February 13, 2019
Name of Listed Company: ISEKI & CO., LTD.
Stock Exchange Listings: Tokyo
Company Code:6310 (URL http://www.iseki.co.jp)
Representative: Title President
Name Eiichiro Kinoshita
Enquiries:
Title General Manager of Financial Department
Name Yoshikazu Ogusu
Telephone: +81-3-5604-7671
Date of the Ordinary General Meeting of Shareholders:
Scheduled Date to Commence Dividend Payment:
Date of Submission of Securities Report:
Supplementary Information for Financial Results:
Financial Results Briefing:

March 26, 2019
March 27, 2019
March 27, 2019
Yes
Yes (for institutional investors and analysts)

Summary Announcement of Consolidated Financial Results
for the Fiscal Year Ended December 31, 2018 (Japanese GAAP)
I. Consolidated Financial Results for the Fiscal Year Ended December 31, 2018 (January 1, 2018－December
31, 2018)
A. Consolidated Results of Operations(Rounded down to millions of yen, % indicates change from the previous corresponding period)

Fiscal Year Ended
December 31, 2018
155,955
3,179
2,629
1,090

%

Fiscal Year Ended
December 31, 2017
158,382
3,953
4,250
2,807

%

Net Sales(1.5)
3.5
Operating Income(19.6)
60.1
Ordinary Income(38.1)
159.8
Profit Attributable to Owners of Parent(61.1)
227.0
Earnings per Share (yen)
Basic
48.29
124.29Diluted48.21
124.08Return on Equity (%)
1.6
4.2
Return on Assets (%)
1.3
2.1
Operating Margin (%)
2.0
2.5
Note: Comprehensive income
Fiscal year ended December 31, 2018: ¥(1,274) million [—%]
Fiscal year ended December 31, 2017: ¥4,113 million [—%]
Reference: Share of profit or loss of entities using equity method
Fiscal year ended December 31, 2018: ¥(1,083) million
Fiscal year ended December 31, 2017: ¥(219) million* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017.
The amounts stated for basic earnings per share and diluted earnings per share are calculated based on theassumption that shares of the common stock were consolidated at the beginning of the previous fiscal year.

B. Consolidated Financial Position(Rounded down to millions of yen)

As of December 31, 2018

As of December 31, 2017

201,248
68,95933.4
2,974.78

201,348
70,91634.4
3,061.84

Total Assets
Net Assets
Shareholder’s Equity to Total Assets Ratio (%)
Net Assets per Share (yen)Reference: Shareholder’s equity
As of December 31, 2018: ¥67,200 million
As of December 31, 2017: ¥69,164 million
C. Consolidated Cash Flows(Rounded down to millions of yen)

Fiscal Year Ended
December 31, 2018
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Cash and Cash Equivalents at End of Period

Fiscal Year Ended
December 31, 2017

7,616
(9,944)
1,970
7,387

3,308
(5,273)(4,294)
7,795

II. Dividends

Total

AnnualDividends(million yen)

Payout Ratio(%,
consolidated)

Dividend to Net
Assets Ratio(%,
consolidated)

Dividend per Share (yen)1Q-end 2Q-end 3Q-end Year-end
FY Ended December
31, 2017
FY Ended December
31, 2018
FY Ending December
31, 2019 (Forecast)

—

—

—

30.00

30.00

677

24.1

1.0

—

—

—

30.00

30.00

677

62.1

1.0

—

—

—

30.00

30.00

42.4

III. Consolidated Financial Results Forecast for the Fiscal Year Ending December 31, 2019 (January 1, 2019－
December 31, 2019)(Rounded down to millions of yen, % indicates change from the previous period)
Net SalesFirst Half
Full Year

81,800
164,000

%

(0.5)
5.2

Operating
Income

1,900
4,000

%

(13.6)
25.8

Ordinary
Income

1,600
2,600

%

(13.0)(1.1)

ProfitAttributableto Owners of
Parent

1,400
1,600

%

(15.1)
46.7

Earnings
per Share
(yen)

61.97
70.83

* Notes
A. Changes in significant subsidiaries during the fiscal year under review (changes in specified subsidiaries
resulting in changes in the scope of consolidation): No
New: — (), Exclusion: — ()
B. Changes in accounting policies, changes in accounting estimates and restatements
1) Changes in accounting policies due to the revision of accounting standards, etc.:
2) Any changes other than 1) above:3) Changes in accounting estimates:
4) Restatements:

No
No
No
No

C. Total number of shares issued (common stock)1) Total number of shares issued at the end of the fiscal year (including treasury shares):
As of December 31, 2018
22,984,993 shares
As of December 31, 2017
22,984,993 shares2) Total number of treasury shares at the end of the fiscal year:
As of December 31, 2018394,999 shares
As of December 31, 2017395,946 shares
3) Average number of shares during the fiscal year:
Fiscal year ended December 31, 2018
22,589,460 sharesFiscal year ended December 31, 2017
22,588,520 shares* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective
July l, 2017. The amounts stated for the total number of shares issued (common stock) are calculated
based on the assumption that shares of the common stock were consolidated at the beginning of theprevious fiscal year.

(Reference) Summary of Non-consolidated Financial Results
Non-consolidated Financial Results for the Fiscal Year Ended December 31, 2018 (January 1, 2018－
December 31, 2018)
A. Non-consolidated Results of Operations(Rounded down to millions of yen, % indicates change from the previous corresponding period)

Fiscal Year Ended
December 31, 201893,118
502
2,358
1,757

Fiscal Year Ended
December 31, 2017
0.2
92,913
0.1
501
10.9
2,126
(12.7)
2,013%%

Net Sales(3.1)
Operating Income(45.6)
Ordinary Income(22.6)
Profit(24.1)
Earnings per Share (yen)
Basic
77.81
89.13
Diluted77.69
88.99* The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017.
The amounts stated for basic earnings per share and diluted earnings per share are calculated based on theassumption that shares of the common stock were consolidated at the beginning of the previous fiscal year.
B. Consolidated Financial Position(Rounded down to millions of yen)

Total Assets
Net Assets
Shareholder’s Equity to Total Assets Ratio (%)
Net Assets per Share (yen)Reference: Shareholder’s equity
As of December 31, 2018: ¥58,012 million
As of December 31, 2017: ¥58,307 million

As of December 31, 2018

As of December 31, 2017

135,034
58,09043.0
2,568.05

134,826
58,38743.2
2,581.21* These financial results are outside the scope of audit to be performed by certified public accountants or an audit
corporation.
* Explanation on the proper use of financial results forecasts and other notes
The financial results forecasts and other forward-looking statements contained in this report are based on
information available to the Company on the date of this report’s release and certain preconditions that theCompany deems to be reasonable. Actual results, etc. may differ significantly from the forecasts, however, as aresult of various factors. For details on the preconditions on the financial results forecasts of the Company andnotes on the use of financial results forecasts, please see “Summary of Results of Operations, etc.” on page 2 of
the Appendix.

 Contents of Appendix
1. Summary of Results of Operations, etc. ...............................................................................................2(1) Summary of Results of Operations for the Fiscal Year under Review .............................................2(2) Summary of Financial Position for the Fiscal Year under Review ...................................................2(3) Summary of Cash Flows for the Fiscal Year under Review .............................................................3(4) Future Outlook..................................................................................................................................3(5) Basic Policy on Distribution of Surplus and Dividends for the Current and Next Fiscal Years .......4(6) Risks Which Could Affect Our Business..........................................................................................4
2. Status of the Corporate Group ................................................................................................................6
3. Management Policies .............................................................................................................................7(1) Basic Management Principles ..........................................................................................................7(2) Long- to Mid-term Management Strategies and Issues to be Addressed .........................................7
4. Basic Policy for Choosing Accounting Standards ..................................................................................9
5. Consolidated Financial Statements and Principal Notes ......................................................................10(1) Consolidated Balance Sheets ..........................................................................................................10(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income .....12(3) Consolidated Statements of Changes in Equity ..............................................................................14(4) Consolidated Statements of Cash Flows .........................................................................................16(5) Notes to Consolidated Financial Statements ...................................................................................18(Notes to Going Concern Assumption) ..........................................................................................18(Important Basic Items for Preparing Consolidated Financial Statements) ...................................18(Consolidated Balance Sheets) .......................................................................................................20(Consolidated Statements of Income).............................................................................................21(Consolidated Statements of Changes in Equity) ...........................................................................22(Consolidated Statements of Cash Flows) ......................................................................................24(Segment Information) ...................................................................................................................24(Per Share Information) ..................................................................................................................24(Significant Subsequent Events) .....................................................................................................24
6. Non-consolidated Financial Statements and Principal Notes ...............................................................25(1) Non-consolidated Balance Sheets ..................................................................................................25(2) Non-consolidated Statements of Income ........................................................................................27(3) Non-consolidated Statements of Changes in Equity .......................................................................28(4) Notes to Non-consolidated Financial Statements ...........................................................................30(Notes to Going Concern Assumption) ..........................................................................................30
7. Others ...................................................................................................................................................30(1) Production, Orders and Sales..........................................................................................................30-1-

1. Summary of Results of Operations, etc.
(1) Summary of Results of Operations for the Fiscal Year under Review
During the fiscal year ended December 31, 2018, the Japanese economy was on a moderate recovery track due to theeffects of various government policies amid continuing improvement in employment and income environments. In
addition, while the economy in the U.S. continued a steady recovery backed by a positive employment environment
and a recovery in corporate earnings, and the economy in Europe remained on a strong recovery track, the Chinese
economy slowed down slightly due to sluggishness in personal consumption and capital investment. Although theworld economy improved gradually as a whole, the pace of improvement was weakened partially due to the effectsof trade friction between the U.S. and China.
On the other hand, in the domestic agricultural environment, the market for agricultural machinery remained
bearish and flat amid ongoing structural changes in agriculture including farmland consolidation to principal farmers
and rice-crop diversion such as a shift to dry field farming and vegetable production.
Under these circumstances, the ISEKI Group continued its initiatives to strengthen the responsiveness to structuralchanges in agriculture mainly by launching new products and improving customer service in Japan, while working tostrengthen its sales in its mainstay overseas markets of North America, Europe, China, and ASEAN. As a result, theGroup’s consolidated financial results are summarized as follows.
[Consolidated financial results]
Net sales for the fiscal year ended December 31, 2018 were ¥155,955 million, a decrease of ¥2,426 million (1.5%)
year on year. Domestic sales in Japan were ¥122,812 million, a decrease of ¥324 million (0.3%) year on year, due toa decrease in construction of facilities and despite a slight increase in overall sales of agricultural machinery year on
year, with increased sales of rice transplanters, farming implements, etc., owing to the launch of new products.
Overseas sales were ¥33,143 million, a decrease of ¥2,102 million (6.0%) year on year. This was due to situations in
China and the ASEAN regions, which are positioned as growth engines, with revenue decline from decreased
shipments of semi-finished rice transplanters which suffered from a cooling market in China, and revenue decline
from decreased shipments of tractors in the ASEAN region due to local inventory adjustments accompanying theintensifying competition in the Thai market, despite higher revenue in North America from factors including
disappearance of the effects of changes in business terms with an OEM partner made in the previous fiscal year, andsteady local distribution in Europe with the introduction of new products.
Operating income was ¥3,179 million, a decrease of ¥773 million (19.6%) year on year, as a result of an increase
in selling and administrative expenses, despite partial abatement of the effects of declined revenue through positiveeffects from improvements in the revenue-expenditure structure in domestic direct dealers and improved revenue inthe Indonesian business.
Ordinary income was ¥2,629 million, a decrease of ¥1,621 million (38.1%) year on year, mainly due to decreases
in the share of profit or loss of entities using equity method and foreign exchange gains or losses.
Profit attributable to owners of parent was ¥1,090 million, a decrease of ¥1,716 million (61.1%) year on year.
[Non-consolidated financial results]
Net sales for the fiscal year ended December 31, 2018 were ¥93,118 million (up 0.2% year on year), operating
income was ¥502 million (up 0.1% year on year), ordinary income was ¥2,358 million (up 10.9% year on year), andprofit was ¥1,757 million (down 12.7% year on year).
Sales by product are as follows.
[Domestic]
Sales of cultivating and mowing machinery (tractors, high-clearance multipurpose vehicles, among others) were¥27,423 million (a decrease of 2.8% year on year). Sales of planting machinery (rice transplanters and vegetabletransplanters) were ¥9,182 million (an increase of 8.2% year on year). Sales of harvesting and processing machinery(combine harvesters, among others) were ¥19,962 million (a decrease of 2.1% year on year). Sales of farming
implements, spare parts and repair fees were ¥40,626 million (an increase of 2.2% year on year). Sales of otheragriculture-related business (construction of facilities, among others) were ¥25,618 million (a decrease of 2.5% year
on year).
[Overseas]
Sales of cultivating and mowing machinery (tractors, among others) were ¥25,895 million (an increase of 2.7% year
on year). Sales of planting machinery (rice transplanters, among others) were ¥1,947 million (a decrease of 53.4%
year on year). Sales of harvesting and processing machinery (combine harvesters, among others) were ¥581 million(a decrease of 65.8% year on year). Sales of farming implements and spare parts were ¥2,775 million (an increase of
5.9% year on year). Sales of other agriculture-related business were ¥1,944 million (an increase of 26.0% year onyear).
(2) Summary of Financial Position for the Fiscal Year under Review
Total assets at the end of the fiscal year ended December 31, 2018 decreased by ¥100 million from the end of theprevious fiscal year to ¥201,248 million. Current assets increased by ¥1,097 million, while non-current assets-2-

decreased by ¥1,197 million. This was mainly due to a decrease of ¥1,785 million in notes and accounts receivable trade, an increase of ¥1,085 million in merchandise and finished goods, an increase of ¥3,244 million in othercurrent assets, a decrease of ¥1,328 million in investment securities, and a decrease of ¥1,346 million in other ininvestments and other assets.
Total liabilities increased by ¥1,856 million from the end of the previous fiscal year to ¥132,288 million. This was
mainly due to an increase of ¥3,872 million in short-term loans payable and long-term loans payable, a decrease of¥936 million in notes and accounts payable-trade, a decrease of ¥413 million in lease obligations, and an increase of¥750 million in net defined benefit liability.
Net assets decreased by ¥1,957 million from the end of the previous fiscal year to ¥68,959 million. This was
mainly due to a decrease of ¥1,399 million in valuation difference on available-for-sale securities, and a decrease of¥743 million in remeasurements of defined benefit plans.
The shareholder’s equity to total assets ratio was 33.4%.
(3) Summary of Cash Flows for the Fiscal Year under Review(Cash flows from operating activities)
Cash flows from operating activities resulted in a net cash inflow of ¥7,616 million (an increase of cash inflow of¥4,308 million from the previous fiscal year). This was mainly due to income before income taxes of ¥2,229 million,¥6,727 million of depreciation, and a decrease of ¥1,807 million in notes and accounts receivable - trade.
(Cash flows from investing activities)
Cash flows from investing activities resulted in a net cash outflow of ¥9,944 million (an increase of cash outflow of¥4,670 million from the previous fiscal year). This was mainly due to ¥6,849 million of capital investment
expenditures, and an increase of ¥2,783 million in loans receivable.
(Cash flows from financing activities)
Cash flows from financing activities resulted in a net cash inflow of ¥1,970 million (an increase in cash inflow of¥6,264 million from the previous fiscal year). This was mainly due to an increase in interest-bearing liabilities.
(Reference) The trend of cash flow indicators
Indicator

FY ended
December31, 2015

FY ended
December31, 2016

FY ended
December31, 2017

FY ended
December31, 2018

Shareholder’s equity to total assets ratio (%)

33.0

32.2

34.4

33.4

Market-based equity ratio (%)

21.2

25.0

31.9

17.7

5.2

7.4

18.0

8.3

16.0

13.7

5.6

11.4

Cash flow/Interest-bearing liabilities ratio(times)Interest coverage ratio (times)• Shareholder’s equity to total assets ratio: Shareholders’ equity/Total assets• Market-based equity ratio: Total market price of shares/Total assets• Cash flow/Interest-bearing liabilities ratio: Interest-bearing liabilities/Cash flow
• Interest coverage ratio: Cash flow/Interest payments
Notes: 1. All figures have been calculated using financial figures on a consolidated basis.
2. The total market price of shares have been calculated by multiplying the per-share closing price at the endof the fiscal year by the total number of shares outstanding (less treasury shares) at the end of the fiscal
year.
3. The cash flow uses the figures of the cash flows from operating activities in the Consolidated Statementsof Cash Flows. Interest-bearing liabilities include all bonds payable and loans payable as recorded in theConsolidated Balance Sheets. The Interest payments use the figures of the interest expenses paid asrecorded in the Consolidated Statements of Cash Flows.
(4) Future Outlook
The environment surrounding the Group during the fiscal year ending December 31, 2019 is expected to be on amoderate recovery in Japan as improvements continue in the employment environment and personal consumption. In
the U.S. economy, although personal consumption remains steady, trade is expected to slow and the recovery is
expected to be moderate. Although the European economy is projected to remain strong, the recovery is expected tobe moderate due to uncertainty surrounding the U.K. exit from the EU. The world economy in general is continuing
to show signs of moderate recovery, but there is growing concern about uncertainty arising from situations such as
trade friction between the U.S. and China and its impact.
-3-

In domestic agriculture, demand for agricultural machinery is likely to remain flat in line with changes in needs
resulting from structural changes in agriculture. Under these circumstances, the Company forecasts higher revenue
centered on products and farming implements via initiatives such as responding to scaling by principal farmers,
responding to efficiency needs against a backdrop of personnel shortages, and providing a product lineup for
rice-crop diversion such as the shift to dry field farming and vegetable production.
Overseas, higher revenues are projected as the Company expands sales for neighboring countries in Asia, and theNorth American and European markets remain steady, despite continuing local inventory adjustments in Thailand
and China.
Profits are expected to increase due to higher gross profit on the back of higher revenue, in addition to factors suchas improvements in the revenue and cost structure at domestic sales companies and improved profitability inproducts for overseas, despite an increase in selling and administrative expenses.
(5) Basic Policy on Distribution of Surplus and Dividends for the Current and Next Fiscal Years
We recognize that decision on dividends to be paid to shareholders is one of the most important policies to be made.
Our basic policy is to continue to make and increase our dividend distribution, taking into consideration, not justconsolidated financial results, but our Group’s financial position and future business developments as well aschanges in our managerial environment. It is our basic policy to distribute retained earnings to shareholders once a
year as year-end dividends. The authority deciding payment of dividends is General Meeting of Shareholders.
With respect to dividends for the fiscal year ended December 31, 2018, we will pay a year-end dividend of 30.0
yen per share in line with the above policy.
For the fiscal year ending December 31, 2019, we plan to pay a year-end dividend of 30.0 yen per share.
(6) Risks Which Could Affect Our Business
Latent risks and uncertainties which could affect our future financial performance are exemplified as below. We
recognize the possibility of the occurrence of such risks and uncertainties, and will strive to avoid their occurrence
and take proper measures should they occur.
Forward-looking statements in the document are based on the judgments of the Company as of the end of the fiscal
year ended December 31, 2018:
1) Economic conditions and changes in the environment of agriculture
Sluggishness of domestic and/or overseas economic conditions and any change in the agricultural policy may
harm our financial performance through reduced demand for agricultural machinery.
2) Exchange rate fluctuation
There is a possibility that fluctuation of foreign exchange may adversely impact our financial performance.
3) Price hike of raw materials, difficulty in procurement, and confusion in the supply chain
As we procure raw materials and parts from numerous suppliers, their prices suddenly increasing more rapidly
than expected and a prolonged tightening of supplies may harm our business performance.
In addition, a fall in production activities due to disruptions in the supply chain may adversely impact the
ISEKI Group’s business performance and financial position.
4) Dependency on specific customers or suppliers
Any change of business policy, business depression or bankruptcy of our specific customers or suppliers may
harm our financial performance.
5) Competition with other companies
We are involved in fierce competition with other companies in the market, and unless overall productcompetitiveness, including relevant services, is maintained, there is the possibility of a decline in our
performance.
6) Serious defects in products and services
The occurrence of serious defects in our products or services may harm our financial performance.
7) Stock market fluctuation
As we hold securities, stock price declines may adversely impact our business performance and financial
position.
8) Government regulation on environmental issues, etc., and occurrence of related difficulties
Substantial costs may be incurred related to our products or business activities due to necessitated responses topublic regulation of environmental issues, etc., corrective measures undertaken upon the occurrence of troubles,
lawsuits and other situations which could lead to a deterioration of our financial performance.
9) Risks derived from international businessAs we promote overseas business development, unexpected changes in tax and legal systems or political unrestof any particular country may harm our financial performance when we engage in international businessactivities.
In addition, as we focus on expanding business to the Asian region, mainly a difficulty in ensuring humanresources, immature technological levels and unstable labor-management relationships in the region may hinder
the ISEKI Group’s business development.
10) Risk of legal violation-4-

We are making group-wide efforts to accomplish complete legal compliance and drive home the code of ethicalbehavior by establishing the “ISEKI Group Code of Ethical Behavior” and preparing an internal control system.
In spite of such efforts, if any of our directors and/or employees should conduct themselves in any way that
violates laws and regulations, the business activities of the Group may be restrained and the businessperformance may be deteriorated.
11) Risk of natural disasters and accidents
Natural disasters such as earthquakes, typhoons, flood or unexpected accidents may occur, which may harm ourfinancial performance.
12) Business alliances, joint ventures and strategic investment with other companies
We will form business alliances and joint ventures and carry out strategic investment with other companies asnecessary. We believe that these measures are an effective means for the effective utilization of the management
resources of both parties and for the timely development, production and sales of products.
However, should a conflict of interests occur between the parties concerned in business alliances or joint
ventures due to financial position or other reasons, we would not be able to maintain the alliances. With regard
to strategic investment, including acquisitions, the expected results and/or effects may not be obtained in the
integration of business, technologies, products and human resources, or more time and expenses than expected
may be required. Accordingly, the success or failure of these measures may materially impact the ISEKI
Group’s business and may adversely impact our business performance and financial position.
13) Debt
We have concluded syndicated loan or commitment line contracts with financial institutions. Should any of thefinancial conditions of these contracts be triggered, we could face obligations to pay back some or all of theseloans, which could adversely impact the financial position of the ISEKI Group. There is a possibility that a hikein interest rate may harm our financial performance.
The forecasts for future results and target figures produced by ISEKI & CO., LTD., are based on
information available as the day of this announcement, and assumptions made as of the same day regarding
a number of latent risks and uncertainties that could affect future financial performance. Actual results
could differ considerably depending on economic conditions, market trends, and future conditions forbusiness operations hereafter.

-5-

2. Status of the Corporate GroupThe main business of the ISEKI Group is the development, manufacture and sale of agricultural machinery for riceand vegetable farming, among other related areas.
The position of the business in the ISEKI Group is stated below.
(Agriculture-related Business)
ISEKI & CO., LTD. primarily handles the development and design of agricultural machinery. Iseki-Matsuyama Mfg.
Co., Ltd., Iseki-Kumamoto Mfg. Co., Ltd. and six other companies handle our agricultural machinery manufacturing
and processing of related components, and 13 domestic sales companies market and sell the machinery across thecountry. Overseas marketing operations are handled by ISEKI France S.A.S. (France), Dongfeng Iseki Agricultural
Machinery Co., Ltd. (China) and local distributors and affiliates.

Domestic Users and Customers

Overseas Users and Customers(Agriculture-related Business)

Sales

Consolidated Subsidiaries

Sales

Consolidated Subsidiaries:

ISEKI France S.A.S

Iseki-Hokkaido Co., Ltd.

(France) and 1 other

Iseki-Tohoku Co., Ltd.

company

and 11 other companies

Equity Method Affiliate
IST Farm Machinery

Sales

Co., Ltd. (Thailand)

Transport andServiceNon-consolidated Subsidiaries

N.V. ISEKI EUROPE
Products
and Parts

SA. (Belgium) and 1
other company

Consolidated
Subsidiaries:
Iseki-Butsuryu
Co., Ltd.
and 1 other company

Products and
Parts

Transport andService

ISEKI & CO., LTD.
Products andParts

Products andParts

Equity Method Affiliate:Dongfeng Iseki Agricultural
Machinery Co., Ltd. (China)

Consolidated Subsidiaries:
Iseki-Matsuyama Mfg. Co., Ltd.
Iseki-Kumamoto Mfg. Co., Ltd.

PT. ISEKI INDONESIA
and 4 other companies-6-3. Management Policies(1) Basic Management Principles
Since the establishment of the Company in 1926, with the principle of our founder, “free farmers from exhaustinglabor” as the cornerstone, the ISEKI Group has been striving to contribute to the modernization of Japan’s
agricultural industry as a full-time manufacturer specialized in agricultural machinery. Over this time, we haveconsistently pursued efficient and labor-saving advances in agriculture, and have served the market by pioneering
the development of a great deal of agricultural machinery and facilities. When we consider the increase of global
population, food issues, food self-sufficiency, land conservation, and global environmental issues, the role
agriculture plays is significant and, consequently, the social mission of agricultural machinery manufacturer
becomes more and more important.
To contribute to agriculture both in Japan and throughout the world, the ISEKI Group will continue to operate
under the basic business philosophy to “provide products that satisfy customers,” and endeavor to further increase
our corporate value.

[Company Motto]
Our management philosophy is to provide
1. Products that satisfy customers,
2. A stable workplace to the employees,
3. Appropriate dividend to the shareholders,
and thereby we will fulfill our social mission.
(2) Long- to Mid-term Management Strategies and Issues to be Addressed
In 2025, ISEKI & CO., LTD., will celebrate its 100th anniversary.
To establish our firm position as a manufacturer specialized in agricultural machinery in the global market by our100th anniversary, we will make concerted efforts throughout the Group in strengthening our responsiveness to
structural changes in agriculture in Japan, expanding our overseas business, reinforcing our organization andgovernance by exercising our strength as a manufacturer specialized in agricultural machinery, and utilizing ourability to develop and propose products that are competitive in the global market.
1) To strengthen the responsiveness to drastic changes in the agriculture in Japan
In domestic agriculture, structural changes are accelerating due to factors such as an aging population of agriculturaloperators, scaling due to a shortage of personnel, and rice-crop diversion from staple rice crops to dry field farming
and vegetable production.
While ISEKI & CO., LTD. has already been making efforts to respond to changes in agriculture in Japan as apriority issue, we will further accelerate our efforts and strengthen the responsiveness to drastic changes in Japanese
agriculture both in our products and services.
In response to a declining number of farmers and the market shifting to large-scale farming, we will promote
efficiency by transitioning to a wide-area structure with large-scale maintenance centers at the core, enabled via sales
office placement and reassignment of personnel. In addition, in view of changes in regional markets, we will work
toward strengthening promotion in the operator, dry field farming, and vegetable production markets whileadvancing improvements in the revenue and cost structure through expanding sales and reducing operating expenses,
as well as developing our strengths through reorganizing our sales network and performing further optimization,
working to create foundations for revenue and profit structures that are not impacted by swings in the market.
In terms of products, we will strengthen measures that leverage our high technological abilities to develop products
in response to market needs, such as simple, low-price machinery, advanced technologies, and vegetable harvesters.
In terms of services, we will work to strengthen its services, proposals, and support abilities by developing
personnel that can respond to market needs primarily at facilities such as the Dream Agricultural Research Institute,which conducts development and case studies of advanced agricultural techniques and support for their proliferation
among operators, and the ISEKI Global Training Center.
We will strengthen the responsiveness to a rapidly changing domestic agricultural market by supporting the “fullof dreams farming industry” in Japan with our products and services.
2) Expanding overseas businesses
We will position North America, Europe, China, and the ASEAN markets as our four strategic regions, and aim toachieve an overseas sales ratio of 40% or more, including entities accounted for using equity method.
In the North American market, we will further strengthen cooperation with our OEM partners and aim to further
expand sales by launching “new strategic products” that satisfy customer needs.
In the European market, we will position ISEKI France S.A.S. as the core of business development to establish the
ISEKI brand in Europe, and focus on expanding sales and market share by enhancing our product lineup and-7-

strengthening our service and support system.
For the Chinese and ASEAN businesses, which we position as a growth engine, we will further strengthen
cooperation with joint venture partners to expand business.
In the Chinese market, while the market is cooling and sales competition with local manufacturers intensifies, wewill work together with Dongfeng Iseki Agricultural Machinery Co., Ltd. to respond with measures that include
strengthening product competitiveness through accurately evaluating the market needs, speeding up the introductionof products, and strengthening after-sales services as well as enhancing purchasing and local procurement
capabilities.
In the Thai market, we have been endeavoring to establish the ISEKI brand through sales by IST Farm MachineryCo., Ltd. since 2013. We also established ISEKI (THAILAND) CO., LTD., in 2016 to further strengthen sales andservices for our products not only in Thailand but also throughout the entire ASEAN region. Going forward, we will
aim to establish our business in Thailand and expand sales channels to surrounding countries by further
strengthening cooperation with joint venture partners.
At the end of the previous year, we signed a technology and business alliance agreement with the second largest
agricultural machinery manufacturer in India, the world’s largest tractor market. Moving forward, we will develop
our business in the Indian market through the sales of our products and the manufacture of medium-sized tractors by
this company.
We will focus on expanding our overseas business by enhancing our product development, production, sales andservice structures by leveraging regional characteristics, and reinforcing the development of personnel that support
such structures.
3) Strengthening profitability through optimizing development and production
The Group has been pushing forward with cost structure reforms mainly in the development and production
departments in order to launch products that are competitive in both Japan and overseas where sales competition isintensifying. While strengthening measures toward improving productivity via thoroughly increasing efficiency withinitiatives such as speeding up development through standardizing and unifying designs, reducing costs of goods,
streamlining processes in manufacturing, and improving indirect operations, we will aim to strengthen responses tovariability in production burdens. Additionally, at PT. ISEKI INDONESIA, a manufacturing base which serves as
the core of the ASEAN market now under full-scale operation, measures to strengthen profitability improvement
such as adjustment of procurement partners and working to improve site operations while increasing production
capacity will serve as efforts to achieve further business expansion. The Global Strategic Products ProjectManagement Department will comprehensively supervise measures toward increasing profitability for overseas
products, and we intend to continue our Groupwide cost structure reforms to implement revenue structure reforms.
4) Active capital investment for growth
In the domestic market, in order to respond to the rapidly changing market, we have been advancing maintenance ofsales bases, including increasing the size and enriching functions of maintenance centers. We will continue withfurther enhancement in the future.
In the expanding overseas market as well, we will aim to make capital investment to increase and strengthen
capacity at PT．ISEKI INDONESIA, a strategic production base for North America, Europe, and ASEAN.
Additionally, at domestic production bases as well, we will engage in measures for active capital investment
toward both internal and external growth via initiatives such as facilities to improve product competitiveness andincreasing capacity and strength of production facilities that aim to increase efficiency with technologicalinnovation.
5) Increasing corporate value through strengthening personnel and governance
At issue are securing and developing personnel, in addition to accommodating the “Work Style Reform Bill” which
will be enforced this year, to support business activities in development, production, and sales departments in theface of strengthening response to a rapidly changing domestic agriculture market and expanding overseas business.
To work toward strengthening personnel development, the Company maintains the ISEKI Basic Engineering
Design Training Center, which fosters the development of young designers, the ISEKI Technical Training Center,
which develops personnel that can be active in both domestic and overseas production, and the ISEKI Global
Training Center, which develops both domestic and overseas personnel in sales and services. In order toaccommodate “Work Style Reform,” we will promote the cultivation of workplaces that improve productivity andcan adapt to various work styles by optimizing operational efficiency through the complete elimination of“overburden, waste, and unevenness” throughout the Group. Additionally, as an element of corporate social
responsibility, we are working to strengthen internal controls and compliance. We will not only comply with relatedlaws, regulations, and statutes, but aim for responsible action by all executives and employees with high ethics andsocial awareness while thoroughly implementing public awareness activities and internal education.

-8-4. Basic Policy for Choosing Accounting Standards
Considering comparability of periods between consolidated financial statements and comparability between
companies, the ISEKI Group will continue to use the accounting standards generally accepted in Japan for preparing
consolidated financial statements for the time being.
Regarding the accounting standards, we will adopt them in proper timing and manner, considering relevant
circumstances in and outside Japan.

-9-5. Consolidated Financial Statements and Principal Notes(1) Consolidated Balance Sheets(Millions of yen)
As of December 31, 2017 As of December 31, 2018
AssetsCurrent assets
Cash and deposits

7,981

7,475

Notes and accounts receivable - trade25,11323,327

Merchandise and finished goods

45,41046,495Work in process

6,728

6,046

Raw materials and supplies

1,267

1,177

Deferred tax assets

1,233

1,057

Other

4,076

7,320

(60)

(51)

91,751

92,849Buildings and structures, net

24,34325,378

Machinery, equipment and vehicles, net

9,898

9,257

Tools, furniture and fixtures, net

2,634

2,854

Land

50,77350,873

Leased assets, net

6,398

6,001

Construction in progress

1,514

2,446

30

29

95,592

96,842

1,025

1,082

7,146

5,817

Long-term loans receivable

42

33

Deferred tax assets

557

912

Net defined benefit asset

773

587

Other

4,616

3,270

Allowance for doubtful accounts

(158)

(146)

Total investments and other assets

12,978

10,474

109,596

108,398

201,348201,248

Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities

Total non-current assets
Total assets- 10 -

(Millions of yen)
As of December 31, 2017 As of December 31, 2018
Liabilities
Current liabilities
Notes and accounts payable - trade26,53223,803

Electronically recorded obligations - operating
Short-term loans payable

14,14027,216

15,93331,475Current portion of long-term loans payable

8,004

11,401

Lease obligations

2,194

2,337

Accrued consumption taxes

989

434

Income taxes payable

894

368

Deferred tax liabilities
Accrued expenses

1
4,611

2
4,240

Provision for bonuses

446

482

Provision for loss on construction contracts

391

Other

4,220

―
5,117

Total current liabilities

89,644

95,595

Non-current liabilities
Long-term loans payable

24,354

20,571

4,566

4,009

Lease obligations
Deferred tax liabilities

476

115

Deferred tax liabilities for land revaluation

5,780

5,780

Provision for directors’ retirement benefits

122

132

Net defined benefit liability
Asset retirement obligations

3,312
315

4,063
322

Other

1,859

1,696

Total non-current liabilities

40,787

36,692

Total liabilities

130,432

132,288

Net assets
Shareholders’ equity
Capital stock

23,344

23,344

Capital surplus

13,453

13,452Retained earnings

16,51916,932

Treasury shares

(986)

(983)

52,33052,746

1,818

418

Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(16)

(0)

Revaluation reserve for land

12,67012,670Foreign currency translation adjustment

1,115

864

Remeasurements of defined benefit plans

1,244

501

Total accumulated other comprehensive income

16,833

14,454

80

78

1,671
70,916

1,681
68,959201,348201,248

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 11 -

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Subsidy income
Subsidies received
Rent income
Technical support fee
Gain on sales of scraps
Other
Total non-operating income
Non-operating expenses
Interest expenses
Sales discounts
Foreign exchange losses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Subsidy income
Gain on step acquisitions
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Penalty
Other
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent- 12 -

Fiscal year ended
December 31, 2017

Fiscal year ended
December 31, 2018

158,382
112,175
46,20642,252
3,953

155,955
110,00945,94542,765
3,179

139
164
132
356
83
170
―
90
479
1,617

133
145
―
―
47
171
499
138
751
1,887

593
93
―
219
414
1,320
4,250

669
88
151
1,083
445
2,438
2,629

36
0
457
―
493

79
52
―
16
148

189
258
30
427
―
905
3,838
1,194
(200)
993
2,844
37
2,807

252
133
160
―
1
548
2,229
756
346
1,102
1,126
35
1,090

Consolidated Statements of Comprehensive Income(Millions of yen)
Fiscal year ended
December 31, 2017

Fiscal year ended
December 31, 2018

2,844

1,126

Valuation difference on available-for-sale securities

601(1,420)

Deferred gains or losses on hedges

(22)

15

Foreign currency translation adjustment

209

(36)

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted
for using equity method

374

(743)

106

(215)

1,269

(2,401)

4,113(1,274)

4,068(1,288)45

14

ProfitOther comprehensive income

Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 13 -

(3) Consolidated Statements of Changes in Equity
Fiscal year ended December 31, 2017 (January 1, 2017－December 31, 2017)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of period

23,344

CapitalsurplusRetainedearnings

13,454

14,034

Total
shareholders’equityTreasuryshares(990)

49,842

Changes of items during period
Dividends of surplus

(338)

(338)

Profit attributable toowners of parent

2,807

2,807

Purchase of treasury shares(0)

Disposal of treasury shares
Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

(7)

(7)

11

11

15

15
―

―

ሺ0)

2,484

4

2,488

23,344

13,453

16,519(986)

52,330

Accumulated other comprehensive income
Valuationdifference on Deferred gains Revaluation
or losses on reserve foravailable
for-salehedgeslandsecurities
Balance at beginning of period

1,227

6

Foreigncurrencytranslation
adjustment

12,686

798

Total
Subscription
Remeasureaccumulated
rights toments ofothersharesdefinedcomprehenbenefit plans
sive income

870

15,58891

Noncontrollinginterests

Total net
assets

1,629

67,151

Changes of items during period
Dividends of surplus

―

(338)

Profit attributable toowners of parent

―

2,807

Purchase of treasury shares―(7)

Disposal of treasury shares

―

11

―

15

Reversal of revaluation
reserve for land
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

590

(22)

(15)

317

374

1,244

(10)

42

1,276

590

(22)

(15)

317

374

1,244

(10)

42

3,764

1,818

(16)

12,670

1,115

1,244

16,83380

1,671

70,916- 14 -

Fiscal year ended December 31, 2018 (January 1, 2018－December 31, 2018)(Millions of yen)
Shareholders’ equity
Capital stock
Balance at beginning of period

23,344

Capitalsurplus13,453Retainedearnings

16,519Total
shareholders’equityTreasuryshares(986)

52,330Changes of items during period
Dividends of surplus

(677)

(677)

Profit attributable toowners of parent

1,090

1,090

Purchase of treasury shares(0)

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

(0)

(0)

2

2
―

―

ሺ0)

413

2

415

23,344

13,452

16,932(983)

52,746

Accumulated other comprehensive income
Valuationdifference on Deferred gains Revaluation
or losses on reserve foravailable
hedgesland
for-salesecurities
Balance at beginning of period

1,818

(16)

12,670Foreigncurrencytranslation
adjustment

1,115

Total
Subscription
Remeasureaccumulated
rights toments ofothersharesdefinedcomprehenbenefit plans
sive income

1,244

16,83380

Noncontrollinginterests

Total net
assets

1,671

70,916

Changes of items during period
Dividends of surplus

―

(677)

Profit attributable toowners of parent

―

1,090

Purchase of treasury shares―(0)

Disposal of treasury shares―

2

Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period(1,399)

15

―

(251)

(743)

(2,379)(2)

9(2,372)(1,399)

15

―

(251)

(743)

(2,379)(2)

9(1,957)418(0)

12,670864

501

14,45478

1,681

68,959- 15 -

(4) Consolidated Statements of Cash Flows(Millions of yen)
Fiscal year ended
December 31, 2017

Fiscal year ended
December 31, 2018

Income before income taxes

3,838

2,229

Depreciation

7,005

6,727

Impairment loss

258

133

Amortization of goodwill

―

2

(813)

―

(1,195)

752

(0)

(52)

Interest and dividend income

(303)

(278)

Interest expenses

593

669

Foreign exchange losses (gains)
Loss (gain) on sales of property, plant and equipment andintangible assets
Penalty

95

41

152

172

427

―

Loss (gain) on step acquisitions

―

(16)

(142)

1,807

Decrease (increase) in inventories(3,805)(297)

Increase (decrease) in notes and accounts payable - trade(1,900)(1,028)Other, net

860(1,340)Subtotal

5,071

9,521

Interest and dividend income received

312

269

Interest expenses paid

(593)

(665)

Proceeds from subsidy income

440

373

Payments for loss on disaster

(545)

―

Surcharges paid

(315)

―

―

(427)

Income taxes paid

(1,061)(1,455)

Net cash provided by (used in) operating activities

3,308

7,616

(5,646)(6,849)

390

438

(0)

(940)

Proceeds from sales of investment securities

077

Decrease (increase) in loans receivable

11(2,783)

Decrease (increase) in time deposits

(158)

98

Other, net

130

15

(5,273)(9,944)

Cash flows from operating activities

Subsidy income
Increase (decrease) in net defined benefit liability
Loss (gain) on sales of investment securities

Decrease (increase) in notes and accounts receivable - trade

Penalty paid

Cash flows from investing activities
Acquisition of property, plant and equipment and intangible
assetsProceeds from sales of property, plant and equipment andintangible assets
Acquisition of investment securities

Net cash provided by (used in) investing activities- 16 -

(Millions of yen)
Fiscal year ended
December 31, 2017

Fiscal year ended
December 31, 2018

Net increase (decrease) in short-term loans payable

2,582

4,313

Proceeds from long-term loans payable

5,058

8,122

Repayments of long-term loans payable(9,384)(8,506)

Proceeds from sales and leasebacks

420

979

Repayments of lease obligations(2,618)(2,254)

(7)

(0)

(341)

(678)

Dividends paid to non-controlling interests

(3)

(4)

Other, net

00(4,294)

1,970

146

(51)

Net increase (decrease) in cash and cash equivalents(6,113)(408)

Cash and cash equivalents at beginning of period

13,9097,795

Cash and cash equivalents at end of period

7,795

7,387

Cash flows from financing activities

Purchase of treasury shares
Cash dividends paid

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents- 17 -

(5) Notes to the Consolidated Financial Statements(Notes to Going Concern Assumption)
Not applicable(Important Basic Items for Preparing Consolidated Financial Statements)
1. Scope of consolidation
Number of consolidated subsidiaries: 24 (including Iseki-Matsuyama Mfg. Co., Ltd., Iseki-Kumamoto Mfg. Co.,
Ltd., Iseki-Hokkaido Co., Ltd. and Iseki-Tohoku Co., Ltd.)As of January 1, 2018, Iseki-Matsuyama Mfg. Co., Ltd. and Iseki-Hoei Mfg. co., Ltd were merged in anabsorption-type merger, with Iseki-Matsuyama Mfg. Co., Ltd. as the surviving company. On the same date, ISEKI
France Holding S.A.S. and ISEKI France S.A.S. were also merged in an absorption-type merger, with ISEKI
France Holding S.A.S. as the surviving company. Due to this, the 2 consolidated subsidiaries Iseki-Hoei Mfg. co.,Ltd and ISEKI France S.A.S. are excluded from the scope of consolidation from the period of the three months
ended March 31, 2018.
In addition, the company name of the surviving company ISEKI France Holding S.A.S. has been changed to
ISEKI France S.A.S.
2. Scope of the equity method companies
Number of affiliates: 2(Dongfeng Iseki Agricultural Machinery Co., Ltd. and IST Farm
Machinery Co., Ltd.)
3. Consolidated accounting period
Of the consolidated subsidiaries, 22 companies (including Iseki-Matsuyama Mfg. Co., Ltd.) use a balance sheet
date of December 31. ISEKI France S.A.S. uses a balance sheet date of September 30.
With regard to the preparation of the consolidated financial statements, for ISEKI France S.A.S. adopting
September 30 as its annual closing date, necessary adjustments at consolidation are made for any significant
transactions that occurred between the consolidated balance sheet date and these dates.
4. Accounting policies(1) Valuation basis and methods of important assets(a) Securities
Held-to-maturity debt securities: recorded at amortized cost
Available-for-sale securities- Securities with fair market value: recorded at market value, based on the fair market price at the closing
date of the consolidated reporting period.
(Any estimate variance is credited or debited to shareholders’ equity)- Securities without fair market value: recorded at cost, based on the moving-average method(b) Inventories: mainly recorded at cost using the gross-average method(Balance sheet amounts for items with reduced profitability have beenadjusted downward accordingly)(c) Derivatives: recorded at the market value(2) Depreciation methods for material depreciable assets(a) Property, plant and equipment (excluding leased assets)
The straight-line method is used.
(b) Intangible assets (excluding leased assets)
The straight-line method is used. However, software for internal use is depreciated using the straight-line
method over an expected useful life within the company of five years.
(c) Leased assets
Leased assets derived from finance leases other than those leases which transfer the ownership of the assets
to the lessee are amortized using the straight-line method with no residual value over the lease period,
which is deemed the useful life.
(3) Allowances and reserves(a) Allowance for doubtful accounts
A likely unrecoverable amount is calculated by applying the historical bad debt ratio to general receivables.
For specific receivables, such as doubtful debt receivables, allowances are made by individually evaluating
the likelihood of them being collected.
(b) Provision for bonuses
To provide for future bonus payments to employees, a provision for bonuses is booked based on estimatedfuture payments.
(c) Provision for directors’ retirement benefits
Some of the consolidated subsidiaries record the directors’ retirement benefits to provide for payment ofsuch retirement benefits in an amount as required by companies’ internal regulations.
- 18 -

(4) Accounting treatment related to retirement benefits(a) Method of attributing the projected benefits to periods of service
In calculating retirement benefits, the method of attributing the projected benefits to periods until the end of
the current fiscal year is based on the benefit formula basis attribution.
(b) Method of amortization of actuarial gains or losses and prior service cost
Actuarial gains or losses are amortized as incurred over the periods, which are the average remaining
service years of employees, by the straight-line method, starting from the following fiscal year. Prior service
cost is amortized as incurred over the periods, which are the average remaining service years of employees,
by the straight-line method.
(c) Adoption of the simplified method at small companies
For calculating net defined benefit liability and retirement benefit expenses, some consolidated subsidiaries
apply the simplified method which assumes the company’s benefit obligation to be equal to the benefits
payable assuming the voluntary retirement of all employees takes place at fiscal year-end.
(5) Accounting standards for revenues and expenses(a) Accounting standards for the value and cost of completed construction contracts
The percentage-of-completion method is applied for construction in progress up to the end of theconsolidated accounting period, for which the outcome can be estimated reliably (the proportional cost
method is applied for estimating the percentage of progress of the construction). The completed-contract
method is applied for other constructions.
(6) Foreign currency translations
Monetary assets and liabilities in foreign currencies are translated into yen at the spot exchange rate at thebalance sheet date. Gains or losses resulting from the translation are credited or charged to income.
Balance sheet accounts (except for shareholders’ equity) and revenue and expense accounts of the overseas
subsidiary are translated into yen at the spot exchange rate at the balance sheet dates. Differences arisingfrom the translation are presented as “Foreign currency translation adjustment” and “Non-controllinginterests” in shareholders’ equity and financial statements.
(7) Hedge accounting(a) Hedge accounting
Recorded in accordance with deferred hedge accounting. Such receivables and payables, which aredenominated in foreign currencies and for which forward exchange contracts have been entered, arerecorded using the forward exchange rates.
(b) Hedging instruments and hedged items(i) Hedging instruments
Forward exchange contracts(ii) Hedged items
Receivables and payables denominated in foreign currencies, forecasted transactions denominated inforeign currencies(c) Hedging policies
The financial risks associated with fluctuations in foreign currencies exchange rates and interest rates arehedged.
Risks associated with fluctuations in foreign currencies exchange rates concerning transactions in foreign
currencies, which occur when import and export operations are performed, are hedged by keeping a balance
between export exchanges and import exchanges. With regard to risks associated with fluctuations ininterest rates on loans payable, risks concerning variable interest rate loans payable are hedged, mainly witha view to equalizing interest burdens.
(8) Amortization method and amortization period of goodwill
The goodwill account is amortized by the straight-line method over a period of no longer than 20 years.
(9) Cash and cash equivalents in the Consolidated Statements of Cash Flows
Cash and cash equivalents consist of cash on hand, demand deposits, and short-term investments which arereadily convertible to cash subject to an insignificant risk of any change in their value and which werepurchased with an original maturity of three months or less.
(10) Other notes pertaining to the preparation of the Consolidated Financial Statements(a) Accounting treatment of consumption tax
Consumption tax and local consumption taxes are accounted for using a tax-exclusive method.
(b) Application of consolidated taxation system
The consolidated taxation system has been applied to the Company and some domestic consolidated
subsidiaries from the fiscal year ended December 31, 2018.
- 19 -

(Consolidated Balance Sheets)

1.
2.
3.
4.
5.

6.

Fiscal year ended
December 31, 2017
108,117(Millions of yen)
Fiscal year ended
December 31, 2018109,810

Fiscal year ended
December 31, 2017336

(Millions of yen)
Fiscal year ended
December 31, 2018
146

1,247
1,566
30

888
1,591
49

47

476

Accumulated depreciation of property, plant andequipment
Guaranteed liabilities
9,075
8,313
Notes receivable less discount-trade3
11
Endorsed notes receivable - trade
88
72
Revaluation of land for business use
The Company has revalued its land for business use pursuant to the Partial Revision to the Act on
Land Revaluation (Act No. 19, announced on March 31, 2001). The equivalent tax related to thechange in the said revaluation has been recorded in the liabilities (non-current liabilities) as “Deferred
tax liabilities for land revaluation” and the deducted amount has been recorded under net assets as“Revaluation reserve for land.”• Revaluation method:
The revaluation of land has been determined using a reasonableadjustment to the assessed value of the non-current assets forproperty tax as stipulated in Paragraph 3, Article 2 of the
Enforcement Order to the Act on Land Revaluation (Government
Ordinance No. 119, announced on March 31, 1998)
March 31, 2001
• Revaluation date:• Variance between the market
value of the revalued land at the¥(12,754) million, ¥(12,862) million
end of the period and therevalued book value:
Notes to mature on the last day of the fiscal year, etc.
Notes to mature on the last day of the fiscal year, etc. are settled as of the clearing date. Since the last
day of the fiscal year ended December 31, 2018 fell on a holiday of financial institutions, the balanceat the end of period includes the following notes to mature on the last day of the fiscal year, etc.

Notes receivable - trade
Notes payable - trade
Electronically recorded obligations - operating
Other (notes payable - facilities)
Other (electronically recorded obligations non-operating)- 20 -

(Consolidated Statements of Income)1.
2.

(Millions of yen)
Fiscal year ended
Fiscal year ended
December 31, 2017 December 31, 2018
3,363
1,757

Research and development expenses
Impairment loss

Fiscal year ended December 31, 2017 (January 1, 2017–December 31, 2017)
The Company recorded impairment losses on the following assets.
Usage

Idle
property

Lease
assetsAssetsscheduled
for saleType

Location(Millions of yen)
Impairment loss

Sanmu, Chiba Pref.

47

Kuwana, Mie Pref.

41

Yachimata, Chiba Pref.

29

Miyakonojo, Miyazaki Pref.

21

Ibaraki-machi, Higashiibaraki-gun, Ibaraki Pref.

8

Teshio-cho, Teshio-gun, Hokkaido

6Inabe, Mie Pref.

6

Okoppe-cho, Monbetsu-gun, Hokkaido

5

Land

Tsugaru, Aomori Pref.

13

Buildings,
structures,
landMatsuyama, Ehime Pref.

78

Buildings,
structures,
land

Total
258
(Reason to record impairment loss)
Impairment losses were recognized for idle property because there is no prospect for use in the future and themarket price of the land is declining; for leased assets, because the market price of the land is declining; and for
assets scheduled for sale because the scheduled sale price is low compared to the book values.
(Measurement of recoverable amount)
Recoverable amounts use the net realizable values and are evaluated based on prices and scheduled sale prices
after reasonable adjustments are made to the valuation amounts of property taxes.
Fiscal year ended December 31, 2018 (January 1, 2018–December 31, 2018)
The Company recorded impairment losses on the following assets.
Usage

Idle
propertyType

Buildings,
structures,
land

Location(Millions of yen)
Impairment loss

Kashiwazaki, Niigata Pref.

84

Higashikagura-cho, Kamikawa-gun, Hokkaido

13

Namegata, Ibaraki Pref.

12

Mukawa-cho, Yufutsu-gun, Hokkaido

10Nagai, Yamagata Pref.

3

Saroma-cho, Tokoro-gun, Hokkaido

2

Kuwana, Mie Pref.

2

Niigata, Niigata Pref.

1

Yokkaichi, Mie Pref.

1

Mitoyo, Kagawa Pref.
Total

1
133

(Reason to record impairment loss)
Impairment losses were recognized because there is no prospect for use in the future and the market price of theland is declining.
(Measurement of recoverable amount)
Recoverable amounts use the net realizable values and are evaluated based on prices after reasonableadjustments are made to the valuation amounts of property taxes.
- 21 -

(Consolidated Statements of Changes in Equity)
Fiscal year ended December 31, 2017 (January 1, 2017–December 31, 2017)
1. Matters concerning the class and total number of shares issued and class and number of treasury shares
Number of shares
Increase in number of(as of January 1, 2017) shares during period(Number ofshares issued)
Common stock(Treasury shares)
Common stock

Decrease in number ofshares during period

Number of shares (as ofDecember 31, 2017)229,849,936―

206,864,943

22,984,993

3,976,123

5,878

3,586,055

395,946

Based on a resolution of the 93rd Ordinary General Meeting of Shareholders held on March 30, 2017, theCompany has consolidated shares of its common stock (one-for-ten share consolidation), effective July l, 2017. As
a result, the number of shares issued decreased by 206,864,943 shares to 22,984,993 shares.
The increase in the number of treasury shares by 5,878 shares was due to purchase of shares below stock trading
unit. The decrease in the number of treasury shares was due to a 48,000 share decrease due to the exercise of stockacquisition rights and a 3,538,055 share decrease due to a one-for-ten share consolidation conducted with aneffective date of July 1, 2017 that was based on a resolution of the 93rd Ordinary General Meeting of Shareholders
held on March 30, 2017.
2. Dividends(1) Cash dividends paid
Resolution

Class of shares

Total amount ofdividend paid
(millions of yen)

Ordinary General
Meeting of
Shareholders on
March 30, 2017

Common stock

338

Dividend per share(yen)

Record date

1.50 December 31, 2016

Effective date

March 31, 2017(2) Of the dividends for which the record date belongs to the fiscal year ended December 31, 2017, those for which
the effective date of the dividends will be in the fiscal year ended December 31, 2018.
Resolution

Class of shares

Source offunds fordividends

Total amount ofdividend paid
(millions of yen)

Dividend pershare (yen)Record date

Effective dateOrdinary General
Meeting of
Shareholders on
March 29, 2018

Common stock

Retainedearnings

677

30.00

December 31,
2017

March 30, 2018- 22 -

Fiscal year ended December 31, 2018 (January 1, 2018–December 31, 2018)
1. Matters concerning the class and total number of shares issued and class and number of treasury shares
Number of shares
Increase in number of(as of January 1, 2018) shares during period(Number ofshares issued)
Common stock(Treasury shares)
Common stock

Decrease in number ofshares during period

Number of shares (as ofDecember 31, 2018)

22,984,993――

22,984,993

395,946

253

1,200

394,999

The increase in the number of treasury shares by 253 shares was due to purchase of shares below stock trading unit.
The decrease in the number of treasury shares was due to a 1,200 share decrease due to the exercise of stockacquisition rights.
2. Dividends(1) Cash dividends paid
Resolution

Class of shares

Total amount ofdividend paid
(millions of yen)

Ordinary General
Meeting of
Shareholders on
March 29, 2018

Common stock

677

Dividend per share(yen)

Record date

30.00 December 31, 2017

Effective date

March 30, 2018

(2) Of the dividends for which the record date belongs to the fiscal year ended December 31, 2018, those for which
the effective date of the dividends will be in the fiscal year ending December 31, 2019.
Resolution

Class of shares

Source offunds fordividends

Total amount ofdividend paid
(millions of yen)

Dividend pershare (yen)Record date

Effective dateOrdinary General
Meeting of
Shareholders on
March 26, 2019

Common stock

Retainedearnings

677

30.00

December 31,
2018

March 27, 2019- 23 -

(Consolidated Statements of Cash Flows)
Reconciliation between cash and cash equivalents at the end of period and the amount reported in the Consolidated
Balance Sheet.
(Millions of yen)
Fiscal year ended
Fiscal year ended
December 31, 2017
December 31, 2018
Cash and deposits
7,981
7,475
Time deposits with terms of more than 3 months
(186)
(88)
Total cash and cash equivalents
7,795
7,387
(Segment Information)
Since the Group had the only “agriculture-related business” segment, the segment information is omitted.
(Per Share Information)(Yen)
Fiscal year ended
December 31, 2017
Net assets per share

Fiscal year ended
December 31, 2018

3,061.84

2,974.78

Basic earnings per share

124.2948.29

Diluted earnings per share

124.0848.21

Notes:
1. The Company has consolidated shares of its common stock (one-for-ten share consolidation), effective July l,2017. The amounts stated for basic earnings per share and diluted earnings per share are calculated based on theassumption that shares of the common stock were consolidated at the beginning of the previous fiscal year.
2. The basis for calculation of basic earnings per share and diluted earnings per share are as follows.
(Millions of yen)
Fiscal year ended
December 31, 2017

Fiscal year ended
December 31, 2018

Basic earnings per share
Profit attributable to owners of parent reported in theConsolidated Statements of Income

2,807

1,090

―

―

2,807

1,090

22,588,520

22,589,460――

Increase in common shares (shares)

37,41735,283[Portion of subscription rights to shares] (shares)[37,417][35,283]――

Profit not attributable to common shareholders
Profit attributable to owners of parent attributed tocommon shares
Average number of common shares during period(shares)
Diluted earnings per share
Adjustment of profit attributable to owners of parent
reported in the Consolidated Statements of Income

Dilutive securities that were not included in thecomputation of diluted earnings per share because of
their anti-dilutive effect(Significant Subsequent Events)
Not applicable- 24 -

6. Non-consolidated Financial Statements and Principal Notes(1) Non-consolidated Balance Sheets(Millions of yen)
As of December 31, 2017 As of December 31, 2018
AssetsCurrent assets
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Advance payments - trade
Prepaid expenses
Deferred tax assets
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net
Structures, net
Machinery and equipment, net
Vehicles, net
Tools, furniture and fixtures, net
Land
Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Leasehold right
SoftwareLeased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Investments in capital
Investments in capital of subsidiaries and associates
Long-term loans receivable
Long-term prepaid expenses
Prepaid pension cost
Deferred tax assets
Other
Allowance for doubtful accounts
Allowance for investment loss
Total investments and other assets
Total non-current assets
Total assets- 25 -

4,447
2,881
24,97017,675
317
343
190
269
498
11,7533,049(4)66,392

3,649
2,881
25,61315,851
6
307
464
267
225
14,282
3,118(4)
66,664

7,891
623
1,774
4
831
25,503268
87
36,985

8,064
569
1,831
3
1,063
25,503330
66
37,432

85
226
140
51
503

85
255
200
39
580

6,811
19,037
97
1,941
2,698
421
420
―
365
(22)
(825)
30,94468,433
134,826

5,598
19,105
94
1,941
2,652
369
874
221
334
(9)
(825)
30,35668,369135,034

(Millions of yen)
As of December 31, 2017 As of December 31, 2018
Liabilities
Current liabilities
Notes payable - trade
Electronically recorded obligations - operating
Accounts payable - trade
Short-term loans payable
Current portion of long-term loans payable
Lease obligations
Account payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Provision for bonuses
Provision for loss on construction contracts
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Lease obligations
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Provision for retirement benefits
Asset retirement obligations
Long-term deposits received
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings
Treasury shares
Total shareholders’ equity
Valuations and translation adjustments
Valuation difference on available-for-sale securities
Revaluation reserve for land
Total valuation and translation adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets- 26 -

4,964
9,910
18,234
7,400
4,094
180
434
2,484
187
240
236
88
391
326
49,174

4,423
8,614
18,768
9,000
7,798
208
874
1,636
111
119
225
106
―
594
52,483

17,613
261
330
5,780
2,504
112
576
85
27,26476,43814,885
367
―
5,780
2,724
112
538
50
24,46076,944

23,344

23,344

11,5542,449
14,004

11,5542,448
14,003

7,479
7,479
(986)
43,842

8,559
8,559
(983)
44,924

1,794
12,67014,46480
58,387
134,826417
12,67013,08778
58,090135,034

(2) Non-consolidated Statements of Income(Millions of yen)
Fiscal year ended
December 31, 2017

Fiscal year ended
December 31, 2018

Net sales

92,913

93,118

Cost of sales

80,79580,779Gross profit

12,117

12,339Selling, general and administrative expenses

11,616

11,837501

502Interest income

314

307

Dividend income

748

908

Rent income

1,235

1,220

Subsidy income

356―

Technical support fee

―

499

Other

474

451

3,130

3,386

Interest expenses

197

194

Sales discounts

45

43

Rent expenses

1,036

978

226

314

1,505

1,530

2,126

2,358

Operating income
Non-operating income

Total non-operating income
Non-operating expenses

Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets

25

24

Subsidy income

254―

Total extraordinary income

279

24

Loss on sales and retirement of non-current assets

70

73

Impairment loss

78―

Loss on valuation of investment securities

30

160

Loss on valuation of shares of subsidiaries and associates―

116

Penalty

427

―

Other

―

1

Total extraordinary losses

607

351

Income before income taxes

1,799

2,030

Income taxes - current

145

(49)

Income taxes - deferred

(359)

322

Total income taxes

(214)

272

Profit

2,013

1,757

Extraordinary losses- 27 -

(3) Non-consolidated Statements of Changes in Equity
Fiscal year ended December 31, 2017 (January 1, 2017－December 31, 2017)(Millions of yen)
Shareholders’ equity
Capital surplus

Balance at beginning of
periodChanges of items during
periodCapital stock

Legal capitalsurplus

Other capitalsurplus23,344

11,5542,450

Retained earnings
Other retained
Total
earnings
Treasurysharesshareholders’
Total capital
Total retained
Retained
equitysurplusearnings
earnings
brought forward

14,004

5,789

5,789

(990)

42,147

Dividends of surplus

―

(338)

(338)

(338)

Profit

―

2,013

2,013

2,013

Purchase of treasury
shares
Disposal of treasury
shares
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of period

(0)

―

―

(7)

(7)

(0)

―

11

11

―

15

―

―

(0)

(0)

1,690

1,690

4

1,694

23,344

11,5542,449

14,004

7,479

7,479

(986)

43,842

1,212

12,686

Dividends of surplus
ProfitBalance at end of period――

Valuation
Total valuation Subscription Total net assets
difference on
Revaluationand translation rights to sharesavailable-for- reserve for land
adjustments
sale securities

Purchase of treasury
shares
Disposal of treasury
shares
Reversal of revaluation
reserve for land
Net changes of items
other than shareholders’equityTotal changes of items
during period

15―

Valuation and translation adjustments

Balance at beginning of
periodChanges of items during
period15

13,89891

56,138

―

(338)

―

2,013

―

(7)

―

11

―

15

581

(15)

565

(10)

554

581

(15)

565

(10)

2,249

1,794

12,67014,46480

58,387- 28 -

Fiscal year ended December 31, 2018 (January 1, 2018－December 31, 2018)(Millions of yen)
Shareholders’ equity
Capital surplus

Balance at beginning of
periodChanges of items during
periodCapital stock

Legal capitalsurplus

Other capitalsurplus23,344

11,5542,449

Retained earnings
Other retained
Total
earnings
Total capital
Total retained Treasury shares shareholders’
Retained
equitysurplusearnings
earnings
brought forward

14,004

7,479

7,479

Dividends of surplus

―

(677)

(677)

(677)

Profit

―

1,757

1,757

1,757

Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of period

(0)

―

(0)

(0)

(0)

―

2

2

―

―

―

(0)

(0)

1,079

1,079

2

1,082

23,344

11,5542,448

14,003

8,559

8,559

(983)

44,924

1,794

12,67014,46480

58,387

Dividends of surplus

―

(677)

Profit

―

1,757

―

(0)

―

2

Balance at end of period――

Valuation
Total valuation Subscription Total net assets
difference on
Revaluationand translation rights to sharesavailable-for- reserve for land
adjustments
sale securities

Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other than shareholders’equityTotal changes of items
during period

43,842―

Valuation and translation adjustments

Balance at beginning of
periodChanges of items during
period(986)(1,377)―(1,377)(2)(1,379)(1,377)―(1,377)

(2)

(297)

417

12,67013,08778

58,090- 29 -