FOR IMMEDIATE RELEASE
Kurita Water Industries Reports Earnings for the Six Months Ended September 30, 2020
Tokyo, Japan, November 5, 2020—Kurita Water Industries Ltd. (TSE Securities Code 6370)
announced net sales of 131,012 million yen and profit attributable to owners of parent of 10,772
million yen, or 95.91 yen per share, for the six months ended September 30, 2020 (April 1, 2020 –September 30, 2020).
Results of Operations
Total consolidated orders for the Kurita Group in the six months ended September 30, 2020 fell 7.4%
from the level of the year-ago period, to 127,549 million yen, and net sales decreased 0.6%, to131,012 million yen. Business profit* was increased 2.0%, to 14,040 million yen, operating profit
was 16,460 million yen, down 11.4% versus the year-ago period, profit before tax was 15,846
million yen, declined 15.8%, and profit attributable to owners of parent amounted to 10,772 million
yen, down 20.2%.
During the six months, the Group had a customer who had terminated ultrapure water supply
agreements and posted a liquidation gain on contract termination settlements of 2,086 million yen inother income. However, due to the absence of the gain on the sale of fixed assets of 4,801 million
yen posted in the same period of the previous fiscal year, operating profit, profit before tax and profit
attributable to owners of parent fell from the previous fiscal year.
The operating results of Pentagon Technologies Group, Inc. (water treatment facilities business) in
the United States, which had been an equity method affiliate, has been consolidated since the firstquarter of the fiscal year under review due to the acquisition of its additional shares by the Group to
make it a consolidated subsidiary.
With regard to the market conditions surrounding the Group, exports sharply fell and the
production activities of the manufacturing industry declined significantly in Japan, reflecting the
spread of novel coronavirus worldwide. However, there were signs of a recovery as economic
activities were resumed in stages worldwide. Companies strengthened their cautious stance on capital
expenditures following their deteriorated corporate earnings and increasing uncertainty over the
future of the economy. Overseas, while the economy was still facing harsh conditions in Europe, theUnited States and Asia, there were signs of improvement.
In this environment, the Group consistently provided products and services essential for thecontinuation of business activities of customers and accelerated the development of total solutions byfocusing on proposal activities that would help solve customer issues such as the reduction of theenvironmental impact, energy saving and an improvement in productivity based on deep insight intosocial and customer issues.
* Business profit is the Group’s own indicator that measures constant business performance. It is net
sales less cost of sales and selling, general and administrative expenses. Although business profit is
not defined by IFRS, the Group voluntarily discloses it, believing that it is beneficial for users of its
financial statements.
Segment Information
The Group consists of two reportable segments in its segment information: Water Treatment
Chemicals and Water Treatment Facilities.
Water Treatment Chemicals
Total Group orders for the Water Treatment Chemicals segment were 52,397 million yen, down
10.5% versus the same period of the fiscal year ended March 31, 2020, while net sales fell 11.9%, to51,511 million yen.
Business profit stood at 6,436 million yen, down 2.7% year on year, and operating profit came to6,362 million yen, down 2.5% year on year, reflecting the Group’s efforts to minimize the impact of1

the fall in sales by improving the cost of sales ratio and reducing expenses.
Both orders and net sales declined in Japan due to a fall in capacity utilization at plants ofcustomers, except for some customers such as the electronics industry, affected by stagnant
economic activities due to the spread of novel coronavirus. Overseas, both orders and net sales
decreased partly due to the effect of a reduction in sales at overseas subsidiaries because of a stronger
yen, in addition to the impact of the spreading novel coronavirus.
Water Treatment Facilities
Total Group orders for the Water Treatment Facilities segment were 75,151 million yen, down 5.1%
versus the same period of the previous fiscal year. Net sales increased 8.5%, to 79,501 million yen.
Business profit rose to 7,628 million yen, up 5.2% year on year, reflecting the commencement ofconsolidation of Pentagon Technologies Group, Inc. and a reduction in expenses. Operating profit
decreased to 10,110 million yen, a fall of 16.7% year on year, reflecting the absence of a gain on thesale of fixed assets of 4,780 million yen posted in other income in the same period of the previous
fiscal year, despite a liquidation gain on contract termination settlements of 2,086 million yen posted
in other income that resulted from the termination of contract with a certain customer in the ultrapure
water supply business.
In Japan, while orders for water treatment facilities for the electronics industry increased, net sales
declined significantly due to the completion of large projects. While orders for maintenance services
decreased in reaction to orders for large projects posted in the same period of the previous fiscal year,
net sales increased due to progress in the construction of projects for which orders were posted in theprevious fiscal year.
For water treatment facilities for general industries, although orders declined in reaction to theposting of orders for large projects in the same period of the previous fiscal year, net sales increased
with progress in the construction of large projects. Both orders for and net sales from maintenanceservices fell, reflecting customers’ move to postpone the implementation of maintenance of theirfacilities due to the spread of the novel coronavirus. Orders from water treatment facilities for theelectric power industry decreased, but net sales rose because of progress in the construction of large
projects. Both orders for and net sales from soil remediation services decreased because orders forand net sales from large projects had run their courses.
Overseas, both orders and net sales increased mainly due to the new consolidation of operating
results (for six months) of Pentagon Technologies Group, Inc. Except for the effect of the newconsolidation, orders declined because orders for large projects for the electronics industry in East
Asia had reached a conclusion, and net sales fell only slightly chiefly due to progress in theconstruction of large projects in South Korea.
Total net sales in the ultrapure water supply business in Japan and overseas increased due to acontract that began in the previous fiscal year.
Financial Condition
Condition of assets, liabilities and equity
1) Total assets: 389,237 million yen, an increase of 1,488 million yen from the end of the previous
fiscal year)
Current assets totaled 158,412 million yen at the end of the second quarter (September 30, 2020), a
decrease of 4,435 million yen from the end of the previous fiscal year (March 31, 2020). This was
mainly attributable to a decrease in trade and other receivables of 6,866 million yen due to thesmooth collection of accounts receivable – trade, offsetting an increase in cash and cash equivalentsof 2,825 million yen.
Non-current assets totaled 230,825 million yen at the end of the second quarter, an increase of
5,923 million yen from the end of the previous fiscal year. Goodwill increased 8,984 million yen
while investments accounted for using equity method decreased 4,945 million yen due to theconversion of Pentagon Technologies Group, Inc. (water treatment facilities business), which had
been an equity method affiliate, to a consolidated subsidiary in the first quarter of this fiscal year.
2Other financial assets rose 5,359 million yen while deferred tax assets decreased 1,572 million yen
owing to an increase in unrealized gains mainly caused by a rise in the market value of shares held.
2) Liabilities: 144,167 million yen, an increase of 527 million yen from the end of the previous fiscal
year.
Current liabilities totaled 84,965 million yen at the end of the period, a decrease of 9,443 million yen
from the end of the previous fiscal year. This was mainly due to a decrease in borrowings of 14,946
million yen resulting from the partial repayment of the commitment line contracts, offsetting an
increase in trade and other payables of 4,539 million yen.
Non-current liabilities totaled 59,202 million yen at the end of the period, an increase of 9,970
million yen from the end of the previous fiscal year. This was chiefly attributable to an increase inother financial liabilities of 11,050 million yen mainly resulting from the initial recognition of thepresent value of the expected value of shares to be transferred in the future based on the forward
contract concluded between Kurita America Holdings Inc., a wholly owned subsidiary of theCompany and non-controlling shareholders of Pentagon Technologies Group, Inc.
3) Equity: 245,069 million yen, an increase of 961 million yen from the end of the previous fiscal
yearThis principally reflected a rise of 7,339 million yen in retained earnings chiefly due to profit for theperiod and an increase of 2,811 million yen in other components of equity in association with a risein the market value of shares held, while the capital surplus decreased 10,605 million yen mainly as aresult of initial recognition related to the aforementioned forward contract for shares in Pentagon
Technologies Group, Inc.
Cash Flows
Consolidated net cash and cash equivalents at the end of the first half (September 30, 2020) totaled
53,040 million yen, an increase of 2,825 million yen from the end of the previous fiscal year (March
31, 2020).
The various cash flows and related factors are outlined below.
1) Cash Flows from Operating Activities
Net cash provided by operating activities during the first half ended September 30, 2020 totaled
27,203 million yen, an increase of 13,328 million yen from the same period of the previous fiscal
year. This was chiefly due to inflows from profit before tax of 15,846 million yen, depreciation andamortization of 9,923 million yen, and a decrease in trade and other receivables of 6,496 million yen.
2) Cash Flows from Investing Activities
Net cash used in investing activities totaled 2,878 million yen, a decrease of 32,382 million yen fromthe same period of the previous fiscal year. Cash was used mainly for the acquisition of subsidiaries
of 4,605 million yen (after deducting cash and cash equivalents included in acquired assets) andpurchases of property, plant and equipment of 3,083 million yen, despite inflows, particularly
proceeds from sales of property, plant and equipment of 5,942 million yen.
3) Cash Flows from Financing Activities
Net cash used in financing activities totaled 21,810 million yen, an increase of 46,181 million yen
from the same period of the previous fiscal year. Cash was used mainly for a net decrease in
short-term borrowings of 15,001 million yen, dividends paid of 4,006 million yen and repayments oflease liabilities of 2,444 million yen.
The Group’s basic policy is to constantly secure the liquidity necessary for business operations andestablish a stable funds-raising system. Short-term working capital is basically supplied by theGroup’s own funds. Capital investment and other investments in growth fields depend chiefly on the3Group’s own funds, but the Group considers financing through bond markets and bank loans asneeded. As of the end of the first half under review, the Group has concluded commitment line
contracts with four financial institutions (executed and unexecuted borrowings within thecommitment line were 20,000 million yen and 50,600 million yen, respectively).
4) Forecasts for the Fiscal Year Ending March 31, 2021
As announced in “Kurita Water Industries Announces Revision of Business Forecast” published on
October 22, 2020, the Group has revised its consolidated business forecasts for the fiscal year ending
March 31, 2021. It remains uncertain what the total number of COVID-19 cases will be and when it
will subside; therefore, a full-fledged recovery will take time. However, as economic activities arebeing resumed in stages worldwide, we assume that economies will recover moderately toward theend of the fiscal year under review.
The business forecasts are made by the Company based on information available at the time of
publication of this report and may differ from actual results due to changes in a range of factors.
(Consolidated business forecasts)
Revision to the consolidated business forecast for the fiscal year ending March 31, 2021 (April 1,2020 – March 31, 2021)

Net sales

Business
profitOperatingprofitProfit before Profit for thetax
periodProfitattributableto owners ofparent(Million yen)Basicearnings per
share
(Yen)

Previous forecast(A)

268,000

23,50022,50022,60016,35016,000142.48

Revised forecast(B)

270,000

28,00029,00028,00019,50019,000169.15

Change (B-A)

2,000

4,500

6,500

5,400

3,150

3,000

-

Percentage change
(%)

0.7

19.1

28.9

23.9

19.3

18.8

-

(Reference) Firstsix months of the
fiscal year ended
March 31, 2020

264,807

26,65427,47926,691

18,312

18,287162.86

4

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

As of September 30, 2020

Cash and cash equivalents

50,21553,040Trade and other receivables

96,974

90,108Other financial assets

2,562

2,590

Inventories

9,247

9,805

Other current assets

3,847

2,867

Total current assets

162,847

158,412

Property, plant and equipment

106,358

105,301

Right-of-use assets

17,784

17,236

Goodwill

47,03356,017

Intangible assets

13,381

13,017

AssetsCurrent assets

Non-current assets

Investments accounted for using equity method

7,469

2,524

Other financial assets

28,46533,824

Deferred tax assets

4,295

2,723

Other non-current assets

113

179

Total non-current assets

224,902230,825

387,749

389,237

Total assets

5

(Million yen)
As of March 31, 2020

As of September 30, 2020

Trade and other payables

35,68040,219Borrowings

35,371

20,425

Lease liabilities

4,234

4,233

219

212

Income taxes payable

1,998

4,661

Provisions

1,557

1,635

Other current liabilities

15,345

13,576

Total current liabilities

94,40884,965

Liabilities and equity
Current liabilities

Other financial liabilities

Non-current liabilities
Borrowings

1,305

1,514

Lease liabilities

13,701

13,191Other financial liabilities

2,562

13,612Retirement benefit liability

16,913

17,401

Provisions

499

502

Deferred tax liabilities

1,346

1,360

Other non-current liabilities

12,903

11,619Total non-current liabilities

49,232

59,202

143,640

144,167

13,45013,450Total liabilities
EquityShare capital
Capital surplus

8,212(2,393)

Treasury shares(10,893)(10,784)

Other components of equity

216

3,027

Retained earnings

231,456

238,795

Equity attributable to owners of parent

242,442

242,095

1,666

2,974

Total equity

244,108

245,069

Total liabilities and equity

387,749

389,237

Non-controlling interests6(2) Condensed quarterly consolidated statement of profit or loss
(Million yen)Six months ended
September 30, 2019
Net sales
Cost of sales
Gross profit

Six months ended
September 30, 2020

131,758

131,01285,438

85,104

46,32045,908Selling, general and administrative expenses

32,552

31,868Other income

5,318

3,359

Other expenses

498

938

Operating profit

18,58816,460Finance income

387

309

Finance costs

210

916

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

59

(7)

18,825

15,846

5,291

4,735

13,533

11,11013,503

10,772

Profit before tax
Income tax expense
Profit for the period
Profit attributable to
Owners of parent
Non-controlling interests
Profit for the period

30

338

13,533

11,110120.26

95.91

‒

‒

Earnings per share
Basic earnings per share (yen)Diluted earnings per share (yen)7(3) Condensed quarterly consolidated statement of comprehensive income(Million yen)Six months ended
September 30, 2019
Profit for the period

Six months ended
September 30, 2020

13,533

11,110

(197)

3,833

(5)

(33)

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

(203)

3,799

Exchange differences on translation of foreign operations(5,162)(798)

Cash flow hedges

323

(188)

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

(109)

(21)

Total of items that may be reclassified to profit or loss

(4,948)(1,007)

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

Other comprehensive income, net of tax(5,151)

2,791

Comprehensive income for the period

8,381

13,901

8,393

13,583

(11)

318

8,381

13,901

Comprehensive income attributable to
Owners of parent
Non-controlling interests
Comprehensive income8(4) Condensed quarterly consolidated statement of changes in equity
Six months ended September 30, 2019 (April 1, 2019 - September 30, 2019)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2019

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Cash flow
hedgesFinancial assets
measured at fairvalue throughothercomprehensive
income9,199

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

310

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(5,230)

323

(197)

‒

‒

‒

(5,230)

323

(197)

Purchase of treasury shares

‒

‒

(1)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

53

42

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

(4)

‒

‒

‒

‒

Increase (decrease) by business combination

‒

‒

‒

‒

‒

‒

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders

‒

‒

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

(256)

Other

‒

(0)

‒

‒

‒

‒

‒

48

40

‒

‒

(256)

13,450

10,313(10,891)(9,901)

633

8,745

Total comprehensive income for the period

Total transactions with owners
Balance as of September 30, 2019

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

Retainedearnings

Total

Non-controllinginterests

Total

Total

Balance as of April 1, 2019

‒

4,838

219,660

237,282

1,902

239,184

Profit for the period‒‒

13,503

13,50330

13,533

Other comprehensive income(4)(5,109)‒(5,109)(42)(5,151)(4)(5,109)13,503

8,393

(11)

8,381

Purchase of treasury shares

‒

‒

‒

(1)

‒

(1)

Dividends‒‒(3,040)(3,040)(10)(3,050)Share-based payment transactions

‒

‒

‒

95

16

111

Changes in ownership interests in subsidiaries

‒

‒

‒

(4)

(56)

(60)

Increase (decrease) by business combination

‒

‒

‒

‒

‒

‒

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders

‒

‒

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

4

(251)

251

‒

‒

‒

Other

Total comprehensive income for the period

‒

‒

(12)

(12)

‒

(12)

Total transactions with owners

4

(251)

(2,801)(2,963)(50)(3,014)

Balance as of September 30, 2019

‒

(522)

230,361

242,712

1,839

244,5529

Six months ended September 30, 2020 (April 1, 2020 - September 30, 2020)(Million yen)
Equity attributable to owners of parent
Other components of equity

Share capital

Balance as of April 1, 2020

Capital surplus Treasury shares

Exchangedifferences ontranslation offoreign
operations

Cash flow
hedgesFinancial assets
measured at fairvalue throughothercomprehensive
income(9,033)

503

8,747

13,4508,212(10,893)

Profit for the period

‒

‒

‒

‒

‒

‒

Other comprehensive income

‒

‒

‒

(800)

(188)

3,833

‒

‒

‒

(800)

(188)

3,833

Purchase of treasury shares

‒

‒

(1)

‒

‒

‒

Dividends

‒

‒

‒

‒

‒

‒

Share-based payment transactions

‒

1

111

‒

‒

‒

Changes in ownership interests in subsidiaries

‒

‒

‒

‒

‒

‒

Increase (decrease) by business combination

‒

‒

‒

‒

‒

‒

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

‒

‒

‒

‒

Transfer from other components of equity toretained earnings

‒

‒

‒

‒

‒

(33)

Other

‒

(28)

‒

‒

‒

‒

‒

(10,605)

109

‒

‒

(33)

13,450(2,393)(10,784)(9,834)315

12,546

Total comprehensive income for the period

Total transactions with owners
Balance as of September 30, 2020

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

Retainedearnings

Total

Non-controllinginterests

Total

Total

Balance as of April 1, 2020‒

216

231,456

242,442

1,666

244,108

Profit for the period‒‒

10,772

10,772338

11,110

(32)

2,811

‒

2,811

(19)

2,791

(32)

2,811

10,772

13,583318

13,901

Purchase of treasury shares

‒

‒

‒

(1)

‒

(1)

Dividends‒‒(3,481)(3,481)(528)(4,010)Share-based payment transactions

‒

‒

‒

112

0

112

Changes in ownership interests in subsidiaries

‒

‒

‒

‒

‒

‒

Increase (decrease) by business combination

‒

‒

‒

‒

1,517

1,517

Liabilities pertaining to forward contracts
concluded with non-controlling shareholders

‒

‒

‒

(10,578)‒(10,578)

Transfer from other components of equity toretained earnings

32

(0)

0

‒

‒

‒

Other comprehensive income
Total comprehensive income for the period

‒

‒

47

18

‒

18

Total transactions with owners

32

(0)

(3,433)(13,930)989(12,941)

Balance as of September 30, 2020

‒

3,027

238,795

242,095

2,974

245,069

Other

10

(5) Condensed quarterly consolidated statement of cash flows(Million yen)Six months ended
September 30, 2019

Six months ended
September 30, 2020

Cash flows from operating activities
Profit before tax

18,825

15,846

Depreciation and amortization

8,423

9,923

(59)

7

Loss (gain) on sale of fixed assets(4,795)(5)Decrease (increase) in inventories

(968)

(123)

Decrease (increase) in trade and other receivables

517

6,496

Increase (decrease) in trade and other payables(1,950)

(371)

(525)

(2,307)

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

Other

19,466

29,465Interest received

Subtotal

24

43

Dividends received

214

184

Interest paid

(45)

(36)

Income taxes paid

(5,784)(2,453)

Net cash provided by (used in) operating activities

13,87527,203(980)(1,067)

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

800

843

Purchase of property, plant and equipment(19,104)(3,083)

Proceeds from sale of property, plant and equipment

508

5,942

Purchase of intangible assets

(641)

(796)

Payments for acquisition of a subsidiary (after deductionof cash and cash equivalents included in acquired assets)(8,501)(4,605)Purchase of investments in associates(5,860)‒Other(1,480)(111)

Net cash provided by (used in) investing activities(35,260)(2,878)30,008(15,001)

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

(268)

(389)

Repayments of lease liabilities(2,256)(2,444)

Dividends paid

(3,061)(4,006)

(60)

‒

9

31

24,371(21,810)Purchase of shares of subsidiaries not resulting in change
in scope of consolidation
Other
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

(979)

309

Net increase (decrease) in cash and cash equivalents

2,007

2,825

Cash and cash equivalents at beginning of period

35,54750,215

Cash and cash equivalents at end of period

37,55453,04011Notes to Consolidated Financial Statements(Notes on the Going-concern Assumption)
Six months ended September 30, 2020 (April 1, 2020 – September 30, 2020)
Not applicable(Segment Information)(1) Overview of reportable segments
The Company’s reportable segments are components of the Group about which separate financial information isavailable. These segments are subject to periodic review to enable the Company’s board of directors to decide how toallocate resources and assess performance.
The Group plans comprehensive strategies for the products that it handles in Japan and overseas, and develops abusiness. The Group’s operations are therefore classified into two reportable segments, the Water Treatment Chemicals
segment and the Water Treatment Facilities segment.
The Water Treatment Chemicals segment manufactures and sells water treatment chemicals and equipment andprovides maintenance services. The Water Treatment Facilities segment manufacturers and sells water treatment systemand facilities, supplies ultrapure water, chemical cleaning, tool cleaning, soil and groundwater remediation services, andprovides maintenance services that encompass operation, maintenance, and management of water treatment facilities.
(2) Information of reportable segments
Six months ended September 30, 2019 (April 1, 2019 – September 30, 2019)(Million yen)
Reportable Segments

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

Adjustments(note 1)

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

Water
Treatment
Facilities

58,484361

73,274
955

131,758
1,317‒(1,317)

131,758‒

58,84674,229133,076(1,317)

131,758

6,524

12,13918,664(76)

18,588

Total

Finance income

387

Finance costs

210

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

59
18,825(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating profit level.

12Six months ended September 30, 2020 (April 1, 2020 – September 30, 2020)(Million yen)
Reportable Segments

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

Adjustments(note 1)

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

Water
Treatment
Facilities

51,511
211

79,501
1,086

131,012
1,297‒(1,297)131,012‒51,72280,588132,310(1,297)131,012

6,362

10,11016,473(12)

16,460

Total

Finance income

309

Finance costs

916

Share of profit (loss) of investments accounted for using equity method(7)

Profit before tax

15,846(Notes) 1. Segment income: Amount resulting from eliminations of inter-segment transactions.
2. Segment income is shown at the operating profit level.

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

5,379 million yen

Total

10,974 million yen

5,594 million yen(2) Gain on remeasurement relating to business combinations
As a result of remeasuring equity interest in the acquired company held immediately before the date of acquisition atfair value, the Company has recognized gain on remeasurement relating to business combinations of 463 million yen
due to the business combination. The gain is recorded in Other income in the condensed quarterly consolidated
statement of profit or loss.

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(3) Assets acquired and liabilities assumed
The fair value of identifiable assets acquired and liabilities assumed of Pentagon Technologies Group, Inc. on the dateof acquisition are shown below.
(Million yen)
Fair value of consideration

10,974

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

989

Trade receivables

1,707

Other current assets

433

Non-current assets

2,152

Trade payables and other payables(1,351)

Non-current liabilities(992)

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

Non-controlling interests

1,517

Goodwill

9,554

The amount of goodwill that occurred was 9,554 million yen, which reflects expected excess earning power.
We do not expect any amounts related to recognized goodwill to be deductible expenses from tax perspective.
Net sales and profit for the period of Pentagon Technologies included in the condensed quarterly consolidated statementof profit or loss for the first half under review are 5,490 million yen and 742 million yen respectively.
The amount of goodwill is provisionally determined because the allocation of the acquisition cost is still ongoing as theidentification of identifiable assets and liabilities as of the time of business combination and the estimation of theirmarket values have yet to be completed given that the period from the date of business combination to the closing dateis short.
Non-controlling interests are measured using the proportion of non-controlling interests to the fair value of identifiable
net assets of the acquired company.
(4) Transactions that are accounted for separately from business combination
Expenses related to the acquisition for the business combination were 171 million yen. The amount is posted in Other
expenses in the condensed quarterly consolidated statement of profit or loss.
(5) Forward contract concluded with non-controlling shareholders
With regard to the remaining 49% of shares in Pentagon Technologies, a forward contact has been concluded between
Kurita America Holdings Inc. and non-controlling shareholders of Pentagon Technologies, and it has been agreed that
Pentagon Technologies will become a wholly owned subsidiary of Kurita America Holdings Inc. with June 30, 2022 as
the target date.
The present value of expected value of shares to be transferred based on the forward contract which is 10,578 million
yen, is initially recognized as Other financial liabilities, and the same amount is deducted from Capital surplus. Afterthe initial recognition, the present value is measured at amortized cost based on the effective interest method, inprinciple, and the amount of subsequent changes is recognized in profit or loss.

Disclaimer- This document is an English translation of the Earnings Report for the Six Months Ended September 30, 2020 asreference information primarily for overseas investors. If there are any discrepancies between the Japanese version andthe English version, the Japanese version shall take precedence in all cases.
- This document is not subject to audit.
- The forward-looking statements such as performance forecasts contained in this document are based on information
currently available to the Company and certain assumptions deemed to be reasonable, and are not intended to be acommitment by the Company. Actual performance, etc. may differ due to a variety of factors. See “Forecasts for the
Fiscal Year Ending March 31, 2021” on page 4 of this document for the conditions assumed in the performance
forecasts and the precautions concerning the use of performance forecasts.

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