Disclaimer: This document has been translated from the financial section of the JapaneseAnnual Securities Report for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail.

Annual Securities Report（Financial Section）

The 158th Fiscal Term (April 1, 2021 to March 31, 2022)

Tokuyama Corporation

1. Consolidated financial statements etc.
(1) Consolidated financial statements(i) Consolidated balance sheets(Millions of yen)
As of March 31, 2021
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Notes receivable - trade
Accounts receivable - trade
Lease receivables
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts

83,68170,901

Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Leased assets
Accumulated depreciation

As of March 31, 2022

83,116－－25
14,674
10,995
13,930
5,666
(115)

－
7,212
70,98911
19,194
14,264
22,265
6,968(72)

199,760

223,950*2, *3 105,028*2, *3 108,926(76,427)(78,815)

28,601

30,111*2, *3 459,039*2, *3 475,226(413,493)(424,410)

45,54550,815*3 22,827*3 23,356(19,995)(20,368)

2,831

2,987

*2 31,903*2 32,112

6,900(2,431)

8,682(3,302)

Leased assets, net

4,469

5,379

Construction in progress

10,674

18,195

Total property, plant and equipment

124,025

139,60286
43*3 1,751

68
25*3 2,588

1,882

2,682

*1, *2 27,171*1, *2 28,255

2,094
16,407
10,660*1 4,854
(61)

2,094
21,111
10,482*1 5,077(46)

61,126

66,974

187,034

209,259

386,794433,210Intangible assets
Goodwill
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets―1―

(Millions of yen)
As of March 31, 2021
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings
Lease obligations
Income taxes payable
Provision for bonuses
Provision for share awards
Provision for repairs
Provision for decommissioning and removal
Provision for product warranties
Provision for loss on compensation for damage
Provision for environmental measures
Provision for loss on disaster
Provision for restructuring
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term borrowings
Lease obligations
Deferred tax liabilities
Provision for retirement benefits for directors (andother officers)
Provision for share awards
Provision for repairs
Provision for decommissioning and removal
Allowance for loss on compensation for building
materials
Provision for environmental measures
Retirement benefit liability
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-salesecurities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

As of March 31, 2022

39,547*2 1,850*2 8,899

1,204
2,375
3,057
33
4,884
1,100
95
122
40
17
－
*2 20,079
83,308―2―

49,055463*2 20,823
1,225
2,157
3,462
－
5,409
908
73
108
14
－
47
18,587102,337－

15,000*2 82,812*2 67,951

3,671
247

3,754
248

201

194

－
1,340
1,028

33
1,181
874

124

88

137
1,991
56
6,613
98,224
181,533

118
2,081
57
6,370
97,954200,292

10,00023,455
157,332(349)
190,438

10,00023,453
180,534(414)
213,573

3,274

3,587

(19)
2,165
2,702
8,122
6,700
205,261
386,794

(8)
4,849
2,505
10,932
8,411
232,917433,210

(ii) Consolidated statements of income and consolidated statements of comprehensive income
Consolidated statements of income(Millions of yen)
Fiscal year ended
March 31, 2021
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Selling expenses
General and administrative expenses
Total selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted for using equity
methodForeign exchange gains
Equipment sale income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Provision for decommissioning and removals
Equipment cost of sales
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of non-current assets
Gain on sale of investment securities
Gain on sale of shares of subsidiaries and associates
Subsidy income
Gain on insurance claimsCompensation for damage income
Gain on sales of patent right and other
Gain on liquidation of subsidiaries and associates
Gain on step acquisitions
Other
Total extraordinary income
Extraordinary losses
Loss on sale of non-current assets
Impairment losses
Loss on disaster
Loss on tax purpose reduction entry of non-current
assetsLoss on disposal of non-current assets
Provision for decommissioning and removals
Other
Total extraordinary loss
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent―3―

Fiscal year ended
March 31, 2022

302,407*1 293,830*2, *5 207,254*2, *5 198,417

95,152

95,412*3 40,510*3 44,854*4, *5 23,719*4, *5 26,017

64,23030,92170,872
24,539

94
395

139
502

949

1,043

320
575
2,836
5,172

1,000
－
4,208
6,894

1,524
750
562
2,459
5,297
30,796

1,382
558
－
3,637
5,578
25,855*6 98*6 474

77
746
155
203
－
1,478
197
125
96
3,180

161
－
203
36
2,218
－
－
－
35
3,129

*7 2

*7 14

*8 825

243

*8 3
157

3

115

830
817
293
3,017
30,959
4,336
1,302
5,639
25,320785
24,534

820
－
224
1,334
27,6494,306(4,831)(525)
28,175174
28,000Consolidated statements of comprehensive income(Millions of yen)
Fiscal year ended
March 31, 2021
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

Fiscal year ended
March 31, 2022
25,32028,175

2,968
16
1,480
694

317
10
2,805
(199)

43

51

*1 5,203*1 2,985

Comprehensive income

30,524

31,160Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to non-controllinginterests

29,67030,814

853

346

―4―

(iii) Consolidated statements of changes in equity
Fiscal year ended March 31, 2021
(Millions of yen)
Shareholders' equity

Balance as of April 1,
2020

Share capital

Capital surplus

10,00020,018Retainedearnings
137,665

Treasury shares

Total
shareholders’equity(1,809)165,874

Changes during period
Profit attributable toowners of parent

24,53424,534

Dividends of surplus(4,868)(4,868)Purchase of treasury
shares
Disposal of treasury
sharesChange due to shareexchanges
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items
other than shareholders'equityTotal changes during
periodBalance as of March 31,
2021

(42)

(42)

(0)

7

7

4,399

1,494

5,894

(961)

(961)

－

3,437

19,666

1,460

24,563

10,00023,455

157,332(349)

190,438

Accumulated other comprehensive income
Total
Valuation
Deferred gains Foreign currency Remeasurements accumulated Non-controlling Total net assets
difference oninterests
or losses
translationof defined benefit
otheravailable-for-saleon hedges
adjustment
planscomprehensive
securities
incomeBalance as of April 1,
2020

332

(35)

703

1,986

2,986

11,568

180,429

Changes during period
Profit attributable toowners of parent

24,534

Dividends of surplus(4,868)Purchase of treasury
shares
Disposal of treasury
sharesChange due to shareexchanges
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes in items
other than shareholders'equityTotal changes during
periodBalance as of March 31,
2021

(42)
7
5,894

(961)

2,942

16

1,461

715

5,136

(4,868)

267

2,942

16

1,461

715

5,136

(4,868)24,831

3,274

(19)

2,165

2,702

8,122

6,700

205,261―5―

Fiscal year ended March 31, 2022
(Millions of yen)
Shareholders' equity

Balance as of April 1,
2021

Share capital

Capital surplus

10,00023,455Retainedearnings
157,332

Treasury shares

Total
shareholders’equity(349)

190,438

Changes during period
Profit attributable toowners of parent

28,00028,000

Dividends of surplus(5,045)(5,045)Purchase of treasury
shares
Disposal of treasury
sharesChange in ownershipinterest of parent due totransactions with noncontrolling interests
Increase (decrease) due
to changes in theaccounting period of
consolidated subsidiaries
Net changes in items
other than shareholders'equityTotal changes during
periodBalance as of March 31,
2022

(112)

(112)

47

47

(0)

(2)

(2)

247

247

－

(2)

23,202(64)

23,135

10,00023,453

180,534(414)

213,573

Accumulated other comprehensive income
Total
Valuation
Deferred gains Foreign currency Remeasurements accumulated Non-controlling Total net assets
difference oninterests
or losses
translationof defined benefit
otheravailable-for-saleon hedges
adjustment
planscomprehensive
securities
incomeBalance as of April 1,
2021

3,274

(19)

2,165

2,702

8,122

6,700

205,261

Changes during period
Profit attributable toowners of parent

28,000

Dividends of surplus(5,045)Purchase of treasury
shares
Disposal of treasury
sharesChange in ownershipinterest of parent due totransactions with noncontrolling interests
Increase (decrease) due
to changes in theaccounting period of
consolidated subsidiaries
Net changes in items
other than shareholders'equityTotal changes during
periodBalance as of March 31,
2022

(112)
47

(2)

247

313

10

2,683

(197)

2,810

1,711

4,521

313

10

2,683

(197)

2,810

1,711

27,656

3,587

(8)

4,849

2,505

10,932

8,411

232,917―6―

(iv) Consolidated statements of cash flows(Millions of yen)
Fiscal year ended
March 31, 2021
Cash flows from operating activities
Profit before income taxes
Depreciation
Increase (decrease) in provisions
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Interest and dividend income
Foreign exchange losses (gains)
Loss (gain) on sale of property, plant and equipment
Loss (gain) on sale of investment securities
Loss (gain) on sale of shares of subsidiaries andassociates
Share of loss (profit) of entities accounted for using
equity method
Subsidy income
Interest expenses
Loss on tax purpose reduction entry of non-current
assetsImpairment losses
Loss (gain) on disposal of non-current assets
Gain on insurance claims
Gain on sales of patent right and otherFiscal year ended
March 31, 2022
30,95917,003
1,795
(129)
(69)
(490)
10
(96)
(77)

27,64919,716
1,451
102
(121)
(641)
(458)
(460)
(161)

(746)

－

(949)

(1,043)

(155)
1,524

(203)
1,382

3

115

825
830
(203)
(1,478)

3
820
(36)

Gain on liquidation of subsidiaries and associates
Loss (gain) on step acquisitions

(197)
(125)

Compensation for damage income
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Increase (decrease) in trade payables
Increase (decrease) in other current liabilities
Other, net－(2,124)
2,283
(914)
(533)
1,190
319

－
－
－
(2,218)(6,796)(15,704)(1,207)
8,538(1,928)(251)

Subtotal

48,45428,547

Interest and dividends received
Interest paid
Proceeds from insurance income
Compensation for damage received
Compensation for damage paid
Income taxes refund (paid)

915(1,530)257－(31)(4,750)1,174(1,386)
36
2,218
(117)
(4,486)

Net cash provided by (used in) operating activities

43,31425,986―7―

(Millions of yen)
Fiscal year ended
March 31, 2021
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries resulting
in change in scope of consolidation
Long-term loan advances
Collection of long-term loans receivable
Subsidies received
Gain on sales of patent right and other
Other, net

Fiscal year ended
March 31, 2022

(106)
240
(23,800)
1,108
(251)
133

(259)
275
(31,887)
713
(428)
547

3,356

－

(29)
180
155
1,489
(1,752)

(201)
187
203
－
(2,948)(19,276)(33,797)(1,490)187(15,857)－
1,303(4,861)(239)(40)(1,531)(1,787)
6,218(9,150)14,926
1,514(5,034)(158)(101)(1,307)

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(22,530)

5,118

623

1,267

2,131

(1,424)

Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents due tochanges in the accounting period of consolidated
subsidiaries
Cash and cash equivalents at end of period

80,91883,050－870*1 83,050*1 82,496

Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Proceeds from issuance of shares
Dividends paid
Dividends paid to non-controlling interests
Decrease (increase) in treasury shares
Other, net―8―Notes to Consolidated Financial Statements(Going Concern Assumption)
Not applicable.
(Significant Matters that Serve as the Basis for Preparing Consolidated Financial Statements)
1. Scope of consolidation(1) The number of consolidated subsidiaries: 53
From the consolidated fiscal year under review, A&T SHANGHAI CO., LTD, a newly established subsidiary, has been includedin the scope of consolidation.
(2) The names, etc., of major non-consolidated subsidiaries
The non-consolidated subsidiaries are Tokuyama You You Farm Co., Ltd. and Tokuyama Taiwan Marketing & Research Center
Co., Ltd.
(Reason for excluding these subsidiaries from the scope of consolidation)
These non-consolidated subsidiaries are of small size, and none of their total assets, net sales, profit/loss (corresponding to equity
interest), retained earnings (corresponding to equity interest), etc., have any material impact on the consolidated financial
statements.
2. Application of equity method(1) The number of associates accounted for using the equity method: 11(2) The non-consolidated subsidiaries that are not accounted for by the equity method (Tokuyama You You Farm Co., Ltd. andTokuyama Taiwan Marketing & Research Center Co., Ltd.) and the affiliates that are not accounted for by the equity method(Oita Mining Co., Ltd. and others) have been excluded from the scope of consolidation because they have little impact on the
consolidated financial statements in terms of profit/loss (corresponding to equity interest), retained earnings (corresponding toequity interest), etc. when they are excluded from the scope of application of the equity method, nor have any material impact onan aggregate basis.
(3) Of equity method affiliates, with regard to the company of which the last date of its fiscal year is different from the consolidated
fiscal year-end, the financial statements of its fiscal year are used in the preparation of consolidated financial statements.
3. Business year, etc. of consolidated subsidiaries
As the fiscal year-end of A&T Corporation, a consolidated subsidiary, was December 31, the Company used the subsidiary’s
financial statements as of December 31 in the preparation of consolidated financial statements and made adjustments necessary forconsolidation purposes to material transactions arising between that date and the consolidated fiscal year-end. The subsidiary,
however, has changed its fiscal year-end to March 31, and accordingly, for the consolidated fiscal year under review, its profit/loss
for the three months from January 1, 2021 to March 31, 2021 was consolidated by adjusting retained earnings.
Of consolidated subsidiaries, Tokuyama Chemicals (Zhejiang) Co., Ltd. and other five companies whose original fiscal year-end is
December 31, are consolidated by performing provisional settlement of accounts on March 31, the consolidated fiscal year-end, incompliance with the regular settlement of accounts.

―9―

4. Significant accounting policies(1) Valuation basis and valuation methods for significant assets(i) Securitiesi) Bonds held to maturity
Stated at cost by the amortized cost method (straight line method).
ii) Available-for-sale securities
Securities other than shares, etc. that do not have a market priceStated at the fair value based on the quoted market price as of the fiscal year-end (Valuation differences are recognizedin net assets; the cost of securities sold is calculated by the moving-average method).
Shares, etc. that do not have a market priceStated at cost by the moving-average method.
(ii) Derivatives
Derivatives are stated at fair value.
(iii) Inventories
Inventories held for sale in the ordinary course of businessStated at cost mainly by the moving-average method. (The balance sheet value of the inventories is calculated by writedown based on the decreased profitability.)(2) Depreciation and amortization methods of significant depreciable and amortizable assets(i) Property, plant and equipment (excluding leased assets)
Buildings and structures acquired on or after April 1, 2016: Depreciated mainly by the straight-line method.
Other than the above: Depreciated mainly by the declining-balance method.
The estimated useful lives of major items are as follows:
Buildings and structures: 2 to 75 years
Machinery, equipment and vehicles: 2 to 20 years(ii) Intangible assets (excluding leased assets)
Amortized mainly by the straight-line method.
Internal use software is amortized by the straight-line method over the internally expected useful life (5 years).
(iii) Leased assets
Leased assets in finance lease transactions that transfer ownership
The Company uses the same depreciation method that is applied to owned fixed assets.
Leased assets in finance lease transactions that do not transfer ownership
Depreciated by the straight-line method based on the assumption that the useful life is equal to the lease term and theresidual value is equal to zero.
(3) Significant allowances and provisions(i) Allowance for doubtful accounts
To cover possible bad debt expenses on trade receivables, loans receivable and others, the allowance for doubtful accounts isprovided at the estimated uncollectable amounts based on the historical default rate for normal receivables, or taking into
account collectability on a case-by-case basis for certain receivables such as doubtful receivables with higher possibility ofdefault.
(ii) Provision for bonuses
To prepare for the payment of next bonuses to employees, provision for bonuses is recorded based on the portion of theestimated amount of bonus payments attributable to the consolidated fiscal year under review.
(iii) Provision for repairs
Repair expenses are calculated individually and recorded to prepare for periodic repairs of manufacturing facilities.
(iv) Provision for decommissioning and removal
Decommissioning and removal expenses are calculated individually and recorded to prepare for decommissioning and―10―

removal of manufacturing facilities.
(v) Provision for product warranties
For required expenses incurred during the warranty period with free servicing (warranty expenses for free servicing) for
laboratory information systems and laboratory automation systems, the estimated amount of expenses is recorded based on
the historical rate of incurrence (proportion of expenses paid to net sales).
(vi) Provision for loss on compensation for damage
The Company records provisions based on reasonably estimated monetary amounts at the end of the consolidated fiscal year
under review for loss on compensation for damages caused by customer delivery delays.
(vii) Provision for environmental measures
The Company records provisions based on estimated amounts at the end of the consolidated fiscal year under review toprepare for payments for environmental measures.
(viii) Provision for restructuring
The Company records provisions based on estimated amounts to prepare for payments for restructuring.
(ix) Provision for retirement benefits for directors (and other officers)
At certain consolidated subsidiaries, the amount to be required at the end of the consolidated fiscal year under review inaccordance with internal rules is recorded to prepare for payment of directors’ retirement benefits.
(x) Provision for share awards
The Company records estimated amounts for share benefit obligations at the end of the consolidated fiscal year under review
in order to prepare for the Company share benefits provided to directors and other executives based on the Company’s shareissuance rules.
(xi) Allowance for loss on compensation for building materials
The estimated amount of losses incurred in replacement, renovation, etc. is recorded to prepare for repairs and maintenanceof plastic sashes for houses and buildings (fire protection and resistance grade).
(4) Accounting method of retirement benefits(i) Method of attributing estimated retirement benefits to accounting periods
When calculating retirement benefit obligations, the benefit formula basis is used to attribute estimated retirement benefits tothe period through the end of the consolidated fiscal year under review.
(ii) Amortization of actuarial differences
Actuarial differences are amortized by using the straight-line method over a period of time within the average remaining
service period of employees (14 years) from the subsequent consolidated fiscal year when they are incurred.
(iii) Application of simplified accounting method used by small companies
In calculating retirement benefit liability and retirement benefit expenses, some of the consolidated subsidiaries apply asimplified accounting method in which an assumed amount of benefits to be paid for voluntary base retirement at theconsolidated fiscal year-end is deemed as retirement benefit obligations.
(5) Revenue and expense recognition standards
The Group’s major businesses are the Chemicals business, the Cement business, the Electronic Materials business, the Life
Science business, and the Eco Business.
For sale of these products in Japan, the Group recognizes revenue when the product is shipped with regard to transactions inwhich the period from when the product is shipped to when the control of the product is transferred to a customer is of normal
length. With regard to other transactions, the Company recognizes revenue when the product is accepted by a customer,
considering that it is when the product is accepted by a customer that the customer gains the control of the product and theperformance obligation is fulfilled. For sale of these products outside Japan, the Group recognizes revenue when the product isdelivered to a customer, considering that it is when the product is delivered to a customer that the customer gains the control ofthe product and the performance obligation is fulfilled.
With respect to transactions in which the Group considers it serves as an agent, the Group recognizes revenue on a net basis (inthe amount of the fees or commissions that the Group expects it will be entitled to receive for the transactions).

―11―

The Group receives consideration under sales contracts for the products generally within one year after revenue for the products
is recognized, and it does not contain a significant financing component.
(6) Application of the consolidated taxation system
The Company applies the consolidated taxation system.
(7) Application of tax effect accounting associated with the transition from the consolidated taxation system to the group tax sharing
system)The Company and some of its domestic consolidated subsidiaries will make the transition from the consolidated taxation system
to the group tax sharing system from the fiscal year ending March 31, 2023. With regard to the transition to the group tax sharing
system established under the “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 8 of 2020) and the items forwhich the nonconsolidated taxation system was revised in line with the transition to the group tax sharing system, pursuant toParagraph 3 of the “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated
Taxation System to the Group Tax Sharing System” (ASBJ PITF No. 39, issued on March 31, 2020), the Company and those
domestic consolidated subsidiaries did not apply the provision of Paragraph 44 of the “Implementation Guidance on Tax EffectAccounting” (ASBJ Guidance No. 28, issued on February 16, 2018), and the amounts of deferred tax assets and deferred tax
liabilities are based on the provisions of the tax laws before the revision.
From the beginning of the fiscal year ending March 31, 2023, the Company and those domestic consolidated subsidiaries plan to
apply the “Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System” (ASBJ PITF No. 42, issued
on August 12, 2021), which stipulates practical solutions on the accounting and disclosure of corporation tax, local corporate tax,
and tax effect accounting when applying the group tax sharing system.
(8) Accounting method for deferred assets
All deferred assets are charged to expenses when incurred.
(9) Translation of significant assets or liabilities denominated in foreign currencies into Japanese yen
Monetary assets and liabilities denominated in foreign currencies are translated into yen at the exchange rate in effect at theconsolidated balance sheet date and the resulting exchange gains or losses are credited or charged to income as incurred.
Assets and liabilities of overseas subsidiaries and the like are translated into yen at the exchange rate in effect at the consolidatedbalance sheet date, while their revenues and expenses are translated into yen at the average rates of exchange prevailing during
the year. The resulting translation adjustments are included in “Foreign currency translation adjustment” and “Non-controllinginterests” in net assets.
(10) Method of significant hedge accounting(i) Method of hedge accounting
For the method of hedge accounting, in general, the deferral hedge accounting is applied. Among hedging instruments,
forward exchange contracts that fulfill the requirement for allocation method are subjected to the allocation method. Interest
rate swaps that fulfill the requirement for special treatment are subjected to the special treatment.
(ii) Hedging instruments and hedged items
Hedging instruments and hedged items to which hedge accounting has been applied in the fiscal year under review are as
follows:
Hedging instruments: Forward exchange contracts, interest rate swaps
Hedged items: Forecast transactions in foreign currencies, accounts receivable and payable, and borrowings denominated inforeign currencies(iii) Hedging policy
Foreign exchange risk and interest rate risk of hedged items are hedged within a certain range.
(iv) Method of assessing hedge effectivenessHedge effectiveness is assessed by comparing cumulative changes in cash flows or market fluctuations of hedged items and―12―cumulative changes in cash flows or market fluctuations of hedging instruments on a quarterly basis and based on changes inboth, etc. For interest rate swaps to which the special treatment is applied, assessment of hedge effectiveness is omitted.
(11) Amortization method and amortization period of goodwill
Goodwill is equally amortized over five years.
(12) Scope of cash and cash equivalents in the consolidated statements of cash flows
Cash and cash equivalents in the consolidated statements of cash flows consist of cash on hand, at-call deposits with banks andshort-term investments that have maturities within three months from acquisition, are readily convertible to cash and are
subject to an insignificant risk of changes in value.
(13) Other significant matters forming the basis of preparing the consolidated financial statements
Accounting for consumption taxes
Consumption tax and local consumption tax are accounted for using the tax-excluded method. Non-deductible consumption tax
and local consumption tax are accounted for as expenses for the consolidated fiscal year under review.

―13―

(Significant Accounting Estimates)
1. Recoverability of deferred tax assets(1) Deferred tax assets recorded in the consolidated financial statements for the fiscal year under review(Millions of yen)
As of March 31, 2021
Deferred tax assets

16,407

As of March 31, 2022
21,111(2) Information on significant accounting estimates for identified items
The recoverability of deferred tax assets is determined by assessing if deductible temporary differences and tax loss
carryforwards have an effect of reducing the amounts of future tax payments. In the assessment, the Company considers if
sufficient taxable profit before adjustments of temporary differences will be available based on the Company’s profitability, if
sufficient taxable profit before adjustments of temporary differences will be available based on the Company’s tax planning or if
sufficient taxable temporary differences will be available in the future.
In assessing the availability of sufficient taxable profit before adjustments of temporary differences based on the Company’s
profitability, the Company estimates taxable profit for the fiscal year in which temporary differences are expected to reverse, as
well as for carryback and carryforward periods. Taxable profit before adjustments of temporary differences is estimated basedon the Company’s future business plan, which includes material assumptions such as: revenue projections based on estimateddemand for the Company’s products and planned new product launches in the Company’s growth businesses in the areas ofelectronics, health and the environment; market trends for coal, the Company’s major raw material and fuel; and capital
investment in the Company’s growth businesses.
If it becomes necessary to revise these estimates and assumptions due to changes in the actual timings of events and realized
values from estimates as a result of changes in the status of the Company’s business and unforeseeable economic conditions,such as issuance of government policy measures for decarbonization, fluctuations in the price of coal, the Company’s major raw
material and fuel, etc., it can have a material effect on the amounts of deferred tax assets and deferred income taxes recognizedin the Company’s consolidated financial statements for subsequent fiscal years. In addition, if the effective tax rate is changed
due to tax reforms, it can have a material effect on the amounts of deferred tax assets and deferred income taxes recognized in
the Company’s consolidated financial statements for subsequent fiscal years.
(Changes in Accounting Policy)(Application of the Accounting Standard for Revenue Recognition)
The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020;
hereinafter “Revenue Recognition Accounting Standard”), etc., from the beginning of the consolidated fiscal year under review,and recognizes revenue at the amount expected to be received in exchange for the promised goods or services when control of thegoods or services is transferred to the customer.
The main change due to the adoption of the Revenue Recognition Accounting Standard, etc. is the revenue recognition for agent
transactions.
The application of the Revenue Recognition Accounting Standard, etc. is subject to the transitional treatment provided for in theproviso of Paragraph 84 of the Revenue Recognition Accounting Standard. The cumulative effect of the retrospective application,
assuming the new accounting policy had been applied to periods prior to the beginning of the consolidated fiscal year under review
was added to or subtracted from the beginning balance of retained earnings of the consolidated fiscal year under review, and thus
the new accounting policy was applied from the beginning balance; provided, however, that the new accounting policy was not
retrospectively applied to contracts where recognitions of nearly all the revenue amounts for periods prior to the beginning of theconsolidated fiscal year under review were subject to the previous treatment, by applying the method provided for in Paragraph 86of the Revenue Recognition Accounting Standard.
As a result, for the consolidated fiscal year under review, net sales decreased by ¥ 46,530 million and cost of sales decreased by¥ 46,530 million. In addition, there was no impact on operating profit, ordinary profit, profit before income taxes, and retained―14―

earnings at the beginning of the consolidated fiscal year under review.
Due to the application of the Revenue Recognition Accounting Standard, etc., “Notes and accounts receivable – trade” which were
included in “Current assets” in the consolidated balance sheets for the previous fiscal year, are divided into “Notes receivable –trade” and “accounts receivable – trade” from the consolidated fiscal year under review. In accordance with transitional treatment
stipulated in Article 89-2 of the Revenue Recognition Accounting Standard, figures for the previous fiscal year have not been
restated in accordance with the new approach to presentation.
(Application of Accounting Standard for Fair Value Measurement)
The Company has applied the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019;
hereinafter “Fair Value Measurement Accounting Standard”), etc., from the beginning of the consolidated fiscal year under review,and the new accounting policies set forth by the Fair Value Measurement Accounting Standard will be applied in the future inaccordance with the transitional treatment set forth in Paragraph 19 of the Fair Value Measurement Accounting Standard andParagraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).There is no effecton the consolidated statements of income.
In addition, the Company will include notes on fair value information by level within the fair value hierarchy in the notes on
financial instruments. However, in accordance with the transitional treatment provided for in Paragraph 7-4 of the “Implementation
Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, July 4, 2019), notes pertaining to theprevious consolidated fiscal year are not presented.
(New Accounting Standards Not Yet Applied)
The description is omitted due to the low level of importance.
(Changes in Presentation)(Consolidated Statements of Income)“Outsourcing service income” and “Rental income from non-current assets,” which were separately presented under “Nonoperating income” for the previous consolidated fiscal year, have been included in “Other” of “Non-operating income” from theconsolidated fiscal year under review as the amount of each of these items has decreased to 10% or less of the total amount of nonoperating income. The consolidated financial statements for the previous consolidated fiscal year have been reclassified to reflect
these changes in presentation.
“Foreign exchange gains,” which was included in “Other” of “Non-operating income” for the previous consolidated fiscal year,
has been separately presented from the consolidated fiscal year under review as the amount of the item has exceeded 10% of thetotal amount of non-operating income. The consolidated financial statements for the previous consolidated fiscal year have been
reclassified to reflect this change in presentation.
As a result, “Outsourcing service income” of ¥651 million, “Rental income from non-current assets” of ¥587 million and “Other”
of ¥1,917 million, which were presented under “Non-operating income” in the consolidated statements of income for the previous
consolidated fiscal year, have been reclassified as “Foreign exchange gains” of ¥320 million and “Other” of ¥2,836 million.
“Fiduciary obligation expenses” which was separately presented under “Non-operating expenses” for the previous consolidated
fiscal year, has been included in “Other” of “Non-operating expenses” from the consolidated fiscal year under review as theamount of the item has decreased to 10% or less of the total amount of non-operating expenses. The consolidated financial
statements for the previous consolidated fiscal year have been reclassified to reflect this change in presentation.
As a result, “Fiduciary obligation expenses” of ¥584 million and “Other” of ¥1,875 million, which were presented under “Nonoperating expenses” in the consolidated statements of income for the previous consolidated fiscal year, have been reclassified as“Other” of ¥2,459 million.

―15―

(Changes in Accounting Estimates)
Not applicable.
(Additional Information)(Performance-based stock remuneration program)
On September 3, 2018, the Company introduced a performance-based stock remuneration program geared for its directors(excluding directors who are Audit and Supervisory Committee members, non-executive directors, external directors and persons
not resident in Japan) and executive officers (excluding persons not resident in Japan).
1. Transaction summary
For this program, the Company adopted a Director Remuneration BIP (Board Incentive Plan) Trust (hereinafter referred to as“the BIP Trust”). As with performance-linked stock (performance share) remuneration and transfer-limited stock (restricted
stock) remuneration in the United States and Europe, the BIP Trust is a program that grants the Company’s shares and benefits
as well as the equivalent amount of convertible bonds of the Company’s shares in accordance with business performance andthe director’s position.
2. Company’s own shares that remains in trust
The Company’s shares that remain in trust is recorded as treasury shares in the net assets section based on the carrying amount(excluding the amount of incidental expenses) of the trust. The book value and number of shares of treasury shares are ¥312
million and 92 thousand shares for the previous consolidated fiscal year and ¥370 million and 122 thousand shares for the
consolidated fiscal year under review.

―16―

(Consolidated Balance Sheets)*1 Items corresponding to unconsolidated subsidiaries and affiliates are as follows:
As of March 31, 2021
Investment securities

11,837 million yen

Investments and other assets - other

As of March 31, 2022
12,378553

million yen

611*2 Assets pledged as collateral and liabilities for which collateral is pledged
Assets pledged as collateral are as follows:
As of March 31, 2021
Buildings and structures

As of March 31, 2022

60 million yen

Machinery, equipment and vehicles

54

million yen

1,372

990

188

188

Investment securities

1,128

1,100

Total

2,749

2,333

As of March 31, 2021

As of March 31, 2022

Land

Liabilities for which collateral is pledged are as follows:

Short-term borrowings
Current portion of long-termborrowings
Long-term borrowings
Other
Total

161 million yen－ million yen

257

186

1,288

802

16

－

1,723

988

*3 Reduction entry
In the consolidated fiscal year under review, reduction entries of ¥42 million for buildings and structures and ¥72 million formachinery, equipment and vehicles were made due to receipt of subsidies, etc.
In addition, as a result of the retirement of buildings and structures that were subject to reduction entry, cumulative reduction
entries decreased by ¥10 million, as a result of the retirement of machinery, equipment and vehicles that were subject toreduction entry, cumulative reduction entries decreased by ¥18 million, and as a result of the retirement of tools, furniture andfixtures that were subject to reduction entry, cumulative reduction entries decreased by ¥97 million.
The cumulative reduction entries due to the receipt of subsidies, etc. in association with fixed assets are as follows:
As of March 31, 2021

As of March 31, 2022

Buildings and structures

1,540 million yen

1,572

Machinery, equipment and vehicles

2,614

2,668

133

36

Tools, furniture and fixtures
Intangible assets - other
Total

4

4

4,292

4,280

―17―

million yen

4Guarantee obligation
The Company provides guarantee of obligations concerning loans from financial institutions by the employee.
Loan guarantees
As of March 31, 2021
Employees
Chuyo Ready-mixed
Concrete Cooperative
Association
Kasuga Kawauchi Kyodo
Ready Mixed Concrete Co.,
Ltd.
Total

5

As of March 31, 2022
103 million yen

Employees
Chuyo Ready-mixed
Concrete Cooperative
Association
Kasuga Kawauchi Kyodo
Ready Mixed Concrete Co.,
Ltd.

35
18

81 million yen
37
15

157

135

Contingent liabilities pertaining to unsecured bond debt assumption agreements
As of the end of the previous consolidated fiscal year, with regard to the following unsecured bonds, the Company delegatedthe performance of the obligation based on an unsecured bond trust-type debt assumption agreement that has been executedwith a bank. Accordingly, although the liabilities pertaining to those unsecured bonds and the amount paid under that same
contract offset each other, the obligation to redeem the Company’s unsecured bonds to bondholders continued until the time of
their redemption. As of the end of the consolidated fiscal year under review, there are no such bonds.
As of March 31, 2021
24th unsecured straight bonds

6

9,400 million yen－ million yen

Repurchase obligation due to liquidation of notes receivable
As of March 31, 2021
Repurchase obligation due toliquidation of notes receivable

7

As of March 31, 2022

1,323 million yen

As of March 31, 2022
1,304

million yen

Notes receivable endorsed
As of March 31, 2021
Notes receivable endorsed

453 million yen―18―

As of March 31, 2022
349 million yen

(Consolidated Statements of Income)*1 Revenue from contracts with customers
Net sales do not present revenue from contracts with customers and other revenue separately. The amount of revenue fromcontracts with customers are presented in “Notes (Revenue Recognition) 1. Disaggregation of revenue from contracts withcustomers.”*2 Inventories at the consolidated fiscal year-end represent the amount after the book value was reduced in connection with adecline in the profitability, and the following losses on valuation of inventories (the amount in parentheses represents gains onreversal) are included in cost of sales.

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

(100) million yen

779 million yen*3 Major items and amounts of selling expenses are as follows:

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Freight-out expenses

22,763 million yen

26,008 million yen

Shipping charges

5,919

6,574

Payroll and allowances

5,152

5,098

Provision for bonuses

428

555

Retirement benefit expenses

169

165

Provision for repairs
Provision of allowance for doubtful
accounts

50

64

0

7

*4 Major items and amounts of general and administrative expenses are as follows:

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Technical research expenses

9,549 million yen

11,314 million yen

Payroll and allowances

4,612

4,799

Provision for bonuses

438

505

Retirement benefit expenses

176

185

Provision for share awards(45)
44
Provision for retirement benefits for
56
38
directors (and other officers)(Note) Technical research expenses for the previous consolidated fiscal year include provision for bonuses of ¥417 million,
retirement benefit expenses of ¥144 million and provision for repairs of ¥80 million.
Technical research expenses for the consolidated fiscal year under review include provision for bonuses of ¥484
million, retirement benefit expenses of ¥149 million and provision for repairs of ¥2 million.
*5 Total amount of research and development expenses included in general and administrative expenses and production cost

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

10,853 million yen

12,641 million yen―19―*6 The breakdown of gain on sale of non-current assets is as follows:

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Buildings and structures

9 million yen

Machinery, equipment and vehicles

63

174

Tools, furniture and fixtures

1

1

Land

24

298

Intangible assets - other

－

0

98

474

Total

0 million yen*7 The breakdown of loss on sale of non-current assets is as follows:

Fiscal year ended March 31, 2021
Buildings and structures

0

Machinery, equipment and vehicles

04

Tools, furniture and fixtures

0

1

Land
Total

million yen

Fiscal year ended March 31, 2022
1 million yen

1

6

2

14

*8 Impairment losses
Fiscal year ended March 31, 2021
The Group groups its assets mainly according to the smallest units independently generating cash flows based on businesscategories. Based on this grouping, impairment losses were recorded for the consolidated fiscal year ended March 31, 2021.
The description of the impairment losses, except for the following, is omitted due to the low level of importance.
Impairment loss
Use
Location
Type(Millions of yen)
Leased assets

Itako, Ibaraki Prefecture, Japan

Land

Total

745
745

As there was a significant difference between the recoverable amount and the carrying amount of the above leased assets as aresult of comparing the two amounts following the Company’s decision to sell the assets and conclusion of a sale and purchaseagreement, the Company reduced the carrying amount of the assets to the recoverable amount and recorded the amount of
reduction as impairment loss in extraordinary losses.
The recoverable amount is measured at net sales value of the assets based on the sale and purchase agreement.
Fiscal year ended March 31, 2022
The Group groups its assets mainly according to the smallest units independently generating cash flows based on businesscategories. Based on this grouping, impairment losses were recorded for the consolidated fiscal year ended March 31, 2022.
The description of content has been omitted due to the low level of importance.

―20―

(Consolidated Statements of Comprehensive Income)*1

Reclassification adjustments and tax effects relating to other comprehensive income

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

4,080 million yen

756 million yen

Valuation difference on available-for-salesecurities:
Gains arising during the year
Reclassification adjustment to profit orloss
Amount before income tax effect

(77)

(161)

4,003

595

Income tax effectTotal valuation difference on availablefor-sale securities
Deferred gains or losses on hedges:(1,034)

(278)

2,968

317

Gains arising during the year
Reclassification adjustment to profit orloss
Amount before income tax effect

23

1

－

13

23

15

Income tax effect

(7)

(4)

Total deferred gains or losses on hedges

16

10

1,678

2,805

(197)

－

1,480

2,805

943

(332)

48

46

Foreign currency translation adjustment:
Gains arising during the year
Reclassification adjustment to profit orloss
Total foreign currency translation
adjustment
Remeasurements of defined benefit plans,
net of tax:
Gains arising during the year
Reclassification adjustment to profit orloss
Amount before income tax effect
Income tax effectTotal remeasurements of defined
benefit plans, net of tax
Share of other comprehensive income ofentities accounted for using equity method:
Gains arising during the year
Reclassification adjustment to profit orloss
Total share of other comprehensive
income of entities accounted for using
equity method
Total other comprehensive income

―21―

992

(285)

(298)

86

694

(199)

42

50

0

1

43

51

5,203

2,985

(Consolidated Statements of Changes in Equity)
Fiscal year ended March 31, 2021
1.

Class and total number of shares issued and class and number of treasury shares
Beginning of year
(Thousands of shares)

Increase during the fiscal Decrease during theyear
fiscal year
(Thousands of shares)(Thousands of shares)

End of year
(Thousands of shares)

Issued shares
Common shares(Note 1)

69,934

2,153－

72,088

Total

69,934

2,153－

72,088

Common shares(Notes 2, 3, 4)

478

16

392

103

Total

478

16

392

103

Treasury shares(Note 1)
(Note 2)
(Note 3)(Note 4)

2.

The increase in the number of issued shares of common shares is due to an increase of 2,153 thousand shares due to theshare exchange with A&T Corporation.
The increase in the number of treasury shares of common shares is due to an increase of 16 thousand shares due topurchase of shares constituting less than a share-trading unit.
The decrease in the number of treasury shares of common shares is a decrease due to the share exchange with A&T
Corporation of 390 thousand shares, the request for additional purchase of 0 thousand shares constituting less than one
share unit and the sale of a portion of the Company’s shares totaling 2 thousand shares held by Director Remuneration
BIP (Board Incentive Plan) Trust.
Included in the number of treasury shares as of the beginning and as of the end of the fiscal year under review are 94
thousand shares and 92 thousand shares, respectively, held by The Master Trust Bank of Japan, Ltd. (executive
compensation BIP trust account; 76,292 accounts).

Dividends(1) Dividend amount paid

Resolution

Class of shares

Dividend
Dividend per share(Millions of yen)
(yen)

Reference date

Effective date

Source ofdividends

Ordinary General
Meeting ofCommonRetained
2,434
35.00 March 31, 2020
June 25, 2020
Shareholders
sharesearnings(June 24, 2020)
Board ofDirectors
Retained
September 30,
CommonDecember 1, 2020
2,434
35.00
Meetingearnings
2020
shares(October 28,
2020)(Note) Included in the total amount of dividends decided by the Ordinary General Meeting of Shareholders on June 24, 2020 is ¥3
million worth of dividends related to 94 thousand Company shares (treasury shares) held in the executive compensation BIP
trust account. Included in the total amount of dividends decided by the Board of Directors Meeting on October 28, 2020 is ¥3
million worth of dividends related to 92 thousand Company shares (treasury shares) held in the executive compensation BIP
trust account.
(2) Dividends whose record date is within the consolidated fiscal year and whose effective date is in the following consolidated
fiscal year

Resolution

Class ofsharesDividend(Millions of yen)

Dividend per
share
(yen)

Reference date

Effective date

Source ofdividends

Ordinary General
Meeting ofCommonRetained
2,522
35.00
March 31, 2021
June 28, 2021
Shareholders
sharesearnings(June 25, 2021)(Note) Included in the total amount of dividends decided by the Ordinary General Meeting of Shareholders on June 25, 2021 is ¥3
million worth of dividends related to 92 thousand Company shares (treasury shares) held in the executive compensation BIP
trust account.
―22―

Fiscal year ended March 31, 2022
1.

Class and total number of shares issued and class and number of treasury shares
Beginning of year
(Thousands of shares)

Increase during the fiscal Decrease during theyear
fiscal year
(Thousands of shares)(Thousands of shares)

End of year
(Thousands of shares)

Issued shares
Common shares

72,088－－72,088

Total

72,088－－72,088

Common shares(Notes 1, 2, 3)

103

47

13

136

Total

103

47

13

136

Treasury shares(Note 1)
(Note 2)

(Note 3)

2.

The increase in the number of treasury shares of common shares is due to purchase of 3 thousand shares constituting lessthan a share-trading unit and purchase of 44 thousand shares of the Company’s shares related to the BIP Trust account.
The decrease in the number of treasury shares of common shares is a decrease due to the request for additional purchaseof 0 thousand shares constituting less than one share unit and the sale of a portion of the Company’s shares totaling 13
thousand shares held by Director Remuneration BIP Trust.
Included in the number of treasury shares as of the beginning and as of the end of the fiscal year under review are 92
thousand shares and 122 thousand shares, respectively, held by The Master Trust Bank of Japan, Ltd. (executive
compensation BIP trust account; 76,292 accounts).

Dividends(1) Dividend amount paid

Resolution

Class of shares

Dividend
Dividend per share(Millions of yen)
(yen)

Reference date

Effective date

Source ofdividends

Ordinary General
Meeting ofCommonRetained
2,522
35.00 March 31, 2021
June 28, 2021
Shareholders
sharesearnings(June 25, 2021)
Board ofDirectors
CommonSeptember 30,
Retained
2,522
35.00
December 1, 2021
Meeting
shares2021
earnings(October 28,
2021)(Note) Included in the total amount of dividends decided by the Ordinary General Meeting of Shareholders on June 25, 2021 is ¥3
million worth of dividends related to 92 thousand Company shares (treasury shares) held in the executive compensation BIP
trust account. Included in the total amount of dividends decided by the Board of Directors Meeting on October 28, 2021 is ¥4
million worth of dividends related to 122 thousand Company shares (treasury shares) held in the executive compensation
BIP trust account.
(2) Dividends whose record date is within the consolidated fiscal year and whose effective date is in the following consolidated
fiscal year

Resolution

Class ofsharesDividend(Millions of yen)

Dividend per
share
(yen)

Reference date

Effective date

Source ofdividends

Ordinary General
Meeting ofCommonRetained
2,522
35.00
March 31, 2022
June 27, 2022
Shareholders
sharesearnings(June 24, 2022)(Note) Included in the total amount of dividends decided by the Ordinary General Meeting of Shareholders on June 24, 2022 is ¥4
million worth of dividends related to 122 thousand Company shares (treasury shares) held in the executive compensation
BIP trust account.

―23―

(Consolidated Statements of Cash Flows)*1 Reconciliation between the balance of cash and cash equivalents at end of period and relevant amount on the consolidatedbalance sheets

Fiscal year ended March 31, 2021
Cash and deposits
Time deposit whose deposit period
exceeds 3 months
Cash and cash equivalents

83,681 million yen

Fiscal year ended March 31, 2022
83,116 million yen

(631)

(620)

83,05082,496(Lease Transactions)(Lessee)(1) Operating lease transactions
Future lease payments related to noncancelable operating lease transactions(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Due within one year

741

833

Due beyond one year

3,425

3,730

4,167

4,563

Total

(Lessor)(1) Operating lease transactions
Future lease income related to noncancelable operating lease transactions(Millions of yen)
As of March 31, 2021

As of March 31, 2022

Due within one year

86

121

Due beyond one year

812

750

899

871

Total

―24―

(Financial Instruments)
1. Matters Regarding Financial Instruments(1) Management policy on financial instruments
The Group raises funds as required (mainly through bank loans and the issuance of corporate bonds) in line with its business
investment program aimed at implementing a customer-oriented approach toward “strengthening the profitability of its
businesses.” The Group invests temporary surplus funds in highly secure financial assets and raises short-term operating capitalwith bank loans and CP (commercial paper). We use derivatives only to hedge risks described below and have a policy of not
implementing derivative transactions for speculative purposes.
(2) Type and risk of financial instruments
Notes and accounts receivable – trade, which are operating receivables, are exposed to credit risks of customers. In addition,although foreign currency-denominated receivables are exposed to foreign exchange fluctuation risk, the Company takes
measures to reduce that risk by managing its foreign currency exposure by letting them be equal to foreign currencydenominated debts and implementing forward exchange contracts on an as needed basis.
Investment securities are mainly shares related to business or capital tie-ups with counterparties, etc., and available for-salesecurities are exposed to the risk of market price fluctuations. In addition, the Group provides long-term loans to counterparties
and others.
Notes and accounts payable – trade, which are operating payables, become due within one year. In addition, although foreign
currency-denominated debts are exposed to foreign exchange fluctuation risk, the Company takes measures to reduce that risk
by managing its foreign currency exposure by letting them be equal to foreign currency-denominated receivables andimplementing forward exchange contracts on an as needed basis.
Borrowings and bonds payable are principally for raising funds necessary for capital investments, and the repayment datecomes up to 56 years after the balance sheet date. Floating rate borrowings are exposed to interest rate risk, some of which are
hedged using derivative transactions (interest rate swaps).
Derivative transactions include forward exchange contracts for the purpose of curbing the foreign exchange fluctuation risks
associated with foreign currency-denominated receivables and payables and forecast transactions, and interest rate swap
transactions for the purpose of fixing the interest rate on borrowings or reducing the interest expenses. With regard to hedging
instruments and hedged items related to hedge accounting, hedge policies and hedge effectiveness evaluation methods, pleaserefer to “(Significant Matters that Serve as the Basis for Preparing Consolidated Financial Statements) 4. Significant accounting
policies (10) Method of significant hedge accounting.”(3) Risk management system for financial instruments(i)Management of credit risk (risk related to default of counterparties, etc.)
With regard to operating receivables and loans receivable, the Company has a division in charge in each businessdepartment monitoring the status of major counterparties regularly and managing maturities and balances for eachcounterparty in accordance with the credit management rules and others, while making efforts to identify early andmitigate any concerns about collection arising from deterioration in the economic environment, their financial position, etc.
Consolidated subsidiaries also conduct similar management as necessary in conformity with the Company’s credit
management rules and others.
In the use of derivative transactions, the Company conducts transactions only with financial institutions with high credit
ratings to mitigate counterparty risk.

(ii)Management of market risk (fluctuation risk of foreign exchange, interest rate, etc.)
On an as needed basis, the Company and some of its consolidated subsidiaries use forward exchange contracts with respect
to the identified currency fluctuation risks of foreign currency-denominated receivables and debts.
In addition, the Company and some of its consolidated subsidiaries use interest rate swaps to reduce the risk of fluctuationsin interest payments on borrowings.
The Company periodically assesses the fair value of securities and investment securities as well as financial conditions of―25―

issuers (counterparty companies), etc., and continuously reviews the holding status in view of relationships withcounterparty companies.
With regard to derivative transactions, the Finance & Investment Management Dept. conducts transactions based on theinterest rate risk management policy and foreign exchange risk management policy approved by the Board of Directors,
makes entries and collates the balances with contract partners, etc. For consolidated subsidiaries, the Finance & Investment
Management Dept. also manages derivative transactions by having them report the content of derivative transactions to thecenter when they conduct such transactions or by other means.
(iii)

Management of liquidity risk associated with financing (risk of inability to make a payment on due date)
The Company manages liquidity risk through timely preparation and updating of the cash flow management plan by the
Finance & Investment Management Dept. based on reports from each division and the consolidated subsidiaries and by
maintaining liquidity on hand at a certain level and by other means.

(4) Supplemental remarks on fair values of financial instruments
Since variable factors are incorporated in calculation of the fair value, the value may vary depending on different preconditions
adopted. In addition, the contract amounts of derivative transactions described in “2. Fair values of financial instruments”
should not be, in themselves, considered indicative of the market risk associated with derivative transactions.

―26―

2. Fair values of financial instruments
The book value of financial instruments, their fair value, and the differences between the two were as follows.
As of March 31, 2021
Book value(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Securities and investment securities
Available-for-sale securities

13,265

13,265－(2) Long-term loans receivable(Note 1)

2,279

2,279

－

Total assets

15,545

15,545－(1) Long-term borrowings (Note 2)

91,711

92,027315

Total liabilities

91,711

92,027315

Derivative financial instruments
(50)
(52)
(1)
(Note 3)(Note 1) The book value and fair value of long-term loans receivable include the current portion of long-term loans receivable.
(Note 2) The book value and fair value of long-term borrowings include the current portion of long-term borrowings.
(Note 3) Receivables and payables arising from derivative transactions are presented on a net basis, and a value of a net payable
after totaling receivables and payables is shown in parentheses.
(Note 4) The descriptions of “Cash and deposits,” “Notes and accounts receivable - trade,” “Notes and accounts payable - trade”
and “Short-term borrowings” are omitted because their fair value approximates their book value as they are settled in cash
and in a short period of time.
(Note 5) The book value of financial instruments whose fair value is extremely difficult to determineClass

As of March 31, 2021 (Millions of yen)

Unlisted shares

2,068

Shares of associates

10,757

Bonds of associates

1,080

Total

13,905

These financial instruments have no market price, and estimation of their future cash flows is expected to require
excessive cost. Therefore, since it is considered extremely difficult to determine the fair value, they are not included in“(1) Securities and investment securities.”―27―

As of March 31, 2022
Book value(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)

(1) Securities and investment securities(i) Held-to-maturity debt securities

1,080

1,079

(0)

(ii) Available-for-sale securities

13,725

13,725－(2) Long-term loans receivable(Note 1)

2,280

2,280

－

Total assets

17,08517,085(0)(1) Bonds payable

15,00015,04545(2) Long-term borrowings (Note 2)

88,77588,81135

Total liabilities

103,775

103,856

80

(136)

(136)

(0)

Derivative financial instruments(Note 3)(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)The book value and fair value of long-term loans receivable include the current portion of long-term loans receivable.
The book value and fair value of long-term borrowings include the current portion of long-term borrowings.
Receivables and payables arising from derivative transactions are presented on a net basis, and a value of a net payable
after totaling receivables and payables is shown in parentheses.
The descriptions of “Cash and deposits,” “Notes receivable – trade,” “Accounts receivable – trade,” “Notes and accounts
payable – trade” and “Short-term borrowings” are omitted because with regard to these accounts the fair value
approximates to the book value as they are settled in cash and in a short period of time.
Shares, etc., that have no market price are not included in “(1) Securities and investment securities.” The book values ofthese financial instruments are as follows:Class

As of March 31, 2022 (Millions of yen)

Unlisted shares

2,127

Shares of associates

11,298

Total(Note 6)

13,426

Investments in partnerships and other equivalent entities for which equity interest are recorded on a net basis in the
consolidated balance sheets are not included in (1) Securities and investment securities.” The book value of theinvestments is ¥23 million.

―28―

Note 1: Redemption schedule for monetary receivables and securities with maturities after the consolidated balance sheet date
As of March 31, 2021
(Millions of yen)More than 1 More than 5More than 10
Within 1 year year, within 5 years, within
years
years
10 years
Cash and deposits

83,681－－－

Notes and accounts receivable - trade70,901

－

－

－

185

726

857

510

154,768

726

857

510

Long-term loans receivable
Total
As of March 31, 2022

(Millions of yen)More than 1 More than 5More than 10
Within 1 year year, within 5 years, within
years
years
10 years
Cash and deposits

83,116－－－

Notes receivable - trade

7,212

－

－

－

Accounts receivable - trade

70,989

－

－

－

－

－

1,080

－

185

798

954

341

161,504

798

2,034

341

Securities and investment securities
Held-to-maturity debt securities
Long-term loans receivable
Total

Note 2: Repayment schedule by term for bonds payable, long-term borrowings and other interest-bearing debt after the consolidatedbalance sheet date
As of March 31, 2021
(Millions of yen)More than 1 More than 2 More than 3 More than 4More than 5
Within 1 year year, within 2 years, within 3 years, within 4 years, within 5
years
years
years
years
years
Short-term borrowings

1,850

－

－

－

－

－

Bonds payable (Note 1)

－

－

－

－

－

－

Long-term borrowings

8,899

20,965

681

452

249

60,463

10,74920,965

681

452

249

60,463

Total(Note) In the cases of the 24th series of unsecured bonds, we delegated the performance of the obligation based on an
unsecured bond trust-type debt assumption agreement that had been executed with a bank. Accordingly, although theliabilities pertaining to those unsecured bonds and the amount paid under that same contract offset each other, since
the obligation to redeem the Company’s unsecured bonds to bondholders continued until the time of theirredemption, this is noted as a contingent liability on the consolidated balance sheets.
As of March 31, 2022
(Millions of yen)More than 1 More than 2 More than 3 More than 4More than 5
Within 1 year year, within 2 years, within 3 years, within 4 years, within 5
years
years
years
years
years
Short-term borrowings

463

－

－

－

－

－

Bonds payable

－

－

－

－

10,0005,000

20,823

1,034

1,199

996

525

64,19521,287

1,034

1,199

996

10,52569,195Long-term borrowings
Total

―29―

3. Fair value information on financial instruments by level within the fair value hierarchy
The fair value of financial instruments is classified into the following three levels according to the observability and materiality of
inputs used to measure fair value.
Level 1 fair value:

Fair value measured using (unadjusted) quoted prices in active markets for the same assets or liabilities

Level 2 fair value:

Fair value measured using directly or indirectly observable inputs other than Level 1 inputs

Level 3 fair value:

Fair value measured using unobservable material inputs

If multiple inputs are used that are significant to the fair value measurement, the fair value measurement is categorized in its entirety
in the level of the lowest level input that is significant to the entire measurement.
(1) Financial instruments recorded at fair value in the consolidated balance sheets
Fiscal year ended March 31, 2022
Class

Fair value (Millions of yen)
Level 1

Level 2

Level 3

Total

Securities and investment securities
Available-for-sale securities
Equity securities

13,725－－

13,725

13,725－－

13,725

Forward exchange contracts

－

123

－

123

Interest

－

12

－

12

－

136

－

136

Total assets
Derivative financial instruments

Total liabilities(2) Financial instruments other than the financial instruments recorded in fair value in the consolidated balance sheets
Fiscal year ended March 31, 2022
Class

Fair value (Millions of yen)
Level 1

Level 2

Level 3

Total

Securities and investment securities
Held-to-maturity debt securities
Bonds of associates

－

1,079

－

1,079

Long-term loans receivable

－

2,280

－

2,280

－

3,359

－

3,359

Bonds payable－

15,045－15,045Long-term borrowings－

88,811－

88,811

－

0

－

0

－

103,856－

103,856

Total assets

Derivative financial instruments
Interest
Total liabilities(Note) Description of the valuation techniques and inputs used in the fair value measurement
Securities and investment securities
Listed shares are valued using quoted prices. As listed shares are traded in active markets, their fair value is classified as Level 1 fairvalue. On the other hand, the fair value of the bonds payable held by the Company are classified as Level 2 fair value because as thebonds are private placement bonds and do not have a market, and the total amount of their principal and interest is, therefore,
calculated by the discounted present value method using an interest rate that is determined by replacing the level of interest rates at
the time of issuance of the bonds with the level of interest rates at a fiscal year end.
Derivative financial instruments
The fair values of the interest rate swaps and forward exchange are measured using prices offered by counterparty financial
institutions, etc., and are classified as Level 2 fair value.
Long-term loans receivable
Because long-term loans receivable bear floating interest rates and reflect market interest rates in a short period, and credit standingof borrowers has not changed significantly since the loans were executed, their fair value is based on the book value and is classified
as Level 2 fair value.

―30―

Bonds payable
The fair value of bonds issued by the Company is measured using quoted prices, but as the bonds are not traded frequently in markets
and the quoted prices, therefore, cannot be considered quoted prices in active markets, the fair value of the bonds is classified as
Level 2 fair value.
Long-term borrowings
Of the long-term borrowings, those with floating interest rates reflect market interest rates in a short period, and there has been no
significant change in the Company’s credit standing since the execution of the borrowing. Therefore, it is considered that the fairvalue of those long-term borrowings approximates the book value. Accordingly, the fair value of those long-term borrowings ismeasured using book value and is classified as Level 2 fair value. The fair value of the long-term borrowings with fixed interest rates
is classified as Level 2 fair value as the total amount of their principal and interest is calculated by the discounted present value
method using an interest rate that is expected to be applied when similar borrowing is newly executed.

―31―

(Securities)
1. Trading securities
Not applicable.
2. Held-to-maturity debt securities
Fiscal year ended March 31, 2021
Not applicable.
Fiscal year ended March 31, 2022
Book value(Millions of yen)

Fair value(Millions of yen)

Difference(Millions of yen)Held-to maturity debt
securities with fair values notexceeding book values
Corporate bonds

1,080

1,079

(0)

3. Available-for-sale securities
As of March 31, 2021
Book value(Millions of yen)

Acquisition cost
(Millions of yen)

Unrealized gain
(Millions of yen)

Securities with book values
exceeding acquisition costs
Equity securities

12,798

7,873

4,925

Debt securities

－

－

－

Other

－

－

－

12,798

7,873

4,925

Equity securities

467

537

(69)

Debt securities

－

－

－

Other

－

－

－

Subtotal

467

537

(69)

Total

13,265

8,410

4,855

Subtotal
Securities with book values
not exceeding acquisition
costs

―32―

As of March 31, 2022
Book value(Millions of yen)

Acquisition cost
(Millions of yen)

Unrealized gain
(Millions of yen)

Securities with book values
exceeding acquisition costs
Equity securities

13,209

7,679

5,530

Debt securities

－

－

－

Other

－

－

－

13,209

7,679

5,530

Equity securities

516

635

(119)

Debt securities

－

－

－

Other

－

－

－

Subtotal

516

635

(119)

Total

13,725

8,314

5,411

Subtotal
Securities with book values
not exceeding acquisition
costs

―33―

4. Available-for-sale securities soldFiscal year ended March 31, 2021
Book value(Millions of yen)
Equity securities

Acquisition cost
(Millions of yen)

Unrealized gain
(Millions of yen)

133

77

－

Government andmunicipal bonds

－

－

－

Corporate bonds

－

－

－

Other

－

－

－

－

－

－

133

77

－

Debt securities

Other
Total

Fiscal year ended March 31, 2022
Book value(Millions of yen)
Equity securities

Acquisition cost
(Millions of yen)

Unrealized gain
(Millions of yen)

247

161

－

Government andmunicipal bonds

－

－

－

Corporate bonds

－

－

－

Other

－

－

－

－

－

－

247

161

－

Debt securities

Other
Total

5. Impairment of marketable securities
During the previous consolidated fiscal year, an impairment of ¥19 million was made for securities (equity securities of availablefor-sale securities). In making impairments of stocks that decline 30% to 50%, the Company makes a comprehensive assessment foreach individual issue by considering the stock price movements over the past two years and quantitatively evaluating credit risk by
examining various figures based on the published financial statements.

―34―

(Derivatives)
1. Derivative transactions to which hedge accounting is not applied(1) Currency-related derivatives
As of March 31, 2021
Not applied Hedge
accounting method
Principle-based
accounting

Transaction type

Main hedged items

Notional value(Millions of yen)

Maturing after one
Fair value
year(Millions of yen)
(Millions of yen)

Currency swap
Receiving JPY, Paying
TWD

Long-term
borrowings

Total

220

－

(23)

220

－

(23)

As of March 31, 2022
Not applied Hedge
accounting method
Principle-based
accounting

Transaction type

Main hedged items

Notional value(Millions of yen)

Maturing after one
Fair value
year(Millions of yen)
(Millions of yen)

Forward exchange
contracts
Short position, TWD

Long-term
borrowings

Total(2) Interest
Not applicable
2. Derivative transactions to which hedge accounting is applied(1) Currency-related derivatives
As of March 31, 2021
Not applicable.
As of March 31, 2022
Not applicable.

―35―

2,139

2,139

(123)

2,139

2,139

(123)

(2) Interest
As of March 31, 2021
Hedge accounting
methodTransaction type

Main hedged items

Notional value(Millions of yen)

Maturing after one
Fair value
year(Millions of yen)
(Millions of yen)Interest rate swaps
Principle-based
accounting

Pay fixed rate, receive
floating rateLong-term
borrowings

Subtotal

2,200

1,000

(27)

2,200

1,000

(27)

270

90

(1)

270

90

(1)

2,470

1,090

(29)

Interest rate swaps
Special treatment
for interest rate
swaps

Pay fixed rate, receive
floating rateLong-term
borrowings

Subtotal
Total
As of March 31, 2022
Hedge accounting
methodTransaction type

Main hedged items

Notional value(Millions of yen)

Maturing after one
Fair value
year(Millions of yen)
(Millions of yen)Interest rate swaps
Principle-based
accounting

Pay fixed rate, receive
floating rateLong-term
borrowings

Subtotal

1,000

600

(12)

1,000

600

(12)

30

－

(0)

30

－

(0)

1,030

600

(12)

Interest rate swaps
Special treatment
for interest rate
swaps

Pay fixed rate, receive
floating rateLong-term
borrowings

Subtotal
Total

―36―

(Retirement Benefits)
1. Outline of adopted retirement benefit plans
The Company and its consolidated domestic subsidiaries have lump-sum severance benefits plans and defined benefit pension plans
as a vested benefits system (DB scheme). They also have defined contribution pension plans as DC scheme. The Company and its
consolidated domestic subsidiaries may pay, under certain circumstances, extra retirement allowances when their employees leave thecompanies. The Company has a retirement benefit trust.
2. Defined benefit plans(1) Reconciliation of beginning and ending balances of retirement benefit obligations

Fiscal year ended March 31, 2021
Balance of defined benefit
obligations at beginning of year
Service cost
Interest cost
Occurrence of actuarial gain andloss
Payments of retirement benefits

17,367 million yen

Fiscal year ended March 31, 2022
17,047

866

877

123

124

151

191

(896)

(1,045)

million yen

Other
(565)
8
Balance of defined benefit
17,047
17,202
obligations at end of year
(Note) The consolidated domestic subsidiaries, except for two companies, have adopted the simplified accounting method in
calculating retirement benefit obligations.
(2) Reconciliation of beginning and ending balances of pension assets

Fiscal year ended March 31, 2021
Balance of pension assets at
beginning of year
Expected return on pension assets
Occurrence of actuarial gain andloss
Corporation’s contributions

24,659 million yen

Fiscal year ended March 31, 2022
25,717

264

279

1,095

(141)

590

608

Payments of retirement benefits

(545)

(860)

Other
Balance of pension assets at end of
year

(346)

－

25,71725,603―37―

million yen

(3) Reconciliation of ending balances of retirement benefit obligations and pension assets to retirement benefit liability
and retirement benefit asset recorded in the consolidated balance sheets

As of March 31, 2021

As of March 31, 2022

Funded defined benefit obligations

15,056 million yen

15,121

Pension assets(25,717)(25,603)(10,661)(10,482)

Unfunded defined benefit obligations

1,991

2,081

Net amount shown on consolidatedbalance sheets(8,669)(8,400)Retirement benefit liability

1,991

2,081

Retirement benefit asset(10,660)(10,482)

Net amount shown on consolidatedbalance sheets(8,669)(8,400)

million yen(4) Retirement benefit expenses and a breakdown of the retirement benefit expenses

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Service cost (Note)

866 million yen

877 million yen

Interest cost

123

124

Expected return on pension assets

(264)

(279)

Expensed actuarial gain and loss
48
46
Retirement benefit expenses
774
768
regarding to vested benefits system(Note) Retirement benefit expenses of the consolidated domestic subsidiaries that have adopted the simplified accounting
method are included in “Service cost.”(5) Remeasurements of defined benefit plans
A breakdown of items recorded in remeasurements of retirement benefit plans (before deduction of tax effects) is as follows:

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Actuarial gain and loss

992 million yen(285) million yen

Total

992

(285)

(6) Accumulated adjustment of retirement benefit plans
A breakdown of items recorded in accumulated adjustment of retirement benefit plans (before deduction of tax effects) is asfollows:

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Unrecognized actuarial gain and loss

3,907 million yen

3,622 million yen

Total

3,907

3,622

―38―

(7) Matters relating to pension assets(i) Principal items of pension assets
The proportion of each principal category to the total of pension assets is as follows:
As of March 31, 2021

As of March 31, 2022

Domestic stocks

8 %

7 %

Foreign stocks

8

8

Domestic bonds

43

43

Foreign bonds

16

15

Insurance product (General account)16

17

Deposits

9

9

Other

0

0

Total

100

100

(Note) Total of pension assets as of March 31, 2021 and March 31, 2022 included a retirement benefit trust, established for
the Company’s pension plans that represented 9% and 9% of the total of pension assets, respectively.
(ii) Method for setting the expected long-term rate of return
The expected long-term rate of return on pension assets has been set based on the allocation of the pension assets as well as
the current and expected rate of return from each category of the pension assets.
(8) Matters relating to the basis for calculation used in the actuarial calculation
Main basis for calculation used in the actuarial calculation (principally represented by the rate used)
As of March 31, 2021

As of March 31, 2022

0.8 %

0.8 %

1.2

1.2

Discount rate
Expected long-term return on pension
assets3.

Defined contribution plans
The amount which the Company and its consolidated subsidiaries were required to contribute to the defined contribution plans was¥535 million for the previous consolidated fiscal year and ¥564 million for the consolidated fiscal year under review.

(Stock Options)Not applicable.

―39―

(Tax Effect Accounting)
1. Breakdown of deferred tax assets and liabilities by their main occurrence causes
As of March 31, 2021
Deferred tax assets:

As of March 31, 2022

(Millions of yen)

(Millions of yen)

Deficits (Note 2)

47,31544,084

Provision for repairs

2,422

2,449

Excess depreciation and amortization

2,134

1,977

Investment securities

1,381

1,347

Provision for bonuses

949

1,097

Retirement benefit liability

719

754

Inventories

629

681

Other

2,888

2,977

58,442

55,370

Valuation allowance (Deficits) (Note 2)(32,026)(23,862)

Valuation allowance (Temporary difference)(3,452)(3,368)(35,479)(27,231)

22,96328,139(3,059)(3,005)(1,298)(1,571)(878)(1,111)

(973)

(994)

Subtotal of deferred tax assets

Less valuation allowance (Note 1)
Total deferred tax assets
Deferred tax liabilities:
Prepaid pension costs
Valuation difference on available-for-salesecurities
Retained earnings of subsidiaries and affiliates
Reserve for tax purpose reduction entry

(592)

(592)

Total deferred tax liabilities

Other(6,803)(7,275)Net deferred tax assets

16,15920,863(Note 1) Valuation allowance decreased by ¥8,248 million. This decline is primarily due to a decrease of ¥8,164 million in
valuation allowance (deficits) due to revision of the five-year plan.
(Note 2) Amounts of deficits and related deferred tax assets by tax loss carry-forwards were as follows.
As of March 31, 2021
(Millions of yen)More than More than More than More thanWithin 1
1 year,2 years,
3 years,
4 years, More thanyear
within 2 within 3 within 4 within 5
5 years
years
years
years
years

Total

Deficits (Note 1)

90

494

207

596

13,54532,38047,315

Valuation allowance

(3)

(410)

(200)

(513)

(641)

(30,256)(32,026)

Deferred tax assets

86

83

6

83

12,904

2,124

15,289(Note 1) Deficits are the amount after multiplying the statutory tax rate.

―40―

As of March 31, 2022
(Millions of yen)More than More than More than More thanWithin 1
1 year,2 years,
3 years,
4 years, More thanyear
within 2 within 3 within 4 within 5
5 years
years
years
years
years

Total

Deficits (Note 2)

318

200

576

10,497

31,979511

44,084

Valuation allowance

(303)

(191)

(513)

(223)

(22,178)(452)(23,862)

Deferred tax assets

15

9

62

10,2739,801

59(Note 3) 20,221(Note 2) Deficits are the amount after multiplying the statutory tax rate.
(Note 3) Regarding deficits of ¥44,084 million (amount after multiplying the statutory tax rate), the Company recorded
deferred tax assets of ¥20,221 million.
Regarding deficits, valuation allowance related to the portion deemed to be recoverable based on future taxable
income forecasts is not recognized.
2. Reconciliation of significant difference between the statutory tax rate and the effective income tax rate after applying tax effectaccounting
As of March 31, 2021

As of March 31, 2022

30.5 %

30.5 %(9.5)(30.0)

(2.5)

(3.2)

(4.2)

(2.9)

1.7

2.5

(0.9)

(1.1)

3.2

2.3

18.2

(1.9)

Statutory tax rate
Increase (decrease) in income taxes resulting from:
Change in valuation allowance allocated to income
tax expenses
Dividend and other items excluded permanently
from taxable income
Effect of tax credits
Inter-company eliminations of dividends income
Equity in earnings of unconsolidated subsidiaries
and affiliates
Other
Effective income tax rate

―41―

(Business Combination)
Description of content has been omitted due to a lack of importance.
(Asset Retirement Obligations)
1. Asset retirement obligations included in the consolidated balance sheets
The Group has obligations to restore a site to its original state at the time of leaving or termination of the business and aftertermination of mining for branches, etc., that use an office under a real estate lease agreement or certain business offices that use aplant or site for sales facilities, as well as mines. Of these obligations, for certain obligations to restore a site to its original state at
the time of leaving under a building lease agreement for which the timing of performance and amount can be reasonably estimatedat the present moment, asset retirement obligations have been recorded. The note on the content of asset retirement obligations isomitted because of immateriality.
2. Asset retirement obligations not included in the consolidated balance sheets
Because past records other than those stated in 1. above are poor, the period of use of the leased asset related to the obligations is
uncertain, and there is no plan for relocation, etc., or mine closure at the present moment, it is difficult to reasonably estimate thetiming, scope and probability of execution for the obligations. Therefore, asset retirement obligations corresponding to the
obligations have not been recorded.
(Investment and Rental Properties)
Information is omitted because of immateriality of the total amount of investment and rental properties.
(Revenue Recognition)
1. Disaggregation of revenue from contracts with customers
For the disaggregation of revenue from contracts with customers, please refer to “Note (Segment Information).”
2. Useful information in understanding revenue from contracts with customers
For useful information in understanding revenue, please refer to “Note (Significant Matters that Serve as the Basis for Preparing
Consolidated Financial Statements) 4. Significant accounting policies (5) Revenue and expense recognition standards.”
3. Relations between the fulfillment of performance obligations under contracts with customers and cash flows generated from thosecontracts, and information on the amount of revenue from those contracts existing as of the end of the consolidated fiscal year underreview that is expected to be recognized in and after the next consolidated fiscal year and on the timing of recognition(1) Balances of contract assets and contract liabilities, etc.
The descriptions of the Group’s contract assets and contract liabilities are omitted as the balances of these accounts are of minor
importance and there has been no major change in the balances. The amount of revenue recognized in the consolidated fiscal year
under review from the performance obligations that were fulfilled (or partially fulfilled) in previous periods is immaterial.
(2) Transaction price allocated to the remaining performance obligations
The Group has applied a practical expedient and omits the description of the remaining performance obligations as the Group
has no important transaction for which the contract term is expected to exceed one year. In addition, of the consideration generated
from contracts with customers, there is no significant amount of consideration that is not included in the transaction price.

―42―

(Segment Information)
Business segment information
1. Summary of reportable segments
The reportable segments in the Company are defined as individual units, where separate financial information is available and which
are subject to regular review to evaluate their results and decide the allocation of management resources by the board of directors.
The Company has business divisions by product group, and conducts business operations through each business division devising its
comprehensive product strategy for domestic and overseas markets.
The Company is, therefore, composed of reportable segments by product group based on business divisions and has five reportablesegments, “Chemicals,” “Cement,” “Electronic Materials,” “Life Science,” and “Eco Business.”
Main products and services of each reportable segment are as follows:
Reportable segment

Major products and services

Chemicals

Caustic soda, soda ash, calcium chloride, sodium silicate, vinyl chloride monomer, polyvinyl
chloride resin, propylene oxide, chlorinated solvents and hydrogen

CementCement, ready-mixed concrete, cement-type stabilizer and resource recycling businessElectronic Materials
Life Science
Eco Business

Polycrystalline silicon, fumed silica, tetrachlorosilane, aluminum nitride, high-purity chemicals forelectronics manufacturing, photoresist developer and isopropyl alcohol
Medical diagnosis systems, dental materials and equipment, pharmaceutical ingredients andintermediates, plastic lens-related materials for glasses and microporous film
Waste gypsum board recycling, ion exchange membranes and plastic window sashes(Changes in reportable segments, etc.)
From the consolidated fiscal year under review, the Company has changed its business segments into the six segments of “Chemicals,”“Cement,” “Electronic Materials,” “Life Science,” “Eco Business,” and “Others.”
The segment information for the previous consolidated fiscal year is presented based on the reporting segments after this change.
2. Calculation of net sales, profit (loss), assets and other items by reportable segment
The accounting methods applied to reportable segments are identical to those stated in “(Significant Matters that Serve as the Basisfor Preparing Consolidated Financial Statements).”
Inter-segment sales or transfer are based on market prices.
Reportable segment’s profit (loss) is based on operating profit.
(Application of the Accounting Standard for Revenue Recognition)
As described in the changes in accounting policy, the Company has applied the Revenue Recognition Accounting Standard, etc., andchanged its accounting method from the consolidated fiscal year under review. Accordingly, the method for the measurement of
profit or loss for the business segments has been changed.
Due to this change, net sales decreased by ¥1,389 million for “Chemicals,” by ¥43,642 million for “Cement,” by ¥228 million for“Electronic Materials,” by ¥10 million for “Life Science,” by ¥742 million for “Eco Business,” and by ¥24,229 million for “Others,”
respectively, as compared with those measured by the previous method. Net sales after adjustment for inter-segment eliminations
and corporate expenses decreased by ¥46,530 million in total.
This change has no impact on segment profit (loss).

―43―

3. Information on net sales, profit (loss), assets and other items by reportable segment and on the disaggregation of revenue
Fiscal year ended March 31, 2021
(Millions of yen)
Reportable segment
Chemicals Cement

Electronic
Life
Materials Science

Eco
Business

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)

Net sales
Sales to customers

80,55588,96949,72827,4089,076

46,668302,407－

302,407

Inter-segment
sales/transfer

829

623

12,125

1,254

504

15,71431,053(31,053)－

Total sales

81,38589,59361,853

28,662

9,581

62,383

333,460(31,053)

302,407

Segment profit (loss)

13,585

4,454

7,104

3,498

(368)

5,677

33,952(3,030)30,921

Segment assets

49,22756,411

69,54734,947

10,65552,892

273,680

113,113

386,794

Other items
Depreciation and
2,651
3,461
3,706
1,312
481
4,222
15,836
1,167
17,003amortization (Note 4)
Increase in property,
plant and equipment
3,277
5,154
6,472
1,930
758
6,030
23,624
3,456
27,080and intangible assets(Note 5)(Note 1)The “Others” segment comprises businesses other than those of the reportable segments and includes overseas sales(Note 2)

(Note 3)(Note 4)(Note 5)business, a distribution business, a real estate business, etc.
Adjustments are as follows:(i) The segment profit (loss) adjustment amount consists mainly of basic R&D expenses that are not allocable to a
specific reportable segment and the amount of inter-segment eliminations.
(ii) The segment assets adjustment amount includes corporate assets that are not allocated to a specific reportablesegment (¥142,698 million).
Segment profit (loss) is adjusted for operating profit in the consolidated financial statements.
Depreciation and amortization includes amortization of long-term prepaid expenses.
Increase in property, plant and equipment and intangible assets includes the amount of increase in long-term prepaid
expenses.

―44―

Fiscal year ended March 31, 2022
(Millions of yen)
Reportable segment
Chemicals Cement

Electronic
Life
Materials Science

Eco
Business

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated(Note 3)

Net sales
Sales to customers

101,093

49,67974,33233,4399,935

25,349293,830－

293,830

Inter-segment
sales/transfer

388

687

664

125

370

10,953

13,188(13,188)－

Total sales

101,482

50,36674,99633,564

10,30536,302

307,018(13,188)

293,830

Segment profit (loss)

14,225(1,912)

7,232

6,036

(468)

3,851

28,964(4,425)24,539Segment assets

59,47258,67091,00839,294

12,36460,593

321,403111,807433,210

Other items
Depreciation and
2,969
3,953
4,952
1,361
605
4,177
18,0201,696
19,716amortization (Note 4)
Increase in property,
plant and equipment
4,891
4,806
14,348
1,657
924
5,238
31,865
3,190
35,056and intangible assets(Note 5)(Note 1)The “Others” segment comprises businesses other than those of the reportable segments and includes overseas sales
business, a distribution business, a real estate business, etc.
Adjustments are as follows:(i) The segment profit (loss) adjustment amount consists mainly of basic R&D expenses that are not allocable to a
specific reportable segment and the amount of inter-segment eliminations.
(ii) The segment assets adjustment amount includes corporate assets that are not allocated to a specific reportablesegment (¥149,158 million).
(Note 3)
Segment profit (loss) is adjusted for operating profit in the consolidated financial statements.
(Note 4)
Depreciation and amortization includes amortization of long-term prepaid expenses.
(Note 5)
Increase in property, plant and equipment and intangible assets includes the amount of increase in long-term prepaid
expenses.
(Note 6) Regarding net sales, revenue from contracts with customers and other revenue are not presented separately as the amountof other revenue is immaterial.
(Note 2)―45―

Related information
Fiscal year ended March 31, 2021
1. Information by product and service
Information is omitted as identical information is disclosed in segment information.
2. Information by region(1) Net sales(Millions of yen)
Japan

Asia
238,722

Others51,742

Total
11,942

302,407(Note) Net sales are categorized into countries or regions based on the location of customers.
(2) Property, plant and equipment
The listed amount of property, plant and equipment has been omitted because over 90% of property, plant and equipment
listed on consolidated balance sheets is located in Japan.
3. Information by major customer
Information is omitted because no external customer accounts for 10% or more of net sales in the consolidated statements
of income.
Fiscal year ended March 31, 2022
1. Information by product and service
Information is omitted as identical information is disclosed in segment information.
2. Information by region(1) Net sales(Millions of yen)
Japan

Asia
206,515

Others71,928

Total
15,386

293,830(Note) Net sales are categorized into countries or regions based on the location of customers.
(2) Property, plant and equipment(Millions of yen)
Japan

Asia
118,952

Others
19,236

Total
1,413

139,602

3. Information by major customer
Information is omitted because no external customer accounts for 10% or more of net sales in the consolidated statements
of income.

―46―

Information on impairment losses on non-current assets by reportable segment
Fiscal year ended March 31, 2021
(Millions of yen)
Chemicals
Impairment
lossesElectronic
Materials

Cement16－

Life Science Eco Business

－

－

－

OthersAdjustment

809

－

Total
825

Fiscal year ended March 31, 2022
(Millions of yen)
Chemicals
Impairment
lossesElectronic
Materials

Cement－－Life Science Eco Business3－

Others－Adjustment
－

Total
3

－

Information on amortization of goodwill and unamortized balance reportable segment
Fiscal year ended March 31, 2021
(Millions of yen)
Chemicals
Amortizationof goodwill
UnamortizedbalanceElectronic
Materials

CementLife Science Eco Business

OthersAdjustment

Total

－

6

3

－

－

－

－

9

－

86

－

－

－

－

－

86

Fiscal year ended March 31, 2022
(Millions of yen)
Chemicals
Amortizationof goodwill
Unamortizedbalance

CementElectronic
Materials

Life Science Eco Business

OthersAdjustment

Total

－

18

－

－

－

－

－

18

－

68

－

－

－

－

－

68

Information on gain on bargain purchase by reportable segment
Fiscal year ended March 31, 2021
Not applicable.
Fiscal year ended March 31, 2022
Not applicable.
Information on related parties
Fiscal years ended March 31, 2021 and 2022
Not applicable.

―47―

(Per Share Information)

Item

Fiscal year ended March 31, 2021

Fiscal year ended March 31, 2022

Net assets per share (yen)2,758.37

3,120.25

Earnings per share (yen)351.11389.09Not applicable because there are no
dilutive shares.

Diluted earnings per share (yen)Not applicable because there are no
dilutive shares.

(Note 1) The basis for calculation
1. Net assets per share
Item

As of March 31, 2021

As of March 31, 2022

Total net assets on consolidated balance sheets (Millionsof yen)205,261

232,917

Net assets related to common shares (Millions of yen)

198,561

224,506

6,700

8,411

72,08872,088103

136

71,984

71,951

Major breakdown of difference (Millions of yen)
Non-controlling interests
Number of shares outstanding of common shares(Thousands of shares)
Number of treasury shares of common shares(Thousands of shares)
Number of common shares used to calculate net assets
per share (Thousands of shares)
2. Earnings per share

Fiscal year ended
March 31, 2021

Item
Profit attributable to owners of parent (Millions of yen)

(Note 2)

24,534

Fiscal year ended
March 31, 2022
28,000

Amount not attributable to common shareholders－－(Millions of yen)
Profit related to common shares attributable to owners of
24,53428,000parent (Millions of yen)
Average number of common shares during the period
69,877
71,963(Thousands of shares)
Company shares held in the executive compensation BIP (Board Incentive Plan) trust are included in treasury sharesdeducted from the total number of shares issued at the end of the consolidated fiscal year in calculating “net assets per
share.” The number of Company shares held in the executive compensation BIP trust at the end of the consolidated fiscal
year under review was 122 thousand shares. (The number of Company shares at the end of the previous fiscal year was
92 thousand shares)
Company shares held in the executive compensation BIP trust are included in treasury shares deducted when calculating
the average number of common shares for the consolidated fiscal year. Of note, the average number of Company sharesfor the consolidated fiscal year under review held in the executive compensation BIP trust is 111 thousand shares (theaverage number of Company shares for the previous consolidated fiscal year was 92 thousand shares.)―48―

(Significant Subsequent Events)(Issuance of bonds)
At the Board of Directors meeting held on May 24, 2022, the Company resolved to issue domestic unsecured straight bonds.
The summary is as follows:
1. Type of bondDomestic unsecured straight bonds

2. Total amount of bonds offered

Up to ¥35,000 million

3. Coupon rate

Less than 1.0%

4. Redemption periodLess than 10 years

5. Redemption method
6. Payment amount

Redeemed in full upon maturity
However, buy-back and early redemption provisions may be applied¥100 per amount of ¥100 of each bond in each case

7. Collateral and guarantees

No collateral or guarantee will be provided

However, multiple issues within this range are not precluded

8. Issuance period

May 24, 2022 (date of the Board of Directors meeting) to March 31, 2023

9. Use of funds

Repayment of fiscal 2023 debt
Decisions regarding matters listed above and all other matters necessary for theissuance of the offered bonds shall be made at the discretion of the Company’s
President within the scope specified above at the time of each issuance

10. Other―49―

(v) Annexed consolidated detailed schedules
Schedule of bonds payableCompany

Tokuyama
Tokuyama
Tokuyama(Note 1)

(Note 2)
(Note 3)as ofBalance as of Balance
Interest
March 31,
Term of
April
1,
2021
rate
Collateral
Issue
2022
(Millions of (Millions ofredemption
(%)
yen)
yen)
24th unsecured straight
September 8,
9,400
September 8,
－
1.371
No
bonds
2011
(9,400)(－)
2021
25th unsecured straightMarch 1,
10,000March 1,
－
0.370
No
bonds
2022
(－)
(－)
2027
March 1,
26th unsecured straightMarch 1,
5,000
－
0.600
No
2032
bonds
2022
(－)
(－)
9,400
15,000
Total
―
―
―
―
(9,400)(－)
In the case of the 24th series of unsecured bonds, we delegated the performance of the obligation based on an unsecured
bond trust-type debt assumption agreement that had been executed with a bank. Accordingly, although the liabilities
pertaining to those unsecured bonds and the amount paid under that same contract offset each other, since the obligation
to redeem the Company’s unsecured bonds to bondholders continued until the time of their redemption, this is noted as acontingent liability on the consolidated balance sheets.
Amounts in parentheses represent amounts due within one year.
Amounts of redemption within five years after the consolidated balance sheet date are as follows:
Date ofissuance

Within 1 year
(Millions of yen)－More than 1 year,
within 2 years(Millions of yen)More than 2 years,
within 3 years(Millions of yen)More than 3 years,
within 4 years(Millions of yen)More than 4 years,
within 5 years(Millions of yen)

－

－

－

10,000

Schedule of borrowings
Balance as ofApril 1, 2021
(Millions of yen)

Balance as ofMarch 31, 2022 Average interest rate(%)
(Millions of yen)

Repayment date

Short-term borrowings

1,850

463

0.51

―

Current portion of long-termborrowings

8,899

20,823

1.12―

Current portion of lease obligations

1,204

1,225

－

―

82,812

67,951

1.492023 - 2078

3,671

3,754

－

2023 - 2041

98,437

94,219－―Long-term borrowings (excluding
current portion of long-termborrowings)
Lease obligations (excluding current
portion of lease obligations)
Total(Note 1)
(Note 2)
(Note 3)

“Average interest rate” shows the weighted average interest rate on the ending balance of borrowings, etc.
The average interest rate on lease obligations is not presented because lease obligations are recorded at the amount
before deduction of the amount equivalent to interest included in total lease payments, in the consolidated balance sheets.
The amounts of long-term borrowings, and lease obligations (excluding current portion of them) to be repaid within five
years after the consolidated balance sheet date are as follows:More than 1 year,
within 2 years(Millions of yen)More than 2 years,
within 3 years(Millions of yen)More than 3 years,
within 4 years(Millions of yen)More than 4 years,
within 5 years(Millions of yen)

Long-term
borrowings

1,034

1,199

996

525

Lease obligations

1,029

809

582

394

―50―

Schedule of asset retirement obligations
Information is omitted since the amounts of asset retirement obligations at the beginning and end of the consolidated fiscal
year under review are 1% or less of the total of liabilities and net assets at the beginning and end of the consolidated fiscal
year under review.
(2) Others
Quarterly information for the consolidated fiscal year ended March 31, 2022
Accumulated period

1Q

Net sales (Millions of yen)

2Q
67,497

132,660

211,609

293,830

7,763

14,031

19,812

27,649

4,941

9,257

13,37628,00068.65

128.61185.87389.09Profit before income taxes(Millions of yen)
Profit attributable to owners ofparent (Millions of yen)
Earnings per share (yen)Accumulated period

Current consolidated
fiscal year

3Q

1Q

Earnings per share (yen)

2Q
68.65

Current consolidated
fiscal year

3Q
59.96

57.25

203.25(Note) The Company records shares held in the executive compensation BIP (Board Incentive Plan) trust as treasury shares. In
addition, said shares are included in treasury shares deducted when calculating the average number of shares for the fiscal year
based on calculations of earnings per share.

―51―