Appendix

BANDO CHEMICAL INDUSTRIES, LTD.
and Subsidiaries
Fiscal year ended March 31, 2019
(April 1, 2018 ― March 31, 2019)

Consolidated financial statements,
Notes to consolidated financial statements

Consolidated Statement of Financial Position

Bando Chemical Industries, Ltd. and Consolidated Subsidiaries
March 31, 2019 and 2018

Thousands of
U.S. dollars(Note 4)

Millions of yen

AssetsCurrent Assets:
Cash and cash equivalents (Notes 8 and 35)
Trade and other receivables (Notes 9 and 35)
Inventories (Note 10)
Income taxes receivable
Other financial assets (Notes 11 and 35)
Other current assets (Note 12)
Total Current Assets

Non-current Assets:
Property, plant and equipment (Notes 13 and 15)
Goodwill (Note 14)
Intangible assets (Notes 14 and 15)
Investments accounted for using equity method (Note 16)
Other financial assets (Notes 11 and 35)
Deferred tax assets (Note 17)
Other non-current assets (Note 12)
Total Non-current Assets
Total Assets

As of March 31,
2019

As of March 31,
2018

Transition date
As of April 1,
2017

￥

￥

￥

￥

17,53021,707
12,94912471
895
53,56432,597
73
1,761
6,357
6,998
458
749
48,993
102,557

See accompanying notes to consolidated financial statements.

1￥

18,477
21,493
12,2077481
833
53,49832,762
74
1,814
5,815
8,201
349
734
49,749103,247￥

18,936
20,836
10,95020
604
812
52,15832,488
75
1,666
5,534
7,535
413
672
48,383
100,541

As of March 31,
2019

$

$

159,364
197,339
117,723
110
4,286
8,130
486,952

296,339662
16,012
57,79363,6154,161
6,806
445,388932,340

Thousands of
U.S. dollars(Note 4)

Millions of yen

Liabilities and Equity
Current Liabilities:
Trade and other payables (Notes 18 and 35)
Bonds and borrowings (Notes 19 and 35)
Income taxes payable
Other financial liabilities (Notes 22 and 35)
Provisions (Note 23)
Other current liabilities(Note 24)
Total Current Liabilities

As of March 31,
2019

As of March 31,
2018

Transition date
As of April 1,
2017

￥

￥

￥

16,650
2,768
552
38
315
3,909
24,232

Non-current liabilities:
Bonds and borrowings (Note 19)
Net defined benefit liability (Note 21)
Other financial liabilities (Notes 22 and 35)
Deferred tax liabilities (Note 17)
Other non-current liabilities (Note 24)
Total Non-current Liabilities
Total Liabilities

EquityCommon stock (Note 25)
Authorized: 187,000,000 shares
Issued as of April 1, 2017, andMarch 31, 2018 and 2019 － 47,213,536 shares
Capital surplus (Note 25)
Retained earnings (Note 25)
Treasury stock, at cost (Note 25)
April 1, 2017 － 1,386,131 shares
March 31, 2018 － 1,434,623 shares
March 31, 2019 － 1,355,774 shares
Other components of equity (Note 25)
Total Equity Attributable to Owners of Parent
Non-controlling interests
Total Equity
Total Liabilities and Equity

18,068
2,921
783
32
－
4,218
26,022

16,293
4,499
869
46
－
4,015
25,722As of March 31,
2019$

151,367
25,167
5,020
347
2,864
35,527220,292

7,636
1,624
146
470
316
10,192
34,424

9,227
1,408
139
926
316
12,01638,038

10,914
2,169
155
505
278
14,021
39,74369,417
14,762
1,325
4,273
2,881
92,658
312,950

10,952
3,093
53,148

10,952
3,061
49,442

10,952
3,023
45,38099,563
28,115483,162( 1,347)
2,026
67,872261
68,133￥ 102,557( 1,433)
2,952
64,974235
65,209103,247( 1,368)
2,588
60,575223
60,798100,541( 12,242)
18,418617,0162,374
619,390932,340

2

￥

￥

$

Consolidated Statement of Profit or Loss andConsolidated Statement of Comprehensive Income

Bando Chemical Industries, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

Millions of yen
2019
2018

Consolidated Statement of Profit or Loss
Revenue (Notes 7 and 27)
Cost of sales (Note 28)
Gross profit
Selling, general and administrative expenses (Note 28)
Other income (Note 29)
Other expenses (Note 29)
Share of profit of investments accounted for using equity method (Note16)
Operating income
Finance income (Note 30)
Finance costs (Note 30)
Profit before income taxes
Income tax expense (Note 17)
Profit for the year
Profit attributable to:
Owners of parent
Non-controlling interests
Profit for the year
See accompanying notes to consolidated financial statements.

￥￥

94,319( 66,756)
27,563( 21,060)
328( 921)￥

90,798( 63,272)
27,526( 20,837)
245( 528)

Thousands of
U.S. dollars(Note 4)
2019
$

905

750

8,229

6,815
487
( 136)
7,166( 1,676)
5,490

7,156
275
( 532)
6,899( 1,763)
5,136

61,9574,430( 1,235)
65,152( 15,238)
49,914

5,457
33
5,490

5,100
36
5,136

49,610304
49,914￥$

U.S. dollars(Note 4)Yen
2019
Earnings per Share Attributable to Owners of Parent
Basic earnings per share (Note 32)

2019

Comprehensive Income Attributable to:
Owners of parent
Non-controlling interests
Comprehensive Income
See accompanying notes to consolidated financial statements.

￥

￥

￥

3

5,490

1.08

111.39Thousands of
U.S. dollars(Note 4)

Millions of yen

Consolidated Statement of Comprehensive Income

2019

2018

119.09Profit for the year
Other Comprehensive Income (Note 31)
Items That Will Not Be Reclassified to Profit or Loss
Net changes in fair value of financial assets measured at FVTOCI
Remeasurements of defined benefit plans
Share of OCI of investments accounted for using equity method
Total Items That Will Not Be Reclassified to Profit or Loss
Items That May Be Reclassified Subsequently to Profit or Loss
Exchange differences on translation of foreign operations
Net changes in fair value of cash flow hedges
Share of OCI of investments accounted for using equity method
Total Items That May Be Reclassified Subsequently to Profit or Loss
Total Other Comprehensive Income
Comprehensive Income

857,443( 606,870)
250,573( 191,454)
2,980( 8,371)

2019

2018
￥

5,136

$

49,914( 829)( 373)
32( 1,170)

535
334
( 70)
799

( 7,534)( 3,391)287( 10,638)

( 96)
－
20
( 76)
( 1,246)
4,244

( 0)
( 1)
( 158)( 159)
640
5,776( 878)－
185( 693)( 11,331)
38,583

4,201
43
4,244

￥

￥

5,755
21
5,776

$

$

38,188395
38,583

Consolidated Statement of Changes in Equity

Bando Chemical Industries, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018
Thousands

Millions of yenof shares

Equity attributable to owners of parent

Number ofshares of

Total equity

commonBalance at April 1, 2017attributable tostock

CommonCapitalRetained

Treasurycomponents ofowners ofNon-controllingTotal

outstandingstock

surplusearnings

stock, at costequityparentinterests

equity47,214¥10,952¥3,023¥45,380

－

－

5,100

－

－

－

－

5,100

－

Profit for the year－

Other comprehensive income－－－

Total Comprehensive Income

Other¥(1,368)¥2,588¥60,575¥223¥60,798

－

－

－

655

5,100

36

5,136

655

( 15)

640

655

5,755

21

5,776

Dividends (Note 26)

－

－

－

( 1,329)－－( 1,329)( 9)( 1,338)

Purchase of treasury stock (Note 25)

－

－

－

－

( 157)－( 157)－( 157)

Disposal of treasury stock (Note 25)

－

－

11

－

84

－

95

－

95

－

－

27

－

8

－

35

－

35

Changes in treasury stock associated withchanges in interests in associates accounted forusing equity method
Share-based payments (Notes 25 and 34)
Transfer from other components of equity toretained earnings (Note 25)

－

－

－

291

－

( 291)－－－

Total Transactions with Owners

－

－

38

( 1,038)( 65)( 291)( 1,356)( 9)( 1,365)
65,209Balance at March 31, 2018

47,214

10,952

3,061

49,442( 1,433)

2,952

64,974

235

Profit for the year

－

－

－

5,457

－

－

5,457

33

5,490

Other comprehensive income

－

－

－

－

－

( 1,256)( 1,256)10( 1,246)

－

－

－

5,457

－

( 1,256)

4,201

43

4,244

－

－

－

( 1,421)－－( 1,421)( 17)( 1,438)

Total Comprehensive Income
Dividends (Note 26)
Purchase of treasury stock (Note 25)

－

－

－

－

( 3)

－

( 3)

－

( 3)

Disposal of treasury stock (Note 25)

－

－

14

－

85

－

99

－

99

Changes in treasury stock associated withchanges in interests in associates accounted forusing equity method

－

－

－

－

( 8)

－

( 8)

－

( 8)

Share-based payments (Notes 25 and 34)

－

－

18

－

12

－

30

－

30

－

－

－

( 330)

－

330

－

－

－

Transfer from other components of equity toretained earnings (Note 25)
Total Transactions with Owners
Balance at March 31, 2019

－

－

32

( 1,751)

86

330( 1,303)( 17)( 1,320)

47,214¥10,952¥3,093¥53,148¥(1,347)¥2,026¥67,872¥261¥68,133

Thousands of U.S. dollars (Note 4)
Equity attributable to owners of parent
Total equity

Balance at March 31, 2018

Other

attributable to

CommonCapitalRetained

Treasurycomponents ofowners ofNon-controlling

Total

stock

surplusearnings

stock, at costequityparentinterests

equity$99,563$27,823$449,478$26,838$590,673$2,137$(13,029)$592,810

Profit for the year－－

49,610－－49,610304

49,914

Other comprehensive income

－

－

－

－

( 11,422)( 11,422)91( 11,331)

Total Comprehensive Income
Dividends (Note 26)－－

49,610－( 11,422)

38,188395

38,583－－( 12,924)－－( 12,924)( 158)( 13,082)

Purchase of treasury stock (Note 25)

－

－

－

( 23)

－

( 23)

－

( 23)

Disposal of treasury stock (Note 25)

－

128

－

772

－

900

－

900

Changes in treasury stock associated withchanges in interests in associates accounted forusing equity method

－

－

－

( 73)

－

( 73)

－

( 73)

Share-based payments (Notes 25 and 34)

－

164

－

111

－

275

－

275

Transfer from other components of equity toretained earnings (Note 25)－－( 3,002)

－

3,002

－

－

－

Total Transactions with Owners－

292( 15,926)

787

3,002

( 11,845)( 158)( 12,003)$99,563$28,115$483,162$(12,242)$18,418$617,016$2,374$619,390

Balance at March 31, 2019

See accompanying notes to consolidated financial statements.

4Consolidated Statement of Cash Flows

Bando Chemical Industries, Ltd. and Consolidated Subsidiaries
Years ended March 31, 2019 and 2018

Millions of Yen
2019
2018

Cash Flows from Operating Activities:
Profit before income taxes
Depreciation and amortization
Impairment losses
Interest and dividend income
Interest expenses
Share of profit of investments accounted for using equity method
Loss on sale and retirement of fixed assets
Increase in inventories
Increase in trade and other receivables(Decrease) increase in trade and other payables
Increase (decrease) in net defined benefit liability
Increase in provisions
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Net Cash Flows from Operating Activities

￥

7,167
4,490
166
( 302)
118( 905)
281( 852)( 288)( 1,545)224
315( 870)
7,999
701( 116)( 1,987)
6
6,603

￥

6,900
4,353
267
( 237)
147( 751)
158( 1,304)( 1,015)
1,749( 759)－
1,004
10,512672( 153)( 1,860)
13
9,184

Thousands of
U.S. dollars(Note 4)
2019$

65,15240,8151,512( 2,741)
1,068( 8,229)2,557( 7,745)( 2,620)( 14,042)
2,040
2,864
( 7,913)72,7186,374( 1,055)( 18,063)
50
60,024

Cash Flows from Investing Activities:
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Purchase of equity instruments
Proceeds from sale of equity instruments
Purchase of investments accounted for using equity method
Other, net
Net Cash Flows from Investing Activities( 441)
432( 3,986)29( 568)
( 22)
32
－
( 51)
( 4,575)( 453)
578( 4,478)30( 781)
( 21)
136
( 30)
11
( 5,008)( 4,010)3,931( 36,240)266( 5,168)( 196)
288－( 466)( 41,595)

Cash Flows from Financing Activities:
Net decrease in short-term borrowings (Note 33)
Proceeds from long-term borrowings (Note 33)
Repayments of long-term borrowings (Note 33)
Purchase of treasury stock
Proceeds from sale of treasury stock
Dividends paid to owners of parent (Note 26)
Dividends paid to non-controlling interests
Other, net (Note 33)
Net Cash Flows from Financing Activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Decrease in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year (Note 8)－－( 1,773)( 1)
99( 1,422)
( 17)
( 20)
( 3,134)160( 947)
18,477
17,530( 207)
100( 3,048)( 155)
95( 1,329)
( 10)
( 34)
( 4,588)( 46)( 459)
18,936￥ 18,477－－( 16,115)( 11)
898( 12,924)( 158)( 177)( 28,487)
1,451( 8,607)
167,972
159,364

See accompanying notes to consolidated financial statements.

5

￥

$

Notes to Consolidated Financial Statements
Bando Chemical Industries, Ltd. and Consolidated Subsidiaries

1. Reporting Entity
Bando Chemical Industries, Ltd. (the “Company”) is a corporation domiciled in Japan.
The Company’s registered headquarter is at 6-6, Minatojima Minamimachi 4-chome, Chuo-ku, Kobe, Hyogo, Japan.
The Company’s consolidated financial statements, with a reporting date of March 31, comprise the Company and its
subsidiaries (collectively, the “Group”) and the Company’s interests in associates and joint ventures. The descriptionof the Group’s main business is described in 7. “Segment Information.”

2. Basis of Presentation(1) Compliance with IFRS and First-time Adoption
The Company meets the requirements for a “Specified Company” as provided in Article 1-2 of the “Ordinance on
Terminology, Forms and Preparation Methods of Consolidated Financial Statements (Ordinance of the Ministry of
Finance of Japan No. 28 of 1976),” and accordingly, pursuant to the provision of Article 93 of the Ordinance, theconsolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (“IFRS”).
The consolidated financial statements were authorized for issue by Mitsutaka Yoshii, President and Representative
Director of the Company, on June 25, 2019.
These are the Group’s first consolidated financial statements prepared in accordance with IFRS. The date oftransition to IFRSs is April 1, 2017, and the Group applied IFRS 1 First-time Adoption of International Financial
Reporting Standards (“IFRS 1”). (See “39. First-time Adoption of IFRS” for the impact of the transition to IFRSs on
the financial position, operating results and cash flows as of April 1, 2017 and as of and for the year ended March 31,
2018)
Except for IFRSs that the Group has not early adopted and the exemptions permitted by the provisions of IFRS 1,
accounting policies of the Group comply with IFRS in force as of March 31, 2019.
(2) Basis of Measurement
The Group’s consolidated financial statements have been prepared on a historical cost basis, except for financial
instruments and net liabilities (assets) relating to retirement benefit plans described in “3. Summary of Significant
Accounting Policies.”(3) Functional and Presentation Currency
The consolidated financial statements of the Group are presented in Japanese yen, which is the Company’sfunctional currency. All amounts have been rounded to the nearest million yen, unless otherwise indicated.

3. Summary of Significant Accounting Policies(1) Basis of Consolidation(A) Subsidiaries
Subsidiaries are entities controlled by the Group. Control is obtained when the Group is exposed to, or has
rights to, variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee.
All subsidiaries are included in the scope of consolidation from the date on which the Group acquires control
until the date on which the Group loses control. Subsidiaries’ financial statements are adjusted, if necessary,
when their accounting policies differ from those of the Group.
Changes in the Group’s ownership interests in subsidiaries without a loss of control are accounted for as6equity transactions. When the Group loses control over subsidiaries, gains or losses resulting from loss ofcontrol are recognized in profit or loss.
Any difference between the amount by which the non-controlling interests are adjusted and the fair value ofthe consideration paid or received is recognized directly in equity as equity attributable to owners of parent.
The consolidated financial statements include financial statements of subsidiaries having different reporting
dates from that of the parent company as it is practically impossible to change their reporting dates due tothe legal requirements in countries or regions where they operate. The subsidiaries with different reporting
dates are consolidated based on the provisional financial statements prepared as of the consolidated
reporting date.
In preparation of the consolidated financial statements, all intra-group balances and transactions, and any
unrealized income and expenses arising from intra-group transactions are eliminated.
(B) Associates and joint ventures
Associates are entities over which the Group has the ability to exercise significant influence over theirfinancial and operational policies, but which are not controlled or jointly controlled by the Group. Joint
ventures are based on a contractual arrangement whereby multiple parties including the Group agree to sharecontrol over material economic activities and the Group has rights to the net assets of the joint arrangement.
All investments in associates and joint ventures are accounted for using equity method from the date on
which the Group obtains significant influence until the date on which the Group loses significant influence.
The financial statements of associates and joint ventures are adjusted, if necessary, when their accounting
policies differ from those of the Group.
Unrealized gains arising from transactions with equity-accounted investees are eliminated against theinvestment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same
way as unrealized gains only if there is no evidence of impairment.
The consolidated financial statements include investments in associates having different reporting dates fromthat of the Company as it is practically impossible to change their reporting dates due to reasons including
the relationship with other shareholders. Adjustments are made for the effects of significant transactions or
events in the intervening period.
（2） Business Combinations
Business combinations are accounted for using the acquisition method. Identifiable assets acquired and liabilities andcontingent liabilities assumed in the business combination are measured at fair value on the date of acquisition.
Acquisition-related costs are expensed as incurred. Non-controlling interests are identified separately from theGroup’s interests. The Group determines, on a transaction by transaction basis, whether to measure non-controllinginterests in the acquiree at fair value or at the proportionate share of the fair value of the acquiree’s identifiable net
assets.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controllinginterests in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity interests in theacquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
If the net amount of identifiable assets and liabilities exceeds the acquisition cost due to bargain purchase, the excess
is recognized in profit or loss.
Goodwill is not amortized but is reviewed for impairment annually or when there is an indication that goodwill may be
impaired. The carrying amount of goodwill is measured at acquisition cost less accumulated impairment losses.
Impairment losses are recognized in profit or loss and not reversed.
For the purpose of impairment testing, goodwill is allocated to each of the cash generating units, or groups of cash
generating units, that is expected to benefit from the business combination.

7

(3) Foreign Currency Translation(A) Foreign currency denominated transactions
The financial statements of Group companies are prepared in each company’s functional currency.
Foreign currency denominated transactions are translated into the functional currency of each company
using the exchange rate prevailing at the transaction date or a rate that approximates such rate.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency
using the exchange rate at the end of the reporting period. Exchange differences arising from translation orsettlement are recognized in profit or loss, except those relating to financial assets measured at fair value
through other comprehensive income and cash flow hedges, which are recognized in other comprehensive
income.
(B) Foreign operations
Assets and liabilities of foreign operations are translated using the exchange rates at the end of the reporting
period, and revenue and expense items are translated using the average exchange rates during the period
unless the exchange rates significantly fluctuate. Exchange differences arising from translating foreign
operations’ financial statements are recognized in other comprehensive income. The differences are included
in other components of equity as “Exchange differences on translation of foreign operations.”(4) Financial Instruments(A) Financial assets other than derivatives(i) Classification
The Group classifies non-derivative financial assets as financial assets measured at amortized cost, fair value
through other comprehensive income (“FVTOCI”) or fair value through profit or loss (“FVTPL”).
a. Financial assets measured at amortized cost
Financial assets are classified as measured at amortized cost when they meet both of the following
requirements:
 The financial asset is held within a business model whose objective is to hold the asset to collectcontractual cash flows.
 The contractual terms of the financial asset give rise to cash flows on specified dates that aresolely payments of principal and interest on the outstanding principal amount.
b. Financial assets measured at FVTOCI(a) Debt instruments measured at FVTOCI
Financial assets are classified as debt instruments measured at FVTOCI when they meet both of thefollowing requirements:
 The financial asset is held within a business model whose objective is achieved by both collecting
contractual cash flows and selling financial assets.
 The contractual terms of the financial asset give rise to cash flows on specified dates that aresolely payments of principal and interest on the outstanding principal amount.
(b) Equity instruments measured at FVTOCI
Of financial assets other than those measured at amortized cost or debt instruments measured at
FVTOCI, equity instruments for which an irrevocable election to present in other comprehensive
income subsequent changes in the fair value is made at initial recognition are classified as measured
at FVTOCI.
c. Financial assets measured at FVTPL
Financial assets other than those measured at amortized cost or FVTOCI are classified as measured
at FVTPL.
However, the Group may make an irrevocable election to designate, at initial recognition, financial
assets not measured at FVTPL as those measured at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch.
(ii) Initial recognition and measurement
The Group initially recognizes trade and other receivables on the date they arise. All other financial assets are
initially recognized on the transaction date when the Group becomes a party to the financial assets. All
financial assets, except for those classified at FVTPL, are initially measured at fair value plus eligible8transaction costs.
(iii) Subsequent measurement
Financial assets are subsequently measured according to their classification as follows:a．Financial assets measured at amortized cost
Measured at amortized cost using the effective interest method.
b．Financial assets measured at FVTOCI(a) Debt instruments measured at FVTOCI
Changes in fair value are recognized in other comprehensive income until the financial assets are
derecognized except for impairment gains and losses and foreign exchange gains and losses. Whenthe financial asset is derecognized, the cumulative gain or loss previously recognized in othercomprehensive income is reclassified to profit or loss.
(b) Equity instruments measured at FVTOCI
Changes in fair value are recognized in other comprehensive income. When the financial asset isderecognized or the fair value significantly declines, the cumulative gain or loss previously recognizedin other comprehensive income is directly reclassified to retained earnings. Dividends from suchfinancial assets are recognized in profit or loss.
c．Financial assets measured at fair value through profit or loss
Measured at FVTPL subsequently to initial recognition, with changes in fair value recognized in profit
or loss.
(iv) Derecognition
Financial assets are derecognized when the contractual rights to its cash flows expire or are transferred, or
substantially all risks and rewards of ownership are transferred.
(v) Impairment
The Group recognizes a loss allowance for expected credit losses on financial assets measured at amortized
cost.
a．Assessment of a significant increase in credit risk
The Group compares the risk of default of financial assets occurring as of the reporting date and thedate of initial recognition to assess whether the credit risk of financial assets has significantly
increased since initial recognition.
The Group determines whether credit risk has significantly increased at each reporting date based on
the change in the risk of default occurring since initial recognition taking into account the following
factors:
Past-due information
Deterioration in operating results of the borrowerb．Expected credit loss approach
Expected credit loss is the present value of the difference between all contractual cash flows that are
due to the Group and all the cash flows that the Group expects to receive. If the credit risk of thefinancial assets has significantly increased since initial recognition, loss allowance is measured at an
amount equal to lifetime expected credit losses. If the credit risk has not significantly increased sinceinitial recognition, loss allowance is measured at 12-month expected credit losses.
Notwithstanding the above, however, loss allowance for trade receivables that do not contain asignificant financing component is measured at an amount equal to lifetime expected credit losses.
Loss allowance for financial assets is recognized in profit or loss. If there is an event that results in
reduction of the loss allowance, the reversal of the loss allowance is recognized in profit or loss.

9(B) Financial liabilities other than derivatives(i) Classification
The Group classifies financial liabilities other than derivatives as financial liabilities measured at amortized
cost.
(ii) Initial recognition and measurement
The Group initially recognizes debt securities issued by the Group on the issue date.
All other financial liabilities are initially recognized on the date of the transaction when the Group becomesparty to the financial liabilities.
All financial liabilities are initially measured at fair value plus eligible transaction costs.
(iii) Subsequent measurement
Subsequent to initial recognition, financial liabilities measured at amortized cost are measured at amortizedcost using the effective interest method.
(iv) Derecognition
Financial liabilities are derecognized when they are extinguished – i.e. when the obligation specified in thecontract is discharged, cancelled or expires.
(C) Derivatives and hedge accounting
The Group uses derivatives including foreign currency forward contracts and interest rate swaps to hedge
foreign currency risk and interest rate risk. There derivatives are initially measured at their fair value on the
trade date and subsequently measured at fair value.
Changes in the fair value of the derivatives are recognized in profit or loss, except for those relating to theeffective portion of the cash flow hedges, which are recognized in other comprehensive income.
(i) Hedge accounting requirements
At the inception of the hedging relationship, the Group formally designates and documents the hedging
relationship to which the hedge accounting is applied and the Group’s risk management objective andstrategy for undertaking the hedge. The documentation includes identification of the hedging instrument, thehedged item or transaction, the nature of the risk being hedged, and how the Group will assess theeffectiveness of changes in fair value or cash flows of the hedging instrument in offsetting the exposure tochanges in fair value or cash flows of the hedged item that is attributable to a particular risk being hedged.
These hedges are expected to be highly effective in offsetting the changes in the fair value or cash flows of
the hedged item, but the Group assesses its effectiveness on an ongoing basis to determine whether they
have been highly effective during all reporting periods that the hedge is designated.
(ii) Accounting for qualifying hedging relationships
Hedge relationships that meet the hedge accounting requirements are accounted for as follows:a．Fair value hedge
Changes in the fair value of the derivatives are recognized in profit or loss. Changes in the fair value ofthe hedged item that is attributable to a risk being hedged adjust the carrying amount of the hedged
item and are recognized in profit or loss.
b．Cash flow hedge
The effective portion of the gain or loss on the hedging instrument is recognized in othercomprehensive income, and the ineffective portion is immediately recognized in profit or loss.
The amount related to the hedging instrument that has been accumulated in other comprehensive
income is reclassified to profit or loss when a hedged transaction affects profit or loss. If a hedgedtransaction results in the recognition of a non-financial asset or non-financial liability, the amountrecognized in other comprehensive income is accounted for as an adjustment to the initial carrying
amount of the non-financial asset or non-financial liability.
If a forecast transaction or firm commitment is no longer expected to occur, the cumulative gains orlosses previously recognized in other comprehensive income are reclassified from equity to profit or10

loss. If a hedging instrument expires or is sold, terminated without replacement or rollover into anotherhedging instrument or exercised, or if the hedge designation is revoked, the amount previously
accumulated in other comprehensive income remains in equity until the forecast transaction or firm
commitment occurs only if the hedged future cash flows are still expected to occur.
(D) Fair value of financial instruments
Fair value of financial instruments are determined using the information, such as market value, and valuation
techniques including the market approach, the income approach and the cost approach.
Inputs used to measure fair value are categorized into the following three levels.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group canaccess at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability(5) Cash and Cash Equivalents
Cash and cash equivalents are cash on hand, demand deposits, and short-term investments with insignificant risk ofchanges in value, with original maturities of three months or less from the date of acquisition that are readily
convertible to cash.
(6) Inventories
Inventories are stated at the lower of cost and net realizable value. The cost comprises purchase cost, processing
cost and all other costs incurred in bringing the inventories to their present location and condition and is generally
calculated by the gross average method. Net realizable value is the estimated selling price in the ordinary course ofbusiness, less estimated costs of completion and the estimated costs necessary to sell.
(7) Property, Plant and Equipment
Items of property, plant and equipment are measured using the cost model and stated at cost less any accumulated
depreciation and accumulated impairment losses. The cost comprises costs directly attributable to the acquisition of
the item, costs of dismantling and removing the item and restoring the site on which it is located, and borrowing costs
directly attributable to the acquisition, construction or production of a qualifying asset.
Subsequent costs are recognized either as the carrying amounts of the item of property, plant and equipment acquiredor as a separate item, only if it is probable that future economic benefits associated with the item will flow to theGroup and the amount can be measured reliably. All other costs related to repair and maintenance are recognized in
profit or loss as incurred.
Depreciable assets are depreciated using the straight-line method.
Estimated useful lives used to calculate depreciation are as follows:
Buildings and structures
3 to 50 years
Machinery and equipment
5 to 12 years
Lease assets
Shorter of the lease term and the estimated useful life
The estimated useful lives and depreciation method are reviewed at the end of each reporting period, with any
changes accounted for on a prospective basis as a change in accounting estimate.
(8) Goodwill and Intangible Assets(a) Goodwill
Goodwill is recognized as the amount of consideration transferred, including the amount of all non-controllinginterests of the acquired entity that are measured at the acquisition-date fair value, in excess of the net
amount of identifiable assets acquired and liabilities assumed at the acquisition date.
Goodwill is measured at cost less any accumulated impairment losses, and not amortized but generally tested
for impairment at least annually.
(b)

Intangible Assets
Intangible assets are measured by the cost model and stated at cost less any accumulated amortization andimpairment losses.

11Development cost is capitalized only if the Group can demonstrate all of the following requirements are
satisfied:・ the technical feasibility of completing the intangible assets so that it will be available for use or sale;・ its intention to complete the intangible assets and use or sell them;・ its ability to use or sell the intangible assets;・ how the intangible assets will generate probable future economic benefits;
・ the availability of adequate technical, financial and other resource to complete the development and touse or sell the intangible assets; and・ its ability to measure reliably the expenditure attributable to the intangible assets during theirdevelopment.
After completion of the development activities, these developed assets are amortized from the time the mass
production starts over the period during which the developed assets are expected to generate net cash
inflows for the Group. Development costs that do not satisfy the above recognition criteria and expenditure
incurred from research activities are expensed as incurred.
Intangible assets with finite useful lives are amortized using the straight-line method over their estimateduseful lives.
The estimated useful lives of major intangible assets, except for those with indefinite useful lives, are as
follows:
Software: 5 years
Development costs: 5 years
The estimated useful lives and depreciation method of intangible assets with finite useful lives are reviewed at
the end of each reporting period, with any changes accounted for on a prospective basis as a change inaccounting estimate.
Intangible assets with indefinite useful lives are not amortized but tested for impairment.
(9) Leases
Leases are classified as finance leases if substantially all the risks and rewards incidental to ownership of theunderlying assets are transferred to the lessee, and as operating leases in all other cases.
(a)Leases as a lessor
Lease income under operating leases is recognized as revenue over the lease term on a straight-line basis.

(b)

Leases as a lessee
For finance leases, lease assets and lease liabilities are stated at the lower of the fair value of the leaseproperty at the inception of the lease and the present value of minimum lease payments in the consolidated
statement of financial position. Minimum lease payments are apportioned between the finance charge and therepayment of the outstanding lease obligation using the interest method, with the finance charge recognizedin the consolidated statement of profit or loss. Lease assets are depreciated using the straight-line method
over the shorter period of their estimated useful lives and the lease term.
Lease payments under operating leases are recognized as an expense in the consolidated statement of profit
or loss using the straight-line method over the lease term.
Whether a contract is a lease or whether a contract contains a lease is determined based on the substance ofthe contract in accordance with IFRIC 4 Determining whether an arrangement contains a lease even when thecontract does not take the legal form of a lease.

12(10) Impairment of Non-Financial Assets
The Group assesses at the end of each reporting period whether there is any indication that an asset may be impaired.
If any such indication exists, or if annual impairment testing is required, the Group estimates the recoverable amountof the asset.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less cost of disposal andits value in use, and is determined for individual assets, unless the asset does not generate cash inflows largely
independent of those from other assets or groups of assets. If the recoverable amount of an asset or cash-generating
unit is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount, and the
reduction is recognized as an impairment loss. The estimate of the future cash flows used in measuring value in use is
discounted using the interest rate that reflects current market assessments of the time value of money and risks
specific to the asset.
Intangible assets with an indefinite useful life or not yet available for use are not amortized but tested for impairment
annually by comparing their estimated recoverable amount to their carrying amount.
Goodwill is also tested for impairment annually, and the carrying amount is cost net of accumulated impairment losses.
Goodwill is allocated for the purpose of impairment testing to each cash-generating unit, or groups of cash-generating
units, that is expected to benefit from the synergies of the business combination.
For assets other than goodwill, the Group assesses at the end of each reporting period whether there is any indicationthat an impairment loss recognized in prior periods may no longer exist or may have decreased. If any such indication
exists, the Group estimates the recoverable amount of the asset. If the estimated recoverable amount of an asset isgreater than the carrying amount, an impairment loss is reversed. The increased carrying amount attributable to areversal of an impairment loss does not exceed the carrying amount that would have been determined (net ofamortization or depreciation) had no impairment loss been recognized for the asset in prior periods. A reversal of an
impairment loss is recognized in profit or loss.
An impairment loss recognized for goodwill is not reversed in a subsequent period.
(11) Employee Benefits(a)Post-retirement benefit
The Group has defined benefit pension plans and defined contribution pension plans.
(i)Defined benefit pension plans
The amount of obligation in respect of defined benefit pension plans is recognized at the present valueof the defined benefit obligation less the fair value of plan assets.
The present value of the defined benefit obligation is calculated annually using the projected unit credit
method by a qualified actuary. The discount rate used in the calculation is determined by reference tomarket yields at the end of the reporting period on high quality corporate bonds having a term that is
consistent with the estimated discount period which is based on the period until the future benefit
payment date.
Remeasurement of net defined benefit liability or asset is recognized in OCI as incurred and
immediately reclassified to retained earnings. Past service cost, net interest on net defined benefit
liability (asset) and settlement gains or losses are recognized in profit or loss.

(ii)

(b)

Defined contribution pension plans
Retirement benefits expense under defined contribution pension plans is recognized as an expense
when contributions are paid.

Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and recognized as an expense whenemployees render the related service.
A liability is recognized for amounts expected to be paid if the Company has present legal or constructive
obligation to pay this amount as a result of past service rendered by employees and the obligation can be
estimated reliably.

13

(c)

Other long-term employee benefits
The Group has a special vacation plan which is available according to certain service years as a long-term
employee benefit in addition to a pension plan. The obligation for other long-term employee benefits ismeasured as the present value of the estimated future benefits that employees have earned in exchange forservice rendered in the current and prior periods.
The discount rate is based on the market yields at the end of the reporting period on high quality corporate
bonds having the same maturity as the Company’s obligation.

(12) Share-based Payments
The Company has introduced the “Directors Compensation Board Incentive Plan (“BIP”) Trust” as the
Performance-based Stock Compensation Plan (the “Plan”) for directors (excluding non-executive directors andoverseas residents) and executive officers (collectively, “Directors, etc.”), with the purpose of further clarifying thelinkage between the remuneration of Directors, etc. and the value of the Company’s shares and increasing theirmotivation to improve performance and increase the corporate value in the mid- to long-term.
The Plan is a performance-based stock compensation plan under which a trust purchases the Company’s shares withthe fund contributed by the Company and issues those shares to the Company’s Directors, etc. based on their levelof performance achievement. However, in principle, Directors, etc. can receive the Company’s shares upon theirretirement.
The consideration for the service rendered is measured by reference to the fair value of the Company’s shares
granted, and the measured consideration is recognized as an expense, with a corresponding increase in equity. The
Company’s shares remaining in trusts are deducted from equity.
(13) Provisions
The Group recognizes provisions when it has a present obligation (legal or constructive) as a result of past events, it
is probable that settlement of the obligation will be required, and the amount of obligation can be reliably estimated.
When the time value of money is material, the amount of provisions is measured by discounting the future cash
outflows expected to be required to settle the obligation at the rate reflecting the time value of money and risks
specific to the obligation to the present value. The increase in the amount of provisions due to passage of time isrecognized as a finance charge.
(14) Equity(a) Ordinary shares
For ordinary shares issued by the Company, the issue price is recorded in common stock and capital surplus.
(b)

Treasury stock
Treasury stock is stated at cost and deducted from equity. No gain or loss is recognized on the purchase, saleor cancellation of treasury stock. The difference between the carrying amount and consideration received on
the sale is recognized in capital surplus.

(15) Revenue Recognition
The Group recognizes revenue in accordance with the following five-step approach except for interest and dividend
income accounted for under IFRS 9 Financial Instruments.
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
The main products offered by the Group are as follows: Automotive Parts Business sells automotive powertransmission belt products and motorcycle power transmission belt products; Industrial Products Business sells
industrial power transmission belt products, other power transmission belt products, conveyor belts, conveyor systemproducts, and rice hulling rolls; and Advanced Elastomer Products Business sells cleaning blades, high-performancerollers, precision belts, polyurethane functional parts, precision polishing materials, films for construction materials,
medical films, decorative display films, and industrial films. For these products, performance obligations are considered
to be satisfied when a promised product is delivered to a customer, and therefore revenue is recognized at that point.
Revenue is calculated as consideration promised in the contracts with customers less estimates of discounts, etc.

14

(16) Government Grants
Government grants are recognized at fair value when the Group satisfies all requirements attached to the grants andthere is reasonable assurance that the Group will receive the grants.
Grants related to expenses are recognized in profit or loss in the periods in which the Group recognizes as expenses
the related costs for which the grants are intended to compensate. Grants related to acquisition of assets arerecognized as deferred income and recognized in profit or loss on a systematic basis over the estimated useful life of
the relevant asset.
There are no unperformed conditions or other contingent events related to the grants.
(17) Income Taxes
Income taxes comprise current tax expense and deferred tax expense and are recognized in profit or loss unless they
are related to items recognized in OCI or equity.
Current tax expense is calculated using the tax rates and tax laws that have been enacted or substantially enacted by
the end of the reporting period in countries where the Company and its subsidiaries operate and generate taxable
income.
Deferred tax is recognized for temporary differences between the carrying amount of an asset or liability and its tax
base. No deferred tax is recognized for the following temporally differences:
Taxable temporary differences arising from initial recognition of goodwillTemporary differences arising from the initial recognition of an asset or liability in a transaction which is not abusiness combination and which, at the time of the transaction, affects neither accounting profit nor taxable
profit (tax loss)

Deductible temporary differences arising from investments in subsidiaries, associates and joint ventures, to theextent that it is not probable that the temporary difference will reverse in the foreseeable future, or it is notprobable that taxable income will be available against which the temporally difference can be utilized.
Taxable temporary differences arising from investments in subsidiaries, associates and joint ventures, to theextent that the Group is able to control the timing of the reversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when theasset is realized or the liability is settled, estimated based on tax rates (and laws) that have been enacted or
substantially enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to set off the recognizedamounts, and they relate to income taxes levied by the same taxation authority on the same taxable entity or different
taxable entities which intend to settle current tax liabilities and assets on a net basis.
(18) Earnings per Share
Basic earnings per share (“EPS”) is calculated by dividing profit for the year attributable to owners of parent by theweighted average number of ordinary shares outstanding during the year adjusted for treasury stock.

4. U.S. Dollar Amounts
The translation of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience ofreaders outside Japan. Such translation should not be construed as representations that the Japanese yenamounts actually represent, or have been or could be converted into U.S. dollars.
The rate of \110.00 = U.S.$1.00, the approximate rate of exchange as at March 31, 2019, has been used for the
purpose of such translation.

15

5. Use of Judgements and Estimates
The consolidated financial statements of the Group include estimates and assumptions made by management relating
to measurement of income, expenses, assets and liabilities. These estimates and assumptions are based on best
judgements by management considering historical data and various factors considered reasonable at the reporting
date. However, actual results may differ from these estimates due to their nature.
Estimates and assumptions are reviewed by management on an ongoing basis. The effects of the review of theestimates and assumptions are recognized in the period of the review and future periods.
Estimates and assumptions that have material effects on the amounts recognized in the Group’s consolidated
financial statements are as follows:
Useful lives of property, plant and equipment and intangible assets (“13. Property, Plant and Equipment” and“14. Goodwill and Intangible Assets”)Impairment of non-financial assets (“14. Goodwill and Intangible Assets” and “15. Impairment of
Non-Financial Assets”)

Recoverability of deferred tax assets (“17. Income Taxes”)
Measurement of defined benefit obligations (“21. Employee Benefits”)

Recognition and measurement of provisions (“23. Provisions”)
Fair value measurement of financial instruments (“35. Financial Instruments”)

6. New Accounting Standards and Interpretations Issued but Not Yet Adopted by the GroupThe following table lists the major new or amended accounting standards and interpretations issued prior to the dateof authorization of the consolidated financial statements that are not yet early adopted by the Group as of March 31,
2019.

Standard

Title

Effective date
(Fiscal year beginningon or after)

To be adopted by
the Group

Description of new or amended
standard

IFRS 16

LeasesJanuary 1, 2019Year ending
March 31, 2020

Amended accounting treatment forleasesChanges to accounting policies and the expected impact on the consolidated financial statements due to applying
IFRS 16 Leases are as follows:
IFRS 16 introduced a single lessee accounting model and requires a lessee to recognize a right-of-use asset
representing its right to use the underlying lease asset and a lease liability representing its obligation to make lease
payments.
In applying IFRS 16, the Group will apply the transition provisions and recognize the cumulative effect of initiallyapplying the standard at the date of initial application. The impact on non-current assets, current liabilities andnon-current liabilities in the consolidated financial statements estimated based on currently available information isapproximately \2,000 million ($18,000 thousand), \900 million ($8,000 thousand) and \1,100 million ($10,000 thousand),
respectively, and the impact on profit for the year is estimated to be insignificant.

16

7. Segment Information(1) Description of reportable segments
The Group’s reportable segments are components of the Company for which separate financial information isavailable and whose operating results are reviewed regularly by the Board of Directors in order to allocate
resources and assess segment performance.
The Group comprises operating divisions based on products and services, and each operating division develops acomprehensive strategy for respective products and services for domestic and overseas markets and conducts
business activities.
Therefore, the Group’s business consists of three reportable segments categorized by product and service based on
operating divisions of the parent company: “Automotive Parts Business,” “Industrial Products Business,” and“Advanced Elastomer Products Business.”
Main products manufactured and sold by each segment are as follows:
Segment nameAutomotive Parts BusinessIndustrial Products Business

Advanced Elastomer Products Business

Main products
Automotive power transmission belt products (accessory drive
power transmission belts and system products), motorcycle powertransmission belt products (variable speed belts for scooters), etc.
Industrial power transmission belt products (industrial machinery
V-belts, toothed belts, pulleys, etc.), other power transmission
products, conveyor belts (conveyor belts, resin conveyor belts,
synchronous conveyor belts), conveyor system products,
rice-hulling rolls, etc.
Cleaning blades, high-performance rollers, precision belts,
polyurethane functional parts, precision polishing materials, films forconstruction materials, medical films, decorative display films,
industrial films, etc.

17

(2) Information on revenue, profit or loss and other items by reportable segments
The accounting treatments applied to the reportable segments are consistent with those described in “3. Summary of
Significant Accounting Policies.” Intersegment sales are based on market prices.

Revenue, profit or loss and other items by reportable segments are as follows:
Millions of yen
2019
Reportable segments
Advanced
Elastomer
Products

Automotive
Parts

Revenue
External sales
Intersegment sales
Total
Segment profit(Core operating income)
Other income
Other expenses
Share of profit of investments
accounted for using equity method
Operating income
Finance income
Finance costs
Profit before income taxes
Income taxes expense
Profit for the year
Other items:
Depreciation and amortization
Increase in property, plant andequipment and intangible assets
Impairment losses (Note 4)

Industrial
Products\ 41,616 \ 34,703 \35
112\ 41,650 \ 34,815 \\Other(Note 1)

Total

Adjustments Consolidated(Note 2)
(Note 3)

15,228 \10
15,237 \91,546 \157
91,703 \2,772 \
1,108
3,881 \

－ \ 94,319(1,265)－(1,265) \ 94,319

3,182 \－－

1,960 \
－
－

799 \
－
－

5,941 \
－
－

531 \
－
－

31 \
－
－

6,503
328
(921)

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

905
6,815
487
(136)
7,166
(1,676)
5,490

\

2,469

\

1,190 \

710 \

4,370 \

39 \

81 \

4,490

\
\

2,369
－

\
\

1,002 \
－ \

710 \
－\

4,081 \
－ \

65 \
－ \

560 \
166 \

4,706
166

Millions of yen
2018
Automotive
Parts

Revenue
External sales
Intersegment sales
Total
Segment profit(Core operating income)
Other income
Other expenses
Share of profit of investments
accounted for using equity method
Operating income
Finance income
Finance costs
Profit before income taxes
Income taxes expense
Profit for the year
Other items:
Depreciation and amortization
Increase in property, plant andequipment and intangible assets
Impairment losses (Note 4)

Reportable segments
Advanced
Elastomer
Products

Industrial
Products\ 41,606 \ 31,830 \84
88\ 41,691 \ 31,918 \\Other(Note 1)

Total

Adjustments Consolidated(Note 2)
(Note 3)

15,123 \37
15,160 \88,559 \210
88,769 \2,239 \
495
2,733 \

－ \ 90,798(704)－(704) \ 90,798

3,401 \－－

1,928 \
－
－

552 \
－
－

5,882 \
－
－

348 \
－
－

459 \
－
－

6,689
245
(528)

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

－
－
－
－
－
－
－

750
7,156
275
(532)
6,899
(1,763)5,136\

2,044 \

1,508 \

705 \

4,257 \

78 \

17 \

4,353

\
\

2,957 \
－ \1,049 \
－ \

606 \
267 \

4,611 \
267 \

113 \
－ \

576 \
－ \

5,300
267

18

Automotive
Parts

Thousands of U.S. dollars
2019
Reportable segments
Advanced
Other
Industrial
Elastomer
Total(Note 1)
Products
Products

Adjustments Consolidated(Note 2)
(Note 3)

Revenue
External sales$ 378,325 $ 315,479 $ 138,434 $ 832,238 $ 25,204 $－ $ 857,443
Intersegment sales
315
1,021
87
1,423
10,073(11,496)－
Total$ 378,640 $ 316,500 $ 138,521 $ 833,661 $ 35,277 $ (11,496) $ 857,443
Segment profit$ 28,928 $ 17,816 $
7,268 $
54,011 $ 4,823 $284 $ 59,119(Core operating income)
Other income
－
－
－
－
－
－
2,980
Other expenses
－
－
－
－
－
－
(8,371)
Share of profit of investments accounted
－
－
－
－
－
－
8,229
for using equity method
Operating income
－
－
－
－
－
－
61,957
Finance income
－
－
－
－
－
－
4,430
Finance costs
－
－
－
－
－
－
(1,235)
Profit before income taxes
－
－
－
－
－
－
65,152
Income taxes expense
－
－
－
－
－
－
(15,238)
Profit for the year
－
－
－
－
－
－
49,914
Other items:
Depreciation and amortization$ 22,449 $ 10,819 $6,456 $
39,724 $359 $733 $ 40,815
Increase in property, plant and$ 21,541 $ 9,107 $6,456 $
37,104 $592 $5,086 $ 42,783
equipment and intangible assets
Impairment losses (Note 4)
$
－ $
－ $
－$
－ $
－ $ 1,512 $ 1,512(Notes)1. “Other” mainly includes robot-related devices and other businesses that are not included in any reportable segments.
2. “Adjustments” are as follows:(a) For the year ended March 31, 2019, adjustments of Segment profit of \31 million ($284 thousand) include \11 million ($98
thousand) of the elimination of intersegment transactions and \20 million ($186 thousand) of corporate expenses. For theyear ended March 31, 2018, adjustments of Segment profit of \459 million include \12 million of the elimination ofintersegment transactions and \447 million of corporate expenses. Corporate expenses represent differences between theestimated allocation of general administrative expenses and research and development costs to each reportable segment andthe actual amount incurred.
(b) Adjustments of Increase in property, plant and equipment and intangible assets of \560 million ($5,086 thousand) and \576
million for the years ended March 31, 2019 and 2018, respectively, are mainly related to fixed assets not belonging to any
reportable segments.
3. The Group uses core operating income calculated as revenue less cost of sales and selling, general and administrative expenses
as a key indicator for business management, and accordingly, segment profit is based on the core operating income.
4. See “15. Impairment of Non-Financial Assets” for impairment losses.
(3) Information on products and services
The disclosure is omitted as the relevant information is disclosed in the section of segment information.
(4)

Geographic Information(a) External sales

Millions of yen
2019
2018
Japan
\ 48,910\
45,574Asia
26,22225,857
China
8,728
8,983
Europe and other
10,45910,384
Total\ 94,319\
90,798(Note) Sales are classified into countries or regions based on customers’ location.

19

Thousands of
U.S. dollars
2019$444,635
238,384
79,342
95,082$
857,443

(b)Non-current assets (excluding financial instruments, deferred tax assets, defined benefit asset and rights
arising from insurance contracts)

Japan
Asia
China
Europe and other
Total

March 31,2019
\ 22,942
8,285
1,227
2,201
\ 34,655

Millions of yen
March 31,
April 1,
20182017
\ 22,676\ 22,611
8,689
8,064
1,210
1,142
2,302
2,690
\ 34,877\ 34,507

Thousands of
U.S. dollars
March 31,2019
$ 208,568
75,317
11,15620,004$ 315,045

Main countries or regions included in Asia, China, and Europe and other are as follows:
Asia: Thailand, South Korea, India, Vietnam, Indonesia, etc.
China: China, Hong KongEurope and other: United States, Europe, Central and South America, Oceania, etc.
Major customers
The disclosure is omitted as no single external customer accounts for more than 10% of revenue stated in the
consolidated statement of profit or loss.
(5)

8. Cash and Cash Equivalents“Cash and cash equivalents” consist of the following:

Cash and deposits
Time deposits with maturities of over 3 months
Total

March 31,2019
\ 18,001(471)\ 17,530

Millions of yen
March 31,
April 1,
20182017
\ 18,948\ 19,523
(471)
(587)
\ 18,477\ 18,936

Thousands of
U.S. dollars
March 31,2019
$ 163,643(4,279)$ 159,364

The balance of cash and cash equivalents in the consolidated statements of financial position as of March 31, 2019and 2018 and April 1, 2017 corresponds to that in the consolidated statement of cash flows.

9. Trade and Other Receivables“Trade and other receivables” consist of the following:
March 31,2019
\ 18,171
3,293
109
213
(79)
\ 21,707

Millions of yen
March 31,
April 1,
20182017
\ 18,435\ 18,720
2,835
1,789
101
254
208
167
(86)
(94)
\ 21,493\ 20,836

Thousands of
U.S. dollars
March 31,2019
$ 165,193
29,936
993
1,936
(719)
$ 197,339

Notes and trade receivables
Electronically recorded monetary claims
Other receivables
Other
Loss allowance (Notes 1 and 2)
Total(Notes)
1. Trade and other receivables are presented net of loss allowance in the consolidated statements of financial position.
2. See “35. Financial Instruments” for credit risk management and fair value of “Trade and other receivables.”2010. Inventories“Inventories” consist of the following:

Merchandise and finished goods
Work in process
Raw materials and supplies
Total

March 31,
2019
\
7,716
1,920
3,313
\ 12,949

Millions of yen
March 31,
April 1,
2018
2017
\
7,427
\
6,807
1,700
1,503
3,080
2,640
\ 12,207\ 10,950

Thousands of
U.S. dollars
March 31,2019
$ 70,148
17,45530,120$ 117,723

The amounts of inventories recognized as cost of sales for the years ended March 31, 2019 and 2018 are \66,053
million ($600,481 thousand) and \63,020 million, respectively.
Loss on valuation of inventories of \411 million ($3,734 thousand) and \464 million is recognized for the years ended
March 31, 2019 and 2018, respectively, as a result of evaluating inventories at their net realizable values.
In addition, reversal of loss on valuation of inventories of \169 million ($1,536 thousand) and \116 million is recorded
for the years ended March 31, 2019 and 2018, respectively, due to an increase in net realizable value.

11. Other Financial Assets(1) “Other financial assets” consist of the following:

Derivative assets
Equity securities
Time deposits with maturities of over 3 months
Other
Total
Other financial assets – current
Other financial assets – non-current
Total

March 31,
2019
\
－
6,422
471
576
7,469
471
6,998
\
7,469

Millions of yen
March 31,
April 1,
2018
2017
\
9
\
15
7,625
6,953
471
587
577
584
8,682
8,139
481
604
8,201
7,535
\
8,682
\
8,139

Thousands of
U.S. dollars
March 31,2019$－
58,3854,279
5,237
67,901
4,286
63,615$ 67,901(2) Financial assets measured at fair value through other comprehensive income
The Group holds shares of client companies for the purpose of business alliance and maintaining and strengthening
stable and long-term relationship and designates those shares as financial assets measured at fair value through othercomprehensive income.
Major issues and their fair values are as follows:

Issue
JSR Corporation
Sumitomo Mitsui Financial Group, Inc.
Noritz Corporation
Makita Corporation
SUZUKI MOTOR CORPORATIONOILES CORPORATION
Kobe Tochi Tatemono Co., Ltd.

March 31,
2019
\
1,030
487
475
455
411
376
\
340

21

Millions of yen
March 31,
April 1,
2018
2017
\
1,436
\
1,127
560
508
529
581
614
460
481
388
482
437
\
304
\
304

Thousands of
U.S. dollars
March 31,
2019
$
9,363
4,424
4,320
4,135
3,740
3,416
$
3,092

(3) Derecognition of financial assets measured at fair value through other comprehensive income
The Group reviews cross-shareholdings on a regular basis.
Fair values and cumulative gains or losses at the time of disposal are as follows:
Millions of yen
2019
2018
Cumulative
Cumulative
Fair value
Fair value
gains/losses
gains/losses
\
31
\
16
\
136
\
47

Thousands of U.S. dollars
2019
Cumulative
Fair value
gains/losses
$
285
$
142

When financial assets measured at FVTOCI are derecognized, the cumulative gains or losses previously recognized in
OCI are reclassified to retained earnings. The cumulative gains or losses reclassified from OCI to retained earnings(net of tax) were \10 million ($93 thousand) and \32 million for the years ended March 31, 2019 and 2018, respectively.
Details of dividend income are as follows:
Millions of yen
2019
Investments
derecognized
during the year
\
0

2018

Investments held
as of March 31\

160

Investments
derecognized
during the year\2

Investments held
as of March 31\

144

Thousands of U.S. dollars
2019
Investments
Investments held
derecognized
as of March 31
during the year
$
3
$
1,453

12. Other Assets“Other current assets” and “Other non-current assets” consist of the following:(1) Other current assets

Prepaid expenses
Consumption taxes receivable
Other
Total

March 31,
2019
\
480
139
276
\
895

Millions of yen
March 31,
April 1,
2018
2017
\
460
\
402
157
213
216
197
\
833
\
812

Thousands of
U.S. dollars
March 31,
2019
$
4,366
1,264
2,500
$
8,130

March 31,
2019
\
377
222
148
2
\
749

Millions of yen
March 31,
April 1,
2018
2017
\
397
\
394
223
274
111
－
3
4
\
734
\
672

Thousands of
U.S. dollars
March 31,
2019
$
3,424
2,020
1,341
21
$
6,806

(2) Other non-current assets

Insurance funds
Long-term prepaid expenses
Prepaid income taxes
Other
Total

22

13. Property, Plant and Equipment(1) Changes in cost, accumulated depreciation and impairment losses and carrying amount are as follows:(a) Cost
Buildings and Machinery andequipment
structures
April 1, 2017
Additions (Note 2)
Sales or disposals
Account transfer (Note 4)
Exchange differences
Other
March 31, 2018
Additions (Note 2)
Sales or disposals
Account transfer (Note 4)
Exchange differences
Other
March 31, 2019

March 31, 2018
Additions (Note 2)
Sales or disposals
Account transfer (Note 4)
Exchange differences
Other
March 31, 2019

(b)

\

\

28,804 \
198
(67)
400
6
11
29,352
70
(59)
903
16
－
30,282 \57,647 \
440
(740)
2,085
(84)
(8)
59,340318(1,089)
2,025
112
30
60,736 \Millions of yen
ConstructionLandin progress
5,877 \
－
－
－
(19)
－
5,858
－
－
－
(39)
－
5,819 \

Other
(Note 1)Total

1,285 \ 13,692 \ 107,305
3,640
364
4,642
(7)
(513)
(1,327)(3,119)
657
23
1
26
(70)
(1)
(14)
(12)
1,799
14,212
110,561
3,487
328
4,203
－
(696)
(1,844)(3,570)
622
(20)
12
(4)
97
(3)
21
48
1,725 \ 14,483 \ 113,045

Thousands of U.S. dollars
Buildings and Machinery andConstruction
Other
Land
Total
structures
equipment
in progress (Note 1)$
266,836 $539,456 $
53,257 $16,352 $ 129,197 $ 1,005,098
639
2,893
－
31,702
2,986
38,220(534)(9,902)－－(6,328)(16,764)
8,207
18,408－(32,452)
5,657
(180)
142
1,014
(362)
114
(32)
876
－
275
－
(31)
186
430
$
275,290 $552,144 $
52,895 $15,685 $ 131,666 $ 1,027,680

Accumulated depreciation and impairment losses

Buildings and Machinery andequipment
structures
April 1, 2017\(18,094) \(45,221) \Depreciation (Note 3)(923)(2,191)
Impairment losses (Notes 3, 5 and 6)
(85)
(125)
Sales or disposals
63
665
Account transfer (Note 4)－(9)
Exchange differences
(17)
32
Other
(1)
1
(19,057)(46,848)
March 31, 2018
Depreciation (Note 3)(923)(2,341)
Sales or disposals
52
900
Exchange differences
(13)
(74)
Other
－
(4)
March 31, 2019\(19,941) \ (48,367) \Buildings and Machinery andstructures
equipment
March 31, 2018
Depreciation (Note 3)
Sales or disposals
Exchange differences
Other
March 31, 2019$$

(173,248) $(8,393)473(110)－(181,278) $Thousands of U.S. dollars
ConstructionLandin progress(425,895) $(21,280)
8,184
(671)
(37)
(439,699) $23

Millions of yen
Construction
Other
Land
Total
in progress (Note 1)(38) \(9) \ (11,455) \ (74,817)
－
－
(886)
(4,000)
－
(4)
(0)
(214)
－
－
488
1,216
－
9
－
－
－
－
(12)
3
－
－
14
14
(38)
(4)
(11,851)(77,798)－－(881)(4,145)
－
－
641
1,593
－
－
0
(87)
－
4
(11)
(11)
(38) \－ \ (12,102) \ (80,448)(344) $－－－－
(344) $

(36) $
－
－
－
36
－ $

Other
(Note 1)

Total

(107,736) $ (707,259)(8,014)(37,687)
5,823
14,480
9
(772)
(103)
(104)
(110,021) $ (731,342)

(c)Carrying amount
Buildings and Machinery andstructures
equipment\
10,710 \12,426 \10,295
12,492\
10,341 \
12,369 \April 1, 2017
March 31, 2018
March 31, 2019

Millions of yen
Construction in Other
Land
Total
progress(Note 1)
5,839 \
1,276 \ 2,237 \ 32,488
5,820
1,795
2,360
32,762
5,781 \
1,725 \ 2,381 \ 32,597

Thousands of U.S. dollars
Buildings and Machinery andConstruction in
Land
Other
Total
structures
equipment
progress$
94,012 $112,445 $
52,552 $15,685 $ 21,645 $ 296,339

March 31, 2019
(Notes)1. “Other” of Property, plant and equipment mainly comprises tools, fixtures and fittings.
2. No borrowing costs are included in cost.
3. Depreciation of Property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses,”and impairment losses are included in “Other expenses” in the consolidated statement of profit or loss.
4. “Account transfer” represents mainly transfers from Construction in progress.
5. See “7. Segment Information” for impairment losses by segment.
6. See “15. Impairment of Non-Financial Assets” for impairment losses.

(2) Lease assets under finance lease
The carrying amount of lease assets under finance lease included in Property, plant and equipment are as follows:
Millions of yen
Machinery and equipment
April 1, 2017
March 31, 2018
March 31, 2019

\
\

Other

34 \
39
44 \

61
50
56

Thousands of U.S. dollars
Machinery and equipment
March 31, 2019

$

Other

404 $

24

509

14. Goodwill and Intangible Assets(1) Changes in cost, accumulated amortization and impairment losses and carrying amount are as follows:(a) Cost
Goodwill
April 1, 2017
AdditionsInternal developments
Sales or disposals
Account transfer
Exchange differences
Other
March 31, 2018
AdditionsInternal developments
Sales or disposals
Account transfer
Exchange differences
March 31, 2019

March 31, 2018
AdditionsInternal developments
Sales or disposals
Account transfer
Exchange differences
March 31, 2019

(b)

\

\

75
－
－
－
－
(1)
－
74
－
－
－
－
(1)
73

Millions of yen
Development
Other
Total
Softwarecosts\ 6,334 \321 \97 \ 6,827
452
－
－
452
－
206
－
206
(147)
(7)
－
(154)
(24)
－
－
(24)
(3)
(2)
(1)
(7)
(1)
－
－
(1)
6,611
518
96
7,299
382
－
－
382
－
120
－
120
(69)
－
(2)
(71)
20
－
0
20
1
(5)
1
(4)
\ 6,945 \633 \95 \ 7,746

Thousands of U.S. dollars
Development
Other
Total
Goodwill Software
costs$
674 $ 60,098 $
4,713 $
872 $ 66,357
－
3,472
－
－
3,472
－
－
1,091
－
1,091
－
(631)
－
(19)
(650)
－
180
－
0
180
(12)
14
(46)
11
(33)
$
662 $ 63,133 $5,758 $
864 $ 70,417

Accumulated amortization and impairment losses
Goodwill

April 1, 2017
Amortization (Note 1)
Impairment losses (Notes 1, 2, and 3)
Sales or disposals
Exchange differences
March 31, 2018
Amortization (Note 1)
Impairment losses (Notes 1, 2 and 3)
Sales or disposals
Exchange differences
March 31, 2019

\

\

－
－
－
－
－
－
－
－
－
－
－

Goodwill

Millions of yen
Development
Other
Total
Softwarecosts\ (4,953) \(108) \
(25) \ (5,086)
(318)
(29)
(5)
(352)
－
(53)
－
(53)
74
－
－
74
5
1
0
6
(5,192)(189)(30)(5,411)
(303)
(36)
(6)
(345)
(166)
－
－
(166)
9
－
0
9
(2)
3
(0)
1
\ (5,654) \(222) \
(36) \ (5,912)
Thousands of U.S. dollars
Development
Other
Total
Softwarecosts$ (47,205) $(1,715) $(275) $ (49,195)(2,747)(332)(50)(3,129)(1,512)－－(1,512)
81
－
1
82
(14)
28
(3)
11
$ (51,397) $(2,019) $(327) $ (53,743)

March 31, 2018$－
Amortization (Note 1)－
Impairment losses (Notes 1, 2 and 3)－
Sales or disposals－
Exchange differences－
March 31, 2019$－
(Notes)
1. Amortization of Intangible assets is included in “Cost of sales” and “Selling, general and administrative expenses,” andimpairment losses are included in “Other expenses” in the consolidated statement of profit or loss.

25

2. See “7. Segment Information” for impairment losses by segment.
3. See “15. Impairment of Non-Financial Assets” for impairment losses.

(c)Carrying amount
Goodwill

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

March 31, 2019

\
\

75
74
73

Millions of yen
Development
Other
Total
Softwarecosts\ 1,380 \214 \72 \ 1,741
1,418
330
66
1,888
\ 1,291 \411 \59 \ 1,834

Thousands of U.S. dollars
Development
Other
Total
Goodwill Software
costs$
662 $ 11,736 $
3,739 $
537 $ 16,674

Research and development costs that do not meet the capitalization criteria are expensed as incurred. Research anddevelopment costs expensed for the years ended March 31, 2019 and 2018 are \1,287 million ($11,697 thousand) and\946 million, respectively.
(2) Lease assets under finance lease
The carrying amount of lease assets under finance lease included in intangible assets are as follows:

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

Millions of yen
Software\2
1\－(3) Impairment test of goodwill and intangible assets with indefinite useful lives
The carrying amount of goodwill and intangible assets with indefinite useful lives allocated to cash generating units are
as follows:
March 31, 2019
Intangible
assets with
Goodwill
indefinite
useful lives
Bando Jungkong Ltd. \
73
\
－
Other
\
－
\
46

Millions of yen
March 31, 2019
Intangible
assets with
Goodwill
indefinite
useful lives
\
74
\
－
\
－
\
47

April 1, 2017
Intangible
assets with
Goodwill
indefinite
useful lives
\
75 \
－
\
－ \
47

Thousands of U.S. dollars
March 31, 2019
Intangible
assets with
Goodwill
indefinite
useful lives
$
662
$
－
$
－
$
414

The recoverable amount used in impairment test of goodwill is calculated based on value in use. Value in use is thepresent value of the projected future cash flows based on a business plan for a maximum period of five years whichreflects past experience and information from external sources and is approved by management, discounted using the
pre-tax weighted average cost of capital of the relevant cash-generating unit. The pre-tax discount rate used in thevalue in use calculation is 8.8%, 8.8% and 8.4% as of March 31, 2019 and 2018, and April 1, 2017, respectively.
Cash flow projections beyond the period covered by the business plan are estimated using a long-term average growthrate for the market to which the cash-generating unit belongs. The growth rate used to calculate the terminal value is
2.8%, 2.9% and 2.9% as of March 31, 2019 and 2018, and April 1, 2017, respectively.
Even if there is a change within a reasonable range in key assumptions used to calculate the recoverable amount as ofMarch 31, 2019 and 2018, and April 1, 2017, the likelihood that such change would result in material impairment losses
is considered to be remote as the recoverable amount of the cash-generating units materially exceeds their carrying
amount.
There are no other material intangible assets with indefinite useful lives.

26

15. Impairment of Non-Financial Assets
For the purpose of measuring an impairment loss, assets are grouped into the smallest identifiable group of assets thatgenerates cash inflows that are largely independent of other cash flows.
Impairment losses are recorded in “Other expenses” in the consolidated statements of income.
Impairment losses by asset type are as follows:
Millions of yen
2019
2018
Property, plant and equipment:
Buildings and structures\
Machinery and equipment
Construction in progress
Other
Intangible assets
SoftwareDevelopment costs
Total\(Note) See “7. Segment Information” for impairment losses by segment.

－
－
－
－
166
－
166

\

\

85
125
4
0
－
53
267

Thousands of
U.S. dollars
2019
$

$

－
－
－
－
1,512
－
1,512

For the year ended March 31, 2019, an impairment loss on software not belonging to any reportable segments was recognized as it
became idle due to a change in plans, etc. The recoverable amount measured based on value in use is assessed to be zero as it is
not certain whether the idle condition will be resolved and the recovery cannot be expected.
For the year ended March 31, 2018, an impairment loss on part of the production facility in the Advanced Elastomer Products
Business was recognized as realization of profits originally expected was no longer probable. The recoverable amount is measured
at fair value less cost to sell, and the land is appraised based on an index which is considered to appropriately reflect market prices.
The fair value hierarchy is Level 3.

16. Disclosure of Involvement with Other Entities(1) Material subsidiaries and associates
The table below summarizes material subsidiaries and associates of the Group.

Company nameBando Industrial Components &Services, Ltd.

Common stock

Principal business

JPY 90 million

Bando USA, Inc.

USD 40,500 thousand

Bando (Shanghai) Management Co.,Ltd.

USD 4,000 thousand

Bando Manufacturing (Vietnam) Co.,Ltd.

USD 2,000 thousand

Bando Manufacturing (Thailand) Ltd.

THB 177,000 thousand

Bando (India) Pvt. Ltd.

INR 883 million

P.T. Bando Indonesia

USD 5,000 thousand

27

Processing and sales of powertransmission belt products, conveyor
belts, polyurethane functional parts, etc.
Manufacturing and sales of powertransmission belt products, etc.
Product sales and sales management in
China, supervision and support for groupcompanies’ administrative functions
such as HR, Finance & Accounting,Information system, Logistics
management, etc.
Manufacturing and sales of powertransmission belt products, etc.
Manufacturing and sales of powertransmission belt products
Manufacturing and sales of powertransmission belt products, etc.
Manufacturing and sales of powertransmission belt products, conveyor
belts, etc.

Ownership ratioof voting rights
(%)
100
100

100

100
100
100
50

(2) Investments accounted for using equity method(a) Investments in associates
There are no individually material associates.
The carrying amount of the investments in associates that are not individually material and the Group’s share
are as follows:

Carrying amount of investments
accounted for using equity method

March 31,2019

Millions of yen
March 31,
2018

\

\

2,389

The Group’s share of profit or loss
The Group’s share of other comprehensive income
The Group’s share of total comprehensive income

(b)

\
\

2,231

April 1,
2017
\

2,006

Millions of yen
2019
2018
211
\
191
（103)
74
108
\
265

Thousands of
U.S. dollars
March 31,2019$

21,719Thousands of
U.S. dollars
2019
$
1,918
(932)
$
986

Investments in joint ventures
The summarized financial information of joint ventures that are individually material to the Group, and thereconciliation of the share attributable to owners of parent to the carrying amount of the interest in the joint
ventures are as follows:
Proportion of ownership interest
Name
PT. Bando
Indonesia

Principal activity
Manufacturing and sale ofpower transmission belt
products, conveyor belts, etc.

Location

March 31,2019

March 31,2018

Indonesia

50.00%

50.00%March 31,
2019
\
5,238
2,866
1,337
1,611
\
5,156

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Total equity

Millions of yen
March 31,
April 1,
2018
2017
\
4,521
\
4,440
2,739
2,877
1,239
1,554
1,513
1,289
\
4,507
\
4,474

April 1,
2017
50.00%

Thousands of
U.S. dollars
March 31,2019
$ 47,615
26,05912,152
14,648$ 46,874

Cash and cash equivalents included in current assets above as of March 31, 2019 and 2018 and April 1, 2017are \1,049 million ($9,539 thousand), \1,054 million and \1,240 million, respectively. Financial liabilities
included in current liabilities (excluding trade and other payables and provisions) as of March 31, 2019 and2018 and April 1, 2017 are \100 million ($910 thousand), \100 million and \101 million, respectively.

Revenue
Depreciation and amortization
Interest income
Interest expenses
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends received by the Group

\

\

28

Millions of yen
2019
2018
9,998
\
9,179
(301)
(322)
2
2
(0)
(0)
(373)
(294)
1,092
915
116
(558)
1,208
357
280
\
162

Thousands of
U.S. dollars
2019$
90,892(2,732)20(3)(3,395)
9,929
1,059
10,988$2,545

Thousands of
U.S. dollars
March 31,2019
$ 46,874
50.00%$ 23,437(312)$ 23,125

Millions of yen
March 31,
March 31,
April 1,
2018
2017
2019
\
5,156
\
4,507
\
4,474
50.00%
50.00%
50.00%
\
2,578
\
2,254
\
2,237
(34)
(52)
（51)
\
2,544
\
2,202
\
2,186

Total equity
Proportion of ownership interest (%)
Share attributable to the Group
Consolidation adjustments
Carrying amount of the investments

The carrying amount and the summarized financial information of investments in joint ventures that are notindividually material are as follows:

Carrying amount of investments
accounted for using equity method

March 31,2019

Millions of yen
March 31,
2018

\

\

The Group’s share of profit or loss
The Group’s share of other comprehensive income
The Group’s share of total comprehensive income

1,424

\
\

1,382

Thousands of
U.S. dollars
March 31,2019

April 1,
2017\

Millions of yen
2019
2018
137
\
105
(22)
(17)
115
\
88

1,342

$

12,950Thousands of
U.S. dollars
2019
$
1,247
(200)
$
1,047

17. Income Taxes(1) Deferred tax
Major components and changes in “Deferred tax assets” and “Deferred tax liabilities” are as follows:
April 1, 2018

Deferred tax assets
Defined benefit liability
Property, plant and equipment
Inventories
Other temporary differences
Total
Deferred tax liabilities
Defined benefit liability
Property, plant and equipment
Financial assets measured at FVTOCIOther temporary differences
Total
Net deferred tax assets (liabilities)

\

\
\

1,582
586
369
993
3,530
(928)
(1,372)(1,286)(521)(4,107)(577)

29

Millions of yen
Recognized in
Recognizedprofit or loss
in OCI

March 31, 2019

\

\

\
\

(85)
86
(4)
113
110
－
(62)
－
(7)
(69)
43

\

\
\

153
－
－
－
153
－
－
369
－
369
522

\
\

1,650
672
365
1,106
3,793
(928)
(1,434)(917)(528)(3,807)(12)

Millions of yen
Recognized in
Recognizedprofit or loss
in OCI

April 1, 2017

Deferred tax assets
Defined benefit liability
Property, plant and equipment
Inventories
Other temporary differences
Total
Deferred tax liabilities
Defined benefit liability
Property, plant and equipment
Financial assets measured at FVTOCIOther temporary differences
Total
Net deferred tax assets (liabilities)

\

\
\

1,794
731
390
906
3,821

\

(928)
(1,479)(1,050)(458)(3,915)
(93)

\
\

(82)
(145)
(21)
87
(161)
－
107
－
(63)
44
(117)

\

\
\

(130)
－
－
－
(130)
－
－
(236)
－
(236)
(367)

Thousands of U.S. dollars
Recognized in
Recognizedprofit or loss
in OCI

April 1, 2018

March 31, 2018

\

\
\

1,582
586
369
993
3,530
(928)
(1,372)(1,286)(521)(4,107)(577)

March 31, 2019

Deferred tax assets
Defined benefit liability$
14,385
$
(772)
$
1,391
$
15,004
Property, plant and equipment
5,327
785
－
6,112
Inventories
3,356
(35)
－
3,321
Other temporary differences
9,023
1,031
－
10,054
Total
32,091
1,009
1,391
34,491
Deferred tax liabilities
Defined benefit liability(8,436)－－(8,436)
Property, plant and equipment(12,470)(560)－(13,030)
Financial assets measured at FVTOCI(11,694)－
3,359(8,335)
Other temporary differences(4,734)(69)－(4,803)
Total$(37,334)
$
(629)
$
3,359
$
(34,604)
Net deferred tax assets (liabilities)$(5,242)
$
380
$
4,750
$
(112)
(Note) The difference between the amounts recognized in profit or loss and deferred tax expense is due to fluctuations in exchange
rates.

Unused tax losses carried forward and deductible temporary differences for which no deferred tax asset is recognized

Unused tax losses carried forward (Note)
Deductible temporary differences

March 31,
2019
\
620
\
797

Millions of yen
March 31,
April 1,
2018
2017
\
935
\
1,648
\
841
\
584

Thousands of
U.S. dollars
March 31,
2019
$
5,636
$
7,248

(Note) The amount and expiry date of unused tax losses for which no deferred tax asset is recognized are as follows:
Thousands ofMillions of yen
U.S. dollars
March 31,
March 31,
April 1,March 31,
2018
2017
2019
2019
Within:One year
\
－
\
－
\
3
$
－
Two years－－
26－
Three years
72
－
19
658
Four years
64
47
－
583
Five years
5
142
51
49
Over five years
479
746
1,549
4,346
Total
\
620
\
935
\
1,648
$
5,636

The taxable temporary differences associated with investments in the Group’s subsidiaries and joint ventures, forwhich no deferred tax liability is recognized as of March 31, 2019 and 2018, and April 1, 2017 are \25,120 million($228,367 thousand), \24,251 million and \23,079 million, respectively. This is because the Group is able to control the30timing of the reversal of the temporary differences and it is certain that the temporary differences will not reverse in
the foreseeable future.
(2) Income taxes“Income taxes” consist of the followings:
Millions of yen
2019
2018
Current tax expense
Current\
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences, etc.
Changes in tax rate
Write-down (reversal of a previous write-down) of deferred tax assets
Total deferred tax expense
Total income taxes
\

1,719
1,719
20
(2)
(61)
(43)
1,676

\

\

1,645
1,645
(12)
26
104
118
1,763

Thousands of
U.S. dollars
2019
$

$

15,62815,628
180
(14)
(556)
(390)
15,238Current tax expense includes the amount of the benefit arising from a previously unrecognized tax loss, tax credit or
temporary difference of a prior period, resulting in a reduction of current tax expense for the year ended March 31,
2019 by \146 million ($1,330 thousand).
Deferred tax expense includes the amount of the benefit arising from a previously unrecognized tax loss, tax credit or
temporary difference of a prior period, resulting in an increase of deferred tax expense for the year ended March 31,
2019 by \62 million ($566 thousand).
Reconciliation of the statutory tax rate to the average effective income tax rate for the years ended March 31, 2019and 2018 was as follows:
Statutory tax rate
(Reconciliation)
Effect of different tax rates of foreign subsidiaries
Share of profit or loss of equity-accounted investments
Changes in realizability of deferred tax assets
Permanent differences
Tax credits
Foreign withholding tax
Other, net
Average effective income tax rate

2019
30.6%

2018
30.8%

(4.2)
(3.9)
(1.1)
1.4
(2.0)
1.6
1.1
23.4%

(3.7)
(3.4)
0.0
1.0
(1.2)
1.3
0.8
25.6%

The Group is subject mainly to income tax, inhabitant tax and enterprise tax, and the statutory tax rate calculated
based on them is 30.6% and 30.8% for the years ended March 31, 2019 and 2018, respectively.
Overseas subsidiaries are subject to corporate tax, etc. of the jurisdiction where they are located.
“Act Partially Amending the Income Tax Act, etc.” (Act No. 15 of 2016) was passed by the Diet on March 29, 2016,
resulting in changes in income tax rates and local tax rates from the year beginning on or after April 1, 2016.
Accordingly, the statutory tax rate was changed to 30.8% for the year beginning on April 1, 2017 and to 30.6% for theyears beginning on or after April 1, 2018.
The Company and its domestic subsidiaries have applied the consolidated tax return filing system.

31

18. Trade and Other Payables“Trade and other payables” consist of the following:Notes and trade payables
Electronically recorded obligations
Other payables
Total

March 31,
2019
\
8,698
4,589
3,363
\ 16,650

Millions of yen
March 31,
April 1,
20182017
\ 10,001
\
9,287
4,585
3,569
3,482
3,437
\ 18,068\ 16,293

Millions of yen
March 31,2018

Thousands of
U.S. dollars
March 31,2019

Thousands of
U.S. dollars
March 31,2019
$ 79,075
41,721
30,571$ 151,367

19. Bonds and Borrowings(1) Bonds and borrowings“Bonds and borrowings” consist of the following:

March 31,2019

April 1,
2017

AverageMaturity
rate(Note 1)
(Note 2)
March 31,2019

Short-term borrowings
\
1,178
\
1,145
\
1,421
$ 10,707－
4.3%
Current portion of long-term borrowings
1,590
1,776
3,078
14,460－0.8%
Long-term borrowings
1,636
3,227
4,914
14,8722020 - 2023
0.4%
Bonds
6,000
6,000
6,000
54,5452022, 2024
0.3%
Total
10,404
12,14815,413
94,584Current liabilities
2,768
2,921
4,499
25,167
Non-current liabilities
7,636
9,227
10,914
69,417
Total\ 10,404\ 12,148\ 15,413$ 94,584(Notes)1. “Maturity” represents the year of maturity applicable to the outstanding balance of each borrowing as of March 31, 2019.
2. “Average rate” represents weighted average rates applicable to the outstanding balance of each borrowing as of March 31, 2019.
3. Borrowings shown above are not subject to any restrictions on capital including financial covenants.
4. Details of bonds as of March 31, 2019 and 2018 and April 1, 2017 are as follows:

Company
name

Issue

Date of issue

Maturity

Interest
rate

Bando
ChemicalIndustries,
Ltd.

2nd Series ofUnsecured
Bond

January 23,
2017

January 20,
2022

0.2%

January 19,
2024

0.4%

Bando
3rd Series ofChemicalJanuary 23,
Unsecured2017
Industries,
Bond
Ltd.
Total
Current portion
Bonds excluding current portion

March 31,2019

Millions of yen
March 31,
2018

\

\

\

(2) Collateral
There are no pledged assets or secured debt.

32

3,000

3,000

April 1,
2017
\

3,000

Thousands of
U.S. dollars
March 31,
2019$

27,273

3,000

3,000

3,000

27,272

6,000
－
6,000

6,000
－
6,000

6,000
－
6,000

54,545－54,545\\$

20. Leases(1) Finance lease
LesseeFuture minimum lease payments under finance leases and their present value are as follows:
Millions of yen

Within one year
Between one and five years
Over five years
Total
Deduction: interest equivalent
Present value of future minimum
lease payments

Future minimum
lease payments

Present value of future
minimum lease payments

March 31, March 31, April 1,
2019
2018
2017
\
31 \ 28 \
34
71
59
68
1
2
1
103
89
103
(1)
(1)
(2)

March 31, March 31, April 1,
2019
2018
2017
\
31 \
28 \
24
71
58
67
\
2 \
2 \
0

\

102

\

88

\

101

Thousands of
U.S. dollars
Present value
Futureof futureminimum
minimum lease
lease payments
payments
March 31, 2019
278 $
278
641
641
15 $
15
934
(5)

$

$

929

（Note） Outstanding balance of lease obligations are included in “Other financial liabilities” in the consolidated statement offinancial position.
(2)

Operating lease
Lessee(a) Non-cancelable operating leases
Details of future minimum lease payments under non-cancelable operating leases are as follows:

Within one year
Between one and five years
Over five years
Total

March 31,
2019
\
482
568
4
\
1,054

Millions of yen
March 31,
April 1,
2018
2017
\
407
\
483
423
461
1
1
\
831
\
945

Thousands of
U.S. dollars
March 31,
2019
$
4,378
5,161
41
$
9,580

(Notes)1. The Group leases real estate, office equipment, etc. classified as operating leases under IAS 17.
2. The contracts do not contain a renewal option, a purchase option, variable lease payments or escalation clauses, and there
are no restrictions imposed by lease contracts such as additional loans or additional leases.

(b)

Operating lease contracts recognized as expenses
Total minimum lease payments under operating lease contract recognized as expenses are as follows:

Total minimum lease payments\

33

Millions of yen
2019
2018
958
\
967

Thousands of
U.S. dollars
2019
$
8,711

21. Employee Benefits(1) Outline of retirement benefit plan
The company and some of its consolidated subsidiaries have defined contribution pension plans and defined
benefit plans including corporate pension funds or employees’ pension funds and lump-sum retirement payment
plans. The Company also has set up a retirement benefit trust, and certain domestic consolidated subsidiaries
have joined the Smaller Enterprise Retirement Payment Mutual Aid Scheme. In order to ensure payments of
employee benefits in future years, trustees have been appointed for the management and administration ofpension assets. Trustees are required by law to act in the best interest of the plan participants and responsible
for managing the pension assets in accordance with the predetermined policy. The investment policy is reviewed
as needed, taking into consideration the financial condition and investment environment of the defined benefit
plans.
Plan assets are expected to be managed in a sound manner but subject to investment risk related to financial
instruments. Also, because defined benefit obligations are measured based on various actuarial assumptions suchas a discount rate, they are subject to the risk arising from changes in those assumptions. Corporate pension
funds share risks between relevant domestic companies under common control.
The Company and some of its consolidated subsidiaries shifted their defined benefit corporate pension plans torisk-sharing corporate pension plans effective April 1, 2019. See “38. Subsequent Events” for details.
(2)

Defined benefit plans
The amount of benefits under defined benefit pension plans is determined based on factors including years ofservice and salary.
(a) The amounts of defined benefit plans in the consolidated statement of financial position are as follows:

March 31,2019
\ 13,613(12,201)
1,412
211
1,623

Present value of defined benefit obligations
Fair value of plan assets
Total
Effect of asset ceiling
Net defined benefit liabilities or assets
Amounts in the consolidated statement of financial position
Defined benefit liability
Defined benefit asset (other non-current assets)
\

(b)

1,624
1

Millions of yen
March 31,
April 1,
20182017
\ 13,245\ 12,900(12,058)(10,731)
1,187
2,169
221
－
1,408
2,169

\

1,408
－

\

2,169
0

Thousands of
U.S. dollars
March 31,2019
$ 123,756(110,923)
12,833
1,921
14,753$

14,762
9

The amounts related to defined benefit plans recognized in the consolidated statement of profit or loss are
as follows:

Current service cost
Net interest cost
Other

\

34

Millions of yen
2019
2018
679
\
659
13
31
0
0

Thousands of
U.S. dollars
2019
$
6,175
121
1

(c) Changes in the present value of defined benefit obligations are as follows:

Balance at April 1
Current service cost
Net interest costRemeasurement
Actuarial gain (loss) arising from changes in demographic
assumptions
Actuarial gain (loss) arising from changes in financial
assumptions
Other
Past service cost
Benefits paid from the plan
Exchange differences
Balance at March 31

(d)

\

\

Millions of yen
2019
2018
13,245 \12,900
679
659
76
97
34

135

252

89

100
0
(752)
(21)
13,613

96
0
(725)
(6)
13,245\

Thousands of
U.S. dollars
2019$ 120,409
6,175
688
307
2,292

$

916
1
(6,839)(193)
123,756

Changes in the fair value of plan assets are as follows:

Balance at April 1
Interest income (Note)
Remeasurement
Return on plan assets (excluding amounts included in net
interest cost)
Contributions from the employer
Benefits paid from the plan
Exchange differences
Balance at March 31\\

Millions of yen
2019
2018
12,058\
10,731
62
66

(149)
965
(722)
(12)
12,202

\

1,006
953
(694)
(4)
12,058

Thousands of
U.S. dollars
2019$109,618567$(1,356)8,770(6,568)(108)
110,923(Note) Interest income is measured by multiplying the fair value of plan assets by the discount rate.

(e) Changes in the effect of the asset ceiling are as follows:

Balance at April 1
Remeasurement
Changes in the effect of the asset ceiling
Balance at March 31

(f)

\

\

Millions of yen
2019
2018
221
\
－
(10)
211

\

221
221

Thousands of
U.S. dollars
2019
$
2,007

$

(86)
1,921

Major actuarial assumptions
March 31, 2019 March 31, 2018
0.7 %
0.6 %

Discount rate

35

April 1, 2017
0.4 %

(g)

Components of plan assets
The components of the Group’s plan assets as of March 31, 2019, 2018 and April 1, 2017 are as follows:
Millions of yen
March 31, 2018

March 31, 2019

April 1, 2017

Without
Without
Without
With quoted
With quoted
With quoted
quoted market
quoted market
quoted market
market price inmarket price inmarket price inprice in active
price in active
price in active
active market
active market
active market
marketmarketmarketCash and cash equivalents\
Domestic equity securities
Foreign equity securities
Domestic debt securities
Foreign debt securities
Life insurance general accounts(Note)
Other
Total
\

802
3,010
1,835
3,782
890

\

－
－
－
－
－

－

1,381

－
10,319501\ 1,882

\

\

664
3,387
1,644
3,809
868
－
－
10,372

\

\

－
－
－
－
－

\

584
3,239
1,399
3,409
779

\

－
－
－
－
－

1,304

－

1,118

382
1,686

－
\ 9,410203\ 1,321

Thousands of U.S. dollars
March 31, 2019
Without
With quoted
quoted market
market price inprice in active
active market
marketCash and cash equivalents
Domestic equity securities
Foreign equity securities
Domestic debt securities
Foreign debt securities
Life insurance general accounts(Note)
Other
Total

$

$

7,291
27,366
16,681
34,380
8,095

$

－
－
－
－
－

－

12,557－
93,813

4,553$ 17,110(Note) Life insurance general accounts are a product offered by a life insurance company which aggregates andmanages personal insurance, corporate pension assets, etc. in one account and guarantees the principal and a certain
rate of return, with investment risk borne by the insurance company.

(h) Sensitivity analysis of major actuarial assumptions
The effect of a change of 0.5% in the discount rate on the present value of the defined benefit obligation is
as follows:

Discount rate

March 31,
2019
\
(746)
\
829

0.5% higher
0.5% lower

Millions of yen
March 31,
April 1,
2018
2017
\
(728)
\
(748)
\
805
\
834

Thousands of
U.S. dollars
March 31,2019
$ (6,786)$
7,541

The analysis assumes that all other variables remain constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the changes in assumptions would occur in isolation of one another assome of the assumptions may be correlated.
In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been
calculated using the projected unit credit method at the end of the reporting period, which is the same asthat applied in calculating the defined benefit liability recognized in the statement of financial position.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prioryears.

36

(i)The funding rules and policy which affect future contributions
At the end of each fiscal year of the corporate pension fund, if the balance of reserves is below the amountof policy reserves less allowable deficit carried forward, the amount of premium will be recalculated.
If the balance of the corporate pension fund’s reserves is below the minimum funding requirements at theend of each fiscal year, the employers of the member companies of the fund will pay the necessary amountof funds as a contribution. In the event that the balance of reserves is expected to be zero during a fiscal
year, the employers will pay funds to be allocated to the expense required for the business related to thebenefit payments during the year as a contribution.

(3)

(j)

Contributions to plan assets
The consolidated companies are expected to pay contributions of \114 million ($1,038 thousand) to thedefined benefit pension plans for the year ending March 31, 2020.

(k)

Information on maturity analysis
The weighted average duration of the defined benefit plan obligation as of March 31, 2019 and 2018 and April
1, 2017 is 11.9 years, 11.9 years and 12.2 years, respectively.

Defined contribution pension plans
The Group recognized as expenses contributions to the defined contribution pension plans of \192 million ($1,746
thousand) and \194 million for the years ended March 31, 2019 and 2018, respectively.
The above amount includes the amount recognized as an expense related to the public pension schemes.

22. Other Financial Liabilities“Other financial liabilities” consist of the following:

Derivative liabilities (Note 1)
Lease obligations (Note 2)
Other
Total
Other financial liabilities (current)
Other financial liabilities (non-current)
Total

March 31,
2019
\
8
102
74
184
38
146
\
184

Millions of yen
March 31,
April 1,
2018
2017
\
17
\
42
88
101
66
58
171
201
32
46
139
155
\
171
\
201

Thousands of
U.S. dollars
March 31,
2019
$
72
929
671
1,672
347
1,325
$
1,672

(Notes)1. Derivative liabilities are classified as financial liabilities measured at FVTPL, and lease obligations are classified as financial
liabilities measured at amortized cost.
2. See “20. Leases (1)” for information on lease obligations.

37

23. Provisions
Details and changes in “Provisions” are as follows:
Provision for product warranty
Thousands of U.S.
dollars

Millions of yen

April 1, 2017
Provision
Intended use
ReversalExchange differences
March 31, 2018
Provision
Intended use
ReversalExchange differences

\

－
－
－
－
－
－
315
－
－
－

$

－
－
－
－
－
－
2,864
－
－
－

March 31, 2019

\

315

$

2,864

Provisions for product warranty are provided for our share of the estimated cost to be incurred when our customers
collect their products in which our products are used from the market. Most of these costs are expected to be
incurred within one year.

24. Other Liabilities“Other current liabilities” and “Other non-current liabilities” consist of the following:(1) Other current liabilities

Accrued expenses
Liabilities for compensated absence
Deposits received from employees
Other
Total
(2)

March 31,
2019
\
2,195
906
356
452
\
3,909

Millions of yen
March 31,
April 1,
2018
2017
\
2,358
\
2,248
860
754
353
341
647
672
\
4,218
\
4,015

Thousands of
U.S. dollars
March 31,2019
$ 19,953
8,235
3,233
4,106
$ 35,527

March 31,
2019
\
181
135
\
316

Millions of yen
March 31,
April 1,
2018
2017
\
166
\
149
150
129
\
316
\
278

Thousands of
U.S. dollars
March 31,
2019
$
1,647
1,234
$
2,881

Other non-current liabilities

Other long-term employee benefit obligations
Other
Total

38

25. Equity and Other Equity Items(1) Common stock and capital surplus
Changes in the number of authorized shares and issued shares, common stock and capital surplus are as follows:
Number of shares
Issuedshares187,000,000
47,213,536－－
187,000,000
47,213,536－－
187,000,000
47,213,536

Millions of yen
CommonCapitalstock
surplus\10,952\
3,023－
38
10,9523,061－
32\
10,952\
3,093

Authorized shares
April 1, 2017
Changes during the year
March 31, 2018
Changes during the year
March 31, 2019

March 31, 2019

Thousands of U.S. dollars
Common stock
Capital surplus$
99,563$
28,115(Note) All shares issued by the Company are no-par value ordinary shares, and all issued shares are fully paid.
(2)

Treasury stock
Changes in the number and amount of treasury stock are as follows:
Shares1,386,131
48,492
1,434,623(78,849)
1,355,774

April 1, 2017
Changes during the year
March 31, 2018
Changes during the year
March 31, 2019

March 31, 2019

Millions of yen
\
1,368
65
1,433
(86)
\
1,347

Thousands of
U.S. dollars$
12,242(Notes)
1. Increases in the number and amount of treasury stock during the year are mainly due to acquisition of shares less than one
unit.
2. The number of treasury stock held by our subsidiaries and associates accounted for using equity method is 67,994 shares,
53,119 shares and 51,548 shares as of March 31, 2019 and 2018 and April 1, 2017, respectively.
3. The Company’s shares owned by Employee Stock Ownership Plan (“ESOP”) Trust and Directors Compensation Board
Incentive Plan (“BIP”) Trust are included in treasury stock.
(3)

Other components of equity
Changes in “Other components of equity” are as follows:

April 1, 2017
Other comprehensive income
Reclassified to retained earnings
March 31, 2018
Other comprehensive income
Reclassified to retained earnings
March 31, 2019

Exchangedifferences ontranslation offoreign
operations(Note 1)

Net changes infair value ofcash flow
hedge

\

\

\

－
(143)
－
(143)
(86)
－
(230)

\

39

1
(1)
－
－
－
－
－

Millions of yen
Net changes infair value offinancial assets
measured at
FVTOCI(Note 2)

\

\

2,587
542
(33)
3,096
(830)
(10)
2,256

Remeasurementsof defined benefit
plans(Note 3)

\

\

－
258
(258)
－
(340)
340
－

Total

\

\

2,588
655
(291)
2,952
(1,256)330
2,026

Exchange
differences ontranslation offoreign
operations(Note 1)Thousands of U.S. dollars
Net changes in
Net changes infair value of
Remeasurements
fair value offinancial assets
of defined benefit
cash flow
measured at
plans
hedge
FVTOCI(Note 3)(Note 2)

Total

March 31, 2018$
(1,306)$－$28,144$－$
26,838Other comprehensive income(784)－(7,543)(3,095)(11,422)
Reclassified to retained earnings
－
－
(93)
3,095
3,002
March 31, 2019$
(2,090)$－$20,508$－$18,418(Notes)
1. Exchange differences on translation of foreign operations represent exchange differences arising from translating thefinancial statements of foreign operations denominated in a foreign currency for consolidation.
2. Net changes in fair value of financial assets measured at FVTOCI represent valuation differences on fair value of financial
assets measured at fair value through other comprehensive income.
3. Remeasurements of defined benefit plans represent the impact of the difference between the assumptions used in actuarial
calculation of “Net defined benefit liability” and the actual value, and of changes in actuarial assumptions.
Remeasurements of defined benefit plans are recognized in “Other comprehensive income” when incurred and reclassified
immediately from “Other components of equity” to “Retained earnings.”(4)

Capital surplus and retained earnings
The Companies Act of Japan provides that at least 50% of the amount paid or contributed upon issuance ofshares shall be included in common stock with the remainder to be included in capital reserve which is acomponent of capital surplus, and that 10% of the amount paid as distribution from surplus shall be appropriatedand set aside as capital reserve or legal earnings reserve until the sum of capital reserve and legal earnings
reserve equals 25% of common stock.
Capital surplus comprises mostly capital reserve, and there is no material change in capital surplus during theyears ended March 31, 2019 and 2018.

40

26. Dividends(1) Dividends paid
Date of resolution
General meeting ofshareholders on
June 22, 2017
Board of Directors
meeting on
November 10, 2017
General meeting ofshareholders on
June 21, 2018
Board of Directors
meeting on
November 9, 2018
Date of resolution

Class of share

Total dividends(Millions of yen)

Dividend per share(yen)\

Record date

Effective date

14

March 31, 2017

June 23, 2017

Ordinary shares \651

Ordinary shares

696

15

September 30, 2017

December 1, 2017

Ordinary shares

696

15

March 31, 2018

June 22, 2018

Ordinary shares \

742

16

September 30, 2018

December 3, 2018

Class of share

Total dividends(Thousands of
U.S. dollars)

Dividend per share(U.S. dollar)

Record date

Effective date\

General meeting ofshareholders on
Ordinary shares $
6,325
$
0.14
March 31, 2018
June 22, 2018
June 21, 2018
Board of Directors
meeting on
Ordinary shares $
6,747
$
0.15
September 30, 2018 December 3, 2018
November 9, 2018
(Notes)1. The total amount of dividends resolved at the ordinary general meeting of shareholders held on June 22, 2017 includes thedividends of \5 million and \4 million on the Company’s shares owned by ESOP Trust and BIP Trust, respectively.
2. The total amount of dividends resolved at the Board of Directors meeting held on November 10, 2017 includes the dividends of \5million and \4 million on the Company’s shares owned by ESOP Trust and BIP Trust, respectively.
3. The total amount of dividends resolved at the ordinary general meeting of shareholders held on June 21, 2018 includes thedividends of \4 million ($38 thousand) on the Company’s shares owned by ESOP Trust and BIP Trust, respectively.
4. The total amount of dividends resolved at the Board of Directors meeting held on November 9, 2018 includes the dividends of \3
million ($34 thousand) and \4 million ($38 thousand) on the Company’s shares owned by ESOP Trust and BIP Trust, respectively.
(2)

Dividends with the effective date in the following fiscal year

Date of resolution
General meeting ofshareholders on
June 25, 2019
Date of resolution

Class of share

Total dividends(Millions of yen)

Ordinary shares \742

Class of share

Total dividends(Thousands of
U.S. dollars)

Dividend per share(yen)

Record date

Effective date16

March 31, 2019

June 26, 2019

Dividend per share(U.S. dollar)

Record date

Effective date\

General meeting ofshareholders on
Ordinary shares $
6,747
$
0.15
March 31, 2019
June 26, 2019
June 25, 2019
(Note) The total amount of dividends resolved at the ordinary general meeting of shareholders held on June 25, 2019 includes thedividends of \3 million ($34 thousand) and \4 million ($38 thousand) on the Company’s shares owned by ESOP Trust and BIP Trust,
respectively.

4127. Revenue(1) Disaggregation of revenue
The Group’s revenue is generated mainly from contracts with customers, and revenue by reportable segment
disaggregated into geographical regions is as follows:
Millions of yen
2019

Reportable segments
Automotive Parts
Industrial Products
Advanced Elastomer Products
Subtotal
Other
Total

\

\

Japan

Asia

China

14,138 \25,09010,83850,066 \19,640 \
3,441
651
23,732 \Europe andother2,973 \
2,296
3,234
8,503 \

4,865 \
3,876
505
9,246 \\\

Total
41,616
34,703
15,22891,547
2,772
94,319Millions of yen
2018

Reportable segments
Automotive Parts
Industrial Products
Advanced Elastomer Products
Subtotal
Other
Total

\

\

Japan

Asia

14,127 \22,68910,39647,212 \

19,520 \
3,303
703
23,526 \Europe andother

3,003 \
2,137
3,543
8,683 \

4,956 \
3,701
481
9,138 \\\

Thousands of U.S. dollars
2019
Europe and
Asia
China
other

Japan
Reportable segments
Automotive Parts
Industrial Products
Advanced Elastomer Products
Subtotal
Other
Total

China

$ 128,531 $ 178,549 $
228,089
31,283
98,531
5,917$ 455,151 $ 215,749 $

27,025 $20,87229,39877,295 $Total
41,606
31,83015,12388,5592,239
90,798

Total

44,220 $ 378,325
35,235
315,479
4,588
138,434
84,043 $ 832,238$ 25,205$ 857,443(Note) Revenue is based on the location of suppliers and presented net of intersegment transactions.

See “7. Segment Information” for main products included in each segment.
The performance obligation for these products is considered to be satisfied when a promised product is delivered
to a customer, and revenue is recognized at that point. Revenue is calculated as consideration promised in thecontracts with customers less estimates of discounts, etc. The payment conditions are those applied in arm’s
length transactions, and there are no material transactions with installment payments, etc.
(2)

Contract balances
Liabilities arising from contracts with customers consist of the following:
March 31,
2019
\
94

Advances received

Millions of yen
March 31,
April 1,
2018
2017
\
59
\
141

Thousands of
U.S. dollars
March 31,
2019
$
851

Advances received as of April 1, 2017 were recognized as revenue for the year ended March 31, 2018, and those
as of March 31, 2018 were recognized as revenue for the year ended March 31, 2019.

42

The amount of revenue recognized for the years ended March 31, 2019 and 2018 from performance obligations
satisfied (or partially satisfied) in previous periods is insignificant.
Assets arising from contracts with customers are notes receivable, accounts receivable, and electronicallyrecorded monetary claims only. See “9. Trade and Other Receivables” for details.
(3)

Transaction price allocated to remaining performance obligations
As the Group does not have any material transactions that have an original expected duration of more than one
year, the Group uses a practical expedient and omits a disclosure about the remaining performance obligations.
Also, there is no material amount of consideration from contracts with customers that is not included in thetransaction price.

(4)

Assets recognized from costs to obtain or fulfill contracts with customers
The Group has no assets recognized from costs to obtain or fulfill contracts with customers.

28. Details of Expenses by Nature
Cost of sales and selling, general and administrative expenses consist of the following:

Purchase of raw materials and merchandise
Personnel expenses
Depreciation and amortization
Other
Total

\

\

Millions of yen
2019
2018
42,057\39,741
23,98323,632
4,433
4,274
17,343
16,46387,816\
84,110Thousands of
U.S. dollars
2019$382,337
218,023
40,302
157,662$
798,324

Millions of yen
2019
2018
22
\
15
165
83
35
33
106
114
328
\
245

Thousands of
U.S. dollars
2019
$
206
1,496
318
960
$
2,980

Millions of yen
2019
2018
304
\
173
166
267
315
－
136
88
921
\
528

Thousands of
U.S. dollars
2019
$
2,762
1,512
2,864
1,233
$
8,371

29. Other Income and Expenses“Other income” and “Other expenses” consist of the following:(1) Other income

Gain on sales of fixed assets
Insurance proceeds
Rent income
Other
Total
(2)

\

\

Other expenses

Loss on sale or retirement of fixed assets
Impairment losses (Note 1)
Provision for product warranty (Note 2)
Other
Total

\

\

(Notes)
1. See “15. Impairment of Non-Financial Assets” for impairment losses.
2. See “23. Provisions” for recognition of provision for product warranty.

43

30. Finance Income and Costs“Finance income” and “Finance costs” consist of the following:(1) Finance income
Thousands of
U.S. dollars
2019

Millions of yen
2019
2018
Interest income
Financial assets measured at amortized cost
Dividend income
Financial assets measured at FVTOCI
Foreign exchange gains
Other
Total
(2)

\

141

\

160
166
20
487

\

92

\

145
－
38
275

$

1,285

$

1,456
1,510
179
4,430

Finance costs
Thousands of
U.S. dollars
2019

Millions of yen
2019
2018
Interest expenses
Financial liabilities measured at amortized cost
Defined benefit liability (Note)
Foreign exchange losses
Other
Total

\

118
13
－
5
136

\

\

147
31
340
14
532

\

$

1,068
121
－
46
1,235

$

(Note) See “21. Employee Benefits” for interest on net defined benefit liability.

31. Other Comprehensive Income
The amount recognized and reclassified to profit or loss during the year and related tax effects for each item of“Other comprehensive income” are as follows:
Millions of yen
2019
Recognized
during theyear
Items that will not be reclassified to profit
or loss
Net changes in fair value of financial
assets measured at FVTOCI\
Remeasurements of defined benefit plans
Share of OCI of investments accounted
for using equity method
Total
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation offoreign operations
Share of OCI of investments accounted
for using equity method
Total
Total other comprehensive income\(1,199)Reclassified to
profit or loss

Before tax

Tax effect

\

\

\

－

(1,199)370

After tax

\

(829)

(526)

－

(526)

153

(373)

43
(1,682)－－43(1,682)

(11)
512

32
(1,170)

(96)

－

(96)

－

(96)

20
(76)
(1,758)

－
－
－

20
(76)
(1,758)

－
－
512

20
(76)
(1,246)

\

44

\

\

\

Millions of yen
2018
Recognized
Reclassified toduring the year profit or loss
Items that will not be reclassified to profit
or loss
Net changes in fair value of financial\
assets measured at FVTOCI
Remeasurements of defined benefit plans
Share of OCI of investments accounted
for using equity method
Total
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation offoreign operations
Net changes in fair value of cash flowhedge
Share of OCI of investments accounted
for using equity method
Total
Total other comprehensive income
\

786
464

\

－
－

Before tax

Tax effect

\

\

786
464

(251)
(130)

After tax

\

535
334

(92)
1,158

－
－

(92)
1,158

22
(359)

(70)
799

1

(1)

(0)

－

(0)

－

(1)

(1)

0

(1)

(158)
(157)
1,001

－
(2)
(2)

(158)
(159)
999

－
0
(359)

(158)
(159)
640

\

\

\

\

Thousands of U.S. dollars
2019
Recognized
Reclassified to
Before tax
Tax effectduring the year profit or loss
Items that will not be reclassified to profit
or loss
Net changes in fair value of financial$ (10,897)
assets measured at FVTOCI
Remeasurements of defined benefit plans(4,783)
Share of OCI of investments accounted
395
for using equity method
Total(15,285)
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation of(878)
foreign operations
Share of OCI of investments accounted
185
for using equity method
Total
(693)
Total other comprehensive income$ (15,978)

$

$

$

－
－

$ (10,897)(4,783)－－395(15,285)

(108)
4,647

287
(10,638)

－

(878)

－

(878)

－
－
－

185
(693)
$ (15,978)

－
－
4,647

185
(693)
(11,331)

$

3,363
1,392

After tax$$

(7,534)(3,391)

32. Earnings Per Share(1) Basic earnings per share
Basic earnings per share are as follows:
Yen
Basic earnings per share

(2)

\

2018
111.39U.S. dollars
2019
$
1.08

Millions of yen
2019
2018
5,457
\
5,100

Thousands of
U.S. dollars
2019$
49,6102019
119.09\Basis for computation of basic earnings per share
Basis for computation of basic earnings per share is as follows:

Profit for the year attributable to owners of parent\

Weighted average number of ordinary shares issued and outstanding

Thousands of shares
2019
2018
45,82445,790The disclosure of diluted earnings per share is omitted as there are no potentially dilutive shares.

4533. Cash Flow Information
Changes in liabilities arising from financing activities are as follows:

Short-term borrowings
Long-term borrowings
Bonds
Lease obligations

Short-term borrowings
Long-term borrowings
Bonds
Lease obligations

Short-term borrowings
Long-term borrowings
Bonds
Lease obligations

April 1, 2018
\ 1,145
5,003
6,000
\
88

April 1, 2017
\ 1,421
7,992
6,000
\
101

April 1, 2018
$ 10,411
45,47954,545$800

Changesarising fromcash flows\－(1,773)－\(33)

Millions of yen
Non-cash changes
Exchangedifferenceson
Foreigntranslation offoreignexchange
gains/losses operations
\
－
\
33
\
－
(3)
－
－
\
－
\
1
\

Other
－
－
－
46

March 31,2019
\ 1,178
3,227
6,000
\
102

Changesarising fromcash flows\(207)(2,948)－\(34)

Millions of yen
Non-cash changes
Exchangedifferenceson
Foreigntranslation offoreignexchange
gains/losses operations
\
－
\
(69)
\
(27)
(14)
－
－
\
－
\
(1)
\

Other
－
－
－
22

March 31,2018
\ 1,145
5,003
6,000
\
88

Changesarising fromcash flows$－(16,115)－$(296)

Thousands of U.S. dollars
Non-cash changes
Exchangedifferenceson
Foreigntranslation of
exchangeforeign
gains/losses operations
$
－
$
296
$
－
(32)
－
－
$
－
$
11
$

Other
－
－
－
414

March 31,2019
$ 10,707
29,33254,545$929

46

34. Share-based Payments
The Company has equity-settled share-based compensation plans for directors (excluding non-executive directors
and overseas residents) and executive officers (collectively, “Directors, etc.”).
(Equity-settled share-based compensation plan)
The Company adopts a scheme called Board Incentive Plan (“BIP”) Trust for Directors, etc. BIP Trust is an incentive
plan for officers established based on a performance share plan and restricted stock plan in the United States underwhich the Company’s shares acquired by BIP Trust are granted to Directors, etc. according to the achievement levelof performance targets, etc. During the trust period, Directors, etc. will receive certain points according to theachievement level of performance targets for each year. Upon retirement, Directors, etc. who satisfy certain
requirements for eligible beneficiaries will receive the Company’s shares corresponding to the number of points whichhave been granted to the Directors, etc. The initial period covered by the Trust will be seven fiscal years from the year
ending March 31, 2017 to the year ending March 31, 2023.
There is no exercise price as the Plan grants shares.
The amount of expenses recognized in relation to the Plan for the years ended March 31, 2019 and 2018 was \30
million ($275 thousand) and \35 million, respectively.
The weighted average fair value of points granted during the years ended March 31, 2019 and 2018 was \1,040 ($9.45)
and \1,013, respectively. As the fair value of the granted points approximates the share price on the grant date, thefair value is based on the share price on the grant date.
Points2019
21,66033,812(12,143)
43,329－Outstanding at April 1
GrantedExercised
Outstanding at March 31
Exercisable at March 31

2018－29,160(7,500)21,660－The number of remaining contractual life of the points is four years and three months and five years and three months
as of March 31, 2019 and 2018, respectively.

4735. Financial Instruments(1) Capital management
The Group’s capital management policy is to establish and maintain a stable financial base in order to achieve its
objective to maximize the corporate value through sustainable growth.
Based on the policy, the Group monitors net interest-bearing liabilities, calculated as interest-bearing liabilities
less cash and cash equivalents, and equity (attributable to owners of parent) for management purpose, and thesevalues are as follows:
The balance of the Group’s net interest-bearing liabilities and equity are as follows:
March 31,2019
\ 10,404(17,530)(7,126)67,872

Interest-bearing liabilities
Cash and cash equivalentｓ
Net interest-bearing liabilities
Equity (attributable to owners of parent)

Millions of yen
March 31,
April 1,
20182017
\ 12,148\ 15,413(18,477)(18,936)(6,329)(3,523)64,97460,575

Thousands of
U.S. dollars
March 31,2019
$ 94,584(159,364)(64,780)
617,016(Notes)1. The Group is not subject to any material capital restrictions.
2.

(2)Interest-bearing liabilities are based on “Bonds and borrowings” stated in the consolidated statement of financial
position.

Financial risks
The Group is subject to various financial risks including credit risk, liquidity risk, and market risk (risk offluctuations in exchange rates and interest rates), and therefore conducts risk management under certain
policies in order to hedge or mitigate these risks.
The Group raises necessary funds according to the cash management plan developed as part of the annual
management plan through stable and low-cost financing methods (mainly borrowings from banks or bond issues)and invests temporary surplus funds in financial assets with high level of liquidity and safety. The Group uses
derivatives to hedge risks to the extent there are actual needs.
(a)Credit risk
The Group is subject to a risk that the financial assets owned by the Group become unrecoverable due todefault by the counterparty of the assets (credit risk). In order to mitigate the risk, the Group monitors
counterparties of trade receivables on a regular basis in coordination with the departments in charge ofreceivable collection and finance in accordance with the credit limit management rules. There is no material
concentration of credit risk as the Group conducts business with large number of customers in various
locations.
We also recognize that the credit risk associated with derivative transactions is low as the counterpartiesare limited to financial institutions with high credit ratings.
The carrying amount of the financial assets net of impairment loss presented in the consolidated statementof financial position is the Group’s maximum exposure to credit risk relating to the financial assets as of thereporting date without taking into account any collateral held or other credit enhancements.
At each reporting date, the Group compares the risk of default of financial assets occurring as of thereporting date and the date of initial recognition to assess whether the credit risk of the financial assets has
significantly increased since initial recognition. The assessment is based on the change in the risk of default
occurring since initial recognition taking into account factors such as past-due information anddeterioration in operating results of the debtor. The Group measures the loss allowance for the financial
assets at an amount equal to lifetime expected credit losses if the credit risk of the financial assets has48

significantly increased since initial recognition, and at an amount equal to 12-month expected credit losses
if the credit risk has not significantly increased since initial recognition. Notwithstanding the above, however,a loss allowance for expected credit losses on trade receivables that do not contain a significant financing
component is measured at an amount equal to lifetime expected credit losses.
The Group assesses the recoverability of trade receivables, etc. based on the credit status of thecounterparties and calculates the amount of loss allowance. A financial asset is considered credit-impaired
when all or part of the asset cannot be recovered or its recovery is determined to be extremely difficult due
to factors including a request of rescheduling from the debtor, severe financial difficulty of the debtor, or thecommencement of legal proceedings due to the debtor’s bankruptcy, etc. When there is no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof, the carrying amount of thefinancial asset is directly reduced, with corresponding decrease in loss allowance.
Expected credit losses are measured individually or in aggregate on the basis of shared credit risk
characteristics that demonstrate debtors’ ability. Expected credit losses on receivables whose credit risk
has not significantly increased are calculated by multiplying the carrying amount by the historical credit loss
rate of similar assets adjusted by forward-looking information such as future economic situation. Expectedcredit losses on receivables whose credit risk has significantly increased and credit-impaired financial
assets are calculated as the difference between the present value of the estimated future cash flows
discounted at the asset’s original effective interest rate and the carrying amount.
Changes in loss allowance are as follows:
Millions of yen
Lifetime expected credit losses
Financial assets forwhich loss allowance
Credit-impairedis always measured
financial assets
at lifetime ECL

12-month ECL

April 1, 2017
Provision
Intended use
ReversalExchange differences
March 31, 2018
Provision
Intended use
ReversalExchange differences
March 31, 2019

\

\

0
－
－
(0)
－
0
－
－
(0)
－
0

\

\

56
1
(3)
－
(4)
50
13
(1)
－
(7)
55

\

\

38
0
－
(3)
1
36
3
(14)
(1)
(0)
24

Total

\

94
1
(3)
(3)
(3)
86
16
(15)
(1)
(7)
79

\

Thousands of U.S. dollars
Lifetime expected credit losses
Financial assets forwhich loss allowance
Credit-impairedis always measured
financial assets
at lifetime ECL

12-month ECLMarch 31, 2018
Provision
Intended use
ReversalExchange differences
March 31, 2019

$

$

2
－
－
(2)
－
0

49

$

$

452
121
(9)
－
(64)
500

$

$

336
22
(130)
(7)
(2)
219

Total

$

$

790
143
(139)
(9)
(66)
719

Changes in financial assets subject to loss allowance are as follows:
Millions of yen
Lifetime expected credit losses
Financial assets forwhich loss allowance
Credit-impairedis always measured
financial assets
at lifetime ECL

12-month ECL

April 1, 2017
Increase/decrease (recognition andderecognition)
Exchange differences
March 31, 2018
Increase/decrease (recognition andderecognition)
Exchange differences
March 31, 2019

\

838

\

\

20,453

Total\

21,347

(143)
(2)
693

(2)
(4)
50

840
(73)
21,220695(79)
21,963

(9)
(6)
678

12
(7)
55

254
(65)
21,409257(78)
22,142

\

\

$

6,301

$

(87)
(53)
6,161

\

\

Thousands of U.S. dollars
Lifetime expected credit losses
Financial assets forwhich loss allowance
Credit-impairedis always measured
financial assets
at lifetime ECL

12-month ECLMarch 31, 2018
Increase/decrease (recognition andderecognition)
Exchange differences
March 31, 2019

56

$

452

$

111
(63)
500

$

192,908

$

2,309
(589)
194,628

Total$

199,661

$

2,333
(705)
201,289

The credit risk ratings of the financial assets for which loss allowance is always measured at lifetime ECL isgenerally the same as that of the financial assets for which loss allowance is measured at 12-month ECL.
The credit risk ratings of financial assets within the same category are generally the same. There were no
significant changes in the carrying amount in aggregate or significant transfers between categories that
affected the changes in loss allowance during the year ended March 31, 2019.
(b)

Liquidity risk
The Group finances working capital and capital expenditure through borrowings from financial institutions orbond issues, and therefore is subject to a risk of becoming unable to satisfy these obligations (liquidity risk).
The Group manages this risk by using a cash management plan prepared and updated in a timely manner by
the finance department and also by maintaining a certain level of liquidity on hand.
The maturity analysis of financial liabilities is as follows:
Millions of yen

March 31, 2019
Carrying
amounts

Trade and other payables \BondsBorrowings
Lease obligations
Derivative financial
liabilities
Other
Total
\

16,650
6,000
4,404
102
8
74
27,238Contractual
cash flows

Within one
year\

16,650
6,081
4,436
103

\ 16,650
19
2,793
30

\

8
74
27,3528－\ 19,500－2\ 1,441\50

1 to 2
years

－
19
1,397
23

2 to 3
years

\

－
3,019
146
19

－
51
\ 3,235

3 to 4years\\

4 to 5years

Over five
years

－
3,012
－
19

\

－
12
100
10

\

－
－
122

－
－
\ 3,031

\

－
－
－
2
－
21
23

Millions of yen
March 31, 2018
Carrying
amounts

Trade and other payables \BondsBorrowings
Lease obligations
Derivative financial
liabilities
Other
Total
\

18,068
6,000
6,148
88
17
66
30,387

Contractual
cash flows

Within one
year\

18,068
6,101
6,245
89

\ 18,068
20
2,968
28

\

17
66
30,58610－\ 21,09479\ 1,690\

1 to 2
years

－
19
1,634
21

2 to 3
years

\

－
19
1,397
20

－
2
\ 1,438

3 to 4
years

\

－
3,019
146
15

－
34
\ 3,2144 to 5years\\

Over five
years

－
12
100
3

\

－
3,012
－
2

－
－
115

－
21
\ 3,035

4 to 5years

Over five
years

－
3,019
46
11

\

Millions of yen
April 1, 2017
Carrying
amounts

Trade and other payables \BondsBorrowings
Lease obligations
Derivative financial
liabilities
Other
Total
\

16,293
6,000
9,413
101
42
58
31,907

Contractual
cash flows

Within one
year\

16,293
6,120
9,527
103

\ 16,293
20
4,559
35

\

42
58
32,14324－\ 20,931

119\ 1,887\

1 to 2
years

－
19
1,823
25

2 to 3
years

\

－
19
1,602
17

7
9
\ 1,654

3 to 4
years

\

－
19
1,397
15

－
2
\ 1,433\－17\ 3,093

－
3,024
100
0

－
21
\ 3,145

Thousands of U.S. dollars
March 31, 2019
Carrying
amounts

Contractual
cash flows

Within one
year

1 to 2years

Trade and other payables $ 151,367
Bonds
54,545
Borrowings
40,039Lease obligations
929
Derivative financial
liabilities
72
Other
670
Total
$ 247,622$ 151,367
55,28740,324934$ 151,367
174
25,387
277

$

72
670
$ 248,654

72－$ 177,277－
20$ 13,100－
175
12,699206

2 to 3years$－
27,447
1,327
170

－
464
$ 29,408

3 to 4
years

$

－
109
911
92

－
－
$ 1,112$4 to 5years

Over fiveyears－
27,382
－
174

$

－
－
$ 27,556

$

－
－
－
15
－
186
201

(c) Market risks(i)
Foreign currency risk
The Group develops global operations and engages in foreign currency denominated transactions for
procurement of certain raw materials and product sales, and as a result, the Group is subject to foreign
currency risk from foreign currency denominated receivables and payables arising from thesetransactions.
The Group uses foreign currency forward contracts, etc. to hedge foreign currency risk identified bycurrency and month for receivables and payables denominated in foreign currencies.
＜Foreign currency sensitivity analysis＞
The impact on profit before income taxes of a 1% strengthening of Japanese yen against U.S. dollar
with respect to foreign currency denominated financial instruments held by the Group at the reporting
date is as follows. The analysis assumes that all other variables remain constant.
The table below shows a sensitivity to foreign currency risk exposure excluding the effect of foreign
currency forward contracts fixing the amount in Japanese yen. Exposures to exchange rate
fluctuations with all currencies other than U.S. dollar are insignificant.

51

Millions of yen
2019
2018
Profit before income taxes
U.S. dollar

(ii)

\

(52)

\

(61)

Thousands of
U.S. dollars
2019
$

(472)

Price risk
The Group owns shares of client companies for the purpose of business alliance and maintaining andstrengthening stable and long-term business relationship, and therefore is subject to equity price risk.
The Group obtains information on fair values or financial condition of the client companies on a regularbasis and reviews the sharing status taking into account the relationship with the client companies on
an ongoing basis.
＜Equity price sensitivity analysis＞
The sensitivity analysis for the equity instruments held by the Group is as follows.
The sensitivity analysis shows the impact on other comprehensive income (before tax effect) of a 10%
decrease in equity prices of the listed shares held at the reporting date. The analysis assumes that allother variables remain constant.

Impact on other comprehensive income

(iii)

\

Millions of yen
2019
2018
(546)
\
(671)

Thousands of
U.S. dollars
2019$(4,967)

Interest rate risk
The Group finances working capital and capital expenditure through borrowings from financial
institutions and bond issues. Most borrowings bear a fixed interest rate, but borrowings bearing afloating interest rate are affected by fluctuations in market interest rates and are subject to interest
rate risk that future cash flows of interest fluctuate.
In order to curb the increase in interest payments for floating rate long-term borrowings due to a risein interest rates, the Group generally uses interest rate swap contracts and interest rate and currency
swap contracts to stabilize cash flows.
Accordingly, the impact of fluctuations in interest rate payments due to interest rate fluctuations issmall and the interest rate risk is considered immaterial to the Group, and therefore the sensitivity
analysis is omitted.

(3)

Carrying amounts and fair values of financial instruments(a) Fair value measurement
The Group determines fair values of major financial assets and liabilities as follows.
When quoted prices are available, the fair value of a financial instrument is measured using the quoted price.
When quoted prices are not available, the fair value of a financial instrument is measured using otherappropriate valuation techniques including the multiples approach.
(Cash and cash equivalents, trade and other receivables, trade and other payables)
They are stated at their carrying amounts as they approximate their fair values due to their short-term
maturities.
(Other financial assets, other financial liabilities)
The fair value of listed equity instruments are calculated based on prices on the exchange at the reporting
date, and the fair value measurement is categorized within Level 1.

52

The fair value of unlisted equity instruments are calculated using the multiples approach or the net asset
method, and the fair value measurement is categorized within Level 3.
In measuring the fair value of unlisted equity instruments, unobservable inputs such as valuation multiples
are used.
The fair value of derivative transactions, etc., are calculated based on the prices provided by correspondent
financial institutions, and the fair value measurement is categorized within Level 2.
The fair values of other financial assets and liabilities approximate their carrying amounts.
(Bonds and borrowings)
The fair value of bonds is calculated based on the market price of the bond, and the fair value measurement
is categorized within Level 2.
The fair value of borrowings is calculated by discounting future cash flows at the interest rate applicable tosimilar borrowings, and the fair value measurement is categorized within Level 2.
(b)

The carrying amounts and fair values of financial instruments measured at amortized cost
The financial instruments whose amortized costs and fair values are different are as follows:

Bonds and borrowings

March 31, 2019
Carrying
Fair values
amounts\ 10,404\ 10,429

Millions of yen
March 31 2018
Carrying
Fair values
amounts\ 12,148\ 12,154

April 1, 2017
Carrying
Fair values
amounts\ 15,413\ 15,445

Thousands of U.S. dollars
March 31, 2019
Carrying
Fair values
amounts
Bonds and borrowings$ 94,584$ 94,805(Note)The disclosure is omitted for cash and cash equivalents, trade and other receivables, and trade andother payables as their carrying amounts approximate their fair values.
(c) Financial instruments measured at fair value and the hierarchy
The following table shows the analysis of financial instruments measured at fair value. Each level of thehierarchy is defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Groupcan access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability
Millions of yen
March 31, 2019
Level 2
Level 3

Level 1
Financial assets
Financial assets measured at FVTPL
Other financial assets\
Financial assets measured at FVTOCI
Equity instruments
Total of financial assets
Financial liabilities
Financial liabilities measured at FVTPL
Derivatives
Total of financial liabilities
\

－

\

5,464
5,464

－
－

53

91

\

－
91

\

8
8

20

Total

\

962
982

\

－
－

111
6,426
6,537

\

8
8

Millions of yen
March 31, 2018
Level 2
Level 3

Level 1
Financial assets\
Financial assets measured at FVTPL
Derivatives\
Other financial assets
Financial assets measured at FVTOCI
Equity instruments
Total of financial assets
Financial liabilities
Financial liabilities measured at FVTPL
Derivatives
Total of financial liabilities
\

\
－
－

\

6,710
6,710

－
－

－
－

\

Level 1
Financial assets
Financial assets measured at FVTPL
Other financial assets$
Financial assets measured at FVTOCI
Equity instruments
Total of financial assets
Financial liabilities
Financial liabilities measured at FVTPL
Derivatives
Total of financial liabilities
$

－

\

54

17
17

－
21

\

918
939

\

15
84

\

－
1
100

\

－
－

42
42

－
20

\

－
－

$

827

$

－
827

$

72
72

180

\

－
－

15
104
6,958
1
7,078

\

42
42

Total

$

8,743
8,923

$

17
17

Total

911
－
931

\

9
109
7,628
7,746

Thousands of U.S. dollars
March 31, 2019
Level 2
Level 349,67049,670－－\\Millions of yen
April 1, 2017
Level 2
Level 3

6,047
－
6,047

－
－

9
88
－
97

Level 1
Financial assets
Financial assets measured at FVTPL
Derivatives\
Other financial assets
Financial assets measured at FVTOCI
Equity instruments
Derivatives
Total of financial assets
Financial liabilities
Financial liabilities measured at FVTPL
Derivatives
Total of financial liabilities
\

\

Total

1,007
58,41359,420$72
72

Reconciliation of the financial instruments categorized within Level 3
A reconciliation of fair value measurement categorized within Level 3 from the opening balance to the closingbalance is as follows:
Millions of yen
March 31, 2019
Financial
instruments
measured at
FVTPL(Note 1)

Balance at April 1\
Gains or losses
Profit or loss
Other comprehensive income
Purchase
Disposal
Other
Balance at March 31
Changes in unrealized gains or losses
recognized in profit or loss relating
to assets held at the reporting date \(Notes)21

Financial
instruments
measured at
FVTOCI(Note 2)Financial
instruments
measured at
FVTPL(Note 1)

Financial
instruments
measured at
FVTOCI(Note 2)Financial
instruments
measured at
FVTPL(Note 1)

\

\

\

$

(0)
－
－
－
(1)
20

918

20

－
45
1
(2)
0
962

(0)

Thousands of U.S. dollars
March 31, 2019

March 31 2018

\

－
－
1
－
0
21

－

\

－

911

187

－
8
－
(1)
0
918
\

Financial
instruments
measured at
FVTOCI(Note 2)

$

(1)
－
－
－
(5)
180

－

$

(1)

8,347
－
413
0
(17)
0
8,743

$

－

1. Gains or losses recognized in profit or loss are included in “Finance income” or “Finance costs” in the consolidated statementof profit or loss.
2. Gains or losses recognized in other comprehensive income, net of tax effect, are included in “Net changes in fair value offinancial assets measured at FVTOCI” in the consolidated statement of comprehensive income.
3. The fair value of financial instruments categorized within Level 3 is measured using the valuation technique determined by thefinance department in accordance with the Group’s valuation policy and procedures. The measurement results are approved by
the person with appropriate authority.
(4)

Derivatives
Main risks managed through the use of derivative transactions are foreign currency risk (mainly U.S. dollars andEuro) and interest rate risk. The Group uses foreign currency forward contracts, interest rate and currency swap
contracts and interest rate swap contracts to mitigate foreign currency risk and interest rate risk.
Changes in fair value of derivatives designated as cash flow hedge are recognized in other comprehensive income
and included in other components of equity, and reclassified to profit or loss when the hedged item is recognizedin profit or loss.
Changes in fair value of derivatives to which the hedge accounting is not applied are recognized in profit or loss.
Details of derivative transactions to which the hedge accounting is not applied are as follows:
Millions of yen
March 31, 2018
April 1, 2017
Of which,
Of which,
Contract
Contract
Fair value
over
over
Fair value
amountamountone year
one yearMarch 31, 2019
Of which,
Fair
Contractovervalue
amountone year
Foreign currency
forward contracts:
Selling:
U.S. Dollar
Euro
Buying:Japanese yen
U.S. Dollar
Interest rate swap
contracts:
Receive floating/pay fixed

\

3
11

\

32
16

\ 1,500

－
－

\

－
－

\

－

(0)
(0)

\

138
230

(0)
(0)

\

(8)

\

\

－
－

38
3

－
－

2,200

\ 1,500

55

\

\

3
6

\

210
121

\

－
－

\

2
(0)

0
0

74
8

－
－

2
(0)

(17)

\ 4,900\ 2,200(41)

Thousands of U.S. dollars
March 31, 2019
Of which,
Fair
Contractoveramountvalue
one year
Foreign currency
forward contracts:
Selling:
U.S. Dollar
Euro
Buying:Japanese yen
U.S. Dollar
Interest rate swap
contracts:
Receive floating/pay fixed

$

27
97

$

－
－

291
141

$13,636

$

$

(1)
(0)

－
－

(2)
(3)

－

$ (69)

Derivative transactions to which the hedge accounting is applied are as follows.

Interest rate andcurrency swap
contracts:
Receive floating/pay fixed
Receive JPY/
Pay INR
Receive USD/
Pay INR

March 31, 2019
Of which,
Fair
Contractovervalue
amountone year

Millions of yen
March 31, 2018
April 1, 2017
Of which,
Of which,
Contract
Contract
Fair value
over
over
Fair value
amountamountone year
one year

\

－

\

－

\ －

\

－

\

－

\

－

\

80

\

－

\

13

\

－

\

－

\ －

\

－

\

－

\

－

\

176

\

－

\

(1)

Thousands of U.S. dollars
March 31, 2019
Of which,
Fair
Contractovervalue
amountone yearInterest rate and currency swap
contracts:
Receive floating/ pay fixed
Receive JPY/ Pay INR$
Receive USD/ Pay INR
$

－
－

$
$

－
－

$ －
$ －

36. Related Parties(1) Related party transactions
The disclosure is omitted due to immateriality.
(2)

Key management personnel compensation
Key management personnel compensation is as follows:

Short-term employee benefits
Share-based payments
Total

\
\

56

Millions of yen
2019
2018
149
\
140
19
18
168
\
158

Thousands of
U.S. dollars
2019
$
1,358
170
$
1,528

37. Commitment
Contractual commitments for the acquisition of property, plant and equipment and intangible assets are as follows:

Property, plant and equipment and intangible assets

March 31,
2019
\
308

Millions of yen
March 31,
April 1,
2018
2017
\
470
\
428

Thousands of
U.S. dollars
March 31,
2019
$
2,802

38. Subsequent Events(1) Business combination through acquisition
The Company entered into a share sales and purchase agreement to acquire all shares of Aimedic MMT Co., Ltd.
(“Aimedic MMT”) on April 5, 2019, and acquired all shares and made the company its subsidiary on May 8, 2019.
(a)

Overview of business combination(i) Name and description of the acquiree
Name of the acquiree: Aimedic MMT Co., Ltd.
Business description: Manufacturing, sales and after-sales service of orthopedic medical device(ii)

Primary reasons for the business combination
The Group positions the period from 2018 through 2022 as the second stage of its ｍid-to-ｌong termbusiness plan “Breakthroughs for the future” and sets “new business creation” as one of its guidelines,
with an aim to be a standout global supplier.
As one of the pillars for new businesses, the Group has worked to establish a solid medical andhealthcare equipment business using the elastic strain sensor “C-STRETCH™.”
Our decision to acquire shares of Aimedic MMT is based on the fact that the company has a strong
brand appeal and sales capabilities in the orthopedic medical device sector and we can expect theacquisition enables the Group to obtain a medical business system all at once and accelerate thecommercialization of “C-STRETCH™” as a medical equipment.

(iii) Name of the counterparties of the share acquisition
Polaris Private Equity Fund III, L.P.
Tiara CG Private Equity Fund 2013, L.P.
(iv) Acquisition date of the business combination
May 8, 2019(v)

Legal form of the business combination
Share acquisition(vi) Name of the company after the business combination
No change(vii) Percentage of voting rights acquired
100%(viii) Primary basis for identifying the acquirer
As the Company acquired shares for cash consideration.
(b)

Acquisition price of the acquiree and the detail of consideration by class
Consideration for the acquisition: Cash \10,450 million ($95,000 thousand)(c) Description and amount of major acquisition-related costs
Advisory fee, etc.: \109 million ($994 thousand)

57

(d)

Amount and factors that make up the goodwill
Not determined at this point.

(e) Fair value of identifiable assets acquired and liabilities assumed at the acquisition date and its major
components
Not determined at this point.
(2)

(3)

Conclusion and execution of a commitment line contract
The Company entered into a commitment line agreement with the terms described below on April 8, 2019 tofinance the acquisition of all shares of Aimedic MMT and the refinancing of the company’s existing borrowings,
and drew down \15,700 million ($14,727 thousand) on May 7, 2019.
Terms of the contract(a) Lender(b) Total commitment(c) Contract date(d) Commitment line period(e) Interest rate(f) Collateral

Mizuho Bank, Ltd.
\15,700 million ($14,727 thousand)April 8, 2019
From April 15, 2019 to April 14, 2020
Base rate + spread
Unsecured

Details of borrowings performed(a) Amount of drawdown(b) Drawdown date(c) Payment date

\15,700 million ($14,727 thousand)May 7, 2019
August 7, 2019

Amendment of retirement benefit plan
The Company and some of its consolidated subsidiaries shifted their defined benefit corporate pension plans torisk-sharing corporate pension plans effective April 1, 2019. Under the plan, employers and plan participants
share risks in such a way that employers assume a certain risk by making fixed contributions including the portion
corresponding to the risk while plan participants also assume a certain risk in the form of benefit adjustments incase the fiscal balance is lost. Under the current defined benefit corporate pension plans, when there is a deficit,
employers are required to make additional contributions. Under the risk-sharing corporate pension plans,
however, employers only need to make level contribution payments within a range specified by theemployee-management agreement based on the possible future risk measured in advance, which allows morestable plan management.
For the purpose of accounting for retirement benefits, a risk-sharing corporate pension plan under which theentity is not subject to additional contribution obligations is classified as a defined contribution pension plan. The
risk-sharing corporate pension plans to which the Company and its subsidiaries shifted do not subject theCompany and its consolidated subsidiaries to additional contribution obligations and therefore are classified as adefined contribution pension plan. Accordingly, at the time of the plan shift, the reversal of net defined benefit
liability attributable to the shifted portion and the retirement benefit trust assets returned to the Group arerecorded, and also a special contribution payment set forth in the fund rules is accrued, with any differences
between them recognized in profit or loss.
As a result, loss on termination of retirement benefit plans of \447 million ($ 4,068 thousand) will be recorded in“Other expenses” for the three months ended June 30, 2019. Also, cash and cash equivalents, other financial
assets and other current liabilities and other non-current liabilities will increase by \155 million ($ 1,405
thousand), \1,356 million ($ 12,325 thousand), and \2,926 million ($ 26,600 thousand), respectively, and net
defined benefit liability will decrease by \968 million ($ 8,800 thousand).

58

39. First-time Adoption of IFRS
(1) Reporting of transition under IFRSThe Group applied IFRS to the consolidated financial statements for the year ended March 31, 2019. The latest
consolidated financial statements prepared under the Japanese GAAP are for the year ended March 31, 2018,
and the date of transition from Japanese GAAP to IFRS is April 1, 2017.
The accounting policies described in notes to the consolidated financial statements “3. Summary of Significant
Accounting Policies” have been applied to the consolidated financial statements for the years ended March 31,
2019 and 2018 and the consolidated statement of financial position as of April 1, 2017.
IFRS 1 generally requires entities adopting IFRS for the first time to apply IFRS retrospectively but grants certain
optional exemptions to full retrospective application. Accordingly, the Group elected the exemptions for thefollowing items.
(a) Business combinations
The Group elected not to apply IFRS 3 Business Combinations retrospectively to business combinations that
occurred before the date of transition to IFRSs.
(b) Exchange differences on translation of foreign operations
The Group deems the cumulative translation differences for all foreign operations at the date of transition to
IFRSs to be zero.
(c) Deemed cost
The Group elected to use the fair value of certain items of property, plant and equipment at the date of transition
to IFRSs as its deemed cost at that date.
(d) Financial instruments
The Group designated financial instruments recognized before the date of transition to IFRSs in accordance withIFRS 9 Financial Instruments on the basis of the facts and circumstances that existed at the date of transition to
IFRSs.
(e) Share-based payments
The Group elected not to apply IFRS 2 Share-based Payment to share-based payment transactions that vested
before the date of transition to IFRSs.
IFRS 1 prohibits retrospective application of IFRSs to “estimates,” “derecognition of financial assets andfinancial liabilities,” “hedge accounting,” “non-controlling interests,” and “classification and measurement offinancial assets.” The Group applies IFRSs to these items prospectively from the date of transition to IFRSs.
In preparing the consolidated financial statements under IFRS, the Group has adjusted figures in the consolidated
financial statements prepared under Japanese GAAP. The reconciliation required to disclose in the first year of
applying IFRS is presented in “(2) Reconciliation of equity at the date of transition to IFRSs (April 1, 2017)” andthereafter.
Major impacts for the year ended March 31, 2019 are as follows:(a) Accounting process for revisions to the retirement benefit pension plans.
As of April 1, 2019, the Company and certain of its consolidated subsidiaries have moved from defined
contribution pension plans to risk sharing pension plans.
Japanese GAAP applies the Accounting Standards Board of Japan’s “Practical Solution on Accounting for Risk
Sharing Pension Plan,” and the Company recorded losses associated with the transition as extraordinary losses
for the fiscal year ended March 31, 2019. With IFRS, however, the Company plans to record such losses as otherexpenses for the first quarter of the fiscal year ending March 31, 2020.
Therefore, when comparing IFRS with Japanese GAAP, income before income taxes increased by ¥806 million59

($7,336 thousand).
(b) Capitalization of research and development costs
With Japanese GAAP, all research and development costs were charged to income as incurred. With IFRS,
however, research and development costs that fulfill capitalization conditions are recognized as intangible assets.
Therefore, when comparing IFRS with Japanese GAAP, selling, general and administrative expenses in the
consolidated statement of profit or loss decreased by ¥120 million ($1,091 thousand).
“Reclassification” in the reconciliation includes items that do not affect retained earnings nor othercomprehensive income, and “Differences in recognition and measurement” includes items that affect retained
earnings and other comprehensive income.

60

(2)

Reconciliation of equity at the date of transition to IFRSs (April 1, 2017)
Millions of yen
Japanese
GAAP
Account name

Change ofreporting dateor scope ofequity method

AmountReclassification

Differences inrecognition
andmeasurement

IFRS
AmountNotes

Account name

AssetsAssetsCurrent Assets

Current Assets

Cash and cash equivalents\

Trade and otherreceivables

19,523

\

－

\

(587)

\

－

\

18,936

18,824

－

2,156

(144)

20,836

1,789－(1,789)

－

－

(39)

－

39

－

－

6,755

(2)

4,149

48

10,950Work in process

1,509

－

(1,509)－－Raw materials and supplies

2,640

－

(2,640)－－

Deferred tax assets

551

0

(551)

－

－

－

－

20

－

20

1,249

－

(645)

－

604

－

－

812

－

812

52,801

(2)

(545)

(96)

52,15829,137

－

40

3,311

32,488A

Goodwill

75

－

－

－

75

B

Goodwill

Software

793

－

666

207

1,666

C

Intangible assets

Other intangible assets

681

－

(681)

－

－

Electronically recordedmonetary claims operating
Allowance for doubtful
accounts
Merchandise and finished
goods

Other current assets

Total Current Assets

G

Cash and cash
equivalents
Trade andotherreceivablesG

Non-current Assets
Property, plant andequipment

Investments in securities

Inventories

Income taxes
receivable
Other financial
assetsOther current
assetsTotal Current
AssetsNon-current
AssetsProperty, plantand equipment

Investments
accounted forusing equity
methodOther financial
assetsDeferred tax
assets

11,488223(6,183)

6

5,534

－

－

6,767

768

7,535

D

404

(2)

551

(540)

413

H

0

－

(0)

－

－

Other investments

1,465

－

(768)

(25)

672

Allowance for doubtful
accounts

(149)

－

149

－

－

43,894

221

541

3,727

48,383Total
Non-current
Assets100,541

Total Assets

Deferred tax assets
Net defined benefit assets

Total Non-current Assets
Total Assets\

96,695

\

219

\

(4)

61

\

3,631

\

Other
non-current
assetsMillions of yen
Change ofreporting dateor scope ofequity method

Japanese
GAAP
Account nameAmountReclassification

Differences inrecognition
andmeasurement

IFRS
AmountNotes

Account name
Liabilities and Equity

Liabilities

Liabilities

Current Liabilities

Current Liabilities

Notes and accounts
payableElectronicallyrecorded obligations- operating
Short-termborrowings

Trade and otherpayables\Income taxes payable
Provision for loss on
liquidation ofsubsidiaries andassociates
Other current
liabilities

Total Current
Liabilities

9,259

\

－

\

7,034

\

－

\

16,293

3,407－(3,407)

－

－

4,499

－

－

－

4,499

Bonds andborrowings

1,065

－

(196)

－

869

Income taxes payable

10

－

(10)

－

－

Provisions

6,533

－

(6,500)

13

46

Other financial
liabilities

－

－

3,085

930

4,015

24,773－

6

943

25,722F

Other current liabilities
Total Current
Liabilities

Long-term Liabilities

Non-current Liabilities

Long-term debt

4,914

－

6,000

－

10,914

Bonds

6,000

－

(6,000)

－

－

29

－

－

(29)

－

2,007

－

－

162

2,169

E

Net defined benefit
liability

－

－

34

471

505

H

Deferred tax liabilities

231

－

(121)

45

155

－

－

77

201

278

Total Long-term
Liabilities

13,181

－

(10)

850

14,021

Total Liabilities

37,954

－

(4)

1,793

39,743

Allowance forstock-based
compensation
Net defined benefit
liability

Other long-term
liabilities

Bonds and borrowings

Other financial
liabilities
Other non-current
liabilities
Total Non-current
Liabilities
Total Liabilities

Net Assets

EquityCommon stock

10,952－－－

10,952

Common stock

Capital surplus

2,996

－

－

27

3,023

Capital surplus

Retained earnings

45,922

319

－

(861)

45,380Treasury stock, at cost

(1,356)

(12)

－

－

(1,368 )

7

(87)

－

2,668

2,588

58,521

220

－

1,834

60,575

Non-controllinginterests

220

－

－

3

223

Total Net Assets

58,741

220

－

1,837

60,798

Total Equity

100,541

Total Liabilities andEquityAccumulated othercomprehensive
incomeTotal Liabilities andNet Assets\

96,695

\

220

\

(4)

62

\

3,630

\

J

Retained earnings
Treasury stock, at cost

E, I

Other components ofequityTotal Equity
Attributable to
Owners of Parent
Non-controllinginterests

(3)Reconciliation of equity as of March 31, 2018
Millions of yen
Japanese
GAAP
Account nameAmountChange ofreporting dateor scope ofequity method

Reclassification

Differences inrecognition
andmeasurement

IFRS
AmountNotes

Account name

AssetsAssetsCurrent Assets

Current Assets

Cash and cash equivalents\

Trade and otherreceivables

18,948

\

－

\

(471)

\

－

\

18,477

18,951

－

3,116

(574)

21,493

2,835－(2,835)

－

－

(38 ）

－

38

－

－

7,100

(7)

4,789

325

12,207Work in process

1,709

－

(1,709)－－Raw materials and supplies

3,081

－

(3,081)－－

Deferred tax assets

570

(0)

(570)

－

－

－

－

7

－

7

1,181

－

(700)

－

481

－

－

833

－

833

54,337

(7)

(583)

(249)

53,49829,409

－

35

3,318

32,762

A

Goodwill

64

－

－

10

74

B

Goodwill

Software

735

－

749

330

1,814

C

Intangible
assetsOther intangible assets

765

－

(765)

－

－

Electronically recordedmonetary claims operating
Allowance for doubtful
accounts
Merchandise and finished
goods

Other current assets

Total Current Assets

G

Cash and cash
equivalents
Trade andotherreceivablesG

Non-current Assets
Property, plant andequipment

Investments in securities

Inventories

Income taxes
receivable
Other financial
assetsOther current
assetsTotal Current
AssetsNon-current
AssetsProperty, plantand equipment

Investments
accounted forusing equity
methodOther financial
assetsDeferred tax
assetsOther
non-current
assets12,442

211(6,843)

5

5,815

－

－

7,411

790

8,201

D

Deferred tax assets

178

(2)

569

(396)

349

H

Other investments

1,449

－

(716)

1

734

Allowance for doubtful
accounts(143 )

－

143

－

－

44,899

209

583

4,058

49,749Total
Non-current
Assets103,247

Total Assets

Total Non-current Assets
Total Assets\

99,236

\

202

\

－

63

\

3,809

\

Millions of yen
Change ofreporting dateor scope ofequity method

Japanese
GAAP
Account nameAmountReclassification

Differences inrecognition
andmeasurement

IFRS
AmountNotes

Account name
Liabilities andEquityLiabilities

Liabilities

Current Liabilities

Current Liabilities

Notes and accounts
payable

\

9,966

\

－

\

8,102

\

－

\

Trade and otherpayables

18,068

Electronically recorded
obligations - operating

4,441

－

(4,441)－－

Short-term borrowings

2,921

－

－

－

2,921

Bonds andborrowings

Income taxes payable

926

－

(143)

－

783

Income taxes
payableProvision for loss on
liquidation ofsubsidiaries andassociates

16

－

－

(16)

－

Provisions

Other current liabilities

6,773

－

(6,745)

4

32

Other financial
liabilities

－

－

3,227

991

4,218

25,043－－979

26,022

Total Current Liabilities

F

Other current
liabilities
Total Current
Liabilities
Non-current
Liabilities

Long-term Liabilities

Bonds andborrowings

Long-term debt

3,227

－

6,000

－

9,227

Bonds

6,000

－

(6,000)

－

－

40

－

－

(40)

－

1,123

－

－

285

1,408

E

Net defined
benefit liability

－

－

274

652

926

H

Deferred tax
liabilities

408

20

(335)

46

139

Other financial
liabilities

－

－

61

255

316

Other non-current
liabilities

Total Long-term
Liabilities

10,798

20

－

1,198

12,016

Total Non-current
Liabilities

Total Liabilities

35,841

20

－

2,177

38,038

Total Liabilities

Allowance forstock-based
compensation
Net defined benefit
liability

Other long-term
liabilities

Net Assets

EquityCommon stock

10,952－－－

10,952

Common stock

Capital surplus

2,996

－

－

65

3,061

Capital surplus

Retained earnings

49,372

466

－

(396)

49,442

Treasury stock, at cost

(1,421)

(12)

－

－

(1,433 )Accumulated othercomprehensive
income

1,264

(273)

－

1,961

2,952

63,163

181

－

1,630

64,974Non-controllinginterests

232

－

－

3

235

Total Net Assets

63,395

181

－

1,633

65,209Total Equity

103,247

Total Liabilities
and Equity

Total Liabilities and Net
Assets\99,236

\

201

\

－

64

\

3,810

\

J

Retained earnings
Treasury stock, at
cost

E, I

Other componentsof equity
Total Equity
Attributable to
Owners of
ParentNon-controllinginterests

(4)Reconciliation of profit or loss and comprehensive income for the year ended March 31, 2018
Millions of yen
Japanese
GAAP
Account name

Net Sales

Amount\91,264

Change ofreporting dateor scope ofequity method

Reclassification

\

\

8

(75)

Differences inrecognition
andmeasurement\(399 )IFRS
Amount\90,798

Notes
G

Account name
Revenue

Cost of sales(63,731 )

－

1

458

(63,272 )A,C,E,
Cost of sales
F,G

Gross profit

27,533

8

(74)

59

27,526Gross profit

Selling, general andadministrative expenses(21,196 )

－

(23)

382

(20,837 )A,B,C,
E,F

－

－

273

(28 )

245

A

Other income

－

－

(391)

(137 )(528 )

A,F

Other expenses

Selling, general andadministrative
expenses

－

－

673

77

750

Share of profit ofinvestments
accounted forusing equity
methodOperating income

6,337

8

458

353

7,156

Operating income

Non-operating income

1,098

161

(947)

(37 )

275

D

Finance income

Non-operating expenses(836 )－

274

30(532 )

D

Finance costs

Extraordinary losses(185 )

－

185

－

－

Income before income
taxes

6,414

169

(30)

346

6,899

Income taxes(1,582 )

(21 )

30

(190 )(1,763 )Profit

4,832

148

－

156

5,136

H

Profit for the year

Other Comprehensive
IncomeUnrealized gains (losses)
on available-for-salesecurities

496

－

－

39

535

Deferred gains onderivative
instruments

(1 )

－

－

－

(1 )

Foreign currencytranslation
adjustments

47

－

－

(47 )

(0 )

Remeasurements ofdefined benefit plans

667

－

－

(333 )

334

Share of othercomprehensive
income in affiliates

34(186 )－(76 )(228 )

1,243(186 )－(417 )

640

Total Other
Comprehensive Income
Comprehensive Income

\

6,075

\

(38 )

\

－

65

\

(261 )\

5,776

Profit before
income taxes
Income tax
expenseE

Other
Comprehensive
IncomeNet changes infinancial assets
measured at
FVTOCINet changes incash flow
hedgesExchangedifferences ontranslation offoreign operations
Remeasurementsof defined
benefit plans
Share of OCI ofinvestments
accounted forusing equity
methodTotal Other
Comprehensive
IncomeComprehensive
Income(5)Notes related to reconciliation
1. Change of reporting date or scope of equity method
Under Japanese GAAP, affiliates accounted for using equity method that have a different reporting date fromthat of the Company are consolidated based on the financial statements of the affiliates as of their reporting date.
Under IFRS, unless it is practically impossible, the financial statements of the affiliates accounted for using
equity method are prepared as of the Company’s reporting date.
Under Japanese GAAP, immaterial affiliates were excluded from the scope of application of equity method. Under
IFRS, such affiliates are included in the scope of application of equity method.
2. Reclassification
The Group reclassifies certain items to conform to provisions of IFRS. Major items are as follows:
Under Japanese GAAP, time deposits with maturities of over 3 months are included in “Cash and deposits.”
Under IFRS, they are included in “Other financial assets.”
Under Japanese GAAP, “Electronically recorded monetary claims-operating” and “Allowance for doubtful
accounts” are separately presented, and other receivables are included in “Other current assets.” Under
IFRS, they are included in “Trade and other receivables.”
Under Japanese GAAP, “Merchandise and finished goods,” “Work in process,” and “Raw materials andsupplies” are separately presented. Under IFRS, they are collectively presented as “Inventories.”
Under Japanese GAAP, investments in affiliates are included in “Investments in securities.” Under IFRS,
they are included in “Investments accounted for using equity method.”
Under Japanese GAAP, “Investments in securities” are separately presented. Under IFRS, they arepresented as “Other financial assets.” Also under Japanese GAAP, lease deposits, etc. are included in“Other investments.” Under IFRS, they are included in “Other financial assets.”
Under Japanese GAAP, “Deferred tax assets” are separately presented as a current item. Under IFRS, they
are presented as a non-current item.

Under Japanese GAAP, “Electronically recorded obligations-operating” are separately presented and otherreceivables are included in “Other current liabilities.” Under IFRS, they are presented as “Trade and otherpayables.”
Under Japanese GAAP, “Bonds” and “Borrowings” are separately presented. Under IFRS, they arepresented as “Bonds and borrowings.”
Under Japanese GAAP, certain sales discounts are included in “Non-operating expenses.” Under IFRS,
they are deducted from “Revenue.”
Items presented as “Non-operating income,” “Non-operating expenses” and “Extraordinary losses” underJapanese GAAP that are related to finance are included in “Finance income” or “Finance costs,” and theother items are presented as “Other income,” “Other expenses” or “Share of profit of investments
accounted for using equity method” under IFRS.

66

3. Differences in recognition and measurement
A．Property, plant and equipment
Under Japanese GAAP, property, plant and equipment are depreciated using mainly the declining-balancemethod. Under IFRS, they are depreciated using the straight-line method.
For certain land, the fair value based on the real estate appraisal at the date of transition to IFRSs was used as
the deemed cost. As a result, property, plant and equipment decreased by \701 million.
At the date of transition to IFRSs, the previous carrying amount of property, plant and equipment for which
deemed costs were used was \1,549 million, and the fair value was \848 million.
B．Goodwill
Under Japanese GAAP, goodwill is amortized on a straight-line basis over ten years. Under IFRS, goodwill is notamortized after the date of transition to IFRSs.
C．Research and development costs
Under Japanese GAAP, all research and development costs are expensed as incurred. Under IFRS, thosesatisfying the capitalization criteria are recognized as intangible assets.
D．Financial instruments
Under Japanese GAAP, securities and golf memberships without quoted prices are generally recorded at cost,and impairment loss is recognized as needed. Under IFRS, they are measured at fair value.
Also, under Japanese GAAP, sale of equity instruments measured at FVTOCI is recognized in profit or loss.
Under IFRS, previously recognized other comprehensive income is directly reclassified to retained earnings.
E．Employee benefits
Under Japanese GAAP, it is not required to account for unused paid vacation and special vacation or incentives
granted on the condition of certain service years. Under IFRS, they are recognized as liabilities.
Under Japanese GAAP, actuarial differences and past service cost are expensed on a straight-line basis overcertain period within the average remaining service years of employees at the time they are incurred. Under IFRS,
remeasurements of defined benefit plans including actuarial differences are recognized as incurred in othercomprehensive income and immediately reclassified to retained earnings, and past service cost is immediately
recognized as part of retirement benefit expenses.
Defined benefit obligations are remeasured in accordance with IFRS, and differences arising due to the allocation
method, etc., of defined benefit obligations are adjusted through retained earnings.
F．Levies
Under IFRS, when to recognize a liability to pay a levy imposed by a government is identified, and a liability isrecognized based on the activity that triggers the payment of the levy.
G．Revenue from sale of goods
Under Japanese GAAP, net sales are mostly recognized at the time of shipment. Under IFRS, the performanceobligation is considered to be satisfied when a promised product is delivered to a customer and revenue isrecognized at that point.
H．Deferred tax assets and liabilities
IFRS-related adjustments to items on the consolidated statement of financial position give rise to temporary
differences. Under Japanese GAAP, tax consequences associated with the elimination of unrealized gain or loss
are calculated using the seller’s effective tax rate. Under IFRS, the buyer’s effective tax rate is used.
The recoverability of all deferred tax assets is reviewed in accordance with IFRS.

67

I．Other components of equity
The Group applies the exemption for exchange differences on translation of foreign operations under IFRS 1 anddeems cumulative translation differences for all foreign operations at the date of transition to IFRSs to be zero,with any cumulative translation differences reclassified to retained earnings.
J．Retained earnings
The impact on retained earnings of adjustments described above is as follows:

Millions of yen
March 31, 2018\
3,196

Property, plant and equipment （Note A）

April 1, 2017
3,202

Goodwill amortization （Note B）

10－

Capitalization of development costs （Note C）

321

204

Financial instruments （Note D）

(13)

(44)

Employee benefits （Note E）(864)(1,583)

Levies （Note F）

(273)

(286)

Revenue from sale of goods （Note G）

(179)

(45)

Deferred tax assets and liabilities （Note H）
Exchange differences on translation of foreign operations （Note I）
Other
Total
(6)

\

\

(900)

(566)

(1,673)(1,716)

(21)

(27)

(396)

\

(861)

Disclosure of major reconciliation items in the consolidated statement cash flows for the year ended March 31,2018 (from April 1, 2017 to March 31, 2018)
Major impacts on the consolidated statement of cash flows of the transition from Japanese GAAP to IFRS are as
follows.
Under Japanese GAAP, payments related to development costs are classified into cash flows from operating
activities, but under IFRS capitalized development costs are classified into cash flows from investing activities.
As a result, cash flows from operating activities increased by \206 million and cash flows from investing activities
decreased by the same amount.

68