KANEMATSU CORPORATIONCONSOLIDATEDFINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021KANEMATSU CORPORATIONCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021

~CONSOLIDATED FINANCIAL STATEMENTS~

PAGES

Consolidated Statement of Financial Position ………………………………………………………………………………

1

Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ………………………………

3

Consolidated Statement of Changes in Equity ………………………………………………………………………………

5

Consolidated Statement of Cash Flows ………………………………………………………………………………………

9~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~
1. Reporting Entity …………………………………………………………………………………………………………

11

2. Basis of Preparing Consolidated Financial Statements …………………………………………………………………

11

3. Significant Accounting Policies …………………………………………………………………………………………

13

4. Standards and Interpretations issued but not yet adopted ………………………………………………………………

21

5. Business Combinations …………………………………………………………………………………………………

21

6. Revenue ..…………………………………………………………………………………………………………………

22

7. Segment Information .……………………………………………………………………………………………………

24

8. Trade and Other Receivables ……………………………………………………………………………………………

28

9. Inventories .………………………………………………………………………………………………………………

28

10. Property, Plant and Equipment ..…………………………………………………………………………………………

29

11. Goodwill and Intangible Assets …………………………………………………………………………………………

31

12. Interests in Associates and Joint Ventures ………………………………………………………………………………

37

13. Other Investments ...………………………………………………………………………………………………………

37

14. Other Current Assets and Other Non-current Assets ……………………………………………………………………

38

15. Trade and Other Payables ..………………………………………………………………………………………………

38

16. Bonds and Borrowings ……………………………………………………………………………………………………

39

17. Provisions …………………………………………………………………………………………………………………

40

18. Other Current Liabilities and Other Non-current Liabilities ……………………………………………………………

41

19. Equity ..……………………………………………………………………………………………………………………

41

20. Selling, General and Administrative Expenses …………………………………………………………………………

43

21. Gain or Loss on Sale or Disposal of Property, Plant and Equipment and Intangible Assets ……………………………

43

22. Impairment Loss …………………………………………………………………………………………………………

44

23. Exchange Differences ……………………………………………………………………………………………………

45

24. Finance Income and Finance Costs ………………………………………………………………………………………

45

25. Earnings Per Share Attributable to Owners of the Parent ………………………………………………………………

46

26. Other Components of Equity and Other Comprehensive Income ………………………………………………………

47

27. Cash Flow Information .…………………………………………………………………………………………………

49

28. Employee Benefits ………………………………………………………………………………………………………

51

29. Current and Deferred Income Tax ………………………………………………………………………………………

55

30. Financial Instruments ……………………………………………………………………………………………………

58

31. Leases ..……………………………………………………………………………………………………………………

78

32. Pledged Assets ……………………………………………………………………………………………………………

79

33. Contingent Liabilities .……………………………………………………………………………………………………

79

34. Significant Subsidiaries .…………………………………………………………………………………………………

80

35. Related Parties ……………………………………………………………………………………………………………

84

36. Share-based Payments ……………………………………………………………………………………………………

85

37. Subsequent Events ..………………………………………………………………………………………………………

86

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Consolidated Statement of Financial Position
JPY
2021

USD (Note 2)
2020

2021

(Assets)
Ⅰ. Current assets
1. Cash and cash equivalents (Note 27)
2. Trade and other receivables (Note 8)

81,045207,285

91,105204,920732,051
1,872,327

3. Inventories (Note 9)
4. Other financial assets (Note 30)

99,711
6,512

100,766
5,383

900,656
58,8285. Other current assets (Note 14)

26,33924,580237,914

Total current assets

420,894

426,756

3,801,775

1. Property, plant and equipment (Note 10)
2. Goodwill (Note 11)42,246
10,29640,756
10,304

381,593
93,008

3. Intangible assets (Note 11)
4. Investments accounted for using the equity method

24,92623,382

225,151

11,8697,506

107,209

Ⅱ. Non-current assets(Note 12)
5. Trade and other receivables (Note 8)

1,280

1,428

11,568

6. Other investments (Note 13)
7. Other financial assets (Note 30)

33,536
7,079

28,2797,370

302,925
63,949

8. Deferred tax assets (Note 29)

2,318
3,046

2,761
3,126

20,941
27,519136,601

124,9151,233,864

557,495

551,671

5,035,640

9. Other non-current assets (Note 14)
Total non-current assets
Total assets(Notes) Presentation of fiscal year and amounts (Japanese Yen and U.S. dollars)
1. “2021” refers to the Company’s consolidated fiscal year ended March 31, 2021 and the other fiscal year is referred to in
the corresponding manner.
2. “JPY” means millions of Japanese Yen and “USD” means thousands of U.S. dollars.

- 1 -KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
JPY
2021

USD (Note 2)
2020

2021

(Liabilities)
Ⅰ. Current liabilities
1. Trade and other payables (Note 15)
2. Bonds and borrowings (Note 16)

182,980
57,723

172,922
68,164

1,652,788
521,394

3. Lease liabilities (Note 31)
4. Other financial liabilities (Note 30)

6,999
5,442

6,303
4,614

63,22849,161

5. Income taxes payable
6. Provisions (Note 17)

2,942
607

3,393
30

26,5745,491

7. Other current liabilities (Note 18)

28,21329,073

254,841

Total current liabilities

284,909284,5032,573,476

Ⅱ. Non-current liabilities
1. Bonds and borrowings (Note 16)

64,43475,229582,008

2. Lease liabilities (Note 31)
3. Other financial liabilities (Note 30)

10,328
1,807

11,251
2,063

93,29816,330

4. Retirement benefit liabilities (Note 28)
5. Provisions (Note 17)

6,517
1,944

6,779
1,914

58,874
17,561

6. Deferred tax liabilities (Note 29)
7. Other non-current liabilities (Note 18)

5,527
1,533

2,385
1,369

49,925
13,852

Total non-current liabilities

92,093

100,994

831,848

377,003385,497

3,405,324

1. Share capital (Note 19)
2. Capital surplus (Note 19)

27,781
27,03427,781
26,957250,936
244,191

3. Retained earnings (Note 19)
4. Treasury stock (Note 19)

78,070(1,311)

69,540(1,309)705,177(11,842)

1,633

930

14,753

10,163

6,816

91,803

554

113

5,009

Total liabilities(Equity)

5. Other components of equity (Note 26)
1) Exchange differences on translation of foreign
operations
2) Financial assets measured at fair value through othercomprehensive income3) Cash flow hedges
Total other components of equity
Total equity attributable to owners of the Parent
6. Non-controlling interests

12,351

7,860

111,566

143,926

130,829

1,300,029

36,56635,344330,287

Total equity

180,492

166,174

1,630,316

Total liabilities and equity

557,495

551,671

5,035,640- 2 -KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(a) Consolidated Statement of Income
JPY
2021
I. Revenue (Notes 6 & 7)

USD (Note 2)
2020

2021

II. Cost of sales

649,142(547,626)

721,802(610,897)

5,863,447(4,946,495)

Gross profit

101,515

110,904

916,952

III. Selling, general and administrative expenses (Note 20)
IV. Other income (expenses)(78,893)(82,716)(712,614)

1. Gain (loss) on sale or disposal of property, plant andequipment and intangible assets, net (Note 21)

(174)

(118)

(1,572)

2. Impairment loss on property, plant and equipment andintangible assets (Note 22)

(44)

(551)

(398)

1,688
(457)

1,958
(1,123)

15,254(4,133)

3. Other income (Note 23)
4. Other expenses
Total other income (expenses)
Operating profit (Note 7)
V. Finance income
1. Interest income (Note 24)
2. Dividend income (Note 24)

1,013

165

9,151

23,63528,352

213,490

161

271

1,461

1,100

1,143

9,941

19

－

177

1,281

1,415

11,5802. Other finance costs (Notes 24 & 30)(1,818)(210)(2,761)(452)(16,428)(1,900)Total finance costs(2,029)(3,214)(18,328)

692

389

6,251

Income tax expense (Note 29)

23,580(7,329)26,944(8,710)212,992(66,202)

Profit for the year

16,251

18,233

146,791

Non-controlling interests

13,315
2,935

14,3993,834

120,272
26,519Total

16,251

18,233

146,791

3. Other finance income (Notes 24 & 30)
Total finance income
VI. Finance costs
1. Interest expenses (Note 24)

VII. Share of profit (loss) of investments accounted for using
the equity method (Note 12)
Profit before tax

Profit for the year attributable to:
Owners of the Parent

Yen

U.S. dollars

Earnings per share attributable to owners of the Parent:
Basic earnings per share (Note 25)

159.44172.43

1.44

Diluted earnings per share (Note 25)

159.34172.28

1.44

- 3 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(b) Consolidated Statement of Comprehensive Income
JPY
2021
Ⅰ. Profit for the year

USD (Note 2)
2020

2021

16,251

18,233

146,791

3,395(2,939)30,666

229

(24)

2,077

8

(8)

78

3,633

(2,972)32,822931(1,105)

8,416

441

403

3,987

(77)

(27)

(701)

Ⅱ. Other comprehensive income
Items that will not be reclassified to profit or loss:
1. Financial assets measured at fair value through othercomprehensive income (Note 26)
2. Remeasurement of defined benefit pension plans(Note 26)
3. Share of other comprehensive income of investments
accounted for using the equity method (Note 26)
Total items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss:
1. Exchange differences on translation of foreign operations(Note 26)
2. Cash flow hedges (Notes 26 & 30)
3. Share of other comprehensive income of investments
accounted for using the equity method (Note 26)

1,295

(729)

11,702Other comprehensive income for the year, net of tax

Total items that may be reclassified to profit or loss

4,929

(3,702)

44,524

Total comprehensive income for the year

21,18014,531

191,314

Non-controlling interests

18,031
3,148

10,927
3,604

162,873
28,442

Total

21,18014,531

191,314

Total comprehensive income for the year attributable to:
Owners of the Parent- 4 -KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Consolidated Statement of Changes in Equity(JPY)
Equity attributable to owners of the Parent
Other components of equity

Share capital Capital surplus

As at April 1, 201927,781

26,882

Profit for the year

Retainedearnings

60,748Treasurystock(1,318)Cash flow
hedges

1,865

9,580

(293)

(935)

(2,926)

406

(935)

(2,926)

406

－

－

－

14,399Other comprehensive income
Total comprehensive income for the year

Financial
Exchange
assetsdifferences on measured attranslation offair value
foreignthrough otheroperations comprehensive
income－－Dividends (Note 19)

14,399－(5,428)Dividends to non-controlling interests
Acquisition of treasury stock(5)

Disposition of treasury stock(0)

Equity transactions with non-controlling

31

interests
Share-based payment transaction (Note 36)
Total transactions with owners

42
－

74

Reclassification from other components of(5,428)8(179)

equity to retained earnings (Note 26)
As at March 31, 2020

14

27,781

26,957

Profit for the year

69,540162(1,309)

6,816

113

703

3,308

441

703

3,308

441

－

－

－

13,315

Other comprehensive income
Total comprehensive income for the year

930

－

－

Dividends (Note 19)

13,315－(5,010)

Dividends to non-controlling interests
Acquisition of treasury stock(1)

Disposition of treasury stock1

Equity transactions with non-controlling

30

interests
Share-based payment transaction (Note 36)
Total transactions with owners

45
－

76

Reclassification from other components of(5,010)(1)225equity to retained earnings (Note 26)
As at March 31, 2021

027,781

27,034- 5 -78,07038(1,311)

1,633

10,163554

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(JPY)
Equity attributable to owners of the Parent
Other components of equity

Total equity
Remeasurement
attributable toTotal otherof definedowners of thecomponents ofbenefit pension
Parentequityplans
As at April 1, 2019

Noncontrollinginterests

Total equity

11,153

125,246

33,451

158,698－

14,3993,834

18,233(17)(3,472)(3,472)(229)(3,702)(17)(3,472)

10,9273,604

14,531Dividends (Note 19)－(5,428)Dividends to non-controlling interests－－

Acquisition of treasury stock

－

(5)

(5)

Disposition of treasury stock

－

14

14

－

31

－

42

－

－

(5,344)

17

179

－

－

7,860

130,829

35,344

166,174－

13,315

2,935

16,251

263

4,716

4,716

212

4,929

263

4,716

18,031

3,148

21,180

Dividends (Note 19)－(5,010)

Dividends to non-controlling interests－－

Acquisition of treasury stock

－

(1)

(1)

Disposition of treasury stock

－

1

1

－

30

－

45

－

－

(4,934)

(263)

(225)

－

－

12,351

143,926－

Profit for the year
Other comprehensive income
Total comprehensive income for the year

Equity transactions with non-controllinginterests
Share-based payment transaction (Note 36)
Total transactions with owners
Reclassification from other components ofequity to retained earnings (Note 26)
As at March 31, 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year

Equity transactions with non-controllinginterests
Share-based payment transaction (Note 36)
Total transactions with owners
Reclassification from other components ofequity to retained earnings (Note 26)
As at March 31, 2021

- 6 -(5,428)(1,891)179(1,891)211
42(1,711)(7,056)－(5,010)(1,750)(177)(1,750)(146)
45(1,927)(6,862)－

36,566

180,492

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(USD)
Equity attributable to owners of the Parent
Other components of equity

As at March 31, 2020

Share capital

CapitalsurplusRetainedearnings

Treasurystock

250,936

243,496628,130(11,832)

Profit for the year

Cash flow
hedges8,402

61,575

1,023

6,352

29,884

3,986

6,352

29,884

3,986

－

－

－

120,272

Other comprehensive income
Total comprehensive income for the year

Financial
Exchange
assetsdifferences on measured attranslation offair value
foreignthrough otheroperations comprehensive
income－－Dividends (Note 19)

120,272－(45,260)

Dividends to non-controlling interests
Acquisition of treasury stock(14)

Disposition of treasury stock11

Equity transactions with non-controlling

277interests
Share-based payment transaction (Note 36)
Total transactions with owners

407
－

695

Reclassification from other components of equity(45,260)

(9)

2,035

to retained earnings (Note 26)
As at March 31, 2021

5

250,936

244,191- 7 -705,177345(11,842)

14,75391,8035,009

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(USD)
Equity attributable to owners of the Parent
Other components of equity

Total equity
Remeasurement
attributable toTotal otherof definedowners of thecomponents ofbenefit pension
Parentequityplans
As at March 31, 2020

Noncontrollinginterests

Total equity

71,0001,181,730

319,256

1,500,986－

120,272

26,519146,791

2,380

42,60142,601

1,923

44,5242,380

42,601

162,873

28,442

191,314

Dividends (Note 19)－(45,260)

Dividends to non-controlling interests－－

Acquisition of treasury stock

－

(14)

(14)

Disposition of treasury stock

－

16

16

－

277

－

407

－

－

(44,574)(2,380)(2,035)－－111,566

1,300,029－

Profit for the year
Other comprehensive income
Total comprehensive income for the year

Equity transactions with non-controllinginterests
Share-based payment transaction (Note 36)
Total transactions with owners
Reclassification from other components of equity
to retained earnings (Note 26)
As at March 31, 2021

- 8 -(45,260)(15,812)(1,599)(15,812)(1,322)407(17,411)(61,985)－

330,287

1,630,316

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Consolidated Statement of Cash Flows
JPY
2021

USD (Note 2)
2020

2021

Ⅰ. Cash flows from operating activities
Profit for the year
Depreciation and amortization
Impairment loss on property, plant and equipment andintangible assets
Finance income and costs
Share of (profit) loss of investments accounted for using theequity method(Gain) loss on sale or disposal of property, plant and16,251
11,555

18,233
9,176

146,791
104,376

44

551

398

747

1,798

6,748

(692)

(389)

(6,251)

174

118

1,572

equipment and intangible assets, net
Income tax expense

7,329

8,710

66,202(Increase) decrease in trade and other receivables(Increase) decrease in inventories

(653)
1,633

23,422(1,391)(5,901)
14,759

Increase (decrease) in trade and other payables
Increase (decrease) in retirement benefits liabilities

9,389
(276)

(23,184)
393

84,812(2,498)Other (Note 6)(2,031)(5,184)(18,350)

Sub total

43,471

32,254

392,658

Interest received

209

200

1,889

Dividends received
Interest paid

1,236
(1,782)

1,188(2,731)

11,169(16,097)

Income taxes paid

(6,149)(6,651)(55,549)

36,98424,259334,070

Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment(4,413)421(6,725)
1,159(39,863)
3,806

Payments for intangible assets
Purchases of other investments(1,058)(4,611)(1,044)(1,452)(9,557)(41,652)

139

436

1,256

(210)

(835)

(1,905)

(45)

(380)

(408)

Increase in loans receivable
Proceeds from collection of loans receivable

(308)
333

(240)
292

(2,787)
3,013

Other (Note 2)(173)(1,427)(1,570)(9,927)(10,215)(89,667)

Net cash provided by (used in) operating activities
Ⅱ. Cash flows from investing activities

Proceeds from sale of other investments
Proceeds from (payments for) acquisition of subsidiaries(Note 27)
Proceeds from transfer of business (Note 27)

Net cash provided by (used in) investing activities- 9 -KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
JPY
2021

USD (Note 2)
2020

2021

Ⅲ. Cash flows from financing activities
Increase (decrease) in short-term (maturing before 3 months)
borrowings, net (Note 27)
Proceeds from short-term (maturing after 3 months)
borrowings (Note 27)
Repayments of short-term (maturing after 3 months)(15,686)

3,972(141,690)

527

2,009

4,760

borrowings (Note 27)
Proceeds from long-term borrowings (Note 27)(734)(3,355)(6,637)

9,616

24,75686,858

Repayments of long-term borrowings (Note 27)
Redemption of Bonds (Note 27)(11,171)(5,050)(26,064)－(100,908)(45,615)

Dividends paid
Payments for acquisition of interests in subsidiaries from(5,001)(5,414)(45,177)(260)－(2,352)

non-controlling interests
Proceeds from stock issuance to non-controlling interests
Dividends paid to non-controlling interests
Repayments of lease liabilities (Note 27)

11

90

107

(1,854)(7,890)(1,791)(5,798)(16,748)(71,268)

(3)

6

(34)

Net cash provided by (used in) financing activities(37,497)(11,590)(338,705)

Ⅳ. Increase (decrease) in cash and cash equivalents, net(10,440)

2,453(94,301)

Ⅴ. Cash and cash equivalents at the beginning of the year

91,10588,941

822,916

380

(290)

3,436

81,045

91,105732,051

Other (Notes 2 & 27)

Ⅵ. Effect of exchange rate changes on cash and cash
equivalents
Ⅶ. Cash and cash equivalents at the end of the year (Note 27)- 10 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
1. Reporting Entity
Kanematsu Corporation (the “Company”) is a company located in Japan. The addresses of the Company’s registered headquarters
and main offices are available on its corporate website (https://www.kanematsu.co.jp/en/). The consolidated financial statements of
the Company as of and for the year ended March 31, 2021 comprise the Company and its subsidiaries (collectively, the“Consolidated Group”), and the Consolidated Group’s interests in associates and joint ventures. The Consolidated Group operates
its businesses as an integrated trading company by providing a broad array of products and services through the organic integrationof domestic and international business networks; expertise acquired in various fields; and the functions of a trading company,
including commodities trading, information gathering, market exploration, business development and organization, risk
management, and distribution. Detailed information on the business operations for each reportable segment are provided in Note 7
Segment Information.

2. Basis of Preparing Consolidated Financial Statements(1) Statement of compliance with IFRSThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards(“IFRSs”) pursuant to the provision of Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976) as all the requirements of the“Specified Company for Designated IFRSs” set forth in Article 1-2 of said Ordinance have been fulfilled.
The consolidated financial statements were authorized by Shuji Masutani, Chief Officer, Finance, Accounting, BusinessAccounting, on August 30, 2021.

(2) Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis except for:・financial assets and liabilities measured at fair value through profit or loss, which are measured at fair value;・financial assets measured at fair value through other comprehensive income, which are measured at fair value;・defined benefit assets or liabilities, which are measured at the present value of the defined benefit obligations less the fair valueof plan assets; and・Impairment of non-financial assets, which are measured at value in use or fair value.

(3) Functional currency and presentation currency
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency. All financial
information presented in Japanese yen has been rounded down to the nearest million.
The U.S. dollar amounts appearing in the consolidated financial statements and the notes thereto represent the arithmeticalresults of translating yen to dollars at the rate of ¥110.71 to U.S.$1.00, the approximate exchange rate prevailing on March 31,
2021. The translation of such dollar amounts is solely for convenience of the readers outside Japan and should not be construed
as a representation that the Japanese yen amounts have been, or could be readily converted, realized or settled in dollars at theabove, or any other rate.

(4) Use of estimates and judgments
The preparation of the consolidated financial statements in accordance with IFRSs requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results could differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. The effect of a change in an accounting estimate
is recognized in the period of the change and future periods. The following notes include information on critical judgments inthe application of accounting policies that have a significant effect on the amounts recognized in the consolidated financial
statements:
・Note 3. Significant Accounting Policies: (1) Basis of consolidation
・Note 3. Significant Accounting Policies: (11) Revenue
The following notes include information on uncertainties of assumptions and estimates that have a significant risk to causematerial revisions in the next fiscal year:
・Note 11. Goodwill and Intangible Assets
・Note 22. Impairment Loss・Note 30. Financial Instruments: (6) Fair value of financial instruments- 11 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
When measuring the fair value of an asset or a liability, the Consolidated Group uses observable market data as much as it isavailable. Fair values are categorized into the following three hierarchy levels based on the inputs to the valuation techniques:・Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Consolidated Group can access at
the measurement date・Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly
・Level 3: unobservable inputs
The following notes include detailed information on assumptions made when measuring the fair value:・Note 22. Impairment Loss・Note 30. Financial Instruments: (6) Fair value of financial instruments
Further, in the current fiscal year, in assessing the impairment of non-financial assets, the recoverable amount is estimated ontaking certain into account the impact of the COVID-19 outbreak on future profit plans. No other impact from the COVID-19
outbreaks have material effects on the accounting estimates and the assumptions on which it is based.

(5) Changes in Presentation(Consolidated statements of cash flows)“Payments for leasehold deposits,” which was separately presented and included in “Cash flows from investing activities” inthe previous fiscal year, is presented in “Other” in the current fiscal year, because the amount has decreased in significance.
Associated with this, ¥(1,640) million presented in “Payments for leasehold deposits” of “Cash flows from investing activities”
in the consolidated statements of cash flows for the previous fiscal year is reclassified as “Other.”In addition, “Purchase of treasury stock,” which was separately presented and included in “Cash flows from financing
activities” in the previous fiscal year, is presented in “Other” in the current fiscal year, because the amount has decreased insignificance. Associated with this, ¥(5) million presented in “Purchase of treasury stock” of “Cash flows from financing
activities” in the consolidated statements of cash flows for the previous fiscal year is reclassified as “Other.”- 12 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
3. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all the periods presented in these consolidated financial
statements and have been applied consistently by the Consolidated Group.

(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities which are controlled by the Consolidated Group. The Consolidated Group controls an entity when it is
exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. When the Consolidated Group holds more than half of the voting rights of another entity,
such entity is included in the subsidiaries of the Consolidated Group as it is determined that control exists, unless it can beclearly demonstrated that such ownership does not constitute control. In addition, even when the Consolidated Group holds
only half or less of the voting rights of another entity, such entity is included in the subsidiaries of the Consolidated Group if it
is determined through agreements with other investors that the Consolidated Group has control over such entity’s financial andoperating policies and thus has the ability to affect returns from such entity.
The financial statements of subsidiaries are included in the consolidated financial statements of the Consolidated Group fromthe date the Consolidated Group obtains control of the subsidiaries until the date it loses such control of the subsidiaries. Whenthe accounting policies adopted by the subsidiaries are different from those adopted by the Consolidated Group and thedifference is considered material, the financial statements of the subsidiaries are adjusted as necessary.
Changes in the Consolidated Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. The Company recognizes directly in equity any difference between the amounts by which the non-controllinginterests are adjusted, and the fair value of the consideration paid or received, and attribute it to the owners of the Company.
If the Consolidated Group loses control of a subsidiary, the Consolidated Group derecognizes the assets and liabilities of theformer subsidiary, and any non-controlling interests and other components of equity related to the former subsidiary. Any
gains or losses arising from such loss of control are recognized in profit or loss. If the Consolidated Group retains any interestin the former subsidiary after the control is lost, such interest is measured at fair value at the date that control is lost.
2) Associates and joint ventures
Associates are those entities over which the Consolidated Group has significant influence, where significant influence isdefined as the power to participate in the financial and operating policy decisions of the entities but is not control or joint
control of those entities. If the Consolidated Group holds between 20 percent and 50 percent of the voting rights of each thoseentities, it is presumed that the Consolidated Group has significant influence over each of those entities.
Even if the Consolidated Group holds less than 20 percent of the voting rights of another entity, such entity is included in theassociates of the Consolidated Group as long as it is determined that the Consolidated Group has significant influence over theentity through the dispatch of the board members, the shareholders’ agreement or the like.
Joint ventures are those entities with respect to which multiple parties, including the Consolidated Group, have joint control
over the economic activities by contract and unanimous consent of all of such parties is required when deciding on the relevant
activities, whereby the Consolidated Group has rights to the net assets of the arrangement.
Except for those that are classified as assets held for sale in accordance with IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations, investments in associates and joint ventures (“equity method investee”) are measured at the carrying
amount following the application of the equity method (including goodwill recognized at the time of acquisition) less any
accumulated impairment losses.
The consolidated financial statements include the Consolidated Group’s share of profit or loss and other comprehensive
income of the associates and joint ventures from the date the Consolidated Group obtains significant influence or joint control
until the date it loses such significant influence or joint control. When the accounting policies adopted by the equity method
investees are different from those adopted by the Consolidated Group, the financial statements of the equity method investees
are adjusted as necessary.

- 13 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
3) Business combinations
Business combinations are accounted for using the acquisition method. The Consolidated Group recognizes goodwill as thesum of the fair value of the consideration transferred, the amounts of any non-controlling interests in the acquiree and the fairvalue of the acquirer’s previously held equity interest in the acquiree measured at the acquisition date; less the net of theacquisition-date amounts of the identifiable assets acquired and the liabilities assumed (generally measured at fair value).
When such difference results in a negative balance, it is immediately recognized in profit or loss. Non-controlling interests aremeasured either at fair value or at the non-controlling interests’ proportionate share in the recognized amounts of theacquiree’s identifiable net assets. The measurement method to be applied at the acquisition date is determined on a transactionby-transaction basis. Acquisition-related costs, which are costs that the Consolidated Group incurs to effect a businesscombination (excluding costs to issue debt or equity securities), are accounted for as expenses in the periods in which the costs
are incurred, and thus not included in the cost of goodwill. In a business combination achieved in stages, the Consolidated
Group remeasures its previously held equity interest in the acquiree at its acquisition-date fair value and recognizes any gains
or losses arising from such remeasurement in profit or loss. Changes in the value of the Consolidated Group’s equity interestin the acquiree that had been recognized in other comprehensive income prior to the acquisition date are recognized in profit orloss, or other comprehensive income, on the same basis as would be required if the Consolidated Group had disposed of thepreviously held equity interest.
4) Transactions eliminated in consolidation
Intragroup balances and transactions, as well as any unrealized gains and losses arising from intragroup transactions, areeliminated when preparing the consolidated financial statements.

(2) Foreign currency translation
1) Translation of foreign currency transactions
Foreign currency transactions are translated into functional currencies of individual companies using the exchange rates at thedates of such transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign
currencies are translated into functional currencies using the exchange rate at the end of each reporting period. Exchange
differences on monetary items are recognized in profit or loss in the period in which they arise. Non-monetary items that aremeasured on a historical cost basis in a foreign currency are translated into the functional currency using the exchange rate at
the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated into thefunctional currency using the exchange rates at the date when the fair value was measured.
With respect to the exchange differences of a non-monetary item, when a gain or loss on a non-monetary item is recognized inother comprehensive income, the Consolidated Group recognizes any exchange component of that gain or loss in othercomprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, theConsolidated Group recognizes any exchange component of that gain or loss in profit or loss.
2) Translation of foreign operations
The assets and liabilities of foreign operations, including any goodwill and fair value adjustments arising on the acquisition offoreign operations, are translated using the exchange rate at the end of the reporting period. In addition, income and expenses
of foreign operations are translated using the average exchange rate for the reporting period unless exchange rates fluctuatesignificantly.
Exchange differences arising from the translation are recognized in other comprehensive income and the cumulative amountsof the exchange differences are included in other components of equity. When the Consolidated Group’s foreign operations aredisposed of, the cumulative amounts of the exchange differences related to foreign operations are reclassified to profit or loss
when the gain or loss on disposal is recognized.

(3) Cash and cash equivalents
Cash and cash equivalents are comprised of cash on hand; demand deposits; and short-term, highly liquid investments with amaturity of three months or less from the date of acquisition that are readily convertible to known amount of cash and which
are subject to an insignificant risk of changes in value.

(4) Inventories
Inventories are measured at the lower of cost determined by the moving-average method and net realizable value.

- 14 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(5) Property, plant and equipment
The Consolidated Group uses the cost model to measure an item of property, plant and equipment after initial recognition andcarries it at its cost less any accumulated depreciation and any accumulated impairment losses. The cost of property, plant andequipment include the cost directly attributable to the acquisition of the asset.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful life of each component
thereof. The ranges of principal estimated useful lives are approximately presented as follows:
Buildings and structures:
3 to 50 years
Machinery, vehicles, tools, furniture & fixtures: 2 to 20 years
Right-of-use assets are fully depreciated over the shorter of the lease term and their estimated useful lives if there is no
reasonable certainty that the Consolidated Group will obtain ownership by the end of the lease term.
The depreciation method, useful life and residual value of an asset are reviewed at least at the end of each reporting period andamended as necessary.

(6) Goodwill and intangible assets
1) Goodwill
Goodwill is carried at cost less any accumulated impairment losses.
2) Intangible assets
The Consolidated Group uses the cost model to measure an intangible asset after initial recognition and carries it at its cost lessany accumulated amortization and any accumulated impairment losses.
A separately acquired intangible asset is initially recognized and measured at cost. The cost of an intangible asset acquired in abusiness combination is its fair value at the acquisition date. With respect to an internally generated intangible asset that does
not qualify for asset recognition, expenditures on such an internally generated intangible asset are recognized as expenses
when they are incurred. Conversely, the cost of an internally generated intangible asset that qualifies for asset recognition is
the sum of expenditures incurred from the date when it first meets the recognition criteria.
An intangible asset with a finite useful life is amortized using the straight-line method over its estimated useful life. The
Consolidated Group’s intangible assets with finite useful lives are comprised mainly of software whose estimated useful life is
5 years.
The amortization method, useful life and residual value of an intangible asset with a finite useful life are reviewed at the end ofeach reporting period and amended as necessary.
Certain intangible assets with indefinite useful lives such as carrier shop operating rights are not amortized, but instead tested
for impairment based on the cash-generating unit at least once a year and whenever there is an indication that they may be
impaired.

(7) Impairment of non-financial assets
The Consolidated Group assesses at the end of each reporting period whether there is any indication that an asset may be
impaired. If any such indication exists, it estimates the recoverable amount of the asset or the cash-generating unit to which theasset belongs. Goodwill and an intangible asset with an indefinite useful life are tested for impairment annually and whenever
there is an indication that such assets may be impaired. If the carrying amount of an individual asset or the cash-generating unit
exceeds its recoverable amount, the carrying amount of the asset is reduced to its recoverable amount and that reduction isrecognized as an impairment loss.
The Consolidated Group assesses at the end of each reporting period whether there is any indication that an impairment loss
recognized in prior fiscal years for an asset other than goodwill may no longer exist or may have decreased. If any such
indication exists, the Consolidated Group will estimate the recoverable amount of that asset. If the recoverable amount exceeds
the carrying amount of that asset or the cash-generating unit to which the asset belongs, the carrying amount is increased to its
recoverable amount, which is, however, limited up to the carrying amount that would have been determined (net ofamortization or depreciation) had no impairment loss been recognized for the asset in prior fiscal years; and that increase isrecognized as a reversal of an impairment loss. An impairment loss recognized for goodwill is not reversed in a subsequent
period.
In addition, because goodwill that forms part of the carrying amount of an investment in an equity method investee is notseparately recognized, it is not tested for impairment separately. If it is indicated that the investment in an equity method
investee may be impaired, the entire carrying amount of the investment is tested for impairment as a single asset, by comparing
its recoverable amount with its carrying amount.
- 15 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(8) Financial instruments
1) Financial assets
The Consolidated Group classifies financial assets at initial recognition as financial assets measured at fair value through profit
or loss, financial assets measured at fair value through other comprehensive income or financial assets measured at amortizedcost. The Consolidated Group initially recognizes financial assets measured at amortized cost on the date that they arise andthe other financial assets on the transaction date.
The Consolidated Group derecognizes a financial asset when, and only when (a) the contractual rights to cash flows from thefinancial asset expire, or (b) it transfers the contractual rights to cash flows and substantially all the risks and rewards ofownership of the financial asset.
(ⅰ) Financial assets measured at amortized cost
A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost:
・The financial asset is held within a business model whose objective is to hold financial assets in order to collectcontractual cash flow and,・The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
The Consolidated Group initially recognizes and measures a financial asset measured at amortized cost at its fair value
plus any transaction costs directly attributable to the acquisition of the financial asset. The Consolidated Group
subsequently measures it at amortized cost using the effective interest method.
(ⅱ) Financial assets measured at fair value through other comprehensive income(a) Debt instruments
Debt instruments that meet both of the following conditions is classified as a financial asset measured at fair value
through other comprehensive income:・The financial asset is held within a business model whose objective is achieved by both collecting contractual cash
flow and selling financial assets and,・The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.
The Consolidated Group initially recognizes and measures a financial asset measured at fair value through othercomprehensive income at its fair value plus any transaction costs directly attributable to the acquisition of the financial
asset. The Consolidated Group subsequently measures it at fair value and recognizes the subsequent changes in fairvalue as other comprehensive income. When the financial asset is derecognized, the cumulative gain or loss isreclassified to profit or loss.
(b) Equity instruments
With regard to a financial asset that has classified as a financial asset measured at fair value through profit or loss, IFRS
9 permits an entity to make an irrevocable election to present in other comprehensive income changes in fair value of
an investment in an equity instrument that is not held for trading. The Consolidated Group makes this election on an
instrument-by-instrument basis.
The Consolidated Group initially recognizes and measures an equity instrument measured at fair value through othercomprehensive income at its fair value plus any transaction costs directly attributable to the acquisition of the financial
asset. The Consolidated Group subsequently measures it at fair value and recognizes the subsequent changes in fairvalue as other comprehensive income. When the equity instrument is derecognized, or its fair value substantiallydecreases, the Consolidated Group reclassifies the cumulative amount of other comprehensive income to retained
earnings and not to profit or loss. Dividends are recognized in profit or loss unless the dividend clearly represents a
recovery of part of the cost of the investment.
(ⅲ) Financial assets measured at fair value through profit or loss
A financial asset other than those classified as (ⅰ), (ⅱ) and (ⅲ) above is classified as a financial asset measured at fairvalue through profit or loss.
The Consolidated Group initially recognizes and measures a financial asset measured at fair value through profit or loss at
its fair value and expenses the transaction costs as incurred that are directly attributable to the acquisition of the financial
asset. The Consolidated Group subsequently measures it at fair value and recognizes the subsequent changes in fair value
in profit or loss.

- 16 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Impairment of financial assets
The Consolidated Group assesses impairment of financial assets measured at amortized cost and financial assets measured atfair value through other compressive income based on the expected credit loss approach.
If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, theConsolidated Group measures the loss allowance for that financial instrument at an amount equal to the 12-month expectedcredit losses, i.e., the expected credit losses that result from default events on that financial instrument that are possible within
the 12-months after the reporting date. Conversely, if, at the reporting date, the credit risk on that financial instrument has
increased significantly since initial recognition, the Consolidated Group measures the loss allowance for that financial
instrument at an amount equal to the lifetime expected credit losses, i.e., the expected credit losses that result from all possible
default events over the expected life of that financial instrument.
However, the Consolidated Group always measures the loss allowance for trade receivables, contract assets and leasereceivables at an amount equal to the lifetime expected credit losses despite the above requirement.
If there is any objective evidence that financial assets are credit-impaired, such as a borrower’s significant financial difficulty,
a breach of contract of default or delinquency by the borrower, etc., the Consolidated Group measured interest income to net
carrying amount after deducting loss allowance following the effective interest method.
Detailed information on the assessment of significant increases in credit risk and the measurement of expected credit losses isprovided in Note 30. Financial Instruments: (3) Credit risk management.
3) Financial liabilities
The Consolidated Group classifies financial liabilities at initial recognition as financial liabilities measured at fair value
through profit or loss or financial liabilities measured at amortized cost. The Consolidated Group initially recognizes financial
liabilities measured at amortized cost on the date that they arise and the other financial liabilities on the transaction date.
The Consolidated Group derecognizes financial liabilities when they are extinguished, i.e., when obligations specified under acontract is discharged, cancelled or expires.
(ⅰ) Financial liabilities measured at amortized cost
The Consolidated Group classified financial liabilities, other than financial liabilities measured at fair value through profit
or loss, as financial liabilities measured at amortized cost. The Consolidated Group initially recognizes and measures afinancial liability measured at amortized cost at its fair value less any transaction costs directly attributable to incurring of
the liability, and subsequently measures it at amortized cost using the effective interest method.
(ⅱ) Financial liabilities measured at fair value through profit or loss
The Consolidated Group initially recognizes and measures a financial liability measured at fair value through profit orloss at its fair value, and subsequently measures it at fair value and recognizes subsequent changes in fair value in profit
or loss.
4) Derivatives and hedge accounting
In order to hedge the foreign currency fluctuation risk, interest rate fluctuation risk and commodity price fluctuation risk, theConsolidated Group enters into derivative transactions, such as forward exchange transactions, interest rate swap transactions
and commodity futures and forwards transactions.
When initiating a hedge, the Consolidated Group designates and documents the risk management purposes and strategies
regarding the hedge relationship and initiation of such hedge. Such documentation includes the designation of the hedging
instrument, the hedged item or transaction, the nature of the risk being hedged and methods of assessing the hedging
instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to thehedged risk. In addition, such hedging is assessed on an ongoing basis whether it was actually effective throughout thereporting periods was designated.
The Consolidated Group initially recognizes and measures derivatives at fair value and subsequently measures them at fairvalue and accounts for subsequent changes in fair value as follows:(ⅰ) Fair value hedge
The Consolidated Group recognizes the changes in fair value of a derivative used as a hedging instrument in profit or loss,
and the changes in fair value of a hedged item attributable to the hedged risk in profit or loss by adjusting the carrying
amount of the hedged item.

- 17 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅱ) Cash flow hedge
Of the changes in fair value of a derivative used as a hedging instrument, the portion determined to be effective isrecognized in other comprehensive income and the cumulative amount is included in other components of equity.
Conversely, the portion determined to be ineffective is recognized in profit or loss. The amounts accumulated in othercomponents of equity are reclassified from other components of equity to profit or loss in the same period that thetransaction of the hedged item affects profit or loss; provided, however, that if hedging of a forecast transaction
subsequently results in the recognition of a non-financial asset or liability, the amounts accumulated in other componentsof equity are then accounted for as an adjustment to the initial carrying amount of the non-financial asset or liability.
When the hedging instrument expires or is sold, terminated or exercised; or when the hedge no longer meets the criteria
for the hedge accounting, the Consolidated Group discontinues the hedge accounting prospectively. The amounts
accumulated in other components of equity remain in equity when hedge accounting is discontinued and are recognized in
profit or loss when the forecast transaction is recognized in profit or loss. However, if the forecast transaction is no longer
expected to occur, the amounts accumulated in other components of equity are reclassified immediately from othercomponents of equity to profit or loss.
(ⅲ) Derivatives not designated as hedging instruments
The Consolidated Group recognizes the changes in fair value of derivatives not designated as hedging instruments in
profit or loss.
5) Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount of such offset is presented in the consolidated statementsof financial position only when the Consolidated Group has a legally enforceable right to offset the recognized amounts andintends either to settle them on a net basis or realize the assets and settle the liabilities simultaneously.

(9) Provisions
The Consolidated Group recognizes a provision when, only when (a) the Consolidated Group has a present obligation (legal orconstructive) as a result of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation.
Where the effect of the time value of money is material, the Consolidated Group recognizes the provision by discounting it
using a current pre-tax discount rate that reflects the risks specific to the liability.

(10) Equity
When the Consolidated Group repurchases the shares of treasury stock, it is measured at cost and is presented as a deduction
from equity. Transaction costs directly attributable to the repurchase of the shares of treasury stock are deducted from capitalsurplus. When the Consolidated Group sells the shares of treasury stock, the consideration received is recognized as anincrease in equity.

(11) Revenue
1) Recognition of revenue
The Consolidated Group recognizes revenue from contracts with customers based on the following five-step approach.
Step 1: Identifying the contracts with customers
Step 2: Identifying the performance obligations in the contracts
Step 3: Determining the transaction price
Step 4: Allocating the transaction price to the performance obligations in the contracts
Step 5: Recognizing revenue when (or as) an entity satisfies the performance obligations
The Consolidated Group’s principal business is mainly to sell goods in its four segments of Electronics & Devices, Foods &Grain, Steel, Materials & Plant, and Motor Vehicles & Aerospace. It recognizes revenue from the sale of these goods at thetime when promised assets are delivered that is, because customers obtain control of the goods and the performanceobligations are satisfied at the time of delivery. In the provision of services, the Consolidated Group recognizes revenue inaccordance with the performance obligations that will be satisfied over time according to the progress of individual contracts.
The Consolidated Group also measures revenue at an amount obtained by deducting discounts, rebates and returned goods
from the promised consideration in the contract with the customer. If there is more than one identifiable performanceobligation in a single contract, the contract is divided into each performance obligations, and revenue is recognized for eachperformance obligation. In addition, if an economic reality is not presented unless multiple contracts are considered as one, theConsolidated Group recognizes revenue by combining the multiple contracts.
If the Consolidated Group receives the consideration from the customer before satisfying the performance obligations, theConsolidated Group recognizes it as a contract liability.
- 18 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Presentation of revenue
If the Consolidated Group conducts a transaction as a principal, the Consolidated Group presents revenue at the total amountof consideration received from the customer. If the Consolidated Group conducts a transaction as an agent for a third party, theConsolidated Group presents revenue at the net amount of the commission.
When the Consolidated Group determines whether it conducts a transaction as a principal or as an agent for a third party, theConsolidated Group takes the following indicators into account.
・Whether the other party is primarily responsible for fulfilling the premise.
・Whether the Consolidated Group has inventory risk both during shipping and upon return around the time when the customer
places an order for the goods.
・Whether the benefits that the Consolidated Group can obtain from the goods or services of the other party are limited becauseof the fact that the Consolidated Group does not have discretion in establishing the price for the goods or services of the otherparty.

(12) Finance income and finance costs
Finance income comprises interest income, dividend income, gain on sale of financial instruments and gain arising fromchanges in fair value of financial instruments. Interest income is recognized at the time of receipt by using the effective
interest method. Dividend income is recognized on the date when the Consolidated Group’s right to receive payment isestablished. Finance costs comprise interest expenses, loss on sale of financial instruments and loss arising from changes in thefair value of financial instruments.

(13) Employee benefits
1) Post-retirement benefits(ⅰ) Defined benefit plans
Defined benefit plans are retirement benefit plans other than defined contribution plans. Defined benefit obligations arecalculated separately for each plan by estimating the future amounts of benefits that employees will have earned in returnfor their services provided in the current and prior periods, and discounting such amounts in order to determine thepresent value. The fair value of any plan assets is deducted from the present value of the defined benefit obligations. The
discount rate is determined by reference to the market yields on highly rated corporate bonds at the fiscal year-end thathave maturity terms that are approximately the same as those of the Consolidated Group’s defined benefit obligations anduse the same currencies as those used for future benefits payments.
When the retirement benefit plans are amended, the change in defined benefit obligations related to past service by
employees is immediately recognized in profit or loss.
The Consolidated Group recognizes the changes in the net defined benefit liability (asset) due to remeasurements in othercomprehensive income and immediately reclassifies them to retained earnings.
(ⅱ) Defined contribution plans
Defined contribution plans are retirement benefit plans under which an employer pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further contributions. The obligations already paid or to be
paid as contributions under the defined contribution plans are recognized as expenses in the period in which theemployees render the related services.
2) Other long-term employee benefits
The Consolidated Group recognizes obligations for long-term employee benefits other than post-employment benefits as aliability by estimating the amounts as of the reporting date that will be paid to the employees in return for their services
without discounting that amounts unless it is material.
3) Short-term employee benefits
The Consolidated Group recognizes short-term employee benefits as a liability and an expense by estimating the amounts thatwill be paid to the employees in return for their services without discounting those amounts. The Consolidated Group
recognizes bonuses to be paid pursuant to the bonus system as a liability when it has present legal or constructive obligations
to pay as a result of past employee service, and when the amounts of the obligations can be estimated reliably.

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KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(14) Income taxes
Income tax expenses comprises current tax expense and deferred tax expense. The Consolidated Group recognizes them in
profit or loss, except when they arise from items that are recognized in other comprehensive income or directly equity, andfrom business combinations.
Current tax expense is measured by the expected taxes receivable from or taxes payable to tax authorities, and the tax rates or
tax laws that are used to calculate the tax amount are those that have been enacted or substantially enacted by the end of the
fiscal year.
The Consolidated Group recognizes deferred tax assets and deferred tax liabilities for temporary differences between the
carrying amount of an asset and liability in the statements of financial position and its tax base, the unused tax losses carriedforward and unused tax credits carried forward. The amounts of deferred tax assets and deferred tax liabilities are calculated
by applying the expected tax rate or tax law applicable as of the period in which assets are realized or liabilities are settled inaccordance with a statutory tax rate or a substantially enacted statutory tax rate and the tax law as of the fiscal year-end. The
Consolidated Group does not recognize deferred tax assets and deferred tax liabilities in the following cases:
・when taxable temporary differences arise from the initial recognition of goodwill;・when they arise from the initial recognition of an asset or a liability in a transaction which is not a business combination; andon the transaction date, affects neither accounting profit nor taxable profit (tax loss); or,・with respect to taxable temporary differences associated with investments in subsidiaries and associates, when theConsolidated Group is able to control the timing of the reversal of the temporary differences; and it is probable that thetemporary differences will not reverse in the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset only when the Consolidated Group has a legally enforceable right to
set off the current tax assets against current tax liabilities, and, such deferred tax assets and liabilities relate to income taxes
levied on the same taxation entity. However, even in the case of different taxable entities, the Consolidated Group can set off if
the tax taxable entities intend either to settle current tax liabilities and assets on a net bases, or to realize the assets and settle
the liabilities simultaneously. Deferred tax assets are recognized for deductible temporary differences, the unused tax losses
carried forward and unused tax credits carried forward to the extent that it is probable that they can be used against futuretaxable profit. The carrying amounts of deferred tax assets are reassessed at each fiscal year-end, and such carrying amountwill be reduced to the extent it is no longer probable that related tax benefits from such assets will be realized. Unrecognizeddeferred tax assets are also reassessed at the end of each reporting period and are recognized to the extent that it is probablethat future taxable profit will be available to recover the deferred tax assets.
The Company and its wholly owned domestic subsidiaries apply the consolidated tax payment system, by which the Company
and its wholly owned domestic subsidiaries are allowed to file a tax return and pay the corporation tax as a consolidated tax
filing group.

(15) Leases
At inception of a contract, the Consolidated Group assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange forconsideration. For a contract that is, or contains, a lease, the Consolidated Group recognizes the lease liability and the right-ofuse asset.
Lease liability is measured at the present value of discounted unpaid lease payments, using the interest rate implicit in the leaseor the Consolidated Group’s incremental borrowing rate, at the commencement date of the lease contract. After thecommencement date, the lease liability is measured by increasing or reducing the carrying amount to reflect interest rate andlease payments made. In addition, if there is a revision to the lease term or a change in the assessment of an option, leaseliability is remeasured to be reflected in the carrying amount. The lease term is determined by taking into consideration an
option to terminate the lease and an option to extend the lease term during the non-cancellable period of the lease.
A right-of-use asset is measured at the acquisition cost that adjusts the initial measurement amount of lease liability on thecommencement date of the lease contract mainly for initial direct costs and expenses for restoration to the condition requiredby the terms and conditions of the lease, and it is depreciated by the straight-line method over the shorter of the estimateduseful life and the lease term.
For short-term leases with a lease term of 12 months or less, the Consolidated Group does not recognize lease liability and aright-of-use asset by applying recognition exemption, and recognizes them as expenses on a straight-line basis over the leaseterm.

- 20 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
When the Consolidated Group is the lessor, it classifies each of its leases as either an operating lease or a finance lease, andaccounts as follows:
1) Finance lease
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an underlying asset.
At the commencement date of the lease, the Consolidated Group recognizes assets held under a financial lease in its
consolidated statement of financial position and presents them as a receivable at an amount equal to net investment in thelease.
2) Operating lease
An operating lease is a lease other than a finance lease. The Consolidated Group presents the assets subject to the operatinglease in its consolidated statement of financial position and recognizes lease payments from operating leases as income oneither a straight-line basis or another systematic basis.

(16) Share-based payments
The Consolidated Group introduces a performance-linked stock compensation plan as an incentive plan for its Directors andExecutive Officers. The equity-settled share-based payment plan measures at the fair value on the date of grant, recognizing it
as an expense from the date of grant through the vesting period and recognizing the same amount as an increase in capitalsurplus.

4. Standards and Interpretations issued but not yet adopted
There were no newly issued or amended standards and interpretations, which were publicly announced prior to the date of theauthorization for issuance of the consolidated financial statements and have material effects on the financial statements of theConsolidated Group.

5. Business Combinations
No major business combinations took place in the fiscal year under review (from April 1, 2020 to March 31, 2021) and theprevious fiscal year (from April 1, 2019 to March 31, 2020).

- 21 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
6. Revenue(1) Disaggregation of revenue
As disclosed in Note 7 Segment information, the Consolidated Group has four reportable segments: Electronics & Devices,
Foods & Grain, Steel, Materials & Plant and Motor Vehicles & Aerospace. In addition, the Consolidated Group disaggregatesrevenue in Electronics & Devices recognized from contracts with customers into three categories: ICT solutions, Mobile andOthers. Similarly, revenue in Steel, Materials & Plant is disaggregated into Energy and Others. The reconciliations of thedisaggregated revenue with the group’s sales components are as follows.
The accounting methods for the revenue are consistent with those stated in Note 3. Significant Accounting Policies.
JPY
USD
2021

2020

2021

Electronics & Devices
63,62670,176

574,715

102,866

118,059

929,155

OthersFoods & Grain

59,292
244,617

66,076
251,403535,566
2,209,532

Steel, Materials & Plant
Energy43,666

62,577394,423

OthersMotor Vehicles & Aerospace

53,16370,987

67,27374,539480,201
641,206

638,220

710,1075,764,798

10,497

11,41894,822648,718

721,526

5,859,620

423

275

3,827

Total
649,142
721,802(Note) Revenue arising from other sources includes revenue recognized in accordance with IFRS 16 "Lease".

5,863,447

ICT solution
MobileTotal reportable segment
OthersTotal revenue arising from contracts with customers
Revenue arising from other sources(2) Contract balances
Information on receivables from contracts with customers, contract assets and liabilities arising from contracts with customers
are as follows:
JPY
USD
2021

Receivables from contracts
with customers

2020

2021

As of April 1,

As of March 31,

As of April 1,

As of March 31,

As of March 31,

2020

2021

2019

2020

2021

198,434

199,116

222,551

198,434

1,798,537

Contract assets

12

17

7

12

157

Contract liabilities

9,289

10,152

11,273

9,289

91,702Contract assets primarily relate to the Consolidated Group’s rights to receive consideration for performance obligations thathave been completed, but not yet billed for, as of the reporting date and they are reclassified as receivables when theConsolidated Group’s rights to payment becomes unconditional.
Contract liabilities are mainly consideration for performance obligation satisfied over time in maintenance and warranty withservice and they are reclassified as revenue according to maintenance period or satisfaction of performance obligation. In
addition, the Consolidated Group recognizes as a contract liability that already received a part of consideration upon delivery of
goods. Of the revenue recognized in the current fiscal year, ¥5,289 million ($47,780 thousand) was included in the balance ofcontract liabilities as of April 1, 2020. There are no significant amounts of revenue recognized during the year ended March 31,
2021 from performance obligations satisfied in the prior fiscal year. The increase of contract liabilities is included in a
reduction of other from operating activities in the Consolidated Statement of Cash Flows.

- 22 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(3) Transaction price allocated to the remaining performance obligations
Transaction price allocated to the remaining performance obligations are as follows. It`s not included expected transactions
term within one years.
JPY
USD
2021

2020

2021

Within one year

11,137

9,939

100,602

Over one years

2,552

7,812

23,057

Total
13,69017,752
123,659(Note) The transaction for remaining performance transaction by over one year is mainly sales of goods as of year ended March 31,
2021 and March 31, 2020, and the performance obligation is satisfied within six years.

(4) Assets recognized from the costs of obtaining or fulfilling contracts with customers
There are no assets recognized from the costs of obtaining or fulfilling contracts with customers as of the year ended March 31,
2021 and March 31, 2020. In addition, if the amortization period of the assets that the group otherwise would have recognizedis one year or less, the group applies the practical expedient of recognizing the incremental costs of obtaining the contract as an
expense when incurred.

- 23 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
7. Segment Information(1) Overview of Reportable Segments
The reportable segments of the Consolidated Group are components of the Consolidated Group for which discrete financial
information is available and are reviewed by the Board of Directors of the Company normally and regularly assesses its
business performance and examines the allocation of management resources.
The Consolidated Group offers a broad array of merchandise and services, using expertise in each business field and trading
function from Japan and its international network. Trading functions include commercial trade, information gathering, market
development, business development and arrangement, risk management and logistics.
The Consolidated Group therefore consists of merchandise and service segments based on its business units: “Electronics &Devices”, “Foods & Grain”, “Steel, Materials & Plant”, and “Motor Vehicles & Aerospace”.
The principal merchandise and services handled by each segment are presented as follows:(Electronics & Devices)
The Electronics & Devices segment provides a wide range of products including electronic parts and components,
semiconductor and LCD manufacturing equipment, materials and indirect materials related to electronics, coupled with
development and proposal services. This segment also deals with mobile communications terminals, mobile internet systems,
and information and telecommunication equipment and security equipment and services.
(Foods & Grain)
The Foods & Grain segment integrates the handling of a broad array of food and foodstuffs, with operations ranging fromsourcing raw materials reliably to providing food and foodstuffs, including high value-added products. Merchandise in thissegment includes cooked foods, processed fruits, processed agricultural products, beverage ingredients, animal and fisheryproducts, wheat, rice, soybeans, feedstuff and pet foods.
(Steel, Materials & Plant)
The Steel, Materials & Plant segment operates the domestic and international trade of general steel products including steel
plates, bars and wire rods, pipes, and stainless products, carries out overseas projects such as plant and infrastructuredevelopment, and sells machine tools and industrial machinery. Additionally, this segment operates the domestic andinternational trade of crude oil, petroleum products, LPG, functional chemicals and food products, pharmaceuticals andpharmaceutical intermediates, and other products. It also operates businesses related to environmental and emissions rights.
(Motor Vehicles & Aerospace)
The Motor Vehicles & Aerospace segment primarily operates international trade of aircrafts, helicopters, satellite- andaerospace-related products, automobiles, motorcycles, industrial vehicles and related parts, etc., and also provides productswith added value based on demand or use.

(2) Information on reportable segments
The accounting methods for the reportable operating segments are consistent with those stated in Note 3. Significant
Accounting Policies. Inter-segment revenue and transfers are based on the transaction prices to external customers.
Profit figures for reportable segments were based previously on operating profit, but the measurement method has changed
starting from the current fiscal year, taking into consideration comparability with other management indicators. Profit ofreportable segments after the change is profit attributable to owners of the parent. Profit figures for reportable segments for theprevious consolidated fiscal year are also presented consistently with this new measurement method.

- 24 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)(JPY)
Reportable segment
Electronics &Devices

Foods &
Grain

Steel,
Materials &
Plant

Motor
Vehicles &Aerospace

226,109287

244,6171

96,831
36

71,086
5

Others(Note 1)

Adjustment(Note 2)

638,644331

10,497208(540)

649,142－

Total

Consolidated

Revenue
External
Inter-segment
Total revenue－

226,397244,618

96,86871,092638,976

10,706(540)

649,142

Operating profit (loss)

17,575

1,498

1,840

2,055

22,969696(30)

23,635

Segment profit (loss)

8,484

1,495

2,060

1,497

13,538380(603)

13,315

6,194

1,513

2,600

923

11,231336(12)

11,555

(25)

20

463

33

492

199

－

692

202,908

129,747

128,550

48,436509,643

12,50835,343

557,495

337

1,777

6,449

372

8,936

2,935

(2)

11,869

2,107

550

1,826

251

4,736

1,222

452

6,411

Other profit or loss:
Depreciation and amortization
Share of profit (loss) of investments
accounted for using the equity method
Segment assets
Other assets:
Investments accounted for using theequity method
Capital expenditures (Note 3)(USD)
Reportable segment

Revenue
External
Inter-segment
Total revenue

Others(Note 1)

Adjustment(Note 2)

Electronics &Devices

Foods &
Grain

Steel,
Materials &
Plant

Motor
Vehicles &Aerospace

2,042,357

2,209,532

874,643

642,093

5,768,625

94,822

－

2,600

10

330

54

2,995

1,886

(4,881)

5,863,447－

Total

Consolidated

2,044,957

2,209,542

874,973

642,147

5,771,620

96,708(4,881)

5,863,447

Operating profit (loss)

158,757

13,532

16,62018,567

207,476

6,288

(275)

213,490

Segment profit (loss)

76,63813,50918,611

13,529122,287

3,435(5,450)120,272

55,950

Other profit or loss:
Depreciation and amortization
Share of profit (loss) of investments
accounted for using the equity method
Segment assets

13,67023,485

8,343

101,448

3,040

(112)

104,376

(227)

186

4,186

304

4,448

1,802

－

6,251

1,832,790

1,171,961

1,161,148

437,5074,603,406

112,986

319,247

5,035,640

Other assets:
Investments accounted for using theequity method
Capital expenditures (Note 3)

3,045

16,05558,252

3,368

80,72026,514(24)

107,209

19,033

4,976

16,4982,276

42,782

11,042

4,090

57,914(Notes) 1. The “Others” column is an operating segment that is not included in the reportable segments and includes the logistics
and insurance service business and the geographic improvement business.
2. Adjustments are presented as follows:(1) Adjustment for operating profit (loss) of ¥(30) million ($(275) thousand) includes inter-segment elimination of ¥(30)
million ($(275) thousand).
(2) Adjustment for segment profit (loss) of ¥(603) million ($(5,450) thousand) includes inter-segment elimination of ¥(25)
million ($(228) thousand) and corporate costs of ¥(578) million ($(5,222) thousand) that are not allocated to any
reportable segment. The corporate costs consist mainly of difference between deferred income tax that are arising in
the Company's and deferred income tax that are allocated to any reportable segment by calculation.
(3) Adjustment for segment assets of ¥35,343 million ($319,247 thousand) includes inter-segment elimination of¥(10,165) million ($(91,825) thousand) and corporate assets of ¥45,509 million ($411,072 thousand) that are notallocated to any reportable segment. The corporate assets consist mainly of cash and bank deposits associated withfinancing activities and assets such as investment securities.
(4) Adjustment for depreciation and amortization of ¥(12) million ($(112) thousand) includes inter-segment elimination of¥(12) million ($(112) thousand).
(5) Adjustment for investments accounted for using the equity method of ¥(2) million ($(24) thousand) includes intersegment elimination of ¥(2) million ($(24) thousand).
(6) Adjustment for capital expenditures of ¥452 million ($4,090 thousand) includes inter-segment elimination of ¥(48)
million ($(434) thousand) and corporate assets of ¥500 million ($4,525 thousand) that are not allocated to any
reportable segment. The corporate assets consist mainly of lease equipment for information systems of the subsidiary.
3. Capital expenditures do not include right-of-use assets.
- 25 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020)(JPY)
Reportable segment
Electronics &Devices

Foods &
Grain

Steel,
Materials &
Plant

Motor
Vehicles &Aerospace

254,516414

251,4032

129,858
94

74,605
8

Others(Note 1)

Adjustment(Note 2)

710,383518

11,418215(734)

721,802－

Total

Consolidated

Revenue
External
Inter-segment
Total revenue－

254,930

251,406

129,952

74,613710,902

11,634(734)

721,802

Operating profit (loss)

18,963

2,381

3,819

2,383

27,547819(14)28,352

Segment profit (loss)

9,328

1,254

2,255

1,666

14,505290(396)

14,399

5,021

1,392

1,809

697

8,920

275

(18)

9,176

(35)

62

180

38

246

143

－

389

201,979

127,143

122,767

54,030505,921

11,21534,534

551,671

399

1,616

2,676

362

5,055

2,453

(2)

7,506

2,006

580

1,249

3,701

7,537

304

653

8,495

Other profit or loss:
Depreciation and amortization
Share of profit (loss) of investments
accounted for using the equity method
Segment assets
Other assets:
Investments accounted for using theequity method
Capital expenditures (Note 3)(Notes) 1. The “Others” column is an operating segment that is not included in the reportable segments and includes the logistics
and insurance service business and the geographic improvement business.
2. Adjustments are presented as follows:(1) Adjustment for operating profit (loss) of ¥(14) million includes inter-segment elimination of ¥(14) million.
(2) Adjustment for segment profit (loss) of ¥(396) million includes inter-segment elimination of ¥(17) million andcorporate costs of ¥(379) million that are not allocated to any reportable segment.
(3) Adjustment for segment assets of ¥34,534 million includes inter-segment elimination of ¥(13,618) million andcorporate assets of ¥48,153 million that are not allocated to any reportable segment. The corporate assets consist
mainly of cash and bank deposits associated with financing activities and assets such as investment securities.
(4) Adjustment for depreciation and amortization of ¥(18) million includes inter-segment elimination of ¥(18) million.
(5) Adjustment for investments accounted for using the equity method of ¥(2) million includes inter-segment eliminationof ¥(2) million.
(6) Adjustment for capital expenditures of ¥653 million includes inter-segment elimination of ¥(53) million and corporate
assets of ¥706 million that are not allocated to any reportable segment. The corporate assets consist mainly of leaseequipment for information systems of the subsidiary.
3. Capital expenditures do not include right-of-use assets.

(3) Information on products and services
The information on products and services is disclosed in Note 6. Revenue.

- 26 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(4) Geographic information
1) External revenue
JPY
2021

USD
2020

2021

Japan
Asia

542,498
48,336593,346
53,3234,900,180
436,603

North America
Europe38,403
13,32653,371
15,421

346,882
120,377

Others

6,576

6,338

59,404649,142

721,802

5,863,447

Total

Revenue is classified by country or region based on the locations of customers.
2) Non-current assets (excluding financial assets and deferred tax assets)
JPY
2021

USD
2020

2021

Japan

67,56465,075610,284

Asia
North America

1,571
8,212

1,621
7,270

14,194
74,176

EuropeOthers

3,134
33

3,569
32

28,311306

80,516

77,570727,272

Total(5) Information on major customers
There is no customer whose transaction amount is equal to or more than 10% of the Consolidated Group’s revenue during the
fiscal years ended March 31, 2021 and March 31, 2020.

- 27 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
8. Trade and Other Receivables
The breakdown of trade and other receivables is presented as follows:
JPY
2021

USD
2020

2021

Notes and accounts receivable
Loans receivable

199,116
3,064

198,434
3,150

1,798,537
27,683

Other
Less: loss allowance

8,437(2,052)6,807(2,043)76,212(18,537)

208,565

206,348

1,883,895

207,285

204,920

1,872,327

1,280

1,428

11,568208,565

206,348

1,883,895

Total
Current assets
Non-current assets
Total

Information on changes in loss allowance is provided in Note 30. Financial Instruments: (3) Credit risk management.

9. Inventories
The breakdown of inventories is presented as follows:
JPY
2021

USD
2020

2021

Merchandise and finished goods

96,344

97,037870,239

Raw materials and supplies

2,246

2,343

20,294Work in progress
Total

1,120

1,385

10,123

99,711

100,766

900,656

Inventory write downs that were recognized as expense during the fiscal year ended March 31, 2021 and March 31, 2020 are¥530,695 million ($4,793,562 thousand) and ¥592,233 million, respectively.
The reversals of inventory write downs that were recognized as gain during the fiscal years ended March 31, 2021 is ¥126 million($1,144 thousand), and the amounts of inventory write downs that were recognized as expense during the fiscal years ended March
31, 2020 is ¥1,140 million.

- 28 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
10. Property, Plant and Equipment(1) Changes in property, plant and equipment
Changes in costs, accumulated depreciation and accumulated impairment losses of property, plant and equipment are presented
as follows:[Costs](JPY)

As of March 31, 2019
Increases (decreases) due to adopting new
accounting standards
As of April 1, 2019
Acquisitions
Acquisitions through business combinations
Transfers from construction in progress
Disposals
Exchange differences
Other
As of March 31, 2020
Acquisitions
Acquisitions through business combinations
Transfers from construction in progress
Disposals
Exchange differences
Other
As of March 31, 2021

Machinery,
vehicles,Buildings andtools,
structures
furniture andfixtures15,56727,274

Construction Right-of-use
in progress
assets

Land

Total

8,301

544

－

51,688(367)(2,037)－－

19,072

16,667

15,199
1,043
679
351
(675)
(17)
(1,629)14,950
371
15
497
(379)
(10)
23
15,467

25,2364,699
42281(2,043)(160)(1,057)
26,9992,034
23
62(1,159)1308628,176

8,301
94
305
84
(16)
(7)
(236)
8,524
3
－
388
(22)
(7)
－
8,886

544
986
5
(717)
－
(10)
(8)
801
2,414
－
(948)
－
59
(93)
2,232

19,072
6,003
54－(1,355)(71)527
24,231
8,259
40－(5,160)61(120)
27,312

68,355
12,827
1,087－(4,091)(267)(2,404)75,507
13,08279－(6,721)
233(105)
82,076[Accumulated depreciation and accumulated impairment losses](JPY)

As of March 31, 2019
Increases (decreases) due to adopting new
accounting standards
As of April 1, 2019
Depreciation
Impairment losses
Disposals
Exchange differences
Other
As of March 31, 2020
Depreciation
Impairment losses
Disposals
Exchange differences
Other
As of March 31, 2021

Machinery,
vehicles,Buildings andtools,
structures
furniture andfixtures(8,830)(19,543)

Construction Right-of-use
in progress
assets

Land

Total

(1,224)－－(29,597)

121

1,343

－

－

(1,464)－(8,708)
(757)
(71)
636
9
1,072
(7,819)
(736)
－
278
(2)
11
(8,268)(18,200)(1,572)
(74)
935
89
40
(18,782)(1,842)
－
743
(92)
(3)
(19,978)(1,224)
－
(405)
－
(0)
－
(1,629)
－
(14)
－
(1)
－
(1,645)

－
－
－
－
－
－
－
－
－
－
－
－
－

(1,464)(5,934)
－
904
2
(27)
(6,519)(7,978)
(24)
4,595
(28)
18
(9,937)(29,597)(8,265)
(551)
2,476
101
1,085
(34,750)(10,557)
(39)
5,616
(124)
25
(39,829)- 29 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
[Carrying amount](JPY)

As of March 31, 2020
As of March 31, 2021

Machinery,
vehicles,Buildings andtools,
structures
furniture andfixtures
7,131
8,217
7,199

8,198

Construction Right-of-use
in progress
assets

Land

Total

6,895

801

17,71140,756

7,241

2,232

17,37542,246[Costs](USD)

As of March 31, 2020

Machinery,
vehicles,Buildings andtools,
structures
furniture andfixtures
135,045
243,876

Construction Right-of-use
in progress
assets

Land

Total

77,002

7,235

218,870682,028

Acquisitions
Acquisitions through business combinations

3,353
142

18,373210

27－

21,807－

Transfers from construction in progress
Disposals

4,492(3,427)560(10,469)

3,512
(204)

(8,565)－74,609367－

118,170719－(46,612)(60,713)

Exchange differences
Other

(97)
208

1,177
780

(65)
－

536
(847)

559
(1,093)

2,109
(952)

As of March 31, 2021

139,716

254,507

80,272

20,166

246,699

741,361[Accumulated depreciation and accumulated impairment losses](USD)

As of March 31, 2020
Depreciation

Machinery,
vehicles,Buildings andtools,
structures
furniture andfixtures(70,630)(169,654)

Total(14,720)－(58,885)(313,889)－－(72,063)(95,361)

6,711

(132)
－

－
－

(223)
41,511(355)
50,735

(20)
102

(836)
(36)

(10)
－

－
－

(261)
163

(1,126)229(74,690)(180,457)(14,863)－(89,758)(359,767)(6,655)－(16,643)－

2,513

Exchange differences
Other
As of March 31, 2021

Impairment losses
Disposals

Construction Right-of-use
in progress
assetsLand[Carrying amount](USD)

As of March 31, 2021

Machinery,
vehicles,Buildings andtools,
structures
furniture andfixtures65,02674,050Land

65,409Construction Right-of-use
in progress
assets
20,166

156,942

Total

381,593

The amounts of expenditures relating to property, plant and equipment under construction are presented in the table above as“Construction in progress”.
Depreciation for property, plant and equipment are included in “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statement of income.
The Consolidated Group has adopted IFRS 16 Leases from the previous fiscal year. The Consolidated Group has recognizedright-of-use assets for the lease contracts of the lessee that were classified as operating leases and expensed upon theiroccurrence in the past by IAS 17 Leases and has reclassified underlying assets into right-of-use assets for finance leases whichis recognized in the consolidated statements of financial position in the past.
- 30 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(2) Right-of-use assets
The breakdown of underlying assets is presented as follows:
JPY
2021

USD
2020

2021

Right-of-use assets for which buildings and structures are theunderlying asset

15,82815,915

142,975

Right-of-use assets for which machinery, vehicles, tools,
furniture and fixtures are the underlying asset

1,103

1,248

9,969

442

548

3,998

17,375

17,711

156,942

Other
Total

11. Goodwill and Intangible Assets(1) Goodwill
Costs, accumulated impairment losses and carrying amount.
Changes in costs, accumulated impairment losses and carrying amount of goodwill are presented as follows:[Costs]
JPY
2021
Balance at the beginning of the year

USD
2020

2021

11,654

10,160105,269

Acquisitions through business combinations
Exchange differences

265
38

2,400
347

Other

(311)

1,537
(43)
－

(2,815)

11,646

11,654105,201

Balance at the end of the year
[Accumulated impairment losses]

JPY
2021

USD
2020

2021

Balance at the beginning of the year
Impairment losses(1,349)－(1,349)－(12,193)－

Balance at the end of the year

(1,349)(1,349)(12,193)[Carrying amount]
JPY
2021
Carrying amount2020
10,296- 31 -

USD
2021
10,30493,008KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(2) Intangible assets
1) Changes in intangible assets
Changes in costs, accumulated amortization and accumulated impairment losses of intangible assets are presented as follows:[Costs](JPY)
Carrier shop
operating rights

Right-of-use
assets8,904

17,140－7,134

33,179

(32)

－

32

－

－

As of April 1, 2019

8,871

17,14032

7,134

33,179Acquisitions

1,039

－

25

7

1,071

23

－

－

4

27

Disposals

(228)

－

(19)

(9)

(257)

Exchange differences

(11)

－

0

(67)

(78)

Other

210

－

(3)

8

215

As of March 31, 2020

9,905

17,14033

7,078

34,158Acquisitions

Software
As of March 31, 2019
Increases (decreases) due to theapplication of new accounting standard

Acquisitions through businesscombinations

Other

Total

1,099

－

38

12

1,149

Acquisitions through businesscombinations

267

－

－

323

591

Disposals

(477)

－

－

(275)

(752)

Exchange differences

10

－

(0)

59

70

Other

338

－

－

478

816

11,143

17,14071

7,677

36,034As of March 31, 2021

- 32 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
[Accumulated amortization and accumulated impairment losses](JPY)
Carrier shop
operating rights

Right-of-use
assets(7,744)(234)－(2,148)(10,128)

28

－

(28)

－

－

(7,716)

(234)

(28)

(2,148)(10,128)

(437)

－

(1)

(472)

(911)

Impairment losses

－

－

－

(0)

(0)

Disposals

222

－

19

5

248

9

－

(0)

30

39

(17)

－

1

(8)

(24)

(7,939)

(234)

(8)

(2,593)(10,776)

Software
As of March 31, 2019
Increases (decreases) due to theapplication of new accounting standard
As of April 1, 2019
Amortization

Exchange differences
Other
As of March 31, 2020
Amortization

Other

Total

(469)

－

(6)

(522)

(998)

Impairment losses

(0)

－

－

(4)

(4)

Disposals

446

－

－

274

721

Exchange differences

(13)

－

0

(39)

(53)

Other
As of March 31, 2021

1

－

(1)

4

4

(7,975)

(234)

(16)

(2,881)(11,107)[Carrying amount](JPY)
Software

Carrier shop
operating rights

Right-of-use
assets

Other

Total

As of March 31, 2020

1,966

16,90624

4,484

23,382As of March 31, 2021

3,168

16,90655

4,796

24,926- 33 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
[Costs](USD)
Software

Carrier shop
operating rights

Right-of-use
assets

Other

Total

As of March 31, 2020

89,471

154,826305

63,940308,543

Acquisitions

9,929

－

345

111

10,385

2,420

－

－

2,922

5,343

(4,312)－－(2,486)(6,798)

97

－

(0)

540

637

3,054

－

－

4,319

7,373

100,659

154,826

650

69,347

325,482

Acquisitions through businesscombinations
Disposals
Exchange differences
Other
As of March 31, 2021

[Accumulated amortization and accumulated impairment losses](USD)
Carrier shop
operating rights

SoftwareRight-of-use
assets

Other

Total

As of March 31, 2020

(71,712)(2,119)(80)(23,430)(97,341)

Amortization(4,239)－(56)(4,720)(9,015)

(7)

－

－

(36)

(43)

Disposals

4,034

－

－

2,484

6,517

Exchange differences

(125)

－

0

(361)

(486)

11

－

(12)

38

36

(72,038)(2,119)(148)(26,027)(100,331)

Impairment losses

Other
As of March 31, 2021
[Carrying amount](USD)
Software
As of March 31, 2021

28,621

Carrier shop
operating rights

Right-of-use
assets152,708

502

Other
43,321

Total
225,151

There are no material internally-generated intangible assets as of March 31, 2021 and March 31, 2020.
Amortization expenses are included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated
statement of income.
The Consolidated Group has adopted IFRS 16 Leases (hereinafter "IFRS 16") from the previous fiscal year. The Consolidated
Group has recognized right-of-use assets for the lease contracts of the lessee that were classified as operating leases andexpensed upon their occurrence in the past by IAS 17 Leases and has reclassified underlying assets into right-of-use assets forfinance leases which is recognized in the consolidated statements of financial position in the past.

- 34 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Right-of-use assets
The breakdown of underlying assets is presented as follows:
JPY
2021

USD
2020

2021

Right-of-use assets for which software is the underlying assets

55

24

502

Total

55

24

502

(3) Impairment test of goodwill and intangible assets with indefinite useful lives
The Consolidated Group’s cash-generating units to which goodwill and intangible assets with indefinite useful lives has been
allocated are tested for impairment annually, and whenever there is an indication that such assets may be impaired. The
carrying amount of significant goodwill and intangible assets with indefinite useful lives allocated to the Consolidated Group’s
cash-generating units are as follows:
JPY
USD
2021

2020

2021

Goodwill
Electronics & Devices segment
Electronics business of the domestic subsidiaries

4,743

4,628

42,844

Mobile business of the domestic subsidiaries
Steel, Materials & Plant segment

2,129

2,098

19,237

Steel pipe business of the foreign subsidiaries

2,241

2,203

20,25016,906

16,906

152,708

Carrier shop operating rights
Electronics & Devices segment
Mobile business of the domestic subsidiaries

Impairment test of goodwill and intangible assets with indefinite useful lives is conducted in multiple cash-generating units.
The recoverable amounts of the Consolidated Group’s cash-generating units to which significant goodwill and intangible assets
with indefinite useful lives have been allocated were calculated based on its value in use forecast for up to five years and thegrowth rate that were approved by management. The cash-generating unit is the smallest identifiable group of assets thatgenerates cash inflows that are largely independent of the cash inflows from other assets or groups of assets, based on thenature and geographical location of the business.
In addition, the main assumptions used to determine the value in use was the estimation of gross profits, growth rates anddiscount rates. The growth rates are determined by considering the forecasts of the nominal GDP growth rates of the countries
in which such Consolidated Group’s cash-generating units are located and the average long-term growth rates of the markets orcountries to which the Consolidated Group’s cash-generating units operate. The cash-generating unit is the smallest identifiablegroup of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups ofassets, based on the nature and geographical location of the business.
The pre-tax discount rates which were used in calculating the value in use of the Consolidated Group’s cash-generating units towhich significant goodwill and carrier shop operating rights have been allocated are as follows:
2021

2020

Goodwill
Electronics & Devices segment
Electronics business of the domestic subsidiaries

7.1％

7.1％

Mobile business of the domestic subsidiaries

8.2％

8.3％

12.5％

12.7％

7.7％

7.7％

Steel, Materials & Plant segment
Steel pipe business of the foreign subsidiaries
Carrier shop operating rights
Electronics & Devices segment
Mobile business of the domestic subsidiaries- 35 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Also, it is highly unlikely to be impaired significantly even if major assumptions used for the impairment test would havechanged within a reasonable and predictable scope.
The contents of significant goodwill and intangible assets with indefinite useful lives are presented as follows:
Mobile business of the domestic subsidiaries
Goodwill and the carrier shop operating rights in the mobile business of the domestic subsidiaries were recognized uponacquisition of the mobile business by Kanematsu Communications Ltd., a consolidated subsidiary of the Company. For the
fiscal year ended March 31,2021, goodwill was recognized at ¥2,129 million ($19,237 thousand) and carrier shop operatingrights of ¥16,906 million ($152,708 thousand) were recognized. The purpose of the acquisition was to expand market share,
and the acquisition increased the size of the mobile business of the domestic subsidiaries on the consolidated financial
statements. In addition, the gross profit of the mobile business of domestic subsidiaries may fluctuate due to the uncertainty of
future earnings caused by changes in the external environment, such as amendments to the Telecommunications Business Act
and cell phone rate plan changes by mobile carriers. The carrier shop operating rights are rights to earn revenue by operating
mobile communications device distribution shops for specific carriers. The rights are identified as indefinite-lived intangible
assets because the intangible assets are considered to continue to exist as long as the business continues.
The value in use that used in the impairment test for goodwill and carrier shop operating rights is assessed using the present
value of cash flows based on five-year forecast and growth rates that reflect the most recent business environment.
Card printer business
Goodwill in the card printer business, one of the key business of the Electronics business of the domestic subsidiaries, wasrecognized as upon acquisition of G-Printec, Inc. For the fiscal year ended March 31,2021, goodwill was recognized at ¥2,485
million ($22,452 thousand). In addition, the gross profit of the card printer business of domestic subsidiaries may fluctuate dueto the uncertainty of future earnings since card printer business faces sales competition with overseas and domestic competitors,
and the overseas market, which is the main market, is exposed to changes in market conditions and trends in each country.
The value in use that used in the impairment test for goodwill is assessed using the present value of cash flows based on fiveyear forecast and growth rates that reflect the most recent business environment.
Steel pipe business of the foreign subsidiaries
Goodwill in the steel pipe business was recognized upon the acquisition of Benoit Premium Threading, LLC located in the
United States. For the fiscal year ended March 31, 2021, goodwill of ¥2,241 million ($20,250 thousand) was recognized. In
addition, the gross profit of the steel pipe business may fluctuate due to the uncertainty of future earnings since steel pipebusiness is greatly affected by international crude oil prices and trading volumes, and the volatility of long-term earnings
forecasts is relatively high.
The value in use used in the impairment test for goodwill is assessed using the present value of cash flows based on four-year
forecast and growth rates that reflect the most recent business environment.

- 36 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
12. Interests in Associates and Joint Ventures
There are no associates or joint ventures that are material to the Consolidated Group.
The aggregate amounts of interests in individually immaterial associates and joint ventures that are accounted for using the equity
method are presented as follows:[Aggregate carrying amount]
JPY
2021
Associates
Joint ventures

USD
2020

11,484
385

2021
7,316
189

103,7313,479[Profit or loss from continuing business]
JPY
2021
Associates
Joint ventures

USD
2020

700
(8)

2021
410
(21)

6,325
(74)

[Other comprehensive income]
JPY
2021
Associates
Joint ventures

USD
2020

(68)
－

2021
(35)
－

(623)
－

[Total comprehensive income]
JPY
2021
Associates
Joint ventures

USD
2020

631
(8)

2021
374
(21)

5,702
(74)

13. Other Investments
The breakdown of other investments is presented as follows:
JPY
2021

USD
2020

2021

Financial assets measured at fair value through profit or loss

3,712

3,647

33,529Financial assets measured at fair value through othercomprehensive income

29,824

24,632

269,396

33,53628,279302,925

Total- 37 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
14. Other Current Assets and Other Non-current Assets
The breakdown of other current assets and other non-current assets is presented as follows:
JPY
2021

USD

2020

2021

Advance payments
Prepaid expenses

15,492
5,208

15,5694,763

139,936
47,047

Contract assets
Other

17
8,667

12
7,361

157
78,29329,386

27,707

265,433

Current assets

26,33924,580237,914

Non-current assets

3,046

3,126

27,51929,386

27,707

265,433

Total

Total

15. Trade and Other Payables
The breakdown of trade and other payables is presented as follows:
JPY
2021

USD
2020

2021

Notes and accounts payable

125,999

114,479

1,138,105

Import bills payable
Accounts payable - commission

45,17811,802

46,17912,262

408,079
106,604

182,980

172,922

1,652,788

182,980－

172,922－

1,652,788－

182,980

172,922

1,652,788

Total
Current liabilities
Non-current liabilities
Total- 38 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
16. Bonds and Borrowings
The breakdown of bonds and borrowings is presented as follows:

Current portion of bonds

114

1,032

4,993

Averageinterest rate
(Note)－

Short-term borrowings

37,298336,905

52,792

1.16%－

Current portion of long-termborrowings

20,310183,457

10,3780.76%－

Bonds (excluding the current portion)

9,998

90,30810,056－－Long-term borrowings (excluding thecurrent portion)

54,436

491,700

65,172

0.63%

Total

122,157

1,103,402

143,394

Current liabilities

57,723521,394

68,164Non-current liabilities

64,434582,008

75,229

2021

2020

JPY

USD

JPY

Maturity date－June 2022 to May 2033

Total
122,157
1,103,402
143,394(Note) The “average interest rate” is presented as the weighted average interest rate against the borrowings outstanding at the end of
the fiscal year. The interest rate for bonds is presented in the “Details of bonds” below.
[Details of bonds]
IssuerKanematsu
Corporation
Kanematsu

Bond Name
Unsecured Straight
Bonds No 2(5-year bonds)
Unsecured Straight
Bonds No 3(5-year bonds)

Corporation
Kanematsu
Corporation

Issue date

(7-year bonds)

JPY

March 10,2016
December
14, 2017

Unsecured Straight
Bonds No 4

2021

December
14, 2017

Other

2020
USD

JPY

Coupon rate

Collateral

MaturitydateMarch 10,
2021

－

－

4,993

0.64% per annum

None

4,987

45,0514,980

0.42% per annum

None

4,981

44,995

4,976

0.57% per annum

None

143

1,292

100

December
14, 2022
December13, 2024(Note) The maturity schedule of bonds after the end of the current fiscal year is presented as follows:
Within one year

CorporatebondsOver one year and Over two years andwithin two years within three years

JPY

USD

JPY

USD

JPY

USD

114

1,032

5,001

45,18014

134- 39 -

Over three years
Over four years andandwithin five years
within four years
JPY
USD
JPY
USD
4,981

44,995－－

Over five years
JPY

USD

－

－

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
17. Provisions
Changes in provisions are presented as follows:(JPY)
Asset retirement
obligations
Balance as of April 1, 2020

Other

Total

1,828

117

1,945

5

－

5

Provisions made

52

605

658

Provisions used

(74)

(13)

(88)

Provisions reversed

－

(12)

(12)

Unwinding of discount

43

－

43

Foreign exchange translation differences

－

0

0

1,854

697

2,552

Acquisitions through business combinations

Balance as of March 31, 2021

(USD)
Asset retirement
obligations
Balance as of April 1, 2020

Other

Total

16,513

1,063

17,576

Acquisitions through business combinations

48

－

48

Provisions made

475

5,469

5,944

Provisions used

(675)

(123)

(798)

Provisions reversed

－

(114)

(114)

Unwinding of discount

393

－

393

Foreign exchange translation differences

－

2

2

16,755

6,296

23,051

Balance as of March 31, 2021

The current and non-current portions of provisions are presented as follows:
JPY
2021
Current liabilities
Non-current liabilities
Total

USD
2020

2021

607

30

5,491

1,944

1,914

17,561

2,552

1,945

23,051

Asset retirement obligations are obligations for restoring offices and shops in accordance with provisions of the property leasing
contracts. While these expenditures will be made after at least one year has passed, the amounts may be affected by the futurebusiness plan and other factors.

- 40 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
18. Other Current Liabilities and Other Non-current Liabilities
The breakdown of other current liabilities and other non-current liabilities is presented as follows:
JPY
2021

USD

2020

2021

Advances received
Contract liabilities

6,293
10,152

5,867
9,309

56,84991,702

Accrued expenses
Unearned revenue

2,735
90

3,680
57

24,710822

Other10,474

11,52994,611

29,74630,443

268,693

28,213
1,533

29,073
1,369

254,841
13,852

29,74630,443

268,693

Total
Current liabilities
Non-current liabilities
Total

19. Equity(1) Capital management
The Consolidated Group has a basic policy of increasing shareholders’ equity (See Note 1) up to a certain level andstrengthening its financial base to enhance its enterprise value through building new businesses and increasing revenues while
maintaining a sound financial position.
The Company sets the maximum ratio of risk assets (See Note 2) and examines the appropriateness of scale of shareholders'equity in terms of it being a risk buffer to potential loss that could result from a deterioration in the companies' respective
businesses, so that it could manage shareholders' equity minutely.
The key indices which the Consolidated Group uses for management of shareholders' equity are as follows, and these indices
are periodically reported to and monitored by management.
・ Ratio of risk assets
・ Net DER(See Note 3)(Note 1) Shareholders’ equity is defined as equity attributable to owners of the Parent.
(Note 2) Ratio of risk assets is defined as a ratio of the amount of maximum potential loss to shareholders' equity. The amountof maximum potential loss is the amount of all assets and off-balance sheet transactions on the consolidated financial
statements multiplied by the original risk weight set by the Consolidated Group according to the potential risk of loss.
(Note 3) Net DER is defined as a ratio of net interest-bearing debt to shareholders’ equity, while net interest-bearing debt is thetotal amount of interest-bearing debt excluding lease liabilities (bonds and borrowings) less cash and deposits.

The figures of net DER as of March 31, 2021 and March 31, 2020 are presented as follows:
Times
2021
Net DER

0.3

2020
0.4

The Consolidated Group is not subjected to any externally imposed capital requirements (except for general requirements, suchas those in the Companies Act).

- 41 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(2) Number of shares authorized to be issued, issued shares and shares of treasury stock(Unit: share)
2021
Shares authorized to be issued(No-par common stock)2020
200,000,000

200,000,000

84,500,202

84,500,202－－

84,500,202

84,500,202

Issued shares(No-par common stock)
Balance at the beginning of the year
Changes during the period
Balance at the end of the year

Shares of treasury stock
1,058,258
1,062,027(No-par common stock)(Note) Shares of treasury stock in the current fiscal year includes 95,000 shares of the Company held by the associate and 702,500
shares of the Company held by the stock issuance trust for officers. Shares of treasury stock in the previous fiscal year
included 100,000 shares of the Company held by the associate and 702,500 shares of the Company held by the stock
issuance trust for officers.

(3) Surplus
1) Capital surplus
Capital surplus mainly consists of legal capital surplus.
2) Retained earnings
Retained earnings consist of legal retained earnings and other retained earnings.
The Companies Act of Japan provides that an amount equal to 10% of distribution of surplus for each fiscal year must be
appropriated as legal capital surplus or legal retained earnings until the total aggregate amount of legal capital surplus andlegal retained earnings equals 25% of share capital.
Under the Companies Act, the amounts available for distribution are calculated based on the amounts of capital surplus andretained earnings, exclusive of legal capital surplus and legal retained earnings, all of which are recorded in accordance withthe accounting principles generally accepted in Japan.

(4) Dividends
1) Amounts of dividends paid
Resolution

Type of stock

May 26, 2020
Board of Directors Common stock
meeting
Oct. 30, 2020
Board of Directors Common stock
meeting

Resolution

Type of stock

May 20, 2019
Board of Directors Common stock
meeting
Oct. 31, 2019
Board of Directors Common stock

Source ofdividends

Total amounts ofdividends

Dividends
per share

Record date

Effective date

JPY

USD

Yen

Retainedearnings

2,527

22,827

30.00

0.271

Mar. 31, 2020

Jun. 10, 2020

Retainedearnings

2,527

22,827

30.00

0.271

Sep. 30, 2020

Dec. 1, 2020

Record date

Effective date

Source ofdividends
Retainedearnings
Retainedearnings

U.S.$

Total amounts ofdividends

Dividends
per share

JPY

Yen
2,948

35.00

Mar. 31, 2019

Jun. 3, 2019

2,527

30.00

Sep. 30, 2019

Dec. 2, 2019

meeting(Note) The total amount of dividends resolved by the board of directors meeting on May 26, 2020, October 30, 2020, May 20, 2019
and October 31, 2019 includes ¥21 million ($190 thousand), ¥21 million ($190 thousand), ¥24 million and ¥21 million of thedividends to the shares of the Company held by the stock issuance trust for officers.
- 42 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Dividends with record date in the current fiscal year, and effective date in the following fiscal year
Total amounts of
Dividends
Source ofdividends
per share
Resolution
Type of stock
Record datedividends
JPY
USD
Yen
U.S.$

Effective date

May 24, 2021
Retained
Board of Directors Common stock
2,527
22,82730.00
0.271 Mar. 31, 2021
Jun. 8, 2021
earnings
meeting(Note) The total amount of dividends resolved by the board of directors meeting on May 24, 2021 includes ¥21 million ($190
thousand) of the dividends to the shares of the Company held by the stock issuance trust for officers.

20. Selling, General and Administrative Expenses
The breakdown of selling, general and administrative expenses is presented as follows:
JPY
2021

USD
2020

2021

Depreciation and amortization

9,355

7,743

84,505

Personnel expenses

45,59846,082411,874

Outsourcing service charges

7,663

7,606

69,222

Other

16,27521,284147,013

Total
78,89382,716712,614(Note) “Rent expenses”, which was listed in the breakdown by type of selling, general and administrative expenses in the previous
fiscal year, is presented in “Other” in the current fiscal year, because the amount has decreased in significance. “Rent
expenses” amounted to ¥2,679 million in the previous fiscal year.

21. Gain or Loss on Sale or Disposal of Property, Plant and Equipment and Intangible Assets
The breakdown of gain or loss on sale or disposal of property, plant and equipment and intangible assets is presented as follows:
JPY
USD
2021
Gain on sale of property, plant and equipment
Total gain on sale of property, plant and equipment andintangible assets
Loss on sale of property, plant and equipment
Total loss on sale of property, plant and equipment andintangible assets
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Total loss on disposal of property, plant and equipment
and intangible assets
Gain (loss) on sale or disposal of property, plant andequipment and intangible assets, net- 43 -

2020

2021

13

42

124

13

42

124

(22)

(4)

(207)

(22)

(4)

(207)

(135)
(29)

(150)
(5)

(1,225)
(265)

(164)

(156)

(1,490)

(174)

(118)

(1,572)KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
22. Impairment Loss
(1) Breakdown of impairment loss by each class of assets
The breakdown of impairment losses by class of assets is presented as follows. Impairment losses for property, plant andequipment and intangible assets are included in “Impairment loss on property, plant and equipment and intangible assets”.
JPY
USD
2021
Property, plant and equipment
Intangible assets
Total

2020

2021

(39)
(4)

(551)
(0)

(355)
(43)

(44)

(551)

(398)

(2) Breakdown by reportable segment
The breakdown of impairment losses by reportable segment is presented as follows:
JPY
2021

USD
2020

2021

Electronics & Devices

(4)

－

(36)

Foods & Grain
Steel, Materials & Plant

(106)
(62)

Other/Adjustment and elimination

(25)
(14)
－

(382)

(229)
(132)
－

Total

(44)

(551)

(398)

For the fiscal year ended March 31, 2020, an impairment loss of ¥382 million was recognized as a result of reducing thecarrying amount of land and buildings and structures owned in Japan, which the Company intends to sell, to the recoverable
amount of ¥1,429 million. The recoverable amount is based on fair value less costs of disposal and the fair value is estimatedmainly based on sale value. The asset belongs to the Others segment.
Regarding the pet-related business of the domestic subsidiary, an impairment loss of ¥164 million was recognized as a result of
reducing the carrying amount of property, plant and equipment which a subsidiary transferred, to the recoverable amount of¥17 million before the transfer. The recoverable amount is based on fair value less costs of disposal and the fair value isestimated mainly based on transfer value. The asset belongs to the Foods & Grain segment.
For the fiscal year ended March 31, 2021, there was no significant impairment loss.
While fair values are categorized into three levels depending on inputs to valuation techniques used, all the fair values above
are categorized within Level 3 of the fair value hierarchy with its details described in Note 2. Basis of Preparing Consolidated
Financial Statements, (4) Use of estimates and judgments.

- 44 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
23. Exchange Differences
Exchange differences recognized in profit or loss for the fiscal years ended March 31, 2021 and March 31, 2020 were ¥111 million($1,011 thousand) and ¥943 million, respectively and are included in “Other income” in the consolidated statement of income. In
addition, each amount includes gains or losses arising from currency-related derivative transactions that were entered into for the
purpose of hedging the foreign currency risk. Gains and losses arising from translating assets and liabilities denominated in acurrency other than the functional currency or from settling such items are included in profit or loss as they arise.

24. Finance Income and Finance Costs
The breakdown of finance income and finance costs is presented as follows:
JPY
2021

USD
2020

2021

Interest income
Financial assets measured at amortized cost

161

271

1,461

Total interest income

161

271

1,461

82

220

747

1,017

923

9,194

1,100

1,143

9,941

Other finance income

19

－

177

Total other finance income

19

－

177

1,281

1,415

11,580(1,706)(2,563)(15,415)

(112)

(198)

(1,013)(1,818)(2,761)(16,428)

Other finance costs

(210)

(452)

(1,900)Total other finance costs

(210)

(452)

(1,900)

Dividend income
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through othercomprehensive income
Total dividend income
Other finance income (Note)

Total finance income
Interest expenses
Financial liabilities measured at amortized cost
Derivatives
Total interest expenses
Other finance costs (Note)

Total finance costs(2,029)(3,214)(18,328)(Note) The amounts of other finance income and other finance costs are those related to financial assets measured at fair value
through profit or loss and the details are presented in Note 30. Financial Instruments: (6) -3) - (ⅱ) Recurring fair value
measurements categorized within Level 3 of the fair value hierarchy.

- 45 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
25. Earnings Per Share Attributable to Owners of the Parent(1) Earnings per share
Yen
2021
Basic earnings per share
Diluted earnings per share

U.S. dollar
2020

159.44
159.342021
172.43172.281.44
1.44

The amount of diluted earnings per share is calculated by deeming the shares authorized to be issued subject to conditions
which are expected to be provided under the performance-linked stock compensation plan as potential shares.

(2) Bases for calculation of earnings per share
JPY
2021

USD
2020

2021

Profit attributable to owners of the Parent
Amount not attributable to common shareholders of the Parent

13,315－

14,399－120,272－

Profit used to calculate basic earnings per share
Profit used to calculate diluted earnings per share

13,315
13,315

14,39914,399120,272
120,272

Thousand shares
2021
Weighted average number of common shares

2020
83,511

83,509

Increase due to the performance-linked stock compensation
plan

54

71

Weighted average number of common shares adjusted for
dilution

83,56583,580(Note) In the calculation of earnings per share, the shares of the Company owned by the stock issuance trust for officers below are
included in the treasury stock which is deducted in the calculation of average number of shares during the fiscal year.
The previous fiscal year
705,961 shares
The current fiscal year
702,500 shares- 46 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
26. Other Components of Equity and Other Comprehensive Income
Changes in other components of equity are presented as follows:
JPY
2021
Exchange differences on translation of foreign operations
Balance at the beginning of the year

USD
2020

2021

930

1,865

8,402

Changes during the period

703

(935)

6,352

Balance at the end of the year

1,633

930

14,753

Balance at the beginning of the year
Changes during the period

6,816
3,308

9,580
(2,926)

61,57529,884

Reclassification to retained earnings

38

162

345

10,163

6,816

91,803

Balance at the beginning of the year
Changes during the period

113
441

(293)
406

1,023
3,986

Balance at the end of the year

554

113

5,009

－

－

－

263
(263)

(17)
17

2,380
(2,380)Financial assets measured at fair value through othercomprehensive income

Balance at the end of the year
Cash flow hedges

Remeasurements of defined benefit pension plans
Balance at the beginning of the year
Changes during the period
Reclassification to retained earnings
Balance at the end of the year

－

－

－

Other components of equity
Balance at the beginning of the year

7,860

11,15371,000Changes during the period
Reclassification to retained earnings

4,716
(225)

(3,472)
179

42,601(2,035)

Balance at the end of the year

12,351

7,860

111,566- 47 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
The breakdown for the amounts of reclassification adjustments and deferred tax in other comprehensive income is presented asfollows:
JPY
USD
2021

2020

2021

Financial assets measured at fair value through othercomprehensive income
4,869(4,163)

Amount before deferred tax

4,869(4,163)43,984

Deferred tax(1,474)

1,224(13,318)

3,395(2,939)30,666

Amount arising during the year

317

(55)

2,867

Amount before deferred tax
Deferred tax

317
(87)

(55)
30

2,867
(789)

Remeasurements of defined benefit pension plans

229

(24)

2,077

931
－

(1,077)
(28)

8,416
－

931

(1,105)

8,416

402
(20)

358
224

3,634
(181)

Deferred tax

382
59

583
(179)

3,453
535

Cash flow hedges

441

403

3,987

(96)
27

(39)
3

(870)
247

(68)

(35)

(623)

4,929

(3,702)

44,524

Amount arising during the year

Financial assets measured at fair value through othercomprehensive income

43,984Remeasurements of defined benefit pension plans

Exchange differences on translation of foreign operations
Amount arising during the year
Reclassification adjustments
Exchange differences on translation of foreign operations
Cash flow hedges
Amount arising during the year
Reclassification adjustments
Amount before deferred tax

Share of other comprehensive income of investments
accounted for using the equity method
Amount arising during the year
Reclassification adjustments
Share of other comprehensive income of investments
accounted for using the equity method
Total other comprehensive income- 48 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
27. Cash Flow Information(1) Cash and cash equivalents
The breakdown of cash and cash equivalents and its reconciliation to the amounts presented in the consolidated statement offinancial position are as follows:
JPY
USD
2021

2020

2021

Cash and bank deposits except for time deposits with originalterm of more than three months

81,045

91,105732,051

Cash and cash equivalentsin the consolidated statement of financial position

81,045

91,105732,051

Cash and cash equivalentsin the consolidated statement of cash flows

81,045

91,105732,051(2) Net payment for acquisition of subsidiaries and transfer of business
The breakdown of the main assets and liabilities of newly acquired subsidiaries at the time control thereof was acquired, andthe reconciliation between consideration paid and net payment for the acquisition are presented as follows:
JPY
USD
2021

2020

2021

Breakdown of assets at the acquisition dateCurrent assets (including cash and cash equivalents)
Non-current assets

1,149
839

9,201
1,750

10,381
7,581

Breakdown of liabilities at the acquisition dateCurrent liabilities(379)(7,940)(3,424)Non-current liabilities
Goodwill

(823)
265

(1,190)1,536(7,434)2,400

Non-controlling interests

(67)

(134)

(605)

Fair value of consideration paid

(985)

(3,223)(8,898)Fair value of holding shares of the acquired companies
Cash and cash equivalents of the acquiree

－
729

377
1,631

6,586

Net proceeds from (payment for) acquisition of subsidiaries

(210)

(835)

(1,905)

Net proceeds from transfer of business

(45)

(380)

(408)

- 49 -－

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(3) Changes in liabilities for financing activities
Changes in liabilities for financing activities are as follows:
Fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)(JPN)
April 1,
2020
Borrowings
Bonds

128,344
15,049

Lease

434
－

745
93

OthersMarch 31,
2021

(29)
19

112,045
10,112(17,449)(5,050)－－17,555(7,890)

8,447

38

40

(862)

17,328160,949(30,389)

8,447

473

879

(873)

139,486

Lease liabilities
Total

Cash flows

Non-cash movements
Increase andExchange decrease fromdifferences acquisition ofsubsidiaries(USD)

Borrowings
Bonds
Lease liabilities
Total

Non-cash movements
Increase andExchange decrease fromdifferences acquisition ofsubsidiaries

April 1,
2020

Cash flows

1,159,284(157,618)－

135,939
158,570(45,615)(71,268)

－

3,927
－

76,304

1,453,793(274,501)

76,304

Lease

OthersMarch 31,
2021

6,738

(269)

1,012,062

346

842
367

173
(7,793)

91,340156,525

4,273

7,946

(7,889)1,259,927

Fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020)(JPN)
March 31,
2019

Adjustment
for IFRS 16

Borrowings

124,574－

124,574

Bonds
Lease

14,930－1,041
140,546

liabilities
Total

April 1,
2019

Cash flows

Lease
－

14,9301,317－

16,853

17,895

16,853

157,399

Non-cash movements
Increase andExchange decrease fromdifferences acquisition ofsubsidiaries

OthersMarch 31,
2020

2,788

－

128,344

－

(336)
－

100

19

15,049(5,798)

6,113

(140)

61

(575)

17,555(4,480)

6,113

(476)

2,949

(555)

160,949(4) Significant non-cash transactions
The adoption of IFRS 16 increased right-of-use assets and lease liabilities for the fiscal year ended March 31, 2021 and March
31, 2020. Please refer to Note 10. Property, Plant and Equipment for more information.

- 50 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
28. Employee Benefits(1) Post-employment benefits
1) Outline of retirement benefit plans adopted by the Consolidated GroupThe Company has a defined benefit pension plan and lump-sum retirement benefit plan covering substantially all employees
other than directors and executive officers. The benefit amounts for the defined benefit pension plan are determined based on
the period of employees’ enrollment in the plan, contribution granted to employees and other factors. The Company has a
responsibility to manage pension assets faithfully and has an obligation to make contributions for the employees enrolled in
the plan in compliance with applicable laws and regulations.
The pension plan that the Company maintains is a contract-type defined benefit pension plan.
Matters such as asset management performance, status of the plan and accounting treatment are reported to the Management
Committee by the Finance Department and the Personnel & General Affairs Department, which are in charge of operation of
the pension plan. These departments hold a meeting on a timely manner to discuss the matters such as a revision to the plan
and a change in the asset investment policy.
Most of the subsidiaries have unfunded retirement benefit plans and/or funded pension plans. Employees, other than directors,
are entitled to, under most circumstances, upon mandatory retirement at normal retirement age or earlier termination of
employment, a lump-sum retirement benefit based on compensation at the time of retirement, years of service and otherfactors. Certain subsidiaries have adopted the defined contribution retirement benefit plan.

- 51 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Defined benefit plan(ⅰ) Net defined benefit liability (asset)
Reconciliation of the beginning and ending balances of net defined benefit liability (asset) and the components for theyears ended March 31, 2021 and March 31, 2020 are presented as follows:(JPY)
Present value
Fair value of plan
Net defined benefitof the defined
assetsliability (asset)
benefit obligation
As of March 31, 2019

20,036(13,481)

6,555

Current service cost

1,489

－

1,489

46

(24)

21

Remeasurements

(110)

166

55

Foreign currency translation difference

(21)

3

(17)

Employer contributions to the plan

－

(973)

(973)

(1,666)

1,311

(354)

Effect of business combinations anddisposals

117

(151)

(33)

Other

27

9

37

As of March 31, 2020

19,917(13,138)

6,779

Current service cost

1,370

－

1,370

Net interest

70

(61)

9

Remeasurements

122

(440)

(317)

Foreign currency translation difference

20

(3)

17

Employer contributions to the plan

－

(938)

(938)

(1,117)

685

(431)

Effect of business combinations anddisposals

－

－

－

Other

0

28

29

20,385(13,867)

6,517

Net interest

Benefits paid

Benefits paid

As of March 31, 2021

- 52 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(USD)
Present valueof the defined
benefit obligation

Fair value of plan
assetsNet defined benefit
liability (asset)

As of March 31, 2020

179,911(118,676)

61,234Current service cost

12,380－12,380

634

(553)

81

1,110

(3,977)(2,867)

Foreign currency translation difference

186

(27)

159

Employer contributions to the plan－

(8,477)(8,477)(10,095)

6,196(3,899)Effect of business combinations anddisposals

－

－

－

Other

7

255

263

184,133(125,258)

58,874

Net interest
Remeasurements

Benefits paid

As of March 31, 2021

Remeasurements of the defined benefit obligation for the fiscal years ended March 31, 2021 and March 31, 2020 are thedifferences arising primarily from changes in financial assumptions.
(ⅱ) Reconciliation of ending balances of defined benefit obligation/plan assets and net defined benefit liability/asset presented
on the consolidated statements of financial position
JPY
USD
2021

2020

2021

Defined benefit obligations of funded plan

16,44015,345

148,498

Plan assets(13,867)(13,138)(125,258)

Net defined benefit liability of funded plan

2,572

2,206

23,240Defined benefit obligations of unfunded plan

3,945

4,572

35,635Net liability or asset presented on the consolidated statementsof financial position (Before the effect of the asset ceiling)

6,517

6,779

58,874The measurement date used to determine the main benefit obligations is March 31 of each year.
The Company’s funding policy is based on a number of factors including the tax deductibility of contributions, funded
status, actuarial calculations and other considerations. Contributions are intended to provide not only for benefits
attributable to service to date, but also for those expected to be earned in the future. In addition, the Company may
contribute cash to an employee retirement benefit trust for any funding deficits in benefit obligations at the fiscal year
end.
The Company’s investment policy is designed to increase the value of plan assets within acceptable risk levels to ensure
payments of pension benefits to eligible participants, including future participants. Taking into account the return and risk
on plan assets thereon, the Consolidated Group formulates a strategic asset mix which aims at an optimal portfolio on along-term basis and supervise asset management by selecting investment management companies and monitoring asset
allocations. The strategic asset mix is subject to review in response to changes in expected market conditions or funded
status. The strategic asset mix is not based on limitations but guidelines, and therefore, the actual allocation may
temporarily exceed or fall below the guidelines. The Company’s target allocation is 10% equity securities, 44% debt
securities, 36% life insurance company general accounts and 10% others.
The Company holds a meeting regularly with the asset management institutions and discusses important issues regarding
pension assets investment.

- 53 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅲ) Plan assets
The composition of the plan assets as of March 31, 2021.
Plan assets with a quoted market pricein an active market
JPY

Plan assets without a quoted market pricein an active market

USD

JPY

USD

Equity securities

2,078

18,774－－

Debt securities

266

2,411

4,092

36,968Life insurance company general accounts

－

－

6,152

55,572

Other

30

272

1,246

11,2602,375

21,457

11,491

103,801

Total

The composition of the plan assets as of March 31, 2020.
Plan assets with a quoted market pricein an active market

Plan assets without a quoted market pricein an active market

JPY

JPY

Equity securities

1,195

－

Debt securities

230

4,342

Life insurance company general accounts

－

6,085

Other

61

1,222

1,488

11,650

Total

Equity securities and debt securities above are managed as jointly-managed trusts by trust banks. Plan assets with aquoted market price in an active market are estimated by using the quoted price. Assets other than equity securities anddebt securities are categorized into the assets without a quoted market price in an active market, which are estimated byusing the fair value the trust banks calculated.
(ⅳ) Significant actuarial assumptions
2021

2020

Discount rate

0.4%

0.5%

The assumptions used for the actuarial calculation include the expected rate of salary increase, the mortality rate and theretirement rate other than the above.
(ⅴ) Sensitivity analysis of defined benefit obligations
JPY
2021

USD
2020

2021

Increase in the defined benefit obligation with a 50-basis-point
decrease in the discount rate

740

829

6,693

Decrease in the defined benefit obligation with a 50-basis-point
increase in the discount rate

(858)

(914)

(7,754)This analysis is based on the premise that the actuarial assumptions other than the discount rate do not fluctuate and that
only the discount rate fluctuates. This method of analysis is based on assumptions, and it is possible that the actual
calculation could be influenced by fluctuations in other variables. Even if the discount rate falls below 0%, the calculationis performed assuming the lower limit of the discount rate is 0%.
(ⅵ) Information on maturity profile of the defined benefit obligation
The weighted average duration of the defined benefit obligation for the years ended March 31, 2021 and March 31, 2020
were 10.2 year and 10.1 year, respectively.
- 54 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅶ) Expected contribution to the plan for the year ending March 31, 2022
The amount of contribution to be made by the Consolidated Group to plan for the year ending March 31, 2022 isestimated to be ¥975 million ($8,807 thousand).
3) Defined contribution plan
Expenses recognized for the defined contribution plan for the years ended March 31, 2021 and March 31, 2020 were ¥3,590
million ($32,428 thousand) and ¥3,593 million, respectively.

(2) Employee benefit expenses
Employee benefit expenses recognized for the years ended March 31, 2021 and March 31, 2020 were ¥5,030 million ($45,438
thousand) and ¥5,188 million, respectively. Employee benefit expenses are included in “Cost of sales” and “Selling, generaland administration expenses” in the consolidated statement of income.

29. Current and Deferred Income Tax(1) Deferred taxes
1) Breakdown of deferred tax assets and deferred tax liabilities
The breakdown of main deferred tax assets and deferred tax liabilities by component is as follows:
JPY
2021

USD

2020

2021

Deferred tax assets
Retirement benefits liabilities
Loss allowance

1,782
868

1,871
618

16,099
7,843

Inventories
Impairment loss

645
903

547
898

5,828
8,161

Other investments
Golf club memberships

634
110

627
110

5,727
999

Tax losses carried forward
Goodwill

657
223

1,060
774

5,935
2,015

4,698

4,865

42,439Total deferred tax assets
Offset against deferred tax liabilities

10,522(8,204)

11,374(8,613)

95,045(74,104)

Total deferred tax assets, net

2,318

2,761

20,941

(673)

(501)

(6,079)(4,524)(3,044)(40,866)

Other

Deferred tax liabilities
Retained earnings in subsidiaries
Financial assets measured at fair value through othercomprehensive income
Cash flow hedges

(244)

(51)

(2,206)

Intangible assets
Other(6,751)(1,538)(6,163)(1,237)(60,979)(13,899)

Total deferred tax liabilities(13,731)(10,998)(124,029)

Offset against deferred tax assets

8,204

8,613

74,104

Total deferred tax liabilities, net(5,527)(2,385)(49,925)

Net deferred tax assets (liabilities)(3,208)375(28,984)- 55 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Details of changes in deferred tax assets and deferred tax liabilities
Details of changes in deferred tax assets and deferred tax liabilities are presented as follows:
JPY
2021
Beginning balance of net deferred tax assets (liabilities)

USD

2020

2021

375

1,247

3,395

Deferred tax expense(1,610)(1,967)(14,550)

Income tax on other comprehensive income
Acquisition through business combinations(1,757)
(193)

1,075
20

(15,871)(1,750)

(22)

0

(207)

(3,208)375(28,984)

Other
Ending balance of net deferred tax assets (liabilities)3) Deductible temporary differences and unused tax losses carried forward for which deferred tax assets were not recognized
The breakdown of deductible temporary differences and unused tax losses carried forward (by expiry date), for which deferred
tax assets were not recognized in the consolidated statement of financial position are presented as follows:
JPY
USD
2021

2020

2021

Deductible temporary differences

8,576

8,425

77,466

Tax losses carried forward
Within one year to expiry

1,028

13,022

9,294

14,005
12,206

14,167
8,844

126,506
110,254

Between one and five years to expiry
Between five and ten years to expiry
Over ten years to expiry
Total tax losses carried forward

63

35

571

27,30336,070246,626

4) Temporary differences associated with investments in subsidiaries for which deferred tax liabilities were not recognized
The total amounts of temporary differences associated with investments in subsidiaries for which deferred tax liabilities were
not recognized as of March 31, 2021 and March 31, 2020 are ¥36,029 million ($325,442 thousand) and ¥32,336 million,
respectively. Because the Consolidated Group is able to control the timing of the reversal of such temporary differences, and it
is probable that such temporary differences will not be reversed within the foreseeable future, it did not recognize deferred tax
liabilities with respect to such temporary differences.

(2) Income taxes
1) Breakdown of income taxes
The breakdown of income taxes is presented as follows:
JPY
2021

USD
2020

2021

Current tax expense (Note 1)(5,718)(6,742)(51,651)

Deferred tax expense (Note 2)
Origination and reversal of temporary differences(1,522)(1,781)(13,757)

(87)

(186)

(794)

(1,610)(1,967)(14,550)

Reassessment of recoverability of deferred tax assets
Total deferred tax expense

Total income taxes(7,329)(8,710)(66,202)(Notes) 1. The amounts of the benefits arising from previously unrecognized tax losses or temporary differences of a prior periodthat were used to reduce current tax expenses for the years ended March 31, 2021 and March 31, 2020 were ¥52 million($472 thousand) and ¥134 million, respectively, and these benefits were included in the current tax expenses.
2. Major causes for deferred tax expense by type are goodwill of ¥(551) million ($(4,978) thousand) and tax losses carriedforward of ¥(403) million ($(3,640) thousand) for the fiscal year ended March 31, 2021, and tax losses carried forward of¥(1,219) million and goodwill of ¥(1,036) million for the fiscal year ended March 31, 2020.

- 56 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
2) Reconciliation of statutory effective income tax rate in Japan
Reconciliations between the statutory effective tax rate in Japan and the average effective tax rate of the Consolidated Group
were as follows:
2021
2020
Statutory effective tax rate

30.6%

30.6%

0.6%

0.6%

0.4%

0.7%

0.4%
(0.9%)(0.2%)(0.5%)(Adjustments)
Permanent differences—additions
such as entertainment expenses
Effect of reassessment of recoverability of deferred tax assets
Effect of tax rate differences
Share of profit (loss) of investments accounted for using the equity method
Other
Average effective tax rate

(0.0%)

1.1%

31.1%

32.3%

The statutory effective tax rate for the fiscal year ended March 31, 2021 and March 31, 2020 are calculated to be 30.6% and30.6% based on the Corporation Tax, Inhabitant Tax and Business Tax in Japan.

- 57 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
30. Financial Instruments(1) Classification of financial instruments
The breakdown of financial instruments for each classification is presented as follows:
JPY
2021

USD
2020

2021

Financial assets
81,045

91,105732,051

Other financial assets

208,565
10,145

206,348
10,637

1,883,895
91,641

Total financial assets measured at amortized cost

218,711

216,986

1,975,535

Other investments

3,712

3,647

33,529Other financial assets

3,447

2,116

31,137

Total financial assets measured at fair value through profit
or loss

7,159

5,763

64,66629,824

24,632

269,396

29,824

24,632

269,396336,740

338,486

3,041,648

182,980

172,922

1,652,788

Bonds and borrowings
Lease Liabilities

122,157
17,328143,394
17,555

1,103,402
156,525

Other financial liabilities

6,130

5,965

55,376

328,597339,836

2,968,092

Other financial liabilities

1,119

712

10,115

Total financial liabilities measured at fair value throughprofit or loss

1,119

712

10,115

Total financial liabilities

329,717340,549

2,978,207

Cash and cash equivalents
Financial assets measured at amortized cost
Trade and other receivables

Financial assets measured at fair value through profit or loss

Financial assets measured at fair value through othercomprehensive income
Other investments
Total financial assets measured at fair value through othercomprehensive income
Total financial assets
Financial liabilities
Financial liabilities measured at amortized cost
Trade and other payables

Total financial liabilities measured at amortized cost
Financial liabilities measured at fair value through profit orloss(2) Basic policies for risk management of financial instruments
The Consolidated Group is an integrated trading company engaged in a wide range of business activities on a global basis. Its
headquarters includes business sections that handle merchandising, trading, product manufacturing, services, project planningand management, investments and financing activities, both domestically and internationally. Such businesses are inherently
exposed to various risks. The Consolidated Group defines and classifies risks per risk item and manages each of them inaccordance with its nature.

- 58 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(3) Credit risk management
1) Credit risks of financial assets owned by the Company (risk exposure and the occurrence of the relevant risk)
The Consolidated Group extends credit to a large number of customers in Japan and abroad in diverse business transactions,
resulting in a number of financial assets such as trade receivables, loans and other financial assets. These financial assets
provide credit accommodation to the various customers; therefore, the Consolidated Group is mainly exposed to the credit
risks related to those customers.
Each department manages credit exposure to each customer by assigning credit ratings on a customer-by-customer basis andsetting credit exposure limits within the framework of the Consolidated Group’s credit risk control.
2) Responses to the risk owned by the Company (purpose, policy and procedure of the risk management and method used tomeasure such risks)
The Consolidated Group manages its credit risk to the customers by defining risk management methods and management
systems for specific risks in accordance with the regulations on risk management. Based on such regulations, the Consolidated
Group mitigates credit risk through periodical monitoring of the customer’s credit status and undertaking the maturity control
and account balance control, while detecting promptly any doubtful accounts caused by deterioration in the financial
conditions of customers and other factors. Expected credit losses are recognized and measured through transactions andfinancial information related to customers available in the course of such credit risk management, while taking
macroeconomic conditions such as the number of bankruptcies into consideration.
With regard to loans, the Consolidated Group determines there has been a significant increase in credit risk of the financial
assets since initial recognition in cases where the cash collection of the financial assets was delayed (as well as the case of
request for a grace period) after the trade date. However, even when a late payment or request for grace period occurs, theConsolidated Group does not determine that there has been a significant increase in credit risk if such late payment or request
for grace period would be attributable to temporary cash shortage, the risk of default would be low and objective data such asexternal credit ratings would reveal their ability to fulfill the obligation of contractual cash flow in the near future.
However, the Consolidated Group determines that the credit of the financial assets are impaired, when late payment or request
for grace period do not arise from temporary cash shortage but significant financial difficulty of the debtor and therecoverability of the modified financial assets is significantly doubtful.
The Consolidated Group determines there has been a significant increase in the credit risk of debt instruments since initialrecognition when an “investment grade” at the initial recognition deteriorates to the level below investment grade. For such
purpose, rating information provided by major rating agencies is used.
When guaranteeing the debts of its customers, the Consolidated Group establishes the guarantee limit amounts based upon thefinancial position and business condition of the customers. The guarantee limit amounts are periodically reviewed andmaintained at appropriate levels.
When entering into derivative transactions, the Consolidated Group selects only major financial institutions with high credit
ratings assigned by independent rating agencies so as to minimize the credit risks. In addition, the Consolidated Group
periodically reviews credit limits in accordance with the internal regulations.
The Consolidated Group considers trade receivables, loans receivable, and debt instruments as default when all or part of thosefinancial instruments are not recovered, or the recoverability of those financial instruments is determined to be extremely
difficult.
Moreover, the Consolidated Group directly writes off the gross carrying amounts of the credit-impaired financial assets when
all or part of the financial assets are evaluated to be uncollectible and determined that it is appropriate to be written off as aresult of credit check.

- 59 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅰ) Measurement of expected credit losses on trade receivables
As trade receivables do not contain a significant financing component, the Consolidated Group measures loss allowanceat an amount equal to the lifetime expected credit losses until the trade receivables are recovered. With regard to past due
receivables, the Consolidated Group estimates the lifetime credit losses on the financial instruments individually andmeasures the amount of loss allowance based upon historical credit loss experience and future recoverable amount.
Moreover, as trade receivables comprise a number of customers, the Consolidated Group measures expected credit loss
collectively by grouping those receivables and considering historical credit loss experience. When those receivables areaffected by a material economic change, the provision rate calculated based upon the historical credit loss experience isadjusted to reflect current and future economic prospect.
Even when a late payment or request for grace period has occurred, the Consolidated Group does not regard them as past
due receivables if such late payment or request for grace period would be attributable to temporary cash shortage as therisk of default would be low, and the debtors are evaluated to have a strong ability to fulfill the obligation of contractual
cash flow in the near future.
(ⅱ) Measurement of expected credit losses on other receivables
When credit risk related to loans has not increased significantly since the initial recognition at the end of the reporting
period, the Consolidated Group calculates the amount of loss allowance of the financial instruments by estimating the 12months expected credit losses collectively based upon historical credit loss experience. When those receivables areaffected by a material economic change, the provision rate calculated based upon the historical credit loss experience isadjusted to reflect current and future economic prospect.
However, when there has been a significant increase in credit risk since initial recognition as of the end of the fiscal year,
the Consolidated Group estimates the lifetime credit losses on the financial instruments individually and measures theamount of loss allowance based upon historical credit loss experience and future recoverable amount.
(ⅲ) Measurement of the expected credit losses on the other investments (debt securities)
When credit risk related to debt securities has not increased significantly since initial recognition at the end of thereporting period, the Consolidated Group calculates the amount of loss allowance of the financial instruments by
estimating the 12-months expected credit losses. However, when there has been a significant increase in credit risk sinceinitial recognition as of the end of the fiscal year, the Consolidated Group estimates the lifetime credit losses on thefinancial instruments and measures the amount of loss allowance of the financial instruments. When estimating suchexpected credit losses, the Consolidated Group uses the default rate published by major rating agencies.
3) Quantitative and qualitative information on the amounts arising from expected credit losses(ⅰ) Trade and other receivables(JPY)
Lifetime expected credit losses

Loss allowance

Collective assessment

Credit-impaired financial assets

As of April 1, 2019

15

1,811

1. Reclassification to credit-impaired financial assets－

264

2. Initial recognition and recoveries

(2)

17

3. Direct write-off

－

(68)

4. Changes due to foreign exchange

－

(1)

6

－

As of March 31, 2020

19

2,024

1. Reclassification to credit-impaired financial assets－

98

5. Increase (decrease) resulting from changes in the provision
rate based on historical credit loss experience

2. Initial recognition and recoveries

0(2)

3. Direct write-off

－

(89)

4. Changes due to foreign exchange

－

2

0

－

19

2,032

5. Increase (decrease) resulting from changes in the provision
rate based on historical credit loss experience
As of March 31, 2021

- 60 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(JPY)
Lifetime expected credit losses

Gross carrying amountCollective assessment

As of April 1, 2019

Credit-impaired financial assets

228,519

2,057

(534)

534

(22,120)

5

3. Direct write-off

－

(68)

4. Changes due to foreign exchange－(1)

205,864

2,527

(98)

98

1. Financial assets reclassified to credit-impaired financial
assets
2. Initial recognition and recoveries

As of March 31, 2020
1. Financial assets reclassified to credit-impaired financial
assets
2. Initial recognition and recoveries

2,567

(253)

3. Direct write-off

－

(89)

4. Changes due to foreign exchange－

2

208,333

2,284

As of March 31, 2021

(USD)
Lifetime expected credit losses

Loss allowance

Collective assessment

Credit-impaired financial assets

As of March 31, 2020

175

18,283

1. Reclassification to credit-impaired financial assets－

887

2. Initial recognition and recoveries

2

(23)

3. Direct write-off

－

(808)

4. Changes due to foreign exchange－

19

5. Increase (decrease) resulting from changes in the provision
rate based on historical credit loss experience

2

－

179

18,358

As of March 31, 2021

(USD)
Lifetime expected credit losses

Gross carrying amountCollective assessment

As of March 31, 2020
1. Financial assets reclassified to credit-impaired financial
assets
2. Initial recognition and recoveries
3. Direct write-off
4. Changes due to foreign exchange
As of March 31, 2021

Credit-impaired financial assets

1,859,496

22,828(887)

887

23,187(2,290)

－

(808)

－

19

1,881,796

20,636(ⅱ) There is no contractual, uncollected balance for financial assets written off during the fiscal year ended March 31, 2021,
for which collecting efforts are still being made.

- 61 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
4) Credit risk exposure
Trade and other receivables
As of March 31, 2021
Balance of receivables (gross)Receivables
Past due receivables
Total

Provision rate based on historicalcredit loss experience

Lifetime expected credit losses

JPY

USD

JPY

USD

208,333

1,881,796

0.01%

19

179

2,284

20,63688.96%

2,032

18,358210,618

1,902,432

－

2,052

18,537

Past due receivables include loans receivable of ¥1,706 million ($15,417 thousand), for which a loss allowance of ¥1,479
million ($13,360 thousand) has been already recognized.
As of March 31, 2020
Balance of receivables (gross)
JPY
Receivables
Past due receivables
Total

Provision rate based on historicalcredit loss experience

Lifetime expected credit losses
JPY

205,864

0.01%

19

2,527

80.09%

2,024

208,392－

2,043

Past due receivables include loans receivable of ¥1,712 million, for which a loss allowance of ¥1,479 million has been alreadyrecognized.

- 62 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
5) Maximum exposure to credit risks
The Consolidated Group’s maximum exposure to credit risks is as follows:
The Consolidated Group’s maximum credit risk exposure (gross) represents the amount of the maximum exposure withrespect to credit risks without taking into account any collateral held or other credit enhancement. The Consolidated Group’s
maximum credit risk exposure (net) represents the amount of the maximum exposure with respect to credit risks reflecting the
mitigation effect of the collateral held or other credit enhancement.
As of March 31, 2021
Gross
carrying amount

Cash andcash equivalents

Maximum
credit risk exposure(gross)
JPY
USD

Loss
allowance
JPY

USD

Maximum
credit risk
exposure (net)
JPY
USD

Total collateral pledged
and credit enhancements

JPY

USD

JPY

USD

81,045732,051－－

81,045732,051－－

81,045732,051

210,618

1,902,432(2,052)(18,537)

208,565

1,883,895(193)(1,750)208,372

1,882,145

10,14591,641－－

10,14591,641－－

10,14591,641

301,8092,726,123(2,052)(18,537)

299,756

2,707,586(193)(1,750)299,563

2,705,836

Financial assets
measured
at amortized cost
Trade andother receivables
Other financial
assetsTotal

The amount of loss allowance for credit-impaired financial assets is reduced by ¥193 million ($1,750 thousand) throughcollateral pledged and credit enhancements.
As of March 31, 2020
Gross
carrying amountLossallowance

JPY

JPY

Cash and cash equivalents

Maximum
Total collateralcredit risk exposure pledged and credit(gross)enhancements
JPY

91,105－

208,392(2,043)JPY

Maximum
credit risk
exposure (net)
JPY

91,105－

91,105

206,348(296)

206,052

Financial assets measured atamortized cost
Trade and other receivables
Other financial assets
Total

10,637－

10,637－

10,637

310,134(2,043)308,091(296)

307,794

The amount of loss allowance for credit-impaired financial assets is reduced by ¥296 million through collateral pledged andcredit enhancements.

(4) Liquidity risk management
The Consolidated Group raises funds through borrowings from financial institutions or issuance of bonds. Accordingly, in theevent of a disruption to the financial system or financial/capital markets, or a major downgrade of the Consolidated Group’s
credit rating by a rating agency, the Consolidated Group’s fundraising becomes constrained and consequently there is apossibility that the Consolidated Group will not be able to carry out the payment on the date of payment.
The Consolidated Group has sufficient levels of cash and cash equivalents and maintains a long-term (unused) commitmentline agreement with a major financial institution in the amount of ¥10.0 billion ($90,326 thousand) to ensure liquidity andstability of funds. The Consolidated Group makes efforts to maintain good relationships with each financial institution.

- 63 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
1) Non-derivative financial liabilities
The breakdown of non-derivative financial liabilities by due date is presented as follows:
As of March 31, 2021
Between one andOver
Within one year
five years
five years
JPY
Trade and other payables
Bonds

USD

JPY

182,980 1,652,788

USD
－

JPY

－

Total

USD
－

JPY

－

USD

182,980 1,652,788

149

1,352

10,13591,549－－Borrowings

58,139525,153

54,466491,977

709

6,409

113,315 1,023,538

Lease liabilities

7,002

63,252

8,194

74,0172,214

20,007

17,412

157,277

Deposits received

3,398

30,695

－

－

－

－

3,398

30,695

Guarantee deposits received

894

8,080

112

1,015

1,633

14,754

2,640

23,849

Other

92

832

－

－

－

－

92

832

252,657 2,282,154

72,908658,558

4,557

41,170Within one year

Between one andfive years

Overfive years

JPY

JPY

JPY

Total

10,28592,901

330,124 2,981,881

As of March 31, 2020

Trade and other payables

Total
JPY

172,922－－

172,922

Bonds

5,079

10,241－

15,321

Borrowings

63,77961,3034,886

129,969

Lease liabilities

6,373

8,507

2,683

17,564

Deposits received

3,042

－

0

3,042

Guarantee deposits received

850

18

1,843

2,713

Other

209

－

－

209

252,256

80,071

9,414

341,743

Total

The Consolidated Group has guarantee obligations of ¥1,153 million ($10,418 thousand) and ¥1,025 million as of March 31,
2021 and March 31, 2020 respectively.
2) Derivative liabilities
The breakdown of derivative liabilities by due date is presented as follows:
As of March 31, 2021
Between one andWithin one year
five years
JPY

USD

JPY

USD

Over
five years
JPY

Total

USD

JPY

USD

Currency-related derivatives
Cash inflows

16,583

149,789

2,155

19,471－－

18,738169,259

Cash outflows

17,073

154,220

2,323

20,991－－

19,397

175,211

Sub total

490

4,431

168

1,520

－

－

658

5,951

Interest rate-related derivatives

79

722

15

138

－

－

95

860

Commodity-related derivatives

358

3,241

－

－

－

－

358

3,241

Total

929

8,395

183

1,658

－

－

1,112

10,053- 64 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
As of March 31, 2020
Within one year

Between one andfive years

Overfive years

Total

JPY

JPY

JPY

JPY

Currency-related derivatives
Cash inflows

33,803605－

34,409Cash outflows

34,207612－

34,820Sub total

404

7

－

411

Interest rate-related derivatives

107

95

－

202

Commodity-related derivatives

86

1

－

87

Total

598

103

－

702

(5) Market risk management
In many cases, the foreign currency risk, interest rate risk and risk of price fluctuations associated with goods traded incidental
to business transactions are hedged in with the transaction terms with trade partners, etc. In addition, the Consolidated Grouphas established a system under which a limit (position limit) and a loss limit are set for foreign exchange, interest rates (funds),
products and their derivatives, taking into account the scale of the risk and the income of each internal unit and company, sothat it can quickly reduce its position when the predetermined limit is exceeded. Also, the price fluctuation risks of these
positions are mitigated by using derivatives as a hedge. The positions are reported to management meeting regularly. When thepredetermined limit is exceeded, the Consolidated Group mitigates these positions after the analysis of the reason without
delay.
1) Foreign currency risk(ⅰ) Nature of foreign currency risk and its management policy
The Consolidated Group is engaged in foreign currency transactions in various currencies and terms incidental to its
export and import trading. The Consolidated Group participates in derivatives transactions such as forward contracts to
reduce the risk of currency fluctuation.
The Consolidated Group also has local subsidiaries and business corporations overseas. Account balances at thesecompanies are converted into yen at the exchange rates prevailing at the end of the reporting period, for the purposes ofpreparing consolidated financial statements. As a result, equity attributable to owners of the Parent may change throughexchange difference of foreign operations associated with exchange rate fluctuations.
In principle, the Consolidated Group enters into forward exchange contracts to hedge against the exchange rate currency
fluctuation risk of foreign currency-denominated receivables and payables that are controlled by currency and by contract
month. The Consolidated Group also enters into forward exchange contracts to hedge against foreign currencydenominated receivables and payables that are highly probable to arise from export/import-related forecast transactions.
(ⅱ) Sensitivity analysis of foreign currency risk
In regards to financial instruments held by the Consolidated Group as of the end of the reporting period, the following
chart shows the amounts affecting profit before tax and other comprehensive income (before tax effect adjustments), as
reported in the consolidated financial statements, that would result from 1% appreciation of Japanese Yen against U.S.
dollars.
The analysis is performed based on the assumption that all the other variables are held constant.
In addition, such analysis does not include the affected amounts based on translations (into Japanese yen) of financial
instruments denominated in functional currency, income and expenses denominated in foreign currency and assets andliabilities of foreign operations.

- 65 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
JPY
2021

USD
2021

2020

Profit before tax
U.S. dollar
Other comprehensive income
U.S. dollar

(59)

(31)

(536)

(175)

(273)

(1,584)

2) Interest rate risk(ⅰ) Nature of interest rate risk and its management policy
The Consolidated Group raises most funds needed for operating and financing activities in the form of borrowings fromfinancial institutions at variable interest rates, with the exception of certain loans. Since these borrowings and fundmanagement are exposed to an interest rate risk, interest expenses for the Consolidated Group may increase with a rise ininterest rates.
The Company and certain consolidated subsidiaries enter into interest rate swap contracts to avoid the interest rate
fluctuation risk stemming from the borrowings.
(ⅱ) Sensitivity analysis of interest rate risk
In regards to financial instruments held by the Consolidated Group at the end of the reporting period, the following tableshows the amounts affecting profit before tax assuming that the interest rate increases by 1%.
Under the analysis, the amounts affecting profit before tax are calculated by multiplying the net balance of floating ratefinancial instruments as of March 31, 2021 and 2020 by 1%, without considering future changes in the net balance,
currency exchange fluctuations and dispersing effects for floating rate borrowings derived from the difference in timing ofrefinancing and resetting of the interest rate, and based on the assumption that all the other variables are held constant.
JPY
USD
2021
2020
2021
Profit before tax
(808)
(969)
(7,299)3) Commodity price risk(ⅰ) Nature of commodity price risk and its management policy
In its mainstay commodity trading business in Japan and overseas, the Consolidated Group deals with grains, meatproducts and petroleum products which are influenced by market conditions. When the positions in these commodities
increase, the Consolidated Group will be exposed to the commodity price fluctuation risk stemming from rapid
movements in commodities prices or a decline in demand.
The Consolidated Group strives to reduce our exposure to price volatility by hedge-selling commodities, matching thequantity and timing of buying and selling, and utilizing commodity-related derivatives for hedging purposes.
(ⅱ) Sensitivity analysis of commodity price risk
In regards to commodity-related derivatives held by the Consolidated Group at the end of the reporting period, thefollowing table shows the amounts affecting profit before tax and other comprehensive income (before the tax effect)assuming that the commodity price decreases by 1%.
The analysis is performed based on the assumption that all the other variables are held constant.
JPY
2021
2020
Profit before tax
(50)
(75)
Foods
(41)
(49)
Fuels
Other comprehensive income
Foods
Fuels

USD
2021
(458)
(377)

(9)
3

(26)
(0)

(81)
31

3
－

(0)
－

31
－

4) Share price risk(ⅰ) Nature of share price risk and its management policy
The Consolidated Group holds marketable securities, which are exposed to the market price fluctuation risk.
The Consolidated Group attempts to reduce share price risk by periodically reviewing its shares held by the Consolidated
Group and selling those shares that it holds without strong rationale.

- 66 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅱ) Sensitivity analysis of share price risk
In regards to listed shares held by the Consolidated Group at the end of the reporting period, the following table shows theamounts affecting other comprehensive income (before the tax effect) assuming that the share price decreases by 1%.
The analysis is performed based on the assumption that all the other variables are held constant.
JPY
2021
2020
Other comprehensive income
(162)
(143)

USD
2021
(1,465)(6) Fair value of financial instruments
1) Fair value measurement
Fair values of financial instruments are presented as follows:
Fair values are categorized into three levels of the fair value hierarchy depending on inputs to valuation techniques; details aredescribed in Note 2. Basis of Preparing Consolidated Financial Statements: (4) Use of estimates and judgments.
2) Financial instruments measured at amortized cost
2021
Type

2020

Carrying amount
JPY

Carrying
amountFair value

USD

JPY

USD

Fair value
JPY

Financial assets
Trade and other receivables

1,280

11,568

1,280

11,568

1,428

1,428

Guarantee deposits

6,451

58,2706,451

58,270

6,783

6,783

Other financial assets

628

5,679

628

5,679

586

586

Total

8,360

75,5178,360

75,517

8,798

8,798

64,434582,008

64,450582,160

75,22975,273Financial liabilities
Bonds and borrowings
Long-term deposits received

－

－

－

－

0

0

Long-term guarantee deposits received

1,745

15,7691,745

15,769

1,862

1,862

Total

66,179597,777

66,196597,929

77,092

77,136The carrying amounts of trade and other receivables, other financial assets, trade and other payables, bonds and borrowings
and other financial liabilities, all of which are categorized into current assets or current liabilities of financial instruments
measured at amortized cost, approximate their fair values; therefore, those amounts are not included in the table above.
The fair values stated above are calculated as follows:(ⅰ) Trade and other receivables
The fair value of trade and other receivables is the present value of future cash flows discounted by an interest rate thatreflects time to maturity and credit risk.
(ⅱ) Guarantee deposits
The fair value of guarantee deposits is the present value of future cash flows discounted by an interest rate that reflects
time to maturity and credit risk.
(ⅲ) Other financial assets
The fair value of other financial assets is the present value of future cash flows discounted by an interest rate that reflects
time to maturity and credit risk.

- 67 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅳ) Bonds and borrowings
The fair value of bonds is determined based on their market price.
The fair value of borrowings is the present value of the sum of principal and interest payments discounted using anassumed interest rate on equivalent incremental borrowings.
(ⅴ) Long-term deposits received
The fair value of the long-term deposits received is the present value of future cash flows discounted by an interest ratethat reflects time to maturity and credit risk.
(ⅵ) Long-term guarantee deposits received
The fair value of long-term guarantee deposits received is the present value of future cash flows discounted by an interest
rate that reflects time to maturity and credit risk.
Financial assets and liabilities measured at amortized cost are categorized within Level 2 of the fair value hierarchy.
3) Financial instruments measured at fair value(ⅰ) Analysis of fair value by hierarchy level
The following tables provide the breakdown by hierarchy level of financial assets and liabilities that are measured at fairvalue on a recurring basis. No financial assets and liabilities are measured at fair value on a non-recurring basis. There
were no material transfers between different levels for the fiscal years ended March 31, 2021 and March 31, 2020.
As of March 31, 2021
Level 1JPY

Level 2USD

JPY

Level 3

USD

Total

JPY

USD

JPY

USD

AssetsOther investments
Financial assets measured
at fair value through profit
or loss
Stock

－

－

－

－

3,712

33,5293,712

33,52916,224

146,546－－

13,600122,850

29,824

269,396

Foreign exchange

－

－

3,058

27,626

－

－

3,058

27,626

Interest rate

－

－

－

－

－

－

－

－

Commodity

388

3,512

－

－

－

－

388

3,512

Foreign exchange

－

－

(658)

(5,951)

－

－

(658)

(5,951)

Interest rate

－

－

(102)

(922)

－

－

(102)

(922)

Commodity(358)(3,241)

－

－

－

－

(358)

(3,241)

Total

16,253

146,816

2,297

20,752

17,312

156,379

35,864

323,947

Financial assets measured
at fair value through othercomprehensive income
Stock
Other financial assets
Derivative transactions:

Liabilities
Other financial liabilities
Derivative transactions:- 68 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
As of March 31, 2020
Level 1

Level 2

Level 3

Total

JPY

JPY

JPY

JPY

AssetsOther investments
Financial assets measured
at fair value through profit
or loss
Stock

－

－

3,647

3,647

14,385－

10,246

24,632

－

1,146

－

1,146

Interest rate

－

－

－

－

Commodity

966

2

－

969

Foreign exchange

－

(411)

－

(411)

Interest rate

－

(213)

－

(213)

Commodity

(55)

(32)

－

(87)

Total

15,296492

13,89329,683Financial assets measured
at fair value through othercomprehensive income
Stock
Other financial assets
Derivative transactions:
Foreign exchange

Liabilities
Other financial liabilities
Derivative transactions:- 69 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
The methods of determining the fair value of the above instruments are described as follows:(a) Other investments
The fair value of listed shares is the quoted price in an active market, and is categorized within fair value hierarchy
Level 1.
The fair value of unlisted shares is calculated using valuation methods including discounted future cash flows, market
prices of comparable companies, net asset value, and other valuation methods, and is categorized within fair value
hierarchy Level 3. Measuring the fair value of unlisted shares involves the use of unobservable inputs such as discountrate and valuation multiples, as well as any necessary adjustments including discounts for a lack of liquidity.
The Company determines the policies and procedures for measuring the fair value of unlisted shares and convertible
bonds, and reviews the approach to measuring fair value on a recurring basis including the valuation model, by obtaining
the information on business operations and business plans associated with each equity issuer and confirming the datafrom comparable public companies.
(b) Derivative financial assets and liabilities
Currency-related derivatives
The fair value of forward exchange transactions is calculated based on the forward exchange rate at the end of the fiscal
year.
Interest rate-related derivatives
The fair value of interest-rate swaps is the present value of future cash flows discounted by an interest rate that reflects
time to settlement, as well as market conditions.
Commodity-related derivatives
The fair value of commodity futures transactions is calculated using final prices on commodities exchanges as of the
fiscal year-end. The fair value of commodity swap transactions is calculated based on the index prices publicly
announced at the end of the fiscal year.
Commodity futures transactions are categorized within Level 1 of fair value hierarchy. All other derivative financial
assets and liabilities are categorized within Level 2 of the fair value hierarchy.

- 70 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅱ) Recurring fair value measurements categorized within Level 3 of the fair value hierarchy
The changes in financial assets and liabilities that are measured at fair value on a recurring basis and are categorized
within Level 3 of the fair value hierarchy are presented as follows. There were no material transfers between different
levels for the years ended March 31, 2021 and March 31, 2020.
2021

2020

Other investments

Other investments
Total

FVPL

Total

FVOCI

FVPL

FVOCI

JPY

USD

JPY

USD

JPY

USD

JPY

JPY

JPY

3,647

32,943

10,24692,54913,893

125,491

3,962

11,862

15,825(190)(1,723)

－

－

(190)

(1,723)

(452)

－

(452)

－

－

3,159

28,536

3,159

28,536－(1,692)(1,692)

Purchase

250

2,261

402

3,640

653

5,901

179

351

531

Sale

－

－

(119)

(1,079)(119)(1,079)

－

(202)

(202)

Foreign currency translationdifference

5

48

0

4

5

53

(42)

(0)

(42)

Other

－

－

(88)

(800)

(88)

(800)

－

(72)

(72)

3,712

33,52913,600122,850

17,312

156,379

3,647

10,246

13,893

Balance at the beginning of theyear
Total gains or losses
Profit or loss (Note 1)
Other comprehensive income(Note 2)

Balance at the end of the year

FVPL: Financial assets measured at fair value through profit or loss.
FVOCI: Financial assets measured at fair value through other comprehensive income.
(Notes) 1. The gains or losses are included in “Other finance income” or “Other finance costs” in the consolidated statement ofincome. Of those gains or losses recognized in profit or loss, the amounts arising from financial instruments that were
held at the period end are ¥(190) million ($(1,723) thousand) for the fiscal year ended March 31, 2021 and ¥(452) million
for the fiscal year ended March 31, 2020.
2. The gains or losses are included in “Financial assets measured at fair value through other comprehensive income” in the
consolidated statement of comprehensive income.

- 71 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(ⅲ) Quantitative Information about the financial instruments categorized within fair value hierarchy Level 3
The following tables present quantitative information on the material assets categorized within Level 3 of the fair value
hierarchy, which were measured at fair value on a recurring basis.
As of March 31, 2021
Category
Financial assets measured at fairvalue through profit or loss
Financial assets measured at fairvalue through profit or loss

Fair value
JPY

Valuation technique

USD

1,679

15,167

Discounted cash flow
method2,032

18,362

Net asset value method－

12,649114,259

Market multiple method

P/B ratio
Illiquidity discount

951

8,591

Net asset value method－

Valuation techniqueSignificant
unobservable
inputsFinancial assets measured at fairvalue through othercomprehensive income

Significant
Weighted average
unobservable inputs
of input values
Discount rate

2.6%－
1.2times
30.0%

Financial assets measured at fairvalue through othercomprehensive income－

As of March 31, 2020
Category
Financial assets measured at fairvalue through profit or loss
Financial assets measured at fairvalue through profit or loss

Fair value
JPY
1,887

Discounted cash flow
method

1,759

Net asset value method

－

9,241

Market multiple method

P/B ratio
Illiquidity discount

1,004

Net asset value method－

Financial assets measured at fairvalue through othercomprehensive income

Discount rate

Weighted
averageof input values
2.6%－
0.9times
30.0%

Financial assets measured at fairvalue through othercomprehensive income－

The significant unobservable inputs used in measuring the fair value of unlisted shares are the discount rate, illiquidity
discount and P/B ratio (price-to-book ratio). A substantial increase (or decrease) in the discount rate or illiquidity discountcauses the fair value to substantially fall (or rise), while a substantial increase (or decrease) in the P/B ratio causes the fairvalue to substantially rise (or fall).

- 72 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(7) Financial assets measured at fair value through other comprehensive income
With respect to investments in equity instruments held for the purpose of maintaining and strengthening relationships withbusiness partners, the Consolidated Group has designated such investments as financial assets to be measured at fair value
through other comprehensive income in view of the holding purpose.
1) Fair value of major items of investment
The following tables present the fair value of major items of investment in equity instruments designated as financial assets
measured at fair value through other comprehensive income.
As of March 31, 2021
AmountName of issuer

JPY

USD

Tokio Marine Holdings, Inc.

3,151

28,463MARUDAI FOOD CO., LTD.

2,061

18,621

Nisshin Seifun Group Inc.

1,683

15,207

Daio Paper Corporation

1,459

13,183

SOTSU CORPORATION

1,457

13,164

BOT Lease Co., Ltd.

1,339

12,097SHIN KURUSHIMA DOCKYARD CO., LTD.

1,184

10,699The Norinchukin Bank

927

8,376

Hitachi Astemo Chassis Systems (Guangzhou) Ltd.

844

7,631

nms Holdings Corporation
Other

715

6,463

15,000135,491

As of March 31, 2020
AmountName of issuer

JPY

Tokio Marine Holdings, Inc.

2,962

MARUDAI FOOD CO., LTD.

2,347

Nisshin Seifun Group Inc.

1,639

Daio Paper Corporation

1,116

SOTSU CORPORATION

984

The Norinchukin Bank

980

BOT Lease Co., Ltd.

946

SHIN KURUSHIMA DOCKYARD CO., LTD.

788

Alpha Group Inc.

652

F.C.C. Co., Ltd.

488

Other

11,723

2) Dividend income
JPY
2021
Investments derecognized during the year
Investments held at the end of the year
Total

- 73 -

USD
2020

2021

74
943

13
909

669
8,525

1,017

923

9,194

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
3) Financial assets measured at fair value through other comprehensive income that were derecognized during the fiscal year
The Consolidated Group periodically reviews its held shares and sells those shares that it holds without a strong rationale withgains or losses on sale recognized in other comprehensive income. The following table presents the fair value on the date ofsale and cumulative gains or losses on sale.
JPY
USD
2021

2020

2021

Fair value on the date of sale

141

436

1,275

Cumulative gains (losses) on sale

59

203

541

4) Reclassification to retained earnings
The Consolidated Group reclassifies to retained earnings cumulative gains or losses arising from changes in the fair value offinancial assets measured at fair value through other comprehensive income in either of the following cases: when an
investment is disposed of, or when there is a significant decline in the fair value. Such cumulative gains or losses in othercomprehensive income that were reclassified to retained earnings for the years ended March 31, 2021 and March 31, 2020
were ¥(38) million ($(345) thousand) and ¥(162) million, respectively.

(8) Hedge Accounting(Cash Flow Hedge)
A cash flow hedge is a hedge of the exposure to variability in future cash flows arising from a forecast transaction orrecognized assets or liabilities. While a hedge is designated as cash flow hedge as long as the hedge is effective, the changes in
the fair value of qualifying hedging instrument should be recorded as other comprehensive income in the Consolidated
Statement of Comprehensive Income. The Consolidated Group continues such accounting treatment until variability in future
cash flows arising from unrecognized forecast transactions or recognized assets or liabilities designated as hedged items arerecorded in profit or loss. Moreover, portions determined to be ineffective for hedging accounting are recognized in profit orloss.
The Consolidated Group designates the following instruments as cash flow hedges: forward exchange contracts to fix cash
flows from foreign currency denominated receivables and payables, foreign currency denominated firm commitments andforeign currency denominated forecast transactions, interest rate swaps to fix variable interest rate on floating rate financial
liabilities, and commodity futures to fix cash flows from forecast transactions of commodity trade.
When applying hedge accounting, the Consolidated Group confirms that there are economic relationships between the hedged
items and hedging instruments through qualitative assessments, which show whether the critical terms of the hedging
instruments and the hedged items match exactly or are closely aligned, and quantitative assessments, which show fluctuationsof the value of hedged items and hedging instruments by the same risk offset each other, in order to confirm there are
economic relationships that variability in fair value or cash flows of the hedged items that are attributable to the hedged risk
shall be offset by the changes in fair value or cash flows of the hedging instruments. The Consolidated Group also establishes
appropriate hedge ratios considering an economic relationship between hedging instruments and hedged items as well as risk
management strategy.
The amounts recognized in profit or loss for the ineffective portion of the hedge are not material both for the fiscal years ended
March 31, 2021 and March 31, 2020. In addition, the amounts reclassified from valuation differences on cash flow hedges toprofit or loss are immaterial because the forecast transactions are no longer expected to occur.
Following are the carrying amounts of the hedging instruments as of March 31, 2021 and March 31, 2020. The fair value offinancial assets related to hedging instruments is included in “Other financial assets” while the fair value of financial liabilities
related to hedging instruments is included in “Other financial liabilities” in the consolidated statements of financial position.

- 74 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
As of March 31, 2021
Notional amount

Carrying amount
Derivative assets
Derivative liabilities
JPY
USD
JPY
USD

JPY

USD

Foreign currency risk
Forward exchange contracts

28,218254,887

1,289

11,651305

2,755Interest rate risk
Interest rate swap contracts

11,300102,068

－

－

102

922

Commodity price risk
Commodity futures contracts

476

4,306

17

157

80

729

As of March 31, 2020
Carrying amount
Derivative assets
Derivative liabilities
JPY
JPY

Notional amount
JPY
Foreign currency risk
Forward exchange contracts
Interest rate risk

35,907558

191

Interest rate swap contracts
Commodity price risk

13,200

－

213

202

10

4

Commodity futures contracts

The longest terms of hedging cash flow fluctuation risks by “Forward exchange contracts”, “Interest rate swap contracts” and“Commodity price risk” are about 3 years 6 months, 1 years 6 months and 1 year 10 months, respectively.
The following tables present the carrying amount of cash flow hedge reserve as of March 31, 2021 and March 31, 2020.
As of March 31, 2021
Cash flow hedge reservefor continuing hedges(before tax)
JPY
USD

Cash flow hedge reservefor discontinuing hedge accounting(before tax)
JPY
USD

Foreign currency risk
Forward exchange contracts

984

8,896

(16)

(153)

Interest rate risk
Interest rate swap contracts

(102)

(922)

－

－

Commodity price risk
Commodity futures contracts

(63)

(571)

(7)

(65)

As of March 31, 2020
Cash flow hedge reservefor discontinuing hedge
accounting(before tax)
JPY

Cash flow hedge reservefor continuing hedges(before tax)
JPY
Foreign currency risk
Forward exchange contracts

366－Interest rate risk
Interest rate swap contracts

(213)

－

Commodity price risk
Commodity futures contracts

6(1)

The following tables present the carrying amounts of transactions that affected the consolidated statements of comprehensive
income as a result of applying hedge accounting for the fiscal years ended March 31, 2021 and March 31, 2020.

- 75 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
Fiscal year ended March 31, 2021 (from April 1, 2020 to March 31, 2021)
Change in value of hedging
Reclassification from cash
instruments recognized inflow hedge reserve to profit
other comprehensive income
or loss
JPY

USD

JPY

USD

Line item for which profit
or loss was affected byreclassification

Foreign currency risk
Forward exchange contracts

728

6,578

(127)

(1,149) Other income

(1)

(10)

112

1,013

(70)

(636)

(4)

Interest rate risk
Interest rate swap contracts

Interest expenses

Commodity price risk
Commodity futures contracts(45) Cost of sales

Fiscal year ended March 31, 2020 (from April 1, 2019 to March 31, 2020)
Change in value of hedging
Reclassification from cash
instruments recognized inflow hedge reserve to profit
other comprehensive income
or loss
JPY

JPYLine item for which profit orloss was affected byreclassification

Foreign currency risk
Forward exchange contracts

333(22) Other income

20

198

Interest expenses

4

49

Cost of sales

Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts(9) Transfer of financial assets
The Consolidated Group liquidates certain trade receivables by discounting notes or the like. However, with respect to someliquidated receivables, the Consolidated Group may be obligated to make payments as recourse for non-payment by the debtor.
The Consolidated Group continues to recognize such liquidated receivables as they do not meet the criteria for derecognition offinancial assets.
The Consolidated Group recognized such liquidated assets as “Trade and other receivables” in the amount of ¥1,509 million($13,635 thousand) and ¥2,592 million as of March 31, 2021 and March 31, 2020, respectively. In addition, liabilities relating
to the deposit amounts which arose upon the transfer of such assets were accounted for as “Bonds and borrowings” in theamount of ¥1,509 million ($13,635 thousand) and ¥2,592 million as of March 31, 2021 and March 31, 2020, respectively. Suchliabilities are settled when payments for such liquidated assets are made, and the Consolidated Group may not use suchliquidated assets until such settlement occurs.

- 76 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(10) Offsetting financial assets and financial liabilities
The following tables present the financial assets and financial liabilities recognized for the same counterparties including
financial instruments that were not offset even though they were covered by an enforceable master netting arrangement orsimilar agreement because they did not meet some or all of the offsetting criteria as of March 31, 2021 and March 31, 2020.
JPY
USD
2021
Amounts of financial assets presented in the consolidated
statement of financial position
Foreign exchangeInterest rate
Commodity
Amounts that were not offset even though they were coveredby an enforceable master netting arrangement or similar
agreement because they did not meet some or all of the

2020

2021

3,447

2,116

31,137

3,058
－

1,146
－

27,626
－

388

969

3,512

(619)

(413)

(5,600)

2,827

1,703

25,537

offsetting criteria
Net amounts

JPY
2021
Amounts of financial liabilities presented in the consolidated
statements of financial position
Foreign exchangeInterest rate
Commodity
Amounts that were not offset even though they were coveredby an enforceable master netting arrangement or similar
agreement because they did not meet some or all of theoffsetting criteria
Financial collateral pledged
Net amounts

USD
2020

2021

1,119

712

10,115

658
102

411
213

5,951
922

358

87

3,241

(619)

(413)

(5,600)(209)－(1,893)

290

299

2,623

Certain financial assets and financial liabilities have not been offset because they do not meet some or all of the criteria for
offsetting financial assets and financial liabilities. The rights to offset such financial assets and financial liabilities become
enforceable only under particular circumstances, such as when the other party fails to discharge an obligation due to its
bankruptcy or other such reasons.

- 77 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
31. Leases(1) Lessee
The Consolidated Group leases office building, computer-related equipment for the enterprise system (tools, furniture andfixtures) and other assets.
The profit or loss amounts recognized as lessee are presented as follows:
JPY
USD
2021

2020

2021

Depreciation of right-of-use assets
Buildings and structures
Machinery, vehicles, tools, furniture and fixtures
Others
Total

7,228
666

5,631
303

65,292
6,023

88

2

802

7,984

5,936

72,119Interest expense on lease liabilities

27

46

248

Short-term lease expenses
Sublease income

411
114

1,984
50

3,717
1,034

The cash outflow related to lease payments are presented as follows:
JPY
2021

USD
2020

Cash outflow for leases

8,329

2021
7,828

75,234The information on the balance and increase or decrease of the right-of-use assets are provided in Note 10. Property, Plant andEquipment and Note 11. Goodwill and Intangible Assets.
And the information on the breakdown of lease liabilities by due date is presented in Note 30. Financial Instruments: (4)Liquidity risk management(2) Lessor
The Consolidated Group leases out machinery, plumping equipment of LPG, aircraft parts and other assets.
The profit or loss amounts recognized as lessor are presented as follows:
JPY
2021

USD

2020

2021

Profit or loss from finance leases

6

16

61

Lease income from operating leases

135

91

1,219

The breakdown of lease receivables of finance lease and lease payments to be received of operating lease are presented asfollows:
JPY
USD
2021

2020

2021

Lease
receivables

Lease
payments
to be received

Lease
receivables

Lease
payments
to be received

Lease
receivables

Lease
payments
to be received

Within one year

20

85

21

85

181

768

Between one and two years

9

59

24

60

88

535

Between two and three years

5

60

12

60

51

544

Between three and four years

5

49

5

61

49

450

Between four and five years

5

6

5

51

47

60

Over five years

8

6

13

8

73

58

54

267

81

324

492

2,418

Total

- 78 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
32. Pledged Assets(1) Pledged assets and associated secured obligations
Details of pledged assets and associated secured obligations are as follows:
JPY
2021

USD
2020

2021

Pledged assets:
Other financial assets (non-current)
Property, plant and equipment

46
539

20
1,464

419
4,872

Total

585

1,484

5,291

Associated secured obligations:Short-term borrowings (current)

1,363

1,466

12,315Long-term borrowings (non-current)
Total

680

921

6,146

2,043

2,388

18,461

Trust receipts issued under customary import financing arrangements give banks a security interest in the goods imported orsales proceeds resulting from the sales of the goods. However, due to the large volume of transactions, it is impracticable todetermine the aggregate amounts of assets covered by outstanding trust receipts and those transactions were not included in theabove amounts.

(2) Assets pledged in lieu of guarantee money
The breakdown of assets pledged in lieu of guarantee money or the like is as follows:
JPY
2021

USD
2020

2021

Assets pledged in lieu of guarantee money or guarantee funds
Other financial assets (current)
Other financial assets (non-current)

－

－

50
60

3,316

3,143

29,959

3,316

3,253

29,959－Other investments
Total

－

33. Contingent Liabilities(1) Debt guarantees
The Consolidated Group is contingently liable for guarantees on bank borrowings and trade payables owed by entities that do
not belong to the Consolidated Group.
The Group may become responsible for the amounts that are unpayable by the borrower and for losses attached to theunpayable amounts.
JPY
USD
2021
Debt guarantees for equity method investees
Debt guarantees for third parties

2020
100
1,052

2021
119
906

911
9,507

Total
1,153
1,025
10,418(Notes) 1. The above amounts include those for quasi-guarantee acts.
2. Debt guarantees for third parties include the debt guarantees covered by the insurance agreements that is limited to¥1,046 million ($9,455 thousand) for the fiscal year ended March 31, 2021 and ¥897 million for the fiscal year ended
March 31, 2020, respectively.

(2) Legal proceedings
The Company’s subsidiary, Kanematsu Communications Ltd., is subject to a claim brought by its business partner to theTokyo District Court in April 2021 for damages, etc. caused by its default in connection with the transactions ofcommunication services (the business partner claimed damages in the suit of ¥14,664 million). However, it is difficult to makean estimation of the loss at present.

- 79 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
34. Significant Subsidiaries(1) Significant subsidiaries of the Company are as follows:
Trade nameLocation

Details of major operations

Percentage of voting
rights (%)
2021

2020

System integration of ICT andcommunications equipment

58.36(0.40)

58.34(0.40)Development, sales, and maintenance ofsoftware for computers and computer

100.00100.00(100.00)(100.00)[Electronics & Devices]
Kanematsu Electronics Ltd.

Chuo-ku, Tokyo, Japan

Nippon Office Systems Ltd.

Koto-ku, Tokyo, Japan

peripherals, etc.
Kanematsu Communications
Ltd.

Shibuya-ku, Tokyo, Japan

Sales of mobile communications devices;
Mobile internet systems and services

100.00100.00Kanematsu Granks, Corp.

Shinjuku-ku, Tokyo, Japan

Website planning, building, and operation;
Content planning, production, and sales

100.00(100.00)

100.00(100.00)

Kanematsu BD Communications

Kurume-shi, Fukuoka,

Ltd.

Japan

Sales of mobile communication device

100.00100.00(100.00)(100.00)

52.97

52.97

100.00100.00100.00100.00100.00100.00

70.00

70.00

100.00(100.00)

100.00(100.00)

100.00(100.00)

100.00(100.00)

100.00100.00100.00100.00100.00100.00

Manufacture and sales of homeKanematsu Sustech Corp.

construction materials; Ground inspection
services and improvement work;

Chuo-ku, Tokyo, Japan

Installation and sales of security cameras
Kanematsu Advanced Materials
Corp.

G-Printec, Inc.

Import, export, storage, sales, andprocessing of materials and components

Chuo-ku, Tokyo, Japanfor vehicle equipment, industrial
electronics, and communication devices
Design, development, manufacture, sales
and maintenance services (OEM) for card

Saiwai-ku, Kawasaki-shi,
Kanagawa, Japan

printers and related equipment
Import, export, processing, development,

Kanematsu Futuretech Solutions
Corporation

design, manufacture, sales ofsemiconductors, electronic components,

Chuo-ku, Tokyo, Japanand module products; EMS business
Kanekoh Electronics (Shanghai)Co., Ltd.
Kanematsu Industrial andTrading (Dalian F.T.Z.) Co., Ltd.

Design, development, manufacture, andsales of control modules for lithium-ion

Shanghai, China

batteries
Manufacture of materials for electronic
Dalian, China

precision parts and import, export andsales of electronic components
Import, export, storage, sales andKanematsu Advanced Materials
USA, Inc.

processing of materials and components
for vehicle equipment, industrial

Texas, USA

electronics, and communication devices[Foods & Grain]
Kanematsu Foods Corp.

Chuo-ku, Tokyo, Japan

Kanematsu Agritec Co., Ltd.

Matsudo-shi, Chiba, Japan

Kanematsu Soytech Corp.

Chuo-ku, Osaka, Japan

Food wholesaling and cold storage
Manufacture and sales of feed andfertilizer
Sales of soybeans, pulses & peas, andgrain; Development and marketing of tofu
and other ingredients for processed foods- 80 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021

Trade name

KG Agri Products, Inc.

Location

Details of major operations
Seed development; Contract farming;
Sorting, processing, and sales of foodOhio, U.S.A.

Percentage of voting
rights (%)
2021

2020

100.00100.00100.00100.00soybeans
Kai Enterprises, Inc.

Washington, U.S.A.

Sales of hay and roughage(15.00)(15.00)P.T. Kanemory Food Service

Serang, Indonesia

Manufacture of processed foods;
Management of central kitchen

59.90(10.00)59.90(10.00)[Steel, Materials & Plants]
Kanematsu Trading Corp.

Chuo-ku, Tokyo, Japan

Sales of steel and construction materials

100.00100.00

Kyowa Steel Co., Ltd.

Kasai-shi, Hyogo, Japan

Kanematsu Chemicals Corp.

Chuo-ku, Tokyo, Japan

Cutting and processing of steel sheet;

100.00100.00

Sales of construction materials(100.00)(100.00)

Sales of petrochemicals, automobilerelated chemicals, health food ingredients,

100.00100.00and pharmaceuticals
Sales of health foods and provision of

100.00100.00medical information(100.00)(100.00)

Chiyoda-ku, Tokyo, Japan

Sales of petroleum products and LPG

100.00100.00Kanematsu Yuso Co., Ltd.

Chiyoda-ku, Tokyo, Japan

Delivery and storage of petroleum
products

100.00100.00Kanematsu KGK Corp.

Chuo-ku, Tokyo, Japan

Sales of machine tools and industrial
machinery

100.0097.89

Benoit Holding Company

Illinois, U.S.A.

Holding company

Benoit Premium Threading, LLC

Louisiana, U.S.A.

Kanematsu Wellness Corp.

Chuo-ku, Tokyo, Japan

Kanematsu Petroleum Corp.

Steel Service
Oilfield Tubular, Inc.

Oklahoma, U.S.A.

85.18

85.18

(85.18)(85.18)

Steel tubing fabrication; Manufacture and

54.00

54.00

sales of oil well-related parts(54.00)(54.00)

51.00

51.00

Sales of steel materials for oil excavation(51.00)(51.00)100.00(100.00)

Illinois, U.S.A.

Sales of machine tools

100.00(100.00)

Kanematsu Aerospace Corp.

Minato-ku, Tokyo, Japan

Sales of aircraft, defense, and aerospacerelated products

100.00100.00

KANEYO Co., Ltd.

Chuo-ku, Osaka, Japan

100.00100.00

90.01

－

93.59

93.59

60.00

60.00

96.67

96.67

KGK International Corp.
[Motor Vehicles & Aerospace]

Sales of bedding, fiber raw materials forindustrial materials, and synthetic fiber
raw materials
Development and sales of network
services for vehicle operation

Datatec Co., Ltd.

Ota-ku, Tokyo, Japan

Aries Motor Ltd.

Warsaw, Poland

Aries Power Equipment Ltd.

Warsaw, Poland

KG Aircraft Rotables Co., Ltd.

Dublin, Ireland

management, driving safety analysis, etc.;
Development and sales of vehicle
measuring instruments
Sales and maintenance of automobiles
Sales of engines, generators, lawnmowers,
and other general-purpose machinery
Replacement and maintenance of aircraft
rotable components; Leasing; Sales- 81 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021

Trade nameLocation

Details of major operations

Percentage of voting
rights (%)
2021

2020

100.00100.00100.00100.00[Others]
Beverage-vending machine operations;
Shintoa Corp.

Kanematsu Logistics &Insurance Ltd.

Chiyoda-ku, Tokyo, Japan

Chuo-ku, Tokyo, Japan

Imports, exports, and sales of aircraft
engines
Insurance agency and forwarding
business; Consigned freight forwarding
business[Overseas local subsidiaries]
Kanematsu USA Inc.

Illinois, U.S.A.

Export, import and sales of merchandise

100.00100.00Kanematsu (Hong Kong) Ltd.

Hong Kong, China

Export, import and sales of merchandise

100.00100.00Kanematsu (China) Co., Ltd.

Shanghai, China

Export, import and sales of merchandise

100.00100.00Kanematsu (Thailand) Ltd.

Bangkok, Thailand

Export, import and sales of merchandise

100.00100.00

Bangkok, Thailand

Export, import and sales of merchandise

49.00(24.00)49.00(24.00)Kanematsu (Singapore) Pte. Ltd.

Singapore, Singapore

Export, import and sales of merchandise

100.00100.00Kanematsu Taiwan Corp.

Taipei, Taiwan

Export, import and sales of merchandise

100.00100.00Kanematsu Europe Plc

London, U.K.

Export, import and sales of merchandise

Kanematsu GmbH

Duesseldorf, Germany

Kanematsu Australia Ltd.

Sydney, Australia

Watana Inter-Trade Co., Ltd.
(Notes) 1

100.00100.00(100.00)(100.00)

Export, import and sales of merchandise

100.00100.00

Export, import and sales of merchandise

100.00100.00Kanematsu New Zealand Ltd.
Auckland, New Zealand
Export, import and sales of merchandise
100.00100.00(Notes) 1. It is treated as a subsidiary because the Consolidated Group has a substantial control of the finance and management
policy over the company through the dispatch of the majority of board members.
2. The figures in the parentheses in “Percentage of voting rights” indicate the indirect ownership ratio included in the total.

- 82 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(2) Non-controlling interests
The subsidiary with non-controlling interests that is significant for the Consolidated Group is Kanematsu Electronics Ltd. Its
condensed financial information is presented as follows. The amounts presented below are before the elimination of intracompany transactions.
[Condensed statement of financial position]
JPY
2021

USD
2020

2021

Current assets

68,97065,735622,981

Current liabilities

17,767

17,522

160,489

Current assets (net)Non-current assets

51,202
8,327

48,213
7,706

462,493
75,220Non-current liabilities

3,031

3,037

27,386

Non-current assets (net)

5,295

4,668

47,833Equity56,49852,881

510,326

Cumulative amounts of non-controlling interests

23,625

22,113

213,399[Condensed statements of income and comprehensive income]
JPY
2021

USD
2020

2021

Revenue

65,55871,956592,168

Profit for the year
Other comprehensive income

7,341
227

7,333
(45)

66,312
2,058

Total comprehensive income

7,569

7,287

68,369Profit for the year attributable to non-controlling interests

3,062

3,059

27,667

Dividends paid to non-controlling interests

1,610

1,610

14,551[Condensed statement of cash flows]
JPY
2021

USD
2020

2021

Cash flows from operating activities

9,754

7,008

88,112

Cash flows from investing activities
Cash flows from financing activities(884)(5,008)(1,472)(4,331)(7,988)(45,240)

Increase (decrease) in cash and cash equivalents, net

3,862

1,204

34,884(3) Transaction with non-controlling interests
There was no transaction with significant non-controlling interests for the fiscal year ended March 31, 2021 and March 31,
2020.

- 83 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
35. Related Parties(1) Related party transactions
For the fiscal year ended March 31, 2021
Type
Associate(including subsidiaries of

Name

Detail of related party
relationshipTransaction amount

Outstanding amount

JPY

USD

JPY

USD

Kantatsu Co., Ltd.

Purchase of merchandise

6,547

59,143

1,678

15,159

Ogura Industrial Corp.

Sales of merchandise

2,180

19,698355

3,214

Purchase of merchandise

2,007

18,133

176

1,597

Sales of merchandise

1,316

11,893

4,603

41,582the associate)
Associate

Sage Hill

AssociateNorthwest, Inc.

Associate(including subsidiaries of

AJU STEEL Co., Ltd.

the associate)(Notes) 1. The related party transaction amounts are determined through negotiation with consideration given to the prevailingmarket prices.
2. As described in Note 33 Contingent Liabilities, debt guarantees are provided to the equity method investees.
3. As the Consolidated Group conducts a transaction as a party involved, transaction amount of AJU STEEL Co., Ltd. ispresented in the net amount of the commission.
For the fiscal year ended March 31, 2020
Type

Name

Detail of related party
relationshipTransaction amount

Outstanding amount

JPY

JPY

Associate(including subsidiaries of
the associate)

Kantatsu Co., Ltd.

Purchase of merchandise

12,756

1,786

Associate

Ogura Industrial Corp.

Sales of merchandise

2,829

395

Sales of merchandise

79

1,004

2,592

212

Associate
Associate

HOKUSHIN CO.,LTD.
Sage Hill
Northwest, Inc.

Purchase of merchandise

Associate(including subsidiaries of
AJU STEEL Co., Ltd.
Sales of merchandise
346
1,046
the associate)(Notes) 1. The related party transaction amounts are determined through negotiation with consideration given to the prevailingmarket prices.
2. As described in Note 33 Contingent Liabilities, debt guarantees are provided to the equity method investees.
3. As the Consolidated Group conducts a transaction as a party involved, transaction amount of HOKUSHIN CO., LTD.
and AJU STEEL Co., Ltd. are presented in the net amount of the commission.

- 84 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
(2) Remuneration to management executives
The remuneration to the Company’s directors and auditors consists of base compensation, performance-linked compensationand performance-linked stock compensation.
The amount of remuneration to the Company’s directors and audit & supervisory board members are as follows:
JPY
USD
2021

2020

2021

Base compensation and performance-linked compensation

292

311

2,644

Performance-linked stock compensation

16

25

153

Total
309
337
2,797
(Note) The amount of performance-linked stock compensation for the fiscal years ended March 31, 2021 and March 31, 2020 are
expenses of performance-linked stock compensation during the fiscal years ended March 31, 2021 and March 31, 2020.

36. Share-based Payments(1) Performance-Linked Stock Compensation Plan
The Company and certain subsidiaries implemented a Performance-Linked Stock Compensation Plan for Directors andExecutive Officers. The aim of adoption of the Plan is to further clarify the linkage between compensation of Directors andExecutive Officers and the corporate performance and stock value of the Company and certain subsidiaries, and to encouragethem to contribute to mid- to long-term improvement in the corporate performance and expansion of corporate value because
they will share the benefits and risks of stock price fluctuations with the shareholders.
Expenses related to A Performance-Linked Stock Compensation Plan for certain subsidiaries are not presented because they are
not significant.
The vesting condition implemented a Performance-Linked Stock Compensation Plan for Directors and Executive Officers of
the Company is that after granted date they will work continuously until achieving certain performance goals and vesting. The
stocks will be granted to Directors and Executive Officers in the final year of the medium-term vision (from April 1, 2018 toMarch 31, 2024), or the fiscal year that achieved the medium-term vision.

(2) Granted stocks and granted prices of shares
The fair value of the granted date was estimated using the Black-Scholes model considering expected dividend based on past
dividend results. The number of shares granted during the fiscal years ended March 31, 2021 and March 31, 2020 and theweighted average share price are as follows.
2021
Number of shares
Share
As of the beginning of the2020

Weighted average
share priceYen

U.S.dollar

Number of shares

Weighted average
share price

Share

Yen

70,2201,524

1440,704

1,583

41,1831,441

1343,369

1,487

Exercised－－－(9,000)1,583

Forfeited(9,367)1,524

14(4,853)

1,583

As of the end of the year

102,0361,490

13

70,220

1,524

－

－

－

－

－

year
GrantedExercisable balance
as of the end of the year(3) Stock compensation expenses
Performance-Linked Stock compensation Plan is equity-settled share-based payment transaction. The stock compensation
expenses for the fiscal years ended March 31, 2021 and March 31, 2020 are ¥45 million ($407 thousand) and ¥57 million,
respectively.

- 85 -

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2021
37. Subsequent Events
Not applicable except for the matter specified in Note 33. Contingent Liabilities: (2) Legal proceedings.

- 86 -