,561

13,698

1

2,419

2,420

49,53068,036

117,567———¥ 49,530¥ 68,036¥ 117,567

Fiscal year under review (from April 1, 2022 to March 31, 2023)
Millions of yen
Reportable segments

4. Changes in the equity of the Company related to the transaction with non-controlling shareholders(1) Major components of changes in capital surplus
Acquisition of additional shares of a subsidiary

Industry¥ 49,391

Human LifeJapan
EuropeAsia
Other
Revenue from contracts with customers
Other revenue
Total

Industry

Total¥ 52,470¥ 22,764¥ 75,234—

33,103

33,103

131

12,524

12,655

—

3,689

3,689

52,602

72,081

124,683———¥ 52,602¥ 72,081¥ 124,683

Fiscal year under review (from April 1, 2022 to March 31, 2023)
Thousands of U.S. dollars
Reportable segments
Human LifeJapan
EuropeAsia
Other
Revenue from contracts with customers
Other revenue
Total

Industry

Total$ 392,945$ 170,478$ 563,423
247,906—

247,906

981

93,791

94,772—

27,626

27,626393,933

539,811

933,745———$ 393,933$ 539,811$ 933,745

2. Information that serves as a basis for understanding revenue from contracts with customers

3. Information to understand the amount of revenue for the
fiscal year under review and subsequent fiscal years

The Group identifies distinct goods or services included in contracts
with customers and identifies performance obligations as a unit oftransaction.

Contract assets are primarily revenue recognized prior to billing
customers.
Contract liabilities are primarily consideration received from customers prior to the delivery of products.

(1) Sales of merchandise and products
As described in “(Basis of preparation of consolidated financial statements) 4. Accounting Policies (5) Recognition of significant revenues
and expenses.”(2) Agent transactions
If the performance obligation is to arrange for the provision of specified
goods or services by another party, the revenue is presented in the
consolidated statement of income in the amount of fee or commission
or the net amount of consideration as an agent.

Previous fiscal year (from April 1, 2021 to March 31, 2022)
The amount of contract liabilities at the beginning of the fiscal year
included in the revenue recognized for the fiscal year ended March 31,
2022 is not material. The amount of revenue recognized in the fiscal
year under review, whose obligations were satisfied in the past periods
is not material.
Fiscal year under review (from April 1, 2022 to March 31, 2023)
The amount of contract liabilities at the beginning of the fiscal year
included in the revenue recognized for the fiscal year ended March 31,
2023 is not material. The amount of revenue recognized in the fiscal
year under review, whose obligations were satisfied in the past periods
is not material.

89

SEKISUI KASEIOtherInformation

Integrated Report 2023

90

Notes to Consolidated Financial Statements
Fiscal year under review (from April 1, 2022 to March 31, 2023)

Segment information

Millions of yen[Segment information]

Reportable segments

1. Overview of reportable segments
The Company’s reportable segments are components of the Company for which separate financial information is available, and are subject to periodic
reviews by the Board of Directors in order to make decisions on the allocation of management resources and evaluate business performance.
The Company has established departments by product market or product function in order to globally develop business in the two fields of“Human Life” and “Industry,” with plastics as its core business. Each department plans comprehensive strategies in cooperation with subsidiaries anddevelops business activities.
Accordingly, the Group is composed of segments by product market and product function based on departments, and has two reportable segments: “Human Life” and “Industry.”
The “Human Life Segment” mainly manufactures and sells boxes/trays for agricultural/fishery products, food containers, housing and civil engineering materials, etc. The “Industry Segment” mainly manufactures and sells automobile components, digital consumer electronics components,
packaging materials, and other related products.

2. Calculation methods used for sales, profit or loss, assets and other items of each reportable segment
The accounting method used for reportable segments is the same as that described in “Basis of preparation of consolidated financial statements.”
Income of reportable segments is based on ordinary income. Inter-segment sales and transfers are based on prevailing market prices.

3. Information on sales, profit or loss, assets and other items of each reportable segment, and information on disaggregation ofrevenue
Previous fiscal year (from April 1, 2021 to March 31, 2022)
Millions of yen
Reportable segments
Human Life

Net sales
Japan
EuropeAsia
Other
Revenue from contracts with customers
Other revenue
Sales to third parties
Inter-segment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Amortization of goodwill
Interest income
Interest expense
Increase in property, plant and equipment
and intangible assets

Industry

Adjustments andeliminations(Note 1)

Total

¥

Total
(Note 2)

¥ 49,391¥ 21,801¥ 71,193—¥ 71,193—

30,25430,254—30,254137

13,561

13,698—

13,698

1

2,419

2,420

—

2,420

49,53068,036

117,567—

117,567

—

—

—

—

—

49,53068,036

117,567—

117,567

611

133

745

¥ 50,141¥ 68,170¥ 118,312

¥

(745)

—

(745)

¥ 117,567

3,376(1,777)

1,598

(196)

1,401

66,05059,708125,758

17,549143,308

1,903

3,535

5,438

738

6,176

—

128

128

—

128

0

11

12

1

13

0

264

264

121

386

1,229

1,856

3,086

739

3,825

(Notes) 1. Adjustments and eliminations are as follows.
(1) Segment income in the amount of (196) million yen consists of inter-segment eliminations of 1 million yen and (198) million yen in corporate expenses that are not allocated to each reportable segment.
(2) Segment assets in the amount of 17,549 million yen mainly consists of investments in securities of the reporting company and assets related to administrative departments
and the Research and Development Center.
(3) Depreciation and amortization include amortization of long-term prepaid expenses. The amount of 738 million yen mainly consists of depreciation of assets related toadministrative departments and the Research and Development Center.
(4) Internal interests are allocated to assets owned by each segment. The adjustment to interest expense is the difference between the actual interest expense and theamount of internal interests allocated to each segment.
(5) Increase in property, plant and equipment and intangible assets in the amount of 739 million yen mainly consist of assets related to Research and Development Center.
2. Segment income (loss) is adjusted with ordinary income on the consolidated statement of income.
3. Names of major products in each segment• Human Life ESLEN Beads, ESLEN Sheet, ESLEN Wood, INTERFOAM, other foamed/molded products, ES Dan Mat, ESLEN Block, etc.
• Industry	PIOCELAN, LIGHTLON, NEOMICROLEN, CELPET, TECHPOLYMER, ST-gel, TECHEATER, ELASTIL,
FOAMAC, ST-LAYER, ST-Eleveat, other foamed/molded products, etc.

Net sales
Japan
EuropeAsia
Other
Revenue from contracts with customers
Other revenue
Sales to third parties
Inter-segment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Amortization of goodwill
Interest income
Interest expense
Increase in property, plant and equipment
and intangible assets

Adjustments andeliminations(Note 1)

Total
(Note 2)

Human Life

Industry

Total¥ 52,470¥ 22,764¥ 75,234—¥ 75,234—

33,103

33,103—

33,103

131

12,524

12,655—

12,655

—

3,689

3,689

—

3,689

52,602

72,081

124,683—

124,683

¥

—

—

—

—

—

52,602

72,081

124,683—

124,683

565

161

726

¥ 53,167¥ 72,242¥ 125,410

¥

(726)

—

(726)

¥ 124,683

2,585

(400)

2,185

(1,481)

704

67,06360,314

127,378

17,796145,175

1,852

3,024

4,877

773

5,650

—

—

—

—

—

0

19

19

0

19

0

340

340

197

538

1,387

1,614

3,002

680

3,682

(Notes) 1. Adjustments and eliminations are as follows.
(1) Segment income in the amount of (1,481) million yen consists of inter-segment eliminations of (1) million yen and (1,480) million yen in corporate expenses that are notallocated to each reportable segment.
(2) Segment assets in the amount of 17,796 million yen mainly consists of investments in securities of the reporting company and assets related to administrative departments
and the Research and Development Center.
(3) Depreciation and amortization include amortization of long-term prepaid expenses. The amount of 773 million yen mainly consists of depreciation of assets related toadministrative departments and the Research and Development Center.
(4) Internal interests are allocated to assets owned by each segment. The adjustment to interest expense is the difference between the actual interest expense and theamount of internal interests allocated to each segment.
(5) Increase in property, plant and equipment and intangible assets in the amount of 680 million yen mainly consist of assets related to Research and Development Center.
2. Segment income (loss) is adjusted with ordinary income on the consolidated statement of income.
3. Names of major products in each segment• Human Life ESLEN Beads, ESLEN Sheet, ESLEN Wood, INTERFOAM, other foamed/molded products, ES Dan Mat, ESLEN Block, etc.
• Industry	PIOCELAN, LIGHTLON, NEOMICROLEN, CELPET, TECHPOLYMER, ST-gel, TECHEATER, ELASTIL,
FOAMAC, ST-LAYER, ST-Eleveat, other foamed/molded products, etc.

Fiscal year under review (from April 1, 2022 to March 31, 2023)
Thousands of U.S. dollars
Reportable segments

Net sales
Japan
EuropeAsia
Other
Revenue from contracts with customers
Other revenue
Sales to third parties
Inter-segment sales and transfers
Total
Segment income (loss)
Segment assets
Other items
Depreciation and amortization
Amortization of goodwill
Interest income
Interest expense
Increase in property, plant and equipment
and intangible assets

Adjustments andeliminations(Note 1)

Total
(Note 2)

Human Life

Industry

Total$ 392,945$ 170,478$ 563,423—

247,906

247,906—

981

93,791

94,772—

94,772—

27,626

27,626—

27,626393,933

539,811

933,745—933,745

—

—

—

—

—

393,933

539,811

933,745—933,745

4,231

1,205

5,436

$ 398,165$ 541,016$ 939,189$—$

247,906(5,436)$(5,436)563,423—$

124,683

19,358(2,995)

16,363(11,091)

5,272

502,231451,688953,927

133,273

1,087,208

13,86922,64636,523

5,788

42,312

—

—

—

—

—

0

142

142

0

142

0

2,546

2,546

1,475

4,029

10,387

12,08722,481

5,092

27,574

91

SEKISUI KASEIIntegrated Report 2023

92

Notes to Consolidated Financial Statements

Other
Information[Related information][Information on impairment loss of non-current assets by reportable segment]

Previous fiscal year (from April 1, 2021 to March 31, 2022)

Previous fiscal year (from April 1, 2021 to March 31, 2022)

1. Information by product and service
Segment information is omitted because the classification is the same as the reportable segment.

Human Life

Impairment loss

2. Information by geographic area
(1) Net sales
Japan

EuropeMillions of yen
Asia¥ 71,193¥ 30,254¥ 13,698

¥—

Other

¥ 2,420

Europe¥ 45,016¥ 4,159¥ 4,506

Human Life

Impairment loss

Industry

¥—

Other

Total

¥ 1,970¥ 55,652

Impairment loss

¥ 50

Total

¥ 6,407

$—

Total

¥—

Thousands of U.S. dollars
Industry
Corporate and elimination

Human Life

$ 374

$—

¥ 50

Total

$ 374

[Information on amortization of goodwill and unamortized balance by reportable segment]
Previous fiscal year (from April 1, 2021 to March 31, 2022)

3. Information by major customer
Customer¥—

Millions of yen
Corporate and elimination

Total¥ 117,567(2) Property, plant and equipment
Japan¥ 6,407

Fiscal year under review (from April 1, 2022 to March 31, 2023)(Note) Net sales are classified into regions based on the location of customers.

Millions of yen
Asia

Millions of yen
Corporate and elimination

Industry

Millions of yen
Net sales

Related segment¥ 15,467

Human LifeFP Corporation

Human Life

Amortization during the period
Balance at end of period

Millions of yen
Corporate and elimination

Industry

Total

¥—

¥ 128

¥—

¥ 128

—

—

—

—

Fiscal year under review (from April 1, 2022 to March 31, 2023)
Fiscal year under review (from April 1, 2022 to March 31, 2023)
Not applicable.

1. Information by product and service
Segment information is omitted because the classification is the same as the reportable segment.

2. Information by geographic area

[Information on gain on negative goodwill by reportable segment]
Not applicable.

(1) Net sales
Japan

EuropeMillions of yen
Asia¥ 75,234¥ 33,103¥ 12,655

Other

Total

¥ 3,689¥ 124,683(Note) Net sales are classified into regions based on the location of customers.

[Related party information]
Related party transactions
Information is omitted due to a lack of materiality.

Japan

EuropeThousands of U.S. dollars
Asia

Other

Total

$ 563,423$ 247,906$ 94,772$ 27,626$ 933,745(Per share information)
Yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)(2) Property, plant and equipment
Japan

EuropeMillions of yen
Asia

Other

Total

¥ 43,271¥ 4,201¥ 4,239¥ 1,990¥ 53,702

Japan

EuropeThousands of U.S. dollars
Asia

Other

Total

$ 324,054$ 31,461$ 31,745$ 14,903$ 402,171

Net assets per share
Net income (loss) per share

Fiscal year under review(From April 1, 2022
to March 31, 2023)

1,272.86

1,275.00(130.99)

10.00(Note) 1. Diluted net income (loss) per share is not stated as there are no dilutive shares.

FP Corporation

CustomerFP Corporation

Millions of yen

Previous fiscal year
(March 31, 2022)

3. Information by major customer
Customer(Note) 2. The basis for calculating net assets per share is as follows.

Millions of yen
Net sales

Related segment¥ 17,381

Human Life

Total net assets
Deductions from total net assets(Non-controlling interests)
Net assets related to common stock at the end of the period

Thousands of U.S. dollars

Fiscal year under review(March 31, 2023)¥ 58,242¥ 58,464

717

740

5,541

(717)

(740)

(5,541)¥ 57,525¥ 57,723$ 432,284

Thousand shares

Thousands of U.S. dollars
Net sales

Related segment$ 130,165

Human Life

Number of shares of common stock outstanding
Number of shares of treasury stock
Number of shares of common stock at the end of the periodused in the calculation of net assets per share

Fiscal year under review(March 31, 2023)

46,98846,988

1,794

1,714

45,19345,273$ 437,834

93

SEKISUI KASEIOtherInformation(Note)

Integrated Report 2023

94

Notes to Consolidated Financial Statements

3.The basis for calculating net income (loss) per share is as follows.
Millions of yen

Previous fiscal year
(From April 1, 2021
to March 31, 2022)

Net income (loss) per share
Net income (loss) attributable to owners of the parent
Amount not attributable to common shareholders
Net income (loss) related to common stock attributable ownersof the parent

Thousands of U.S. dollars

Fiscal year under review(From April 1, 2022
to March 31, 2023)

Fiscal year under review(From April 1, 2022
to March 31, 2023)¥ (5,917)¥ 452$ 3,385

—

—

—

452

(5,917)

3,385

Thousand shares

Average number of shares of common stock during the period[Detailed schedule of asset retirement obligations]
Since the amount of asset retirement obligations at the beginning of the fiscal year under review and at the end of the fiscal year under review is 1/100
or less of the total amount of liabilities and net assets at the end of the fiscal year under review, the description is omitted.
(2) Other
Quarterly information for the fiscal year under review
Millions of yen(Cumulative period)

Net sales
Net income (loss) before income taxes
Net income (loss) attributable to owners of
the parent

Q1

Q2

Q3

¥ 28,441¥ 60,917¥ 93,089¥ 124,683

(320)

301

1,033

2,287

(569)

(345)

(245)

452

¥ (5.43)¥ 10.00

45,25045,176Yen

Net income (loss) per share (yen)¥ (12.61)¥ (7.65)(Significant subsequent events)
Not applicable.

Yen(Accounting period)(v) Annexed consolidated detailed schedules[Detailed schedule of corporate bonds]

Company name

Issue

Net income (loss) per share

Date of issuanceNo.1 unsecured
bonds—

Sekisui Kasei Co., Ltd.
Total

Millions of yen
Balance atBalance at
beginning of period
end of period

Secured/unsecuredInterest rate (%)

Within 1 year

Over 1 year
within 2 years

2019.12.12¥ 7,000¥ 7,000

0.500

N/A

2026.12.11—¥ 7,000¥ 7,000

—

—

—

¥—

¥—

Millions of yen
Over 2 years
within 3 years¥—

Over 3 years
within 4 years

Over 4 years
within 5 years¥ 7,000¥—[Detailed schedule of loans]

Balance at
beginning of period

Balance at
end of period

Thousands of
U.S. dollars
Balance at
end of period¥ 6,086¥ 7,878$ 58,997

2.70%—

10,166

5,148

38,5530.29%—

Millions of yen
Category

Short-term loans
Current portion of long-term loans
Current portion of lease liabilities
Long-term loans (excluding the current portion)
Lease liabilities (excluding the current portion)
Other interest-bearing debt
Total

Average interest
rate (%)

Repayment
date

807

846

6,335

—

—

13,86318,094

135,505

0.91%

2024 to 2030

3,663

3,423

25,634—2024 to 2044

—

—

—

—

—

¥ 34,588¥ 35,390$ 265,034——(Notes) 1. “Average interest rate” is the weighted average interest rate on the balance of loans at the end of the period.
2. The average interest rate of lease liabilities is not recorded because lease liabilities are recorded in the consolidated balance sheet at the amount before deducting theamount equivalent to interest included in the total lease payment.
3. The repayment schedule of long-term loans and lease liabilities (excluding the current portion) within five years after the consolidated balance sheet date is as follows.
Over 1 year within 2 years

Over 4 years within 5 years¥ 5,790¥ 8,243¥ 2,188¥ 1,128

685

513

391

322

Over 1 year within 2 years

Long-term loans
Lease liabilities

Millions of yen
Over 2 years within 3 years
Over 3 years within 4 years

Thousands of U.S. dollars
Over 2 years within 3 years
Over 3 years within 4 years

Q1¥ (12.61)

Q2

Q3¥ 4.95

Fiscal year under review¥ 2.21¥ 15.42

Thousands of U.S. dollars
Maturity(Note) The scheduled amount of redemption of bonds for the five years after the consolidated balance sheet date is as follows.

Long-term loans
Lease liabilities

Fiscal year under review

Over 4 years within 5 years$ 43,361$ 61,731$ 16,385$ 8,447

5,129

3,841

2,928

2,411

(Cumulative period)

Net sales
Net income (loss) before income taxes
Net income (loss) attributable to owners of
the parent

Q1

Q2

Q3

Fiscal year under review$ 212,993$ 456,204$ 697,139$ 933,745(2,396)

2,254

7,736

17,127(4,261)(2,583)(1,834)

3,385

95

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96

11 Years Summary

Fiscal Year2012

2014*2

2013

2015

2016

2017

2018

2019

2020

For the year:
Net Sales

2022

2022

Millions of yen

Thousands of
U.S. dollars*1

2021¥ 101,784¥ 109,923¥ 113,660¥ 101,559¥ 102,398¥ 112,101¥ 112,593¥ 136,155¥ 118,851¥ 117,567¥ 124,683$ 933,745

Operating Income

1,152

2,124

3,930

5,118

5,401

5,284

4,784

3,725

2,091

1,463

793

5,938

Ordinary Income

1,237

2,206

4,180

4,862

5,049

5,154

4,776

3,391

1,956

1,401

704

5,272

926

1,264

2,530

3,147

3,404

3,448

3,129

2,323

1,126

(5,917)

452

3,385

Capital Expenditures

6,849

3,434

5,908

4,424

5,836

7,762

7,368

5,261

5,377

3,825

3,682

27,574

Depreciation and Amortization

3,940

3,856

3,999

3,937

3,591

4,087

4,517

6,071

6,217

6,176

5,650

42,312

Research and Development Costs

1,993

1,936

1,877

1,856

1,916

2,104

2,145

2,769

2,655

2,784

2,707

20,272¥ 105,562¥ 110,687¥ 116,201¥ 114,892¥ 119,670¥ 131,774¥ 152,845¥ 149,103¥ 158,439¥ 143,308¥ 145,175$ 1,087,208

Total Net Assets

50,92954,03658,27558,80061,363

66,145

66,771

67,21770,65758,242

58,464

437,834

Interest-bearing Debt

18,492

18,566

19,467

18,274

18,42419,09635,22939,58341,704

41,58842,390317,456

Yen

U.S. dollars*1

Net Income Attributable to
Owners of the Parent

At year-end:
Total Assets

Per Share Data*3:
Net Income¥

Net Assets

1,063.68

1,136.52

1,231.36

1,243.30

1,322.14

1,444.28

1,439.43

8.00

14.00

18.00

24.00

24.00

27.00

Operating Income Ratio (%)

1.1

1.9

3.5

5.0

5.3

ROE (%)

1.9

2.5

4.6

5.4

ROA (%)

1.2

2.0

3.7

Equity Ratio (%)

47.4

48.0

Cash Dividends

19.72

¥

26.96

¥

54.14

¥

67.34

¥

73.03

¥

75.33

¥

69.09

¥

51.29

¥

24.86

¥(130.99)

1,450.32

1,549.84

1,272.86

1,275.00

9.54

30.00

30.00

21.00

12.00

12.00

0.08

4.7

4.2

2.7

1.8

1.2

0.6

5.7

5.5

4.8

3.6

1.6

(9.3)

0.8

4.2

4.3

4.1

3.4

2.2

1.3

0.9

0.5

49.5

50.6

50.7

49.6

42.7

44.1

44.2

40.1

39.8

¥

10.00

Other Data (financial):

Other Data (non-financial):
Number of Employees
as of March 31
Number of Employees in Japanas of March 31
Number of Employees outside Japanas of March 31

1,813

1,833

1,859

1,895

2,011

2,101

3,881

3,855

3,808

3,658

3,505

1,646

1,609

1,539

1,545

1,633

1,680

1,723

1,695

1,676

1,726

1,653

167

224

320

350

378

421

2,158

2,160

2,132

1,932

1,852

Ratio of Women (%)*4

N.A.

N.A.

N.A.

16.9

18.1

18.9

20.7

19.9

26.9

28.5

28.4

*1 U.S. dollar amounts represent translations of Japanese yen, for readers’ convenience only, at the rate of ¥133.53 = U.S.$1.00, the prevailing exchange rate at March 31, 2023.
*2 In order to synchronize accounting periods of overseas group companies with the accounting period in Japan beginning in FY2014, the FY2014 results for overseas group companies are
based on a 15-month accounting period.
*3 SEKISUI KASEI CO., LTD. consolidated its common share at the ratio of two shares to one, effective on October 1, 2016.
*4 Excluding subsidiaries in Europe and the Americas that are not publicly listed.

$

0.07

97

SEKISUI KASEIOtherInformation

Integrated Report 2023

98

Company Information
❶

❸
❹❺❻
❼

❷
10
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0
1●

❾

11
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11
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21
20 ●

17
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12 ●
16 15
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14
13 ●
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18
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❽

19
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Our Group Network

Stock Information (As of March 31, 2023)❶ Sekisui Kasei Korea Co., Ltd.

❽ PT. Sekisui Kasei Indonesia

15 Proseat Verwaltung GmbH●❸ Sekisui Kasei Tianjin Co., Ltd.

10 Sekisui Kasei U.S.A., Inc.
●

17 Proseat LLP●❷ Sekisui Kasei Taiwan Co., Ltd.
❹ Sekisui Kasei Suzhou Co., Ltd.

❺ Sekisui Kasei Shanghai International Trading Co., Ltd.

❻ Sekisui Kasei Shanghai Precision Forming Co., Ltd❼ Sekisui Kasei Hong Kong Trading Co., Ltd.

❾ Sekisui Kasei (Thailand) Co., Ltd.

❷ Sekisui Kasei Tohoku Co., Ltd.
❸ Sekisui Kasei Toubu Co., Ltd.

❹ Sekisui Kasei Urethane Co., Ltd.
❺ Sekisui Kasei Kanto Co., Ltd.

❻ Sekisui Kasei Gunma Co., Ltd.

❼ Sekisui Kasei Saitama Co., Ltd.

❽ Shonan Sekisui Kogyo Co., Ltd.

❾ Sekisui Kasei Yamakyu Co., Ltd.

Ordinary general meetingof shareholders

16 Proseat Schwarzheide GmbH●

11 Sekisui Kasei Mexico S.A. de C.V.
●
12 Sekisui Kasei Europe B.V.
●

19 Proseat Foam Manufacturing, S.L.U.
●

13 Proseat Europe GmbH●

20 Proseat Mladá Boleslav s.r.o.
●

14 Proseat GmbH + Co. KG●

21 Proseat Sp.zo.o●1●

10 Sekisui Kasei Chubu Co., Ltd.
●
11 Sekisui Kasei Omi Co., Ltd.
●

14 Sekisui Kasei Kansai Co., Ltd.
●
15 Sekisui Kasei Tenri Co., Ltd.
●

16 Sekisui Kasei Seibu Co., Ltd.
●

10
12 ●
●
11
14 ●
●
15
13 ●
●

17 Sekisui Kasei Oita Co., Ltd.
●

18 Sekisui Kasei Okinawa Co., Ltd.
●SEKISUI KASEI CO., LTD.

Head Office

2-4-4 Nishi-tenma Kita-ku, Osaka, Japan

Headquarters

2-7-1 Nishi-Shinjuku Shinjuku-ku, Tokyo, Japan

Establishment

October 1, 1959

Paid-in Capital

16,533 million yen

President andRepresentative
Director

Masato Kashiwabara

Number of
Employees

410 (non-consolidated)
3,505 (consolidated)

Consolidated
Subsidiaries(Japan)18 companies(Overseas) 21 companies

Equity Method
Affiliates

None

Fiscal Year

Ended March 31

Prime Market, Tokyo Stock Exchange
4228

Common stock—issued

46,988,109 shares

Number of shareholders

9,268Transfer agent

Mitsubishi UFJ Trust and Banking Corporation

Independent auditor

Ernst & Young ShinNihon LLC

Financial services
provider1.1%

Financial institutions
24.2%

Domestic companies
and others
33.2%

Individuals and others
32.0%

17
16 ●
●

Note: Calculated after deducting treasury stock holdings of 1,714 thousand sharesCompany Profile (As of March 31, 2023)
Name

March 31
September 30

Securities code

Foreign investors
9.5%

4
5●
6●
●
3
●
7
●
8
9 ●
●

Percentage ofOwnership(%)

SEKISUI CHEMICAL CO., LTD.

9,855

21.77

The Master Trust Bank of Japan, Ltd.

3,524

7.79

The Dai-ichi Life Insurance Company, Limited

2,273

5.02

Employees’ Shareholding

1,945

4.30

Sekisui Jushi Corporation

1,419

3.14

Daido Life Insurance Company

1,418

3.13

FP Corporation

1,348

2.98

MUFG Bank Ltd.
(Yen)

1,327

2.93

March 31

Listings

2●

13 Sekisui Kasei Sakai Co., Ltd.
●

Number of
Shares Held(thousands)

Name

Breakdown of Shareholder

18●

12 Sekisui Kasei Shiga Co., Ltd.
●

June
Ordinary general meeting ofshareholders:Year-end dividend:Interim dividend:

Record date18 Proseat SAS●

Domestic Subsidiaries 18 Companies❶ Sekisui Kasei Hokkaido Co., Ltd.

Major Shareholders

Basic Information

Overseas Subsidiaries 21 Companies

Stock price (left axis)
800Partners Shareholding
Business
Custody Bank of Japan, Ltd.

9.5%

Financial services
provider1.1%

Industry

Market/Application

Financial institutions
Domestic companies
24.2%
Automotive components, packaging materials for and others
33.2%
transportingparts, industrial components,
Individuals
and automotive
othersindustrial packaging, electric part materials, medical and
32.0%
health care materials

Note: Calculated after deducting treasury stock holdings of 1,714 thousand shares

Major
Products

PIOCELAN, LIGHTLON, NEOMICROLEN, CELPET,TECHPOLYMER, ST-gel, TECHEATER, ELASTIL,
FOAMAC, ST-LAYER, ST-Eleveat, other foamed/molded
products

Human Life
Market/Application

Agricultural and marine product containers, foodcontainers, distribution materials, construction materials,
civil engineering materials

Major
Products

ESLEN Beads, ESLEN Sheet, ESLEN Wood, INTERFOAM,
other foamed/molded products, ES Dan Mat, ESLEN
Block, etc.

(Yen)
800

Stock price (left axis)

990

2.19

Note: The
600Company maintains 1,714,000 shares of treasury stock, which dose not include
the holdings of the major shareholders in the above list.

Stock Price/Trading Volume
Foreigninvestors
Business Lines
in EachSegment

Trading volume (right axis)
1,210
2.67

400

Trading volume (right axis)(Thousand shares)

200

8,000

0

600

6,000
April
2021

July

OctoberJanuary
2022

400

4,000

200

2,000

0

0
April
2021

July

OctoberJanuary
2022

April

July

OctoberJanuary
2023

Apr

You can find the latest information of corporation, shareholder
and investor relations as well as details of our products andgreen activities on the Website of SEKISUI KASEI.

https://www.sekisuikasei.com/en/

SEKISUI KASEI CO., LTD.
Contact
Corporate Communications Dept.
Corporate Strategic HQ.
2-7-1 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0727, Japan
Tel. +81-3-3347-9711
Integrated Report 2023

2310SD410.4-0

Published in October 2023

Easy-to-read universal design fonts areused in this report.