Annual Securities Report
90th term (from April 1, 2019 to March 31, 2020)

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 ........................................................................................................................... 4
3. Description of business.................................................................................................................. 5
4. Overview of subsidiaries and other affiliates .............................................................................. 7
5. Information about employees ..................................................................................................... 10
II. Overview of business ....................................................................................................................... 11
1. Management policy, management environment, issues to address, etc. ................................. 11
2. Business risks ............................................................................................................................... 12
3. Management analysis of financial position, operating results and cash flows ....................... 13
4. Critical contracts for operation .................................................................................................. 17
5. Research and development activities ......................................................................................... 17
III. Information about facilities ............................................................................................................ 19
1. Overview of capital investments, etc. ......................................................................................... 19
2. Major facilities ............................................................................................................................. 19
3. Planned additions, retirements, etc. of facilities ....................................................................... 21
IV. Information about reporting company.......................................................................................... 22
1. Information about shares, etc. .................................................................................................... 22
2. Dividend policy ............................................................................................................................ 24
3. Status of corporate governance, etc. .......................................................................................... 25
V. Financial information ..................................................................................................................... 43
1. Consolidated financial statements, etc. ...................................................................................... 44
2. Non-consolidated financial statements, etc. .............................................................................. 93
VI. Overview of operational procedures for shares of the reporting company .............................. 106
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 25, 2020
90th term (from April 1, 2019 to March 31, 2020)
株式会社エフ・シー・シー (Kabushiki Kaisha F.C.C.)
F.C.C. CO., LTD.
Yoshitaka Saito
President and Representative Director
7000-36 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi,
Shizuoka+81-53-523-2400 (Main)
Yasutaka Oishi, Executive Officer, Head of Management andAdministration
7000-36 Nakagawa, Hosoe-cho, Kita-ku, Hamamatsu-shi,
Shizuoka+81-53-523-2400 (Main)
Yasutaka Oishi, Executive Officer, 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 dataTerm

86th term

87th term

88th term

89th term

90th term

Fiscal year-end

March 31,2016

March 31,2017

March 31,2018

March 31,2019

March 31,
2020

Revenue(Millions of yen)

167,429

157,217173,174

177,605

171,060

Profit before income taxes (Millions of yen)

8,118

11,41914,083

16,503

6,653

Profit attributable to owners of parent(Millions of yen)

6,162

7,204

9,691

11,7793,921

Comprehensive income(Millions of yen)

(1,155)

7,027

7,935

12,380(2,068)Equity attributable to owners of parent(Millions of yen)

107,010

111,624

117,311

125,875

120,869

Total assets(Millions of yen)

159,212

162,708

170,302173,644

161,727

Equity attributable to owners of parent per
share
(Yen)

2,132.18

2,224.12

2,337.43

2,533.32

2,432.56

Basic earnings per share(Yen)

122.79143.54193.11235.0578.92

Diluted earnings per share

(Yen)

–

–

–

–

–

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

67.21

68.60

68.88

72.49

74.74

Ratio of profit to equity attributable toowners of parent

5.67

6.59

8.47

9.69

3.18

(Times)

15.49

15.48

15.48

9.96

20.01

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

25,10824,16524,12023,62225,079Net cash flows from (used in) investing
activities(Millions of yen)

(17,369)(15,846)(19,122)(8,695)(10,597)

Net cash flows from (used in) financing
activities(Millions of yen)96

(7,641)(2,657)(7,981)(8,990)Cash and cash equivalents at end of period(Millions of yen)

23,45023,47425,23032,44435,350

7,893

8,189

8,555

8,829

8,718

[3,235][3,210][3,637][4,017][3,777]

Price earnings ratio (PER)(%)

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

Notes: 1. Revenue does not include consumption taxes.
2. Information on diluted earnings per share is omitted due to an absence of potential shares.

3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 LIMITED, 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 LIMITED (currently a consolidated subsidiary) inHaryana, India.
Acquires 100% of shares of FCC RICO LTD. (currently FCC CLUTCH INDIA PRIVATELIMITED, a consolidated subsidiary).
FCC INDIA MANUFACTURING PRIVATE LIMITED has been merged by FCC CLUTCH INDIA
PRIVATE LIMITED.
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
December4

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 PRIVATELIMITED [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 LIMITED [India], PT. FCC INDONESIA [Indonesia], FCC(VIETNAM) CO., LTD. [Vietnam], FCC DO BRASIL LTDA. [Brazil]

5

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 LIMITED
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

6

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>
Manufacturing the Company’s
product components and products.
100Interlocking officers and leasing
land.

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.

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

100

Indiana, U.S.

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.

North Carolina,
U.S.

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.

FCC (INDIANA), LLC(Notes 2, 4)

FCC (North Carolina),
LLC(Note 2)Motorcycle
clutches

Purchasing motorcycle,
automobile and general-purpose
80.22
components. Interlocking officers
and capital assistance.
Purchasing Flint Co.,Ltd.’s
100 products.
Interlocking officers.
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
clutches7

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 LIMITED(Notes 2, 4)

Address

Guangdong, China

Tainan, Taiwan

Haryana, India

Issued capital

US$28,000,000

NT$195,000,000

Principal contentsof business

Automobile
clutches

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

PT. FCC INDONESIA(Notes 2, 4)

Karawang,Indonesia

PT. FCC PARTSINDONESIA

Karawang,Indonesia

Motorcycle
US$300,000
clutches

FCC DO BRASIL
LTDA.
(Note 2)

Relationship

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 andUS$11,000,000 automobile
clutches

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

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

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¥86,067,000,000

Manufacture andsales ofautomobiles 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.

84. For FCC (INDIANA), LLC, FCC (Adams), LLC, FCC CLUTCH INDIA PRIVATE LIMITED 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¥34,939 million(2) Ordinary profit¥737 million(3) Profit¥522 million(4) Net assets¥16,066 million(5) Total assets¥21,588 million• FCC (Adams), LLC(1) Net sales(2) Ordinary profit(3) Profit(4) Net assets(5) Total assets¥32,345 million¥518 million¥381 million¥6,035 million¥22,862 million• PT. FCC INDONESIA(1) Net sales¥23,694 million(2) Ordinary profit¥3,103 million(3) Profit¥2,156 million(4) Net assets¥14,696 million(5) Total assets¥17,780 million• FCC CLUTCH INDIA PRIVATE LIMITED(1) Net sales¥20,912 million(2) Ordinary profit¥(258 million)(3) Profit¥(193 million)(4) Net assets¥1,264 million(5) Total assets¥13,804 million
5. This company files its Annual Securities Report.
6. In addition to the above, there are four affiliates.

95. Information about employees(1) Consolidated companies
As of March 31, 2020
Segment name

Number of employees

Motorcycle clutches

4,597

Automobile clutches

3,625

[253]

8,222

[3,676]

Total of reportable segments
Corporate (common)
Total[3,423]

496

[101]

8,718

[3,777]

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, 2020
Number of employees

Average age

1,105 [171]Average years of service
41.8

Average annual salary (Yen)

17.3

Segment name6,861,276

Number of employees

Motorcycle clutches

227

[48]

Automobile clutches

382

[22]

Total of reportable segments

609

[70]

Administration (general operations)

496

[101]

1,105

[171]

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.

10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) Management environment, business strategy, issues to address, etc.
Looking at the future management environment, the risk of further downturn in the economy due tothe impact of the novel coronavirus disease (COVID-19) requires attention, and the outlook is
extremely uncertain. Regarding urgent issues, the Group will strive to minimize the impact on thebusiness while continuing to prioritize safety.
Meanwhile, as a medium- to long-term issue, an era of significant structural changes has arrived for
not only the automotive industry but also other industries, as developments, including measures foraddressing fuel consumption regulations, advances in technologies for the electrification of cars andautomated driving, and the spread of car sharing, indicate.
Under such a management environment, the Group will ensure the implementation of the 11th
Medium-Term Management Plan starting in FY2020, and strive to further expand existing businesses
and generate new businesses.
The 11th Medium-Term Management Plan (FY2020 – FY2022)
Go! Reach Beyond Evolution II—Strengthen product development capabilities and on-site capabilities, digital evolution, newbusiness—
Policies
Establish a sustainable competitive advantage by strengthening product development capabilities
and on-site capabilities
Manufacturing and work revolution through digital evolution
Ensure future growth and radical change in thinking by strengthening new business development
The Group is actively involved in new business development for paper application products and EV
products as well as the digital evolution that utilizes AI while also leading to a stronger businessstructure at even higher dimensions for the “Go! Reach Beyond Evolution” put forward in the 10th
Medium-Term Management Plan. Earning power will be improved through enhancements to thecompetitiveness of the clutch business by further strengthening product development capabilities andon-site capabilities, which will be used as a basis for accelerating growth investment into new
business. Through this, the Group aims for sustainable improvement in corporate value even in timesof drastic change.
Please note that the forecast for the fiscal year ending March 31, 2021 and the performance targets forthe 11th Medium-Term Management Plan, etc. are undetermined given the difficulties in making areasonable estimate at the current point in time. These will be disclosed promptly once calculation
becomes possible.

112. Business risks
Of the items related to the overview of business and financial information described in this Annual
Securities Report, the following are major risks that management recognizes could have significant
effect on the financial position, operating results and cash flows of consolidated companies. 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) Business development centered on clutch products
The Group continues to evolve as a specialist in clutch products. Although clutch products areimportant functional components of drive trains for automobiles and motorcycles driven by internal
combustion engines, there is no guarantee that a replacement 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 automobiles and motorcycles that are not driven by internal combustion
engines.
The automotive industry is currently facing an era of significant structural change. While there arevarious opinions concerning the pace at which electric vehicles are spreading, near-term growth isanticipated for both motorcycle clutches and automobile clutches, so the Group is definitely
responding by evolving the existing businesses. Regarding new business, the Group is actively
promoting the use of the Company’s technologies and know-how in paper application products and
EV products that are currently being developed as well as in other business areas, while also looking
at alliances and M&A.
(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 44% of the Group’s revenue in the fiscal year ended March 31, 2020. 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.
The Group is striving to acquire new customers through sales expansion in addition to sales to the
Honda Motor Group, which has led to the receipt of orders, and the Group continues to actively makeproposals to customers.
(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.
To conduct business while having an appropriate understanding and reducing country risk, the Group
strives to collect and appropriately address local information through overseas subsidiaries, etc. while
utilizing a system of mutual synergies within the Group.
(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.
The Group strives for further expansion of its global share by improving product competitiveness inareas such as quality, cost, and delivery.
(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
12

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.
The Group aims to further improve quality throughout all business activities and is taking initiatives
to strengthen the quality assurance structure.
(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.
The Group has taken action necessary to continue operations in emergencies triggered by major
natural disasters. This includes the preparation of a risk response manual and the creation of abusiness continuity plan (BCP). In response to COVID-19, initiatives have been implemented toprevent the spread of infection, prioritizing the safety of employees and their families as well as
related person. Measures have also been taken to minimize the impact on business in light of requests
from each country’s government and local government bodies, etc.
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 (hereinafter “operating results, etc.”)
for the fiscal year ended March 31, 2020 were as follows.
1) Financial position and operating results
In the fiscal year ended March 31, 2020, the Japanese economy had been gradually recovering
against a backdrop of stronger employment and income environments, but weakness was evident inexports and production in part because of US-China trade friction and the consumption tax hike.
Overseas, the U.S. economy remained firm mainly for consumer spending, while in Asia, theChinese and Indian economies remained weak. Meanwhile, domestic and international economic
activity plummeted through the end of the fiscal year due to the impact of COVID-19 with a sudden
slowdown in the global economy.
In the automotive industry, in Japan, sales of both registered vehicles and lightweight mini vehicles
fell in the automobile market, resulting in a decline in the number of new vehicles sold for the firsttime in four years. Overseas, although sales of passenger vehicles in the U.S. continued to struggle,
sales of light trucks remained at reasonable levels. In China, sales by Japanese manufacturers had
remained strong amid decreased sales of new vehicles, but circumstances became severe due tofactors such as the suspension of operations because of the impact of COVID-19. In the motorcycle
market, demand fell in India, resulting in lower sales year on year.
Under these circumstances, the Group has worked to strengthen development capabilities and on-site
capabilities in the final year of the 10th Medium-Term Management Plan. In the motorcycle business,amid a weak market in India, the Group strived to ensure profitability by thoroughly controlling
costs. In the automobile business, amid the overall solid sales of light trucks in the U.S., the Group
worked to increase production of clutches for 10-speed ATs. In terms of development, the Groupfocused on developing friction materials and clutches with new mechanisms, and also promoted thedevelopment of new business for paper application products and EV products with an eye to the
future. In response to COVID-19, initiatives have been implemented to prevent the spread of
infection, prioritizing the safety of employees and their families as well as related person. Measures
have also been taken to minimize the impact on business in light of requests from each country’s
government and local government bodies, etc.
As a result, during the fiscal year ended March 31, 2020, although there was an increase in sales ofautomobile clutches in the U.S., in addition to a decrease in sales of automobile clutches in China, adecrease in sales of motorcycle clutches in India led to revenue shrinking by 3.7% from the previous
13fiscal year to ¥171,060 million. Operating profit decreased by 50.2% from the previous fiscal year to¥7,896 million, reflecting compensation costs attributed to recalls and impairment losses. Profit
before income taxes decreased by 59.7% from the previous fiscal year to ¥6,653 million. Profit
attributable to owners of parent decreased by 66.7% from the previous fiscal year to ¥3,921 million.
The following are the business results in each operating segment.
Motorcycle clutches
Although there was an increase in sales of motorcycle clutches in Indonesia, a decrease in sales ofmotorcycle clutches in India and Japan led to revenue decreasing by 5.0% from the previous fiscal
year to ¥80,090 million. Operating profit decreased by 15.0% from the previous fiscal year to ¥9,963
million.
Automobile clutches
Although there was an increase in sales of automobile clutches in the U.S., a decrease in sales ofautomobile clutches in China led to revenue shrinking by 2.5% from the previous fiscal year to¥90,970 million. Operating loss was ¥1,096 million (compared with operating profit of ¥4,122
million in the previous fiscal year), reflecting compensation costs attributed to recalls andimpairment losses.
2) Cash flows
As of the end of the fiscal year under review, cash and cash equivalents (hereinafter “net cash”)
totaled ¥35,350 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 ¥25,079 million.
This is mainly due to profit before income taxes of ¥6,653 million and depreciation and amortization
expense of ¥13,838 million.
Cash flows from (used in) investing activities
Net cash used in investing activities was ¥10,597 million.
This is mainly due to purchase of property, plant and equipment of ¥8,584 million and purchase ofintangible assets of ¥1,307 million.
Cash flows from (used in) financing activities
Net cash used in financing activities was ¥8,990 million.
This is mainly due to net increase (decrease) in short-term borrowings of ¥5,527 million and cash
dividends paid of ¥2,882 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, 2020

Motorcycle clutches (Millions of yen)

75,787

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

14

Year-on-year comparison (%)
93.5

87,57896.1

163,365

94.9ii) Performance of orders received
Performance of orders received by segment for the fiscal year under review is as shown below.
Orders received(Millions of yen)

Year-on-yearcomparison (%)

Order backlog(Millions of yen)

Year-on-yearcomparison (%)

Motorcycle clutches

75,620

90.2

2,191

32.9

Automobile clutches

84,655

90.0

2,077

24.8

160,275

90.1

4,268

28.4

Segment name

Total

Notes: 1. Amounts are based on sales prices.
2. Consumption taxes are not included in the above amounts.
3. In the fiscal year ended March 31, 2020, there was significant fluctuation in the order backlog. This was attributed
to the spread of COVID-19 that has led to a recent substantial decline in orders.

iii) Sales performance
Sales performance by segment for the fiscal year under review is as shown below.
Segment nameFiscal year ended March 31, 2020

Year-on-year comparison (%)

Motorcycle clutches (Millions of yen)

80,09095.0

Automobile clutches (Millions of yen)

90,97097.5

171,060

96.3

Total (Millions of yen)

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, 2019

Fiscal year ended March 31, 2020

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

Ratio (%)

Ratio (%)

Ford Motor Company

28,512

16.1

29,926

17.5

Honda Motor Co., Ltd.

11,418

6.4

10,0785.9

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

15(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) Recognition as well as details and considerations of status of financial position and operating results
Analysis of operating results(Revenue)
Revenue for the fiscal year under review decreased by 3.7% from the previous fiscal year to¥171,060 million.
Although sales of automobile clutches rose in the U.S., sales of automobile clutches fell in China
while sales of motorcycle clutches fell in India.
Although sales of passenger cars in the U.S. continued to struggle up until the third quarter, sales oflight trucks remained at reasonable levels. In China, sales by Japanese manufacturers remained
strong amid decreased sales of new vehicles. Demand in the Indian motorcycle market fell.
Meanwhile, some overseas production bases suspended operations due to the impact of COVID-19
through the end of the fiscal year.
(Operating profit)
Operating profit for the fiscal year under review decreased by 50.2% from the previous fiscal year to¥7,896 million.
The main factors contributing to the decline in operating profit included a decline in profit due tolower sales, an increase in research and development expense, the impact of foreign exchange,
compensation cost and impairment loss.
Regarding compensation cost, there were defects in some products (lock-up clutches) produced by
the Company and vehicle models equipped with such products were recalled by the Company’s
customer. Consequently, provision for product warranty of ¥2,880 million was recorded as otherexpense. Regarding impairment loss, as a result of investigating the future recoverability of noncurrent assets owned by the Company’s consolidated subsidiary FCC AUTOMOTIVE PARTS DE
MEXICO, S.A. DE C.V. and some domestic consolidated subsidiaries based on the businessenvironment and profitability, the carrying amount was reduced to the recoverable amount and theamount of reduction was recorded as an impairment loss of ¥2,167 million in other expense.
(Profit before income taxes)
Profit before income taxes for the fiscal year under review decreased by 59.7% from the previous
fiscal year to ¥6,653 million.
In addition to the decline in operating profit, finance costs also increased because of foreignexchange losses.
(Profit attributable to owners of parent)
Profit attributable to owners of the parent for the fiscal year under review decreased by 66.7% fromthe previous fiscal year to ¥3,921 million.
Analysis of financial position(Current assets)
At the end of the fiscal year under review, current assets were ¥82,759 million, down ¥2,261 million
compared with the end of the previous fiscal year. This is mainly due to decreases of ¥3,850 million
in trade and other receivables and ¥1,136 million in inventories in spite of an increase of ¥2,906
million in cash and cash equivalents.

16

(Non-current assets)
At the end of the fiscal year under review, non-current assets were ¥78,968 million, down ¥9,655
million compared with the end of the previous fiscal year. This is mainly due to decreases of ¥8,294
million in property, plant and equipment and ¥864 million in other financial assets.
(Current liabilities)
At the end of the fiscal year under review, current liabilities were ¥29,645 million, down ¥5,401
million compared with the end of the previous fiscal year. This is mainly due to decreases of ¥5,585
million in borrowings and ¥1,595 million in trade and other payables in spite of an increase of¥2,880 million in provisions.
(Non-current liabilities)
At the end of the fiscal year under review, non-current liabilities were ¥9,596 million, down ¥1,473
million compared with the end of the previous fiscal year. This is mainly due to a decrease of ¥1,503
million in deferred tax liabilities.
(Equity)
At the end of the fiscal year under review, equity was ¥122,486 million, down ¥5,041 million
compared with the end of the previous fiscal year. This is mainly due to a decrease of ¥6,220 million
in other components of equity in spite of an increase of ¥1,214 million in retained earnings.
2) Details of analysis and considerations regarding cash flows and information pertaining to capital
resources and funding liquidity
Analysis of cash flows
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 ofoperating results, etc., 2) Cash flows.”
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, funds forcapital investment and funds for research and development investment from internal funds, mainly
sourced from cash flows from operating activities, and bank borrowings. The Group considers that it
has sufficiently secured the level of funds currently required.
3) Significant accounting estimates and assumptions used in such estimates
The consolidated financial statements of the Group 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.
Note that the significant accounting policies, accounting estimates and assumptions used in such
estimates applied in the consolidated financial statements of the Group are provided in “V. Financial
information, 1. Consolidated financial statements, etc., (1) Consolidated financial statements, Notes
to consolidated financial statements, 2. Basis of preparation, (5) Significant accounting estimates andjudgments, and 3. Significant accounting policies.”
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 and17

R&D on the clutches themselves, including R&D on production technologies for use in their
manufacture.
The Group has conducted research on porous fiber catalytic sheet (paper catalyst) and R&D on its
application as a paper catalyst to clean engine exhaust emissions, using technologies it has accumulated
through experience in manufacturing clutches (and friction materials employed in clutches) and in
making improvements to existing products. However, the Group is also taking initiatives in new
business development in areas such as paper application products and EV products with the aim of
expanding into business areas other than clutches.
During the fiscal year ended March 31, 2020, research and development expense (including expenses
recognized as development assets) amounted to ¥4,953 million.
The following is a summary of research and development expense by segment during the fiscal year
ended March 31, 2020.
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.
Research and development expense in the motorcycle clutches segment amounted to ¥2,671 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 and CVTs and dry friction materials for manual transmissions
provided a foundation for these activities.
Research and development expense in the automobile clutches segment amounted to ¥2,282 million.

18

III. Information about facilities
1. Overview of capital investments, etc.
During the fiscal year ended March 31, 2020, the Company made total capital investments (including
investments on intangible assets) of ¥8,858 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 ¥3,037
million for motorcycle clutches, ¥4,977 million for automobile clutches, and ¥844 million for thecommon segment.
(1) Reporting company
Manufacturing facilities to produce new models at Watagashima Factory
Testing apparatus and measuring instruments in the R&D Division(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 LIMITED
Manufacturing facilities to produce new models and production capacity expansion at FCC(VIETNAM) CO., LTD.
2. Major facilities
Major facilities of the Group are as follows:(1) Reporting company
As of March 31, 2020
Carrying amount (Millions of yen)
Buildings
andstructures

Machinery,equipment
andvehicles

Land
(m2)

Other

Total

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

1,275

1,505

595
(85,261)

321

3,698

202
[7]

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

1,559

950

766
(61,268)

57

3,334

182
[14]

Suzuka Factory(Suzuka-shi, Mie)

Motorcycle and Manufacturing
automobile
facilities forclutches
clutches

1,823

999

1,228
(50,477)

87

4,139

196
[46]

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

CommonTesting
apparatus andmeasuring
instruments

411

816

216
(12,093)

95

1,539

171
[85]

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

Segment nameFacilities

Number of
employees(2) Domestic subsidiaries
As of March 31, 2020
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

190

310

11
(20,474)

119

631

19

Number of
employees

122
[18]

(3) Overseas subsidiaries
As of March 31, 2020
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

1,612

5,188

79
(246,263)

316

7,197

700

FCC (North
Carolina), LLC

North
Carolina,
U.S.

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

3,487

2,173

30
(366,274)

210

5,902

316
[4]

FCC (Adams), LLC

Indiana, U.S.

Manufacturing
Automobile
facilities forclutches
clutches

2,894

10,96650(161,880)

2,263

16,174619

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

Manufacturing
Automobile
facilities forclutches
clutches

340

513

46
(81,837)

110

1,011

476

FCC (THAILAND)
CO., LTD.

Bangkok,ThailandMotorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

612

813

623
(87,890)

456

2,505

434
[458]

FCC CLUTCHINDIA PRIVATELIMITED

Haryana,
India

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

839

2,615

462
(114,619)

1,821

5,738

811
[2,390]PT. FCCINDONESIA

Karawang,Indonesia

Motorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

397

582

–
(72,812)

81

1,061

1,218
[487]

FCC (VIETNAM)
CO., LTD.

Hanoi,
VietnamMotorcycle
andautomobile
clutches

Manufacturing
facilities forclutches

754

1,910

–
(45,816)

804

3,469

1,249

Notes: 1. The carrying amount of “Other” assets relates to tools, furniture and fixtures, right-of-use 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.

20

3. Planned additions, retirements, etc. of facilities(1) Planned additions, etc. of important facilities
The capital investments planned for the fiscal year ending March 31, 2021 (from April 1, 2020 toMarch 31, 2021) are yet to be determined as of the filing date due to the difficulties in making areasonable calculation given the many undetermined elements due to the impact of COVID-19.
(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.

21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, 2020
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

22

118

203

7

14,377

14,769–Number ofshares held
(Units)–138,576

4,915

142,983

119,537

14

120,300

526,325

11,530Shareholding
ratio (%)

–

26.33

0.93

27.17

22.71

0.00

22.86

100.00–Notes: 1. 2,956,099 treasury shares are included in “Individuals, etc.” as 29,560 units and “Shares less than one unit” as 99
shares.
2. “Other corporations” column above includes 37 units of shares held in the name of Japan Securities Depository
Center, Incorporated.

22

(4) Major shareholders
As of March 31, 2020
Name

Address

Number of shares
held(Thousands ofshares)Shareholding ratio(excluding treasury
shares) (%)

Honda Motor Co., Ltd.

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

21.90

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

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

2,483

5.00

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

2,379

4.79

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

1,867

3.76

National Mutual Insurance
Federation of Agricultural
Cooperatives

JA Kyosai Building, 2-7-9 Hirakawacho, 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

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)

885

1.78

F.C.C. Supplier Stock Ownership
Association

7000-36 Nakagawa, Hosoe-cho,
Kita-ku,
Hamamatsu-shi, Shizuoka

807

1.63

25,480

51.28

Total

–

Notes: 1. In addition to the above, the Company held 2,956 thousand treasury shares.
2. Of the above number of shares held, the number of shares in association with fiduciary activities is as follows:
SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation Retirement Benefit
Trust Account)
The Master Trust Bank of Japan, Ltd. (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.

2,483 thousand shares
2,379 thousand shares
1,867 thousand shares
1,315 thousand shares

3. 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, 2020, it was
not included in the above major shareholders.
Name
Mondrian Investment
Partners Limited

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

Number of shares,
etc. held(Shares)
Shares2,138,600

Shareholding ratio
(%)
4.06

4. 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, 2020, they were not included in the above major shareholders.

23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

5. Sumitomo Mitsui DS Asset Management Company, Limited and its joint holder, Sumitomo Mitsui Banking
Corporation, made the change report for the substantial shareholding report available for public inspection as ofJune 21, 2019, describing that each of these companies held shares as follows as of June 14, 2019. Since theCompany could not confirm the actual number of shares held by them as of March 31, 2020, they were notincluded in the above major shareholders.
Number of shares,
etc. held(Shares)

Shareholding ratio
(%)

Name

Address

Sumitomo Mitsui DS AssetManagement Company,
LimitedAtago Green Hills MORI Tower
28F, 2-5-1 Atago, Minato-ku, Tokyo

Shares661,600

1.26

Sumitomo Mitsui Banking
Corporation

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

Shares2,508,000

4.76

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¥58 per share (of which ¥29 was paid out as an interim dividend). This resulted in a dividend payout
ratio of 73.5%.
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 November 5, 2019

1,440

29

Resolution at the Ordinary General Meetingof Shareholders held on June 23, 2020

1,440

29

Resolution date24

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 25, 2020.

25

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 charter of corporate conduct that is shared by the entire Group andimplement it thoroughly to ensure that the execution of duties by Directors and employees
complies with laws and regulations and the Articles of Incorporation and earns the trust of society.

26

Apart from appointing the Compliance Officer, who is in control of compliance, the Company
shall establish an internal reporting system to promote compliance.
• System for storing and managing information on the execution of duties by the Company’s
Directors
The Company shall establish the information management policy and various regulations, andappropriately 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 Company shall appoint a Risk Management Officer, who is in control of risk management,
identify risk in the Group’s business activities and develop a system for the appropriate
management of the identified risk.
The Company’s Board of Directors shall evaluate the management risk of important matters forthe entire Group and determine the response.
• 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 the charter of corporate conduct, group policies, group guidelines
and various 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.
27

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).

28

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.

29

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

Chairman and Representative
Director

Name

Toshimichi
MatsudaDate of birth

December 9,1952

Career summary

Term ofofficeMar. 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
business operation in China of the(Note 2)Company
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
Jun. 2020 Chairman and Representative
Director of the Company(incumbent)

30

Number ofshares held
(Hundreds ofshares)129

Title and position

Name

Date of birth

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)Yoshitaka
Saito

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 of
business operation in North Americaof the Company
November 29,
Apr. 2013 Managing Director and Head of(Note 2)
1973
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
Jun. 2020 President and Representative
Director of the Company(incumbent)

157

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

Mar. 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)

30

President and Representative
Director

March 11,1960

31

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)

32

Number ofshares held
(Hundreds ofshares)38

Title and position

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

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

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

Director,
Head of Research andDevelopment and General
Manager of R&D Division

Name

Date of birth

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)Terufumi
Nishimura

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)

40

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)

28

SatoshiNakayaMarch 17,1964

Apr. 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)

53

Toshinari
MoharaMay 1985 Joined Honda R&D Co., Ltd.
Apr. 2017 President of Honda R&D (India)
Private Limited
Apr. 2019 Joined the Company, Executive
Officer and Head of Research andDevelopment of Motorcycle
Components
November 11,
Apr. 2020 Executive Officer, Head of Research (Note 2)
1965
and Development and General
Manager of R&D Division of theCompany
Jun. 2020 Director, Head of Research andDevelopment and General Manager
of R&D Division of the Company(incumbent)–

33

Title and position

Director,
Head of Production
Engineering

Director,
Audit and Supervisory
Committee Member(full time)

Director,
Audit and Supervisory
Committee Member

Director,
Audit and Supervisory
Committee Member

Name

Tomoyuki
Goto

Date of birth

Career summary

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)

Term ofofficeNumber ofshares held
(Hundreds ofshares)(Note 2)

21

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
Apr. 2013 Director, Head of Management andAdministration, General Manager of(Note 3)
Corporate 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
Apr. 2020 Director of the Company
Jun. 2020 Director, Audit and Supervisory
Committee Member (full time) of
the Company (incumbent)

22

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
April 17, 1959
Established Yoshinori Tsuji Law(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)–

Masahide
SatoOct. 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)–

February 10,
1964

34

Title and position

Director,
Audit and Supervisory
Committee Member

Name

Kazumoto
Sugiyama

Date of birth

Career summary

Term ofofficeNumber ofshares held
(Hundreds ofshares)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

–

518

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 23, 2020
3. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on June 23, 2020

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.
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.
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.

35

(3) Audits
1) Audits by the Audit and Supervisory Committee
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 the fiscal year under review, the Company convened 12 meetings of the Audit and Supervisory
Committee and the status of attendance of each individual Audit and Supervisory Committee
Member is as follows.
Number of committee

Number of committee

meetings held

meetings attended

Katsuyoshi Fukatsu

12

12

Yoshinori Tsuji

12

11

Masahide Sato

12

12Kazumoto Sugiyama

12

12

Name

The key matters for consideration at the Audit and Supervisory Committee include auditing policies,
auditing plans, development of the internal control system and its operational status, the Accounting
Auditor’s method of audit and reasonableness of results.
In terms of the activities of the Audit and Supervisory Committee, in accordance with auditing
policies, plans and division of responsibility established by 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 and oversees the execution of duties of the Directors andthe development and operation of the Company’s internal control system by examining the status ofoperations and assets of the Company. 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.
The Company appoints a full time Audit and Supervisory Committee Member with the aim ofenhancing the collection of information and improving the effectiveness of the Audit andSupervisory Committee.
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.

363) Accounting auditsa. Name of the audit corporation
Yasumori Audit Corporationb. Length of continuous tenure
32 yearsc. CPAs who conducted audits
Satoru Saigusa, Takashi Yamazakid. Assistant accountants who participated in audits
Assistant accountants who participated in accounting audits of the Company are nine CPAs.
e. 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. 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 thecontent of a proposal to be proposed to the General Meeting of Shareholders concerning thedismissal or non-reappointment of the Accounting Auditor.
Also, the Audit and Supervisory Committee will dismiss the Accounting Auditor if it judges thatany of 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.
f. 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 nonreappointment of the Accounting Auditor.
4) Details of audit fee, etc.
a. Remuneration to independent auditors
Fiscal year ended March 31, 2019
Category

Fees for audit
certification services(Millions of yen)

Fiscal year ended March 31, 2020

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

–

37

b. Remuneration to the same network as independent auditors (excluding a.)
Not applicable.
c. Details of other major remuneration for audit certification services
Not applicable.
d. Policy on determining audit fee
The Company has not formulated a policy on determining fees for audits conducted byindependent auditors. However, the Company has implemented procedures for deciding the
remuneration by obtaining 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.
e. Reasons for approval of the Accounting Auditor’s remuneration, etc. by the Audit andSupervisory Committee
The Audit and Supervisory Committee has approved remuneration for the Accounting Auditor
based on 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.
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
38

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. bytype (Millions of yen)
Remuneration

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

288

243

45

9

Directors, Audit and Supervisory
Committee Members[Outside Directors]

35
[12]

35
[12]

–
[–]

4
[3]

Total
[Outside Directors]

324
[12]

279
[12]

45
[–]

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).

(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.
One issue of unlisted shares and two issues of shares other than unlisted shares were sold in thefiscal year under review as follows. As of the end of the fiscal year under review, cross-held sharesaccounted for less than 1% of total equity, and the impact on the consolidated financial statements
is recognized as insignificant.

39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

8

39

Shares other than unlisted shares

8

1,056

(Issues whose number of shares increased in the fiscal year ended March 31, 2020)
Total acquisition
costs associated with
Number of issues
increase in number of(Issues)shares(Millions of yen)

Reason for increase in number of shares

Unlisted shares

–

–

–

Shares other than unlisted shares

1

0

Contributions to Supplier Stock Ownership
Association(Issues whose number of shares decreased in the fiscal year ended March 31, 2020)
Number of issues(Issues)

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

Unlisted shares

10

Shares other than unlisted shares

2

10

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, 2020
March 31, 2019
Issue

Number of shares Number of shares Purpose of holding, quantitative effect(Shares)(Shares)of holding and reason for increase in
number of shares (Note)
Balance sheet
Balance sheet
amount(Millions of yen)740,200

amount(Millions of yen)740,200

KANEMATSU
CORPORATION
820

52,500936

52,500SUZUKI MOTORCORPORATION

Mizuho Financial Group,
Inc.

Sumitomo Mitsui Financial
Group, Inc.

135

257

532,169

532,169

65

91

5,755

5,755

15

22

12,00012,000MUSASHI SEIMITSU
INDUSTRY CO., LTD.
10

18

41

Holding oftheCompany’s
sharesPrincipally engaged in the sale ofmotorcycle clutches to U.S. andEuropean customers through thisGroup, which accounted for 3.4% ofrevenue in the fiscal year under review.
Although held to maintain andstrengthen the transactional
relationship in the business, this is not
limited to a transactional relationshipand we consider that the exchange of
personnel and technologies and thestable relationship of trust iscontributing to improvement in the
Company’s corporate value.

Yes

A customer for motorcycle clutches,
etc. with sales to this Group accountingfor 2.1% of revenue in the fiscal year
under review. Although held tomaintain and strengthen thetransactional relationship in thebusiness, this is not limited to atransactional relationship and we
consider that the exchange of personnel
and technologies and the stable
relationship of trust is contributing to
improvement in the Company’s
corporate value.

No

Held to maintain and strengthensmooth financial transactions such as
investment and procurement of funds
as a main financial institution.

No

Held to maintain and strengthensmooth financial transactions such as
investment and procurement of funds
as a main financial institution.

No

Purchase clutch components from thisGroup and although held to maintainand strengthen the transactional
relationship in the business, this is not
limited to a transactional relationshipand we consider that the exchange of
personnel and technologies and thestable relationship of trust iscontributing to improvement in the
Company’s corporate value.

YesFiscal year ended Fiscal year ended
March 31, 2020
March 31, 2019
Issue

Number of shares Number of shares Purpose of holding, quantitative effect(Shares)(Shares)of holding and reason for increase in
number of shares (Note)
Balance sheet
Balance sheet
amount(Millions of yen)

6,347

amount(Millions of yen)

5,613

YAMABIKOCORPORATION
5

4,000

5

4,000

TANAKA SEIMITSU
KOGYO CO., LTD.
2

1,000

3

1,000

Yutaka Giken Company
Limited
1

1

–

4,500

–

6

–

2,400

Nissin Kogyo Co., Ltd.

G-TEKT CORPORATION–

3

Holding oftheCompany’s
shares

A customer for general-purpose
exhaust gas purification catalysts andalthough held to maintain andstrengthen the transactional
relationship in the business, this is not
limited to a transactional relationshipand we consider that the exchange of
personnel and technologies and thestable relationship of trust iscontributing to improvement in the
Company’s corporate value. Numberof shares increased due to contributions
to Supplier Stock Ownership
Association.

No

Although held to maintain andstrengthen the transactional
relationship in the business, this is not
limited to a transactional relationshipand we consider that the exchange of
personnel and technologies and thestable relationship of trust iscontributing to improvement in the
Company’s corporate value.

Yes

Sell automobile clutches (lock-up
clutches), etc. to customers throughthis Group and although held tomaintain and strengthen thetransactional relationship in thebusiness, this is not limited to atransactional relationship and we
consider that the exchange of personnel
and technologies and the stable
relationship of trust is contributing to
improvement in the Company’s
corporate value.

No

Although the shares had been held tomaintain and strengthen thetransactional relationship in thebusiness, all shares were sold in thefiscal year under review.

No

Although the shares had been held tomaintain and strengthen thetransactional relationship in thebusiness, all shares were sold in thefiscal year under review.

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).

42

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, 2020 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.

43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

Notes

As of
March 31, 2019

As ofMarch 31, 2020

7, 28
8, 28
9, 28
10
11

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

35,35024,2292,114
19,366
1,697

85,02082,75969,786

61,491

4,201

4,520

89

63

11,2382,775
532

10,3742,388
129

88,62478,968

173,644

161,727

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

12, 14, 18,31
13, 31159, 28
16
11, 20Total non-current assets
Total assets

44

(Millions of yen)

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Income taxes payable
Provisions
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, 2019

As ofMarch 31, 2020

19, 2817, 28
9, 28
16
21
11

12,794
12,791
152
2,704
–
6,604

11,199
7,206
345
2,133
2,880
5,881

35,046

29,64517, 28
9, 28
20
21
16
11

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

1
1,189
1,470
29
6,625
280
9,596
39,241

22
22
22

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

4,175
123,579(4,787)(2,098)120,869
1,617
122,486

173,644

161,727

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

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

Fiscal year ended
March 31, 2019
177,605(145,564)

171,060(142,919)23
24
14, 2432,041(15,496)
1,070(1,770)28,141(15,813)950(5,381)

4
25
25

15,843
992
(299)

7,896
1,025
(2,253)

15

(32)

(15)

16

16,503(4,537)

6,653(2,624)

Profit11,965

4,028

Profit attributable to
Owners of parent
Non-controlling interests

11,779
186

3,921
106

11,9654,028

235.05–78.92–

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, 2020

ProfitEarnings per share(Attributable to owners of parent)
Basic earnings per share (Yen)
Diluted earnings per share (Yen)27
27(Note) The accompanying notes are an integral part of these financial statements.

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

Fiscal year ended
March 31, 2019

ProfitFiscal year ended
March 31, 2020

11,965

4,028

26

(30)

166

26

(915)

(912)

(945)

(745)

1,356

(5,343)

3

(8)

1,360

(5,351)414(6,097)

Comprehensive income

12,380(2,068)Comprehensive income attributable to
Owners of parent
Non-controlling interests

12,187
192(2,124)55

12,380(2,068)Other 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
Total
Components that may be reclassified to profit orloss
Exchange differences of foreign operations
Share of other comprehensive income ofassociates accounted for using equity method

26
15, 26

Total
Total other comprehensive income

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

47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
–
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
ProfitOther comprehensive income

4,175
–
–

122,365
3,921–(4,787)––

187–(5,310)

–
–
–

–
–
–

3,921
–
(2,881)–(0)–(5,310)
–
–

–
–
–

–

175

–

–

–

Total transactions with theowners–(2,706)(0)––Balance as of March 31, 2020

4,175

123,579(4,787)(5,122)–

Note

Balance as of April 1, 2018
Changes in accounting policies
Balance after restatement
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from other componentsof equity

Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from other componentsof equity

22
22

22
22

48

Equity attributable to owners of parent
Other components of equity
Changesin the fairvalue offinancialassetsmeasured
at fairvaluethroughothercomprehensive
incomeRemeasurements ofdefinedbenefit
plans

Total

Millions ofyenMillions of
yen

–
4,872
4,872
–
(905)

Total

Noncontrollinginterests

Total
equityMillions ofyenMillions ofyenMillions ofyenMillions of
yen

–
–
–
–
(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
11,965
414

(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
ProfitOther comprehensive income

3,934
–
(901)

–
–
166

4,122
–
(6,045)

125,875
3,921(6,045)

1,652
106
(51)

127,527
4,028(6,097)

(901)
–
–

166
–
–

(6,045)––(2,124)(0)(2,881)55–(90)(2,068)(0)(2,972)

(8)

(166)

(175)

–

–

–

Total transactions with theowners

(8)

(166)

(175)

(2,882)(90)(2,972)

Balance as of March 31, 2020

3,024

–

(2,098)120,869

1,617

122,486

Note

Balance as of April 1, 2018
Changes in accounting policies
Balance after restatement
ProfitOther comprehensive income
Total comprehensive income
Purchase of treasury shares
Dividends
Transfer from othercomponents of equity

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

22
22

22
22

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

49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
assetsDecrease (increase) in inventories
Decrease (increase) in trade and other receivables
Increase (decrease) in trade and other payables
Increase (decrease) in defined benefit liability
Increase (decrease) in provisions
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
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
Repayments of lease liabilities
Purchase of treasury shares
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Other
Net cash flows from (used in) financing activities

6

22

50

(Millions of yen)
Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 201916,503
12,549
1,601
(628)

6,653
13,838
2,167
(959)

32

15

(87)

9

(2,540)744(2,490)204–
1,229
27,117773(160)(4,148)

(503)
2,413
189
(236)
2,880
1,682
28,148945(126)(4,004)40

116

23,62225,079(1,236)
1,898(10,277)(1,239)457(8,584)707

567(1,242)0(1,307)
0

1,828

–

(184)
159
(61)
44
(331)

(119)
137
(482)
10
(38)

(8,695)(10,597)(4,130)–(1,378)(2,209)(5,527)(489)(0)(2,882)

(129)

(90)

(133)
(7,981)–(8,990)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, 2019
6,945
25,230Fiscal year ended
March 31, 2020
5,491
32,444268(2,585)32,44435,3507(Note) The accompanying notes are an integral part of these financial statements.

51

[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 (https://www.fcc-net.co.jp/). The Company’s consolidated financial statements wereprepared with the end of the fiscal year on March 31, 2020 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 23, 2020.
(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.
None of the main accounting standards and interpretations published as being newly established oramended by the approval date of the consolidated financial statements that have not been early
applied by the Group have a significant effect.
(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.
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 20. Employee benefits
Note 21. Provisions(Additional information)
Apart from the suspension of production because of lockdown by some of the Group’s overseas
subsidiaries, there has recently been a substantial decline in sales both domestically and overseas dueto the worldwide spread of COVID-19, which has had a major impact.
52

Under such circumstances, when applying the impairment loss on non-current assets and tax effectaccounting as of the end of the fiscal year under review, the Group forecasts a gradual recovery of suchimpact in the second half of the fiscal year ending March 31, 2021 and estimates future cash flows andthe recoverability of deferred tax assets following adjustments to the initial business plan.
However, there are many uncertainties over the impact of the spread of COVID-19, which could affect
the Group’s financial position, operating results and cash flows for the fiscal year ending March 31,
2021.
(6) Changes in accounting policies
Application of IFRS 16 “Leases”
Effective from the fiscal year ended March 31, 2020, the Group has applied IFRS 16 “Leases.”
With the application of IFRS 16 “Leases” (hereinafter “IFRS 16”), 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 and there has been no restatement of comparative fiscal years.
In transitioning to IFRS 16, the Group has applied the practical expedient provided in IFRS 16
paragraph C3 and maintained its assessment of whether a contract contains a lease under IAS 17“Leases” (hereinafter “IAS 17”) and IFRIC 4 “Determining whether an Arrangement contains a
Lease.”
Except for short-term leases or leases of low-value assets, leases as lessee which the Group previouslyclassified as operating leases applying IAS 17 are recognized as right-of-use assets and leaseliabilities at the date of application.
Right-of-use assets are depreciated on a systematic basis over the lease term.
The Group recognizes the lease payments associated with short-term leases and leases of low-value
assets as an expense on a straight-line basis over the lease term.
Lease liabilities are measured at the present value of the remaining lease payments discounted using
the lessee’s incremental borrowing rate at the date of initial application. The weighted average
lessee’s incremental borrowing rate is 0.31%.
The Group recognizes right-of-use assets at the same amount as the lease liabilities when recognizing
lease liabilities, so there is no impact on the retained earnings at the beginning of the fiscal year.
In the transition to IFRS 16, the Group used the following practical expedients:
 A lessee may exclude initial direct costs from the measurement of the right-of-use assets at the dateof initial application, and A lessee may use hindsight in determining the lease term if the contract contains options to extend
or terminate the lease.
As for leases as lessee which the Group previously classified as finance leases applying IAS 17, thecarrying amounts of right-of-use assets and lease liabilities at the date of initial application aremeasured respectively as the carrying amounts of leased assets and lease obligations based on IAS 17
immediately before the date of initial application.
As a result, the right-of-use assets and lease liabilities additionally recognized in the consolidated
statement of financial position at the date of application are both respectively ¥884 million.
The impact on the consolidated statement of income is immaterial.
In addition, for the consolidated statement of cash flows, cash flows pertaining to leases previously
reported as operating leases had been presented as cash flows from (used in) operating activities, butwith the application of IFRS 16, are presented as repayments of lease liabilities in the cash flows from(used in) financing activities, excluding short-term leases and leases of low-value assets, etc. notincluded in the measurement of lease liabilities, but including the repayment amount of leaseliabilities previously reported as finance leases.

53

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 isrecorded 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.

54

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.
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
For financial assets measured at amortized cost, the Group has adopted the method of recognizing
allowance for credit losses to deal with such losses expected in relation to the concerned financial
assets. In this method, the Group evaluates, at the end of each fiscal year, whether credit risk ofeach financial asset has significantly increased since the initial recognition. If credit risk of afinancial asset has not increased significantly since the initial recognition, 12-month expected credit
losses on the financial asset are recognized 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.

55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 theestimated 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.

56

(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.
(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) Leases
The Group judges whether a contract is a lease or contains a lease when entering into the contract. If
the contract conveys the right to control the use of identified assets for a period of time in exchange
for consideration, the Group judges whether such contract is a lease or contains a lease.
If the contract is judged to be a lease or contains a lease, the right-of-use assets and lease liabilities arerecognized as of the commencement date of the lease. Lease liabilities are measured at the present
value of the total amount of accrued lease payments and right-of-use assets are measured at cost,which comprises the amount of the initial measurement of the lease liability adjusted for initial direct
costs, etc.
Following initial recognition, right-of-use assets are depreciated on a systematic basis over the leaseterm.
In the consolidated statement of financial position, right-of-use assets are presented in “property, plantand equipment” and lease liabilities are presented in “other financial liabilities.”
Lease payments are allocated to finance costs and repayments of lease liabilities based on theeffective interest method with finance costs recognized in the consolidated statement of income.
However, right-of-use assets and lease liabilities are not recognized for short-term leases with leaseterms of 12 months or less and leases where the underlying assets are of low value, and lease
payments are recognized as an expense over the lease term using the straight-line method.
(10) 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 cash57

generating 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.
(11) 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.
(12) 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 estimating
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.
(13) 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
58

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.
(14) 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.
(15) 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.
(16) 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:• 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.

59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.
(17) 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.
(18) 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.

60

(2) Revenue and performance for reportable segments
Fiscal year ended March 31, 2019
Reportable segments
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

Revenue
External revenue
Intersegment revenue
Total
Depreciation and amortization
expenseOther profit (loss)(4,599)(7,950)(12,549)–(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).

Fiscal year ended March 31, 2020
Reportable segments

Revenue
External revenue
Intersegment revenue
Total
Depreciation and amortization
expenseOther profit (loss)
Operating profit (loss)

Motorcycle
clutches

Automobile
clutches

Total

Adjustments

Consolidated

Millions of yen

Millions of yen

Millions of yen

Millions of yen

Millions of yen

80,090–90,970–171,060–––

171,060–

80,09090,970171,060–

171,060(5,133)(8,640)(13,773)(64)(13,838)(64,993)(83,425)(148,418)(906)(149,325)

9,963(1,096)

8,867

(970)

7,896

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

1,025(2,253)

Profit before income taxes

6,653

(15)

Note: Other profit (loss) includes ¥2,167 million of impairment loss (¥480 million for motorcycle clutches, ¥1,687 million
for automobile clutches).

61

(3) Geographic information
The regional breakdown of revenue and non-current assets is as follows:
Revenue from external customers
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

Japan
U.S.
Indonesia
India
Other
Total

18,97766,068
20,11423,43549,00916,66866,07820,256
20,40347,653

177,605

171,060

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, 2019

As ofMarch 31, 2020

Millions of yen

Japan
U.S.
China
Other
Total

Millions of yen

21,49832,666
1,771
18,54021,09928,631
1,373
14,98874,476

66,093

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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

40,29540,69630,40639,15836,56030,671

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.
(1) Balance of contracts
Balance of contract liability is as follows:

62

Fiscal year ended March 31, 2019
As ofApril 1, 2018

As ofMarch 31, 2019

Millions of yen

Contract liability

Millions of yen

878

Fiscal year ended March 31, 2020
As ofApril 1, 2019

As ofMarch 31, 2020

Millions of yen

Contract liability

Millions of yen

78

10

The amount of revenue recognized in the balance of contract liability at the beginning of the period
was ¥8 million in the previous fiscal year and ¥78 million in the fiscal year under review.
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, 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.

63

(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(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.
Fiscal year ended March 31, 2020
Not applicable.
7. Cash and cash equivalents
Breakdown of cash and cash equivalents
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Cash and deposits

Millions of yen

32,44435,350Note: 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, 2019

As ofMarch 31, 2020

Millions of yen

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

Millions of yen

26,381
1,705(6)

22,3451,891(7)28,08024,229Note: Information on management of credit risk and liquidity risk to “trade and other receivables” is provided in the note
“28. Financial instruments.”64

9. Other financial assets and other financial liabilities
Breakdown of other financial assets
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

Other current financial assets
Financial assets measured at amortized cost
Loans and receivables

1,625

2,114

Other non-current financial assets
Financial assets measured at fair value
through other comprehensive income
Financial assets measured at amortized cost
Loans and receivables
Allowance for credit losses

9,997

8,968

1,301
(60)

1,460
(54)

Total

11,238

10,374

Breakdown of other financial liabilities
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

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

65

152
–

–
345

127
288
–

127
–
864

72

196

487

1,189

10. Inventories
Breakdown of inventories
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

Finished goods
Work in process
Raw materials and supplies

4,243
3,714
12,544

3,745
2,620
12,999Total

20,50319,366

The amounts of write-down of inventories recognized as expenses and inventories recognized as
expenses
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

Amount of write-down
Amount of inventories

909
145,564

1,030
142,919

11. Other assets and liabilities
Breakdown of other assets
As ofMarch 31, 2019

As ofMarch 31, 2020

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

1,611
383
25
345

824
345
60
466

2,366

1,697

397
91
44

–
81
48

532

129

Breakdown of other liabilities
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

Other current liabilities
Accruals
Accrued bonuses
Other

1,866
1,890
2,847

1,797
1,803
2,280

Total

6,604

5,881

Other non-current liabilities
Deferred income
Other

160
97

9
270

Total

258

280

66

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,
Tools,
equipment
furnitureand vehicles and fixtures

Millions ofyenMillions ofyen

40,795234(1,279)633

Land

Right-ofuse assets

LeasedassetsConstruction inprogress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

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

–
40,959–125,880–
19,171

–
7,452

–
–

–
742

(163)
2,614

(163)
196,820

–

–

–

(809)

2,832

(742)

–

1,281

April 1, 2019
Acquisition
Disposal
Transfer of line items
Exchange differenceson translation
Other

40,959
196
(698)
535

125,880
2,419(1,871)
2,798

19,171713(1,211)
991

6,643
–
(235)
–

2,832
475
(50)
–

–
–
–
–

2,614
5,006
(98)
(4,325)

198,101
8,810(4,166)–(1,302)(5,453)

(783)

(201)

(68)

–

(77)

(7,887)

(32)

30

2

93

(111)

–

(22)

(40)

March 31, 2020

39,657

123,803

18,883

6,299

3,078

–

3,097

194,818

Land

Right-ofuse assets

LeasedassetsConstruction inprogress

Total

April 1, 2018
Acquisition
Disposal
Transfer of line items
Exchange differenceson translation
Other
March 31, 2019
Adjustment due toapplication of IFRS 16(2) Accumulated depreciation and impairment loss
Buildings
andstructures

Machinery,
Tools,
equipment
furnitureand vehicles and fixtures

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

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

–
21,530–87,830–16,269

–
1,128

–
–

–
185

–
88

–
127,033

–

–

–

–

185

(185)

–

–

April 1, 2019
Depreciation expense
Impairment loss
DisposalExchange differenceson translation
Other

21,530
1,525
670
(588)

87,8309,212
1,250(1,753)

16,2691,575–(1,011)

1,128
–
247
–

185
393
–
(12)

–
–
–
–

88
–
–
–

127,033
12,705
2,167(3,365)(667)(3,926)

(587)

(14)

(18)

–

–

(5,214)

(7)

6

0

–

–

–

–

–

March 31, 2020

22,462

92,61916,246

1,361

547

–

88

133,326

April 1, 2018
Depreciation expense
Impairment loss
DisposalExchange differenceson translation
Other
March 31, 2019
Adjustment due toapplication of IFRS 1667

(3) Carrying amounts

Balance as of April 1,
2018
Balance as of March
31, 2019
Balance as of March
31, 2020

Buildings
andstructures

Machinery,
Tools,
equipment
furnitureand vehicles and fixtures

Millions ofyenMillions ofyen

20,377Land

Right-ofuse assets

LeasedassetsConstruction inprogress

Total

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

33,063

2,752

6,662

–

568

9,518

72,942

19,42938,049

2,901

6,323

–

556

2,525

69,786

17,194

31,183

2,637

4,937

2,530

–

3,008

61,491

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 “31.
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, 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)

March 31, 2019
Acquisition
Increase due to internal
development
Disposal
Transfer of line items
Exchange differences ontranslation
Other

489
–

1,961
165

4,117
–

6,568
165

–

–

1,141

1,141

–
–

(43)
–

(45)
–

(88)
–

–

(29)

–

(29)

–

4

–

4

March 31, 2020

489

2,057

5,213

7,760

68

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

SoftwareProperties fordevelopment

Total

Millions of yen

Millions of yen

Millions of yen

April 1, 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
Amortization expense
Impairment loss
DisposalExchange differences ontranslation
Other

–
–
–
–

1,604
117
–
(43)

761
855
–
(45)

2,366
972
–
(88)

–

(13)

–

(13)

March 31, 2020

–

3

–

3

–

1,668

1,571

3,240

(3) Carrying amounts
Intangible assets
Goodwill
Millions of yen

April 1, 2018
March 31, 2019
March 31, 2020

SoftwareMillions of yen

1,246
489
489

264
356
389

Properties fordevelopment

Total

Millions of yen

Millions of yen

2,885
3,356
3,642

4,396
4,201
4,520

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 “31. Commitments.”6914. Impairment loss
(1) Breakdown of assets for which impairment loss is recognized by type
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

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.

479
850
142
–
14

670
1,250
–
247
–

1,486

2,167

115

–

Total other non-current assets, etc.

115–

Total impairment loss

1,601

2,167

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, 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.
Fiscal year ended March 31, 2020
In consideration of business environment and profitability, the Company has conducted an impairment
test with regard to TENRYU SANGYO CO., LTD. and FCC AUTOMOTIVE PARTS DE MEXICO,S.A. DE C.V., subsidiaries 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 and recorded as
impairment loss (¥2,167 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.

70

15. Investments accounted for using the equity method
Summary of financial information aggregating accounts of associates accounted for using the equity
methodAs ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Total carrying amountMillions of yen

89
Fiscal year ended
March 31, 201963
Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

ProfitOther comprehensive income

(32)
3

(15)
(8)

Comprehensive income

(28)

(23)

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

71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, 2019
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)

(114)

87

–

–

8

(18)

(9,079)(1,409)

434

–

(213)

(10,268)

April 1,
2019

Recognizedthrough
profit orloss

Recognizedin othercomprehensive income

Recognizeddirectly inequityOther

March 31,
2020

Millions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyenMillions ofyen

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

892
414
210
2,012
647
737

(270)
(6)
(36)
(754)
(276)
744

–
–
–
–
(61)
–

–
–
–
–
–
–

149
–
(24)
402
109
(2)

771
408
149
1,659
418
1,479

Total

4,914

(600)

(61)

–

634

4,886

(5,006)

1,428

–

–

(804)

(4,383)(1,678)

–

389

–

–

(1,289)(3,564)

88

–

–

–

(3,476)

(18)

34

–

–

8

25

(10,268)

1,552

389

–

(796)

(9,123)

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

Fiscal year ended March 31, 2020

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

72

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, 2019

As ofMarch 31, 2020

Millions of yen

Unused tax losses
Deductible temporary differences
Total

Millions of yen

6,611
742

7,583
562

7,354

8,145

Expiration of unused tax losses for which deferred tax assets have not been recognized is as follows:
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

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

Millions of yen

1,009
656
395
166
4,384

656
395
166
970
5,394

6,611

7,583

The total amount of taxable temporary differences associated with investments in subsidiaries forwhich deferred tax liabilities have not been recognized were ¥41,488 million as of March 31, 2019and ¥47,023 million as of March 31, 2020. 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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Current tax expense
Deferred tax expense
Total

Millions of yen

3,244
1,293

3,576
(951)

4,537

2,624

(3) Factors of differences between the effective statutory tax rate and the effective tax rate
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020%%

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

30.0

29.9

1.2

5.2

2.9
(3.2)

8.5
7.5

(6.1)

(12.3)

2.7

0.7

Effective tax rate

27.5

39.5

73

17. Borrowings
Breakdown of borrowings
As ofMarch 31, 2019

As ofMarch 31, 2020

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

12,429

7,188

0.56

–

361

18

0.65

–

12,791

7,206

Non-current
Financial liabilities measured
at amortized cost
Long-term borrowings

19

1

0.65

April 2021

Total

19

1

Total

Notes: 1. “Average interest rate” shows weighted average interest rate on the balance as of March 31, 2020.
2. “Due” shows the repayment due for the balance as of March 31, 2020.
3. For the breakdown of the balance of borrowings by due date, refer to the note “28. Financial instruments, (3)Financial risk management, 2) Liquidity risk management.”

18. Leases
Breakdown of the expense relating to leases is as follows.
Fiscal year ended
March 31, 2020
Millions of yen

Depreciation expense for right-of-use assets
Land, buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures

333
40
18

Total

393

Interest expense for lease liabilities
Expense for short-term leases
Expense for low-value asset leases

21
2
3

Total

26

The breakdown of the carrying amounts of right-of-use assets is as follows.
As ofApril 1, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

Right-of-use assets
Land, buildings and structures
Machinery, equipment and vehicles
Tools, furniture and fixtures
Total

2,507
128
11

2,263
131
135

2,647

2,530

Notes: 1. The amount of increase in the right-of-use assets in the fiscal year ended March 31, 2020 was ¥475 million.
2. The total cash outflow for leases for the fiscal year ended March 31, 2020 is ¥489 million.

74

3. The amount of lease liabilities was ¥345 million (current) and ¥864 million (non-current). Lease liabilities arerespectively included in the consolidated statement of financial position under “other financial liabilities” ofcurrent liabilities and non-current liabilities.
4. The breakdown of the balances of lease liabilities by due date are provided in “28. Financial instruments, (3)Financial risk management, 2) Liquidity risk management.”

19. Trade and other payables
Breakdown of trade and other payables
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

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

9,847
1,003
1,943

8,196
1,066
1,935

Total

12,794

11,19975

20. 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, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

Funded defined benefit obligations
Plan assets

8,984(8,037)9,020(8,672)

Subtotal
Unfunded defined benefit obligations

947
1,153

348
1,074

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

2,100

1,422

Defined benefit liability
Defined benefit asset

2,144
(44)

1,470
(48)

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

2,100

1,422

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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

Retirement benefit expenses for defined benefit
plans

753

804

3) Reconciliation of defined benefit obligations
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

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

9,755

10,138

670
112
25
186
(465)
(162)
15

718
133
(49)
(301)
(344)
–
(199)

10,138

10,095

Note: The weighted average duration of defined benefit obligations was 12.3 to 20 years as of March 31, 2019 and 11.9 to18 years as of March 31, 2020.

76

4) Reconciliation of plan assets
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

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

7,773
52
105
388
(283)
1

8,037
46
(59)
944
(276)
(19)

Plan assets at end of period

8,037

8,672

5) Composition of plan assets
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

Debentures
SharesOther
Total

Millions of yen

4,734
1,501
1,801

4,764
631
3,276

8,037

8,672

6) Major actuarial assumptions
As ofMarch 31, 2019

As ofMarch 31, 2020%%

Discount rate (Japan)
Discount rate (Overseas)

0.3
3.0 to 8.7

0.5
3.0 to 8.87) Sensitivity analysis
The impact of 0.5% changes in the key actuarial assumption on defined benefit obligations is asfollows:
As ofMarch 31, 2019

As ofMarch 31, 2020

Millions of yen

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

Millions of yen

(555)
603

(539)
561

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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Amount recorded as expenses

Millions of yen

271

77

266

(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 ¥186 million in
the previous fiscal year and ¥188 million in the fiscal year under review.
1) Latest funding position of multi-employer plan
As ofMarch 31, 2018

As ofMarch 31, 2019

Millions of yen

Millions of yen

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

64,84062,661

54,68753,613

10,1539,047

2) Proportion of contributions by the Group to total contributions of the multi-employer plan
As ofMarch 31, 2018

As ofMarch 31, 2019%%

Proportion of contributions by the Group

6.1

6.2

Provision for productwarranty

Asset retirement
obligations

Total

Millions of yen

Millions of yen

Millions of yen

21. Provisions
Breakdown of and changes in provisions

April 1, 2018
Interest expense during the period in
discounting
Decrease during the period (intended use)
Decrease during the period (reversal)

–

33

33

–

0

0

–
–

–
(3)

–
(3)

–
2,880

29
–

29
2,880

–

0

0

–
–

–
0

–
0

March 31, 2020

2,880

29

2,909

Current
Non-current

2,880
–

–
29

2,880
29

March 31, 2019
Increase during the period
Interest expense during the period in
discounting
Decrease during the period (intended use)
Decrease during the period (reversal)(1) Provision for product warranty
Provision for product warranty is recorded based on the estimate of the amount to be borne by theCompany due to defects in some products previously manufactured by the Company where vehicle
models equipped with such products were recalled by the Company’s customer.

78

(2) Asset retirement obligations
To prepare for removal of toxic substances related to buildings, the Group recognizes andmeasures the provision by estimating asset retirement obligations based on the period in which thebuilding is expected to be used in light of useful lives of fixtures inside the building and otherfactors, 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 each fiscal year.
22. 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, 2018
Change during the period

90,000,000–

52,644,030
–

4,175
–

As of March 31, 2019
Change during the period

90,000,000–

52,644,030
–

4,175
–

As of March 31, 2020

90,000,000

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, 2018
Change during the period

2,455,841
500,134

3,409
1,378

As of March 31, 2019
Change during the period

2,955,975
124

4,787
0

As of March 31, 2020

2,956,099

4,787

Note: Changes during the previous fiscal year are due to purchase of treasury shares of 500,000 shares based on a resolutionof the Board of Directors and purchase of shares less than one unit of 134 shares.
Changes during the fiscal year under review are due to purchase of shares less than one unit of 124 shares.

79

(4) Dividends
Fiscal 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

Record date

Effective date

1,053

21.00

March 31, 2018

June 20, 2018

1,154

23.00

September 30, 2018

November 27, 2018

Record date

Effective dateFiscal year ended March 31, 2020
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 25, 2019
Ordinary General Meetingof Shareholders
November 5, 2019
Board of Directors
meeting

1,440

29.00

March 31, 2019

June 26, 2019

1,440

29.00

September 30, 2019

November 27, 2019

• Dividends for which record date is in the current fiscal year with effective date in the following fiscal
year
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

Record date

Effective date

March 31, 2019

June 26, 2019

Record date

Effective date

March 31, 2020

June 24, 2020

Fiscal year ended March 31, 2020
Resolution date

Total amount ofdividends

Dividends per share

Millions of yen

Yen

June 23, 2020
Ordinary General Meetingof Shareholders

1,440

29.00

23. Selling, general and administrative expenses
Breakdown of selling, general and administrative expenses
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

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

80

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

1,598
5,132
427
3,812
4,842

15,496

15,813

24. Other income and expense(1) Breakdown of other income
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

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

157

192

121

–

–
791

45
711

1,070

950

(2) Breakdown of other expense
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

Loss on sales and retirement of non-current
assetsImpairment loss
Provision for product warranty
Other
Total

69

202

1,601
–
99

2,167
2,880
131

1,770

5,381

Notes: 1. Refer to the note “14. Impairment loss” for impairment loss.
2. Refer to the note “21. Provisions” for provision for product warranty.

25. Finance income and finance costs(1) Breakdown of finance income
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

Interest income
Cash and cash equivalents, financial assets
measured at amortized cost
Dividend income
Changes in the fair value of financial assets
measured at fair value through othercomprehensive income
Foreign exchange gains
Total

538

744

271

281

182

–

992

1,025

(2) Breakdown of finance costs
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

Interest expense
Borrowings
Lease liabilities
Other
Foreign exchange losses
Other
Total

81

157
–
23
–
118

44
21
0
2,030
157

299

2,253

26. 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, 2019
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

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

227

–

227

(61)

166

(1,305)–(1,301)

389

(912)

(1,073)–(1,073)

327

(745)

(5,343)–(5,343)–(5,343)

(8)

–

(8)

–

(8)

Subtotal(5,351)–(5,351)–(5,351)

Total(6,424)–(6,424)327(6,097)

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 method

Fiscal year ended March 31, 2020

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 method8227. Earnings per share
Basis of calculating basic earnings per share attributable to ordinary equity holders
Fiscal year ended
March 31, 2019
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, 2020
11,7793,921

50,114

49,688235.0578.92

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

28. 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, 2019

As ofMarch 31, 2020

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
32,44424,2293,520
35,350

8,034
1,963

7,178
1,789

73,38972,068

Total 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

196

12,794
12,810567

11,1997,207
1,337

Total financial liabilities

26,246

19,941(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.
83

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.
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

779

–

779

Balance at end of period

638

–

638

Total

As of March 31, 2020
(Millions of yen)

84

Total

Allowance for credit losses
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 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

Debtors not experiencing
significant issues inoperating conditions

Debtors experiencing
significant issues inoperating conditions

Balance at beginning of period

67

–

67

Increase in the period

2

–

2

Decrease in the period

(6)

–

(6)

Other

0

–

0

Balance at end of period

62

–

62

Total

As of March 31, 2020
(Millions of yen)

85

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, 2019

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

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

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

11,199

11,199

11,199

–

–

–

–

–

7,207
1,210

7,238
1,285

7,237
358

1
222

–
117

–
105

–
79

–
400

324

324

27

–

–

–

–

296

19,941

20,046

18,822

224

117

105

79

697

As of March 31, 2020

Trade and otherpayablesBorrowings
Lease liabilities
Other financial
liabilities
Total

86

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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

US dollar
RMB

Millions of yen

146
41

130
16

(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¥691 million in the previous fiscal year and ¥562 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.

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

As ofMarch 31, 2020

Millions of yen

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

Millions of yen

5,532
936
257
91
37
22

4,546
820
135
65
22
15

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

Fiscal year ended
March 31, 2020

Millions of yen

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

Millions of yen

44
32

10
8

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

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

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

0

0

259

266

259

266

(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.

88Other financial assets are measured by the discounted cash flow method or other appropriate
valuation methods.
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, 2019
Carrying amount
Fair value
Long-term borrowings (Note 1)

As ofMarch 31, 2020
Carrying amount
Fair value

Millions of yen

Millions of yen

Millions of yen

Millions of yen

381

380

19

19

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.

89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, 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

As of March 31, 2020
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

5,627
–
–

–
–
–

–
1,551
1,789

5,627
1,551
1,789

Total

5,627

–

3,340

8,968

–

196

–

196

–

196

–

196

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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Millions of yen

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

909
–

3,078
–

210
1,958

262
–

Balance at end of period

3,078

3,340

90

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.
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 previous fiscal year, other changes were revised with changes to the classification of financial instruments
due to the application of IFRS 9.

29. 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 LIMITED

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.

9130. Related parties(1) Related party 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

Transaction
amountUnsettledamountMillions of yen

Millions of yen

11,418

1,693

Transaction
amountUnsettledamountMillions of yen

Millions of yen

10,0781,478

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

Fiscal year ended March 31, 2020
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, 2019

Fiscal year ended
March 31, 2020

Millions of yen

Remuneration and bonuses

Millions of yen

317

350

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.”

31. Commitments
Breakdown of commitments related to expenditures at and after the end of the fiscal year
As of
March 31, 2019

As ofMarch 31, 2020

Millions of yen

Millions of yen

Property, plant and equipment and intangible
assets2,617

32. Subsequent events
Not applicable.

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

92

861

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
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

93

As of March 31, 2019

As of March 31, 2020

3,079
0

4,969
–

222

188

8,712
915
854
2,096
56

8,420
858
682
2,392
63

16,170

9,123

2,914
(2)
35,0202,478(2)29,176

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

5,024
364
4,571
60
678
3,878
92
14,670

136
–
0
137

162
11
0
174

3,545
22,139
5,846
4

3,470
21,214
5,846
4

3,069

3,069

119

113

5,191

4,029

57
–
688
(31)
40,62955,661
90,681

52
1,031
687
(772)
38,74753,591
82,768(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
Provision for product warranties
Other
Total current liabilities
Non-current liabilities
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

94

As of March 31, 2019

As of March 31, 2020–
2,591
12,771
921
1,003
444
361
4
123
1,233
–
50
19,506

36
2,634
7,188
870
1,066
379
18
6
51
1,199
2,880
50
16,382

234
842
29
27
1,133
20,639

–
375
29
27
432
16,814

4,175

4,175

4,555
10
4,566

4,555
10
4,566

1,043

1,043

1,600

1,600

969

484

52,5006,776
62,890(4,787)
66,84554,5002,200
59,829(4,787)
63,783

3,196

2,170

3,196
70,041
90,681

2,170
65,95382,768

2) Non-consolidated statements of income(Millions of yen)
Fiscal year ended
March 31, 2019
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 expense
Other
Total selling, general and administrative expenses
Operating profit (loss)
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
Provision of allowance for doubtful accounts
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
Settlement received
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Loss on valuation of shares of subsidiaries andassociates
Provision for product warranties
Total extraordinary losses
Profit (loss) before income taxes

95

Fiscal year ended
March 31, 2020

40,85038,337

1,026
29,050790
30,867915
29,952
10,898915
28,037595
29,548858
28,689
9,647

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

748
1,704
251
200
90
4,834
1,952
9,781
(134)

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

461
86
495
3,050
11
121
–
89
79
4,395

167
4
–
–
13
185
6,295

63
5
904
747
37
1,757
2,503

47
32
81
–
161

63
8
–
166
238

54

122

386

–

–
441
6,016

2,880
3,002
(260)

(Millions of yen)
Fiscal year ended
March 31, 2019
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss)

903
(125)
778
5,237

96

Fiscal year ended
March 31, 2020
758
(839)
(81)
(179)

3) Non-consolidated statements of changes in shareholders’ equity
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

4,175

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurpluses

Legalretainedearnings

4,555

10

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

Fiscal year ended March 31, 2020
(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

4,175

Legal
capitalsurplus

OthercapitalsurplusTotal
capitalsurpluses

Legalretainedearnings

4,555

10

4,566

1,043

Reservefordividends

Reserve foradvanceddepreciationof noncurrent
assetsGeneralreserve

Retainedearnings
brought
forward

1,600

969

52,5006,776

62,890485–(2,000)–(2,881)(2,881)

(179)

(179)

(485)

2,000

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

Total
retainedearnings

–

–

–

–

–

–

(485)

2,000

(4,575)(3,061)

4,175

4,555

10

4,566

1,043

1,600

484

54,5002,200

59,82999

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(4,787)Loss
Purchase oftreasury shares
Net changes of
items other thanshareholders’equityTotal changes of
items during period
Balance at end ofcurrent period(0)66,845

3,196

3,196

Total net
assets70,041––––(2,881)(2,881)

(179)

(179)

(0)

(0)
(1,026)(1,026)(1,026)(0)(3,061)(1,026)(1,026)(4,088)(4,787)

63,783

2,170

2,170

65,953100

[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 costsof 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.

101

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 15 years) at the time of occurrence in each fiscal
year.
(4) Provision for product warranties
The Company anticipates that claims for already sold products will be made, so the individual
estimates for such expense are recorded as provision for product warranties for the fiscal year underreview.
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.
(3) Application of tax effect accounting for the transition from the consolidated taxation system to thegroup tax sharing system
As for items revised on non-consolidated taxation system in connection with the transition to thegroup tax sharing system introduced in the “Act Partially Amending the Income Tax Act” (Act No. 8
of 2020), the Company has not applied the provisions of paragraph 44 of the “Guidance on
Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018) asallowed by the provisions of paragraph 3 of the “Tax Effect Accounting for the Transition from theConsolidated Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, March 31,2020). Accordingly, amounts of deferred tax assets and deferred tax liabilities are determined inaccordance with the provisions of the tax law before revision.

102

(Additional information)
Apart from the suspension of production due to lockdown by some of the Company’s overseas subsidiaries,
there has recently been a substantial decline in sales both domestically and overseas due to the worldwide
spread of COVID-19, which has had a major impact.
Under such circumstances, when recording allowance for doubtful accounts on subsidiaries and applying
tax effect accounting as of the end of the fiscal year under review, the Company forecasts a gradual
recovery of such impact in the second half of the fiscal year ending March 31, 2021 and estimates future
cash flows and the recoverability of deferred tax assets following adjustments to the initial business plan.
However, there are many uncertainties over the impact of the spread of COVID-19, which could affect theCompany’s financial position and operating results for the fiscal year ending March 31, 2021.

103

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

4,995

338

39

269

5,024

7,336

Structures

406

2

0

43

364

1,206

Machineryandequipment

4,153

1,555

26

1,111

4,571

19,103

Vehicles

61

18

0

20

60

138

Tools,
furniture andfixtures

713

435

190

281

678

5,351

3,942

–

63

–

3,878

–

Constructionin progress

620

1,047

1,575

–

92

–

Total

Land

Intangible
assetsInvestments
and otherassetsNote:

14,894

3,399

1,896

1,726

14,67033,137Right ofusing water
facilities

0

–

–

0

0

3

Software

136

82

–

56

162

131

Software in
progress

–

15

4

–

11

–

Total

137

97

4

56

174

135

Long-term
prepaid
expenses

57

13

18

–

52

–

Principal increases and decreases in the period are as follows:
Property, plant and equipment[Increase]
Machinery and equipment

Hamakita Factory

Manufacturing facilities forclutches¥445 million

Machinery and equipment

R&D Division

Testing apparatus and measuring
instruments¥436 million

Machinery and equipment

Watagashima Factory

Manufacturing facilities forclutches¥417 million

104

[Detailed schedule of allowances](Millions of yen)
Balance at end of
periodBalance at beginning of
periodIncrease in the period

Decrease in the period

33

747

6

774

Provision for bonuses

1,233

1,199

1,233

1,199

Provision for productwarranties

–

2,880

–

2,880

Category
Allowance for
doubtful accounts(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
105

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 handling business
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.

106