Consolidated Financial Results
for the Six Months Ended September 30, 2021
[Japanese GAAP]
October 26, 2021
Company name: SHIKOKU CHEMICALS CORPORATION
Stock exchange listing: Tokyo Stock Exchange
Code number: 4099
URL: https://www.shikoku.co.jp/
Representative: Naoto Tanaka, President and C.E.O.
Contact: Yoshinori Manabe, Director, Executive Officer, Head of Business Promotion Division
Phone: +81-877-22-4111
Scheduled date of filing quarterly securities report: November 15, 2021
Scheduled date of commencing dividend payments: December 3, 2021
Availability of supplementary briefing material on quarterly financial results: Available
Schedule of quarterly financial results briefing session: Scheduled(Amounts less than one million yen are rounded down)
1. Consolidated Financial Results for the Six Months Ended September 30, 2021 (from April 1, 2021 to September
30, 2021)(1) Consolidated Operating Results(% indicates changes from the previous corresponding period.)
Profit attributable to
Net sales
Operating profit
Ordinary profit
owners of parent
Six months ended
Million yen%
Million yen%
Million yen%
Million yen%
September 30, 2021
25,266
7.9
3,795
45.5
4,116
45.9
2,943
52.9
September 30, 2020
23,408(8.9)
2,609(26.9)
2,822(22.2)
1,924(24.1)(Note) Comprehensive income: Six months ended September 30, 2021: ¥2,941 million [(6.1) %]Six months ended September 30, 2020: ¥3,133 million [70.2 %]Diluted earnings
Basic earnings
per shareper share
Six months ended
Yen
Yen
September 30, 2021
53.45–
September 30, 2020
34.39–
(2) Consolidated Financial Position
Total assets

Net assets

Million yen

Equity ratio

Million yen%

77,551
As of September 30, 2021
105,798
76,566
As of March 31, 2021
107,344(Reference) Equity: As of September 30, 2021: ¥76,711 million
As of March 31, 2021: ¥75,718 million

72.5
70.5

2. Dividends
1stquarter-end
Yen

Annual dividends
2nd
3rd
Fiscal yearquarter-end
quarter-end
end
Yen

Total

Yen

Yen

Yen

12.00
Year ended March 31, 2021
12.00
Year ending March 31, 2022
Year ending March 31, 2022
(Forecast)(Note) Revisions to the cash dividends forecasts most recently announced: None

12.00

24.00

12.00

24.00

3. Forecast of Consolidated Financial Results for the Year Ending March 31, 2022 (from April 1, 2021 to March
31, 2022)(% indicates changes from the previous corresponding period.)
Profit attributable Basic earnings
Net sales
Operating profit
Ordinary profit
to owners of parent
per share
Million yen% Million yen% Million yen% Million yen

Full year
51,500
3.9
8,000
8.1
8,300
3.8
(Note) Revisions to the financial results forecast most recently announced: None

6,000

%

Yen

4.2

107.79* Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes inscope of consolidation): No(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: Yes(3) Changes in accounting policies, changes in accounting estimates and retrospective restatement
1) Changes in accounting policies due to the revision of accounting standards: Yes
2) Changes in accounting policies other than 1) above: No
3) Changes in accounting estimates: No4) Retrospective restatement: No(4) Total number of issued shares (ordinary shares)
1) Total number of issued shares at the end of the period (including treasury shares):
September 30, 2021: 54,832,263 shares
March 31, 2021: 55,877,263 shares2) Total number of treasury shares at the end of the period:
September 30, 2021: 205,638 shares
March 31, 2021: 212,603 shares
3) Average number of shares during the period:
Six months ended September 30, 2021: 55,069,507 shares
Six months ended September 30, 2020: 55,971,000 shares* These quarterly financial results are outside the scope of quarterly review by certified public accountants or audit
firms* Explanation regarding the appropriate use of financial results forecasts and other special items
Forward-looking statements such as operating results forecasts and other projections contained in this report are
based on information currently available to the Company and certain assumptions deemed reasonable. Actual results
may differ significantly from these forecasts due to a wide range of factors. For the assumptions underlying theoperating results forecasts and cautionary notes concerning their use, please refer to “(3) Explanation ofConsolidated Financial Results Forecast and Other Forward-looking Information” under “1. Qualitative Information
on Quarterly Financial Results for the Period under Review” on page 3 of the attached documents to the quarterly
financial statements.

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. Quarterly Consolidated Financial Statements and Primary Notes ................................................................ 4(1) Quarterly Consolidated Balance Sheets ................................................................................................... 4(2) Quarterly Consolidated Statements of Income and Comprehensive Income ........................................... 6(3) Quarterly Consolidated Statements of Cash Flows .................................................................................. 8(4) Notes to Quarterly Consolidated Financial Statements ............................................................................ 9(Notes on going concern assumption) ...................................................................................................... 9(Notes in the case of significant changes in shareholders’ equity) ........................................................... 9(Accounting policies adopted specially for the preparation of quarterly consolidated financial statements) .. 9
(Changes in accounting policies) ............................................................................................................. 9(Additional information) ........................................................................................................................ 10(Segment information, etc.) .................................................................................................................... 111

1. Qualitative Information on Quarterly Financial Results for the Period under Review(1) Explanation of Operating Results
The Japanese economy during the six months ended September 30, 2021 showed signs of slow recovery due
to the repeated issuance of the state of emergency declaration which led to subdued individual consumption.
However, it is expected to recover faster after the lifting of the declaration and restrictions on activities on andafter September 30. As for overseas economies, although the U.S. economy continued to recover steadily, demand
grew at a slower pace recently because of the greater inflation pressure driven by supply constraints mainly insemiconductors and higher resources prices. In China, there were new risks related to issues of excessive debt
and power shortage, and the situation remained unpredictable.
Under these circumstances, for the six months ended September 30, 2021 (from April 1, 2021 to September
30, 2021), the Group posted net sales of ¥25,266 million (up 7.9% year-on-year), operating profit of ¥3,795
million (up 45.5% year-on-year), ordinary profit of ¥4,116 million (up 45.9% year-on-year) and profit attributableto owners of parent of ¥2,943 million (up 52.9% year-on-year), all of which increased from the previous year’s
results. In addition, when compared with periods before the novel coronavirus disease (COVID-19) pandemic,
net sales recorded the second-highest number following that at the corresponding period of the year before last,and in terms of profits, profit attributable to owners of parent was at a high level as profit hit a record high.
Operating results by segment are as follows.
1) Chemicals operations(Inorganic chemicals)
Sales of insoluble sulfur, a material for radial tires, have largely surpassed those of the previous fiscal year,
which was affected by the spread of COVID-19, backed by a rapid recovery in demand for automobiles and tires
since the second half of the previous fiscal year. Sales of carbon disulfide for rayon and cellophane, and sodium
sulfate for bath agents and detergents increased year on year due to a rebound from the COVID-19 pandemic.
(Organic chemicals)
Regarding chlorinated isocyanuric acid for disinfectants, sales of agents for swimming pools recovered indomestic market, thanks to the partial resumption of swimming lessons at schools. Sales of agents for plumbing
systems (sanitary devices) remained strong with increased demand for sterilization and cleaning as a result of
rising awareness of hygiene at homes. Sales remained strong in the U.S. market, backed by the growing homeswimming pool market due to a recovery in economic conditions and stay-at-home demand.
(Fine chemicals)
Regarding Glicoat-SMD, a heat-resistant soluble OSP (Organic Solderability Preservative) for printed wiringboards, sales remained solid, against a backdrop of the growth of electronics markets worldwide. Sales of advanced& specialty chemicals such as epoxy resin curing agent (imidazoles) and resin modifier (glycoluril derivatives)
increased year on year, backed by a recovery in demand for use in electronic components and automobiles.
As a result, net sales for the chemicals operations segment were ¥16,407 million (up 14.8% year-on-year),and segment profit was ¥3,614 million (up 69.6% year-on-year), both surpassing the previous year’s results.
2) Housing Materials operations
Although the number of new housing starts showed signs of a slight recovery, sales of interior, exterior finishes
and paving materials and exterior products remained sluggish, as governments and private companies deferredor had a wait-and-see attitude for their projects or capital investment, against a backdrop of weak domestic
demand and uncertainty about the future under the state of emergency declaration. Profitability also declined due
to soaring prices of raw materials including aluminum ingots.
As a result, net sales for the housing materials operations segment were ¥8,199 million (down 5.9% year-onyear), and segment profit was ¥1,058 million (down 20.9% year-on-year), both falling below the previous year’s
results.

2

Reference information[Overseas net sales]
Six months ended September 30, 2020
(from April 1, 2020 to September 30, 2020)

Six months ended September 30, 2021
(from April 1, 2021 to September 30, 2021)

Net sales(Million yen)

Net sales(Million yen)Overseas net sales toconsolidated net sales (%)

Overseas net sales toconsolidated net sales (%)

Asia

3,094

13.2

3,798

15.0

North America

3,279

14.0

3,746

14.8

Other regions

907

3.9

1,009

4.0

Total

7,281

31.1

8,554

33.9

Consolidated net sales

23,40825,266(2) Explanation of Financial Position(Status of assets, liabilities and net assets)
Total assets decreased by ¥1,546 million from the end of the previous fiscal year to ¥105,798 million. Major
increases were ¥987 million in machinery, equipment and vehicles and ¥473 million in investment securities, andmajor decreases were ¥1,254 million in notes and accounts receivable – trade and ¥1,230 million in cash anddeposits.
Liabilities decreased by ¥2,531 million from the end of the previous fiscal year to ¥28,246 million. Major
decreases were ¥1,559 million in retirement benefit liability and ¥759 million in notes and accounts payable –trade.
Net assets increased by ¥985 million from the end of the previous fiscal year to ¥77,551 million. A major
increase was ¥990 million in retained earnings.
As a result, equity ratio rose to 72.5%, from 70.5% at the end of the previous fiscal year.
(Status of Cash Flows)
Cash flows provided by operating activities totaled ¥2,275 million (a decrease of ¥817 million year-on-year).
Major cash inflows were profit before income taxes of ¥4,135 million, decrease in trade receivables of ¥1,632
million and depreciation of ¥942 million, while major cash outflows were contribution to employees’ retirement
benefits trust of ¥1,500 million and income taxes paid of ¥1,415 million.
Cash flows used in investing activities totaled ¥626 million (a decrease of ¥417 million year-on-year). A major
cash inflow was proceeds from redemption of securities of ¥2,000 million, while major cash outflows werepurchase of property, plant and equipment of ¥1,681 million and purchase of investment securities of ¥510 million.
Cash flows used in financing activities totaled ¥1,928 million (a decrease of ¥361 million year-on-year). The
major component was purchase of treasury shares of ¥1,290 million.
As a result, cash and cash equivalents totaled ¥36,977 million (a decrease of ¥230 million from the end of theprevious fiscal year).

(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information
The full-year financial results forecast has not been changed from the initial plan (announced on April 27,2021). Assumptions for the exchange rates of major currencies are ¥105 to U.S. dollar and ¥128 to Euro.

3

2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly Consolidated Balance Sheets(Million yen)
As of March 31, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Electronically recorded monetary claims - operating
Securities
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

4

As of September 30, 2021

25,907
12,637
2,678
13,999
6,259
46
3,024
471
(1)
65,024

24,677
11,382
2,311
13,300
6,323
68
3,355
564
(0)
61,981

5,040
3,176
8,857
3,771
646
21,492
165

5,231
4,164
8,857
3,639
571
22,464252

19,705
324
309
325
(3)
20,662
42,319107,344

20,179
323
311
289
(3)
21,09943,816
105,798

(Million yen)
As of March 31, 2021
Liabilities
Current liabilities
Notes and accounts payable – trade
Electronically recorded obligations - operating
Short-term borrowings
Current portion of long-term borrowings
Accrued expenses
Income taxes payable
Accrued consumption taxes
Notes payable - facilities
Electronically recorded obligations-facilities
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Provision for retirement benefits for directors (andother officers)
Retirement benefit liability
Asset retirement obligations
Provision for share awards
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

5

As of September 30, 2021

6,602
338
2,530
74
1,418
1,389
201
17
75
3,055
15,702

5,842
311
2,530
91
1,392
1,214
100
1
381
2,855
14,721

10,95716
1,111

10,991
16
1,111

77

81

2,134
379
32
365
15,07530,778

574
380
36
332
13,52428,246

6,867
5,740
57,140(236)
69,512

6,867
5,740
58,130(236)
70,503

3,789
(27)
2,533
(90)
0
6,205
847
76,566
107,344

3,763
(18)
2,533
(78)
7
6,208
839
77,551
105,798

(2) Quarterly Consolidated Statements of Income and Comprehensive Income
Quarterly Consolidated Statements of Income
Six Months Ended September 30(Million yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Transportation and storage costs
Advertising expenses
Salaries
Retirement benefit expenses
Provision for retirement benefits for directors (and otherofficers)
Research and development expenses
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Sales discounts
Foreign exchange losses
Donations
Miscellaneous losses
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

Six months
ended September 30, 2020
23,408
14,5758,833

Six months
ended September 30, 2021
25,266
14,86910,397

2,204
179
1,101
102

2,584
204
1,126
79

9

8

588
2,037
6,224
2,609

598
1,998
6,601
3,795

19
250
–
48
318

31
284
28
41
385

11
62
27
–
3
105
2,822

12
–
–
50
2
64
4,116

0
4
35
39

0
–
28
28

16
16
2,845
930
1,915
(9)
1,924

9
9
4,135
1,198
2,937
(5)
2,943

6

Quarterly Consolidated Statements of Comprehensive Income
Six Months Ended September 30(Million yen)

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

Six months
ended September 30, 2020
1,915

Six months
ended September 30, 2021
2,937

1,224
4
(24)
13
1,218
3,133

(24)
9
12
6
3
2,941

3,143

2,946

(10)

(4)

7

(3) Quarterly Consolidated Statements of Cash Flows(Million yen)Six months
ended September 30, 2020
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Contribution to employees' retirement benefits trust
Interest and dividend income
Interest expenses
Loss (gain) on sale of investment securities
Subsidy income
Loss on retirement of property, plant and equipment
Loss (gain) on sale of property, plant and equipment
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Other, net
SubtotalInterest and dividends received
Interest paid
Subsidies received
Income taxes refund (paid)
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of securities
Proceeds from redemption of securities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for retirement of property, plant andequipment
Purchase of investment securities
Proceeds from sale and redemption of investment
securities
Decrease (increase) in time deposits
Other, net
Net cash provided by (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
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

8

Six months
ended September 30, 2021

2,845
892
(29)
13
–
(270)
11
(4)
(35)
16
(0)
2,007
818
(1,597)
(234)
(301)
4,133
270
(12)
35
(1,333)
3,093

4,135
942
(52)
1
(1,500)
(315)
12
–
(28)
9
(0)
1,632
(412)
(785)
(318)
37
3,357
317
(12)
28
(1,415)2,275(2,000)3,500(1,313)
0

(300)
2,000
(1,681)
4

(15)

(7)

(2,247)

(510)

5

–

1,000
27
(1,043)

–
(131)
(626)

(200)
900
(667)
(1,605)
(686)
(3)
(26)
(2,289)(39)(279)
32,60732,327–100(49)(1,290)
(669)
(3)
(15)
(1,928)48(230)
37,20736,977

(4) Notes to Quarterly Consolidated Financial Statements(Notes on going concern assumption)
There is no relevant information.
(Notes in the case of significant changes in shareholders’ equity)(Purchase of treasury shares)
The Company resolved on June 10, 2021 to purchase its treasury shares pursuant to the provisions of the articles
of incorporation, as set forth in Article 459, Paragraph 1 of the Companies Act, and purchased 1,045,000 shares oftreasury shares, in accordance with Article 370 of the Companies Act and Article 25 of the articles of incorporationof the Company (Written resolution in lieu of resolution at the Board of Directors). As a result, during the six months
ended September 30, 2021, treasury shares increased by ¥1,290 million.
(Cancellation of treasury shares)
The Company resolved on June 10, 2021 to cancel its treasury shares pursuant to the provisions in Article 178 of
the Companies Act, and cancelled 1,045,000 shares of treasury shares, in accordance with Article 370 of theCompanies Act and Article 25 of the articles of incorporation of the Company (Written resolution in lieu of resolution
at the Board of Directors). As a result, during the six months ended September 30, 2021, retained earnings andtreasury shares decreased by ¥1,283 million and ¥1,283 million, respectively.
(Accounting policies adopted specially for the preparation of quarterly consolidated financial statements)(Calculation of tax expenses)
The Company makes a reasonable estimate of the effective tax rate after the application of tax effect accounting
to profit before income taxes for the current fiscal year, including the second quarter under review, and multiply
profit before income taxes for the quarter by the estimated effective tax rate.
Income taxes – deferred is included in income taxes.
(Changes in accounting policies)(Adoption of Accounting Standard for Revenue Recognition, etc.)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March
31, 2020, hereinafter referred to as “Revenue Recognition Accounting Standard”) from the beginning of the firstquarter to recognize revenue when control of promised goods or services is transferred to a customer in the estimatedamount to be received in exchange for those goods or services.
The application of the Revenue Recognition Accounting Standard follows the transitional measures set forth in
the proviso of Paragraph 84 of the Revenue Recognition Accounting Standard, but has no impact on the beginningbalance of retained earnings.
In addition, the adoption of the Revenue Recognition Accounting Standard has no impact on profit and loss.
In accordance with the transitional measures set forth in Paragraph 89-2 of the Revenue Recognition AccountingStandard, the Company made no reclassification of the previous fiscal year’s results to conform to the newpresentation method. Moreover, in accordance with the transitional measures set forth in Paragraph 28-15 of the“Accounting Standard for Quarterly Financial Reporting” (ASBJ Statement No. 12, March 31, 2020), the Company
did not provide information on composition of revenue from contracts with customers for the six months ended
September 30, 2020.
(Adoption of Accounting Standard for Fair Value Measurement, etc.)
The Company has applied the “Accounting Standard for Faire Value Measurement” (ASBJ Statement No. 30,
July 4, 2019, hereinafter referred to as “Fair Value Measurement Accounting Standard”) from the beginning of the9first quarter. In accordance with the transitional measures set forth in Paragraph 19 of the Fair Value Measurement
Accounting Standard and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement
No. 10, July 4, 2019), the Company applies the new accounting policies set forth in the Fair Value Measurement
Accounting Standard into the future. This application has no impact on the quarterly consolidated financial
statements.
(Additional information)(Establishment of Retirement Benefit Trust)During the six months ended September 30, 2021, the Company established a Retirement Benefit Trust for further
improving the soundness of the retirement benefit system and contributed ¥1,500 million in cash and deposits. As aresult, retirement benefit liability decreased by the same amount.

10

(Segment information, etc.)
I. For the six months ended September 30, 2020 (from April 1, 2020 to September 30, 2020)
Information on net sales and profit (loss) by reportable segment
Reportable segment
Chemicals
operations

Housing
Materials
operations

Total

Other
(Note) 1

Total(Million yen)Amount recorded inquarterly
Adjustment
consolidated(Note) 2
statement of income(Note) 3

Net sales
Net sales to outside
14,297
8,711 23,009
399
23,408－23,408customers
Inter-segment net sales
0
1
1
153
154
(154)
－
or transfers
Total
14,297
8,712 23,010
552
23,563(154)
23,408Segment profit
2,131
1,337
3,468
54
3,523
(913)
2,609
(Notes) 1. The “Other” category represents business segments not included in the reportable segments, and includes
the IT systems operations and food operations.
2. The adjustment for segment profit of ¥(913) million includes inter-segment eliminations of ¥0 million
and corporate expenses in the amount of ¥(914) million not allocated to each reportable segment. The
relevant corporate expenses are mainly general and administrative expenses not allocated to thereportable segments.
3. Segment profit is adjusted with operating profit on the quarterly consolidated statement of income.
II. For the six months ended September 30, 2021 (from April 1, 2021 to September 30, 2021)
Information on net sales and profit (loss) by reportable segment and information on composition of revenue(Million yen)
Reportable segment
Chemicals
operations

Housing
Materials
operations

Total

Other
(Note) 1

Total

Amount recorded inquarterly
Adjustment
consolidated(Note) 2
statement of income(Note) 3

Net sales
Inorganic chemicals
5,877
－
5,877
－
5,877
－
5,877
Organic chemicals
5,991
－
5,991
－
5,991
－
5,991
Fine chemicals
4,538
－
4,538
－
4,538
－
4,538
Interior, exterior finishes
－
672
672
－
672
－
672
and paving materials
Exterior products
－
7,527
7,527
－
7,527
－
7,527
Other
－
－
－
658
658
－
658
Revenue from contracts with
16,407
8,199 24,607
658
25,266－25,266customers
Net sales to outside customers
16,407
8,199 24,607
658
25,266－25,266
Inter-segment net sales or
0
1
1
147
149
(149)
－
transfers
Total
16,4088,201 24,609
806
25,416(149)
25,266
Segment profit
3,614
1,058
4,672
75
4,748
(952)
3,795
(Notes) 1. The “Other” category represents business segments not included in the reportable segments, and includes
the IT systems operations and food operations.
2. The adjustment for segment profit of ¥(952) million includes inter-segment eliminations of ¥0 million
and corporate expenses in the amount of ¥(952) million not allocated to each reportable segment. The
relevant corporate expenses are mainly general and administrative expenses not allocated to thereportable segments.
3. Segment profit is adjusted with operating profit on the quarterly consolidated statement of income.

11

(Significant subsequent events)(Transition to a holding company structure through company split)
At the meeting of the Board of Directors held on October 26, 2021, the Company resolved to start
preparations for the transition to a holding company structure through absorption-type company split effective
January 1, 2023 (scheduled) subject to related proposals being approved at the general meeting of shareholders
as well as permission and approval by relevant government agencies, as necessary (hereinafter referred to as“Absorption-type Split”).
1. Background and purpose of the transition to a holding company structureWith its corporate philosophy “Dokusouryoku (creativity),” the Group established its long-term vision“Challenge 1000” to become a company that makes a proposal one step ahead with Dokusouryoku (creativity)
by 2030. In other words, as a company that solves social challenges with creative ideas and leads in global
progress, the Group aims for “Yonpou Yoshi” meaning to provide value to each group of stakeholders: customers,
employees, shareholders, and society.
In addition, the Group has set financial goals of net sales of ¥100.0 billion, operating profit of ¥15.0 billion,
and ROE at 10% or higher to be achieved when it fulfills the vision, and strives to make growth investments
aggressively to shift to “proactive management.”
On the other hand, the business environment surrounding the Group has changed faster year after year partly
due to impact from COVID-19, and the Group needs to steadily solve a multitude of management issues,
including adapting to a new business environment in the post-COVID-19 era and the era of coexisting with
COVID-19, creating new products and services that are acceptable in the growing global market, preparing for
geopolitical risks such as the U.S.-China conflict, and decarbonization efforts to achieve carbon neutrality by
2050.
Under such circumstances, in order to achieve its long-term vision, “Challenge 1000,” the Group judged thatit needed to enhance the Group management structure and make decisions more swiftly, and decided to transition
to a holding company structure in January 2023 (scheduled).
The Group has two core operations: Chemicals and Housing Materials operations. Under its long-term vision,“Challenge 1000,” it sets a goal for the Chemicals operations to “continue to develop and advance for the sakeof the world” and a goal for the Housing Materials operations to “design a new lifestyle in the future andcontribute to the community development around the world for everyone’s happiness.” The Company will spin
off the Chemicals, the Housing Material and the head office’s back-office operations to make them its whollyowned subsidiaries.
The Group will be reborn as a company having a new management structure to celebrate its 75th anniversaryof incorporation on October 10, 2022, and will strive to achieve the long-term vision, “Challenge 1000” to ensure
its leap toward a 100-year company in the next 25 years.
(1) Enhancement of the business operation structure
By transferring authority to each operating company boldly, the Group will enable each operating company
to make decisions more swiftly, vertically integrate manufacturing, sales and development functions, become amore unified and seamless organization, and implement consistent strategies.
(2) Governance structure and redefinition of the head office’s role
The Group will make the holding company concentrate on group management, and assume governance over
operating companies, decision making regarding strategic investments, and promotion of company-wide
management strategies such as M&As to achieve “Challenge 1000,” in order to clarify the corporate governancestructure further. The head office’s back-office operations will be split off as a shared services company toeliminate duplicate operations among group companies for optimization.

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(3) Strengthening the development of management talents
In order to strengthen management capabilities sustainably, operating companies will promote thedevelopment of human resources who have the potential to be senior management as part of their autonomous
operations.
2. Overview of company split(1) Method of company split
Through an absorption-type company split in which the Company will be the splitting company and newly
established three split preparation companies will be the succeeding company, the Company will transition toa holding company structure while maintaining its listing status.
(2) Schedule of company split
The Board of Directors meeting to approve theestablishment of split preparation companies
Establishment of split preparation companies
The Board of Directors meeting to approve the absorptiontype company split agreement
Execution of the absorption-type company split agreement
Annual general meeting of shareholders to approve theabsorption-type company split agreement
Effective date of the absorption-type company split

October 26, 2021
Early January 2022 (scheduled)
Late April 2022 (scheduled)
Late April 2022 (scheduled)
Late June 2022 (scheduled)
January 1, 2023 (scheduled)

3. Overview of the Split Preparation Companies to be established in line with the transition to a holding company
structure(Chemicals operations)(1) Name(2) Location(3) Representative(4) Business description(5) Capital(6) Date of establishment(7) Number of issued shares(8) Fiscal year-end(9) Major shareholder andshareholding ratio

SHIKOKU CHEMICALS CORPORATION CHEMICALS OPERATIONSSPLIT PREPARATION CORPORATION
8-537-1, Doki-cho-higashi, Marugame, Kagawa
Representative Director, Naoto Tanaka
Manufacturing, processing and sales of industrial chemicals,
pharmaceutical products, quasi-pharmaceutical products, chemicalfertilizers and agricultural chemicals¥10 million
January 2022 (scheduled)
1,000 shares
December 31 (to be determined)
SHIKOKU CHEMICALS CORPORATION: 100%13

(Housing Material operations)(1) Name
SHIKOKU CHEMICALS CORPORATION HOUSING MATERIALOPERATIONS SPLIT PREPARATION CORPORATION(2) Location
8-537-1, Doki-cho-higashi, Marugame, Kagawa(3) Representative
Representative Director, Naoto Tanaka(4) Business description
Manufacturing, processing and sales of construction and civil engineering
materials and products for housing and stores; Designing and constructionof related facilities(5) Capital¥10 million(6) Date of establishment
January 2022 (scheduled)(7) Number of issued shares 1,000 shares(8) Fiscal year-end
December 31 (to be determined)(9) Major shareholder and SHIKOKU CHEMICALS CORPORATION: 100%
shareholding ratio(Shared services)(1) Name(2) Location(3) Representative(4) Business description(5) Capital(6) Date of establishment(7) Number of issued shares(8) Fiscal year-end(9) Major shareholder andshareholding ratio

SHIKOKU CHEMICALS CORPORATION SHARED SERVICES SPLITPREPARATION CORPORATION
8-537-1, Doki-cho-higashi, Marugame, Kagawa
Representative Director, Naoto Tanaka
Support operations for accounting, finance, human resources, legal affairs,
tax practices, labor affairs, compliance, internal control, and asset
management¥10 million
January 2022 (scheduled)
1,000 shares
December 31 (to be determined)
SHIKOKU CHEMICALS CORPORATION: 100%

4. OtherSince the Split Preparation Companies that will succeed to businesses through the absorption-type company
split are the Company’s wholly-owned subsidiaries, there will be minor impacts on its consolidated financial
results. Details of the company split and other information will be announced as soon as a decision is made.

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