Business Report 2019Year ended March 31, 2019

The Pursuit of Excellence

Kureha Corporation Business Report 201901

Building on Core Strengths
Kureha Corporation is a manufacturer of highly originative specialty chemicals andplastics that leverages proprietary technologies to develop products in the fields ofadvanced materials, agrochemicals, pharmaceuticals, and packaging materials. Since its
establishment in 1944, Kureha has utilized its strengths in technology and innovation toprovide a wide range of solutions suited to the market needs of each era.
Today, this corporate DNA drives Kureha to always pursue originality and excellencein harmony with the environment, and consistently create products that bring value tocustomers and society.

Corporate Philosophy
To be a company supporting an ever-changing society.
To be a company that changes society for the better.
We formulated our Corporate Identity to reflect our
vision for Kureha.

• We treasure people and the naturalenvironment.

The Pursuit of
Excellence• We constantly evolve through innovation.
• We contribute to society by developing
beneficial products.

Contents
01 • Profile

22 • Corporate Governance02 • At a Glance

26 • Management Team35 • Consolidated Statements of
		 Changes in Equity

03 • Consolidated Financial Highlights

27 • Consolidated Financial Summary

37 • Consolidated Statements of Cash Flows

04 • President’s Message

28 • Management Discussion and Analysis

08 • Kureha Medium-Term Management Plan
12 • Business Updates

32 • Consolidated Statements of		 Financial Position

38 • Notes to Consolidated Financial
		Statements

14 • Review of Operations

34 • Consolidated Statements of Profit or Loss

18 • Research & Development

34 • Consolidated Statements of		 Comprehensive Income

20 • CSR

80 • Major Subsidiaries and Affiliates
81 • Investor Information

R&D Innovation:
The Source of Our CompetitivenessWe pride ourselves on our expertise in polymer engineering and processing as well asorganic synthesis and carbon materials development. These technologies provide thebase for the development of our original innovative materials and products. We areconstantly adding and fusing new ideas to these accumulated technologies, and in thespirit of “if it doesn’t exist, let’s create it,” each day we pursue technology solutions that
only Kureha can provide to meet unmet needs.

Originality and Quality to Answer Global Needs:
The Growth Potential in Global Markets
Kureha’s overseas sales had reached 30% of total revenue in FY2018. Along with exports fromJapan, we have production, processing and sales locations in the United States, Germany, theNetherlands, France, the U.K., China, Vietnam and Australia, enabling an effective response toneeds in overseas markets. With continued growth expected in newly emerging countries
and many other regions, we are taking active and strategic steps to expand sales of highly
competitive products in line with the needs of overseas markets, whether for advanced
materials, chemicals, or plastic products.

Maximizing Earnings & Diversifying Risks:
The Path to Sustainable Growth
Our innovative products and services are broadly based but highly specialized,
supporting a wide range of industries, including electrical and electronic-appliances,automotive, agriculture, medicine and energy. We maximize earnings and diversify risk
through broad-based business development in promising growth fields such as theenvironment, energy, health and lifestyle. We continuously optimize our portfolio toalign with shifting market needs while securing our earnings path.

Kureha Corporation Business Report 201901

At a Glance
FY2018 Revenue by Segment

Advanced Materials¥45,749 million

30.8%

Specialty Chemicals¥27,309 million
FY2018
Revenue¥148,265 million

18.4%

Specialty Plastics¥45,148 million

30.5%

Construction and Other Operations¥12,415 million ¥17,643 million

8.4%(Construction)

02

Kureha Corporation Business Report 2019

11.9%

(Other Operations)Consolidated Financial Highlights
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 (FY2018) and 2018 (FY2017)

Business Areas
Thousands of
U.S. dollars

Millions of yen

Advanced Plastics
Carbon Fibers & Products
Battery Materials

For the year:
Revenue
Operating profit
Profit attributable to ownersof parent
Capital expenditure
Depreciation and amortization
Research and development
expensesYear-end:
Total assets
Total equity attributable toowners of parent
Interest-bearing debt

FY2018FY2017FY2018¥148,265
17,172¥147,329
12,973$1,335,848
154,724

13,933

9,697

125,539

13,174
10,310

9,768
9,898

118,700
92,893

5,270

4,962

47,488¥247,352¥242,281$2,228,599

160,551

150,193

1,446,542

39,018351,550

48,089Yen

Agrochemicals
Pharmaceuticals
Industrial Chemicals

Household Products

Amounts per share:
Basic profit per share
Owners' equity per share¥ 679.55
7,922.58

U.S. dollars$¥ 507.48
7,271.67

6.12
71.38

Percent

Ratios:Profit attributable to ownersof parent to revenue
Return on equity
Return on assets
Owner’s equity ratio

9.4%

6.6%

9.0
7.1
64.9

7.1
5.3
62.0

Notes: 1. For convenience only, U.S. dollar amounts have been translated from Japanese yen at the rate of ¥110.99 to US$1,
the rate of exchange prevailing on the Tokyo Foreign Exchange Market on March 31, 2019.
2. Return on equity = Profit attributable to owners of parent/Shareholders’ equity × 100
3. Return on assets = Profit before tax/Total assets × 100
4. Owner’s equity ratio = Owner’s equity/Total liabilities and equity

Packaging Materials
Synthetic Fiber Products

Revenue

Operating Profit(Millions of yen)

(Millions of yen)

Profit Attributable to
Owners of Parent(Millions of yen) (Left scale)

Basic Profit per Share(Yen) (Right scale)Engineering & Construction

160,000

20,000120,000

15,00015,0001,000

12,000

800

9,000

600

6,000

400

3,000

200

10,00080,000

Environment Management
Transport/Warehousing

5,000

40,000

0

(FY)

2017

2018

0

(FY)

2017

2018

0

(FY)

2017

2018

0

Kureha Corporation Business Report 201903

President’s Message

Yutaka Kobayashi
President & Chief Executive Officer

04

Kureha Corporation Business Report 2019

Dear Shareholders,
FY2018 (ended March 31, 2019) was a year that inspires confidence in Kureha’s future growth. We recorded
operating profit of 17.2 billion yen (32% up from 13.0 billion yen in FY17) due to steady expansion in the Advanced
Materials segment, one of our strategic businesses. Profit attributable to the owners of Kureha rose to 13.9 billion
yen (44% up from 9.7 billion yen in FY17) on the increase in operating profit and greater efficiency in asset
utilization. Return on sales, an indicator of business operating efficiency, was 11.6%, finally exceeding the 10%
considered required by specialty chemicals companies. As a result, together with the commemorative dividend to
mark 75 years since Kureha’s founding, we were able to increase returns to shareholders by 40 yen per share, for anannual dividend of 165 yen per share.
FY2018 was also the final year of the medium-term management plan Kureha’s Challenge 2018. As promised in lastyear’s business report, Kureha made a positive start to establishing a “history of reliable growth” by not only
achieving, but significantly surpassing, the operating profit target of 14.0 billion yen set out in the initial plan.
Our continuous efforts to improve the competitiveness and earnings capacity of existing businesses, indeed oneof the plan’s key strategies, contributed significantly toward this success. Along with the favorable businessenvironment for polyvinylidene fluoride (PVDF) and carbon products in the Advanced Materials segment, weenhanced product differentiation and expanded earnings. Similarly, in the Specialty Plastics segment, we recorded
steady growth for our flagship household product NEW Krewrap plastic wrap, as well as in leisure products such as
fishing lines. We also enhanced operating efficiency throughout the corporate group, and began to see the realeffects of our successful cost reduction program, which over the six years since its introduction has lowered
group-wide costs by 8.8 billion yen.

A New Plan to Solidify Kureha’s Future Path

However, for some medium-term plan strategies we were unable to meet our targets, among them the
expansion of the polyglycolic acid (PGA) business. Sales and earnings rose steadily for frac plugs used in shale
gas and oil extraction—the main application of PGA—but we were unable to broaden sales as expected, andposted an operating loss for the business again in FY2018. Furthermore, in generating new businesses, we do
not at present have any projects at the stage where we can announce commercialization. Going forward, wemust therefore accelerate our efforts to seek out new lines of business by adopting a more global andmarket-led approach.
Also, we still have much to do with strengthening our management foundation. We need to further enhancebusiness efficiency throughout the group, and make use of new digital technologies. We must also bolster ourefforts to make CSR an integrated part of our group’s management, and enforce tighter measures for safety, quality
and environmental protection that are aligned with the Sustainable Development Goals (SDGs).
Considering these circumstances, Kureha decided to extend its management plan by two years, and thus
formulated the “Kureha’s Challenge 2020” plan. This plan sets a target of 18.0 billion yen in operating profit by
FY2020, with expanded earnings in the Advanced Materials segment.

Kureha Corporation Business Report 201905

President’s Message

Although the overall growth rate will be modest compared with FY2018 due to an anticipated decline in theSpecialty Chemicals segment caused by slower agrochemical demand, these next two years will be an important
period to solidify the foundations for Kureha’s future development. I believe that accomplishing the remaining
measures from Kureha’s Challenge 2018, while also adapting to new changes in the business environment, willlead to sustainable growth and an increase in enterprise value.

Strengthening Our Growth Drivers

It is vital that we address the lagging performance in the PGA business, which will be a pillar for earnings going
forward. To comprehensively cover the entire North American shale gas and oil market, we must strengthen our
lineup of frac plugs that degrade at various soil temperatures, and put this business on a solid growth track.
Kureha is also seeking further growth for the polyvinylidene fluoride (PVDF) business in the area of lithium-ion
batteries for automotive applications. We are focusing on developing high-performance, competitive products foruse as electrode binders in lithium-ion batteries, and are expanding our production structure. For this lattermeasure, we have already increased production capacity to 2,000 tonnes annually in January 2019, and areconsidering building a new plant that would begin operating in 2023.
The engineering plastic polyphenylene sulfide (PPS) is another target for future investment. Demand for PPS is
expected to grow steadily as a means to make automobiles lighter, and we are constructing facilities at our Iwaki
Factory in Japan to increase production capacity by 5,000 tonnes. It will become operational in 2021.
These efforts must of course be backed by solid R&D. Consequently, Kureha will increase investment in R&D byaround 30%. We plan to spend 13.0 billion yen over the two-year period of FY2019 - FY2020 to accelerate new
business development, seek new applications for existing businesses to enable entry into new markets, and drive
downstream business development.

Building an Efficient, Responsive Business Organization

At the same time, it is extremely important that we control costs across all aspects of our operations to strengthen
our business foundation. To enhance operational efficiency and productivity, we will therefore seek to achieve afurther 1.5 billion yen in cost reductions over the next two years. Going forward, we will also actively pursue
digitization in manufacturing and R&D processes.
Kureha’s efforts to bolster the management foundation also include measures to strengthen governance. During
FY2018, we established a number of advisory committees, comprising mainly outside directors, to consider such
issues as the appointment or dismissal of the president and other directors, as well as director compensation. We
also revised the director compensation system to be more performance-oriented, and abolished the system of
appointing retiring directors as special advisers or counselors.

06

Kureha Corporation Business Report 2019

The Key to the Future: Our Employees

Kureha seeks to develop differentiated high-value products that contribute to society. In this way, we will
become a company that generates sustainable value and profit growth. This is the goal toward which we
continually strive.
Our employees are the force driving us forward. Thanks to their skill and passion, and their ability to realize
numerous technological innovations and overcome all manner of difficulties, I believe Kureha is moving toward aprosperous future. I would like to thank all of our employees for their hard work, and ask that they pursue theirgoals with passion and fully demonstrate their potential. Our company will spare no investment to support them
toward this goal, and realize sustainable long-term growth for all of our stakeholders.
We thank you for your investment and confidence in us, and look forward to your continued support.

Yutaka Kobayashi
President & Chief Executive Officer
June 2019

Kureha Corporation Business Report 201907

Kureha Medium-Term Management Plan

From Kureha’s Challenge 2018

To Kureha’s Challenge 2020

Review of Kureha’s Challenge 2018
Kureha designated the three-year period of KC2018 (FY2016 - 2018) as a period to lay the foundation for future expansion
and focused its business operations on achieving the plan’s five management goals: 1) Enhance competitiveness andearnings capacity in existing businesses; 2) Expand the PGA business; 3) Explore new business themes; 4) Promote CSR
management; and 5) Strengthen management foundations.
As a result, operating profit in FY2018 (ended March 31, 2019) amounted to 17.2 billion yen, significantly surpassing theinitial target of 14.0 billion yen. However, some of the management goals were only achieved partway, including 2) Expand
the PGA business; 3) Explore new business themes; and 5) Strengthen management foundations.
Consequently, Kureha decided to extend the KC2018 plan by two years in order to complete the management goals thathave not been fulfilled as intended, and to adapt to changes in the social structure and business environment. This new
medium-term management plan has been named “Kureha’s Challenge 2020 (FY2019 - 2020).”

Review of KC2018
Management Goals

Results after Three Years

Enhance competitiveness andearnings capacity in existing
businesses

Profitability has been achieved for carbon fiber, and earnings expanded
in home products, but sales expansion targets for packaging materials
have yet to be achieved.

Expand the PGA business

Expansion targets have not been reached, and the business is still
showing losses.

Explore new business themes

The market-led approach has been insufficient.

Promote CSR management

Expansion to group companies is incomplete.

Strengthen managementfoundations

Cost reduction targets have been met, but measures to enhance
efficiency are insufficient.

Strategic Direction of Kureha’s Challenge 2020
The new plan carries over the vision set out in KC2018. Kureha will, in accordance with its corporate philosophy, seek to growas a company built on technology, develop differentiated products in the specialty chemicals field, and become a highvalue-added company that continually contributes to society.
By completing the management goals left over from KC2018, Kureha will pursue business restructuring that shifts thepillar for earnings from pharmaceuticals and agrochemicals to advanced materials. At the same time, we recognize the needto adapt to changes in the business environment and address new issues from a long-term perspective, including theadvancement of digitization in society, marine pollution caused by plastic wastes, and countering global warming.
Kureha is positioning the next two years as a “period to solidify the foundation for future expansion,” and will steadily
achieve the management goals and quantitative targets in Kureha’s Challenge 2020, realizing sustainable growth and greater
enterprise value.

08

Kureha Corporation Business Report 2019

Management Goals:
Kureha has defined the next three years as a “period to lay the foundation for future expansion,”and set the following goals to fundamentally reform Kureha’s earnings structure.

1) Expand the PGA business and generate earnings
2) Strengthen the PVDF business for further expansion

Next pagefor detailed
information

3) Optimize the business models for existing businesses
4) Explore and develop new businesses in Japan and overseas
5) Strengthen management foundations

Breakdown by Business Segment

Expanding Overseas Sales

Operational Profit (Billions of yen)

FY2018

2.1

30

1.8

0.7

0.3

4.6

FY2018Results%

7.6

FY2020Targets
3.3

6.7

33
FY20206.2
2.1

Advanced Materials
Specialty Chemicals

Specialty Plastics
Construction%

Other Operations

Quantitative Targets
Revenue/
Overseas Proportion

Operating Profit/
Operating Margin(Billions of yen)
180

150

(%)

60

157.0

148.3

50

120
90

30

33

40

20

30

10

FY2018Result

(%)

18.0

17.2

16

16

11.6

12

FY2020Plan

0(Billions of yen)

20

11.5

30

60

0

(Billions of yen)
20

Profit Attributable to
Owners of Kureha

12

20
16

13.9

14.0

FY2018ResultFY2020
Plan

12

10
8

8

4
0

4

FY2018ResultFY2020
Plan

0

8
4
0

(Presumptions) Forex: ¥110/$, ¥125/€, ¥16.5/yuan; Crude oil: $70/bbl

Kureha Corporation Business Report 201909

Kureha Medium-Term Management Plan

Management Goals and Priority Measures(Asterisks indicate a new priority measure)

Action01

Action02

Expand the PGA Business and Generate Earnings• Increase and stabilize sales of Kureha’s original frac plugs, and establish a business foundation

Strengthen the PVDF Business for Further Expansion• Advance the development of high-performance LiB binders with competitive advantages• Secure raw materials and raise production capacity to support business expansion

Optimize the Business Models for Existing Businesses
Action03• Revise business strategies and alliances to better respond to changes in the business environment*• Develop new applications for downstream business; expand existing business in different markets
and application fields*

Explore and Develop New Businesses in Japan and Overseas
Action04• Seek out new application business themes in Japan and overseas*• Assess the themes already identified, prioritize the necessary resources, and utilize outside resourcesto accelerate commercialization• Cultivate the personnel needed for downstream business development; invest the resources neededto accelerate technological innovations*Targeted Domain:
Environment

EnergyQuality of Life

(Healthcare, Food
Packaging, Etc.)

Development Initiatives Underway forCommercial Launch in Next 5 to 10 Years
KurehaInternal Technologies

External
Technologies

Collaboration & Integration
Generating New Businesses for the Betterment of Society

Strengthen Management Foundations
Action05

Targeted Fields• Build a value chain management structure led by business divisions
Needs• Enhance efficiency of administrative tasks and group management
Environment&
Wants• Reinforce performance-based personnel and pay systems; promote talented middle-age/young
employees and recruit senior workers; cultivate and strengthen human resources
Energy• Enhance productivity by utilizing digital technologies; build smart operation models for production
Quality of life
and R&D*(medicine, food)• Strengthen corporate social responsibility (CSR) management to encompass Sustainable
Differentiated Expandin
Development Goals (SDGs); ensure strong governance particularly for safety, quality, andProducts
to denvironment (SQE) management*

Expanding P

10

Kureha Corporation Business Report 2019

Capital Investment and R&D Expenditures
During the FY2018 - 2020 period, Kureha will enhance its facilities and R&D activities as follows.
FY2019 - 20 Capital Investment• PPS 5000t capacity increase• PVDF capacity increase, 5000t or more
• New business development/R&D facilities, etc.

FY2019 - 20 R&D Expenditures• Accelerate the development of new businesses• Improve process technologies and develop downstream businesses• Accelerate the development of new azole-type agrochemicals• Promote collaborative work with other companies and universities(Billions of yen)
25

(Billions of yen)
25

(Billions of yen)
8

(Billions of yen)
8

20

20

6

6

15

15

10

10.3

0

17
13.2
10.3

9.7
10

5

21

21

6.4

17

9.7

5

FY20160

FY2017FY2018FY2016

4.9

4.7

13.2

4

4

2

2

0

FY2019e FY2018
FY2020e FY2019e FY2020e
FY2017FY20160

FY2017

5.3
4.7

4.9

FY2018FY2016

6.6

6.4

6.6

5.3

FY2019e FY2018
FY2020e FY2019e FY2020e
FY2017

Capital Investment and R&D Expenditures

FY2018 Result
13.2
10.3
5.3

(Billions of yen)

Capital investment
Depreciation
R&D expenditures

FY2019 – 2020 Plan (2yrs)
38.0
23.0
13.0

Basic Capital Policy
Capital Management
Kureha will aim for sustainable growth that leads to long-term increase in enterprise value. We will steadily achieve
the business goals and quantitative targets outlined in Kureha’s Challenge 2020, while maintaining financial stability,
enhancing earnings capacity and capital efficiency, and paying stable dividends to shareholders.
ROA and ROE

FY2018 Result
ROA
ROE

FY2020 Plan
Same level as FY2018
8.0%

7.1%
9.0%

Dividend Payout and Dividend Payout Ratio

Share Repurchase
50%

250

Annual per-share dividend (yen)Dividend payout ratio (%)
200
Exploring and Integrating
165
Kureha’s Technological Strengths
125
110
150
Organic
Polymerization
synthesis
100

50
Processing
technology 0

ng from upstream
downstream

170

170

30%
20%

Testing &Analysis
Process

FY2016developmentFY2017

10%

FY2018FY2019e

FY2020e

FY2018FY2019 (Plan)¥3 billion¥5 billion

40%

Note:
• Share buybacks are conducted to flexibly adjust tovarying financial conditions.

0%

Note:
• Kureha conducted a ten-to-one share consolidation on October 1, 2016. All figures inthis chart are presented on a post share consolidation basis for comparison purposes.

Product Value Chain
Kureha Corporation Business Report 201911

Business Updates

Polyglycolic Acid—A Game-Changing Material in Shale Oil and
Gas Exploration
Polyglycolic acid (PGA) is a biodegradable resin with exceptional

Currently, the mining areas in North America constitute themechanical strength and gas barrier properties. Kureha is the only

principal market for these plugs, with the use of PGA plugs

company in the world producing this resin on an industrial scale.

particularly widespread in the large Permian Basin region. The soil

We have high expectations for this innovative specialty polymer

temperature in this area is lower than that of other mining regions, so

as a frac plug material that will revolutionize the shale oil and gas

Kureha developed a plug that would degrade at a low temperature,

extraction process.

alongside modifications to meet specific customer needs. Some

Shale oil and gas extraction involves drilling a horizontal

customers have already conducted field tests with positive results.

wellbore into the shale layer, and using hydraulic pressure to

Kureha is steadily expanding its presence in this market thanks to acreate fissures. Frac plugs are used to temporarily block the holelineup of frac plug products that degrade at different temperatures.

in order to maintain the pressure. Once the fissures are created,

In 2016, Kureha established Kureha Energy Solutions LLC in

the plugs are typically crushed and need to be recovered. Frac

Texas. This has allowed us to rapidly grasp market needs andplugs made of PGA degrade naturally, eliminating this drill-out

apply that knowledge to product development. Going forward,

process, thereby greatly reducing the cost and time needed for

we will focus on end user-oriented client services and respondthe extraction process. The wellbore can also be extended to a

precisely to customer needs in order to further raise awareness of

distance beyond the reach of the crusher drills, increasing thethe value of PGA frac plugs in the shale oil and gas market.

amount of shale oil and gas that can be extracted from each rig,
thus enhancing productivity.

Kureha aims to achieve profitability in the PGA business in
FY2019, targeting 1.0 billion yen in operating profit in FY2020.

PGA frac plug

Image of shale oil and gas extraction process

12

Kureha Corporation Business Report 2019

Polyvinylidene Fluoride—
Growing Demand in the EV
Market as an LiB Binder Material

Kureha Ecology Management
Establishes the W.I.L. Center

Polyvinylidene fluoride (PVDF), when used as a binder for the

As the subsidiary of a specialty chemicals manufacturer, Kureha

connecting electrodes in lithium-ion batteries (LiBs), requires

Ecology Management Co., Ltd. is able to apply advanced

advanced electrical characteristics. As one of just a handful oftechnological capabilities to operate a business specializing in thecompanies that produces PVDF for this purpose, Kureha holds

proper disposal of waste considered difficult to process by ordinaryaround a 40% share of the worldwide market for automotivemeans. Since 2011, the company has been detoxifying low-

PVDF binders, with acclaimed product performance.

concentration PCB waste. While low-concentration PCB is used as

Demand for LiBs for automotive use is growing rapidly withan insulating material in electronic devices, its toxicity is considered

the widespread adoption of electric vehicles (EVs), and Kureha isa social problem. In Japan, it must be processed in accordance withsteadily expanding PVDF production capacity in China andstrict government guidelines.

Japan. The expanded 2,000-tonne manufacturing plant at Iwaki

Kureha Ecology Management has established the W.I.L.

in Japan began commercial operation in January 2019 and(Wastech Iwaki Logistic) Center in Iwaki, Japan as a preprocessing

continues to operate at full capacity.

facility to dismantle and store large-sized waste electrical

Initially, Kureha considered expanding the facilities at its

equipment, including items containing low-concentration PCB. The

Changshu site in China, but regulatory changes in the country

center, which is capable of accepting large-sized electrical

has led us to explore expansion at other sites. We plan to announce

equipment weighing up to 30 tonnes, began operating on April 1,

our decision on this matter within FY2019. Nevertheless, Kureha will

2019. Kureha Ecology Management provides quick and efficient

continue to make proactive investments to ensure it maintain adetoxification for the many pieces of large-sized electricalmarket-leading position in the global trend toward the adoption

equipment stored throughout Japan, thus helping to reduce theof EVs. To this end, we will further strengthen our production

workload for waste disposal companies.

capacity incorporating highly efficient manufacturing processes.

W.I.L. Center
PVDF production facility at Iwaki Factory

Kureha Corporation Business Report 201913

Review of Operations

Advanced Materials
Major Product Areas:

Advanced plastics (PPS, PVDF, PGA), carbon materials
Advanced Materials revenue rose 10% year-on-year to 45.7 billion yen
while operating profit jumped from 1.7 billion yen to 4.6 billion yen.

Advanced plastics: Continued Momentum for PGA
and PVDF

Revenue (Left scale)Operating Profit (Right scale)(Millions of yen)
60,0006,000

50,0005,000

40,0004,000

30,0003,000

20,0002,000

10,000

1,000

0

(FY)

2017

2018

2019
(Planned)

Key products• Polyphenylene sulfide (PPS)0

In the polyglycolic acid (PGA) business, higher sales volumes of frac plugs for shale gas
and oil extraction enabled revenue of 4.4 billion yen and a significant decrease in theoperating loss. Kureha’s innovative degradable frac plugs have now been adopted by
17 field operators in the United States, up by 13 since the beginning of FY2018. The
first field trial for an improved ultra-low temperature grade frac plug has beensuccessfully completed, and other location trials are being prepared.
Demand for polyvinylidene fluoride (PVDF), an LiB binder material, continued to
grow at a rapid rate due to the expanding global market for electric and plug-in hybrid
electric vehicles, particularly in China. All of Kureha’s PVDF plants are now operating at full
capacity, including the latest addition in Iwaki launched in 2019. The continued highdemand led operating profit in the PVDF business to increase 166.7% to 2.4 billion yen
year-on-year.
The polyphenylene sulfide (PPS) business continued to see demand growth forautomotive applications. However, operating profit continued to be affected by
Hurricane Florence, which in September 2018 severely disrupted production at FortronIndustries, Kureha’s joint venture with Celanese in North Carolina.

Carbon Products: Continued Healthy Growth

The carbon products business continued to see healthy growth, driven by demand forheat-insulating materials used in the manufacturing of ingots for semiconductors, as wellas the positive benefits of higher prices and operational improvements during theprevious fiscal year. Revenue increased by 4% to 5.1 billion yen, leading to a rise inoperating profit.
FY2019 Outlook:
Kureha expects to grow the PGA business in the North
American market by expanding the product line-up
with frac plugs that degrade at various temperatures.
Revenue from this business is estimated to reach 6.4
billion yen, resulting in an increase in operating profit.
In the PVDF business, the intense demand is
PGA frac plug used for shale
expected to continue, leading to further growth inoil and gas extraction
revenue and operating income. The PPS business is
forecast to recover fully from the effects of the hurricane in 2018, benefitting from solid
demand from the automotive industry for weight-reducing metal substitutes. The
carbon products business will see further demand for insulation materials, but sales ofother types of carbon materials are forecast to decline, which will affect profits.
The Advanced Materials segment revenue is expected to increase by 10% to 50.5
billion yen, while operating profit will climb by 30% to 6.0 billion yen.

• Polyvinylidene fluoride (PVDF)• Polyglycolic acid (PGA)• Carbon fibers• Bead-shaped activated carbon
PVDF used as a binder for
lithium-ion batteries

14

Kureha Corporation Business Report 2019

Carbon fiber insulation products

Specialty Chemicals
Major Product Areas:

Industrial chemicals, agrochemicals, pharmaceuticals
Specialty Chemicals revenue grew by 4% to 27.3 billion yen while
operating profit decreased by 4% to 3.3 billion yen.

Agrochemicals: Lower Sales Volumes of Fungicide
In the agrochemicals business, inventory adjustments affected sales volumes offungicides, leading to reduced revenue and operating profit.

Pharmaceuticals: Revenue and Operating Profit Growthfor Kremezin Tablets
Revenue (Left scale)Operating Profit (Right scale)(Millions of yen)
50,0005,000

40,0004,000

30,0003,000

20,0002,000

10,000

1,000

0

(FY)

2017

2018

2019
(Planned)0

In the pharmaceuticals business, sales volumes increased for the new tablet version of
Kremezin, a therapeutic agent for chronic kidney disease, which was launched in
FY2017, leading to a rise in operating profit that more than offset the negative effect ofnational drug price revisions.

Industrial chemicals: Revenue and Operating Profit Riseon Volume Growth
The industrial chemicals business saw increases in both revenue and operating profit
following measures to improve the operating margin including price adjustments andcost reductions.
FY2019 Outlook:
Kureha expects to see continued strong sales of the new Kremezin tablets, which will
mitigate the effects of national drug price revisions. In the agrochemicals business,inventory adjustments will continue to weigh on revenue and operating profit. In
industrial chemicals, sales volumes for certain products are forecast to decline, which willaffect revenue and operating profits. However, Kureha will continue its efforts to improve
the operating margin.
The Specialty Chemicals segment revenue is forecast to decline slightly to 27.0
billion yen, while operating profit will fall by 18% to 2.7 billion yen.

Key products• Therapeutic agent for chronic
renal failure• Agricultural and horticulture
fungicide• Caustic soda
• Hydrochloric acid

Agricultural and horticulture
fungicide (Metconazole)• Sodium hypochlorite• Monochlorobenzene• para-Dichlorobenzene

KREMEZIN® Tablets 500 mg• ortho-Dichlorobenzene

Kureha Corporation Business Report 201915

Review of Operations

Specialty Plastics
Major Product Areas:

Household packaging products, food packaging materials,
auto-packaging machinery
Specialty Plastics segment revenue fell to 45.1 billion yen from 45.4 billion
yen. Operating profit also decreased slightly to 6.7 billion yen.

Home Products: Higher Costs Offset Sales Volume Growth
While the home products business saw higher sales volumes of Kureha’s flagship NEW
Krewrap plastic wrap and the Kichinto-san product series, operating profit growth wasmore than offset by rising costs related to raw materials and sales promotion.

Fiber Products: Continued Growth Momentum for
Seaguar Fishing Lines

Revenue (Left scale)Operating Profit (Right scale)(Millions of yen)
50,00010,00040,0008,000

30,0006,000

20,0004,000

10,000

2,000

0

(FY)

2017

2018

2019
(Planned)0

Kureha continued to enjoy strong sales volumes of Seaguar fishing lines in North
America, leading to an increase in operating profit for this business.

Food Packaging Materials: Lower Earnings for HeatShrink Multilayer Film
Lower sales volumes of heat-shrink multilayer film in overseas markets, caused byintense competition, led to decreases in revenue and operating profit.
FY2019 Outlook:
Kureha expects to see continued sales growth for NEW Krewrap and the Kichinto-sanseries in the home products business, although higher costs, including for sales
promotion, will negatively affect operating profit. Likewise, sales of Seaguar fishinglines are forecast to maintain their healthy momentum although higher depreciation
expenses will weigh on operating profit. In food packaging materials, Kureha willcontinue its strategy of expanding sales of value-added film products in the Europe
and Oceania regions. However, market competition is expected to remain fierce,
causing revenue to remain flat and operating profits to decrease.
The Specialty Plastics segment revenue is forecast to remain nearly unchanged at
45.0 billion yen, while operating profit will decline by 9% to
6.1 billion yen.

Key products• Household wrap film

Home-use wrap film, NEW Krewrap• Plastic containers• PVDF fishing lines• Polyvinylidene chloride (PVDC) film
• Multilayer shrinkable film
• Multilayer bottles• Machinery for auto-seal foodpackaging

16

Kureha Corporation Business Report 2019

Krehalon food packaging film
Seaguar fluorocarbon fishing lines

Construction and Other Operations
Major Product Areas:

Construction, environmental engineering, transport/
warehousing, and trading-related businesses
Construction: Earnings Affected by Lower Demand forPrivate Sector Projects
In FY2018, lower demand for private sector construction projects affected earnings,
more than offsetting healthy sales volume growth for public projects in the engineeringbusiness. As a result, revenue for Kureha’s Construction segment fell by 28% to 12.4
billion yen, while operating profit decreased to 0.7 billion yen.

Revenue (Left scale)Operating Profit (Right scale)

Other Operations: Waste Treatment Business Continues
Its Growth Trajectory
Construction

35,000

Other
Operations
7,000

30,0006,000

25,0005,000

20,0004,000

15,0003,000

10,000

2,000

5,000

1,000

(Millions of yen)

0

(FY)

2017

2018

2019
(Planned)

Key products and services

0

In the environmental engineering business, Kureha’s industrial waste treatment business
continued on the growth trajectory seen since the previous year. In the logistics
business, operating profit continued to rise despite lower revenue, primarily due tosuccessful measures to boost operational efficiency and cut costs. In the hospitalbusiness, revenue returned to a growth track, leading to an increase in operating profit.
As a result, revenue in Other Operations increased by 5% to 17.6 billion yen while
operating profit climbed by 15% to 2.1 billion yen.
FY2019 Outlook:
Earnings in the Construction segment is expected to be affected by lower demand forpost-quake reconstruction, while higher labor and raw material costs will weigh on
operating profit. Segment revenue is forecast to remain largely unchanged at 12.5
billion yen while operating profit will decline by 40% to 0.4 billion yen.
In Other Operations, Kureha expects to see continued healthy growth in thelogistics and hospital businesses, but intensifying competition in the industrial waste
treatment business will affect revenue and operating profit. Segment revenue is
expected to fall slightly to 17.0 billion yen while operating profit will decline by 14% to
1.8 billion yen.
Facility to detoxify low-concentration
PCB wastes[Kureha Ecology Management Co.]

• Civil engineering andconstruction• Plant engineering andmaintenance• Industrial waste treatment andenvironmental engineering• Environmental andphysiochemical testing andanalysis• Transport and warehousing• Medical hospital operation

Construction of water gate of Nakata Riverin Fukushima[Kurehanishiki Construction Co.]
Kureha Corporation Business Report 201917

Research & Development

Since its founding in 1944, Kureha has worked with creativity andpassion to generate proprietary technologies that enrich people’s lives
and contribute to the advancement of industry. With core strengths inorganic synthesis, polymer technology, carbon control, evaluation
techniques, and process engineering, Kureha continues to reinforce its
market position through product differentiation and innovation.

Research Center & Process Innovation
Research Laboratories

Our R&D efforts are twofold—creating new businesses andstrengthening strategic growth businesses. To create new businesses,
we are focusing our proprietary technologies on latent market needs,
exploring business themes in the areas of environment, energy andquality of life (medicine and food). For existing businesses, we focus on
enhancing competitiveness in both quality and cost, as well as

Polymer Processing ResearchLaboratories

strengthening secondary process technologies to further expand in thedownstream businesses. For both existing and new businesses, Kureha
will pursue open innovation and active collaboration with outsideorganizations. In everything that we do, Kureha will bring unique value
creation to bear on the challenges faced by society and communities
around the world.

Strategy for Intellectual Property
Kureha uses three intellectual property strategies to maintain its technological advantages and advance its business operations.
1. Assert intellectual property rights to R&D results to establish barriers to entry.
2. Utilize intellectual property rights to advance businesses.
3. Respect the intellectual property rights of others, and conduct appropriate intellectual property clearance.
The Kureha Group held 1,572 intellectual property rights as of May 2019, of which 1,074 are patent registrations. With theglobalization of Kureha’s business, we are also acquiring intellectual property rights in countries and territories outside Japan.
Currently, 64.1% of the intellectual property rights held by the Kureha Group are outside Japan.

IP Held by Kureha Group

Global Distribution of IP
Pending
applications

498

Total
1,572

patents

Registeredpatents

37
51
246

245

Total
1,572

patents

1,074
429

18

Kureha Corporation Business Report 2019564

IP in Business Segments
Japan
Asia
EuropeNorth America
WIPO
Others
WIPO: World Intellectual
Property Organization

Advanced Materials
Specialty Plastics
Specialty Chemicals
Others

268
114

Total
1,572

patents
368

822

FY2018 R&D Spending
Kureha’s R&D spending amounted to ¥5,270 million in the fiscal year ended March
31, 2019 (FY2018). An overview of spending is as follows.

Advanced Materials
For Fortron KPS (PPS), which is widely used in automobiles and electronic devices,
Kureha has determined to enhance production at its Iwaki Factory, and is developing
improved manufacturing processes and exploring ways to expand applications.
For KF Polymer (PVDF), Kureha’s R&D and Manufacturing & Technology teams areworking together to raise productivity and ensure stable production for an additional facility.
For Kuredux (PGA), we are actively developing applications while working to
improve resin manufacturing technologies. Particularly in the area of shale oil and gas
exploration, where PGA’s easy-to-degrade attribute has proved useful, Kureha
collaborates with its U.S. subsidiary, Kureha Energy Solutions LLC, to rapidly expand thesale of PGA frac plugs. We are continually working on materials development andimproved engineering designs to reflect customer needs for degradable frac plugs.
Among battery materials, our development effort has centered on binder materials
for the large lithium-ion batteries used in hybrid and electric vehicles. We areaccelerating the development of advanced binder grades and improved solutions forcustomers, which will enable us to expand our market share.
FY2018 R&D spending in this segment amounted to ¥2,037 million.

Specialty Chemicals
In the agrochemicals business, we are working to expand markets in Japan andoverseas for Metconazole agricultural and horticultural fungicide and Ipconazole seedtreatment fungicide. We are also improving productivity for these fungicide products.
In pharmaceuticals, we have developed and launched new easy-to-dissolve tabletsof Kremezin, a therapeutic agent for chronic renal failure, as part of our supporting
research to enhance the earnings of Kremezin.
FY2018 R&D spending in this segment amounted to ¥1,903 million.

Specialty Plastics
For food packaging film, Kureha is pursuing technology development to ensure stablesupply and improve quality. In addition, to further expand global sales, we are actively
providing technical support to customers in Japan and overseas.
FY2018 R&D spending in this segment amounted to ¥1,329 million.

R&D Expenditure/Ratio of R&D
Expenditure to Revenue(Millions of yen)
6,000
5,000

4,734

4,000
3,000

3.6

4,962
3.4

5,270

(%)
6
5

3.6

4
3

2,000

2

1,000

1

0

(FY)

2016

2017

2018

0

Kureha Corporation Business Report 2019

19

CSR

Our CSR
Kureha is continually working to strengthen its competitiveness toenhance its enterprise value over the longer term. Our corporate
philosophy and vision for the future is expressed in our ESG(Environmental, Social, and Governance) measures, which arealigned with the UN’s Sustainable Development Goals. As a
responsible corporate citizen, we seek to achieve harmony with thenatural environment and contribute to the realization of asustainable society, while reducing risk, providing motivation toemployees and ensuring quality products and services. We firmly
believe that generating environmental and social value alongsideeconomic value leads to sound, sustainable growth as a company.

The Framework of Kureha CSR
Corporate Philosophy

Local communities
Customerss
Suppliers
S Shareholders/Investors
Employees
NPO/NGO
Educational institutions
Government/Industry groups

DialogueSociety

Responsible
Care

EconomyDevelopment of Human Resources
and Technology
Stakeholders

Code of Conduct,
Governance, Compliance

Supporting Social Development
Participation in Event to Nurture Venture Firms from
Fukushima Prefecture
Fukushima Tech Planter is a program sponsored by Fukushima
Prefecture and Leave a Nest Co., Ltd. to identify and support
R&D-oriented venture firms. The final qualifying round was held on
February 9, 2019, with Kureha participating in the judging panel.
Presentations from nine teams were considered. First prize went
to Kureha Award recipient Professor Shuji Uchida of the National
Institute of Technology, Fukushima College, for his presentation
titled “Commercialization of Fruit Packaging with Aging Delay
Function Using Plant-derived Materials.”
Kureha will continue to support activities such as this and explore
the potential for commercialization of products that benefit society.

Reducing Environmental Burdens

Group Company Certified as “Low CO₂ Kawasaki Brand ‘ 18”
In February 2019, the waste disposal operations of Kureha Group
company Wastech Kanagawa, which incorporate a power generating
facility that uses the exhaust heat from waste incineration, received
certification from Kawasaki City as a “Low CO₂ Kawasaki Brand.”
Wastech Kanagawa’s incineration facility uses boilers to recoverexhaust heat from the waste incineration process and generate

20

Kureha Corporation Business Report 2019

Business operations

Global environment
Energy/Resources
Food
Daily living
Medical care/Health
Sustainability

Social issues connected tobusiness operations

electricity. The electricity produced is used in the plant to reduce
the reliance on fossil fuels. The plant has reduced its utility powerusage by around 94% compared with incineration facilities without
such generators.

Community Engagement
Hospital Work Experience for Elementary School Students
In August 2018, Kureha Group’s Kureha General Hospital held a “Kids
Tour Experience” for elementary school students. Donning whitecoats, the children played the roles of doctors, nurses, clinicaltechnicians, radiologists, and pharmacists. After an explanation of thevarious types of work in a hospital, they conducted mock medical
examinations and otherhospital tasks. Several
parents of children
aspiring to be doctors
expressed appreciationand noted a boost in
motivation. The KurehaGroup will continue to
conduct activities suchas this to support
community health care.
“Kids Tour Experience” for elementary
school students

Plan

Environmental
Security anddisaster
response

ActionCommunity
relations

RC
PolicyEnergyconservation

Logistics
safetyLabor
safetyand healthDo

Kureha, an inaugural member of the Japan Responsible
Care Council founded in 1995, continues to pursue
Responsible Care initiatives to improve health, safety andenvironmental performance throughout its operations. We
regard our commitment to Responsible Care as an integral
part of our corporate responsibility.

Product safety
Quality assurance

Check

Responsible Care Implementation

Safety and Disaster Prevention

Kureha is continually enhancing its responsible care initiatives under
the direction of the Corporate Social Responsibility Committee andthe Kureha Group Responsible Care Committee. We take proactive
actions to protect the environment, improve labor safety and healthand ensure product safety and quality, while being responsive andsensitive to community concerns. Our actions are in line with ISO14001,
the international standards for environmental management, ISO9001
for product quality management as well as OHSAS18001 for labor
safety and hygiene management, and are constantly improving
through the Plan-Do-Check-Act cycle.

Safety and disaster prevention are among the most important
responsibilities of a chemical manufacturing company. Kureha
manages its facilities and operations in strict compliance withthe relevant laws and regulations as well as voluntary safety
standards set to best protect its employees and community.
Comprehensive safety and emergency drills and training havebeen also conduced regularly at our manufacturing sites in orderto enhance our preparedness for emergency situations, including
a large-scale earthquake.

Reducing the Burden on the Environment

In addition to Kureha General Hospital serving as a community
medical facility in the southern part of Iwaki City, Kureha contributes
to the local community in a variety of different ways. These include
opening company sports facilities for public use, volunteering forclean up activities, teaching science classes at elementary schools
and holding community meetings to initiate dialogue with local
neighborhood associations.

Since its establishment, Kureha has developed technologies andproducts with a view to reducing the burden on the environment.
In our manufacturing facilities, we strive to minimize environmental
impact by implementing strict measures to prevent air and waterpollution, reduce chemical material and industrial wastes, andmake effective use of energy.

Contributing to the Community

Waste Generated

GHG (CO2) Emissions(Thousands of tonnes) (Left scale)(Thousands of tonnes) (Left scale)

Recycled Rate

Specific Energy Consumption Index(%) (Right scale)(Right scale)

35

100

450

125

28

80

430

100

21

60

410

75

14

40

390

50

7

20

370

25

0

(FY) 2014

2015

2016

2017

2018

0

350

(FY) 2014

2015

2016

2017

2018

Disaster prevention and safety drill at the
Iwaki Factory

0

Kureha Corporation Business Report 201921

Corporate Governance

Kureha’s Corporate Philosophy, Corporate Mission, and Employee Code of Conduct together constitute ourcompany’s identity. All executives and employees share these ideals, and constantly strive to achieve ambitious
goals. Corporate governance is a critical element in maintaining and acting in accordance with this identity, andwe have outlined our basic policies and stance in Kureha’s Corporate Governance Guidelines. Kureha follows theseguidelines to ensure compliance and enhance internal control functions, provide for fair and transparent
management, and ensure a high standard of corporate governance.

Corporate Philosophy• We treasure people and the natural environment.
• We constantly evolve through innovation.
• We contribute to society by developing beneficial products.
Corporate Mission
Kureha will continually strive in the pursuit of excellence.
Employee Code of Conduct
We always act as global corporate citizens, recognizing our corporate social responsibilities.
In relation to our clients: We will act with sincerity and with customer satisfaction as our priority.
In relation to our work: We will consistently pursue progress and innovation.
We will consistently respond to change and act with a global perspective.
In relation to our colleagues: We will maintain mutual respect and exhibit teamwork.

Decision-Making, Execution and Management Framework
1. Supervisory and executive responsibilities are clearly
distinguished to strengthen corporate governance andaccelerate managerial decision-making and execution.
The Board of Directors, which is limited in size to a maximumof 10 directors, of whom at least 2 should be outside directors,
consists of 3 directors and 2 outside directors as of June 2017.
The Board, presided over by the President & Representative
Director, meets once a month in principle, to make decisions onimportant management issues and supervise execution.
The Executive Committee, chaired by the President & CEO
and comprised of executive officers meets twice a month inprinciple. The committee considers basic authoritative policies
and mid- and long-term management strategy that cover all
aspects of general management. The committee members
pass resolutions on issues as authorized in official company
regulations and take steps to ensure speedy implementation.
To clarify responsibilities for fiscal year results, a one-year
term is given to all directors and executive officers.
2. The consolidated Executive Committee, set up to unify the
Kureha Group’s internal policies and long-term management
vision, is chaired by the President & CEO. It serves as a forum toexchange views on basic management policies and business

22

Kureha Corporation Business Report 2019

strategies with representatives from each group company, withthe aim of strengthening consolidated management.
Meanwhile, the operations of group companies are supervised
and managed in accordance with the Group Company
Management Rules, in which the obligations of groupcompanies are clearly specified, while giving autonomy, interms of certain business and management issues required forreporting and consultation prior to making decisions within
their companies.
3. A total of three Audit & Supervisory Board Members (including
two independent outside Audit & Supervisory Board Members)
forms the Audit & Supervisory Board. This body works within aframework that allows them to monitor the deliberation processesof board resolutions and reports, as well as have a representative
Audit & Supervisory Board Member attend and monitor meetingsof the Executive Committee and the Consolidated Executive
Committee. In addition, Audit & Supervisory Board Members areable to access documentation including all documents requiring
senior approval, results of internal audits, and documentation on
the status of customer inquiries.
Audit & Supervisory Board Members interact withaccounting and internal control functions, for example toDiagram of Internal Control Systems (As of June 25, 2019)
General Meeting of Shareholders
Appoints
Nomination Advisory
Committee
Remuneration Advisory
Committee(Non-mandatory)

Consultation

Appoints

Supervisory Function
Board of Directors(Maximum of 10 directors, including 2
or more external directors)

Audit

LiaiseAppoints

Audit & Supervisory Board(Maximum of 4 members,
including 2 or more
external members)
LiaiseLiaiseCompliance Committee
Trade Control (Export/Import) Committee
Labeling and Trade Promotions Committee
Antitrust Committee
Personal Information Protection Committee

Executive Function

Independent
AuditorPresident &Chief Executive Officer

Executive
Committee

Internal Control and
Auditing Department

CSR Committee
Energy Management Committee

Audit

All divisions ofKureha Corporation

Information Management
Committee
Information Disclosure Committee
Information Security Committee

Audit
Audit

Kureha Group companies

Risk Management Committee

Internal Control ofFinancial Reporting Committee

exchange opinions on audit planning and progress. They also
regularly exchange opinions with the President & Representative
Director and outside directors on management matters including
corporate governance, business conditions and issues that theCompany should address.
In addition, the Internal Control and Auditing Department
acts independently of other departments and under direct
management and supervision of the President & CEO. Based on
an annual internal audit plan approved by the Board of
Directors, this department assesses the suitability andeffectiveness of internal management control systems including
compliance and risk management. It then proposes necessary or
desired changes and improvements, so as to enhance bothmanagement efficiency and public trust in Kureha.
4. A Nomination Advisory Committee and a Remuneration
Advisory Committee have been established as voluntary advisory

bodies for the Board of Directors. Each committee comprises atleast three directors, with outside directors in majority.
The Nomination Advisory Committee deliberates onmatters concerning the appointment and dismissal of the
President and Chief Executive Officer, Representative Directors,
and Directors, as well as candidates to succeed the President
and Chief Executive Officer and relevant succession plans, andreports its opinions and recommendations to the Board of
Directors. The Remuneration Advisory Committee deliberates
on matters related to the system and policies regarding
remuneration for Directors, and reports its opinions andrecommendations to the Board of Directors.
The establishment of these committees enhancestransparency to the Board of Director’s decision-making regardingthese matters, and increases accountability to stakeholders.

Kureha Corporation Business Report 201923

Corporate GovernanceInternal Control System
To further strengthen its internal control system, Kureha hasestablished a set of basic policies, committees and internal rules toensure that it observes laws and regulations and conducts its
business operations in an appropriate and fair manner.
Under this system, Kureha publishes Internal Control Reports
under the responsibility of the President & CEO.

In addition, Kureha has also established a set of Basic Rules forInternal Control of Financial Reports to ensure the reliability of thefinancial reports and to guarantee implementation ofmanagement’s assessment and certified public accountant’s
auditing of the effectiveness of internal control of financial reports,
as stipulated in the Financial Instruments and Exchange Law.

Independent Directors and Audit & Supervisory Board Members
Presently, Kureha’s Board of Directors and Audit & Supervisory
Board each include two independent members selected fromoutside the Company. They fulfill their respective roles andduties in providing independent and fair supervision over theCompany’s management and business execution, while serving
the interest of its stakeholders. Their independence standards
also meet the requirements prescribed by the Tokyo Stock
Exchange as well as the ‘Criteria for Determining the Independenceof Outside Executives’ established by the Company.

Outside Directors
1. Osamu Tosaka
Dr. Osamu Tosaka possesses advanced views and a wealth ofexperience in corporate management from a technologicaland research viewpoint due to his history of responsibility ininternational business and managing research and production
divisions at a global food manufacturing company.
Dr. Tosaka was appointed Kureha Outside Director in
June 2016.
2. Tadao Ogoshi
Mr. Tadao Ogoshi possesses advanced views and a wealth ofglobal experiences in the management of financial
institutions and business companies.

Mr. Ogoshi has been Kureha Outside Director since June
2017. Currently, he also serves as Outside Director and Audit
and Supervisory Committee Member of Joban Kosan Co., Ltd.

Outside Audit & Supervisory Board Members
1. Masaru Kiriyama
Mr. Masaru Kiriyama has extensive knowledge and expertisein risk management and compliance as well as financing andaccounting through his previous work at Meiji Yasuda Life
Insurance Company.
Mr. Kiriyama was appointed Kureha Outside Audit &Supervisory Board Member in June 2019.
2. Yukako Oshimi
Ms. Oshimi is a lawyer and partner at SHIBATA, SUZUKI &NAKADA, a Tokyo-based independent law firm. She isspecialized in corporate laws and compliance, serving
currently as Outside Member of Risk Management andCompliance Committee at ORIX Asset Management
Corporation and Outside Auditor at FUJI SOFT
INCORPORATED.
Ms. Oshimi was appointed Kureha Outside Audit &Supervisory Board Member in June 2019.

Executive Remuneration
Executive remuneration reflects corporate performance. It isdetermined with consideration to enhancing medium- tolong-term enterprise value, and in accordance with thecompensation structure and levels appropriate to the roles andresponsibilities required of each executive.
Total remuneration paid to directors and Audit & Supervisory
Board Members in fiscal 2018 (ended March 31, 2019) was as follows.

24

Kureha Corporation Business Report 2019

Board directors(for total of 5 directors)¥235.7 mil(of which ¥30.6 mil was paid to 2 outside directors)

Audit & Supervisory
Board Members(for total of 3 members)¥48.0 mil(of which ¥27.3 mil was paid to 2 outside Audit &Supervisory Board Members)

Note: The remuneration for board directors includes stock acquisition rights at a total value
equivalent to 11.1 million yen, issued as reward-type stock options to 3 directors, notincluding outside directors.

Compliance Program Framework
Kureha has in place a compliance program framework, based on
the Kureha Group Ethical Charter and its Compliance Rules.
Kureha’s compliance objective is to ensure that all executives
and employees act in a manner that is consistent with legal
compliance and that also meets the standards of our society. This
framework is constantly being improved and reinforced so as tocultivate a compliance-focused corporate culture.
The Compliance Committee, led by the President & Chief
Executive Officer (CEO), keeps employees informed of complianceissues through training programs and other activities based on
the Compliance Handbook and the Compliance Standards. In
addition, direct access to internal and external (legal) advisers forinquiries and reporting on compliance issues is maintained so thatlegal violations, confirmed or suspected, can be detected anddeterred at an early stage.

Disclosure and Transparency
Impartial and continuous information disclosure ensuresmanagement transparency and builds trust with stakeholders. Kureha
provides timely and appropriate disclosure in accordance with allapplicable laws and regulations, as well as the Timely Disclosure Rules
prescribed by the Tokyo Stock Exchange. Kureha also proactively
releases information deemed to be valuable to shareholders.
Kureha’s General Meeting of Shareholders is held annually in
June. To ensure that shareholders have sufficient time to review
the proposals, the proxy statement for the shareholders’ meetingis posted on the Company’s website at the end of May, and mailedin early June. Shareholders are able to exercise their voting rights
by post or via the Internet.
During the shareholders’ meeting, Kureha uses video to clearly
explain its business content and results, and makes every effort torespond directly and fully to shareholders’ questions.
Kureha also holds regular briefings for institutional investors
and analysts regarding its medium-term business strategies andresults, and regularly provides individual hearings for investors inJapan and overseas.

Risk Management System
In response to various types of risk accompanying businessactivities, Kureha has established a risk management structure
consisting of a Risk Management Committee, a CSR Committee
and an Information Management Committee. Each committee istasked with recognizing related risks, and proposes concretemeasures to the President & Representative Director aimed at
reducing and avoiding risk and manages implementation.
In addition, to respond to unforeseen circumstances, aBusiness Continuity Plan is in place for the establishment of an
emergency response task force, with the objective of prioritizing
the safety of personnel, minimizing economic damage, andensuring the continuation of corporate activities.
In terms of information management, Kureha works rigorously
to ensure appropriate security and disclosure based on its
regulations for information control, security and disclosure, withindividual committees set up to oversee each of these areas.
To address environmental and safety risks, management
procedures for the environment, quality, and labor safety havebeen established that comply with ISO 14001, ISO 9001, and
OHSAS 18001 standards. In addition, Kureha is also continuingwith ongoing efforts to improve environmental conservation,
quality assurance, and occupational health and safety.

Compliance with the Corporate Governance Code
The Corporate Governance Code is a compilation of various
regulations aimed at ensuring substantive corporate governanceat listed companies. It was formulated in March 2015 in responseto revisions made to the Japanese government’s growth strategy,
the Japan Revitalization Strategy, in 2014.

Kureha considers thorough corporate governance to be ofvital importance for strengthening the management base toachieve medium- to long-term corporate growth. In November
2015, the Company formulated its own Corporate Governance
Guidelines to comply with the government code.

Kureha Corporation Business Report 201925

Management Team

Board of Directors

Yutaka Kobayashi

Michihiro Sato

Yoshio Noda

President &Chief Executive Officer

Senior Vice President
General Manager of Manufacturing &Technology Division
General Manager of R&D Division

Senior Vice President
General Manager ofFinance & Accounting Division
General Manager of
Administration Division

Osamu Tosaka

Tadao Ogoshi

Outside Director

Outside Director

Audit & Supervisory Board

Toru Yoshida

Masaru Kiriyama

Yukako Oshimi

Naomitsu Nishihata

Koji Suyama

Hiroyuki Tanaka

Senior Vice President

Katsuhiro Natake

Senior Vice President, General Manager
of Home Products & Packaging
Materials Division

Vice President, General Manager ofIwaki Factory

Vice President, General Manager ofAdvanced Products Division

Satoshi Yonezawa

Vice President, General Manager ofCorporate Planning & Strategy Division

Executive Officers

Vice President, General Manager ofChemicals Division26

Kureha Corporation Business Report 2019

Masahiro Namikawa

Consolidated Financial Summary
Kureha Corporation and Consolidated Subsidiaries
Years ended March 31, 2019 (FY2018) and 2018 (FY2017)

Millions of yen

For the year:
Revenue:
Domestic
Overseas
Revenue by segment:
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations
Operating profit
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations
Elimination or corporate
Profit attributable to owners of parent
Capital expenditure
Depreciation and amortization
Research and development expenses
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Year-end:
Total assets
Total equity attributable to owners of parent
Interest-bearing debt

FY2018FY2017¥ 148,265
103,862
44,402¥ 147,329
107,145
40,18245,74927,30945,14812,415
17,643
17,172
4,607
3,301
6,738
668
2,087
(230)
13,933
13,174
10,310
5,270
2,037
1,903
1,329
—
—
23,377(8,363)(15,478)

41,64026,17645,397
17,354
16,76012,973
1,669
3,421
6,907
1,037
1,812
(1,876)
9,697
9,768
9,898
4,962
1,940
1,792
1,229
—
—
20,178(9,698)(10,415)¥ 247,352
160,551
39,018¥ 242,281
150,193
48,089Yen

Amounts per share:
Basic profit per share
Owners’ equity per share
Cash dividends per share¥ 679.55
7,922.58
165.00¥ 507.48
7,271.67
125.00Percent

Ratios:Operating profit to revenue
Profit attributable to owners of parent to revenue
Return on equity
Return on assets
Owner’s equity ratio

11.6%
9.4
9.0
7.1
64.9

8.8%
6.6
7.1
5.3
62.0

Notes: 1. Return on equity = Profit attributable to owners of parent/Shareholders’ equity × 100
2. Return on assets = Profit before tax/Total assets × 100
3. Owner’s equity ratio = Owner’s equity/Total liabilities and equity

Kureha Corporation Business Report 201927

Management Discussion and Analysis
Business environment
During the fiscal year ended March 31, 2019 (FY2018), theJapanese economy continued on a moderate recovery trend due
to improvements in corporate earnings and the employment
environment. Meanwhile, the world economy has faced uncertainty owing to geopolitical risks and trade friction.

Analysis of business results
Revenue of the Kureha Group (“the Group”) in the subject fiscal
year increased by ¥936 million from the previous fiscal year to¥148,265 million. Gross profit increased by ¥3,553 million to¥43,582 million, and gross profit margin improved from 27.2%
to 29.4%. Selling, general and administrative expenses increasedby ¥858 million to ¥28,051 million. Share of profit of entities
accounted for using equity method decreased by ¥261 million
to ¥1,969 million, and other expenses (net of other income)amounted to a loss of ¥328 million, a decrease of ¥1,764
million in the loss from the previous fiscal year. As a result,operating profit increased by ¥4,199 million to ¥17,172
million, and the ratio of operating profit to revenue improved
from 8.8% to 11.6%.
Finance income amounted to ¥262 million against a loss of¥290 million in the previous fiscal year. As a result, profit before
tax increased by ¥4,751 million to ¥17,435 million.
Income tax expense was ¥3,435 million, and profit for the year
increased by ¥4,185 million to ¥13,999 million. The Group
posted profit attributable to non-controlling interests of ¥65

Revenue
Revenue
Revenuemillion, and profit attributable to owners of parent increased by¥4,236 million to ¥13,933 million.

Cash flow analysis
The balance of cash and cash equivalents at the end of thesubject fiscal year (March 31, 2019) amounted to ¥5,989
million, a decrease of ¥486 million from the end of the previous
fiscal year (March 31, 2018). An outline of individual cash flows
and the main factors affecting each is as follows:
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥23,377
million, an increase of ¥3,198 million from the previous fiscal
year. This was mainly due to an increase in profit before tax andother factors.
Cash flows from investing activities
Net cash used in investing activities amounted to ¥8,363
million, a decrease of ¥1,335 million from the previous fiscal
year. This was mainly because there were proceeds from down
payment related to sales of property, plant and equipment andan increase in proceeds from sales of investment securities, andother factors, despite an increase in payments for purchases ofproperty, plant and equipment, and intangible assets.
Cash flows from financing activities
Net cash used in financing activities amounted to ¥15,478
million, an increase of ¥5,063 million from the previous fiscal
year. This was mainly due to a decrease in proceeds from issuance of bonds, an increase in acquisition of treasury stock, andother factors.

ProfitAttributable
ProfitAttributable
ProfitAttributable
OwnersParenttoto
Ownersofof
Parentto Ownersof Parent

Operating
ProfitOperating
ProfitOperating
Profit(Millionsyen)(Millions
of of
yen)
(Millionsof yen)(Leftscale)(Millionsof yen)(Leftscale)(Millions(Left scale)(Millionsof yen)of yen)

Ratio
Operating
Profit
Ratio
ofof
Operating
ProfitRatioof Operating
Profit(Rightscale)(%)(%)(Right(Rightscale)(%)scale)
Revenue
toto
Revenueto Revenue(Leftscale)(Millionsof yen)(Leftscale)(Millions(Left scale)(Millionsof yen)of yen)

Ratio
ProfitRevenue
Ratio
ofof
Profittoto
Revenue
Ratio
of Profit
to Revenue(Rightscale)(%)(%)(Right(Rightscale)(%)scale)

150,000
150,000150,000

18,00018,00018,000

18

18 18

15,00015,00015,000

12

12 12

150,000
150,000150,000

15,00015,00015,000

15

15 15

12,50012,50012,500

10

10 10

120,000
120,000120,000

12,00012,00012,000

12

12 12

10,00010,00010,000

8

8 8

90,00090,00090,000

9,000
9,000 9,000

9

9 9

7,500
7,500 7,500

6

6 6

60,00060,00060,000

6,000
6,000 6,000

6

6 6

5,000
5,000 5,000

4

4 430,00030,00030,000

3,000
3,000 3,000

3

3 3

2,500
2,500 2,500

2

2 2

0 0

0

0 0

0 0

0

0 0

0

0 0

2017
2018
2018 2018(FY) (FY)(FY)2017 2017

0

2017
2018
(FY) (FY)(FY)2017 20172018 2018

0

2017
2018
(FY) (FY)(FY)2017 20172018 2018

Domestic
Overseas
Domestic
Overseas
Domestic
Overseas

28

Cash
Flows
from
Cash
Flows
from
Cash
Flows
from
Operating
Activities
Operating
Activities
Operating
Activities
Cash
Flows
from
Cash
Flows
from
Cash
Flows
from

Kureha Corporation Business Report 2019

Total
Assets
Total
Assets
Total
Assets(Millionsof yen)(Millions(Millionsof yen)of yen)

Total
EquityTotal
EquityTotal
Equity(Leftscale)(Millionsof yen)(Leftscale)(Millions(Left scale)(Millionsof yen)of yen)

Ratio
EquityRatio
ofof
EquityRatio
of Equityincrease in inventories and other factors. Non-current assets
amounted to ¥168,574 million, an increase of ¥3,255 million
The Kureha Group procures required capital through borrowing
from the end of the previous fiscal year, since property, plantfrom financial institutions, and the issuance of corporate bondsand equipment amounted to ¥117,553 million, an increase ofand commercial paper. In addition, a cash management system¥3,316 million, mainly due to capital expenditures at the Iwaki
has been introduced, in order to ensure that the Group is
Factory and other locations.
effectively utilizing funds and reducing finance costs. In addiTotal liabilities at the end of the subject fiscal year amounted
tion to cash and cash equivalents, the Group also ensures theto ¥85,184 million, a decrease of ¥5,056 million from the end
liquidity of funds by entering into commitment line agreementsof the previous fiscal year. This was mainly because of a declinewith financial institutions.
in interest-bearing debt, by ¥9,071 million from the end of the
The Group’s basic policy is to maximize cash flows fromprevious fiscal year to ¥39,018 million.
operating activities by securing earnings in line with its businessTotal equity at the end of the subject fiscal year amounted toplan and by enhancing asset efficiency, and to allocate cash with
¥162,167 million, an increase of ¥10,126 million from the end
priority given to capital expenditure for new businesses andof the previous fiscal year. This was due to the posting of profit
expansion of existing businesses, investments and loans, research
attributable to owners of parent of ¥13,933 million, despite theand development, and dividend payments to investors. In line
payment
amountof ¥2,891
million andProfitAttributable
Revenue
Operating
Profit of dividends in anProfit
Attributable
Revenue
ProfitProfitAttributable
Revenue
Operating
Profitwith thispolicy,the Group procures required capitalOperating
with
(Left
scale)(Millionsof yen) of treasury shares to(Left scale)(Millionsof yen)(Leftscale)(Millionsof yen)(Millionsyen)(Millionsof yen)(Millions
of of
yen)
purchasein anof Parent¥3,004
million.
to
OwnersParentOwnersof
toamount
Ownersofof
Parentpriority given to securing long-term funding, and inRatio
consider(Leftscale)(Millionsof yen)(Millionsof yen)of yen)(Leftscale)(Millions
Ratio
Operating
Profitof Operating
Profit
Ratio
ofof
Operating
ProfitAsa resultof the above,(Leftthescale)ratio
ofowners’equityto grossation of the balance between long- and short-term borrowings.
(Right(Right(Rightscale)(%)scale)scale)(%)(%)
Ratio
of
ProfittoRevenue
Revenue
Ratio
ofProfittoRevenueto Revenue
Ratio
of
ProfittoRevenue
toto
Revenueassets improved by 2.9 percentage
pointsfrom the previous(Right(Right(Rightscale)(%)scale)scale)(%)(%)In regard to important planned outflows of capital and thefiscalyear
to64.9%.
Rateofreturnonequity(ROE) 12improved
150,000
15,00018,000150,000150,000
18
15,00015,000
18,00018,000
18 18
12 12
sourcesofthose funds, the Group intends to conduct
capitalby 1.9 percentage points to 9.0%. Return on assets (ROA)
expenditure
centered on the Advanced Materials
Division,and150,000
12,50015,000150,000150,000
15 by
12,50012,500
10
15,00015,000
15 15
10 10
improved
1.8 percentage
points to 7.1%.
intends for capital required to be procured from cash-at-hand,
120,000
12,00010,000120,000120,000
8
12
12,00012,000
10,00010,000
8 8
12 12
corporatebonds, and borrowings.

Financial policy

90,00090,00090,000

9,000
9,000 9,000

9

9 9

7,500
7,500 7,500

6

6 6

60,00060,00060,000

6,000
6,000 6,000

6

6 6

5,000
5,000 5,000

4

4 4

3 3

2,500
2,500 2,500

2

2 2

0 0

0

0 0

Balance sheet analysis

As of March 31, 2019, the Kureha Group’s total assets
amountedto ¥247,352 million, an increase of ¥5,070
million30,0003,000
30,00030,000
3,000 3,000
3from the end of the previous fiscal year (March 31, 2018).
0
0
0
0 0
0 0
Current
assetstotaled¥78,777
million, an increase¥1,814(FY)2017
2017
2018
2017
2018
(FY) (FY)(FY) of2018 20182018 2018(FY)(FY)2017 20172017
million from
theend oftheOverseas
previous
Domestic
Overseas fiscal year, due to an
Domestic
Overseas
Domestic

Cash
Flows
from
Cash
Flows
from
Cash
Flows
from
Operating
Activities
Operating
Activities
Operating
Activities
Cash
Flows
from
Cash
Flows
from
Cash
Flows
from
Investing
Activities
Investing
Activities
Investing
Activities

0 0

0

2017
2018
(FY) (FY)(FY)2017 20172018 2018

Total
Assets
Total
Assets
Total
Assets

Total
EquityTotal
EquityTotal
Equity(Leftscale)(Millionsof yen)(Left scale)(Millionsof yen)of yen)(Leftscale)(Millions(Millionsof yen)(Millionsof yen)of yen)
(Millions

Ratio
EquityRatio
of Equity
Ratio
ofof
EquityAttributable
Attributable
to totoAttributable
OwnersParentOwnersof Parent
Ownersofof
Parent(Millionsof yen)(Millionsof yen)of yen)
(Millions
30,00030,00030,000

300,000
300,000300,000

25,00025,00025,000
15,00015,00015,000
10,00010,00010,000

240,000
240,000240,000

180,000
180,000180,000

5,000
5,000 5,000
0

0 0-5,000-5,000 -5,000

2017
2018
2018 2018(FY) (FY)(FY)2017 2017

ReturnAssetsReturnon Assets
Returnonon
AssetsReturnEquityReturnon Equity
Returnonon
Equity(%) (%)(%)

90

90 90

150,000
150,000150,000

75

75 75

120,000
120,000120,000

60

60 60

90,00090,00090,000

45

45 45

60,00060,00060,000

30

30 30

30,00030,00030,000

15

15 15

0 0

0

0 0

120,000
120,000120,000

60,00060,00060,000-10,000-10,000-10,000-15,000-15,000-15,000(Right(Right(Rightscale)(%)scale)scale)(%)(%)

180,000
180,000180,000

0

0 0

2017
2018
2018 2018(FY) (FY)(FY)2017 2017

Interest-Bearing
Debt
Interest-Bearing
Debt
Interest-Bearing
Debt(Millionsof yen)(Millionsof yen)of yen)
(Millions

0(FY) (FY)(FY)2017 2017
2017
2018
2018 2018

CapitalExpenditure
CapitalExpenditure
CapitalExpenditure
Kureha Corporation
Business Report 2019 29
Depreciation
andDepreciation
andandDepreciation
Amortization
Amortization
Amortization

Revenue
Revenue
Revenue

ProfitAttributable
ProfitProfitAttributable
Attributable
toOwners
OwnersofParent
Parentto Owners
toof ParentofOperating
ProfitOperatingOperating
ProfitProfit(Millionsyen)(Millions(Millionsof yen)ofofyen)(Leftscale)scale)(Millionsyen)(Left (Leftscale)(Millions(Millionsof yen)ofofyen)(Leftscale)scale)(Millionsyen)(Left (Leftscale)(Millions(Millionsof yen)ofofyen)
Ratio
ofOperating
Operating
ProfitRatio
Ratio
of Operatingof
ProfitProfit(Rightscale)(%)(Right(Rightscale)
scale)
(%)
(%)
Ratio
ofProfit
ProfittoRevenue
RevenuetoRevenue
RevenueBusiness and other risks
Ratio
Ratio
of Profit
ofto Revenue
toto Revenue
to(Rightscale)(%)(Right(Rightscale)scale)(%) (%)

Overview of capital expenditure

150,000 expenditure of the Kureha Group 18,000
18,000150,000
150,000
18,000Total
capitalduringthe fiscal
year ended March 31, 2019 amounted to ¥13,174 million.

15,00018 1818
12 121215,00015,000
The KurehaGroup’s business
operations are diverse, comprising
the Advanced Materials segment focused on processed PGA
150,000
12,50015,000150,000
150,000
15 1515
12,50012,500
10 1010
15,00015,000
resin products, PVDF resin, and PPS resin; the Specialty
Chemicals
segment
focusedon pharmaceuticals, agrochemicals
Capitalexpenditure by business segment
120,000
12
12,00010,000120,000
120,000
888
12 12
12,00012,000
10,00010,000
and industrial chemicals; the Specialty Plastics segment focused
The Advanced Materials segment invested ¥7,067 million,
90,0007,500
9,000
90,00090,000
999
7,500 7,500
666
9,000 9,000
on household products and food packaging; the Construction
mainly in manufacturing-related facilities for PPS resin (Kureha
segment6 focusedon construction
Corporation),
PVDF
60,000 manufacturing-related facilities for
5,000 and engineering; and6,000 resin
60,00060,000
5,000 5,000
4 the
44
6,000
6,000
66
Other Operations segment including environmental businesses(Kureha Corporation), and an extrusion processing plant for
30,0003,000
2,500
30,00030,000
3,000 3,000
333
222,500 2,500
and logistics.
Also geographically,
the Group conducts2 businessplastic
stock
shapes and films (Kureha Extron Co.,
Ltd.).
globally.0 00
TheSpecialty
Chemicals segment invested ¥510
million,
0
00
0
00
0
00
0
00
(FY)
(FY)
(FY) affect
2017
2018
2017
2018 results,
2017
2018
(FY)
(FY)
(FY)
(FY)
(FY)
2017
2017
2018
2018
20172017
20182018
2017
2017
2018
2018
The main factors that(FY)could
the operating
primarily in manufacturing-related facilities for industrial
Domestic
Overseas
Domestic
Domestic
Overseas
Overseasstock price, financial position and other aspects of the Kureha
chemicals (Kureha
Corporation).
Group are as follows.
The Specialty Plastics segment invested ¥1,541 million,
Forward-looking statements in this text are based on evaluaprimarily in manufacturing-related facilities for PVDC resin
tions made as of the end of the subject fiscal year (March 31,(Kureha Corporation).
Cash
Flows
from
Total
Assets
Total
Equity
Cash
Cash
Flows
Flows
from
from
Total
Total
AssetsAssets
Total
Total
EquityEquity2019).
The Operating
Construction
segment
invested¥62
millioninfacilities.
(Leftscale)scale)(Millionsyen)(Left (Leftscale)(Millions(Millionsof yen)ofofyen)(Millionsofyen)(Millions(Millions
of
yen)
of
yen)
Operating
Activities
Operating
Activities
Activities
Ratio
ofEquity
EquityRatio
Ratio
of Equityof
The Cash
Other
Operations
segment
Cash
Flows
from invested ¥1,675 million,
Cash
Flows
Flows
from
from
Attributable
to
Attributable
Attributable
to toInvesting
Activities
Investing
Activities
Activities
mainly inInvesting
industrial
waste
processing facilities (Kureha Ecology(1) Changes in the businessOwners
environmentinand overseas;
OwnersofJapanParentOwnersof ParentofParent(Millionsyen)(Millions(Millionsof yen)ofofyen)(Rightscale)(%)(Right(Rightscale)
scale)(%)(%)
Management
Co., Ltd.).
changes in the market priceof products
300,000
30,000300,000
300,000
30,00030,000
180,000
180,000
180,000
90 9090
In addition, as a joint initiative, the Advanced Materials,
The Group’s business is exposed to external factors such as
25,00025,00025,000
150,000 and intensification of
150,000
75 compe7575
Specialty Chemicals, and Specialty Plastics segments
investedchanges in markets or150,000
customers,
240,000
240,000
240,000
15,00015,00015,000¥2,317
millionin such areas as research and development
tition with rival companies. Accordingly, changes such as a120,000
120,000
120,000
60 6060
10,00010,00010,000
facilities(Kureha Corporation) and common factory
facilities
decrease in demand for the Group’s principle products,
180,000
180,000
180,000(KurehaCorporation).
customers shifting production
5,000
5,000 5,000
90,000overseas, and an increase
90,00090,000
45 in4545
120,000
120,000
120,000
Capitalrequiredfor
these
investments
wasprocuredfromproduction
capacitybycompetingfirms,
could
haveanegative
000
60,00060,00060,000
30 3030
cash-at-hand,
corporatebonds,
andborrowings.
effectontheGroup’soperatingresultsandfinancial
position.
-5,000-5,000-5,000
60,00060,00060,000-10,000-10,000-10,000-15,000-15,000-15,0002017 20182018(FY) 20172017
2018(FY) (FY)

0

00

2018
2017 20182018(FY) 20172017(FY) (FY)

ReturnonAssets
AssetsReturnReturnon on
AssetsReturnonEquity
EquityReturnReturnon on
Equity30,00030,00030,000

15

1515

00

0

00

0

(FY) 20172017(FY) (FY)2017 20182018
2018

Interest-Bearing
Debt
Interest-Bearing
Interest-Bearing
Debt
Debt

CapitalExpenditure
CapitalCapitalExpenditure
Expenditure
Depreciation
andDepreciation
Depreciation
andandAmortization
Amortization
Amortization(Millionsyen)(Millions(Millionsof yen)ofofyen)(%)(%) (%)(Millionsyen)(Millions(Millionsof yen)ofofyen)121212

90,00090,00090,000

15,00015,00015,000

10

1010

75,00075,00075,000

12,50012,50012,500

888

60,00060,00060,000

10,00010,00010,000

666

45,00045,00045,000

7,500
7,500 7,500

444

30,00030,00030,000

5,000
5,000 5,000

2

22

15,00015,00015,000

2,500
2,500 2,500

0002017 20182018
2018(FY) 20172017(FY) (FY)30

Kureha Corporation Business Report 2019000

2017 20182018
2018(FY) 20172017(FY) (FY)000(FY) 20172017
2017 20182018
2018(FY) (FY)(2) Changes in fuel and raw material prices
Raw materials such as naphtha and coal used by the Group, as
well as fuel, are susceptible to changes in market conditions. As
a result, changes such as an increase in the price of these raw
materials, or the inability to shift the additional cost to productprices in a timely and appropriate manner, could have a negative
effect on the Group’s operating results and financial position.

(7) Investment securities
The Group holds investment securities (approximately 10% of
total assets on a consolidated basis) for the purpose of long-termholdings as of the end of the subject fiscal year. Significant
changes in market prices, or in the financial position of theissuing companies, could have a negative effect on the Group’s
operating results and financial position.

(3) Product liability
The Group’s core business is chemical manufacturing. The
Group is acutely aware of the risks connected with its products
and the manufacturing process, and is careful to continually
exercise Responsible Care (autonomous management for environmental conservation, disaster safety and other measures).
However, should a significant, unforeseen quality issue arise,
there could be a negative effect on the Group’s operating results
and financial position.

(8) Occurrence of natural disasters or accidents
Manufacturing of the Group’s principal products is concentrated
in the Iwaki Factory (Iwaki, Fukushima Prefecture), and as such
the Group makes continual efforts focused on this facility forenvironmental conservation and to ensure safety. However,damage to production facilities as a result of natural disasters
such as major earthquakes or typhoons, or due to fires and otheraccidents, could have a negative effect on the Group’s operating
results and financial position.

(4) The Specialty Chemicals Division’s pharmaceutical businessOne of the Group’s main businesses is the manufacture and saleof pharmaceuticals. Accordingly, revisions to drug prices underJapan’s medical insurance system, as well as the rise of the usageof generic drugs, could have a negative effect on the Group’s
operating results.

(9) Litigation
The Group has established the “Kureha Group Ethical Charter,”“Compliance Rules” and “Compliance Standards,” and strives toensure that the Group strictly complies with all laws, regulations
and societal norms. However, there is a risk that the Group’s
domestic or overseas businesses could be the target of lawsuits,administrative measures or other action. A major lawsuit orother action filed against Kureha could have a negative effect on
the Group’s operating results and financial position.

(5) Country risks for overseas businesses
The Group conducts business globally. Accordingly, changes
such as deterioration in the political or economic situation ineach region, the enactment or abolishment of laws and regulations, international tax practice risks such as transfer pricetaxation, and deterioration in public safety, as well as unforeseen
circumstances such as terrorism, armed conflict or natural
disaster, could have a negative effect on the Group’s operating
results and financial position.
(6) Currency fluctuations
The items in the Group’s financial statements not denominatedin yen are susceptible to fluctuations in exchange rates whenconverted into yen. The Group concludes exchange contracts
and takes other steps to minimize the effects of fluctuations in
exchange rates. However, fluctuations in exchange rates beyond
those predicted could have a negative effect on the Group’s
operating results and financial position.

(10) Emergence of new technologies
The Group is committed to research and development in all its
business fields, aiming to “develop differentiated products in thespecialty chemicals field, and become a high value-added
company that continually contributes to society.” Particularly in
the Advanced Materials segment, the Group considers it essential to develop and bring to market new products in a timely
manner, given the remarkable pace of technological innovation.
However, in cases where it is not possible to continuously
develop and supply new products to meet customer needs, or incases where other companies come up with revolutionary newtechnologies, there is a risk of obsolescence of some Kureha
products and technologies due to rapid technological advance,
or of product prices falling more steeply than anticipated due tointensified price competition triggered by new entrants in Japanand overseas. In such case, they could have a negative effect on
the Group’s operating results and financial position.

Kureha Corporation Business Report 201931

Consolidated Statements of Financial Position
Kureha Corporation and Consolidated Subsidiaries
As of March 31, 2019 (FY2018) and 2018 (FY2017)

Millions of yen

FY2017FY2018ASSETS
Current assets:
Cash and cash equivalents (Notes 7, 22)Trade and other receivables (Notes 8, 22, 23)
Other financial assets (Note 22)
Inventories (Note 9)
Other current assets (Note 23)
Total current assets

32

5,989
30,72128
38,3283,709
78,777¥ 6,475
32,66389
36,018
1,715
76,963

Non-current assets:
Property, plant and equipment, net (Notes 10, 12, 15)
Intangible assets, net (Note 11)
Investments accounted for using equity method (Note 13)
Other financial assets (Notes 15, 22)Deferred tax assets (Note 14)
Other non-current assets (Note 18)
Total non-current assets

117,553
1,094
13,15228,5891,249
6,935
168,574

114,236
1,336
12,09130,4581,191
6,003
165,318

Total assets¥247,352¥242,281

Kureha Corporation Business Report 2019¥

Millions of yen

FY2017FY2018LIABILITIES AND EQUITYCurrent liabilities:
Trade and other payables (Notes 15, 16, 22)
Bonds and loans payable (Notes 15, 22)
Other financial liabilities (Notes 15, 22)
Accrued income taxes
Provisions (Note 17)
Other current liabilities (Note 23)
Total current liabilities
Non-current liabilities:
Bonds and loans payable (Notes 15, 22)
Other financial liabilities (Notes 15, 22)Deferred tax liabilities (Note 14)
Provisions (Note 17)
Net defined benefit liability (Note 18)
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity:Shareholders’ equity:
Capital stock, no par value (Note 20)
Capital surplus (Note 20)
Less: Treasury stock, at cost (Note 20)
Retained earnings (Note 20)
Other components of equity (Note 20)
Total equity attributable to owners of parent
Non-controlling interests
Total equity
Total liabilities and equity¥ 24,011
23,038
523
2,897
6,176
7,348
63,995¥ 21,530
25,759
533
2,234
5,947
6,591
62,595

15,514
1,009
2,546
671
329
1,116
21,18885,184

21,657
1,201
2,657
663
380
1,084
27,64490,24018,16915,044(3,689)122,363
8,664
160,551
1,616
162,167¥247,352

18,16915,267(685)
108,715
8,725
150,193
1,847
152,041¥242,281

Kureha Corporation Business Report 201933

Consolidated Statements of Profit or Loss
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 (FY2018) and 2018 (FY2017)

Millions of yen

FY2017FY2018
Revenue (Notes 6, 23)
Cost of sales (Notes 9, 10, 11, 18)
Gross profit
Selling, general and administrative expenses (Notes 10, 11, 18, 19)
Share of profit of entities accounted for using equity method (Notes 6, 13)
Other income (Note 24)
Other expenses (Notes 10, 12, 25)
Operating profit (Note 6)
Finance income (Note 26)
Finance costs (Note 26)
Profit before tax
Income tax expense (Note 14)
Profit for the year

¥148,265
104,683
43,582
28,051
1,969
615
944
17,172651
389
17,435
3,435
13,999¥147,329
107,300
40,02827,193
2,230
510
2,602
12,973603
893
12,683
2,869
9,813

Profit attributable to:
Owners of parent
Non-controlling interests
Total

13,93365¥ 13,999

¥

9,697
116
9,813

Profit per share (in Yen):
Basic (Note 27)
Diluted (Note 27)¥ 679.55
679.07¥ 507.48
469.18

Consolidated Statements of Comprehensive Income
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 (FY2018) and 2018 (FY2017)

Millions of yen

FY2017FY2018

34

Profit for the year
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Financial assets measured at fair value through other comprehensive
income (Notes 22, 28)
Remeasurements of defined benefit plans (Note 28)
Total
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (Note 28)
Total
Total other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests
Comprehensive income (loss)

Kureha Corporation Business Report 2019¥13,999¥ 9,813

1,504
304
1,809

3,936
189
4,126

692
692
2,501
¥16,500

(778)
(778)
3,348
¥13,161¥16,465
34¥16,500¥13,020
141¥13,161

Consolidated Statements of Changes in Equity
Kureha Corporation and its Consolidated Subsidiaries

FY2017 (From April 1, 2017 To March 31, 2018)
Millions of yen
Total equity attributable to owners of parent
Other components of equity

BALANCE-APRIL 1, 2017
Profit for the period
Other comprehensive income
Comprehensive income
Acquisition of treasury stock (Note 20)
Disposal of treasury stock (Note 20)
Share-based payment transaction (Note 19)
Dividends (Note 21)
Conversion of convertible bonds (Note 20)
Equity transactions with non-controlling interests
Reclassification from other components of equity toretained earnings
Total transactions with owners
BALANCE-MARCH 31, 2018

Capital, nopar value

CapitalsurplusTreasurystock, at cost

¥12,460¥ 9,430

—

—

Stock
acquisitionrightsExchange differences ontranslating foreign operations¥319¥(3,582)

—

(767)
(767)

¥(4,456) ¥101,731
9,697
—
(6)
0
29

(0)
5,709

Retainedearnings

5,826
10

3,748

9,697
0
(4)
(2,033)
(116)

(12)
(254)
(20)

(557)
5,709
¥18,169

5,837¥15,267

3,771(2,712)¥ (685) ¥108,715

(266)
¥ 52

(20)
¥(4,370)

Total equity attributable to owners of parent
Other components of equity
Financial assets
measured at fair Remeasurements
value throughof definedotherbenefit planscomprehensive
incomeBALANCE-APRIL 1, 2017
Profit for the period
Other comprehensive income
Comprehensive income
Acquisition of treasury stock (Note 20)
Disposal of treasury stock (Note 20)
Share-based payment transaction (Note 19)
Dividends (Note 21)
Conversion of convertible bonds (Note 20)
Equity transactions with non-controlling interests
Reclassification from other components of equity toretained earnings
Total transactions with owners
BALANCE-MARCH 31, 2018

¥ 8,395

¥ —

3,922
3,922

167
167

725
725
¥13,043

(167)
(167)
¥ —

Non-controllinginterests

Total

Total

¥5,132
—
3,323
3,323
—
—
(12)
—
(254)

¥124,297
9,697
3,323
13,020(6)
012(2,033)
14,913¥1,674
116
24
141

(20)

(10)

73

62

557
270
¥8,725—
12,875¥150,193

31¥1,847—
12,906¥152,041(41)

Total equity¥125,972
9,813
3,348
13,161(6)
0
12(2,075)
14,913

Kureha Corporation Business Report 201935

FY2018 (From April 1, 2018 To March 31, 2019)
Millions of yen
Total equity attributable to owners of parent
Other components of equity

BALANCE-APRIL 1, 2018
Profit for the period
Other comprehensive income
Comprehensive income
Acquisition of treasury stock (Note 20)
Share-based payment transaction (Note 19)
Dividends (Note 21)
Equity transactions with non-controlling interests
Reclassification from other components of equity toretained earnings
Total transactions with owners
BALANCE-MARCH 31, 2019

Capital, nopar value

Capitalsurplus¥18,169¥15,267

—

—

Stock
acquisitionrightsExchange differences ontranslating foreign operations¥ (685) ¥108,715
13,933¥52¥(4,370)—(3,004)

—

684
684

Treasurystock, at cost

Retainedearnings

13,93311(2,891)
(222)
2,605
—
¥18,169(222)¥15,044(3,004)(286)¥(3,689) ¥122,363

11
¥63

—
¥(3,686)

Total equity attributable to owners of parent
Other components of equity
Financial assets
measured at fair Remeasurements
value throughof definedotherbenefit planscomprehensive
incomeBALANCE-APRIL 1, 2018
Profit for the period
Other comprehensive income
Comprehensive income
Acquisition of treasury stock (Note 20)
Share-based payment transaction (Note 19)
Dividends (Note 21)
Equity transactions with non-controlling interests
Reclassification from other components of equity toretained earnings
Total transactions with owners
BALANCE-MARCH 31, 201936

Kureha Corporation Business Report 2019¥13,043

¥ —

1,545
1,545

302
302

Non-controllinginterests

Total

Total

¥ 8,725
—
2,532
2,532
—
11
—
—

¥150,193
13,933
2,532
16,465(3,004)11(2,891)(222)(2,302)(302)(2,605)—(2,302)¥12,286(302)¥ —(2,594)¥ 8,664(6,107)¥160,551¥1,847
65
(30)
34

(105)
(160)

Total equity¥152,041
13,9992,501
16,500(3,004)11(2,996)
(383)
—

(265)
¥1,616(6,373)¥162,167

Consolidated Statements of Cash Flows
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 (FY2018) and 2018 (FY2017)

Millions of yen

FY2017FY2018Cash flows from operating activities:
Profit before tax
Depreciation and amortization
Impairment loss (Note 12)
Finance income
Finance costs
Share of (profit) loss of entities accounted for using equity method(Profit) loss on disposal and sale of property, plant and equipment, andintangible assets(Increase) decrease in trade and other receivables(Increase) decrease in inventories
Increase (decrease) in trade and other payables
Increase (decrease) in provision
Increase (decrease) in net defined benefit asset and liability
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment, and intangible
assetsProceeds from down-payment related to sales of property, plant andequipment
Payments for purchases of property, plant and equipment, and intangible
assetsProceeds from sales of investment securities
Purchase of investment securities
Proceeds from sales of assets held for sale
Proceeds from government grants
Other, net
Cash flows from investing activities
Cash flows from financing activities:
Dividends paid (Note 21)
Dividends paid to non-controlling interests
Net increase (decrease) in commercial paper and short-term loans payable(Note 29)
Proceeds from non-current loans payable (Note 29)
Repayments of non-current loans payable (Note 29)
Proceeds from issue of bonds (Note 29)
Repayments of bonds (Note 29)
Proceeds from contributions of non-controlling interests
Payments from changes in ownership interests in subsidiaries that do not
result in change in scope of consolidation
Acquisition of treasury stock (Note 20)
Other, net
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 7)¥ 17,435
10,310—(647)
359(1,969)¥ 12,683
9,898
746
(593)
468
(2,230)758
961(2,407)
2,625
241
(547)
(1,257)25,862
1,656(375)(3,766)23,377

1,298(3,415)
634
783
473
(847)
838
20,737
1,759(414)(1,903)
20,178

59

65

1,175

—

(13,438)
4,102
(25)
—
247
(485)
(8,363)(9,857)
247
(180)
793
230
(996)
(9,698)(2,891)(105)(2,033)(41)(3,730)—(5,051)
4,971(5,000)—(4,325)
1,130(6,780)
6,963(5,000)66(383)(3,004)(283)(15,478)
(22)
(486)
6,475
¥ 5,989

(3)
(6)
(383)
(10,415)
189
253
6,222
¥ 6,475

Kureha Corporation Business Report 201937

Notes to the Consolidated Financial Statements
Kureha Corporation and its Consolidated Subsidiaries
For the fiscal years ended March 31, 2019 (FY2018) and 2018 (FY2017)

1. Reporting entity

Kureha Corporation (the “Company”) is a company registered in Japan and listed on the Tokyo Stock Exchange. The locationsof the Company’s registered headquarters and main offices are available on the Company’s website at https://www.kureha.co.jp/
en/. The consolidated financial statements of the Company for FY2018 (from April 1, 2018 to March 31, 2019) comprise theCompany and its subsidiaries (collectively the “Group”), and the Group’s interests in its affiliates. The Group operates its
businesses primarily in the manufacturing and sale of advanced materials, specialty chemicals, and specialty plastics, and engages
in business activities including construction and repair of facilities, logistics and environmental protection, and other services.

2. Basis of preparation of the consolidated financial statements(1) Matters concerning compliance with IFRSThe Group’s consolidated financial statements have been prepared in accordance with the International Financial ReportingStandards (“IFRS”).
The Group has adopted the provision of Article 93 of Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements because the Group satisfies the requirements for a “Designated IFRS Specified Company” as
set forth in Article 1-2 of said Ordinance.
(2) Basis of measurement
The Group’s consolidated financial statements have been prepared on a historical cost basis except for some of the financial
assets, financial liabilities, employee benefits and other items, which have been measured at fair value, as stated in “3. Significant
accounting policies.”(3) Functional currency and presentation currency
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency. In principle,
all financial information presented in Japanese yen has been rounded down to the nearest million.
(4) Approval of the consolidated financial statements
The consolidated financial statements have been approved at the Board of Directors meeting held on June 25, 2019.

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all the periods presented in the consolidated financial
statements, unless otherwise specified.
(1) Basis of consolidation
1) Subsidiaries
A subsidiary is an entity which is controlled by the Group. The Group controls an entity when it is exposed, or has rights, tovariable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The financial statements of a subsidiary are included in the scope of consolidation from the date the Group obtains controlof the subsidiary until the date it loses such control of the subsidiary.
When the accounting policies adopted by a subsidiary differ from those adopted by the Group, the financial statements of a
subsidiary are adjusted as necessary.
When the closing date of the financial statements of a subsidiary differs from that of the Group’s consolidated financial
statements, the Group uses the financial statements based on a provisional settlement of accounts.
Intra-group balances and transactions, and any unrealized gains and losses arising from intra-group transactions, areeliminated in preparing the consolidated financial statements.
Comprehensive income of the subsidiaries is allocated to owners of the parent and non-controlling interests, even when the
non-controlling interests will result in a negative balance.
2) Affiliates
An affiliate is an entity over which the Group has significant influence in the financial and operating policy decisions, but that is
not controlled or jointly controlled by the Group. If the Group holds between 20 percent and 50 percent of the voting rights ofanother entity, it is presumed that the Group has significant influence over the other entity. An investment in an affiliate isaccounted for using the equity method.
When the closing date of the affiliate’s financial statements differs from that of the Group’s consolidated financial statements,
the Group uses the financial statements based on a provisional settlement of accounts.
3) Joint ventures
A joint venture is an entity with a contractual agreement whereby two or more parties including the Group undertake aneconomic activity that is subject to joint control, which is the contractually agreed sharing of control over an economic activity,and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of theparties sharing control.
The joint ventures held by the Group are accounted for using the equity method.
38

Kureha Corporation Business Report 2019

(2) Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred by the Company as an
acquirer is measured as the aggregate of the acquisition-date fair value of the assets given, liabilities assumed and equity
instruments issued by the Company in exchange for control of the acquiree. If (a) the aggregate of the consideration transferredby the Company, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held
equity interest in the acquiree in a business combination achieved in stages (step acquisitions) exceeds (b) the fair value ofidentifiable assets and liabilities, the excess is recognized as goodwill in the consolidated statements of financial position. If, in
the contrary, the amount of (a) above falls below the amount of (b), the difference is recognized immediately as profit or loss inthe consolidated statements of profit or loss.
Acquisition-related costs, which are the costs the Group incurs to effect a business combination, are expensed as incurred.
As additional acquisitions of non-controlling interests in the Group’s subsidiaries are accounted for as equity transactions, nogoodwill is recognized as a result of such transactions.
(3) Foreign currency translation
1) Foreign currency transactions
The items included in the financial statements of each entity of the Group are measured in its functional currency. Foreign
currency transactions are converted into the functional currency of each entity using the spot exchange rate at the transaction
date. Monetary assets and liabilities denominated in foreign currencies are converted into the functional currency using theexchange rate at the end of the reporting period. Foreign exchange gains and losses resulting from the currency conversion andsettlement are recognized in profit or loss, except where gains and losses arising from financial assets measured at fair value
through other comprehensive income and cash flow hedges are recognized in other comprehensive income.
2) Financial statements of foreign operations
Assets and liabilities of foreign operations (including goodwill and fair value adjustments arising from the acquisition of foreign
operations) are translated into Japanese yen using the exchange rate at the end of the reporting period, and revenue and expense
items are translated into Japanese yen using the average exchange rates during the period. Exchange differences arising from thetranslation of financial statements of the foreign operations are recognized in other comprehensive income. In the event of a lossof control or significant influence (or joint control) due to the disposal of foreign operations, the relevant cumulative amount oftranslation differences associated with the foreign operations is reclassified into profit or loss as part of gain or loss on disposal.
(4) Cash and cash equivalents
Cash and cash equivalents are comprised of cash on hand; demand deposits; and short-term, highly liquid investments with amaturity of three months or less from the date of acquisition that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
(5) Inventories
Inventories are measured at the lower of cost and net realizable value. The cost of inventories includes costs of purchase, costs of
conversion and all the other costs incurred in bringing the inventories to their present location and condition, and the cost isdetermined using the periodic average method if items of inventories are interchangeable or the specific identification method ifthey are not interchangeable. Net realizable value is the estimated selling price in the ordinary course of business less theestimated costs of completion and the estimated costs necessary to make the sale. Any difference arising from the measurement
is recognized in profit or loss.
(6) Property, plant and equipment
The Group uses the cost model to measure items of property, plant and equipment. They are stated at cost less any accumulated
depreciation and any accumulated impairment losses.
The cost of an item of property, plant and equipment includes directly attributable costs of acquisition, costs of dismantling,
removing or restoring the item, and borrowing costs eligible for capitalization.
Except for non-depreciable assets such as land, an item of property, plant and equipment is depreciated using the straightline method over the estimated useful life. The estimated useful lives of the major classes of assets are presented as follows:
Buildings and structures:
Machinery and equipment:
Vehicles, tools, furniture and fixtures:

10 to 50 years
7 to 20 years
4 to 10 years

The estimated useful life, depreciation method and residual value of an asset are reviewed at the end of each reporting
period. Any changes are accounted for prospectively as a change in accounting estimate.

Kureha Corporation Business Report 201939

(7) Intangible assets
1) Goodwill
The measurement of goodwill upon initial recognition is described in “3. Significant accounting policies, (2) Businesscombinations.” Goodwill is stated at cost less any accumulated impairment losses.
Goodwill is not amortized, but instead tested for impairment annually or whenever there are indications that goodwill may
be impaired. An impairment loss for goodwill is recognized in the consolidated statements of profit or loss and is not
subsequently reversed.
2) Other intangible assets
The Group uses the cost model to measure a separately acquired intangible asset other than goodwill. With respect to aninternally generated intangible asset, expenditure on such an asset is recognized as expenses in the period in which they are
incurred except for development expenditures that qualify for capitalization.
Intangible assets with definite useful lives are stated at cost less any accumulated depreciation and any accumulated
impairment losses, depreciated using the straight-line method over the estimated useful life, and tested for impairment whenever
there are indications that the assets may be impaired. The estimated useful lives of the major classes of assets are presented asfollows:
Trademarks:
Software:10 years
5 years

The estimated useful life, amortization method and residual value of an asset are reviewed at the end of each reporting
period. Any changes are accounted for prospectively as a change in accounting estimate.
Intangible assets with indefinite useful lives and those not yet available for use are not amortized, but instead tested for
impairment individually or at a cash-generating unit level annually or whenever there are indications that they may be impaired.
(8) Lease
The Group determines whether the agreement contains a lease based on the substance of the arrangement at the commencement
date of the lease transaction.
If a lease transfers to the Group, substantially all risks and rewards incidental to ownership of an asset, such a lease isclassified as a finance lease, or otherwise it is classified as an operating lease.
A leased asset under a finance lease transaction is initially recognized at the lower of the fair value of the leased asset
determined at inception of the lease and the present value of the minimum lease payments, and subsequently depreciated basedon the applicable accounting policies using the straight-line method over shorter of the estimated useful life and the lease term.
Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge isallocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of theliability.
Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term. Contingent
rents are charged as expenses in the periods in which they are incurred.
(9) Impairment of non-financial assets
The Group assesses at the end of each reporting period whether there is any indication that its non-financial assets other thaninventories and deferred tax assets may be impaired. If any such indication exists, it estimates the recoverable amount of theasset. Goodwill and an intangible asset with indefinite useful life or an intangible asset not yet available for use are tested for
impairment annually regardless of whether there is an indication of impairment.
The recoverable amount of an asset or a cash-generating unit is the higher of its value in use and fair value less costs ofdisposal. In determining the value in use, estimated future cash flows are discounted using a pre-tax discount rate that reflects
the time value of money and the risks specific to the asset.
Assets that are not individually tested for impairment are integrated with the smallest cash-generating unit that generates
cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets. The
Group’s corporate assets do not generate independent cash inflows. If there is an indication that the corporate assets may be
impaired, the recoverable amount is determined for the cash-generating unit to which the corporate assets belong.
Goodwill acquired in a business combination is allocated to each of the cash-generating units that is expected to benefit fromthe synergies of the combination to ensure that goodwill is tested for impairment reflecting the smallest unit to which the
goodwill relates.
Impairment losses are recognized as profit or loss when the carrying amount of an asset or a cash-generating unit exceeds its
estimated recoverable amount.
The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized inprior periods for an asset other than goodwill may have decreased or may no longer exist. An impairment loss is reversed if there
is a change in the estimates used to determine the asset’s recoverable amount.
40

Kureha Corporation Business Report 2019(10) Financial Instruments
1) Non-derivative financial assets(i) Initial recognition and measurement
The Group initially recognizes sale and purchase of securities on the account day and initially recognizes other financial assets
when the Group becomes party to the contractual provisions of the financial assets.
At initial recognition, the financial assets are classified as financial assets measured at fair value through profit or loss,
financial assets measured at fair value through other comprehensive income, or financial assets measured at amortized cost.
Financial assets are classified as financial assets measured at amortized cost if both of the following conditions are met.
Otherwise financial assets are classified as financial assets measured at fair value.
•The financial assets are held within a business model whose objective is to hold assets in order to collect contractual cash
flows; and•The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Of financial assets measured at fair value, certain equity instruments such as stocks that are held with the purpose of
facilitating business relations with investees are initially designated as financial assets measured at fair value through othercomprehensive income. Other financial assets are designated as financial assets measured at fair value through profit or loss.
All financial assets are measured at fair value plus transaction costs directly attributable to acquisition of the financial assets
unless the financial assets are classified as financial assets measured at fair value through profit or loss.
(ii) Subsequent measurement
Measurement of financial assets after initial recognition is performed as follows according to the classification:(a) Financial assets measured at amortized cost
These financial assets are measured at amortized cost using the effective interest method.
(b) Financial assets measured at fair value through other comprehensive income
These financial assets are measured at fair value after initial recognition, and subsequent changes in fair value areincluded in other comprehensive income. If the Group disposes of an investment, or if the fair value of the investment
declines significantly, for example, the cumulative gains or losses recognized in other comprehensive income arereclassified from other components of equity to retained earnings.
Dividends from the financial assets measured at fair value through other comprehensive income are recognized as
finance income in profit or loss.
(c) Financial assets measured at fair value through profit or loss
Financial assets designated to be measured at fair value through profit or loss, or financial assets other than (a) and (b)above are measured at fair value, and subsequent changes in their fair value are recognized in profit or loss.
(iii) Derecognition of financial assets
The Group derecognizes financial assets when the rights to receive benefits expire or when the Group transfers financial assets or
substantially all the risks and rewards of ownership of the financial assets.
(iv) Impairment of financial assets
With respect to financial assets measured at amortized cost, the Group recognizes allowance for doubtful accounts based on the
expected credit loss model for such financial assets. At each reporting date, the Group assesses whether the credit risks on thefinancial assets have increased significantly since initial recognition. If the credit risk on a financial asset has increased
significantly since the initial recognition, the allowance for doubtful accounts is measured at an amount equal to the lifetime
expected credit losses. If the risk on a financial asset has not increased significantly since the initial recognition, the allowance for
doubtful accounts for the financial asset is measured at an amount equal to the 12-month expected credit losses. However, theallowance for doubtful accounts on trade and other receivables is always measured at an amount equal to the lifetime expectedcredit losses.
The Group estimates expected credit losses of a financial asset in a way that reflects:• an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;• the time value of money; and• reasonable and supportable information that is available without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic conditions.
The amounts of these measurements are recognized in profit or loss.

Kureha Corporation Business Report 201941

2) Non-derivative financial liabilities(i) Initial recognition and measurement
The Group initially recognizes a financial liability when the Group becomes party to the contractual provisions of the financial
liability.
At the initial recognition, the Group classifies financial liabilities as financial liabilities measured at fair value through profit
or loss or financial liabilities measured at amortized cost.
All financial liabilities are measured in the full amount after deducting transaction costs directly attributable to the financial
liabilities from the fair value unless the financial liabilities are classified as financial liabilities measured at fair value throughprofit or loss.
(ii) Subsequent measurement
Financial liabilities measured at fair value through profit or loss are measured at fair value, and subsequent changes in the fairvalue are recognized in profit or loss.
After initial recognition, financial liabilities measured at amortized cost are measured at amortized cost using the effective
interest method. Amortization using the effective interest method and gains and losses upon derecognition are recognized in
profit or loss in its consolidated statements of profit or loss for the period.
(iii) Derecognition of financial liabilities
The Group derecognizes financial liabilities when they are discharged, cancelled or expired.
3) Derivatives and hedge accounting
The Group uses derivatives such as forward exchange contracts and interest rate swaps to hedge foreign currency risk andinterest rate risk.
Derivatives are initially measured at fair value at the date when the derivative contract is entered into and are subsequently
measured at fair value. Changes in the fair value of derivatives are immediately recognized in profit or loss except for those that
qualify for hedge accounting.
The Group formally designates and documents the hedging relationship and the risk management objective and strategy forundertaking the hedge. The documentation includes the hedging instrument, the hedged item, the nature of the risk being
hedged and the methods of assessing whether the hedging relationship meets the hedge effectiveness requirements. In addition,
the Group assesses whether the hedging relationship meets the hedge effectiveness requirements, both at the inception and on an
ongoing basis.
Hedging relationship that meet the criteria for hedge accounting are accounted as follows.
Changes in fair value of a derivative designated as fair value hedges are recognized in profit or loss. The carrying amount ofhedged items is measured at fair value and the changes in the fair value of hedged items attributable to the hedged risk arerecognized as profit or loss with adjustments to the carrying amount of the hedged items.
With regard to cash flow hedge, the effective portions of the gain or loss on the hedging instrument are recognized in othercomprehensive income as the line item titled “Cash flow hedges.” Subsequently, such amounts associated with forward exchange
contracts are reclassified as reclassification adjustment from equity to profit or loss in the same period in which the hedged item
affects profit or loss. With regard to interest rate swaps, the changes in gains and losses on the hedging instrument are recognizedas other comprehensive income.
Hedge accounting is discontinued prospectively when, and only when, the hedging relationship ceases to meet the qualifying
criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised.
(11) Employee benefits
1) Post-retirement benefits
The Group has defined benefit plan and defined contribution plan as post-employment benefit plan.
The net defined benefit liability (asset) associated with the defined benefit plans is calculated by deducting the fair value ofthe plan assets from the present value of defined benefit obligations. The present value of defined benefit obligations and related
current service costs and prior service costs are measured annually by independent actuaries based on the projected unit credit
method. The discount rate is calculated by reference to market yields at the end of the fiscal year on highly rated corporate
bonds denominated in the same currency as those used for future benefit payment, corresponding to the discount period
determined based on the period until annual future payment dates.
Remeasurements of all of the net benefit liability (asset) arising from the defined benefit plans are recognized at once in othercomprehensive income in the period in which they are incurred and immediately reclassified from other components of equity
to retained earnings.
Current service costs are recognized as profit or loss for the period in which they are incurred.
Prior service costs are immediately recognized as profit or loss for the period in which they are incurred.
Contributions to defined contribution plans are recognized as an expense when they are paid.

42

Kureha Corporation Business Report 20192) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis, and are recognized at once when the related
services are rendered. When there is a legal or constructive obligation to make payments of bonuses and paid leave expenses, andthe obligation can be estimated reliably, the estimated amount to be paid under the relevant plans is accounted for as a liability.
(12) Share-based payments
The Group has a stock option plan accounted for as an equity-settled share-based payment plan. Stock options are estimatedusing its fair value at the grant date and recognized as expenses over the vesting periods with corresponding increases to equity
and taking into account the estimated number of options to be vested. The fair value of options granted is measured using theBlack-Scholes model based on the terms and conditions of the options.
(13) Provisions
The Group recognizes a provision when the Group has a present obligation (legal or constructive) as a result of a past event; it isprobable that the Group will be required to settle the obligation through an outflow of resources embodying economic benefits,
and a reliable estimate can be made of the amount of the obligation.
The amount of provision is measured at the present value of the expenditures expected to be required to settle the obligation.
In calculating the present value, the pre-tax discount rate that reflects the current market assessment of the time value of money
and the risks that are specific to the obligation is applied. Unwinding of the discount associated with the passage of time isrecognized as finance costs.
(14) Levies
For levies that are an outflow of resources embodying economic benefits required by a government to the Group in accordancewith laws and regulations, the estimated payment is recognized as a liability when the obligation event that triggers the paymentof levies prescribed by laws and regulations occurs.
(15) Revenue
The Group has adopted IFRS 15 “Revenue from Contracts with Customers” since FY2018. In adopting this standard, theGroup employs the method of recognizing the cumulative effect of changes in accounting policies on the date of start ofapplication, which is utilized as a transitional measure.
The Group recognizes revenue based on the five-step approach described below.
Step 1: Identify the contract(s) with a customer
Step 2: Identify performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to each performance obligation in the contract
Step 5: Recognize revenue when the performance obligation is satisfied
With regard to the timing when the performance obligation is satisfied, the Group recognizes revenue after determining
whether control over goods or services is transferred to a customer over a certain period of time or at a single point in time.
The Group operates its businesses primarily in the manufacturing and sale of advanced materials, specialty chemicals, andspecialty plastics and with regard to sales of these products, the Group determines that a customer obtains control over a productand the performance obligation is satisfied when the product is delivered to the customer. Accordingly, the Group principally
recognizes revenue at the time of delivery of its product to the customer.
With regard to provision of services, the Group determines that the performance obligation is satisfied while control over a
service is transferred to a customer over a certain period of time and therefore, recognizes revenue principally in accordance withthe progress of the service.
Revenue is measured at the amount of consideration promised in a contract with a customer less discounts, rebates, returns,
taxes collected for a third party, etc. In addition, in the event that another party is involved in providing goods or services to acustomer, the Group, if it is deemed as a principal, recognizes revenue on the gross amount basis (amount of consideration towhich it expects to be entitled) and, if it is deemed as an agent, recognizes revenue on the net amount basis (amount of fee orcommission to which it expects to be entitled).
(Change in accounting policies)
The Group has adopted the standards described below since FY2018.
Standard

IFRS 15

Title

Revenue from Contracts with Customers

Details of new or amended standard

Amendments to accounting treatment and disclosure method forrevenue recognition

In adopting this standard, the Group employs the method of recognizing the cumulative effect of changes in accounting policies
on the date of start of application, which is utilized as a transitional measure.
Kureha Corporation Business Report 201943

In accordance with adoption of this standard, 1,789 million yen of contract assets, which were previously included in tradeand other receivables, is included in other current assets and 896 million yen of refund liabilities is included in other current
liabilities in the consolidated statements of financial position for FY2018. This adoption does not have material effect on the
consolidated statements of profit or loss.
(16) Government grants
Government grants are recognized at fair value when there is reasonable assurance that the Group will comply with theconditions attaching to them and the grants will be received.
Government grants related to expense items are recognized as revenue on a systematic basis over the period in which theGroup recognizes the related expenses for which the grants are intended to compensate. Government grants related to assets are
directly deducted in arriving at the carrying value of the assets. Government grants are recognized in profit or loss over the useful
lives of the depreciable assets as a reduction in depreciation.
(17) Finance income and finance costs
Finance income consists mainly of interest income and dividend income. Interest income is recognized when accrued by using
the effective interest method. Dividend income is recognized when the Group’s right to receive the dividends is established.
Finance costs consist mainly of interest expenses. Interest expenses are recognized when incurred by using the effective
interest method.
(18) Income taxes
Income tax expenses consist of current tax expense and deferred tax expense. Income taxes are recognized in profit or loss, except
when they arise from business combinations, and from items that are recognized directly in equity or in other comprehensive
income.
Current tax expense is measured by the expected taxes payable to or receivable from tax authorities. The tax rates and tax
laws that are used to calculate the tax amount are those enacted or substantively enacted by the end of the fiscal year injurisdictions in which the Group operates business and earns taxable income.
Deferred tax expense is calculated based on temporary differences between the carrying amounts of assets and liabilities forfinancial accounting purposes and the tax bases of such assets and liabilities. Deferred tax assets are recognized for deductible
temporary differences, the carryforwards of unused tax credits and the carryforwards of unused tax losses to the extent that it isprobable that future taxable income will be available against which such deferred tax assets can be recovered. Deferred tax
liabilities are recognized, in principle, for taxable temporary differences.
Deferred tax assets and liabilities are not recognized for the following temporary differences:• Temporary differences arising from initial recognition of goodwill,• Temporary differences arising from initial recognition of assets and liabilities from transactions that are not businesscombinations and affect neither accounting profit nor taxable income (tax loss),• Deductible temporary differences on investments in subsidiaries and affiliates, when it is probable that such temporary
differences will not reverse in the foreseeable future, or when it is unlikely that taxable income will be earned against which
the temporary difference can be utilized,• Taxable temporary differences on investments in subsidiaries and affiliates, when the timing of the reversal of thetemporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable
futureDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets are
realized or the liabilities are settled, based on the tax rates and tax laws enacted or substantively enacted by the end of the fiscal
year.
Deferred tax assets and liabilities are offset if the Group has a legally enforceable right to set off current tax assets against
current tax liabilities and income taxes are levied by the same taxation authority on the same taxable entity.
(19) Treasury stock
Treasury stock is recognized at cost and deducted from equity. No gains or losses are recognized on the repurchase, sale orretirement of shares of the Company’s treasury stock. Any difference between the carrying amount and consideration received on
the sale of shares of the treasury stock is recognized directly as capital surplus.
(20) Profit per share
Basic profit per share are calculated by dividing profit attributable to owners of parent by the weighted average number ofordinary shares outstanding during the period, adjusted for treasury stocks held. Diluted profit per share is calculated byadjusting for the effects of all dilutive potential ordinary shares.

44

Kureha Corporation Business Report 2019

(Change in presentation methods)(Consolidated Statements of Cash Flows)“Acquisition of treasury stock,” which was included in “other, net” under “cash flows from financing activities” in FY2017, ispresented separately from FY2018 as its importance has increased. For reflecting this change in presentation method, theconsolidated financial statements for FY2017 have been reclassified.
As a result, (390) million yen, which was included in “other, net” under “cash flows from financing activities” in the
consolidated statements of cash flows for FY2017 has been reclassified to “acquisition of treasury stock” of (6) million yen and“other, net” of (383) million yen.

4. Significant accounting estimates and associated judgments

In preparing the Group’s consolidated financial statements in compliance with IFRSs, the management is required to makejudgments, estimates and assumptions that affect the adoption of accounting policies and the reportable amount of assets,
liabilities and revenue and expenses. Actual results may differ from such estimates.
The estimates and their underlying assumptions are reviewed on an ongoing basis. The effect of a change in accounting
estimates is recognized in the accounting period in which such estimates are changed and also in the future accounting periods.
Estimates and assumptions that may have material impact on the preparation of the Group’s consolidated financial statements
are as follows:• Useful lives of property, plant and equipment (Item (6) of 3. Significant accounting policies and 10. Property, plant andequipment),• Impairment of property, plant and equipment; goodwill and intangible assets (Item (9) of 3. Significant accounting policies
and 12. Impairment of non-financial assets),• Valuation of inventories (Item (5) of 3. Significant accounting policies and 9. Inventories),• Recoverability of deferred tax assets (Item (18) of 3. Significant accounting policies and 14. Income taxes),• Valuation of defined benefit obligations (Item (11) of 3. Significant accounting policies and 18. Employee benefits),• Recognition of provisions (Item (13) of 3. Significant accounting policies and 17. Provisions) and• Assumption on valuation of financial instruments (Item (10) of 3. Significant accounting policies and 22. Financial
instruments).
Judgments made by the management in the course of applying the accounting policies are as follows:• Determination of scope of consolidation (Item (1) of 3. Significant accounting policies) and• Classification of financial instruments (Item (10) of 3. Significant accounting policies and 22. Financial instruments).
(Change in accounting estimates)(Change in useful lives of property, plant and equipment)
The Company has reduced the useful life of a fixed asset which will become unavailable due to relocation of the headquarters
annex building so that depreciation will be complete by the scheduled relocation date.
Pursuant to this change, operating profit and profit before tax for FY2018 were respectively lowered by 239 million yen
compared to the previous method.

5. Standards and interpretations issued but not yet adopted

Of the new standards or interpretations that were established or amended by the date of approval of the consolidated financial
statements, the following are the titles and other related information of the major new IFRSs. The Group has not yet adopted
these standards in FY2018.
Standard

IFRS 16

Title

Leases

Effective dateFiscal year in which
the Group will apply
the standard

Fiscal year
January 1, 2019 ending March
31, 2020

Summary of new or amended standard

Amendments to accounting treatment for lease
contracts

IFRS 16 “Leases” requires that a right-of-use asset representing the right to use the underlying asset and a lease liability
representing the obligation to make lease payments are recognized for all leases in principle. However, entities may elect not toadopt this standard in the case of short-term leases or low-value leases. After a right-of-use asset or a lease liability is recognized,
depreciation of the right-of-use asset and interest expenses on the lease liability are recorded. With regard to application of thisstandard, we plan to adopt the method of recognition of the cumulative effect on the date of start of application, which isutilized as a transitional measure. The effect on the consolidated financial statements of the Group is under assessment.

Kureha Corporation Business Report 201945

6. Segment information(1) Overview of reportable segments
The Group’s reportable segments are components for which separate financial information is available and whose operating
results are regularly reviewed by the Board of Directors to decide on the allocation of operating resources and assess theirperformance.
The Group has separate divisions by product, and each division formulates a comprehensive strategy for business activities indomestic and overseas markets.
Accordingly, the Group consists of segments by product and service on the basis of the business divisions, and has the fivereportable segments of “Advanced Materials,” “Specialty Chemicals,” “Specialty Plastics,” “Construction,” and “Other
Operations.”
Major products and services for each segment are as follows:
Segment
Advanced Materials
Specialty Chemicals
Specialty Plastics
Construction
Other Operations

Products and services
polyphenylene sulfide (PPS), polyvinylidene fluoride (PVDF), processed polyglycolic acid
(PGA) products, carbon fiber, bead-shaped activated carbon, anode materials for lithium ion
batteries
agricultural and horticultural fungicides, therapeutic agent for chronic renal failure, caustic
soda, hydrochloric acid, sodium hypochlorite, monochlorobenzene, para-dichlorobenzene,
ortho-dichlorobenzene
household plastic wrap, garbage bags for kitchen sink, plastic food containers, cooking
paper, PVDF fishing lines, polyvinylidene chloride (PVDC) film, multilayer heat-shrinkablefilm, multilayer bottle, auto-pack machinery (for food packaging)
civil engineering and construction contracting business, construction and management
serviceindustrial waste management and environmental processing facilities, physiochemical andbiochemical testing, analysis and measurement services, transport and warehousing, medical
services(2) Information on reportable segments
The accounting policies for the reportable segments are the same as those of the Group stated in “3. Significant accounting
policies.” Intersegment revenue is principally based on the market price.
As described in “4. Significant accounting estimates and associated judgments (Change in accounting estimates),” the usefullife of a fixed asset which will become unavailable due to relocation of the headquarters annex building changed from FY2018.
Pursuant to this change, operating profits for “Advanced Materials,” “Specialty Chemicals” and “Specialty Plastics” were loweredby 87 million yen, 63 million yen, and 88 million yen, respectively, for FY2018, compared to the previous method.

46

Kureha Corporation Business Report 2019

The Group’s segment information is as follows:
Millions of yen

FY2017 (From April 1, 2017 To March 31, 2018)

Revenue
Revenue fromexternal customers
Intersegment revenue
Total
Operating profit
Finance income
Finance costs
Profit before tax
Other items
Segment assets
Depreciation andamortization
Impairment loss
Share of profit ofentities accounted forusing equity method
Increases in property,
plant and equipment,
and intangible assets

Advanced
Materials

Specialty
Chemicals

Reportable segments
Specialty
Plastics
Construction¥41,640
707
42,348
1,669¥26,176
327
26,504
3,421¥45,397334
45,731
6,907

82,94322,601

3,278
—
1,963
¥ 3,308¥

Adjustment(Note)

Other
Operations

Total¥17,354
4,580
21,935
1,037¥16,760
5,745
22,505
1,812¥147,329
11,695
159,025
14,85040,066

8,198

18,519172,32969,951

242,281

932
—

2,311
—

100
—

1,203
—

7,826
—

2,071
746

9,898
746

—

267

—

—

2,230

—

2,230

661

¥ 2,585

7,421¥ 2,346

¥

90

¥

777

¥

Consolidated¥— ¥147,329(11,695)—(11,695) 147,329(1,876)
12,973603(893)
12,683¥

9,768

Note: Adjustment to operating profit consists mainly of 216 million yen of profit resulting from elimination of intersegment transactions, 510
million yen of other income and 2,602 million yen of other expenses not allocated to any reportable segment.
Adjustment to segment assets includes corporate assets not allocated to reportable segments, which mainly consist of cash and deposits,
investment securities and shared facilities of the Company.
Adjustment to impairment losses includes impairment losses for fixed assets of 194 million yen associated with the Advanced Materials
segment and 552 million yen for fixed assets of the Specialty Plastics segment.
Millions of yen

FY2018 (From April 1, 2018 To March 31, 2019)

Revenue
Revenue fromexternal customers
Intersegment revenue
Total
Operating profit
Finance income
Finance costs
Profit before tax
Other items
Segment assets
Depreciation andamortization
Impairment loss
Share of profit ofentities accounted forusing equity method
Increases in property,
plant and equipment,
and intangible assets

Advanced
Materials

Specialty
Chemicals

Reportable segments
Specialty
Plastics
Construction

Other
Operations

Total¥45,749782
46,531
4,607¥27,309227
27,5373,301¥45,148
230
45,3796,738¥12,415
6,093
18,509668¥17,643
5,923
23,5662,087¥148,265
13,258
161,523
17,40389,575

21,18739,911

7,734

18,913

177,32270,029247,352

3,381
—

1,155
—

2,310
—

102
—

1,279
—

8,228
—

2,081
—

10,310
—

1,690

—

238

—

40

1,969

—

1,969

510

¥ 1,54162¥ 1,675¥ 10,856¥ 2,317¥ 13,174¥ 7,067¥¥

Adjustment(Note)

Consolidated¥— ¥148,265(13,258)—(13,258) 148,265(230)
17,172651(389)
17,435

Note: Adjustment to operating profit consists mainly of 97 million yen of profit resulting from elimination of intersegment transactions, 615
million yen of other income and 944 million yen of other expenses not allocated to any reportable segment.
Adjustment to segment assets includes corporate assets not allocated to reportable segments, which mainly consist of cash and deposits,
investment securities and shared facilities of the Company.

Kureha Corporation Business Report 201947

(3) Information on products and services
This information is omitted because the same information is disclosed in “(1) Overview of reportable segments” and “(2)Information on reportable segments.”(4) Information by geographical area
Revenue from external customers
Millions of yen

FY2018Japan
Asia
EuropeOther(From April 1, 2018
To March 31, 2019)¥103,862
18,061
13,53312,808¥148,265

Total
Note: Revenues are classified based on the location of customers.

FY2017(From April 1, 2017
To March 31, 2018)¥107,145
14,014
13,717
12,451¥147,329

Non-current assets (property, plant and equipment and intangible assets)
Millions of yen

FY2018(As of March 31, 2019)

Japan
U.S.
Other

Total
Note: Non-current assets are classified based on the location of the assets.

FY2017(As of March 31, 2018)¥ 89,749
14,432
11,390¥115,573¥ 94,319
13,936
10,390¥118,647(5) Information on major customers
This information is omitted because no customer accounted for 10% or more of revenue from external customers in the
consolidated statements of profit or loss.

7. Cash and cash equivalents

Cash and cash equivalents comprise cash and deposits. The balances of “cash and cash equivalents” in the statements of financial
position as of the end of FY2017 and FY2018 equal the balances of “cash and cash equivalents” presented in the corresponding
consolidated statements of cash flows.

8. Trade and other receivables

The breakdown of trade and other receivables is as follows:
Millions of yen

FY2018(As of March 31, 2019)

Trade notes and accounts receivable
Other
Allowance for doubtful accounts
Total

48

Kureha Corporation Business Report 2019¥29,610
1,276(165)¥30,721

FY2017(As of March 31, 2018)¥31,907915(159)¥32,663

9. Inventories

The breakdown of inventories is as follows:
Millions of yen

FY2018(As of March 31, 2019)

FY2017(As of March 31, 2018)

Merchandise and finished goods¥32,070¥30,278Work in process
1,411
1,022
Raw materials and supplies
4,846
4,717
Total
¥38,328¥36,018
Note: The amounts of inventory write-down recognized as expense for FY2017 and FY2018 are 1,827 million yen and 619
million yen, respectively. These amounts are included in “Cost of sales” in the consolidated statements of profit or loss.

10. Property, plant and equipment(1) Changes in carrying amount, cost, and accumulated depreciation and accumulated impairment losses
Carrying amountMillions of yen
Machinery,
Buildings and equipment andstructures
vehiclesBalance as of April 1, 2017
Acquisitions
Disposals
Depreciation
Impairment loss
Direct deduction due to government grants
Exchange rate differences
Other changes
Balance as of March 31, 2018
Acquisitions
Disposals
Depreciation
Impairment loss
Direct deduction due to government grants
Exchange rate differences
Other changes
Balance as of March 31, 2019

¥40,0704,009(32)(2,856)
(202)
(0)
(47)
0
¥40,940
4,184(49)(3,111)——
49—¥42,013¥47,802
3,875(172)(5,524)
(540)
(96)
(442)
0
¥44,9028,049(150)(5,739)——386(0)¥47,449

Land¥17,864
31
(45)
—
—
—
12
—
¥17,863
18
(0)
—
—
—
(6)
—
¥17,875

Construction inprogress¥6,752
774
—
—
—
—
(9)
—
¥7,517
(342)
—
—
—
—
8
—
¥7,183Other¥ 3,421750(16)(1,133)
(4)
(15)
10
(0)
¥ 3,0121,123(8)(1,090)——(5)0¥ 3,031

Total¥115,911
9,441
(267)
(9,514)
(746)
(112)
(475)
0
¥114,236
13,032(207)(9,940)——432—¥117,553

Notes: 1. Depreciation is recorded in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated
statements of profit or loss.
2. Impairment loss is recorded in “Other expenses” in the consolidated statements of profit or loss. See the section
entitled 12. Impairment of non-financial assets” for further details on impairment.
3. The line item “Acquisitions” above includes transfers from construction in progress to items of property, plant andequipment.
Cost
Millions of yen
Machinery,
Buildings and equipment andstructures
vehiclesBalance as of April 1, 2017
Balance as of March 31, 2018
Balance as of March 31, 2019

¥102,705¥106,222¥109,930¥165,649¥165,733¥171,079Land¥18,459¥18,458¥18,470

Construction inprogress¥6,752¥7,517¥7,183

Other

Total

¥16,411¥16,291¥16,354¥309,979¥314,223¥323,018

Kureha Corporation Business Report 201949

Accumulated depreciation and accumulated impairment losses
Millions of yen
Machinery,
Buildings and equipment andstructures
vehiclesBalance as of April 1, 2017
Balance as of March 31, 2018
Balance as of March 31, 2019

¥62,635¥65,282¥67,917¥117,847¥120,830¥123,629

Land

¥594
¥594
¥594

Other

Total

¥12,989¥13,278¥13,323¥194,067¥199,986¥205,464(2) Government grants that were directly deducted from the cost of fixed assets (by applying reduction entry to fixed
assets) are as follows:
Millions of yen

FY2018(As of March 31, 2019)

FY2017(As of March 31, 2018)

Amount subject to reduction entry¥7,309¥7,322
Note: The amount represents direct deduction of subsidy from the carrying amounts of building, machinery and equipment,
etc. related to Fukushima Business Investment Subsidy for Revitalization of Industries.

11. Intangible assets(1) Changes in carrying amount, cost, and accumulated amortization and accumulated impairment losses
Carrying amountMillions of yen
Other

SoftwareBalance as of April 1, 2017
Acquisitions
Disposals
Amortization
Exchange rate differences
Other changes
Balance as of March 31, 2018
Acquisitions
Disposals
Amortization
Exchange rate differences
Other changes
Balance as of March 31, 2019

¥ 692
325
(1)
(286)
0
(0)
¥ 729
126
(15)
(273)
(0)
—
¥ 567

Total

¥703
1
(0)
(96)
(1)
—
¥606
15
(0)
(96)
1
—
¥526

¥1,395
326
(1)
(383)
(1)
(0)
¥1,336
142
(15)
(369)
1
—
¥1,094

Notes: 1. Amortization of intangible assets is recorded in “Cost of sales” and “Selling, general and administrative expenses” inthe consolidated statements of profit or loss.
2. The line item “Acquisitions” above mainly represents the amounts of intangible assets purchased from external parties.
Cost
Millions of yen
Other

SoftwareBalance as of April 1, 2017
Balance as of March 31, 2018
Balance as of March 31, 2019

¥1,883¥1,727¥1,640Total¥1,037¥1,006¥1,011¥2,920¥2,734¥2,652

Accumulated amortization and accumulated impairment losses
Millions of yen
Other

SoftwareBalance as of April 1, 2017
Balance as of March 31, 2018
Balance as of March 31, 201950

Kureha Corporation Business Report 2019

¥1,191¥ 997¥1,072

Total

¥333
¥400
¥485

¥1,525¥1,397¥1,557

(2) Research and development expenses
The total amounts of expenditures for research and development recognized as expense for FY2017 and FY2018 are 4,962
million yen and 5,270 million yen, respectively.

12. Impairment of non-financial assets(1) Impairment loss
The Group recognizes impairment losses when either the carrying amount of an asset or a cash-generating unit exceeds its
estimated recoverable amount.
The Group recognized impairment losses for property, plant and equipment for FY2017 in an amount of 746 million yen.
(2) Main events and circumstances that led to recognition of impairment losses
FY2017 (From April 1, 2017 To March 31, 2018)
Millions of yen

Segment
Advanced Materials
Specialty Plastics

Purpose of use
Location
Manufacturing facility Shanghai, PRC
Idle assets
Iwaki, Fukushima

Type of assets
Machinery and equipment
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures
Total

Amount
¥194
122
80
346
4
552
746

Total

In principle, the Group has grouped the operating assets by segment and by company, and idle assets and assets for lease byindividual properties.
Recoverable value is the higher of value in use and fair value less costs of disposal. Value in use is the present value of future
cash flows calculated by using pre-tax weighted average cost of capital of a cash-generating unit. If future cash flows are notexpected to be derived from a cash-generating unit, the value in use is taken as zero. Fair value less costs of disposal is evaluatedeither by the estimated disposal amount or the amount reasonably calculated based on assessed values of fixed assets for property
tax, and it is taken as zero when sale cannot be expected.
1) Advanced Materials segment
For manufacturing facility, under the carbon products business in the Advanced Materials segment which was affected by the
weak demand and increasingly fierce competition in China, the Group conducted a thorough review and assessment of business,
including its projected earnings. Consequently, for the above mentioned manufacturing facility, the Group wrote down the
carrying amount of fixed assets associated with the carbon products business to their recoverable value and recognized the
reduction of 194 million yen as other expenses. In addition, the Group applies value in use for recoverable value, which is
calculated as 768 million yen after discounting future cash flows of 13%.
2) Specialty Plastics segment
For idle assets, due to change in market conditions, they are no longer expected to be used in the future. Consequently, theGroup wrote down the carrying amount of the above mentioned fixed assets to their recoverable value and recognized the
reduction of 552 million yen as other expenses. In addition, the Group applies value in use for recoverable value, which is
calculated as zero.
FY2018 (From April 1, 2018 To March 31, 2019)
Not applicable.

13. Investments accounted for using the equity method(1) The aggregate carrying amounts of the Group’s interests in individually immaterial affiliates and joint ventures are as follows:
Millions of yen

FY2018(As of March 31, 2019)

Joint ventures
Affiliates¥10,475
2,677

FY2017(As of March 31, 2018)¥9,1302,960

Kureha Corporation Business Report 201951

(2) The aggregate amounts of profit for the year, other comprehensive income and comprehensive income of individually
immaterial affiliates and joint venture that are adjusted to reflect the portion of ownership interests are as follows:
Joint ventures
FY2018Millions of yen

Profit for the year
Comprehensive income

FY2017(From April 1, 2017
to March 31, 2018)(From April 1, 2018
to March 31, 2019)¥1,963
1,963¥1,731
1,731

Affiliates
FY2018Millions of yen

Profit for the year
Comprehensive income

FY2017(From April 1, 2017
to March 31, 2018)(From April 1, 2018
to March 31, 2019)

¥267
267

¥238
238

14. Income taxes(1) Breakdown of deferred tax assets and deferred tax liabilities
The breakdown of deferred tax assets and deferred tax liabilities by major cause and the details of changes are as follows:
FY2017 (From April 1, 2017 To March 31, 2018)

As of April 1, 2017

Deferred tax assets
Tax loss carryforwards
Provisions
Unrealized gain on fixed assets
Loss on valuation of inventories
Impairment loss
Amount in excess of allowed depreciation limit
Other
Subtotal
Deferred tax liabilities
Financial assets measured at fair value throughother comprehensive income
Accelerated depreciation and amortization offoreign operations
Deemed cost
Net defined benefit assets
Other
Subtotal
Net amountMillions of yen
Amount recognized in
Amount recognized inother comprehensive
profit or loss
income

¥

—
—
—
—
—
—
(22)
(22)

As of March 31, 2018

¥ 5,781
1,793
1,737
804
1,153
607
2,739
14,617¥(2,612)
91
(5)
529
24
(32)
(469)
(2,474)

¥

3,169
1,885
1,732
1,334
1,177
574
2,246
12,120(4,187)—(1,656)(5,843)(6,601)(2,200)(1,252)(519)(14,760)¥ (142)

3,137
—
(228)
(20)
2,889
¥ 415

—
—
(58)
—
(1,714)¥(1,737)(3,464)(2,200)(1,538)(539)(13,585)¥ (1,465)

Note: A difference between the amount recognized in profit or loss and total deferred tax expenses is mainly due to exchange
rate fluctuations.

52

Kureha Corporation Business Report 2019

FY2018 (From April 1, 2018 To March 31, 2019)

As of April 1, 2018

Deferred tax assets
Tax loss carryforwards
Provisions
Unrealized gain on fixed assets
Loss on valuation of inventories
Impairment loss
Amount in excess of allowed depreciation limit
Other
Subtotal
Deferred tax liabilities
Financial assets measured at fair value throughother comprehensive income
Accelerated depreciation and amortization offoreign operations
Deemed cost
Net defined benefit assets
Other
Subtotal
Net amountMillions of yen
Amount recognized in
Amount recognized inother comprehensive
profit or loss
incomeAs of March 31, 2019

¥ 3,169
1,885
1,732
1,334
1,177
574
2,246
12,120¥(263)
91
(21)
230
(246)
69
235
95

¥ —
—
—
—
—
—
1
1

¥ 2,905
1,976
1,711
1,565
930
643
2,484
12,217(5,843)—337(5,505)(3,464)(2,200)(1,538)(539)(13,585)¥ (1,465)

10
—
(149)
(17)
(156)
¥ (61)

—
—
(110)
—
227
¥ 229

(3,453)(2,200)(1,797)(557)(13,514)¥ (1,296)

Note: A difference between the amount recognized in profit or loss and total deferred tax expenses is mainly due to exchange
rate fluctuations.
(2) Deductible temporary differences, etc. for which deferred tax assets are not recognized
Deductible temporary differences and tax loss carryforwards for which deferred tax assets were not recognized are as follows:
Millions of yen

FY2018Deductible temporary differences
Tax loss carryforwards
Total

FY2017(As of March 31, 2019)(As of March 31, 2018)¥6,0902,005¥8,096¥ 7,156
3,731¥10,887

Note: The breakdown by expiry date of tax loss carryforwards for which deferred tax assets were not recognized is as follows:
Millions of yen

FY2018Due in one year or lessDue after one year through five years
Total

FY2017(As of March 31, 2019)(As of March 31, 2018)

¥ 451
1,553
¥2,005¥ 448
3,282¥3,731(3) Temporary differences arising from investments in subsidiaries for which deferred tax liabilities were not recognizedNot applicable.

Kureha Corporation Business Report 201953

(4) Income tax expense
The breakdown of income tax expense is as follows:
FY2018Millions of yen

Current tax expense
Deferred tax expense
Total

FY2017(From April 1, 2017
to March 31, 2018)(From April 1, 2018
to March 31, 2019)¥3,278(409)¥2,869¥3,39341¥3,435(5) Reconciliation of statutory effective tax rate and actual tax rate
The reconciliation of the statutory effective tax rate and actual tax rate is as follows.
The actual tax rate represents the ratio of income tax expense to profit before tax.
FY2017FY2018(From April 1, 2017
to March 31, 2018)(From April 1, 2018
to March 31, 2019)

Statutory effective tax rate
Permanently non-deductible items such as entertainment expenses
Permanently non-taxable items such as dividend income
Tax credit on research expense
Effect of unrecognized tax loss carryforwards or temporary differences
Adjustment of ending balance of deferred tax assets due to changes in tax rates
Other
Actual tax rate

30.69%
0.83%(0.68)%(6.03)%
0.47%(0.54)%(2.12)%
22.62%

30.46%
0.53%(0.22)%(6.91)%(3.60)%—(0.55)%
19.71%

Note: The Group is subject mainly to income tax, inhabitant tax and enterprise tax, based on which the statutory effective tax
rate above is calculated. The Group’s foreign operations are subject to income and other taxes at their respective locations.

15. Assets pledged as collateral and secured obligations

Assets pledged as collateral and obligations with pledged assets are as follows:(1) Assets pledged as collateralMillions of yen

FY2018(As of March 31, 2019)

Property, plant and equipment
Other financial assets
Total

FY2017(As of March 31, 2018)¥38,842322¥39,164¥34,600
340¥34,940(2) Obligations with pledged assets
Millions of yen

FY2018(As of March 31, 2019)

Trade and other payables
Loans payable
Other financial liabilities
Total
Current liabilities
Non-current liabilities

54

Kureha Corporation Business Report 2019

¥ 563
359
260
1,182
632
¥ 549

FY2017(As of March 31, 2018)

¥ 865
480
278
1,624
1,007
¥ 617

16. Trade and other payables

The breakdown of trade and other payables is as follows:
Millions of yen

FY2018(As of March 31, 2019)

Trade notes and accounts payable
Other
Total

FY2017(As of March 31, 2018)¥16,013
5,517¥21,530¥18,602
5,408¥24,011

17. Provisions

The breakdown of provisions and the details of changes are as follows:
Millions of yen
Provision for
employee benefits(Note)

Balance as of April 1, 2017
Increases during the period
Decreases during the period (provisions used)
Decreases during the period (provisions reversed)
Exchange rate differences
Balance as of March 31, 2018
Increases during the period
Decreases during the period (provisions used)
Decreases during the period (provisions reversed)
Exchange rate differences
Balance as of March 31, 2019

Other

¥ 5,564
4,216(4,049)
—
8
5,740
4,397
(4,154)—(3)¥ 5,979

Total

¥ 563
698
(391)
—
—
870
253
(255)
—
—
¥ 868

¥ 6,128
4,914(4,440)
—
8
6,610
4,651
(4,409)—(3)¥ 6,848

Millions of yen

FY2018(As of March 31, 2019)

Current liabilities
Non-current liabilities
Total¥6,176671¥6,848FY2017(As of March 31, 2018)¥5,947663¥6,610Note: Provision for employee benefits represent an estimated amount of expenditures for costs associated mainly with unused
paid leaves and bonuses. The expected timing of any resulting outflows of economic benefits is mostly within one year
from the end of each fiscal year.

18. Employee benefits

The Company and certain consolidated subsidiaries have adopted the funded and unfunded defined benefit plans and defined
contribution plans to provide for retirement benefits to the employees.
(1) Defined benefit plan
The defined benefit plans adopted by the Group mainly consists of defined benefit corporate pension plans and lump-sum
retirement benefit plans.
The Group’s defined benefit corporate pension plan is a contract-type corporate pension plan managed under a cash balanceplan. Under the plan, each participant is given a hypothetical individual account to record their funded amount which will be
the source of pension payment. Interest credit based on the market interest rate trends and contribution credit based primarily
on a level of compensation are the two main items accumulated in the hypothetical individual account. Certain consolidated
subsidiaries make lump-sum or pension payments based on the amount of salary and the lengths of service.
Under the contract-type corporate pension plan, plan assets management is entrusted to asset management institutions inaccordance with the defined benefit corporate pension regulations agreed between labor and management. In addition, theGroup abides by the rules provided under the Defined-Benefit Corporate Pension Law that requires recalculation of the amountof contribution at least every five years to maintain the plan’s funded status into the future.
Kureha Corporation Business Report 201955

Under the lump-sum retirement benefit plan, lump-sum payment is made based on the amount of salary and the lengths ofservice.
(2) Amounts related to defined benefit plans reported in the consolidated financial statements
1) Amounts recognized in the consolidated statements of financial position
The amounts recognized in the consolidated statements of financial position are as follows:
Millions of yen

FY2018Present value of defined benefit obligations under funded plans (with plan assets)
Fair value of plan assets
Funded status
Present value of defined benefit obligations under unfunded plans (without plan
assets)Net amount of liability and asset recognized in the consolidated statements offinancial position
Net defined benefit liability
Net defined benefit asset

FY2017(As of March 31, 2019)(As of March 31, 2018)¥ 21,586(27,345)(5,759)¥ 22,138(26,956)(4,818)249

261(5,509)329¥ 5,839(4,557)380¥ 4,937

Note: Net defined benefit asset is recorded under “Other non-current assets” in the consolidated statement of financial position.
2) Amounts recognized in the consolidated statements of profit or loss
The amounts of defined benefit cost recognized in the consolidated statements of profit or loss are as follows:
FY2018Millions of yen(From April 1, 2018
To March 31, 2019)

Service cost
Net interest
Total defined benefit cost

FY2017(From April 1, 2017
To March 31, 2018)¥1,162(23)¥1,138¥1,164(25)¥1,139Note: Defined benefit cost is recorded under “Cost of sales” and “Selling, general and administrative expenses” in the
consolidated statements of profit or loss.
3) Changes in the present value of defined benefit obligations
Changes in the present value of defined benefit obligations are as follows:
FY2018Millions of yen(From April 1, 2018
To March 31, 2019)

Present value of defined benefit obligations (beginning of the year)
Service cost
Interest cost
Benefits paid
Remeasurements(i) Actuarial differences arising from changes in demographical assumptions(ii) Actuarial differences arising from changes in financial assumptions(iii) Other adjustments to actual results
Exchange rate differences
Present value of defined benefit obligations (end of the year) (Note)¥22,399
1,164
117(1,681)
(156)
—
228
(384)
(7)
¥21,835

FY2017(From April 1, 2017
To March 31, 2018)¥22,250
1,162
136(1,555)
388
(66)
150
303
17
¥22,399

Note: The weighted average duration of defined benefit obligations for the FY2017 and FY2018 were 9.9 years and 9.8 years,
respectively.

56

Kureha Corporation Business Report 2019

4) Fair value of plan assets
The Group’s investment policy is designed to ensure the total return in a long term to fund for the stable payments of pension
benefits and lump-sum payments into the future.
Accordingly, taking into account the maturity and financial position of the Group by giving consideration to expected rate of
return from fundamental investment assets, standard deviation of the rate of return, and the correlation coefficient of these rates,
the Group formulates a strategic asset mix ratio from a mid-to-long term standpoint, which is considered as an optimal portfolio
on a long-term basis. The Group reviews the investment policy as necessary and provides comprehensive management over its
assets and liabilities.
The Group manages risks appropriately through diversified asset management by investing in multiple asset classes andfunds that have different risk and return characteristics, thereby balancing the risk exposure.
Changes in fair value of plan assets are as follows:
FY2018Millions of yen(From April 1, 2018
To March 31, 2019)

Fair value of plan assets (beginning of the year)
Interest income
Return on plan assets
Contributions by the employer (Note)
Benefits paid
Exchange rate differences
Fair value of plan assets (end of the year)

FY2017(From April 1, 2017
To March 31, 2018)¥25,696
160
658
1,947
(1,516)9¥26,956¥26,956
143
235
1,631
(1,615)(5)¥27,345

Note: Expected contribution for the year ending March 31, 2020 is 1,624 million yen.
5) The breakdown of the fair value of plan assets
The breakdown of the fair value of plan assets are as follows:
Millions of yen

Bonds
StocksGeneral accounts of life insurance companies
Other
Total

FY2018(As of March 31, 2019)
Quoted market pricein an active market
Not
Available
available¥ 9,680
¥ —
8,205
—
—
6,794
—
2,664
¥17,886¥9,459FY2017(As of March 31, 2018)
Quoted market pricein an active market
Not
Available
available¥13,541
¥ —
7,627
—
—
4,414
—
1,373
¥21,168¥5,7876) Major assumptions used for actuarial calculations
Major assumptions used for actuarial calculations are as follows:
FY2018(As of March 31, 2019)

Discount rate (weighted average)

0.4%

FY2017(As of March 31, 2018)

0.5%

7) Sensitivity analysis
Effects on defined benefit obligations due to changes in actuarial assumptions are as follows:
Sensitivity analysis is performed by applying the same method used to calculate defined benefit obligations recognized in the
consolidated statements of financial position, based on the change in assumption that can be reasonably estimated at the end of
the reporting period. Under the analysis, all other variables are assumed to remain constant.

Kureha Corporation Business Report 201957

Millions of yen

FY2018(As of March 31, 2019)

0.1% increase in discount rate
0.1% decrease in discount rate

FY2017(As of March 31, 2018)¥(215)
215¥(207)
207(3) Defined contribution plan
Amounts of contribution to the defined contribution plan recognized as expenses for FY2017 and FY2018 were 2,005 million
yen and 2,056 million yen, respectively. The amounts are recorded under “Cost of sales” and “Selling, general and administrative
expenses” in the consolidated statements of profit or loss.
(4) Employee benefit expenses
Total employee benefit expenses excluding the above items for FY2017 and FY2018 were 29,476 million yen and 29,981
million yen, respectively. The amounts are recorded under “Cost of sales” and “Selling, general and administrative expenses” inthe consolidated statements of profit or loss.

19. Share-based payments(1) Details of share-based payment plan
The Company has a stock option plan that grants rights to its directors (excluding outside directors) to purchase the Company’s
shares. The plan is accounted for as an equity-settled share-based payment plan.
The Company’s stock option plan outstanding in FY2017 and FY2018 are as follows:
Date of resolution

Number of shares
granted (shares)
Grant date
Fair value at grant
date (yen)Vesting condition(Note)
Expiry date
Shares outstanding
as of the end of
FY2017
Shares outstanding
as of the end of
FY2018Date of resolution

Number of shares
granted (shares)
Grant date
Fair value at grant
date (Yen)
Vesting condition(Note)
Expiry date
Shares outstanding
as of the end of
FY2017
Shares outstanding
as of the end of
FY2018June 25, 2009

June 25, 2010

June 24, 2011

June 26, 2012

June 25, 2013

5,550
July 22, 2009

5,530
July 21, 2010

5,660
July 20, 2011

7,650
July 18, 2012

5,670
July 17, 2013

4,870
Continued service
from June 25,2009 to June 24,
2010
July 21, 2039

4,060
Continued service
from June 25,2010 to June 24,
2011
July 20, 2040

3,600
Continued service
from June 24,2011 to June 23,
2012
July 19, 2041

2,780
Continued service
from June 26,
2012 to June 25,
2013
July 17, 2042

2,890
Continued service
from June 25,2013 to June 24,
2014
July 16, 2043

530

580

660

1,300

1,810

530

580

660

1,300

1,810

June 25, 2014

June 24, 2015

June 24, 2016

June 27, 2017

June 26, 2018

Total

3,390
July 16, 2014

3,410
July 22, 2015

4,050
July 20, 2016

2,120
July 19, 2017

1,500
July 18, 201844,530—5,060
Continued service
from June 25,2014 to June 24,
2015
July 15, 2044

4,260
Continued service
from June 24,2015 to June 23,
2016
July 21, 2045

3,680
Continued service
from June 24,2016 to June 23,
2017
July 19, 2046

5,299
Continued service
from June 27,2017 to June 26,
2018
July 18, 2047

7,393
Continued service
from June 26,2018 to June 25,
2019July 17, 2048

—

1,140

2,570

3,050

2,120

—

13,760

1,140

2,570

3,050

2,120

1,500

15,260——Note: If a director retires during the vesting period, exercisable stock acquisition rights will decrease in accordance with thedirector’s service period.
58

Kureha Corporation Business Report 2019

(2) Number of outstanding stock options and weighted average exercise price
FY2018(From April 1, 2018
To March 31, 2019)
Number of options
Weighted average(shares)
exercise price (yen)FY2017(From April 1, 2017
To March 31, 2018)
Number of options
Weighted average(shares)
exercise price (yen)Outstanding at the beginning of the year
13,7601
18,0701
Granted
1,500
1
2,120
1
Exercised——(6,430)1
Outstanding at the end of the year
15,2601
13,760
1
Exercisable at the end of the year————
Notes: 1. For stock options exercised during the period, the weighted average share price as of the exercise date was 5,500 yen
for FY2017.
2. Weighted average fair value of stock options outstanding at the end of FY2017 and FY2018 were 4,021 yen and 4,352 yen,respectively. Weighted average contractual life remaining for FY2017 and FY2018 were 26.2 years and 25.6 years, respectively.
(3) Expenses in relation to stock options are as follows:
FY2018Selling, general and administrative expenses

Millions of yen(From April 1, 2018
To March 31, 2019)

FY2017(From April 1, 2017
To March 31, 2018)

¥11

¥12

(4) Fair value of stock options granted was calculated as follows:
FY2018FY2017(As of March 31, 2019)(As of March 31, 2018)
Expected volatility (Note 1)
24.8%
27.2%
Expected remaining life (Note 2)
2.0 years
3.0 years
Expected dividend (Note 3)
125 yen/share
110 yen/share
Risk-free rate (Note 4)(0.12)%(0.09)%
Notes: 1. Expected volatility for FY2017 and FY2018 are calculated using the actual share price over a period of three years(from July 2014 to July 2017) and two years (from July 2016 to July 2018), respectively.
2. Expected retirement date used in the computation is estimated based on the average service period.
3. Expected dividend for FY2017 and FY2018 are calculated based on the actual annual dividend amounts for the year
ended March 2017 and March 2018, respectively.
4. Risk-free rates are calculated by linear interpolation between spot rates of separated principal component of JGBs witha maturity corresponding to the expected remaining life.

20. Paid-in capital and other equity items(1) Numbers of authorized shares and issued (and fully paid) shares
Changes in the numbers of authorized shares and issued shares are as follows:
FY2018

Number of authorized shares
Common stock
Number of issued shares
Balance as of the beginning of the year
Increases during the year (Note 2)
Balance as of the end of the year

Shares

FY2017(From April 1, 2018
To March 31, 2019)(From April 1, 2017
To March 31, 2018)

60,000,000

60,000,000

20,805,407—
20,805,407

18,168,390
2,637,017
20,805,407

Notes: 1. All of the shares issued by the Company are shares of common stock with no par value and no limits to any rights ofthe shareholders.
2. Increases during the current fiscal year were due to the exercise of stock acquisition rights of convertible bond-typebonds with stock acquisition rights.
Kureha Corporation Business Report 201959

(2) Treasury stock
Changes in treasury stock are as follows:
FY2018

Shares(From April 1, 2018
To March 31, 2019)

Balance as of the beginning of the year
Increases during the year (Note 1)
Decreases during the year (Note 2)
Balance as of the end of the year

150,740
389,585—
540,325

FY2017(From April 1, 2017
To March 31, 2018)

983,280
1,068
833,608
150,740

Notes: 1. Increases during FY2017 were due to 1,068 shares resulting from purchase of shares less than one trading unit andincreases during FY2018 were due to 685 shares resulting from purchase of shares less than one trading unit and
388,900 shares resulting from acquisition based on a resolution of the Board of Directors’ meeting held on November
7, 2018.
2. Decreases during FY2017 were due to 827,167 shares resulting from the exercise of stock acquisition rights of
convertible bond-type bonds with stock acquisition rights, 6,430 shares resulting from the exercise of stock option,and 11 shares resulting from sale of shares less than one trading unit.
(3) Capital surplus and retained earnings(a) Capital surplus
Under the Companies Act, 50% or more of the total amount paid in or contributed upon share issue must be recorded as sharecapital while the remaining amount must be recorded as legal capital surplus, which is a component of capital surplus. The
amount of legal capital surplus may be transferred to share capital by a resolution of a general meeting of shareholders.
(b) Retained earnings
Under the Companies Act, 10% of the amount of surplus that decreased due to distribution of surplus must be accumulated aslegal capital surplus or legal retained earnings until the aggregate amount of legal capital surplus and legal retained earnings
equals 25% of the capital stock. The amount reserved in legal retained earnings may be appropriated to compensate
accumulated deficit. It may also be reversed by a resolution of a shareholders’ meeting.
(4) Other components of equity(a) Stock acquisition rights
This amount represents the increase in equity arising from the reception or acquisition of goods or services pertaining to equitysettled share-based payment plan.
(b) Exchange differences on translating foreign operations
This amount represents exchange differences arising from translating the financial statements of foreign operations to Japaneseyen, which is the presentation currency of the Group.
(c) Financial assets measured at fair value through other comprehensive income
The amount represents the difference between the cost and the year-end fair value of equity instruments measured at fair value
through other comprehensive income.

21. Dividends(1) Amounts of dividends paid
FY2017 (From April 1, 2017 To March 31, 2018)

Resolution

Board of Directors’
meeting held on April 18,
2017
Board of Directors’
meeting held on October24, 2017

60

Kureha Corporation Business Report 2019

Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Common stock¥ 945

Common stock

1,088

Class of shares

Record date

Effective date

¥55.00March 31,2017

June 2,
2017

55.00

September 30,
2017

December 4,2017

FY2018 (From April 1, 2018 To March 31, 2019)
Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Common stock¥1,445

Common stock

1,445

Resolution

Class of shares

Board of Directors’
meeting held on April 17,
2018
Board of Directors’
meeting held on October23, 2018

Record date

Effective date

¥70.00March 31,2018

June 4,
2018

70.00

September 30,
2018

December 4,
2018(2) Dividends whose record date is in the current fiscal year but whose effective date is in the following fiscal year
FY2017 (From April 1, 2017 To March 31, 2018)

Resolution

Board of Directors’
meeting held on
April 17, 2018

Source of dividends

Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Common stock Retained earnings¥1,445¥70.00Source of dividends

Total amount ofdividends(Millions of yen)

Dividend per share(Yen)

Common stock Retained earnings¥1,925¥95.00Class of shares

Record date

Effective date

March 31,2018

June 4,
2018

Record date

Effective date

March 31,2019

June 4,2019

FY2018 (From April 1, 2018 To March 31, 2019)

Resolution

Board of Directors’
meeting held on
April 23, 2019

Class of shares

22. Financial instruments(1) Capital management
In order to maintain proper capital adequacy ratio and to maximize shareholder’s value, the Group determines an appropriate
amount of dividends, acquires its own shares, grants stock acquisition rights and raises funds through debt capital and equity
capital.
The followings are the key indicators employed by the Group in managing the Group’s capital.
The Group is not subject to any significant externally imposed capital requirements (except for general requirements such as
those required by the Companies Act and other laws and regulations).
Millions of yen

FY2018(As of March 31, 2019)

Interest-bearing debt
Less: Cash and cash equivalents
Net interest-bearing debt
Equity capital
Equity-to-asset ratio (Equity ratio)

FY2017(As of March 31, 2018)¥ 39,018(5,989)33,029160,55164.9%¥ 48,089(6,475)41,613150,19362.0%

Note: Equity capital presented above represents total equity attributable to owners of the parent.
Equity-to-asset ratio (Equity ratio) = Equity capital / Total liabilities and equity(2) Basic policies on financial instruments
The Group uses financial instruments, mainly bank loans and bonds for the purpose of raising its necessary fund based on its
capital expenditure plan. Cash surpluses, if any, are invested only in short-term deposits, etc. Working capital for short-term
ongoing operations is procured from short-term bank loans. Derivatives are used, not for speculative purposes, but to manage
exposure to financial risks as described below.

Kureha Corporation Business Report 201961

(3) Description of financial instruments and associated risk
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Although receivables in foreign currencies
are exposed to the market risk of fluctuation in foreign currency exchange rates, the position, net of payables in foreign
currencies, is hedged principally by using forward foreign currency contracts. Other financial assets such as investments
securities are equity instruments of customers and suppliers of the Group, and are exposed to the risk of market pricefluctuations. The Group also provides long-term loans to the employees.
Payment terms of payables, such as trade notes and trade accounts, are less than one year. Although payables in foreign
currencies, partly accompanied by the import of materials, are exposed to the market risk of fluctuation in foreign currency
exchange rates, the position, net of payables in foreign currencies, is hedged principally by using forward foreign currency
contracts.
Loans payable, bonds payable and lease obligations related to finance lease are mainly used to procure necessary funds forcapital expenditure, most of which carry fixed interest rates.
Derivatives mainly include forward foreign currency contracts which are used to manage exposure to risks from fluctuations
in foreign currency exchange rates of trade receivables and payables denominated in foreign currencies.
(4) Risk management structure related to financial instruments and quantitative information on risk
a. Credit risk
1) Management of risk pertaining to counterparty default
Credit risk is the risk of economic loss arising from counterparty’s failure to repay or service debt according to thecontractual terms. The Group manages its credit risk from receivables on the basis of internal guidelines, which include
setting up an individual credit limit and monitoring of payment terms and balances of major customers by each businessadministration department to identify the default risk of customers at an early stage. A credit limit is changed, if necessary,
based on a periodic monitoring of customers’ financial positions. The Group mitigates the risk of receivable collection due
to deteriorating financial position by utilizing such facilities as credit insurance or factoring.
In using derivatives, the Group chooses highly creditworthy financial institutions to avoid counterparty risk.
The same method of risk control is applicable to consolidated subsidiaries.
2) Quantitative information on credit riski) Maximum exposure to credit risk
Maximum exposure to the credit risk is the sum of the carrying amounts of financial assets, net of impairment losses
presented in the consolidated statements of financial position, and the balance of guarantee obligations.
ii) Credit risk exposure of the Group pertaining to trade and other receivables
The credit risk exposure of the Group pertaining to trade and other receivables are as follows:
FY2017 (As of March 31, 2018)

Days in arrears

Current
Within 30 days
Between 31 to 60 days
Between 61 to 90 days
Over 90 days
Total

62

Kureha Corporation Business Report 2019

(Millions of yen)
Financial assets for which the allowance for doubtful accounts is measured
at an amount equal to lifetime expected credit loss
Financial asset for which
Financial assets forthe allowance forwhich the allowance for
doubtful accounts is
doubtful accounts is
Financial assets foralways measured at an
measured at an amountwhich credit risk
amount equal to aequal to 12-monthincreased significantly lifetime expected credit
Credit-impaired
expected credit loss
after initial recognition
loss
financial assets¥2,1770———¥2,177

¥—
—
—
—
—
¥—

¥31,186
535
56
10
117
¥31,907

¥30
—
—
—
62
¥93

Total

¥33,393
535
56
10
180
¥34,177

FY2018 (As of March 31, 2019)

Days in arrears

Current
Within 30 days
Between 31 to 60 days
Between 61 to 90 days
Over 90 days
Total

(Millions of yen)
Financial assets for which the allowance for doubtful accounts is measured
at an amount equal to lifetime expected credit loss
Financial asset for which
Financial assets forthe allowance forwhich the allowance for
doubtful accounts is
doubtful accounts is
Financial assets foralways measured at an
measured at an amountwhich credit risk
amount equal to aequal to 12-monthincreased significantly lifetime expected credit
Credit-impaired
expected credit loss
after initial recognition
loss
financial assets¥2,4620———¥2,462

¥—
—
—
—
—
¥—

¥28,970
354
95
20
169
¥29,610

¥ 30
—
—
—
77
¥107

Total

¥31,463
354
95
20
246
¥32,180iii) Analysis of changes in allowance for doubtful accounts
The Group reviews the recoverability of trade receivables depending on the credit conditions of counterparties andrecords allowance for doubtful accounts accordingly. Changes in allowance for doubtful accounts are as follows:
FY2017 (From April 1, 2017 To March 31, 2018)

12-month expectedcredit loss

Beginning balance
Increases during the year
(allowances made)Decreases during the year
(allowances used)
Decreases during the year
(allowances reversed)
Exchange differences
Ending balance(Millions of yen)
Lifetime expected credit loss
Financial asset for which
the allowance for
doubtful accounts is
Financial assets foralways measured at an
which credit risk
amount equal to aincreased significantly lifetime expected credit
after initial recognition
loss

Credit-impaired
financial assets

Total

¥—

¥—

¥ 173

¥ 94

¥ 267

—

—

159

0

159

—

—

—

—

—

—
—
¥—

—
—
¥—

(183)
9
¥ 159

(16)
(0)
¥ 77

(200)
9
¥ 237

Kureha Corporation Business Report 2019

63

FY2018 (From April 1, 2018 To March 31, 2019)12-month expectedcredit loss

Beginning balance
Increases during the year
(allowances made)Decreases during the year
(allowances used)
Decreases during the year
(allowances reversed)
Exchange differences
Ending balance(Millions of yen)
Lifetime expected credit loss
Financial asset for which
the allowance for
doubtful accounts is
Financial assets foralways measured at an
which credit risk
amount equal to aincreased significantly lifetime expected credit
after initial recognition
loss

Credit-impaired
financial assets

Total

¥—

¥—

¥ 159

¥ 77

¥ 237

—

—

171

17

188

—

—

(5)

—

(5)

—
—
¥—

—
—
¥—

(153)
(5)
¥ 165

(13)
0
¥ 81

(167)
(5)
¥ 247

b. Liquidity risk
1) Management of liquidity risk related to fund procurement
Trade payables and loans payables are exposed to liquidity risk. In the Group, each entity manages its liquidity risk byformulating a monthly cash flow plan and the Company manages it by using commercial paper and commitment line.
2) Quantitative information on liquidity risk
The breakdown of financial liabilities including derivative financial instruments by due date is as follows:
FY2017 (As of March 31, 2018)

Trade and other payables
Bonds and loans payable
Other financial liabilities
Derivative liabilities
Total

Carrying
amountContractual
cash flows

Due within
one year¥21,530
47,416
1,734
66¥70,748¥21,530
47,467
1,734
66¥70,798¥21,530
25,760533
66¥47,891(Millions of yen)
Due after one Due after two Due after three Due after four
year through years through years through years through Due after five
two years
three years
four years
five years
years

¥

—
11,157
196—¥11,353

¥ —
2,226
146
—
¥2,373

¥ —
1,055
123
—
¥1,179

¥

—
7,053
54
—
¥7,108

¥ —
212
680
—
¥892

FY2018 (As of March 31, 2019)

Trade and other payables
Bonds and loans payable
Other financial liabilities
Derivative liabilities
Total

64

Kureha Corporation Business Report 2019

Carrying
amountContractual
cash flows

Due within
one year¥24,01138,5521,519
13¥64,096¥24,011
38,6111,519
13¥64,155¥24,01123,046510
13¥47,580(Millions of yen)
Due after one Due after two Due after three Due after four
year through years through years through years through Due after five
two years
three years
four years
five years
years

¥

—
2,243
149
—
¥2,392

¥ —
1,055
111
—
¥1,167

¥ —
7,053
59
—
¥7,113

¥ —
5,052
42
—
¥5,094

¥ —
160
646
—
¥807

c. Market risk
1) Market risk management
The Company and certain consolidated subsidiaries manage market risk resulting from fluctuations in foreign currency
exchange rates of foreign currency trade receivables and payables, which are to be identified through management permonth and per currency. Such foreign exchange risk is hedged principally by forward foreign currency contracts.
Investment securities are managed by monitoring market values and financial position of issuers on a regular basis.
Basic principles of derivative transactions are based on the internal guidelines which prescribe the authority and the limit
for each transaction. The same principles are applicable to the consolidated subsidiaries.
2) Quantitative information on market riski) Sensitivity analysis of foreign currency risk
With regard to the foreign-currency-denominated loans payable and receivable held by the Group as of the end of the
FY2017 and FY2018, the following sensitivity analysis shows an impact on profit before tax in the consolidated
statements of profit or loss of the Group, when the yen depreciates by 1% against the U.S. dollar and Chinese yuan(sensitivity to foreign currency). The analysis is based on the assumption that all other variable factors are held constant.
Item

FY2018Millions of yen(From April 1, 2018
To March 31, 2019)

U.S. dollar
Chinese yuan

FY2017(From April 1, 2017
To March 31, 2018)

¥19
1

¥19
1

ii) Sensitivity analysis of interest rate risk
With regard to the financial instruments held by the Group as of the end of FY2017 and FY2018, the following
sensitivity analysis shows an impact on profit before income taxes in the consolidated statements of profit or loss of theGroup, when the interest rate increases by 1% (sensitivity to interest rate). The analysis is based on the assumption that
all other variable factors are held constant.

Item
Effect on profit before tax

FY2018Millions of yen(From April 1, 2018
To March 31, 2019)

FY2017(From April 1, 2017
To March 31, 2018)¥(137)¥(109)

iii) Sensitivity analysis of share price fluctuation risk
With regard to the listed shares held by the Group as of the end of FY2017 and FY2018, the following sensitivity
analysis shows an impact on other comprehensive income (before taking into account tax benefit) in the consolidated
statements of comprehensive income of the Group, when the share price declines by 10% (sensitivity to share price).
The analysis is based on the assumption that all other variable factors are held constant.

Item
Effect on other comprehensive income

FY2018Millions of yen(From April 1, 2018
To March 31, 2019)¥(2,581)

FY2017(From April 1, 2017
To March 31, 2018)¥(2,773)

Kureha Corporation Business Report 201965

(5) Fair value of financial instruments
1) Carrying amounts and fair values of financial assets and financial liabilities
Carrying amounts and fair values of financial assets and financial liabilities by class held by the Group are as follow:
Millions of yen

FY2018(As of March 31, 2019)
Carrying
Fair value
amountFinancial assets
Financial assets measured atamortized cost
Other financial assets
Financial assets measured at fairvalue through othercomprehensive income
Other financial assets
Total
Financial liabilities
Financial liabilities measured atamortized cost
Bonds and loans payable
Other financial liabilities
Financial liabilities measured atfair value through profit or loss
Derivative liabilities
Total

FY2017(As of March 31, 2018)
Carrying
Fair value
amount¥ 1,239¥ 1,239¥ 1,276¥ 1,276

27,37828,61827,37828,61829,27130,54729,27130,54738,552
1,519

38,685
1,519

47,416
1,734

47,5601,734

13¥40,08513¥40,21866¥49,21766¥49,3612) Method of fair value measurement
Fair values of key financial assets and financial liabilities are determined as follows.
i) Cash and cash equivalents, trade and other receivables and trade and other payables
Classified as financial assets measured at amortized cost. The carrying amounts of these accounts approximate fair value
because of their short maturities. Therefore, information on fair values is omitted.
ii) Other financial assets
The fair values of marketable shares are presented based on the price on the stock exchange. The fair values of unlisted
shares are determined using reasonable valuation techniques.
The fair values of long-term loans receivable are measured at the present value of the future cash flows discounted by arate of return, an appropriate rate such as government bond rate added to a credit spread, with respect to each credit
risk segment of credit control.
The carrying amount of others approximates fair value because of its short maturities.
iii) Bonds and borrowings
The fair values of bonds are measured based on the market price.
The fair values of borrowings are measured by discounting the principal and interest by an assumed new borrowing
rate.
iv) Other financial liabilities
The fair values of lease obligations are measured by discounting them at the prevailing interest rate to be applied forsimilar lease transactions.
The carrying amount of others approximates fair value because of its short maturities.
v) Derivative transactions
The fair values of forward exchange contracts are measured based on forward exchange rates.
3) Classification of the fair values of financial instruments measured at fair value by hierarchy level
The fair value measurements are categorized into the following three levels in a fair value hierarchy.
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at themeasurement 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.
66

Kureha Corporation Business Report 2019In the case of several inputs used to measure the fair value, the fair value measurement is categorized in its entirety in thesame level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Transfers
between the levels of fair value hierarchy are recognized assuming that such transfers occurred at the end of each reporting
period.
i) Financial assets and liabilities recognized at fair value
FY2017 (As of March 31, 2018)
Millions of yen
Level 1

Financial assets
Financial assets measured at fair value throughother comprehensive income
Other financial assets
Total
Financial liabilities
Financial liabilities measured at fair value
through profit or loss
Derivative liabilities
Total

Level 2

Level 3

Total

¥27,730
27,730¥——¥1,540
1,540

—
—

66
¥66

¥

¥

—
—

¥29,271
29,271¥

66
66

Note: There were no transfers between different levels of the fair value hierarchy.
FY2018 (As of March 31, 2019)
Millions of yen
Level 1

Financial assets
Financial assets measured at fair value throughother comprehensive income
Other financial assets
Total
Financial liabilities
Financial liabilities measured at fair value
through profit or loss
Derivative liabilities
Total

Level 2

Level 3

Total

¥25,817
25,817¥——¥1,561
1,561

—
—

13
¥13

¥

¥

—
—

¥27,378
27,378¥13
13

Note: There were no transfers between different levels of the fair value hierarchy.
ii) Information on fair value measurement categorized in Level 2 and Level 3
Financial assets and financial liabilities categorized in Level 2 arise from derivative transactions. The fair value of theseassets and liabilities are measured based on the observable inputs such as the forward exchange rate or the interest rate.
Financial assets categorized in Level 3 are mainly unlisted equity instruments. The fair values of unlisted equity
instruments are measured by applying valuation techniques such as market multiple method and net asset value
method, in addition to using unobservable inputs including valuation multiples.
The fair values of financial assets categorized in Level 3 on a recurring or non-recurring basis are measured inaccordance with the provisions of the Group’s accounting policies. In measuring the fair value, the Group uses valuation
techniques and inputs that reflect the nature, characteristics and risks of the relevant financial instruments mostappropriately. The results of the measurement are reviewed by senior managers.
If each unobservable input used to measure financial instruments categorized in Level 3 is changed to a reasonable
alternative assumption, no material changes in the amount of fair values would be assumed.

Kureha Corporation Business Report 201967iii) Changes in financial instruments categorized in Level 3
FY2018Millions of yen(From April 1, 2018
To March 31, 2019)

Beginning balance
Gains or losses for the period (Note 1)
Purchase
Sale and return
Transfer (Note 2)
Ending balance

FY2017(From April 1, 2017
To March 31, 2018)

Financial assets
Financial assets
measured at fairmeasured at fairvalue through other value through othercomprehensive
comprehensive
incomeincome¥1,540¥2,288
16
285
5
161
(0)
(775)
—
(421)
¥1,561¥1,540Notes: 1. The line item “Gains or losses for the period” above is presented in “Financial assets measured at fair value throughother comprehensive income” in the consolidated statements of comprehensive income.
2. The line item “Transfer” above is transfer to investments accounted for using the equity method.
iv) Information on financial assets measured at fair value through other comprehensive income
The Group classifies long-term investments held mainly for the purpose of maintaining amicable relationships with its
business partners as financial assets measured at fair value through other comprehensive income.
(a) Major items and fair values
The fair values of financial assets measured at fair value through other comprehensive income by item are as follows:
FY2017 (As of March 31, 2018)
Item

Millions of yen
Fair value

Daiichi Sankyo Company, Limited
NOF Corporation
Tosoh Corporation
Taiyo Nippon Sanso Corporation
Kuraray Co., Ltd.

¥10,578
2,865
2,727
1,493
1,190

FY2018 (As of March 31, 2019)

68

Item

Millions of yen
Fair value

Daiichi Sankyo Company, Limited
NOF Corporation
Tosoh Corporation
Taiyo Nippon Sanso Corporation
Kuraray Co., Ltd.

¥10,200
3,434
2,249
1,562
928

Kureha Corporation Business Report 2019

(b) Dividend income
The breakdown of dividend income on financial assets measured at fair value through other comprehensive income
is as follows:
Item

FY2018Millions of yen

FY2017(From April 1, 2018
To March 31, 2019)(From April 1, 2017
To March 31, 2018)

¥546
74
¥621

¥570
5
¥576

Investments held at the end of the year
Investments derecognized during the year
Total(c) Derecognized financial assets measured at fair value through other comprehensive income
The fair values on the date of derecognition and cumulative gains and losses (before taxes) of the financial assets
measured at fair value through other comprehensive income that were derecognized during the year are as follows:
Item

FY2018Millions of yen

Fair value
Cumulative gains or losses

FY2017(From April 1, 2017
To March 31, 2018)(From April 1, 2018
To March 31, 2019)¥1,466(585)¥4,102
3,320

Notes: 1. For the purpose mainly of reviewing the relationship with the customers, the Group disposes the financial assets
measured at fair value through other comprehensive income and derecognizes such financial assets.
2. The Group reclassifies to retained earnings cumulative gains or losses arising from changes in the fair values offinancial assets measured at fair values through other comprehensive income in either of the following cases: when an
asset is derecognized; or when there is a significant decline in the fair value, etc. The amount of cumulative gains orlosses (after taxes) in other comprehensive income reclassified to retained earnings for FY2017 and FY2018 were (725)
million yen and 2,302 million yen, respectively.
v) Breakdown of fair values of financial instruments measured at amortized cost by hierarchy level
The breakdown of financial assets and liabilities measured at amortized cost by fair value hierarchy is as follows. The
financial assets whose carrying amounts approximate their fair values are not included in the table below.
FY2017 (As of March 31, 2018)
Millions of yen
Level 1

Financial assets
Other financial assets
Total
Financial liabilities
Bonds payable
Loans payable
Commercial papers
Total

Level 2

Level 3

Total

¥—
—

¥ 1,276
1,276

¥—
—

¥ 1,276
1,276

—
—
—
¥—

19,042
26,5182,000¥47,560———¥—

19,042
26,5182,000¥47,560

FY2018 (As of March 31, 2019)
Millions of yen
Level 1

Financial assets
Other financial assets
Total
Financial liabilities
Bonds payable
Loans payable
Commercial papers
Total

Level 2

Level 3

Total

¥—
—

¥ 1,239
1,239

¥—
—

¥ 1,239
1,239

—
—
—
¥—

19,02818,656
1,000¥38,685———¥—

19,02818,656
1,000¥38,685

Kureha Corporation Business Report 201969

(6) Derivatives
Derivative transactions to which hedge accounting is not applied
FY2017 (As of March 31, 2018)
Type

Off-market
transactions

Forward exchange contracts(Selling)
Euro
Chinese yuan
U.S. dollar(Buying)
Euro
Japanese yen
U.S. dollar
British pound
Total

Contract amountMillions of yen
Contract amount
Fair value
due after one year

Unrealized
gains or losses

¥ 621
124
593

¥ —
24
—

¥ 6
(8)
7

¥ 6
(8)
7

74
971
1,381
65
¥3,831

—
450
—
—
¥475

(0)
(55)
(17)
0
¥(66)

(0)
(55)
(17)
0
¥(66)

Notes: 1. The fair values of derivative transactions are calculated using forward exchange rates.
2. Unrealized gains or losses on foreign exchange contracts are presented as the fair values of the contracts.
FY2018 (As of March 31, 2019)
Type

Off-market
transactions

Forward exchange contracts(Selling)
Euro
Chinese yuan
U.S. dollar(Buying)
Chinese yuan
Japanese yen
U.S. dollar
British pound
Total

Contract amountMillions of yen
Contract amount
Fair value
due after one year

Unrealized
gains or losses

¥ 328
160
878

¥—
—
—

¥ 4
(0)
(3)

¥ 4
(0)
(3)

149
438
1,976
130
¥4,061

—
—
—
—
¥—

(1)
(32)
22
(1)
¥(13)

(1)
(32)
22
(1)
¥(13)

Notes: 1. The fair values of derivative transactions are calculated using forward exchange rates.
2. Unrealized gains or losses on foreign exchange contracts are presented as the fair values of the contracts.

23. Revenue(1) Disaggregation of revenue
The Group has separate divisions by product, and each division formulates a comprehensive strategy for business activities indomestic and overseas markets.
Accordingly, the Group consists of segments by product and service on the basis of the business divisions, and has the fivereportable segments of “Advanced Materials,” “Specialty Chemicals,” “Specialty Plastics,” “Construction,” and “Other
Operations.” Main products and services of each reportable segment are described in “6. Segment information.”With regard to sales of advanced materials, specialty chemicals, and specialty plastics, the Group determines that a customer
obtains control over a product and the performance obligation is satisfied when the product is delivered to the customer.
Accordingly, the Group principally recognizes revenue at the time of delivery of its product to the customer. In addition, revenue
generated from sales of products is measured at the amount of consideration promised in a contract with a customer lessdiscounts, rebates, etc. The consideration is paid generally within three months after the performance obligation is satisfied. It
does not include significant financial components.

70

Kureha Corporation Business Report 2019

With regard to provision of construction and other services, the Group determines that the performance obligation issatisfied while control over a service is transferred to a customer over a certain period of time and therefore, recognizes revenue
principally in accordance with the progress of the service. In addition, progress of construction is measured by the proportion of
the contract costs incurred to the estimated total contract costs. The consideration is paid generally within three months after
the performance obligation is satisfied. It does not include significant financial components.
Relationships between revenue by reportable segment and revenue disaggregated by type are as follows.
FY2018 (From April 1, 2018 To March 31, 2019)
Millions of yen
Advanced Materials Specialty Chemicals Specialty Plastics

Sale of products
Construction
Provision of other services
Total¥45,747—2¥45,749¥26,590—718¥27,309¥45,148——¥45,148

Construction

Other Operations¥—
12,415—¥12,415¥—
2,353
15,289¥17,643

Total¥117,486
14,76916,009¥148,265(2) Contract balance
The Group records contract assets relating to consideration on construction work in progress, records contract liabilities relating
to advances received from customers, and records refund liabilities by estimating rebates for which payment is expected in the
future.
Millions of yen

Beginning of
FY2018Trade receivables
Contract assets
Contract liabilities
Refund liabilities(As of April 1, 2018)¥31,907
2,036
732
¥ 918

FY2018(As of March 31, 2019)¥29,610
1,789
1,876
¥ 896

Note: With respect to revenue recognized during the FY2018, the amount included in contract liabilities was 732 million yen at
the beginning of the year. In the consolidated statements of financial position, contract assets are included in “Other
current assets,” and contract liabilities and refund liabilities are included in “Other current liabilities.”

24. Other income

The breakdown of “Other income” is as follows:
Millions of yen

FY2018Gain on government grants (Note)
Compensation income
Other
Total

(From April 1, 2018
To March 31, 2019)

¥343
—
272
¥615

FY2017(From April 1, 2017
To March 31, 2018)

¥250
60
198
¥510

Note: Gain on government grants for FY2017 mainly consists of 230 million yen of proceeds from subsidy for Subsidy forOperating Expenses for Businesses that Promote Regional Reconstruction and Commercialization Development, etc., netof 112 million yen as a direct deduction from the cost of property, plant and equipment acquired using said subsidy. Gainon government grants for FY2018 mainly consists of 247 million yen of proceeds from subsidy for Subsidy for Operating
Expenses for Businesses that Promote Regional Reconstruction and Commercialization Development, etc.

Kureha Corporation Business Report 201971

25. Other expenses

The breakdown of “Other expenses” is as follows:
Millions of yen

FY2018Loss on retirement and sale of property, plant andequipment, and intangible assets
Impairment loss
Provision for environmental measures
Other
Total

FY2017(From April 1, 2018
To March 31, 2019)(From April 1, 2017
To March 31, 2018)

¥766
—
—
177
¥944

¥1,311746
375
170¥2,602

26. Finance income and finance costs

The breakdown of finance income is as follows:
Millions of yen

FY2018Interest income
Dividend income
Other
Total

(From April 1, 2018
To March 31, 2019)

¥ 26
621
4
¥651

FY2017(From April 1, 2017
To March 31, 2018)

¥ 17
576
9
¥603

The breakdown of finance costs is as follows:
Millions of yen

FY2018Interest expenses
Foreign exchange losses
Other
Total

(From April 1, 2018
To March 31, 2019)

¥359
20
9
¥389

FY2017(From April 1, 2017
To March 31, 2018)

¥468
397
27
¥893

27. Profit per share(1) Basis for determining basic profit per share
Millions of yen,unless otherwise stated

FY2018

Profit attributable to ordinary equity holders of parent:
Profit attributable to owners of parent
Profit not attributable to ordinary equity holders ofparentProfit used for determining basic profit per share
Weighted average number of common stock during theperiod (shares)
Basic profit per share (yen)72

Kureha Corporation Business Report 2019

FY2017(From April 1, 2018
To March 31, 2019)(From April 1, 2017
To March 31, 2018)¥13,933¥9,697—
13,933—
9,697

20,504,133

19,109,108679.55507.48

(2) Basis for determining diluted profit per share
Millions of yen,unless otherwise stated

FY2018

Profit attributable to ordinary equity holders including
dilutive effects:
Profit used for determining basic profit per share
Adjustments on profit
Profit used for determining diluted profit per share

FY2017(From April 1, 2018
To March 31, 2019)(From April 1, 2017
To March 31, 2018)¥13,933—
13,933¥9,697—
9,697

20,504,133
14,593

19,109,108
1,559,543

20,518,726

20,668,651

679.07469.18Weighted average number of common stock during theperiod (shares):
Dilutive effects (shares)
Weighted average number of common stock including
dilutive effects (shares)
Diluted profit per share (yen)28. Other comprehensive income

Reclassification adjustment and tax effect for other comprehensive income are as follows:
FY2017 (From April 1, 2017 To March 31, 2018)
Millions of yen
Amount before tax
effectAmount arisingduring the year

Reclassification
adjustment

Items that will not be reclassified to profit or
loss:
Financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Total¥5,652
269
5,922

¥—
—
—

¥5,652269
5,922¥(1,716)(80)(1,796)¥3,936
189
4,126

Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translating foreign
operations
Total

(778)
(778)

—
—

(778)
(778)

—
—

(778)
(778)

¥5,144¥—¥5,144¥(1,796)¥3,348Total

Tax effectAmount after tax
effectKureha Corporation Business Report 201973

FY2018 (From April 1, 2018 To March 31, 2019)
Millions of yen
Amount before tax
effectAmount arisingduring the year

Reclassification
adjustment

Items that will not be reclassified to profit or
loss:
Financial assets measured at fair value
through other comprehensive income
Remeasurements of defined benefit plans
Total¥2,185
413
2,598

¥—
—
—

¥2,185413
2,598¥(680)(109)(789)¥1,504304
1,809

Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translating foreign
operations
Total

692
692

—
—

692
692

—
—

692
692

¥3,291¥—¥3,291¥(789)¥2,501

Non-cash transactions
Amortized cost Exchange rate Conversion tomeasurementchangesstock

As of March
31, 2018

Total

Tax effectAmount after tax
effect29. Cash flow information

The table below presents reconciliations regarding liabilities arising from financing activities.
FY2017 (From April 1, 2017 To March 31, 2018)
Millions of yen

Short-term loans payable andcommercial paper
Long-term loans payable
Bonds
Bonds with stock acquisitionrightsTotal

As of April 1,
2017Cash flow¥19,974
18,377
16,965¥(4,325)(5,650)
1,963

¥—
—
19

¥55
36
—

¥

—
—
—

¥15,704
12,762
18,94914,933¥70,250—¥(8,012)

29
¥49

—
¥91

(14,962)¥(14,962)—¥47,416

Non-cash transactions
Amortized cost Exchange rate Conversion tomeasurementchangesstock

As of March
31, 2019

FY2018 (From April 1, 2018 To March 31, 2019)
Millions of yen

Short-term loans payable andcommercial paper
Long-term loans payable
Bonds
Total

74

Kureha Corporation Business Report 2019

As of April 1,
2018

Cash flow¥15,704
12,762
18,949¥47,416¥(3,730)(5,051)(28)¥(8,810)

¥—
—
20
¥20

¥(57)
(16)
—
¥(73)

¥—
—
—
¥—

¥11,917
7,694
18,940¥38,552

30. Related party transactions(1) Related party transactions
There were no related party transactions to be reported (excluding those eliminated in the consolidated financial statements).
(2) Executive compensation
The compensation for the Group’s management executives was as follows:
Millions of yen

FY2018(From April 1, 2018
To March 31, 2019)

Basic compensation
Bonus
Share-based compensation
Total

¥210
62
11
¥283

FY2017(From April 1, 2017
To March 31, 2018)

¥226
37
11
¥275

31. Major subsidiaries

Major subsidiaries of the Group are disclosed in page 80 of our Business Report.

32. Loan commitments

The Company and certain consolidated subsidiaries have entered into overdraft agreements and loan commitment agreementswith multiple financial institutions in order to efficiently procure working capital. The balances of undrawn credit facilities
pursuant to these agreements are as follows:
Millions of yen

FY2018FY2017(As of March 31, 2019)(As of March 31, 2018)¥6,069—¥6,069¥6,710—¥6,710Aggregate amount of maximum
overdraft limit and loan commitment
Less: Drawn down balance
Balance of undrawn credit facilities

33. Additional information(Transfer of a fixed asset)
The Company decided to transfer a fixed asset by resolution of the Board of Directors’ meeting held on March 26, 2019 andconcluded a sales contract on March 28, 2019.
An overview of the transfer, etc. is as follows.
(1) Reason for the transfer
The Company’s headquarters annex building (located at 3-26-2 Hyakunin-cho, Shinjyuku-ku, Tokyo) currently houses theCompany’s Pharmaceuticals Department, Pharmaceuticals Safety & Quality Management Department, Safety Research Center,and Medical Materials Research Laboratories. With the aim of enhancing inter-organizational collaboration and operational
efficiency, we are relocating the former two departments to our Tokyo headquarters (at 3-3-2 Nihonbashihama-cho, Chuo-ku,
Tokyo) on April 1, 2020 and the latter two units to one of the Iwaki Research and Development facilities (at 16 Ochiai, Nishikicho, Iwaki, Fukushima) by October 2020.
Accordingly, we have decided to dispose the following fixed asset so as to utilize management resources effectively andstrengthen the Company’s financial position.
(2) Details of the asset to be transferred
Description and location of asset

Gain on transfer of asset

Current status

Land: 6,702.44 m2
3-26-2 Hyakunin-cho, Shinjyuku-ku, Tokyo

Approximately 9.2 billion yen

In use for Kureha’s HQ annex building* The gain on transfer of asset indicated above is a rough estimate calculated by subtracting the asset’s book value and transferrelated expenses from the transfer price. We will not disclose the exact transfer price and book value of the asset at the requestof the party to whom the asset is transferred (“the transferee”).
Kureha Corporation Business Report 201975

(3) Information on the transferee
The Company will withhold the identity of the transferee due to confidentiality obligations to the transferee. The Company andthe transferee do not have capital, personnel or business ties, and the transferee is not a party related to the Company or its
subsidiaries.
(4) Transfer schedule
Resolution passed by the Company’s Board of Directors: March 26, 2019
Contract signing: March 28, 2019
Transfer of asset: November 30, 2019 (tentative)
Vacation of land: October 2020 (tentative and after the Company’s relocation is completed)(5) Impact of the event on the consolidated profit and loss
The Company expects to record an approximately 9.2 billion yen gain resulting from the sale of the aforementioned fixed asset
as “Other income” during the fiscal year ending March 31, 2020 (FY2019). Meanwhile, there is no impact on the FY2018
consolidated financial results.

34. Subsequent events

1. Acquisition of treasury stock
The Company has resolved at the Board of Directors’ meeting held on May 14, 2019 to acquire its treasury stock in accordancewith Article 156 of the Companies Act, as applied pursuant to Article 165, Paragraph 3 of said Act.
1) Reason for acquisition of treasury stock
To enhance shareholder return measures and improve capital efficiency
2) Details of acquisition
Type of shares to be acquired: Common shares of the Company
Total number of shares to be acquired: Up to 750,000 shares
Total cost of acquisition: Up to 5,000 million yen
Acquisition period: May 15, 2019 to March 31, 2020
3) Details of acquisition conducted (until May 31, 2019 [contract date basis])Type of shares acquired: Common shares of the Company
Total number of shares acquired: 100,000 shares
Total cost of acquisition: 678 million yen
Acquisition method: Open market purchase on the Tokyo Stock Exchange
2. Business combination due to acquisition
Kureha Ecology Management Co., Ltd. which is a consolidated subsidiary of the Company, has acquired shares of Himeyuri
total work Co., Ltd. as described below on April 1, 2019, based on a share transfer contract concluded on March 1, 2019. In
addition, the initial accounting for this business combination is currently incomplete.
1) Name and business of acquiree
Name: Himeyuri total work Co., Ltd.
Main business: final disposal of industrial waste (controlled landfill)2) Reason for acquisition
The Group, through its business activities, is making earnest efforts to solve social issues in fields such as the global
environment, energy and resources, food, life, and medical and health, and Kureha Ecology Management Co., Ltd. strives toconserve the global environment through the collection, transportation, and intermediate disposal of industrial wastes. By
making into a subsidiary Himeyuri total work Co., Ltd., which operates final disposal sites and has a long business transaction
history with the Group, we can provide an integrated service from collection and transportation to intermediate and final
disposal of industrial wastes and the Group will have a structure which can further satisfy the needs of customers and local
communities.
3) Acquisition date
April 1, 201976

Kureha Corporation Business Report 20194) Ratio of voting rights acquired
Ratio of voting rights owned immediately before the acquisition date: 19%
Ratio of voting rights acquired additionally on the acquisition date: 81%
Ratio of voting rights after acquisition: 100%5) Fair value of consideration transferred on the acquisition date and its type
Cash: 470 million yen
6) Fair value of the assets and liabilities on the acquisition date and goodwill
Currently not determined as recognition and measurement of identifiable assets acquired and liabilities assumed are incomplete.

Kureha Corporation Business Report 2019775) Consolidated supplementary schedules[Details of bonds]

Issuer(Millions of yen)
Beginning balance Ending balance
FY2018FY2018Issue date(as of Apr. 1,(as of Mar. 31,
2018)
2019)

Type

KurehaCorporation
KurehaCorporation
KurehaCorporation
KurehaCorporation

Interest rate(%)

Collateral

October 19,
2018
March
6,
None
2020
1,
None September
2022
18,
None October2023

The 4th unsecured bonds

October 20,
2011¥ 4,998(4,998)The 5th unsecured bonds

March 6, 2015

6,984

6,991
(6,991)The 6th unsecured bonds

6,967

6,974

The 7th unsecured bonds

September 1,
2017
October 18,
2018

—

4,974

0.82 perannum
0.30 perannum
0.14 perannum
0.14 per
annum

—

—

18,949¥ (4,998)

18,940¥ (6,991)

—

Total

¥

—

Maturity date

None

—

—

Notes: 1. The amounts shown in parenthesis in “Ending balance” column represent the current portion of bonds payable.
2. The aggregate annual amounts to be redeemed within five years after the end of FY2018 are as follows:

Within one year

Over one year andwithin two years¥7,000(Millions of yen)Over two years andwithin three years¥—

Over three years andwithin four years¥—

Over four years andwithin five years¥7,000¥5,000[Details of loans payable](Millions of yen)Classifications

Short-term loans payable
Current portion of long-term loans payable
Current portion of lease obligations
Commercial papers (current portion)
Long-term loans payable (excluding thecurrent portion)
Lease obligations (excluding the current
portion)
Total

Beginning balance
FY2018(as of Apr. 1, 2018)

Ending balance FY2018(as of Mar. 31, 2019)

Average interest rate (%)¥13,704
5,055
252
2,000

¥10,917
4,129
195
1,000

1.72
0.58
0.60
(0.00)

7,706

3,565

0.58

420

269

0.60

¥29,140¥20,077—

Maturity date————
April 2020 toFebruary 2029
April 2020 toMarch 2028—

Notes: 1. “Average interest rate” is presented as the weighted average interest rate against the loans outstanding at the end of the year.
2. The aggregate annual amounts of long-term loans payable and lease obligations to be repaid within five years after theend of FY2018 are as follows:
Over one year andwithin two years

Long-term loans payable
Lease obligations¥2,243
119(Millions of yen)Over two years andOver three years andwithin three years
within four years¥1,05584¥5334Over four years andwithin five years¥52
17[Details of asset retirement obligations]
The disclosure is omitted because the amounts of asset retirement obligations as of the beginning and end of FY2018 were lessthan 1% of the total liabilities and equity as of the same dates.

78

Kureha Corporation Business Report 2019

(2) Other information
Quarterly information for FY2018(Cumulative period)

Revenue
Profit before tax
Profit attributable to owners ofparentBasic profit per share (yen)(Each quarter)

Basic profit per shareFirst quarter(Millions of yen, unless otherwise stated)
Second quarter
Third quarter

FY2018¥34,555
3,498¥72,466
7,327¥110,811
14,193¥148,265
17,435

2,499

5,321

11,112

13,933121.01

257.63539.87679.55First quarter¥121.01

Second quarter¥136.63(Yen)
Fourth quarter

Third quarter¥283.29¥139.21

Kureha Corporation Business Report 201979

Major Subsidiaries and Affiliates

Country

Company Name

Major BusinessJapan

Kureha Trading Co., Ltd.

Trading of chemical and plastic products

Resinous Kasei Co., Ltd.

Manufacture/sale of advanced materials

Kureha Extron Co., Ltd.

Manufacture/sale of plastic products

Kureha Gohsen Co., Ltd.

Manufacture/sale of plastic fiber and products

Kurehanishiki Construction Co., Ltd.

Construction

Kureha Engineering Co., Ltd.

Plant engineering and maintenance

Kureha Ecology Management Co., Ltd.

Waste treatment and management

Kureha Special Laboratory Co., Ltd.

Environmental/physiochemical evaluation and analysis

Kureha Unyu Co., Ltd.

Transportation and storage services

Kureha Service Co., Ltd.

Real estate, travel and welfare services for Kureha Group

Kureha Staff Service Co., Ltd.

Recruiting and staffing services

Kureha-kai Medical Corporation

Hospital operations (Kureha General Hospital)

Kureha America Inc.

Holding company and finance/sales of advanced products andfishing lines

Kureha PGA LLC

Manufacture/sale of PGA resins

Kureha Energy Solutions LLC

Sale of PGA downhole tools

Fortron Industries LLC*

Manufacture/sale of PPS resins and compounds

Germany

Kureha GmbH

Sale of advanced products

Netherlands

Kureha Europe B.V.

Holding company and financeKrehalon B.V.

Manufacture/sale of food packaging products

Australia

Krehalon Australia Pty. Ltd.

Sale of food packaging products

China

Kureha (China) Investment Co., Ltd.

Holding company and finance

Kureha (Shanghai) Carbon Fiber Materials Co., Ltd.

Manufacture/sale of carbon fiber products

Kureha (Changshu) Fluoropolymers Co., Ltd.

Manufacture/sale of PVDF resins and compounds

Nantong SKT New Material Co., Ltd.*

Manufacture/sale of PVDC resins and compounds

Kureha Vietnam Co., Ltd.

Manufacture/sale of food packaging films

USA

Vietnam*Affiliates accounted for by equity method

80

Kureha Corporation Business Report 2019

Investor Information(As of March 31, 2019)

Major Stockholders

Corporate Data
Corporate Name
Headquarters

Kureha Corporation

Japan Trustee Services Bank, Ltd. (Trust account)

3-3-2, Nihonbashi-Hamacho,

Meiji Yasuda Life Insurance Company

Chuo-ku, Tokyo 103-8552, JapanThe Master Trust Bank of Japan Ltd. (Trust account)Tel: 81-3-3249-4666
Fax: 81-3-3249-4744
Establishment

June 21, 1944

Paid-in Capital¥18,169 million

Number of Employees

4,299 (Consolidated)

Independent Auditor

Ernst & Young ShinNihon LLC

Japan Trustee Services Bank, Ltd. (9 trust accounts)
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Trust & Custody Services Bank, Ltd.
(Securities investment trust account)
Mizuho Bank, Ltd.
Japan Trustee Services Bank, Ltd. (Trust account 5)
J.P. MORGAN BANK LUXEMBOURG S.A. 380578

Stock Information
Number of Shares ofCommon Stock Issued

JP MORGAN CHASE BANK 385151

20,805,407 shares

Number of Shareholders 10,467
Number of Shares Heldby Foreign Shareholders 5,479,747 (26.4% of total)
Stock Exchange Listings Tokyo Stock Exchange
Transfer Agent

Mizuho Trust & Banking Co., Ltd.

Kureha Corporation Business Report 201981

https://www.kureha.co.jp/

Printed in Japan