Consolidated Financial Results
for the Nine Months Ended September 30, 2020
[IFRS]
November 13, 2020
Company name: NIPPON PAINT HOLDINGS CO., LTD.
Stock exchange listing: Tokyo Stock Exchange
Code number: 4612
URL: https://www.nipponpaint-holdings.com/
Representative: Masaaki Tanaka, Chairman of the Board, Representative Executive Officer, President & CEO
Contact: Ryosuke Tanaka, General Manager of Investor Relations
Phone: +81-50-3131-7419
Scheduled date of filing the quarterly securities report: November 13, 2020
Scheduled date of commencing dividend payments: Availability of supplementary briefing material on quarterly financial results: Yes
Schedule of quarterly financial results briefing session: Yes(Amounts of less than one million yen are rounded down)
1. Consolidated Financial Results for the Nine Months Ended September 30, 2020 (January 1, 2020 to September 30, 2020)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period)
Revenue

Operating profit

Nine months ended
September 30, 2020
September 30, 2019

Million yen
562,294
495,119

%
13.6
4.3

Nine months ended
September 30, 2020
September 30, 2019

Profit attributable toowners of parent
Million yen%
31,637(3.0)
32,616(6.9)

Million yen
63,314
66,367

Profit before tax

%
(4.6)
(0.7)

Million yen
63,57265,816

%
(3.4)
(4.0)

ProfitMillion yen
48,19747,609

%
1.2
(6.2)

Comprehensive income
Million yen
11,319(2,871)%－－

Basic earnings per
Diluted earnings per
share
share
Nine months ended
Yen
Yen
September 30, 2020
98.62
98.59
September 30, 2019
101.70101.67
The provisional treatment relating to business combinations carried out during the third quarter ended September 30, 2019 was finalized
at the end of the fiscal year ended December 31, 2019. Therefore, relevant figures for the third quarter ended September 30, 2019 havebeen adjusted retroactively to reflect the results of the finalization of provisional accounting treatment.
(2) Consolidated Financial Position
Total assets

As of September 30, 2020
As of December 31, 2019

Million yen
1,502,949
1,478,646

Total equity
Million yen
682,208
687,979

Equity attributable toowners of parent
Million yen
537,022552,922Equity attributable toowners of parent tototal assets
%
35.7
37.4

2. Dividends
Annual dividends

Fiscal year ended
December 31, 2019
Fiscal year ending
December 31, 2020
Fiscal year ending
December 31, 2020 (Forecast)

1stquarter-end
Yen

2nd
quarter-end
Yen

3rd
quarter-end
Yen

－

22.00

－

－

22.00

－

Year-end

Total

Yen

Yen

23.00

45.00

23.00

45.00

Note: Revision to the dividends forecast announced most recently: No
3. Consolidated Financial Results Forecast for the Fiscal Year Ending December 31, 2020 (January 1, 2020 to December 31,
2020)

Revenue
Full year

Million yen
760,000

Operating profit%
9.8

Million yen
76,000%(2.6)(% indicates changes from the previous corresponding period)
Profit attributable to
Basic earnings
Profit before tax
owners of parent
per share
Million yen% Million yen%
Yen
76,000(4.4)
35,000(4.7)
109.10Note: Revision to the financial results forecast announced most recently: Yes

* Notes:(1) Changes in significant subsidiaries during the period under review: No(Changes in specified subsidiaries resulting in changes in the scope of consolidation)
Newly consolidated- Excluded(2) Changes in accounting policies and changes in accounting estimates
1) Changes in accounting policies required by IFRS: No
2) Changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: Yes(3) Total number of issued shares (common shares)
1) Total number of issued shares at the end of the period (including treasury shares):
September 30, 2020: 325,402,443 shares
December 31, 2019: 325,402,443 shares2) Total number of treasury shares at the end of the period:
September 30, 2020: 4,568,918 shares
December 31, 2019: 4,635,484 shares
3) Average number of shares during the period:
Nine months ended September 30, 2020: 320,798,977 shares
Nine months ended September 30, 2019: 320,724,704 shares*These consolidated financial results are outside the scope of audit by Certified Public Accountants or auditing corporations.
*Explanation of the proper use of financial results forecast and other notes(Caution concerning forward-looking statements)
The earnings forecasts and other forward-looking statements herein are based on information currently available to the Company andcontain risks and uncertainties. Actual results, etc. may differ greatly from the forecast figures depending on various factors.

Table of Contents
1. Qualitative Information on Quarterly Financial Results for the Period under Review ....................... 2(1) Explanation of Operating Results ................................................................................................ 2(2) Explanation of Financial Position ................................................................................................ 3(3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Information..3
2. Condensed Quarterly Consolidated Financial Statements and Primary Notes ................................... 5(1) Condensed Quarterly Consolidated Statements of Profit or Loss and Comprehensive Income ...... 5(2) Condensed Quarterly Consolidated Statement of Financial Position ............................................ 9(3) Condensed Quarterly Consolidated Statement of Changes in Equity ........................................... 11(4) Condensed Quarterly Consolidated Statement of Cash Flows .................................................... 12(5) Notes to Condensed Quarterly Consolidated Financial Statements ............................................. 13(Notes on going concern assumption) ................................................................................... 13(Changes in accounting estimates) ........................................................................................ 13(Segment information) ......................................................................................................... 13(Business Combinations, etc.) ............................................................................................... 16(Significant subsequent events) ............................................................................................ 21

1

1. Qualitative Information on Quarterly Financial Results for the Period under Review(1) Explanation of Operating Results
The Company finalized the provisional accounting treatment relating to business combinations carried out
during the nine months ended September 30, 2019 at the end of the fiscal year ended December 31, 2019. As aresult, the financial figures for the nine months ended September 30, 2019 have been adjusted to reflect the
finalized provisional accounting treatment, and year-on-year comparisons were made with figures adjusted
retroactively.
During the nine months ended September 30, 2020, consolidated revenue of the Company and its groupcompanies (collectively, the “Group”) increased by 13.6% from the corresponding period of the previous year(the “previous year”) to ¥562,294 million due to the conversion of Australian paint manufacturer DuluxGroup
Limited and Turkish paint manufacturer Betek Boya ve Kimya Sanayi Anonim Sirketi into subsidiaries.
Consolidated operating profit decreased by 4.6% from the previous year to ¥63,314 million due to the absenceof insurance income recorded for the Japan segment in the previous year and the impact of the COVID-19
pandemic on all Group businesses. Consolidated profit before tax decreased by 3.4% from the previous year to¥63,572 million, and profit attributable to owners of the parent company decreased by 3.0% from the previous
year to ¥31,637 million.
*DuluxGroup Limited is an Australian company that owns the Dulux Ⓡ trademark in Australia, New
Zealand, Papua New Guinea, Samoa and Fiji only. DuluxGroup Limited is not associated with, and has noconnection to, the owners of the DuluxⓇ trademark in any other countries, nor does it sell Dulux Ⓡ products inany other countries.
Results by business segment are as follows.
Japan
In this region, revenue for automotive coatings was lower than in the previous year due to a decrease inproduction of automobiles due to COVID-19. Industrial coatings revenue was lower than in the previous year
due to factors such as continued production cuts due to COVID-19 and weak market conditions accompanied by
fewer new housing starts. Decorative paints revenue was lower than in the previous year due to COVID-19.
As a result, consolidated revenue for the Japan segment decreased by 15.3% from the previous year to¥115,631 million. Consolidated operating profit decreased by 77.2% from the previous year to ¥7,470 million.
Consolidated operating profit includes ¥2,568 million of dividend income from overseas group companies(¥13,585 million in the previous year). All of this dividend income is eliminated as an internal transaction under“intersegment eliminations and adjustments.”
Asia
In this region, revenue for automotive coatings was lower than in the previous year because of soft market
conditions including a decrease in the number of automobiles manufactured in China and Thailand due to
COVID-19. Revenue for decorative paints, the mainstay business in Asia, was lower than in the previous year
due to the deterioration of market conditions in Malaysia, Singapore, and other Asian nations caused by COVID19, despite a recovery in demand for new housing construction and repainting existing housing in China.
As a result, consolidated revenue decreased by 6.4% from the previous year to ¥253,747 million.
Consolidated operating profit decreased by 4.0% from the previous year to ¥38,430 million.
Oceania
In this region, the profit and/or loss of DuluxGroup Limited since September 2019 has been reflected in theGroup’s consolidated financial results. The performance of decorative paints remained strong, driven bycontinuing high demand influenced by COVID enhanced home improvement activity. Performance in the paintrelated business was robust due to high home improvement demand.
2

As a result, consolidated revenue increased by 714.7% to ¥107,117 million, and consolidated operating
profit increased by 388.4% to ¥13,715 million.
Americas
In this region, revenue for automotive coatings decreased from the previous year, reflecting a sharp fall in
production of automobiles in the United States, the core market in this region, due to COVID-19. Revenue fordecorative paints increased from the previous year due to the brisk demand for housing accompanied by favorable
weather.
As a result, consolidated revenue decreased by 8.4% from the previous year to ¥52,144 million.
Consolidated operating profit decreased by 15.3% from the previous year to ¥3,367 million.
Other
In this segment, the profit and/or loss of Betek Boya ve Kimya Sanayi Anonim Sirketi since July 2019 has
been reflected in the Group’s consolidated financial results. Revenue for automotive coatings decreased from theprevious year due to a sharp decrease in production of automobiles in this region as a result of COVID-19. On
the other hand, revenue for decorative paints and the paint related businesses increased from the previous year,
driven by growth in housing starts and sales of pre-owned houses in Turkey.
As a result, consolidated revenue increased by 92.4% from the previous year to ¥33,654 million, andconsolidated operating profit increased by 770.1% from the previous year to 2,864 million.

(2) Explanation of Financial Position
Total assets at the end of the third quarter of the fiscal year under review increased by ¥24,302 million fromthe end of the previous fiscal year to ¥1,502,949 million.
Current assets increased by ¥43,001 million from the end of the previous fiscal year. This was mainly
attributable to an increase in trade and other receivables resulting from the recovery of revenue in the Chinese
business. Non-current assets decreased by ¥18,698 million from the end of the previous fiscal year. The decrease
was mainly attributable to a decrease in goodwill and other intangible assets due to changes in exchange rates.
Liabilities increased by ¥30,072 million from the end of the previous fiscal year to ¥820,740 million mainly
due to an increase in bonds and borrowings.
Equity decreased by ¥5,770 million from the end of the previous fiscal year to ¥682,208 million. This was
mainly attributable to a decrease in foreign currency translation adjustment.
As a result, equity attributable to owners of the parent company to total assets fell from 37.4% at the end of
the previous fiscal year to 35.7%.
(3) Explanation of Consolidated Financial Results Forecast and Other Forward-Looking Information
The impact of the COVID-19 pandemic is subsiding worldwide, but the degree of the recovery varies
across regions and industries. In some regions, the number of new cases has started to rise again, creating a riskthat market conditions may worsen. Therefore, it is still difficult to determine a reasonable earnings forecast.
However, we have upwardly revised our consolidated earnings forecast for the fiscal year ending December 31,
2020, taking into consideration our financial results for the nine months ended September 30, 2020 and the nearterm trends in our performance.
During the third quarter of the fiscal year under review, the decorative paints business in the Asia segment
saw a strong recovery in demand for new housing construction and repainting existing housing in China, as wellas higher performance than in the previous year in Malaysia. The performance of the decorative paints businessin the Oceania segment was supported by consistently strong demand for home improvements. The performanceof the decorative paints business in the Other segment reflected solid demand and successful sales promotion3

measures such as launch of new brand strategies in Turkey. In addition, the automotive coatings business in all
our operating regions benefited from a greater-than-expected near-term recovery in automobile production.
Revision of the Consolidated Performance Forecast for the Fiscal Year Ending December 31, 2020
(January 1, 2020 – December 31, 2020)
Revenue

OperatingprofitMillion yen

Million yen

Million yen

Million yen

yen

forecast (A)730,000

66,00065,00028,00087.28

Revised forecast (B)760,000

76,00076,00035,000109.10

Amount of change (B-A)

30,00010,00011,000

7,000

4.1

15.2

16.9

25.0

Previously announced

Percentage change (%)

Profitbefore tax

4

Profit attributableto owners of parent

Profit pershare

2. Condensed Quarterly Consolidated Financial Statements and Primary Notes(1) Condensed Quarterly Consolidated Statements of Profit or Loss and Comprehensive Income
Condensed Quarterly Consolidated Statement of Profit or Loss
Nine Months Ended September 30(Million yen)
For the nine months ended
September 30, 2019

For the nine months ended
September 30, 2020

Revenue
Cost of sales

495,119(299,220)562,294(329,244)

Gross profit
Selling, general and administrative expenses
Other income
Other expenses

195,898(134,128)
6,160(1,562)233,050(170,644)
2,955(2,047)

Operating profit
Finance income
Finance costs
Share of profit of investments accounted forusing equity method
Profit before tax
Income taxes

66,367
3,522(4,755)63,314
3,945(4,489)681

800

65,816(18,206)

63,572(15,375)

Profit47,60948,197

Profit attributable to
Owners of parent
Non-controlling interests

32,61614,992

31,637
16,55947,60948,197101.70101.67

98.62
98.59

ProfitEarnings per share
Basic earnings per share (yen)Diluted earnings per share (yen)5Third Quarter Ended September 30(Million yen)
Third quarter ended
September 30, 2019
Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Other income
Other expenses
Operating profit
Finance income
Finance costs
Share of profit of investments accounted forusing equity method
Profit before tax
Income taxes
ProfitProfit attributable to
Owners of parent
Non-controlling interests
ProfitEarnings per share
Basic earnings per share (yen)Diluted earnings per share (yen)6

Third quarter ended
September 30, 2020

182,694(110,383)
72,311(49,649)
2,443
(683)
24,422
1,172(2,412)

216,854(126,358)
90,495(62,033)
939(756)
28,645
1,854(1,408)224

490

23,406(6,542)
16,86429,580(7,694)
21,886

11,677
5,186
16,864

14,746
7,139
21,886

36.41
36.40

45.97
45.95

Condensed Quarterly Consolidated Statement of Comprehensive Income
Nine Months Ended September 30(Million yen)
For the nine months ended
September 30, 2019

For the nine months ended
September 30, 2020

47,60948,197

1,312(4,266)

(18)

(30)

1,294

(4,296)(18,479)

31,969)(32,626)

(34)

(669)

(575)

(51,774)(32,580)

Comprehensive income(50,480)(2,871)(36,877)
11,319Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income(11,810)8,939(2,871)(1,825)
13,144
11,319ProfitOther comprehensive income
Items that will not be reclassified subsequently to profit
or loss
Financial assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified subsequently
to profit or loss
Items that may be reclassified subsequently to profit orloss
Exchange differences on translation of foreign
operations
Cash flow hedges
Share of other comprehensive income of entities
accounted for using equity method
Total of items that may be reclassified subsequently to
profit or loss
Total other comprehensive income

7Third Quarter Ended September 30(Million yen)
Third quarter ended
September 30, 2019

Third quarter ended
September 30, 2020

16,864

21,886

1,021

80

(6)

5

1,015

85

(4,512)(789)(12,315)

(51)

(295)

35

(17,122)(805)

Comprehensive income(16,107)756(719)
21,166Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income(1,662)
2,419
756

12,647
8,519
21,166

ProfitOther comprehensive income
Items that will not be reclassified subsequently to profit
or loss
Financial assets measured at fair value through othercomprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified subsequently
to profit or loss
Items that may be reclassified subsequently to profit orloss
Exchange differences on translation of foreign
operations
Cash flow hedges
Share of other comprehensive income of entities
accounted for using equity method
Total of items that may be reclassified subsequently to
profit or loss
Total other comprehensive income8(2) Condensed Quarterly Consolidated Statement of Financial Position
As ofDecember 31, 2019
AssetsCurrent assets
Cash and cash equivalents
Inventories
Trade and other receivables
Other financial assets
Other current assets
Subtotal
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Other intangible assets
Investments accounted for using equity method
Other financial assets
Other non-current assets
Deferred tax assets
Total non-current assets
Total assets

9(Million yen)
As of
September 30, 2020

123,300
92,860212,844
65,158
12,623506,787428
507,216

141,191
91,199245,01457,312
15,176549,894323
550,217240,319427,091
230,986
12,68054,381
2,818
3,151
971,430
1,478,646

243,806
418,721
222,204
12,01049,1683,012
3,806
952,731
1,502,949

As ofDecember 31, 2019

(Million yen)
As of
September 30, 2020

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Bonds and borrowings
Other financial liabilities
Income taxes payable
Provisions
Other current liabilities
Total current liabilities

153,277
384,049
12,4706,739
2,197
39,413598,147

152,451
73,64813,336
9,643
3,063
51,872304,014

Non-current liabilities
Bonds and borrowings
Other financial liabilities
Retirement benefit liability
Provisions
Other non-current liabilities
Deferred tax liabilities
Total non-current liabilities

58,14744,681
24,382900
1,847
62,560
192,519

383,546
46,276
23,406739
3,919
58,837516,725

Total liabilities

790,667

820,740

78,862
62,927(6,378)411,941
5,568
552,922
135,056
687,979
1,478,646

78,862
63,207(6,294)429,106(27,859)
537,022
145,186
682,208
1,502,949－

EquityShare capital
Capital surplus
Treasury shares
Retained earnings
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity10(3) Condensed Quarterly Consolidated Statement of Changes in Equity
For the Nine Months Ended September 30, 2019 (From January 1, 2019 to September 30, 2019)(Million yen)SharecapitalBalance as of January 1, 2019
ProfitOther comprehensive
incomeComprehensive income

Equity attributable to owners of parent
Other
CapitalTreasury Retained components
surplussharesearnings of equity

Noncontrolling Total equity
interests

Total

78,862

63,247(6,444)

390,287(5,905)520,047

127,570647,618－－－

32,616－32,61614,99247,609－－－－(44,427)(44,427)(6,052)(50,480)－－－

32,616(44,427)(11,810)8,939(2,871)

Purchase of treasury shares
Disposal of treasury shares
Dividends
Share-based paymenttransactions
Changes in ownershipinterest in subsidiaries
Change in scope of
consolidation
Transfer from othercomponents of equity toretained earnings
Transfer from othercomponents of equity to
non-financial assets
Capital increase of
subsidiaries
Other

－
－
－

－
104
－

(6)
49
－

－
－
(14,433)

－
－
－

(6)
153
(14,433)－－(12,047)(6)
153(26,481)

－

－

－

－

9

9

－

9

－

(481)

－

－

－

(481)

(441)

(922)

－

－

－

－

－

－

493

493

－

－

－

(13)

13

－

－

－

－

－

－

－

32,62632,626－32,626

－

－

－

－

－

－

1,618

1,618

－

－

－

－

－

－

(25)

(25)

Total transactions with owners

－

(377)

43

(14,447)

32,64917,867(10,402)

7,465

Balance as of September 30,
201978,86262,869(6,401)

408,457(17,683)

526,105

126,107652,212For the Nine Months Ended September 30, 2020 (From January 1, 2020 to September 30, 2020)(Million yen)SharecapitalBalance as of January 1, 2020
ProfitOther comprehensive
incomeComprehensive income

Equity attributable to owners of parent
Other
CapitalTreasury Retained components
surplussharesearnings of equity

Noncontrolling Total equity
interests

Total

78,862

62,927(6,378)411,941

5,568

552,922

135,056

687,979－－－

31,637－

31,637

16,55948,197－－－－(33,463)(33,463)(3,414)(36,877)－－－

31,637(33,463)(1,825)

13,144

11,319Purchase of treasury shares
Disposal of treasury shares
Dividends
Share-based paymenttransactions
Changes in ownershipinterest in subsidiaries
Change in scope of
consolidation
Transfer from othercomponentsof equity
to retained earnings
Transferfromothercomponents of equity to nonfinancial assets
Capital increase of
subsidiaries
Other

－
－
－

－
279
－

(10)
93
－

－
－
(14,437)

－
－
－

(10)
372
(14,437)－－(2,469)(10)372(16,907)

－

－

－

－

－

－

－

－

－

－

－

－

－

－

(552)

(552)

－

－

－

－

－

－

(82)

(82)

－

－

－

(35)

35

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

43

43

－

－

－

－

－

－

46

46

Total transactions with owners

－

279

83

(14,472)35(14,074)(3,014)(17,089)

Balance as of September 30,
2020

78,862

63,207(6,294)429,106(27,859)

537,022

145,186

682,20811

(4) Condensed Quarterly Consolidated Statement of Cash Flows(Million yen)
For the nine months ended
September 30, 2019

For the nine months ended
September 30, 2020

65,816
17,858(2,648)2,860

63,572
21,578(2,742)
4,300

(681)

(800)

(1,040)314(2,634)(13,428)
1,609
(348)
412
6,012
1,050
74,8381,998
1,353(2,406)(16,990)
58,793(1,279)(40,632)
3,340
(621)
1,142
13,3794,696
66,2481,910
2,159(4,693)(16,692)
48,932(526)(4,600)

1,823

11,684(15,115)
2,817(1,621)(318,655)(57)－(3,639)－－(191)(335,167)(18,679)
1,018(2,242)(1,937)－(2,652)(71)
162(1,538)23(18,834)

315,096－(21,200)(5,788)
1,611(14,433)(1,225)(6)
274,052(338,341)
371,849(16,265)(6,057)43(14,390)(2,091)(605)(5,859)(2,371)(6,346)(4,692)
129,633
124,941

17,891
123,300
141,191

Cash flows from operating activities
Profit before tax
Depreciation and amortization
Interest and dividend income
Interest expenses
Share of loss (profit) of investments accounted forusing equity method
Loss (gain) on sale and retirement of property, plantand equipment, and intangible assets
Decrease (increase) in inventories
Decrease (increase) in trade and other receivables
Increase (decrease) in trade and other payables
Increase (decrease) in retirement benefit liability
Increase (decrease) in provisions
Increase (decrease) in other current liabilities
Other
SubtotalInterest received
Dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Net decrease (increase) in time deposits
Net decrease (increase) in short-term investment
securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Purchase of shares of subsidiaries
Payments for sale of shares of subsidiaries
Payments for transfer of business
Payments for loans receivables
Proceeds from collection of loans receivables
Purchase of other financial assets
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Repayments of lease obligations
Capital contribution from non-controlling interests
Dividends paid
Dividends paid to non-controlling interests
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period12(5) Notes to Condensed Quarterly Consolidated Financial Statements(Notes on going concern assumption)
There is no relevant information.
(Changes in accounting estimates)
Trademark rights (other intangible assets) of NIPPON PAINT (H.K.) COMPANY LIMITED, etc.,
recognized when these companies became consolidated subsidiaries of the Company in December 2014, had beenamortized over 20 years. However, we have reexamined the amortization period of these trademark rights by
taking into consideration that the trademark rights have maintained high brand recognition and other factors.
Accordingly, the Company has changed the estimated useful life of the trademark rights to an indefinite usefullife from the beginning of the three months ended March 31, 2020.
As a result of this change, amortization of trademark rights (selling, general and administrative expenses)
decreased ¥1,694 million yen in the condensed quarterly consolidated statements of profit or loss for the ninemonths ended September 30, 2020.
The change has affected the results of operations for the Asia segment.
(Segment information)(1) Summary of reportable segments
The reportable segments of the Group categorize are based on the business units of the Group for which
separate financial information is available and are subject to periodical evaluation by the Board of Directors,
which is the highest decision-making body, in order to make decisions regarding resource allocations andperformance assessments. The Group’s primary businesses are the paint and coating business which manufacturesand sells automotive coatings, decorative paints, industrial coatings, fine chemicals, and other paints, and the paintrelated business which manufactures and sells paint-related products such as adhesives. The Company andseparate companies are responsible for activities in Japan; and overseas, separate companies are responsible for
the Asia, Oceania, Americas, and Other regions. All companies are individual management units that conductbusiness operations based on comprehensive strategies for products in the regions where they operate.
As a result, the Group consists of four reportable segments divided by region and based on manufacturing
and sales infrastructures: Japan, Asia, Oceania, and Americas.
Other consists of business activities at overseas subsidiaries in Europe, etc. Those business activities aremanaged individually, but are not material enough to be disclosed separately as an independent segment of theGroup.

13

(2) Performance by reportable segment
For the Nine Months Ended September 30, 2019 (From January 1, 2019 to September 30, 2019)

Reportable segment(Million yen)
Condensed
quarterly
Adjustment
consolidated(Note 1)
financialstatements

Other

Total

477,625

17,493495,119－495,119107

31,523630

32,153(32,153)－

13,14857,018509,148

18,124527,272(32,153)495,119

2,808

3,974

79,627329

79,957(13,589)

66,367

Japan

Asia

Oceania

Americas Subtotal

Revenue from externalcustomers

136,501

271,063

13,14856,911

Intersegment revenue

28,541

2,874

－

Total

165,043

273,938

32,81640,028

Revenue

Segment profit (loss)
Financial income

3,522

Financial costs(4,755)Shareofprofitofinvestments accounted forusing equity method

681

Profit before tax

65,816

Notes: 1. Adjustments to “intersegment revenue” and “segment profit (loss)” are primarily due to intersegment eliminations.
2. The provisional treatment relating to business combinations carried out during the third quarter ended September 30, 2019was finalized at the end of the fiscal year ended December 31, 2019. Therefore, relevant figures for the third quarter ended
September 30, 2019 have been adjusted retroactively to reflect the results of the finalization of provisional accounting
treatment.

For the Nine Months Ended September 30, 2020 (From January 1, 2020 to September 30, 2020)

Reportable segment(Million yen)
Condensed
quarterly
Adjustment
consolidated(Note)
financialstatements

Other

Total

528,640

33,654562,294－562,29467

17,578543

18,121(18,121)－

107,21452,211

546,218

34,197580,416(18,121)562,294

13,715

3,367

62,9832,864

65,848(2,533)63,314

Japan

Asia

Oceania

Americas Subtotal

Revenue from externalcustomers

115,631

253,747

107,117

52,144

Intersegment revenue

14,491

2,922

97

Total

130,122

256,669

Segment profit

7,470

38,430

Revenue

Financial income

3,945

Financial costs(4,489)Shareofprofitofinvestments accounted forusing equity method

800

Profit before tax

63,572

Note: Adjustments to “intersegment revenue” and “segment profit” are primarily due to intersegment eliminations.

14

(3) Information on products and services
For the Nine Months Ended September 30, 2019 (From January 1, 2019 to September 30, 2019)(Million yen)
Japan

Asia

Oceania

Americas

Other

Total

Paint and coating business

136,501

271,063

7,075

56,911

15,667487,221

Automotive coatings

34,68949,598－19,763

8,807

112,859

Decorative paints

36,434

185,176

6,582

34,702

4,651

267,547

Industrial coatings

30,27319,929

493

－

922

51,618Fine chemicals

6,580

4,493

－

2,299

767

14,140

Other paints

28,524

11,865

－

146

518

41,055

Paint related business

－

－

6,072

－

1,825

7,898

Total

136,501

271,063

13,14856,911

17,493495,119

For the Nine Months Ended September 30, 2020 (From January 1, 2019 to September 30, 2020)(Million yen)
Japan

Asia

Oceania

Paint and coating business

115,631

253,747

Automotive coatings

24,599Decorative paints

31,956

Industrial coatings

25,906

17,619Fine chemicals

5,474

3,728

Other paints

Americas

Other

Total

60,14052,14425,849507,51339,453－

14,845

5,840

84,739181,799

55,99435,221

16,140321,113

4,145

－

2,586

50,257

－

1,941

1,005

12,14927,694

11,145

－

135

277

39,252

Paint related business－－

46,976－

7,804

54,781

Total

115,631

253,747

107,117

52,14433,654562,294

15

(Business combinations, etc.)
For the Nine Months Ended September 30, 2019 (From January 1, 2019 to September 30, 2019)(Acquisition (acquisition of ownership) of Australian DuluxGroup Limited)(1) Overview of business combination
1) Name and business of acquired company
Name: DuluxGroup Limited and its 42 subsidiaries
Business: Manufacture and sale of premium branded paint & coatings and home
improvement products mainly in Oceania* DuluxGroup Limited has an affiliate accounted for using the equity method.
2) Date of acquisition
August 21, 20193) Percentage of voting equity interests acquired
100%4) Method of obtaining control
Share acquisition in exchange for cash5) Primary reasons for the acquisition
The paints market in Australia and New Zealand (“ANZ”) is an attractive market that continues to growsteadily even in developed countries. The DuluxGroup Limited has the largest share of the ANZ paints
market. DuluxGroup Limited is a leading company in ANZ with a wealth of iconic brands especially in thedecorative paint segment and continues to expand its market share ahead of the No. 2 ranking player.
Therefore, it is expected that this acquisition will further strengthen the business foundation of the Company.
The acquisition gives the Company a strong position in the decorative paint business, which accounts for alarge share of worldwide demand for paint and has significant growth potential. The acquisition also gives
the Company a balanced portfolio in both fast-growing regions and regions where growth is expected to bestable. Furthermore, the acquisition is expected to contribute greatly to the progress of the medium-term
management plan of the Company. Therefore, the Company decided to conduct this acquisition.
(2) Fair values of assets and liabilities as of the date of business combination(Million yen)
Fair value
Cash and cash equivalents

2,906

Property, plant and equipment

54,141Intangible assets

125,809

Other assets

52,342

Fair value of liabilities assumed
Fair value of assets acquired and liabilities
assumed, net(134,350)
100,84816

Trade and other receivables
Contractual amount due(Million yen)
Fair value

18,924

18,541163

163

19,087

18,704(382)－

18,70418,704

Trade receivables
Receivables
Total
Best estimate of contractual cash flows notexpected to be collected
Net total

Note: The acquisition price is allocated to assets and liabilities based on the fair value at the date of obtaining
control. A provisional accounting treatment was applied for the third quarter ended September 30, 2019because allocation of acquisition price had not been completed. However, this allocation was completed
at the end of the fiscal year ended December 31, 2019. Accordingly, amounts shown in the Condensed
Quarterly Consolidated Financial Statements for the nine months ended September 30, 2019 and thethird quarter ended September 30, 2019 have been adjusted retroactively. The details of adjustmentsfrom the initial provisional amounts are as follows.
Property, plant and equipment¥6,468 million increase
Intangible assets¥120,099 million increase
Fair value of liabilities assumed¥37,970 million increase
Goodwill¥88,597 million decrease(3) Consideration transferred and goodwill(Million yen)AmountConsideration transferred (cash)A262,932

Basis adjustments
Fair value of assets acquired and liabilities
assumed, net
Non-controlling interests (Note 1)B

31,720C

100,848

D(156)

A+B-(C-D)

193,647

Goodwill (Note 2)

Note 1: Non-controlling interests are measured at the proportion of non-controlling interests to the fair valueof the acquired company’s identifiable net assets.
Note 2: Goodwill primarily reflects the ability to generate excess earnings in the future and synergies withexisting businesses. The goodwill does not include any amount which is expected to be deductible
for tax purposes.
(4) Acquisition-related expenses
Line item:

Selling, general and administrative expenses

Amount:¥1,425 million17(5) Effects on the consolidated statement of profit or loss
1) Acquired company’s financial results on and after the date of acquisition recognized in the consolidated
statement of profit or loss
(Million yen)
For the fiscal year ending
December 31, 2019
(From September 1, 2019
to September 30, 2019)
Revenue
13,148
Profit1,763

2) Effects on the consolidated statement of profit or loss in the case where the business combination isassumed to have been executed at beginning of period(Million yen)
For the fiscal year ending
December 31, 2019
(From January 1, 2019
to September 30, 2019)
Revenue
103,747
Profit4,482

The pro forma information (unaudited information) has not been reviewed.
(6) Effects of business combination on cash flows(Million yen)AmountConsideration paid for acquisition

294,652

Cash and cash equivalents(2,906)

Purchase of shares of subsidiaries

291,745(Acquisition (acquisition of ownership) of Turkish Betek Boya ve Kimya Sanayi Anonim Sirketi)(1) Overview of business combination
1) Name and business of acquired company
Name: Betek Boya ve Kimya Sanayi Anonim Sirketi and its 8 subsidiaries

Business: Manufacture and sale of decorative paint and construction materials* Betek Boya ve Kimya Sanayi Anonim Sirketi has an entity accounted for using equity method.
2) Date of acquisition
July 10, 20193) Percentage of voting equity interests acquired
99.71%
4) Method of obtaining control
Share acquisition in exchange for cash185) Primary reasons for acquisition
The decorative paint market in Turkey is an attractive market with good prospects for strong growth.
Betek Group, which is the group of companies in which the Company is purchasing stock, was founded in1988 and handles decorative paints and industrial coatings as well as ETICS (External Thermal Insulation
Composite System: insulation materials) and other products. Betek Group is a leading company that has the
top share in the decorative paint market in Turkey. Its major brands Filli Boya and Fawori have a large market
share and a high brand-recognition level. The acquisition of the leading player in Turkey will allow the
Company to benefit from the high growth potential of this market. The Company has had a strong presencein Asia and China for many years. Furthermore, giving Betek Boya ve Kimya Sanayi Anonim Sirketi accessto the know-how and business resources the Company has accumulated through its Asian paint and coatingsbusiness is expected to further increase the speed of this company’s growth. Accordingly, the Company
decided to conduct this acquisition, firmly believing that the transaction will greatly contribute to theprogress of the Company’s medium-term management plan and the achievement of its medium/long-term
management goals.
(2) Fair values of assets and liabilities as of the date of business combination(Million yen)
Fair value
Cash and cash equivalents

3,813

Property, plant and equipment

8,235

Intangible assets

7,917

Other assets

22,623

Fair value of liabilities assumed
Fair value of assets acquired and liabilities
assumed, net(36,812)5,777

Trade and other receivables(Million yen)Contractual amount due
Trade receivables
Receivables
Total
Best estimate of contractual cash flows notexpected to be collected
Net total

Fair value

17,251

14,566327

327

17,57914,893(2,685)－

14,893

14,893

Note: The acquisition price is allocated to assets and liabilities based on the fair value at the date of obtaining
control. A provisional accounting treatment was applied for the third quarter ended September 30,
2019 because allocation of the acquisition price had not been completed. However, this allocation wascompleted at the end of the fiscal year ended December 31, 2019. Accordingly, the figures shown in
the Condensed Quarterly Consolidated Financial Statements for the nine months ended September
30, 2019 and the third quarter ended September 30, 2019 have been adjusted retroactively. The detailsof adjustments from the initial provisional amounts are as follows.
Intangible assets¥7,897 million increase
Fair value of liabilities assumed¥1,584 million increaseNon-controlling interests¥18 million increase
Goodwill¥6,295 million decrease19

(3) Consideration transferred and goodwill(Million yen)AmountConsideration transferred (cash)A

26,456

Basis adjustments
Fair value of assets acquired and liabilities
assumed, net
Non-controlling interests (Note 1)

B

906

C

5,777

D

531

A+B-(C-D)

22,116

Goodwill (Note 2)

Note 1: Non-controlling interests are measured at the proportion of non-controlling interests to the fair valueof the acquired company’s identifiable net assets.
Note 2: Goodwill primarily reflects the ability to generate excess earnings in the future and synergies withexisting businesses. The goodwill does not include any amount which is expected to be deductible
for tax purposes.
(4) Acquisition-related expenses
Line item:

Selling, general and administrative expenses

Amount:¥556 million(5) Effects on the consolidated statement of profit or loss
1) Acquired company’s financial results on and after the date of acquisition recognized in the consolidated
statement of profit or loss
(Million yen)
For the fiscal year ending
December 31, 2019
(From July 1, 2019
to September 30, 2019)
Revenue
7,825Profit

1,017

2) Effects on the consolidated statement of profit or loss in the case where the business combination is assumed
to have been executed at beginning of period(Million yen)
For the fiscal year ending
December 31, 2019
(From January 1, 2019
to September 30, 2019)
Revenue
21,960
Profit112

The pro forma information (unaudited information) has not been reviewed.

20

(6) Effects of business combination on cash flows(Million yen)AmountConsideration paid for acquisition

27,362

Cash and cash equivalents(3,813)Purchase of shares of subsidiaries

23,548For the Nine Months Ended September 30, 2020 (From January 1, 2020 to September 30, 2020)
There is no relevant information.

(Significant subsequent events)
There is no relevant information.

21