Annual Securities Report
89th term (from April 1, 2018 to March 31, 2019)

F.C.C. CO., LTD.

Table of Contents
A.

Company information ........................................................................................................................... 3
Overview of the Company ................................................................................................................ 3
1. Trends in selected financial data .................................................................................................. 3
2. Company history ........................................................................................................................... 5
3. Description of business.................................................................................................................. 6
4. Overview of subsidiaries and other affiliates .............................................................................. 8
5. Information about employees ..................................................................................................... 11
II. Overview of business ....................................................................................................................... 12
1. Management policy, management environment, issues to address, etc. ................................. 12
2. Business risks ............................................................................................................................... 13
3. Management analysis of financial position, operating results and cash flows ....................... 14
4. Critical contracts for operation .................................................................................................. 18
5. Research and development activities ......................................................................................... 18
III. Information about facilities ............................................................................................................ 20
1. Overview of capital investments, etc. ......................................................................................... 20
2. Major facilities ............................................................................................................................. 20
3. Planned additions, retirements, etc. of facilities ....................................................................... 22
IV. Information about reporting company.......................................................................................... 23
1. Information about shares, etc. .................................................................................................... 23
2. Dividend policy ............................................................................................................................ 25
3. Status of corporate governance, etc. .......................................................................................... 26
V. Financial information ..................................................................................................................... 42
1. Consolidated financial statements, etc. ...................................................................................... 43
2. Non-consolidated financial statements, etc. .............................................................................. 91
VI. Overview of operational procedures for shares of the reporting company .............................. 103
I.

1

Cover Page
Document title
Clause of stipulation
Place of filing
Filing dateFiscal year
Company nameCompany name in English
Title and name of representative
Address of registered headquarters
Telephone number
Name of contact person
Nearest place of contact
Telephone number
Name of contact person
Place for public inspection

Annual Securities Report
Article 24, paragraph 1 of the Financial Instruments andExchange Act
Director-General of the Tokai Local Finance Bureau
June 27, 201989th term (from April 1, 2018 to March 31, 2019)
株式会社エフ・シー・シー (Kabushiki Kaisha F.C.C.)
F.C.C. CO., LTD.
Toshimichi Matsuda, President and Representative Director
7000-36 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi,
Shizuoka+81-53-523-2400 (Main)
Ryujiro Matsumoto, Director, Head of Management andAdministration
7000-36 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi,
Shizuoka+81-53-523-2400 (Main)
Ryujiro Matsumoto, Director, Head of Management andAdministration
Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

2

A. Company information
I. Overview of the Company
1. Trends in selected financial data
Summary of consolidated financial data
IFRS

Term
Fiscal year-end
Revenue85th term

86th term

87th term

88th term

89th term

March 31,2015

March 31,2016

March 31,2017

March 31,2018

March 31,2019

(Millions of yen)

154,395

167,429

157,217173,174

177,605

Profit before income taxes (Millions of yen)

12,104

8,118

11,41914,083

16,503

Profit attributable to owners of parent(Millions of yen)

7,230

6,162

7,204

9,691

11,779Comprehensive income(Millions of yen)

16,809(1,155)

7,027

7,935

12,380Equity attributable to owners of parent(Millions of yen)

110,190

107,010

111,624

117,311

125,875

Total assets(Millions of yen)

163,819

159,212

162,708

170,302173,644

Equity attributable to owners of parent per
share
(Yen)

2,195.52

2,132.18

2,224.12

2,337.43

2,533.32

Basic earnings per share(Yen)

144.07122.79143.54193.11235.05

Diluted earnings per share

(Yen)

–

–

–

–

–

Ratio of equity attributable to owners ofparent to total assets
(%)

67.26

67.21

68.60

68.88

72.49

Ratio of profit to equity attributable toowners of parent

6.75

5.67

6.59

8.47

9.69

Price earnings ratio (PER)(%)(Times)

13.03

15.49

15.48

15.48

9.96

Net cash flows from (used in) operating
activities(Millions of yen)

13,002

25,10824,16524,12023,622

Net cash flows from (used in) investing
activities(Millions of yen)

(20,308)(17,369)(15,846)(19,122)(8,695)

Net cash flows from (used in) financing
activities(Millions of yen)

4,106

96

(7,641)(2,657)(7,981)

Cash and cash equivalents at end of period(Millions of yen)

17,55723,45023,47425,23032,444

7,603

7,893

8,189

8,555

8,829

[3,647][3,235][3,210][3,637][4,017]

Number of employees[Separately, average number of temporary
employees]

Notes: 1. Effective from the 85th term, the consolidated financial statements are prepared based on International Financial
Reporting Standards (hereinafter “IFRS”).
2. Revenue does not include consumption taxes.
3. Information on diluted earnings per share is omitted due to an absence of potential shares.

3

Japanese
GAAP

Term

85th term
March 31,2015

Fiscal year-end
Net sales(Millions of yen)

153,939

Ordinary profit(Millions of yen)

12,952

Profit attributable to owners of parent(Millions of yen)

6,760

Comprehensive income(Millions of yen)

16,702

Net assets(Millions of yen)

115,948

Total assets(Millions of yen)

162,348

Net assets per share(Yen)

2,195.73

Basic earnings per share(Yen)

134.70

Diluted earnings per share

(Yen)

–

(%)

67.88

Equity ratio
Return on equity (ROE)

(%)

6.31

(Times)

13.93

Net cash provided by (used in) operating
activities(Millions of yen)

13,465

Net cash provided by (used in) investing
activities(Millions of yen)

(21,783)

Net cash provided by (used in) financing
activities(Millions of yen)

4,129

Cash and cash equivalents at end of period(Millions of yen)

17,403

Price earnings ratio (PER)

Number of employees[Separately, average number of temporary
employees]

7,564[3,676]

Notes: 1. An audit pursuant to Article 193-2, paragraph 1 of the Financial Instruments and Exchange Act of Japan has notbeen conducted for the consolidated financial statements for the 85th term prepared in accordance with Japanese
GAAP.
2. Net sales do not include consumption taxes.
3. Information on diluted earnings per share is omitted due to an absence of potential shares.

42. Company history
Year

Month

Event

1939

June

1943
1982

March
February

1984
1988

July
July

1989

March

1992
1993

June
September
September

Fuji Lite Industries Co., Ltd. is established in Sato-cho, Hamamatsu-shi, Shizuoka.
The Company begins manufacturing clutch plates, gears and other products employing compression
molding of Bakelite resins.
Changes name to Fuji Chemical Co., Ltd.
Establishes Kyushu Fuji Chemical Industries Co., Ltd. (currently KYUSHU F.C.C. CO., LTD., aconsolidated subsidiary) in Matsubase-machi, Shimomashiki-gun, Kumamoto (currently Uki-shi,
Kumamoto).
Changes name to F.C.C. CO., LTD.
Establishes JAYTEC, INC. (currently FCC (INDIANA) LLC., a consolidated subsidiary) in Indiana,
U.S.A.
Establishes FCC (THAILAND) CO., LTD. (currently a consolidated subsidiary) in Bangkok,
Thailand.
Moves its corporate head office to the current address.
Makes equity investment in KWANG HWA SHING INDUSTRIAL CO., LTD. of Tainan, Taiwan.
Establishes FCC (PHILIPPINES) CORP. (currently a consolidated subsidiary) in Laguna,Philippines.
Acquires shares of TENRYU SANGYO CO., LTD. (currently a consolidated subsidiary).
Registers its shares for OTC trading with Japan Securities Dealers Association.
Establishes CHENGDU JIANG HUA. F.C.C. CLUTCHES. CO., LTD. (currently CHENGDUYONGHUA. F.C.C. CLUTCHES CO., LTD., a consolidated subsidiary) in Chengdu, Sichuan,
China.
Establishes CHU’S F.C.C. CO., LTD. (SHANGHAI) (currently a consolidated subsidiary) in
Shanghai, China.
Establishes FCC (EUROPE) LTD. in Milton Keynes, UK.
Establishes FCC RICO LTD. (currently FCC CLUTCH INDIA PRIVATE LTD., a consolidated
subsidiary) in Haryana, India.
Establishes FCC DO BRASIL LTDA. (currently a consolidated subsidiary) in Amazonas, Brazil.
Establishes FCC (North Carolina), INC. (currently FCC (North Carolina), LLC., a consolidated
subsidiary) in North Carolina, U.S.A.
Establishes PT. FCC INDONESIA (currently a consolidated subsidiary) in Karawang, Indonesia.
Establishes FCC (North America), INC. (currently a consolidated subsidiary) and FCC (INDIANA),
INC. (currently FCC (INDIANA) LLC., a consolidated subsidiary) in Indiana, U.S.A.
Lists its shares on the Second Section of the Tokyo Stock Exchange.
Establishes FCC (Adams), LLC. (currently a consolidated subsidiary) in Indiana, U.S.A.
Lists its shares on the First Section of the Tokyo Stock Exchange.
Increases investment in KWANG HWA SHING INDUSTRIAL CO., LTD. (currently FCC(TAIWAN) CO., LTD.), making the company a consolidated subsidiary.
Establishes FCC (VIETNAM) CO., LTD. (currently a consolidated subsidiary) in Hanoi, Vietnam.
Establishes CHINA FCC FOSHAN CO., LTD. (currently a consolidated subsidiary) in Foshan,
Guangdong, China.
Acquires 100% of shares of Tohoku Chemical Industries, Ltd.
Establishes F.C.C. (China) Investment Co., Ltd. (currently a consolidated subsidiary) in Chengdu,
Sichuan, China.
Completes liquidation of FCC (EUROPE) LTD.
Establishes FCC SEOJIN CO., LTD. in Siheung, Gyeonggi-do, Korea.
Establishes FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V. (currently a consolidated
subsidiary) in San Luis Potosi, Mexico.
Establishes FCC CLUTCH INDIA PRIVATE LTD. (currently a consolidated subsidiary) in Haryana,
India.
Acquires 100% of shares of FCC RICO LTD. (currently FCC CLUTCH INDIA PRIVATE LTD., aconsolidated subsidiary).
FCC INDIA MANUFACTURING PRIVATE LTD. has been merged by FCC CLUTCH INDIA
PRIVATE LTD.
Acquires 100% of shares of Flint Co.,Ltd (currently a consolidated subsidiary).
Transferred all of the shares of Tohoku Chemical Industries, Ltd.

1994

October
AugustDecember

1995

March

1997

September
April

1998
2000

November
April

2001
2002

April
December

2003
2004
2005

February
May
March
June

2006

NovemberJanuary

2010
2012

November
September

2013

DecemberFebruary
June

2014

November
December

2015

November

2017
2018

September
December5

3. Description of business
The Group, comprising the Company, 23 subsidiaries and one associate, is engaged primarily in the
manufacture and sale of clutches for motorcycles and automobiles.
The following breaks down the Group’s businesses into operating segments and indicates in which
segment each company falls. These operating segments are the same as those in “V. Financial
information, 1. Consolidated financial statements, etc., (1) Consolidated financial statements, Notes toconsolidated financial statements, 4. Segment information.”
Motorcycle clutches
This segment is engaged primarily in the manufacture and sale of motorcycles, scooters, all-terrain
vehicles (ATVs) and general-purpose clutches; it also manufactures and sells components and parts formotorcycles and automobiles.
Business
category

Principal companies

Sales

PT. FCC PARTS INDONESIA [Indonesia]

Manufacture andsales

The Company, KYUSHU F.C.C. CO., LTD., TENRYU SANGYO CO., LTD., Flint Co.,Ltd, FCC(North Carolina), LLC. [U.S.], FCC (THAILAND) CO., LTD. [Thailand], FCC (PHILIPPINES) CORP.
[Philippines], CHENGDU YONGHUA. F.C.C. CLUTCHES CO., LTD. [China], CHU’S F.C.C. CO.,LTD. (SHANGHAI) [China], FCC (TAIWAN) CO., LTD. [Taiwan], FCC CLUTCH INDIA PRIVATE
LTD. [India], PT. FCC INDONESIA [Indonesia], FCC (VIETNAM) CO., LTD. [Vietnam], FCC DO
BRASIL LTDA. [Brazil]

Automobile clutches
This segment is engaged primarily in the manufacture and sale of clutches for automatic and manualtransmission automobiles.
Business
category

Principal companies

Manufacture andsales

The Company, KYUSHU F.C.C. CO., LTD., FCC (INDIANA), LLC. [U.S.], FCC (North Carolina),
LLC. [U.S.], FCC (Adams), LLC. [U.S.], FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V.
[Mexico], FCC (THAILAND) CO., LTD. [Thailand], FCC (PHILIPPINES) CORP. [Philippines],
CHENGDU YONGHUA. F.C.C. CLUTCHES CO., LTD. [China], CHINA FCC FOSHAN CO., LTD.
[China], FCC CLUTCH INDIA PRIVATE LTD. [India], PT. FCC INDONESIA [Indonesia], FCC(VIETNAM) CO., LTD. [Vietnam], FCC DO BRASIL LTDA. [Brazil]

6

Group business structure chart
The following Group business structure chart shows the matters described above.

Domestic* KYUSHU F.C.C. CO., LTD.
* TENRYU SANGYO CO., LTD.

* Flint Co.,Ltd<Administration company>* FCC (North America), INC.
* FCC (INDIANA), LLC.
* FCC (North Carolina), LLC.
* FCC (Adams), LLC.

The Company

Mexico* FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE C.V.
Thailand* FCC (THAILAND) CO., LTD.
Philippines* FCC (PHILIPPINES) CORP.
China<Administration company>* F.C.C. (China) Investment Co., Ltd.
* CHENGDU YONGHUA. F.C.C. CLUTCHES CO., LTD.
* CHINA FCC FOSHAN CO., LTD.
* CHU’S F.C.C. CO., LTD. (SHANGHAI)
Taiwan* FCC (TAIWAN) CO., LTD.
India
* FCC CLUTCH INDIA PRIVATE LTD.
Indonesia* PT. FCC INDONESIA* PT. FCC PARTS INDONESIA
Vietnam* FCC (VIETNAM) CO., LTD.
Brazil* FCC DO BRASIL LTDA.

* Consolidated subsidiaries○ Other affiliated company

Receiving and supplying materials and parts
Supplying products
Leasing land

7

Domestic/Overseas customers (○ Honda Motor Co., Ltd. and others)US4. Overview of subsidiaries and other affiliates
Name

Address

Issued capital

Principal contentsof business

Ratio of voting
rights holding(held) (%)(Note 3)

Relationship<Consolidated
subsidiaries>
KYUSHU F.C.C. CO.,LTD.

Uki-shi,
Kumamoto

Motorcycle and¥30,000,000 automobile
clutches

TENRYU SANGYO
CO., LTD.

Higashi-ku,
Hamamatsu-shi,
ShizuokaMotorcycle¥22,500,000
clutches

Flint Co.,Ltd

Ongatown, Ongagun, Fukuoka¥10,000,000

FCC (North America),
INC.
(Note 2)

Indiana, U.S.

Motorcycle
clutches

Manufacturing the Company’s
product components and products.
100Interlocking officers and leasing
land.
Purchasing motorcycle,
automobile and general-purpose
80.22
components. Interlocking officers
and capital assistance.
Purchasing Flint Co.,Ltd’s
100 products.
Interlocking officers.

Administration of
US$42,800,000 subsidiaries in the
U.S.

100

FCC (INDIANA), LLC.
Indiana, U.S.
(Notes 2, 4)

Automobile
US$17,800,000
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (INDIANA),[100]
LLC.’s products and components.
Interlocking officers.

FCC (North Carolina),
LLC.
(Note 2)Motorcycle andUS$10,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (North Carolina),[100]
LLC.’s products and components.
Interlocking officers.

North Carolina,
U.S.

Interlocking officers and capitalassistance.

FCC (Adams), LLC.
(Notes 2, 4)

Indiana, U.S.

US$15,000,000

Automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (Adams), LLC.’s[100]
products and components.
Interlocking officers.

FCC AUTOMOTIVEPARTS DE MEXICO,S.A. DE C.V.
(Note 2)

San Luis Potosi,
Mexico

MXN500,000,000

Automobile
clutches

Selling the Company’s products,
100 components and raw materials.
[40.60] Interlocking officers and capitalassistance.

FCC (THAILAND) CO., Bangkok,
LTD.
ThailandMotorcycle and
THB60,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing FCC (THAILAND)[0.07]
CO., LTD.’s products andcomponents. Interlocking officers.

FCC (PHILIPPINES)
CORP.
(Note 2)

Laguna,Philippines

Motorcycle and
PHP200,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100 Purchasing FCC (PHILIPPINES)
CORP.’s products andcomponents. Interlocking officers.

F.C.C. (China)
Investment Co., Ltd.
(Note 2)

Sichuan, China

Administration of
US$30,000,000 subsidiaries in
China

100 Interlocking officers.

CHENGDU
YONGHUA. F.C.C.
Sichuan, China
CLUTCHES CO., LTD.
(Note 2)

CHU’S F.C.C. CO.,LTD. (SHANGHAI)(Note 2)

Shanghai, China

Motorcycle andUS$28,000,000 automobile
clutches

US$9,800,000

Motorcycle
clutches8

Selling the Company’s products,
components and raw materials.
Purchasing CHENGDU100
YONGHUA. F.C.C. CLUTCHES[71.43]
CO., LTD.’s products andcomponents. Interlocking officers
and capital assistance.
Selling the Company’s products,
components and raw materials.
Purchasing CHU’S F.C.C. CO.,100
LTD. (SHANGHAI)’s products
and components. Interlocking
officers.

Name

CHINA FCC FOSHAN
CO., LTD.
(Note 2)

FCC (TAIWAN) CO.,LTD.
(Note 2)FCC CLUTCH INDIA
PRIVATE LTD.
(Notes 2, 4)

PT. FCC INDONESIA(Notes 2, 4)

PT. FCC PARTSINDONESIAFCC (VIETNAM) CO.,LTD.
(Note 2)

FCC DO BRASIL
LTDA.
(Note 2)

Address

Guangdong, China

Tainan, Taiwan

Haryana, India

Karawang,Indonesia

Karawang,Indonesia

Issued capital

US$28,000,000

NT$195,000,000

Principal contentsof business

Ratio of voting
rights holding(held) (%)(Note 3)

Relationship

Automobile
clutches

Selling the Company’s products,
components and raw materials.
100 Purchasing CHINA FCC[61.43] FOSHAN CO., LTD.’s products
and components. Interlocking
officers.

Motorcycle
clutches

Selling the Company’s products,
components and raw materials.
70
Purchasing FCC (TAIWAN) CO.,
[15]
LTD.’s products and components.
Interlocking officers.

Motorcycle and
INR2,800,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
Purchasing FCC CLUTCH
100
INDIA PRIVATE LTD.’s products
and components. Interlocking
officers and capital assistance.

Motorcycle andUS$11,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing PT. FCC[0.55]INDONESIA’s products andcomponents. Interlocking officers.

US$300,000

Motorcycle
clutches

Selling the Company’s products,
components and raw materials.
100
Purchasing PT. FCC PARTS[100]
INDONESIA’s products andcomponents.

Hanoi, Vietnam

Motorcycle andUS$25,000,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
90 Purchasing FCC (VIETNAM)
CO., LTD.’s products andcomponents. Interlocking officers.

Amazonas, Brazil

Motorcycle and
BRL31,600,000 automobile
clutches

Selling the Company’s products,
components and raw materials.
100 Purchasing FCC DO BRASIL
LTDA.’s products andcomponents. Capital assistance.

Minato-ku, Tokyo

Manufacture andsales of¥86,067,000,000
automobiles andengines

Selling the Company’s products
21.90
and purchasing raw materials and(held)
components.

<Other affiliate>
Honda Motor Co., Ltd.
(Note 5)

Notes: 1. Descriptions in the “Principal contents of business” column are names of segments.
2. These companies are classified as “Specified Subsidiaries” under the Financial Instruments and Exchange Act ofJapan.
3. The figures in brackets in the “Ratio of voting rights holding” column are indirect holding ratio included in the
figures outside the brackets.

94. For FCC (INDIANA) LLC., FCC (Adams), LLC., FCC CLUTCH INDIA PRIVATE LTD. and PT. FCC
INDONESIA, the percentage of their net sales (excluding internal sales between consolidated companies) toconsolidated net sales exceeded 10%. Key profit and loss information in each company’s financial statements
prepared under the generally accepted accounting standards in Japan is as follows:
Key profit and loss information• FCC (INDIANA), LLC.
(1) Net sales¥33,929 million(2) Ordinary profit¥1,615 million(3) Profit¥1,214 million(4) Net assets¥15,876 million(5) Total assets¥20,919 million• FCC (Adams), LLC.
(1) Net sales(2) Ordinary profit(3) Profit(4) Net assets(5) Total assets¥32,549 million¥1,383 million¥1,192 million¥5,784 million¥25,755 million• FCC CLUTCH INDIA PRIVATE LTD.
(1) Net sales¥23,799 million(2) Ordinary profit¥(251 million)(3) Profit¥(174 million)(4) Net assets¥2,578 million(5) Total assets¥15,861 million• PT. FCC INDONESIA(1) Net sales¥23,066 million(2) Ordinary profit¥2,862 million(3) Profit¥2,228 million(4) Net assets¥15,742 million(5) Total assets¥19,036 million
5. This company files its Annual Securities Report.
6. In addition to the above, there are four affiliates.

10

5. Information about employees(1) Consolidated companies
As of March 31, 2019
Segment name

Number of employees

Motorcycle clutches

4,717

Automobile clutches

3,642

[267]

8,359

[3,926]

Total of reportable segments
Corporate (common)
Total[3,659]

470

[91]

8,829

[4,017]

Notes: 1. The number of employees indicates the number of working employees, and the average number of temporary
employees during the fiscal year under review is given in brackets separately.
2. The number in the Corporate (common) segment indicates employees in the administration department, the R&D
Division and the Manufacturing Technology Center.

(2) Reporting company
As of March 31, 2019
Number of employees

Average age

1,102 [161]Average years of service
41.3

Average annual salary (Yen)

17.0

Segment name6,750,365

Number of employees

Motorcycle clutches

238

[49]

Automobile clutches

394

[21]

Total of reportable segments

632

[70]

Administration (general operations)

470

[91]

1,102

[161]

Total

Notes: 1. The number of employees indicates the number of working employees, and the average number of temporary
employees during the fiscal year under review is given in brackets separately.
2. Average annual salary includes bonuses and surplus wages.
3. The number in the Administration (general operations) segment indicates employees in the administration
department, the R&D Division and the Manufacturing Technology Center.

(3) Status of labor union
The reporting company and some of its consolidated subsidiaries have labor unions. However, thesecompanies have no labor-management issues to note.

11II. Overview of business
1. Management policy, management environment, issues to address, etc.
Please note that matters concerning the future in this article were determined by the Group as of the filingdate of this Annual Securities Report.
(1) Basic corporate management policy
The Group’s fundamental policy of corporate philosophy is to “make a contribution to society bysupplying products that make the best of ideas and technology to satisfy customers in every way, andwhich are also safe and environmentally friendly.”In line with this corporate philosophy, the Group’s officers and employees “place safety and theenvironment first when conducting business,” “employ ingenuity and creative thinking for the greater
purpose of advancing our business,” “renew and improve ourselves and our business, every day,”“carry out our work in a speedy and timely manner” and “honor harmony among people and make ouroffices a place where people enjoy what they do in a bright working atmosphere.”(2) Medium- and long-term business strategy of the Company
The 10th Medium-Term Management Plan (FY2017 – FY2019)
Go! Reach beyond evolution.
Business policy
To promote sustainability and increase corporate value.
To build a business structure that has overwhelming competitive strength by progressing with thedetails of strengthening product development capabilities and on-site capabilities.
Performance targets (FY2019 revised targets)
Revenue:¥180.0 billion

ROE:

9.1%

Operating profit:¥16.0 billion

Dividend payout ratio: 24.8%(3) Issues to address
Looking at the future business environment, the risks of downturn in the global economy, such as USChina trade friction, trends concerning Brexit and effects caused by fluctuations in financial andcapital markets, require attention. In the automotive industry, demand is expected to grow in bothmotorcycle and automobile markets over the medium to long term. However, an era of significant
structural changes has arrived for not only the automotive industry but also other industries, asdevelopments, including measures for addressing fuel consumption regulations, advances intechnologies for the electrification of cars and automated driving, and the spread of car sharing,indicate.
Under such a management environment, the Group will ensure the implementation of the 10th
Medium-Term Management Plan ending in FY2019, and strive to further expand existing businesses
and generate new businesses with a sense of speed, looking hard at the next Medium-Term
Management Plan.

12

2. Business risks
Of the items related to the overview of business and financial information described in this Annual
Securities Report, the following may have a considerable impact on the investment decisions ofinvestors.
Please note that matters concerning the future in this article were determined by the Group as of thefiling date of this Annual Securities Report.
(1) Business development centered on clutch products
The Group continues to evolve as a specialist in clutch products. Although the clutch products
currently manufactured and sold by the Group are important functional components of drive trains forautomobiles and motorcycles driven by internal combustion engines, there is no guarantee that areplacement for a clutch product will not be developed and put into general use in the future.
In addition, clutch products may become unnecessary as drive train components in next-generation
automobiles and motorcycles that are not driven by internal combustion engines.
(2) Dependence on certain industries and customers
Most clutch products manufactured and sold by the Group are for the automobile and motorcycle
industries. As a result, the financial performance of the Group may be affected by future trends inthese industries. In addition, the Group’s Revenue from the Honda Motor Group accounted forapproximately 46% of the Group’s Revenue in the fiscal year ended March 31, 2019. The financial
performance of the Group could be significantly affected, therefore, by the Honda Motor Group’s
future business strategy, procurement policies and other decisions.
(3) Development of overseas business
The Group operates globally, centering on Japan, the U.S. and Asia. Accordingly, the Group’s
financial performance could be affected by following factors: political and economic trends in various
countries; fluctuations in foreign exchange markets; unforeseen changes in laws and regulations;international tax-related risks, such as transfer pricing taxation; and the occurrence of natural disasters.
(4) Competition faced by the GroupInternational competition in the automobile and motorcycle industries has become extremely fierce.
While the Group is endeavoring to sustain and strengthen its competitiveness in various areas, ranging
from product development and manufacturing to quality assurance, certain obstacles may make it
difficult to do so in the future, in which case the Group’s market share and earnings capability could
decline.
(5) Compensation for product defects
Although the Group is doing all it can to ensure sufficient quality control, it is not possible tocompletely prevent defects and deficiencies in all products. In addition, large recalls by final
assemblers caused by defects in products supplied by the Group could result in enormous costs to theGroup, as well as in serious damage to its reputation. In such an event, product defect liability could
have a serious impact on both the Group’s financial performance and financial condition.
(6) Impacts of natural disasters and earthquakes, etc.
The Group is implementing measures to minimize potential risks of disruptions to its production lines
caused by major natural disasters. There is no guarantee, however, that it will be able to completely
avoid or reduce damage. In this respect, the Group’s principal manufacturing facilities areconcentrated notably in western Shizuoka, and this area lies within a region that is likely to beaffected by the widely predicted Tokai and Tonankai earthquakes. The occurrence of such a majordisaster could have an enormous impact on the Group’s manufacturing facilities and cause asignificant reduction in its production capacity.

13

3. Management analysis of financial position, operating results and cash flows(1) Overview of operating results, etc.
The Group’s financial position, operating results and cash flows for the fiscal year ended March 31,
2019 were as follows.
1) Financial position and operating results
In the fiscal year ended March 31, 2019, the Japanese economy gradually recovered against a
backdrop of stronger employment and income environments despite signs of weakness in some areas
due to such factors as the growing sense of uncertainty concerning the global economy outlook.
Overseas, the U.S. economy remained firm mainly for consumer spending. In Asia, economies
recovered in ASEAN countries in general. However, a growth rate decline was observed in India
from the first half to the second half of the fiscal year, in addition to a trend toward a moderate
slowdown in China.
In the automotive industry, in Japan, sales of registered vehicles remained unchanged in theautomobile market, but due to an increase in sales of lightweight mini vehicles, the number of newvehicles sold increased for the third consecutive year. Overseas, although sales of passenger cars in
the U.S. continued to struggle, sales of light trucks remained solid. In China, sales by Japanesemanufacturers remained strong amid decreased sales of new vehicles. In the motorcycle market,
demand grew in Indonesia. Sales rose year on year in India, even though demand there fell in thesecond half.
Under these circumstances, the Group has worked to strengthen development capabilities and on-site
capabilities in the second year of the 10th Medium-Term Management Plan. In the motorcycle
business, in India, we began mass production in the new Ahmedabad Plant and strove to expand
production capacity. In the automobile business, amid the solid sales of light trucks in the U.S., wehave worked to build a stable mass production structure and improve profitability of clutches for 10speed ATs. In terms of development, we focused on developing friction materials and clutches withnew mechanisms. Outside of the clutches business, we worked on the development of fuel cellsystems, thin paper and thin film technologies, and EV (electric vehicle) products with an eye to the
future. Furthermore, the Company established the New Business Development Division effective asof April 1, 2019 by integrating the New Business Development Division, the EV productdevelopment block of R&D Division, and the catalyst development department of the research block,R&D Division that had taken charge of the development of those new businesses, with the aim ofenhancing business development functions more.
As a result, during the fiscal year ended March 31, 2019, in addition to an increase in sales ofmotorcycle clutches in Indonesia and Thailand, an increase in sales of automobile clutches for Fordand GM in the U.S. led to revenue increasing by 2.6% from the previous fiscal year to ¥177,605
million, and operating profit increasing by 12.7% from the previous fiscal year to ¥15,843 million
due to an increase in profit accompanying sales growth and the effect of cost reduction, etc. Profit
before income taxes increased by 17.2% from the previous fiscal year to ¥16,503 million. Profit
attributable to owners of parent increased by 21.5% from the previous fiscal year to ¥11,779 million.
The following are the business results in each operating segment.
Motorcycle clutches
An increase in sales of motorcycle clutches in Indonesia and Thailand led to revenue increasing by
1.6% from the previous fiscal year to ¥84,288 million. Operating profit increased by 4.1% from theprevious fiscal year to ¥11,720 million.
Automobile clutches
An increase in sales of automobile clutches for Ford and GM in the U.S. led to revenue increasing by
3.4% from the previous fiscal year to ¥93,317 million. Operating profit increased by 47.4% from theprevious fiscal year to ¥4,122 million due to an increase in profit accompanying sales growth and theeffect of cost reduction, etc.
The financial position is as follows.

14

At the end of the fiscal year under review, total assets were ¥173,644 million, up ¥3,341 million
compared with the end of the previous fiscal year.
At the end of the fiscal year under review, total liabilities were ¥46,116 million, down ¥5,285 million
compared with the end of the previous fiscal year.
At the end of the fiscal year under review, equity was ¥127,527 million, up ¥8,626 million comparedwith the end of the previous fiscal year.
2) Cash flows
As of the end of the fiscal year under review, cash and cash equivalents (hereinafter “net cash”)
totaled ¥32,444 million.
Cash flow positions in the fiscal year under review and the factors thereof are as follows.
Cash flows from (used in) operating activities
Net cash flows from operating activities was ¥23,622 million.
This is mainly due to profit before income taxes of ¥16,503 million and depreciation andamortization expense of ¥12,549 million.
Cash flows from (used in) investing activities
Net cash used in investing activities was ¥8,695 million.
This is mainly due to purchase of property, plant and equipment of ¥10,277 million and proceedsfrom sales of shares of subsidiaries resulting in change in scope of consolidation of ¥1,828 million.
Cash flows from (used in) financing activities
Net cash used in financing activities was ¥7,981 million.
This is mainly due to net increase (decrease) in short-term borrowings of ¥4,130 million, cash
dividends paid of ¥2,209 million and purchase of treasury shares of ¥1,378 million.
3) Performance of production, orders received and salesi) Production performance
Production performance by segment for the fiscal year under review is as shown below.
Segment nameFiscal year ended March 31, 2019Year-on-year comparison (%)

Motorcycle clutches (Millions of yen)

81,034

100.3

Automobile clutches (Millions of yen)

91,151

103.9

172,186102.2

Total (Millions of yen)
Notes: 1. Amounts are based on sales prices.
2. Consumption taxes are not included in the above amounts.

ii) Performance of orders received
Performance of orders received by segment for the fiscal year under review is as shown below.
Segment name
Motorcycle clutches
Automobile clutches
Total

Orders received(Millions of yen)

Year-on-yearcomparison (%)

Order backlog(Millions of yen)

Year-on-yearcomparison (%)

83,867

99.4

6,661

92.2

94,105

102.5

8,391

110.4

177,973

101.0

15,053

101.5

Notes: 1. Amounts are based on sales prices.
2. Consumption taxes are not included in the above amounts.

15

(iii) Sales performance
Sales performance by segment for the fiscal year under review is as shown below.
Segment nameFiscal year ended March 31, 2019

Motorcycle clutches (Millions of yen)
Automobile clutches (Millions of yen)
Total (Millions of yen)

Year-on-year comparison (%)

84,288101.6

93,317

103.4

177,605

102.6

Notes: 1. The table below shows sales results by major transaction partner and the ratio of those sales results to total sales
results for the last two fiscal years.
Transaction partner

Fiscal year ended March 31, 2018

Fiscal year ended March 31, 2019

Amount(Millions of yen)Amount(Millions of yen)

Ratio (%)

Ratio (%)

Ford Motor Company

24,301

14.0

28,512

16.1

Honda Motor Co., Ltd.

10,436

6.0

11,4186.4

2. Consumption taxes are not included in the amounts in the above table.

16(2) Details of analysis and considerations regarding the status of operating results etc., frommanagement’s perspective
The details of analysis and considerations regarding the status of operating results etc., frommanagement’s perspective are as follows. Please note that matters concerning the future in this article
were determined as of the filing date of this Annual Securities Report.
1) Significant accounting policies and estimates
The consolidated financial statements of the Company have been prepared in accordance with IFRS
pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation
Methods of Consolidated Financial Statements. Estimates that are deemed necessary have been
made based on reasonable criteria.
Significant accounting policies applied in the consolidated financial statements of the Company areprovided in “V. Financial information, 1. Consolidated financial statements, etc., (1) Consolidated
financial statements, Notes to consolidated financial statements, 3. Significant accounting policies.”
2) Recognition as well as details and considerations of status of operating results etc., for the fiscal year
under review
Analysis of operating results
Please refer to “II. Overview of business, 3. Management analysis of financial position, operating
results and cash flows, (1) Overview of operating results, etc. 1) Financial position and operating
results.”
Analysis of financial position(Current assets)
At the end of the fiscal year under review, current assets were ¥85,020 million, up ¥8,127 million
compared with the end of the previous fiscal year. This is mainly due to increases of ¥7,214 million
in cash and cash equivalents and ¥2,074 million in inventories.
(Non-current assets)
At the end of the fiscal year under review, non-current assets were ¥88,624 million, down ¥4,786
million compared with the end of the previous fiscal year. This is mainly due to decreases of ¥3,156
million in property, plant and equipment and ¥1,322 million in other financial assets.
(Current liabilities)
At the end of the fiscal year under review, current liabilities were ¥35,046 million, down ¥6,096
million compared with the end of the previous fiscal year. This is mainly due to decreases of ¥3,388
million in borrowings and ¥3,250 million in trade and other payables.
(Non-current liabilities)
At the end of the fiscal year under review, non-current liabilities were ¥11,069 million, up ¥810
million compared with the end of the previous fiscal year. This is mainly due to an increase of¥1,042 million in deferred tax liabilities in spite of a decrease of ¥345 million in borrowings.
(Equity)
At the end of the fiscal year under review, equity was ¥127,527 million, up ¥8,626 million comparedwith the end of the previous fiscal year. This is mainly due to an increase of ¥9,536 million inretained earnings in spite of a decrease of ¥1,378 million due to the purchase of treasury shares.
Present conditions and outlook of business strategy
In terms of progress made in FY2018, the second year of the 10th Medium-Term Management Plan,
both motorcycle clutches and automobile clutches generally performed well. Based on these results,
future demand trends, and other factors, the performance targets of the 10th Medium-Term
Management Plan have been revised. The new performance targets are provided in “II. Overview ofbusiness, 1. Management policy, management environment, issues to address, etc.”

17

Analysis of capital resources and funding liquidity
The Group’s financial policy is to maintain the sound balance sheet taking into account appropriate
liquidity, etc. in securing funds for business activities. The Group procures working funds and funds
for equipment from internal funds and bank borrowings, and believes that it has sufficiently secured
the level of funds currently required. Cash flows for the fiscal year under review are provided in “II.
Overview of business, 3. Management analysis of financial position, operating results and cash flows,(1) Overview of operating results, etc., 2) Cash flows.”(3) Information about differences in main items in the overview of operating results, etc.
The following are differences between main items in consolidated financial statements prepared inaccordance with IFRS and equivalent items in consolidated financial statements if prepared inaccordance with Japanese GAAP.
Fiscal year ended March 31, 2018
Certain development expense that was expensed under Japanese GAAP is capitalized under IFRS.
Consequently, goodwill and intangible assets in the consolidated statement of financial position
increased by ¥2,885 million.
In the consolidated statement of income, cost of sales increased by ¥603 million, and research anddevelopment expense included in selling, general and administrative expenses decreased by ¥1,068
million.
Fiscal year ended March 31, 2019
Certain development expense that was expensed under Japanese GAAP is capitalized under IFRS.
Consequently, goodwill and intangible assets in the consolidated statement of financial position
increased by ¥3,356 million.
In the consolidated statement of income, cost of sales increased by ¥585 million, and research anddevelopment expense included in selling, general and administrative expenses decreased by ¥1,056
million.
4. Critical contracts for operation
Not applicable.
5. Research and development activities
As a manufacturer of functional components for transportation vehicles, the Group has adopted thebasic R&D policy of identifying customer needs and providing products that give customers excellent
performance through the application of creative ideas and technologies. Accordingly, it carries out bothbasic research on friction materials for use in motorcycle, automobile and general-purpose clutches andR&D on the clutches themselves, including R&D on production technologies for use in their
manufacture.
The Group also develops new products by making improvements to existing products and using
technologies it has accumulated through experience in manufacturing clutches (and friction materials
employed in clutches). Among R&D activities aimed at protecting the environment, it is developing a
porous fiber catalytic sheet (paper catalyst), which it believes can be employed as a paper catalyst to
clean engine exhaust emissions.
During the fiscal year ended March 31, 2019, research and development expense (including expenses
recognized as development assets) amounted to ¥4,179 million.

18

The following is a summary of R&D activities by segment during the fiscal year ended March 31, 2019.
Motorcycle clutches
Research and development activities are underway to improve product appeal, including clutch
operability, and reduce costs. Research and development of wet friction materials for motorcycles anddry friction materials for scooters provided a foundation for these activities.
Principal achievements during the fiscal year ended March 31, 2019:1) In ASEAN, began mass production of pulley assemblies and clutches for commuter-use
motorcycles targeting the global consumer market;
2) Expanded development of clutches for large-displacement sports model motorcycles incorporating
the Company’s proprietary A&S technology; and
3) Developed new friction materials with enhanced product appeal and durability.
In addition, the Company is conducting R&D activities aimed at expanding applications for paper
catalysts to clean engine exhaust emissions of general-purpose machinery, for which mass production
began in March 2011.
Research and development expense in the motorcycle clutches segment amounted to ¥1,876 million.
Automobile clutches
Research and development activities are underway to make clutches more compact and lightweight,
less expensive to manufacture, and more fuel efficient. Research and development of wet friction
materials for automatic transmissions (including ATs/CVTs) and dry friction materials for manualtransmissions provided a foundation for these activities.
Principal achievements during the fiscal year ended March 31, 2019:1) Began mass production of clutch assemblies for ATs based on the following:• Elements of the Company’s proprietary segment method for manufacturing friction plates, and• Elements of the Company’s proprietary technologies that increase fuel efficiency and achieve
weight reductions;2) Began mass production of lock-up clutches featuring a new damper structure with excellent
damping properties; and
3) Developed new friction materials with enhanced product appeal and durability.
Research and development expense in the automobile clutches segment amounted to ¥2,302 million.

19

III. Information about facilities
1. Overview of capital investments, etc.
During the fiscal year ended March 31, 2019, the Company made total capital investments (including
investments on intangible assets) of ¥10,861 million. The principal capital investment details were:expanding production capacity for automobile clutches in the U.S.; and expanding production capacity
for motorcycle clutches in India. The breakdown of capital investments by business segment is ¥3,550
million for motorcycle clutches, ¥6,815 million for automobile clutches, and ¥496 million for thecommon segment.
(1) Reporting company
Manufacturing facilities to produce new models at Hamakita Factory(2) Subsidiaries
Manufacturing facilities to produce new models, production capacity expansion and acquisition ofbuildings at FCC (Adams), LLC.
Manufacturing facilities to produce new models and production capacity expansion at FCC CLUTCHINDIA PRIVATE LTD.
Manufacturing facilities to produce new models and production capacity expansion at FCC(VIETNAM) CO., LTD.
Manufacturing facilities to produce new models and production capacity expansion at FCC(INDIANA), LLC.
2. Major facilities
Major facilities of the Group are as follows:(1) Reporting company
As of March 31, 2019
Carrying amount (Millions of yen)
Buildings
andstructures

Machinery,equipment
andvehicles

Land
(m2)

Other

Total

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

1,325

1,357

595
(85,261)

815

4,092

211
[9]

Watagashima Factory
Motorcycle and Manufacturing(Tenryu-ku, Hamamatsu- automobile
facilities for
shi, Shizuoka)
clutches
clutches

1,379

734

766
(61,268)

138

3,018

192
[13]

Suzuka Factory(Suzuka-shi, Mie)

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

1,964

1,090

1,292
(75,130)

55

4,402

198
[54]

R&D Division(Kita-ku, Hamamatsushi, Shizuoka)

CommonTesting
apparatus andmeasuring
instruments

405

712

216
(12,093)

113

1,447

193
[82]

Name
(Location)
Hamakita Factory(Hamakita-ku,
Hamamatsu-shi,
Shizuoka)

Segment nameFacilities

Number of
employees(2) Domestic subsidiaries
As of March 31, 2019
Carrying amount (Millions of yen)
Name
(Location)
KYUSHU F.C.C. CO.,LTD.
(Uki-shi, Kumamoto)

Segment nameFacilities

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

Buildings
andstructures

Machinery,equipment
andvehicles

Land
(m2)

Other

Total

179

246

11
(20,474)

114

552

20

Number of
employees

117
[29]

(3) Overseas subsidiaries
As of March 31, 2019
Carrying amount (Millions of yen)
Name

Location

Segment
nameFacilities

Machinery,
Buildings
equipment
andandstructures
vehicles

Land
(m2)

Other

Total

Number of
employees

FCC (INDIANA),
LLC.

Indiana, U.S.

Manufacturing
Automobile
facilities forclutches
clutches

1,789

6,798

81
(246,263)

143

8,813

750

FCC (North
Carolina), LLC.

North
Carolina,
U.S.

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

3,995

3,437

31
(366,274)

325

7,788

378
[8]

FCC (Adams), LLC. Indiana, U.S.

Manufacturing
Automobile
facilities forclutches
clutches

3,081

12,55051(161,880)

1,411

17,094680[10]

FCC AUTOMOTIVE
San Luis
PARTS DE
Potosi,
MEXICO, S.A. DE
MexicoC.V.

Manufacturing
Automobile
facilities forclutches
clutches

1,091

2,197

141
(81,837)

51

3,482

470

FCC (THAILAND)
CO., LTD.

Bangkok,ThailandMotorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

721

1,099

653
(87,890)

251

2,725

425
[509]

FCC CLUTCHINDIA PRIVATELTD.

Haryana,
India

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

951

3,273

1,326
(114,619)

790

6,341

811
[2,229]PT. FCCINDONESIA

Karawang,Indonesia

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

509

811

–
(72,812)

196

1,518

1,227
[458]

FCC (VIETNAM)
CO., LTD.

Hanoi,
VietnamMotorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

830

1,954

–
(45,816)

545

3,329

1,270

Notes: 1. The carrying amount of “Other” assets relates to tools, furniture and fixtures, leased assets and intangible assets
and includes construction in progress. The amounts shown above do not include consumption taxes.
2. Of the land of KYUSHU F.C.C. CO., LTD., 19,174 m2 was leased from the reporting company.
3. Of the land of FCC (North Carolina), LLC. of 366,274 m2, 11,266 m2 was leased.
4. The number of employees shown in brackets is the number of temporary employees at the end of the period.

21

3. Planned additions, retirements, etc. of facilities(1) Planned additions, etc. of important facilities
During the next fiscal year (from April 1, 2019 to March 31, 2020), the Company plans to make total
capital investments of ¥11,298 million.
The principal capital investment items will be manufacturing facilities to produce new models andexpansion of production capacity in the U.S., Japan, India and Vietnam. The breakdown of planned
capital investments by business segment will be ¥3,852 million for motorcycle clutches, ¥6,312
million for automobile clutches, and ¥1,134 million for the common segment.
• Reporting company
Production capacity expansion at Watagashima Factory and acquisition of testing apparatus, etc. at
the R&D Division• Subsidiaries
Manufacturing facilities to produce new models and production capacity expansion at FCC(Adams), LLC.
Manufacturing facilities to produce new models and production capacity expansion at FCC
CLUTCH INDIA PRIVATE LTD.
Manufacturing facilities to produce new models and production capacity expansion at FCC(VIETNAM) CO., LTD.
(2) Retirement, etc. of important facilities
The Company has no plan for the sales/retirement of important facilities, with the exception of theregular upgrading of facilities.

22IV. Information about reporting company
1. Information about shares, etc.
(1) Total number of shares, etc.
Total number of shares
Class

Total number of authorized shares (Shares)

Ordinary shares

90,000,000
Total

90,000,000(2) Changes in number of shares issued, issued capital, etc.

Date

Increase(decrease) in
total number ofshares issued(Shares)

April 1, 2006
(Note)

26,322,015

Balance of total
Increase
number of(decrease) inshares issued
issued capital(Shares)(Millions of yen)
52,644,030

Balance ofissued capital(Millions ofyen)

Increase(decrease) in
capital reserve(Millions ofyen)

Balance ofcapital reserve(Millions of
yen)

4,175

–

4,555

–

Note: This was due to a 2-for-1 share split.

(3) Shareholding by shareholder category
As of March 31, 2019
Shareholding status (Number of shares per share unit: 100 shares)
Category

Financial
Foreign investors
Financial instruments
Other
Individuals,
institutions
business corporations Companies, Individuals
etc.
etc.
operators

Publicsector

Total

Shares lessthan oneunit(Shares)Number ofshareholders

–

42

31

123

206

4

13,22013,626–

Number ofshares held
(Units)–147,054

4,208

143,865

113,6818

117,508526,324

11,630Shareholding
ratio (%)

–

27.94

0.80

27.33

21.60

0.00

22.33

100.00–Notes: 1. 2,955,975 treasury shares are included in “Individuals, etc.” as 29,559 units and “Shares less than one unit” as 75
shares.
2. “Other corporations” column above includes 37 units of shares held in the name of Japan Securities Depository
Center, Incorporated.

23

(4) Major shareholders
As of March 31, 2019
Number of shares
held(Thousands ofshares)Shareholding ratio(excluding treasury
shares) (%)

2-1-1 Minami-Aoyama, Minato-ku,
Tokyo10,881

21.90

The Master Trust Bank of Japan, Ltd. 2-11-3 Hamamatsu-cho, Minato-ku,(Trust Account)
Tokyo

2,539

5.11

SMBC Trust Bank Ltd. (Sumitomo
Mitsui Banking Corporation
Retirement Benefit Trust Account)

1-3-1 Nishi-Shimbashi, Minato-ku,
Tokyo

2,508

5.05

Y.A Co., Ltd.

38-28 Yamate-cho, Naka-ku,
Hamamatsu-shi, Shizuoka

2,019

4.06

Japan Trustee Services Bank, Ltd.
(Trust Account)

1-8-11 Harumi, Chuo-ku, Tokyo

1,672

3.37

National Mutual Insurance
Federation of Agricultural
Cooperatives

JA Kyosai Building, 2-7-9
Hirakawa-cho, Chiyoda-ku, Tokyo

1,539

3.10

Trust & Custody Services Bank, Ltd.
as trustee for Mizuho Bank
Harumi Island Triton Square Office
Retirement Benefit Trust Account re- Tower Z, 1-8-12 Harumi, Chuo-ku,
entrusted by Mizuho Trust &Tokyo
Banking Co., Ltd.

1,315

2.65

Ei Yamamoto

Naka-ku, Hamamatsu-shi, Shizuoka

1,300

2.62

Japan Trustee Services Bank, Ltd.
(Trust Account 9)1-8-11 Harumi, Chuo-ku, Tokyo

1,024

2.06

THE BANK OF NEW YORKMELLON 140044(Standing Proxy: Settlement &Clearing Services Department ofMizuho Bank, Ltd.)240 GREENWICH STREET, NEW
YORK, NY 10286, U.S.A.
(Shinagawa Intercity Tower A, 2-151 Konan, Minato-ku, Tokyo)

1,001

2.02

–

25,801

51.93

Name

Address

Honda Motor Co., Ltd.

Total

Notes: 1. In addition to the above, the Company held 2,955 thousand treasury shares.
2. Of the above number of shares held, the number of shares in association with fiduciary activities is as follows:
The Master Trust Bank of Japan, Ltd. (Trust Account)
SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation Retirement Benefit
Trust Account)
Japan Trustee Services Bank, Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd. as trustee for Mizuho Bank Retirement Benefit
Trust Account re-entrusted by Mizuho Trust & Banking Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust Account 9)2,539 thousand shares
2,508 thousand shares
1,672 thousand shares
1,315 thousand shares
1,024 thousand shares

3. Mizuho Bank, Ltd. and its joint holders, Mizuho Securities Co., Ltd., Mizuho Trust & Banking Co., Ltd. andAsset Management One Co., Ltd. made the change report for the substantial shareholding report available forpublic inspection as of June 22, 2017, describing that each of these companies held shares as follows as of June 15,
2017. Since the Company could not confirm the actual number of shares held by them as of March 31, 2019, they
were not included in the above major shareholders.
Name

Address

Number of shares,
etc. held(Shares)

Shareholding ratio(%)

Mizuho Bank, Ltd.

1-5-5 Otemachi, Chiyoda-ku, Tokyo

Shares1,315,200

2.50

Mizuho Securities Co., Ltd.

1-5-1 Otemachi, Chiyoda-ku, Tokyo

Shares90,6000.17

Mizuho Trust & Banking
Co., Ltd.

1-2-1 Yaesu, Chuo-ku, Tokyo

Shares429,000

0.81

Asset Management One Co.,Ltd.

1-8-2 Marunouchi, Chiyoda-ku,
Tokyo

Shares1,034,700

1.97

24

4. Mondrian Investment Partners Limited made the change report for the substantial shareholding report available forpublic inspection as of July 6, 2018, describing that this company held shares as follows as of July 2, 2018. Since
the Company could not confirm the actual number of shares held by this company as of March 31, 2019, it was
not included in the above major shareholders.
Name
Mondrian Investment
Partners Limited

Number of shares,
etc. held(Shares)

Address
Fifth Floor, 10 Gresham Street,
London EC2V 7JD, United
Kingdom

SharesShareholding ratio(%)

2,138,600

4.06

5. Nomura Securities Co., Ltd. and its joint holders, NOMURA INTERNATIONAL PLC and Nomura AssetManagement Co., Ltd., made the change report for the substantial shareholding report available for public
inspection as of November 22, 2018, describing that each of these companies held shares as follows as ofNovember 15, 2018. Since the Company could not confirm the actual number of shares held by them as of March
31, 2019, they were not included in the above major shareholders.
Number of shares,
etc. held(Shares)

Shareholding ratio
(%)

Name

Address

Nomura Securities Co., Ltd.

1-9-1 Nihombashi, Chuo-ku, Tokyo

Shares

1,986

0

NOMURA
INTERNATIONAL PLC

1 Angel Lane, London EC4R 3AB,
United Kingdom

Shares

126,800

0.24

Nomura Asset Management
Co., Ltd.

1-12-1 Nihombashi, Chuo-ku, Tokyo Shares

3,146,500

5.98

2. Dividend policy
The Company considers returning profits to shareholders to be one of the top management issues. Ourbasic policy is to continue to pay a stable dividend from a comprehensive point of view based on
consolidated financial performance and dividend payout ratio, etc., while striving to improve corporate
value by making capital investments and carrying out research and development activities necessary for
future growth and thus maintaining and strengthening its competitiveness.
The Company’s basic policy on dividend payments is to pay dividends twice a year in the form ofinterim dividends and year-end dividends.
Decisions on year-end dividends are made by the General Meeting of Shareholders, and decisions on
interim dividends are made by the Board of Directors.
Based on the foregoing policy, the Company paid a total dividend for the fiscal year under review of¥52 per share (of which ¥23 was paid out as an interim dividend). This resulted in a dividend payout
ratio of 22.1%.
The Company uses internal reserves to make investments for future business expansion, etc.
The Company stipulates in the Articles of Incorporation that it is able to pay an interim dividend, with
September 30 as the record date, based on a resolution of the Board of Directors.
Dividends for the fiscal year under review were as follows.
Total amount ofdividends(Millions of yen)

Dividends per share(Yen)

Resolution at a Board of Directors meeting
held on October 31, 2018

1,154

23

Resolution at the Ordinary General Meetingof Shareholders held on June 25, 2019

1,440

29

Resolution date25

3. Status of corporate governance, etc.
(1) Overview of corporate governance1) Basic policy regarding corporate governance
Based on its corporate philosophy, the Company endeavors to enhance its corporate governance as
one of the top management issues, aiming to build trust of its stakeholders, including shareholders,customers, employees, and local communities, conduct an agile and decisive decision-making in afair and transparent way and pursue its continuous growth and an increase in corporate value overthe medium- to long-term.
< Corporate philosophy >“F.C.C. Co., Ltd. is committed to making a contribution to society by supplying products that makethe best of ideas and technology to satisfy customers in every way, and which are also safe andenvironmentally friendly.”2) Summary of system of corporate governance and reasons for adopting the systemi) Summary of the system of corporate governancePartial amendments to the Articles of Incorporation have been resolved at the 86th Ordinary
General Meeting of Shareholders held on June 22, 2016. Consequently, the Company made thetransition to a company with an Audit and Supervisory Committee on the same date.
The Board of Directors comprises 13 Directors, of whom three are Outside Directors, and thePresident and Representative Director serves as its chairperson. In addition to making decisions on
matters prescribed by laws and regulations and execution of important operations, the Board of
Directors oversees the execution of duties of the Directors. The Audit and Supervisory Committee
is composed of four Directors who are Audit and Supervisory Committee Members, of whom three
are Outside Directors, and the Audit and Supervisory Committee Member (full time) serves as its
chairperson. In accordance with auditing policies, plans and division of responsibility establishedby the Audit and Supervisory Committee, each Audit and Supervisory Committee Member
participates in meetings of the Board of Directors and other important meetings, and audits andoversees the execution of duties of the Directors and the development and operation of theCompany’s internal control system by examining the status of operations and assets of theCompany. Accounting Auditor has concluded an audit contract with Yasumori Audit Corporation
pertaining to accounting audits in compliance with the Companies Act and Financial Instruments
and Exchange Act and undergoes its audit.
The following diagram shows the relationships among the Company’s organizations and internal
control as of June 27, 2019.

26

[Diagram of corporate governance system]
Election/Dismissal

General Meeting of Shareholders
Election/Dismissal

Election/Dismissal

Audit

Board of Directors
Directors(excluding Audit andSupervisory Committee
Members)

Audit, Oversight

ReportPoint of contact for
accepting proposals
for corporate ethics
improvement

CorporateethicsproposalAccounting
AuditorDirectors(Audit and Supervisory
Committee Members)

ReportInstruction

Compliance
Officer

Risk Management
OfficerCompliance
Committee

Risk Management
Committee

Compliance

Companywide CG
Secretariat

Audit and Supervisory
Committee

ReportInternal Audit
Division

Risk Management

Audit
Each division
Division CG Secretariat

Note: Members of the Board of Directors and the Audit and Supervisory Committee are provided in “(2) Information about
officers, 1) Officers.”ii) Reasons for adopting the system of corporate governance described above
With the aim of strengthening the oversight function of the Board of Directors, improving thetransparency and soundness of management and accelerating decision-making, the Company has
adopted an institutional design of a company with an Audit and Supervisory Committee. The
Company has a Board of Directors to oversee the execution of duties of the Directors. The Board of
Directors comprises Directors who are well versed in the operations of the Company and Outside
Directors with an objective, broad-ranging and in-depth perspective. In light of its business
contents and scale, the Company considers its current corporate structure as appropriate.
3) Other matters regarding corporate governance
Basic policy regarding the internal control system
The Company resolved the following basic policy regarding the systems to ensure the proper
execution of operations prescribed in the Companies Act at a meeting of the Board of Directors.
• System to ensure that the execution of duties by Directors and employees of the Company andGroup companies complies with laws and regulations and the Articles of Incorporation
The Company shall establish a code of conduct that is shared by the entire Group and implement
it thoroughly to ensure that the execution of duties by Directors and employees complies withlaws and regulations and the Articles of Incorporation and earns the trust of society.
The Company shall establish a Compliance Committee in which a Compliance Officer serves as
Chairman as an organization to control compliance. In addition, the Company shall establish aninternal reporting system to promote compliance.

27• System for storing and managing information on the execution of duties by the Company’s
Directors
The Company shall establish various regulations based on the basic policy for information
management, and appropriately store and manage information regarding the execution of duties
by the Directors.
• Regulations and other systems for managing risk of losses of the Company and Group companies
The management risk of the entire Group shall be acknowledged and evaluated at a meeting of theCompany’s Board of Directors. The Board of Directors of the Company shall elect Directors tomanage the acknowledged and evaluated management risk.
The Company shall establish a Risk Management Committee in which a Risk Management
Officer serves as Chairman as an organization that controls risk management. The Risk
Management Committee shall manage risks in daily operations and cross-functional risks of theentire Group.
• System to ensure the efficient execution of duties by Directors of the Company and Group
companies
A meeting of the Board of Directors of the Company shall be held once or more in three months
and on an extraordinary basis whenever necessary to take decisions on legally required mattersand important operations, and oversee the execution of duties by the Directors.
The Company shall expedite and increase the efficiency of the management decision-making
process using meetings such as management meetings and the executive officer system.
The Company shall draw up a medium-term management plan and annual business plan to
manage the progress of operations and promote the effective use of management resources of theentire Group.
The Company shall establish segregation of duties, reporting lines, and other organizational
standards in the regulations for executing duties, etc.
• System for reporting from Group companies to the Company and other systems to ensure theproper execution of operations within the corporate group comprising the Company and Group
companies
The Company shall establish subsidiary management regulations, with the aim of properly
managing Group companies in accordance with their scale of business and significance, etc.
The Company shall oblige Group companies to report to it on a regular basis and develop asystem for having them report specified important matters promptly.
The Internal Audit Division of the Company shall audit the Company and Group companies
regularly or whenever necessary.
• Matters concerning Directors and employees who assist the Audit and Supervisory Committee of
the Company in its duties
The Company shall establish the Internal Audit Division as an organization to assist the duties of
the Audit and Supervisory Committee. The Audit and Supervisory Committee shall have
responsibility for the Internal Audit Division, and the appointment, dismissal, personnel change,
and revision of wages of employees in the Internal Audit Division shall be determined by the
Board of Directors upon consent of the Audit and Supervisory Committee. The Company shall nothave Directors who assist the Audit and Supervisory Committee in its duties.
• System for reporting to the Audit and Supervisory Committee of the Company
Audit and Supervisory Committee Members shall attend meetings of the Board of Directors andother important meetings, and be allowed to request Directors and employees of the Company andGroup companies to report to them whenever necessary.
Upon receiving a request from the Audit and Supervisory Committee for a report, the Director or
employee shall report to it promptly and appropriately.

28

The Company shall establish an internal reporting system to ensure an appropriate system forreporting to the Audit and Supervisory Committee.
The Company shall develop a system to prohibit unfavorable treatment of a reporting party in its
operation rules for the internal reporting system.
• Matters regarding the policy for handling expenses and debts incurred for executing duties by the
Audit and Supervisory Committee Members of the Company
If the Audit and Supervisory Committee requests payment of expenses needed for executing its
duties, the Company shall pay such expenses promptly.
The Audit and Supervisory Committee shall factor expenses deemed necessary for executing its
duties into the budget in advance. Provided, however, that the Audit and Supervisory Committee
shall be allowed to request reimbursement of emergency or extraordinary expenses after the fact.
• Other systems to ensure audits by the Audit and Supervisory Committee of the Company are
conducted effectively
The Audit and Supervisory Committee shall exchange opinions with Representative Director,
Directors and Accounting Auditor regularly or whenever necessary.
The Audit and Supervisory Committee shall conduct audits effectively by cooperating closelywith the Internal Audit Division.
Overview of limited liability agreements
In accordance with the provisions of Article 427, paragraph 1 of the Companies Act, the Company
has concluded agreements limiting the extent of any liability for statutory compensation as stipulated
in Article 423, paragraph 1 of the said Act with the Directors who are Audit and Supervisory
Committee Members. The limits on compensation stipulated in these agreements are the minimum
amounts prescribed in Article 425, paragraph 1 of the said Act.
Matters normally requiring adoption of a resolution by the General Meeting of Shareholders, which
may be decided by the Board of Directors• Acquisition of own shares
To carry out capital policy in a flexible and timely manner in response to changes in the economic
environment, the Company provides in its Articles of Incorporation that, in accordance with theprovisions of Article 165, paragraph 2 of the Companies Act, it may acquire own shares throughmarket transactions, etc. based on a resolution of the Board of Directors.
• Interim dividends
To make a flexible return of profits to shareholders, the Company provides in its Articles ofIncorporation that, in accordance with Article 454, paragraph 5 of the Companies Act, it may pay
dividends of surplus (interim dividends) based on a resolution of the Board of Directors.
• Exemption of Directors from liability
To create an environment where Directors are able to fulfill their expected roles adequately, theCompany provides in its Articles of Incorporation that, pursuant to the provisions of Article 426,
paragraph 1 of the Companies Act, it may exempt Directors (including former Directors) fromliability as set forth in Article 423, paragraph 1 of the said Act within the limits stipulated by laws
and regulations based on a resolution of the Board of Directors.
Number of Directors
The Company states in its Articles of Incorporation that it shall have no more than 20 Directors (ofwhich, no more than 5 Directors are Audit and Supervisory Committee Members).

29Requirements for election of Directors
The Company states in its Articles of Incorporation that adoption of resolutions for the election of
Directors shall require that at least one-third of the shareholders entitled to execute voting rights bepresent, and that an affirmative vote be cast by a majority of such shareholders present. The
Company also states in its Articles of Incorporation that cumulative voting shall not be used for theelection of Directors.
Requirements for the adoption of special resolutions by the General Meeting of Shareholders
With the aim of ensuring the smooth operation of the General Meeting of Shareholders, theCompany states in its Articles of Incorporation that the adoption of a special resolution based on
Article 309, paragraph 2 of the Companies Act shall require that at least one-third of theshareholders entitled to execute voting rights be present, and that an affirmative vote be cast by atleast two-thirds of such shareholders present.

30

(2) Information about officers
1) Officers
Men: 13, Women: – (Percentage of female officers: –%)Title and position

President and Representative
Director

Name

Toshimichi
MatsudaVice President andYoshitaka
Representative Director and in
Saito
charge of Alliance

Term ofofficeNumber ofshares held
(Hundreds ofshares)Mar. 1975 Joined the Company
Apr. 1996 President and Director of FCC(EUROPE) LTD.
Jun. 2001 Director and General Manager ofSales Division of the Company
Jun. 2005 Director, in charge of Sales andPurchasing of the Company
Jun. 2006 Director, in charge of Sales andPurchasing and Risk Management
Officer of the Company
Apr. 2007 Director, Head of Sales andPurchasing, Head of business
operation in China and Risk
Management Officer of theCompany
Jun. 2008 Managing Director, Head of Sales
and Purchasing and Head of(Note 2)business operation in China of theCompany
Jun. 2010 Managing Director, Head of Sales
and Purchasing and Compliance
Officer of the Company
Jun. 2011 Managing Director, Head of Sales
and Compliance Officer of theCompany
Jun. 2012 Senior Managing Director, Head of
Sales and Compliance Officer of theCompany
Apr. 2013 Senior Managing Director of theCompany
Jun. 2013 President and Representative
Director of the Company(incumbent)

114

Feb. 2009 Joined the Company
Jan. 2011 President and Director of FCC(INDIANA) Mfg., LLC. (currently
FCC (INDIANA), LLC.)
President and Director of FCC(INDIANA), INC. (currently FCC(INDIANA), LLC.)
Jun. 2011 Director of the Company
Apr. 2012 Director and Head of business
operation in North America of theCompany
President and Director of FCC(North America), INC.
Jun. 2012 Managing Director and Head ofNovember 29,
business operation in North America(Note 2)1973
of the Company
Apr. 2013 Managing Director and Head of
business operation of motorcycles
business of the Company
Apr. 2014 Managing Director, Head of
Purchasing, Head of business
operation in China and Risk
Management Officer of theCompany
Jun. 2018 Senior Managing Director, in chargeof Sales and Head of business
operation in China of the Company
Apr. 2019 Vice President and Representative
Director and in charge of Alliance of
the Company (incumbent)

152

Date of birth

December 9,1952

Career summary

31

Title and position

Name

Managing Director,
Head of business operation in
North America and Head of
Kazuhiro
Next-generation Development Itonaga
for Customers in Europe andthe United States

Date of birth

March 11,1960

Career summary

Term ofofficeMar. 1982 Joined the Company
Apr. 2009 General Manager of R&D Divisionof the Company
Jun. 2009 Director and General Manager of
R&D Division of the Company
Jun. 2010 Director, Head of Research andDevelopment and General Manager
of R&D Division of the Company
Jun. 2013 Managing Director, Head of
Research and Development andGeneral Manager of R&D Divisionof the Company
Apr. 2015 Managing Director, Head of
business operation of automobiles
business and Head of Research andDevelopment of Automobile
Components of the Company(Note 2)
Apr. 2016 Managing Director, Head of
business operation of automobiles
business of the Company
Nov. 2016 Managing Director, Head of
business operation of automobiles
business and in charge of New
Business Development Division of
the Company
Apr. 2019 Managing Director, Head of
business operation in North Americaand Head of Next-generation
Development for Customers in
Europe and the United States of theCompany
President and Director of FCC(North America), INC. (incumbent)

32

Number ofshares held
(Hundreds ofshares)25

Title and position

Name

Managing Director,
Head of business operation of
motorcycles business, Head of
business operation in ASEAN, Kazuto
Head of business operation in Suzuki
South America, Risk
Management Officer and in
charge of Racing

Date of birth

Career summary

Term ofofficeApr. 1984 Joined the Company
Apr. 2009 General Manager of Corporate
Planning Office of the Company
Jun. 2010 Director, Head of business operationin China and South America andGeneral Manager of Corporate
Planning Office of the Company
Jun. 2011 Director, Head of business operationin China and South America,
General Manager of Corporate
Planning Office and Risk
Management Officer of theCompany
Jan. 2012 Director, Head of business operationin China and South America andRisk Management Officer of theCompany
Apr. 2012 Director, Head of Production
Engineering, Head of business
operation in China and SouthAmerica and Risk Management
Officer of the Company
Jun. 2012 Director, Head of Production ofMotorcycle Components, Head of
Production Engineering and Head of
business operation in China andSouth America of the Company
Apr. 2013 Director, Head of business operationof motorcycles business in Japan,
Head of business operation in China
and South America and Risk
Management Officer of theCompany
Apr. 2014 Director, Head of business operation
May 27, 1961
of motorcycles business, Head of(Note 2)business operation in ASEAN and
India and Head of business
operation in South America of theCompany
Apr. 2016 Director, Head of business operationof motorcycles business, Head of
Production of Motorcycle
Components, Head of business
operation in ASEAN and Head of
business operation in South Americaof the Company
Jun. 2017 Managing Director, Head of
business operation of motorcycles
business, Head of Production ofMotorcycle Components, Head of
business operation in ASEAN andHead of business operation in SouthAmerica of the Company
Jun. 2018 Managing Director, Head of
business operation of motorcycles
business, Head of Production ofMotorcycle Components, Head of
business operation in ASEAN andSouth America and Risk
Management Officer of theCompany
Apr. 2019 Managing Director, Head of
business operation of motorcycles
business, Head of business operationin ASEAN, Head of business
operation in South America, Risk
Management Officer and in chargeof Racing of the Company(incumbent)

33

Number ofshares held
(Hundreds ofshares)33

Title and position

Director,
Head of New Business
Development and in charge ofSales of the Company

Director,
Head of Management andAdministration, Compliance
Officer and Chief Information
Officer

Director,
Head of business operation of
automobiles business and in
charge of Stacked Mold
Technology Development

Name

Date of birth

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)

December 5,
1960

Jul. 1989 Joined the Company
Jan. 2011 General Manager of Sales Divisionof the Company
Apr. 2013 Executive Officer, Head of Sales
and General Manager of Sales
Division of the Company
Apr. 2015 Senior Executive Officer, Head of
Sales and General Manager of Sales (Note 2)
Division of the Company
Jun. 2018 Director, Head of Sales andPurchasing and General Manager ofSales Division of the Company
Apr. 2019 Director, Head of New Business
Development and in charge of Salesof the Company (incumbent)

36

RyujiroMatsumoto

June 4, 1962

Jul. 2005 Joined the Company
Jan. 2011 General Manager of FCC(THAILAND) CO., LTD.
Jun. 2011 Director, Head of Production ofMotorcycle Components and Headof business operation in Asia of theCompany
Jun. 2012 Director and Head of business
operation in Asia of the Company(Note 2)
Apr. 2013 Director, Head of Management andAdministration, General Manager ofCorporate Planning Office,Compliance Officer and Chief
Information Officer of the Company
Jun. 2013 Director, Head of Management andAdministration, Compliance Officer
and Chief Information Officer of theCompany (incumbent)

18

Atsuhiro
Mukoyama

Apr. 1984 Joined the Company
Apr. 2012 Head of Production of Automobile
Components of the Company
Jun. 2012 Director and Head of Production ofAutomobile Components of theCompany
Apr. 2013 Director and Head of business
operation of automobiles business of
the Company
July 31, 1963
(Note 2)
Apr. 2015 Director, Head of Production
Engineering and Head ofEnvironment and Safety of theCompany
Apr. 2019 Director, Head of business operationof automobiles business and in
charge of Stacked Mold Technology
Development of the Company(incumbent)

22

Terufumi
Nishimura34

Title and position

Director,
Head of Purchasing, Head ofEnvironment and Safety andHead of business operation in
China

Director,
Head of Production
Engineering

Director,
Audit and Supervisory
Committee Member(full time)

Director,
Audit and Supervisory
Committee Member

Name

Date of birth

Career summary

Term ofofficeApr. 1986 Joined the Company
Jan. 2012 General Manager of Corporate
Planning Office of the Company
Jun. 2012 Director, Head of Management andAdministration, General Manager ofCorporate Planning Office, Risk
Management Officer and Chief
Information Officer of the Company
Apr. 2013 Director, Head of business operationin North America of the Company
President and Director of FCC(Note 2)(North America), INC.
President and Director of FCC(INDIANA), LLC.
Apr. 2017 Director, Head of business operationin North America of the Company
President and Director of FCC(North America), INC.
Apr. 2019 Director, Head of Purchasing, Headof Environment and Safety andHead of business operation in Chinaof the Company (incumbent)

Number ofshares held
(Hundreds ofshares)SatoshiNakayaMarch 17,
1964

Tomoyuki
Goto

Apr. 1987 Joined Honda Motor Co., Ltd.
Apr. 2017 Engineer of Power Train Strategy
Planning Department, Production
Operations of Honda Motor Co.,Ltd.
Apr. 2018 Joined the Company, Assistant to
President
May 21, 1962
Jun. 2018 Director, Head of production in
North America and Deputy Head of
Production Engineering of theCompany
Apr. 2019 Director, Head of Production
Engineering of the Company(incumbent)(Note 2)

16

Katsuyoshi
FukatsuMar. 1977 Joined the Company
Apr. 2009 President and Director of FCC(INDIANA) Mfg., LLC. (currently
FCC (INDIANA), LLC.)
Jun. 2009 Director and Head of business
operation in North America of theCompany
President and Director of FCC
November 30,(INDIANA), INC. (currently FCC(Note 3)
1954
(INDIANA), LLC.)
Jun. 2010 President and Director of FCC(North America), INC.
Jun. 2012 Audit & Supervisory Board Member(full time) of the Company
Jun. 2016 Director, Audit and Supervisory
Committee Member (full time) of
the Company (incumbent)

47

Yoshinori
Tsuji

Mar. 1986 Graduated from The Legal Training
and Research Institute of Japan
Apr. 1986 Registered as an attorney (Nagoya
Bar Association)
Apr. 1987 Transferred registration to the
Shizuoka Bar Association
Established Yoshinori Tsuji Law
April 17, 1959
(Note 3)
Office(to present)
Jun. 2007 Audit & Supervisory Board Memberof the Company
Jun. 2016 Director, Audit and Supervisory
Committee Member of the Company(incumbent)

–

35

49

Title and position

Director,
Audit and Supervisory
Committee Member

Director,
Audit and Supervisory
Committee Member

Name

Date of birth

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)Masahide
Sato

February 10,
1964

Oct. 1992 Joined Showa Ota & Co. (currently
Ernst & Young ShinNihon LLC)
Apr. 1996 Registered as Certified Public
Accountant
Sep. 2005 Established Masahide Sato
Accounting Firm
(to present)(Note 3)
Jun. 2010 Audit & Supervisory Board Memberof the Company
Apr. 2015 Director of CRESTEC Inc.
(incumbent)
Jun. 2016 Director, Audit and Supervisory
Committee Member of the Company(incumbent)–

Kazumoto
Sugiyama

Sep. 2006 Graduated from The Legal Training
and Research Institute of Japan
Oct. 2006 Registered as an attorney (Shizuoka
Bar Association)
Joined Toshio Sugiyama Law Office(currently Sugiyama Law Office)May 27, 1969
(Note 3)
Sep. 2008 President of Sugiyama Law Office(to present)
Jun. 2014 Director of the Company
Jun. 2016 Director, Audit and Supervisory
Committee Member of the Company(incumbent)

–

Total

512

Notes: 1. Mr. Yoshinori Tsuji, Mr. Masahide Sato and Mr. Kazumoto Sugiyama are Outside Directors.
2. One year from the conclusion of the Ordinary General Meeting of Shareholders held on June 25, 2019
3. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on June 19, 2018

2) Outside Officers
The Company has three Outside Directors.
No conflict of interest of any personal, financial, or commercial nature exists between the Company
and Mr. Yoshinori Tsuji, Mr. Masahide Sato and Mr. Kazumoto Sugiyama.
The function and role of the Outside Directors in corporate governance of the Company is to provide
management with objective advice related to corporate management from the standpoint of experts
and objective viewpoints based on extensive experience.
Mr. Yoshinori Tsuji was elected as an Outside Director in the light of his specialized expertise andextensive experience of corporate legal affairs acquired as a lawyer.
Mr. Masahide Sato was elected as an Outside Director in the light of his specialized expertise andextensive experience of corporate finance and accounting affairs acquired as a certified public
accountant.
Mr. Kazumoto Sugiyama was elected as an Outside Director in the light of his specialized expertiseand extensive experience of corporate legal affairs acquired as a lawyer.
While the Company has not established any specific standards or policy regarding independence
when electing Outside Directors, the Company gives due consideration to ensure that no conflict ofinterest exists between them and the Company’s ordinary shareholders and that there isindependence from the Company in view of the Companies Act, the standards set by financial
instruments exchanges, and the like.
In accordance with the requirements of the Tokyo Stock Exchange, Mr. Yoshinori Tsuji, Mr.
Masahide Sato and Mr. Kazumoto Sugiyama are designated as independent officers and areregistered with the said stock exchange as such.

363) Coordination between supervision or auditing by Outside Directors and internal audits, audits by the
Audit and Supervisory Committee and accounting audits, and relationship with divisions involved ininternal control
The Company has established the Internal Audit Division as an organization to assist the duties of
the Audit and Supervisory Committee. Outside Directors are performing audits and supervision in
sufficient cooperation with the Internal Audit Division, the Audit and Supervisory Committee andthe Accounting Auditor, receiving periodic reports from them and asking them for explanations asneeded.
(3) Audits
1) Audits by the Audit and Supervisory Committee
The Audit and Supervisory Committee Members audit and oversee the execution of duties by the
Directors, the development and operation of the Company’s internal control system, and otheraspects of operations by, among other things, attending meetings of the Board of Directors and otherimportant meetings, and examining the operations and assets of the Company. Such audits arecarried out in accordance with auditing policies, plans, and division of responsibility established by
the Audit and Supervisory Committee. The Company has a system where Audit and Supervisory
Committee Members exchange opinions with Representative Director, Directors, and Accounting
Auditor regularly or whenever necessary, and collaborate with the Internal Audit Division to ensure
the effectiveness of audits.
Outside Director Masahide Sato is a licensed CPA with considerable knowledge of finance andaccounting.
2) Internal audits
The Company has established the Internal Audit Division as an organization to assist the duties of
the Audit and Supervisory Committee. The Audit and Supervisory Committee has responsibility for
the Internal Audit Division, and the appointment, dismissal, personnel change, and revision of wagesof employees in the Internal Audit Division are determined by the Board of Directors upon consent
of the Audit and Supervisory Committee.
The Internal Audit Division audits the status of development and operations of internal controls of
the entire Group with the aim of improving the effectiveness and efficiency of operations, increasing
the reliability of financial reporting, ensuring compliance with laws and regulations relating tobusiness activities, and protecting the Company’s assets.
This office’s eight staff members, including the General Manager, carry out periodic andunscheduled audits in collaboration with the Audit and Supervisory Committee.
3) Accounting audits
The Company’s Accounting Auditor is Yasumori Audit Corporation. The following information
covers the names of the certified public accountants involved in accounting audits of the operationsof the Company and the number of assistant accountants who participated in audits.
• Names of CPAs who conducted audits:
Engagement partner: Satoru Saigusa, Takashi Yamazaki• Assistant accountants who participated in accounting audits:
Ten CPAs
Policy and reason for selecting the audit corporation
The Company has selected Yasumori Audit Corporation, taking factors, including the Audit
Corporation’s specialization, independence and suitability as the Accounting Auditor, quality control
systems and thorough knowledge of the Company’s operations, comprehensively into consideration.

37

The policy on decisions concerning the dismissal or non-reappointment of the Accounting Auditor is
as follows.
In the event that there is an obstacle preventing the Accounting Auditor from performing its duties,
the Audit and Supervisory Committee, if it is deemed necessary, will determine the content of a
proposal to be proposed to the General Meeting of Shareholders concerning the dismissal or nonreappointment of the Accounting Auditor.
Also, the Audit and Supervisory Committee will dismiss the Accounting Auditor if it judges that anyof the items stipulated in Article 340, paragraph 1 of the Companies Act is applicable to the
Accounting Auditor, based on the consent of all members of the Audit and Supervisory Committee.
In this case, an Audit and Supervisory Committee Member appointed by the Audit and Supervisory
Committee will report the fact of dismissal and the reasons thereof at the first General Meeting of
Shareholders convened after the dismissal.
Evaluation of the audit corporation conducted by the Audit and Supervisory Committee
The Audit and Supervisory Committee decides on the propriety of the reappointment of the
Accounting Auditor by evaluating the suitability and validity of audits conducted by the Accounting
Auditor based on the policy on decisions concerning the dismissal or non-reappointment of the
Accounting Auditor.
Details of audit fee, etc.
Details of remuneration to independent auditors
Fiscal year ended March 31, 2018
Category

Fees for audit
certification services(Millions of yen)

Fiscal year ended March 31, 2019

Fees for non-audit
services(Millions of yen)

Fees for audit
certification services(Millions of yen)

Fees for non-audit
services(Millions of yen)

Reporting company

53

–

53

–

Consolidated
subsidiaries

–

–

–

–

Total

53

–

53

–

Policy on determining audit fee
The Company has not formulated a policy on determining fees for audits conducted by independent
auditors. However, the Company has implemented procedures for deciding the remuneration byobtaining the approval of the Audit and Supervisory Committee, taking factors, such as audit plans,
audit details and the number of days spent on audits submitted by the Audit Corporation, into
consideration.
Reasons for approval of the Accounting Auditor’s remuneration, etc. by the Audit and Supervisory
Committee
The Audit and Supervisory Committee has approved remuneration for the Accounting Auditor basedon the scale and characteristics of the Company’s businesses, and the content of documents
submitted by the Audit Corporation including the summaries of audit plans.
(4) Remuneration, etc. for officers
Policy for determining remuneration amounts paid to officers and the method of calculating suchamount as well as the method of determination thereof
The Board of Directors of the Company has resolved as follows with regard to the policy on
determining remuneration for officers.
38

Policy on determining remuneration for officers
The Company sets remuneration, etc. for officers as an appropriate level for their duties andresponsibilities so that it shall serve as sound and proper incentives. The amounts paid to Directors(excluding Directors who are Audit and Supervisory Committee Members) comprise the officer’s
remuneration of fixed amount paid in exchange for executing duties and bonuses paid in
consideration of the Company’s financial performance and economic and industry trends during therelevant fiscal year and set based on the Medium-Term Management Plan. The amounts paid to
Directors who are Audit and Supervisory Committee Members consist solely of the officer’s
remuneration of fixed amount paid in exchange for executing duties. The amounts paid will bewithin the limit approved by resolution of the General Meeting of Shareholders. Those paid to
Directors (excluding Directors who are Audit and Supervisory Committee Members) will be basedon a resolution of the Board of Directors. Those paid to Directors who are Audit and Supervisory
Committee Members will be based on deliberations among the Directors who are Audit andSupervisory Committee Members.
With the aim of promoting the Company’s continuous growth and an increase in corporate value
over the medium- to long-term by sharing interests with shareholders through the holding of theCompany’s shares, Directors (excluding Directors who are Audit and Supervisory Committee
Members) contribute a portion of their fixed remuneration to Officers Stock Ownership Plan andacquire the Company’s shares, while continuing its holding during their term and for a year after
their retirement from office.
The President and Representative Director authorized by the Board of Directors based on its
resolution decided remuneration amounts for the fiscal year under review based on the policy on
determining remuneration for officers stated above, taking factors such as job responsibilities by
position, into consideration. No indicator and the like showing profit status has been established forbonuses for officers.
Total amount of remuneration, etc., total amount of remuneration, etc. by type and number of payees by
category
Category

Total amount of
remuneration, etc.
(Millions of yen)

Total amount of remuneration, etc.
by type (Millions of yen)
Remuneration

BonusesNumber ofpayeesDirectors (excluding Directors who are
Audit and Supervisory Committee
Members)

257

216

41

9

Directors, Audit and Supervisory
Committee Members[Outside Directors]

34
[11]

34
[11]

–
[–]

4
[3]

Total
[Outside Directors]

292
[11]

250
[11]

41
[–]

13
[3]

Notes: 1. The amount of remuneration, etc. of Directors (excluding Directors who are Audit and Supervisory Committee
Members) does not include employee salaries paid to persons who are concurrently Directors and employees.
2. At the 86th Ordinary General Meeting of Shareholders held on June 22, 2016, remuneration of Directors(excluding Directors who are Audit and Supervisory Committee Members) was capped at ¥500 million per year
(which, however, does not include salaries paid for work performed as employees) (number of Directors(excluding Directors who are Audit and Supervisory Committee Members) at the conclusion of this Ordinary
General Meeting of Shareholders: eight).
3. At the 86th Ordinary General Meeting of Shareholders held on June 22, 2016, remuneration of Directors who are
Audit and Supervisory Committee Members was capped at ¥90 million per year (number of Directors who are
Audit and Supervisory Committee Members at the conclusion of this Ordinary General Meeting of Shareholders:five).

39

(5) Share ownership
1) Policy and concept of the classification of investment shares
The Company has classified investment shares into shares held for the purpose of net investment
aimed entirely at achieving profits from fluctuations in their value or dividends on them and crossheld shares owned from viewpoints, including the maintenance and strengthening of business
relationships.
2) Investment shares whose purpose of holding is other than for net investmenti) Method for inspecting the holding policy and the rationality of ownership, and the details ofinspections by the Board of Directors and the like concerning the propriety of the ownership ofindividual issues
The Company may hold investment shares from viewpoints, including the maintenance andstrengthening of business relationships with customers and transaction partners, in cases where it
judges their ownership contributes to enhancing its corporate value in the medium and long term.
The Board of Directors inspects the propriety of owning cross-held shares every year, taking
benefits, risks and the like involved in holding them into consideration, in addition to the natureand scale of transactions.
ii) Number of issues and total amount of balance sheet amount
Total amount of
Number of issues
balance sheet amount(Issues)(Millions of yen)
Unlisted shares

939

Shares other than unlisted shares

10

1,346

(Issues whose number of shares increased in the fiscal year ended March 31, 2019)
Total acquisition
costs associated with
Number of issues
increase in number of(Issues)shares(Millions of yen)
Unlisted shares
Shares other than unlisted shares–

Reason for increase in number of shares

–

2

0

–
Share split and contributions to stock
ownership plans at client companies(Issues whose number of shares decreased in the fiscal year ended March 31, 2019)
Number of issues(Issues)

Total sale value
associated withdecrease in numberof shares(Millions of yen)

Unlisted shares––

Shares other than unlisted shares

1

44

40

iii) Information about the numbers of specified investment shares by issue, balance sheet amounts, etc.
Specified investment sharesFiscal year ended Fiscal year ended
March 31, 2019
March 31, 2018
Issue

KANEMATSU
CORPORATIONSUZUKI MOTORCORPORATION

Number of shares Number of shares(Shares)(Shares)
Balance sheet
amount(Millions of yen)

Balance sheet
amount(Millions of yen)740,200

740,200

936

1,082

52,50052,500257

300

532,169

532,169

91

101

–

39,000

–

37

5,755

5,755

22

25

12,000

6,000

18

21

4,500

4,500

6

8

5,613

5,039

5

7

4,000

4,000

3

3

1,000

1,000

1

2

2,400

2,400

3

4

Mizuho Financial Group, Inc.

SHIMIZU CORPORATION

Sumitomo Mitsui Financial
Group, Inc.

MUSASHI SEIMITSU
INDUSTRY CO., LTD.

Nissin Kogyo Co., Ltd.

YAMABIKOCORPORATIONTANAKA SEIMITSU
KOGYO CO., LTD.

Yutaka Giken Company
Limited

G-TEKT CORPORATION

Purpose of holding, quantitative
effect of holding and reason forincrease in number of shares (Note)

Holding oftheCompany’s
sharesTo maintain and strengthen business
relationships

Yes

To maintain and strengthen business
relationships

No

Primarily to maintain and strengthen
financial transaction relationships

No

To maintain and strengthen business
relationships

Yes

Primarily to maintain and strengthen
financial transaction relationships

No

To maintain and strengthen business
relationships
Number of shares increased due toshare splitYes

To maintain and strengthen business
relationships

No

To maintain and strengthen business
relationships
Number of shares increased due tocontributions to stock ownershipplans at client companies

No

To maintain and strengthen business
relationships

Yes

To maintain and strengthen business
relationships

No

To maintain and strengthen business
relationships

No

Note: The quantitative effects of holding the specified investment shares are difficult to state, but the rationality of theirownership is inspected as stated in the above item i).

41

V. Financial information
1. Preparation policy of the consolidated and non-consolidated financial statements(1) The consolidated financial statements of the Company are prepared in accordance with International
Financial Reporting Standards (hereinafter “IFRS”) pursuant to the provisions of Article 93 of theOrdinance on Terminology, Forms and Preparation Methods of Consolidated Financial Statements(Ordinance of the Ministry of Finance No. 28 of 1976).
(2) The non-consolidated financial statements of the Company are prepared in accordance with theOrdinance on Terminology, Forms and Preparation Methods of Financial Statements, etc. (Ordinanceof the Ministry of Finance No. 59 of 1963; hereinafter the “Ordinance on Financial Statements, etc.”).
The Company is qualified as a company submitting financial statements prepared in accordance withspecial provision and has prepared financial statements pursuant to the provisions of Article 127 of theOrdinance on Financial Statements, etc.
2. Audit certification
In accordance with the provisions of Article 193-2, paragraph 1 of the Financial Instruments andExchange Act, the consolidated financial statements and the non-consolidated financial statements forthe fiscal year ended March 31, 2019 were audited by Yasumori Audit Corporation.
3. Special efforts to ensure the appropriateness of consolidated financial statements, etc., anddevelopment of a system for fair preparation of consolidated financial statements, etc. inaccordance with IFRSThe Company is making special efforts to ensure the appropriateness of consolidated financial
statements, and developing a system for the appropriate preparation of consolidated financial
statements, in accordance with IFRS. The content thereof is as follows:(1) To develop a system for ensuring correct understanding of accounting standards, etc. andappropriate responses to any changes in accounting standards, etc., the Company has joined the
Financial Accounting Standards Foundation and attends seminars held by the foundation and audit
corporations.
(2) For the adoption of IFRS, the Company keeps up with the latest accounting standards by obtainingpress releases and standards published by the International Accounting Standards Board as needed.
To prepare appropriate consolidated financial statements, etc. under IFRS, the Company has
developed accounting policies of the Group in accordance with IFRS and performs accounting
procedures based on these policies.

421. Consolidated financial statements, etc.
(1) Consolidated financial statements
1) Consolidated statement of financial position(Millions of yen)

AssetsCurrent assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Goodwill and intangible assets
Investments accounted for using the equity
methodOther financial assets
Deferred tax assets
Other non-current assets

Notes

As of
March 31, 2018

As ofMarch 31, 2019

7, 27
8, 27
9, 27
10
11

25,23028,8552,339
18,4282,038

32,44428,0801,625
20,5032,366

76,89285,02012, 14, 30
13, 3072,942
4,396

69,786
4,201

15

117

89

9, 27
16
11

12,561
2,734
657

11,2382,775
532

Total non-current assets
Total assets

43

93,41088,624

170,302173,644(Millions of yen)

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Income taxes payable
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other financial liabilities
Defined benefit liability
Provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityIssued capital
Retained earnings
Treasury shares
Other components of equity
Total equity attributable to owners of parent
Non-controlling interests
Total equity

Notes

As of
March 31, 2018

As ofMarch 31, 201918, 2717, 279, 27
16
1116,044
16,179
128
2,784
6,006

12,794
12,791
152
2,704
6,604

41,14335,04617, 27
9, 27
19
20
16
11

365
448
2,027
33
7,086
297
10,25851,402

19
488
2,144
29
8,129
258
11,06946,116

21
21
21

4,175
112,828(3,409)3,716
117,311
1,589
118,900

4,175
122,365(4,787)
4,122
125,875
1,652
127,527

170,302173,644

Total liabilities and equity(Note) The accompanying notes are an integral part of these financial statements.

442) Consolidated statement of income(Millions of yen)
Notes
Revenue
Cost of sales

Fiscal year ended
March 31, 2018
173,174(142,877)

177,605(145,564)

22
23
14, 2330,297(15,070)657(1,831)

32,041(15,496)
1,070(1,770)4
24
24

14,052808(763)

15,843
992
(299)

15

(13)

(32)

16

14,083(4,160)16,503(4,537)

Profit9,923

11,965

Profit attributable to
Owners of parent
Non-controlling interests

9,691
231

11,779186

9,923

11,965193.11–235.05–Gross profit
Selling, general and administrative expenses
Other income
Other expense
Operating profit
Finance income
Finance costs
Share of profit (loss) in investments accounted forusing the equity method
Profit before income taxes
Income tax expense

4, 5Fiscal year ended
March 31, 2019

ProfitEarnings per share(Attributable to owners of parent)
Basic earnings per share (Yen)
Diluted earnings per share (Yen)26
26(Note) The accompanying notes are an integral part of these financial statements.

453) Consolidated statement of comprehensive income(Millions of yen)
Notes

Fiscal year ended
March 31, 2018

ProfitOther comprehensive income
Components that will not be reclassified to profit
or loss
Remeasurements of defined benefit plans
Changes in the fair value of financial assets
measured at fair value through othercomprehensive income

9,923

11,965

25

286

(30)

25

–

(915)

286

(945)

25

720

–

25

(2,988)

1,356

(6)

3

Total
Components that may be reclassified to profit orloss
Changes in fair value of available-for-salefinancial assets
Exchange differences of foreign operations
Share of other comprehensive income ofassociates accounted for using equity method

Fiscal year ended
March 31, 201915, 25(2,274)

1,360

Total other comprehensive income

Total(1,988)414

Comprehensive income

7,935

12,380Comprehensive income attributable to
Owners of parent
Non-controlling interests

7,744
190

12,187192

7,935

12,380Comprehensive income(Note) The accompanying notes are an integral part of these financial statements.

464) Consolidated statement of changes in equity
Equity attributable to owners of parent
Other components of equity
IssuedcapitalRetainedearnings

TreasurysharesExchangedifferencesof foreign
operations

Changes infair value ofavailablefor-salefinancialassetsMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions of
yen

4,175
–
–

104,908
9,691–(3,409)
–
–

1,792
–
(2,949)

4,156
–
716

–
–
–

9,691
–
(2,057)–(0)–(2,949)
–
–

716
–
–

–

286

–

–

–

–

(1,771)

(0)

–

–

4,175
–
4,175
–
–

112,828(37)
112,791
11,779–(3,409)–(3,409)––(1,156)–(1,156)
–
1,344

4,872
(4,872)
–
–
–

–
–
–

11,779–(2,208)–(1,378)
–

1,344
–
–

–
–
–

–

2

–

–

–

Total transactions with theowners–(2,205)(1,378)––

Balance as of March 31, 2019

4,175

122,365(4,787)

187

–

Note

Balance as of April 1, 2017
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from other componentsof equity

21
21

Total transactions with theownersBalance as of March 31, 2018
Changes in accounting policies
Balance after restatement
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from other componentsof equity

21
21

47

Equity attributable to owners of parent
Other components of equity
Changes in
the fairvalue offinancialassetsmeasured atfair value
throughothercomprehens
ive income

Remeasurements ofdefinedbenefit
plans

Total

Millions ofyenMillions of
yen

–
–
–

Total

Noncontrollinginterests

Total
equityMillions ofyenMillions ofyenMillions ofyenMillions of
yen

–
–
286

5,949
–
(1,947)

111,624
9,691(1,947)

1,530
231
(41)

113,155
9,923(1,988)

–
–
–

286
–
–

(1,947)
–
–

7,744
(0)
(2,057)

190
–
(131)

7,935
(0)
(2,189)

–

(286)

(286)

–

–

–

–

(286)

(286)

(2,057)(131)(2,189)Balance as of March 31, 2018
Changes in accounting policies
Balance after restatement
ProfitOther comprehensive income

–
4,872
4,872
–
(905)

–
–
–
–
(30)

3,716
–
3,716
–
408

117,311(37)
117,274
11,779
408

1,589
–
1,589
186
5

118,900(37)
118,863
11,965414

Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from othercomponents of equity

(905)
–
–

(30)
–
–

408
–
–

12,187(1,378)(2,208)

192
–
(129)

12,380(1,378)(2,337)

(32)

30

(2)

–

–

–

Total transactions with theowners

(32)

30

(2)

(3,586)(129)(3,716)

Balance as of March 31, 2019

3,934

–

4,122

125,875

1,652

127,527

Note

Balance as of April 1, 2017
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from othercomponents of equity

21
21

Total transactions with theowners21
21(Note) The accompanying notes are an integral part of these financial statements.

485) Consolidated statement of cash flows
Note
Cash flows from (used in) operating activities
Profit before income taxes
Depreciation and amortization expense
Impairment loss
Finance income and finance costs
Share of loss (profit) in investments accounted forusing the equity method
Loss (gain) on sales and retirement of non-current
assets(Increase) decrease in inventories(Increase) decrease in trade and other receivables
Increase (decrease) in trade and other payables
Increase (decrease) in defined benefit liability
Other
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Income taxes refund and interest on refund
received
Net cash flows from (used in) operating activities
Cash flows from (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant andequipment
Purchase of intangible assets
Proceeds from sales of intangible assets
Payments for acquisition of newly consolidated
subsidiaries
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Purchase of investments
Proceeds from sales of investments
Other
Net cash flows from (used in) investing activities
Cash flows from (used in) financing activities
Net increase (decrease) in short-term borrowings
Purchase of treasury shares
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Other
Net cash flows from (used in) financing activities

21

49(Millions of yen)
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 201814,083
12,766
1,454(599)

16,503
12,549
1,601
(628)

13

32

133

(87)

(1,156)(2,619)
1,812
331
1,512
27,732649(207)(4,312)(2,540)744(2,490)204
1,229
27,117773(160)(4,148)259

40

24,12023,622(3,887)2,737(14,199)(1,236)
1,898(10,277)301

707(1,196)
4(1,242)
0

(791)

–

–

1,828

(115)
196
(2,070)
–
(100)

(184)
159
(61)
44
(331)

(19,122)(8,695)(365)(0)(2,058)(4,130)(1,378)(2,209)

(131)

(129)

(101)
(2,657)(133)(7,981)Note
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Effect of exchange rate change on cash and cash
equivalents
Cash and cash equivalents at end of period

7

Fiscal year ended
March 31, 2018
2,340
23,474

Fiscal year ended
March 31, 2019
6,945
25,230(584)

268

25,23032,444

7(Note) The accompanying notes are an integral part of these financial statements.

50

[Notes to consolidated financial statements]
1. Reporting entity
F.C.C. CO., LTD. (hereinafter the “Company”) is a public company incorporated under the laws ofJapan. The addresses of the registered headquarters and major business offices have been disclosed on
the website (http://www.fcc-net.co.jp/). The Company’s consolidated financial statements wereprepared with the end of the fiscal year on March 31, 2019 and consist of accounts of the Company andits subsidiaries as well as interests in its associates (hereinafter the “Group”).
The Group is principally engaged in the sales and manufacture of motorcycle and automobile clutches.
2. Basis of preparation(1) Applicable accounting standards
The consolidated financial statements of the Group have been prepared in accordance with IFRS as
pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms and Preparation
Methods of Consolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976),
since all the requirements of a “Specified Company under Designated International AccountingStandards” set forth in Article 1-2 of this Ordinance have been fulfilled.
These consolidated financial statements were approved by the Board of Directors on June 25, 2019.
(2) Basis of measurement
As described in the note “3. Significant accounting policies,” the consolidated financial statements of
the Group have been prepared on the basis of cost, except for certain financial instruments, etc. thatare measured at fair value.
(3) Functional currency and presentation currency
The consolidated financial statements of the Group are presented in Japanese yen, which is theCompany’s functional currency. All financial information presented is rounded down to the nearest
million yen.
(4) Accounting standards and interpretations that have been published but not yet applied
The following accounting standards and interpretations were newly established or amended by theapproval date of the consolidated financial statements. The Group has not early applied thesestandards and interpretations.
The impact of application of these standards and interpretations is under consideration and cannot be
estimated at this point.

IFRS

IFRS 16

LeasesMandatory
effective date(fiscal year
beginning on thedate)

Timing ofapplication by theGroup

Overview of the new standard oramendment

January 1, 2019

Fiscal year
ending March 31,
2020

Amendment concerning accounting
treatment for leases(5) Significant accounting estimates and judgments
In preparing IFRS-compliant consolidated financial statements, the management makes judgments,
estimates and assumptions that may affect the application of accounting policies and the reported
amounts of assets, liabilities, revenue and expenses. Because actual results may differ from theseestimates, such estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the accounting period in which the estimate isrevised and future periods that are affected.

51

Of items for which the management made estimates and judgments, those that have significant effects
on the amounts recognized in the consolidated financial statements are as follows:
Note 6. Business combinations
Note 14. Impairment loss
Note 16. Income taxes
Note 19. Employee benefits(6) Changes in accounting policies
1) Application of IFRS 9 “Financial Instruments”
Effective from the fiscal year ended March 31, 2019, the Group has applied IFRS 9 “Financial
Instruments.”
The impact on the Group’s consolidated financial statements is immaterial.
2) Application of IFRS 15 “Revenue from Contracts with Customers”
Effective from the fiscal year ended March 31, 2019, the Group has applied IFRS 15 “Revenue fromContracts with Customers.”
With the application of this standard, the Group has adopted the method whereby the cumulative
effect of initially applying the standard is recognized at the date of initial application as a transition
measure. With the adoption of the method, the balance of retained earnings at the beginning of the
fiscal year under review decreased by ¥37 million.
The impact on the Group’s consolidated financial statements for the fiscal year ended March 31,
2019 is immaterial.
3. Significant accounting policies(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities that are controlled by the Group. The Group is deemed to control an entity
when the Group has exposures or rights to variable returns arising from the Group’s involvement in
the investee and has an ability to affect those returns through power over the investee.
The acquisition date is the date when the Group obtained control, and the entity is consolidated fromthat date to the date when the Group loses the control.
If any accounting policies applied by a subsidiary differ from those applied by the Group,
adjustments are made to the subsidiary’s financial statements where needed.
The Group’s balances of payables and receivables and transactions as well as unrealized gains orlosses arising from intra-group transactions are offset in preparing the consolidated financial
statements. Comprehensive income of subsidiaries is attributable to owners of parent and noncontrolling interests, even if the balance of non-controlling interests is negative.
Accounts of all subsidiaries that comprise the Group were reflected in the consolidated financial
statements with March 31 as the reporting date.
2) Associates
Associates are entities over which the Group has significant influence in terms of financial andmarketing policies but which the Group does not control or jointly control.
Investments in associates are recognized at cost at the time of acquisition and subsequently
accounted for using equity method.
(2) Business combinations
Business combinations are accounted for using the acquisition method. Considerations for acquisition
are measured as the total of fair values of assets transferred and liabilities assumed in exchange for thecontrol over the acquired entity and equity financial instruments on the acquisition date. If theconsideration for acquisition exceeds fair values of identifiable assets and liabilities, the excess is52

recorded as goodwill in the consolidated statement of financial position. If the consideration for
acquisition is less than those fair values, the shortfall is immediately recorded as revenue. Any change
in ownership interests in subsidiaries that does not result in a loss of control is accounted for as equity
transaction.
(3) Foreign currency translation
1) Foreign currency transactions
Foreign currency transactions are translated into the functional currency of each entity in the Group
using the exchange rates at the date of the transactions. Monetary assets and liabilities denominatedin foreign currencies at the end of each fiscal year are translated into the functional currencies using
the exchange rates at that date.
Foreign exchange differences arising from the translation or settlement are recognized as profit orloss.
2) Financial statements of foreign operations
To prepare consolidated financial statements, assets and liabilities of the Group’s foreignsubsidiaries, etc. are translated into Japanese yen using exchange rates at the end of the fiscal year.
Profit or loss items are translated using the average exchange rate during the fiscal period, unlessexchange rates fluctuate significantly during that period. If there is any significant fluctuation in
exchange rates, the exchange rate on the transaction date is used.
Exchange differences on translation are recognized as other comprehensive income in the
consolidated statement of comprehensive income and cumulative translation differences are included
in other components of equity in the consolidated statement of financial position.
Cumulative translation differences of a foreign operation are reclassified to profit or loss when theGroup loses control and significant influence over the foreign operation.
(4) Financial instruments
1) Financial assets(i) Initial recognition and measurement
The Group classifies the financial assets into financial assets measured at fair value through profit
or loss (hereinafter “financial assets at FVTPL”), financial assets measured at fair value throughother comprehensive income (hereinafter “financial assets at FVTOCI”), and financial assets
measured at amortized cost. This classification is determined at initial recognition.
All financial assets are initially measured at fair value plus transaction costs, except for the case ofbeing classified as financial assets at FVTPL.
Financial assets are classified as financial assets measured at amortized cost, on the condition thatthey meet both of the following conditions:• Assets are held based on the business model to hold assets for the purpose of collecting
contractual cash flows.
• Contractual terms associated with financial assets give rise to cash flows on specified dates,consisting only of payment of the principal and interest on the principal balance.
Among financial assets not classified as those measured at amortized cost, equity financial
instruments held for purposes other than trading for which ex post facto fair value changes are
selected to be presented through other comprehensive income at the time of initial recognition areclassified as financial assets at FVTOCI.
With the application of IFRS 9, the Group changed the classification of financial assets as follows
on the day application began.
The Group classifies financial assets classified in the past as loans and receivables pursuant to IAS
39 as financial assets at FVTOCI or financial assets measured at amortized cost and equity
financial instruments previously classified as financial assets available for sale pursuant thereto as
53

financial assets at FVTOCI. The Group applies a transition measure which permits no correction
and restatement of consolidated financial statements for prior fiscal years in connection with theseclassification and measurement changes.
For equity financial instruments measured at fair value through other comprehensive income,changes in the fair value are recognized as other comprehensive income, and when the equity
financial instruments are derecognized, the accumulated other comprehensive income is transferred
to retained earnings.
(ii) Impairment of financial assets
In recognizing the impairment of financial assets measured at amortized cost, the Group made aswitch to the method of recognizing allowance for credit losses to deal with such losses expected inrelation to the concerned financial assets with the application of IFRS 9. In this method, the Groupevaluates, at the end of each fiscal year, whether credit risk of each financial asset has significantly
increased since the initial recognition. If credit risk of a financial asset has not increased
significantly since the initial recognition, 12-month expected credit losses on the financial asset arerecognized as allowance for credit losses.
On the other hand, if credit risk of a financial asset has increased significantly since the initialrecognition, an amount equal to the lifetime expected credit losses is recognized as allowance for
credit losses.
However, with regard to trade receivables that do not contain a significant financing component,
allowance for credit losses is always recognized at an amount equal to the lifetime expected credit
losses, regardless of whether credit risk has increased significantly since the initial recognition.
(iii) Derecognition of financial assets
If contractual rights to cash flows arising from a financial asset are extinguished, or if a financial
asset is transferred and substantially all risks and economic rewards relating to ownership of theasset are transferred, the financial asset is derecognized.
2) Financial liabilities
Financial liabilities are initially measured at fair value after the deduction of transaction costs, andsubsequently measured at amortized cost using the effective interest method.
When a financial liability is extinguished, that is, the debt is dismissed, cancelled or expired, theGroup derecognizes the financial liability.
3) Offsetting financial instruments
Financial assets and liabilities are offset, with the net amount presented in the consolidated statementof financial position, if the Group holds a legal right to offset the balance and intends either to settle
on a net basis, or to realize the asset and settle the liability simultaneously.
4) Derivatives
The Group enters into currency swap contracts as risk management against fluctuations in foreignexchange rates.
As its policy, the Group does not conduct derivative transactions for speculative purposes.
Derivatives to which hedge accounting is not applied are classified as either “financial assets
measured at fair value through profit or loss” or “financial liabilities measured at fair value throughprofit or loss” and they are accounted for in accordance with the aforesaid classification.
(5) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments withmaturities or repayment terms of three months or less from the date of acquisition that are readily
convertible to cash and subject to an insignificant risk of changes in value.
(6) Inventories
Inventories are measured at cost, or if lower, at net realizable value. Net realizable value is calculated
by deducting estimated costs and estimated costs to sell required up to the completion from the54

estimated selling price in the normal course of business. The cost is calculated principally based on
the progressive average inventory method and includes material costs, labor costs and manufacturing
expenses.
(7) Property, plant and equipment
The cost model is applied in measurement of property, plant and equipment. Property, plant andequipment are recorded at the value calculated as cost less any accumulated depreciation and any
accumulated impairment loss.
The cost of property, plant and equipment includes cost directly incidental to the acquisition of assets,
and the initial estimated costs of dismantling and removing the assets and restoration costs for theplaces where the assets were located. Depreciation of these assets is started when the assets become
available for use.
Maintenance costs arising on a daily basis for property, plant and equipment are recognized in profit
or loss when incurred.
Depreciation expense for assets except for land and construction in progress is recorded by thestraight-line method over the following estimated useful lives.
Buildings and structures

5 to 31 years

Machinery, equipment and vehicles

3 to 9 years

Tools, furniture and fixtures

2 to 6 years(8) Goodwill and intangible assets
1) Goodwill
Goodwill is recorded at the value calculated as cost less any accumulated impairment loss. Goodwill
is not amortized. As a result of impairment test performed each fiscal year, impairment loss isrecorded if necessary. Impairment loss of goodwill is recognized in the consolidated statement ofincome and not reversed subsequently.
2) Intangible assets
The cost model is applied in measurement of intangible assets. Intangible assets are recorded at thevalue calculated as cost less any accumulated amortization and any accumulated impairment loss.
(i) Properties for development
Expenditure incurred in development activities are capitalized only if it can be verified that all thefollowing conditions are met:
• Technical practicability of completing the intangible asset so that the asset can be used or sold
• The entity’s intention to complete the intangible asset and then use or sell the asset• Ability to use or sell the intangible asset• Highly probable method for the intangible asset to generate future economic benefits• Usability of appropriate technical, financial and other resources necessary to complete
development of the intangible asset and then use or sell the asset• Ability to reliably measure expenditure attributable to the intangible asset during thedevelopment period
The amount of initial recognition of properties for development is the total of expenses arising in
the period from the date when an intangible asset meets all the above recognition requirements forthe first time to the completion of development. Properties for development are amortized using thestraight-line method over a period in which funds spent for the development are expected to be
recovered. The amortization method and useful life are reviewed at the end of each fiscal year andrevised as needed.

55

(ii) Other intangible assets
Other intangible assets consist of software. Software is amortized using the straight-line method
over its estimated useful life of five years from the time when it becomes usable. The amortization
method and useful life are reviewed at the end of each fiscal year and revised as needed.
(9) Impairment
The Group assesses whether there is any indication of impairment at the end of each fiscal year for the
carrying amounts of non-financial assets except for inventories and deferred tax assets. If any such
indication exists, the recoverable amount of the asset is estimated. The recoverable amount of
goodwill is estimated at the same time in each fiscal period.
The recoverable amount of an asset or a cash-generating unit is the higher of its value in use or its fairvalue less costs to sell. In calculation of value in use, estimated future cash flows are discounted to thepresent value using the pretax discount rate that reflects time value of money and risks inherent to theasset. Assets that are not individually tested for impairment are integrated in the smallest cashgenerating unit that generates cash inflow substantially independent of cash inflow of other assets orasset groups through continued use. Impairment loss is recognized in profit or loss when the carrying
amount of the asset or cash-generating unit exceeds the estimated recoverable amount.
For previously recognized impairment loss, the Group assesses whether there is any indication of adecrease or disappearance of the loss at the end of each fiscal year. For assets or cash-generating units
for which there is any indication of reversal of impairment loss, the recoverable amount is estimated,
and the impairment loss is reversed if the recoverable amount exceeds the carrying amount. Reversalof impairment loss is recognized in profit or loss to the extent that the carrying amount assuming that
impairment loss recognized for the asset in the past period had not existed is not exceeded.
Impairment loss relating to goodwill is not reversed.
(10) Employment benefits
1) Defined benefit plans
For defined-benefit retirement benefit plans, the net amount of the present value of defined benefit
obligations and the fair value of plan assets is recognized as liabilities or assets. The present value of
defined benefit obligations and related service costs are, as a general rule, calculated using the
projected unit credit method. The discount rate used to calculate the present value of defined benefit
obligations is, as a general rule, determined by reference to the market yield on high quality
corporate bonds as of the end of the fiscal year.
The Group recognizes remeasurements arising from defined-benefit retirement benefit plans as othercomprehensive income and immediately transfers the amounts to retained earnings.
2) Defined contribution plans
Expenses for defined-contribution retirement benefits are recognized as current expenses at theamount of contributions required.
3) Multi-employer plans
Multi-employer plans, for which the amount of plan assets corresponding to the entity’s own
contributions cannot be calculated reasonably, are accounted for in the same manner as defined
contribution plans.
4) Short-term employee benefits
Short-term employee benefits are expensed when an employee renders the related service.
Bonus accrual and paid absences are recognized as liabilities when the Group has legal orconstructive obligations to pay them and when a reliable estimate of the amount of obligations canbe made.
(11) Provisions
When there are present legal or constructive obligations as a result of past events, it is highly probablethat outflows of resources with economic benefits will be required to settle the obligations, andreliable estimates can be made of the amount of obligations, provisions are recognized by estimating56

expenditure necessary to settle the present obligations taking into account uncertainties related to the
obligations at the end of the fiscal year.
If the time value of money for provisions is significant, the provisions are measured at discounted
present value.
(12) Revenue
The Group recognizes revenues based on the following five-step approach:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Group is principally engaged in the sales and manufacture of motorcycle and automobile clutches.
With regard to the sales of these products, the Group recognizes revenue at the time of delivery of a
product since it considers that the customer obtains control over the product and performanceobligations are satisfied at the time of delivery of the product. Revenue is measured at the amount ofconsideration promised in contracts with customers less discounts, etc.
(13) Government grants
Government grants are measured at fair value and recognized when there is reasonable assurance that
the Group will comply with the conditions attached to the grants and that the grants will be received.
Grants for expenses incurred are recorded as revenue in the fiscal year during which the expenses
occurred. Grants for the acquisition of an asset are recorded as other income regularly over the usefullife of the asset, and unearned grant income is recorded as deferred income in liabilities.
(14) Finance income and finance costs
Finance income principally consists of interest income, dividend income, gains on sales of financial
assets and foreign exchange gains.
Interest income is recognized using the effective interest method when the income arises. Dividend
income is recognized when the Group’s right to receive the income is established.
Finance costs principally consist of interest expense, losses on sales of financial assets and foreignexchange losses. Interest expense is recognized using the effective interest method when incurred.
(15) Income taxes
Income taxes consist of current taxes and deferred taxes. These taxes are recognized in profit or loss,
except for those related to business combinations and items recognized directly in equity or othercomprehensive income.
Current taxes are measured at the amount of expected tax payment to or expected tax refund from tax
authorities. The amount of taxes is computed in accordance with tax rates and tax laws that are ineffect or substantially in effect by the end of the fiscal year in countries where the Group conducts
business activities and earns taxable profits or losses.
Deferred taxes are recognized for temporary differences between accounting carrying amounts ofassets and liabilities as of the reporting date and amounts of them for tax purposes, unused tax losses
and unused tax credits.
Deferred tax assets are recognized for deductible temporary differences to the extent that it is highly
probable that taxable profits will be available against which the deductible temporary differences
could be utilized. Deferred tax liabilities are recognized for taxable temporary differences.
The carrying amount of deferred tax assets is reviewed in every period, and reduced by the amount ofdeferred tax assets for which taxable profit sufficient to use all or part of the deferred tax assets areunlikely to be earned. Unrecognized deferred tax assets are reassessed in every fiscal period andrecognized to the extent that it is highly probable that deferred tax assets are realizable with futuretaxable profit.
Deferred tax assets and liabilities are not recorded for the following temporary differences:57• Temporary differences arising from initial recognition of goodwill• Temporary differences arising from initial recognition of assets and liabilities which occur throughtransactions that affect neither accounting profit nor taxable profit for tax purposes, except forbusiness combinations• In cases where, for taxable temporary differences associated with investments in subsidiaries,
timing of reversal can be controlled and it is highly probable that such temporary differences are
not reversed in a foreseeable period
Deferred tax assets and liabilities are measured in accordance with tax rates and tax laws expected tobe applied in the period in which the assets are realized or the liabilities are settled based on tax rates
and tax laws that are in effect or substantially in effect at the end of the fiscal year.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to offset
current tax assets against current tax liabilities, and they are related to income taxes levied by thesame taxation authority on the same taxable entity.
The Company and some of its domestic subsidiaries have applied the consolidated taxation system.
(16) Earnings per share (attributable to owners of parent)
Basic earnings per share are calculated by dividing profit or loss for the year attributable to ordinary
equity holders of parent, by the weighted-average number of ordinary shares issued during the periodthat is adjusted by the number of treasury shares. Diluted earnings per share are not calculated
because there are no potential ordinary shares with dilutive effects.
(17) Shareholders’ equity
1) Ordinary shares
Ordinary shares issued by the Company are recorded at the issuance value in issued capital and sharepremium.
2) Treasury shares
When treasury shares are acquired, the consideration paid is recognized as deduction from equity.
When treasury shares are sold, the difference between the carrying amount and consideration at thetime of the sale is recognized as share premium.
4. Segment information(1) Overview of reportable segments
The Group’s reportable segments are components of the Group for which discrete financial
information is available, and whose operating results are regularly reviewed by the Board of Directors
to make decisions about managerial resources to be allocated to the segments and assess theirperformances. In the Group, principally the Head of business operation of motorcycles business andthe Head of business operation of automobiles business develop domestic and overseas
comprehensive strategies and build businesses for the motorcycle clutches business and theautomobile clutches business, respectively. Thus the Group has two reportable segments: “motorcycle
clutches” and “automobile clutches.” The motorcycle clutches segment manufactures clutches formotor cycles, scooters and ATVs and other products, while the automobile clutches segment
manufactures clutches for manual and automatic transmission automobiles and other products.

58

(2) Revenue and performance for reportable segments
Fiscal year ended March 31, 2018
Reportable segments
Motorcycle
clutches

Automobile
clutches

Total

Adjustments

Consolidated

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

82,936–

90,238–173,174–––

173,174–

82,936

90,238173,174–

173,174

Revenue
External revenue
Intersegment revenue
Total
Depreciation and amortization
expenseOther profit (loss)(4,685)(8,081)(12,766)–(12,766)(66,994)(79,360)(146,354)–(146,354)

Operating profit

11,256

2,796

14,052–

14,052Finance income
Finance costs
Share of profit (loss) in investments
accounted for using the equity method

808
(763)
(13)

Profit before income taxes

14,083

Note: Other profit (loss) includes ¥1,454 million of impairment loss (¥1,454 million for automobile clutches).

Fiscal year ended March 31, 2019
Reportable segments

Revenue
External revenue
Intersegment revenue
Total

Motorcycle
clutches

Automobile
clutches

Total

Adjustments

Consolidated

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

84,288–93,317–

177,605–––

177,605–

84,28893,317

177,605–

177,605–(12,549)

Depreciation and amortization
expenseOther profit (loss)(4,599)(7,950)(12,549)(67,967)(81,244)(149,212)–(149,212)

Operating profit

11,7204,122

15,843–

15,843Finance income
Finance costs
Share of profit (loss) in investments
accounted for using the equity method

992
(299)
(32)

Profit before income taxes

16,503

Note: Other profit (loss) includes ¥1,601 million of impairment loss (¥1,601 million for automobile clutches).

59(3) Geographic information
The regional breakdown of revenue and non-current assets is as follows:
Revenue from external customers
Fiscal year ended March 31, 2018

Fiscal year ended March 31, 2019

Millions of yen

Millions of yen

Japan
U.S.
Indonesia
India
Other
Total

19,05162,591
17,461
23,69150,377

18,97766,068
20,11423,43549,009173,174

177,605

Notes: 1. Revenue is classified by country based on the location of customers.
2. Major countries belonging to “Other” category are Thailand, China, Brazil and Vietnam.

Non-current assets
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Japan
U.S.
China
Other
Total

Millions of yen

22,07733,395
3,666
18,811

21,49832,666
1,771
18,54077,951

74,476

Notes: 1. Non-current assets are classified based on the location of assets and do not include financial assets, deferred tax
assets and defined benefit assets.
2. Main countries belonging to “Other” category are Indonesia, Thailand, India and Vietnam.

(4) Information about major customers
Counterparties of which revenue accounts for 10% or more of revenue of the entire Group
Related segment

Honda Motor Co., Ltd. and its group
Ford and its group

Motorcycle clutches
Automobile clutches
Automobile clutches

Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

39,58841,912
28,74840,29540,69630,406

5. Revenue
The Group is principally engaged in the sales and manufacture of motorcycle and automobile clutches.
With regard to the sales of these products, the Group recognizes revenue at the time of delivery of a
product since it considers that the customer obtains control over the product and performanceobligations are satisfied at the time of delivery of the product. Revenue is measured at the amount ofconsideration promised in contracts with customers less discounts, etc.
The statement of disclosed information about disaggregated revenue is omitted on the basis of
judgment that information stated in “4. Segment information” fulfills disclosure requirements
prescribed in IFRS 15.

60

(1) Balance of contracts
Balance of contract liability is as follows:
As of April 1, 2018

As of March 31, 2019

Millions of yen

Contract liability

Millions of yen

878

Of revenue recognized in the fiscal year under review, ¥8 million was included in the balance ofcontract liability as of April 1, 2018.
Note: Contract liability is included in “other current liabilities” in the consolidated statement of financial position.

(2) Transaction price allocated to the remaining performance obligations
The statement of information about remaining performance obligations is omitted because there isno significant transaction whose predicted individual term of contract exceeds one year in theGroup. Considerations arising from contracts with customers contain no significant amount notincluded in transaction prices.
(3) Performance obligations
1) Point in time at which performance obligations are satisfied
Unless set forth otherwise in contracts, in principle, the point in time at which performanceobligations are satisfied is the point in time at which products are delivered to customers.
There is no contract for fulfilling performance obligations over a fixed period in step with theprovision of services.
2) Conditions for the payment of considerations
Payments normally become due one month to five months after the fulfillment of performanceobligations. They do not include any significant financial component.
3) Content of goods or services transferred to customers
The goods transferred to customers are principally motorcycle and automobile clutches.
The Group does not conduct transactions as an agent.
4) Transaction price allocated to the remaining performance obligations at the end of the fiscal year
The statement of allocated transaction prices and their breakdown by forecasted net sales
recording period is omitted because no unfulfilled performance obligation existed as of the last
day of the fiscal year under review.
(4) Assets recognized from the costs to obtain or fulfill a contract with a customer
There was no asset recognized from the costs of contracts as of the end of the previous fiscal year
and as of the end the fiscal year under review.
6. Business combinations
Fiscal year ended March 31, 2018
(1) Summary of business combinations
1) Name and business description of the acquired company
Company name:

Flint Co.,Ltd

Business description:

Design, production and processing of precision press metal molds

2) Primary reason for the business combination
In order to promote product evolution in the Group’s clutches business, and to promote thecommercialization of next-generation businesses, we acquired all of the shares of Flint Co.,Ltd,
thereby making the company a wholly-owned subsidiary.

613) Date of the business combination
September 29, 20174) Legal form of the business combination
Share acquisition in exchange for cash5) Percentage of voting rights acquired
100%(2) Consideration for acquisition and breakdown thereofMillions of yen
Cash

903

Total consideration for acquisition

903(3) Assets acquired and liabilities assumed
Millions of yen
Current assets
Non-current assets

305
398

Total assets

704

Current liabilities
Non-current liabilities

105
185

Total liabilities

290

Net assets

413

Goodwill

489(4) Impact on the Group’s business results
Details have been omitted due to the fact that this has minimal impact on the consolidated
statement of income.
Fiscal year ended March 31, 2019(1) Summary of loss of control
On December 25, 2018, the Company transferred all of the shares of its consolidated subsidiary,
Tohoku Chemical Industries, Ltd., to ALCONIX CORPORATION Group.
(2) Assets and liabilities involving loss of control
Current assets
Non-current assets

Millions of yen
1,463
662

Total assets

2,126

Current liabilities
Non-current liabilities

231
165

Total liabilities

397

62

(3) Cash flows resulting from loss of control
Cash and cash equivalents received as consideration for loss of control
Cash and cash equivalents of subsidiaries over which control is lost
Proceeds from sales of shares of subsidiaries resulting in change inscope of consolidation

Millions of yen
2,600
(771)
1,828

(4) Profit or loss resulting from loss of control
A profit of ¥121 million was recognized with the loss of control of Tohoku Chemical Industries,
Ltd. and recorded in “other income” in the consolidated statement of income.

7. Cash and cash equivalents
Breakdown of cash and cash equivalents
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Cash and deposits

Millions of yen

25,23032,444

Note: Cash and cash equivalents recorded in the consolidated statement of financial position are equal to cash and cash
equivalents recorded in the consolidated statement of cash flows.

8. Trade and other receivables
Breakdown of trade and other receivables
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Notes and accounts receivable - trade
Accounts receivable - other
Allowance for credit losses
Total

Millions of yen

27,1041,780(29)

26,3811,705(6)

28,85528,080Note: Information on management of credit risk and liquidity risk to “trade and other receivables” is provided in the note
“27. Financial instruments.”63

9. Other financial assets and other financial liabilities
Breakdown of other financial assets
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Other current financial assets
Financial assets measured at amortized cost
Loans and receivables
Other non-current financial assets
Financial assets measured at fair value
through other comprehensive income
Financial assets measured at fair value
through profit or loss (derivatives)
Financial assets measured at amortized cost
Loans and receivables
Allowance for credit losses
Financial assets measured at fair value
Available-for-sale financial assets
Total

2,339

1,625

–

9,997

46

–

3,296
(60)

1,301
(60)

9,277

–

12,561

11,238

Breakdown of other financial liabilities
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Other current financial liabilities
Financial liabilities measured at amortized
cost
Lease obligations
Other non-current financial liabilities
Financial liabilities measured at amortizedcostLong-term accounts payable - other
Lease obligations
Financial liabilities measured at fair value
through profit or loss (derivatives)
Total

64

128

152

26
421

127
288

–

72

448

487

10. Inventories
Breakdown of inventories
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Finished goods
Work in process
Raw materials and supplies

3,770
3,320
11,337

4,243
3,714
12,544

Total

18,42820,503

The amounts of write-down of inventories recognized as expenses and inventories recognized as
expenses
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Amount of write-down
Amount of inventories

882
142,877909
145,564

11. Other assets and liabilities
Breakdown of other assets
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Other current assets
Accrued income taxes
Prepaid expenses
Suspense payments
Other
Total
Other non-current assets
Land use rights
Long-term prepaid expenses
Other
Total

1,301
325
32
379

1,611
383
25
345

2,038

2,366

561
50
45

397
91
44

657

532

Breakdown of other liabilities
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Other current liabilities
Accruals
Accrued bonuses
Other

1,613
1,890
2,502

1,866
1,890
2,847

Total

6,006

6,604

Other non-current liabilities
Deferred income
Other

168
128

160
97

Total

297

258

65

12. Property, plant and equipment
Changes in cost and accumulated depreciation and impairment loss of property, plant and equipment,
and carrying amounts thereof(1) Cost
Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixturesLand

LeasedassetsConstructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

April 1, 2017
Acquisition
Disposal
Transfer of line items
Exchange differences ontranslation
Other

39,541
432
(143)
2,205

112,902
2,703(2,583)
4,495

18,450
708
(419)
890

8,208
613
(1,023)
19

749
–
–
–

6,727
11,358(331)(7,611)

186,579
15,815(4,501)–(1,080)(5,654)

(849)

(70)

(39)

(448)

(8,142)

(160)

914

21

43

–

(101)

718

March 31, 2018
Acquisition
Disposal
Transfer of line items
Exchange differences ontranslation
Other

40,795234(1,279)633

112,778
3,921(3,507)
10,61518,801729(1,559)
1,060

7,791
0
(330)
–

710
–
–
–

9,592
5,210
(62)
(12,310)

190,469
10,095(6,738)
–

575

2,072

138

(8)

31

348

3,156

–

–

–

–

–

(163)

(163)

March 31, 2019

40,959125,880

19,171

7,452

742

2,614

196,820(2) Accumulated depreciation and impairment loss
Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixturesLand

LeasedassetsConstructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

April 1, 2017
Depreciation expense
Impairment loss
DisposalExchange differences ontranslation
Other

18,348
1,572
683
109

76,495
8,729
629(2,172)

15,612
1,586
–
(391)

1,414
–
141
(427)

112
29
–
–

74
–
–
–

112,058
11,9181,454(2,880)(419)(4,386)

(778)

–

–

–

(5,584)

122

418

19

–

–

–

560

March 31, 2018
Depreciation expense
Impairment loss
DisposalExchange differences ontranslation
Other

20,417
1,494
479(1,009)79,7158,946
850(3,007)

16,0481,392
142(1,451)

1,128
–
–
–

142
–
–
–

74
–
14
–

117,527
11,834
1,486(5,468)

147

1,325

137

–

43

–

1,654

–

–

–

–

–

–

–

March 31, 201921,53087,83016,269

1,128

185

88

127,03366

(3) Carrying amounts

Balance as of April 1,
2017
Balance as of March 31,
2018
Balance as of March 31,
2019

Buildings
andstructures

Machinery,equipment
and vehicles

Tools,
furniture andfixturesLand

LeasedassetsConstructionin progress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

21,19236,406

2,838

6,793

637

6,652

74,521

20,37733,063

2,752

6,662

568

9,518

72,942

19,42938,049

2,901

6,323

556

2,525

69,786

Notes: 1. Depreciation expense of property, plant and equipment is recorded in “cost of sales” and “selling, general andadministrative expenses” in the consolidated statement of income.
2. Information on commitments related to purchase of property, plant and equipment is provided in the note “30.
Commitments.”

13. Goodwill and intangible assets
Changes in cost and accumulated amortization and impairment loss of goodwill and intangible assets,
and carrying amounts thereof(1) Cost
Intangible assets
Goodwill
Millions of yen

SoftwareProperties fordevelopment

Total

Millions of yen

Millions of yen

Millions of yen

April 1, 2017
Acquisition
Increase due to internal
development
Disposal
Transfer of line items
Exchange differences ontranslation
Other

756
489

2,054
127

3,487
–

6,299
616

–

–

1,068

1,068

–
–

(91)
–

(482)
–

(574)
–

–

(2)

–

(2)

–

5

–

5

March 31, 2018
Acquisition
Increase due to internal
development
Disposal
Transfer of line items
Exchange differences ontranslation
Other

1,246
–

2,093
185

4,073
–

7,413
185

–

–

1,056

1,056

(756)
–

(309)
–

(1,011)–(2,077)
–

–

2

–

2

–

(11)

–

(11)

489

1,961

4,117

6,568

March 31, 201967

(2) Accumulated amortization and impairment loss
Intangible assets
Goodwill
Millions of yen

April 1, 2017
Amortization expense
Impairment loss
DisposalExchange differences ontranslation
Other

SoftwareProperties fordevelopment

Total

Millions of yen

Millions of yen

Millions of yen

–
–
–
–

1,823
88
–
(87)

1,067
603
–
(482)

2,890
691
–
(570)

–

0

–

0

–

4

–

4

March 31, 2018
Amortization expense
Impairment loss
DisposalExchange differences ontranslation
Other

–
–
–
–

1,828
91
0
(306)

1,187
585
–
(1,011)

3,016
677
0
(1,317)

–

0

–

0

–

(11)

–

(11)

March 31, 2019

–

1,604

761

2,366

(3) Carrying amounts
Intangible assets
Goodwill
Millions of yen

April 1, 2017
March 31, 2018
March 31, 2019

SoftwareMillions of yen

756
1,246
489

230
264
356

Properties fordevelopment

Total

Millions of yen

Millions of yen

2,420
2,885
3,356

3,408
4,396
4,201

Notes: 1. Amortization expense of software is recorded in “cost of sales” and “selling, general and administrative expenses”
in the consolidated statement of income, while amortization expense of properties for development is recorded in“cost of sales.”
2. Information on commitments related to purchase of intangible assets is provided in the note “30. Commitments.”

6814. Impairment loss
(1) Breakdown of assets for which impairment loss is recognized by type
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Land
Construction in progress
Total property, plant and equipment
Software, etc.
Total other non-current assets, etc.
Total impairment loss

683
629
–
141
–

479
850
142
–
14

1,454

1,486

–

115

–

115

1,454

1,601

Note: The impairment loss is included and recorded in “other expense” in the consolidated statement of income.

(2) Cash-generating unit
The Group groups assets based on the smallest unit of asset groups identifiable as a unit generating
cash inflow that is substantially independent of cash inflow of other assets or asset groups, bycompany and type of business. Idle assets that are not expected to be used in the future are determinedby individual asset unit.
(3) Impairment loss
Fiscal year ended March 31, 2018
The Group has worked to improve production efficiency through the reorganization of domestic
production bases. However, after considering the business environment and profitability, etc. of thedomestic automobiles business, buildings, machinery and equipment, and land were reduced to therecoverable amount and recorded as impairment loss (¥1,454 million) in other expense.
The recoverable amount is calculated with the value in use, obtained by discounting the estimatedamount of cash flows based on the future business plan to the present value using the pretax weighted
average cost of capital for the cash-generating unit.
Fiscal year ended March 31, 2019
In view of a deterioration of business environment and profitability due to the slowdown of Chinese
economy, the Company has conducted an impairment test with regard to CHENGDU YONGHUA.
F.C.C. CLUTCHES CO., LTD., a subsidiary of the Company, based on the latest plan. Consequently,
the carrying amount of the assets held by the subsidiary was reduced to the recoverable amount andrecorded as impairment loss (¥1,601 million) in other expense.
The recoverable amount is calculated with the value in use, obtained by discounting the estimatedamount of cash flows based on the future business plan to the present value using the pretax weighted
average cost of capital for the cash-generating unit.

6915. Investments accounted for using the equity method
Summary of financial information aggregating accounts of associates accounted for using the equity
methodAs ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Total carrying amountMillions of yen

117
Fiscal year ended
March 31, 201889
Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

ProfitOther comprehensive income

(13)
(6)

(32)
3

Comprehensive income

(19)

(28)

Note: There is no associate that has quoted market prices of its shares.

7016. Income taxes(1) Deferred tax assets and liabilities
Breakdown of and changes in deferred tax assets and deferred tax liabilities by major cause
Fiscal year ended March 31, 2018
April 1,
2017

Recognizedthrough
profit orloss

Recognizedin othercomprehensive income

Recognizeddirectly inequityOther

March 31,2018

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

Deferred tax assets
Inventories
Accrued bonuses
Accruals
Non-current assets
Defined benefit liability
Other

935
402
216
1,593
529
1,041

(229)
9
0
402
278
(360)

–
–
–
–
(89)
–

–
–
–
–
–
–

(2)
–
0
0
0
1

703
411
216
1,996
717
681

Total

4,718

100

(89)

–

(1)

4,727

(5,779)

1,940

–

–

34

(3,804)(1,802)

–

(310)

–

–

(2,112)(986)(2,061)–––(3,047)

Deferred tax liabilities
Non-current assets
Available-for-salefinancial assets
Retained surplus ofoverseas consolidated
subsidiaries
Other

(30)

(84)

–

–

0

(114)

(8,598)

(205)

(310)

–

35

(9,079)April 1,
2018

Recognizedthrough
profit orloss

Recognizedin othercomprehensive income

Recognizeddirectly inequityOther

March 31,2019

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

Deferred tax assets
Inventories
Accrued bonuses
Accruals
Non-current assets
Defined benefit liability
Other

703
411
216
1,996
717
681

166
3
2
(23)
(100)
68

–
–
–
–
11
–

–
–
–
–
–
–

22
–
(8)
39
18
(13)

892
414
210
2,012
647
737

Total

4,727

116

11

–

58

4,914

(3,804)

(980)

–

–

(222)

(5,006)(2,112)

–

434

–

–

(1,678)(3,047)

(517)

–

–

–

(3,564)

Total

Fiscal year ended March 31, 2019

Deferred tax liabilities
Non-current assets
Available-for-salefinancial assets
Retained surplus ofoverseas consolidated
subsidiaries
Other
Total

(114)

87

–

–

8

(18)

(9,079)(1,409)

434

–

(213)

(10,268)

71

The amounts of unused tax losses and deductible temporary differences for which deferred tax assets
have not been recognized are as follows:
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Unused tax losses
Deductible temporary differences
Total

Millions of yen

5,875
762

6,611
742

6,638

7,354

Expiration of unused tax losses for which deferred tax assets have not been recognized is as follows:
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

1st year
2nd year
3rd year
4th year
5th year and onward
Total

Millions of yen

–
1,009
656
395
3,815

1,009
656
395
166
4,384

5,875

6,611

The total amount of taxable temporary differences associated with investments in subsidiaries forwhich deferred tax liabilities have not been recognized were ¥40,501 million as of March 31, 2018and ¥41,488 million as of March 31, 2019. For these taxable differences, deferred tax liabilities havenot been recognized since the Group may control timing of their reversal and there is high possibility
that the temporary differences will not be reversed within a foreseeable period.
(2) Breakdown of income tax expense
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Current tax expense
Deferred tax expense
Total

Millions of yen

4,055
104

3,244
1,293

4,160

4,537

Fiscal year ended March 31, 2018
In accordance with the tax reform act enacted in the U.S. in December 2017, the federal corporate tax
rate has been reduced to 21% from 2018. As a result, deferred tax liabilities decreased by ¥1,600
million.
In addition, deferred tax liabilities increased by ¥2,202 million as a result of additional recognition of
taxable temporary differences associated with investments in subsidiaries, etc. for some overseas
subsidiaries.

72

(3) Factors of differences between the effective statutory tax rate and the effective tax rate
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019%%

Effective statutory tax rate
Non-deductible expenses in calculation of
taxable profits
Unrecognized deferred tax assets
Tax credits
Difference from the applicable tax rate ofoverseas subsidiaries
Other

30.2

30.0

1.7

1.2

5.4
(0.5)

2.9
(3.2)

(8.4)

(6.1)

1.1

2.7

Effective tax rate

29.5

27.5

17. Borrowings
Breakdown of borrowings
As ofMarch 31, 2018

As ofMarch 31, 2019

Average interest
rate

Millions of yen

Millions of yen%

Current
Financial liabilities measured
at amortized cost
Short-term borrowings
Current portion of longterm borrowings

Due

12,556

12,429

0.98

–

3,623

361

1.40

–

16,17912,791Long-term borrowings

365

19

0.65

April 2020 toApril 2021

Total

365

19

Total
Non-current
Financial liabilities measured
at amortized cost

Notes: 1. “Average interest rate” shows weighted average interest rate on the balance as of March 31, 2019.
2. “Due” shows the repayment due for the balance as of March 31, 2019.
3. For the breakdown of the balance of borrowings by due date, refer to the note “27. Financial instruments, (3)Financial risk management, 2) Liquidity risk management.”

18. Trade and other payables
Breakdown of trade and other payables
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Notes and accounts payable - trade
Electronically recorded obligations - operating
Accounts payable - other

12,268
1,119
2,656

9,847
1,003
1,943

Total

16,044

12,79473

19. Employee benefits
To provide for retirement benefits of employees, the Group has adopted funded and unfunded defined
benefit plans and defined contribution plans and has joined Nihon Jidosha Buhin Kogyo Kigyo Nenkin
Kikin, which is a multi-employer corporate pension fund.
(1) Defined benefit plans
Under defined benefit plans, a lump-sum benefit or pension is granted based on salaries and periodsof service.
1) Amounts recognized in the consolidated statement of financial position
The year-end balances of defined benefit obligations and plan assets, and defined benefit
liability and defined benefit asset recognized in consolidated statement of financial position
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Funded defined benefit obligations
Plan assets

8,847(7,773)

8,984(8,037)

Subtotal
Unfunded defined benefit obligations

1,074
907

947
1,153

Net amount of liabilities and assets recognizedin consolidated statement of financial position

1,981

2,100

Defined benefit liability
Defined benefit asset

2,027
(45)

2,144
(44)

Net amount of liabilities and assets recognizedin consolidated statement of financial position

1,981

2,100

Note: Defined benefit assets are included in “other non-current assets” in the consolidated statement of financial position.

2) Amounts recognized as retirement benefit expenses
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Retirement benefit expenses for defined benefit
plans

776

753

3) Reconciliation of defined benefit obligations
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Defined benefit obligations at beginning of
periodService cost
Interest cost
Past service costRemeasurement
Retirement benefits paid
Decrease resulting from sale of subsidiaries
Exchange differences on translation
Defined benefit obligations at end of period

9,329

9,755

805
139
–
(112)
(315)
–
(91)

670
112
25
186
(465)
(162)
15

9,755

10,138

Note: The weighted average duration of defined benefit obligations was 12.8 to 21 years as of March 31, 2018 and 12.3 to20 years as of March 31, 2019.

74

4) Reconciliation of plan assets
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Plan assets at beginning of period
Interest income
Remeasurement
Contributions by the employer
Retirement benefits paid
Exchange differences on translation

7,308
48
217
393
(174)
(20)

7,773
52
105
388
(283)
1

Plan assets at end of period

7,773

8,037

5) Composition of plan assets
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Debentures
SharesOther
Total

Millions of yen

3,937
1,852
1,983

4,734
1,501
1,801

7,773

8,037

6) Major actuarial assumptions
As ofMarch 31, 2018

As ofMarch 31, 2019%%

Discount rate (Japan)
Discount rate (Overseas)

0.4
2.8 to 7.7

0.3
3.0 to 8.77) Sensitivity analysis
The impact of 0.5% changes in the key actuarial assumption on defined benefit obligations is asfollows:
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

0.5% increase in the discount rate
0.5% decrease in the discount rate

Millions of yen

(536)
582

(555)
603

Note: The sensitivity analysis is calculated in a manner that keeps assumptions other than variable factors constant and does
not take into account interdependencies between the assumptions.

(2) Defined contribution plans
Amounts recognized as expenses for defined contribution plans
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Amount recorded as expenses

Millions of yen

252

75

271

(3) Multi-employer plan
To the multi-employer plan, the amount calculated by multiplying salaries in the period employees
rendered services by a constant rate is contributed and contributions during the fiscal period arerecognized as retirement benefit expenses in profit or loss.
The total amount of expenses recognized for the employees’ pension fund that is a multi-employer
plan, which is accounted for in the same manner as defined contribution plans, was ¥181 million in
the previous fiscal year and ¥186 million in the fiscal year under review.
1) Latest funding position of multi-employer plan
As of March 31, 2017

As of March 31, 2018

Millions of yen

Millions of yen

Plan assets
Total of actuarial obligations for the purpose ofpension financing calculation and minimum
liability reserve

178,928

64,840178,704

54,687223

10,153Difference

2) Proportion of contributions by the Group to total contributions of the multi-employer plan
As of March 31, 2017

As of March 31, 2018%%

Proportion of contributions by the Group

5.9

6.1

20. Provisions
Breakdown of and changes in provisions
Asset retirement
obligations
Millions of yen

April 1, 2017
Interest expense during the period in
discounting
Decrease during the period (intended use)
Decrease during the period (reversal)

36

March 31, 2018
Interest expense during the period in
discounting
Decrease during the period (intended use)
Decrease during the period (reversal)

33

March 31, 2019

29

0
–
(3)
0
–
(3)

Note: To prepare for removal of toxic substances related to buildings, the Group recognizes and measures the provision by
estimating asset retirement obligations based on the period in which the building is expected to be used in light ofuseful lives of fixtures inside the building and other factors, taking into account the status of each property
individually and specifically. The payment is made in a period after one year or more passed from the end of eachfiscal year.

7621. Equity and other equity items(1) Issued capital
Breakdown of changes in number of shares authorized, number of shares issued and issued capital
Number of sharesauthorized

Number of sharesissuedIssued capitalMillions of yen

SharesShares

As of April 1, 2017
Change during the period

90,000,000–

52,644,030
–

4,175
–

As of March 31, 2018
Change during the period

90,000,000–

52,644,030
–

4,175
–

As of March 31, 201990,000,000

52,644,030

4,175

Note: All shares issued by the Company are ordinary shares with no rights limitations and without par value. Issued sharesare fully paid up.

(2) Retained earnings
Retained earnings consist of earned reserve and unappropriated retained surplus. Retained earnings
include the amount of remeasurements of defined benefit plans recognized in other comprehensive
income when the amount arose and immediately transferred to retained earnings, and cumulative
exchange differences of foreign operations as of the date of transition to IFRS.
(3) Treasury shares
Changes in the number and the amount of treasury shares are as follows:
Number of shares

AmountSharesMillions of yen

As of April 1, 2017
Change during the period

2,455,809
32

3,409
0

As of March 31, 2018
Change during the period

2,455,841
500,134

3,409
1,378

As of March 31, 2019

2,955,975

4,787

Note: Changes during the period are due to purchase of treasury shares of 500,000 shares based on a resolution of the Boardof Directors and purchase of shares less than one unit of 134 shares.

77

(4) Dividends
Fiscal year ended March 31, 2018
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 20, 2017
Ordinary General Meetingof Shareholders
October 27, 2017
Board of Directors
meeting

Record date

Effective date

1,003

20.00

March 31, 2017

June 21, 2017

1,053

21.00

September 30, 2017

November 27, 2017

Record date

Effective dateFiscal year ended March 31, 2019
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 19, 2018
Ordinary General Meetingof Shareholders
October 31, 2018
Board of Directors
meeting

1,053

21.00

March 31, 2018

June 20, 2018

1,154

23.00

September 30, 2018

November 27, 2018

• Dividends for which record date is in the current fiscal year with effective date in the following fiscal
year
Fiscal year ended March 31, 2018
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 19, 2018
Ordinary General Meetingof Shareholders

1,053

21.00

Record date

Effective date

March 31, 2018

June 20, 2018

Record date

Effective date

March 31, 2019

June 26, 2019

Fiscal year ended March 31, 2019
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 25, 2019
Ordinary General Meetingof Shareholders

1,440

29.00

22. Selling, general and administrative expenses
Breakdown of selling, general and administrative expenses
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Packing and shipping expenses
Personnel expenses
Depreciation and amortization expense
Research and development expense
Other
Total

78

1,721
4,941
435
2,984
4,987

1,759
5,054
427
3,192
5,062

15,07015,496

23. Other income and expense(1) Breakdown of other income
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Gain on sales of non-current assets
Gain on sales of shares of subsidiaries andassociates
Grant income
Other
Total

49

157

–

121

11
596

–
791

657

1,070

(2) Breakdown of other expense
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Loss on sales and retirement of non-current
assetsImpairment loss
Other
Total

182

69

1,454
194

1,601
99

1,831

1,770

Note: Refer to the note “14. Impairment loss” for impairment loss.

24. Finance income and finance costs(1) Breakdown of finance income
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Interest income
Cash and cash equivalents, loans andreceivables
Cash and cash equivalents, financial assets
measured at amortized cost
Dividend income
Available-for-sale financial assets
Changes in the fair value of financial assets
measured at fair value through othercomprehensive income
Foreign exchange gains
Other
Total

558

–

–

538

236

–

–

271

–
13

182
–

808

992

(2) Breakdown of finance costs
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Interest expense
Borrowings
Other
Foreign exchange losses
Other
Total

79

166
29
568
–

157
23
–
118

763

299

25. Other comprehensive income
Amount arising during year, reclassification adjustments to profit or loss and tax effects for eachcomponent of other comprehensive income
Fiscal year ended March 31, 2018
Amountarising

Reclassification
adjustments

Before tax
effects

Tax effects

Net of tax
effects

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

375

–

375

(89)

286

375

–

375

(89)

286

1,030

–

1,030

(310)

720

(2,988)–(2,988)–(2,988)

(6)

–

(6)

–

(6)

Subtotal(1,964)–(1,964)(310)(2,274)

Total(1,588)–(1,588)(399)(1,988)Amountarising

Reclassification
adjustments

Before tax
effects

Tax effects

Net of tax
effects

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

(41)

–

(41)

11

(30)

(1,350)–(1,350)

434

(915)

(1,392)–(1,392)

446

(945)

1,356

–

1,356

–

1,356

3

–

3

–

3

Subtotal

1,360

–

1,360

–

1,360

Total

(31)

–

(31)

446

414

Components that will not bereclassified to profit or loss
Remeasurements of defined benefit
plans
SubtotalComponents that may be reclassified
to profit or loss
Changes in fair value of availablefor-sale financial assets
Exchange differences of foreign
operations
Share of other comprehensive
income of associates accounted forusing equity method

Fiscal year ended March 31, 2019

Components that will not bereclassified to profit or loss
Remeasurements of defined benefit
plans
Changes in the fair value offinancial assets measured at fairvalue through other comprehensive
incomeSubtotalComponents that may be reclassified
to profit or loss
Exchange differences of foreign
operations
Share of other comprehensive
income of associates accounted forusing equity method80

26. Earnings per share
Basis of calculating basic earnings per share attributable to ordinary equity holders
Fiscal year ended
March 31, 2018
Profit attributable to ordinary equity holders ofparent (Millions of yen)
Weighted-average number of ordinary shares(Thousands of shares)
Basic earnings per share (Yen)

Fiscal year ended
March 31, 2019
9,691

11,77950,18850,114193.11235.05

Note: Information on diluted earnings per share is omitted due to an absence of potential shares.

27. Financial instruments(1) Capital management
The Group’s basic policy for capital risk management is to build and maintain the stable financialbase in order to firmly maintain soundness and efficiency of the management and achieve sustainablegrowth. In line with this policy, the Group returns profits to shareholders through investments in effect,
dividends and other means based on operating cash flows.
(2) Classification of financial assets and financial liabilities
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Financial assets
Financial assets measured at fair value
through profit or loss (derivatives)
Other financial assets
Loans and receivables
Trade and other receivables
Other financial assets
Available-for-sale financial assets
Other financial assets
Cash and cash equivalents

46–

28,855
5,575

–
–

9,277
25,230––Total financial assets
Financial liabilities
Financial liabilities measured at amortized
cost
Trade and other payables
Borrowings
Other financial liabilities

68,986–

16,044
16,545576–––

Total financial liabilities

33,166–81

As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Financial assets
Financial assets measured at amortized cost
Trade and other receivables
Other financial assets
Cash and cash equivalents
Financial assets measured at fair value
through other comprehensive income
Other financial assets (shares)
Other financial assets–––

28,0802,866
32,444

–
–

8,034
1,963

–

73,389Total financial assets
Financial liabilities
Financial liabilities measured at fair value
through profit or loss (derivatives)
Other financial liabilities
Financial liabilities measured at amortized
cost
Trade and other payables
Borrowings
Other financial liabilities

–

72

–
–
–

12,794
12,810567

Total financial liabilities–

26,246(3) Financial risk management
The Group is exposed to financial risks (credit risks, liquidity risks and market risks) in the course ofbusiness activities. In order to avoid or mitigate these risks, the Group conducts risk management
under certain policies. As its policy, the Group does not conduct derivative transactions for speculative
purposes.
1) Credit risk management
Credit risks are risks that result in financial losses incurred by the Group when a customer
becomes in default for contractual obligations.
Most clutch products manufactured and sold by the Group are for the automobile and motorcycle
industries.
The certain customer group accounts for a large percentage of the Group’s revenue.
The credit risks on trade receivables from the customer group are always measured at an amountequal to lifetime expected credit losses. The Group considers significant increase in credit risk,
financial circumstances of debtors at year-end, history of recorded losses from past bad debts, andinformation on past overdue payments, etc. The Group classifies financial assets of “Debtors notexperiencing significant issues in operating conditions” and financial assets of “Debtors
experiencing significant issues in payment of their debt.” With respect to each of those categories,
the Group estimates the expected credit losses and records the allowance for credit losses.
“Debtors not experiencing significant issues in operating conditions” are debtors that do not show
any indication of issues in payment of their debt or do not have issues in their ability to pay theirdebt. The allowance for credit loss for the credit of the applicable debtors is recorded collectively
using a ratio taking into account future circumstances and the past bad debt rate. “Debtors
experiencing significant issues in payment of their debt” are debtors that are experiencing
significant issues in payment of their debt or show a high likelihood of experiencing such issues.
The allowance for credit loss for the credit of the applicable debtors is recorded based on theindividually estimated recoveries related to the applicable assets.

82

Information about trade receivables
The carrying amounts of the allowance for credit loss related to trade receivables and the credit
concerned are as follows.
Trade receivables
As of March 31, 2019
(Millions of yen)

Debtors not experiencing
significant issues inoperating conditions

Debtors experiencing
significant issues inoperating conditions

Balance at beginning of period

668

–

668

Balance at end of period

779

–

779

Debtors not experiencing
significant issues inoperating conditions

Debtors experiencing
significant issues inoperating conditions

Balance at beginning of period under
IAS 3989–

89

Adjustment on initial application of
IFRS 9–––Balance at beginning of period under
IFRS 989–

89

Increase in the period

1

–

1

Decrease in the period

(22)

–

(22)

Other

0

–

0

Balance at end of period

67

–

67

Total

Allowance for credit losses
As of March 31, 2019
(Millions of yen)

83

Total

2) Liquidity risk management
Liquidity risks are risks of failure to make payments on the due date in situations when the Groupis required to fulfill its repayment obligations for financial liabilities due. The Group manages
liquidity risks by securing credit lines available at any time in financial institutions andcontinuously monitoring a cash flow plan and actual performance while raising appropriate funds
for repayment.
Breakdown of the balances of financial liabilities by due date
As of March 31, 2018

Trade and otherpayablesBorrowings
Other financial
liabilities
Total

Carrying
amountContractual
amountDue within
one year

Due after
one yearwithintwo years

Due after
two years
withinthree years

Due after
three years
withinfour years

Due after
four years
withinfive years

Due after
five years

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

16,044

16,044

16,044

–

–

–

–

–

16,545

16,651

16,283

348

18

1

–

–

576

675

150

162

171

12

12

164

33,16633,371

32,478

510

190

14

12

164

Carrying
amountContractual
amountDue within
one year

Due after
one yearwithintwo years

Due after
two years
withinthree years

Due after
three years
withinfour years

Due after
four years
withinfive years

Due after
five years

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

12,794

12,794

12,794

–

–

–

–

–

12,81012,924

12,904

18

1

–

–

–

640

719

169

178

13

13

13

330

26,24626,43725,868

196

14

13

13

330

As of March 31, 2019

Trade and otherpayablesBorrowings
Other financial
liabilities
Total

84

3) Market risk management(i) Exchange risks
Because the Group has business operations on a global basis, it is exposed to risks thattransactions denominated in currencies other than its functional currency may affect profit orloss and cash flows and risks that equity and profit or loss may be affected when equity andprofit or loss denominated in currencies other than its functional currency are translated into thefunctional currency, both due to currency fluctuations. The Group strives to mitigate these risks
due to currency fluctuations by monitoring currency fluctuations.
• Sensitivity analysis of foreign exchange
For financial instruments held by the Group as of the reporting date, the impact of a 1%
depreciation of Japanese yen against US dollars and renminbi on profit before income taxes in
the consolidated statement of income is as follows.
The effects of translation of financial instruments denominated in the functional currency,
assets and liabilities and revenue and expenses of foreign operations into yen are not included.
This analysis is based on the assumption that other variable factors are constant.
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

US dollar
RMB

Millions of yen

147
39

146
41

(ii) Price fluctuation risks
Although the Group is exposed to risks of fluctuations in share prices, which arising from equity
financial instruments (shares), these instruments are shares in companies with which the Grouphas business relationships and the Group grasps information on market prices of the sharesquarterly.
• Sensitivity analysis on market prices
The impact of a 10% fluctuation in market prices of equity financial instruments held by theGroup as of the end of fiscal year on other comprehensive income (before tax effects) was¥836 million in the previous fiscal year and ¥691 million in the fiscal year under review.
This analysis is based on the assumption that other variable factors are constant.
(iii) Interest rate risks
Since borrowings are raised with fixed interest rates and interest rate risks are consideredinsignificant to the Group, the sensitive analysis of interest rates has not been performed.
(4) Equity financial instruments measured at fair value through other comprehensive income
The Group holds shares in listed companies with which it has business relationships. In light of the
purpose of holding to maintain and strengthen business relationships, those equity financial
instruments are designated as financial assets measured at fair value through other comprehensive
income.

85

1) Major financial instruments and their fair value
Major financial instruments and their fair value are as follows:
As ofMarch 31, 2019
Millions of yen

Honda Motor Co., Ltd.
KANEMATSU CORPORATIONSUZUKI MOTOR CORPORATION
Mizuho Financial Group, Inc.
Kawasaki Heavy Industries, Ltd.
Sumitomo Mitsui Financial Group, Inc.

5,532
936
257
91
37
22

2) Derecognized equity financial instruments measured at fair value through other comprehensive
incomeDuring the period, the Company derecognized equity financial instruments measured at fair value
through other comprehensive income. The fair value and cumulative gain or loss at the date ofderecognition of those equity financial instruments measured at fair value through othercomprehensive income are as follows:
Fiscal year ended
March 31, 2019
Millions of yen

Fair value at the date of derecognition
Cumulative gain (loss) on disposal

4432

Notes: 1. Primarily with the purpose of reviewing business relationships, in the fiscal year under review, a portion of thoseequity financial instruments measured at fair value through other comprehensive income was derecognized due tosale.
2. When equity financial instruments measured at fair value through other comprehensive income are derecognized,
the cumulative gain or loss of other comprehensive income is transferred to retained earnings.

3) Dividend income
The breakdown of dividend income recognized from those equity financial instruments measured
at fair value through other comprehensive income is as follows:
Fiscal year ended
March 31, 2019
Millions of yen

Equity financial instruments derecognized
during the period
Equity financial instruments held at the end of
the period

0
259

Total

259

(5) Fair value of financial instruments
1) Method of fair value measurement
Financial assets and liabilities measured at fair value through profit or loss
The fair value of derivatives to which hedge accounting is not applied is obtained from thecounterparty financial institutions.
Financial assets measured at amortized cost
The carrying amounts of trade and other receivables and cash and cash equivalents reasonably
approximate the fair values, since the period to maturity is short.
Other financial assets are measured by the discounted cash flow method or other appropriate
valuation methods.
86

Financial assets measured at fair value through other comprehensive income
The fair values of listed shares are measured based on market prices at the end of the fiscal year. The
fair values of unlisted shares are principally measured by valuation techniques based on net asset
value. Other financial assets are measured by the discounted cash flow method or other appropriate
valuation methods.
Financial liabilities measured at amortized cost
The fair values of borrowings are measured by the discounted cash flow method using the interest
rate for the case where funds are borrowed under the same conditions with the same remaining
period. The carrying amounts of liabilities other than the above reasonably approximate the fairvalues since they are principally settled in a short period of time.
2) Fair value hierarchy
The fair value hierarchy of financial instruments is categorized as follows:
Level 1:

Fair value measured at the quoted price in active markets

Level 2:

Fair value, other than Level 1, that is determined by directly or indirectly using theobservable price

Level 3:

Fair value that is determined using a valuation technique including unobservable inputs

When multiple inputs are used for fair value measurement, the level of the fair value is determinedbased on the lowest level of significant input in the entire measurement of the fair value.
Transfers between levels of the fair value hierarchy are recognized as if they had occurred at the
beginning of each quarter.
3) Carrying amount and fair value of financial instruments
As ofMarch 31, 2018
Carrying amount
Fair value
Long-term borrowings (Note 1)

As ofMarch 31, 2019
Carrying amount
Fair value

Millions of yen

Millions of yen

Millions of yen

Millions of yen

3,988

3,982

381

380

Notes: 1. Include current portion of long-term borrowings.
The fair value of long-term borrowings is in Level 2.
2. Financial instruments measured at fair value and financial instruments of which the fair value extremely
approximates the carrying amount are not included in the above table.

874) Financial instruments measured at fair value on a recurring basis
Classification of financial instruments measured at fair value on a recurring basis based on the fairvalue hierarchy is as follows:
As of March 31, 2018
Level 1

Level 2

Level 3

Total

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Financial assets
Financial assets measured
at fair value through profit
or loss (derivatives)
Available-for-salefinancial assets
Listed shares
Unlisted shares
Other

–

46

–

46

8,368
–
–

–
–
–

–
904
4

8,368
904
4

Total

8,368

46

909

9,324

As of March 31, 2019
Level 1

Level 2

Level 3

Total

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Financial assets
Financial assets measured
at fair value through othercomprehensive income
Listed shares
Unlisted shares
Other

6,919
–
–

–
–
–

–
1,115
1,963

6,919
1,115
1,963

Total

6,919

–

3,078

9,997

–

72

–

72

–

72

–

72

Financial liabilities
Financial liabilities
measured at fair value
through profit or loss
(derivatives)
Total

Note: No transfers between Level 1, Level 2 and Level 3 were made in the fiscal year under review and the previous fiscal
year.

Changes in financial instruments classified as Level 3 are as follows:
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Millions of yen

Balance at beginning of period
Acquisition
Total gains and losses
Other comprehensive income
Other changes

762
78

909
–

68
–

210
1,958

Balance at end of period

909

3,078

Notes: 1. Gains and losses included in other comprehensive income relate to shares, etc. held as of the reporting date thatwere not traded at a market. These gains and losses are included in “changes in the fair value of financial assets
measured at fair value through other comprehensive income” and “exchange differences of foreign operations” inthe consolidated statement of comprehensive income.

882. Financial assets classified as Level 3 mainly consist of unlisted shares. The fair values of unlisted shares are
principally measured by valuation techniques based on net asset value, and results of the fair value measurement
are approved by an appropriate authorized person.
3. In the fiscal year under review, other changes have been revised with changes to the classification of financial
instruments due to the application of IFRS 9.

28. Important subsidiaries
Status of important subsidiaries at the end of the fiscal year under review
Name

Location

Principal contents ofbusiness
Motorcycle andautomobile clutches
Motorcycle clutches
Motorcycle clutches
Administration ofsubsidiaries in theU.S.

KYUSHU F.C.C. CO., LTD.

JapanTENRYU SANGYO CO., LTD.
Flint Co.,Ltd

Japan
Japan

FCC (North America), INC.

U.S.

FCC (INDIANA), LLC.

U.S.

Automobile clutches

FCC (North Carolina), LLC.

U.S.

Motorcycle andautomobile clutches

FCC (Adams), LLC.

U.S.

Automobile clutches

FCC AUTOMOTIVE PARTS DE MEXICO, S.A. DE
C.V.

MexicoAutomobile clutches

FCC (THAILAND) CO., LTD.

ThailandFCC (PHILIPPINES) CORP.

Philippines

F.C.C. (China) Investment Co., Ltd.

China

China

Motorcycle andautomobile clutches
Motorcycle andautomobile clutches
Administration ofsubsidiaries in China
Motorcycle andautomobile clutches
Motorcycle clutches

CHINA FCC FOSHAN CO., LTD.

China

Automobile clutches

FCC (TAIWAN) CO., LTD.

TaiwanMotorcycle clutches

FCC CLUTCH INDIA PRIVATE LTD.

India

PT. FCC INDONESIA

Indonesia

FCC (VIETNAM) CO., LTD.

Vietnam

FCC DO BRASIL LTDA.

BrazilCHENGDU YONGHUA. F.C.C. CLUTCHES CO.,LTD.
CHU’S F.C.C. CO., LTD. (SHANGHAI)

China

Motorcycle andautomobile clutches
Motorcycle andautomobile clutches
Motorcycle andautomobile clutches
Motorcycle andautomobile clutches

Ratio of voting rights
holding (%)
100
80.22
100
100
100
[100]
100
[100]
100
[100]
100
[40.60]100[0.07]
100
100
100[71.43]100
100[61.43]
70
[15]
100
100
[0.55]
90
100

Note: The figures in brackets in the “Ratio of voting rights holding” column are indirect holding ratio included in the
figures outside the brackets.

8929. Related parties(1) Related party transactions
Fiscal year ended March 31, 2018Type
Other affiliate

Name
Honda Motor Co., Ltd.

Description of relationship with therelated party
Sale of the Company’s products

Transaction
amountUnsettledamountMillions of yen

Millions of yen

10,436

1,748

Transaction
amountUnsettledamountMillions of yen

Millions of yen

11,4181,693

Note: Related party transactions are conducted on the basis of arm’s length transactions.

Fiscal year ended March 31, 2019
Type
Other affiliate

Name
Honda Motor Co., Ltd.

Description of relationship with therelated party
Sale of the Company’s products

Note: Related party transactions are conducted on the basis of arm’s length transactions.

(2) Remuneration for key management personnel
Fiscal year ended
March 31, 2018

Fiscal year ended
March 31, 2019

Millions of yen

Remuneration and bonuses

Millions of yen

312

317

Note: For the basic policy, etc. for remuneration of key management personnel, refer to “A. Company information, IV.
Information about reporting company, 3. Status of corporate governance, etc., (4) Remuneration, etc. for officers.”

30. Commitments
Breakdown of commitments related to expenditures at and after the end of the fiscal year
As of
March 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

Property, plant and equipment and intangible
assets2,469

31. Subsequent events
Not applicable.

Opinion of independent auditors
Auditors: Yasumori Audit Corporation
Opinion: unqualified

90

2,617

2. Non-consolidated financial statements, etc.
(1) Non-consolidated financial statements
1) Non-consolidated balance sheet(Millions of yen)

AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Electronically recorded monetary claims operating
Accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Short-term loans receivable from subsidiaries andassociates
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Structures
Machinery and equipment
VehiclesTools, furniture and fixtures
Land
Construction in progress
Total property, plant and equipment
Intangible assets
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Bonds of subsidiaries and associates
Investments in capital
Investments in capital of subsidiaries andassociates
Long-term loans to employees
Long-term loans receivable from subsidiaries
and associates
Long-term prepaid expenses
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

91

As of March 31, 2018

As of March 31, 2019

1,267
0

3,079
0

186

222

7,956
1,026
802
2,283
60

8,712
915
854
2,096
56

20,425

16,1702,692(4)36,6972,914(2)35,020

4,819
411
4,348
44
784
3,943
135
14,487

4,995
406
4,153
61
713
3,942
620
14,894

139
6
0
146

136
–
0
137

3,629
26,129
5,846
4

3,545
22,139
5,846
4

3,069

3,069

130

119

3,594

5,191

0
688
(31)
43,062
57,697
94,39457
688(31)
40,62955,661
90,681

(Millions of yen)

Liabilities
Current liabilities
Notes payable - trade
Accounts payable - trade
Short-term loans payable
Accounts payable - other
Electronically recorded obligations - operating
Accrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Deferred tax liabilities
Provision for retirement benefits
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surpluses
Retained earnings
Legal retained earnings
Other retained earnings
Reserve for dividends
Reserve for advanced depreciation of noncurrent assets
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuation and translation adjustments
Valuation difference on available-for-salesecurities
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

92

As of March 31, 2018

As of March 31, 2019

234
3,104
16,160
590
1,119
396
132
2
122
1,175
47
23,085–2,591
12,771
921
1,003
444
361
4
123
1,233
50
19,506

327
789
750
29
27
1,923
25,009

–
234
842
29
27
1,133
20,639

4,175

4,175

4,555
10
4,566

4,555
10
4,566

1,043

1,043

1,600

1,600

968

969

50,5005,748
59,861(3,409)65,19352,5006,776
62,890(4,787)
66,845

4,191

3,196

4,191
69,38594,394

3,196
70,041
90,681

2) Non-consolidated statements of income(Millions of yen)
Fiscal year ended
March 31, 2018
Net sales
Cost of sales
Beginning finished goods
Cost of products manufactured
Purchase of finished goods
Total
Ending finished goods
Cost of finished goods sold
Gross profit
Selling, general and administrative expenses
Packing and delivery expenses
Salaries and allowances
Provision for bonuses
Retirement benefit expenses
Depreciation
Research and development expenses
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Interest on capital receivable
Interest on securities
Dividend income
Rental income
Commissions on equipment sales
Foreign exchange gains
Technical advisory fee
Other
Total non-operating income
Non-operating expenses
Interest expenses
Rent expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Transfer pricing taxation adjustment
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of shares of subsidiaries andassociates
Total extraordinary losses
Profit before income taxes
Income taxes - current

93

Fiscal year ended
March 31, 201939,66340,850835
28,327890
30,052
1,026
29,026
10,636

1,026
29,050790
30,867915
29,952
10,898

808
1,568
257
179
70
4,052
1,722
8,659
1,977

773
1,625
281
202
76
4,179
2,087
9,226
1,671

521
41
555
3,136
35
371
–
133
79
4,874

607
37
512
2,715
14
239
441
149
92
4,809

173
28
739
13
954
5,897

167
4
–
13
185
6,295

2
–
–
255
257

47
32
81
–
161

13
1,454

54
–

2,031

386

3,499
2,655
890

441
6,016
903

(Millions of yen)
Fiscal year ended
March 31, 2018
Income taxes - deferred
Total income taxes
Profit

(512)
377
2,278

94

Fiscal year ended
March 31, 2019
(125)
778
5,237

3) Non-consolidated statements of changes in shareholders’ equity
Fiscal year ended March 31, 2018
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplusLegalcapitalsurplus

4,175

Other
capitalsurplus

4,555

10

Total
capitalsurpluses

Legalretainedearnings

4,566

1,043

Reservefordividends

Reserve foradvanceddepreciationof noncurrent
assetsGeneralreserve

Retainedearnings
brought
forward

1,600

969

48,5007,527

59,6400–(2,000)–(2,057)(2,057)

2,278

2,278

(0)

2,000

ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period

Total
retainedearnings

–

–

–

–

–

–

(0)

2,000

(1,778)

220

4,175

4,555

10

4,566

1,043

1,600

968

50,5005,748

59,86195

Valuation and translation
adjustments
Valuation
Total
difference
Totalvaluationonshareholders’andavailableequity
translation
for-saleadjustments
securities

Shareholders’ equity

TreasurysharesBalance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplus(3,409)ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period(0)64,973

3,553

Total net
assets

3,553

68,527––––(2,057)(2,057)

2,278

2,278

(0)

(0)
637

637

637

(0)

220

637

637

858

(3,409)65,193

4,191

4,191

69,38596

Fiscal year ended March 31, 2019
(Millions of yen)
Shareholders’ equity
Capital surplus

Retained earnings
Other retained earnings

Capitalstock

Balance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplus

OthercapitalsurplusLegalcapitalsurplus

4,175

4,555

10

Total
capitalsurpluses

Legalretainedearnings

4,566

1,043

Reservefordividends

Reserve foradvanceddepreciationof noncurrent
assetsGeneralreserve

Retainedearnings
brought
forward

1,600

968

50,5005,748

59,861

(0)

0

–

1

(1)

–

(2,000)–(2,208)(2,208)

5,237

5,237

2,000

ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period

Total
retainedearnings

–

–

–

–

–

–

1

2,000

1,028

3,029

4,175

4,555

10

4,566

1,043

1,600

969

52,5006,776

62,89097

Valuation and translation
adjustments
Valuation
Total
difference
Totalvaluationonshareholders’andavailableequity
translation
for-saleadjustments
securities

Shareholders’ equity

TreasurysharesBalance at beginningof current period
Changes of items
during period
Reversal of reserve
for advanced
depreciation of
non-current assets
Provision of reserve
for advanced
depreciation of
non-current assets
Provision ofgeneral reserve
Dividends ofsurplus(3,409)ProfitPurchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period(1,378)65,193

4,191

Total net
assets

4,191

69,385

–

–

–

–

–

–

(2,208)(2,208)

5,237

5,237

(1,378)(1,378)
(994)

(994)

(994)

(1,378)

1,651

(994)

(994)

656

(4,787)

66,845

3,196

3,196

70,04198

[Notes to non-consolidated financial statements]
Significant accounting policies
1. Valuation basis and methods for assets(1) Valuation basis and methods for securities
Shares of subsidiaries and associates
Stated at cost determined by the weighted-average method.
Available-for-sale securities (securities classified as other securities under Japanese GAAP)
Securities with readily determinable fair value
Stated at fair value based on market price and others as of the fiscal year-end date (unrealized
gains and losses, net of applicable taxes, are recognized in a separate component of net assets,
and costs of securities sold are determined by the weighted-average method).
Securities without readily determinable fair value
Stated at cost determined by the weighted-average method.
The Company records investments in limited liability investment partnerships and similar
partnerships (deemed to be securities under the provisions set forth in Article 2, paragraph 2 of
the Financial Instruments and Exchange Act) using the net amount of ownership in suchpartnerships computed based on the most recent financial statements available for the report datestipulated in the partnership agreement.
(2) Valuation basis and methods for inventories
Finished goods and work in process
Stated at cost determined by the weighted-average method (the carrying amounts in the nonconsolidated balance sheet are calculated by the method in which carrying amounts are written
down due to a decline in profitability of assets).
Raw materials and supplies
Stated at cost determined by the first-in, first-out method (the carrying amounts in the nonconsolidated balance sheet are calculated by the method in which carrying amounts are written
down due to a decline in profitability of assets).
2. Depreciation methods for non-current assets(1) Property, plant and equipment
The straight-line method is applied.
Major useful lives are as follows:
Buildings

10 to 38 years

Machinery and equipment

9 years(2) Intangible assets
The straight-line method is applied.
For software for internal use, the straight-line method based on the estimated usable period (fiveyears) in the Company is applied.

99

3. Recognition of reserves(1) Allowance for doubtful accounts
To cover losses from bad debts for trade receivables, loans, etc., allowance for doubtful accounts isprovided in the amount expected to be uncollectible based on historical experience of bad debts forgeneral receivables and individual collectability for specific receivables such as doubtful receivables.
(2) Provision for bonuses
To prepare for bonus payments to employees, provision for bonuses is provided based on theestimated amount of payments.
(3) Provision for retirement benefits
To prepare for payment of retirement benefits to employees, provision for retirement benefits isprovided based on the estimated amounts of retirement benefit obligations and plan assets at the endof the fiscal year under review.
1) Method of attributing expected retirement benefits to periods
In calculation of retirement benefit obligations, the benefit formula basis is applied to attributeexpected retirement benefits to periods up to the end of the fiscal year under review.
2) Amortization of actuarial gains or losses and past service cost
Past service cost is amortized on a straight-line basis from the fiscal year in which the cost
occurred over a period equal to or less than the average remaining service period of eligible
employees (five years) at the time of occurrence.
Actuarial gains or losses are amortized by the declining-balance method from the fiscal year inwhich the gains or losses occurred over a period equal to or less than the average remaining
service period of eligible employees (mainly 16 years) at the time of occurrence in each fiscal
year.
4. Other significant matters for preparing financial statements(1) Accounting for retirement benefits
Accounting treatment for unrecognized actuarial gains or losses and unrecognized past service costfor retirement benefits are different from accounting treatment for them in the consolidated financial
statements.
(2) Application of consolidated taxation system
The Company has applied the consolidated taxation system in Japan with the Company as theconsolidated taxpayer parent company.
Changes in presentation
Application of “Partial Amendments to Accounting Standard for Tax Effect Accounting”
The Company has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting”(ASBJ Statement No. 28, February 16, 2018) effective from the beginning of the fiscal year ended March
31, 2019. Accordingly, deferred tax assets (if any) were presented under “investments and other assets” anddeferred tax liabilities (if any) were presented under “non-current liabilities.”
As a result, in the non-consolidated balance sheet for the fiscal year ended March 31, 2018, deferred tax
assets of ¥535 million under current assets were offset against deferred tax liabilities of ¥1,325 million
under non-current liabilities and presented as deferred tax liabilities of ¥789 million under non-current
liabilities, and there has been a decrease of ¥535 million in total assets compared with before the change.

1004) Supplementary statements[Detailed schedule of property, plant and equipment and others](Millions of yen)
Balance at
beginning of
periodIncrease in
the period

Decrease in
the period

Depreciation
during theperiodBalance at
Accumulatedend of period depreciation

Category

Type of assets

Property,plant andequipment

Buildings

4,819

434

3

254

4,995

7,482

Structures

411

37

–

41

406

1,216

Machineryandequipment

4,348

894

112

976

4,153

18,855

Vehicles

44

35

1

17

61

131

Tools,
furniture andfixtures

784

292

58

304

713

5,280

3,943

–

0

–

3,942

–

Constructionin progress

135

1,298

814

–

620

–

Total

Land

Intangible
assetsInvestments
and otherassets(Note)

14,487

2,992

990

1,595

14,89432,965Right ofusing water
facilities

0

–

–

0

0

3

Software

139

49

–

52

136

117

Software in
progress

6

–

6

–

–

–

Total

146

49

6

52

137

121

Long-term
prepaid
expenses

0

60

4

–

57

–

Principal increases and decreases in the period are as follows:

Property, plant and equipment[Increase]
Buildings

Watagashima Factory

Refurbishment of Watagashima
Factory¥418 million

Machinery and equipment

Watagashima Factory

Manufacturing facilities forclutches¥344 million

R&D Division

Testing apparatus and measuring
instruments¥292 million

Buildings

Hamakita Factory

Decrease due to relocation ofprocess operations to a domestic
subsidiary¥564 million

Tools, furniture and fixtures

Hamakita Factory

Decrease due to relocation ofprocess operations to a domestic
subsidiary¥221 million[Decrease]101

[Detailed schedule of allowances]
Category
Allowance for
doubtful accounts
Provision for bonuses(Millions of yen)
Balance at end of
periodBalance at beginning of
periodIncrease in the period

Decrease in the period

36

–

2

33

1,175

1,233

1,175

1,233

(2) Components of major assets and liabilities
This information has been omitted as the consolidated financial statements have been prepared.

Opinion of independent auditors
Auditors: Yasumori Audit Corporation
Opinion: unqualified
102

VI. Overview of operational procedures for shares of the reporting company
Fiscal year

From April 1 to March 31

Ordinary General Meeting of
Shareholders

June

Record date

March 31

Record dates for dividends ofsurplus

September 30
March 31

Number of shares per share unit

100 shares

Purchase of shares less than one
unit
Office for handlingbusiness
Shareholder register
administrator
Forwarding officeHandling charge for purchase(Special account)
1-2-1 Yaesu, Chuo-ku, Tokyo
Securities Agent Department, Head Office, Mizuho Trust & Banking Co., Ltd.
(Special account)
1-2-1 Yaesu, Chuo-ku, Tokyo
Mizuho Trust & Banking Co., Ltd.
—The amount separately stipulated as the amount equivalent to share brokerage fees

Method of public noticeElectronic public notice will be made. However, if it is impossible to publish public
notices electronically because of an accident or other unavoidable circumstances, thepublic notices shall be made by publication in the Nihon Keizai Shimbun.
The Company’s URL for public notice: https://www.fcc-net.co.jp/

Special benefits for shareholders• Content of the shareholder special benefit plan
Regional goodies worth ¥2,500 are offered to each shareholder holding 200 shares ormore who is on the list of shareholders as of March 31 and September 30 every year.

Note: Pursuant to the provision of the Company’s Articles of Incorporation, the Company’s shareholders may not exercise
any right, in relation to their holding shares less than one unit, other than rights set forth in each item of Article 189,
paragraph 2 of the Companies Act.

103