FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Nine Months Ended December 31, 2020
Tokyo, Japan, February 4, 2021—Kurita Water Industries Ltd. (TSE Securities Code 6370) announced
net sales of 198,007 million yen and profit attributable to owners of parent of 14,925 million yen, or
132.88 yen per share, for the nine months ended December 31, 2020 (April 1, 2020 - December 31,2020).
Results of Operations
Total consolidated orders for the Kurita Group in the nine months ended December 31, 2020 fell 4.4%
from the level of the year-ago period, to 187,425 million yen, and net sales increased 0.5%, to 198,007
million yen. Business profit* was increased 8.8%, to 22,179 million yen, operating profit was 24,213
million yen, down 3.4% versus the year-ago period, profit before tax was 22,254 million yen, declined
9.0%, and profit attributable to owners of parent amounted to 14,925 million yen, down 12.0%.
During the nine months, while the Group had a customer who had terminated ultrapure water supply
agreements and posted a liquidation gain on contract termination settlements of 2,076 million yen inother income, the gain on the sale of fixed assets posted in other income decreased by 4,808 million
yen compared to the same period of the previous fiscal year, and as a result, operating profit, profit
before tax and profit attributable to owners of parent fell from the previous fiscal year.
The operating results of Pentagon Technologies Group, Inc. (Water Treatment Facilities business)in the United States, which had been an equity method affiliate, has been consolidated since the firstquarter of the fiscal year under review due to the acquisition of its additional shares by the Group to
make it a consolidated subsidiary.
Looking at the market conditions surrounding the Group, the production activities of the
manufacturing industry declined significantly in Japan, reflecting a fall in demand in Japan andoverseas due to the spread of novel coronavirus worldwide. However, there were signs of a recovery
as economic activities resumed in stages worldwide. More and more companies postponed capital
expenditures following weaker corporate earnings and increasing uncertainty over the future of theeconomy. Overseas, while the economies of Europe, the United States and Asia except China werestill facing harsh conditions, there were signs of improvement. In China, economic activity was
normalizing, and the economy was recovering steadily.
In this environment, the Group consistently provided products and services essential for thecontinuation of customers’ business activities and accelerated the development of total solutions byfocusing on proposal activities that would help solve customers’ issues such as the reduction of theenvironmental impact, including energy saving and waste reduction, and an improvement inproductivity based on deep insight into social and customers’ issues.
* Business profit is the Group’s own indicator that measures constant business performance. It is net
sales less cost of sales and selling, general and administrative expenses. Although business profit is
not defined by IFRS, the Group voluntarily discloses it, believing that it is beneficial for users of its
financial statements.
Segment Information
The Group consists of two reportable segments in its segment information: Water Treatment
Chemicals and Water Treatment Facilities.
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 77,475 million yen, down 10.2%
year on year, while net sales fell 10.7%, to 77,515 million yen.
Despite the fall in sales, business profit stood at 9,658 million yen, up 3.9% year on year, andoperating profit came to 9,279 million yen, up 2.5% year on year, as a result of improving the cost of
sales ratio and reducing expenses.
1Both orders and net sales declined in Japan due to a fall in capacity utilization at plants of customers,
except for some customers such as the electronics industry, affected by stagnant economic activities
due to the spread of novel coronavirus. Overseas, both orders and net sales decreased partly due to theeffect of a reduction in sales at overseas subsidiaries because of a stronger yen, in addition to the impactof the spreading novel coronavirus.
Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 109,949 million yen, up 0.1%
versus the same period of the previous fiscal year. Net sales increased 9.3%, to 120,491 million yen.
Business profit rose to 12,523 million yen, up 12.5% year on year, reflecting the commencement ofconsolidation of Pentagon Technologies Group, Inc. and a reduction in expenses. Operating profit
decreased to 14,924 million yen, a fall of 6.9% year on year, reflecting a decrease of gain on the saleof fixed assets posted in other income by 4,782 million yen compared to the same period of the previous
fiscal year, despite a liquidation gain on contract termination settlements of 2,076 million yen posted
in other income that resulted from the termination of contract with a certain customer in the ultrapure
water supply business.
In Japan, while orders for water treatment facilities for the electronics industry increased, net sales
declined significantly due to the completion of large projects. While orders for maintenance services
for the industry decreased because of the postponement of maintenance work following the spread of
the novel coronavirus, and also in reaction to orders for large projects posted in the same period of theprevious fiscal year, net sales increased due to progress in the construction of projects for which orders
were posted in the previous fiscal year.
For water treatment facilities for general industries, although orders declined significantly inreaction to the posting of orders for large projects in the same period of the previous fiscal year, net
sales increased due to progress in the construction of large projects. Both orders for and net sales frommaintenance services for general industries fell, reflecting customers’ moves to postpone theimplementation of maintenance of their facilities due to the spread of the novel coronavirus. Orders
for water treatment facilities for the electric power industry fell, and net sales remained at the similarlevel as the same period of the previous fiscal year. Orders and net sales of soil remediation decreased
because orders for and net sales from large projects had run their courses.
Overseas, both orders and net sales increased mainly due to the new consolidation of operating
results (for nine months) of Pentagon Technologies Group, Inc. Except for the effect of the newconsolidation, while orders declined because orders for large projects for the electronics industry inEast Asia had reached a conclusion, net sales fell only slightly chiefly due to progress in theconstruction of large projects in South Korea and Taiwan.
Total net sales in the ultrapure water supply business in Japan and overseas increased due to acontract that began in the previous fiscal year.
Financial Condition
Condition of assets, liabilities and equity
1) Total assets: 405,687 million yen, an increase of 17,938 million yen from the end of the previous
fiscal year)
Current assets totaled 169,703 million yen at the end of the third quarter (December 31, 2020), an
increase of 6,856 million yen from the end of the previous fiscal year (March 31, 2020). This was
mainly attributable to an increase in cash and cash equivalents of 11,193 million yen, partly being
offset by a decrease in trade and other receivables of 4,124 million yen due to the smooth collection of
accounts receivable - trade.
Non-current assets totaled 235,984 million yen at the end of the third quarter, an increase of 11,082
million yen from the end of the previous fiscal year. Property, plant and equipment increased 2,919
million yen chiefly due to progress in the construction of a new research and development base in
Akishima-shi, Tokyo, which the Company plans to open in April 2022. Goodwill increased 8,570
million yen while investments accounted for using equity method decreased 5,999 million yen due to2the conversion of Pentagon Technologies Group, Inc. (Water Treatment Facilities business), which
had been an equity method affiliate, to a consolidated subsidiary in the first quarter of this fiscal year.
Other financial assets rose 6,072 million yen while deferred tax assets decreased 2,091 million yen
owing to an increase in unrealized gains mainly caused by a rise in the market value of shares held.
2) Liabilities: 157,502 million yen, an increase of 13,862 million yen from the end of the previous
fiscal year.
Current liabilities totaled 66,441 million yen at the end of the period, a decrease of 27,967 million yen
from the end of the previous fiscal year. This was mainly due to a decrease in borrowings of 34,955
million yen resulting from the repayment of the commitment line contracts, offsetting an increase intrade and other payables of 6,647 million yen.
Non-current liabilities totaled 91,061 million yen at the end of the period, an increase of 41,829
million yen from the end of the previous fiscal year. Bonds and borrowings increased 29,935 million
yen chiefly due to the issuance of unsecured bonds (30,000 million yen) in the third quarter of thisfiscal year. An increase of 11,131 million yen in other financial liabilities is chiefly attributable to theinitial recognition of the present value of the expected value of shares to be transferred in the future
based on the forward contract concluded between Kurita America Holdings Inc., a wholly owned
subsidiary of the Company and non-controlling shareholders of Pentagon Technologies Group, Inc.
(Water Treatment Facilities business).
3) Equity: 248,185 million yen, an increase of 4,077 million yen from the end of the previous fiscal
yearThis principally reflected a rise of 8,827 million yen in retained earnings chiefly due to profit for theperiod and an increase of 4,487 million yen in other components of equity in association with a rise in
the market value of shares held, while the capital surplus decreased 10,549 million yen mainly as aresult of initial recognition related to the aforementioned forward contract for shares in Pentagon
Technologies Group, Inc.
Cash Flows
Consolidated net cash and cash equivalents at the end of the third quarter (December 31, 2020) totaled
61,408 million yen, an increase of 11,193 million yen from the end of the previous fiscal year (March
31, 2020).
The various cash flows and related factors are outlined below.
1) Cash Flows from Operating Activities
Net cash provided by operating activities totaled 32,686 million yen, an increase of 11,958 million yen
from the same period of the previous fiscal year. Inflows from profit before tax of 22,254 million yen
and depreciation and amortization of 14,883 million yen were partly offset by income taxes paid of
3,896 million yen.
2) Cash Flows from Investing Activities
Net cash used in investing activities totaled 4,825 million yen, a decrease of 31,963 million yen fromthe same period of the previous fiscal year. Cash was used mainly for the acquisition of subsidiaries
of 4,605 million yen (after deducting cash and cash equivalents included in acquired assets) andpurchases of property, plant and equipment of 6,307 million yen, despite inflows, particularly proceedsfrom sales of property, plant and equipment of 5,934 million yen.
3) Cash Flows from Financing Activities
Net cash used in financing activities totaled 17,349 million yen, an increase of 42,197 million yen fromthe same period of the previous fiscal year. Cash was used mainly for a net decrease in short-termborrowings of 35,001 million yen, dividends paid of 8,062 million yen and repayments of leaseliabilities of 3,682 million yen, despite inflows, particularly proceeds from issuance of bonds of 29,882
3

million yen.
The Group’s basic policy is to constantly secure the liquidity necessary for business operations andestablish a stable funds-raising system. Short-term working capital is basically supplied by the Group’s
own funds. Capital investment and other investments in growth fields depend chiefly on the Group’s
own funds, but the Group considers financing through bond markets and bank loans as needed. As ofthe end of the period under review, the Group has concluded commitment line contracts with one
financial institution (no borrowing executed and unexecuted borrowings within the commitment line
was 20,000 million yen).
4) Forecasts for the Fiscal Year Ending March 31, 2021
It remains uncertain what the total number of COVID-19 cases will be and when it will subside;
therefore, a full-fledged recovery will take time. However, as economic activities are being resumed
in stages worldwide, we assume that economies will recover moderately. Therefore, the Group’s
current outlook for the fiscal year ending March 31, 2021 is consistent with the earnings forecast
disclosed in “Earnings Report for the Six Months Ended September 30, 2020,” which was announced
on November 5, 2020.
The business forecasts are made by the Company based on information available at the time of
publication of this report and may differ from actual results due to changes in a range of factors.

4Condensed quarterly consolidated financial statements(1) Condensed quarterly consolidated statement of financial position(Million yen)
As of March 31, 2020

As of December 31, 2020

Cash and cash equivalents

50,21561,408Trade and other receivables

96,97492,850

Other financial assets

2,562

2,708

Inventories

9,247

10,203

Other current assets

3,847

2,532

Total current assets

162,847

169,703

Property, plant and equipment

106,358

109,277

Right-of-use assets

17,784

19,774

Goodwill

47,03355,603

Intangible assets

13,381

12,939AssetsCurrent assets

Non-current assets

Investments accounted for using equity method

7,469

1,470

Other financial assets

28,46534,537

Deferred tax assets

4,295

2,204

Other non-current assets

113

177

Total non-current assets

224,902

235,984

387,749

405,687

Total assets

5

(Million yen)
As of March 31, 2020

As of December 31, 2020

Trade and other payables

35,68042,327

Borrowings

35,371

416

Lease liabilities

4,234

4,320

219

‒

Income taxes payable

1,998

4,844

Provisions

1,557

1,405

Other current liabilities

15,345

13,125

Total current liabilities

94,40866,441

Bonds and borrowings

1,305

31,240

Lease liabilities

13,701

15,470

Other financial liabilities

2,562

13,693Retirement benefit liability

16,913

17,639Liabilities and equity
Current liabilities

Other financial liabilities

Non-current liabilities

Provisions

499

502

Deferred tax liabilities

1,346

1,503

Other non-current liabilities

12,903

11,010Total non-current liabilities

49,232

91,061

143,640

157,50213,45013,450Total liabilities
EquityShare capital
Capital surplus

8,212(2,337)

Treasury shares(10,893)(10,785)

Other components of equity

216

4,703

Retained earnings

231,456

240,283

Equity attributable to owners of parent

242,442

245,315

1,666

2,870

Total equity

244,108

248,185

Total liabilities and equity

387,749

405,687

Non-controlling interests6(2) Condensed quarterly consolidated statement of profit or loss
(Million yen)
Nine months ended
December 31, 2019
Net sales
Cost of sales
Gross profit

Nine months ended
December 31, 2020

197,072

198,007

127,539

128,066

69,532

69,940

Selling, general and administrative expenses

49,14347,760

Other income

5,628

3,449

Other expenses

960

1,415

Operating profit

25,057

24,213Finance income

526

490

Finance costs

1,182

1,401

62

(1,047)

24,463

22,254

Share of profit (loss) of investments accounted for using
equity method
Profit before tax
Income tax expense
Profit for the period

7,414

6,616

17,04915,638

16,957

14,925

Profit attributable to
Owners of parent
Non-controlling interests
Profit for the period

92

713

17,04915,638151.01132.88‒‒

Earnings per share
Basic earnings per share (yen)Diluted earnings per share (yen)7(3) Condensed quarterly consolidated statement of comprehensive income(Million yen)
Nine months ended
December 31, 2019
Profit for the period

Nine months ended
December 31, 2020

17,04915,638

1,524

5,933

(11)

(34)

Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss

1,512

5,898

Exchange differences on translation of foreign operations(2,042)(84)

Cash flow hedges

77

(393)

Share of other comprehensive income of investments
accounted for using equity method

(73)

(35)

Total of items that may be reclassified to profit or loss

(2,038)(514)

Other comprehensive income
Items that will not be reclassified to profit or loss
Net change in the fair value of financial assets measured
at fair value through other comprehensive income
Remeasurements of defined benefit plans

Other comprehensive income, net of tax

(525)

5,384

Comprehensive income for the period

16,52321,022

16,42020,343103679

16,52321,022Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income8(4) Condensed quarterly consolidated statement of changes in equity
Nine months ended December 31, 2019 (April 1, 2019 - December 31, 2019)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2019

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Cash flow
hedgesFinancial assets
measured at fairvalue throughothercomprehensive
income9,199

13,45010,265(10,932)(4,671)

310

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(2,127)77

1,524

Total comprehensive income for the period

‒

‒

‒

(2,127)77

1,524

Purchase of treasury shares

‒

‒

(2)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

92

42

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

(4)

‒

‒

‒

‒

Increase (decrease) by business combination

‒

‒

‒

‒

‒

‒

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders

‒

‒

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

(248)

Other

‒

(0)

‒

‒

‒

‒

‒

88

39

‒

‒

(248)

13,45010,353(10,893)(6,798)388

10,474

Total transactions with owners
Balance as of December 31, 2019

(Million yen)
Equity attributable to owners of parent
Other components of equity
Remeasurementsof defined
benefit plans

Retainedearnings

Total

Non-controllinginterests

Total

Total

Balance as of April 1, 2019

‒

4,838

219,660

237,282

1,902

239,184

Profit for the period‒‒

16,957

16,95792

17,049

(10)

(536)

‒

(536)

10

(525)

(10)

(536)

16,957

16,420103

16,523Purchase of treasury shares

‒

‒

‒

(2)

‒

(2)

Dividends‒‒(6,521)(6,521)(10)(6,532)

Share-based payment transactions

‒

‒

‒

134

7

142

Changes in ownership interests in subsidiaries

‒

‒

‒

(4)

(56)

(60)

Increase (decrease) by business combination

‒

‒

‒

‒

‒

‒

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders

‒

‒

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

10

(237)

237

‒

‒

‒

Other comprehensive income
Total comprehensive income for the period

‒

‒

0

(0)

‒

(0)

Total transactions with owners

Other

10

(237)

(6,284)(6,393)(59)(6,453)

Balance as of December 31, 2019

‒

4,064

230,332

247,308

1,945

249,2549

Nine months ended December 31, 2020 (April 1, 2020 - December 31, 2020)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2020

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Cash flow
hedgesFinancial assets
measured at fairvalue throughothercomprehensive
income
8,747

13,4508,212(10,893)(9,033)

503

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(87)

(393)

5,933

Total comprehensive income for the period

‒

‒

‒

(87)

(393)

5,933

Purchase of treasury shares

‒

‒

(2)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

29

111

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

‒

‒

‒

‒

‒

Increase (decrease) by business combination

‒

‒

‒

‒

‒

‒

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders‒(10,578)

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

(964)

Other

‒

(1)

‒

‒

‒

‒

‒

(10,549)

108

‒

‒

(964)

13,450(2,337)(10,785)(9,121)

109

13,715

Total transactions with owners
Balance as of December 31, 2020

(Million yen)
Equity attributable to owners of parent
Other components of equity
Remeasurementsof defined
benefit plans

Retainedearnings

Total

Non-controllinginterests

Total

Total

Balance as of April 1, 2020‒

216

231,456

242,442

1,666

244,108

Profit for the period‒‒

14,925

14,925713

15,638

(33)

5,418

‒

5,418

(34)

5,384

(33)

5,418

14,925

20,343679

21,022

Purchase of treasury shares

‒

‒

‒

(2)

‒

(2)

Dividends‒‒(7,076)(7,076)(993)(8,069)

Share-based payment transactions

‒

‒

‒

140

0

141

Changes in ownership interests in subsidiaries

‒

‒

‒

‒

‒

‒

Increase (decrease) by business combination

‒

‒

‒

‒

1,517

1,517

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders

‒

‒

‒

(10,578)‒(10,578)

Transfer from other components of equity toretained earnings

33

(931)

931

‒

‒

‒

Other comprehensive income
Total comprehensive income for the period

‒

‒

47

46

‒

46

Total transactions with owners

Other

33

(931)

(6,097)(17,470)524(16,945)

Balance as of December 31, 2020

‒

4,703

240,283

245,3152,870

248,18510

(5) Condensed quarterly consolidated statement of cash flows(Million yen)
Nine months ended
December 31, 2019

Nine months ended
December 31, 2020

Cash flows from operating activities
Profit before tax

24,463

22,254

Depreciation and amortization

13,167

14,883

(62)

1,047

Loss (gain) on sale of fixed assets(4,813)(4)

Decrease (increase) in inventories(1,823)(452)

Decrease (increase) in trade and other receivables(2,094)

3,890

Increase (decrease) in trade and other payables

2,103(2,338)

Other

(132)

(3,056)

Share of loss (profit) of investments accounted for using
equity method

30,80736,224

Interest received

Subtotal

32

64

Dividends received

396

349

Interest paid

(70)

(55)

Income taxes paid

(10,438)(3,896)

Net cash provided by (used in) operating activities

20,72832,686

Payments into time deposits(1,609)(1,407)

Proceeds from withdrawal of time deposits

1,040

1,123

Purchase of property, plant and equipment(23,176)(6,307)

Cash flows from investing activities

Proceeds from sale of property, plant and equipment

4,845

5,934

Purchase of intangible assets(1,455)(1,290)

Proceeds from sale of investment securities

41

2,533

Payments for acquisition of a subsidiary (after deductionof cash and cash equivalents included in acquired assets)(8,501)(4,605)Purchase of investments in associates(5,865)‒Other(2,107)(805)

Net cash provided by (used in) investing activities(36,788)(4,825)35,004(35,001)‒

29,882

Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from issuance of bonds
Repayments of long-term borrowings

(323)

(516)

Repayments of lease liabilities(3,254)(3,682)

Dividends paid

(6,525)(8,062)

(60)

‒

8

30

24,848(17,349)

Purchase of shares of subsidiaries not resulting in change
in scope of consolidation
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

(336)

682

Net increase (decrease) in cash and cash equivalents

8,451

11,193

Cash and cash equivalents at beginning of period

35,54750,215

Cash and cash equivalents at end of period

43,99961,40811

Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Nine months ended December 31, 2020 (April 1, 2020 - December 31, 2020)
Not applicable(Segment Information)(1) Overview of reportable segments
The Company’s reportable segments are components of the Group about which separate financial information is available.
These segments are subject to periodic review to enable the Company’s board of directors to decide how to allocate
resources and assess performance.
The Group plans comprehensive strategies for the products that it handles in Japan and overseas, and develops a business.
The Group’s operations are therefore classified into two reportable segments, the Water Treatment Chemicals segment andthe Water Treatment Facilities segment.
The Water Treatment Chemicals segment manufactures and sells water treatment chemicals and equipment and provides
maintenance services. The Water Treatment Facilities segment manufacturers and sells water treatment system andfacilities, supplies ultrapure water, chemical cleaning, tool cleaning, soil and groundwater remediation services, andprovides maintenance services that encompass operation, maintenance, and management of water treatment facilities.
(2) Information of reportable segments
Nine months ended December 31, 2019 (April 1, 2019 - December 31, 2019)(Million yen)
Reportable Segments
Water Treatment Water Treatment
Chemicals
Facilities

Total

Adjustments(note 1)

Amounts reported
on the condensed
quarterly
consolidated
statement of profit
or loss (note 2)

Sales
Sales to outside customers
Inter-segment sales and transfers

86,850565

110,2211,390

197,072
1,955‒(1,955)

197,072‒

Total

87,415

111,612

199,027(1,955)

197,072

9,049

16,02925,078(21)

25,057

Segment income
Finance income

526

Finance costs

1,182

Share of profit (loss) of investments accounted for using equity method

62

Profit before tax

24,463(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating profit level.

Nine months ended December 31, 2020 (April 1, 2020 - December 31, 2020)(Million yen)
Reportable Segments
Water Treatment Water Treatment
Chemicals
Facilities

Total

Adjustments(note 1)

Amounts reported
on the condensed
quarterly
consolidated
statement of profit
or loss (note 2)

Sales
Sales to outside customers
Inter-segment sales and transfers

77,515
339

120,491
1,586

198,007
1,926‒(1,926)

198,007‒

Total

77,855122,078

199,933(1,926)

198,007

9,279

14,92424,204

9

24,213

Segment income
Finance income

490

Finance costs

1,401

Share of profit (loss) of investments accounted for using equity method(1,047)

Profit before tax

22,254(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating profit level.

12

(Business Combination and Acquisition of Non-Controlling Interests)(Acquisition of Pentagon Technologies Group, Inc.)On April 1, 2020, Kurita America Holdings Inc., a wholly owned subsidiary of the Company, acquired an additional 26%
stake in Pentagon Technologies Group, Inc. (“Pentagon Technologies”), a tool cleaning company operating in the UnitedStates in which Kurita America Holdings Inc. held a 25% stake as of the end of the previous fiscal year. As a result, theproportion of equity interest Kurita America Holdings Inc. has in Pentagon Technologies increased to a total of 51%, andPentagon Technologies became a consolidated subsidiary of the Company.
The Company will make Pentagon Technologies its subsidiary to have a base for overseas service in the electronics
industry, which the Company positions as one of its key business fields, and to further strengthen its competitiveness inthe market. The Company also aims to accelerate its growth and offer new value by acquiring the cutting-edge toolcleaning technologies and expertise of Pentagon Technologies and creating synergies with the tool cleaning business that
the Kurita Group has been developing in Japan.
(1) Acquisition cost and a breakdown
Consideration for acquisition
Fair value on the date of acquisition of the shares in the acquiredcompany held immediately before the date of acquisition
Fair value of the additional shares in the acquired company
acquired on the date of acquisition
Total

5,379 million yen
5,594 million yen
10,974 million yen(2) Gain on remeasurement relating to business combinations
As a result of remeasuring equity interest in the acquired company held immediately before the date of acquisition at fairvalue, the Company has recognized gain on remeasurement relating to business combinations of 463 million yen due tothe business combination. The gain is recorded in Other income in the condensed quarterly consolidated statement of
profit or loss.
(3) Assets acquired and liabilities assumed
The fair value of identifiable assets acquired and liabilities assumed of Pentagon Technologies Group, Inc. on the date ofacquisition are shown below.
(Million yen)
Fair value of consideration

10,974

Fair value of assets acquired and liabilities assumed
Cash and cash equivalents

989

Trade receivables

1,707

Other current assets

433

Non-current assets

2,152

Trade payables and other payables(1,351)

Non-current liabilities(992)

Fair value of assets acquired and liabilities assumed (net)2,938

Non-controlling interests

1,517

Goodwill

9,554

The amount of goodwill that occurred was 9,554 million yen, which reflects expected excess earning power. We do not
expect any amounts related to recognized goodwill to be deductible expenses from tax perspective.
Net sales and profit for the period of Pentagon Technologies included in the condensed quarterly consolidated statementof profit or loss for the nine months under review are 8,406 million yen and 1,071 million yen respectively.
The amount of goodwill is provisionally determined because the allocation of the acquisition cost is still ongoing as theidentification of identifiable assets and liabilities as of the time of business combination and the estimation of their market
values have yet to be completed given that the period from the date of business combination to the closing date is short.
Non-controlling interests are measured using the proportion of non-controlling interests to the fair value of identifiable13

net assets of the acquired company.
(4) Transactions that are accounted for separately from business combination
Expenses related to the acquisition for the business combination were 171 million yen. The amount is posted in Other
expenses in the condensed quarterly consolidated statement of profit or loss.
(5) Forward contract concluded with non-controlling shareholders
With regard to the remaining 49% of shares in Pentagon Technologies, a forward contact has been concluded between
Kurita America Holdings Inc. and non-controlling shareholders of Pentagon Technologies, and it has been agreed that
Pentagon Technologies will become a wholly owned subsidiary of Kurita America Holdings Inc. with June 30, 2022 as
the target date.
The present value of expected value of shares to be transferred based on the forward contract which is 10,578 million
yen, is initially recognized as Other financial liabilities, and the same amount is deducted from Capital surplus. After the
initial recognition, the present value is measured at amortized cost based on the effective interest method, in principle,
and the amount of subsequent changes is recognized in profit or loss.
(Bonds)Nine months ended December 31, 2019 (April 1, 2019 - December 31, 2019)
No bonds were issued or redeemed.
Nine months ended December 31, 2020 (April 1, 2020 - December 31, 2020)
The bonds issued are described below.
Total amount issued
Name
Issue
Issue date(million yen)
The Company

First series of
unsecured bonds

December 10, 2020

30,000Interest rate(%)

Redemption period

0.150 December 10, 2025

No bonds were redeemed.

Disclaimer- This document is an English translation of the Earnings Report for the Nine Months Ended December 31, 2020 asreference information primarily for overseas investors. If there are any discrepancies between the Japanese version andthe English version, the Japanese version shall take precedence in all cases.
- This document is not subject to audit.
- The forward-looking statements such as performance forecasts contained in this document are based on information
currently available to the Company and certain assumptions deemed to be reasonable, and are not intended to be acommitment by the Company. Actual performance, etc. may differ due to a variety of factors. See “Forecasts for the
Fiscal Year Ending March 31, 2021” on page 4 of this document for the conditions assumed in the performance forecasts
and the precautions concerning the use of performance forecasts.

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