FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Nine Months Ended December 31, 2019
Tokyo, Japan, February 10, 2020—Kurita Water Industries Ltd. (TSE Securities Code 6370)
announced net sales of 197,072 million yen and profit attributable to owners of parent of 16,965 million
yen, or 151.09 yen per share, for the nine months ended December 31, 2019 (April 1, 2019 – December
31, 2019).
The Kurita Group (Kurita Water Industries Ltd. and its consolidated subsidiaries and equity method
affiliates) is applying the International Financial Reporting Standards (IFRS) from the first quarter ofthe fiscal year ending March 31, 2020. The figures for the same period of the previous fiscal year andfor the previous consolidated fiscal year are also compliant with IFRS. For information about thedifference between financial data under IFRS and those under Japanese GAAP, please refer to Notes
to Consolidated Financial Statements (First-time Adoption) on page 15 of the attached document.
Results of Operations
Total consolidated orders for the Kurita Group in the nine months ended December 31, 2019 fell 2.2%
from the level of the year-ago period, to 196,121 million yen, and net sales increased 2.8%, to 197,072
million yen. Operating profit was 24,948 million yen, up 87.8% versus the year-ago period, profit
before tax was 24,415 million yen, up 77.2%, and profit attributable to owners of parent amounted to
16,965 million yen, up 118.5%. Operating profit and profit at other levels rose significantly, chiefly
reflecting a gain on the sale of fixed assets of 4,818 million yen in the nine months under review andthe absence of a loss on transfer of business of 2,838 million yen and an impairment loss on goodwillof 1,181 million yen posted in the same period of the previous fiscal year.
Looking at the market environment surrounding the Kurita Group, in Japan, production in the
manufacturing sector remained weak as exports continued to struggle. Capital expenditure restraint
was evident in certain sectors. Overseas, while the U.S. economy remained firm, economic growthslowed in China and emerging countries in Asia as well as in Europe, reflecting the growing effects ofprotracted trade dispute between the United States and China.
In this environment, the Group strengthened its sales system in each market and each region toincrease customer intimacy. Meanwhile, the Group promoted proposals of total solutions that willcontribute to solving issues of customers, such as environmental mitigation, energy saving andproductivity improvement.
From the first quarter of this fiscal year, the operating results at U.S.-based U.S. Water Services,
Inc., as well as U.S.-based Avista Technologies, Inc. and U.K.-based Avista Technologies (UK) Ltd.
have been newly consolidated.
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 86,305 million yen, up 10.9%
versus the same period of the fiscal year ended March 31, 2019, while net sales rose 12.2%, to 86,850
million yen.
Operating profit stood at 8,941 million yen, up 166.9% year on year, chiefly reflecting a decrease inother expenses due to the absence of a loss on transfer of business of 2,838 million yen related to thealuminum compound business in Europe and an impairment loss on goodwill of 1,181 million yen
based on the Group’s decision to transfer a certain water treatment chemical production function in
China to a plant of a newly formed company (both are temporary losses) posted in the same period of
the previous fiscal year.
Orders and net sales in Japan, primarily orders and net sales of process treatment chemicals for ironand steel production, increased, reflecting the Group’s efforts to gain new customers by proposing total
1

solutions that contribute to energy saving at customers’ plants.
Orders and net sales rose also overseas despite the effect of the transfer of the aluminum compoundbusiness in Europe in the previous fiscal year, primarily due to the new consolidation of operating
results (for nine months) in the water treatment chemicals business at U.S. Water Services, Inc. andoperating results (for seven months) at U.S.-based Avista Technologies, Inc. and U.K.-based Avista
Technologies (UK) Ltd.
Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 109,816 million yen, down 10.6%
versus the same period of the previous fiscal year. Net sales declined 3.5%, to 110,221 million yen.
Operating profit came to 16,026 million yen, up 60.0% year on year, reflecting a gain on the sale of
fixed assets of 4,782 million yen posted in other income resulting primarily from the sale of certain
facility in the ultrapure water supply business and the absence of temporary additional costs due to an
insufficient production system in the same period of the previous fiscal year.
In Japan, orders and net sales of water treatment facilities for the electronics industry declined fromthe same period of the previous fiscal year, during which orders were received and sales were recorded
for large projects. However, both orders and net sales rose in maintenance services for the electronics
industry due to orders for expansion and renovation projects for the purpose of increasing production
capacity at customers’ plants.
Orders for water treatment facilities for general industries climbed, but net sales declined. Bothorders and net sales in maintenance services for general industries fell in reaction to strong orders andnet sales in the same period of the previous fiscal year. Orders for facilities for electric power plants
declined in reaction to orders for large projects in the same period of the previous fiscal year, but net
sales increased due to progress in construction work for a backlog of orders. Orders and net sales ofsoil remediation decreased, reflecting a completion of large projects.
Overseas, orders increased, chiefly attributable to the new consolidation of operating results (fornine months) in the water treatment facilities business of U.S. Water Services, Inc. However, net sales
decreased in reaction to sales from large projects posted in the same period of the previous fiscal year.
Net sales in the ultrapure water supply business in Japan and overseas fell due to the effect of changes
in contracts with a certain customer.
Financial Condition
Condition of assets, liabilities and equity
1) Total assets: 398,025 million yen, an increase of 39,359 million yen from the end of the previous
fiscal year)
Current assets totaled 162,874 million yen at the end of the third quarter (December 31, 2019), an
increase of 11,749 million yen from the end of the previous fiscal year (March 31, 2019). This was
mainly attributable to an increase in cash and cash equivalents of 8,451 million yen, chiefly reflecting
the partial execution of the commitment line contracts, offsetting funds used for business acquisitions
and capital expenditures.
Non-current assets totaled 235,150 million yen at the end of the third quarter, an increase of 27,610
million yen from the end of the previous fiscal year. Property, plant and equipment increased 7,033
million yen, chiefly due to capital expenditure in the ultrapure water supply business (Water Treatment
Facilities business). Right-of-use assets rose 4,441 million yen, chiefly reflecting the acquisition of theright of use of land. Goodwill climbed 7,746 million yen due to acquisitions in North America andEurope (Water Treatment Chemicals business). Investments accounted for using equity method
increased 6,598 million yen owing to an increase in equity method affiliates (Water Treatment
Chemicals business and Water Treatment Facilities business).

22) Liabilities: 148,848 million yen, an increase of 29,297 million yen from the end of the previous
fiscal year.
Current liabilities totaled 99,820 million yen at the end of the period, an increase of 26,698 million yen
from the end of the previous fiscal year. This was mainly due to an increase in borrowings of 35,004
million yen resulting from the partial execution of the commitment line contracts, offsetting a decreaseof 6,061 million yen in trade and other payables.
Non-current liabilities totaled 49,028 million yen at the end of the period, an increase of 2,600
million yen from the end of the previous fiscal year. This was primarily attributable to an increase inlease liabilities of 4,051 million yen due to the acquisition of the right of use of land.
3) Equity: 249,176 million yen, an increase of 10,062 million yen from the end of the previous fiscal
year.
This mainly reflected an increase in retained earnings of 10,681 million yen chiefly due to the postingof a profit for the period, which outweighed the posting of year-end dividends and interim dividends
and were partly offset by a decrease in other components of equity of 790 million yen mainly due to a
decline in exchange differences on translation of foreign operations associated with the stronger yen
against foreign currencies.
Cash Flows
Consolidated net cash and cash equivalents at the end of the third quarter (December 31, 2019) totaled
43,999 million yen, an increase of 8,451 million yen from the end of the previous fiscal year (March
31, 2019).
The various cash flows and related factors are outlined below.
1) Cash Flows from Operating Activities
Net cash provided by operating activities during the nine months ended December 31, 2019 totaled
20,728 million yen, a decrease of 14,090 million yen from the same period of the previous fiscal year.
Inflows from profit before tax of 24,415 million yen and depreciation and amortization of 13,354
million yen were partly offset by income taxes paid of 10,438 million yen.
2) Cash Flows from Investing Activities
Net cash used in investing activities totaled 36,788 million yen, an increase of 23,869 million yen fromthe same period of the previous fiscal year. Cash was used for purchases of property, plant andequipment of 23,176 million yen, payments for acquisition of business of 8,501 million yen, andpurchases of shares and investments in capital of subsidiaries and affiliates of 5,865 million yen.
3) Cash Flows from Financing Activities
Net cash provided by financing activities totaled 24,848 million yen, an increase of 37,128 million yen
from the same period of the previous fiscal year. Inflows chiefly from a net increase in short-termborrowings of 35,004 million yen were partly offset by dividends paid of 6,525 million yen.
The Group’s basic policy is to constantly secure liquidity necessary for business operations andresource of funds. 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 theGroup considers financing through bank loans as needed. As of the end of the period under review, theGroup has concluded commitment line contracts with four financial institutions (realized borrowings:
35,000 million yen; unrealized borrowings: 35,600 million yen).

3

Forecasts for the Fiscal Year Ending March 31, 2020
The Group’s current outlook for the fiscal year ending March 31, 2020 is consistent with the earnings
forecast disclosed in “Earnings Report for the Six Months Ended September 30, 2019,” which wasannounced on November 11, 2019.
(Note on forward-looking statements)
The forward-looking statements such as business forecasts included in this document are based on the information available
to the Company at the time of the announcement and on certain assumptions considered reasonable, and the Company
makes no representations as to their achievability. Actual results may differ materially from the forecast depending on a
range of factors.

4Condensed quarterly consolidated financial statements(1) Condensed quarterly consolidated statement of financial position(Million yen)
Date of transition to
IFRS(April 1, 2018)

As of March 31, 2019

As of December 31,
2019

Cash and cash equivalents

60,53135,54743,999Trade and other receivables

89,354100,497

101,704

Other financial assets

2,809

1,709

2,911

Inventories

8,078

9,348

11,351Other current assets

2,619

4,022

2,907

Total current assets

163,393

151,125

162,874

81,336103,275

110,308

AssetsCurrent assets

Non-current assets
Property, plant and equipment
Right-of-use assets

11,331

12,226

16,667

Goodwill

19,96637,95445,700Intangible assets

10,197

17,515

17,052

Investments accounted for using equity method

1,098

956

7,554

Other financial assets

40,10328,592

31,236

Deferred tax assets

4,581

6,803

6,367

Other non-current assets

277

216

262

Total non-current assets

168,893

207,540

235,150

332,287358,666

398,025

Total assets

5

(Million yen)
Date of transition to
IFRS(April 1, 2018)

As of March 31, 2019

As of December 31,
2019

Trade and other payables

40,13949,57643,515

Borrowings

2,963

385

35,389Lease liabilities

2,958

3,818

3,796

Liabilities and equity
Current liabilities

Other financial liabilities
Income taxes payable
Provisions

12

1

220

4,737

5,887

2,839

572

1,026

928

Other current liabilities

10,72912,427

13,130Total current liabilities

62,11373,122

99,820Borrowings

2,331

1,717

1,373

Lease liabilities

9,397

9,628

13,679Non-current liabilities

Other financial liabilities

1,122

1,771

1,779

Retirement benefit liability

16,374

16,58017,317

Provisions

331

491

499

Deferred tax liabilities

547

854

851

Other non-current liabilities

761

15,385

13,527

Total non-current liabilities

30,86846,42849,02892,981

119,551

148,848

Share capital

13,45013,45013,450Capital surplus

10,95910,265

10,353

Treasury shares(10,943)(10,932)(10,893)

Other components of equity

16,785

4,838

4,048

Retained earnings

207,005

219,590

230,271

Total equity attributable to owners of parent

237,257

237,212247,231

Total liabilities
EquityNon-controlling interests
Total equity
Total liabilities and equity

2,048

1,902

1,945

239,305

239,114249,176

332,287358,666

398,0256

(2) Condensed quarterly consolidated statement of profit or loss and comprehensive income
Condensed quarterly consolidated statement of profit or loss
(Million yen)
Nine months ended
December 31, 2018

Nine months ended
December 31, 2019

Net sales

191,659

197,072

Cost of sales

131,037

127,462

Gross profit

60,621

69,61042,25949,329Other income

720

5,628

Other expenses

5,794

960

Operating profit

Selling, general and administrative expenses

13,287

24,948Finance income

715

526

Finance costs

288

1,182

Share of profit of investments accounted for using equity
method61

123

Profit before tax

13,776

24,415

Income tax expense

6,037

7,358

Profit for the period

7,738

17,057

7,763

16,965

(25)

92

7,738

17,05769.15

151.09‒‒Profit attributable to
Owners of parent
Non-controlling interests
Profit for the period
Earnings per share
Basic earnings per share (yen)Diluted earnings per share (yen)7

Condensed quarterly consolidated statement of comprehensive income(Million yen)
Nine months ended
December 31, 2018
Profit for the period

Nine months ended
December 31, 2019

7,738

17,057(1,860)

1,524

(26)

(11)

(1,887)

1,512

Other comprehensive income
Items that will not be reclassified to profit or loss
Net change in the fair value of financial assets measured
through other comprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations(4,074)(2,058)Cash flow hedges

210

77

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

(20)

(73)

Total of items that may be reclassified to profit or loss

(3,884)(2,054)

Other comprehensive income, net of tax(5,771)(541)

Comprehensive income for the period

1,966

16,5152,036

16,412Comprehensive income attributable to
Owners of parent
Non-controlling interests

(69)

103

Comprehensive income

1,966

16,5158

(3) Condensed quarterly consolidated statement of changes in equity
Nine months ended December 31, 2018 (April 1, 2018 - December 31, 2018)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2018

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Financial assets
measured at fairvalue throughothercomprehensive
incomeCash flow
hedges13,45010,959(10,943)‒

2

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(4,053)210(1,860)Total comprehensive income for the period

16,783‒‒‒(4,053)210(1,860)Purchase of treasury shares

‒

‒

(2)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

‒

14

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

(294)

‒

11

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

(6,392)

Other

‒

(558)

‒

‒

‒

‒

‒

(852)

11

11

‒

(6,392)

13,45010,106(10,932)(4,041)

213

8,529

Total transactions with owners
Balance as of December 31, 2018

(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, 2018‒16,785207,005

237,257

2,048

Profit for the period

‒

‒

7,763

7,763

(25)

7,738

(24)

(5,727)‒(5,727)(44)(5,771)
1,966

Other comprehensive income
Total comprehensive income for the period

239,305(24)(5,727)

7,763

2,036

(69)

Purchase of treasury shares

‒

‒

‒

(2)

‒

(2)

Dividends‒‒(5,968)(5,968)(5)(5,973)

Share-based payment transactions

‒

‒

‒

14

‒

14

Changes in ownership interests in subsidiaries

‒

11

‒

(282)

1

(280)

Transfer from other components of equity toretained earnings

24(6,368)

6,368

‒

‒

‒

‒

‒

66

(491)

‒

(491)

Total transactions with owners

Other

24

(6,357)467(6,730)(4)(6,734)

Balance as of December 31, 2018

‒

4,701

215,236

232,563

1,974

234,5379

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

‒

‒

‒

(2,143)77

1,524

Total comprehensive income for the period

‒

‒

‒

(2,143)77

1,524

Purchase of treasury shares

‒

‒

(2)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

92

42

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

(4)

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

‒

－

‒

‒

‒

(248)

Other

‒

(0)

‒

‒

‒

－

‒

88

39

‒

‒

(248)

13,45010,353(10,893)(6,814)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

219,590237,212

1,902

239,114

Profit for the period‒‒

16,965

16,96592

17,057

(10)

(552)

‒

(552)

10

(541)

(10)

(552)

16,965

16,412103

16,515Purchase 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)

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

‒

4,048

230,271247,231

1,945

249,17610

(4) Condensed quarterly consolidated statement of cash flows(Million yen)
Nine months ended
December 31, 2018

Nine months ended
December 31, 2019

Cash flows from operating activities
Profit before tax

13,776

24,415

Depreciation and amortization

14,042

13,354

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

(61)

(123)

Loss (gain) on sale of fixed assets

516(4,813)

Decrease (increase) in inventories(1,422)(1,925)Decrease (increase) in trade and other receivables(2,412)(2,078)

Increase (decrease) in trade and other payables

200

2,103

18,044(124)

42,68330,807

48

32

Dividends received

555

396

Interest paid

(143)

(70)

Income taxes paid

(8,326)(10,438)

Net cash provided by (used in) operating activities

34,81820,728(19,216)(1,609)Other
SubtotalInterest received

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits

16,8981,040

Purchase of property, plant and equipment(19,319)(23,176)

515

4,845

Proceeds from sale of property, plant and equipment
Purchase of intangible assets(855)(1,455)

Proceeds from sale of investments

12,528

41

Payments for acquisition of business (after deduction of
cash and cash equivalents included in acquired assets)(2,338)(8,501)‒(5,865)Purchase of shares and investments in capital ofsubsidiaries and affiliates
Other(1,131)(2,107)

Net cash provided by (used in) investing activities(12,919)(36,788)(2,331)35,004

(541)

(323)

Repayments of lease liabilities(2,336)(3,254)

Dividends paid

(5,980)(6,525)Purchase of shares of subsidiaries not resulting in change
in scope of consolidation(1,094)(60)

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

Other

4

8

Net cash provided by (used in) financing activities(12,280)

24,848

Effect of exchange rate changes on cash and cash equivalents

(748)

(336)

Net increase (decrease) in cash and cash equivalents

8,870

8,451

Cash and cash equivalents at beginning of period

60,53135,547

Cash and cash equivalents at end of period

69,402

43,99911

Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Nine months ended December 31, 2019 (April 1, 2019 – December 31, 2019)
Not applicable(Segment Information)
Information of reportable segments
Nine months ended December 31, 2018 (April 1, 2018 – December 31, 2018)(Million yen)
Reportable Segments

Sales
Sales to outside customers
Inter-segment sales and transfers
Total
Segment income

Adjustments(Note 1)

Amounts
reported on thecondensed
quarterly
consolidated
statement of
profit or loss
(Note 2)Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

77,434
608

114,225
1,141

191,659
1,750‒(1,750)191,659‒

78,043

115,367

193,410(1,750)191,659

3,350

10,01913,369(81)

13,287

Finance income

715

Finance costs

288

Share of profit of investments accounted for using equity method

61

Profit before tax

13,776(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating income level.

Nine months ended December 31, 2019 (April 1, 2019 – December 31, 2019)(Million yen)
Reportable Segments

Sales
Sales to outside customers
Inter-segment sales and transfers
Total
Segment income

Adjustments(Note 1)

Amounts
reported on thecondensed
quarterly
consolidated
statement of
profit or loss
(Note 2)Water
Treatment
Chemicals

Water
Treatment
Facilities

Total

86,850565

110,2211,390

197,072
1,955‒(1,955)

197,072‒

87,415

111,612

199,027(1,955)

197,072

8,941

16,026

24,967(19)

24,948Finance income

526

Finance costs

1,182

Share of profit of investments accounted for using equity method
Profit before tax

123
24,415(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating income level.

12(Significant subsequent events)
At a meeting of the Board of Directors held on January 30, 2020, the Company resolved to establish a new research and developmentbase (new global technology center) in Akishima-shi, Tokyo in April 2022. The existing research and development base, the functionsof Kurita Global Technology Center (Nogi-machi, Shimotsuga-gun, Tochigi), will be transferred to the new global technology center on
March 31, 2022. The land of the Kurita Global Technology Center will be sold.
(1) Purpose of the establishment of the new global technology center
The Company will establish the new base in response to the aging of the existing Kurita Global Technology Center. The project is aimed
at building a development environment with state-of-the-art equipment and analytical instruments, so as to accelerate the creation ofleading-edge technologies and total solutions related to “water and the environment.” The Company will position the new global
technology center as the core of its global research and development system, aiming to make a research and development facility that isopen to society, where new innovations are created through interactions with customers and other stakeholders.
(2) Overview of the new global technology center
New Research and Development Facility (tentative name), New Multi-Functional Facility
Name(tentative name)Location

Parts of 3993-1 and 3993-8 Aza Kohake, Haijima-cho, Akishima-shi, Tokyo

Site area

30,381.37 m2

Total floor area

38,075 m2

Construction of the buildings(planned)

New Research and Development Facility: A five-story building and other structures
New Multi-Functional Facility: A three-story building

Construction cost

Approximately 30 billion yen (The Company’s own funds and debt financing)

Commencement of construction

May 2020

Completion of construction

March 2022 (planned)

Opening (commencement ofoperation)

April 2022 (planned)

13(Additional information)
Acquisition of shares by a consolidated subsidiary
Kurita America Holdings Inc., a wholly owned subsidiary of Kurita Water Industries Ltd., signed an agreement to acquire an additional
26% of the shares of Pentagon Technologies Group, Inc. (“Pentagon Technologies”), in which Kurita America Holdings currently holds
a 25% stake, on December 26, 2019. As a result, Kurita America Holdings will hold a 51% stake in Pentagon Technologies, which will
become a consolidated subsidiary of Kurita Water Industries.
(1) Name, address, representative, capital and business of the company whose shares the Company will acquire
(i)
(ii)

Name:
Address:

Pentagon Technologies Group, Inc.
21031 Alexander Ct. Hayward, California, U.S.A.

(iii) Representative: Irwin H. Pfister, Chairman(iv) Capital:
2,000 US dollars(v)

Business:

Tool cleaning business, development of measuring instruments for surface particles on semiconductor
manufacturing equipment, services related to clean rooms(2) Purpose of the acquisition of shares
The Company will make Pentagon Technologies its subsidiary to have a base for overseas service in the electronics industry, which
the Company positions as a key business field, and to further increase its competitiveness in the market. The Company also aims toaccelerate its business growth and offer new value by acquiring the cutting-edge tool cleaning technologies and expertise of Pentagon
Technologies and creating synergies with the tool cleaning business that the Kurita Group has been developing in Japan.
(3) Date of acquisition of shares
April 1, 2020 (plan)(4) Number of shares to be acquired, acquisition value and shareholding ratio after acquisition(i)Number of shares to be acquired
757,875 shares(ii) Acquisition value
52,000,000 US dollars(iii) Shareholding ratio after acquisition
51.0%(5) Funding
The Company’s own funds(6) Becoming a wholly owned subsidiary
Under the share acquisition agreement, it has been agreed that Pentagon Technologies becomes a wholly owned subsidiary of Kurita
America Holdings around June 30, 2022.

14

(First-time Adoption)
The Group is disclosing quarterly consolidated financial statements complying with IFRS from the first quarter of this fiscal year. The
most recent consolidated financial statements prepared under Japanese GAAP are those for the fiscal year ended March 31, 2019. The
date of transition to IFRS is April 1, 2018.
(1) Exemptions set out in IFRS 1
In principle, an entity that applies IFRS for the first time (hereinafter “First-time Adopter”) is requested to retrospectively apply IFRS.
However, IFRS 1 - First-time Adoption of International Financial Reporting Standards (hereinafter “IFRS 1”) sets out standards to which
exemptions have to be applied mandatorily and standards to which exemptions are applied optionally. The effects of the applied
exemptions are adjusted by retained earnings or other components of equity on the date of transition to IFRS. When the Group moved
from Japanese GAAP to IFRS, it applied the following exemptions:
I. Business Combinations
The First-time Adopter is allowed to choose not to retrospectively apply IFRS 3 Business Combinations (hereinafter “IFRS 3”) tobusiness combinations before the date of transition to IFRS. The Group has applied the exemption and has chosen not to retrospectively
apply IFRS 3 to business combinations before the date of transition. As a result, goodwill that resulted from business combinations
before the date of transition is based on the book value on the date of transition under Japanese GAAP.
The Group conducted an impairment test related to goodwill on the date of transition regardless of the existence of signs of impairment.
II. Deemed Cost
IFRS 1 allows entities to use the fair value of property, plant and equipment, investment property and intangible assets on the date oftransition to IFRS as a deemed cost on the date of transition. The Group uses the fair value of certain property, plant and equipment on
the date of transition as deemed cost on the date of transition under IFRS.
III. Cumulative Translation Differences for Foreign Operations
IFRS 1 allows entities to choose to deem cumulative translation differences for foreign operations as of the date of transition to IFRS
to be zero. The Group has chosen to deem cumulative translation differences for foreign operations to be zero as of the date of transition.
IV. Share-based Payment Transactions
The Group has chosen not to apply IFRS 2 to stock compensation that was vested before the date of transition.
V. Leases
IFRS 1 allows the First-time Adopter to determine whether contracts existing as of the date of transition to IFRS include leases, basedon facts and circumstances existing on the date of transition. It also allows the First-time Adopter to measure lease liabilities at thepresent value of the remaining lease payments, which is calculated by discounting the remaining lease payments using the lessee’s
incremental borrowing rate on the date of transition, and to make the amount of right-of-use assets the same as the amount of leaseliabilities. The First-time Adopter is allowed to recognize as expenses leases whose term expires within 12 months of the date oftransition and leases whose underlying assets are of low value.
The Group applies the exemption to recognize and measure leases.
(2) Mandatory exceptions in retrospective application set out in IFRS 1IFRS 1 prohibits retrospective application of IFRS in relation to estimates, derecognition of financial assets and financial liabilities,
hedge accounting, non-controlling interests, classification and measurement of financial assets, etc. The Group has been applying these
items from the date of transition onwards.
(3) Reconciliation from Japanese GAAP to IFRSThe tables below are reconciliation sheets required in IFRS 1.
The reclassification column is for the figures of items that do not affect retained earnings or comprehensive income. The difference due
to changes in recognition, measurement and accounting period column is for the figures of items that affect retained earnings andcomprehensive income.

15

I. Reconciliation of Assets on Date of Transition to IFRS (April 1, 2018)(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Assets

Account under IFRS

AssetsCurrent assets

Current assets

Cash and deposits

61,086(1,652)

1,097

60,531(1)

Cash and cash equivalents

Notes and accounts
receivable – trade

86,865

(464)

2,954

89,354(1), (2)Trade and other receivables

–

2,769

40

2,809

(1)

Finished products

3,968(3,968)––Work in process

3,621(3,621)––

Raw materials and supplies

2,800(2,800)–––

10,390(2,312)

8,078(1), (2)

Other

2,531

(1,119)

1,206

2,619

(1)

Allowance for doubtful
accounts

(464)

464

–

–

160,409–

2,984

163,393

Total current assets

Intangible fixed assets

Inventories
Other current assets

Total current assets

Non-current assets
Property, plant andequipment

Other financial assets

Non-current assets
86,028(86,028)–––

81,603(266)

81,336(1), (3)Property, plant and equipment(1), (4)Right-of-use assets
Goodwill

–

4,455

6,875

11,331

31,003(31,003)–––

20,362(396)

19,966(1), (5)–10,610(412)

10,197(1)

Intangible assets

35,683(35,683)

–

–

–

1,147

(48)

1,098

(1)

Investments accounted forusing equity method

Investments and other assets
Investment securities–

38,6301,473

40,103(1), (6)Other financial assets

Deferred tax assets

4,860(1,119)

840

4,581

(1), (7)Deferred tax assets

Other

5,238

(5,238)

–

–

–

967

(690)

277

Allowance for doubtful
accounts

(176)

176

–

–

Total non-current assets

162,637(1,119)7,376

168,893

323,046(1,119)10,360332,287

Total assets(1)

Other non-current assets

Total non-current assets
Total assets

16

(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Liabilities

Account under IFRS

Liabilities and equity

Current liabilities

Current liabilities

Notes and accounts payable– trade28,875(28,875)––

Accounts payable – other

10,995(10,995)–––

38,575

1,564

40,139(1)

Trade and other payables

–

1,337

1,625

2,963

(1)

Borrowings

–

635

2,322

2,958

(1), (4)

–

–

12

12

(1)

Other financial liabilities(1)

Income taxes payable

Provisions

Income taxes payable

4,806

–

(68)

4,737

Provision for bonuses

2,420(2,420)

–

–

695

(695)

–

–

–

549

23

572

(1)

Other

8,355

1,888

486

10,729(1), (8),(9)

Total current liabilities

56,149–5,964

62,113

Other provision

Other current liabilities
Total current liabilities

Non-current liabilities
Lease obligations

Lease liabilities

Non-current liabilities
4,038(4,038)

–

–

–

2,388

(56)

2,331

(1)

–

4,038

5,359

9,397

(1), (4)

–

1,644

(522)

1,122

(1)

Other financial liabilities

16,610–(235)

16,374(1), (10)Retirement benefit liability

191

(190)

330

331

(1)

1,119

(492)

(79)

547

(1), (7)

Other

4,084

(4,469)

1,146

761

(1)

Total non-current liabilities

26,044(1,119)5,943

30,868

Total non-current liabilities

82,193(1,119)11,907

92,981

Total liabilities

Net defined benefit liability
Provision
Deferred tax liabilities
related to revaluation

Total liabilities
Net assets

Borrowings
Lease liabilities

Provisions
Deferred tax liabilities
Other non-current liabilities

EquityShareholders’ equity
Common stock

13,450––13,450Share capital

Capital surplus

10,959–Treasury stock(10,943)––

10,959

Capital surplus–(10,943)

Accumulated othercomprehensive income

16,187–597

Retained earnings

209,149–

238,803–

Non-controlling interests

Treasury shares

16,785(1),(12),(13)

Other components of equity(2,144)207,005(1), (12),(13)

Retained earnings(1,546)237,257

Total equity attributable toowners of parent

2,049

–

(1)

2,048

Total net assets

240,853–(1,547)239,305(1), (13)Total equity

Non-controlling interests

Total liabilities and net assets

323,046(1,119)10,360332,287

Total liabilities and equity

17II. Reconciliation of Assets at End of Third Quarter of the Previous Fiscal Year (December 31, 2018)(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

AssetsAssetsCurrent assets

Current assets

Cash and deposits

72,005(2,603)–69,402

Notes and accounts
receivable – trade89,56992834

90,496

–

4,590

(3)

4,587

Finished products

4,133(4,133)––Work in process

2,202(2,202)––

Raw materials and supplies

2,765(2,765)

–

–

–

9,101

50

9,151

Other

5,183

(2,582)26

2,627

Allowance for doubtful
accounts

(503)

503

–

–

175,356–

908

176,264

Total current assets

Cash and cash equivalents(2)

Intangible fixed assets

Trade and other receivables
Other financial assets(2)

Inventories
Other current assets

Total current assets

Non-current assets
Property, plant andequipment

Account under IFRS

Non-current assets
98,388(98,388)–––

92,346(3)

92,343(3)

Property, plant and equipment(4)

Right-of-use assets(5)

Goodwill

–

6,042

4,612

10,65428,706(28,706)－－–

19,2401,502

20,743

–

9,465

(121)

9,344

20,026(20,026)

–

–

–

954

35

990

Intangible assets

Investments and other assets
Investment securities

Investments accounted forusing equity method–

23,456

2,667

26,123(6)

Other financial assets

Deferred tax assets

7,529(1,119)

538

6,949

(7)

Deferred tax assets

Other

6,614

(6,614)

－

－

–

2,080

(1,924)

155

Allowance for doubtful
accounts

(149)

149

–

–

Total non-current assets

161,115(1,119)7,309

167,304

336,471(1,119)8,217

343,569

Total assets

Other non-current assets

Total non-current assets
Total assets

18

(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Liabilities

Liabilities and equity

Current liabilities

Current liabilities

Notes and accounts payable– trade24,746(24,746)––

Accounts payable – other

14,089(14,089)–––

43,548(192)

43,355

–

966

–

966

–

968

2,021

2,989

Income taxes payable

3,378

–

–

3,378

Provision for bonuses

1,304(1,304)––

Other provision

1,246(1,246)

–

–

–

934

–

934

Other

13,701(5,030)2,272

10,943

Total current liabilities

58,466–

4,101

62,568Trade and other payables
Borrowings(4)

Lease liabilities
Income taxes payable

Provisions(8), (9)Other current liabilities
Total current liabilities

Non-current liabilities
Lease obligations

Account under IFRS

Non-current liabilities
5,269(5,269)

–

–

–

1,771

–

1,771

–

5,269

3,528

8,797

(4)

Lease liabilities

–

1,659

40

1,699

(11)

Other financial liabilities

16,907–(230)

16,677(10)Retirement benefit liability

175

(175)

491

491

Deferred tax liabilities
related to revaluation

1,119

–

(18)

1,100

Other

19,757(4,375)543

15,925

Total non-current liabilities

43,229(1,119)4,354

46,463

Total non-current liabilities

101,695(1,119)8,455

109,032

Total liabilities

Net defined benefit liability
Provision

Total liabilities

Borrowings

Provisions(7)

Deferred tax liabilities
Other non-current liabilities

Net assets

EquityShareholders’ equity
Common stock

13,450––13,450Capital surplus

10,665–(558)

10,106

Treasury stock(10,932)––(10,932)

Accumulated othercomprehensive income
Retained earnings

Non-controlling interests

Share capital(11)

Capital surplus
Treasury shares

3,828

–

873

4,701

(12),
(13)

215,916–(680)

215,236

(12),
(13)

232,928–(365)

232,563

Other components of equity
Retained earnings
Total equity attributable toowners of parent

1,847

–

126

1,974

Total net assets

234,775–(238)

234,537(13)

Total equity

Non-controlling interests

Total liabilities and net assets

336,471(1,119)8,217

343,569

Total liabilities and equity

19III. Reconciliation of Assets at End of Previous Fiscal Year (March 31, 2019)(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

AssetsAssetsCurrent assets

Current assets

Cash and deposits

35,351

196–

35,547

Notes and accounts
receivable – trade99,247113

1,137

100,497

–

1,599

109

1,709

Finished products

5,106(5,106)––Work in process

1,235(1,235)––

Raw materials and supplies

3,133(3,133)

–

–

–

9,474

(126)

9,348

Other

6,136

(2,570)

456

4,022

Allowance for doubtful
accounts

(659)

659

–

–

149,550–

1,575

151,125

Total current assets

Cash and cash equivalents(2)

Intangible fixed assets

Trade and other receivables
Other financial assets(2)

Inventories
Other current assets

Total current assets

Non-current assets
Property, plant andequipment

Account under IFRS

Non-current assets
109,669(109,669)–––

103,278(3)

103,275(3)

Property, plant and equipment(4)

Right-of-use assets(5)

Goodwill

–

6,391

5,835

12,226

53,958(53,958)–––

36,301

1,652

37,954–

17,656(140)

17,51522,203(22,203)

–

–

–

1,100

(144)

956

Intangible assets

Investments and other assets
Investment securities

Investments accounted forusing equity method–

26,8501,742

28,592(6)

Other financial assets

Deferred tax assets

7,929(1,119)

(6)

6,803

(7)

Deferred tax assets

Other

6,724

(6,724)

–

–

–

829

(613)

216

Allowance for doubtful
accounts

(149)

149

–

–

Total non-current assets

200,335(1,119)8,324

207,540

349,885(1,119)9,899

358,666

Total assets

Other non-current assets

Total non-current assets
Total assets

20

(Million yen)Account under Japanese GAAP

Japanese
GAAP

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

IFRS

Notes

Liabilities

Liabilities and equity

Current liabilities

Current liabilities

Notes and accounts payable– trade26,362(26,362)––

Accounts payable – other

19,737(19,737)–––

50,134(558)

49,576

–

385

–

385

–

1,176

2,641

3,818

–

–

1

1

Income taxes payable

5,890

–

(3)

5,887

Provision for bonuses

2,520(2,520)––

Other provision

1,158(1,158)

–

–

–

1,026

–

1,026

Other

12,403(2,942)

2,966

12,427

Total current liabilities

68,072–

5,050

73,122

5,250(5,250)

–

–

–

1,717

–

1,717

–

5,250

4,377

9,628

Trade and other payables
Borrowings(4)

Net defined benefit liability
Provision

Lease liabilities
Other financial liabilities
Income taxes payable

Provisions(8), (9)Other current liabilities
Total current liabilities

Non-current liabilities
Lease obligations

Account under IFRS

Non-current liabilities
Borrowings(4)

Lease liabilities

–

1,663

108

1,771

(11)

Other financial liabilities

16,648–(68)

16,580(10)Retirement benefit liability

359

(358)

490

491

Deferred tax liabilities
related to revaluation

1,119

(361)

95

854

Other

18,961(3,781)

205

15,38542,339(1,119)5,208

46,428

Total non-current liabilities

110,412(1,119)10,258

119,551

Total liabilities

Total non-current liabilities
Total liabilities

Provisions(7)

Deferred tax liabilities
Other non-current liabilities

Net assets

EquityShareholders’ equity
Common stock

13,450––Capital surplus

10,665–(400)

10,265

Treasury stock(10,932)––(10,932)

4,187

–

651

4,838

(12),
(13)

Other components of equity

220,234–(643)

219,590

(12),
(13)

Retained earnings

237,604–(392)

237,212

1,868

–

33

1,902

Accumulated othercomprehensive income
Retained earnings

Non-controlling interests

13,450Share capital(11)

Capital surplus
Treasury shares

Total equity attributable toowners of parent(13)

Non-controlling interests

Total net assets

239,473–(358)

239,114

Total equity

Total liabilities and net assets

349,885(1,119)9,899

358,666

Total liabilities and equity

21

IV. Reconciliation of Income in Nine Months of Previous Fiscal Year (from April 1, 2018 to December 31, 2018)(Million yen)Account under Japanese GAAP

Japanese
GAAPNet sales

193,723

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period–(2,063)

IFRS

Notes

191,659(2)

Account under IFRSNet sales

Cost of sales

133,050–(2,012)131,037(2), (4),Cost of sales(8)

Gross profit

60,672–(50)

60,621Gross profit

Selling, general andadministrative expenses

43,419–(1,159)42,259(4), (5), Selling, general and(8)administrative expenses

–

828

(108)

720

Other income

–

5,706

88

5,794

Other expenses

Operating income

17,252(4,878)913

13,287

Operating profit

Non-operating income

1,611(1,611)––Non-operating expenses

1,282(1,031)(251)–

Extraordinary income

8,381

–

(8,381)–

Extraordinary losses

4,920(4,920)

–

–

–

669

45

715

–

245

42

288

–

112

(51)

61

Income before income taxes

21,043–(7,266)

13,776

Income taxes

8,129

–

(2,091)

6,037(6), (7) Income tax expense

Net income

12,913–(5,174)

7,738

Profit for the period

Profit attributable to owners ofparent12,938–(5,174)

7,763

Owners of parent

(24)

–

(0)

(25)

Loss attributable to noncontrolling interests(6)
Finance income(4)

Finance costs
Share of profit of investments
accounted for using equity
methodProfit before tax

Non-controlling interests

Other comprehensive income

Other comprehensive income

Unrealized gains (losses) on
available-for-sale securities(8,246)

8,246

–

–

Deferred gains (losses) onhedges

214

(214)

–

–

Foreign currency translation
adjustments(2,001)

2,001

–

–

Remeasurements of defined
benefit plans, net of tax

(24)

24

–

–

Share of othercomprehensive income ofassociates accounted forusing equity method

(152)

152

–

–
Items that will not bereclassified to profit or loss–

(8,246)

6,385(1,860)(6)

Net change in the fairvalue of financial assets
measured through othercomprehensive income

–

(24)

(2)

(26)

(10)

Remeasurements ofdefined benefit plans
Items that may bereclassified to profit or loss–

(2,001)(2,073)(4,074)

Exchange differences ontranslation of foreign
operations

22

(Million yen)Account under Japanese GAAP

Japanese
GAAP–

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

214

(3)

IFRS

Notes

Account under IFRS

210

Cash flow hedges

–

(152)

131

(20)

Share of othercomprehensive income ofinvestments accounted forusing equity method

Total other comprehensive
income(10,210)–

4,439(5,771)Other comprehensive income,net of tax

Comprehensive income

2,702

–

(736)

1,966

Comprehensive income for theperiod23

V. Reconciliation of Income in Previous Fiscal Year (from April 1, 2018 to March 31, 2019)(Million yen)Account under Japanese GAAP

Japanese
GAAPNet sales

259,409

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period–(2,078)

IFRS

Notes

257,331(2)

Account under IFRSNet sales

Cost of sales

176,663–(1,993)

174,670(2), (4),Cost of sales(8)

Gross profit

82,746–(84)

82,661Gross profit

Selling, general andadministrative expenses

58,420–(1,425)56,994(4), (5), Selling, general and(8)administrative expenses

–

1,091

(67)

1,024

Other income

–

6,908

(77)

6,831

Other expenses

Operating income

24,326(5,816)1,350

19,860Operating profit

Non-operating income

2,006(2,006)––

Non-operating expenses

2,413(2,162)(251)–

Extraordinary income

8,676

–

(8,676)–Extraordinary losses

5,063(5,063)

–

–

–

776

5

781

–

316

205

521

–

136

10

146

Income before income taxes

27,532–(7,264)

20,267

Income taxes

10,207–(1,927)

8,279(6), (7) Income tax expense

Net income

17,325–(5,337)

11,987

Profit for the period

Profit attributable to owners ofparent17,323–(5,273)

12,050Owners of parent

1

–

(64)

(63)

Profit attributable to noncontrolling interests(6)
Finance income(4)

Finance costs
Share of profit of investments
accounted for using equity
methodProfit before tax

Non-controlling interests

Other comprehensive income

Other comprehensive income

Unrealized gains (losses) on
available-for-sale securities(7,904)

7,904

–

–

Deferred gains (losses) onhedges

315

(315)

–

–

Foreign currency translation
adjustments(2,208)

2,208

–

–

Remeasurements of defined
benefit plans, net of tax

(3)

3

–

–

Share of othercomprehensive income ofassociates accounted forusing equity method

(46)

46

–

–
Items that will not bereclassified to profit or loss–

(7,904)6,860(1,044)(6)

Net change in the fairvalue of financial assets
measured through othercomprehensive income

–

(3)

(69)

(72)

(10)

Remeasurements ofdefined benefit plans
Items that may bereclassified to profit or loss–

(2,208)(2,384)(4,593)

Exchange differences ontranslation of foreign
operations

24

(Million yen)Account under Japanese GAAP

Japanese
GAAP–

Difference due
to changes inrecognition,
Reclassification
measurement
and accounting
period

315

(6)

IFRS

Notes

Account under IFRS

308

Cash flow hedges

–

(46)

(106)

(153)

Share of othercomprehensive income ofinvestments accounted forusing equity method

Total other comprehensive
income(9,848)–4,293(5,554)

Other comprehensive income,net of tax

Comprehensive income

7,476

–

(1,044)

6,432

Comprehensive income for theperiod25

VI. Notes on Reconciliation(i) Reclassification
Of the items that were included in Non-operating income, Non-operating expenses, Extraordinary income, and Extraordinary losses
under Japanese GAAP, finance-related items are reclassified as Finance income or Finance costs under IFRS, and the other items arereclassified as Other income, Other expenses or Share of profit of investments accounted for using equity method under IFRS.
(ii) Differences due to changes in recognition, measurement and accounting period(1) Reconciliation related to the unification of reporting periods
Under Japanese GAAP, if the reporting date of a subsidiary and that of the Company are different, consolidated financial statements
were prepared based on the financial statements of the subsidiary on the reporting date of the subsidiary. Under IFRS, the reporting
date of a subsidiary is made the same as that of the Company or a provisional financial closing is conducted on the same reporting
date as that of the Company unless that is impossible practically. This has resulted in a difference in each account.
(2) Reconciliation of revenue recognition
Under Japanese GAAP, if reliable estimates are available for the work completed in construction work, the percentage of completion
method is used, and the completed-contract method is used for other construction work. Under IFRS, under a contract where control
over goods or services is transferred to the customer over a certain period of time, revenue is recognized over the period regardlessof the legal form of the contract.
(3) Reconciliation of property, plant and equipment
For certain property, plant and equipment, the Group applies an optional exemption where the fair value on the date of transition to
IFRS is used as a deemed cost.
(4) Reconciliation of leases
Under Japanese GAAP, an operating lease was expensed. Under IFRS, due to the adoption of IFRS 16, right-of-use assets and leaseliabilities are posted.
(5) Reconciliation of goodwill
Under Japanese GAAP, goodwill was amortized over a certain period of time. Under IFRS, goodwill is not amortized. Goodwill
amortized under Japanese GAAP on or after the date of transition to IFRS is reversed.
(6) Reconciliation of other financial assets (non-current)
Under Japanese GAAP, unlisted shares were posted based on acquisition cost and impairment losses were recorded in accordancewith deterioration in the financial position of the issuing company. Under IFRS, unlisted shares are measured at fair value throughother comprehensive income. Loss (gain) on sale and impairment loss of financial instruments recognizable as capital are recognizedas profit or loss under Japanese GAAP. Under IFRS, changes in fair value are recognized as other comprehensive income, and loss
(gain) on sale and impairment loss are not recognized as profit or loss.
(7) Reconciliation of deferred tax assets and deferred tax liabilities
Under Japanese GAAP, the deferred method was employed for tax effects associated with the elimination of unrealized intercompany
profits. Under IFRS, the asset and liability method is employed. The recoverability of deferred tax assets is examined under IFRS.
Temporary differences have occurred due to adjustments associated to the transition from Japanese GAAP to IFRS, and deferred tax
assets and deferred tax liabilities have been adjusted accordingly.
(8) Reconciliation of unused paid leave
Under Japanese GAAP, no accounting process were required for unused paid leave. Under IFRS, the Group has recorded liabilities
related to unused paid leave.
(9) Reconciliation of other current liabilities
Under Japanese GAAP, expenses were recognized throughout a fiscal year when fixed assets tax etc. was paid. Under IFRS, theamount expected to be paid is recognized as liabilities when debts to the government are determined.
(10) Reconciliation of employees’ retirement benefits
Under Japanese GAAP, the Group recorded actuarial differences as expenses in a year or two, on a pro-rata basis, from the fiscal
year when the differences occurred. Under IFRS, actuarial differences are recognized in other comprehensive income when theyoccur and are transferred to retained earnings immediately. Prior service cost is recognized as profit or loss at the time of occurrence.
(11) Liabilities related to put option contracts for non-controlling interests
If the Group is required to buy the non-controlling interests of certain subsidiaries under certain conditions at the request of theshareholders of the non-controlling interests, financial liabilities are recognized and capital surplus is reduced under IFRS.

26

(12) Reconciliation of other components of equity
The Group has chosen an exemption set out in IFRS 1 and transferred all cumulative translation differences related to foreignsubsidiaries to retained earnings on the date of transition to IFRS, April 1, 2018.
(13) Reconciliation of retained earnings(Million yen)
Date of transition
to IFRS(April 1, 2018)

As of December 31,
As of March 31, 20192018

Reconciliation due to the unification ofreporting periods(Refer to (1))

(123)

―

―

Reconciliation of property, plant andequipment(Refer to (3))

(380)

(380)

(200)

Reconciliation of goodwill(Refer to (5))

―

1,251

1,643

Reconciliation of other financial assets(Refer to (6))

(207)

84

(52)

Reconciliation of unused paid leave(Refer to (8))(1,875)(1,875)(1,908)Reconciliation of other current liabilities (Refer to (9))

(161)

(151)

(154)

Reconciliation of employees’ retirement(Refer to (10))
benefits

225

225

104

Reconciliation of other components ofequity

(193)

(193)

(193)

Other

(Refer to (12))

(6)

(217)

(462)

(2,720)(1,256)(1,222)

Tax effect related to the adjustments
above and increase (decrease) in noncontrolling interests

576

576

579

Reconciliation of retained earnings(2,144)

(680)

(643)

Sum of reconciliations

VII. Reconciliation of Cash Flows
There is no significant difference between the consolidated statement of cash flows under the Japanese GAAP and the consolidated
statement of cash flows under IFRS.

27