Contents

We, Sekisui Kasei, practice “Zen-in Keiei”

SEKISUI KASEI’s Value Creation

2
3
5
7
9
11

Management Philosophy/Goal/Code of Conduct

Management
Philosophy

100th Year Vision

based on respect and mutual trust.
We are always innovating in our aim of “new happiness.”

CSR Declaration
Challenges and Growth Trajectory
Business Model
Financial and Non-Financial Highlights

Strategies for Value Creation

13
19

A Message from the President
Special: O ur Prevention Measures and Efforts
against COVID-19

21 Mid-Term Management Plan
23 Business Overview:		Industry Segment
		23		
Human Life Segment
		25
27 Research & Development Strategy
29 Human Resources Strategy

Goal

Plastics Solution Company Trusted 
by Customers around the WorldFoundation of Value Creation

31 ESG That Supports Corporate Value		Special: SKG-5R Initiatives
		33
			

–Results of FY2020 Activities–

37 SEKISUI KASEI’s ESG
		Environment
		37
		Social
		41
		Governance		45
49 Directors & Auditors
51 Discussion between Three Outside Directors
Other Information

55
59
65
85
87
88
88

MD&A and Business Risks
Consolidated Financial Statements
Notes to Consolidated Financial Statements
11 Years Summary
Our Group Network
Company Profile
Investor Information

Editorial Policy
To convey the sustainable growth potential of Sekisui Kasei to all readers,
including our stakeholders, from the perspective of ESG, we showcase
corporate information focusing on medium- to long-term value creation.
Period Covered
The activities included in this report were primarily carried out in the
period from FY2020 (April 1, 2020 – March 31, 2021) and in part up until
August 2021.

Code of
Conduct

3. Contribute to a better environment and an enriched society	in perfect harmony among people, nature, and technology.
4. Make an honest, generous and fresh workplace.
5. Address each and every challenge in creation and	 innovation to achieve our goals.

Scope of Reporting
This report covers the 40 companies of the Sekisui Kasei Group, including
Sekisui Kasei Co., Ltd. However, the environmental performance data
do not include Proseat Europe GmbH, which became a subsidiary in
February 2019.

Some of the data in this report differs from data disclosed in the past as aresult of revisions implemented to reflect changes in calculation methods
and the business sites covered.

Integrated Report 2021 / SEKISUI KASEI

2. Grow and develop together with customers by creating top quality and service.

Katsumi Sasaki—Publication Officer
Senior Managing Executive Officer
Head of Corporate Strategic Headquarters

Guidelines Used as Reference• Ministry of the Environment: Environmental Accounting Guidelines(Y2018 Edition)• Japanese Standards Association: Guidance on Social Responsibility
JISZ26000 (ISO 26000)

1

1. Unite individual efforts to make a strong power.

Publication of Integrated Report 2021
We have continued to improve this report every year with the
feedback of our stakeholders. We therefore warmly welcome thehonest opinions of all readers.

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 Groupare assumptions that the Company’s management believes to be reasonable based on currently available information. Actual outcomes may differ materially fromthose expressed in these forward-looking statements due to various factors. The Company undertakes no obligation to publish revised forward-looking statements
to reflect new events, conditions, or circumstances.

Integrated Report 2021 / SEKISUI KASEI2SEKISUI KASEI’s Value Creation

100th Year
VisionTo mark its 50th anniversary, in 2009, Sekisui Kasei Co., Ltd. formulated the Sekisui Kasei Group’s 100th Year Vision
to serve as a roadmap for further growth and development in the next half century.

Business Vision—Develop Globally as a “Plastics Solution Company” in Three Business Segments
The Sekisui Kasei Group is targeting net sales of over ¥250 billion and ¥200 billion in the Industry and Human Life segments, respectively, and also will grow the Environment/Energy segment to the ¥50 billion scale in net sales in FY2059, the100th anniversary of the Group’s founding.
FY2009Consolidated sales
50th Year
Anniversary¥100.7billion

FY2059Consolidated sales
100th Year
Anniversary¥500.0billion or more

¥50.0 billion
or moreEnvironment/
Energy¥200.0

Human Life

¥250.0Industry

billion or morebillion or more

¥71.5billion¥29.2billion

2059

2009

Corporate Goal for Our 100th Year Anniversary (in FY2059)

CSR Vision—Sekisui Kasei Group, Expanding Our Dreams for People and the Earth

The Sekisui Kasei Group aims to gain the trust of customers by globally expanding businesses based on plastics andproviding solutions.

We, Sekisui Kasei Group, carry out social responsibility to stakeholders including the global environment by practicing ourmanagement philosophy and contribute to the sustainable development of the global society.

Situation Goal

Scale Goal

Plastics Solution Company

Consolidated Sales¥500.0 billion or more

Trusted by Customers around the World

Responsibility to Stakeholders

Customers

Group
Members

Local
Communities

Shareholders

Business
Partners

GlobalEnvironment

Corporate Domains

Sekisui Kasei Group Solutions

Materials

Plastics based

Technologies

Technology thatcreates added value

Systems

By systemizing, know-how
and providing information

Culture Vision—Zen-in Keiei
All members, including managements and employees in general, of Sekisui Kasei Group always recognize the 4 keywords,“Innovation,” “Speed,” “Teamwork” and “Respect for Diversity” as starting point of achievement by making the most of
strength and improving the weakness.

Industry: Contributing to the growth and development of the industry by proposing business solutions to client companies
Lifestyle Transformation: Contributing to the transformation of people’s lifestyles
Global Environment: Simultaneously aiming to improve the global environment

3

Integrated Report 2021 / SEKISUI KASEIIntegrated Report 2021 / SEKISUI KASEI

4SEKISUI KASEI’s Value Creation

CSR
Declaration
Looking ahead to the “Sekisui Kasei Group 100th Year Vision,” the Sekisui Kasei Group is conducting business activities
with the aim of fulfilling its social responsibilities to all stakeholders, including the global environment. The CSR activities
that form the basis of the Group’s business activities are summarized in its “CSR Declaration.”

Zen-in Keiei
Under the concept of Zen-in Keiei, each member thinks by themselves, proposes, and makes voluntary actions, not beforced by top-down instructions. Under the Sekisui Kasei Group culture, we value brainstorm with other members for
improving personality and strength of individuals.

For the growth of both company and its people
4 keywords for the practice of Zen-in Keiei

Innovation

Stakeholder

Customers

Group Members

5

Responsibility of Sekisui Kasei GroupThe Company not only supplies safe/reliable products but also bring comfort and convenience to thelives of people by always creating new functions/value and proposing materials/services as solutions
for customers.
The Company places emphasis on mutual respect and trust, and pursues the happiness of people
working for the company. Consequently, we will improve fairness to skill development and rating, andmake efforts to create a healthy/safe work environment, and a good balance between work and family.

Local Communities

The Company believes being a safe workplace is the most important to communities. In addition, as amember of local communities, we aim to be a company trusted and loved by the whole community.

Shareholders

The Company meets expectations from shareholders with returns by improving its corporate value.
Furthermore, we focus on the active disclosure of our management information and dialogue withshareholders.

Business Partners

The Company builds trust in relationships with business partners through fair, honest businesspractices with sincerity as our motto. Also, we aim at co-existence and co-prosperity as a better
partner for the partners.

GlobalEnvironment

The Company actively endeavors to improve environment to protect our precious earth. In particular,
we contribute to the low-carbon society and develop the recycling-based society with foam plastics inthe community and lowering carbon levels centering on foam plastics which are eco materials.

Integrated Report 2021 / SEKISUI KASEI

Speed

Teamwork

Respect for
Diversity

Zen-in Keiei

Make the most of
personality andstrength ofindividuals(power ofindividuals)

Respect diversity
and join forces
as a team(power of teams)

Recognizes
Group’s
direction
as a member
Share the aim of
the entire Groupand havethe same goals

Leads toachieving
the Group’s
goals

People andcompany growtogetherSet up andachieve goals
as a member

Integrated Report 2021 / SEKISUI KASEI

6SEKISUI KASEI’s Value Creation

Challenges and Growth Trajectory
It has been more than 60 years since we began manufacturing and selling the first expandable polystyrene (EPS) in 1959
using technology developed in Japan. We continued to develop alongside Japan’s economic growth and have since
aimed for further sustainable growth through full-scale global business development.

1959—Establishment period

1979—Growth to maturity period

1999—Global development period

2019—To a next stage

In 1960, we began manufacturing and selling the first EPS (expandable
polystyrene) beads using technology developed in Japan. Our shareswere listed after five years in business, and after overcoming the obstacles presented by the 1973 oil crisis and boycott movements against
EPS foam, we listed our shares on the First Section of the Tokyo Stock
Exchange in 1978.

The Company continued to develop in line with Japan’s economic
growth, but with the collapse of the bubble economy, our performance deteriorated, with consolidated operating losses recorded for
four consecutive years from 1995.
We shifted from a policy of multifaceted expansion of our existing
businesses to one of management that utilizes our strengths throughselection and concentration.

The adoption of products such as PIOCELAN and TECHPOLYMER
polymer particles in new fields progressed. Taking this as an opportunity, we embarked on a full-scale global expansion, and in 2009, the50th anniversary of our founding, we achieved consolidated net salesof ¥100 billion and consolidated operating income of ¥5 billion.

On the milestone of the 60th anniversary of our foundation, we created a new corporate logo and corporate message. “Our planet. Our
tomorrow.” We aim to realize a sustainable society.

1959

1971

2000

2015

Sekisui Sponge Industries
Co., Ltd. (the current Sekisui
Kasei Co., Ltd.) establishedBegan collection and recycling of EPS foam

PIOCELAN (polystyrene/polyolefin hybrid resin foam)
adopted in automobile components (shock-absorbing
pads)

Developed ELASTIL (thermoplastic elastomeric bead
foam)

1960

1985

2001

2019

Began manufacturing andselling ESLEN Beads (EPS
(expandable polystyrene)beads)

Launched the EPS civilengineering method, alightweight embankment
method to counteract soft
groundPublished our first environmental report (environmental initiatives are currently
disclosed through our integrated reports and website)

Made Proseat GmbH &Co. KG, a European manufacturer of automotive
components, a consolidated
subsidiary

1962

1993

2004

2020

Began selling ESLEN Sheets(foamed polystyrene sheets)

Began selling ST-gel (a functional high-polymer gel)Entered into the medical
field

Established a closed-loop
recycling system for EPSREM

Formulated the “SKG-5R
STATEMENT” to realize asustainable society

Waste plastics collected aretransported to our Tenri Plant
and Kanto Plant, where they are
recycled into molded products
and construction materials.

Recycled from resins from home
appliances and other waste,
EPSREM is an EPS foam productthat addresses environmental
issues head-on

Transition of business results
140 (billions of yen)(billions of yen) 3.5

120

3.0

100

2.5

80

2.0

60

1.5

40

1.0

20

0.5

0

0

1959

n Net sales (left axis)

1970

1980

1990

2000

2010

2020

(FY)

Net income (right axis)

Note: Non-consolidated results until FY1998, consolidated results from FY1999 onward listed.

7

Integrated Report 2021 / SEKISUI KASEIIntegrated Report 2021 / SEKISUI KASEI

8SEKISUI KASEI’s Value Creation

Business Model
The Sekisui Kasei Group aims to solve social issues and realize a safe,
comfortable, and convenient society through business activities.

INPUT

BUSINESS

Organization:
6 Forms of Management Capital

Segment

Business Partners

Human Resources Strategy gP29
Improving human resource capabilities(promoting workstyle reforms & diversity)

Packaging container manufacturer retailers,
wholesale markets, agriculture and fisheries-related companies
Automobile manufacturers, automobile parts manufacturers
Home appliance and IT companies, LCD-related manufacturers
Other various industrial product manufacturers
Construction companies, landscaping companies,
construction material manufacturers
Medical equipment manufacturers, cosmetics manufacturers
Trading companies, etc.

Improving organizational capabilities
Strengthening governance andadvisory systems

Intellectual Capital
Number of patents held: 1,292(As of the end of June 2021)
Research and development costs: ¥2.7 billion(FY2020)

R&D Strategy gP27
Enhancing development of new materials& competitiveness

Manufactured Capital
Capital expenditures: ¥5.4 billion(FY2020)

Management Philosophy
Founding Spirit

9Integrated Report 2021 / SEKISUI KASEIContributions
to industry

Achieved reduction of thickness and weight
without compromising functionality
g Improved fuel efficiency leads toreduced CO 2 emissions
Developed materials with improved strengthand heat resistanceg Leads to improved safety

PIOCELAN
Bumper cores

ELASTIL
Shoe midsoles

Contributions
to lifestyletransformation

Group Manufacturing andSales Companies
EPS (expandable polystyrene) beads
Foamed polystyrene sheets
Other types of foam plastics
Polymer micro-particles
Functional high-polymer gels
Products processed from the above materials, etc.

Human Life gP25
Agricultural and marine
product containers
Food containers
Distribution materials
Construction materials
Civil engineering materials

Contributed to food safety and security
g Thorough compliance with laws andregulations and efforts toward quality lead to
improvements in food hygiene(Polystyrene, polyethylene, elastomer, etc.)

We, Sekisui Kasei, practice “Zen-in Keiei” based on respect and mutual

Aiming to improve the global environment
Contributions
to the global
environment

ESLEN Sheets(Styrene, MMA, acrylamide, etc.)

Various polymers

Food loss reduction

Achieved our pursuit of shock absorbency andimproved heat insulationg In addition to protecting food from impact
during transport, it also helps to reduce foodloss by keeping food fresh and preserving it
for a long period of time

ESLEN Beads

Main Raw Materials

Contributing to transformations inpeople’s lifestyles

For example,
with food containers, we have...

Business CapitalBusiness Foundation
Developing monozukuri(manufacturing craftsmanship)that coexists with the environment
through energy saving, recycling,
and more, aiming to realize a low-carbon,
recycling-based society

Eco-friendly and comfortable automobiles
For example,
with automobile components, we have...

Automobile structural materials
Transporting automotive parts
packaging materials
Medical/health care materials
Home appliance packaging
materials
Industrial components

TECHPOLYMER
LCD film
additive

Various monomers

Natural Capital
Energy consumption: 2,175,730 GJ(FY2020)

Value Back to Society

Product & Service

Industry gP23

SEKISUI KASEIFinancial Capital
Shareholders’ equity: ¥55.077 billion
Equity ratio: 44.2%(FY2020)
Social & Relationship Capital
40 locations across 16 countries and regions(As of the end of March 2021)

OUTCOME

Contributing to the growth and developmentof industry by proposing business solutions

Human Capital
Number of Group members: 3,808(As of the end of March 2021)

Fundamental technologies supporting
the development of SEKISUI KASEIPolymerization, extrusion,
impregnated foaming, molding technology

OUTPUT

ESLEN Blocks

Our planet. Our tomorrow.
For example,
as an environmental strategy, we have...
Promoted SKG-5R gP33
g Creating "Sustainable Star Products" andexpanding their market lead to the realizationof a sustainable society

trust. We are always innovating in our aim of “new happiness.”“For happiness of people working for the company”

Integrated Report 2021 / SEKISUI KASEI10SEKISUI KASEI’s Value Creation

Financial and Non-Financial Highlights
Net Sales/Ratio of Overseas Net Sales

Operating Income/Operating Income Ratio(%) 50150 (billions of yen)

118.9

120

33.9

90

78.6

60
30
0

40.3
2016

2017

2018

2019

■Overseas sales (left axis) ■Japan sales (left axis)
Ratio of overseas net sales (right axis)2020

6 (billions of yen)(%) 12

40
30
20

4

8

2

(FY)

0

0

4

1.8
2016

2017

2018

■Operating income (left axis)

2019

2020

(FY)

100

(%) 40

90

20

30
0

2018

2019

2020

2030

(target)■ □Number of Sustainable Star Products registered (left axis)
Ratio of net sales (right axis)

Operating income ratio (right axis)

Free Cash Flow(%) 8

90,00020

60,00010

30,00000(FY)1,500,000

2

4

0

6

1,000,000

2

-2.5

3

500,000

0

-5.0

2016

2017

2018

2019

2020

(FY)

■Net income attributable to owners of the parent (left axis)
ROE (right axis)

2016

2017

2018

2019

2020

(FY)

0

2016

2017

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

Capital Expenditure/Depreciation and Amortization

Number of Employees

3 (billions of yen)

8 (billions of yen)

5,000

2.7

5.4

6

2

6.2

1

2018

2019

2020

(FY)

In order to promote SKG-5R, we are focusing on creating “Sustainable Star Products” (environmentally-friendly products)
and expanding their market, and are engaged in research anddevelopment that provides value to society.

Integrated Report 2021 / SEKISUI KASEI

0

(FY)

0

2016

2017

2018

2019

2020

(FY)

■Capital expenditure ■Depreciation and amortization

3,808

We are making capital investments for sustainable corporate
growth, including the development of systems-related infrastructures and R&D facilities for new polymer materials.

80

2,132
56.0

60

2,000

40

1,000

20

0

2016

2017

2020

(equivalent)

2030(target)(FY)

1,862,070

313,660
2016

2017■Japan ■Overseas

2018

2019

2020

(FY)

*All companies excluding the Proseat GroupWe recognize the importance of resource and energy savings
during the production as well as use of our products, and areworking to reduce our energy consumption.

(%) 100

3,000

2

2019

Ratio of Female Employees

4,000

4

2017

2020

Based on our founding spirit of “For happiness of people
working for the Company,” we are engaged in improving human resource capabilities (promoting workstyle reforms) under
the Make Innovations Stage-II (mid-term management plan
2019-2021) priority issue of “strengthening the Group’s management foundation.”

Research and Development Costs

2016

2019

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

We strive to ensure healthy profitability in terms of net income
relative to invested equity capital. We recognize ROE as animportant indicator of management efficiency and aim to improve it.

0

2018

2018

2,000,000 (GJ／t)

10.50

9

0

-27％

Energy Consumption

2.5

1.6

FY2018comparison

In aiming for “business activities that do not place a burden
on society” as raised in Make Innovations Stage-II (mid-term
management plan 2019-2021), we have formulated and areworking toward CO2 reduction targets through FY2030. gP33

6

1.1

107,861*All companies excluding the Proseat GroupWe have established a target (FY2030) for the number of registered “Sustainable Star Products” (environmentally-friendly
products), and are engaged in both evolving existing products
and putting new materials into practical use. gP33

12 (days)

3.4

120,000 (t-CO2)30

Number of Paid Vacation Days

5.0 (billions of yen)

CO2 Emissions (Scope 1+2)

3

1

11

0

We are promoting measures to evolve the “execution ofstrategies to strengthen earnings structure,” clearly stated in
the Make Innovations Stage-II (mid-term management plan
2019-2021) basic policy.

Net Income Attributable to Owners of the Parent/ROE

120 (products)

60

2.1

10

Under the Make Innovations Stage-II (mid-term management
plan 2019-2021) priority issue “evolution of business portfolio,” we are focusing on expanding the ratio of global sales
with a view to long-term global expansion.

4 (billions of yen)

Number of Sustainable Star Products Registered/Ratio of Net Sales

2018

2019

■Number of employees in Japan (left axis)■Number of employees outside Japan (left axis)
Ratio of employees outside Japan (right axis)

2020

(FY)

With a view to long-term global expansion, we are working
to increase the number of Group members active in locations
outside Japan and to promote diversity.

040 (%)

26.9

30
20
10
0

2016

2017

2018

2019

2020

(FY)

*All companies excluding some Group companies

In order to promote diversity, we are engaged in improving human resource capabilities (advancement of women) under theMake Innovations Stage-II (mid-term management plan 20192021) priority issue of “strengthening the Group’s managementfoundation.”

Integrated Report 2021 / SEKISUI KASEI

12Strategies for Value Creation

A Message from the President

Pursuing “new happiness”
by adapting to
the changing times andconstantly innovating

Masato Kashiwabara
President and Chief Executive Officer

13

Integrated Report 2021 / SEKISUI KASEIOur management philosophy and vision

Our management philosophy reads as follows: We,
Sekisui Kasei, practice “Zen-in Keiei” based on respectand mutual trust. We are always innovating in our aim of“new happiness.” This management philosophy is basedon the original statement formulated at the time of theCompany’s 30th anniversary, but we turned it into a shared
philosophy for the entire Sekisui Kasei Group when wecelebrated 50 years of existence in 2009.
The social environment that currently envelops the Sekisui
Kasei Group is changing dynamically. As symbolized by the
adoption of the Sustainable Development Goals (SDGs)
at a United Nations summit in 2015, there is a growing
awareness in society about solving environmental andsocial issues on a global scale. At the same time, technological innovation in fields that have the potential to drive
new growth—namely, digital technology and mobility—isevolving much faster than expected. In this environment,
the “new happiness” that we seek to deliver carries morethan one meaning. Not only do our products and services
create material and emotional gratification, but I believethat providing value to help solve global environmental
and social issues is conducive to sustained corporate development, which in turn leads to happiness on multiple
fronts for the next generation.
Our reason for existence in society is to develop and offer
products of value whilst coexisting with the environmentby harnessing our monozukuri (manufacturing craftsmanship) to deliver various forms of happiness to people’s
lives. Even if people’s values change over the years, wewill adapt to those changes and keep on innovating. We
therefore believe it very important to constantly be there
for the happiness of every single person.

Progress of the mid-term management
plan “Make Innovations Stage-II”
Under our current mid-term management plan “MakeInnovations Stage-II,” we continue to implement measures
aimed at transforming our business portfolio and executing
strategies to strengthen our earnings structure in order tofurther propel the transformation process we started in ourprevious plan.
Both sales and profit declined in FY2020 mainly due to theimpact of the COVID-19 pandemic. Even now we are still
being affected by the emergence and spread of new variants of the virus and there is still no telling when the pandemic might end. Although the outlook for the businessenvironment remains clouded, we still intend to steadily
push ahead with our mid-term management plan.
To transform our business portfolio, we are focused onincreasing our global sales weighting and expanding operations mainly in the Industry segment, particularly in theareas of automotive and home appliance IT.
As electrification in the automotive market continues toaccelerate, we expect the shift to electric vehicles (EVs) togain even more momentum up ahead. At present, electriccomponent R&D and demand growth is taking precedent,
mainly in semiconductors, but in the near future we expect tosee a rapid uptake of lightweight materials and components,
which is why we intend to globally expand sales of mainly
PIOCELAN and ST-Eleveat, both of which contribute to making car bodies lighter. Owing to the impact of COVID-19,
earnings are currently sluggish at Proseat, the automotive
component manufacturer we acquired in February 2019, but
we continue to steadily push ahead with product development to generate synergies, implementing measures thatcan led to our initially anticipated customer growth.
Also, we are aggressively pursuing the development of newtechnologies and new materials and endeavoring to expand sales in such fields as information-intensive industries
and medicine and healthcare where demand growth is expected to materialize going forward.
Meanwhile, demand has remained brisk for eating at homeand ready-made meals in the Human Life segment, but
excursion- and travel-related demand is sluggish as people
refrain from going out and because of the sharp drop in
inbound tourism demand. The agriculture/fishery-related
field too has been lackluster in general.

Integrated Report 2021 / SEKISUI KASEI

14

Strategies for Value Creation

A Message from the President

Progress of SKG-5R in tackling global
environmental issues
From our founding in 1959 to the present day, we haveconsistently developed business lines whilst taking environmental factors into account. We were the first in Japan toproduce expandable polystyrene (EPS) foam with as little
resources as possible and by developing applications thatleverage the thermal insulation and lightweight properties
of such material, we have contributed to a reduction in foodloss and energy saving in logistics, among other environmental challenges. We also started recovering and recycling
EPS foam in 1971 and by ramping up activities across theentire industry, the domestic recycling rate for this material
is now higher than 90%.
Our initiatives in pursuit of becoming a leading environmental
company are anchored by our SKG-5R action plan, which adds
the Sekisui Kasei Group’s own 2Rs (replace and re-create) tothe conventional 3Rs (reduce, reuse, and recycle).
We have also set two medium- to long-term targets to beachieved by the milestone year of 2030.
The first is to create Sustainable Star Products (SSPs) andexpand their target markets. The sales weighting of SSPs in
FY2020 rose 2.0 percentage points year on year to 16.9%,
but we intend to lift this ratio to at least 20% by 2030. To
that end, we will develop new products under the SSP
brand, step up the pace of market launches, and expand
sales. As for the certification of SSPs, we have formulated
certification criteria and an in-house approval process,but we are also adding a third-party suitability assessment
component to the mix. In addition, we have created an SSP
brand logo that is instantly recognizable by our stakeholders and we are proactively disseminating information about
it within and outside of the Group.
The second milestone target is reducing CO2 emissions.
Under the Paris Agreement that came into force in 2016,a global target was established to “hold the increase in
the global average temperature to well below 2°C above
pre-industrial levels.” We aim to do business without being a burden on society and in order to contribute to theachievement of the 2°C target, we set ourselves the goalof reducing our own CO 2 emissions by 27% by FY2030
versus FY2018. In FY2020 we lowered our CO2 emissions
by 8.5% compared to FY2018 mainly by promoting energy

Brand logo for Sustainable Star Products
high
Degree of environmental
contribution

low

15

Integrated Report 2021 / SEKISUI KASEI

Sustainable Star Products (SSP)
Products and systems that make greater contributions
to the environment among our sustainable products

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

saving in production activities and reviewing our energy
procurement methods.
The global movement towards realizing a carbon-free society is gathering momentum and Japan too has jumped
on board the bandwagon with the December 2020 releaseof the Green Growth Strategy Through Achieving Carbon
Neutrality in 2050. In light of this, we think even tougher
measures than the ones we initially planned to implement
will be required going forward, which is why we are starting
to consider a carbon neutrality roadmap through to theyear 2050, including the utilization of renewable energy.
As long as we continue to implement the 5Rs up ahead andexecute our strategy to become a leading environmental
company, I believe we can generate a virtuous cycle of contributing to a sustainable society and sustainably enhancing
corporate value.

Initiatives to strengthen the Group’s
management foundation
Based on our plan to strengthen the Group’s managementfoundation, we are focused on the following three aspects:
reinforcing organizational capabilities, boosting productivity, and bolstering human resources.
For the first—reinforcing organizational capabilities—werestructured a number of organizational units. To quicken the pace of our business portfolio transformation, weshored up our R&D and production technology systems
with a view to accelerating the development cycle fornew materials and new products. Furthermore, we recognized anew the importance of safety and security after
both the lost time injury frequency rate and accident severity rate came in higher in FY2019. We thus took steps
to further heighten awareness of safety by turning the
Safety Promotion Dept. into an independent unit. Also, topromote our business in Europe, we set up an EB Project
Team in the head office. This team will focus on quickly
launching businesses operations there. In addition to theabove measures, we are improving global collaboration
throughout the Sekisui Kasei Group. We therefore standardized the English name of the Company as Sekisui Kaseion the occasion of our 60th anniversary as one measurefor strengthening the Group’s management foundation.

To boost productivity, we set up a DX Committee to guidethe Company’s digital transformation, the main objectivesof which are using digital technology to link all informationand operations and integrate production, sales, and services. The production departments are working to strengthen
their competitiveness with each other by using IoT androbotics to improve productivity, the management departments are adopting AI and IoT to streamline operations,and the sales departments are endeavoring to enhance theefficiency of sales by strengthening marketing. The research
departments continue to beef up their R&D platforms by
actively incorporating the concept of research transformation (RX) mainly with the use of science information searchtools and AI for leading scientific research.
Lastly, as part of our efforts to bolster our human resources, we are focusing on workstyle reforms and diversity (empowerment of women, mid-career hiring, and nurturing of
globally-minded managers). We are therefore rebuilding
our HR structure so that our diverse workforce can workwith flexibility and give full play to their ambitions andcapabilities. In terms of promoting diversity, we are beginning to see results materialize with the emergence of afemale president of a Group company and the executive
officer appointment of a non-Japanese mid-career hire.
Also, as a measure to cultivate and support the activitiesof talented employees that possess high-level skills, wehave introduced a specialist employee scheme. Five employees were accredited under this system in FY2020.

Integrated Report 2021 / SEKISUI KASEI

16

Strategies for Value Creation

A Message from the President

Risk management

Corporate governanceAs part of our efforts to strengthen corporate governance, in FY2019 we newly established the Nomination
and Remuneration Committee. In addition to myself, theother members of this committee are the Company’s threeoutside directors and one outside auditor. The committee
actively discusses topics concerning remuneration and thenurturing of successors. Regarding the former, we introduced a new restricted stock-based compensation system
to further incentivize performance improvement. As fornurturing successors, we are aiming to run more training
sessions with guest lecturers and study sessions on various
topics in an effort to raise the knowledge level of all officers.
Also, the Nomination and Remuneration Committee iscurrently examining how to best go about evaluating theeffectiveness of the Board of Directors. The incorporationof external opinions, including the regular hosting of offsite meetings with outside directors, has meant that theBoard has been able to engage in in-depth discussions
about carefully selected topics.

17

Integrated Report 2021 / SEKISUI KASEIThe risks that we had envisioned as an organization up
until now were usually of a local nature, such as natural
disasters or accidents/IT system errors in certain countries
and regions. However, the current spread of the COVID-19
pandemic to all corners of the earth pretty much represents a global risk, so I feel that we will need to change
our conventional approach along with the kind of countermeasures we take to address risks.
We will continue to do business whilst prioritizing thehealth and safety of our employees and their families on
the assumption that the pandemic is here to stay for quitea while yet. Owing to the pandemic, demand has risen
for take-away containers and food containers driven by
growth in ready-made meals. We believe it is the responsibility of the Sekisui Kasei Group to ensure steady supply offood packaging materials, a daily necessity for many people. We are therefore doubling down on hygiene management and attendance control at our production sites. And
along with a reassessment of inventory levels, we are also
rebuilding our system of guaranteeing a constant supplyof products across the entire supply chain.
As an in-house measure for coexisting with COVID-19,
teleworking has become commonplace mainly in our sales
and management departments. This is also related to ourefforts to promote workstyle reforms. In the future, weshould be able to roll out a permanent work-from-homesolution by making use of online conferencing tools andvarious other applications and by actively improving work
processes. Of course, some of our production sites andother workplaces are unable to switch over to this new approach and some issues still remain particularly regarding
communication and evaluation systems, but we hope toaccelerate this shift with a focus on realizing flexible anddiverse working styles. For our “diversity initiatives” and“Health and Productivity Management” too, we will aim to
be a corporation where our respective employees can be
motivated to work towards their goals.

Shareholder returns

The Sekisui Kasei Group regards the distribution of profits to shareholders as an important management issue.
Accordingly, our basic policy is to distribute profits in accordance with consolidated financial results as well as inconsideration of the stability of dividends while strengthening our management structure and securing internal
reserves to prepare for future business development.
Based on this approach, our dividend policy is to aim todeliver stable returns over the medium to long term bytargeting a consolidated payout ratio of 30%–40%. Due tothe impact of the COVID-19 pandemic, in FY2020 we paid
an annual dividend of ¥21.
Even though we expect the pandemic to still affect the
global economy in FY2021, our plan is to keep paying stable dividends to our shareholders.

To our stakeholders

The outlook for the future remains uncertain mainly becauseof the impact of the unavoidable external circumstance thatis the COVID-19 pandemic. However, it is precisely becauseof this challenging business environment that we must lookat the bigger picture and reassess what we hope to achieve.
We will endeavor to improve corporate value in a sustainedmanner by steadily pushing ahead with initiatives geared
towards aggressively entering high value-added businesses,
solving environmental and social issues, and strengthening
corporate governance.

President and Chief Executive Officer

Integrated Report 2021 / SEKISUI KASEI

18

Strategies for Value Creation

Special: Our Prevention Measures and Efforts
against COVID-19
Here, we will introduce the kind of measures we have taken and how we have proceeded with our corporate activities without
stop as COVID-19 spreads around the world, having major impacts on societies and the economy.

Procurement

Establishment of the COVID-19
Emergency Response Headquarters

Sales

We will fulfill our supply responsibilities inrecognition that we are a provider of materials and products to fields that support people’s lives, such as those related to medicine,
food, and housing. We will take the best
possible measures to ensure that people cancontinue to lead safe and healthy lives.

Emergency Response Headquarters
Structure
1.	General Response Headquarters
		 headed by president
2.	Regional Response Headquarters
		 headed by each Group company president
K Works to prevent the spread of COVID-19
with the health and safety of Group employees and their families given top priority
Sends notifications with the latest inforK
mation based on announcements by thegovernments and local authorities of eachcountry and region		(as of August 2021, 27 such notifications
have been issued)
Quickly determines responses in line withK
each headquarters’ situation

Examples of Notifications• Response to working system		(attendance rate, staggered commuting, teleworking)• Overseas travel (banned in principle)• Domestic movement (in principle, banon travel to production sites)• Exhibitions in Japan and overseas(in principle, ban on exhibitions, tours)• Participation in various events	(ban on meetings, social gatherings
with more than five people)• Response to meetings (utilization ofvideo conferencing, wearing of masks)• Customer support (designation of reception location, history management)• How to use in-house cafeterias	(staggered timings, avoidance of faceto-face seating)

19

Integrated Report 2021 / SEKISUI KASEIContribution to Society

Risk response

Risk response

In light of the impact on the procurement of raw materials of products and their components, we havebeen working for some time to diversify our suppliers
and the raw materials we use, as well as to purchasefrom multiple business partners, in order to stabilize
procurement.
In addition, we are also promoting stronger cooperation with our suppliers.

In order to ensure the health and safety of Group employees and their families, and to prevent the spreadof COVID-19 both inside and outside of the Group,
we have strengthened measures such as promoting
telework and staggered work hours, and refraining
from visiting business sites. We have implemented
support for remote work to decrease the number offace-to-face meetings.

Future considerations

Future considerations

We are examining criteria for setting inventory
volumes.

We are examining the introduction of new systems suchas telework as we move into the ‘new normal’ era.

Production

Logistics

Future Initiatives
COVID-19 has completely changed theworld, and many new issues have emerged
for society as a whole. We will redefine newstandards for the ‘new normal’ era, strengthen our BCP, and aim for the stable supply of
products that support people’s daily lives.

Risk response

Risk response

We are promoting thorough infection response
measures as in the event that a cluster were to breakout within a company following an infection fromCOVID-19, there is a possibility that we would not beable to maintain safe production and supply systems.

In order to prevent delays and other impacts on thetransportation of products and intermediate products caused by disruption and stagnation of thelogistics network, we implement multiple COVID-19
prevention measures during distribution and strive toplan for stable logistics channels.

Future considerations
We are reexamining the production site decentralization measures already being taken.

Future considerations
We are reexamining logistics systems.

Integrated Report 2021 / SEKISUI KASEI

20

Strategies for Value Creation

Mid-Term Management Plan

Make
Innovations
Stage-II

Promote business portfolio transformation and execution of strategies to strengthen earnings structure
while solidifying position as a leading environmental company

1
Evolution ofbusiness portfolio
Accelerate growth withthree business domains andtwo key products
Automobile structural material field
High functional food container field
Medical/Health Care field
PIOCELANTECHPOLYMER

Mid-term management plan

Make
Innovations
Stage-II

Culture Vision:
Both the people and company growbased on management by all members’
participation (Zen-in Keiei)

3
Contribution tosustainable society
Evolution of existing products
Development of new materials
Business activities that do notplace a burden on society

2
Strengthening groupmanagement foundation
Improvement of organizational
capabilities
Improvement of productivity

Progress of “Make Innovations Stage-Ⅱ” 2019-2021
With regard to COVID-19, we put product safety and the health and safety of our business partners and Group employees
first, taking measures to avoid risks related to the disease to the greatest extent possible. As we do so, we are evolving
the basic policies of “business portfolio transformation” and “execution of strategies to strengthen earnings structure” ofour three-year mid-term management plan “Make Innovations Stage-II,” in its second year in FY2020, and are advancing
measures in order to cement our position as a leading company in environmental issues.
While we benefitted from home nesting demand in the Human Life segment for items such as grocery store food trays
and restaurant take-out containers, a significant negative impacted resounded throughout the Industry segment in the firsthalf of the year centered around our automobile-related businesses, resulting in a year-over-year decrease in revenues andearnings for the full year.
FY2021 is the final year of the mid-term management plan, and as we adhere to the basic policy and three priority policies
of “improvement of corporate value through evolution of business portfolio,” “strengthening group management foundation,” and “contribution to sustainable society,” we will thoroughly execute “transformations to strengthen our earnings
structure” and establish the foundation for our next mid-term management plan.
• Improvement of corporate value through evolution of business portfolio
Industry segment: Aim for expanded profit through high value-added businesses that respond to changes in market structure	Human Life segment: Strengthen profitability by reviewing low-profit businesses and firmly engaging new demand in the“with COVID-19” era• Strengthening group management foundation
Strengthen the governance system of the entire company, enhancing compliance and risk management
Promote business innovation and workstyle reforms• Contribution to sustainable society
Strengthen activities around SKG-5R through our business to solidify our position as a leading environmental company

Improvement of capabilities ofhuman resources

Make Innovations Stage-II Quantitative Targets(Unit: Billions of yen)

FY2019 Results

FY2020 Plan
(Announced in July)FY2020 Results

FY2021 Plan

Net Sales

136.16116.00118.85118.00(Overseas sales)(Overseas sales ratio)

49.37
36.3%

̶
̶

40.26
33.9%

̶
̶

Operating income(Operating income ratio)

3.73
2.7%

2.00
1.7%

2.09
1.8%

3.60
3.1%

Recurring income

3.39

1.60

1.96

3.20

Net income attributable to ownersof the parent

2.32

1.00

1.13

1.80

* The FY2020 and FY2021 plans have been reviewed and reset in consideration of the impact of the COVID-19 pandemic on the Group.
* The “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) is applied from FY2021.
(For reference: Net sales equivalent to ¥130 billion in the previous standard)

21

Integrated Report 2021 / SEKISUI KASEIIntegrated Report 2021 / SEKISUI KASEI

22

Strategies for Value Creation

Business Overview: Industry Segment
Looking Back on FY2020

Co-creating new value
in the new normal era

Automotive
A significant decline in demand due to the COVID-19 pandemic led to lower sales of PIOCELAN, our automotive
component and packaging material for automobile parts.
However, with the resumption of production by automobile
manufacturers, the market has begun to recover.

This department has continued to provide components
and materials to new markets by developing products
and proposing solutions that satisfy customers.
Preparing for the era of the “new normal” in the midst of
rapid social changes, in fields where the pace of technological innovation is accelerating, such as mobility, IT,
medicine, and healthcare, we will focus on establishinga system that enables value co-creation with our customers so that we can help them create the future.

Home Appliance/IT
There was a decline in sales of our panel transport material/
packaging material applications using PIOCELAN.
Increased demand for PCs and monitors for stay-at-homeworkers led to strong sales of TECHPOLYMER in light diffusion applications such as LCD panels.

Medical/Healthcare
Sales of ELASTIL, which is used in the midsole of runningshoes, were impacted in the first half of the fiscal year bystaying indoors imposed in various countries, but sales grewsignificantly throughout the second half of the fiscal year
prompted by the recovery in shoe demand and the introduction of models equipped with ELASTIL BIO.
Sales of ST-gel were weak due to trade frictions between the
United States and China and the impact of the COVID-19
pandemic.

Tetsuharu Hirota
Director and Managing Executive Officer,
Head of The 2nd Business Headquarters

FY2021 Challenges and Outlook

Strategic Target Markets
Automotive, Home Appliance/IT, Medical/Healthcare,
Overall Industry

Strengths and Features

Automobile components

Packaging materials fortransporting automobile parts

ReduceTECHPOLYMER
liquid crystal film additive

ST-gel electrodes for ECGs

ReduceNet Sales

Industry segment(Millions of yen)

composition ratio• Solution proposals that combine sustainability and functionality• Material development and customization using composite
technology• Global efforts to reduce environmental impact throughbusiness

Reduce

Reuse

Reuse

Business Strategies

Recycle• Together with the Proseat Group, build a foundation as a supplier of automobile parts•D eeply cultivate the Medical/Healthcare field through theprovision of components and promotion of systemization•M ake rapid progress in the provision of high-value-added
components and the development of high-performancematerials

Reduce

Reuse

Reuse

RecycleRecurring Income

55.0%

Recycle(Millions of yen)

In an effort to further evolve the business portfolio, theCompany is pursuing growth, particularly in the automotive, Home Appliance/IT fields, with a view to global expansion. In the automotive industry, the shift to electricvehicles (EVs) is expected to accelerate, driving growthfor our products that contribute to vehicle weight reduction. As a stepping stone to expanding our business in
Europe, we acquired the Proseat Group, a manufacturerof automotive components, in 2019. Although performance was weak in the current fiscal year due to the significant impact of the COVID-19 pandemic, the Company
is executing what it initially set out to do, namely creatingsynergies through product development and customer
expansion and strengthening governance. We will contin-

ReplaceReduce

Replace

Re-create
Reuse

ue to develop new materials and expand sales in areas
such as Home Appliance/IT, the information industry, andMedical/Healthcare.

Re-create

FY2021 Outlook
Automotive
Instability due to supply chain bottlenecks for somepartsHome Appliance/IT
Recovery trend, although with regional differences

Replace

RecycleEnvironmentally-friendly product brand “Sustainable Star Products”
ELASTIL BIO Thermoplastic elastomer foam with biomass content of 45% or more

RecycleReplace Reduce

Replace

Re-createReuse

Re-create

Replace

RecycleThis is a thermoplastic elastomer bead foam that contains plant-basedmaterial derived from castor beans oil. It features a biomass content
of 45% or more.
While retaining the characteristics of ELASTIL, which is lightweight andcombines the elasticity of rubber with the softness of polyurethane, wewere able to reduce the product weight by 30% compared to the conventional product made from petroleum-derived materials.

65,381-957

Used in the midsole of running shoes

2016

23

2017

2018

2019

Integrated Report 2021 / SEKISUI KASEI

2020

(FY)

2016

2017

2018

2019

2020

(FY)

(FY)

Integrated Report 2021 / SEKISUI KASEI

24

Strategies for Value Creation

Business Overview: Human Life Segment
Looking Back on FY2020

Driving the delivery of value toachieve a sustainable society
This department provides a wide range of products
and services for the Human Life segment, which supports
the food and civil engineering markets. In response to
today’s diversification of lifestyles, we will not only pursue need-driven product development and evolutionof existing products, but also actively work on thecreation and practical application of new materials witha reduced environmental impact in order to solve theglobal-scale issues set forth in the goals and targets of
the SDGs.

Food containers related
Due to the COVID-19 pandemic, although demand for
leisure and tourism-related services declined, there wasstrong continuing demand related to home-cooked
meals and prepared foods eaten at home.
Agricultural/Fishery related
In the fisheries-related business, in addition to a decline
in fish catches, demand from tourism and restaurants declined, resulting in a doldrums.
Housing/Civil Engineering relatedMore and more customers have adopted AQUAROAD, alightweight resin-based embankment material, as a measure against flooded roads during natural disasters suchas localized torrential rainfall.
ESLEN Sheet
Sales volume increased from the previous year as theCompany steadily captured increased demand fromhome-bound consumers for food packaging such as
perishable food trays used at supermarkets, as well as
continuing strong demand for take-out containers withsuperior heat retention properties.
ESLEN Beads
Household goods applications such as beads for cushions continued to perform well as consumers spent more
hours at home, but sales in the fishery sector, which is themain application, were generally sluggish.

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

Net Sales

Industry segment(Millions of yen)

composition ratio

Recurring Income

55.0%(Millions of yen)

Strategic Target Markets

Agricultural/Fishery, Food, Distribution, Civil Engineering/Construction,
Disaster Prevention, Environment, Household Goods

65,381

Strengths and Features

ESLEN Beads

2016

2017

ESLEN Sheet

2018

2019

2020

(FY)

• Polymerization, extrusion, impregnation, and foaming technology;
molding technology-957• Product design that takes advantage of the light weight, heatinsulation, and cushioning properties of foam products• An integrated system that can handle everything from material
development
molding2018
to the supply(FY)2016 to2017
2019 of final
2020products

Business Strategies

CELPET Functional food container

Super Soilen System
Lightweight greening method• In the high functional food container field, increase the value ofcontainers and packaging materials to contribute(FY) to the transformation of food culture• By practicing the SKG-5Rs and creating “Sustainable Star
Products,” try to expand the market by providing value thatmeets the needs of the times

FY2021 Challenges and Outlook
In the final year of the mid-term management plan, “MakeInnovations Stage-II,” in addition to the growth of functional food containers in the food sector, we will work to
expand the market by steadily capturing new demand in
the era of coexistence with the coronavirus.
Moreover, to help achieve a sustainable society, we willcontinue to work on the evolution of existing products andthe creation of new materials, including bio-based materials and recycled materials, which we launched ahead ofother companies to meet the needs of the times.
Furthermore, in order to take concrete measures against
heavy rains and typhoons, which are becoming more frequent due to the effects of climate change, we will continue to propose disaster prevention-related products suchas AQUAROAD (used against road flooding and to handle

ReduceRecurring Income(Millions of yen)

(Millions of yen)

Human Life segmentcomposition ratio

3,754

45.0%

53,470

2016

25

2017

2018

2019

Integrated Report 2021 / SEKISUI KASEI

2020

534.7

(FY)

2016

2017

2018

2019

2020

37.5

(FY)

FY2021 Outlook
Food containers related
In the face of continuing restrictions on activities,
continuing strong demand is expected related to
take-out meals and prepared foods eaten at home.
However, in the leisure and tourism sectors, recovery
in inbound demand is expected to be slow.

RecycleReplace

Agricultural/Fishery related, Housing/Civil
Engineering related
A gradual recovery is expected, but demand willtake a long time to return to pre-COVID levels.

Environmentally-friendly product brand “Sustainable Star Products”
ESLEN Beads HCMH Bead-method polystyrene foam that contributes to resource conservation with 100x foam expansion

ReduceNet Sales

Reuse

rainwater during torrential downpours) to protect thesafety of people’s lives.

Reuse

RecycleThis resource-conserving material consists of 99% air and 1% polystyrene resin in
total volume.
It is 10% lighter than our conventional product with 90x foam expansion, which isused as a structural and cushioning material.
By advancing our polymer and foaming technologies, we have enabled production
using normal manufacturing processes. This not only reduces the amount of plastic
used but also reduces the impact on the environment.
Furthermore, only materials that have been evaluated for safety as food containers and packaging are used, ensuring both eco-friendliness and safety. Large foam
blocks with excellent buoyancy and rigidity are already being used as a buoyant
material for floating solar panels.

Replace

100x foam (left) and non-foamed polystyrene
resin (right)

Foam blocks used as a buoyant material for
floating solar system
Integrated Report 2021 / SEKISUI KASEI

26

Strategies for Value Creation

Research & Development Strategy
Sekisui Kasei
research transformation*

Towards a more beautiful future

Materials informatics(Fusion of real and digital)

By engaging in research challenges that contributeto solving social problems and achieving sustainable
management, we contribute to sustainable growthby creating new value that brightens the future of
the global environment and society.

· Machine learning· Simulation· Experimental database

Prior art search· Scientific information search tool
· Intellectual property AI

Commercialization study
Prototyping

Pre-marketing(Fusion of real and digital)· Marketing automation· Sales force automation· Customer hypothesis proposal· Exhibition

Research and development
Feasibility verification
Idea creation
Issue setting

External technologies

Social environment
Future value creation

Hideyuki AsadaCore technologies

Director and Managing Executive Officer,
Head of Research & Development Center

Priority areas* Transformation of the R&D system with digital technology as the main driver, proposed by the R&D Strategy Center of the Japan Science and Technology AgencyuDevelop new products that contribute to thegrowth of the company
Polish up marketing mindsets, promote development based on hypothetical needs through thefusion of real and digital technologies.

u
Engage in developments that lead to enhancement
and expansion of existing businesses
Develop solutions that help enhance existing
businesses from the four perspectives of“economic value,” “social value,” “environmental
value,” and “emotional value”u
Nurture developers and creative personnel
that think about and experiment with business
Developers hold their own thoughts and put their“desire to achieve something” into practiceResearch & Development Framework

27

Integrated Report 2021 / SEKISUI KASEIThe Sekisui Kasei Group’s corporate message is “Our planet.
Our tomorrow.” Aiming to become a leading environmental
company, we are working to create value that contributes
to a sustainable society by practicing the SKG-5Rs.
To accelerate the R&D cycle, in addition to speedy response to changes inside and outside of the company
environment, it is necessary to concentrate resources onsolving issues in priority business areas using our own coretechnologies as well as incorporating a wide range of outside technologies.
However, in today’s highly uncertain world, even setting
an issue is difficult. Therefore, as a first step we establish a“hypothetical” issue and create ideas for solving it. We startfeasibility verification and improvements quickly with a small
start, resulting in highly accurate problem identification.
In addition, the R&D Center conducts not only prior art
searches on the issues that are set, focuses on marketing.
We recognize the importance of the R&D organizationthat first envisions how the products we develop can

1. As a baseline, measure the water content of the skin with a corneometer.
2. Affix the pack for 10 minutes.
3. Measure the water content 1 hour after removing the pack.
4. Convert to a relative value where 1.0 corresponds to the value measured
in step 1 (before the pack was affixed).

TO

PI

C

Transformation) as an innovative form of R&D that is differSekisui Kasei
Commerent from the conventional
series of R&D activities.
research transformation*
We believe that it is our role to continue to provide value
which contributes to sustainable society by improving outPro
Materials informatics
put with pre-marketinginconjunction
withMA(marketing(Fusion of real and digital)
automation) and SFA(saleslearning
force automation) as well as Research a· Machine
Simulation
utilizing simulation · formaterials informatics and machine· Experimental databaselearning technologies such as AI.
Feasibil
Prior art search

Ide· Scientific information search tool
· Intellectual property AI

Iss

Example of R&D that incorporates RX
External technologies

ST-gel is a safe, high-performance gel material created with polymerization technology. It is highly functional mainly because of its
ability to retain solvents such as water and humectants, as well as
electrolytes and additives, in a 3D polymer matrix.
For cosmetic gel mask applications, the ability to control the waterand oil content makes it possible to simultaneously provide contradictory textures such as “moist” and “crisp”. However, “moistness”
is a sensation that varies from person to person, and it takes time todevelop formulas that meet the needs of customers.
“ST-gel AI-FIT” is one example of our development in which wequantified the sensory evaluation that hitherto varied greatly fromperson to person. By using AI to derive the formulations, AI-FIT wasable to significantly shorten the time required to match customer
requirements with formulation development and we realized the
product that could not be obtained in the traditional mindset. AIFIT also contributed to the reduction of materials and energy required during the development period.

Future v
Core technologies* Transformation of the R&D system with digital technology as the main driver,

Example ofcosmetic
mask use

Quantitative evaluation of high-moisturizing productStratum corneum water content(relative value)

The Research & Development Center, which is our corefacility for R&D, handles duties from marketing to productdevelopment and improvement for development of new
products that lead to new businesses and technologies
that support development.
Within the Center are the R&D Planning Dept., theBasic Research Laboratory, the Development Dept., theIntellectual Property Dept., and the Evaluation Test Dept.
By establishing a system that integrates the development

Value Creation Processcontribute to society in the future, then implements verQuantitative evaluation of high-moisturizing productification cycle in a hypothetical market up to the point of
1.9
commercialization.
1.8
1.7
1.6
Specifically,in all of our R&DAI-FIT
themes, we set challenges
1.5
High
Existing
and1.4
create ideasthat generate
economic value on top of
1.3
moisturizing
product
1.2 value, based on environmental value, even takingsocialformulaCP grade
1.1
into1.0
account emotional value.
Measurement method
Moreover,we actively promote the idea of RX (Research
Stratum corneum water content(relative value)

Research & Development Center Policy

process from conceptualization of new materials and technologies to basic research and marketing to mass production, the Center is accelerating the development cycle.
The Center collaborates with both the Production
Technology Center, which works on processes that leadto production innovations and design development forequipment, including the use of IoT and AI, and with
the Design & Technology departments of each Business
Headquarters, to create new products.

1.9
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1.0

Existing
product
CP grade

AI-FITHigh
moisturizing
formulaMeasurement method
1. As a baseline, measure the water content of the skin with a corneometer.
2. Affix the pack for 10 minutes.
3. Measure the water content 1 hour after removing the pack.
4. Convert to a relative value where 1.0 corresponds to the value measured
in step 1 (before the pack was affixed).

Integrated Report 2021 / SEKISUI KASEI

28

Strategies for Value Creation

Human Resources Strategy“Human resources,” the sourceof sustained growth
In carrying out “Zen-in Keiei” (all-member management), we promote the creation of a workplaceenvironment where we are able to place value on
mutual improvement that leads to the growth of ourrespective individuality and individual strengths.

Makoto Okuno
General Manager of Human Resources Dept.
and Training Dept.
Administration Headquarters

Basic Stance with Regard to
Human Resources
u Founding spirit“For happiness of people working for the company”u
Culture and DNA that have underpinned
development throughout our history

Full participationin management

Leading to the current
Zen-in Keiei“Executing full-participation management– the spirit of entrepreneurs and industrialists –”· Entrepreneurial spirit: the spirit of enterprise,
the spirit of tackling new things (No. 1)· Industrialist spirit: proactively moving forward
and taking action, mutually improving

The very culture that has supported our growth up
to the present is, we believe, a basic and essential
element toward realizing our vision, and in handing this down to those who follow, has value in its
practice.
In accordance with this belief, we have formulated
the five human resource qualities required of employees of the Sekisui Kasei Group in order to carryout our management philosophy: We, Sekisui Kasei,
practice Zen-in Keiei based on respect and mutual
trust. We are always innovating in our aim of “newhappiness.”
We promote the creation of a workplace environment through the carrying out of Zen-in Keiei which
can produce such human talent and thoroughly
instill such qualities.

29

Integrated Report 2021 / SEKISUI KASEIThe Ideal Type of Person Being Sought by
Sekisui Kasei Group
1. Aspiration
	Human resources that feel strongly about achieving highgoals and the nurturing of people
2. Creativity
	Personnel with the ability to conceptualize in order to create and innovate based on mental agility, and that are notbound by preconceived notions
3. Self-reliance	Having a sense of ownership in all matters, people who canthink for themselves, who can think things through and makeassessments, and then take responsibility for their actions
4. Communication skills
	Together with being able to clearly convey their own
thoughts in any situation, human resources who will become engaged through the exchange of ideas with others
5. Ability to execute	Personnel who make concrete plans to achieve objectives,act promptly and take the initiative, and who produce results

Human Resources-related Structure
The Human Resources Dept. and Training Dept., principal drivers of our human resources strategy, are united
in carrying out an array of operations with regard tohuman resources.
The Human Resources Dept. plays a role in the welfare
and hiring of personnel and labor, including putting inplace personnel systems in line with our human resources
strategy, while the Training Dept. is in charge of matterspertaining to the education and training of employees. In
FY2020, we are rebuilding our training system and developing an environment that enables the growth of individuals.

Diversity Initiatives
Based on our founding spirit of “For happiness of people
working for the Company,” as well as our management
philosophy of We, Sekisui Kasei, practice “Zen-in Keiei”
based on respect and mutual trust. We are always innovating, and in our aim of “new happiness,” we provide
each and every employee, regardless of nationality, age, orgender, with workplaces where they can fully demonstrate
their skills and abilities.
As an initiative commencing from April 2019, we haveformulated a three-year action plan to support the advancement of women and to nurture the next generation,
and we are conducting recruiting activities with a goal of
having women account for over 17% of new hires.

Furthermore, to create an environment that provides
opportunities for motivated and capable employees toachieve career advancement, we held a women’s forum
to identify potential problems, and then implemented
measures such as transfer rotation and career development support to address the issues in each organization.
The employment rate for people with disabilities for theentire Group was 1.4% in FY2020. We are developing
case studies of employment at business sites and Group
companies that are making progress in hiring people
with disabilities, and have set the goal of creating a comfortable working environment for everyone.

Promoting Workstyle Reforms“Strengthening group management foundation” is one of
the Priority Policies in the mid-term management plan, “MakeInnovations Stage-II,” and as part of our efforts to strengthen
human resources, we are promoting workstyle reforms.
In order to achieve diverse and flexible workstyles while
respecting each employee’s life stage and values, we are
studying the possibility of making telecommuting, which we
started as a measure against COVID-19, a permanent system.
We are also working to promote work-life balance by expanding systems such as childcare leave, reduced working
hours, and nursing care leave.
In addition, in order to achieve workstyles in anticipation ofboth a post-coronavirus world and a world of coexistencewith the coronavirus, we have updated our attendance management system to ensure that working hours are properly
managed by us and our respective organizations.

TO

PI

C

As measures to improve employee engagement, we are conducting employee satisfaction surveys and forums to identify
and analyze issues with the goal of revising the personnel system and improving the workplace environment in the future.

Our Headquarters promotes telecommuting and practices diverseand flexible workstyles.

SKG Kaizen Activities Tournament

The Sekisui Kasei Group holds an annual company-wide SKG Kaizen
Activities Tournament as part of its efforts to promote improvements in
productivity and workability in all aspects of its operations.
This year, 203 teams from around the world entered the competition,and 11 teams that passed the regional qualifying rounds participatedin the company-wide tournament.
After the presentation of the kaizen activities, the best teams are recognized, and their kaizen efforts are shared through our internal Grouppublication and other outlets.
This kind of setting for kaizen activities is another example of our initiatives tosupport “Zen-in Keiei that drives the growth of people and the Company.”

14th SKG Kaizen Activities Tournament, held remotely

Integrated Report 2021 / SEKISUI KASEI

30

Foundation of Value Creation

ESG That Supports Corporate Value
In addition to meeting the expectations of all our stakeholders, including shareholders, Group employees, and customers,
the Sekisui Kasei Group remains committed to developing a variety of business activities and social contribution activities
that put our management philosophy into practice, so that we can fulfill our responsibility to the international community.

Key Issues and Targets

Contributing to the Achievement of the SDGs through Our Business Activities

With the goal of contributing to the creation of a sustainable society, the Sekisui Kasei Group organizes its ESG issues
into the five key areas of “environment,” “safety, security and health,” “quality,” “community,” and “governance.” We arecommitted to continually developing policies and implementing specific initiatives in each of these areas.
Focus Area

Key Points

PolicySpecific Initiatives (Direction, Examples)

Business activities based on the SKG-5R* concept

Providing sustainable products, goods and services
Expanding application products and improving the functionality of products that reduce weight and enhancethermal insulation
Developing products making use of biodegradable andbiomass plastics
Promoting recycling and the saving of energy in production, administration, and management activities
Improving the environmental management system andcomplying with all laws and regulations
Compiling and releasing information in cooperation withindustry and government
Participating in Green Wave and Satoyama Conservation
Activities

Evolving existing products

E
Environment

1.
Environment

Contributing through ourbusiness to the preservation and improvement of
the global environment

Management
Contributing to the environment in cooperation
with our stakeholders
Providing safe businessactivities and work environment

2.
Safety,security, and Creating safe cities
healthContributing to healthy
lives

SSocial3.
Quality4.
Community

G
Governance

Creating practical uses from new materials
Engaging in activities that do not put aburden on society

5.
Governance

Providing products andservices of the highest
quality

Addressing international issues
Preserving biodiversity
Achieving zero accidents
Contributing to the prevention and mitigation of disasters, and the advancement ofgreen energy
Promoting improved health

Reflecting customer feedback

Enacting measures to incorporate customer feedback
into management

Concluding disaster prevention agreements,
etc.

Cooperating with local governments

Strengthening the global governance system
Creating a company where Sincere efforts to comply with the Corporatetransactions are conducted Governance Codewith confidenceStrengthening compliance andrisk management measures

SKG-5RTo realize a sustainable society, we released theSKG-5R STATEMENT and set two targets tobe achieved by 2030. In order to achieve thesetargets, we promote the 5Rs of Reduce, Reuse,
Recycle, Replace, and Re-create, and contributeto solutions for the problems faced by the
global environment as raised by the SDGs.

P33-36

Environment

We ascertain the environmental ramifications
originating from various aspects of our businessactivities, and strive to mitigate and reduce
environmental impact.

P37-402-1

Human rights
and labor
practices

Based on the Sekisui Kasei Group founding
spirit of “For happiness of people working for
the Company,” we engage in creating
environments in which all Group employees canwork in good health, both mentally andphysically, and with vitality.

P44

2-2

Manufacturingwith a focus on
the environment,
safety, andproduct quality

In accordance with our polices related to theenvironment, safety, and quality, we strive toprevent accidents and disasters, ensure the healthand safety of all people including Group
employees, business partners, and local residents,
and aim to provide products and services thatmeet the expectations of consumers.

P41-433-1

Consumer issues

We engage in manufacturing from theperspective of our customers and undertake thechallenge of providing new value.

P43

4-1

RecycleWe contribute to the promotion of regional
recycling by expanding reclamation centers forused EPS (expandable polystyrene) foam.

P38

5-1

Creating acompany wheretransactions are
conducted withconfidence

Based on our management philosophy, we arecommitted to the prompt, appropriate
disclosure of pertinent information in order toensure transparency, validity, and compliance inmanagement.

P45-54

1-1

E
Environment

1-2

Developing products that contribute to the advancement of green energy and the prevention and mitigationof disasters
Developing gels for use in medical products, cosmetics,
and sports-related products
Maintaining and improving product quality

Participating in community clean-up activities,
disaster relief operations
Promoting flex-time, work-at-home, telecommuting for
employees
Promoting diversity and the development of humanresources
Strengthening the global management system

to contribute to society through our business activities. In
the following section we will outline business activities andsocial contribution activities of the Sekisui Kasei Group that
contribute to the achievement of each SDG.

Sekisui Kasei Group Initiatives

Strengthening efforts to eliminate accidents and realize
zero occupational accidents

Complying with product characteristics

Achieving co-existence
Promoting local volunteer activities
and mutual prosperity withlocal communities andemployees
Promoting workstyle reforms and diversity

The Sustainable Development Goals (SDGs) aim to addressa wide range of issues which consist of 17 universal goals
and 169 individual targets, and we note that there is quite
a bit of overlap in these goals and targets with our efforts

S
SocialImplementing steady management, including advisorycommittees
Improving quality in management systems and methods* SKG-5R: Reduce/Reuse/Recycle/Replace/Re-create

Contributing to the Realization of a Sustainable Society
The “2030 Agenda for Sustainable Development” establishing international sustainable development targets
for the years between 2016 and 2030 was adopted at a
UN Summit in 2015. The Agenda contains 17 Sustainable
Development Goals (SDGs) that are applied universallyto all countries, including developed countries, and focus
on confronting climate change, ensuring sustainableconsumption and production, and resolving poverty andinequalities. With this international focus in mind, we arecommitted to clarifying our priority issues.

31

Integrated Report 2021 / SEKISUI KASEI

GGovernanceIntegrated Report 2021 / SEKISUI KASEI

32

Foundation of Value Creation

Special: SKG-5R Initiatives–Results of FY2020 Activities–

Replace

RecycleFlow for examination, certification, and registration

Development

Application

Examination by theEnvironmental Committee

Re-create value and functions tocontribute to environmental improvement

We have set detailed criteria for each environmental contribution item for the certification, creating a system to

Sustainable Products, we certify those that make evengreater contributions to the environment as “Sustainable
Star Products,” aiming to promote the creation and market expansion of those products.

certify products and systems that exceed a certain predefined level as “Sustainable Star Products.”

RecycleContribution at
the development/ Contribution atdesign and raw
the production
material procure- stage
ment stages

Environmental contribution item

Total number ofregistrations

100

Share of net sales

20%

-27%

(Compared to FY2018)

Energy saving during transportation (established as a system)

Reuse
RecycleIntegrated Report 2021 / SEKISUI KASEI●●

Reusability●

Use of recycled materials
Higher recyclability (e.g. easier to sort)

Contribution at
the disposal/
recycling stage●●●

Establishment of an independent recycling system

Reuse
ReplaceUse of biomass raw materials
Substitution of oil-derived materials●

Re-create

Contribution to environmental improvement by the re-creationof new value and functions●

RecycleContribute at
the use stage

Energy saving and improved durability (longer life) during use
Reduction of other environmental loads during use

Other environmental Offset of environmental load and support for environmental
conservation activities
contributions

33

Contribute at
the shipping(transportation)
stage

●

Re-create

Scope1+2

Re-create

Expand Sustainable Star Products

Replace

Replace

Targets for FY2030

Replace

Targets for FY2030

Energy saving and reduction of CO2 emissions during production
Reduction of water resource use during production
Reduction of waste during production

RecycleⅡ CO2 emissions

RecycleTargetReduceRecycleReuse

Create Sustainable Star Products
Ⅰ and expand their market

TargetWeight and space reduction
Reduction of the amount of waste after product use
Reduction of hazardous substances and volatile solvents
Reduction of greenhouse gases
Reduction of other environmental loads in development and design

ReduceTargets of SKG-5R

Reuse

Reuse

ReduceReduceApproval by the president,
directors, and executive officers
at a management meeting

Re-create

Develop recycling technologies
and systems topromote recycling

Reuse

Replace

Certification Criteria

Re-create

RecycleReduceRecyclePromote replacement withsustainable materials and energy

Reuse

Replace

Reuse

Reuse wastematerials andenergyWe define “Sustainable Products” as products that take
into consideration the reduction of environmental impact and the finiteness of resources throughout their life
cycles, from the procurement of materials and supply of
the products to their disposal and recycling. Among our

ReduceReduceReduce the use ofresources andenergyon the Sekisui Kasei Group’s
2Rs basedunique technologies

Certification/
Registration

Approval

Re-create

Replace

Reuse

RecycleApplication filed by
the dept. in charge

Reuse

ReduceExamination

Product Definition
the creation of
3Rs fora recycling-based society

meeting, and the products that are then approved by thepresident, directors, and executive officers will be certified
and registered as Sustainable Star Products. The validityof this certification and registration is evaluated by a third
party.

Re-create

ReduceFor a product to be registered as a Sustainable Star
Product, the Environmental Committee will conduct an examination after receiving an application from the department in charge. Products that have met the committee’s
criteria will subsequently be submitted at a management

ReduceThe Sekisui Kasei Group (SKG) released the SKG-5R STATEMENT in FY2019 andset two targets to be achieved by FY2030.
In order to achieve these targets, we promote SKG-5R, the 5Rs, which add 2Rs(Replace and Re-create) that are made possible by the Company’s unique technologies, to the conventional 3Rs (Reduce, Reuse, and Recycle), and contribute to
the solution of global issues as raised by the SDGs.

Examination, Certification, and Registration Process

Reuse

SKG-5R

What are Sustainable Star Products?

ReduceUnder the mid-term management plan “Make Innovations Stage-II,” we have positioned “contribution to sustainable
society” as a priority issue for management.
After back-casting from our vision for 2030 and following repeated discussions, we set out SKG-5R as our action plan.

●

●

●

●

●
Integrated Report 2021 / SEKISUI KASEI

34

Foundation of Value Creation

Special : SKG-5R Initiatives– Results of FY2020 Activities–
120 (products)
90

20

30

10

2030

(target)0(FY)

Ratio of net sales (right axis)
120 (products)

90

30

20

60

20
10

0

0

2019

2020

2030

(target)(FY)

Re-create

CO2 emissions and rate of reduction
120,000 (thousand t - CO2)●

TECHEATER●

ST-LAYER Wind power generation blade

(%)

-27%

0

●

Residual monomer reduced to less than 1/100 [Comparison: Industrial grades]

TECHTELAS●

250% reduction in CO2 emissions during product use [Comparison: Fluorescent lamps]

ST-gel Electrodes for low-frequency
therapy equipment

NEO-MICROLEN SHE-30

EPS Slope●(FY)

CO2 emissions reduction rate (right axis)
(%)

-27%

90,000-20-30

30,000CO2 emissions (left axis)

2019

2020

(estimate)2030(target)(FY)

RecycleRecycleRecycleRecycleRecycle-40

CO2 emissions reduction rate (right axis)

TECHPOLYMER BIO EF-A series
electron micrograph

The 10th Cosmetic Ingredients & Technology Exhibition(CITE JAPAN 2021) was held at Pacifico Yokohama fromMay 19 to 21, 2021.

Integrated Report 2021 / SEKISUI KASEI

Repeated use
Recycled plastic bottle flakes used for 80% of raw materials●

More than 30% weight reduction by high foam expansion rate
[Comparison: Conventional products]
Cause-brand product (A part of the sales proceeds is donated to environmental contribution
activities)
57% reduction in CO2 emissions from raw materials to product use[Comparison: Concrete water storage tanks]
Newly conceived disaster recovery item without the need for heavy machines
Approx. 79% reduction in CO2 per set of 30 cm level difference elimination[Comparison: Sandbags and laid iron plates]

ESLEN Wood Panel RC Panel●

25% or more recycled resin used (Eco Mark certified)

ESLEN Sheet Product made from recycledmaterials●

25% or more recycled polystyrene used

ESLEN Container●

Repeated use

Insulated Foldable Container●

Repeated use

SET BOX●

Repeated use

KATAEMON●

Designed to eliminate waste without the need to dismantle the formwork

ES Dan Mat LV●

73% reduction in CO2 emissions from raw materials to product use[Comparison: No thermal insulation materials used]●

Made from 100% crushed granules of used EPS

Sponge carrier for DHS water purification
systemESLEN Block for EPS civil engineering
method●ESLEN Beads HCMH Foam with 100 times
expansion rate●

EPSREM●●

100% recycled resin + Proprietary recycling system

EPSREM Returnable Box●●

EPSREM + Eco Mark certified product

EPSREM ERX-ZERO●●

EPSREM + Carbon offset

ELASTIL●

ELASTIL BIO●

ST-Eleveat●

ST-Eleveat BIO●

Replace
Replace
Replace
Replace
Replace

Re-create
Re-create
Re-create
Re-create
Re-create

Environmental load reduction in water bodies
48% reduction in CO2 emissions from raw materials to product use[Comparison: Air bubble mixed lightweight soil]
Product liability compliance and 36% reduction in plasticizer additives[Comparison: Molded products with 90 times expansion rate]
10% reduction in weight per cubic meter of molded product[Comparison: Molded products with 90 times expansion rate]●

LIGHTLON BIOTECHPOLYMER BIO

35

Repeated use●

SUPER SOILEN SYSTEM

Material

At the Cosmetic Ingredients & Technology Exhibition (CITE JAPAN2021), our TECHPOLYMER BIO EF-A series of water-degradable polymers received the Silver Award in the Environment Category, which
recognizes products that contribute to the cosmetic industry and havesuperior innovativeness and impacts.
This award was made in recognition of our efforts to address marine
plastics, one of the most significant environmental issues. Our replacement of petroleum-based materials with plant-based materials,
together with our approach to using water-degradable polymers, wasrecognized for emphasizing the use of sustainable resources in consideration of the global environment for future generations.

0-10

Sustainable Star Product Brand
60,000TECHPOLYMER BIO Biodegradable polymer microparticles that decompose in the natural environment■-40

Human life segment2030(target)Compared with
FY20182018●●

30,0000

Repeated use●●

CO2 emissions (left axis)●●

AQUAROAD

2020●

Approx. 30% reduction in CO2 emissions during product use[Comparison: Commonly used electrothermal heaters]
80% lighter than steel blades and 60% lighter than aluminum blades when compared withthe same strength●-20(estimate)

Weight reduced by approx. 75% compared to competitive FRP products

TECHPOLYMER Cosmetic grades

60,0002019●

27% reduction in CO2 emissions compared to inorganic diffusing agents

FRAHASANA

2018

Environmental contribution content(certification basis)

●

-10

0

(as of March 31, 2021)

PIOCELAN Flat-panel TV component
transporting container
PIOCELAN Packing material fortransporting automobile parts
TECHPOLYMER Microparticles forlighting covers

CELEPET F
Compared with
FY201890,000■Re-create

CMT bathtub pan

Reuse
Reuse
Reuse
Reuse
Reuse

Number of registered Sustainable Star Products (left axis)

Ratio of net sales (right axis)

120,000 (thousand t - CO2)

ReplaceIndustry segment

30

2018

Product name(%) 40100

Target Ⅱ CO2 emissions

Replace

ReduceReduceReduceReduceReduceof registeredStar
SustainableStar
Products (left andaxis) ratio of net sales
Numberof Sustainable
Product
registrations■ Number■

Our CO2 emissions reduction rate in FY2020 was -8.5% ascompared to FY2018. This was due to a 2.4% reduction in
production itself as compared to FY2018 caused by factors
such as the COVID-19 pandemic, and an 8.9% decrease
in CO2 emission factors by our power companies as compared with an expected 3.9% decrease.

Sustainable Star Product List

Re-create
Re-create
Re-create
Replace
Re-create
Replace
Re-create
Replace
RecycleReplace
RecycleReplace
RecycleReuse
RecycleReuse
RecycleReuse
ReduceReuse
ReduceReuse
ReduceReduceReduce0Target Ⅰ Create Sustainable Star Products andexpandtheirmarket
2018
2019
2020

The total number of registered Sustainable Star Products
in FY2020 was 34, with the ratio of net sales up two percentage points year-on-year at 16.9%. The increase inratio of net sales over the previous year was mainly due toincreased sales of ESLEN Sheets (product made from recycled materials) and ELASTIL containing biomass grade.

30

20

60

Results of FY2020 Activities(%) 40

100

●

●
●

●

50% reduction in weight compared to non-foam PU/EVA competitive products●

ELASTIL + Biomass content of 45% or more (Biomass Mark certified)●

80 to 90% reduction in weight compared to non-foam competitive products●

ST-Eleveat + Biomass content of 25% (Biomass Mark certified)●

Biomass content of 10% or more (Biomass Mark certified)●

Biodegradable polymer microparticles that decompose in the natural environment

Integrated Report 2021 / SEKISUI KASEI

36

Foundation of Value Creation

SEKISUI KASEI’s ESG

Environment

Contributing to the creationof a sustainable society

To achieve a sustainable society, the Sekisui Kasei Group promotes monozukuri (to create things)
activities in coexistence with the environment, such as the reduction of environmentally hazardous
substance emissions generated through business activities.

Inputs/Outputs (FY2020 Results)

Environmental Data

The 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

InputsEnergy consumption
Water consumption

3,252

GJ
Electric: 120,562 MWh
Non-electric: 17,671 kl[Crude oil equivalent]

thousand m3

Recycling 9,292 t
Materials Recycling: 7,946 t
Thermal Recycling: 1,346 t

Outputs
Atmospheric environmental load
CO2 emissions: 89,649 t-CO2 (Production)
CO2 emissions: 7,634 t-CO2 (Logistics)
NOX emissions: 27 t
SOX emissions: 50 t

313,660

Energy consumption (GJ)
Unit consumption/output (MJ/t)
Water consumption (thousand m3)
Unit consumption/output (m3/t)

Water consumption

151

GJ
Electric: 10,265 MWh
Non-electric: 5,452 kl[Crude oil equivalent]

thousand m3

Sekisui Kasei

Recycling 245 t• Sales• Production
• R&D

Japan
Overseas

2017

Materials Recycling: 244 t
Thermal Recycling: 1 t

Outputs
Atmospheric environmental load
CO2 emissions: 17,503 t-CO2 (Production)
NOX emissions: 12 t
SOX emissions: 6 t

Aquatic environmental load

Aquatic environmental load

Total effluent: 3,200 thousand m3

Total effluent: 105 thousand m3

Amount of COD discharge: 14 t

Amount of COD discharge: 16 t

CO2 emissions (Production) (t)Unit consumption/output (kg-CO2/t)
CO2 emissions (Transportation) (t)Unit consumption/output (kg-CO2/t)
CO2 emissions (Office) (t)Unit consumption/output (kg-CO2/m2)
Effluent (Production) (thousand m3)
Unit consumption/output (m3/t)
COD discharge (t)Industrial waste (t)Recycling rate (%)

37
10

39
19

39
19

39
19

1,801,260
8,308
3,256
15.0

1,882,440
8,453
3,459
15.5

1,882,750
8,389
3,389
15.1

1,926,500
8,782
3,451
15.5

1,862,070
8,646
3,252
15.1

99,303
458
7,177
34.9
121
31.7
3,044
14.0
14.1
8,138
98.5

102,742
461
7,854
36.0
110
28.8
3,263
14.7
16.6
8,961
98.5

101,909
453
8,304
36.3
125
32.7
3,241
14.4
17.0
8,780
97.2

95,760
432
8,180
36.3
100
26.2
3,268
14.7
15.8
10,436
95.4

89,649
416
7,634
33.7
74
19.5
3,200
14.9
14.0
9,725
95.5

229,360
14,041
118
7.2

291,560
16,165138
7.7

295,500
15,491
156
7.7

319,590
16,948164
8.7

313,660
19,163151
9.2

12,398
759
106
6.5
10.4
410
78.3

15,406
854
109
6.0
11.0
476
73.9

17,799
875
75
3.7
7.5
706
81.0

17,966
954
134
7.1
13.6
763
63.9

17,503
1,069
105
6.4
16.0
379
64.6

Inputs (Overseas):
Energy consumption (GJ)
Unit consumption/output (MJ/t)
Water consumption (thousand m3)
Unit consumption/output (m3/t)

Outputs (Overseas):
CO2 emissions (Production) (t)Unit consumption/output (kg-CO2/t)
Effluent (Production) (thousand m3)
Unit consumption/output (m3/t)
COD discharge (t)Industrial waste (t)Recycling rate (%)

Note 1: The 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.
Note 2: “Inputs (Overseas)” and “Outputs (Overseas)” exclude the results of Proseat Europe GmbH.

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

Industrial waste

80

9,725 t

379 t

60

90.8
37.9

52.9

20

Final landfill disposal and simple incineration:
134 t

0

2016

2017

2018

■Material recovery rate ■Energy recovery rate
Data source: JEPSA

Integrated Report 2021 / SEKISUI KASEI

2020

36
10

40

37

2019

Outputs (Japan):Industrial waste

Final landfill disposal and simple incineration:
433 t

2018

Inputs (Japan):

Energy consumption

1,862,070

2016

Fiscal Year
Number of production sites:

2019

2020

(CY)

The Sekisui Kasei Group has been a leader in the recycling
of EPS foam
for 50 years, since 1971. We established the100
Japan EPS Recycling Association (current: JEPSA – Japan
80
Expanded Polystyrene Association) together with raw mate60
rial and molding
companies in 1991.
Following40the acquisition of permission to operate industrial waste disposal businesses in Ibaraki, Nara, Ehime, Oita,
20
and Okinawa
Prefectures as well as wide-area certification
at Sekisui Kasei
Seibu (covering Hiroshima, Yamaguchi, and0
Shimane Prefectures), we are actively engaged in the recycling of Styrofoam.

Integrated Report 2021 / SEKISUI KASEI

38

Foundation of Value Creation

SEKISUI KASEI’s ESG

Contributing to the creationof a sustainable society

Environment
Performance
Data

Environmental Accounting (Japan)

Certification List

Environmental Conservation Costs(Millions of yen)

Category

FY2019Investment
Costs

Major activities

FY2020Investment
Costs1) Costs in business area
(1) Pollution control

Control measures for air/water quality

55(2) Global environment

Energy saving(3) Recycling

Recycling, industrial waste treatment
Subtotal

115

19

249

5

61

2

0

309

4

400

304

429

84

496

94

2) Up-/down-steam

Product recycling

0

326

0

20

3) Management costs

Departmental costs associated withintroducing environment management system

5

164

2

140

4) R&D costs

R&D for environmental conservation products

0

47

0

40

5) Social Activity cost

Greening, social supports

0.2

37

0.1

1

0

0

0

0

309

1,003

86

697

6) Environmental damage fixing cost Nature restoration
Total

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

Economic Effects Related to Environmental
Conservation Measures(Millions of yen)

FY2019Details of effects

FY2019FY2020

1) Cost reduction through energy-saving activities

30

2

FY20201) Effects on costs in business area
(1) Electricity consumption (MWh)122,595

120,562

2) Income from recycling

475

325

(2) Crude oil consumption (kl)

18,271

17,235

Total

512

328

(3) Total effluent (thousand m3)

3,268

3,268

(4) Amount of COD discharge (t)

16

14.7

144

200

Cost Effectiveness of Environmental
Conservation Activities

2) Effects on Up-/down-steam costs
Amount of recycled polystyrene foam (t)FY2019FY2020

51.5%

47.1%

Investment figures are for construction completed during the period. Expense
figures do not include depreciation and amortization

ISO9001 Certification

ISO14001 Certification

Sekisui Kasei Co., Ltd. The 2nd Business Headquarters
Sekisui Kasei Hokkaido Co., Ltd. Chitose Plant
Sekisui Kasei Toubu Co., Ltd. Main Plant
Sekisui Kasei Urethane Co., Ltd.
Sekisui Kasei Kanto Co., Ltd. Main Plant
Sekisui Kasei Kanto Co., Ltd. Miho Mfg. Department
Sekisui Kasei Gunma Co., Ltd.
Sekisui Kasei Saitama Co., Ltd.
Shonan Sekisui Kogyo Co., Ltd.
Sekisui Kasei Yamakyu Co., Ltd.
Sekisui Kasei Omi Co., Ltd.
Sekisui Kasei Shiga Co., Ltd.
Sekisui Kasei Kansai Co., Ltd. Kasai Plant
Sekisui Kasei Kansai Co., Ltd. Meihan Ogura Plant
Sekisui Kasei Tenri Co., Ltd.
Sekisui Kasei Seibu Co., Ltd.
Sekisui Kasei Oita Co., Ltd.
Sekisui Kasei Okinawa Co., Ltd.
Sekisui Kasei Taiwan Co., Ltd.
Sekisui Kasei Tianjin Co., Ltd.
Sekisui Kasei Suzhou Co., Ltd.
Sekisui Kasei Shanghai International Trading Co., Ltd.
Sekisui Kasei Shanghai Precision Forming Co., Ltd.
PT. Sekisui Kasei Indonesia
Sekisui Kasei (Thailand) Co., Ltd.
Sekisui Kasei Europe B.V.
Proseat GmbH & Co. KG Mörfelden-Walldorf Plant

Sekisui Kasei Co., Ltd. The 2nd Business Headquarters
Sekisui Kasei Urethane Co., Ltd.
Sekisui Kasei Kanto Co., Ltd. Main Plant
Sekisui Kasei Kanto Co., Ltd. Miho Mfg. Department
Sekisui Kasei Gunma Co., Ltd.
Sekisui Kasei Shiga Co., Ltd.
Sekisui Kasei Sakai Co., Ltd.
Sekisui Kasei Tenri Co., Ltd. Main Plant
Sekisui Kasei Oita Co., Ltd.
Sekisui Kasei Taiwan Co., Ltd.
Sekisui Kasei Tianjin Co., Ltd.
Sekisui Kasei Suzhou Co., Ltd.
Sekisui Kasei Shanghai International Trading Co., Ltd.
Sekisui Kasei Shanghai Precision Forming Co., Ltd.
Proseat GmbH & Co. KG
Proseat Schwarzheide GmbH
Proseat SAS
Proseat LLP
Proseat Foam Manufacturing, S.L.U.
Proseat Sp.zo.o
Proseat Mladá Boleslav s.r.oCompliance with the Chemical Substances Management Act
We promote improvements in compliance with the PRTR*
system under the Chemical Substances Management
Act (the Act on Confirmation, etc. of Release Amountsof Specific Chemical Substances in the Environment andPromotion of Improvements to the Management Thereof).

Substance

Toluene(t)

Methyl methacrylate

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

Air

6.6

4.7

4.7

6.7

5.0

0.4

0.5

0.4

0.5

0.3

1.4

1.6

1.4

1.4

1.2

0.1

0.1

0.1

0.1

0.1

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

Transfer

2.7

2.8

3.4

3.1

1.6

0.0

0.0

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

Integrated Report 2021 / SEKISUI KASEISekisui Kasei Yamakyu Co., Ltd.

ISO45001 Certification

ISO/TS16949 Certification
Sekisui Kasei U.S.A., Inc.
Sekisui Kasei Mexico S.A.de C.V.
Proseat GmbH & Co. KG Espelkamp Plant
Proseat Schwarzheide GmbH
Proseat SAS
Proseat LLP
Proseat Foam Manufacturing, S.L.U.
Proseat Sp.zo.o
Proseat Mladá Boleslav s.r.oSekisui Kasei Tenri Co., Ltd.

Ethyl benzene

Fiscal Year
Emission

39

StyreneEco-Action 21 Certification* PRTR: Pollutant Release and Transfer Register

Emissions of Chemical Substances (PRTR substances: Rounded to one decimal place)

As of July 31, 2021

ISO50001 Certification
ISO13485 Certification
Sekisui Kasei Co., Ltd. The 2nd Business Headquarters
Sekisui Kasei Kanto Co., Ltd. Miho Mfg. Department

Proseat GmbH & Co. KG Espelkamp Plant
Proseat Schwarzheide GmbH* Even in the case that there is no description, relevant departments
within a site may be included.

Integrated Report 2021 / SEKISUI KASEI

40

Foundation of Value Creation

SEKISUI KASEI’s ESG

Contributing to the creationof a sustainable society— Safety —SocialIn line with our management policies related to the environment, safety, and quality, we work to assure safety throughout all of our business processes, and to raise the level of trust from society.

Management Policies Related to the Environment, Safety, and Quality
1. Provide high-quality, safe products and services that meet the expectations of each customer
2. In overall business activities, strive to prevent accidents and disasters and ensure the health and safety of all thepeople including employees, business partners, and local residents
3. Consider the environment and safety in every process from product development to use and disposal and strive toconserve the environment
4. Consider the resource and energy savings in product development and production, and promote the recycling ofused products
5. Engage in responsible care activities to improve environment, safety, and quality management and gain further
confidence from society
6. Comply with domestic and overseas laws, regulations and standards established by local governments andindustries, and engage in business activities

FY2020 Policy for Safety-Related Activities

In Pursuit of Inherent Safety: Group-Wide Initiatives to Achieve Zero Accidents

Safety Activities
In FY2019, the Group saw increases in both lost time injury frequency rates and accident severity rates caused byindustrial accidents, while other accidents also occurred.
Recognizing the severity of these trends, in November 2019
we issued a Group-wide “emergency declaration with regard
to safety” and expedited initiatives aimed at the pursuit ofinherent safety, from the three perspectives of tangible, intangible , and human (both mental and physical aspects).
We focused efforts on safety measures based on the order ofpriority identified in risk assessments, updated safety training tools aimed at ensuring rules compliance, and focusedon establishing a safety-first culture. We also completed thehorizontal rollout of these safety activities across similar facilities, processes, and work procedures. Consequently, we
lifted the emergency declaration at the end of March 2021.
Nevertheless, we continue to promote the pursuit of inherent
safety across our entire Group.

Goals
Zero occupational and industrial accidents
Key Items
1. Implementing safety activities from three perspectives in order to prevent accidents resulting from unsafe behaviors
or unsafe conditions
The three perspectives: tangible, intangible, and human (both mental and physical aspects)
2. Enhancing initial response systems and continuing to practice on-site drills in preparation for large-scale natural disasters
3. Strengthening coordination between the Safety Committee and Group offices, and promoting on-site safety activities

Oversees and promotes safety and health management within
the Sekisui Kasei Group

Enhancing Online Communications
We have introduced systems such as staggered working
hours and working from home as part of our push for workstyle reforms. By using the internet as an additional means ofcommunication, we are working to ensure that accurate information can be delivered to every one of our employees.

1.50

0.15

1.20
1.02

1.00

1.20

0.13

1.21

1.14

All Group offices

0.07

0.50

Group companies in the Tokai and Kansai regions

Safety and HealthCommittee

West Japan Safety Committee(Safety Committee)

0.08

0.10

0.07

0.05

0.20

0.22

(38 in Japan)

Kansai Safety Committee

0.10

0.10

0.62

Kanto Safety Committee
Group companies in the East Japan region

Awareness Raising on 6S Activities
Our Group’s “6S Activities” refers to implementing 5S activities with a focus on safety awareness. The 5Ss of seiri, seiton,
seiso, seiketsu, and shitsuke—which approximately translate
to sort, set in order, shine, standardize, and sustain—are fundamental to establishing sound working environments. When
carrying out 5S activities, we instruct all employees to maintain an awareness of safety, with the goal of preemptively
reducing the risk of industrial accidents.

Accident Severity Rate*

1.15

Safety Committee

Updated Operating Manual for Safety Training (video content)
Video content is one type of operating manual to deepen
the understanding of users, and we are continually updating
video content that visualizes the procedures. The operating
manual is not only intended as a tool to be referred to before starting work procedures; we also encourage its repeated use in both new recruit training and safety training.

Lost Time Injury Frequency Rates*

Safety Management System
CSR Control Committee(Chair: President)

TOPICS

0.015

0

0

2016

2017

The Sekisui Kasei Group

2018

0

2019

2020

(FY)

Manufacturers (100 or more employees)

2016

0.005
2017

The Sekisui Kasei Group

0.010

0
2018

2019

2020

(FY)

Manufacturers (100 or more employees)

Group companies in the West Japan region

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

41

Integrated Report 2021 / SEKISUI KASEI* Lost Time Injury Frequency Rates: The number of absent employees due toindustrial accidents per 1 million working hours
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.

* Accident Severity Rate: The number of lost workdays per 1,000 working hours
Accident Severity Rate of Manufacturers (100 or more employees): Excerpted
from statistics in the Ministry of Health, Labour and Welfare’s Survey on
Industrial Accidents.

Integrated Report 2021 / SEKISUI KASEI

42

Foundation of Value Creation

SEKISUI KASEI’s ESG

Contributing to the creationof a sustainable society— Quality —Social— Human Rights/Labor Practices —To raise quality awareness, and to provide products and services that fully meet the expectations ofcustomers, we carry out initiatives to ensure the safety and security of our products.

FY2020 Quality Management Policy
To satisfy our customers and to provide safe and secure products and services,
we promote quality management from a customer-centric standpoint.

Quality Assurance Activities
To provide products and services that meet the expectationsof our customers, the Sekisui Kasei Group promotes quality
management activities in line with its management philosophy and management policies.
For quality management, we construct quality assurance
systems tailored to unique business characteristics for eachof our products. In particular, we focus on clarifying customer
specifications in the R&D stage and seek to improve productquality at the development stage.
Improve Product Quality at Development Stage
Market needs, Customer needs
Sales Activities
Development Topic, Evaluate/Decide

Design Review
Environmental
ImpactLaws and
Regulations

Preliminary
SafetyInitial Production control
New ProductMarket Evaluation

TOPICS
Response to Food Sanitation Act revisions
In June 2020, partial revisions to the Food Sanitation Act
came into effect, stipulating a new Positive List System forfood utensils, containers, and packaging and prohibiting theuse of substances that have not been assessed as safe. We
comply with the revised Food Sanitation Act for all productsthat fall under the category of food utensils, containers, andpackaging.
Chemical Substance Initiatives
In order to provide information swiftly to our customers, we
use ChemSHERPA (a scheme for standardizing information
handling in Japan) to manage the chemical substances
contained in our products. We have also formulated an independent green procurement standard for raw materials,
based on which we not only seek to ensure legal compliance, but also endeavor to consider the environment, safety,
and health in our product development process.
Quality Training
In November, which is World Quality Month, we implemented quality-related campaigns and offered e-learning (quality
management courses) to further raise quality awareness.
We use QC KENTEI (Quality Management and Quality Control
Examination),* which tests knowledge of quality management, to objectively assess the levels of quality-related
knowledge among our employees.
* The exams are certified by The Japanese Society for Quality Control,
and are administered by the Japanese Standards Group and theUnion of Japanese Scientists and Engineers.

SocialThe Sekisui Kasei Group respects fundamental human rights and takes into consideration that no one
is discriminated on any and all factors such as birth, nationality, ethnicity, creed, religion, gender, age.
On the basis of our founding spirit such as “for the happiness of people working for the Company,”
we regard human resources as one of our most important management resources.

Initiatives to Human Rights
Our stance on human rights appears in the Compliance
Manual and is widely publicized among the Group’s employees. To prevent sexual harassment, power harassment, andother abuses that could occur in the workplace, we conductvarious training programs as part of employee education.
In March 2018, Sekisui Kasei published the second editionof the Company’s compliance manual, which included revisions centered on labor practices and harassment. In order
to expand the understanding of the topics covered in thesecond edition, we are implementing e-learning programs
for all Group employees, and with the goal of fostering anawareness of the importance of compliance we continue toremind our employees that the issues of human rights andharassment are never far away.

Company Business Promotion Committee:
Shasui Kai—Upholding Sekisui Kasei’s
Founding Spirit—
The Company Business Promotion Committee is an organization
comprised of all members of the Company (directors as well as
employees), and by positioning as fundamental mutual respect
and trust, it pursues our founding spirit of “the happiness ofpeople working for the Company,” and corporate growth.
Realizing “the happiness of people working for theCompany” means Group employees working in good health,both mentally and physically, and through the Committee weare working to implement our corporate culture of “Zen-in
Keiei” so that employees can voluntarily participate in management activities and have an awareness of contributing tosociety through business.

The “Zen-in Keiei” Card
The Sekisui Kasei Group has created the “Zen-in
Keiei” card that contains information on the origin of
the Group name “Sekisui,” management philosophy
and code of conduct, and action guidelines for the“Zen-in Keiei,” all in a bookletsized card provided toGroup employees.

Respond to Consumer Problems
Responding to Accidents/Defects on Products
We developed internal regulations to deal with product accidents. When an accident occurs, responsible departments takethe lead in promptly response based on the regulations, withfull consideration of the customers’ perspective, and related
departments cooperate in finding a solution as necessary. In
the case of a serious product accident, responsible departments promptly report to the top management and takes rapid, appropriate response.

43

Integrated Report 2021 / SEKISUI KASEIRaising Customer Satisfaction
The Group attempts to identify customer needs using inquiries via our corporate website and by visits to customers, inour pursuit of customer satisfaction.

Integrated Report 2021 / SEKISUI KASEI

44

Foundation of Value Creation

SEKISUI KASEI’s ESG

Contributing to the creationof a sustainable society— Organizational Governance /Fair Operating Practices —GovernanceIn line with our management philosophy, we will be proactive in the prompt and appropriate disclosure of information while ensuring compliance, reliability, and transparency in management. We also
ensure compliance and strive to engage in fair operating practices.

Our Basic Approach to Corporate Governance
The Sekisui Kasei Group aims be a plastics solutions company trusted by customers around the world as it fulfills its
social responsibilities to all its stakeholders.
In order to achieve this, we recognize that we will needto ensure effective corporate governance, reliability andtransparency in management, and the establishment of amanagement system that is well equipped of responding toCorporate Governance Systemchanges in the business environment.
We have established Corporate Governance Guidelines thatset forth our basic approach and policy regarding corporate
governance and have published them on our website.
Corporate Governance Guidelines
https://www.sekisuikasei.com/en/assets/images/company/pdf/guideline.pdf

Corporate Governance Initiatives
We promote initiatives to achieve highly effective corporate governance.
1996

Management
Philosophy

2009

2020

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 the appropriateness and transparency of theBoard of Directors’ decision making.
Of the five members of the Audit & Supervisory Board,
three are outside auditors. By establishing a system oftimely and appropriate reporting of important matters to
the Audit & Supervisory Board and its members, we havestrengthened the auditing function and ensure the rationality, transparency, and fairness of management decisions.
Further, in 2019, we established the Nomination andRemuneration Committee, of which a majority of members
are independent outside directors, which deliberates matters including candidates to succeed the president, director
candidates, and director remuneration.
Through this current system, we have put in place a structure that functions both to ensure the rationality, transparency, and fairness of management decisions and to supervise
management from an objective and neutral perspective.

(FY)

Chart of the SEKISUI KASEI Corporate Governance System

2009 100th Year Vision established

Shareholders Meeting
Appointment/Dismissal

2012 3 outside auditors
Nomination and Remuneration Committee

Consultation

Board of Directors

Appointment/
Dismissal(Inside Board Member: 1) (Outside Board Members: 4)

Report(Inside Board Members: 5) (Outside Board Members: 3)

Audit &
Supervisory Board

Total Members: 5

2013 Executive officer system introduced

2018 Increased to 3

CSR Integral Committee

President

Executive Officers: 13
Internal Audit Department

Nomination and Remuneration
Committee established

Committees

2010 CSR Control Committee established2010–2012

Environmental Contribution Committee established2018 Environmental Committee established(integrated into Social Contribution Committee)

2010 Social Contribution Committee established

Integrated Report 2021 / SEKISUI KASEI

Independent
Accounting Auditor

Headquarters, Departments, Subsidiaries

Nomination and Remuneration Committee
As an advisory body to the Board of Directors that aims
Board of Directors
to enhance the independence and objectivity of theBoardPresidentof Directors with relation
toCommittee
overall corporate govExecutive
ernance and fulfil its accountability to stakeholders, thecommittee deliberates matters such as personnel
Complianceaffairs
and
CSR Integral
and remuneration of directors and the evaluationof theRisk Management
Committee
effectiveness of the Board of Directors. TheCommittee
outcomes ofEnvironment
Committee

45

Cooperation

Internal Audit

1996 Responsible Care Internal Audit Committee (currently Responsible Care Voluntary Audit Committee) established2007 Compliance Committee (currently Compliance and Risk Management Committee) established

Audit

2019

(Internal Members: 2)(Outside Members: 3)

ReportCompliance andRisk Management Committee

2015 Corporate Governance Guidelines established

Total Audit & Supervisory
Board Members: 5

Appointment/Dismissal

2015 2 outside directors

Executive Committee

ReportAudit

Appointment/Dismissal
Audit

2014 Director’s term of office shortened from 2 years to 1 year
GovernanceInitiatives

8 Directors

Security
Committee

the deliberation are reported to the Board of Directors.
It is stipulated that the majority of committee members
be comprised of independent outside directors and auditors. The chair is determined by the committee throughmutual election from among the independent outside
directors and auditors.

Quality
Committee
Integrated Report 2021 / SEKISUI KASEI

46

Foundation of Value Creation

SEKISUI KASEI’s ESG

Contributing to the creationof a sustainable society

GovernanceEvaluation of the Effectiveness of the Board of Directors
In order to analyze and evaluate the overall effectivenessof the Board of Directors, we conducted a survey of all the
directors as well as Audit & Supervisory Board members
based on the advice and guidance of a third party, with theresults of the survey discussed at a Board meeting.
The Board of Directors was judged to be sufficiently effective, including in regard to its size, composition, operational status, and in its deliberations. We also recognizedrecent efforts to improve the Company’s governance,

Risk Management System

including through the establishment of the Nomination andRemuneration Committee.
At the same time, we identified areas for improvement, including: 1) review of Board of Directors agenda items, 2) enhancement of discussions regarding the medium to long termbusiness direction, and 3) improvement of “officer training.”
We will continue to work on further improving the effectiveness of the Board of Directors based on the results of thelatest evaluation.

Policy on Director Remuneration
The Board of Directors has resolved as follows regarding
the policy for determining the individual remuneration of

directors and other details based on the report from theNomination and Remuneration Committee.

In the Sekisui Kasei Group, the departments in charge ofeach type of risk formulate response plans and take specificcountermeasures under the basic policy on risk management established by the Compliance and Risk Management
Committee, which manages all risks. Further, the Complianceand Risk Management Committee creates a matrix of currently assumed risks according to their degree of severity,and evaluates and deliberates on the response status basedon reports from the departments in charge of each risk.
The committee then operates on a system of reviewing therisk 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 and shared with the Board of Directors and Board ofManaging Directors.

Plan

Do

Compliance and Risk
Management Committee
Formulates risk
management policyi
Departments in charge of risk
Formulate risk response plans

Departments in chargeof risk
Implement risk
response measures

ActionCheck

Compliance and Risk
Management Committee
Reviews risk additions and changesiDepartments in charge of risk
Review risk response measures
Compliance Promotion

Departments in charge of risk
Report on status of risk responseiCompliance and Risk
Management Committee
Evaluates/deliberates status ofrisk response

Policy on Director Remuneration (excerpt)
The link between director remuneration and theCompany’s shareholder value shall be clarified to further promote value sharing with shareholders in order tocontribute to improved medium to long term businessperformance and increased corporate value. In addition,
the remuneration system shall emphasize the proportionof remuneration determined through a comprehensive
analysis, including in regard to the degree to contribution
toward performance and progress in achieving targets.

Specifically, 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 be based on the discussions of the Nomination
and Remuneration Committee, of which independent outside directors and auditors comprise the majority.

Director Remuneration
FY2020 Officer Remuneration Amounts
Classification(Millions of yen)

Eligible
Personnel

Type of Remuneration
Performance-based
Restricted stock
Basic remuneration
remuneration
remuneration

Total

Directors (excluding outside directors)

7

92

26

25

143

Audit & Supervisory Board members (excluding outside auditors)

3

45

—

—

45

Outside directors and auditors

8

42

—

—

42

Note: 1. The above includes two directors (including one outside director) and two Audit & Supervisory Board members (including one outside
auditor) who stepped down at the conclusion of the 76th Ordinary General Meeting of Shareholders held June 24, 2020.
2. Director remuneration amounts do not include employee salaries for directors concurrently serving as company employees.

Restricted Stock Remuneration System
We introduced a restricted stock remuneration system at the 76th
Ordinary General Meeting of Shareholders held in June 2020.
This system aims to further promote shared value withshareholders by clarifying the link between director

47

Integrated Report 2021 / SEKISUI KASEI

remuneration and the value of Company shares and by providing incentive to contribute to improvements in medium
to long term business performance and increase corporate
value for directors, with the exclusion of outside directors.

Compliance Promotion
throughout the Group, we established the Compliance andRisk Management Committee to ensure ongoing compliance with all laws and regulations. The Compliance andRisk Management Group meets in principle once every
six months to discuss compliance issues within the Sekisui
Kasei Group and to report any items for attention to the
Executive Committee.
We have also established Compliance Committees andCompliance officers at Group companies, depending on
their size, with the goal of further promoting cooperation
within the Group.

The Sekisui Kasei Group defines compliance as not only
complying with laws and regulations, but also ensuring that
operations within the Sekisui Kasei Group are carried out
in an appropriate manner by complying with related rules
and regulations while acting with integrity based on thevalues, personal ethics, and corporate ethics required by
the society in which we operate. The Sekisui Kasei Group
Compliance Action Guidelines define how we should act asa corporate entity as part of our effort to promote a strong
relationship with society.
With the goal of strengthening and promoting compliance

SKG Clean Network
To fulfill its corporate social responsibilities, the Sekisui
Kasei Group set up the “SKG Clean Network” as an internalreporting system in line with our effort to build a fair andactive organization.

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

Internal contact point

External contact point

General Manager of the Legal &Compliance Department
 Office of the Compliance andRisk Management CommitteeReport
Reply

Request for investigation



Reply

Selection
Person reporting

Lawyers

ReportReply

Integrated Report 2021 / SEKISUI KASEI

48

Foundation of Value Creation

Directors & Auditors

Osamu Matsumoto

Keizo Kousaka

Toshitaka Fukunaga

Yasunobu Furubayashi

Tetsuharu Hirota

DOB: May 29, 1960

DOB: December 11, 1945

DOB: April 7, 1956

DOB: June 30, 1967

DOB: January 24, 1959

1985 Joined the Company
2021 Audit & Supervisory Board
Member of the Company(current position)1970	Admitted to the bar
Joined Irokawa Law Office
2001 Chairman of Irokawa Law
Office2009 Outside Director of Sumitomo
Rubber Industries, Ltd.
2012 Outside Audit & Supervisory
Board Member of the Company
2016 Outside Audit & Supervisory
Board Member of Techno
Associe Co., Ltd.
2020 Chairman of Irokawa Law OfficeOutside Audit & Supervisory
Board Member of SeirenCo., Ltd

1979 Joined Sekisui ChemicalCo., Ltd.
2011 Executive Officer of Sekisui
Chemical Co., Ltd.
2017 Managing Executive Officer
of Sekisui Chemical Co., Ltd.
2020 Full-time Audit &Supervisory Board Memberof Sekisui Chemical Co., Ltd.
(current position)
Outside Audit & Supervisory
Board Member of theCompany (current position)

Head of The 1st Business
Headquarters, Supervising
Business Research Department

Head of The 2nd Business
Headquarters, Supervising
Information System Department

DOB: May 5, 1960

1992 Joined the Company
2021 Director
Managing Executive Officerof the Company(current position)

1984 Joined the Company
2016 Director
Managing Executive Officerof the Company(current position)

1983 Joined the Company
2021 Director
Senior Managing Executive
Officer of the Company(current position)

Audit & Supervisory Board
MemberOutside Audit & Supervisory
Board Member

Director
Managing Executive Officer

Director
Managing Executive Officer

Katsumi Sasaki

Director
Senior Managing Executive
Officer
Head of Corporate Strategic
Headquarters

Hideyuki Asada

Morinobu Nagahama

Kojiro Takekoshi

DOB: March 17, 1967

DOB: December 18, 1956

DOB: December 16, 1959

Head of Research & Development
Center, General Manager of Basic
Research Laboratory

1979 Joined the Dai-ichi Mutual Life
Insurance Company
2008 Executive Officer of the Dai-ichi
Mutual Life Insurance Company
2013 Managing Executive Officer ofthe Dai-ichi Life Insurance Co., Ltd.
2014 Director
Managing Executive Officer of theDai-ichi Life Insurance Co., Ltd.
Outside Audit & Supervisory
Board Member of the Company(current position)2016 Director
Senior Managing Executive
Officer of the Dai-ichi Life
Insurance Co., Ltd.
Director (Audit & Supervisory
Committee Member (full-time))of Dai-ichi Life Holdings, Inc.
(current position)

1978 Joined the Company
2020 Audit & Supervisory Board
Member of the Company(current position)

Director
Managing Executive Officer

1989 Joined the Company
2020 Director
Managing Executive Officer of
the Company (current position)

Outside Audit & Supervisory
Board Member

Audit & Supervisory Board
MemberNaoto Kitagawa

Hiroyuki Bamba

Masato KashiwabaraMorio Kubota

DOB: December 8, 1953

DOB: January 27, 1954

DOB: June 29, 1959

DOB: November 23, 1952

Please refer to page 54 fordetailed profile.

Please refer to page 54 fordetailed profile.

1983 Joined the Company
2014 Representative Director,
President and Chief
Executive Officer of theCompany (current position)

Please refer to page 54 fordetailed profile.

Outside Director

49

Outside Audit & Supervisory
Board Member

Integrated Report 2021 / SEKISUI KASEI

Outside Director

President and Representative Director

Outside Director

Integrated Report 2021 / SEKISUI KASEI

50

Foundation of Value Creation

Discussion between Three Outside Directors

Strengthening Governance with Diverse Knowledge
hailing from outside of the Company.
On top of that, agenda items at Board meetings have also
been improved. To be more specific, the way meetings arerun has been improved so that we can allot plenty of time
to medium- and long-term management issues.
Kubota I certainly feel that over the past year we havebeen able to more clearly apportion the roles of both theBoard of Directors and the Executive Committee with aslittle overlap as possible.
Bamba I’m expecting that free discussion regarding the
topics to be deliberated by the Board during the offsite meetings that Mr. Kitagawa just mentioned will help
invigorate discussions from a medium- to long-term
perspective.

Initiatives of the Nomination and Remuneration Committee
Raising transparency concerning the Company’s officer
appointment and remuneration policies is also key tostrengthening governance. What steps are being takenin this regard?

Hiroyuki Bamba

Morio Kubota

Naoto Kitagawa

Outside Director

Outside Director

Outside Director

Having appointed a number of outside officers (outside directors and outside auditors), the Company is striving
to enhance and strengthen the auditing and supervisory functions of the Board of Directors. The Company’s
outside directors—tasked with supervising management (business execution)—recently sat down to talk about
their approach to strengthening corporate governance and how they are furthering discussions with the aim ofenhancing corporate value.

Initiatives to strengthen governance
How has corporate governance at Sekisui Kasei evolved
over the past year? Please provide a summary from an
outside director’s point of view.
Kitagawa I only took office as an outside director lastyear, so I can’t really comment on how the situation has
evolved before that, but I think the following points areworthy of recognition.
We have repeatedly engaged in serious discussions toenhance the effectiveness of the Board of Directors andquickly incorporated ideas for improvement that came outof those discussions. For example, holding off-site meetings separate from Board meetings to discuss medium- tolong-term management policies have been really beneficial
to deepening Board discussions around the formulation ofmanagement plans.

51

Integrated Report 2021 / SEKISUI KASEIKubota In terms of governance initiatives, we are endeavoring to roll out new rules and frameworks to reflect the recent amendments to Japan’s Corporate Governance Code.
For instance, the Board previously consisted of six internal directors and three outside directors, but this fiscal
year the ratio of outside directors was increased by lowering the number of internal directors. This reflects theCompany’s intention to further incorporate opinions fromoutside of the organization.
Bamba The Nomination and Remuneration Committee
was established in July 2019 and it wasted little time inhammering out some concrete ideas on how to improve
the Board’s effectiveness evaluation and activation.
As Mr. Kubota just mentioned, the makeup of the Board
was first changed to increase the percentage of directors

Bamba Since its establishment as an advisory body to
the Board of Directors, the Nomination and Remuneration
Committee has convened meetings nearly every month.
Given that the committee comprises the President andfour outside officers, I believe transparency and fairness
is properly guaranteed with an emphasis on perspectives
from outside of the Company.
How would you rate the Company’s initiatives on appointing next-generation managers and officers?
Bamba The committee has talked about what kind of key
capabilities are required as manager qualifications in orderfor the Company to continue to grow. Also, with the aim ofactively promoting talented employees, we are discussing
and improving the human resources structure, mainly byconsidering the removal of the personnel system hierarchyso that we might employ a more flexible approach.
Kitagawa I certainly believe we have been able to deepen discussions about what qualities are needed to be a
manager.
Going forward, I’m hoping that our discussions can go
into more detail about how to unearth next-generation
management candidates and what methods we can use to
select them, among other topics.

Kubota I’d like to personally add that diversity is anotherfactor.
For the Company to set its sights on sustained growth, I
feel that we need to closely examine how we should go
about promoting diversity in the management ranks interms of gender and internationalism.
What are your thoughts on remuneration?
Bamba Restricted stock-based compensation was approved at the general meeting of shareholders in June
2020. This initiative will urge management to focus moreon shareholders and hopefully improve governancefunctions.
The committee determines remuneration by discussing
also the methods of performance assessment and the appropriateness of compensation levels for officers.
Kitagawa In terms of remuneration, I think it comes down
entirely to the kind of criteria we use to measure performance. In order to develop an objectively convincing
yardstick to measure the performance of each officer, we
hope to brush up our methods. This includes how we evaluate results as well as the feedback we receive from thosebeing evaluated.
Bamba My impression is that even though only two years
have passed since the Nomination and Remuneration
Committee was formed, its work to address nomination
and remuneration issues has been very significant.

Integrated Report 2021 / SEKISUI KASEI

52

Foundation of Value Creation

Discussion between Three Outside Directors

Impact of the COVID-19 pandemic and risk management
What is your opinion about the impact of COVID-19 on
Sekisui Kasei and the Company’s measures to address
such a situation?
Bamba I really applaud the emergency measures undertaken since February last year to improve profitability by
drastically overhauling fixed costs.
In taking such steps, I think many people realized thatcertain procedures in the workplace could be done differently. The Company also took steps to diversify working
styles, mainly with the use of telecommuting and staggered working hours.
I’d like to see management make good use of these initiatives implemented to raise the quality of work even after
the pandemic. If new discoveries can be leveraged skillfully without being bound by preconceived ideas, I think theCompany’s business structure can be further improved.
Kubota I agree. Roughly one year ago when COVID-19
was wreaking havoc on the global economy, I remember
advising the Board that the pandemic was an opportune
time to embrace a scrap-and-build approach usually outof reach during normal times.

I took the opportunity to suggest that it is precisely because of these challenging times that the Company should
think outside the box and try something new without
being shackled by convention. In order to create slightly
more new value, I think the Company would benefit from achange and quantum leap in mindset.

the Group’s work sites to gain a better understanding of
how things are faring.
There are two issues for the Company to address up
ahead. The first is reviewing the mechanism for accurately

Expectations for Sekisui Kasei
Lastly, what expectations do you have for Sekisui Kasei?

Taking the lessons of the pandemic into account, whatkind of situations do you think the Company must be
prepared for in the future?
Kitagawa I think management must acutely anticipatechanges in society and forecast what the future might look
like. Based on that, it should examine how its products
might fit into such a scenario and consider whether production or sales activities would survive.
Sekisui Kasei is in the business of food packaging materials and daily necessities indispensable to people’s lives. It
might have to rethink its system of speedily and continuously supplying the market with products even if the economy grinds to a halt because of the COVID-19 pandemic. I
hope to offer my advice on how the Company can becomea more agile and dynamic organization.

assessing the profitability of products with a view to bolstering the earnings structure, while the second is the direction of the European business strategy.

Kitagawa The Company has kicked off its SKG-5R action
plan, which was formulated by back-casting from its vision
for 2030. I certainly hope the Company can further accelerate the pace of this initiative.
As you know, topics concerning climate change on a global scale and the problem of plastic waste in the world’s
oceans are the focus of much attention and not a day goesby without hearing about these issues in the news.
In addition to launching Sustainable Star Products thatmake greater contributions to resolving such environmental issues, I want to see Sekisui Kasei become the kind of
corporation that instigates the transformation of people’s
lifestyles in society.

Kubota I’m of the same mind as Mr. Kitagawa. I believemonozukuri (manufacturing) know-how that draws on thecharacteristics of materials with a view to the future willlead to the creation of corporate value.
I value the Company’s current flexible approach to doing
business, but I’d like to see Sekisui Kasei set its sights on
becoming an even more open-minded company, without
being constrained by convention.
Bamba Sekisui Kasei has forged ahead with the creationof its range of Sustainable Star Products in a bid to become a leading environmental company.
Going forward, I’m hoping it can not only develop new
products, but also position itself at the center of the market to deliver influential, yet extremely useful environmentally-friendly products.

Issues to overcome to achieve sustained growth
What are your thoughts on areas where there is room for
improvement and issues that the Company must start
addressing?
Bamba I feel that the off-site meetings that were held in atimely manner ultimately led to the deepening of discussions in the sense that they improved the effectiveness of
the Board. I would like to see such meetings held continually or periodically. I think they raise the quality of discussions and have a positive impact on invigorating the Boardof Directors.
Kubota While I have mentioned it already, initiatives
aimed at broadening the diversity of officers is vital toproper governance. I intend to continue to raise this subject at the meetings of the Nomination and Remuneration
Committee.

53

Integrated Report 2021 / SEKISUI KASEIAt the same time, as part of the process of expanding theCompany’s global reach, I think it would be beneficial if
the outside officers could provide advice on the systems
and organizations needed to suitably support Group companies in Japan and overseas.
Kitagawa If we outside directors are to fulfill our roles, itis crucial that we have an understanding of the Company’s
management situation. My personal mantra is to approacheverything in light of work sites, so I currently feel frustrated about not being able to visit development work sites orinspect manufacturing processes.
Of course, I currently receive detailed business briefings,
various reports, and KPI data, and use my imagination
when attending Board meetings and meetings of theNomination and Remuneration Committee, but as soon as
the COVID-19 pandemic comes to an end I intend to visit

Profile of Hiroyuki Bamba

Profile of Morio Kubota

Profile of Naoto Kitagawa

Apr. 1976
Joined Sumitomo Rubber Industries, Ltd.

Apr. 1977
Joined Okura & Co., Ltd. (until August 1998)

Mar. 2000
Director of Sumitomo Rubber Industries, Ltd.

Mar. 1996
Director of ORBCOMM Japan Planning Limited(now ORBCOMM Japan Limited)

Apr. 1976
Joined Toyota Motor Co., Ltd. (currently Toyota
Motor Corporation) (until June 2006)

Jul. 2003
President and Representative Director of SRI Sports
Limited (currently Sumitomo Rubber Industries, Ltd.)(until March 2013)

Jun. 2006
Executive Officer of Daihatsu Motor Co., Ltd.

Jun. 2002
Representative Director and Managing Director of
ORBCOMM Japan Limited (until October 2007)

Jun. 2008
Director and Senior Executive Officer of Daihatsu
Motor Co., Ltd.

Mar. 2011
Chairman and Representative Director of SRI Sports
Limited (until March 2015)

Oct. 2017
Counselor of ORBCOMM Japan Limited(until August 2018)

Apr. 2010
Director and Senior Managing Executive Officer of
Daihatsu Motor Co., Ltd. (until June 2015)

Mar. 2015
Counselor of SRI Sports Limited(until December 2017)

Jun. 2018
Director of Sekisui Kasei Co., Ltd.
(current position)

Jun. 2020
Outside Director of Sekisui Kasei Co., Ltd.
(current position)

Jun. 2015
Director of Sekisui Kasei Co., Ltd.
(current position)
Jun. 2017
Outside Director of Kobe Steel, Ltd.
(current position)
Jan. 2018
Advisor of Sumitomo Rubber Industries, Ltd.
(until February 2019)

Integrated Report 2021 / SEKISUI KASEI

54

Other Information

MD&A and Business Risks

MD&A
Market Environment
Global economic growth in FY2020 contracted sharply as aresult of the spread of the COVID-19 pandemic from January
2020 onwards. In particular, demand in domestic and overseas manufacturing industries quickly dried up in the first halfof the fiscal year owing to suspended plant operations andproduction adjustments. While some regions, namely China,
showed signs of a recovery as economic activity picked up
again from summer, the outlook remained clouded in otherregions and industries. In the automotive industry, manufacturer and supplier plant operating rates started to recoverfrom summer onwards, but the situation remains unstable
partly because of the impact of semiconductor shortages
and other supply chain issues. In home appliance and IT industries, the ongoing shift to teleworking continues to drive
growth in demand for mainly personal computers.
In Japan too, economic activity was severely hampered by
the government’s first declaration of a state of emergency inApril 2020, which conversely buoyed stay-at-home demand.
Economic activity gradually resumed thereafter, but a second and third wave of infections coupled with a second stateof emergency in January 2021—not to mention the recent
emergence of new variants of COVID-19—have meant thatthe future is still shrouded in uncertainty. Meanwhile, taking
further action is growing important to combat climate change
and environmental issues including marine debris as well as
announcing targets for the reduction of greenhouse gas emissions by governments worldwide.
In Japan’s foam plastics industry, even though stay-at-homedemand stemming from the pandemic drove sales of foodcontainers, the business environment was extremely challenging because of stagnant demand for various components andtransportation and packaging materials. Demand has continued to recover gradually with economic activity picking
up again, but the future outlook still remains uncertain.

Consolidated Performance
In FY2020, we achieved ¥118.851 billion in net sales(down 12.7% YoY), ¥2.091 billion in operating income(down 43.9% YoY), ¥1.956 billion in recurring income(down 42.3% YoY), and ¥1.126 billion in net income attributable to owners of the parent (down 51.5% YoY).

55

Integrated Report 2021 / SEKISUI KASEIThe results by segment were as follows.
The Human Life segment recorded net sales of ¥53.470
billion (down 8.0% YoY) and segment income of ¥3.754
billion (up 14.4% YoY).
The Industry segment recorded net sales of ¥65.381 billion (down 16.2% YoY) and segment loss of ¥957 million.
Financial Position• Assets
Total assets as of the end of FY2020 were ¥158.439 billion,rising by ¥9.336 billion year on year.
Current assets rose ¥4.401 billion to ¥62.744 billion due
to mainly increases in cash and deposits and notes andaccounts receivable.
Non-current assets rose ¥4.933 billion to ¥95.694 billion
due to mainly an increase in the market value of investment securities.
• Liabilities
Total liabilities as of the end of FY2020 were ¥87.781 billion, rising by ¥5.894 billion year on year due to increases
in mainly short-term loans and income taxes payable.
• Net assets
Total net assets as of the end of FY2020 were ¥70.657 billion, rising by ¥3.44 billion year on year due to mainly an
increase in net unrealized holding gain on securities.
• Cash flow
Cash and cash equivalents in FY2020 were ¥12.498 billion,rising by ¥2.965 billion year on year.
(Cash flow from operating activities)
Cash flow from operating activities in FY2020 provided
net cash of ¥6.428 billion, a year-on-year decrease of¥58.0 million due to a decrease in mainly income before
income taxes.
(Cash flow from investment activities)
Cash flow from investment activities in FY2020 increasedby ¥2.122 billion year on year, resulting in ¥3.007 billion
used in investing activities due to mainly a decrease incapital expenditure outlay and an increase in proceedsfrom sales of investment securities.

(Cash flow from financing activities)
Cash flow from financing activities in FY2020 increasedby ¥1.935 billion year on year, resulting in ¥0.632 billion
used in financing activities due to mainly a net increase in
short-term loans (vs. a net decrease in FY2019).
• Capital investment
The Sekisui Kasei Group (the Company and consolidated
subsidiaries) implements initiatives in line with its management plan, making capital investments focusing on renewals, repairs, and capacity expansion. The Group’s capital
investment in FY2020 totaled ¥5.377 billion. By segment,
the investment amount was ¥1.220 billion for the Human
Life segment and ¥3.538 billion for the Industry segment.
• Dividend policy
The Company positions the returning of profits to shareholders as an important management issue. Our basic
policy is to distribute profits in accordance with consolidated financial results as well as in consideration of stability of dividends while strengthening our management
structure and securing internal reserves to prepare for
future business development. We target a consolidated
payout ratio of 30% to 40%.
In FY2020, we decided to execute a year-end dividendof ¥17 per share upon careful consideration, taking into
account our basic policy on dividend of surplus and ourdividend policy. On December 2, 2020, we paid an interim
dividend of ¥4 per share, bringing the annual dividend
amount to ¥21 per share. As a result, the consolidated
payout ratio came to 84.5%.

Business Risks
Business and Other Risks
Matters concerning business and accounting circumstancesthat significantly influence the decisions of investors are described below. Risks to the businesses and other aspects of
the Sekisui Kasei Group may be affected by economic situations in Japan and overseas and are not limited to the items
described below.
1. COVID-19 Risks
We recognize mainly the following risks associated with
COVID-19 that could particularly have implications for the
Sekisui Kasei Group. Under the leadership of the President,
the Group is making collective efforts to manage and respond to the risks posed by COVID-19.
a. Infection of Officers and Employees
If officers or employees of the Group become infected with
COVID-19 and a cluster develops within the Company, theresulting suspension or delay of operations at the businesssite could cause a significant impact on the performanceand financial condition of the Group.
In order to ensure the health and safety of officers, employees, and their families and to prevent the spread of COVID-19
within and outside of the Group, we have strengthened
measures such as encouraging employees to telework or
stagger work hours and refraining from travelling between
business sites.
b. Prolonged Suspension of Business Partner Operations
and Deterioration of Credit Status
In the case that COVID-19 causes a prolonged suspension ofoperations at the global plants of the Group’s business partners, particularly plants of the automotive, home appliance,and IT industries, the Group’s product net sales will decrease,which could have a significant impact on the performance andfinancial condition of the Group. In addition, if the credit status of the Group’s business partners deteriorates as a result of
COVID-19, there may be delays in the Group’s collection of
accounts receivable or the accounts receivable may be irrecoverable, which could have a significant impact on the performance and financial condition of the Group.
The Group is therefore working to drastically reduce costs
and boost productivity in its business activities and for some

Integrated Report 2021 / SEKISUI KASEI

56

Other Information

MD&A and Business Risks

time now has endeavored to minimize the impact of the current business environment on the Group’s performance andfinancial condition with the use of factoring and other credit
guarantee systems.
c. Disruption and Stagnation of the Logistics Network
COVID-19 may cause a disruption or stagnation of the worldwide logistics network, resulting in delays in the procurement of raw materials of products and their components andin the transportation of products and intermediate products,
which could have a significant impact on the performanceand financial condition of the Group.
The Group has thus been taking measures for some time,such as procuring raw materials from multiple business partners and decentralizing production sites, in order to minimize the impact.
d. R&D Risks
If the prolonged impact of the COVID-19 pandemic causes
long-term restrictions on employees going to the Group’s
research and development (R&D) sites, ongoing R&D activities may face scheduling delays, possibly hindering the development and launch of new materials and products.
The Group has thus been working for some time to minimize
the impact by taking measures, such as increasing the number of R&D sites and ensuring close sharing of information.
It is also taking steps to smoothly undertake joint developments and other collaborative activities with external partners with the use of online tools.
2. Business Risks Unrelated to COVID-19
a. Ensuring Safety
If a major industrial accident were to occur at any of the business locations of the Sekisui Kasei Group, it will result in lossof social trust, costs for dealing with the accident, loss of opportunities from suspending production activities, and clientcompensation, which could have a significant impact on theperformance and financial condition of the Group.
The Group has thus established the Safety Committee.
The entire Group is committed to ensuring that there areno accidents and disasters across all of its business activities, setting forth a policy on safety operations and planningand implementing activities, including safety patrols, safety
awareness-raising, safety education, and various trainings.
b. Product Quality Assurance
Unexpected product defects or failures could have a sig-

57

Integrated Report 2021 / SEKISUI KASEInificant impact on the performance and financial conditionof the Group, including product recalls and compensation
for damages.
The Group has thus established the Quality Committee
to strengthen its quality management system. The entire
Group has also set forth a quality management policy. It
plans and implements activities, such as quality audits, quality management training, and quality meetings, giving consideration to safety and quality in the product development
and production stages. In addition, the Group conducts
business activities in compliance with quality-related domestic and international laws and ordinances as well as regulations and standards set by industry organizations.
Furthermore, it is enrolled in product liability insurance incase a quality problem arises.
c. Environmental Management
If an incident occurs that affects the environment surrounding a plant, such as leakage of a chemical substance or an
accident during the process of storing and managing product materials or manufacturing, the performance and financial condition of the Group could be significantly impacted
by loss of trust from clients and local communities, compensation and other associated costs, and loss of opportunities
from production suspension.
The Group has thus established the Environmental
Committee. The entire Group is committed to environmental management, setting forth an environmental management policy and planning and implementing activities, including environmental audits, environmental education, andvarious trainings at respective business sites. In addition, theGroup conducts business activities in compliance with environmental regulations, laws, and ordinances.
d. Economic Situation and Public Works
The Group’s performance and financial condition may potentially be affected by contracting demand due to economic trends, as well as by changes in the supply-demandbalance and prices owing to competition with rival companies. In addition, the COVID-19 pandemic has had an enormous impact on global economic activity and the overall
future outlook remains uncertain, including when the virus
will be brought under control and what the post-pandemic
economic situation might look like. It is therefore expectedthat the pandemic will significantly impact the Group’s performance and financial condition.
The Group is committed to strengthening its sales capabilities,

development know-how, and financial health to ensure it
can flexibly respond to changes in economic conditions,customer trends, and personal consumption. It has formulated the three-year FY2019–2021 medium-term management
plan “Make Innovations Stage-II,” and will steadily roll out
measures in an effort to maximize profitability.
e. Overseas Business Activities
The Sekisui Kasei Group has production and sales businesses in Asia, the United States, Central America, and Europe.
In addition to the effects of the COVID-19 pandemic, unexpected changes in laws and regulations, unfavorable political and economic factors, and social disruptions such as war
and political instability may affect the performance and thefinancial condition of the Group.
In order to minimize such risks, the Group actively collects
information to be ready to adapt to changes in the businessenvironment.
f. Raw Material Market Fluctuations
The Sekisui Kasei Group uses mainly raw materials such as
styrene monomer and polystyrene. If price fluctuations ofsuch raw materials are not passed on to product prices in atimely manner, or if there is a natural disaster or the supply of
raw materials from the supplier is unstable, it may affect theperformance and financial condition of the Group.
In this light, the Group seeks to create favorable conditions
for purchases, including raw materials, packing materials,
and production equipment. We are also working to diversify
suppliers and the raw materials we use and stabilize logistics
channels.
g. Foreign Currency Risk
Transactions denominated in foreign currency in the Group’s
domestic and overseas businesses are impacted by exchange rate fluctuations when converted into yen. The
Group takes steps to minimize the risk on these transactions,but fluctuations in currency exchange rates could impact theperformance and financial condition of the Group.
The Group will continue to consider additional measures,such as foreign currency hedging of transactions, in orderto minimize risk.
h. Impairment and Asset Write-Down Risks
The Group books goodwill and various property, plant andequipment and intangible assets for businesses when acquiring other companies. It also has shareholdings in othercompanies. In the event these assets fail to generate expected cash flow due to a divergence from earnings targets,changes in market trends, or other factors, or if the value ofsuch assets declines, the performance and financial condition of the Group could be impacted.
The Group has therefore established the Investment and
Financing Committee to carefully discuss the propriety ofinvestments and financing. The Group also has a system inplace to ensure scrupulous after-the-fact project management and to also accurately gauge asset value.
i. Natural Disaster Risks
In the event the Group’s business sites are severely damaged
or opportunity losses arise from suspended production owing
to supply chain disruptions affecting mainly the procurement of
raw materials as a result of a larger-than-expected earthquake,
typhoon, or other natural disaster, the performance and financial condition of the Group could be impacted.
The Group has produced a manual on how to respondduring a natural disaster or other emergency situation, hasmade preparations in full readiness for such scenarios, andhas methods in place for sharing critical information. The
Group is also working on the development of a business
continuity plan (BCP) for its mainstay businesses.
j. Information Security
The Group stores confidential information and personal information for business purposes, but in the event theGroup’s critical systems go offline and impede the executionof business due to a natural disaster or unforeseen attackfrom outside of the Group, or if the Group’s credibility is undermined by the leaking or inappropriate use of informationfrom within the organization, the performance and financial
condition of the Group could be impacted.
The Group has therefore established the IT Security
Committee to handle the management and promotion ofGroup-wide IT measures in order to appropriately safeguard
the aforementioned information assets. This committee
formulates information security action plans, improves thefunctionality of information security systems, and provides
training to employees. The Group also assigns an information security officer to each department and each Group
company to oversee information security activities and properly manage information assets.

Integrated Report 2021 / SEKISUI KASEI58

Other Information
Consolidated Financial Statements

Consolidated Balance Sheet
Sekisui Kasei Co., Ltd. and Consolidated Subsidiaries
March 31, 2020 and 2021
Thousands of U.S. dollars(Note 4)

Millions of yen

2021

2020

2021

AssetsLiabilities and net assets

Current assets:

Current liabilities:

Cash and cash equivalents (Note 5)

¥

9,532

¥ 12,498$

112,889

7

32

289

Notes and accounts receivable (Note 5)

32,142

33,522

302,791

Inventories (Note 7)

13,805

13,324

120,350

Other current assets

2,913

3,426

30,945

(59)

(59)

(532)

58,34262,744

566,741

Short-term investments (Note 5)Less allowance for doubtful accounts
Total current assets

Thousands of U.S. dollars(Note 4)

Millions of yen

2020

2021

2021

¥ 23,522¥ 23,145

Short-term loans (Notes 5, 8 and 9)

2,606

3,627

32,761

Current portion of long-term loans (Notes 5, 8, 9 and 17)

3,844

5,558

50,203

Accrued expenses

4,156

4,481

40,475282

1,213

10,956

1,038

1,054

9,520

Notes and accounts payable (Notes 5)

Accrued income taxes (Note 10)
Provision for bonuses to employees$

209,059

Provision for bonuses to directors and audit andsupervisory board members

27

59

532

Provision for loss on business withdrawal of a subsidiary (Note 16)

—

919

8,300

Other current liabilities

2,914

3,246

29,319Total current liabilities

38,39343,305391,157

Long-term liabilities:

Property, plant and equipment (Note 20):
Land (Notes 9 and 13)

21,182

21,306

192,448

Buildings and structures (Note 9)

47,40948,112434,576

Machinery and equipment

105,944

109,301

987,273

Construction in progress

1,493

1,978

17,866

176,030

180,698

1,632,174(114,129)(119,266)(1,077,282)

61,901

61,432554,891

Less accumulated depreciation
Property, plant and equipment, net

Software
Other intangible assets
Total intangible assets

1,363

1,236

11,164

699

587

5,302

1,401

1,549

13,991

3,464

3,373

30,466

Investments and other assets:
369

35

325

17,67921,314

192,522

779

808

7,298

5,677

7,772

70,201Other assets

941

1,007

9,096

Less allowance for doubtful accounts

(51)

(49)

(442)

Total investments and other assets

25,39530,889279,002¥ 149,103¥ 158,439$ 1,431,117

Investments in unconsolidated subsidiaries and affiliates (Notes 5 and 6)
Investments in securities (Notes 5 and 6)
Deferred income taxes (Note 10)
Assets for retirement benefits (Note 11)

Total assets (Note 20)

7,000

7,000

63,228Long-term loans less current portion (Notes 5, 8, 9 and 17)

22,211

20,900188,781

Liabilities for retirement benefits (Note 11)

3,446

3,590

32,427

Deferred income taxes (Note 10)

5,612

7,261

65,585

Deferred income taxes for land revaluation

1,596

1,596

14,416

158

132

1,192

Provision for product warranty
Other long-term liabilities

3,467

3,995

36,085

Total long-term liabilities

43,49344,475

401,725

Net assets:
Shareholders’ equity (Note 12):
Common stock:
Authorized:	124,751,000 shares as of		March 31, 2020 and 2021

Intangible assets
Goodwill (Note 20)

Bond (Notes 5 and 8)

Issued:	46,988,109 shares as ofMarch 31, 2020 and 2021

16,533

16,533

149,336

Capital surplus

16,532

16,515

149,173

Retained earnings (Note 21)

23,524

23,523

212,474

Less treasury stock, at cost:
1,697,882 shares as of March 31, 2020
1,850,959 shares as of March 31, 2021

(1,426)(1,493)(13,485)

Total shareholders’ equity

55,16455,077497,488

Net unrealized holding gain on securities (Notes 5, 6 and 14)

9,226

11,859107,117

Surplus arising from land revaluation (Note 13)

1,479

1,479

13,359Translation adjustments (Note 14)

(583)

11

99

Accumulated other comprehensive income:Retirement benefits liability adjustments (Notes 11 and 14)
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

399

1,527

13,792

10,52014,877

134,378

1,531

702

6,340

67,21770,657638,216¥ 149,103¥ 158,439$ 1,431,117

See notes to consolidated financial statements.

59

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Other Information
Consolidated Financial Statements

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Sekisui Kasei Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2020 and 2021

Sekisui Kasei Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2020 and 2021
Thousands of U.S. dollars(Note 4)

Millions of yen

Net sales (Note 20)

2020

2021

2021

¥ 136,155¥ 118,851$ 1,073,534

105,978

92,451

835,073

Other comprehensive (loss) income (Note 14):30,177

26,399238,451

Net unrealized holding gain on securities
Translation adjustments

Cost of sales
Gross profit
Selling, general and administrative expenses (Note 15)
Operating income

Thousands of U.S. dollars(Note 4)

Millions of yen

Profit

2020

2021

2021

¥ 2,137¥309$ 2,791

426

2,633

23,782

(819)

640

5,780

26,451

24,308219,564

Retirement benefits liability adjustments

(125)

1,128

10,188

3,725

2,091

18,887

Total other comprehensive (loss) income

(517)

4,402

39,761¥ 1,619¥ 4,712$ 42,561¥ 1,759¥ 5,584$ 50,438

(139)

(872)

(7,876)Comprehensive income
Other income (expenses):
5

17

153

Dividend income

361

311

2,809

Owners of parent

Subsidy income

—

289

2,610

Non-controlling interests

Interest expense (Note 20)

(392)

(373)

(3,369)Equity in loss of an affiliate (Note 20)

(13)

(9)

(81)

Foreign exchange loss, net

(71)

(97)

(876)

Loss on sales or disposal of equipment

(61)

(139)

(1,255)

Commission paid

(86)

(58)

(523)

1

857

7,740

Interest income (Note 20)

Gain on sales of investments in securities (Note 6)
Gain on subsidiary liquidation

95

—

—

Loss on sales of investments in securities

(37)

(37)

(333)

Loss on impairment of investments in securities

(8)

(2)

(18)

Loss on office closure

(61)

—

—

Loss on subsidiary liquidation

—

(2)

(18)

Loss on business withdrawal of a subsidiary (Note 16)

—

(901)

(8,138)Other, net

(76)

(74)

(668)

3,380

1,870

16,890Current

1,111

1,564

14,126

Deferred

132

(3)

(27)

1,243

1,560

14,090

2,137

309

2,791

Profit before income taxes

Comprehensive income attributable to:

See notes to consolidated financial statements.

Income taxes (Note 10):

ProfitProfit (loss) attributable to:Non-controlling interests
Owners of parent

(816)

(185)
¥

2,323

¥

1,126

(7,370)$10,170See notes to consolidated financial statements.

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62

Other Information
Consolidated Financial Statements

Consolidated Statement of Changes in Net Assets

Consolidated Statement of Cash Flows

Sekisui Kasei Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2020 and 2021

Sekisui Kasei Co., Ltd. and Consolidated Subsidiaries
Year ended March 31, 2020 and 2021
Millions of yen
Common stock

Balance as of April 1, 2019
Cash dividends
Profit attributable to owners of parent for the year
Acquisition of treasury stock
Other changes
Balance as of April 1, 2020
Cash dividends
Profit attributable to owners of parent for the year
Acquisition of treasury stock
Disposal of treasury shares
Change in scope of equity method
Other changes
Balance as of March 31, 2021

Capital surplus¥ 16,533————
16,533——————¥ 16,533¥ 16,532————
16,532
—
—
—
(17)
—
—
¥ 16,515

Retained earnings¥ 22,560(1,358)2,323——
23,524
(951)
1,126
—
—
(176)
—
¥ 23,523¥ (1,425)——(0)—(1,426)
—
—
(141)
57
16
—
¥ (1,493)

Millions of yen
Netunrealized
holding gain
on securities

Balance as of April 1, 2019
Cash dividends
Profit attributable to owners of parent for the year
Acquisition of treasury stock
Other changes
Balance as of April 1, 2020
Cash dividends
Profit attributable to owners of parent for the year
Acquisition of treasury stock
Disposal of treasury shares
Change in scope of equity method
Other changes
Balance as of March 31, 2021

Surplusarisingfrom land
revaluation¥

8,799 ¥ 1,479
—
—
—
—
—
—
426
—
9,226
1,479
—
—
—
—
—
—
—
—
—
—
2,633
—
¥ 11,859 ¥ 1,479

Translation
adjustments

Retirement
benefits
liability
adjustments

Noncontrollinginterests¥ 190 ¥ 524
—
—
—
—
—
—
(773)
(125)
(583)
399
—
—
—
—
—
—
—
—
—
—
594
1,128
¥ 11 ¥ 1,527

Total net
assets¥ 1,766 ¥ 66,960—(1,358)
—
2,323
—
(0)
(235)
(707)
1,531
67,217
—
(951)
—
1,126
—
(141)
—
40
—
(160)
(829)
3,527
¥ 702 ¥ 70,657

Thousands of U.S. dollars (Note 4)
Common stock

Balance as of April 1, 2020
Cash dividends
Profit attributable to owners of parent for the year
Acquisition of treasury stock
Disposal of treasury shares
Change in scope of equity method
Other changes
Balance as of March 31, 2021

$ 149,336
—
—
—
—
—
—
$ 149,336

Capital surplus$ 149,327
—
—
—
(153)
—
—
$ 149,173

Retained earnings

Treasury stock,at cost$ 212,483(8,590)10,170——(1,589)—$ 212,474$ (12,880)——(1,273)514
144—$ (13,485)

Thousands of U.S. dollars (Note 4)

Balance as of April 1, 2020
Cash dividends
Profit attributable to owners of parent for the year
Acquisition of treasury stock
Disposal of treasury shares
Change in scope of equity method
Other changes
Balance as of March 31, 2021
See notes to consolidated financial statements.

Net
unrealized
holding gain
on securities

Surplusarisingfrom land
revaluation

Retirement
benefits
liability
adjustments

Translation
adjustments$ 83,334—————
23,782$ 107,117$ 13,359
—
—
—
—
—
—
$ 13,359$ (5,266) $ 3,604
—
—
—
—
—
—
—
—
—
—
5,365
10,188$99 $ 13,792

Noncontrollinginterests

Total net
assets$ 13,828 $ 607,144—(8,590)—10,170—(1,273)—361—(1,445)(7,488)31,858$ 6,340 $ 638,216

Thousands of U.S. dollars(Note 4)

Millions of yen

Treasury stock,at cost

2020

2021

2021

¥

3,380

¥ 1,870$ 16,890

6,071
168
(2)
(366)
392
13
(17)
(31)
(452)
36
8
51
—
—
3,971
(120)
(4,258)
(978)
7,865
366
(432)
304
—
(1,616)
6,486

6,217
168
(4)
(328)
373
9
15
(26)
(332)
(820)
2
138
(289)
901
(868)
699
(596)
(496)
6,633
328
(377)
105
289
(552)
6,428

56,155
1,517(36)(3,363)
2,962
81
(135)
(234)
(2,998)(7,406)18
1,246(2,610)8,138(7,840)6,313(5,383)(4,528)59,913
2,962(3,405)948
2,610(4,895)58,061

Cash flows from investing activities
Increase in short-term investments
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 used in investing activities(1)(5,930)
109
(6)
166
(3)
468
65
(5,129)(23)(3,987)
13
(5)
1,113
(3)
2
(115)
(3,007)(207)(36,013)117(45)
10,053(27)
18(1,038)(27,161)

Cash flows from financing activities
Net (decrease) increase in short-term loans
Proceeds from long-term loans
Proceeds from issuance of bond
Repayment of long-term loans
Purchases of treasury stock
Dividends paid
Dividends paid to non-controlling shareholders
Other
Net cash used in financing activities(10,138)
9,033
7,000
(5,104)(0)(1,357)(2)(1,999)(2,568)

851
4,989
—
(4,943)
(141)
(953)
(2)
(433)
(632)

(7,686)45,063—(44,648)(1,273)(8,608)(18)(3,911)(5,708)(527)(1,739)11,271¥ 9,532

(177)
2,965
9,532
¥ 12,498(1,598)26,78186,098$ 112,889

Cash flows from operating activities
Profit before income taxes
Adjustments for:
Depreciation and amortization
Amortization of goodwill
Decrease in allowance for doubtful accounts
Interest and dividend income
Interest expense
Equity in losses of an affiliate(Decrease) increase in provision for bonuses to employees
Decrease in provision for product warranty
Changes in assets and liabilities for retirement benefits, net
Loss (gain) on sales of investments in securities
Loss on impairment of investments in securities
Loss on sales or disposal of equipment, net
Subsidy income
Loss on business withdrawal of a subsidiary
Decrease (increase) in notes and accounts receivable(Increase) decrease in inventories
Decrease in notes and accounts payable
Other, net
SubtotalInterest and dividends received
Interest paid
Proceeds from casualty insurance claims
Amount of receipt of subsidy received
Income taxes
Net cash provided by operating activities

Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase 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
See notes to consolidated financial statements.

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Other Information

Notes to Consolidated Financial Statements
Sekisui Kasei Co., Ltd. and Consolidated Subsidiaries
March 31, 2021

1. Significant Accounting Policies(a) Basis of Preparation
The consolidated financial statements of Sekisui Kasei Co., Ltd. (the“Company”) and its consolidated subsidiaries are prepared on the basisof accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirementsof International Financial Reporting Standards (“IFRS”), and have been
compiled from the consolidated financial statements prepared by theCompany as required by the Financial Instruments and Exchange Act
of Japan.
In preparing the consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a format
which is more familiar to readers outside Japan.
Certain reclassifications of previously reported amounts have been
made to conform the consolidated financial statements for the year ended March 31, 2020 to the 2021 presentation. Such reclassification had noeffect on consolidated profit.
As permitted by the Financial Instruments and Exchange Act of Japan,
amounts of less than one million yen have been omitted. Consequently,
the totals shown in the consolidated financial statements do not necessarily agree with the sum of the individual yen and U.S. dollar amounts.
(b) Principles of Consolidation and Accounting for Investments in
Unconsolidated Subsidiaries Affiliates
The principles of consolidation are to include significant subsidiaries
over which substantial control is exerted either through majority ownership of voting stock and/or by other means.
The consolidated financial statements include the accounts of theCompany and its 39 significant consolidated subsidiaries (collectively, the“Group”) for the years ended March 31, 2020 and 2021. The Company
has applied the equity method to its investment in one significant affiliate, Yusui Kasei Kogyo Co., Ltd. for the purpose of the consolidated
financial statements for the year ended March 31, 2020. There was no
significant equity-method affiliate for the purpose of the consolidated
financial statements for the year ended March 31, 2021 as the Company
sold a portion of investment in Yusui Kasei Kogyo Co., Ltd. and excluded
this investment from the scope of applying the equity method.
Other affiliates are not significant in terms of their total assets, profit
or loss, and retained earnings. Accordingly, these other affiliates havenot been consolidated nor are they accounted for by the equity method.
Investments in such affiliates are stated at cost unless there has been apermanent decline in the value of such investments. In such case, theCompany is required to write down the investments.
All significant intercompany balances and transactions have been
eliminated in the consolidated financial statements.
Goodwill arising from the difference between the purchase cost andthe underlying equity in net assets at the respective dates of acquisitionis amortized by straight-line method over the estimated period of its
effect.
Five overseas consolidated subsidiaries whose fiscal year end is
December 31 have been consolidated using provisional financial statements as of March 31, 2021.
For other nine overseas consolidated subsidiaries whose fiscal year
ends on December 31, necessary adjustments have been made for any
significant intercompany transactions which took place during the period between the year end of the overseas consolidated subsidiaries andthe year end of the Company.
(c) Foreign Currency Translation
The financial statements of the overseas consolidated subsidiaries aretranslated into yen at the rates of exchange in effect at the balance sheet
date except that the components of net assets excluding non-controllinginterests are translated at their historical exchange rates. Differences resulting from translating the financial statements of the overseas consolidated subsidiaries are not included in the determination of profit but arereported as translation adjustments and non-controlling interests in net
assets in the consolidated balance sheet.

65

Integrated Report 2021 / SEKISUI KASEI

file tax returns based on the combined profits or losses of the parent
company and wholly owned domestic subsidiaries.
Revenue and expense items arising from transactions denominatedin foreign currencies are generally translated into yen at the rates of exchange in effect at the respective transaction dates.
All monetary assets and liabilities denominated in foreign currencies
are translated into yen at the rates of exchange in effect at the balance
sheet date and gain or loss on each translation is credited or charged
to income.
(d) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits with banks
withdrawable on demand and short-term investments with a maturity of
three months or less when purchased which can easily be converted to
cash and are subject to little risk of change in value.
(e) Allowance for Doubtful Accounts
The Group provides an allowance for doubtful accounts at an amountcalculated based on their historical experience of bad debts on ordinary
receivables plus an additional estimate of probable specific bad debts
from customers experiencing financial difficulties.
(f) Inventories
Inventories are stated at lower of cost or net selling value, cost being
determined by the moving average method.
(g) Securities
Securities are classified into three categories: trading securities, held-to-maturity debt securities and other securities. Trading securities, consisting ofdebt and marketable equity securities are stated at fair value. Gain or loss,
both realized and unrealized, is credited or charged to income. Held-tomaturity debt securities are stated at amortized cost. Marketable securities
classified as other securities are carried at fair value with any changes in unrealized holding gain or loss, net of the applicable income taxes, reported
as a separate component of accumulated other comprehensive income.
Non-marketable securities classified as other securities are carried at cost
determined by the moving average method.
(h) Property, Plant and Equipment (except for leased assets)
Property, plant and equipment are stated at cost.
Depreciation of buildings and structures is calculated by the straightline method over the estimated useful lives of the respective assets.
Depreciation of other property, plant and equipment is principally computed by the straight-line method, except for certain subsidiaries which
compute depreciation by the declining-balance method over the estimated useful lives of the respective assets.
The estimated useful lives of major property, plant and equipment
are summarized as follows:
Buildings
Machinery

principally 31 to 38 years
principally 8 years

Significant renewals and additions are capitalized at cost. Maintenanceand repairs are charged to income as incurred.
(i) Leased Assets (included in other assets)
Leased assets under finance lease contracts that do not transfer ownership to the lessee are depreciated to a residual value of zero by thestraight-line method using the term of the contract as the useful life.
(j) Income Taxes
Income taxes are calculated on taxable income and charged to incomeon an accrual basis. Certain temporary differences exist between taxable
income and income reported for financial statement purposes which enter into the determination of taxable income in a different period. The
Group has recognized the tax effect of such temporary differences in the
consolidated financial statements.
The Company and certain domestic consolidated subsidiaries haveapplied the consolidated taxation system, which allows companies to(Treatment of Tax Effect Accounting for Transition from Consolidated
Taxation System to the Group Tax Sharing System)
As an alternative to applying Article No.44 of “Partial Amendments to
Accounting Standard for Tax Effect Accounting” (Accounting Standards
Board of Japan (“ASBJ”) Guidance No. 28, February 16, 2018), theCompany and certain domestic consolidated subsidiaries that adopted the consolidated taxation system calculate deferred tax assets anddeferred tax liabilities based on provisions stipulated in related tax
laws before revision for certain items remeasured from the single tax
payment system at the time of transition to the group tax sharing system based on provisions in “Act for Partial Amendments to Income Tax
Act” (Act No.8) in accordance with Article No.3 of “Practical Solution
on the Treatment of Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ
PITF No.39, March 31, 2020).
(k) Provision for Bonuses to Employees
Provision for bonuses to employees is provided at the estimated amountof bonuses to be paid to the employees in the following year which has
been allocated to the current fiscal year.
(l) Provision for Bonuses to Directors and Audit and Supervisory
Board Members
Provision for bonuses to directors and audit and supervisory board
members is calculated based on the estimated amount of bonuses tobe paid to directors and audit and supervisory board members in thefollowing year which has been allocated to the current fiscal year.
(m) Provision for Product Warranty
Provision for product warranty is provided based on an estimatedamount which is expected to be incurred subsequent to the balance
sheet date.
(n) Retirement Benefit Plansi) Method of attributing expected benefits to each period
The retirement benefit obligation for employees is attributed to eachperiod by the benefit formula method over the estimated years ofservice of the eligible employees.
ii) Amortization method of actuarial gain or loss
Actuarial gain or loss is amortized from the year following the year inwhich the gain or loss is recognized by the straight-line method overa period of 5 years, which is within the estimated average remaining
years of service of the eligible employees.
(o) Software (except for leased assets)
Expenditures relating to computer software developed for internal use
are charged to income when incurred, except if these are deemed tocontribute to the generation of future income or cost savings. Such expenditures are capitalized as assets and amortized by the straight-line
method over their respective estimated useful lives, generally a periodof 5 years.
(p) Research and Development Costs
Research and development costs are charged to income when incurred.
(q) Hedge Accounting
The Company has entered into interest-rate swaps to hedge the risk ofinterest rate and foreign currency exchange rate fluctuations on longterm loans denominated in foreign currencies.
i) Hedge accounting method
Interest-rate swaps that meet special matching criteria are notremeasured at market value, but the differential paid or received
under the swap agreements is recognized and included in interest
expense or income, and the long-term loans hedged by the swap by

the swap agreements is translated at the swap contract rate (“special treatment”).
ii) Hedging instruments and hedged items
Hedging instruments:
Hedged items:
Interest-rate swaps	 Long-term loans denominated inforeign currenciesiii) Hedging policy
Derivative transactions are used to hedge the risk of interest-rate fluctuation in accordance with the Company’s risk management policy.
iv) Assessing hedge effectivenessWith regard to interest-rate currency swaps accounted for by the special treatment evaluation of hedge effectiveness is omitted.
(r) Distribution of Retained Earnings
Under the Corporation Law of Japan, the distribution of retained earnings with respect to a given financial period is made by resolution of theshareholders at a general meeting held subsequent to the close of thefinancial period. The accounts for that period do not, therefore, reflect
such distributions (see Note 21).
(s) Accounting Standards Issued but Not Yet Effective(Accounting Standard and Implementation Guidance for Revenue
Recognition)
On March 31, 2020, the ASBJ issued “Accounting Standard for Revenue
Recognition” (ASBJ Statement No. 29) and “Implementation Guidanceon Accounting Standard for Revenue Recognition” (ASBJ Guidance
No. 30).
i) Overview
The International Accounting Standards Board (the “IASB”) andthe Financial Accounting Standards Board (the “FASB”) in the
United States co-developed comprehensive accounting standards
for revenue recognition and issued “Revenue from Contracts with
Customers” (issued as IFRS 15 by the IASB and Topic 606 by the
FASB) in May 2014. The ASBJ developed comprehensive accounting standards on revenue recognition and issued them in conjunction
with the implementation guidance based on the fact that IFRS 15 wasapplied from fiscal years starting on or after January 1, 2018 and Topic
606 was applied from fiscal years starting after December 15, 2017.
As the basic policy in developing accounting standards for revenue recognition, the ASBJ defined the accounting standard startingwith incorporating the basic principle of IFRS 15 from a standpointof comparability between financial statements, which is one benefit
of ensuring consistency with IFRS 15. Furthermore, the ASBJ added alternative accounting treatment without impairing comparability when there are matters to be considered related to accounting
practices, etc. common in Japan.
ii) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
March 31, 2022.
iii) Impact of the adoption of accounting standard and implementation
guidance
The Company is currently evaluating the effect of the adoption ofthis accounting standard and implementation guidance on its consolidated financial statements.
(Accounting Standard and Implementation Guidance for Fair Value
Measurement)i) Overview
On July 4, 2019, the ASBJ issued “Accounting Standard for Fair Value
Measurement” (ASBJ Statement No.30), “Accounting Standard for
Measurement of Inventories” (ASBJ Statement No.9), “AccountingStandard for Financial Instruments” (ASBJ Statement No.10),

Integrated Report 2021 / SEKISUI KASEI

66

Other Information

Notes to Consolidated Financial Statements“Implementation Guidance on Accounting Standard for Fair Value
Measurement” (ASBJ Guidance No.31).
On March 31, 2020, the ASBJ issued “Implementation Guidance
for Disclosures on Estimated Fair Value of Financial Instruments”(ASBJ Guidance No.19).
The ASBJ tried ensuring consistency between Japanese standards
and international standards mainly for guidance and disclosures on
estimated fair value of financial instruments and issued “AccountingStandard for Fair Value Measurement”, etc. based on the fact that
the IASB and the FASB in the United States had already issued almost identical detailed guidance on fair value measurement (issued
as IFRS 13 “Fair Value Measurement” by the IASB and Topic 820 “Fair
Value Measurement” in the Accounting Standards Codification by
the FASB).
As the basic policy in developing accounting standards for fair value measurement, the ASBJ incorporated basically all of the mattersdefined in IFRS 13 from a standpoint of increasing comparability offinancial statements among domestic and foreign companies by using a unified measurement method. Furthermore, the ASBJ definedalternative accounting treatment to the individual matters without
impairing comparability considering related to accounting practices,
etc. common in Japan.
ii) Scheduled date of adoption
The Company expects to adopt the accounting standard and implementation guidance from the beginning of the fiscal year ending
March 31, 2022.
iii) Effect of the adoption of accounting standard and implementation
guidance
The effect of the adoption of the accounting standard and the implementation guidance on the consolidated financial statements iscurrently unknown.

2. Significant Accounting Estimates(Impairment of Fixed Assets)
Due to the decline in profitability as a result of recent changes in thebusiness environment, the Company determined that there was anindication of impairment for the property, plant and equipment andintangible assets in Proseat Europe GmbH and its subsidiaries, whichwere acquired by the Company in February 2019, and the Company
made the following judgements.

5. Financial Instruments(a) Status of Financial Instruments
The Group manages fund surpluses only through short-term financial
assets. In addition, the Group currently raises capital through bank borrowings and bond. Derivative transactions are not used for speculation,but only used to hedge various risks as addressed below.
In accordance with the internal business management rules of theCompany for managing credit risk arising from notes and accounts receivable, each business section and the sales supervisory department
monitor credit worthiness of their customers periodically, and monitor
due dates and outstanding balances. Subsidiaries of the Company also
manage credit risk in accordance with the Company’s business management rules.
Investments in securities are exposed to market risk. Those securities
are composed of mainly the shares of common stock of other companies with which the Group has business relationships. The finance andaccounting department, on a quarterly basis, reviews the fair value ofsuch financial instruments.
Trade payables, such as notes and accounts payable, have payment
due dates within one year.
Short-term loans are raised mainly in connection with operating activities, and long-term loans are taken out principally for the purpose ofMillions of yen

Millions of yen

For the year ended March 31, 2021
Impairment loss¥

As of March 31, 2021
Property, plant and equipment
Intangible asset
Total¥ 7,494
2,485¥ 9,979—

Thousands of U.S. dollars$—$ 67,691
22,453$ 90,144

Although no impairment loss was recorded in the current fiscal year, it was recognized as an item to be disclosed in view of the risk bringing a significant impact to the financial statements for the following fiscal year.

ii) Significant assumptions
Significant assumptions in estimating future cash flows are i) the
forecasts of product sales volumes, ii) trends in sales prices, iii)
the market growth rates for the periods subsequent to the period(b) Fair Value of Financial Instruments
Carrying value, fair value and the difference between them for financial
instruments on the consolidated balance sheets as of March 31, 2020
and 2021 are shown in the following table. The following table does notinclude financial instruments for which it is extremely difficult to determine the fair value.

2021

2020

(a) Amount reported in consolidated financial statements in the current fiscal year(b) Other information that contributes to the understanding of theusers of financial statementsi) Method of calculation
The Company groups assets by business. No impairment loss wasrecognized as the future cash flows generated from the asset groupby business exceeded the carrying amount. The future cash flows are
estimated based on the business plan for the following fiscal years
approved by the Board of Directors and the market growth rates forthe periods subsequent to the period covered by the business plan.

making capital investments. Loans with variable interest rates is exposed
to interest-rate fluctuation risk. Interest-rate swaps are used to hedge
the risk of interest rate and foreign currency exchange rate fluctuations
on the Group’s long-term loans denominated in foreign currencies. Bondis issued for the purpose of paying off loans and raising working capital.
Derivative transactions are not used for speculation, but only used to
manage various market risks and to reduce those risks.
Further information regarding the method of hedge accounting canbe found in Note 1(q).
Trade payables, short-term loans and long-term loans are exposed
to liquidity risk. The Company makes efforts to facilitate financing andensure diverse sources of financing. Each component of the Group also
prepares monthly cash flow plans to manage liquidity risk.

covered by the business plan and iv) trend in gross profit margin,
which serve as the basis of the business plan. The market growthrate was determined based on the available external market data asa reference. The Company made the assumption that the impact
of COVID-19 on business activities will continue but there will be a
gradual recovery.
iii) Impact on the financial statements for the following fiscal year.
The market growth rate, which is one of the significant assumptions,is subject to a high degree of uncertainty in its estimation, and many
uncertain factors are involved in the impact of the COVID-19 on
business activities, therefore, changes in these assumptions could
result in the recognition of impairment losses on property, plant andequipment and intangible assets.

3. Changes in Presentation

Carrying
value

Fair value

Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Investments in securities
Total assets¥ 9,532
7
32,142
17,627¥ 59,310¥ 9,532
7
32,142
17,627¥ 59,310

Notes and accounts payable
Short-term loans
BondLong-term loans*
Total liabilities¥ 23,522
2,606
7,000
26,056¥ 59,184¥ 23,522
2,606
6,971
26,235¥ 59,334

Difference

Carrying
value

Fair value

Difference

¥ —
—
—
—
¥ —

¥ 12,498
32
33,522
21,271¥ 67,324¥ 12,498
32
33,522
21,271¥ 67,324

¥ —
—
—
—
¥ —

¥ —
—
(28)
178
¥ 150

¥ 22,481
3,627
7,000
26,459¥ 59,567¥ 22,481
3,627
6,975
26,553¥ 59,637

¥ —
—
(24)
93
¥ 69

Thousands of U.S. dollars

2021
Carrying
value

Fair value

Difference

Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Investments in securities
Total assets$ 112,889
289
302,791
192,132$ 544,978$ 112,889
289
302,791
192,132$ 544,978$Notes and accounts payable
Short-term loans
BondLong-term loans*
Total liabilities$ 203,062
32,761
63,228238,993$ 538,045$ 203,062
32,761
63,002
239,842$ 538,677

$

$

—
—
—
—
—

—
—
(216)
840
$ 623

* Includes current portion of long-term loans of ¥3,844 million and ¥5,558 million ($50,203 thousand) as of March 31, 2020 and 2021, respectively.

(Adoption of Accounting Standard for Disclosure of Accounting Estimates)
The Company adopted Accounting Standard for Disclosure of Accounting
Estimates (ASBJ Statement No.31, March 31, 2020) effective from the year
ended March 31, 2021 and disclosed notes on accounting standard fordisclosure of accounting estimates in the consolidated financial statements.
However, comparative information for the previous fiscal year has notbeen disclosed in accordance with the transitional treatment set forth in
the provision of section 11 of the accounting Standard.

4. U.S. Dollar Amounts
The U.S. dollar amounts in the consolidated financial statements havebeen translated from yen solely for convenience and, as a matter ofarithmetic computation only, at ¥110.71 = U.S. $1.00, the exchange rate
prevailing on March 31, 2021. This translation should not be construed

67

Integrated Report 2021 / SEKISUI KASEI

as a representation that the yen amounts have been, could have been,or could in the future be, converted into U.S. dollars at the above or any
other rate.

Methods to determine the estimated fair value of financial instruments and other matters related to securities are as follows:
Assets:	Cash and cash equivalents, short-term investments and notes andaccounts receivable:	Since cash and cash equivalents, short-term investments and notes
and accounts receivable are settled in a short period of time, theircarrying value approximate the fair value.

market prices. For information on securities classified by purpose ofholding, please refer to Note 6.
Liabilities:
Notes and accounts payable and short-term loans:	Since notes and accounts payable and short-term loans are settled ina short period of time, their carrying value approximate the fair value.

Investments in securities:
	The fair values of other investments in securities are based on quoted

Integrated Report 2021 / SEKISUI KASEI

68

Other Information

Notes to Consolidated Financial Statements
Bond:
The fair value of bond is determined based on their market prices.
	Long-term loans:	The fair value of long-term loans are based on the present value ofthe total of principal and interest discounted by the interest rate to be
applied if similar new borrowings were entered into. The fair value of
long-term loans with variable interest rates hedged with interest-rate
swaps which qualify for hedge accounting and meet special matching
criteria is calculated by discounting the sum of principal and interest,

including the difference paid or received under the swap agreements,
with the rate which would be applied if similar new borrowings wereentered into.
Unlisted equity securities in the amounts of ¥421 million and ¥78 million ($704 thousand) as of March 31, 2020 and 2021, respectively, are
not included in investments in securities in the preceding table since itis extremely difficult to determine their fair value as of March 31, 2020
and 2021.

The redemption schedule as of March 31, 2021 for bank deposits, included in cash and cash equivalents and short-term investments presented in the
consolidated balance sheet, and notes and accounts receivable is summarized as follows:
Millions of yen

Thousands of U.S. dollars

2021

2021

Within 1 year

Within 1 year

¥ 12,509
33,522¥ 46,032$ 112,988
302,791$ 415,779

Bank deposits
Notes and accounts receivable
Total

6. Investments in Securities
Marketable securities classified as other securities as of March 31, 2020 and 2021 were as follows:
Millions of yen

2021

2020
Acquisition
cost

Carrying
value

Unrealized
holding gain

Acquisition
cost

Carrying
value

Unrealized
holding gain

¥ 4,338¥ 17,627¥ 13,289¥ 4,338¥ 21,271¥ 16,9330¥ 4,3380¥ 17,6270¥ 13,2890¥ 4,338

0¥ 21,2710¥ 16,933

Thousands of U.S. dollars

2021
Securities whose carrying value exceeds their acquisition cost:
Equity securities
Securities whose acquisition cost exceeds their carrying value:
Equity securities
Total
Unlisted equity securities other than securities of affiliates in the amountof ¥51 million and ¥42 million ($379 thousand) as of March 31, 2020 and
2021, respectively, are not included in equity securities in the above table

Acquisition
cost

Carrying
value

Unrealized
holding gain

$ 39,183$ 192,132$ 152,949

0$ 39,1830$ 192,1320$ 152,949

since it is extremely difficult to determine their fair value as of March 31,
2020 and 2021.

Millions of yen

Integrated Report 2021 / SEKISUI KASEI

Thousands of U.S. dollars

2021

2020

69

Millions of yen

2020
Merchandise, finished goods and semi-finished goods
Work in process goods
Raw materials and supplies
Total¥ 8,216
1,722
3,866¥ 13,805

Thousands of U.S. dollars

2021

2021

¥ 7,670
1,481
4,172¥ 13,324$ 69,280
13,377
37,684$ 120,350

8. Short-Term Loans and Long-Term Debt
Short-term loans as of March 31, 2020 and 2021 represented loans in
the form of deeds and overdrafts at interest rates ranging from 0.18% to6.47% and from 0.35% to 4.85% per annum, respectively.

Long-term debt as of March 31, 2020 and 2021 were composed of the following:
Millions of yen

Unsecured loans from banks and insurance companies, payable in Japaneseyen, at rates ranging from 0.095% to 0.39% and variable rates
Unsecured loans from banks, payable in U.S. dollars,
at rates ranging from 2.48% to 3.40%
Unsecured loans from banks, payable in Euro,at rates ranging from 0.25% to 1.00% and variable rates
Unsecured loans from banks, payable in Baht, at a rate of 2.575%
Unsecured bonds, payable in Japanese yen at a rate of 0.5%, due 2026
Total
Less current portion

Thousands of U.S. dollars

2021

2021

¥ 20,067¥ 20,511$ 185,267

1,080

822

7,424

4,090
818
7,000
33,056(3,844)¥ 29,211

4,507
619
7,000
33,459(5,558)¥ 27,900

40,7095,591
63,228302,223(50,208)$ 252,015

The aggregate annual maturities of long-term debt subsequent to March 31, 2021 are summarized as follows:
Millions of yen

Thousands of U.S. dollars

Years ending March 31,

2021

2021

2022
2023
2024
2025
2026
2027 and thereafterTotal¥ 5,558
9,951
4,878
3,714
1,030
8,323
¥ 33,459$ 50,208
89,89044,06933,556
9,312
75,187$ 302,223

9. Pledged Assets and Secured Liabilities
Assets pledged as collateral for liabilities as of March 31, 2020 and 2021 are summarized as follows:
Millions of yen

The proceeds from sales of, and gross realized gain on investments in securities for the years ended March 31, 2020 and 2021 are summarized as follows:

Proceeds from sales
Gross realized gain

Inventories as of March 31, 2020 and 2021 were composed of the following:

2020

The redemption schedule for long-term loans are disclosed in Note 8.

Securities whose carrying value exceeds their acquisition cost:
Equity securities
Securities whose acquisition cost exceeds their carrying value:
Equity securities
Total

7. Inventories¥11¥ 1,014857

2021$ 9,159
7,740

2020
Land
Buildings

¥ 166
51
¥ 217

Thousands of U.S. dollars

2021
¥ 166
49
¥ 215

2021
$ 1,499442$ 1,942

Liabilities secured by these assets as collateral consist of ¥19 million and ¥7 million ($63 thousand) of short-term loans and ¥17 million and ¥9 million($81 thousand) of long-term loans as of March 31, 2020 and 2021, respectively.

Integrated Report 2021 / SEKISUI KASEI70

Other Information

Notes to Consolidated Financial Statements
10. Income Taxes
Income taxes applicable to the Company and its domestic subsidiaries
consist of corporation, enterprise and inhabitants’ taxes. The statutory

Millions of yen

tax rate in Japan for the years ended March 31, 2020 and 2021 was, in theaggregate, approximately 30.6%.

Reconciliationa of the statutory and effective tax rates for the years ended March 31, 2020 and 2021 as a percentage of profit before income taxes arepresented as follows:

2021

2020
Statutory tax rates
Non-deductible expenses
Per capita portion of inhabitants’ taxes
Tax credit of research and development costs
Tax rate differences of overseas subsidiaries
Loss on business withdrawal of a subsidiary
Retained earnings of overseas subsidiaries
Amortization of goodwill
Gain on liquidation of subsidiaries
Other
Effective tax rate

30.6%
1.4
1.7
(13.2)
38.8
14.7
4.2
2.8
—
2.5
83.5%

30.6%
1.7
0.9
(4.8)
9.6
—
(0.2)
1.5
(3.1)
0.6
36.8%

Deferred tax assets:
Liabilities for retirement benefits
Tax loss carryforwards
Provision for bonuses to employees
Unrealized profit on intercompany transactions
Impairment loss on property, plant and equipment
Loss on devaluation of inventories
Acquisition related cost of acquired companies
Other
Gross deferred tax assets
Valuation allowance for tax loss carryforwards
Valuation allowance for temporary differences
Valuation allowance
Total deferred tax assets

2022
2023
2024
2025
2026
2027 and thereafter
Total

¥

¥

Years ending March 31,

Thousands of U.S. dollars

2021

2021

¥

¥

$

—
3,231
344
508
62
85
93
495
4,819
(3,029)(313)(3,342)
1,477

Tax loss carryforwards (*1)

18

(4)

(985)
(4,063)
(146)
(178)
(325)
(515)
(6,215)¥ (4,832)(923)(5,217)
(146)
(733)
(313)
(595)
(7,930)¥ (6,453)—
29,184
3,107
4,588
560
767
840
4,471
43,528(27,359)(2,827)(30,186)
13,341(8,337)(47,123)(1,318)(6,620)(2,827)(5,374)(71,628)$ (58,287)

(16)

1

104

(103)

0

99

(79)

19

42

(21)

21

2,948

(2,803)145¥ 3,231¥ (3,029)

¥ 201

2022
2023
2024
2025
2026
2027 and thereafter
Total

Tax loss carryforwards (*1)$

Valuation allowance fortax loss carryforwards

162

$

(36)

$

126

153

(144)

939

(930)

0

894

(713)

171

9

379

(189)

189

26,628(25,318)

1,309$ 29,184$ (27,359)$ 1,815(*1) The tax loss carryforwards in the above table are measured using the statutory tax rates.

11. Retirement Benefit Plans(a) Outline of adopted retirement benefit plans for employees
The Company and its consolidated subsidiaries adopt plans similar to
cash balance pension plans, corporate pension plans (all funded plans)
and retirement lump-sum payment plans as defined benefit plans. Further, the Company and its consolidated subsidiaries may pay premium
benefits to employees on retirement. The Company also has established retirement benefit trusts. Certain consolidated subsidiaries adopt

defined contribution plans. Certain consolidated subsidiaries calculate
the liabilities for retirement benefits and retirement benefit expense
by using the simplified method which assumes the retirement benefit
obligation to be equal to the benefits payable if all eligible employees
voluntarily terminated their employment at the fiscal year end for the
calculation of liabilities for retirement benefits and retirement benefit
expenses.

(b) Defined benefit plans for the years ended March 31, 2020 and 2021(i) Excluding amounts calculated by the simplified method, the changes in the retirement benefit obligation for the years ended March 31, 2020 and
2021 were as follows:
Thousands of U.S. dollars

2021

2020
Retirement benefit obligation at the beginning of the year
Service cost
Interest cost
Actuarial (gain) loss
Retirement benefit paid
Other
Retirement benefit obligation at the end of the year

¥ 9,444
282
29
(176)
(588)
21
¥ 9,013¥ 9,013
267
38
99
(670)
25
¥ 8,772

Millions of yen

Millions of yen

2020

2020
Years ending March 31,

Tax loss carryforwards (*1)

Valuation allowance fortax loss carryforwards

2021
2022
2023
2024
2025
2026 and thereafter
Total

¥

¥

Integrated Report 2021 / SEKISUI KASEIDeferred tax assets for
tax loss carryforwards

2021$ 81,410
2,411
343
894
(6,051)225$ 79,234(ii) Excluding amounts calculated by the simplified method, the changes in plan assets at fair value for the years ended March 31, 2020 and 2021 wereas follows:

Note 1: Tax loss carryforwards and related deferred tax assets as of March 31, 2020 and 2021 will expire as follows:

71

¥ 14

17

Millions of yen

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
Customer related assets
Other
Total deferred tax liabilities
Net deferred tax liabilities

Deferred tax assets for
tax loss carryforwards

2021

2020
51
3,184
328
527
76
73
93
381
4,715
(3,002)(331)(3,333)
1,382

Years ending March 31,

Thousands of U.S. dollars

Deferred income taxes reflect the net tax effect of the temporary differences between the carrying amounts of the assets and liabilities for financial
reportable purposes and the corresponding amounts for income tax purposes. The significant components of the Group’s deferred tax assets andliabilities as of March 31, 2020 and 2021 are summarized as follows:
Millions of yen

2021
Valuation allowance fortax loss carryforwards

21

Deferred tax assets for
tax loss carryforwards

(7)

¥ 14

34

(25)

9

101

(98)

3

85

(83)

1

99

(97)

1

2,841

(2,689)152¥ 3,184¥ (3,002)¥ 182

Plan assets at fair value at the beginning of the year
Expected return on plan assets
Actuarial (loss) gainContributions by the employer
Retirement benefit paid
Plan assets at fair value at the end of the year

¥ 14,459
243
(3)
399
(581)
¥ 14,517

Thousands of U.S. dollars

2021

2021

¥ 14,517
236
1,858
387
(658)
¥ 16,341$ 131,126
2,131
16,782
3,495(5,943)$ 147,601

Integrated Report 2021 / SEKISUI KASEI72

Other Information

Notes to Consolidated Financial Statements(iii) The changes in liabilities for retirement benefits under the simplified method for the years ended March 31, 2020 and 2021 were as follows:
Millions of yen

Liabilities for retirement benefits at the beginning of the year
Retirement benefit expense
Retirement benefit paid
Contribution to defined contribution pension plans
Other
Liabilities for retirement benefit at the end of the year2021

¥ 3,273
436
(304)
(20)
1
¥ 3,386¥ 3,064
381
(149)
(20)
(2)
¥ 3,273$ 29,563
3,938(2,745)(180)
9$ 30,584(iv) Including the amounts presented calculated by the simplified method, the balance of retirement benefit obligation and plan assets at fair value,liabilities and assets recognized in the consolidated balance sheets for the years ended March 31, 2020 and 2021 were as follows:
Millions of yen

Funded retirement benefit obligation
Plan assets at fair value

Thousands of U.S. dollars

2020

2021

2021

¥

¥

8,856
(16,409)(7,552)
3,370(4,182)$

3,590(7,772)(4,182)32,427(70,201)$ (37,774)

Unfunded retirement benefit obligation
Net amount of liabilities and assets recognized in the consolidated balance sheet

9,073(14,572)(5,499)3,268(2,231)

Liabilities for retirement benefits
Assets for retirement benefits
Net amount of liabilities and assets recognized in the consolidated balance sheet

3,446(5,677)¥ (2,231)¥

79,992(148,216)(68,214)30,439(37,774)

2021

2020

Thousands of U.S. dollars

2021

2020

(ix) The assumptions used in accounting for the defined benefit plans for the years ended March 31, 2020 and 2021 are as follows:

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

0.4%
1.6%
2.8%

0.4%
1.7%
2.7%

(c) Defined contribution pension plans for the years ended March 31, 2020 and 2021 are as follows:
Millions of yen

2021

2020
Contributions to defined contribution pension plans

Thousands of U.S. dollars

2021

¥ 16

¥ 17

$ 144

12. Shareholders’ Equity
The Corporation Law of Japan provides that an amount equal to 10% of
the amount to be disbursed as distributions of capital surplus (other thanthe capital reserve) and retained earnings (other than the legal reserve)
be transferred to the capital reserve and the legal reserve, respectively,
until the sum of the capital reserve and the legal reserve equals 25% of
the capital stock account. Such distributions can be made at any time byresolution of the shareholders, or by the Board of Directors if certain conditions are met.
Retained earnings include the legal reserve provided in accordancewith the provisions of the Corporation Law of Japan. The legal reserve of
the Company included in retained earnings amounted to ¥1,370 million($12,374 thousand) as of March 31, 2020 and 2021.

Common stock and treasury stock
Movements in shares of common stock and treasury stock during the years ended March 31, 2020 and 2021 are summarized as follows:

2020(v) The components of retirement benefit expense (credit) for the years ended March 31, 2020 and 2021 were as follows:

Number of shares
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain
Retirement benefit expenses calculated by the simplified method
Retirement benefit expense

Thousands of U.S. dollars

2021

2020
¥ 282
29
(243)
(349)
381
¥ 100

¥ 267
38
(236)
(123)
436
¥ 382

2021
$ 2,411343(2,131)(1,111)
3,938$ 3,450(vi) The components of retirement benefits liability adjustments included in other comprehensive income (before tax effect) for the years ended March
31, 2020 and 2021 were as follows:
Millions of yen

Actuarial (gain) loss

Thousands of U.S. dollars

2021

2020
¥ (180)¥ 1,6262021$ 14,687(vii) The components of retirement benefits liability adjustments included in accumulated other comprehensive income (before tax effect) as of March
31, 2020 and 2021 were as follows:
Millions of yen

2020
Unrecognized actuarial (loss) gain

¥ (575)

Thousands of U.S. dollars

2021¥ 2,2012021$ 19,880(viii) The plan assets by major category consist of the following:

2020
Bond
Equities
General accounts at life insurance companies
Cash and deposits
Other
Total
The total pension plan assets include 32% and 36% of the retirement
benefits trust for the corporate pension fund plans as of March 31, 2020
and 2021, respectively.
The expected long-term rates of return on plan assets is determined

73

Integrated Report 2021 / SEKISUI KASEI

21%
44
13
5
17
100%

April 1, 2019

Common stock
Treasury stock

46,988,109
1,696,864

Increase

Decrease—
1,018

March 31, 2020——

46,988,109
1,697,882

The increase in treasury stock consists of 1,018 shares due to the purchase of fractional shares of less than one voting unit.

2021
Number of shares
April 1, 2020

Common stock
Treasury stock

46,988,109
1,697,882

The increase in treasury stock consists of 250,000 shares due to purchaseof shares based on the resolution of the Board of Directors meeting,and 75 shares due to the purchase of fractional shares of less than one
voting unit.

Increase—
250,075

Decrease—
96,998March 31, 2021

46,988,109
1,850,959

The decrease in treasury stock consists of 68,000 shares due to allotment under the restricted stock-linked remuneration system, 28,998
shares due to exclusion of an affiliate from the scope of applying theequity method.

13. Land Revaluation
In accordance with the “Law Concerning Revaluation of Land” promulgated on March 31, 1998, land used for business was revalued asof March 31, 2002, and the related unrealized gain was reported as“Surplus arising from land revaluation” after deducting the relevant
tax effect. The method followed for this revaluation was determined inaccordance with the “Land Revaluation Tax Law” as stipulated in the“Enforcement Act Concerning Land Revaluation” and other regulations.
The carrying values of ¥9,545 million and ¥9,545 million ($85,998 thousand) for the purpose of land revaluation exceeded the land’s estimatedmarket values by ¥3,580 million and ¥3,594 million ($32,463 thousand) as
of March 31, 2020 and 2021, respectively.

2021
19%
49
11
5
15
100%

as a result of consideration of both the portfolio allocation at present
and in the future, and the long-term rate expected rate of return frommultiple plan assets at present and in the future.

Integrated Report 2021 / SEKISUI KASEI74

Other Information

Notes to Consolidated Financial Statements
14. Other Comprehensive Income

Thousands of U.S. dollars

2021

Reclassification adjustments and tax effects on components of other comprehensive income for the years ended March 31, 2020 and 2021 were as follows:
Millions of yen

2021

2020
Net unrealized holding gain on securities
Gain arising during the year
Reclassification adjustments
Before tax effectTax effectNet unrealized holding gain on securities
Translation adjustments:(Loss) gain arising during the year
Reclassification adjustments
Before tax effectTax effectTranslation adjustments
Retirement benefits liability adjustments:(Loss) gain arising during the year
Reclassification adjustments
Before tax effectTax effect
Retirement benefits liability adjustments
Total other comprehensive (loss) income

Thousands of U.S. dollars

2021

¥ 615
—
615
(188)
426

¥ 4,630(842)
3,787(1,153)
2,633$ 41,820(7,605)34,206(10,414)
23,782

(765)
(53)
(819)
—
(819)

640
—
640
—
640

5,780
—
5,780
—
(5,780)

(544)
364
(180)
54
(125)
¥ (517)

1,783
(156)
1,626
(497)
1,128
¥ 4,402

16,105(1,409)14,687(4,489)10,188$ 39,761

Notional amount
Total

Interest-rate swaps hedging long-term loans,accounted for by special treatment:
Receivable / floating and U.S. dollar
Payable / fixed and Japanese yen

Maturing after one year

$ 8,951

Fair value$ 3,351(*)(*) Because interest-rate currency swaps and interest-rate swaps accounted for by the special treatment for hedge accounting are accounted for applying swap rates to underlying
long-term loans, their fair value is included in that of the hedged long-term loans disclosed in Note 5.

18. Amounts per ShareYen

Profit attributable to owners of parent
Net assets
Cash dividends

U.S. dollars

2020

2021

¥

¥

51.29
1,450.32
30.00

24.86
1,549.84
21.00

2021
$ 0.2213.99
0.18

15. Research and Development Costs

Profit attributable to owners of parent per share has been computed
based on the profit attributable to owners of parent available for distribution to shareholders of common stock and the weighted-average
number of shares of common stock outstanding during the year. Diluted
profit attributable to owners of parent per share has not been presented
for the years ended March 31, 2020 and 2021 since neither the Company nor any of the consolidated subsidiaries had any potentially dilutive

Research and development costs included in selling, general and administrative expenses for the years ended March 31, 2020 and 2021 amounted to¥2,769 million and ¥2,655 million ($23,981 thousand), respectively.

The financial data used in the computation of profit attributable to owners of parent per share based on the above method for the years ended March
31, 2020 and 2021 is summarized as follows:

shares as of March 31, 2020 and 2021.
The amounts per share of net assets have been computed based on
the number of shares of common stock outstanding at the year end.
Cash dividends per share represent the cash dividends declared as
applicable to the respective years together with the interim cash dividends paid.

Millions of yen

16. Loss on Business Withdrawal of a Subsidiary
Millions of yen

2021

2020
Loss on business withdrawal of a subsidiary
Loss on business withdrawal of a subsidiary represents losses associated with the withdrawal of the business in the UK which was operated
by Proseat LLP, a consolidated subsidiary of the Company. It includ-

Thousands of U.S. dollars

¥ 901

¥ —

2021

Profit attributable to owners of parent
Adjusted profit attributable to owners of parent available for distribution tocommon stockholders2021¥ 2,323¥ 1,126$ 10,170¥ 2,323¥ 1,126$ 10,170$ 8,138ed employees’ retirement benefits amounting to ¥789 million ($7,127
thousand) and cancellation of lease asset expenses amounting to ¥111
million ($1,003 thousand).

Thousands of U.S. dollars

2021

2020

Thousands of shares

2021

2020
Weighted-average number of shares of common stock outstanding

45,29945,290The financial data used in the computation of net assets per share based on the above method as of March 31, 2020 and 2021 is summarized as follows:

17. Derivatives and Hedge Accounting

Millions of yen

The estimated fair value of derivative instruments outstanding as of March 31, 2020 and 2021 for which hedge accounting has been applied issummarized as follows:
Millions of yen

2020
Notional amount
Total

Interest-rate swaps hedging long-term loans,accounted for by special treatment:
Receivable / floating and U.S. dollar
Payable / fixed and Japanese yen

Maturing after one year

$ 638,216

1,531¥ 65,685

702¥ 69,955

6,340$ 631,876

2020
¥ 935

¥ 584

(*)

¥ 991

Maturing after one year

¥ 371

Number of shares of common stock used in the calculation of net assets per share

45,2902021
45,137

19. Business Combination

Notional amount
Total

Integrated Report 2021 / SEKISUI KASEI¥ 70,657

Thousands of shares

2021

75

2021

¥ 67,217

Fair value

Millions of yen

Interest-rate swaps hedging long-term loans,accounted for by special treatment:
Receivable / floating and U.S. dollar
Payable / fixed and Japanese yen

Total net assets
Deductions from total net assets:
Non-controlling interests
Total net assets available to owners of parent

Thousands of U.S. dollars

2021

2020

Merger between consolidated subsidiaries
At a meeting of the Board of Directors held on January 24, 2020, the Company approved a resolution to merge Sekisui Plastics Kyushu Co., Ltd. awholly-owned consolidated subsidiary, with wholly-owned consolidated subsidiaries Sekisui Plastics Yamaguchi Co., Ltd. and Sekisui Plastics Shikoku
Co., Ltd. The merger was completed on April 1, 2020.

Fair value(*)(i) Outline of the absorption-type merger
1) Name of combined company and business descriptiona) Name of combined companies Sekisui Plastics Yamaguchi Co., Ltd.
Sekisui Plastics Shikoku Co., Ltd.
b) Business description
Sales and manufacturing of foamed plastics
Integrated Report 2021 / SEKISUI KASEI76

Other Information

Notes to Consolidated Financial Statements
2) Date of the business combination
April 1, 2020

Millions of yen

20213) Legal form of the business combination
Absorption-type merger with Sekisui Plastics Kyushu Co., Ltd. as the surviving company, and Sekisui Plastics Yamaguchi Co., Ltd. and Sekisui
Plastics Shikoku Co., Ltd. as the dissolved companies.
4) Name of company after the business combination
Sekisui Kasei Seibu Co., Ltd.
5) Other matters related to the outline of transaction
The Company decided to merge the three consolidated subsidiaries, considering their locations and the nature of their businesses, in order toenhance competitiveness through prompt decision-making to handle a rapidly changing business environment and enjoy synergies consolidating know-how of these 3 subsidiaries.
As a result of this business combination, the Company believes the operating structure will be more efficient, and expects further sales growthby leveraging competitive advantages of each subsidiary to others.
(ii) Summary of accounting treatment
The Company treated this as a transaction under common control in accordance with “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, January 16, 2019) and “Implementation Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, January 16, 2019).

Reportable segments
Human Life

Sales, income and assets by reportable segments:
Sales to third parties
Inter-segment sales and transfers
Total
Segment income / (loss) (*2)
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Interest income
Interest expense
Equity in earnings of an affiliate
Investments in affiliates accounted for by the equity method
Increase in property, plant and equipment and intangible assets

materials, etc., while the main products for Industry Segment are automobile components, digital consumer electronics components, packaging materials, and other related products.
(b) Calculation methods used for sales, income, assets and otheritems of each reportable segment
The accounting policies of the segments are substantially the same as
those described in significant accounting policies in Note 1.
Segment income represents ordinary income, which consists of operating income and non-operating income/expenses. Non-operating
income/expenses mainly include interest income, dividend income, interest expense, equity in losses of an affiliate. Intersegment sales arerecorded at the same price used in transactions with third parties.

2020
Reportable segments
Human Life

Integrated Report 2021 / SEKISUI KASEIConsolidated¥ 65,381
115¥ 65,496¥ (957)¥ 65,630¥ 118,851
665¥ 119,516¥ 2,797¥ 136,257

¥

—
(665)
¥ (665)¥ (840)¥ 22,182¥ 118,851—¥ 118,851¥ 1,956¥ 158,439¥ 1,869
—
0
0
9
—
1,220

¥ 3,642
168
17
245
—
—
3,538

¥

¥

¥

5,511
168
17
244
9
—
4,759

705
—
0
128
—
—
618

6,217
168
17
373
9
—
5,377

Thousands of U.S. dollars

2021

Millions of yen

77

Adjustments andeliminations (*1)

Reportable segments(c) Information on sales, income, assets and other items of each reportable segment
Information by reportable segment for the years ended March 31, 2020 and 2021 is as follows:

Sales, income and assets by reportable segments:
Sales to third parties
Inter-segment sales and transfers
Total
Segment income / (loss) (*2)
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Interest income
Interest expense
Equity in losses of an affiliate
Investments in affiliates accounted for by the equity method
Increase in property, plant and equipment and intangible assets

Total¥ 53,470
549¥ 54,020¥ 3,754¥ 70,626

20. Segment Information(a) Outline of segment information
The Group’s business mainly involves the manufacturing and sales ofplastic products. The Company has established departments based on
product markets or product function for global development in the two
fields of “Human Life” and “Industry.” Each department has works closely with subsidiaries to plan overall strategies and operate its business.
Accordingly, the Group’s reportable segments are “Human Life” and“Industry.”
These reportable segments of the Group are components for which
discrete financial information is available and whose operating results
are regularly reviewed by the Board of Directors to make decisions
about resource allocation and to assess performance.
The main products for Human Life Segment are boxes/trays for agricultural/fishery products, food containers, housing and civil engineering

Industry

Industry

Total

Adjustments andeliminations (*1)

¥ 58,101670¥ 58,771¥ 3,280¥ 70,493¥ 78,053
156¥ 78,210¥ 1,186¥ 67,242¥ 136,155826¥ 136,982¥ 4,467¥ 137,735—(826)¥ (826)¥ (1,075)¥ 11,368¥ 136,155—¥ 136,155¥ 3,391¥ 149,103¥ 1,933
—
0
0
13
335
1,807

¥ 3,522
168
4
262
—
—
2,767

¥

¥

¥

5,455
168
5
263
13
335
4,573

¥

Consolidated

615
—
0
128
—
—
687

6,071
168
5
392
13
335
5,261

Sales, income and assets by reportable segments:
Sales to third parties
Inter-segment sales and transfers
Total
Segment income / (loss) (*2)
Segment assets
Other items:
Depreciation and amortization
Amortization of goodwill
Interest income
Interest expense
Equity in earnings of an affiliate
Investments in affiliates accounted for by the equity method
Increase in property, plant and equipment and intangible assets

Total

Adjustments andeliminations (*1)

Consolidated

Human Life

Industry$ 482,973
4,958$ 487,941$ 33,908$ 637,936$ 590,560
1,038$ 591,599$ (8,644)$ 592,810$ 1,073,534
6,006$ 1,079,541$
25,264$ 1,230,756—(6,006)$ (6,006)$ (7,587)$ 200,361$ 1,073,534—$ 1,073,534$
17,667$ 1,431,117$ 16,881—0081—11,019$ 32,896
1,517
153
2,203
—
—
31,957$$$

49,778
1,517
153
2,212
81
—
42,986

$

6,367
—
0
1,156
—
—
5,582

56,155
1,517
153
3,369
81
—
48,568(*1) Adjustments and eliminations in the preceding tables were as follows:(i)	Segment income in the amounts of (¥1,075 million) and (¥840 million) ($7,587 thousand) for the years ended March 31, 2020 and 2021, respectively, consisted of eliminationof inter-segment transactions in the amounts of ¥(0) million and ¥1 million ($9 thousand), and unallocable expenses in the amounts of (¥1,075 million) and (¥842 million)($7,605 thousand) , respectively.
(ii)	Segment assets in the amounts of ¥11,368 million and ¥22,182 million ($200,361 thousand) for the years ended March 31, 2020 and 2021, respectively, mainly consisted ofinvestments in securities and assets related to administrative departments and the Central R&D Laboratory owned by the Company.
(iii)	Depreciation and amortization in the amounts of ¥615 million and ¥705 million ($6,367 thousand) for the years ended March 31, 2020 and 2021, respectively, include amortization of long-term prepaid expenses. In addition, these amounts mainly consisted of depreciation of assets related to administrative departments and the Central R&D
Laboratory owned by the Company.
(iv)	Increase in property, plant and equipment and intangible assets in the amounts of ¥687 million and ¥618 million ($5,582 thousand) for the years ended March 31, 2020 and
2021, respectively, mainly consisted of assets related to the Central R&D Laboratory owned by the Company.
(*2) Segment income was adjusted for the ordinary income as described in “(b) Calculation methods used for sales, income, assets and other items of each reportable segment.”(d) Geographical information
Sales to third parties by countries or areas grouped according to geographical classification for the years ended March 31, 2020 and 2021 were summarized as follows:
Millions of yen

Japan
Europe
Asia
Other
Total

Thousands of U.S. dollars

2020

2021

¥ 86,790
34,198
12,173
2,993¥ 136,155¥ 78,589
26,352
11,6062,303¥ 118,851

2021$

709,863
238,027
104,832
20,802$ 1,073,534

Integrated Report 2021 / SEKISUI KASEI

78

Other Information

Other Information

Notes to Consolidated Financial Statements

Independent Auditor’s Report

Property, plant and equipment by countries or areas grouped according to geographical classification as of March 31, 2020 and 2021 were summarized
as follows:
Millions of yen

2020
Japan
Europe
Asia
Other
Total

¥ 47,788
7,800
4,498
1,814
¥ 61,901

Thousands of U.S. dollars

2021

2021

¥ 46,679
8,331
4,471
1,949
¥ 61,432$ 421,633
75,25040,384
17,604$ 554,891(e) Information by major customer
The information by major customer for the years ended March 31, 2020 and 2021 was summarized as follows:
Millions of yen
Customer

Related segment

FP Corporation

Human Life2020
¥ 14,562

Thousands of U.S. dollars

2021

2021

¥ 15,546$ 140,420(f) Amortization of goodwill and unamortized balance of goodwill for the years ended and as of March 31, 2020 and 2021.
Millions of yen

2020
Amortization of goodwill
Unamortized balance of goodwill

Industry

Consolidated

¥

¥

168
1,363

168
1,363
Millions of yen

2021
Human life

Amortization of goodwill
Unamortized balance of goodwill¥——

Adjustments andeliminations

Industry

¥

168
1,236

¥—
—

Consolidated

¥

168
1,236

Thousands of U.S. dollars

2021
Human life

Amortization of goodwill
Unamortized balance of goodwill$——

Industry$ 1,517
11,164

Adjustments andeliminations

Consolidated$——$ 1,517
11,164

21. Subsequent Event
The following distribution of retained earnings of the Company, which has not been reflected in the consolidated financial statements for the year
ended March 31, 2021 was approved at a shareholders’ meeting held on June 24, 2021.

Cash dividends (¥17 (U.S. $0.15) per share)

79

Integrated Report 2021 / SEKISUI KASEIMillions of yen

Thousands of U.S. dollars

2021

2021

¥ 767

$ 6,928

Integrated Report 2021 / SEKISUI KASEI80

Other Information

Independent Auditor’s Report

81

Integrated Report 2021 / SEKISUI KASEIIntegrated Report 2021 / SEKISUI KASEI82

Other Information

Independent Auditor’s Report

83

Integrated Report 2021 / SEKISUI KASEIIntegrated Report 2021 / SEKISUI KASEI84

Other Information

11 Years Summary

2010

Fiscal Year

2011

2012

2014*2

2013

2015

2016

2017

2018

2019

For the year:

2020

2020

Millions of yen

Thousands of
U.S. dollars*1¥ 101,418¥ 101,350¥ 101,784¥ 109,923¥ 113,660¥ 101,559¥ 102,398¥ 112,101¥ 112,593¥ 136,155¥ 118,851$ 1,073,534

Operating income

4,876

2,271

1,152

2,124

3,930

5,118

5,401

5,284

4,784

3,725

2,091

18,887

Recurring income

4,628

2,107

1,237

2,206

4,180

4,862

5,049

5,154

4,776

3,391

1,956

17,667

Net income attributable toowners of the parent

2,306

744

926

1,264

2,530

3,147

3,404

3,448

3,129

2,323

1,126

10,170Capital expenditures

4,561

5,059

6,849

3,434

5,908

4,424

5,836

7,762

7,368

5,261

5,377

48,568Depreciation and amortization

3,814

3,848

3,940

3,856

3,999

3,937

3,591

4,087

4,517

6,071

6,217

56,155

Research and development costs

2,237

2,261

1,993

1,936

1,877

1,856

1,916

2,104

2,145

2,769

2,655

23,981¥ 99,263¥ 101,889¥ 105,562¥ 110,687¥ 116,201¥ 114,892¥ 119,670¥ 131,774¥ 152,845¥ 149,103¥ 158,439$ 1,431,117

Total net assets

48,165

48,91150,92954,03658,27558,80061,363

66,145

66,771

67,21770,657638,216

Interest-bearing debt

17,175

17,06818,492

18,566

19,467

18,274

18,42419,09635,22939,58341,704

376,695

Net sales

At year-end:
Total assets

Amounts per share*3:

Yen

Net income¥

Net assets

1,005.62

1,021.26

1,063.68

1,136.52

1,231.36

1,243.30

1,322.14

1,444.28

1,439.43

1,450.32

1,549.84

13.99

20.00

12.00

8.00

14.00

18.00

24.00

24.00

27.00

30.00

30.00

21.00

0.18

Operating income ratio (%)

4.8

2.2

1.1

1.9

3.5

5.0

5.3

4.7

4.2

2.7

1.8

ROE (%)

5.0

1.6

1.9

2.5

4.6

5.4

5.7

5.5

4.8

3.6

1.6

ROA (%)

4.7

2.1

1.2

2.0

3.7

4.2

4.3

4.1

3.4

2.2

2.2

Equity ratio (%)

47.6

47.1

47.4

48.0

49.5

50.6

50.7

49.6

42.7

44.1

44.2

Number of employees

1,719

1,757

1,813

1,833

1,859

1,895

2,011

2,101

3,881

3,855

3,808

Number of employees in Japan

1,545

1,587

1,646

1,609

1,539

1,545

1,633

1,680

1,723

1,695

1,676

174

170

167

224

320

350

378

421

2,158

2,160

2,132

N.A.

N.A.

N.A.

N.A.

N.A.

16.9

18.1

18.9

20.7

19.9

26.9

Cash dividends

49.08

¥

15.84

¥

19.72

¥

26.96

¥

54.14

¥

67.34

¥

73.03

¥

75.33

¥

69.09

¥

51.29

U.S. dollars*1

¥

24.86

$

0.22

Key ratios (financial):

Key ratios (non-financial):

Number of employees outside Japan
Ratio of female employees (%)*4(excluding subsidiaries in Europe andthe Americas that are not publicly listed)*1 U.S. dollar amounts represent translations of Japanese yen, for readers’ convenience only, at the rate of ¥110.71 = U.S.$1.00, the prevailing exchange rate at
March 31, 2021.
*2 In order to synchronize accounting periods of overseas Group companies with the accounting period in Japan beginning in FY2014, the FY2014 results foroverseas 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 a part of subsidiaries

85

Integrated Report 2021 / SEKISUI KASEIIntegrated Report 2021 / SEKISUI KASEI86

Other Information

Other Information

Our Group Network

Company Profile

Overseas Subsidiaries 21 Companies

Company
name

SEKISUI KASEI CO., LTD.

Osaka head
office2-4-4 Nishi-tenma Kita-ku, Osaka,❶JapanTokyo
headquarters

2-7-1 Nishi-Shinjuku Shinjuku-ku, Tokyo, JapanFounded
17 ●
12
●
16
●
20 21
13 14 15●
18●●●
●
●

10
●

❸

19
●

❶

11
●

❹❺❻
❼

❷

❾

❽

18
●

(As of March 31, 2021)

Business Lines in Each Segment
Automotive components, packaging
materials for transporting automotive parts,
Market/industrial components,
Applicationindustrial packaging, electric part materials,
medical and health care materials
Industry

October 1, 1959

Major
Products

Paid-in capital

16,533 million yen

President

Masato Kashiwabara

Number of
employees

424 (non-consolidated)
3,808 (consolidated)

Consolidated
subsidiaries(Japan)18 companies(Worldwide) 21 companies

Equity method
affiliates

None

Fiscal year

Ended March 31❷

Agricultural and marine product containers,
Market/food containers, distribution materials,
Application construction materials, civil engineering
materials

Human
Life

❻❺❹❸
❼
❾ ❽

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

Major
Products

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

10
12 ●
11 ●
14 ●
●
15
13 ●
●
16
●
17
●

Investor Information❶ Sekisui Kasei Korea Co., Ltd.
❷ Sekisui Kasei Taiwan Co., Ltd.

❼ Sekisui Kasei Hong Kong Trading Co., Ltd.
❽ PT. Sekisui Kasei Indonesia❾ Sekisui Kasei (Thailand) Co., Ltd.

❸ Sekisui Kasei Tianjin Co., Ltd.
❹ Sekisui Kasei Suzhou Co., Ltd.

❺ Sekisui Kasei Shanghai International
Trading Co., Ltd.
❻ Sekisui Kasei Shanghai Precision
Forming Co., Ltd.

10 Sekisui Kasei U.S.A., Inc.
●
11 Sekisui Kasei Mexico S.A. de C.V.
●
12 Sekisui Kasei Europe B.V.
●
13 Proseat Europe GmbH●

Stock Information

15 Proseat Verwaltung GmbH●
16 Proseat Schwarzheide GmbH●17
● Proseat LLP

18 Proseat SAS●
19 Proseat Foam Manufacturing, S.L.U.
●
20 Proseat Mladá Boleslav s.r.o.
●
21 Proseat Sp.zo.o●

14 Proseat GmbH + Co. KG●(As of March 31, 2021)

Major Shareholders

Ordinary general
meeting of shareholders

June

Record dateOrdinary general meeting of shareholders: March 31
Year-end dividend: March 31
Interim dividend: September 30

SEKISUI CHEMICAL CO., LTD.

9,855

21.84

Listings

First section, Tokyo stock exchange

The Dai-ichi Life Insurance Company, Limited

Securities code

4228

3,031

6.72

Common stock—issued

46,988,109 shares

The Master Trust Bank of Japan, Ltd.

1,921

4.26

Number of shareholders

7,800

Employees’ Shareholding

1,817

4.03

Transfer agent

Mitsubishi UFJ Trust and Banking Corporation

Sekisui Jushi Corporation

Independent auditor

Ernst & Young ShinNihon LLC

1,419

3.14

Daido Life Insurance Company

1,418

3.14

FP Corporation

1,348

2.99

MUFG Bank Ltd.

1,327

2.94

Domestic Subsidiaries 18 Companies
Shareholdings by Type of Shareholder❶❶ Sekisui Kasei Hokkaido 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.

18●

❻ Sekisui Kasei Gunma Co., Ltd.
❼ Sekisui Kasei Saitama Co., Ltd.

❷

❻❺❹❸
❼
❾ ❽
10
12 ●
11 ●
14 ●
●
15
13 ●
●
16
●
17
●

10 Sekisui Kasei Chubu Co., Ltd.
●

Foreign investors
11 Sekisui Kasei Omi Co., Ltd.
●

7.4%

12 Sekisui Kasei Shiga Co., Ltd.
●
13 Sekisui Kasei Sakai Co., Ltd.
●
Financial institutions

26.6%

Financialservices provider

1.7%

Domestic companies

14 Sekisui Kasei Kansai Co., Ltd. and others●
15 Sekisui Kasei Tenri Co., Ltd.
36.9%●
16 Sekisui Kasei Seibu Co., Ltd.
●
17 Sekisui Kasei Oita Co., Ltd.
●

Note: Calculated after deducting treasury stock holdings of 1,850 thousand shares
18 Sekisui Kasei Okinawa Co., Ltd.
●

Integrated Report 2021 / SEKISUI KASEIFinancialservices provider

7.4%

1.7%

Financial institutions

Domestic companies
and others

26.6%

36.9%

Individuals and others

(Yen)

Denka
Company LimitedStock price (left axis)
1,000

1,250

2.77

Business Partners Shareholding
750

1,151

2.55

Note:	T he Company maintains 1,850,000 shares of treasury stock, which dose not500
include the holdings of the major shareholders in the above list.

27.4%

250
0
2019
April

Stock Price/Trading Volume
(Yen)

1,000

Trading volume (right axis)

Stock price (left axis)

July

October

2020
January

Apr(Thousand shares)

Trading volume (right axis)

12,000

750

9,000

500

6,000

250

3,000

Individuals and others

27.4%

87

Foreign investors

Note: Calculated after deducting treasury stock holdings of 1,850 thousand shares❽ Shonan Sekisui Kogyo Co., Ltd.
❾ Sekisui Kasei Yamakyu Co., Ltd.

Numbers of Percentage
shares heldof shares(thousands)
held (%)

Name

0

0
2019
April

July

October

2020
January

April

July

October

2021
January

Integrated Report 2021 / SEKISUI KASEI88

You can find the latest information of corporation,
shareholder and investor relations as well as detailsof our products and green activities on the Website of
Sekisui Kasei.
https://www.sekisuikasei.com/en/

SEKISUI KASEI CO., LTD.
Contact
Investor and Public Relations Dept.
Corporate Strategic HQ.
2-7-1 Nishi-Shinjuku, Shinjuku-ku,
Tokyo 163-0727, Japan
Tel. +81-3-3347-9711
Integrated Report 2021

2110SD410.2-0

Published in October 2021

Easy-to-read universal design fonts areused in this report.