KANEMATSU CORPORATIONCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016

～CONSOLIDATED FINANCIAL STATEMENTS～

PAGES

Consolidated Statement of Financial Position: .............................................................................................................................. 1
Consolidated Statement of Income and Consolidated Statements of Comprehensive Income: .................................................... 3
Consolidated Statement of Changes in Net Assets: ....................................................................................................................... 5
Consolidated Statement of Cash Flows: ........................................................................................................................................ 7～NOTES TO CONSOLIDATED FINANCIAL STATEMENTS～
1.

Reporting Entity: .................................................................................................................................................................... 92.

Basis of Preparing Consolidated Financial Statements: ......................................................................................................... 93.

Significant Accounting Policies: .......................................................................................................................................... 104.

Standards and interpretations issued but not yet adopted: .................................................................................................... 16

5.

Business Combinations: ....................................................................................................................................................... 17

6.

Segment Information: ........................................................................................................................................................... 18

7.

Trade and Other Receivables: .............................................................................................................................................. 21

8.

Inventories: ........................................................................................................................................................................... 22

9.

Property, Plant and Equipment: ............................................................................................................................................ 22

10.

Goodwill and Intangible Assets: ........................................................................................................................................ 24

11.

Investments in Associates and Joint Ventures: ................................................................................................................... 28

12.

Other Investments: ............................................................................................................................................................. 28

13.

Other Current Assets and Other Non-current Assets: ......................................................................................................... 28

14.

Trade and Other Payables:.................................................................................................................................................. 29

15.

Bonds and Borrowings: ...................................................................................................................................................... 29

16.

Provisions: .......................................................................................................................................................................... 30

17.

Other Current Liabilities and Other Non-current Liabilities: ............................................................................................. 30

18.

Equity: ................................................................................................................................................................................ 31

19.

Revenue: ............................................................................................................................................................................. 32

20.

Selling, General and Administrative Expenses: ................................................................................................................. 32

21.

Gain or Loss on Sale and Disposal of Fixed Assets: .......................................................................................................... 33

22.

Impairment Loss: ................................................................................................................................................................ 33

23.

Exchange Differences: ....................................................................................................................................................... 34

24.

Finance Income and Finance Costs: ................................................................................................................................... 34

25.

Earnings Per Share Attributable to Owners of the Parent: ................................................................................................. 34

26.

Other Comprehensive Income: ........................................................................................................................................... 35

27.

Cash Flow Information: ...................................................................................................................................................... 36

28.

Employee Benefits: ............................................................................................................................................................ 37

29.

Deferred Taxes and Income Taxes: .................................................................................................................................... 40

30.

Financial Instruments: ........................................................................................................................................................ 42

31.

Lease: ................................................................................................................................................................................. 62

32.

Pledged Assets: .................................................................................................................................................................. 63

33.

Contingent Liabilities: ........................................................................................................................................................ 64

34.

Significant Subsidiaries: ..................................................................................................................................................... 64

35.

Related Parties: ................................................................................................................................................................... 68

36.

Subsequent Events:............................................................................................................................................................. 68

37.

Disclosures Regarding Transition to IFRSs: ...................................................................................................................... 69

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Consolidated Statement of Financial Position
JPY
2016

USD (Note 2)2014(Transition Date)

2015

2016

(Assets)
I. Current assets
1. Cash and cash equivalents (Note 27)

87,466

66,48573,978776,234

2. Trade and other receivables (Notes 7)

163,540

186,486

182,627

1,451,367

3. Inventories (Note 8)

80,19591,844

66,514

711,706

4. Other financial assets (Note 30)

2,596

6,792

3,675

23,0395. Other current assets (Note 13)

12,776

16,054

14,268113,383

346,574

367,664

341,065

3,075,737

1. Property, plant and equipment (Note 9)26,88328,96624,179238,578

2. Goodwill (Note 10)

4,631

4,493

2,329

41,0993. Intangible assets (Note 10)

8,083

8,641

8,298

71,734

4. Investments accounted for using the equity method(Note 11)

7,420

5,385

5,536

65,850

460

388

135

4,082

6. Other investments (Note 12)

31,53533,04926,727

279,863

7. Other financial assets (Note 30)

5,441

5,481

4,484

48,287

8. Deferred tax assets (Note 29)

9,084

10,557

15,70280,6189. Other non-current assets (Note 13)

3,477

1,686

1,764

30,857

Total non-current assets

97,01798,65089,158860,996

Total assets

443,592

466,314430,224

3,936,741

Total current assets
II. Non-current assets

5. Trade and other receivables (Note 7)(Notes) Presentation of fiscal year and amount (Japanese Yen and U.S. dollars)
1. “JPY” means millions of Yen and “USD” means thousands of U.S. dollars.
2. “2016” refers to the Company’s consolidated fiscal year ended March 31, 2016 and the other fiscal years are referred to in thecorresponding manner.

Continued
1

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016

JPY
2016

USD (Note 2)2014(Transition Date)

2015

2016

(Liabilities)
I. Current liabilities
1. Trade and other payables (Note 14)

142,143

159,522150,518

1,261,475

2. Bonds and borrowings (Note 15)

61,98965,30579,852550,133

3. Other financial liabilities (Note 30)

7,129

5,828

5,023

63,268

4. Income taxes payable

2,274

2,561

1,962

20,181

5. Provisions (Note 16)

31

300

92

275

6. Other current liabilities (Note 17)

19,46524,736

20,870172,746

Total current liabilities

233,034

258,255

258,319

2,068,104

1. Bonds and borrowings (Note 15)

74,87774,426

61,113

664,510

2. Other financial liabilities (Note 30)

6,679

6,620

6,376

59,274

3. Retirement benefits liabilities (Note 28)

6,024

5,581

5,906

53,461

4. Provisions (Note 16)

1,272

1,098

804

11,2895. Deferred tax liabilities (Note 29)

297

313

283

2,636

6. Other non-current liabilities (Note 17)

699

1,002

692

6,203

89,851

89,04375,177

797,400

322,885

347,298

333,496

2,865,504

1. Share capital (Note 18)

27,781

27,781

27,781

246,548

2. Capital surplus (Note 18)

26,463

26,621

27,494

234,851

3. Retained earnings (Note 18)

29,103

21,87912,414258,280

4. Treasury stock (Note 18)

(235)

(222)

(321)

(2,086)

1) Exchange differences on translation of foreign operations

2,912

5,258

－

25,843

2) Financial assets measured at fair value through othercomprehensive income

6,967

8,784

5,113

61,8303) Cash flow hedges(1,393)

142

(297)

(12,362)

Total other components of equity

8,486

14,185

4,816

75,311

Total equity attributable to owners of the Parent

91,59990,24472,185

812,913

6. Non-controlling interests

29,107

28,771

24,541

258,316

Total equity

120,706

119,015

96,727

1,071,228

Total liabilities and equity

443,592

466,314430,224

3,936,741

II. Non-current liabilities

Total non-current liabilities
Total liabilities(Equity)

5. Other components of equity (Note 26)

The accompanying notes are an integral part of these consolidated financial statements
2

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Consolidated Statement of Income and Consolidated Statement of Comprehensive Income:(a) Consolidated Statement of Income
JPY

USD (Note 2)

2016

2015

2016

I. Revenue (Notes 6 & 19)

668,374

704,211

5,931,612

II. Cost of sales(582,135)(616,331)(5,166,267)

Gross profit

86,23887,880765,335

III. Selling, general and administrative expenses (Note 20)(68,577)(66,245)(608,600)

1. Gain (loss) on sale or disposal of property, plant andequipment and intangible assets, net (Note 21)

(311)

(63)

(2,760)2. Impairment loss on property, plant and equipment andintangible assets (Note 22)

(94)

(580)

(834)

IV. Other income (expenses)

3. Other income

2,596

4,146

23,0394. Other expenses(1,078)(1,589)(9,567)

Total other income (expenses)

1,111

1,912

9,860

Operating profit (Note 6)

18,772

23,547

166,596

1. Interest income (Note 24)

478

400

4,242

2. Dividend income (Note 24)

927

1,082

8,227

3. Other finance income (Notes 24 & 30)

－

18

－

1,405

1,501

12,469(2,407)(2,910)(21,361)

(323)

(908)

(2,867)(2,731)(3,819)(24,237)

675

1,143

5,990

Profit before tax

18,122

22,373160,827

Income tax expense (Note 29)(7,313)(9,238)(64,901)

Profit for the year

10,80813,135

95,918

Owners of the Parent

8,959

10,546

79,508Non-controlling interests

1,848

2,588

16,400Total

10,80813,135

95,918

V. Finance income

Total finance income
VI. Finance costs
1. Interest expenses (Note 24)
2. Other finance costs (Notes 24 & 30)
Total finance costs
VII. Share of profit (loss) of investments accounted forusing the equity method (Note 11)

Profit for the year attributable to:

Yen

U.S. dollars

Earnings per share attributable to owners of the Parent:
Basic earnings per share (Note 25)

21.29

25.10

0.19

Diluted earnings per share (Note 25)

21.29

25.10

0.19

Continued
3

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(b) Consolidated Statement of Comprehensive Income
JPY
2016

USD (Note 2)
2015

I. Profit for the year2016

10,80813,135

95,918(1,580)3,762(14,022)

(426)

492

(3,781)

(14)

7

(124)

Total items that will not be reclassified to profit and loss

(2,021)

4,263(17,936)

Items that may be reclassified to profit and loss:
1. Exchange differences on translation of foreign
operations (Note 26)(2,894)6,564(25,683)

2. Cash flow hedges (Notes 26 & 30)(1,511)

435(13,410)

(127)

106

(1,127)

Total items that may be reclassified to profit and loss

(4,532)

7,106(40,220)

Other comprehensive income for the year, net of tax(6,554)

11,369(58,165)

Total comprehensive income for the year

4,253

24,50437,744

Owners of the Parent

3,248

20,467

28,825

Non-controlling interests

1,005

4,037

8,919

Total

4,253

24,50437,744

II. Other comprehensive income
Items that will not be reclassified to profit and loss:
1. Financial assets measured at fair value through othercomprehensive income (Note 26)
2. Remeasurement of retirement benefits liabilities
defined benefit pension plans (Note 26)
3. Share of other comprehensive income of investments
accounted for using the equity method (Note 26)

3. Share of other comprehensive income of investments
accounted for using the equity method (Note 26)

Total comprehensive income for the year attributable to:

The accompanying notes are an integral part of these consolidated financial statements
4

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Consolidated Statement of Changes in Equity:
JPY
2016

USD (Note 2)
2015

2016

Equity1. Share capital (Note 18)
Balance at the beginning of the year

27,781

27,781

246,548

Balance at the end of the year

27,781

27,781

246,548

26,621

27,494

236,253

Acquisition of treasury stock

－

－

－

Disposition of treasury stock

0

8

0

(158)

(899)

(1,402)－

16－

26,463

26,621

234,851

2. Capital surplus (Note 18)
Balance at the beginning of the year

Equity transactions with non-controlling interests
Changes due to business combinations
Balance at the end of the year
3. Retained earnings (Note 18)
Balance at the beginning of the year

21,87912,414

194,169

Dividends(1,683)(1,680)(14,936)

Profit for the year attributable to owners of the Parent

8,959

10,546

79,508

Reclassification from other components of equity

(11)

551

(98)

Other changes
Balance at the end of the year

(40)

46

(355)

29,103

21,879258,280

4. Other components of equity (Note 26)
Balance at the beginning of the year
Exchange differences on translation of foreign
operations
Financial assets measured at fair value through othercomprehensive income

14,185

4,816

125,887(2,346)

5,258(20,820)(1,542)

3,747(13,685)

Cash flow hedges(1,535)439(13,623)

(286)

474

(2,538)Remeasurement of defined benefit pension plans
Reclassification to retained earnings

11

(551)

98

8,486

14,18575,311

Balance at the beginning of the year

(222)

(321)

(1,970)Acquisition of treasury stock

(12)

(13)

(106)

Disposition of treasury stock

0

155

0

Acquisition through business combinations

－

(42)

－

(235)

(222)

(2,086)

91,59990,244

812,913

Balance at the end of the year
5. Treasury stock (Note 18)

Balance at the end of the year
Total equity attributable to owners of the Parent

Continued
5

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
JPY
2016

USD (Note 2)
2015

2016

6. Non-controlling interests
Balance at the beginning of the year

28,771

24,541

255,334

Dividends to non-controlling interests(891)(1,275)(7,907)

Equity transactions with non-controlling interests

222(1,119)1,970

Changes due to business combinations
Profit for the year attributable to non-controllinginterests

－

2,586

－

1,848

2,588

16,400

(843)

1,449

(7,481)

(650)

1,410

(5,769)

(53)

22

(470)

(0)

(2)

(0)

(139)

17

(1,234)

29,107

28,771

258,316

120,706

119,015

1,071,228

Owners of the Parent

3,248

20,467

28,825

Non-controlling interests

1,005

4,037

8,919

4,253

24,50437,744

Other components of equity
Exchange differences on translation of foreign
operations
Financial assets measured at fair value through othercomprehensive income
Cash flow hedges
Remeasurement of defined benefit pension plans
Balance at the end of the year
Total equity
Comprehensive income for the year attributable to:Total comprehensive income for the year

The accompanying notes are an integral part of these consolidated financial statements
6

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Consolidated Statement of Cash Flows
JPY
2016
I.

USD (Note 2)
2015

2016

Cash flows from operating activities
Profit for the year

10,80813,135

95,918Depreciation and amortization

3,082

2,996

27,352

94

580

834

Finance income and costs

1,326

2,317

11,768

Share of (profit) loss of investments accounted for using
the equity method(675)(1,143)(5,990)

Impairment loss of property, plant and equipment andintangible assets(Gain) loss on sale or disposal of property, plant andequipment and intangible assets

311

63

2,760

Income tax expense

7,313

9,238

64,901(Increase) decrease in trade and other receivables

19,262

6,100

170,944(Increase) decrease in inventories

10,664(21,048)

94,640

Increase (decrease) in trade and other payables(17,662)3,260(156,745)

274

(356)

2,432

Other

3,812

(2,257)

33,830Sub total

38,613

12,887

342,678

Interest received

491

402

4,357

Dividends received

1,193

864

10,588Interest paid

(2,414)(2,915)(21,424)

Income taxes paid

(4,860)(4,480)(43,131)

33,024

6,758

293,078(1,982)(3,628)(17,590)

Increase (decrease) in retirement benefits liabilities

Net cash provided by (used in) operating activities
II. Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment

572

851

5,076

Payments for intangible assets

(496)

(651)

(4,402)

Purchases of other investments(5,054)(1,050)(44,853)

502

49

4,455

Proceeds from (payments for) acquisition ofsubsidiaries (Note 27)

1,178

(97)

10,454

Proceeds from (payments for) sale of subsidiaries(Note 27)

(165)

－

(1,464)

Increase in loans receivable

(917)

(437)

(8,138)Proceeds from collection of loans receivable

1,005

630

8,919

Other

1,142

(2,317)

10,135(4,214)(6,649)(37,398)

Proceeds from sale of other investments

Net cash provided by (used in) investing activities

Continued
7

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016

JPY
2016

USD (Note 2)
2015

2016

III. Cash flows from financing activities
Increase (decrease) in short-term borrowings, net(9,718)4,188(86,244)

Proceeds from long-term borrowings

18,68738,511

165,841

Repayment of long-term borrowings(22,231)(47,756)(197,293)

Proceeds from issuance of bonds

9,923

－

88,064

Dividends paid

(1,678)(1,675)(14,892)

－

355

－

Payments for acquisition of subsidiaries' interests from
non-controlling interests(328)(2,030)(2,911)Dividends paid to non-controlling interests(897)(1,300)(7,961)

Other

(485)

(338)

(4,304)

Net cash provided by (used in) financing activities(6,729)(10,046)(59,718)

IV. Increase (decrease) in cash and cash equivalents, net

22,081(9,937)

195,962

V. Cash and cash equivalents at the beginning of the year

66,48573,978590,034

VI. Effect of exchange rate changes on cash and cash
equivalents(1,100)2,444(9,762)

VII. Cash and cash equivalents at the end of the year
(Note 27)

87,466

66,485776,234

Proceeds from sale of shares of the Parent held bysubsidiaries

The accompanying notes are an integral part of these consolidated financial statements
8

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
1. Reporting Entity
Kanematsu Corporation (the “Company”) is a company located in Japan. The addresses of the Company’s registered headquarters and main
offices are available on its corporate website (http://www.kanematsu.co.jp/en/). The consolidated financial statements of the Company as ofand for the year ended March 31, 2016 comprise the Company and its subsidiaries (collectively, the “Consolidated Group”), and theConsolidated Group’s interests in associates. The Consolidated Group operates its businesses as an integrated trading company by providing
a broad array of products and services through the organic integration of domestic and international business networks; expertise acquired invarious fields; and the functions of a trading company, including commodities trading, information gathering, market exploration, businessdevelopment and organization, risk management, and distribution. Detailed information on the business operations for each reportablesegment are provided in Note 6 Segment Information.

2. Basis of Preparing Consolidated Financial Statements(1) Statement of compliance with IFRSThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) pursuant
to the provision of Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements(Ordinance of the Ministry of Finance No. 28 of 1976) as all the requirements of the “Specified Company for Designated IFRSs” set forth in
Article 1-2 of said Ordinance have been fulfilled. The Consolidated Group has adopted IFRSs for the first time in preparing its consolidated
financial statements for the fiscal year ended March 31, 2016 and the date of transition to IFRSs was April 1, 2014 (the “transition date”).
These consolidated financial statements have been prepared in accordance with IFRSs for the first time and has also applied IFRS 1 FirstTime Adoption of International Financial Reporting Standards. An explanation regarding how the transition has affected the Consolidated
Group’s financial position, results of operations and cash flows as reported by the Company is provided in Note 37 Disclosures regardingtransition to IFRSs.
The consolidated financial statements were authorized for issue by Masayuki Shimojima, President and CEO, on August 10, 2016.

(2) Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis except for the following material items in the
consolidated statements of financial position:
 Financial assets and liabilities measured at fair value through profit or loss, which are measured at fair value; Financial assets measured at fair value through other comprehensive income, which are measured at fair value; and Defined benefit assets or liabilities, which are measured at the present value of the defined benefit obligations less the fair value of plan
assets.

(3) Functional currency and presentation currency
The consolidated financial statements are presented in Japanese yen, which is the Company’s functional currency. All financial information
presented in Japanese yen has been rounded down to the nearest million.
The U.S. dollar amounts appearing in the consolidated financial statements and the notes thereto represent the arithmetical results oftranslating yen to dollars at the rate of ¥112.68 to U.S.$1.00, the approximate exchange rate prevailing on March 31, 2016. The translation ofsuch dollar amounts is solely for convenience of the readers outside Japan and should not be construed as a representation that the Japanese
yen amounts have been, or could be readily converted, realized or settled in dollars at the above, or any other rate.

(4) Use of estimates and judgments
The preparation of the consolidated financial statements in accordance with IFRSs requires management to make judgments, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results could differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. The effect of a change in an accounting estimate is recognizedin the period of the change and future periods. The following notes include information on critical judgments in the application of accounting
policies that have a significant effect on the amounts recognized in the consolidated financial statements:
 Note 3 Significant Accounting Policies: (1) Basis of consolidation
 Note 3 Significant Accounting Policies: (11) Revenue
The following notes include information on uncertainties of assumptions and estimates that have a significant risk to cause material revisions
in the next fiscal year: Note 22 Note 28 Note 29 Note 30

Impairment loss
Employee benefits
Deferred taxes and income tax expenses
Financial instruments: (6) Fair value of financial instruments

When measuring the fair value of an asset or a liability, the Consolidated Group uses observable market data as far as available. Fair values
are categorized into the following three levels based on the inputs to the valuation techniques: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Consolidated Group can access at themeasurement date; Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly; and Level 3: unobservable inputs.

Continued
9

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
The following notes include detailed information on assumptions made when measuring the fair value: Note 22 Impairment loss
 Note 30 Financial instruments: (6) Fair value of financial instruments

3. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all the periods presented in these consolidated financial statements,and have been applied consistently by the Consolidated Group.

(1) Basis of consolidation
1) Subsidiaries
Subsidiaries are entities which are controlled by the Consolidated Group. The Consolidated Group controls an entity when it is exposed,or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over theentity. When the Consolidated Group holds more than half of the voting rights of another entity, such entity is included in the subsidiariesof the Consolidated Group as it is determined that control exists, unless it can be clearly demonstrated that such ownership does notconstitute control. In addition, even when the Consolidated Group holds only half or less of the voting rights of another entity, such entity
is included in the subsidiaries of the Consolidated Group if it is determined through agreements with other investors that theConsolidated Group has control over such entity’s financial and operating policies and thus has the ability to affect returns from such
entity.
The financial statements of subsidiaries are included in the consolidated financial statements of the Consolidated Group from the date
the Consolidated Group obtains control of the subsidiaries until the date it loses such control of the subsidiaries. When the accounting
policies adopted by the subsidiaries are different from those adopted by the Consolidated Group and the difference is consideredmaterial, the financial statements of the subsidiaries are adjusted as necessary.
Changes in the Consolidated Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. The Company recognizes directly in equity any difference between the amount by which the non-controlling interests areadjusted and the fair value of the consideration paid or received, and attribute it to the owners of the Company.
If the Consolidated Group loses control of a subsidiary, the Consolidated Group derecognizes the assets and liabilities of the former
subsidiary, and any non-controlling interests and other components of equity related to the former subsidiary. Any gains or losses
arising from such loss of control are recognized in profit or loss. If the Consolidated Group retains any interest in the former subsidiary
after the control is lost, such interest is measured at fair value at the date that control is lost.
2) Associates
Associates are those entities over which the Consolidated Group has significant influence, where significant influence is defined as thepower to participate in the financial and operating policy decisions of the entities but is not control or joint control of those entities. If theConsolidated Group holds between 20 percent and 50 percent of the voting rights of each those entities, it is presumed that theConsolidated Group has significant influence over each of those entities.
Even if the Consolidated Group holds less than 20 percent of the voting rights of another entity, such entity is included in the associatesof the Consolidated Group as long as it is determined that the Consolidated Group has significant influence over the entity through thedispatch of the board members, the shareholders’ agreement or the like.
Except for those that are classified as assets held for sale in accordance with IFRS 5 Non-current Assets Held for Sale andDiscontinued Operations, an investment in an associate (an “equity method investee”) is measured at the carrying amount following theapplication of the equity method (including goodwill recognized at the time of acquisition) less any accumulated impairment losses.
The consolidated financial statements include the Consolidated Group’s share of profit or loss and other comprehensive income of theassociates from the date the Consolidated Group obtains significant influence until the date it loses such significant influence. When theaccounting policies adopted by the equity method investees are different from those adopted by the Consolidated Group, the financial
statements of the equity method investees are adjusted as necessary.
3) Business combinations
Business combinations are accounted for using the acquisition method. The Consolidated Group recognizes goodwill as the sum of thefair value of the consideration transferred, 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 measured at the acquisition date; less the net of the acquisition-date amounts of theidentifiable assets acquired and the liabilities assumed (generally measured at fair value). When such difference results in a negativebalance, it is immediately recognized in profit or loss. Non-controlling interests are measured either at fair value or at the non-controllinginterests’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. The measurement method to be appliedat the acquisition date is determined on a transaction-by-transaction basis. Acquisition-related costs, which are costs that theConsolidated Group incurs to effect a business combination (excluding costs to issue debt or equity securities), are accounted for as
expenses in the periods in which the costs are incurred, and thus not included in the cost of goodwill. In a business combination achievedin stages, the Consolidated Group remeasures its previously held equity interest in the acquiree at its acquisition-date fair value andrecognizes any gains or losses arising from such remeasurement in profit and loss. Changes in the value of the Consolidated Group’s
equity interest in the acquiree that had been recognized in other comprehensive income prior to the acquisition date are recognized in
profit or loss, or other comprehensive income, on the same basis as would be required if the Consolidated Group had disposed of thepreviously held equity interest.
Continued
10

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 20164) Transactions eliminated in consolidation
Intragroup balances and transactions, as well as any unrealized gains and losses arising from intragroup transactions, are eliminated when
preparing the consolidated financial statements.

(2) Foreign currency translation
1) Translation of foreign currency transactions
Foreign currency transactions are translated into functional currencies of individual companies using the exchange rates at the dates ofsuch transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated
into functional currencies using the exchange rate at the end of each reporting period. Exchange differences on monetary items arerecognized in profit or loss in the period in which they arise. Non-monetary items that are measured on a historical cost basis in a foreign
currency are translated into the functional currency using the exchange rate at the date of the transaction. Non-monetary items that aremeasured at fair value in a foreign currency are translated into the functional currency using the exchange rates at the date when the fairvalue was measured.
With respect to the exchange differences of a non-monetary item, when a gain or loss on a non-monetary item is recognized in othercomprehensive income, the Consolidated Group recognizes any exchange component of that gain or loss in other comprehensive income.
Conversely, when a gain or loss on a non-monetary items is recognized in profit or loss, the Consolidated Group recognizes any
exchange component of that gain or loss in profit or loss.
2) Translation of a foreign operation
The assets and liabilities of a foreign operation, including any goodwill and fair value adjustments arising on the acquisition of that
foreign operation, are translated using the exchange rate at the end of the reporting period. In addition, income and expenses of foreign
operations are translated using the average exchange rate for the reporting period unless exchange rates fluctuate significantly.
Exchange differences arising from the translation are recognized in other comprehensive income and the cumulative amount of theexchange differences is included in other components of equity. When the Consolidated Group’s foreign operation is disposed of, thecumulative amount of the exchange differences related to that foreign operation is reclassified to profit or loss when the gain or loss on
disposal is recognized. Based on the application of the exemption clauses under IFRS 1, the Consolidated Group has reclassified thecumulative exchange differences that existed at the transition date to retained earnings.

(3) Cash and cash equivalents
Cash and cash equivalents are comprised of cash on hand; demand deposits; and short-term, highly liquid investments with a maturity 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.

(4) Inventories
Inventories are measured at the lower of cost determined by the moving-average method and net realizable value.

(5) Property, plant and equipment
The Consolidated Group uses the cost model to measure an item of property, plant and equipment after initial recognition and carries it at its
cost less any accumulated depreciation and any accumulated impairment losses. The cost of property, plant and equipment include the costdirectly attributable to the acquisition of the asset.
Property, plant and equipment are depreciated using the straight-line method over the estimated useful life of each component thereof. The
ranges of principal estimated useful lives are presented as follows:
Buildings and structures:
Machinery, vehicles, tools, furniture & fixtures:

3 to 50 years
2 to 20 years

Leased assets are fully depreciated over the shorter of the lease term and their estimated useful lives if there is no reasonable certainty that
the Consolidated Group will obtain ownership by the end of the lease term.
The depreciation method, useful life and residual value of an asset are reviewed at least at the end of each reporting period and amended asnecessary.

(6) Goodwill and intangible assets
1) Goodwill
Goodwill is carried at cost less any accumulated impairment losses.
2) Intangible assets
The Consolidated Group uses the cost model to measure an intangible asset after initial recognition and carries it at its cost less any
accumulated depreciation and any accumulated impairment losses.
A separately acquired intangible asset is initially recognized and measured at cost. The cost of an intangible asset acquired in a businesscombination is its fair value at the acquisition date. With respect to an internally generated intangible asset that does not qualify for asset
recognition, expenditure on such an internally generated intangible asset is recognized as expenses when they are incurred. Conversely,

Continued
11

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
the cost of an internally generated intangible asset that qualifies for asset recognition is the sum of expenditure incurred from the datewhen it first meets the recognition criteria.
An intangible asset with finite useful life is amortized using the straight-line method over its estimated useful life. The Consolidated
Group’s intangible assets with finite useful life are comprised mainly of software whose estimated useful life is 5 years.
The depreciation method, useful life and residual value of an intangible asset with finite useful life are reviewed at the end of eachreporting period and amended as necessary.
Certain intangible assets with indefinite useful lives such as carrier shop operating rights are not amortized, but instead tested for
impairment based on the cash-generating unit at least once a year and whenever there is an indication that they may be impaired.

(7) Impairment of non-financial assets
The Consolidated Group assesses at the end of each reporting period whether there is any indication that an asset may be impaired. If any
such indication exists, it estimates the recoverable amount of the asset or the cash-generating unit to which the asset belongs. Goodwill andan intangible asset with indefinite useful life are tested for impairment annually and whenever there is an indication that such assets may be
impaired. If the carrying amount of an individual asset or a cash-generating unit exceeds its recoverable amount, the carrying amount of theasset is reduced to its recoverable amount and that reduction is recognized as an impairment loss.
The Consolidated Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized inprior fiscal years for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the Consolidated
Group will estimate the recoverable amount of that asset. If the recoverable amount exceeds the carrying amount of that asset or the
cash-generating unit to which the asset belongs, the carrying amount is increased to its recoverable amount, which is, however, limited up to
the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for theasset in prior fiscal years; and that increase is recognized as a reversal of an impairment loss. An impairment loss recognized for goodwill is
not reversed in a subsequent period.
In addition, because goodwill that forms part of the carrying amount of an investment in an equity method investee is not separately
recognized, it is not tested for impairment separately. If it is indicated that the investment in an equity method investee may be impaired, theentire carrying amount of the investment is tested for impairment as a single asset, by comparing its recoverable amount with its carrying
amount.

(8) Financial instruments
The Consolidated Group has early adopted IFRS 9 Financial Instruments (as amended in July 2014).
1) Financial assets
The Consolidated Group classifies financial assets at initial recognition 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. The
Consolidated Group initially recognizes financial assets measured at amortized cost on the date that they arise and the other financial
assets on the transaction date.
The Consolidated Group derecognizes a financial asset when, and only when (i) the contractual rights to the cash flows from the financial
asset expire, or (ii) it transfers the contractual rights to the cash flows and substantially all the risks and rewards of ownership of thefinancial asset.
(i) Financial assets measured at amortized cost
A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost: The financial asset is held within a business model whose objective is to hold financial 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 andinterest on the principal amount outstanding.
The Consolidated Group initially recognizes and measures a financial asset measured at amortized cost at its fair value plus any
transaction costs directly attributable to the acquisition of the financial asset. The Consolidated Group subsequently measures it atamortized cost using the effective interest method.
(ii) Financial assets measured at fair value through other comprehensive income
A financial asset that meets both of the following conditions is classified as a financial asset measured at fair value through othercomprehensive income: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows andselling financial assets and,
 The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal andinterest on the principal amount outstanding.
The Consolidated Group initially recognizes and measures a financial asset measured at fair value through other comprehensive
income at its fair value plus any transaction costs directly attributable to the acquisition of the financial asset. The Consolidated
Group subsequently measures it at fair value and recognizes the subsequent changes in fair value as other comprehensive income.
Continued
12

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
When the financial asset is derecognized, the cumulative gain or loss is reclassified to profit or loss.
(iii) Equity instruments measured at fair value through other comprehensive income
With regard to a financial asset that has not been classified as either a financial asset measured at amortized cost or a financial asset
measured at fair value through other comprehensive income, and classified as a financial asset measured at fair value throughprofit or loss, IFRS 9 permits an entity to make an irrevocable election to present in other comprehensive income changes in fairvalue of an investment in an equity instrument that is not held for trading. The Consolidated Group makes this election on an
instrument-by-instrument basis.
The Consolidated Group initially recognizes and measures an equity instrument measured at fair value through othercomprehensive income at its fair value plus any transaction costs directly attributable to the acquisition of the financial asset. The
Consolidated Group subsequently measures it at fair value and recognizes the subsequent changes in fair value as othercomprehensive income. When the equity instrument is derecognized, or its fair value substantially decreases, the Consolidated
Group reclassifies the cumulative amount of other comprehensive income to retained earnings and not to profit or loss. Dividends
are recognized in profit or loss.
(iv) Financial assets measured at fair value through profit or loss
A financial asset other than those classified as (a), (b) and (c) above is classified as a financial asset measured at fair value throughprofit or loss.
The Consolidated Group initially recognizes and measures a financial asset measured at fair value through profit or loss at its fairvalue and expenses the transaction costs as incurred that are directly attributable to the acquisition of the financial asset. The
Consolidated Group subsequently measures it at fair value and recognizes the subsequent changes in fair value in profit or loss.
2) Impairment of financial assets
The Consolidated Group assesses impairment of financial assets measured at amortized cost and financial assets measured at fair value
through other compressive income based on the expected credit loss approach.
If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the Consolidated
Group measures the loss allowance for that financial instrument at an amount equal to the 12-month expected credit losses, i.e., theexpected credit losses that result from default events on that financial instrument that are possible within the 12months after the reporting
date. Conversely, if, at the reporting date, the credit risk on that financial instrument has increased significantly since initial recognition,
the Consolidated Group measures the loss allowance for that financial instrument at an amount equal to the lifetime expected credit
losses, i.e., the expected credit losses that result from all possible default events over the expected life of that financial instrument.
However, the Consolidated Group always measures the loss allowance for trade receivables that do not contain a significant financing
component at an amount equal to the lifetime expected credit losses despite the above requirement.
Detailed information on the assessment of significant increases in credit risk and the measurement of expected credit losses is provided in
Note 30 Financial Instruments: (3) Credit risk management.
3) Financial liabilities
The Consolidated Group classifies financial liabilities at initial recognition as financial liabilities measured at fair value through profit orloss or financial liabilities measured at amortized cost. The Consolidated Group initially recognizes financial liabilities measured atamortized cost on the date that they arise and the other financial liabilities on the transaction date.
The Consolidated Group derecognizes financial liabilities when they are extinguished, i.e., when obligations specified under a contract isdischarged, cancelled or expires.
(i) Financial liabilities measured at amortized cost
The Consolidated Group classified financial liabilities, other than financial liabilities measured at fair value through profit or loss, as
financial liabilities measured at amortized cost. The Consolidated Group initially recognizes and measures a financial liability
measured at amortized cost at its fair value less any transaction costs directly attributable to incurring of the liability, and subsequently
measures it at amortized cost using the effective interest method.
(ii) Financial liabilities measured at fair value through profit or loss
The Consolidated Group initially recognizes and measures a financial liability measured at fair value through profit or loss at its fairvalue, and subsequently measures it at fair value and recognizes subsequent changes in fair value in profit or loss.
4) Derivatives and hedge accounting
In order to hedge the foreign currency fluctuation risk, interest rate fluctuation risk and commodity price fluctuation risk, theConsolidated Group enters into derivative transactions, such as forward exchange transactions, interest rate swap transactions andcommodity futures and forwards transactions.
When initiating a hedge, the Consolidated Group designates and documents the risk management purposes and strategies regarding thehedge relationship and initiation of such hedge. Such documentation includes the designation of the hedging instrument, the hedged itemor transaction, the nature of the risk being hedged and methods of assessing the hedging instrument’s effectiveness in offsetting theexposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Although such hedging is expected to behighly effective in offsetting changes in fair value or cash flows attributable to the hedged risk, it is assessed on an ongoing basis whether
it was actually highly effective throughout the reporting periods for which such hedging was designated.

Continued
13

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
The Consolidated Group initially recognizes and measures derivatives at fair value and subsequently measures them at fair value andaccounts for subsequent changes in fair value as follows:(i) Fair value hedge
The Consolidated Group recognizes the changes in fair value of a derivative used as a hedging instrument in profit or loss, and thechanges in fair value of a hedged item attributable to the hedged risk in profit or loss by adjusting the carrying amount of the hedged
item.
(ii) Cash flow hedge
Of the changes in fair value of a derivative used as a hedging instrument, the portion determined to be effective is recognized in othercomprehensive income and the cumulative amount is included in other components of equity. Conversely, the portion determined to
be ineffective is recognized in profit or loss. The amount accumulated in other components of equity is reclassified from othercomponents of equity to profit or loss in the same period that the transaction of the hedged item affects profit or loss; provided,
however, that if hedging of a forecast transaction subsequently results in the recognition of a non-financial asset or liability, theamount accumulated in other components of equity is then accounted for as an adjustment to the initial carrying amount of thenon-financial asset or liability.
When the hedging instrument expires or is sold, terminated or exercised; or when the hedge no longer meets the criteria for thehedge accounting, the Consolidated Group discontinues the hedge accounting prospectively. If the forecast transaction is no longer
expected to occur, the amount accumulated in other components of equity is reclassified immediately from other components ofequity to profit or loss.
(iii) Derivatives not designated as hedging instruments
The Consolidated Group recognizes the changes in fair value of derivatives not designated as hedging instruments in profit or loss.
5)

Offsetting of financial assets and financial liabilities
Financial assets and financial liabilities are offset and the net amount of such offset is presented in the consolidated statements offinancial position only when the Consolidated Group has a legally enforceable right to offset the recognized amounts and intends either
to settle them on a net basis or realize the assets and settle the liabilities simultaneously.

(9) Provisions
The Consolidated Group recognizes a provision when, only when (a) the Consolidated Group has a present obligation (legal orconstructive) as a result of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation; and (c) a reliable estimate can be made of the amount of the obligation.
Where the effect of the time value of money is material, the Consolidated Group recognizes the provision by discounting it using a current
pre-tax discount rate that reflects the risks specific to the liability.

(10) Equity
Treasury stock
When the Consolidated Group repurchases the shares of treasury stock, it is measured at cost and is presented as a deduction from equity.
Transaction costs directly attributable to the repurchase of the shares of treasury stock are deducted from capital surplus. When theConsolidated Group sells the shares of treasury stock, the consideration received is recognized as an increase in equity.

(11) Revenue
Revenue is measured at fair value of the consideration received or receivable, net of returned goods, discounts and rebates. If there are
multiple identifiable components in a single transaction, such transaction is separated into components, and revenue is recognized per suchcomponent. Conversely, when the actual economic state cannot be expressed without treating multiple transactions as one unit, revenue isrecognized by treating such multiple transactions as one unit. The recognition standards and presentation method with respect to revenue
are presented as follows:
1) Revenue recognition criteria(i) Sale of goods
Revenue from the sale of goods is recognized when all of the following conditions have been satisfied: the Consolidated Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
 the Consolidated Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold; the amount of revenue can be measured reliably; it is possible that the economic benefits associated with the transaction will flow to the Consolidated Group; and,
 the costs incurred or to be incurred in respect to the transaction can be measured reliably.
(ii) Rendering of services
If results of revenue from the rendering of services can be reliably estimated, such revenue will be recognized in accordance withsuch transaction’s degree of progress as of the fiscal year end. If all of the following conditions are satisfied, it is determined that
results of a transaction can be reliably estimated:
Continued
14

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
 the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Consolidated Group; the stage of completion of the transaction at the end of the reporting period can be measured reliably; and the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, the Consolidated Group
recognizes revenue only to the extent of the expenses recognized that are recoverable.
2) Method of presenting revenue
When the Consolidated Group is acting as a principal in a transaction, revenue is presented in the gross amount received from acustomer. Conversely, when the Consolidated Group is acting as an agent for a third party in a transaction, revenue is presented in theamount of commission, which is the gross amount received by a customer less the amount collected on behalf of the third party.
The following features are considered when determining whether the Consolidated Group is acting as a principal or as an agent in atransaction:
 whether the Consolidated Group has the primary responsibility for providing goods or services to the customer or for fulfilling theorder;
 whether the Consolidated Group has inventory risk before or after receiving the customer order, during shipping or on return; whether the Consolidated Group has latitude in establishing prices, either directly or indirectly;
 whether the Consolidated Group bears the customer’s credit risk for the amount receivable from the customer; and whether the amount the Consolidated Group earns is predetermined, being either a fixed fee per transaction or a stated percentage ofthe amount billed to the customer.

(12) Finance income and finance costs
Finance income comprises interest income, dividend income, gain on sale of financial instruments and gain arising from changes in fairvalue of financial instruments. Interest income is recognized at the time of receipt by using the effective interest method. Dividend income
is recognized on the date when the Consolidated Group’s right to receive payment is established. Finance costs comprise interest expenses,
loss on sale of financial instruments and loss arising from changes in the fair value of financial instruments.

(13) Employee benefits
1) Post-retirement benefits(i) Defined benefit plans
Defined benefit plans are retirement benefit plans other than defined contribution plans. Defined benefit obligations are calculated
separately for each plan by estimating the future amount of benefits that employees will have earned in return for their services
provided in the current and prior periods, and discounting such amount in order to determine the present value. The fair value of any
plan assets is deducted from the present value of the defined benefit obligations. The discount rate is determined by reference to themarket yields on highly rated corporate bonds at the fiscal year-end that have maturity terms that are approximately the same as
those of the Consolidated Group’s defined benefit obligations and use the same currencies as those used for future benefits
payments.
When the retirement benefit plans are amended, the change in defined benefit obligations related to past service by employees isimmediately recognized in profit or loss.
The Consolidated Group recognizes the changes in the net defined benefit liability (asset) due to remeasurements in othercomprehensive income and immediately reclassifies them to retained earnings.
(ii) Defined contribution plans
Defined contribution plans are retirement benefit plans under which an employer pays fixed contributions into a separate entity andwill have no legal or constructive obligation to pay further contributions. The obligations already paid or to be paid as contributions
under the defined contribution plans are recognized as expenses in the period in which the employees render the related services.
2) Other long-term employee benefits
The Consolidated Group recognizes obligations for long-term employee benefits other than post-employment benefits as a liability by
estimating the amount as of the reporting date that will be paid to the employees in return for their services without discounting thatamount unless it is material.
3) Short-term employee benefits
The Consolidated Group recognizes short-term employee benefits as a liability and an expense by estimating the amounts that will be
paid to the employees in return for their services without discounting those amounts. The Consolidated Group recognizes bonuses to be
paid pursuant to the bonus system as a liability when it has present legal or constructive obligations to pay as a result of past employee
service, and when the amount of the obligations can be estimated reliably.

(14) Income taxes
Income tax expenses comprises current tax expense and deferred tax expense. The Consolidated Group recognizes them in profit or loss,
except when they arise from items that are recognized in other comprehensive income or directly equity, and from business combinations.

Continued
15

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Current tax expense is measured by the expected taxes receivable from or taxes payable to tax authorities, and the tax rates or tax laws thatare used to calculate the tax amount are those that have been enacted or substantially enacted by the fiscal year-end.
The Consolidated Group recognizes deferred tax assets and deferred tax liabilities for temporary differences between the carrying amountof an asset and liability in the statements of financial position and its tax base, the unused tax losses carried forward and unused tax credits
carried forward. The amounts of deferred tax assets and deferred tax liabilities are calculated by applying the expected tax rate or tax law
applicable as of the period in which assets are realized or liabilities are settled in accordance with a statutory tax rate or a substantiallyenacted statutory tax rate and the tax law as of the fiscal year-end. The Consolidated Group does not recognize deferred tax assets anddeferred tax liabilities in the following cases: when taxable temporary differences arise from the initial recognition of goodwill; when they arise from the initial recognition of an asset or a liability in a transaction which is not a business combination; and, on thetransaction date, affects neither accounting profit nor taxable profit (tax loss); or, with respect to taxable temporary differences associated with investments in subsidiaries and associates, when the Consolidated Group isable to control the timing of the reversal of the temporary differences; and it is probable that the temporary differences will not reverse in
the foreseeable future.
Deferred tax assets and deferred tax liabilities are offset only when the Consolidated Group has a legally enforceable right to set off thecurrent tax assets against current tax liabilities, and, such deferred tax assets and liabilities relate to income taxes levied on the same
taxation entity. However, even in the case of different taxable entities, the Consolidated Group can set off if the tax taxable entities intend
either to settle current tax liabilities and assets on a net bases, or to realize the assets and settle the liabilities simultaneously. Deferred tax
assets are recognized for deductible temporary differences, the unused tax losses carried forward and unused tax credits carried forward to
the extent that it is probable that they can be used against future taxable profit. The carrying amount of deferred tax assets are reassessed ateach fiscal year-end, and such carrying amount will be reduced to the extent it is no longer probable that related tax benefits from such
assets will be realized. Unrecognized deferred tax assets are also reassessed at the end of each reporting period and are recognized to theextent that it is probable that future taxable profit will be available to recover the deferred tax assets.
The Company and its wholly owned domestic subsidiaries apply the consolidated tax payment system, by which the Company and its
wholly owned domestic subsidiaries are allowed to file a tax return and pay the corporation tax as a consolidated tax filing group.

(15) Lease
The Consolidated Group determines whether an agreement is, or contains, a lease based on the substance of the agreement at inception of
the lease. The substance of an agreement is assessed based on (a) whether fulfillment of the arrangement is dependent on the use of a
specified asset or assets; and (b) whether the agreement conveys a right to use the asset.
1) Finance lease
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. The Consolidated
Group initially recognizes a leased asset at the lower of the fair value of the leased asset and the present value of the minimum lease
payments, and subsequently accounts for the lease asset based on the applicable accounting policies. Minimum lease payments areapportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period
during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
2) Operating lease
An operating lease is a lease other than a finance lease. The Consolidated Group recognizes lease payments under an operating lease as
an expense on a straight-line basis mainly over the lease term. When the Consolidated Group is the lessor of assets under an operatinglease, it presents the assets subject to the operating lease in its consolidated statements of financial position.

4. Standards and interpretations issued but not yet adopted
The following are the major standards and interpretations that have been newly issued or amended prior to the date of authorization forissuance of the consolidated financial statements. The Consolidated Group has not yet adopted these standards for the fiscal year ended
March 31, 2016. The effects of application of these standards on the Consolidated Group are currently under assessment and cannot be
estimated as of the filing date.

Standard

Title

Mandatory application(from fiscal years
beginning on or after)

Fiscal year in which theConsolidated Group will
apply the standard

Summary of new or amended standard

IFRS 15

Revenue from Contracts
with Customers

January 1, 2018

Fiscal year ending
March 31, 2019

Amendment of accounting treatment for anddisclosure on revenue recognition

IFRS 16

LeasesJanuary 1, 2019

Fiscal year ending
March 31, 2020

Amendment of accounting treatment forlease contracts

Continued
16

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
5. Business Combinations
The major business combination that occurred during the fiscal year ended March 31, 2015 is described as follows:Business combination by means of acquisition(1) Outline of the transaction
1) Name of the acquired company and its lines of business
Name of the acquired company: Kanematsu-NNK CorporationLines of business:
Security equipment business, Geo-tech (Ground improvement) business, wood processing business andpetroleum product business
2) Purpose of the business combination
The Company expected that through strengthening the capital relationship between Kanematsu-NNK Corporation (“KNN”) and theCompany, it would accelerate decision-making and strategy execution as well as collaboration of security camera business of KNN andElectronics & Device Division of the Company. Thus the business combination would contribute to strengthening the business basefurther and enhancing the corporate value of KNN and the Consolidated Group.
3) Acquisition date
December 24, 2014 (Date of the acquisition of shares)
4) Legal form of the business combination
Acquisition of shares for cash consideration (through tender offer)5) Company name after the combination
Kanematsu-NNK Corporation
6) Percentage of voting rights
Percentage of voting rights immediately before the acquisition date:
Percentage of voting rights added on the acquisition date:
Percentage of voting rights after the acquisition date:

32.1%
18.9%
51.0%

7) Basis for deciding the acquiring company
The Company has acquired the shares of KNN for cash consideration.

(2) Earnings since the acquisition date
Revenue:
Profit:¥2,759 million¥69 million(3) Acquisition costs and the details
Consideration for acquisition
Fair value of shares of KNN held before the date of the business combination:
Fair value of additional shares of KNN acquired at the date of the business combination:
Total costs¥2,661 million¥1,567 million¥4,228 million(4) The amount of costs directly attributable to the acquisition is ¥74 million, which is expensed and included in selling,
general and administrative expenses.
(5) Difference between the costs of the acquired company and the sum of the costs of each transaction that has
resulted in the acquisition
Gain on step acquisitions: ¥1,123 million
The above gain is included in “Other income”.

(6) Amount and cause of goodwill
1) Amount of goodwill: ¥1,526 million
2) Cause of goodwill
The excess of acquisition costs over the net of the assets acquired and liabilities assumed on the acquisition date. Goodwill consists
primarily of future economic benefits and synergies with the Consolidated Group’s existing businesses. Goodwill is not tax deductible.

Continued
17

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(7) Breakdown of assets acquired and liabilities assumed on the acquisition dateCurrent assets
Cash and cash equivalents
Trade receivables
Inventories
Other
Non-current assets
Property, plant and equipment
Other
Total assets

(JPY)
5,186
1,469
2,232
1,080
403
3,260
2,722
537
8,446

Current liabilities
Trade payables
Other
Non-current liabilities
Total liabilities

2,427
2,009
417
742
3,169

(8) The carrying amount of non-controlling interests of the acquiree recognized on the acquisition date is ¥(2,586) million.
This carrying amount is calculated by multiplying the identifiable net assets received on the acquisition date with thepercentage of the non-controlling interests’ proportionate share after the acquisition.
(9) The disclosure of pro forma information on the above business combination assuming that it occurred at the beginning of
the period is omitted because the effect on the consolidated financial statements is immaterial.
There were no major business combinations that occurred during the fiscal year ended March 31, 2016.

6. Segment Information(1) Overview of Reportable Segments
The reportable segments of the Consolidated Group are components of the Consolidated Group for which discrete financial information isavailable and are reviewed by the Board of Directors of the Company normally and regularly assesses its business performance and examines
the allocation of management resources.
The Consolidated Group offers a broad array of merchandise and services, using expertise in each business field and trading function fromJapan and its international network. Trading functions include commercial trade, information gathering, market development, businessdevelopment and arrangement, risk management and logistics.
The Consolidated Group therefore consists of merchandise and service segments based on its business units: “Electronics & Devices”,“Foods & Grain”, “Steel, Materials & Plant”, and “Motor Vehicles & Aerospace”.
The principal merchandise and services handled by each segment are presented as follows:(Electronics & Devices)
The Electronics & Devices segment provides a wide range of products including electronic parts and components, semiconductor and LCD
manufacturing equipment, materials and indirect materials related to electronics, coupled with development and proposal services. This
segment also conducts retail sales of electric cells, LED, etc. and deals with mobile communications terminals, mobile internet systems, andinformation and telecommunication equipment and security equipment and services.
(Foods & Grain)
The Foods & Grain segment integrates the handling of a broad array of food and foodstuffs, with operations ranging from sourcing raw
materials reliably to providing food and foodstuffs, including high value-added products. Merchandise in this segment includes cooked foods,
processed fruits, processed agricultural products, beverage ingredients, animal and fishery products, wheat, rice, soybeans, feedstuff and pet
foods.
(Steel, Materials & Plant)
The Steel, Materials & Plant segment operates the domestic and international trade of general steel products including steel plates, bars andwire rods, pipes, and stainless products, carries out overseas projects such as plant and infrastructure development, and sells machine tools
and industrial machinery. Additionally, this segment operates the domestic and international trade of crude oil, petroleum products, LPG,
functional chemicals and food products, pharmaceuticals and pharmaceutical intermediates, and other products. It also develops
environmental materials such as heat shield paints and new technologies, and operates businesses related to emissions rights.
(Motor Vehicles & Aerospace)
The Motor Vehicles & Aerospace segment primarily operates international trade of aircrafts and aircraft parts, satellite- and aerospace-related
products, automobiles, motorcycles and related parts, industrial vehicles, construction machinery, etc., and also provides products with added
value based on demand or use.

Continued
18

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(2) Information on reportable segments
The accounting methods for the reportable operating segments are largely consistent with those stated in “Note 3: Significant Accounting
Policies”. Inter-segment revenue and transfers are based on the prevailing market prices or third-party transaction prices.
Fiscal year ended March 31, 2016 (from April 1, 2015 to March 31, 2016)(JPY)
Electronics& Devices
Revenue
External
Inter-segment
Total revenue
Segment profit
Other profit or loss:
Depreciation andamortization
Share of profit (loss) ofinvestments accounted
for using the equity
methodSegment assets
Other assets:
Investments accounted
for using the equity
methodCapital expenditure

Foods &
Grain

Reportable segment
Steel,
Motor
Materials &Vehicles &Plant
Aerospace

Total

Others(Note 1)

Adjustment(Note 2)

Consolidated

235,028220
235,249
10,658

222,5772
222,579
1,427

135,26956
135,325
3,388

63,792
063,792
2,964

656,667279
656,947
18,43911,70668
11,774
329

－
(347)
(347)
4

668,374－
668,374
18,772

1,036

621

929

364

2,951

141

(10)

3,082

278

77

13

34

403

271

－

675

152,348

110,116

102,204

25,172389,842

9,907

43,842443,592

3,918

1,208

50

332

5,509

1,913

(2)

7,420

1,604

439

527

278

2,850

117

258

3,226

Fiscal year ended March 31, 2016 (from April 1, 2015 to March 31, 2016)(USD)

Revenue
External
Inter-segment
Total revenue
Segment profit
Other profit or loss:
Depreciation andamortization
Share of profit (loss) ofinvestments accounted
for using the equity
methodSegment assets
Other assets:
Investments accounted
for using the equity
methodCapital expenditure

Reportable segment
Steel,
Motor
Materials &Vehicles &Plant
Aerospace

Total

Others(Note 1)

Adjustment(Note 2)

Consolidated

566,134
0566,134
26,3055,827,716
2,476
5,830,201
163,640

103,887603
104,491
2,920－(3,080)(3,080)35

5,931,612－
5,931,612
166,596

8,245

3,230

26,189

1,251

(89)

27,352

683

115

302

3,576

2,405

－

5,990

1,352,041

977,245907,029

223,394

3,459,727

87,922

389,084

3,936,741

34,771

10,721444

2,946

48,891

16,977(18)

65,850

14,235

3,896

4,677

2,467

25,293

1,038

2,290

28,630Electronics& Devices

Foods &
Grain

2,085,800
1,952
2,087,762
94,586

1,975,302
18
1,975,319
12,6641,200,470
497
1,200,967
30,067

9,194

5,511

2,467

(Notes) 1 The “Others” column is a business segment that is not included in the reportable segments and includes the logistics and insurance
service business and the geotech business.
2 Adjustments are presented as follows:(1) Adjustment of ¥4 million ($35 thousand) for segment profit includes inter-segment elimination of ¥4 million ($35 thousand).
(2) Adjustment for segment assets of ¥43,842 million ($389,084 thousand) includes inter-segment elimination of ¥(11,964) million(($106,177) thousand) and corporate assets of ¥55,807 million ($495,270 thousand) that are not allocated to any reportablesegment. The corporate assets consist mainly of cash and bank deposits associated with financing activities and assets such as
investment securities.
(3) Adjustment for depreciation and amortization of ¥(10) million ($(89) thousand) includes inter-segment elimination of ¥(10)
million ($(89) thousand).
(4) Adjustment for investments accounted for using the equity method of ¥(2) million ($(18) thousand) includes inter-segment
elimination of ¥(2) million ($(18) thousand).
(5) Adjustment for capital expenditure of ¥258 million ($2,290 thousand) includes inter-segment elimination of ¥(71) million($(630) thousand) and corporate assets of ¥329 million ($2,920 thousand) that are not allocated to any reportable segment. The
corporate assets consist mainly of software related to the information system of the Company.
Continued
19

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Fiscal year ended March 31, 2015 (from April 1, 2014 to March 31, 2015)(JPY)
Reportable segment
Steel,
Motor
Electronics &Foods & Grain Materials &Vehicles &Devices
Plant
Aerospace
Revenue
External
Inter-segment
Total revenue
Segment profit
Other profit or loss:
Depreciation andamortization
Share of profit (loss) ofinvestments accounted forusing the equity method
Segment assets
Other assets:
Investments accounted forusing the equity method
Capital expenditure

Others(Note 1)

Total

Adjustment(Note 2)

Consolidated

231,230353
231,583
10,152

213,7202
213,7233,365

201,957
5
201,963
6,345

52,396
052,3962,601

699,304
361
699,666
22,464

4,906
57
4,964
1,068

－
(419)
(419)
14

704,211－704,21123,547

1,058

589

870

403

2,921

79

(4)

2,996

740

40

12

29

823

295

25

1,143

134,780

106,835

127,643

31,249400,508

11,531

54,274

466,314

2,166

891

44

300

3,401

1,830

153

5,385

1,694

976

1,528

834

5,034

61

730

5,826

(Notes) 1 The “Others” column is a business segment that is not included in the reportable segments and includes the logistics and insurance
service business and the geotech business.
2 Adjustments are presented as follows:(1) Adjustment of ¥14 million for segment profit includes inter-segment elimination of ¥14 million.
(2) Adjustment for segment assets of ¥54,274 million includes inter-segment elimination of ¥(8,507) million and corporate assets of¥62,781 million that are not allocated to any reportable segment. The corporate assets consist mainly of cash and bank deposits
associated with financing activities and assets such as investment securities.
(3) Adjustment for depreciation and amortization of ¥(4) million includes inter-segment elimination of ¥(4) million.
(4) Adjustment for investments accounted for using the equity method of ¥153 million includes inter-segment elimination of ¥(0)
million and the corporate assets of ¥154 million that are not allocated to any reportable segment.
(5) Adjustment for capital expenditure of ¥730 million includes inter-segment elimination of ¥(32) million and corporate assets of¥763 million that are not allocated to any reportable segment. The corporate assets consist mainly of leased equipment related tothe information system of the Company.
Transition date (April 1, 2014)(JPY)

Segment assets(Other assets)
Investments accounted forusing the equity method

Reportable segment
Steel,
Motor
Electronics &Foods & Grain Materials &Vehicles &Devices
Plant
Aerospace
130,978
89,173
123,539
26,797
1,404

560

133

235

Total

Others(Note 1)

Adjustment(Note 2)

Consolidated

370,489

7,395

52,339430,224

2,333

3,072

129

5,536

(Notes) 1 The “Others” column is a business segment that is not included in the reportable segments and includes the aluminum recycling
business and the logistics and insurance service business.
2. Adjustment for segment assets of ¥52,339 million includes inter-segment elimination of ¥(9,800) million and corporate assets of¥62,140 million that are not allocated to any reportable segment. The corporate assets consist mainly of cash and bank deposits
associated with financing activities and assets such as investment securities.

Continued
20

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Adjustments from segment profit (operating profit) to profit before tax presented in the consolidated statements of income arepresented as follows:
USD
2016

JPY
2016

2015

Segment profit

18,772

23,547

166,596

Finance income and finance costs(1,326)(2,317)（11,768)

675

1,143

5,990

18,122

22,373160,827

Share of profit (loss) of investments accounted
for using the equity method
Profit before tax(3) Information on products and services
The disclosure is omitted because the classification of products and services is the same as that of reportable segments.

(4) Geographic information
1)

External revenue
JPY
2016

Japan
Asia
North America
EuropeOthers542,333
62,18543,571
13,598
6,685
668,374

Total

538,466
85,09354,753
19,681
6,217
704,211USD
2016
4,813,037
551,873
386,679
120,678
59,327
5,931,612

Transition date
28,314
1,009
4,941
2,297
9
36,571USD
2016
305,857
9,283
48,207
18,566346
382,286

2015

Revenue is classified by country or region based on the locations of customers.
2)

Non-current assets (excluding financial assets and deferred tax assets)

Japan
Asia
North America
EuropeOthers
Total

JPY
2015
33,670
1,415
6,263
2,425
14
43,7882016
34,464
1,046
5,432
2,092
39
43,076(5) Information on major customers
There is no customer whose transaction volume is equal to or more than 10% of the Consolidated Group’s revenue for the fiscal years ended
March 31, 2016 and March 31, 2015.

7. Trade and Other Receivables
The breakdown of trade and other receivables is presented as follows:

Notes and accounts receivable
Loans receivable
Other
Less: loss allowance
Total
Current assets
Non-current assets
Total

JPY
2015
183,422
2,405
3,718(2,671)
186,874
186,486388
186,874

2016
159,173
3,019
4,190(2,383)164,001
163,540460
164,001

Transition date
179,286
2,623
3,564(2,710)182,763
182,627135
182,763

Information on changes in loss allowance is provided in Note 30 Financial Instruments: (3) Credit risk management.

Continued
21

USD
2016
1,412,611
26,79337,185(21,148)
1,455,458
1,451,367
4,082
1,455,458

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
8. Inventories
The breakdown of inventories is presented as follows:

Merchandise and finished goods
Real estate for sale
Raw materials and supplies
Work in progress
Total

JPY
2015
88,747
61
2,134
901
91,844

2016
76,899－2,328
967
80,195

USD
2016
682,455－
20,6608,582
711,706

Transition date
63,14661
2,344
962
66,514

The amounts of inventories that were recognized as expense during the fiscal years ended March 31, 2016 and March 31, 2015 are ¥561,989
million ($4,987,478 thousand) and ¥595,079 million, respectively.
The amounts written down on inventories that were recognized as expense during the fiscal years ended March 31, 2016 and March 31, 2015
are ¥820 million ($7,277 thousand) and ¥226 million, respectively.

9. Property, Plant and Equipment
Changes in costs, accumulated depreciation and accumulated impairment losses of property, plant and equipment are presented as follows:[Costs](JPY)

15,464
655
344
0
(424)
179

Machinery,
vehicles, tools,
furniture andfixtures24,9593,316
360
71(2,746)907

Buildings andstructures
As of the transition date (April 1, 2014)
Additions
Acquisitions through business combinations
Transfers from construction in progress
Disposals
Exchange differences
Increases (decreases) due to a change in thescope of consolidation
Other
As of March 31, 2015
Additions
Acquisitions through business combinations
Transfers from construction in progress
Disposals
Exchange differences
Increases (decreases) due to a change in thescope of consolidation
Other
As of March 31, 2016

Construction inprogress

Land

Total

11,909
155
2,141
－
(170)
77

190
775
－
(71)
－
75

52,523
4,903
2,846
－
(3,340)
1,239

－

(18)

－

－

(18)

151
16,371
652
419
357
(520)
(96)

(68)
26,7811,380
3369(1,965)(456)－
14,114
－
326
－
(468)
(54)

16
985
309
－
(727)
－
(39)

99
58,253
2,342
749－(2,954)
(647)

(594)

(214)

－

－

(808)

(112)
16,47660
25,959(1,372)
12,545(43)484(1,468)55,466

Continued
22

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
[Accumulated depreciation and accumulated impairment losses](JPY)
Buildings andstructures

Machinery,
vehicles, tools,
furniture andfixtures(9,530)(18,814)

Depreciation(489)

Impairment losses(54)

Disposals
Exchange differences
Increases (decreases) due to a change in thescope of consolidation
Other

As of the transition date (April 1, 2014)

Construction inprogress

Land

Total

－

－

(28,344)(1,569)－－(2,059)

(27)

(360)

－

(443)

371

1,664

－

－

2,036

(69)

(399)

－

－

(469)

－

17

－

－

17

(87)

62

－

－

(24)

(9,860)(19,065)(360)－(29,287)

Depreciation(547)(1,652)－－(2,199)Impairment losses

(15)

(2)

(64)

－

(81)

Disposals

428

1,599

－

－

2,028

Exchange differences

23

224

－

－

247

Increases (decreases) due to a change in thescope of consolidation

321

208

－

－

529

Other

98

82

－

－

181

(9,551)(18,605)(425)－(28,582)

Buildings andstructures

Machinery,
vehicles, tools,
furniture andfixtures

As of the transition date (April 1, 2014)

5,933

6,145

11,909190

24,179As of March 31, 2015

6,511

7,716

13,753985

28,966

As of March 31, 2016

6,924

7,354

12,119484

26,883

Buildings andstructures

Machinery,
vehicles, tools,
furniture andfixtures

As of March 31, 2015

As of March 31, 2016

[Carrying amounts](JPY)
Construction inprogress

Land

Total

[Costs](USD)

As of March 31, 2015

Construction inprogress

Land

Total

145,288237,673

125,257

8,742

516,977

Additions

5,786

12,247－

2,742

20,785Acquisitions through business combinations

3,718

27

2,893

－

6,647

Transfers from construction in progress

3,168

3,275

－

(6,452)－

Disposals(4,615)(17,439)(4,153)－(26,216)(852)(4,047)

(479)

(346)

(5,742)(5,272)(1,899)－－(7,171)

(994)

532

(12,176)(382)(13,028)

146,219

230,378

111,333

4,295

492,244

Exchange differences
Increases (decreases) due to a change in thescope of consolidation
Other
As of March 31, 2016

Continued
23

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
[Accumulated depreciation and accumulated impairment losses](USD)
Buildings andstructures

Machinery,
vehicles, tools,
furniture andfixtures

As of March 31, 2015

(87,504)(169,196)

Depreciation

Construction inprogress

Land

Total

(3,195)－(259,913)(4,854)(14,661)－－(19,515)

Impairment losses

(133)

(18)

(568)

－

(719)

Disposals

3,798

14,191－－

17,998

204

1,988

－

－

2,192

2,849

1,846

－

－

4,695

870

728

－

－

1,606

(84,762)(165,114)(3,772)－(253,656)

Buildings andstructures

Machinery,
vehicles, tools,
furniture andfixtures61,44865,264

Exchange differences
Increases (decreases) due to a change in thescope of consolidation
Other
As of March 31, 2016

[Carrying amounts](USD)

As of March 31, 2016Land

Construction inprogress

107,552

Total

4,295

238,578

The amounts of expenditures relating to property, plant and equipment under construction are presented in the table above as “Construction inprogress”.
Depreciation for property, plant and equipment are included in “Cost of revenues” and “Selling, general and administrative expenses” in the
consolidated statements of income.

10. Goodwill and Intangible Assets(1) Goodwill
1)

Costs, accumulated impairment losses and carrying amount
Changes in costs, accumulated impairment losses and carrying amount of goodwill are presented as follows:[Costs]JPY
2016
Beginning balance
Acquisitions through business combinations
Exchange differences
Ending balance

USD
2016

2015
5,249
277
(139)
5,387

3,086
1,817
346
5,249

46,583
2,458(1,234)47,808[Accumulated impairment losses]
JPY
2016
Beginning balance
Impairment losses
Exchange differences
Ending balance

USD
2016

2015
(756)
－
－
(756)

Continued
24

(756)
－
－
(756)

(6,709)－－(6,709)KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
[Carrying amount]

JPY
2015

2016
Carrying amount

4,631

USD
2016

Transition date
2,329

4,493

41,099The beginning balance of accumulated impairment losses of ¥(756) million represents an impairment loss recognized on the transition date on
goodwill that arose upon acquisition of the mobile communication terminal distribution business in the Electronics & Devices segment.
2)

Impairment test
Consolidated Groups of cash-generating units to which goodwill has been allocated are tested for impairment annually, and whenever
there is an indication that the Consolidated Groups may be impaired. The carrying amounts of significant goodwill allocated to theConsolidated Groups of cash-generating units were as follows:

JPY
2015

2016
Electronics & Devices segment
Electronics business of the domestic
subsidiaries
Foods & Grain segment
Pet-related businesses of the domestic
subsidiaries
Steel, Materials & Plant segment
Oilfield tubing business of the foreignsubsidiaries

Transition date

USD
2016

1,763

1,763

236

15,646

569

291

－

5,050

2,300

2,433

2,084

20,412

The recoverable amount of the cash-generating unit Consolidated Groups to which significant goodwill has been allocated was calculated
based on its value in use founded on the five-year forecast that was approved by management.
The five-year forecast of cash flows is based on future plans reflecting past performance. In addition, the main assumption used todetermine such forecast was the growth rate of gross profits through such terms, such growth rate being consistent with the forecasts of
the nominal GDP growth rate or the like of the countries in which such cash-generating unit of the Consolidated Groups are situated. The
ultimate growth rates are determined by considering the average long-term growth rates of the markets or countries to which the
cash-generating units belong.
The discount rates before tax which were used in calculating the value in use of the Consolidated Groups of cash-generating units towhich significant goodwill has been allocated were as follows:
2016
Electronics & Devices segment
Electronics business of the domestic subsidiaries
Foods & Grain segment
Pet-related businesses of the domestic subsidiaries
Steel, Materials & Plant segment
Oilfield tubing business of the foreign subsidiaries

2015

Transition date

3.4%

4.5%

4.2%

6.3%

6.0%

―

12.0%

12.0%

12.6%

With respect to goodwill that has been allocated to the Consolidated Groups of cash-generating units, the recoverable amount of such goodwill
largely exceeds its carrying amount. Thus, even if major assumptions are changed to a reasonable extent, it is unlikely that such changes in major
assumptions will reduce the recoverable amounts of the cash-generating units below the carrying amount.

Continued
25

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(2) Intangible assets
Changes in costs, accumulated amortization and accumulated impairment losses of intangible assets are presented as follows:[Costs]
（JPY）

7,532
945

Carrier shop operatingrights
3,291－

Software
As of the transition date (April 1, 2014)
Additions
Acquisitions through businesscombinations
Disposals
Exchange differences
Other
As of March 31, 2015
Additions
Acquisitions through businesscombinations
Disposals
Exchange differences
Other
As of March 31, 2016

Other

Total
4,299
31

15,123
977

14

－

6

20

(159)
55
(214)
8,174
656

－
－
－
3,291
－

(3)
560
74
4,968
37

(163)
616
(140)
16,434

4

－

9

(161)
(32)
(4)
8,636

－
－
－
3,291

(45)
(235)
(242)
4,492

693
14
(207)
(267)
(246)
16,421[Accumulated amortization and accumulated impairment losses]（JPY）
Software
As of the transition date (April 1, 2014)
Amortization
Impairment losses
Disposals
Exchange differences
Other
As of March 31, 2015
Amortization
Impairment losses
Disposals
Exchange differences
Other
As of March 31, 2016

(5,860)
(618)
(24)
114
(48)
76
(6,361)
(571)
－
140
25
(4)
(6,771)

Carrier shop operatingrights
(234)
－
－
－
－
－
(234)
－
－
－
－
－
(234)

Other

Total
(6,824)

(729)
(348)
(26)
1
(93)
(0)
(1,196)
(373)
(12)
35
57
158
(1,331)

(967)
(50)
115
(141)
75
(7,792)
(944)
(12)
175
82
153
(8,337)[Carrying amount]（JPY）

As of the transition date (April 1, 2014)

1,671

Carrier shop operatingrights3,057

As of March 31, 2015
As of March 31, 2016

1,812
1,864

3,057
3,057

SoftwareContinued
26

Other

Total
3,569

8,298

3,771
3,161

8,641
8,083

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
[Costs]（USD）

72,542
5,822

Carrier shop operatingrights
29,207－35(1,429)(284)(35)
76,642

Software
As of March 31, 2015
Additions
Acquisitions through businesscombinations
Disposals
Exchange differences
Other
As of March 31, 2016

Other

Total
44,089328

145,847
6,150

－

80

124

－
－
－
29,207(399)(2,086)(2,148)39,865(1,837)(2,370)(2,183)
145,731[Accumulated amortization and accumulated impairment losses]（USD）
Software
As of March 31, 2015
Amortization
Impairment losses
Disposals
Exchange differences
Other
As of March 31, 2016

(56,452)(5,067)
－
1,242
222
(35)
(60,091)

Carrier shop operatingrights(2,077)－－－－－(2,077)

Other

Total
(10,614)(3,310)
(106)
311
506
1,402
(11,812)(69,152)(8,378)
(106)
1,553
728
1,358
(73,988)[Carrying amount]（USD）

As of March 31, 2015

16,081

Carrier shop operatingrights27,130

As of March 31, 2016

16,542

27,130Software

Other

Total
33,466

76,68628,05371,734

Carrier shop operating rights were recognized as intangible assets upon acquisition of the mobile communication terminal distribution businessby a consolidated subsidiary of the Company. As the rights are expected to exist fundamentally as long as the business continues, they are
determined to be classified as intangible assets with indefinite useful lives.
The recoverable amounts of the Consolidated Groups of cash-generating units including the carrier shop operating rights were calculated basedon its five-year forecast’s value in use that was approved by management. The five-year forecast of cash flows is based on the future plans
anticipated based on past performance. In addition, the main assumption used to determine such forecast was the growth rate of gross profits
through such terms, such growth rate being consistent with the forecasts of the nominal GDP growth rate or the like of the countries in whichsuch cash-generating unit Consolidated Groups are situated. The ultimate growth rates are determined by considering the average long-term
growth rates of the markets or countries to which the cash-generating units belong.
There were no material internally-generated intangible assets as of March 31, 2016, March 31, 2015 and the transition date.
Amortization expenses are included in “Cost of revenues” and “Selling, general and administrative expenses” in the consolidated statements ofincome.
The discount rates before taxes used to determine the value in use of this cash-generating unit are presented as follows:
2016

2015

Transition date

Electronics & Devices segment
Electronics business of the domestic subsidiaries

6.0%

6.4%

6.6%

With respect to the carrier shop operating rights, the recoverable amount of the cash-generating unit largely exceeds its carrying amount. Thus,
even if major assumptions are changed to a reasonable extent, it is unlikely that such changes in major assumptions will reduce the recoverable
amount of the cash-generating units below the carrying amount.

Continued
27

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
11. Investments in Associates and Joint Ventures
There are no associates or joint ventures that are material to the Consolidated Group.
The aggregate amount of interests in individually immaterial associates and joint ventures that are accounted for using the equity method
are presented as follows:[Aggregate carrying amount]
JPY
2015

2016
Associates
Joint ventures

7,420
－

Transition date
5,536
－

5,385
－

USD
2016
65,850－[Profit or loss from continuing business]
JPY
2016
Associates
Joint ventures

USD
2016

2015
675
－

1,143
－

5,990
－

[Other comprehensive income]
JPY
2016
Associates
Joint ventures

USD
2016

2015
(141)
－

114
－

(1,251)－[Total comprehensive income]
JPY
2016
Associates
Joint ventures

USD
2016

2015
533
－

1,258
－

4,730
－

12. Other Investments
The breakdown of other investments is presented as follows:
JPY
2015

2016
Financial assets measured at fair value
through profit or loss
Financial assets measured at fair value
through other comprehensive income
Financial assets measured at amortized cost
Total

Transition date

USD
2016

5,637

6,425

6,341

50,027

24,89725,623

19,386

220,953

1,000
31,5351,000
33,0491,000
26,727

8,875
279,863

Transition date
7,416
3,255
5,361
16,033
14,2681,764
16,033USD
2016
50,932
34,682
58,626144,240
113,383
30,857
144,240

13. Other Current Assets and Other Non-current Assets
The breakdown of other current assets and other non-current assets is presented as follows:
JPY
2015

2016
Advance payments
Prepaid expenses
Other
Total
Current assets
Non-current assets
Total

5,739
3,908
6,606
16,253
12,776
3,477
16,253

8,336
3,482
5,922
17,741
16,054
1,686
17,741

Continued
28

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
14. Trade and Other Payables
The breakdown of trade and other payables is presented as follows:
JPY
2015
116,649
32,53010,342
159,522
159,522－
159,522

2016
102,276
31,034
8,832
142,143
142,143－
142,143

Notes and accounts payable
Import bills payable
Accounts payable - commission
Total
Current liabilities
Non-current liabilities
Total

USD
2016
907,668
275,417
78,381
1,261,475
1,261,475－
1,261,475

Transition date
114,694
27,6108,213
150,518
150,518－
150,518

15. Bonds and Borrowings
The breakdown of bonds and borrowings is presented as follows:

2016

Short-term borrowings
Current portion of long-termborrowing
Bonds (excluding the current portion)
Long-term borrowings (excluding thecurrent portion)
Total
Current liabilities
Non-current liabilities
Total

2015

Transition date

Averageinterest
rate(Note)

Maturity date

JPY
33,374USD
296,184

JPY
43,433

JPY
35,4460.86%－

28,615

253,949

21,87144,405

1.34%

－

9,925

88,081－－－64,952576,429

74,426

61,113

1.47%

136,867
61,98974,877
136,867

1,214,652
550,133
664,5101,214,652

139,731
65,30574,426
139,731

140,965
79,852
61,113140,965－
July 2017 to
October 2029

(Note) The “average interest rate” is presented as the weighted average interest rate against the borrowings outstanding at the end of the year.
For the purpose of avoiding the interest rate fluctuation risk for borrowings hedged by derivative transactions, such as interest rate swaps,
the average interest rate is calculated using the interest rate after hedging. The interest rate of bonds is presented in the “Details of bonds”
below.
[Details of bonds]
IssuerKanematsu
Corporation
Kanematsu
Corporation

Bond Name
Unsecured Straight
Bonds No 1
(3-year bonds)
Unsecured Straight
Bonds No 2(5-year bonds)

Issue date

2016
JPY

USD

2015
JPY

Coupon rate

Collateral Maturity date

March 10,
2016

4,961

44,027－

0.40% per annum

None

March 8, 2019

March 10,
2016

4,964

44,054－

0.64% per annum

None

March 10,2021

(Note) The maturity schedule of bonds (excluding the current portion) within 5 years after the end of the current fiscal year is presented asfollows:

Corporate bonds

Over one year andwithin two years
JPY
USD
－
－

Over two years andwithin three years
JPY
USD
4,961
44,027

Continued
29

Over three years andwithin four years
JPY
USD
－
－

Over four years andwithin five years
JPY
USD
4,964
44,054

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 201616. Provisions
Changes in provisions are presented as follows:
（JPY）
Other

As of the transition date (April 1, 2014)
Acquisitions through business combinations
Provisions madeProvisions used
Provisions reversed
Unwinding of discountForeign exchange translation differences
Other
As of March 31, 2015
Acquisitions through business combinations
Provisions madeProvisions used
Provisions reversed
Unwinding of discountForeign exchange translation differences
Other
As of March 31, 2016

Asset retirement obligations
811
18
94
(4)
(17)
15
－
－
917
－
98
(108)
(2)
18
－
－
922

Other

As of March 31, 2015
Acquisitions through business combinations
Provisions madeProvisions used
Provisions reversed
Unwinding of discountForeign exchange translation differences
Other
As of March 31, 2016

Asset retirement obligations
8,138
－
870
(958)
(18)
160
－
－
8,182

Total
85
218
262
(69)
(16)
－
0
－
482
－
181
(206)
(7)
－
(0)
(67)
382

896
237
357
(74)
(33)
15
0
－
1,399
－
279
(314)
(10)
18
(0)
(67)
1,304
（USD）
Total

4,278
－
1,606
(1,828)
(62)
－
(0)
(595)
3,390

12,416－2,476(2,787)
(89)
160
(0)
(595)
11,573The current and non-current portions of provisions are presented as follows:
JPY
2015

2016
Current liabilities
Non-current liabilities
Total

31
1,272
1,304

300
1,098
1,399

Transition date
92
804
896

USD
2016
275
11,289
11,573

Asset retirement obligations are the obligations for restoring offices and shops in accordance with provisions of the property leasing
contracts. While these expenditures will be made after at least one year has passed, the amounts may be affected by the future business planand other factors.

17. Other Current Liabilities and Other Non-current Liabilities
The breakdown of other current liabilities and other non-current liabilities is presented as follows:
JPY
2015

2016
Advances received
Accrued expenses
Unearned revenue
Other
Total
Current liabilities
Non-current liabilities
Total

6,515
3,351
2,958
7,339
20,164
19,465699
20,164

10,991
3,363
2,841
8,541
25,73924,736
1,002
25,739Continued
30

Transition date
8,787
2,625
2,991
7,158
21,562
20,870692
21,562

USD
2016
57,81929,73926,251
65,131
178,949
172,746
6,203
178,949

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
18. Equity(1) Capital management
The Consolidated Group has a basic policy of increasing shareholders’ equity (See Note 1) up to a certain level and strengthening its
financial base to enhance its enterprise value through building new businesses and increasing revenues while maintaining a sound financial
position. In addition, the Company uses net DER (See Note 2) as a key indicator for capital management.
The Consolidated Group will strive to expand its business to the extent allowed by its own financial strength with the target net DER to be
kept under 1.0 time, as per the medium-term vision “VISION-130”, for which the revision was made and announced on May 10, 2016.
These indices are periodically reported to and monitored by management.
(Note 1) Shareholders’ equity is defined as equity attributable to owners of the Parent.
(Note 2) Net DER is defined as a ratio of net interest-bearing debt to shareholders’ equity, while net interest-bearing debt is the total amountof interest-bearing debt less cash and cash equivalents.
The figures of net DER as of the March 31, 2016, March 31, 2015 and transition date are presented as follows:
2016
Net DER2015
0.5 times

Transition date
0.8 times

0.9 times

The Consolidated Group is not subjected to any externally imposed capital requirements (except for general requirements, such as those in
the Companies Act).

(2) Number of shares authorized to be issued, issued shares and shares of treasury stock(Unit: share)
2016
Shares authorized to be issued(No-par common stock)
Issued shares(No-par common stock)
Beginning balance
Changes during the periodEnding balance
Treasury stock(No-par common stock)
Beginning balanceEnding balance

2015

1,016,653,604

1,016,653,604

422,501,010－
422,501,010

422,501,010－
422,501,010

2,893,263
2,953,939

5,111,537
2,893,263

The number of shares of treasury stock includes treasury stock held by the associates of the Company.

(3) Surplus
1) Capital surplus
Capital surplus mainly consists of legal capital surplus.
2) Retained earnings
Retained earnings consist of legal retained earnings and other retained earnings.
The Companies Act of Japan provides that an amount equal to 10% of distribution of surplus for each fiscal year must be appropriated aslegal capital surplus or legal retained earnings until the total aggregate amount of legal capital surplus and legal retained earnings equals
25% of share capital.
Under the Companies Act, the amount available for distribution is calculated based on the amount of capital surplus and retained earnings,
exclusive of legal capital surplus and legal retained earnings, all of which are recorded in accordance with the accounting principles
generally accepted in Japan.

Continued
31

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(4) Dividends
1) Amount of dividends paid
Resolution
May 25, 2015
Board of Directors
meetingNov. 5, 2015
Board of Directors
meeting

Resolution
May 26, 2014
Board of Directors
meeting
Oct. 31, 2014
Board of Directors
meeting

Total amount ofdividends
JPY
USD

Dividends
per share
Yen
U.S.$

Type of stock

Source ofdividends

Common stock

Retainedearnings

632

5,609

1.50

Common stock

Retainedearnings

1,053

9,345

2.50

Type of stock

Source ofdividends

Total amount ofdividends
JPY

Common stock

Retainedearnings

632

Common stock

Retainedearnings

1,053

Record date

Effective date

0.013

Mar. 31, 2015

Jun. 4, 2015

0.022

Sep. 30, 2015

Dec. 4, 2015

Record date

Effective date

1.50

Mar. 31, 2014

Jun. 5, 2014

2.50

Sep. 30, 2014

Dec. 2, 2014

Dividends
per shareYen2) Dividends with record date in the current fiscal year, and effective date in the following fiscal year
Resolution

Type of stock

Source ofdividends

May 23, 2016
Board of Directors
meeting

Common stock

Retainedearnings

Total amount ofdividends
JPY
USD
1,053

Dividends
per share
Yen
U.S.$

9,345

2.50

0.022

Record date

Effective dateMar. 31, 2016

Jun. 6, 2016

19. Revenue
The breakdown of revenue is presented as follows:
JPY
2016
Revenue from the sale of goods
Revenue from rendering of services and others
Total

2015
646,004
22,369668,374

679,743
24,467704,211USD
2016
5,733,085
198,518
5,931,612

20. Selling, General and Administrative Expenses
The breakdown of selling, general and administrative expenses is presented as follows:
JPY
2016
Depreciation and amortization
Personnel expenses
Outsourcing service charges
Rent expenses
Other
Total

USD
2016

2015
1,883
37,782
6,417
5,351
17,143
68,577

Continued
32

1,866
37,3506,211
5,069
15,74866,245

16,711
335,304
56,94947,488152,139
608,600

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
21. Gain or Loss on Sale and Disposal of Fixed Assets
The breakdown of gain or loss on sale and disposal of fixed assets is presented as follows:
JPY
2016
Gain on sale of property, plant and equipment
Gain on sales of intangible assets
Total gain on sale of fixed assets
Loss on sale of property, plant and equipment
Loss on sales of intangible assets
Total loss on sale of fixed assets
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Total loss on disposal of fixed assets
Gain (loss) on sale and disposal of fixed assets,
net

USD
2016

2015
25
14
40
(251)
(0)
(252)
(76)
(22)
(99)

71
0
71
(2)
－
(2)
(87)
(45)
(132)

222
124
355
(2,228)(0)(2,236)
(674)
(195)
(879)

(311)

(63)

(2,760)22. Impairment Loss
(1) Breakdown of impairment loss by each class of assets
The breakdown of impairment losses for the fiscal year ended March 31, 2016 and March 31, 2015 for by class of assets ispresented as follows. Impairment losses were included in “Impairment loss on fixed assets” in the consolidated statement ofincome.
JPY
2016
Property, plant and equipment
Intangible assets
Other non-current assets
Total

USD
2016

2015
(81)
(12)
－
(94)

(443)
(50)
(86)
(580)

(719)
(106)
－
(834)

(2) Breakdown by reportable segment
The breakdown of impairment losses for the fiscal year ended March 31, 2016 and March 31, 2015 by reportable segment is presented asfollows:
JPY
2016
Electronics & Devices
Foods & Grain
Steel, Materials & Plant
Motor Vehicles & Aerospace
Other/Adjustment and elimination
Total

USD
2016

2015
(13)
－
(79)
－
(1)
(94)

(144)
(1)
(438)
(0)
3
(580)

(115)
－
(701)
－
(9)
(834)

For the fiscal year ended March 31, 2015, the impairment loss of ¥299 million was recognized as a result of reducing the carrying amount ofproperty, plant and equipment related to LPG tanks, for which the Company determined to withdraw from the business due to deteriorationof profitability, to the recoverable amount of ¥170 million. In addition, the impairment loss of ¥137 million was recognized as a result of
reducing the carrying amount of property, plant and equipment related to several petrol service stations in Japan, for which the Company
determined to withdraw from the business, to the recoverable amount of ¥35 million. The recoverable amount is based on fair value less costsof disposal and fair value is estimated mainly based on the real estate appraisal. The assets belong to the Steel, Materials & Plant segment.
Regarding the impairment of other non-current assets, the impairment loss of ¥86 million was recognized as the assets were evaluated tohave a zero recoverable amount mainly because future cash flows could no longer be expected primarily due to termination of a license
agreement. The assets belong to the Electronics & Devices segment.
For the fiscal year ended March 31, 2016, the impairment loss of ¥79 million ($701 thousand) was recognized as a result of reducing thecarrying amount of property, plant and equipment related to several petrol service stations in Japan, for which the Company determined towithdraw from business, to the recoverable amount of ¥4 million ($35 thousand). The recoverable amount is based on fair value less costs ofdisposal and fair value is estimated mainly based on the real estate appraisal. The assets belong to the Steel, Materials & Plant segment.
While fair values are categorized into three levels depending on inputs to valuation techniques used, all the fair values above are categorized
within Level 3 of the fair value hierarchy with its details described in “2. Basis of Preparing Consolidated Financial Statements, (4) Use of
estimates and judgments”.

Continued
33

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
23. Exchange Differences
Exchange differences recognized in profit or loss for the fiscal years ended March 31, 2016 and March 31, 2015 were gains of ¥713 million($6,328 thousand) and ¥1,713 million, respectively and are included in “Other income” in the consolidated statement of income. In addition,
each amount includes gains or losses arising from currency-related derivative transactions that were entered into for the purpose of hedging
the foreign currency risk. Gains and losses arising from translating assets and liabilities denominated in a currency other than the functional
currency or from settling such items are included in profit or loss as they arise.

24. Finance Income and Finance Costs
The breakdown of finance income and finance costs is presented as follows:
JPY
2016
Interest income
Financial assets measured at amortized cost
Total interest income
Dividend income
Financial assets measured at fair value through profit
or loss
Financial assets measured at fair value through othercomprehensive income
Total dividend income
Other finance income (Note)
Other finance income
Total other finance income
Total finance income
Interest expenses
Financial liabilities measured at amortized cost
Derivatives
Total interest expenses
Other finance costs (Note)
Other finance costs
Total other finance costs
Total finance costs

USD
2016

2015
478
478

400
400

4,242
4,242

147

372

1,305

779

709

6,913

927

1,082

8,227

－
－
1,405

18
18
1,501

－
－
12,469(2,167)(240)(2,407)(2,598)(312)(2,910)(19,231)(2,130)(21,361)

(323)
(323)
(2,731)

(908)
(908)
(3,819)(2,867)(2,867)(24,237)(Note) The amounts of other finance income and other finance costs are those related to financial assets measured at fair value through profit orloss and the details are presented in Note 30 Financial Instruments: (6)-3)-(ii) Recurring fair value measurements categorized within
Level 3 of the fair value hierarchy.

25. Earnings Per Share Attributable to Owners of the Parent(1) Basic earnings per share
Yen
2016
Basic earnings per share

U.S. dollar
2016

2015
21.29

25.10

0.19

Diluted earnings per share is not presented as there are no share with dilutive effect.

(2) Bases for calculation of basic earnings per share
JPY
2016
Profit attributable to owners of the Parent
Amount not attributable to common shareholders of
the Parent
Profit used to calculate basic earnings per share
Weighted average number of common shares

USD
2016

2015
8,959
－
8,959
Thousand shares
420,803

Continued
34

10,546

79,508－－

10,546

79,508420,211

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
26. Other Comprehensive Income
The breakdown for the amounts of reclassification adjustments and deferred tax in other comprehensive income is presented
as follows:
JPY
2016
Financial assets measured at fair value through othercomprehensive income
Amount arising during the year
Amount before deferred tax
Deferred tax
Total net unrealized gains (losses), net of tax
Remeasurements of defined benefit plans, net of tax
Amount arising during the year
Amount before deferred tax
Deferred tax
Remeasurements of defined benefit plans, net oftax
Exchange differences on translation of foreign
operations
Amount arising during the year
Reclassification adjustments
Exchange differences on translation of foreign
operations
Cash flow hedges
Amount arising during the year
Reclassification adjustments
Amount before deferred tax
Deferred tax
Cash flow hedges
Share of other comprehensive income ofinvestments accounted for using the equity method
Amount arising during the year
Reclassification adjustments
Share of other comprehensive income ofinvestments accounted for using the equity
methodTotal other comprehensive income

USD
2016

2015

(2,727)(2,727)
1,147(1,580)

5,164
5,164
(1,401)
3,762(24,201)(24,201)
10,179(14,022)

(578)
(578)
152

393
393
99

(5,130)(5,130)
1,349

(426)

492

(3,781)(2,911)
17

6,564
－

(25,834)
151(2,894)6,564(25,683)(1,097)(1,058)(2,156)645(1,511)

817
(142)
674
(239)
435

(9,736)(9,389)(19,134)
5,724(13,410)

(114)
(27)

112
2

(1,012)
(240)

(141)

114

(1,251)(6,554)

11,369(58,165)

Continued
35

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
27. Cash Flow Information(1) Cash and cash equivalents
Cash and cash equivalents for the fiscal years ended March 31, 2016 and March 31, 2015 consist of cash and bank deposits (excluding time
deposits with deposit term exceeding three months).

(2) Net payment for acquisition of subsidiaries
The breakdown of main assets and liabilities of newly acquired subsidiaries at the time control thereof was acquired, and the relationshipbetween considerations paid and net payment for the acquisition are presented as follows:

JPY
2016
Breakdown of assets at the acquisition dateCurrent assets (including cash and cash
equivalents)
Non-current assets
Breakdown of liabilities at the acquisition dateCurrent liabilities
Non-current liabilities

USD
2016

2015
5,276

5,186

46,823

1,285

4,786

11,404(5,572)(696)(2,427)(742)(49,450)(6,177)JPY
2016
Considerations paid
Cash and cash equivalents included in the assets atthe time control thereof was acquired
Net proceeds from (payment for) acquisition ofsubsidiaries

USD
2016

2015
(105)

(1,567)

(932)

1,283

1,469

11,386

1,178

(97)

10,454(3) Net proceeds from sale of subsidiaries
The breakdown of main assets and liabilities of companies that are no longer the subsidiaries of the Company as a result of sale of shares at
the time control thereof was lost, and the relationship between considerations received and net proceeds from the sale are presented asfollows:
JPY
2016
Details of assets upon loss of control
Current assets (including cash and cash
equivalents)
Non-current assets
Details of liabilities upon loss of control
Current liabilities

USD
2016

2015
1,833

－

16,267

493

－

4,375

(2,941)－(26,100)

JPY
2016
Considerations received
Cash and cash equivalents included in the assets atthe time control thereof was lost
Net proceeds from (payment for) sale of subsidiaries

USD
2016

2015
282

－

2,503

(447)

－

(3,967)(165)－(1,464)(4) Significant non-cash transactions
There were no significant non-cash transactions for the fiscal years ended March 31, 2016 and March 31, 2015.

Continued
36

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
28. Employee Benefits(1) Post-employment benefits
1) Outline of retirement benefit plans adopted by the Consolidated GroupThe Company has the defined benefit pension plan and lump-sum retirement benefit plan covering substantially all employees other thandirectors and executive officers. The benefit amounts for the defined benefit pension plan are determined based on the period of
employees’ enrollment in the plan, contribution granted to employees and other factors. The Company has a responsibility to manage
pension assets faithfully and has an obligation to make contributions for the employees enrolled in the plan in compliance with laws andregulations.
The pension plan that the Company maintains is a contract-type defined benefit pension plan.
Matters such as asset management performance, status of the plan and accounting treatment are reported in the Management Committeeby the Finance Department and the Personnel & General Affairs Department, which are in charge of operation of the pension plan. These
departments hold a meeting on a timely manner to discuss the matters such as a revision to the plan and a change in the asset investment
policy.
Most of the subsidiaries have unfunded retirement benefit plans and/or funded pension plans. Employees, other than directors, are entitled
to, under most circumstances, upon mandatory retirement at normal retirement age or earlier termination of employment, a lump-sum
retirement benefit based on compensation at the time of retirement, years of service and other factors. Certain subsidiaries have adopted
the defined contribution retirement benefit plan.
2) Defined benefit plan(i) Net defined benefit liability (asset)
Reconciliation of the beginning and ending balances of net defined benefit liability (asset) and the components for the years ended
March 31, 2016 and March 31, 2015 are presented as follows:(JPY)

As of the transition date (April 1, 2014)
Current service cost
Net interest
Remeasurements
Foreign exchange translation differences
Employer contributions to the plan
Benefits paid
Effect of business combinations and disposals
Other
As of March 31, 2015
Current service cost
Net interest
Remeasurements
Foreign currency translation difference
Employer contributions to the plan
Benefits paid
Effect of business combinations and disposals
Other
As of March 31, 2016

Present valueof the defined
benefit obligation
18,574
1,265
143
77
32
－
(1,696)567(141)
18,823
1,260
103
639
(60)
－
(1,577)－(106)
19,082As of March 31, 2015
Current service cost
Net interest
Remeasurements
Foreign currency translation difference
Employer contributions to the plan
Benefits paid
Effect of business combinations and disposals
Other
As of March 31, 2016

Present valueof the defined
benefit obligation
167,048
11,182
914
5,671
(532)
－
(13,995)－(941)
169,347

Fair value of plan
assets(12,841)
－
(119)
(470)
(35)
(981)
1,227
(202)
1
(13,422)
－
(77)
(60)
14
(929)
1,160
－
4
(13,309)

Net defined benefit
liability (asset)
5,732
1,265
24
(393)
(2)
(981)
(468)
365
(140)
5,400
1,260
26
578
(46)
(929)
(416)
－
(102)
5,772
(USD)

Fair value of plan
assets(119,116)
－
(683)
(532)
124
(8,245)
10,295－35(118,113)

Net defined benefit
liability (asset)
47,923
11,182
231
5,130
(408)
(8,245)(3,692)－(905)
51,225Remeasurements of the defined benefit obligation for the fiscal years ended March 31, 2016 and March 31, 2015 are the differences
arising primarily from changes in financial assumptions.

Continued
37

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(ii) Reconciliation of ending balances of defined benefit obligation/plan assets and net defined benefit liability/asset presented on the
consolidated statements of financial position

15,561(13,309)
2,251
3,520

JPY
2015
15,137(13,422)
1,715
3,685

Transition date
14,990(12,841)
2,148
3,584

USD
2016
138,099(118,113)
19,977
31,239

5,772

5,400

5,732

51,2252016
Defined benefit obligations of funded plan
Plan assets
Net defined benefit liability of funded plan
Defined benefit obligations of unfunded plan
Net liability or asset presented on the consolidated
statements of financial position

The measurement dates used to determine the benefit obligations are mainly March 31 of each year.
The Consolidated Group’s funding policy is based on a number of factors including the tax deductibility of contributions, funded
status, actuarial calculations and other considerations. Contributions are intended to provide not only for benefits attributable toservice to date, but also for those expected to be earned in the future. In addition, the Company may contribute cash to an employee
retirement benefit trust for any funding deficits in benefit obligations at the fiscal year end.
The Consolidated Group’s investment policy is designed to increase the value of plan assets within acceptable risk levels to ensure
payments of pension benefits to eligible participants, including future participants. Taking into account the return and risk on plan
assets thereon, the Consolidated Group formulate a strategic asset mix which aims at an optimal portfolio on a long-term basis andsupervise asset management by selecting investment management companies and monitoring asset allocations. The strategic asset mix
is subject to review in response to changes in expected market conditions or funded status. The strategic asset mix is not based onlimitations but guidelines, and therefore, the actual allocation may temporarily exceed or fall below the guidelines. The Company’s
target allocation is 10% equity securities, 39% debt securities, 40% life insurance company general accounts and 11% others.
The Consolidated Group holds a meeting regularly with the asset management institutions and discuss important issues regarding
pension assets investment.
(iii) Plan assets
The composition of the plan assets as of March 31, 2016.

Equity securities
Debt securities
Life insurance company general accounts
Other
Total

Plan assets with a quoted market price inan active market
JPY
USD
1,164
10,3304,798
42,581
－
－
161
1,429
6,124
54,349Plan assets without a quoted market
price in an active market
JPY
USD
1
9
403
3,576
4,464
39,617
2,316
20,554
7,185
63,765The composition of the plan assets as of March 31, 2015.

Equity securities
Debt securities
Life insurance company general accounts
Other
Total

Plan assets with a quoted market price inan active market
JPY
1,489
4,739
－
114
6,343

Plan assets without a quoted market
price in an active market
JPY
0
416
5,834
827
7,078

The composition of the plan assets as of the transition date are presented as follows:

Equity securities
Debt securities
Life insurance company general accounts
Other
Total

Plan assets with a quoted market price inan active market
JPY
1,382
4,576
－
99
6,057

Continued
38

Plan assets without a quoted market
price in an active market
JPY
0
337
5,681
764
6,783

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(iv) Significant actuarial assumptions
2016
Discount rate

2015
0.3%

Transition date
0.7%

0.9%

The assumptions used for the actuarial calculation include the expected rate of salary increase, the mortality rate and the retirement
rate other than the above.
(v) Sensitivity analysis of defined benefit obligations
JPY
2016
Increase in the defined benefit obligation with a
50-basis-point decrease in the discount rate
Decrease in the defined benefit obligation with a
50-basis-point increase in the discount rate

USD
2016

2015
135

253

1,198

(254)

(253)

(2,254)This analysis is based on the premise that the actuarial assumptions other than the discount rate do not fluctuate and that only thediscount rate fluctuate. This method of analysis is based on assumptions, and it is possible that the actual calculation could be
influenced by fluctuations in other variables. Even if the discount rate falls below 0%, the calculation is performed assuming thelower limit of the discount rate is 0%.
(vi) Information on maturity profile of the defined benefit obligation
The weighted average duration of the defined benefit obligation for both of the fiscal years ended March 31, 2016 and March 31,
2015 was 10.9 years.
(vii) Expected contribution to the plan for the year ending March 31, 2017
The amount of contribution made by made by the Consolidated Group to plan assets for the year ending March 31, 2017 isestimated to be ¥836 million ($7,419 thousand).
3) Defined contribution plan
Expenses recognized for the defined contribution plan for the years ended March 31, 2016 and March 31, 2015 were ¥177 million($1,571 thousand) and ¥217 million, respectively.

(2) Employee benefit expenses
Employee benefit expenses recognized for the years ended March 31, 2016 and March 31, 2015 were ¥1,559 million ($13,836 thousand) and¥1,535 million, respectively. Employee benefit expenses are included in “Cost of revenues” and “Selling, general and administration
expenses” in the consolidated statement of income.

Continued
39

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 201629. Deferred Taxes and Income Taxes(1) Deferred taxes
1) Breakdown of deferred tax assets and deferred tax liabilities
The breakdown of main deferred tax assets and deferred tax liabilities by component is as follows:
JPY
2015

2016
Deferred tax assets
Retirement benefits liabilities
Loss allowance
Inventories
Impairment loss
Other investments
Golf club memberships
Tax losses carried forward
Cash flow hedges
Other
Total deferred tax assets
Offset against deferred tax liabilities
Total deferred tax assets, net
Deferred tax liabilities
Retained earnings in subsidiaries
Cash flow hedges
Financial assets measured at fair value throughother comprehensive income
Other
Total deferred tax liabilities
Offset against deferred tax assets
Total deferred tax liabilities, net
Net deferred tax assets

Transition date

USD
2016

1,302
681
497
677
857
157
5,628
613
3,547
13,963(4,879)
9,084

1,693
802
1,706
853
875
170
6,784
－
3,938
16,825(6,268)10,557

1,553
968
1,784
791
944
177
10,334216
3,481
20,252(4,549)15,702

11,555
6,044
4,411
6,008
7,606
1,393
49,9475,440
31,479123,917(43,300)
80,618

(267)
－

(253)
(12)

(260)
－

(2,370)－(3,085)(4,204)(2,569)(27,378)(1,824)(5,177)
4,879
(297)
8,786

(2,111)(6,582)
6,268(313)
10,243(2,003)(4,833)
4,549(283)
15,418(16,187)(45,944)
43,300(2,636)
77,9732) Details of changes in deferred tax assets and deferred tax liabilities
Details of changes in deferred tax assets and deferred tax liabilities are presented as follows:
JPY
2016
Beginning balance of net deferred tax assets
Deferred tax expense
Income tax on other comprehensive income
Acquisition through business combinations
Other
Ending balance of net deferred tax assets

2015
10,243(3,316)
1,944
－
(85)
8,786

15,418(4,024)(1,541)413(23)
10,243USD
2016
90,903(29,428)
17,252－(754)
77,973

3) Deductible temporary differences and unused tax losses carried forward for which deferred tax assets were not recognized
The breakdown of deductible temporary differences and unused tax losses carried forward (by expiry date), for which
deferred tax assets were not recognized in the consolidated statement of financial position are presented as follows:
JPY
2016
Deductible temporary differences

USD

2015

17,639Transition date

19,054

18,114

2016
156,541

Tax losses carried forward
21

－

115

186

Between one and five years to expiry

26,606

19,172

11,340236,120

Between five and ten years to expiry

11,609

7,747

17,683103,026

186

48

49

1,651

38,42426,967

29,188341,001

Within one year to expiry

Over ten years to expiry
Total tax losses carried forward

4) Temporary differences associated with investments in subsidiaries for which deferred tax liabilities were not recognized
The total amounts of temporary differences associated with investments in subsidiaries for which deferred tax liabilities were notrecognized as of March 31, 2016 and March 31, 2015 and the transition date are ¥16,549 million ($146,867 thousand), ¥13,616 millionand ¥11,771 million, respectively. Because the Consolidated Group is able to control the timing of the reversal of such temporary
differences, and it is probable that such temporary differences will not be reversed within the foreseeable future, it did not recognize
deferred tax liabilities with respect to such temporary differences.

Continued
40

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(2) Income taxes
1) Breakdown of income taxes
The breakdown of income taxes is presented as follows:

JPY
2016
Current tax expense (Note 1)

USD
2015

2016

(3,997)(5,213)(35,472)

Origination and reversal of temporary differences
Reassessment of recoverability of deferred tax
assetsChanges in tax rate

(1,721)(2,752)(15,273)(1,036)874(9,194)(558)(2,146)(4,952)

Total deferred tax expense(3,316)(4,024)(29,428)(7,313)(9,238)(64,901)

Deferred tax expense (Note 2)

Total income taxes(Notes) 1. The amounts of the benefits arising from previously unrecognized tax losses or temporary differences of a prior period that wereused to reduce current tax expenses for the years ended March 31, 2016 and March 31, 2015 were ¥487 million ($4,322 thousand)and nil, respectively, and these benefits were included in the current tax expenses.
2. Major causes for deferred tax expense by type are inventories of ¥(1,209) million ($(10,729) thousand) and tax loss carried forwardof ¥(1,156) million ($(10,259) thousand) for the fiscal year ended March 31, 2016, and tax loss carried forward of ¥(3,549) million
for the fiscal year ended March 31, 2015.
2) Reconciliation of statutory effective income tax rate in Japan
Reconciliations between the statutory effective tax rate in Japan and the average effective tax rate of the Consolidated Group were as
follows:
2016
Effective statutory tax rate

2015
33.1%

35.6%

0.7%

2.2%

5.7%

(3.9)%

Effect of tax rate differences(0.5)%

1.8%

Tax reform

3.1%

9.6%

Other

(1.8)%(4.0)%

40.4%

41.3%

(Adjustments)
Permanent differences—additions
such as entertainment expenses
Effect of reassessment of recoverability ofdeferred tax assets

Average effective tax rate

The effective statutory effective tax rate for the fiscal year ended March 31, 2016 is calculated to be 33.1% based on the Corporation Tax,
Inhabitant Tax and Business Tax in Japan.
On March 29, 2016, “Partial Revision of Income Tax Act, etc.” (Act No.15 of 2016) and “Partial Revision of Local Tax Act, etc.” (ActNo.13 of 2016 ) were approved in the Diet. Under these Acts, the reduction in the corporate tax rate will become effective from the fiscal
year beginning on or after April 1, 2016. As a result of this change, the statutory effective tax rate being applied in the deferred tax
calculation reduced from 32.3% to 30.9% for the temporary differences which will be deducted during the fiscal year beginning on April 1,2016 and on April 1, 2017, and to 30.6% for those which will be deducted during and after the fiscal year beginning on April 1, 2018.

Continued
41

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
30. Financial Instruments(1) Classification of financial instruments
The breakdown of financial instruments for each classification is presented as follows:2016
Financial assets
Cash and cash equivalents
Financial assets measured at amortized cost
Trade and other receivables
Other investments
Other financial assets
Total financial assets measured at amortized cost
Financial assets measured at fair value through profit or loss
Other investments
Other financial assets
Total financial assets measured at fair value through profit or
loss
Financial assets measured at fair value through othercomprehensive income
Other investments
Total financial assets measured at fair value through othercomprehensive income
Total financial assets
Financial liabilities
Financial liabilities measured at amortized cost
Trade and other payables
Bonds and borrowings
Other financial liabilities
Total financial liabilities measured at amortized cost
Financial liabilities measured at fair value through profit or loss
Other financial liabilities
Total financial liabilities measured at fair value through profit orloss
Total financial liabilities

JPY
2015

Transition date

USD
2016

87,466

66,48573,978776,234

164,001
1,000
7,657
172,658

186,874
1,000
9,250
197,125

182,763
1,000
6,663
190,426

1,455,458
8,875
67,953
1,532,286

5,637
379

6,425
3,024

6,341
1,497

50,027
3,364

6,016

9,449

7,838

53,39024,89725,623

19,386

220,953

24,89725,623

19,386

220,953

291,039

298,684

291,629

2,582,881

142,143
136,867
9,979
288,990

159,522
139,731
11,027
310,281

150,518
140,965
10,062
301,546

1,261,475
1,214,652
88,5612,564,696

3,829

1,421

1,336

33,981

3,829

1,421

1,336

33,981

292,819

311,703302,8832,598,678(2) Basic policies for risk management of financial instruments
The Consolidated Group is an integrated trading company engaged in a wide range of business activities on a global basis. Its headquarters
includes business sections that handle merchandising, trading, product manufacturing, services, project planning and management,
investments and financing activities, both domestically and internationally. Such businesses are inherently exposed to various risks. The
Consolidated Group defines and classifies risks per risk item and manages each of them in accordance with its nature.

(3) Credit risk management
1)

Credit risks of financial assets owned by the Company (risk exposure and the occurrence of the relevant risk)
The Consolidated Group extends credit to a large number of customers in Japan and abroad in diverse business transactions, resulting ina number of financial assets such as trade receivables, loans and other financial assets. These financial assets provide credit
accommodation to the various customers; therefore, the Consolidated Group is mainly exposed to the credit risks related to thosecustomers.
Moreover, other investments include debt instruments that are the investments in the customers, which expose the Consolidated Groupto the credit risk arising from deterioration in the financial position of issuers.
Each department manages credit exposure to each customer by assigning credit ratings on a customer-by-customer basis and setting
credit exposure limit within the framework of the Consolidated Group’s credit risk control.

2)

Responses to the risk owned by the Company (purpose, policy and procedure of the risk management and method used to measuresuch risks)
The Consolidated Group manages its credit risk to the customers by defining risk management methods and management systems for
specific risks in accordance with the regulations on risk management. Based on such regulations, the Consolidated Group mitigatescredit risk through periodical monitoring of the customer’s credit status and undertaking the maturity control and account balance
control, while detecting promptly any doubtful accounts caused by deterioration in the financial conditions of customers and otherfactors. Expected credit losses are recognized and measured through transactions and financial information related to customers
available in the course of such credit risk management, while taking macroeconomic condition such as the number of bankruptcies into
consideration.
With regard to loans, the Consolidated Group determines there has been a significant increase in credit risk of the financial assets sinceinitial recognition in case the cash collection of the financial assets was delayed (as well as the case of request for grace period) after the
trade date. However, even when late payment or request for grace period occurs, the Consolidated Group does not determine that there
has been a significant increase in credit risk if such late payment or request for grace period would be attributable to temporary cash
shortage and the risk of default would be low. Objective data such as external credit ratings reveals their ability to fulfil the obligation ofContinued
42

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
contractual cash flow in the near future.
On the other hand, the Consolidated Group determines that the credit of the financial assets are impaired, when late payment or request
for grace period do not arise from temporary cash shortage but significant financial difficulty of the debtor and the recoverability of themodified financial assets is significantly doubtful.
The Consolidated Group determines there has been a significant increase in the credit risk of debt instruments since initial recognition
when an “investment grade” at the initial recognition deteriorates to the level below investment grade. For such purpose, rating
information provided by major rating agencies is used.
When guaranteeing the debts of its customers, the Consolidated Group establishes the guarantee limit amounts based upon the financial
position and business condition of the customers. The guarantee limit amounts are periodically reviewed and maintained at appropriate
level.
When entering into derivative transactions, the Consolidated Group only deals with major financial institutions with high credit ratings
assigned by independent rating agencies so as to minimize the credit risks. In addition, the Consolidated Group periodically reviews
credit limits in accordance with the internal regulations.
The Consolidated Group considers the trade receivables, loans receivable, and debt instruments as default when all or part of thosefinancial instruments are not recovered or the recoverability of those financial instruments is determined to be extremely difficult.
( i) Measurement of expected credit losses on trade receivables
As trade receivables do not contain a significant financing component, the Consolidated Group measures loss allowance at an
amount equal to the lifetime expected credit losses until the trade receivables are recovered. As performing trade receivables
comprise a number of customers, the Consolidated Group measures expected credit loss collectively by grouping those receivables
and considering historical credit loss experience. When those receivables are affected by material economic change, provision rate
calculated based upon the historical credit loss experience is adjusted to reflect current and future economic prospect.
Even when late payment or request for grace period has occurred, the Consolidated Group does not regard them as past due
receivables if such late payment or request for grace period would be attributable to temporary cash shortage as the risk of default
would be low, and the debtors are evaluated to have strong ability to fulfil the obligation of contractual cash flow in the near future.
(ii) Measurement of expected credit losses on other receivables
When credit risk related to loans has not increased significantly since the initial recognition at the end of the reporting period, theConsolidated Group calculates the amount of loss allowance of the financial instruments by estimating the 12-months expectedcredit losses collectively based upon historical credit loss experience. When those receivables are affected by material economicchange, provision rate calculated based upon the historical credit loss experience is adjusted to reflect current and future economic
prospect.
On the other hand, when there has been a significant increase in credit risk since initial recognition as of the end of fiscal year, theConsolidated Group estimates the lifetime credit losses on the financial instruments individually and measures the amount of loss
allowance based upon historical credit loss experience and future recoverable amount.
(iii) Measurement of the expected credit losses on the other investments (debt securities)
When credit risk related to debt securities has not increased significantly since initial recognition at the end of the reporting period,
the Consolidated Group calculates the amount of loss allowance of the financial instruments by estimating the 12-months expectedcredit losses. On the other hand, when there has been a significant increase in credit risk since initial recognition as of the end of
fiscal year, the Consolidated Group estimates the lifetime credit losses on the financial instruments and measures the amount ofloss allowance of the financial instruments. When estimating such expected credit losses, the Consolidated Group uses the default
rate published by major rating agencies.
The Consolidated Group directly writes off the gross carrying amount of the credit-impaired financial assets when all or part of thefinancial assets are evaluated to be uncollectible and determined that it is appropriate to be written off as a result of credit check.

Continued
43

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 20163) Quantitative and qualitative information on the amounts arising from expected credit losses(i) Trade and other receivables
Loss allowance
As of the transition date (April 1, 2014)
1. Reclassification to credit-impaired financial assets
2. Incurrence or collection during the period
3. Direct write-off
4. Changes due to foreign exchange
5. Increase (decrease) resulting from changes in provision rate
based on historical credit loss experience
As of March 31, 2015
1. Reclassification to credit-impaired financial assets
2. Incurrence or collection during the period
3. Direct write-off
4. Changes due to foreign exchange
5. Increase (decrease) resulting from changes in provision rate
based on historical credit loss experience
As of March 31, 2016

Gross carrying amount
As of the transition date (April 1, 2014)
1. Financial assets reclassified to credit-impaired financial assets
2. Incurrence or collection during the period
3. Direct write-off
4. Changes due to foreign exchange
As of March 31, 2015
1. Financial assets reclassified to credit-impaired financial assets
2. Incurrence or collection during the period
3. Direct write-off
4. Changes due to foreign exchange
As of March 31, 2016

Loss allowance
As of March 31, 2015
1. Reclassification to credit-impaired financial assets
2. Incurrence or collection during the period
3. Direct write-off
4. Changes due to foreign exchange
5. Increase (decrease) resulting from changes in provision rate
based on historical credit loss experience
As of March 31, 2016

Gross carrying amount
As of March 31, 2015
1. Financial assets reclassified to credit-impaired financial assets
2. Incurrence or collection during the period
3. Direct write-off
4. Changes due to foreign exchange
As of March 31, 2016

(JPY)
Lifetime expected credit losses
Collective assessment
Credit-impaired financial assets
32
2,677
(0)
44
0
67
(147)
－
9
－
(13)

－

19
(0)
(1)
－
－

2,651
79
(97)
(249)
(7)

(10)

－

7

2,375

(JPY)
Lifetime expected credit losses
Collective assessment
Credit-impaired financial assets
182,285
3,188
(44)
44
4,323
(113)
(147)
－
9
－
186,564
2,981
(159)
159
(22,758)
(145)
(249)
－
(7)
－
163,646
2,737(USD)
Lifetime expected credit losses
Collective assessment
Credit-impaired financial assets
169
23,527
(0)
701
(9)
(861)
(2,210)
－
(62)
－
(89)

－

62

21,077(USD)
Lifetime expected credit losses
Collective assessment
Credit-impaired financial assets
1,655,698
26,455(1,411)
1,411(201,970)(1,287)(2,210)－(62)－
1,452,307
24,290Continued
44

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(ii) Other investments (debt instrument securities)

Loss allowance

12 months

As of the transition date (April 1, 2014)
1. Changes in financial instruments recognized at the
beginning of the period(a) Reclassified to lifetime expected credit losses(b) Reclassified to credit-impaired financial assets(c) Individual financial assets reclassified fromcredit-impaired financial assets
2. Increase (decrease) in loss allowance resulting fromincurrence or collection
3. Direct write-off
4. Increase (decrease) due to changes in default rate
As of March 31, 2015
1. Changes in financial instruments recognized at the
beginning of the period(a) Reclassified to lifetime expected credit losses(b) Reclassified to credit-impaired financial assets(c) Individual financial assets reclassified fromcredit-impaired financial assets
2. Increase (decrease) in loss allowance resulting fromincurrence or collection
3. Direct write-off
4. Increase (decrease) due to changes in default rate
As of March 31, 2016

0

(JPY)
Expected credit losses
Lifetime
Credit-impaired financial
Individual assessment
assets
－
－

－

－

－

－
－

－
－

－
－

－

－

－

－

－

－

－
0
0

－
－
－

－
－
－

－

－

－

－
－

－
－

－
－

－

－

－

－

－

－

－
0
0

－
－
－

－
－
－

There was no change in the gross carrying amount of the debt instrument securities that caused a change in the amount of loss
allowance.

Continued
45

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(JPY)
Expected credit losses
Gross carrying amount

12 months

As of the transition date (April 1, 2014)
1. Changes in financial instruments recognized at the
beginning of the period(a) Reclassified to lifetime expected credit losses(b) Reclassified to credit-impaired financial assets(c) Individual financial assets reclassified fromcredit-impaired financial assets
2. Incurrence or collection
3. Direct write-off
4. Other changes
As of March 31, 2015
1. Changes in financial instruments recognized at the
beginning of the period(a) Reclassified to lifetime expected credit losses(b) Reclassified to credit-impaired financial assets(c) Individual financial assets reclassified fromcredit-impaired financial assets
2. Incurrence or collection
3. Direct write-off
4. Other changes
As of March 31, 2016

Loss allowance

Lifetime
Credit-impaired financial
assets－－Individual assessment
1,000
－

－

－

－
－

－
－

－
－

－

－

－

－
－
－
1,000

－
－
－
－

－
－
－
－

－

－

－

－
－

－
－

－
－

－

－

－

－
－
－
1,000

－
－
－
－

－
－
－
－

12 months

As of March 31, 2015
1. Changes in financial instruments recognized at the
beginning of the period(a) Reclassified to lifetime expected credit losses(b) Reclassified to credit-impaired financial assets(c) Individual financial assets reclassified fromcredit-impaired financial assets
2. Increase (decrease) in loss allowance resulting fromincurrence or collection
3. Direct write-off
4. Increase (decrease) due to changes in default rate
As of March 31, 2016

0

(USD)
Expected credit losses
Lifetime
Credit-impaired financial
Individual assessment
assets
－
－

－

－

－

－
－

－
－

－
－

－

－

－

－

－

－

－
0
0

－
－
－

－
－
－
(USD)

Expected credit losses
Gross carrying amount

12 months

As of March 31, 2015
1. Changes in financial instruments recognized at the
beginning of the period(a) Reclassified to lifetime expected credit losses(b) Reclassified to credit-impaired financial assets(c) Individual financial assets reclassified fromcredit-impaired financial assets
2. Incurrence or collection
3. Direct write-off
4. Other changes
As of March 31, 2016

8,875

Lifetime
Credit-impaired financial
Individual assessment
assets
－
－

－

－

－

－
－

－
－

－
－

－

－

－

－
－
－
8,875

－
－
－
－

－
－
－
－

(iii)There is no contractual, uncollected balance for financial assets written off during the fiscal year ended March 31, 2016, for which;however, collecting efforts are still being made.

Continued
46

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
4) Credit risk exposure(i) Trade and other receivables
2016 (March 31, 2016)

Performing receivables
Past due receivables
Total

Balance of receivables (gross)
JPY
USD
163,646
1,452,307
2,737
24,290166,384
1,476,606

Lifetime expected credit losses
JPY
USD
7
62
2,375
21,077
2,383
21,148Provision rate based on historicalcredit loss experience
0.00%
86.79%－

Past due receivables includes loans receivable of ¥1,969 million ($17,474 thousand), for which loss allowance of ¥1,688 million($14,980 thousand) is already recognized.
2015 (March 31, 2015)

Performing receivables
Past due receivables
Total

Balance of receivables (gross)
JPY
186,564
2,981
189,546

Lifetime expected credit losses
JPY

Provision rate based on historicalcredit loss experience
0.01%
88.96%
－

19
2,651
2,671

Past due receivables include loans receivable of ¥2,062 million, for which loss allowance of ¥1,733 million is already recognized.
Transition date (April 1, 2014)
Balance of receivables (gross)
JPY
Performing receivables
182,285
Past due receivables
3,188
Total
185,474

Lifetime expected credit losses
JPY

Provision rate based on historicalcredit loss experience
0.02%
84.00%
－

32
2,677
2,710

Past due receivables includes loans receivable of ¥2,156 million, for which loss allowance of ¥1,652 million is already recognized.
(ii) Other investments (Debt instrument securities)
2016 (March 31, 2016)
Gross carrying amount
Debt instrument securities
External rating

Lifetime

12 months

JPY
AAA-AAA
BBB-BB
B
Total

USD
－
－
－
－
－

JPY
－
－
－
－
－

USD
－
－
1,000
－
1,000

－
－
8,875
－
8,875

2015 (March 31, 2015)
Gross carrying amount
Debt instrument securities
External rating

Lifetime
JPY

12 months
JPY
－
－
－
－
－

AAA-AAA
BBB-BBB
Total

Continued
47

－
－
1,000
－
1,000

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Transition date (April 1, 2014)
Gross carrying amount
Debt instrument securities
External rating

Lifetime
JPY

12 months
JPY
－
－
－
－
－

AAA-AAA
BBB-BB
B
Total

－
－
1,000
－
1,000

5) Maximum exposure to credit risks
The Consolidated Group’s maximum exposure to credit risks is as follows:
The Consolidated Group’s maximum credit risk exposure (gross) represents the amount of the maximum exposure with respect to credit
risks without taking into account any collateral held or other credit enhancement. On the other hand, the Consolidated Group’s maximum
credit risk exposure (net) represents the amount of the maximum exposure with respect to credit risks reflecting the mitigation effect of
the collateral held or other credit enhancement.
As of March 31, 2016
Gross
carrying amount
Cash andcash equivalents
Financial assets
measured
at amortized cost
Trade andother receivables
Other financial
assetsOther investments
Total

Total collaterals
Maximum
pledged and credit
credit risk exposure (gross)enhancements
JPY
USD
JPY
USD

Loss
allowance
JPY

USD

Maximum
credit risk
exposure (net)
JPY
USD

JPY

USD

87,466776,234－－

87,466776,234－－

87,466776,234

166,384

1,476,606(2,383)(21,148)

164,001

1,455,458(290)(2,574)

163,710

1,452,875

7,657

67,953

－

－

7,657

67,953

－

－

7,657

67,953

1,000
262,508

8,875
2,329,677(0)(2,383)(0)(21,148)1,000
260,124

8,875
2,308,520

－
(290)

－
(2,574)1,000
259,834

8,875
2,305,946

The amount of loss allowance for credit-impaired financial assets is reduced by ¥290 million ($2,574 thousand) through collaterals
pledged and credit enhancements.
As of March 31, 2015

Cash and cash equivalents

Grosscarrying amountLossallowance

JPY

JPY

Maximum
credit risk exposure(gross)
JPY

Total collaterals
pledged and credit
enhancements
JPY

Maximum
credit risk
exposure (net)
JPY

66,485－66,485－66,485

189,546(2,671)

186,874(223)

186,651

Financial assets measured atamortized cost
Trade and other receivables
Other financial assets

9,250

－

9,250

－

9,250

Other investments

1,000

(0)

1,000

－

1,000

Total

266,282(2,671)

263,611(223)

263,388

The amount of loss allowance for credit-impaired financial assets is reduced by ¥223 million through collaterals pledged and credit
enhancements.

Continued
48

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
As of the transition date (April 1, 2014)
Gross
carrying amountLossallowance

Maximum
credit risk exposure(gross)Total collaterals
pledged and credit
enhancements

Maximum
credit risk
exposure (net)

JPY

JPY

JPY

JPY

JPY

Cash and cash equivalents

73,978－73,978－73,978

185,474(2,710)182,763(214)

182,548

6,663

－

6,663

－

6,663

Financial assets measured atamortized cost
Trade and other receivables
Other financial assets
Other investments

1,000

(0)

1,000

－

1,000

Total

267,115(2,710)264,404(214)

264,190

The amount of loss allowance for credit-impaired financial assets is reduced by ¥214 million through collaterals pledged and credit
enhancements.

(4) Liquidity risk management
The Consolidated Group raises funds through borrowings from financial institutions or issuance of bonds. Accordingly, in the event of a
disruption to the financial system or financial/capital markets, or a major downgrade of the Consolidated Group’s credit rating by a rating
agency, the Consolidated Group’s fundraising becomes constrained and consequently there is a possibility that the Consolidated Group will
not be able to carry out the payment on the date of payment.
The Consolidated Group has a sufficient levels of cash and cash equivalents and maintains a long-term (unused) commitment line agreementwith a major financial institution in the amount of ¥12.5 billion ($110,934 thousand) to ensure liquidity and stability of funds. The
Consolidated Group makes efforts to maintain good relationships with each financial institution.
1) Non-derivative financial liabilities
The breakdown of non-derivative financial liabilities by due date is presented as follows:
As of March 31, 2016
Within one year

Between one andfive years

JPY

USD

JPY

142,143

1,261,475

－

－

－

52

461

10,16490,202－

63,086559,869

52,942469,844

Lease obligations

486

4,313

1,108

Deposits received

3,028

26,873960

8,520

Trade and other payables
Bonds
Borrowings

Guarantee deposits received
Other
Total

Over
five years

USD

JPY

Total

USD

JPY

USD

－

142,143

1,261,475－

10,216

90,664

13,651

121,148

129,680

1,150,870

9,833

19

169

1,613

14,315

－

－

3,050

27,0686,079

53,949

19

169

1,377

12,2202,357

20,918

82

728

－

－

－

－

82

728

209,839

1,862,256

64,235570,066

18,098160,614292,173

2,592,945

The Consolidated Group has guarantee obligations of ¥1,477 million ($13,108 thousand), ¥2,716 million and ¥2,279 million
as of March 31, 2016, March 31, 2015 and the transition date, respectively.
As of March 31, 2015
Within one year

Between one andfive years

Overfive years

Total

JPY

JPY

JPY

JPY

Trade and other payables

159,522－－

159,522

Borrowings

67,14867,522

9,675

144,345

Lease obligations

711

1,307

134

2,153

Deposits received

3,153

－

3,206

6,359

890

19

1,301

2,212

Guarantee deposits received
Other
Total

529

－

－

529

231,956

68,84914,317315,123

Continued
49

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
As of the transition date (April 1, 2014)
Within one year

Between one andfive years

Overfive years

JPY

JPY

JPY

Total
JPY

Trade and other payables

150,518－－

150,518

Borrowings

82,25359,173

4,320

145,746

Lease obligations

813

1,075

23

1,913

Deposits received

2,604

－

3,328

5,933

927

18

1,282

2,228

Guarantee deposits received

107

－

－

107

237,224

60,267

8,955

306,447

Other
Total

2) Derivative liabilities
The breakdown of derivative liabilities by due date is presented as follows:
As of March 31, 2016

JPY

USD

Between one andfive years
JPY
USD

45,61748,013
2,396
264
77
2,738

404,837
426,100
21,264
2,343
683
24,299

2,378
2,528
149
765
0
915

Within one year
Current-related derivatives
Cash inflows
Cash outflows
Sub totalInterest rate-related derivatives
Commodity-related derivatives
Total

Over
five years
JPY
USD
－
－
－
90
－
90

21,104
22,435
1,322
6,789
0
8,120

Total

－
－
－
799
－
799

JPY

USD

47,99650,542
2,546
1,120
77
3,744

425,950
448,545
22,5959,940
683
33,227

As of March 31, 2015
Within one year
JPY
Current-related derivatives
Cash inflows
Cash outflows
Sub totalInterest rate-related derivatives
Commodity-related derivatives
Total

Between one andfive years
JPY

17,467
17,947
479
217
125
823

Over
five years
JPY

Total
JPY
－
－
－
92
－
92

176
177
0
691
0
692

17,644
18,124
480
1,001
126
1,608

As of the transition date (April 1, 2014)
Within one year
JPY
Current-related derivatives
Cash inflows
Cash outflows
Sub totalInterest rate-related derivatives
Commodity-related derivatives
Total

Between one andfive years
JPY

27,27927,601
322
309
299
930

416
419
2
434
0
437

Over
five years
JPY

Total
JPY
－
－
－
40
－
40

27,69628,021
324
784
299
1,408

(5) Market risk management
Since the Consolidated Group operates a broad array of businesses around the world, it is directly and indirectly affected by politicaldevelopments and economic conditions in countries where it has a presence, including changes in supply and demand situations. Operationsof the Consolidated Group are exposed to risks stemming from fluctuations in foreign exchange rate, interest rate, commodity price and shareprice.
In many cases, the foreign currency risk, interest rate risk and risk of price fluctuations associated with goods traded incidental to business
transactions are transferred to trade partners, etc. in the form of transaction terms. In addition, the Consolidated Group has established asystem under which a limit (position limit) and a loss limit are set for foreign exchange, funds (interest rates), products and their derivatives,
taking into account the scale of the risk and the income of each internal unit and company, so that it can quickly reduce its position when thepredetermined limit is exceeded.

Continued
50

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Also, the price fluctuation risk of these positions is mitigated by using derivatives as a hedge.
1) Foreign currency risk(i) Nature of foreign currency risk and its management policy
The Consolidated Group is engaged in foreign currency transactions in various currencies and terms incidental to its export andimport trading. The Consolidated Group not only transfers the risk of currency fluctuations to customers in accordance withtransaction terms but also participates in derivatives transactions such as forward contracts to reduce the risk.
The Company also has local subsidiaries and business corporations overseas. Account balances at these companies are converted into
yen at the exchange rates prevailing at the end of the reporting period, for the purposes of preparing consolidated financial statements.
As a result, net assets may change through exchange difference of foreign operations associated with exchange rate fluctuations.
In principle, the Company and its certain subsidiaries enter into forward exchange contracts to hedge against the exchange ratecurrency fluctuation risk of foreign currency-denominated receivables and payables that are controlled by currency and by contract
month. The Company and its certain subsidiaries also enter into forward exchange contracts to hedge against foreign
currency-denominated receivables and payables that is highly probable to arise from export/import-related forecast transactions.
(ii) Sensitivity analysis of foreign currency risk
In regards to financial instruments held by the Consolidated Group as of the end of the consolidated year, the following chart shows
the amounts affecting profit before tax and other comprehensive income (before tax effect adjustments), as reported in the
consolidated financial statements, that would result from 1% appreciation of yen against the U.S. dollar.
Such analysis is based on the assumption that other factors are held constant.
In addition, such analysis does not include the affected amounts based on translations (into Japanese yen) of financial
instruments denominated in functional currency, income and expenses denominated in foreign currency and assets and liabilities
of foreign operations.
JPY
2016
Profit before tax
U.S. dollar
Other comprehensive income
U.S. dollar

USD
2016

2015
1

(2)

9

174

262

1,544

2) Interest rate risk(i) Nature of interest rate risk and its management policy
The Consolidated Group raises most funds needed for operating and financing activities in the form of borrowings from financial
institutions at variable interest rates, with the exception of certain loans. Since these borrowings and fund management are exposed to
an interest rate risk, interest expenses by the Consolidated Group may increase with a rise in interest rates.
The Company and its certain consolidated subsidiaries enter into the interest rate swap contracts to avoid the interest rate fluctuation
risk stemming from the borrowings.
(ii) Sensitivity analysis of interest rate risk
In regards to financial instruments held by the Consolidated Group at the end of the reporting period, the following table shows theamount affecting profit before tax in the case that the interest rate increases by 1%.
Under the analysis, the amount affecting profit before tax is calculated by multiplying the net balance of floating rate financial
instruments as of March 31, 2016 and 2015 by 1%, without considering future changes in the net balance, currency exchange
fluctuations and dispersing effects for floating rate borrowings derived from the difference in timing of refinancing and resetting of
the interest rate, and based on the assumption that all the other variables are held constant.
JPY
2016
Profit before tax

3)

USD
2016

2015
(749)

(897)

(6,647)

Commodity price risk(i) Nature of commodity price risk and its management policy
In its mainstay commodity trading business in Japan and overseas, the Consolidated Group deals with grains and petroleum products
as well as electronic parts and information, communications and technology (ICT) products. Grains and petroleum products will be
influenced by the market conditions, while electronic parts and ICT products are exposed to the risk of frequent price erosion causedby competition and obsolescence resulting from technological innovation. When the positions in these commodities increase, theConsolidated Group will be exposed to the commodity price fluctuation risk stemming from rapid movements in commodities prices
or a decline in demand.
The Consolidate Group strives to reduce our exposure to price volatility by hedge-selling commodities, matching the quantity andtiming of buying and selling, and utilizing commodity-related derivatives for hedging purposes.

Continued
51

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(ii) Sensitivity analysis of commodity price risk
In regards to commodity-related derivatives held by the Consolidated Group at the end of the reporting period, the following tableshows the amount affecting profit before tax and other comprehensive income (before the tax effect) in the case that the commodity
price decreases by 1%.
The analysis is performed based on the assumption that all the other variables are held constant.
JPY
2016

USD
2016

2015

Profit before tax
Foods
Fuels
Other comprehensive income
Foods
Fuels

(58)
(52)
(5)
(4)
(4)
－

(51)
(37)
(14)
(0)
(0)
－

(515)
(461)
(44)
(35)
(35)
－

4) Share price risk(i) Nature of share price risk and its management policy
The Consolidated Group holds marketable securities, which are exposed to the market price fluctuation risk.
The Consolidated Group attempts to reduce share price risk by periodically reviewing its shares held by the Consolidated Group andselling those shares that it hold without strong rationale.
(ii) Sensitivity analysis of share price risk
In regards to listed shares held by the Consolidated Group at the end of the reporting period, the following table shows the amountaffecting other comprehensive income (before the tax effect) in the case that the share price decreases by 1%. The analysis isperformed based on the assumption that all the other variables are held constant.

JPY
2016

USD
2016

2015

Other comprehensive income

(140)

(132)

(1,242)(6) Fair value of financial instruments
1) Fair value measurement
Fair values of financial instruments are presented as follows:
While fair values are categorized into three levels of the fair value hierarchy depending on inputs to valuation techniques, its details
are described in “2. Basis of Preparing Consolidated Financial Statements: (4) Use of estimates and judgments”.
2) Financial instruments measured at amortized cost

2016
Type

Carrying amount
JPY

Financial assets
Trade and other receivables
Other investments (Debt
instrument securities)
Guarantee deposits
Other financial assets
Total
Financial liabilities
Bonds and borrowings
Long-term lease obligations
Long-term deposits received
Long-term guarantee
deposits received
Total

2015

460

USD

Carrying
amountFair value
JPY

4,082

460

1,000

8,875

3,814
1,626
6,901

33,84814,43061,24474,877
1,025
3,050

664,510
9,097
27,068USD

Fair value
JPY

Transition date
Carrying
Fair value
amount
JPY

4,082

388

388

135

135

1,000

8,875

1,000

1,000

1,000

1,000

3,814
1,626
6,901

33,84814,43061,244

3,893
1,588
6,870

3,893
1,588
6,870

3,921
563
5,620

3,921
563
5,620

75,7461,015
3,050

672,222
9,008
27,06874,426
1,286
3,206

74,636
1,286
3,206

61,113
1,032
3,328

61,222
1,038
3,328

1,396

12,3891,396

12,389

1,321

1,321

1,301

1,301

80,351

713,090

81,209720,705

80,24180,451

66,776

66,890The carrying amounts of short-term trade and other receivables, other short-term financial assets, short-term trade and other payables,
short-term bonds and borrowings and other short-term financial liabilities, all of which are measured at amortized cost, approximate theirfair values; therefore, those amounts are not included in the table above.

Continued
52

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
The fair values stated above are calculated as follows:(i) Trade and other receivables
The fair value of trade and other receivables is the present value of future cash flows discounted by an interest rate that reflects time
to maturity and credit risk.
(ii) Other investments (Debt securities)
The fair value of other investments is the present value of future estimated cash flows discounted by an interest rate applicable tosimilar financial assets.
(iii)Guarantee deposits received
The fair value of guarantee deposits received is the present value of future cash flows discounted by an interest rate that reflects time
to maturity and credit risk.
(iv) Other financial assets
The fair value of other financial assets is the present value of future cash flows discounted by an interest rate that reflects time tomaturity and credit risk.
(v) Bonds and borrowings
The fair value of bonds is determined based on their market price.
The fair value of borrowings is the present value of the sum of principal and interest payments discounted using an assumed interest
rate on equivalent incremental borrowings.
(vi) Long-term lease obligations
The fair value of the long-term deposits received is the present value of future cash flows discounted by an interest rate that reflects
time to maturity and credit risk.
(vii) Long-term deposits received
The fair value of long-term deposits received is the present value of future cash flows discounted by an interest rate that reflects time
to maturity and credit risk.
(viii) Long-term guarantee deposits received
The fair value of long-term guarantee deposits received is the present value of future cash flows discounted by an interest rate thatreflects time to maturity and credit risk.
Financial assets and liabilities measured at amortized cost are categorized within Level 2 of the fair value hierarchy.
3) Financial instruments measured at fair value(i) Analysis of fair value by hierarchy level
The following tables provide the breakdown by hierarchy level of financial assets and liabilities that are measured at fair value on arecurring basis. No financial assets and liabilities are measured at fair value on a non-recurring basis. There were no materialtransfers between different levels for the fiscal years ended March 31, 2016 and March 31, 2015.
As of March 31, 2016
Level 1JPY
AssetsOther investments
Financial assets measured atfair value through profit or
loss
Stock
Financial assets measured atfair value through othercomprehensive income
Stock
Other financial assets
Derivative transactions:
Foreign exchangeInterest rate
Commodity
Liabilities
Other financial liabilities
Derivative transactions:
Foreign exchangeInterest rate
Commodity
Total

Level 2USD

JPY

Level 3
USD

JPY

Total
USD

JPY

USD

－

－

－

－

5,637

50,027

5,637

50,027

14,061

124,787－－

10,836

96,16624,897

220,953

－
－
174

－
－
1,544

200
－
4

1,775
－
35

－
－
－

－
－
－

200
－
179

1,775
－
1,589

－
－
(63)
14,172－－(559)
125,772(2,546)(1,205)(14)(3,561)(22,595)(10,694)(124)(31,603)－－－
16,474－－－
146,202(2,546)(1,205)(77)
27,084(22,595)(10,694)(683)
240,362

Continued
53

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
As of March 31, 2015
Level 1JPY
AssetsOther investments
Financial assets measured at fair value
through profit or loss
Stock
Financial assets measured at fair value
through other comprehensive income
Stock
Other financial assets
Derivative transactions:
Foreign exchangeInterest rate
Commodity
Liabilities
Other financial liabilities
Derivative transactions:
Foreign exchangeInterest rate
Commodity
Total

Level 2JPY

Level 3
JPY

Total
JPY

－

－

6,425

6,425

13,260－12,362

25,623

－
－
157

2,845
－
21

－
－
－

2,845
－
178

－
－
(112)
13,305

(480)
(814)
(13)
1,557

－
－
－
18,788

(480)
(814)
(126)
33,651

As of the transition date (April 1, 2014)
Level 1JPY
AssetsOther investments
Financial assets measured at fair value
through profit or loss
Stock
Financial assets measured at fair value
through other comprehensive income
Stock
Other financial assets
Derivative transactions:
Foreign exchangeInterest rate
Commodity
Liabilities
Other financial liabilities
Derivative transactions:
Foreign exchangeInterest rate
Commodity
Total

Level 2JPY

Level 3
JPY

Total
JPY

－

－

6,341

6,341

9,187

－

10,19819,386

－
－
260

1,233
－
3

－
－
－

1,233
－
263

－
－
(298)
9,148

(324)
(712)
(0)
199

－
－
－
16,539

(324)
(712)
(299)
25,887The methods of determining the fair value of the above instruments are described as follows:(a) Other investments
The fair value of listed shares is the quoted price in an active market, and is categorized within fair value hierarchy Level 1.
The fair value of unlisted shares is calculated using valuation methods including discounted future cash flow, market prices ofcomparable companies, net asset value, and other valuation methods, and is categorized within fair value hierarchy Level 3. Measuring
the fair value of unlisted shares involves the use of unobservable inputs such as discount rate and valuation multiples, as well as any
necessary adjustments including discounts for a lack of liquidity.
The Company determines the policies and procedures for measuring the fair value of unlisted shares, and reviews the approach tomeasuring fair value including the valuation model, by obtaining the information on business operation and business plans associatedwith each equity issuer and confirming the data from comparable public companies.
(b) Derivative financial assets and liabilities
Currency-related derivatives
The fair value of forward exchange transactions is calculated based on the forward exchange rate at the end of the fiscal year.

Continued
54

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Interest rate-related derivatives
The fair value of interest-rate swaps is the present value of future cash flow discounted by an interest rate that reflects time to settlement,
as well as market situations.
Commodity-related derivatives
The fair value of commodity futures transactions is calculated using final prices on commodities exchanges as of the fiscal year-end.
The fair value of commodity swap transactions is calculated based on the index prices publicly announced at the end of the fiscal year.
Commodity futures transactions are categorized within Level 1 of fair value hierarchy. All other derivative financial assets and liabilities
are categorized within Level 2 of the fair value hierarchy.
(ii)

Recurring fair value measurements categorized within Level 3 of the fair value hierarchy
The Charges in financial assets and liabilities that are measured at fair value on a recurring basis and are categorized within Level 3 ofthe fair value hierarchy are presented as follows. There were no material transfers between different levels for the years ended March
31, 2016 and March 31, 2015.

Beginning balance
Total gains or losses
Profit or loss (Note 1)
Other comprehensive
income (Note 2)
Purchase
Sale
Other
Foreign currencytranslation difference
Increase (decrease) due tochanges in scope of
consolidation
Ending balance

FVTPL
JPY
USD
6,425
57,0202016
Other investments
FVTOCI
JPY
USD
12,362
109,709

Total
JPY
USD
18,788
166,738

2015
Other investments
FVTPL
FVTOCI
JPY
JPY
6,341
10,198

Total
JPY
16,539(323)(2,867)

－

－

(323)

(2,867)

(889)

－

(889)

－

－

(1,577)(13,995)(1,577)(13,995)

－

2,097

2,097

－
－

－
－

524
(472)

4,650
(4,189)

524
(472)

4,650
(4,189)

－
－

24
(8)

24
(8)

(375)

(3,328)

－

－

(375)

(3,328)

974

－

974

(89)

(790)

0

0

(89)

(790)

－

50

50

5,637

50,027

10,836

96,166

16,474

146,2026,425

12,362

18,788FVTPL: Financial assets measured at fair value through profit or loss
FVTOCI: Financial assets measured at fair value through other comprehensive income(Notes) 1. The gains or losses are included in “Other finance income” or “Other finance costs” in the consolidated statements of income. Of
those gains or losses recognized in profit or loss, the amounts arising from financial instruments that were held at the period end are¥(323) million ($(2,867) thousand) for the fiscal year ended March 31, 2016 and ¥(889) million for the fiscal year ended March 31,
2015.
2. The gains or losses recognized in other comprehensive income are included in “Financial assets measured at fair value throughother comprehensive income” in the consolidated statements of comprehensive income.
(iii) Quantitative Information about the financial instruments categorized within fair value hierarchy Level 3
The following tables present quantitative information on the material assets categorized within Level 3 of the fair value hierarchy,
which were measured at fair value on a recurring basis.
As of March 31, 2016
Fair value
Category

JPY

USD

Valuation techniqueSignificant
unobservable inputs

Weighted
average of input
valuesFinancial assets measured at fairvalue through profit or loss

5,637

50,027

Discounted cash flow
methodDiscount rate

3.5%

Financial assets measured at fairvalue through othercomprehensive income

9,733

86,377

Market multiple method

P/B ratio
Illiquidity discount

1.1 times
30.0%

Financial assets measured at fairvalue through othercomprehensive income

1,103

9,789

Net asset value method－－

Continued
55

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
As of March 31, 2015
Fair value(JPY)

Category

Valuation techniqueSignificant unobservable
inputs

Weighted
average of input
valuesFinancial assets measured at fair value
through profit or loss

6,336

Discounted cash flow
methodDiscount rate

3.5%

Financial assets measured at fair value
through profit or loss

89

Market multiple method

P/B ratio
Illiquidity discount

1.4 times
30.0%

Financial assets measured at fair value
through other comprehensive income

11,597

Market multiple method

P/B ratio
Illiquidity discount

1.4 times
30.0%

Financial assets measured at fair value
through other comprehensive income

764

Net asset value method－－

Significant unobservable
inputs

Weighted
average of input
values

As of the transition date (April 1, 2014)
Fair value(JPY)

Category

Valuation technique

Financial assets measured at fair value
through profit or loss

6,276

Discounted cash flow
methodDiscount rate

4.1%

Financial assets measured at fair value
through profit or loss

64

Market multiple method

P/B ratio
Illiquidity discount

1.3 times
30.0%

Financial assets measured at fair value
through other comprehensive income

9,484

Market multiple method

P/B ratio
Illiquidity discount

1.2 times
30.0%

Financial assets measured at fair value
through other comprehensive income

713

Net asset value method－－

The significant unobservable inputs used in measuring the fair value of unlisted shares are the discount rate, illiquidity discount and P/B ratio(price-to-book ratio). A substantial increase (or decrease) in the discount rate or illiquidity discount causes the fair value to substantially fall(or rise), while a substantial increase (or decrease) in the P/B ratio causes the fair value to substantially rise (or fall).

(7) Financial assets measured at fair value through other comprehensive income
With respect to investments in equity instruments held for the purpose of maintaining and strengthening relationships with business partners,
the Consolidated Group has designated such investments as financial assets to be measured at fair value through other comprehensive income
in view of the holding purpose.
1) Fair value of major items of investment
The following tables present the fair value of major items of investment in equity instruments designated as financial assets measured atfair value through other comprehensive income.
As of March 31, 2016
AmountName of issue

JPY

USD

MARUDAI FOOD CO., LTD.

2,620

23,252

Tokio Marine Holdings, Inc.

2,277

20,208Nissin Seifun Group Inc.

1,628

14,448

BOT Lease Co., Ltd.

1,311

11,635

Sotsu Corporation

1,258

11,164The Norinchukin Bank

1,100

9,762

SHIN KURUSHIMA DOCKYARD CO., LTD.

1,099

9,753

DAIO PAPER CORPORATION

728

6,461

GUANGZHOU SHOWA AUROPARTS CO., LTD.

590

5,236

F.C.C. Co., Ltd.

588

5,218

11,692

103,763

Other

Continued
56

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
As of March 31, 2015
AmountName of issue

JPY

Tokio Marine Holdings, Inc.

2,714

Sotsu Corporation

1,617

BOT Lease Co., Ltd.

1,491

Nissin Seifun Group Inc.

1,286

SHIN KURUSHIMA DOCKYARD CO., LTD.

1,201

MARUDAI FOOD CO., LTD.

1,132

GUANGZHOU SHOWA AUTOPARTS CO., LTD.

914

DAIO PAPER CORPORATION

791

The Norinchukin Bank

762

Nippon Manufacturing Service Corporation

602

Other

13,107

As of the transition date (April 1, 2014)
AmountName of issue
JPY
Tokio Marine Holdings, Inc.

1,791

Sotsu Corporation

1,498

BOT Lease Co., Ltd.

1,088

SHIN KURUSHIMA DOCKYARD CO., LTD.

1,046

DAIO PAPER CORPORATION

952

Nissin Seifun Group Inc.

938

MARUDAI FOOD CO., LTD.

848

The Norinchukin Bank

713

GUANGZHOU SHOWA AUTOPARTS CO., LTD.

530

MARUICHI STEEL TUBE LTD.

499

Other

9,478

2) Dividend income
JPY
2016
Investments derecognized during the year
Investments held at the end of the year
Total

USD
2016

2015
7
772
779

0
709
709

62
6,851
6,913

3) Financial assets measured at fair value through other comprehensive income that were derecognized during the fiscal year
The Consolidated Group periodically reviews its holding shares and selling those shares that it holds without strong
rationale with gains or losses on sale recognized in other comprehensive income. The following table presents the fair valueon the date of sale and cumulative gains or losses on sale.
JPY2016
Fair value on the date of sale
Cumulative gains (losses) on sale

USD
2016

2015
605
393

Continued
57

238
106

5,369
3,488

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
4) Reclassification to retained earnings
The Consolidated Group reclassifies to retained earnings cumulative gains or losses arising from changes in the fair value of financial
assets measured at fair value through other comprehensive income in either of the following cases: when an investment is disposed of; orwhen there is a significant decline in the fair value. Such cumulative gains or losses in other comprehensive income that were reclassified
to retained earnings for the years ended March 31, 2016 and March 31, 2015 were ¥275 million ($2,441 thousand) and ¥76 million,
respectively.

(8) Hedge Accounting(Cash Flow Hedge)
A Cash flow hedge is a hedge of the exposure to variability in future cash flow arising from a forecast transaction or recognized assets or
liabilities. While a hedge is designated as cash flow hedge as long as the hedge is effective, the changes in the fair value of qualifying
hedging instrument should be recorded as the other comprehensive income in the Consolidated Statement of Comprehensive Income. The
Consolidated Group continues such accounting treatment until variability in future cash flow arising from unrecognized forecast transaction
or recognized assets or liabilities designated as hedged item are recorded in profit or loss. Moreover, portions determined to be ineffective as
hedging accounting are recognized in profit or loss.
The Company and its certain consolidated subsidiaries designate the following instruments as cash flow hedge: forward exchange contracts
to fix cash flows from foreign currency denominated receivables and payables, foreign currency denominated firm commitment and foreign
currency denominated forecast transactions; interest rate swap to fix variable interest rate on floating rate financial liabilities; and commodity
future to fix cash flow from forecast transactions of commodity trade.
When applying hedge accounting, the Consolidated Group confirms that there are economic relationship between the hedged items andhedging instruments through qualitative assessments, which show whether the critical terms of the hedging instruments and the hedged items
match exactly or are closely aligned, and quantitative assessments, which show fluctuations of value of hedged item and hedging instruments
by the same risk offset each other, in order to confirm there are economic relationship that variability in fair value or cash flows of thehedged items that are attributable to the hedged risk shall be offset by the changes in fair value or cash flows of the hedging instruments . The
Consolidated Group also establish appropriate hedge ratios considering an economic relationship between hedging instruments and hedged
item as well as risk management strategy.
The amounts recognized in profit or loss for the ineffective portion of the hedge are not material both for the fiscal years ended March 31,
2016 and March 31, 2015. In addition, the amounts reclassified from valuation difference on cash flow hedge to profit or loss are either notmaterial because the forecast transactions are no longer expected to occur.
Followings are the carrying amount of the hedging instruments for the years ended March 31, 2016, March 31, 2015 and the transition date.
The fair value of financial assets related to hedging instruments is included in “Other financial assets” while the fair value of financial
liabilities related to hedging instruments is included in “Other financial liabilities (current)” or “Other financial liabilities (non-current)” in
the consolidated statements of financial position.

Continued
58

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
As of March 31, 2016
Carrying amount
Derivative assets
Derivative liabilities
JPY
USD
JPY
USD

Notional amount
JPY
Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

USD

20,883

185,330

58

515

764

6,780

29,000257,366

－

－

1,205

10,694

547

4,854

16

142

4

35

As of March 31, 2015
Carrying amount
Derivative assets
Derivative liabilities
JPY
JPY

Notional amount
JPY
Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

28,0371,191

50

28,454

－

814

392

15

54

As of the transition date (April 1, 2014)
Carrying amount
Derivative assets
Derivative liabilities
JPY
JPY

Notional amount
JPY
Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

24,154280

30

28,531

－

337

946

92

98

The following tables present the carrying amounts of cash flow hedge reserve as of March 31, 2016, March 31, 2015 and the transition date.
As of March 31, 2016
Cash flow hedge reservefor continuing hedges(before tax)
JPY
USD
Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

Cash flow hedge reservefor discontinuing hedge accounting(before tax)
JPY
USD

(706)

(6,266)－－(1,205)(10,694)

－

－

12

106

(51)

(453)

As of March 31, 2015
Cash flow hedge reservefor continuing hedges(before tax)
JPY
Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

Cash flow hedge reservefor discontinuing hedge accounting(before tax)
JPY
1,141

－

(814)

－

(38)

(82)

As of the transition date (April 1, 2014)
Cash flow hedge reservefor continuing hedges(before tax)
JPY
Foreign currency risk
Forward exchange contracts
Interest rate risk
Interest rate swap contracts
Commodity price risk
Commodity futures contracts

Continued
59

Cash flow hedge reservefor discontinuing hedge accounting(before tax)
JPY
250

－

(337)

(375)

(6)

(0)

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
The following tables present the carrying amounts of transactions that affected the consolidated statements of comprehensive income as a resultof applying the hedge accounting for the fiscal years ended March 31, 2016 and March 31, 2015.
Fiscal year ended March 31, 2016 (from April 1, 2015 to March 31, 2016)
Change in value of hedging
instruments recognized in othercomprehensive income
JPY
USD
Foreign currency risk
Forward exchange contracts(745)(6,612)
Interest rate risk
Interest rate swap contracts(396)(3,514)
Commodity price risk
Commodity futures contracts
44
390
Fiscal year ended March 31, 2015 (from April 1, 2014 to March 31, 2015)
Change in value of hedging
instruments recognized in othercomprehensive income
JPY
Foreign currency risk
Forward exchange contracts
1,123Interest rate risk
Interest rate swap contracts(185)
Commodity price risk
Commodity futures contracts(120)

Reclassification from cash
flow hedge reserve to profit or
loss
JPY
USD

Line item for which profit orloss was affected byreclassification(1,102)(9,780)

Other income

544Interest expenses

37

328

Cost of revenues

Reclassification from cash
flow hedge reserve to profit or
loss
JPY

Line item for which profit orloss was affected byreclassification(232)

Other income

83

Interest expenses

6

Cost of revenues(9) Transfer of financial assets
The Consolidated Group liquidates certain trade receivables by discounting notes or the like. However, with respect to some liquidated
receivables, the Consolidated Group may be obligated to make payments as recourse for non-payment by the debtor. The Consolidated
Group continues to recognize such liquidated receivables as they do not meet the criteria for derecognition of financial assets.
The Consolidated Group recognized such liquidated assets as “Trade and other receivables” in the amounts of ¥1,771 million ($15,717
thousand) and ¥2,735 million as of March 31, 2016 and March 31, 2015, respectively. In addition, liabilities relating to the deposit amounts
which arose upon the transfer of such assets were accounted for as “Bonds and borrowings” in the amounts of ¥1,771 million ($15,717
thousand) and ¥2,735 million as of March 31, 2016 and March 31, 2015, respectively. Such liabilities are settled when payments for suchliquidated assets are made, and the Consolidated Group may not use such liquidated assets until such settlement occurs.
It is noted that due to the exceptions to the retrospective application of IFRS 1 applicable to entities adopting IFRSs for the first time, therequirements regarding derecognition of financial assets and liabilities apply to transactions occurring on and after the transition date (but not
before the transition date). Therefore, as of the transition date, such liquidated assets were derecognized in accordance with accounting
principles generally accepted in Japan.

(10) Offsetting financial assets and financial liabilities
The following tables present the financial assets and financial liabilities recognized for the same counterparties including financial
instruments that were not offset even though they were covered by an enforceable master netting arrangement or similar agreement because
they did not meet some or all of the offsetting criteria as of March 31, 2016, March 31, 2015 and the transition date.

JPY
2015

2016
Amounts of financial assets presented in the
consolidated statements of financial position
Foreign exchangeInterest rate
Commodity
Amounts that were not offset even though they werecovered by an enforceable master netting arrangement
or similar agreement because they did not meet someor all of the offsetting criteria
Net amounts

Transition date

USD
2016

379

3,024

1,497

3,364

200
－
179

2,845
－
178

1,233
－
263

1,775
－
1,589

(186)

(352)

(563)

(1,651)

192

2,671

934

1,704

Continued
60

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
JPY
2015

2016
Amounts of financial liabilities presented in the
consolidated statements of financial position
Foreign exchangeInterest rate
Commodity
Amounts that were not offset even though they werecovered by an enforceable master netting
arrangement or similar agreement because they did
not meet some or all of the offsetting criteria
Financial collateral pledged
Net amounts

Transition date

USD
2016

3,829

1,421

1,336

33,981

2,546
1,205
77

480
814
126

324
712
299

22,595
10,694
683

(186)

(352)

(563)

(1,651)

(4)
3,638

(30)
1,037

(39)
734

(35)
32,286

Certain financial assets and financial liabilities have not been offset because they do not meet some or all of the criteria for offsetting
financial assets and financial liabilities. The rights to offset such financial assets and financial liabilities become enforceable only underparticular circumstances, such as when the other party fails to discharge an obligation due to its bankruptcy or other such reasons.

Continued
61

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
31. Lease(1) Lessee
1) Finance leases
The Consolidated Group leases the computer-related equipment for the enterprise system (tools, furniture and fixtures) and other assets
under the finance leases.
The carrying amounts of the leased assets, net of accumulated depreciation and accumulated impairment losses, as ofMarch 31, 2016, March 31, 2015 and the transition date are as follows:
JPY
2015

2016
Machinery, equipment, vehicle, tools and fixtures
Other
Total

1,218
58
1,276

USD
2016

Transition date
1,073
39
1,113

1,463
69
1,533

10,809515
11,324

The future minimum lease payments under the finance lease as of March 31, 2016, March 31, 2015 and the transition dateare as follows:
Future minimum lease payments
JPY

USD

486

711

Transition
date
813

1,108

1,307

1,075

9,833

997

1,170

1,015

8,848

19
1,613
(163)

134
2,153
(228)

23
1,913
(113)

169
14,315(1,447)

18
1,449

115
1,924

22
1,799

160
12,859

1,449

1,924

1,799

12,8592016
Within one year
Between one and five
years
Over five years
Total
Less future finance costs
Present value of future
minimum lease
payments

USD

Present value of
future minimum lease payments
JPY
Transition
2016
2015
date
433
638
761

2015

2016
4,313

2016
3,843

The future minimum lease payments receivable under the non-cancelable subleases as of March 31, 2016 and March 31, 2015 and thetransition date are ¥54 million ($479 thousand), ¥248 million and ¥612 million, respectively.
2) Operating leases
The Consolidated Group leases office buildings and system equipment and other assets as cancellable or non-cancellable
operating leases. The future minimum lease payments for non-cancellable operating leases as of March 31, 2016, March 31,
2015 and the transition date are as follows:
JPY
2015

2016
Within one year
Between one and five years
Over five years
Total

10
19
－
30

USD
2016

Transition date
10
31
－
42

13
39
－
53

89
169
－
266

The total lease payments recognized as expenses under the cancellable or non-cancellable operating leases for the fiscal year ended
March 31, 2016 and March 31, 2015 are ¥5,981 million ($53,080 thousand) and ¥5,660 million, respectively.
The future minimum lease payments receivable under the non-cancelable subleases as of March 31, 2016 and March 31, 2015 and thetransition date are ¥38 million ($337 thousand), ¥44 million and ¥50 million, respectively.

Continued
62

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(2) Lessor
1) Finance leases
The Consolidated Group leases out machinery, equipment and other assets that are classified as finance lease. The future
minimum lease payments receivable under the finance lease as of March 31, 2016 and March 31, 2015 and the transition
date are as follows:

Within one year
Between one and five
years
Over five years
Total
Unguaranteed residual
value
Less
future financeincomePresent value of future
minimum lease
payments receivable

Future minimum lease payments receivableand unguaranteed residual value
JPY
USD
Transition
2016
2015
2016
date
4
2
2
35

Present value of
future minimum lease payments receivable
JPY
USD
Transition
2016
2015
2016
date
3
1
1
27

17

9

9

151

12

6

6

106

13
35

6
18

9
21

115
311

8
23

4
12

6
14

71
204

－

－

－

－

(12)

(6)

(7)

(106)

23

12

14

204

32. Pledged Assets(1) Pledged assets and associated secured obligations
Details of pledged assets and associated secured obligations are as follows:
JPY
2015

2016
Pledged assets:
Trade receivables
Other financial assets (non-current)
Property, plant and equipment
Total
Associated secured obligations:Short-term borrowings (current)Long-term borrowings (non-current)
Other
Total

Transition date

USD
2016

－
23
653
676

303
3
909
1,215

229
6
907
1,143

－
204
5,795
5,999

1,806
231
1
2,039

1,150
－
1
1,151

750
500
3
1,253

16,0282,050
918,095

Trust receipts issued under customary import financing arrangements give banks a security interest in the goods imported or sales proceeds
resulting from the sales of the goods. However, due to the large volume of transactions, it is impracticable to determine the aggregate
amounts of assets covered by outstanding trust receipts and those transactions were not included in the above amounts.

(2) Assets pledged in lieu of guarantee money
The breakdown of assets pledged in lieu of guarantee money or the like is as follows:
JPY
2015

2016
Assets pledged in lieu of guarantee money orguarantee funds
Other financial assets (current)
Other financial assets (non-current)
Other investments
Total

71
14
2,692
2,779

Transition date

3
14
3,125
3,143

Continued
63

18
－
2,134
2,152

USD
2016

630
124
23,891
24,663

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
33. Contingent Liabilities
The Consolidated Group is contingently liable for guarantees on bank borrowings and trade payables owed by entities that do not belong to
the Consolidated Group.
The Group may become responsible for the amounts that are unpayable by the borrower and for losses attached to the unpayableamounts.
JPY
2015

2016
Debt guarantees for equity method investees
Debt guarantees for third parties
Total

489
988
1,477

1,812
904
2,716

USD
2016

Transition date
1,278
1,001
2,279

4,340
8,768
13,108The above amounts include those for quasi-guarantee acts.

34. Significant Subsidiaries(1) Significant subsidiaries of the Company are as follows:
Trade nameLocation

Detail of major operations

Percentage of voting rights (%)
Transition
2015
date

2016

(Consolidated subsidiaries)[Electronics & Devices]
Kanematsu Electronics
Ltd.

Chuo-ku, Tokyo,
Japan

System integration of ICT andcommunications equipment

58.32(0.40)

58.32(0.40)

58.32(0.40)

Nippon Office Systems
Ltd.

Chuo-ku, Tokyo,
Japan

Development of software for and sales andmaintenance of computers and computer
peripherals, etc.

100.00(100.00)

96.55(96.55)54.65(54.65)

Kanematsu
Communications Ltd.

Shibuya-ku, Tokyo,
Japan

Sales of mobile communications devices;
Mobile internet systems and services

100.00100.00100.00Kanematsu Granks,
Corp.

Shinjuku-ku, Tokyo,
Japan

Mobile contents delivery and mobile-related
solution business

89.05(89.05)

82.43(82.43)

82.43(82.43)Kanematsu BD
Communications
LimitedKurume-shi, Fukuoka,
Sales of mobile communication deviceJapan

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu-NNK Corp.

Chuo-ku, Tokyo,
Japan

Manufacture and sales of home-construction
materials; Ground inspection services andimprovement work; Sales of security systems

52.96

52.97

32.17

Kanematsu Advanced
Materials Corp.

Chuo-ku, Tokyo,
Japan

Import, export, storage, sales, and processingof materials and components for vehicle
equipment, industrial electronics, andcommunication devices

100.00100.00－Tanashin (Europe)GmbH

Dusseldorf,
Germany

Sales and maintenance of parts for car audio
systems

100.00(20.00)100.00(20.00)100.00(20.00)

Kanekoh Electronics(Shanghai) Co., Ltd.

Shanghai,China

Development, manufacture, and sales ofcontrol modules for lithium ion batteries

70.00

70.00

70.00

Kanematsu Industrial
and Trading (Dalian
F.T.Z.) Co., Ltd.

Dalian, China

Manufacture of materials for electronic
precision parts and import, export and sales ofelectronic components

100.00(100.00)

100.00100.00Continued
64

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Trade nameLocation

Detail of major operations

Percentage of voting rights (%)
Transition
2016
2015
date

[Foods & Grain]
Kanematsu Shintoa
Foods Corp.

Minato-ku, Tokyo,
Japan

Food wholesaling and cold storage

100.00100.00100.00Kanematsu Agritec
Co., Ltd.

Matsudo-shi, Chiba,
Japan

Manufacture and sales of feed and fertilizer

100.00100.00100.00Kanematsu Soytech
Corp.

Sales of soybeans, pulses & peas, and grain;
Chuo-ku, Osaka, Japan Development and marketing of tofu and otheringredients for processed foods

100.00100.00100.00

North Pet Co., Ltd.

Yubari-gun, Hokkaido, Manufacture of pet snacks (jerky, dried meat,Japanbiscuits)

100.00100.00－KG Agri Products, Inc.

Delaware,
U.S.A.

Seed development; Contract farming; Sorting,processing, and sales of food soybeans

100.00100.00100.00Kai Enterprises, Inc.

Washington,
U.S.A.

Sales of hay and roughage

100.00(15.00)100.00(15.00)100.00(15.00)P.T. Kanemory Food
ServiceSerang,Indonesia

Manufacture of processed foods; Managementof central kitchen

59.90(10.00)59.90(10.00)59.90(10.00)[Steel, Materials & Plants]
Kanematsu Trading
Corp.

Chuo-ku, Tokyo, Japan Sales of steel and construction materials

100.00100.00100.00

Kyowa Steel Co., Ltd.

Kasai-shi, Hyogo,Japan

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu Chemicals
Corp.

Sales of petrochemicals, automobile-related
Chuo-ku, Tokyo, Japan chemicals, health food ingredients, andpharmaceuticals

100.00100.00100.00Kanematsu Wellness
Corp.

Chuo-ku, Tokyo, Japan

Sales of health foods and provision of medical
information

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu Petroleum
Corp.

Chiyoda-ku, Tokyo,
Japan

Sales of petroleum products and LPG

100.00100.00100.00Kanematsu Yuso Co.,Ltd.

Chiyoda-ku, Tokyo,
Japan

Delivery and storage of petroleum products

100.00100.00100.00Kanematsu KGK Corp.

Nerima-ku, Tokyo,
Japan

Sales of machine tools and industrial
machinery

97.89

97.89

97.89

Benoit Holding
Company

Delaware,
U.S.A.

Holding company

85.18(85.18)85.18(85.18)85.18(85.18)

Benoit Premium
Threading, LLC

Delaware,
U.S.A.

Oil well casing fabrication; Manufacture andsales of oil well-related parts

54.00(54.00)54.00(54.00)54.00(54.00)

Steel Service
Oilfield Tubular, Inc.

Oklahoma,
U.S.A.

Sales of steel materials for oil excavation

51.00(51.00)51.00(51.00)51.00(51.00)KGK International
Corp.

Illinois,
U.S.A.

Sales of machine tools

100.00(100.00)

100.00(83.67)100.00(83.67)

Cutting and processing of steel sheet; Sales of
construction materials

Continued
65

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Trade nameLocation

Detail of major operations

Percentage of voting rights (%)
Transition
2016
2015
date

[Motor Vehicles & Aerospace]
Kanematsu Aerospace
Corp.

Minato-ku, Tokyo,
Japan

Sales of aircraft, defense, andaerospace-related products

100.00100.00100.00Aries Motor Ltd.

Warsaw, Poland

Sales of automobiles

93.59

93.59

93.59

Aries Power
Equipment Ltd.

Warsaw, Poland

Sales of engines, generators, water pumps,
and other general-purpose machinery

60.00

60.00

60.00

KG Aircraft Rotables
Co., Ltd.

Dublin, Ireland

Replacement and maintenance of aircraft
rotable components; Leasing

96.67

86.67

86.67

Aso Kanko Kaihatsu
Co., Ltd.

Minato-ku, Tokyo,
Japan

Golf course management

100.00100.00100.00

Shintoa Corp.

Chiyoda-ku, Tokyo,
Japan

Beverage-vending machine operations;
Imports, exports, and sales of aircraft engines

100.00100.00100.00Kanematsu Logistics &Insurance Ltd.

Chuo-ku, Tokyo,
Japan

Insurance agency and forwarding business;
Consigned freight forwarding business100.00100.00100.00[Others][Overseas local subsidiaries]
Kanematsu USA Inc.

New York,
U.S.A.

Export, import and sales of merchandise

100.00100.00100.00Kanematsu (HongKong) Ltd.

Hong Kong,
China

Export, import and sales of merchandise

100.00100.00100.00Kanematsu(China) Co.,Ltd.

Shanghai, China

Export, import and sales of merchandise

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu(Thailand)Ltd.

Bangkok,ThailandExport, import and sales of merchandise

100.00(100.00)

100.00(100.00)

100.00(100.00)

Watana Inter-Trade
Co., Ltd. *1

Bangkok,ThailandExport, import and sales of merchandise

49.00(49.00)49.00(49.00)49.00(49.00)Kanematsu (Singapore)
Pte. Ltd.

Singapore,
Singapore

Export, import and sales of merchandise

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu Taiwan
Corp.

Taipei, Taiwan

Export, import and sales of merchandise

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu Europe Plc

London, U.K.

Export, import and sales of merchandise

100.00(100.00)

100.00(100.00)

100.00(100.00)

Kanematsu GmbH

Dusseldorf,
Germany

Export, import and sales of merchandise

100.00100.00100.00Kanematsu Australia
Ltd.

Sydney,Australia

Export, import and sales of merchandise

100.00100.00100.00Kanematsu New
Zealand Ltd.

Auckland,
New Zealand

Export, import and sales of merchandise

100.00100.00100.00Notes: 1
2

Although the percentage of the Consolidated Group’s voting rights for the company marked with *1 is not more than 50%, it istreated as a subsidiary because the Consolidated Group has a substantial control over the company.
The figures in the parenthesis in “Percentage of voting rights” indicate the indirect ownership ratio included in the total.

Continued
66

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(2) Non-controlling interests
The subsidiary with non-controlling interests that are significant for the Consolidated Group is Kanematsu Electronics Ltd. Its condensed
financial information is presented as follows. The amounts presented below are before the elimination of intra-company transactions.
[Condensed statement of financial position]

Current assets
Current liabilities
Current assets (net)Non-current assets
Non-current liabilities
Non-current assets (net)
EquityCumulative amount of non-controlling interests

JPY
2015
47,967
15,49732,470
7,333
3,033
4,299
36,77015,4182016
48,217
13,90934,307
7,511
3,177
4,333
38,641
16,180Transition date
46,366
13,62632,740
7,148
3,146
4,001
36,741
16,203USD
2016
427,911
123,438
304,464
66,65828,19538,454
342,927
143,592[Condensed statements of income and comprehensive income]JPY
2016
61,305
4,310
(285)
4,025
1,807
835

Revenue
Profit for the year
Other comprehensive income
Total comprehensive income
Profit for the year attributable to non-controlling interests
Dividends paid to non-controlling interests

2015
61,863
3,632
158
3,791
1,588
715

USD
2016
544,063
38,250(2,529)35,721
16,037
7,410

2015
1,909
(1,168)(3,743)(3,002)USD
2016
44,968(1,518)(22,000)
21,441[Condensed cash flow statement]
JPY
2016
5,067
(171)
(2,479)2,416

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Increase (decrease) in cash and cash equivalents, net(3) Transaction with non-controlling interests
On March 26, 2015, Kanematsu Electronics Ltd., a consolidated subsidiary of the Company, acquired the additional shares of Nippon Office
Systems Ltd. through the tender offer, aimed at making it a wholly owned subsidiary.
The summary of transaction with non-controlling interests in conjunction with the purchase of the shares are as follows:
2015
Carrying amount of purchased non-controlling interests
Amount paid to non-controlling interests
Excess consideration paid in the transaction with non-controlling interests that isincluded in equity

964(1,839)(874)

There was no transaction with significant non-controlling interests for the fiscal year ended March 31, 2016.

Continued
67

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
35. Related Parties(1) Related party transactions
For the fiscal year ended March 31, 2016
Type
Associate(including subsidiaries of theassociate)Transaction amount
JPY
USD

Detail of related party
relationship

Name
Kantatsu Co., Ltd.

Purchase of merchandise

8,603

76,349Outstanding amount
JPY
USD
486

4,313

(Notes) 1. The related party transactions are conducted on an arm’s length basis.
2. As described in Note 33 Contingent Liabilities, debt guarantees are provided to the equity method investees.
For the fiscal year ended March 31, 2015
Type
Associate(including subsidiaries of theassociate)Transaction amount
JPY

Detail of related party
relationship

Name
Kantatsu Co., Ltd.

Purchase of merchandise

Outstanding amount
JPY

5,253

1,985

(Notes) 1. The related party transactions are conducted on an arm’s length basis.
2. As described in Note 33 Contingent Liabilities, debt guarantees are provided to the equity method investees.

(2) Remuneration to management executives
The amounts of remuneration to the Company’s directors for the fiscal years ended March 31, 2016 and March 31, 2015 are ¥202 million($1,793 thousand) and ¥228 million, respectively. The remuneration to the directors consists of base salary and directors’ bonus.

36. Subsequent Events
On April 1, 2016, Kanematsu Telecom Investment Co., Ltd. (headquartered in Minato-ku, Tokyo, Japan; hereinafter “Kanematsu Telecom”), a
newly established and wholly owned subsidiary of the Company, acquired Diamondtelecom, Inc. (headquartered in Chuo-ku, Tokyo, Japan;“Diamond Telecom”), a wholly owned subsidiary of Mitsubishi Electric Corporation (headquartered in Chiyoda-ku, Tokyo, Japan; “Mitsubishi
Electric”), in accordance with a merger agreement for the acquisition of Diamond Telecom concluded with the Company and Mitsubishi Electric
concerning an absorption-type merger on January 18, 2016.

(1) Contents of the business combination
Name of the acquired company
Contents of business
Date of the business combination
Legal form of the business combination

Company name after the combination
Percentage of the voting rights acquired

Diamond Telecom
Information communication business involved with sales of mobile communication device andsystemApril 1, 2016
Acquisition the shares of Diamond Telecom by Kanematsu Telcom (Kanematsu Telecomabsorbed the acquired company as of April 1, 2016 and changed its company name to Diamond
Telecom)
Diamondtelecom, Inc.
100.0%(2) Purpose of the business combination
The mobile business of the Consolidated Group is driven mainly by Kanematsu Communications Limited (“Kanematsu Communications”), a
wholly owned subsidiary of the Company. With its large market share in the mobile phone sales distribution industry, the mobile business is
one of the core businesses as well as one of the focus areas under the Consolidated Group’s medium-term vision, VISION-130.
Diamond Telecom has been engaging in the mobile phone sales business for more than 20 years since its foundation in 1994 as a wholly
owned subsidiary of Mitsubishi Electric, and owns a dominant number of carrier-certified shops throughout Japan.
As a result of the acquisition of Diamond Telecom, the Consolidated Group’s total sales volume combining the sales of the two companies
will reach the industry’s top class, and we expect that this will significantly enhance our presence in the mobile phone sales distribution
industry.
We also believe that the integration of Diamond Telecom will enable us to create synergies in the Consolidated Group as the Kanematsu
Communications’ network of carrier-certified shops will be complemented and strengthened by the addition of Diamond Telecom’s network
and achieve a national network of blue-chip shops, service sophistication through shared human resources and knowhow and theenhancement of management efficiency for both companies.

(3) Acquisition costs and those details
JPY

Acquisition cost (cash consideration)

USD

17,400154,420(4) Acquisition-related costs and its line item
Acquisition-related costs for the business combination are ¥168 million ($1,491 thousand), and they are recognized in selling, generaland administrative expenses on the consolidated statement of income of this fiscal year.

Continued
68

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(5) Assets and liabilities on the day of the business combination
JPY

USD

Fair value of the consideration paid

17,400154,420

Cash and cash equivalents
Trade receivable
Inventories
Other current assets
Property, plant and equipment
Goodwill
Intangible assets
Other non-current assets
Current liabilities
Non-current liabilities
Total

4,613
12,82840,939113,845

1,212
351
736
1,635
13,930764(17,746)(925)

10,756
3,115
6,532
14,510123,624
6,780(157,490)(8,209)17,400154,420

37. Disclosures Regarding Transition to IFRSs(1) Exemptions under IFRS 1
In principle, IFRSs require an entity applying IFRS for the first time (“first-time adopter of IFRSs”) to retrospectively apply the standards
required in IFRSs. However, IFRS 1 provides for some mandatory exceptions and voluntary exemptions from the above requirement. The
effects of the application of such provisions are adjusted at the transition date in retained earnings or other components of equity. The
exemptions adopted by the Consolidated Group at the transition from the Japanese GAAP to IFRS are as follows:・Business combinations
A first-time adopter of IFRSs may elect not to apply IFRS 3 Business Combinations (“IFRS 3”) retrospectively in regards to businesscombinations that occurred prior to the transition date. The Consolidated Group has applied this exemption to elect not to apply IFRS 3
retrospectively to the business combinations occurred prior to the transition date. As such, the Consolidated Group has not restated any
business combinations that occurred prior to the transition date. However, goodwill was tested for impairment as of the transition dateregardless of whether there is any indication that the goodwill may be impaired.
・Exchange differences for foreign operations
IFRS 1 allows the entity to elect to deem the cumulative exchange differences for foreign operations to be zero as of the transition date.
The Consolidated Group has elected to deem the cumulative exchange differences for foreign operations as of the transition date to be
zero.
・Designation of financial instruments recognized in the past
According to the facts and status existing at the transition date to IFRSs, the Consolidated Group has designated the investment in equity
instruments as one which shall be measured at fair value through other comprehensive income.

(2) Mandatory exceptions under IFRS 1IFRS 1 prohibits retrospective application of some items of IFRSs including “estimates”, “derecognition of financial assets and financial
liabilities”, “hedge accounting”, “non-controlling interests” and “classification and measurement of financial assets”. The Consolidated
Group has applied these items prospectively from the transition date.

Continued
69

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(3) Reconciliation
In preparing the consolidated financial statements under IFRSs, the Consolidated Group has adjusted the amounts reported in the
consolidated financial statements under the Japanese GAAP. The effects of the adjustments on the Consolidated Group’s financial position,
results of operations and cash flows are presented as follows:
1)

Reconciliation of equity[As of March 31, 2015](JPY)(Japanese GAAP account)

Japanese
GAAP

Change inclosing date

Reclassification

Effect oftransition to
IFRSs

IFRSs

Notes

IFRSs account

Assets(Assets)

Current assets

Current assets

Cash and bank deposits
Notes and accounts
receivable
Lease investment assets

68,468(891)(1,090)－66,485

1

180,319

375

3,080

2,711

186,486

2, 26

227

－

(227)

－

91,844

Cash and cash equivalents
Trade and otherreceivables

3

－

(3)

87,254

4,589－

Short-term loans
receivable

297

(1)

(295)

Deferred tax assets

3,250

(59)

(3,191)
6,792

－

6,792

3

Other financial assets

Other27,148(2,679)(8,414)－

16,054

4

Other current assets

Allowance for doubtful
accounts

(158)

0

158

Total current assets

366,811

1,333(3,191)

2,711

367,664

Short-term investments
Inventories

Inventories

Total current assets

Long-term assets

Non-current assets
Property, plant andequipment

Tangible fixed assets

28,931

49

－

(14)

28,966

Goodwill

6,063

219

－

(1,790)4,493

25, 27

Other

8,661

(73)

－

53

8,641

25

5,385

－

5,385

5

393

(5)

388

6

Investments and otherassetsInvestments insecurities

Goodwill
Intangible assets
Investments accounted forusing the equity method
Trade and otherreceivables

38,3720(6,400)1,076

33,0495, 22

Other investments

Other

6,098

(0)

(616)

－

5,481

7

Other financial assets

Long-term loans
receivable

2,134

－

(2,134)

Doubtful accounts

765

－

(765)

Net defined benefit
asset

199

－

(199)

Deferred tax assets

3,643

57

3,191

3,664

10,557

9, 22,
25, 27,28, 29, 30

Deferred tax assets

1,666

20

1,686

8

Allowance for doubtful
accounts(2,671)－

2,671

Total long-term assets

92,200

253

3,191

3,004

98,650Total assets

459,011

1,587

－

5,716

466,314

Continued
70

Other non-current assets

Total non-current assets
Total assets

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(JPY)
(Japanese GAAP account)

Japanese
GAAP

Change inclosing date

Reclassification

Effect oftransition to
IFRSs

IFRSs

Notes

IFRSs accountLiabilities and equity

Liabilities

Liabilities

Current liabilities

Current liabilities

Notes and accounts
payableImport bills payable
Short-term borrowings
Lease obligations

Accrued income taxes

116,567－

159,52210

Trade and other payables

2,760

65,30526

Bonds and borrowings

5,828

－

5,828

11, 30

Other financial liabilities

－

－

2,561

300

－

300

14

12, 2883

42,871

32,530－(32,530)

61,688

856

－

638

(0)

(638)

2,492

69

1

－

(1)

107

－

(107)

Other

38,322819(15,725)

1,319

24,736

Total current liabilities

252,347

1,828

(1)

4,079

258,255

Deferred tax liabilities
Asset retirement
obligations

Income taxes payableNon-current liabilities

Long-term borrowings

74,426－－

Lease obligations

1,286

(0)

(1,286)

5,137

(0)

－

74,426

5,814

805

6,620

13

Other financial liabilities

－

444

5,581

29

Retirement benefits
liabilities

1,098

14

Provisions

1,098
Deferred tax liabilities(105)

Bonds and borrowings

9, 22,
313 25, 27,
28,29, 30

488

(70)

1

367

－

(367)

810

－

(810)

Other

5,414

11

(4,449)25

1,002

Total non-current
liabilities

87,931

(59)

1

1,170

89,043

Total liabilities

340,279

1,769

5,249

347,298

Provision for retirement
benefits for directors andstatutory auditors
Asset retirement
obligations

Other current liabilities
Total current liabilities

Non-current liabilities

Net defined benefit
liability

Provisions

Deferred tax liabilities

Other non-current
liabilities
Total non-current
liabilities
Total liabilities

Net assets

EquityCapital stock

27,781－－－

27,781

Capital surplus

27,502

－

－

(881)

26,62125

Capital surplus

22, 23,25, 27,28, 29Retained earnings

Retained earnings

44,845(123)－(22,842)

21,879Treasury stock

(222)

－

－

－

(222)

(9,805)(130)－

24,121

Accumulated othercomprehensive income

Share capital

Treasury stock

14,185 22, 23, 30
90,244

Other components ofequityTotal equity attributable toowners of the Parent

Non-controlling interests

28,63071－

68

28,771

Total net assets

118,731

(182)

－

466

119,015

Total equity

Total liabilities and net
assets459,011

1,587

－

5,716

466,314

Total liabilities and equity

Continued
71

22, 27

Non-controlling interests

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
[Transition date (April 1, 2014)](JPY)(Japanese GAAP account)

Japanese
GAAP

Change inclosing date

Reclassification

Effect oftransition to
IFRSs

IFRSs

Notes

IFRSs account

AssetsAssetsCurrent assets

Current assets

Cash and bank deposits

73,867

429

(318)

－

73,9781

Notes and accounts
receivable

178,984

301

3,337

4

182,6272, 26

Lease investment assets

541

－

(541)

Short-term investments

16

－

(16)

66,256258－－

66,514Inventories

Cash and cash equivalents
Trade and otherreceivables

Inventories

Short-term loans
receivable
Deferred tax assets

825

(0)

(825)

2,660

116

(2,776)
3,675

－

3,675

3

Other financial assets

Other

22,364(2,634)(5,461)－

14,268

4

Other current assets

Allowance for doubtful
accounts

(149)

0

149

Total current assets

345,366(1,528)(2,776)

4

341,065

Total current assets

Long-term assets

Non-current assets
Property, plant andequipment

Tangible fixed assets

24,218

(11)

－

(27)

24,179Goodwill

3,175

(89)

－

(756)

2,329

25, 27

Other

8,531

(122)

－

(111)

8,298

25

5,536

－

5,536

5

140

(5)

135

6

Investments and otherassetsInvestments insecurities

Goodwill
Intangible assets
Investments accounted forusing the equity method
Trade and otherreceivables

32,198(0)(5,551)

81

26,7275, 22

Other investments

Other
Long-term loans
receivable

6,236

2

(1,754)

－

4,484

7

Other financial assets

1,798

－

(1,798)

Doubtful accounts

902

－

(902)

Deferred tax assets

8,742

(76)

2,776

4,259

15,7029, 22,
25, 27,28, 29, 30

Deferred tax assets

1,578

185

1,764

8

Other non-current assets

Allowance for doubtful
accounts(2,750)－2,750

Total long-term assets

83,053

(297)

2,776

3,626

89,158

Total non-current assets

428,420(1,826)－

3,630

430,224

Total assets

Total assets

Continued
72

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(JPY)
(Japanese GAAP account)

Japanese
GAAP

Change inclosing date

Reclassification

Effect oftransition to
IFRSs

IFRSs

Notes

IFRSs accountLiabilities and equity

Liabilities

Liabilities

Current liabilities

Current liabilities

Notes and accounts
payableImport bills payable
Short-term borrowings
Lease obligations

Accrued income taxes

115,210－

150,518

10

Trade and other payables－

79,85226

Bonds and borrowings

5,023

－

5,023

11, 30

Other financial liabilities

－

－

1,962

92

－

92

(516)

35,824

27,610－(27,610)80,792

(940)

－

760

(0)

(760)

1,951

11

Deferred tax liabilities

1

－

(1)

Asset retirement
obligations

6

－

(6)

Other

32,302(244)(12,562)

1,375

20,870Total current liabilities

258,635(1,690)

(1)

1,375

258,319

Income taxes payable1412, 28Non-current liabilities

Long-term borrowings

61,113－－

Lease obligations

1,033

(0)

(1,032)

Deferred tax liabilities

5,428

(1)

－

61,113

6,039

337

6,376

13

Other financial liabilities

－

480

5,906

29

Retirement benefits
liabilities

804

－

804

14

Provisions(21)

9, 22,
283 25, 27,
28, 29, 30

368

(63)

1

387

－

(387)

804

－

(804)

Other

5,281

2

(4,618)26

692

Total non-current
liabilities

74,417

(63)

1

821

75,177

Total liabilities

333,053(1,753)－

2,197

333,496

Provision for retirement
benefits for directors
and statutory auditors
Asset retirement
obligations

Bonds and borrowings

Total liabilities
EquityCapital stock

27,781－－－

27,781

Capital surplus

27,493－－

027,494Retained earnings

35,055(138)－(22,501)

12,414

Treasury stock

(321)

－

－

－

(321)

(19,033)(18)－

23,868

Share capital
Capital surplus
22, 23,25, 27,28, 29Total net assets
Total liabilities and net
assetsRetained earnings
Treasury stock

4,816 22, 23, 30
72,185

Non-controlling interests

Deferred tax liabilities

Other non-current
liabilities
Total non-current
liabilities

Net assets

Accumulated othercomprehensive income

Other current liabilities
Total current liabilities

Non-current liabilities

Net defined benefit
liability

Provisions

Other components ofequityTotal equity attributable toowners of the Parent

24,391

84－

66

24,541

95,367

(72)

－

1,433

96,727

Total equity

428,420(1,826)－

3,630

430,224

Total liabilities and equity

Continued
73

22, 27

Non-controlling interest

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
2)

Reconciliation of profit or loss and other comprehensive income[Fiscal year ended March 31, 2015 (from April 1, 2014 to March 31, 2015)](JPY)
Change inclosing date

Reclassification

Effect oftransition to
IFRSs(Japanese GAAP account)

Japanese
GAAPNet sales

1,117,096(1,180)－(1,025,655)

973

91,441(207)

Cost of sales
Gross trading profit
Selling, general andadministrative expenses(69,315)

167

IFRSs

Notes

(411,704)

704,21124(3,353)411,704(616,331)

15, 24(3,353)－

87,880

3,353

(452)

IFRSs accountRevenue
Cost of sales
Gross profit

Selling, general and(66,245) 25, 28, 29
administrative expenses
Other income (expenses)

(64)

0

(63)

(580)

0

(580)

4,508

(362)

4,146

16, 22(1,589)17, 22,23, 25(2,422)

833

Gain (loss) on sale anddisposal of fixed assets,net
Impairment loss on fixed
assetsOther income
Other expenses

1,441

471

1,912

Total other income(expenses)

19

23,547

Operating profit

Operating income

22,125

(39)

1,441

Non-operating income

5,872

0

(5,873)Non-operating expenses(5,103)18

5,085

Extraordinary gains

1,385

0

(1,386)Extraordinary losses

(985)

2

983
Finance income
415

(15)

400

Interest income

1,118

(35)

1,082

Dividend income

－

18

18

22

1,533

(31)

1,501

18

(2,929)18(2,910)

－

(908)

(908)

22

(2,929)(889)(3,819)19

Total finance costs

1,145

(2)

1,143

20

Share of profit (loss) ofinvestments accounted forusing the equity method

Other finance income
Total finance income
Finance costs

Income before income
taxes andnon-controllinginterests

Interest expenses
Other finance costs

23,294

(17)

－

(904)

22,37323, 32

Profit before tax(8,925)

191

－

(503)

(9,238)27, 28,29, 30

Income tax expense

Income before
non-controlling interests

14,369174－(1,408)13,135

Net income

11,470

(44)

－

(879)

10,546

Net income attributable
to non-controllinginterests

2,898

218

－

(528)

2,588

Income taxes

Continued
74

Profit for the year
Profit for the year
attributable to owners of
the Parent
Profit for the year
attributable tonon-controlling interests

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
(JPY)
(Japanese GAAP account)
Income before
non-controlling interests
Other comprehensive
incomeNet unrealized gains(losses) on securities, netof taxRemeasurements ofdefined benefit plans

Japanese
GAAP
14,369Change inclosing date

Reclassification

Effect oftransition to
IFRSs

174

－

(1,408)

IFRSs

Notes

13,135

Profit for the year

2,236

0

－

1,525

3,762

22

316

－

－

176

492

29

7

0

7

4,263

Foreign currencytranslation adjustment

7,092

(158)

－

(370)

6,564

Net gains (losses) on
deferred hedges, net of
tax

569

－

－

(133)

435

117

(10)

106

7,106
Share of othercomprehensive incomeof associates accounted
for using equity method

124

－

(124)

Total other comprehensive
income10,339

(157)

－

1,187

11,369Comprehensive income

24,708

16

－

(220)

24,504Comprehensive income
attributable to theowners of the parent

20,698

120

－

(352)

20,467

Comprehensive income
attributable tonon-controlling interests

4,009

(104)

－

131

4,037

3)

IFRSs account23

Other comprehensive
incomeItems that will not bereclassified to profit andloss:
Financial assets
measured at fair value
through othercomprehensive income
Remeasurement ofdefined benefit pension
plans
Share of othercomprehensive incomeof investments
accounted for using theequity method
Total items that will not
be reclassified to profit
and loss
Items that may bereclassified to profit andloss:
Exchange differenceson translation offoreign operations
Cash flow hedges
Share of othercomprehensive incomeof investments
accounted for using theequity method
Total items that may bereclassified to profit
and loss

Other comprehensive
income for the year, net oftax
Total comprehensive
income for the year
Total comprehensive
income for the year
attributable to owners of
the Parent
Total comprehensive
income for the year
attributable tonon-controlling interests

Reconciliation of cash flows
The effect of the transition from Japanese GAAP to IFRSs on the consolidated statement of cash flows is primarily the effect on a change
in closing date, which is not material.

Continued
75

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
4)

Notes on reconciliation
Details on the reconciliation of the difference between the Japanese GAAP and IFRSs as presented in Item 3) Reclassification above areas follows:(i) Change in closing date
Under the Japanese GAAP, the Consolidated Group had prepared the consolidated financial statements based on the financial
statements of its subsidiaries and equity method investees as of their closing dates even if such closing dates differ from that of theCompany. Under IFRSs, however, as it is not acceptable for the Company, its subsidiaries and its equity method investees to havedifferent closing dates except where impracticable, changes have been made to the closing dates.
(ii) Reclassification
The reclassifications affected presentation of the consolidated statements of financial position and consolidated statements of income
only and did not affect retained earnings. The details of reclassifications are described as follows:(a) Cash and cash equivalents
Under the Japanese GAAP, time deposits with the maturity longer than three months were included in “Cash and bank deposits”.
Under IFRSs, they are presented as “Other financial assets”.
(b) Trade and other receivables (current)
Under the Japanese GAAP, “Notes and accounts receivable”, “Allowance for doubtful accounts” and “Loans receivable” were
presented separately and accounts receivable – other were included in “Other (current assets)”. Under IFRSs, they are presented
as “Trade and other receivables (current)”.
(c) Other financial assets (current)
Under the Japanese GAAP, time deposits with the maturity longer than three months were included in “Cash and bank deposits”,
and derivative assets and guarantee deposits were included in “Other (current assets)”. Under IFRSs, they are presented as “Other
financial assets (current)”.
(d) Other current assets
Under the Japanese GAAP, accounts receivable – other were included in “Other (current assets)”. Under IFRSs, they arepresented as “Trade and other receivables”. In addition, derivative assets and guarantee deposits are presented as “Other financial
assets (current assets)”.
(e) Other investments / investments accounted for using the equity method
Under the Japanese GAAP, investments accounted for using the equity method were included in “Investments in securities”.
Under IFRSs, they are presented separately as “Investments accounted for using the equity method”, and investments insecurities other than investments accounted for using the equity method are presented as “Other investments”.
(f) Trade and other receivables (non-current)
Under the Japanese GAAP, “Long-term loans receivable”, “Doubtful accounts” and “Allowance for doubtful accounts” were
presented separately. Under IFRSs, they are included in “Trade and other receivables (non-current)”.
(g) Other financial assets (non-current)
Under the Japanese GAAP, guarantee deposits were included in “Other (investments and other assets)” and government andcorporate bonds were included in “Investments in securities”. Under IFRS, they are included in “Other financial assets(non-current)”.
(h) Other non-current assets
Under the Japanese GAAP, long-term prepaid expenses were included in “Other (investments and other assets)”. Under IFRSs,
they are included in “Other non-current assets”.
(i) Deferred tax assets / deferred tax liabilities
Under IFRSs, “Deferred tax assets” and “Deferred tax liabilities” are all reclassified into the “Non-current assets” section and the“Non-current liabilities” section, respectively.
(j) Trade and other payables
Under the Japanese GAAP, “Notes and accounts payable” and “Import bills payable” were presented separately and accounts
payable – other was included in “Other (current liabilities)”. Under IFRSs, they are presented as “Trade and other payables”.
(k) Other financial liabilities (current)
Under the Japanese GAAP, deposits received and derivative liabilities were included in “Other (current liabilities)”. Under IFRSs,
they are included in “Other financial liabilities”.
(l) Other current liabilities
Under the Japanese GAAP, deposits received and others were included in “Other (current liabilities)”. Under IFRSs, it is included
in “Other financial liabilities (current)”. In addition, accounts payable – other, which was included in “Other (current liabilities)”
under the Japanese GAAP, is included in “Trade and other payables”.

Continued
76

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(m) Other financial liabilities (non-current)
Under the Japanese GAAP, “Lease obligations (non-current liabilities)” was separately presented and long-term deposits
received were included in “Other (non-current liabilities)”. Under IFRSs, they are included in “Other financial liabilities(non-current)”.
(n) Provisions
Under the Japanese GAAP, “Asset retirement obligations” was separately presented. Under IFRSs, it is included in “Provisions”.
(o) Cost of revenues
Under the Japanese GAAP, part of freightage related expenses was included in “Selling, general and administrative expenses”.
Under IFRSs, they are included in “Cost of revenues”.
(p) Other income
Under the Japanese GAAP, “Non-operating income” was presented separately. Under IFRSs, it is presented as “Other income”
except for “Share of profit (loss) of investments accounted for using the equity method”, “Interest income” and “Dividend
income”, while “Share of profit (loss) of investments accounted for using the equity method”, “Interest income” and “Dividend
income” are included in “Finance income”.
(q) Other expenses
Under the Japanese GAAP, “Non-operating expenses” was presented separately. Under IFRSs, it is presented as “Other
expenses”, and “Interest expenses” is included in “Finance costs”.
(r) Finance income
Under the Japanese GAAP, “Interest income”, “Dividend income” and others were presented as “Non-operating income”. Under
IFRSs, they are presented as “Finance income”.
(s) Finance costs
Under the Japanese GAAP, “Interest expenses” and others were presented as “Non-operating expenses”. Under IFRSs, they arepresented as “Finance costs”.
(t) Share of profit (loss) of investments accounted for using the equity method
Under the Japanese GAAP, “Equity in earnings of affiliates” was presented as “Non-operating income”. Under IFRSs, it ispresented as “Share of profit (loss) of investments accounted for using the equity method.
(iii) Effects from transition to IFRSs(a) Scope of consolidated subsidiaries and equity method investees
The transition to IFRSs has not affected the numbers of consolidated subsidiaries and equity method investees.
(b) Investments in equity instruments without quoted prices
Pursuant to IFRSs, investments in equity instruments without quoted prices are measured at fair value. Under the Japanese GAAP,
investments in equity instruments without quoted prices were measured at cost. Changes in fair value of financial assets
measured at fair value through profit or loss are recorded in “Other finance costs” or “Other finance income”. The summary ofeffects caused by this change is presented as follows:(JPY)
Consolidated statement of financial position
Other investments
Related tax effects
Other components of equity
Non-controlling interests
Adjustment to retained earnings

2015

Transition date995
(2,259)(4,712)882(5,094)

11(1,823)(3,271)
7(5,075)(JPY)

Consolidated statement of income
Other finance costs
Other expenses
Other income
Other finance income
Profit before tax

2015

Consolidated statement of comprehensive income
Financial assets measured at fair value through other comprehensive
incomeOther comprehensive income for the year, net of tax

2015

(908)
899
(106)
18
(97)
(JPY)
1,441
1,441

Continued
77

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(c) Exchange differences on translation of foreign operations
In accordance with IFRS 1, the Consolidated Group elected to deem the cumulative exchange differences for all the foreign
operations which existed as of the transition date to be zero as of the transition date. The summary of effects caused by suchelection is presented as follows:(JPY)
Consolidated statement of financial position
Transfer from other components of equity
Adjustment to retained earnings

2015

Transition date
(21,012)(21,012)(21,094)(21,094)(JPY)

Consolidated statement of income
Other expenses
Profit before tax

2015
81
81

Under the Japanese GAAP, revenues and expenses of foreign operations were translated using the exchange rate at the end of thereporting period. Under IFRSs, income and expenses of foreign operations are translated using the average exchange rate of thereporting period unless exchange rates fluctuate significantly. This change has caused profit before tax to decrease by ¥338
million. The summary of effects to the consolidated statements of comprehensive income caused by this change is presented asfollows:(JPY)
Consolidated statement of comprehensive income
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax

2015
(81)
(81)

(d) Method of presenting revenue
Under the Japanese GAAP, the amount of net sales is presented as the sum of the gross amounts for transactions in which theConsolidated Group acted as a principal and also for transactions in which the Consolidated Group was involved as an agent.
Under IFRSs, however, revenue is presented as the net amount for transactions in which the Consolidated Group is determined tobe acting as an agent. The summary of effects caused by this change is as follows:(JPY)
Consolidated statement of income
Revenue
Cost of sales
Profit before tax

2015(411,704)
411,704－(e) Goodwill
While goodwill is amortized over a certain period under the Japanese GAAP, it is not amortized under IFRSs. With respect toimpairment of goodwill, the Japanese GAAP requires an entity to test for impairment only when there is an indication that is may
be impaired. However, IFRSs requires an entity to test for impairment annually and whenever there is an indication that it may be
impaired.
Impairment losses which arose as of the transition date due to the differences between the Japanese GAAP and IFRSs ispresented as follows. The carrying amounts of intangible assets and goodwill arising from the acquisition of the mobile phonesales business have been reduced to their recoverable amounts, and consequently the Consolidated Group recognized impairment
losses of ¥71 million and ¥756 million, respectively. Both of the recoverable amounts have been determined based on their theamounts of value in use, which were calculated by discounting the future cash flows at the discount rate of 6.75%. These assets
belong to the Electronics & Devices segment. A transaction with non-controlling interests as a result of additional purchase ofshares of a consolidated subsidiary causes adjustment to capital surplus as it is treated as an equity transaction under IFRSs.
(JPY)
Consolidated statement of financial position
Goodwill
Intangible assets
Related tax effects
Adjustment to retained earnings
Adjustment to capital surplus

2015

Transition date
(1,790)
53
－
(862)
(874)

(756)
(111)
39
(828)
－
(JPY)

Consolidated statement of income
Selling, general and administrative expenses
Other expenses
Profit before tax

2015
(59)
107
47

There is no effect of this change on the consolidated statements of comprehensive income.
(f) Transfer of financial assets
Continued
78

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016
Of liquidated receivables such as discounted notes receivable that are allowed to be derecognized after transfer under theJapanese GAAP, the Consolidated Group continues to recognize those for which it may be obligated to make payments asrecourse for non-payment by the debtor because such liquidated receivables do not meet the criteria for derecognition of financial
assets under IFRSs. The summary of effects caused by such difference is presented as follows:(JPY)
Consolidated statement of financial position
Trade and other receivables
Bonds and borrowings
Adjustment to retained earnings

2015

Transition date
－
－
－

2,735
(2,735)－(g) Review of recoverability of deferred tax assets
With application of IFRSs, except for investments in certain subsidiaries and associated, deferred tax assets are recognized for
deductible temporary differences to the extent that it is probable that they can be used against future taxable profits. The summaryof effects caused by the change is presented as follows:(JPY)
Consolidated statement of financial position
Deferred tax assets
Goodwill
Non-controlling interests
Adjustment to retained earnings

2015

Transition date
5,136
(122)
(108)
5,367

5,402
－
－
5,402
(JPY)

Consolidated statement of income
Adjustment to income tax expense

2015
(265)

(h) Accrued paid leave
For the unused paid leaves at the end of the reporting period, the Consolidated Group recognizes a liability as accrued paid leaveby estimating the number of days to be used in the future based on the historical ratio of paid leave used and other factors. The
summary of effects caused by this treatment is presented as follows:(JPY)
Consolidated statement of financial position
Accrued paid leave
Related tax effects
Adjustment to retained earnings

2015

Transition date
(1,405)521(884)(1,375)
515
(860)
(JPY)

Consolidated statement of income
Provision for accrued paid leave
Adjustment to income tax expense

2015
(30)
6

(i) Employee benefits
Upon application of IFRSs, the Consolidated Group has reviewed the calculation method of retirement benefit obligation andservice cost. Also, the discount rate applicable to pension assets has been changed to the market yields of corporate bonds. The
summary of effects caused by these changes is presented as follows:(JPY)
Consolidated statement of financial position
Retirement benefits liabilities
Related tax effects
Adjustment to retained earnings

2015

Transition date
(444)
158
(286)

(480)
170
(309)
(JPY)

Consolidated statement of income
Selling, general and administrative expenses
Deferred income tax

2015

Consolidated statement of comprehensive income
Remeasurement of defined benefit pension plans
Other comprehensive income for the year, net of tax

2015

35
(12)
(JPY)
176
176

Continued
79

KANEMATSU CORPORATION AND CONSOLIDATED SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the fiscal year ended March 31, 2016(j) Hedge accounting
Regarding the interest rate swap transactions for which the exceptional hedge accounting treatment (“tokurei shori”) is applied
under the Japanese GAAP, fair value of the interest swap is recognized in the consolidated statements of financial position under
IFRSs. The summary of effects caused by this treatment is presented as follows:(JPY)
Consolidated statement of financial position
Other financial liabilities
Related tax effects
Other components of equity
Adjustment to retained earnings

2015

Transition date
(805)
260
545
－

(337)
119
217
－

(k) Adjustment to deferred tax
The effect of the adjustments above on deferred tax assets (net after offsetting against deferred tax liabilities) in the consolidated
statements of financial position is presented as follows:(JPY)
Item subject to adjustment
Review of recoverability of deferred tax assets
Investments in equity instruments without quoted prices
Accrued paid leave
Employee benefits
Hedge accounting
Other
Total

Note
(27)
(22)
(28)
(29)
(30)

2015

Transition date
5,136
(2,259)
521
158
260
(47)
3,769

5,402
(1,823)
515
170
119
(103)
4,281

The adjustments above have caused income taxes for fiscal year ended March 31, 2015 to decrease by ¥301 million.
(l) Retained earnings
The effect of the adjustments above on retained earnings is presented as follows:(JPY)
Item subject to adjustment
Exchange differences on translation of foreign operations
Review of recoverability of deferred tax assets
Investments in equity instruments without quoted prices
Accrued paid leave
Goodwill
Employee benefits
Other
Total

Note
(23)
(27)
(22)
(28)
(25)
(29)

2015

Transition date
(21,012)
5,367(5,094)
(884)
(862)
(263)
(92)
(22,842)(21,094)
5,402(5,075)
(860)
(828)
(309)
263
(22,501)(m) Profit before tax
The effect of the adjustments above on profit before tax is presented as follows:(JPY)
Item subject to adjustment
Exchange differences on translation of foreign operations
Investments in equity instruments without quoted prices
Goodwill
Other
Total

Note
(23)
(22)
(25)

2015
(256)
(97)
47
(598)
(904)

End
80