Annual Report 2021
For the Year Ended 31st March 2021

PROFILE
Since its establishment in 1958, MARUDAI FOOD CO., LTD. has been dedicated tooffering delicious, high-quality meat products. In order to understand the latest
consumer trends and to meet the needs of modern lifestyles, we have continuously
strengthened our research, sales and production operations. Intending to become
Japan’s leading food company, we successfully listed our stock on the First Section of
the Tokyo Stock Exchange in 1972.
Starting as a ham and sausage producer, Marudai Food has steadily expanded its
range of products to include heat-processed, vacuum-packed food, dessert and beverage
products and fresh meats. Ham and sausage, however, remain an integral part of our
product line and continue to account for almost a third of our sales.
While pursuing a leading position in the ham and sausage market, Marudai Food waseager to explore new avenues by developing precooked and processed foods, which
went on sale in 1973. This long shelf-life food was developed to meet the specific needfor fast meal preparation. Containing absolutely no preservatives and requiring only
several minutes to prepare, Marudai precooked and processed foods have established astrong foothold in the market. Building on this success, we will make even greater
efforts to create new products that satisfy the increasingly discriminating tastes ofconsumers.

CONTENTSFINANCIAL HIGHLIGHTS ............................................................................... 1
TO OUR SHAREHOLDERS .............................................................................. 2
PRODUCTS ......................................................................................................... 3
CONSOLIDATED BALANCE SHEETS ............................................................ 5
CONSOLIDATED STATEMENTS OF INCOME .............................................. 7
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ............ 8CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS .............. 9
CONSOLIDATED STATEMENTS OF CASH FLOWS ................................... 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ......................... 11
INDEPENDENT AUDITOR’S REPORT .......................................................... 39
DIRECTORS AND STATUTORY AUDITORS ................................................ 44
OUTLINE OF THE COMPANY ....................................................................... 45

MARUDAI FOOD CO., LTD.

FINANCIAL HIGHLIGHTS
For the Years Ended 31st March 2021 and 2020
(Consolidated basis)Thousands of
U.S. dollars, except
per share amounts (Note)

Millions of yen,
except per share amounts
2021

2020

2021

Net sales ...................................................................................................

¥ 234,152¥ 245,820$ 2,115,003

Profit attributable to owners of parent .....................................................

414

1,654

3,740

Profit attributable to owners of parent (Note 2) .................................

16.31

65.04

0.15

Profit attributable to owners of parent, diluted (Note 2) ....................

–

–

–

Dividends (Note 13) ...........................................................................

30.00

35.00

0.27

Total assets ...............................................................................................

¥ 133,547¥ 131,854$ 1,206,278

Per share (yen and dollars):

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥110.71 to U.S.$1.00.

1MARUDAI FOOD CO., LTD.

TO OUR SHAREHOLDERS

new consumption trends. In addition, as price competition
is becoming even more intense against a backdrop of
consumers’ persistent budget-consciousness, conditions
continue to be severe.
Regarding the meat market, domestic beef prices fellin the first half of the year due to a decline in demandcaused by government requests to refrain from going out.
However, from the second half of the year, beef prices
exceeded the previous year’s levels. Domestic pork prices
also exceeded the previous year’s levels, reflecting
increased demand for home consumption. In addition,
due to unstable supplies from overseas suppliers,
imported beef prices turned from high prices in the firsthalf of the year to prices below the previous year’s levels,and then began to rise again in the second half. The
outlook for the meat market is difficult to predict, as
imported pork prices have repeatedly fluctuated.
In these circumstances, the Marudai Food Group
conducted its corporate activities with the aim ofadvancing reputation as an enterprise with a social
mission, namely, a comprehensive food products company
offering merchandise satisfying the highest standards ofsafety and reliability.
As a result, consolidated net sales for the fiscal year
ended 31st March 2021 decreased by 4.7% year on year to¥234,152 million. Operating loss was ¥330 million,
compared to operating income of ¥2,617 million in thesame period of the previous year, and profit attributableto owners of parent decreased by 74.9% to ¥414 million.

With the issuance of our company’s 73th annual report,
we hope that our shareholders are enjoying health andprosperity. We would also like to take this opportunity to
express our deep appreciation for your continued support.
During the fiscal year ended 31st March 2021, theJapanese economy initially showed signs of recovery, but
the conditions remained severe due to the impact of
COVID-19. With the repeated issuance of state of
emergency declarations and the uncertain prospects forthe containment of COVID-19, the overall outlook for the
economy remains unpredictable.

Once again we would like to thank you, our shareholders,for your support and trust that we can rely on yourcontinued confidence.
June 2021.

The industry in which the Marudai Food Group
operates is facing a major change in people’s lifestyles andthe market environment, with rising demand for eat-in andready-to-eat meals amid a decline in demand for eatingout, influenced mainly by consumers refraining fromdining out due to COVID-19, and the need to respond to

Yuji Sato
President and Representative Director

2

MARUDAI FOOD CO., LTD.

PRODUCTS

The following table shows an analysis of the consolidated sales of MARUDAI FOOD CO., LTD. and its consolidated
subsidiaries (together, the “Companies”) by product categories for the years ended 31st March 2021 and 2020:

Millions of yen(percent of total net sales)

Processed Food Products .........................................................................

Meat Products ..........................................................................................

Other ........................................................................................................

Total ....................................................................................................

2021

2020

¥ 161,267¥ 170,649(68.9%)(69.4%)

72,73575,024(31.0%)(30.5%)

150

147(0.1%)(0.1%)¥ 234,152¥ 245,820

2021

Note: U.S. dollar amounts are translated from yen for convenience only at the rate of ¥110.71 to U.S.$1.00.

3

Thousands of
U.S. dollars (Note)$ 1,456,662

656,987

1,354$ 2,115,003

Processed Food Products
The Ham & Sausage Products operations strove to expand sales through various campaigns in response to rising demand for
eat-at-home meals due to the impact of COVID-19 with a focus on mainstay products such as “Kunseiya-Ripened Pork Sausage”
and “Itsumo shinsen - Always Fresh Loin Ham.” In addition, we also worked to expand sales of for home consumption products
by introducing new products, including “Kunseiya-Ripened Pork Sausage: White,” and by proposing meals suited to various
occasions. On the other hand, sales of some commercial food products were sluggish due to the impact of weak demand foreating out, and sales of midyear and year-end gifts declined owing to the overall decline in the market as well as the effects fromgovernment stay-at-home requests related to COVID-19. As a result, sales in the Ham & Sausage Products operations decreasedby 3.7% year on year.
In our Precooked & Processed Foods operations, amid severe fluctuations in consumption due to the COVID-19 pandemic,
the trend toward eating at home and the growing demand for products for stockpiling led to a sales expansion through sales
promotions centered on retort products, such as the “Bistro Club Beef Curry” series. In addition, sales of the “Sundubu” series
increased due mainly to the introduction of new products, including “Shrimp Sundubu,” and efforts to a capture new customer
base through SNS-based sales promotion. On the other hand, government stay-at-home requests and increased working fromhome adversely affected sales of products for convenience stores, mainly in urban areas. In addition, sales of beverages containing
black tapioca decreased significantly due to the entry of new competitors. As a result, sales in the Precooked & Processed Foods
operations decreased by 7.1% year on year.
As a result, sales in the Processed Food Products segment amounted to ¥161,267 million, a decrease of 5.5% year on year.
Segment loss of ¥935 million was recorded, which was significantly below the previous fiscal year segment income of ¥1,668
million in the same period of the previous fiscal year, owing mainly to lower sales, lower prices due to intensified sales
competition and higher raw material prices.
Meat Products
With regard to beef, amid the growing impact of COVID-19, overall beef sales were below the previous year’s level,
mainly resulting from sluggish sales of imported beef to restaurants, despite increased sales of domestic beef to massretailers. Regarding pork, sales of pre-pack products increased, but overall pork sales fell below the previous year’s leveldue mainly to lower supplies from overseas operators and a delayed recovery in demand for eating out. Sales of chicken
were lower due to an increase in domestic inventories of imported products and a consequent decline in unit prices.
As a result, sales in the Meat Products segment decreased by 3.1% year on year to ¥72,735 million, and segment
income decreased by 39.2% year on year to ¥548 million, due mainly to a decline in demand for eating out.
Other
Sales in the Other business increased by 2.4% year on year to ¥150 million, and operating income increased by 17.7% to ¥57
million.

4

MARUDAI FOOD CO., LTD.

CONSOLIDATED BALANCE SHEETS
31st March 2021 and 2020

Millions of yen
ASSETS
Current assets:
Cash and time deposits (Notes 3 and 17) ...........................................
Receivables:
Trade notes and accounts (Note 3) ...............................................
Other .............................................................................................
Allowance for doubtful accounts ..................................................
Inventories (Note 6) ............................................................................
Advances and other current assets .....................................................
Total current assets .......................................................................
Investments and other assets:
Investment securities (Notes 3 and 4)
Affiliates .......................................................................................
Other .............................................................................................
Retirement benefit asset (Note 10).....................................................
Deferred tax assets (Note 11) .............................................................
Other ...................................................................................................
Allowance for doubtful accounts .......................................................
Total investments and other assets ................................................
Property, plant and equipment, at cost:
Land (Note 8) .....................................................................................
Buildings and structures (Note 8) ......................................................
Machinery and equipment (Note 8) ...................................................
Lease assets ........................................................................................
Construction in progress ....................................................................
Less accumulated depreciation ..........................................................
Net property, plant and equipment ...............................................
Intangible assets .....................................................................................
Total assets .........................................................................................
See accompanying Notes to Consolidated Financial Statements.

5

2021

2020

¥

¥

8,476

8,244

Thousands of
U.S. dollars (Note 1)
2021$

76,56026,1381,382(13)15,767519
52,26927,502
1,662(16)
17,593613
55,598236,094
12,483(117)
142,417
4,688
472,125167
13,314
1,580
318
2,885
(113)
18,151

121
10,283
72
278
3,496
(117)
14,133

1,508
120,260
14,272
2,872
26,060(1,021)
163,951

18,84061,92875,035
8,345
909
165,057(104,710)
60,3472,780¥ 133,547

18,39354,25967,383
7,879
2,545
150,459(91,386)
59,0733,050¥ 131,854

170,174
559,371677,762
75,3778,211
1,490,895(945,804)
545,091
25,111$ 1,206,278

Millions of yen
2021
2020

LIABILITIES AND NET ASSETS

Thousands of
U.S. dollars (Note 1)
2021

Current liabilities:
Payables:Trade notes and accounts payable (Note 3) ..................................
Other (Note 3) ...............................................................................
Short-term borrowings (Notes 3 and 7) ..............................................
Long-term debt due within one year (Notes 3, 7 and 8) ....................
Short-term lease obligations (Notes 3 and 7) .....................................
Accrued income taxes ........................................................................
Allowance for bonuses .......................................................................
Other current liabilities ......................................................................
Total current liabilities ..................................................................

¥ 20,237
9,147
7,890
2,658
905
187
851
1,641
43,516¥ 23,166
8,943
8,080
1,888
855
524
850
1,839
46,145$ 182,793
82,621
71,26724,009
8,175
1,689
7,687
14,822
393,063

Long-term liabilities:
Long-term debt due after one year (Notes 3, 7 and 8) .......................
Long-term lease obligations (Notes 3 and 7) .....................................
Deferred tax liabilities (Note 11) .......................................................
Liabilities for retirement benefits (Note 10) ......................................
Other long-term liabilities ..................................................................
Total long-term liabilities .............................................................

4,649
4,296
1,439
1,309
658
12,351

3,934
4,658
550
854
657
10,653

41,99338,804
12,998
11,824
5,943
111,562

NET ASSETS (Note 13)
Shareholders’ equity:
Common stock
Authorised — 40,000,000 shares in 2021 (40,000,000 shares in 2020)
Issued — 26,505,581 shares in 2021 (26,505,581 shares in 2020)........
Capital surplus ....................................................................................
Retained earnings ...............................................................................
Treasury stock, at cost ........................................................................
Total shareholders’ equity �����������������������������������������������������������

6,716
22,08645,201(2,697)71,306

6,716
22,08645,677(2,658)71,821

60,663
199,494408,283(24,361)
644,079

Accumulated other comprehensive income:Unrealised gains on securities ............................................................
Deferred gains (losses) on hedges ......................................................
Foreign currency translation adjustments ..........................................
Adjustments for retirement benefits ...................................................
Total accumulated other comprehensive income ..........................

5,944
35
34
(252)
5,761

3,833
(3)
41
(1,182)
2,689

53,690316
307(2,276)52,037613
77,680¥ 133,547

546
75,056¥ 131,854

5,537
701,653$ 1,206,278

Contingent liabilities (Note 12)

Noncontrolling interests �����������������������������������������������������������������������
Total net assets ...................................................................................
Total liabilities and net assets .............................................................
See accompanying Notes to Consolidated Financial Statements.
6

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF INCOME
Years Ended 31st March 2021 and 2020

Net sales ..................................................................................................
Cost of sales ............................................................................................

Millions of yen
2021
2020
¥ 234,152¥ 245,820
184,688
190,340

Thousands of
U.S. dollars (Note 1)
2021$ 2,115,003
1,668,214

Gross profit ........................................................................................
Selling, general and administrative expenses (Note 14) ......................

49,464
49,79455,48052,863446,789449,770

Operating income (loss) ....................................................................

(330)

2,617

(2,981)

338
(233)
1
56
998
(204)
(300)
409

348
(216)
7
(165)
–
(91)
(85)
322

3,053
(2,105)9506
9,015(1,843)(2,710)
3,695

1,065

120

9,620

Income before income taxes ...................................................................

735

2,737

6,639

Income taxes (Note 11):
Current ................................................................................................
Deferred ..............................................................................................

329
(79)

1,028
24

2,972
(714)

250

1,052

2,258

485
(71)

1,685
(31)

4,381
(641)

Other income (expenses):
Interest and dividend income .............................................................
Interest expense ..................................................................................
Gain on sale of securities, net (Note 4) ..............................................
Loss (gain) on disposal of property, plant and equipment, net...........
Gain on bargain purchase ...................................................................
Special retirement expenses ...............................................................
Loss on impairment of assets (Note 15) .............................................
Other, net ............................................................................................

Profit .......................................................................................................
Profit attributable to noncontrolling interests .....................................
Profit attributable to owners of parent .................................................

¥

414

Profit attributable to owners of parent per share (Note 2) .................

¥

16.31

¥

1,654

¥

65.04

Dividends per share (Note 13) ...............................................................

See accompanying Notes to Consolidated Financial Statements.

7

–
¥

30.00

3,740

U.S. dollars (Note 1)

Yen
Profit attributable to owners of parent, diluted per share (Note 2) ...

$

$

–
¥

35.00

0.15
–

$

0.27

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended 31st March 2021 and 2020

Profit ������������������������������������������������������������������������������������������������������
Other comprehensive income:Unrealised gains on securities �����������������������������������������������������������
Deferred gains (losses) on hedges �����������������������������������������������������
Adjustments for retirement benefits ��������������������������������������������������
Share of other comprehensive income of associates accounted for using equity method ���Total other comprehensive income (Note 18) �����������������������������
Comprehensive income �������������������������������������������������������������������������
Comprehensive income attributable to:
Owners of the parent �������������������������������������������������������������������������
Noncontrolling interests ��������������������������������������������������������������������
See accompanying Notes to Consolidated Financial Statements.

8

Millions of yen
2021
2020
¥ 485
¥ 1,685

Thousands of
U.S. dollars (Note 1)
2021$ 4,381

2,111
38
930
(6)
3,073
¥ 3,558(1,441)
(12)
(359)
4
(1,808)¥ (123)19,068
343
8,400
(54)
27,757$ 32,138¥ 3,487¥ 71¥ (154)¥ 31$ 31,497$ 641

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
Years Ended 31st March 2021 and 2020

Thousands of
U.S. dollars (Note 1)
2021

Millions of yen
2021
2020
Common stock:
Balance at beginning and end of the year �����������������������������������������

¥ 6,716¥ 6,716$ 60,663

Capital surplus:
Balance at beginning and end of the year �����������������������������������������

¥ 22,086¥ 22,086$ 199,494

Retained earnings:
Balance at beginning of the year �������������������������������������������������������Cash dividends paid ��������������������������������������������������������������������������
Profit attributable to owners of parent ����������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥ 45,677(890)
414¥ 45,201¥ 44,913
(890)
1,654
¥ 45,677$ 412,582(8,039)3,740$ 408,283

Treasury stock, at cost:
Balance at beginning of the year �������������������������������������������������������
Purchase of treasury stock �����������������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥ (2,658)(39)¥ (2,697)¥ (2,635)(23)¥ (2,658)$ (24,009)(352)$ (24,361)

Unrealised gains on securities:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥ 3,833
2,111¥ 5,944¥ 5,274(1,441)¥ 3,833$ 34,622
19,068$ 53,690

¥

¥

9
(12)
(3)

$

36
5
41

$

Deferred gains (losses) on hedges:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥

(3)
38
35

¥

$

(27)
343
316

Foreign currency translation adjustments:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥Adjustments for retirement benefits:
Balance at beginning of the year �������������������������������������������������������
Increase (decrease) for the year ���������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������

¥ (1,182)
930¥ (252)

¥

(823)
(359)
¥ (1,182)$ (10,676)
8,400$ (2,276)¥¥$

Noncontrolling interests:
Balance at beginning of the year �������������������������������������������������������
Increase for the year ��������������������������������������������������������������������������
Balance at end of the year �����������������������������������������������������������������
See accompanying Notes to Consolidated Financial Statements.

9

¥

¥

41
(7)
34

546
67
613

¥
¥

¥

519
27
546

$

$

370
(63)
307

4,932
605
5,537

MARUDAI FOOD CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended 31st March 2021 and 2020

Millions of yen
2021
2020
Cash flows from operating activities:
Income before income taxes ...............................................................
Depreciation and amortisation ...........................................................
Loss on impairment of assets .............................................................
Decrease in allowance for doubtful accounts .....................................
Decrease in liabilities for retirement benefits ....................................
Gain on bargain purchase ...................................................................
Special retirement expenses ...............................................................
Interest and dividend income .............................................................
Interest expense ..................................................................................
Gain on sale of securities, net ............................................................
Loss (gain) on disposal of property, plant and equipment, net ..........
Decrease in receivables ......................................................................
Decrease (increase) in inventories ......................................................
Increase (decrease) in trade notes and accounts payable ...................
Decrease in consumption tax payable.................................................
Other, net ............................................................................................
Subtotal .........................................................................................
Interest and dividends received ..........................................................
Interest paid ........................................................................................
Income taxes paid ...............................................................................
Payments for special retirement expenses ..........................................
Net cash provided by operating activities .....................................

Thousands of
U.S. dollars (Note 1)
2021

¥

735
7,798
300
(7)
(267)
(998)
204
(338)
233
(1)
(56)
2,222
2,286
(3,567)
(199)
(86)
8,259
336
(233)
(597)
(91)
7,674

¥ 2,737
6,802
85
(11)
(414)
–
91
(348)
216
(7)
165
3,208
(1,822)84(200)(1,264)
9,322
347
(217)
(662)
(181)
8,609

$ 6,639
70,4362,710(63)(2,412)(9,015)
1,843(3,053)
2,105
(9)
(506)
20,07020,649(32,219)(1,797)(778)
74,6003,035(2,105)(5,392)(822)
69,316

Cash flows from investing activities:
Purchase of short-term investments and investment securities ...........
Proceeds from sale of short-term investments and investment securities ....
Purchase of property, plant and equipment ..................................................
Proceeds from sale of property, plant and equipment ........................
Purchase of shares of subsidiaries resulting in change in scope of consolidation....
Other, net ............................................................................................
Net cash used in investing activities .............................................

(34)
3(5,418)1,008(1,195)247(5,389)(34)
23(8,740)460–
19(8,272)(307)27(48,939)
9,105(10,794)
2,231(48,677)

Cash flows from financing activities:
Net increase (decrease) in short-term borrowings ..............................
Proceeds from long-term debt ............................................................
Repayment of long-term debt .............................................................
Repayment of lease obligations .........................................................
Cash dividends paid ...........................................................................
Purchase of treasury shares ................................................................
Other, net ............................................................................................
Net cash used in financing activities ............................................

(190)
3,910
(3,925)
(914)
(890)
(40)
(4)
(2,053)

1,700
1,850
(1,927)
(926)
(891)
(22)
(4)
(220)

(1,716)35,318(35,453)(8,256)(8,039)(361)(37)(18,544)

Net increase in cash and cash equivalents ...........................................
Cash and cash equivalents at beginning of year ..................................
Cash and cash equivalents at end of year (Note 17) ............................

232
8,244
¥ 8,476

117
8,127¥ 8,244

2,095
74,465$ 76,560

See accompanying Notes to Consolidated Financial Statements.

10

MARUDAI FOOD CO., LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For years Ended 31st March 2021 and 2020

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of MARUDAI FOOD CO., LTD. (the “Company”) and its consolidated
subsidiaries (together, the “Companies”) have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law and its related accounting regulations and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements fromInternational Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English from the consolidated
financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Act. Certain supplementary
information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation,
is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollar amounts is included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at 31st March 2021, which was ¥110.71 to U.S. $1.00. These translations should not be
construed as representations that the Japanese yen amounts have been, could have been or could in the future be converted into
U.S. dollars at this or any other rate of exchange.
2. Significant accounting policies
Consolidation - The consolidated financial statements include the accounts of the Company and its 28 subsidiaries. From thesecond quarter ended 30th September 2020, Toraku Foods Co., Ltd., whose shares were newly acquired, and one other company
have been included in the scope of consolidation. ALL of the Company’s subsidiaries have the same fiscal year end as theCompany, 31st March.
All significant intercompany balances, transactions and profits have been eliminated. In the elimination of investments in
subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to noncontrolling shareholders, areevaluated using the fair value at the time the Company acquired control of the respective subsidiary. The difference between thecost of an investment and the equity in the assets at the date of acquisition is amortized over five years. Equity method accounting
is applied to affiliates which are substantially controlled by the Company. Betagro MF Deli Co., Ltd. is being included in thescope of the Companies to which the equity method is applied.
Cash and cash equivalents - Cash on hand, readily available deposits and short-term highly liquid investments with maturities
not exceeding three months at the time of purchase are considered cash and cash equivalents.
Securities - Available-for-sale securities with available fair market value are stated at fair market value. Unrealized gains andlosses on these securities are reported, net of applicable income taxes, as a separate component of shareholders’ equity. Realized
gains and losses on the sale of such securities are computed using the moving average cost method. Debt securities with noavailable fair market value are stated at amortized cost, net of the amount considered not collectible. Other securities with noavailable fair market value are stated using the moving average cost method.
If the market value of equity securities or available-for-sale securities declines significantly, the difference between the fairmarket value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities
is not readily available, such securities are written down to net asset value with a corresponding charge in the consolidated
statement of income in the event the net asset value declines significantly. In these cases, the fair market value or the net asset
value will be the carrying amount of the securities at the beginning of the next year.
Derivatives and hedge accounting - The Companies account for derivative financial instruments at fair value and recognizechanges in the fair value as gain or loss unless the derivative financial instrument is used for hedging purposes. If derivative
financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gain or loss
resulting from changes in the fair value of the derivative financial instrument until the related loss or gain on the hedged item isrecognized. However, foreign monetary obligations denominated in foreign currencies for which foreign exchange forward
contracts are used to hedge foreign currency fluctuations are translated at the contracted rate if the forward contracts qualify forhedge accounting (“the alternative method”). Also, if interest rate swap contracts are used as hedges and meet certain hedging

11

criteria, the net amount to be paid or received under the interest rate swap contract is added to or deducted from the interest on theassets or liabilities for which the swap contract was executed (“the special treatment”).
Allowance for doubtful accounts - An allowance for doubtful accounts is provided to cover possible losses on collection. With
respect to normal trade accounts receivable, it is stated at an amount based on the actual rate of historical bad debts. For certain
doubtful receivables, the uncollectible amounts are individually estimated.
Inventories - The Company and its domestic consolidated subsidiaries state inventories at the lower of average cost or net
realizable value.
Property, plant and equipment - Property, plant and equipment are stated at cost. Depreciation is computed primarily using thedeclining balance method. However, the straight-line method is applied for depreciation of buildings acquired on or after 1st April
1998 and facilities attached to buildings and structures acquired on or after 1st April 2016. The useful life of buildings andstructures ranges from 12 to 50 years. The useful life of machinery and equipment ranges from 4 to 10 years.
Software - The Company and its consolidated domestic subsidiaries include software in intangible assets and amortize it using
the straight-line method over the estimated useful life of 5 years.
Goodwill - Goodwill is amortized over a period of 5 years using the straight-line method.
Lease assets - Assets under finance leases that do not transfer ownership of the lease assets are amortized using the straight-line
method over the lease term with the assumption that the useful life coincides with the lease term and the residual value is zero.
Research and development expenses - Research and development expenses for the improvement of existing products and thedevelopment of new products, including basic research and fundamental development costs, are charged to expenses as incurred.
Bonuses - The Company and its consolidated domestic subsidiaries follow the general Japanese practice of paying bonuses to
employees in July and December. The allowance for bonuses is determined based upon the estimated amounts to be paid in thesubsequent period.
Translation of foreign currencies - Short-term and long-term receivables and payables denominated in foreign currencies aretranslated into Japanese yen at year-end rates.
Accounting for Retirement Benefits - Projected benefit obligations are attributed to periods on a benefit formula basis indetermining retirement benefit obligations. Actuarial gains and losses are amortized by the straight-line method over a fixed
period of 10 years, which is within the average remaining service years of the eligible employees, beginning in the fiscal year
following the year in which the gains and losses are recognized. In determining the amount of retirement benefit obligations andretirement benefit costs, some small sized consolidated subsidiaries have adopted a simplified method in which the amount thatwould be required if all the employees retired voluntarily at the fiscal year end is treated as retirement benefit obligation.
Income taxes - The asset-liability approach is used to recognize deferred tax assets and liabilities for tax loss carryforwards
and the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities forfinancial reporting purposes and the amounts used for income tax purposes.
Amounts per share - The computations of profit attributable to owners of parent per share of common stock shown on the
consolidated statements of income are based on the weighted average number of shares outstanding during each financial
period. Cash dividends per share shown in the consolidated statements of income are the amounts applicable to therespective years. Diluted profit attributable to owners of parent is not disclosed because the Company had no outstanding
securities which might have diluted the per share amounts for the years ended 31st March 2021 and 2020.
Corporate taxes - Consolidation taxation system has been adopted.

12Application of tax effect accounting related to the transition from a consolidated taxation system to a group tax sharing system Regarding items that have been transitioned to a group tax sharing system established under the Act for Partial Amendment of the
Income Tax Act, etc. (Act No. 8 of 2020) and for which a revision of the non-consolidated taxation system has been carried out
pursuant to this transition, the Company and some of its consolidated subsidiaries in Japan have not applied the provisions in
Paragraph 44 of Implementation Guidance on Tax Effect Accounting (ASBJ Guidance No. 28, 16th February, 2018), in
accordance with the treatment prescribed in Paragraph 3 of Practical Solution on the Treatment of Tax Effect Accounting for theTransition from the Consolidation Taxation System to the Group Tax Sharing System (PITF No. 39, 31st March, 2020). The
amounts of deferred tax assets and deferred tax liabilities for these items are based on taxation law as it was before amendment.
Significant accounting estimates
1. Impairment of fixed assets(1) Amount recorded in the consolidated financial statements for the fiscal year ended 31st March 2021
The book value of business assets (including common assets) of the Company for the fiscal year ended 31st March
2021was ¥33,117 million ($299,133 thousand). (Property, plant and equipment was ¥30,549 million ($275,937 thousand),and intangible assets were reported in the amount of ¥2,568 million ($23,196 thousand))The Company determined that there was an indication of impairment of the business assets of the Company due to thecontinuous recording of operating loss and reviewed the necessity of recording an impairment loss. However, as it was determinedthat the undiscounted future cash flows would exceed the book value of the business assets, including the common assets of theCompany, the Company did not record any impairment loss.
(2) Significant accounting estimates for identified items① Calculation method
When an indication of impairment exists for an asset or asset group, the Company conducts an assessment of whether
recording an impairment loss is required based on the future cash flows of the asset.
The Company groups its cash generating units, which are the units used to determine whether recognizing impairment isrequired, into business assets, rental assets, idle assets and artwork. Regarding business assets, the management accounting
business category in which income and expenditure are continuously monitored is considered one asset group, and future
cash flows are calculated based on the profit plan formulated on the basis of the management plan approved by the Board of
Directors. Regarding rental assets, idle assets and artwork, individual assets are used as the smallest unit for grouping. The
future cash flows of rental assets are estimated by the net selling price on the basis of appraisal values, etc., or future cash
flows on the basis of rental income, etc., while future cash flows of idle assets and artwork are estimated based on the net
selling price on the basis of the appraisal values, etc.
② Key assumptions
The key assumptions used in the calculation of undiscounted future cash flows are subject to a high degree of uncertainty.
- With regard to the net sales plan, it is assumed that the plan for the next fiscal year will be at the same level as the degreeof achievement of the budget for the current fiscal year, depending on the division, and that the plan for the next fiscal year
and beyond will remain at the same level, taking into account changes in the market environment for the industry as a whole.
- With regard to the cost of sales plan, the unit price of raw materials used is based on the projected unit price inconsideration of current market trends and reflects the cost reduction effect of capital investment in the production division.
The impact of COVID-19 is expected to continue through the first half of the fiscal year, followed by a gradual recovery
in the second half.
③ Effect on the consolidated financial statements for the fiscal year ending 31st March 2022
There may be a significant impact on the consolidated financial statements for the fiscal year ending 31st March 2022 if
actual amounts differ from the estimates due to uncertain future economic conditions or changes in the businessenvironment.

13

2. Recoverability of deferred tax assets(1) Amount recorded in the consolidated financial statements for the fiscal year ended 31st March 2021
Deferred tax assets before offsetting with deferred tax liabilities in the fiscal year ended 31st March 2021 was ¥2,188
million ($19,763 thousand).
(2) Significant accounting estimates for the identified items① Calculation method
Deferred tax assets are recognized to the extent that it is highly probable that taxable income will be available against
which the unused portion of tax loss carryforwards and future deductible temporary differences can be utilized. In
determining the taxable income to be generated, the Company calculates the timing and amount of taxable income that canbe earned in the future based on the future profit plan formulated on the basis of the management plan approved by the
Board of Directors.
② Key assumptions
For the Company, the estimated amount of taxable income is calculated based on the figures linked to the profit planreferred to above in this Note in Subsection 1 (2) ②, “Key assumptions.”
Among the consolidated subsidiaries that have a significant impact on the amount of taxable income, for those companies
whose management plans for the next fiscal year, as approved by the Board of Directors, are expected to increasesignificantly as compared to the actual results of the current fiscal year, taxable income is estimated based on the assumptionthat profits from the next fiscal year will remain at the same level as those in the current fiscal year, except for items that are
expected to improve in the next fiscal year.
③ Effect on the consolidated financial statements for the fiscal year ending 31st March 2022
There may be a significant impact on the consolidated financial statements for the fiscal year ending 31st March 2022 if
the actual timing and amounts differ from the estimates due to uncertain future economic conditions or changes in thebusiness environment. In addition, changes in the effective statutory tax rate due to tax reforms may also have a significant
impact on those consolidated financial statements.
Accounting standards and relevant regulations that have not yet been adopted- Accounting Standard for Revenue Recognition (Accounting Standards Board of Japan (ASBJ) Statement No. 29, 31st March 2020)- Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance No. 30, 26th March 2021)(1) Summary
The International Accounting Standards Board (IASB) and the US Financial Accounting Standards Board (FASB) jointly
developed a comprehensive accounting standard for revenue recognition and announced “Revenue from Contracts with
Customers” (IFRS 15 by IASB and Topic 606 by FASB) in May 2014. As IFRS 15 and Topic 606 were to be applied from thefiscal years beginning on or after 1st January 2018 and after 15th December 2017, respectively, the ASBJ developed acomprehensive accounting standard for revenue recognition and announced it together with an implementation guidance.
The ASBJ’s basic policy for developing the accounting standard for revenue recognition was to determine an accounting
standard upon incorporating the basic principles of IFRS 15 for comparability between financial statements, which is one of thebenefits of compatibility with IFRS 15, and to add an alternative treatment to the extent it does not impair comparability for any
items that require special consideration regarding business practices customary in Japan.
(2) Effective date
The standards are scheduled to be applied from the beginning of the fiscal year ending 31st March 2022.
(3) Effect of application of the standards
As a result of the application of the “Accounting Standard for Revenue Recognition” and other related standards, we havedecided to change the method of deducting a portion of distribution expenses and promotion expenses, etc., which werepreviously recorded as selling, general and administrative expenses, from net sales. As a result, net sales are expected to decreaseby ¥11,900 million ($107,488 thousand) and selling, general and administrative expenses are expected to also decreaseby ¥11,900 million ($107,488 thousand).

14

- Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, 4th July 2019)- Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9, 4th July 2019)- Accounting Standard for Financial Instruments (ASBJ Statement No. 10, 4th July 2019)- Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ Guidance No. 31, 4th July 2019)- Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, 31st March 2020)(1) Summary
As the IASB and FASB have both formulated similar detailed guidances on fair value measurement (IFRS 13 Fair Value
Measurement under International Financial Reporting Standards (IFRS), and Accounting Standards Codification Topic 820
Fair Value Measurement under US GAAP), the ASBJ announced “Accounting Standard for Fair Value Measurement” andother standards to seek compatibility between Japanese GAAP and international accounting standards mainly relating to
guidances and disclosure about fair value of financial instruments.
The ASBJ’s basic policy for developing the Accounting Standard for Fair Value Measurement was to incorporate basicallyall the provisions of IFRS 13 to improve the comparability between financial statements of corporations both inside andoutside Japan by adopting a unified calculation method, as well as to establish other treatments for individual items in
consideration of business practices customary in Japan to the extent it does not greatly impair comparability between
different financial statements.
(2) Effective date
The standards are scheduled to be applied from the beginning of the fiscal year ending 31st March 2022.
(3) Effect of application of the standards
The total numerical value of the effect of the application is being determined as of the time of preparation of these
consolidated financial statements.
Changes in presentation method(Application of Accounting Standard for Disclosure of Accounting Estimates)
As the Company has applied Accounting Standard for Disclosure of Accounting Estimates (Accounting Standards Board ofJapan (ASBJ) Statement No. 31, 31st March 2021) from the consolidated financial statements for the end of the fiscal year ended
31st March 2021, notes on significant accounting estimates are included in the consolidated financial statements. However, in
accordance with the transitional treatment prescribed in Paragraph 11 of the accounting standard, details related to the previous
fiscal year are not described in the notes.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year's presentation.
3. Financial instruments(1) Current status of financial instruments① Policy concerning financial instruments
The Group makes it a policy to limit fund investments to bank deposits and other investments in which the principal isfree from risk and raise funds principally through borrowings from financial institutions such as banks and issuance ofcorporate bonds. The Group uses derivatives to reduce foreign exchange and interest rate fluctuation risks but does notengage in any speculative transactions.
② Details of financial instruments and their risks and the Group’s risk management system
The Group is exposed to credit risk arising from operating receivables such as trade notes and accounts receivable. To
limit the risk, the Company conducts due date and outstanding receivable management by customer in accordance with its“credit exposure management guidelines” and has a grading system to evaluate the credit condition of its major customers
every six months. The consolidated subsidiaries manage credit risk similarly, following the Company’s “credit exposure
management guidelines”.
Investment securities held by the Company are comprised of exchange listed shares (strategic shareholdings) and unlisted15

stocks, with the bulk consisting of exchange listed shares (strategic shareholdings). As a policy, exchange listed shares (strategic
shareholdings), in accordance with the “Guidelines for the Holding and Management of Exchange Listed Shares,” are held only
if judged to contribute to sustained growth and medium- to long-term corporate value enhancement. Individual investment
securities, including unlisted stocks, are subject to verification of their holding purpose and rationale, etc. and reported each year
to the Board of Directors for comprehensive deliberation regarding the justification of their holding. Verification of shareholding
rationale includes verification that benefits and risks resulting from the shareholdings are proportionate to the cost of capital.
Operating payables, such as trade notes and accounts payables, and other payables, are generally payable within one
year. Some arise in connection with the import of raw materials and goods that are denominated in foreign currencies. The
Company uses foreign currency forward contracts to reduce foreign currency fluctuation risk that arises from operating
payables in foreign currencies.
The Group primarily uses loans to procure operating funds and lease receivables from finance leases to raise funds forcapital expenditure. The amount of interest expenses has been fixed for the long-term portion of borrowings through the use ofindividual fixed-rate contracts as well as interest rate swap transactions as hedging instruments, in order to avoid the risk ofinterest rate fluctuations. No interest swap transactions were current as of 31st March, 2021. To minimize counterparty risk, theCompany follows its “derivative transaction rules” and enters such transactions only with highly rated financial institutions.
The Company is exposed to liquidity risk arising from its operating obligations and loan payables. To minimize this risk,
the Accounting Department prepares statements of cash flows based on other divisions’ reports and regularly updates thestatements. The consolidated subsidiaries also manage liquidity risk in accordance with the methods used by the Company.
③ Supplementary explanation on fair values of financial instruments
The fair values of financial instruments include values based on market prices or reasonably calculated values whenmarket prices are not available. Because a variety of factors, some of which are variable, are taken into account whencalculating the values, the adoption of different assumptions may result in different values.
The contract amounts of the derivative transactions stated in “(2) Fair value of financial instruments” do not reflect themarket risk involved in the derivative transactions themselves.
(2) Fair value of financial instruments
The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2021. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (*2)).

16

Millions of yen
Consolidatedbalance sheet
amounts¥ 8,476① Cash and time deposits ���������������������������
26,138② Trade notes and accounts receivable ��������
③ Investment securities
Available-for-sale securities ��������������������
13,267
Total assets ��������������������������������������������
47,881
20,237① Trade notes and accounts payable ������������
9,147② Payables - other ������������������������������������
7,890③ Short-term borrowings ����������������������������
7,307④ Long-term debt ��������������������������������������
Lease
obligations
5,201�����������������������������������
⑤
Total liabilities ���������������������������������������
49,782Derivatives (*) ���������������������������������������
50

Fair value¥ 8,476
26,13813,26747,881
20,237
9,147
7,890
7,303
5,236
49,81350

Thousands of U.S. dollars (Note 1)
2021
Consolidated
Difference balance sheet Fair value
Difference
amounts¥ –$ 76,560$ 76,560$ ––236,094
236,094
–
–
–
–
–
–
(4)
35
31
–

119,836
432,490
182,793
82,621
71,26766,002
46,979449,662452

119,836
432,490
182,793
82,621
71,26765,96547,295449,941
452

–
–
–
–
–
(37)
316
279
–

(*) Derivative assets and liabilities are presented on a net basis.
(*1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Cash and time deposits and ② Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4,“Securities.”
LIABILITIES① Trade notes and accounts payable, ② Payables - other and ③ Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
④ Long-term debt and ⑤ Lease obligations
The fair value for these items has been calculated as the present value of the sum of principal and interest amounts,
discounted using the estimated rates for new borrowings of the same kind or lease transactions.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(*2) Financial instruments whose fair values were deemed extremely difficult to determine
Millions of yen

Category
Unlisted stocks ...................................................................
Affiliates ............................................................................

Thousands of U.S. dollars (Note 1)
2021
Consolidated balance sheet amounts Consolidated balance sheet amounts
¥ 47
$ 424
167
1,508

17

Since no market prices were available for unlisted stocks, and their fair values were difficult to determine by an estimation of
the future cash flows, these items were not included in “③ Investment securities - Available-for-sale securities.”
The fair values of stocks of subsidiaries and affiliates have not been disclosed as no market prices for these securities areavailable and their fair values are deemed extremely difficult to determine by an estimation of the future cash flows.
( *3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen

Thousands of U.S. dollar (Note 1)
2021
Over fiveyears

Within one
year¥ 8,476
26,138Over one year
but within
five years
–
–

–
–

–
¥ 34,614––––

Within one
year
Cash and time deposits ..............................
Trade notes and accounts receivable .........
Investment securities
Available-for-sale securities withmaturity dates (bonds) .............................
Total ..........................................................

Over fiveyears$ 76,560
236,094

Over one year
but within
five years–––$ 312,654

–
–

–
–

–
–

(*4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Short-term borrowings, long-term debt and lease obligations.”
The following table shows consolidated balance sheet amounts, fair value and any difference between book value and fairvalue as of 31st March 2020. However, financial instruments whose fair values were deemed difficult to determine are notincluded in the table (refer below to (*2)).
Millions of yen
2020
Consolidatedbalance sheet Fair value
amounts¥ 8,244¥ 8,244① Cash and time deposits ........................
27,50227,502② Trade notes and accounts receivable ....
③ Investment securities
Available-for-sale securities ................
10,241
10,241
Total assets ...........................................
45,98745,987
23,16623,166① Trade notes and accounts payable .......
8,943
8,943
② Payables - other....................................
8,080
8,080
③ Short-term borrowings .........................
5,822
5,810
④ Long-term debt ....................................
5,513
5,566
⑤ Lease obligations .................................
Total liabilities .....................................
51,52451,565Derivatives (*) ......................................
(4)(4)(*) Derivative assets and liabilities are presented on a net basis.

18

Difference
¥ –
–
–
–
–
–
–
(12)
53
41
–

(*1) Determination of fair value for financial instruments and matters concerning securities and derivative transactions
ASSETS① Cash and time deposits and ② Trade notes and accounts receivable
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
③ Investment securities
The fair value of these securities are based on prices on securities exchanges. For information on securities
classified by the purpose for which they are held, refer to Note 4,“Securities.”
LIABILITIES① Trade notes and accounts payable, ② Payables - other and ③ Short-term borrowings
The fair value of these items are stated at book value. Because these instruments are settled in a short period oftime, book value approximates fair value.
④ Long-term debt and ⑤ Lease obligations
The fair value for these items has been calculated as the present value of the sum of principal and interest amounts,
discounted using the estimated rates for new borrowings of the same kind or lease transactions.
DERIVATIVES
Refer to Note 5, “Derivative financial instruments and hedging transactions.”(*2) Financial instruments whose fair values were deemed extremely difficult to determine
Millions of yen
2020
Category

Consolidated balance sheet amounts

Unlisted stocks .....................................................................
Affiliates ..............................................................................

¥ 42
121

Since no market prices were available for unlisted stocks, and their fair values were difficult to determine by an estimation of
the future cash flows, these items were not included in “③ Investment securities - Available-for-sale securities.”
The fair values of stocks of subsidiaries and affiliates have not been disclosed, as no market prices for these securities wereavailable and their fair values are deemed extremely difficult to determine by an estimation of the future cash flows.
(*3) Estimated redemption amounts of monetary assets and available-for-sale securities with maturity dates after the
consolidated balance sheet dateMillions of yen
2020
one year Over five
Within one Overbut within
years
year
five years
Cash and time deposits ...................................
Trade notes and accounts receivable ..............
Investment securities
Available-for-sale securities withmaturity dates (bonds) .................................
Total ...............................................................

¥ 8,244
27,502–––––¥ 35,746––––(*4) For estimated repayment amounts of long-term debt, lease obligations and other interest bearing debt, refer to Note 7,“Shortterm borrowings, long-term debt and lease obligations.”19

4. Securities
The following tables summarize historical costs and book values (fair values) of available-for-sale securities with available
fair market values as of 31st March 2021 and 2020.
Securities with book values
exceeding historical cost:

Millions of yen

TypeHistorical
cost

2021
Book
value

Equity securities ........................
Bonds ........................................
Others ........................................
Total ..........................................

¥ 4,551––¥ 4,551¥ 13,060––¥ 13,060

Historical
cost

2021
Book
value

Securities with book values
not exceeding historical cost:
Type
Equity securities ......................
Bonds .......................................
Others .......................................
Total ..........................................

¥ 265
–
–
¥ 265

¥ 207
–
–
¥ 207

Thousands of U.S. dollars (Note 1)

Gain

Historical
cost

2020
Book
value

¥ 8,509––¥ 8,509¥ 4,094––¥ 4,094¥ 9,692––¥ 9,692

Loss

Historical
cost

2020
Book
Value

¥ (58)––¥ (58)

¥ 690
–
–
¥ 690

¥ 549
–
–
¥ 549

2021
Book
value

Gain

Historicalcost¥ 5,598––¥ 5,598$ 41,107 $ 117,966––––$ 41,107 $ 117,966

Loss

Historical
cost

2021
Book
value

¥ (141)––¥ (141)$ 2,394––$ 2,394$ 1,870––$ 1,870

Gain$ 76,859––$ 76,859

Loss$ (524)––$ (524)

Unlisted stocks (carrying amount of ¥47 million ($424 thousand)) as of 31st March 2021 and unlisted stocks (carrying amountof ¥42 million) as of 31st March 2020 were not included in the above table as no market prices for these securities were available
and their fair values were deemed extremely difficult to determine by an estimation of the future cash flows.
Available-for-sale securities
sold during the year:
Type
Equity securities ....................
Bonds ....................................
Others ....................................
Total ......................................

Millions of yen
Proceeds
¥3
–
–
¥3

2021
Gains
on salesLosseson salesProceeds

¥1
–
–
¥1

–
–
–
–

¥ 23
–
–
¥ 23

Thousands of U.S. dollars (Note 1)
2020
Gains
on salesLosseson salesProceeds

¥7
–
–
¥7

–
–
–
–

$ 27
–
–
$ 27

2021
Gains
on salesLosseson sales

$9
–
–
$9

–
–
–
–

There was no impairment of investment securities during the fiscal year ended 31st March, 2021.
There was no impairment of investment securities during the fiscal year ended 31st March, 2020.
When the value of stocks depreciated from 30% to 50%, the Company determined impairment loss by analyzing theoperational performance of the issuing entities based on prevailing financial data and market value information such as
discrepancies between the book value and the highest or lowest market value during the year.

205. Derivative financial instruments and hedging transactions
Derivative financial instruments and hedging transactions at 31st March 2021 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Thousands of U.S. dollars (Note 1)
2021
Contract
amounts

Transaction types

Major hedged
items

Contract
amounts

Due overone year

Fair
value

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable¥ 1,651–(*) ¥ 50

¥ 1,651–¥ 50

Due overone year

Fair
value

$ 14,913–$ 452$ 14,913–$ 452(*) Fair value is based on information provided by financial institutions at the end of the fiscal year.
(2) Interest related
Not applicable for the year ended 31st March 2021.
Derivative financial instruments and hedging transactions at 31st March 2020 were as follows:(1) Currency related
Millions of yen
Hedge accounting
methodAlternative method

Transaction types

Major hedged
items

Contract
amounts2020
Due overone year

Foreign exchange trading
On purchased
U.S. dollar
Total

Accounts
payable¥ 2,353–(*) ¥ (4)

¥ 2,353

–

¥ (4)

Fair
value

(*) Fair value is based on information provided by financial institutions at the end of the fiscal year.
(2) Interest related
Not applicable for the year ended 31st March 2020.
6. Inventories
Inventories at 31st March 2021 and 2020 consisted of the following:
Millions of yen
Finished goods and merchandise ������������������������������������������������������������
Work in progress �������������������������������������������������������������������������������������
Raw materials and supplies ���������������������������������������������������������������������

21

Thousands of
U.S. dollars (Note 1)

2021

2020

2021

¥ 9,592377
5,798¥ 15,767¥ 11,058
648
5,887¥ 17,593$ 86,641
3,405
52,371$ 142,417

The balance of inventories at the end of the fiscal year is the amount after a reduction of book value in line with a decline inprofitability, and the following loss on valuation of inventories is included in cost of sales. The amount below has been offset
against reversal amounts:
Thousands of
U.S. dollars (Note 1)

Millions of yen
2021
Loss on valuation of inventories �������������������������������������������������������������

2020¥ (25)2021¥ 26$ (226)

7. Short-term borrowings, long-term debt and lease obligations
Short-term borrowing at 31st March 2021 and 2020 consisted of short-term notes, which generally mature within one year,with average interest rates of 0.42% and 0.43%, respectively.
Long-term debt at 31st March 2021 and 2020 consisted of the following:
Millions of yen
2021
2020
Loans from banks, insurance companies and otherfinancial institution at 0.16% to 1.00% maturing through 2028
Secured ����������������������������������������������������������������������������������������������������
Unsecured �����������������������������������������������������������������������������������������������
Less current portion ��������������������������������������������������������������������������������

¥

138
7,169
7,307
(2,658)¥ 4,649

Thousands of
U.S. dollars (Note 1)
2021

¥

176
5,646
5,822
(1,888)¥ 3,934$ 1,247
64,75566,002(24,009)$ 41,993

The aggregate annual maturities of long-term debt as of 31st March 2021 were as follows:

Years ending 31st March,2022 ������������������������������������������������������������������������������������������������
2023 ������������������������������������������������������������������������������������������������
2024 ������������������������������������������������������������������������������������������������
2025 ������������������������������������������������������������������������������������������������
2026 ������������������������������������������������������������������������������������������������
2027 and thereafter �������������������������������������������������������������������������

22

Millions of yen

Thousands of U.S. dollars (Note 1)

2021

2021
¥ 2,658
2,160
1,420
834
210
25
¥ 7,307$ 24,009
19,511
12,826
7,533
1,897
226
$ 66,002

The aggregate annual maturities of lease obligations as of 31st March 2021 were as follows:

Years ending 31st March,2022 ������������������������������������������������������������������������������������������������
2023 ������������������������������������������������������������������������������������������������
2024 ������������������������������������������������������������������������������������������������
2025 ������������������������������������������������������������������������������������������������
2026 ������������������������������������������������������������������������������������������������
2027 and thereafter �������������������������������������������������������������������������

Millions of yen

Thousands of U.S. dollars (Note 1)

2021

2021
¥

905
991
866
832
611
996
¥ 5,201$ 8,175
8,951
7,822
7,515
5,519
8,997
$ 46,979

8. Pledged assets
Assets were pledged as collateral for the current portion of long-term debt of ¥38 million ($343 thousand) and long-term debtof ¥99 million ($894 thousand) as of 31st March 2021 and for the current portion of long-term debt of ¥38 million and long-term
debt of ¥138 million as of 31st March 2020. The assets pledged are summarized as follows:

Land ��������������������������������������������������������������������������������������������������������
Buildings and structures ��������������������������������������������������������������������������
Machinery and equipment �����������������������������������������������������������������������

Millions of yen
2021
2020
¥ 4
¥ 4
40
46
63
85
¥ 107
¥ 135

Thousands of
U.S. dollars (Note 1)
2021
$ 36
361
569
$ 966

9. Overdraft agreements
The Company and its consolidated subsidiaries have signed overdraft agreements with their correspondent banks to efficiently
procure working capital. The unrealized borrowings under these agreements at the end of the period were as follows:

Total amounts in the overdraft agreements����������������������������������������������
Borrowing balance ����������������������������������������������������������������������������������
Difference ������������������������������������������������������������������������������������������������

Millions of yen
2021
2020
¥ 32,760¥ 22,250
7,790
7,980
¥ 24,970¥ 14,270

Thousands of
U.S. dollars (Note 1)
2021$ 295,908
70,364$ 225,544

10. Retirement benefits(1) Outline of retirement benefit plans adopted
The Company and its consolidated subsidiaries have defined benefit corporate pension plans (fund type) and lump-sum
retirement allowance plans as well as defined contribution plans. In the case of certain defined contribution plans, employees canselect a defined contribution plan or advanced payment of retirement benefits. In some cases, additional severance benefits may
be paid to the employees upon retirement.

23

(2) Defined Benefit Obligation① The changes in retirement benefit obligation for the fiscal years ended 31st March 2021 and 2020 (excluding those forwhich the simplified method was applied) were as follows:

Beginning balance of retirement benefit obligation �������������������������������
Service cost - benefits earned during the year ����������������������������������������
Interest cost on projected benefit obligation �������������������������������������������
Actuarial gains and losses �����������������������������������������������������������������������
Retirement benefits paid �������������������������������������������������������������������������
Ending balance of retirement benefit obligation ������������������������������������

Millions of yen
2021
2020
¥ 13,211¥ 13,752
311
333
106
110
20
(39)
(815)
(945)
¥ 12,833¥ 13,211

Thousands of
U.S. dollars (Note 1)
2021$ 119,330
2,809
957
181
(7,362)$ 115,915② The changes in plan assets for the fiscal years ended 31st March 2021 and 2020 (excluding those for which the simplified
method was applied) were as follows:

Beginning balance of plan assets ������������������������������������������������������������
Expected return on plan assets ����������������������������������������������������������������
Actuarial gains and losses �����������������������������������������������������������������������
Contribution from the employer �������������������������������������������������������������
Retirement benefits paid �������������������������������������������������������������������������
Ending balance of plan assets �����������������������������������������������������������������

Millions of yen
2021
2020
¥ 13,780¥ 14,309
413
429
981
(653)
394
401
(627)
(706)
¥ 14,941¥ 13,780

Thousands of
U.S. dollars (Note 1)
2021$ 124,469
3,730
8,861
3,559
(5,663)$ 134,956③ The changes in liabilities for retirement benefits of the plans for which the simplified method was applied for the fiscal years
ended 31st March 2021 and 2020 were as follows:

Beginning balance of liabilities for retirement benefits ��������������������������
Retirement benefit expenses �������������������������������������������������������������������
Retirement benefits paid �������������������������������������������������������������������������
Amount of increase due to new consolidation ����������������������������������������
Amount of decrease due to transfer to defined
contribution pension plans ����������������������������������������������������������������������
Ending balance of liabilities for retirement benefits �������������������������������

24

Millions of yen
2021
2020
¥ 1,351¥ 1,275
172
129
(98)
(53)
–
456
(45)
¥ 1,836–¥ 1,351

Thousands of
U.S. dollars (Note 1)
2021$ 12,203
1,554
(885)
4,119
(407)
$ 16,584

④ Reconciliation between the ending balance of projected benefit obligation and plan assets and liability and asset for
retirement benefits recorded in the consolidated balance sheet

Funded retirement benefit obligation ������������������������������������������������������
Plan assets �����������������������������������������������������������������������������������������������
Unfunded retirement benefit obligation ��������������������������������������������������
Net liability (asset) for retirement benefits recordedin the consolidated balance sheet �����������������������������������������������������������
Retirement benefit asset ��������������������������������������������������������������������������
Liabilities for retirement benefits �����������������������������������������������������������
Net liability (asset) for retirement benefits recordedin the consolidated balance sheet �����������������������������������������������������������

Millions of yen
2021
2020
¥13,361¥13,708(14,941)(13,780)(1,580)
(72)
1,309
854

Thousands of
U.S. dollars (Note 1)
2021$ 120,684(134,956)(14,272)
11,824(271)(1,580)
1,309

782
(72)
854

(2,448)(14,272)
11,824

(271)

¥782

$ (2,448)

Millions of yen
2021
2020
¥310
¥332
106
110
(413)
(429)
282
136
172
129
457
278
204
91

Thousands of
U.S. dollars (Note 1)
2021$ 2,800
957(3,730)
2,547
1,554
4,128
1,843

¥

Note: The plans to which the simplified method is applied are included.
⑤ The components of retirement benefit expenses were as follows:

Service cost - benefits earned during the year ����������������������������������������
Interest cost on projected benefit obligation �������������������������������������������
Expected return on plan assets ����������������������������������������������������������������
Amortisation of actuarial differences ������������������������������������������������������
Retirement benefit expenses calculated using the simplified method ����
Retirement benefit expenses on defined benefit plans ���������������������������
Special retirement expenses (*) ��������������������������������������������������������������

(*) Recorded under other expenses. In addition, special retirement expenses for the fiscal year ended 31st March 2021 and thefiscal year ended 31st March 2020 are extra retirement payments for early retirees.
⑥ Adjustments for retirement benefits
The components of adjustments for retirement benefits (before tax effect) were as follows:

Actuarial gains and losses �����������������������������������������������������������������������
Total ��������������������������������������������������������������������������������������������������������

25

Millions of yen
2021
2020
¥ 1,243¥ (478)¥ 1,243¥ (478)

Thousands of
U.S. dollars (Note 1)
2021$ 11,228$ 11,228

⑦ Accumulated adjustments for retirement benefits
The components of accumulated adjustments for retirement benefits (before tax effect) were as follows:

Unrecognised actuarial gains and losses �������������������������������������������������
Total ��������������������������������������������������������������������������������������������������������

Millions of yen
2021
2020
¥ 334
¥ 1,577¥ 334¥ 1,577

Thousands of
U.S. dollars (Note 1)
2021$ 3,017$ 3,017

2021

2020

⑧ Plan assets
The components of plan assets were as follows:

Debt securities ���������������������������������������������������������������������������������
Alternatives �������������������������������������������������������������������������������������
Equity securities ������������������������������������������������������������������������������
General account ������������������������������������������������������������������������������
Short-term assets �����������������������������������������������������������������������������
Total ������������������������������������������������������������������������������������������������

43.0%
24.7
22.4
7.8
2.1
100.0%

46.4%
25.3
17.6
8.3
2.4
100.0%

Note: Regarding alternatives, hedge fund investments are made for the purpose of risk diversification.
Method of determining long-term expected rate of return
The long-term expected rate of return on plan assets is determined by taking into consideration the allocation of plan
assets which are expected currently and in the future and the long-term rates of return which are expected currently and in
the future from the various components of the plan assets.
⑨ Assumptions used for actuarial calculations for the fiscal years ended 31st March 2021 and 2020 were as follows:
2021
Discount rate �����������������������������������������������������������������������������������
Long-term expected rate of return ��������������������������������������������������
Expected rate of salary increase:
Lump-sum payment plans ��������������������������������������������������������������

2020
0.8%
3.0

0.8%
3.0

4.6

4.6

Note: Because the defined benefit corporate pension plan (fund type) is a fixed amount system (point system) based on thenumber of years of service, the expected rate of salary increase is not used.
(3) Define Contribution Plans
The amount of required contribution to the defined contribution plans of the Companies was ¥253 million ($2,285 thousand)for the year ended 31st March 2021 and ¥244 million for the year ended 31st March 2020.

26

11. Income taxes
Income taxes applicable to the Company and its domestic consolidated subsidiaries comprise corporate taxes, inhabitants
taxes and enterprise taxes which, in the aggregate, resulted in a statutory tax rate of 30.6% and 30.6% for the years ended 31st
March 2021 and 2020, respectively.
The following table summarises the significant differences between the statutory income tax rate and the Companies’ effective
tax rate for financial statement purposes for the years ended 31st March 2021 and 2020.

Statutory tax rate ��������������������������������������������������������������������������������������������������������������������
Nondeductible expenses, including entertainment expenses �������������������������������������������
Nontaxable income, including dividend received ������������������������������������������������������������
Per capita inhabitants tax �������������������������������������������������������������������������������������������������
Changes in valuation allowance ���������������������������������������������������������������������������������������
Tax rate difference between the Company and consolidated subsidiaries �����������������������
Income taxes for prior periods �����������������������������������������������������������������������������������������
Gain on bargain purchase �������������������������������������������������������������������������������������������������
Tax credit for testing and research expenses ��������������������������������������������������������������������
Other ���������������������������������������������������������������������������������������������������������������������������������
Effective tax rate ��������������������������������������������������������������������������������������������������������������������

2021
30.6%
3.7
(2.7)
13.6
23.0
6.2
1.0
(41.6)
–
0.2
34.0%

2020
30.6%
1.4
(0.7)
3.9
2.0
2.1
0.4
–
(1.3)
0.1
38.5%

(Changes in presentation method)“Income taxes for prior periods,” which was included in “Other” in the previous fiscal year, is presented separately in thecurrent fiscal year due to its increased materiality. The notes to the previous consolidated fiscal year have been reclassified toreflect this change in presentation. As a result, the 0.5% presented in “Other” for the previous fiscal year has been reclassified as
0.4% in “Income taxes for prior periods” and 0.1% in “Other.”27

Significant components of the Companies’ deferred tax assets and liabilities as of 31st March 2021 and 2020 were as follows:

Deferred tax assets:
Loss on impairment of assets ������������������������������������������������������������
Loss carryforwards (*2) ��������������������������������������������������������������������
Liabilities for retirement benefits ������������������������������������������������������
Accounts payable on distribution expenses���������������������������������������
Denied sales discounts ����������������������������������������������������������������������
Allowance for bonuses ����������������������������������������������������������������������
Long-term trade receivables ��������������������������������������������������������������
Allowance for doubtful accounts ������������������������������������������������������
Other �������������������������������������������������������������������������������������������������
Total deferred tax assets ��������������������������������������������������������������������������
Valuation allowance for loss carryforwards (*2) ������������������������������
Valuation allowance for deductible temporary differences ���������������
Total valuation allowance (*1) ����������������������������������������������������������
Net deferred tax assets ����������������������������������������������������������������������������

Millions of yen
2021
2020
¥
920
¥ 891
729
301
439
215
362
417
304
279
275
272
215
215
42
44
717
519
4,003
3,153
(405)
(261)
(1,410)(1,311)(1,815)(1,572)
2,188
1,581

Deferred tax liabilities:
Unrealised gains on securities �����������������������������������������������������������
Retirement benefit asset �������������������������������������������������������������������
Reserve for property, plant and equipment ���������������������������������������
Other �������������������������������������������������������������������������������������������������
Total deferred tax liabilities ��������������������������������������������������������������������
Net deferred tax assets ����������������������������������������������������������������������������

(2,509)
(484)
(30)
(286)
(3,309)¥ (1,121)(1,627)
(22)
(30)
(174)
(1,853)¥ (272)Thousands of
U.S. dollars (Note 1)
2021$ 8,310
6,585
3,965
3,270
2,746
2,484
1,942
379
6,476
36,157(3,658)(12,736)(16,394)
19,763(22,663)(4,372)(271)(2,583)(29,889)$ (10,126)(*1) Valuation allowance increased ¥243 million ($2,195 thousand) year on year. This was primarily due to a ¥45 million($406 thousand) increase in the valuation allowance for total deductible temporary differences, etc. related to newly
consolidated subsidiaries, Toraku Foods Co., Ltd. and one other company, a ¥26 million ($235 thousand) increase in
the valuation allowance for tax loss carryforwards, and a ¥119 million ($1,075 thousand) increase in the valuation
allowance for tax loss carryforwards of the Company and its consolidated subsidiaries excluding newly consolidated
subsidiaries.

28

(*2) Loss carryforwards and deferred tax assets by expiration periods for the years ended 31st March 2021 and 2020
Loss carryforwards and deferred tax assets by expiration periods as of and for the fiscal year ended 31st March 2021 wereas follows:
Millions of yen
2021
2022
Loss carryforwards (a) ..........
Valuation allowance ..............
Deferred tax assets ................

¥ 14
(14)
–

2023

2024

¥ 10
(10)
–

¥ 11
(11)
–

2025
¥ 14
(14)
0

2026
¥ 9
(9)
0

2027 and
thereafter
¥ 671
(347)
324

Total
¥ 729
(405)
(b) 324

Thousands of U.S. dollars (Note 1)
2021
2022
Loss carryforwards (a) ..........
Valuation allowance ..............
Deferred tax assets ................

$ 127
(127)
–

2023

2024

$ 90
(90)
–

$ 99
(99)
–

2025
$ 127
(127)
0

2026
$ 81
(81)
0

2027 and
thereafter$ 6,061(3,134)
2,927

Total
$ 6,585(3,658)(b) 2,927(a) Loss carryforwards shown in the above table are after multiplying the statutory tax rate.
(b) With respect to ¥729 million ($6,585 thousand) in tax loss carryforwards (after application of the statutory tax rate), ¥324
million ($2,927 thousand) in deferred tax assets has been recognised. This ¥324 million ($2,927 thousand) in deferred tax
assets was recognised as loss carryforwards recoverable based on projected future taxable income out of the ¥729 million($6,585 thousand) balance in tax loss carryforwards (mainly inhabitants tax and enterprise tax) (after application of thestatutory tax rate) at the Company and twelve consolidated subsidiaries.
Loss carryforward and its deferred tax assets by expiration periods as of and for the fiscal year ended 31st March 2020 wereas follows:
Millions of yen
2020
2021
Loss carryforwards (a) ..........
Valuation allowance ..............
Deferred tax assets ................

¥ 25
(12)
13

2022

2023

¥ 13
(13)
–

¥ 10
(10)
–

2024
¥ 11
(11)
–

2025
¥ 14
(14)
0

2026 and
thereafter
¥ 228
(201)
27

Total
¥ 301
(261)
(b) 40(a) Loss carryforwards shown in the above table are after multiplying the statutory tax rate.
(b) With respect to ¥301 million in tax loss carryforwards (after application of the statutory tax rate), ¥40 million in deferred
tax assets has been recognised. This ¥40 million in deferred tax assets was recognised as loss carryforwards recoverable
based on projected future taxable income out of the ¥301 million balance in tax loss carryforwards (mainly inhabitants
tax and enterprise tax) (after application of the statutory tax rate) at the Company and six consolidated subsidiaries.
(Changes in presentation method)“Retirement benefits asset,” which was included in “Other” under deferred tax liabilities in the previous fiscal year, ispresented separately in the current fiscal year due to its increased materiality in relation to the total amount of deferred tax
liabilities. The notes to the previous consolidated fiscal year have been reclassified to reflect this change in presentation. As aresult, the negative ¥196 million classified as “Other” under deferred tax liabilities for the previous fiscal year has been
reclassified as negative ¥22 million in “Retirement benefits asset” and negative ¥174 million in “Other.”29

12. Contingent liabilities
There are no matters to be reported.
13. Net assets
Under the Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price ofthe new shares as additional paid-in capital, which is included in capital surplus. Under the Japanese Corporate Law (“the Law”),
in cases in which a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess,if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside asadditional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets. Under the Law, both of these appropriations generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which arepotentially available for dividends. The maximum amount that the Company can distribute as dividends is calculated based on thenonconsolidated financial statements of the Company in accordance with Japanese laws and regulations.
At the general shareholders’ meeting held on 25th June 2021, appropriations of retained earnings for year-end dividends
applicable to the year ended 31st March 2021 were duly approved as follows:
Millions of yen

Thousands of U.S. dollars

2021

2021

Cash dividends: ¥30.00 ($0.27) per share ���������������������������������������

¥ 762$ 6,883

Millions of yen
2020
Cash dividends: ¥35.00 per share����������������������������������������������������

¥ 890

14. Selling, general and administrative expenses
Main items and amounts were as follows:

Distribution expenses ������������������������������������������������������������������������������
Salaries and allowances ��������������������������������������������������������������������������
Allowance for bonuses ����������������������������������������������������������������������������
Retirement benefit expenses �������������������������������������������������������������������
Provision of allowance for doubtful accounts �����������������������������������������

Millions of yen
2021
2020
¥ 28,020¥ 30,053
6,499
6,596
401
427
400
311
3
22

Thousands of
U.S. dollars (Note 1)
2021$ 253,094
58,703
3,622
3,613
27

Research and development expenses included in selling, general and administrative expenses for the years ended 31st March
2021 and 2020 were ¥673 million ($6,079 thousand) and ¥733 million, respectively.

30

15. Loss on impairment of assets
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2021. The Company classified
fixed assets into four categories: business assets, rental assets, idle assets and artwork. The Company groups its business assets bycash generating units and rental assets, idle assets and artwork by individual asset as these represent the smallest identifiable
assets generating cash inflows. As a result, where the recoverable value of idle assets has fallen below the book value due todeclines in market prices, the book value of these assets has been reduced to their recoverable value. The total impairment loss forthe year ended 31st March 2021 consisted of ¥300 million ($2,710 thousand) for investment and rental properties (Investments
and other assets “Other”).
The recoverable value of idle assets were measured based on value in exchange, which was determined using independent
appraisals.
The Company recorded impairment loss on certain asset groups for the year ended 31st March 2020. The Company classified
fixed assets into four categories: business assets, rental assets, idle assets and artwork. The Company groups its business assets bycash generating units and rental assets, idle assets and artwork by individual asset as these represent the smallest identifiable
assets generating cash inflows. As a result, where the recoverable value of idle assets or rental assets has fallen below book value,
due to declines in market prices or profitability or where market prices for artworks have declined significantly, the book value ofthese assets has been reduced to their recoverable value. The total impairment loss for the year ended 31st March 2020 consistedof ¥52 million for investment and rental properties (Investments and other assets “Other”), ¥25 million for tools, furnitureand fixtures and ¥8 million for structures.
The recoverable value of rental assets is measured by the net realisable value or the value in use. The recoverable value of
idle assets is measured by the net realisable value. The net realisable value is assessed based on the appraisal value, etc. and value
in used is calculated by discounting future cash flows by 3.2%. The recoverable amounts for artwork were calculated based on
independent appraisals obtained from third-party art experts and others. The Company records impairment loss on artwork when
the carrying amount is significantly below the estimated recoverable amount.
16. Segment information(1) Overview of the reportable segments① Method for determining reportable segments
The Group’s reportable segments are determined based on the availability of separate financial information for suchsegments that is examined periodically by the Board of Directors to make decisions regarding the allocation of management
resources and to assess business performance. The Group has divided its business operations into two reportable segments
and an “Other” segment. Its reportable segments are “the Processed Food Products” segment and “the Meat Products”
segment.
② Description of the businesses that constitute each reportable segment
In the Processed Food Products segment, the Company purchases, manufactures and sells ham, sausage and cooked andprocessed foods. In the Meat Products segment, the Company purchases, manufactures and sells meat products.
(2) Methods of measurement for sales, profit (loss), assets, liabilities and other items for each reportable segment
Accounting policies adopted by the reportable segments are identical to those described in Note 2, “Significant
Accounting Policies. ”

31

(3) Segment information for the years ended 31st March 2021 and 2020
Segment information as of and for the fiscal year ended 31st March 2021 was as follows:
Millions of yen
2021
Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Sales to third parties ...................... ¥ 161,267–
Intersegment sales and transfers���
Net sales ��������������������������������������� 161,267
Segment income (loss) �����������������
(935)
Segment assets �����������������������������
89,456
Other items:
Depreciation and amortisation (*4)...
7,414
Increase in property, plant andequipment and intangible
5,448
assets (*4)��������������������������������������

Other
(*1)

Total

Adjustments(*2)

Consolidated
(*3)

¥

–
(746)
(746)
–
25,901¥234,152–
234,152(330)
133,547¥ 72,735–
72,735548
17,976¥ 234,002–
234,002(387)
107,432

¥ 150
746
896
57
214

¥ 234,152
746
234,898(330)
107,646

374

7,788

10

7,798

–

7,798

679

6,127

13

6,140

7

6,147

Adjustments(*2)

Consolidated(*3)

Thousands of U.S. dollars (Note 1)
2021
Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Sales to third parties ��������������������� $ 1,456,662–
Intersegment sales and transfers���
Net sales ��������������������������������������� 1,456,662
Segment income (loss) �����������������
(8,445)
Segment assets �����������������������������
808,021
Other items:
Depreciation and amortisation (*4)��
66,968
Increase in property, plant andequipment and intangible
49,210assets (*4)��������������������������������������

Other
(*1)

Total

$ 656,987–
656,987
4,950
162,370$ 2,113,649–
2,113,649(3,495)970,391$ 1,354
6,738
8,092
514
1,933

$ 2,115,003
6,738
2,121,741(2,981)
972,324$– $ 2,115,003(6,738)–(6,738)2,115,003–(2,981)
233,954
1,206,278

3,378

70,34690

70,436–70,436

6,133

55,343

117

55,46063

55,523(*1) The “Other” segment is business other than that of the reportable segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥25,901 million ($233,954 thousand) indicate assets not attributed to any other segments and comprisemainly cash and time deposits, investments in securities and investment and rental properties.
(*3)	Segment income (loss) is equal to the operating loss in the consolidated statements of income.
(*4)	Depreciation and amortisation and increase in property, plant and equipment and intangible assets include long-term prepaid expenses.

32

Segment information as of and for the fiscal year ended 31st March 2020 was as follows:
Millions of yen
2020
Reportable segments
Processed
Meat
Total
Food Products
Products

Sales:
Sales to third parties ��������������������� ¥ 170,649–
Intersegment sales and transfers���
Net sales ��������������������������������������� 170,649
Segment income ���������������������������
1,668
Segment assets �����������������������������
89,777
Other items:
Depreciation and amortisation (*4)��
6,459
Increase in property, plant andequipment and intangible
8,681
assets (*4)��������������������������������������

Other
(*1)

Total

Adjustments(*2)

Consolidated
(*3)

¥

–
(776)
(776)
–
22,956¥ 245,820–
245,820
2,617
131,854¥ 75,024–
75,024901
18,903¥ 245,673–
245,673
2,569
108,680

¥ 147
776
923
48
218

¥ 245,820
776
246,596
2,617
108,898

326

6,785

17

6,802

–

6,802

484

9,165

3

9,168

14

9,182

(*1) The “Other” segment is business other than that of the reportable segments and includes the insurance agency business.
(*2)	Adjustments for total assets of ¥22,956 million indicate assets not attributed to any other segments and comprise mainly cash and time
deposits, investments in securities and investment and rental properties.
(*3)	Segment income is equal to the operating income in the consolidated statements of income.
(*4)	Depreciation and amortisation and increase in property, plant and equipment and intangible assets include long-term prepaid expenses.

(4) Information about loss on impairment of assets by reportable segment
Information about loss on impairment of assets by reportable segments as of and for the fiscal year ended 31st March 2021
was as follows:
Millions of yen
2021
Reportable segments
Processed
Meat
Total
Food Products
Products

Loss on impairment of assets �������

–

–

Other

–

Total

–

–

Adjustments

Consolidated

¥ 300

¥ 300

Adjustments

Consolidated$ 2,710$ 2,710

Thousands of U.S. dollars (Note 1)
2021
Reportable segments
Processed
Meat
Total
Food Products
Products

Loss on impairment of assets �������

–

–

Other

–

33

Total

–

–

Information about loss on impairment of assets by reportable segment as of and for the fiscal year ended 31st March 2020
was as follows:
Millions of yen
2020
Reportable segments
Processed
Meat
Total
Food Products
Products

Loss on impairment of assets �������

–

Other

–

–

Total

–

Adjustments

Consolidated

¥ 85

¥ 85

–

(5) Information about amortisation and balance of goodwill by reportable segment
Regarding information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended
31st March 2021, there are no matters to be reported.
Information about amortisation and balance of goodwill by reportable segment as of and for the fiscal year ended 31st
March 2020 was as follows:
Millions of yen
2020
Reportable segments
Processed
Meat
Total
Food Products
Products

Amortisation of goodwill �������������
Balance of goodwill ���������������������

¥3
–

–
–

Other

¥3
–

Total

–
–

Adjustments

Consolidated

–
–

¥3
–

¥3
–

(6) Information on gain on bargain purchase by reportable segment
In the Processed Food Products segment, the Company recorded gain on bargain purchase of ¥998 million ($9,015 thousand)in the fiscal year ended 31st March 2021 due to the acquisition of shares of Toraku Foods Co., Ltd. in the second quarter ended
30th September 2020.
17. Cash flow information
The reconciliation of cash and time deposits in the consolidated balance sheets and cash and cash equivalents in the
consolidated statements of cash flows as of 31st March 2021 and 2020 were as follows:

Cash and time deposits in the consolidated balance sheets ��������������������Cash and cash equivalents in the consolidated statements of cash flows ����

34

Millions of yen
2021
2020
¥ 8,476¥ 8,244¥ 8,476¥ 8,244

Thousands of
U.S. dollars (Note 1)
2021$ 76,560$ 76,560

Significant non-cash transactions as of 31st March 2021 and 2020 were as follows:
Newly recorded assets and liablities related to finance lease transactions were as follows:

Lease assets and obligations��������������������������������������������������������������������

Millions of yen
2021
2020
¥ 549
¥ 865

Thousands of
U.S. dollars (Note 1)
2021$ 4,959

Breakdown of the major assets and liabilities of a company that became a newly consolidated subsidiary through acquisitionof shares
The breakdown of the assets and liabilities at the time of the consolidation of Toraku Foods Co., Ltd. due to the acquisitionof its shares and the relationship between the acquisition price of that company and the expenditure (net) for the acquisition
were as follows:
Millions of yen
Current assets ����������������������������������������������������������������������������������
Noncurrent assets�����������������������������������������������������������������������������
Current liabilities�����������������������������������������������������������������������������
Long-term liabilities ������������������������������������������������������������������������
Gain on bargain purchase ����������������������������������������������������������������
Acquisition price of shares ��������������������������������������������������������������Cash and cash equivalents ���������������������������������������������������������������
Net: Expenditures for the acquisition����������������������������������������������

35¥ 1,836
3,553(1,198)(1,993)
(998)
1,200
(5)
¥ 1,195

Thousands of
U.S. dollars (Note 1)$ 16,584
32,093(10,821)(18,002)(9,015)
10,839(45)$ 10,794

18. Comprehensive income
Amounts reclassified to profit attributable to owners of parent in the current period that were recognised in othercomprehensive income in the current or previous periods and the tax effects for each component of other comprehensive income
were as follows:
Thousands of
U.S. dollars (Note 1)
2021

Millions of yen
2021
2020
Unrealised gains on securities:
Increase (decrease) during the year ....................................................
Reclassification adjustments ..............................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Deferred gains (losses) on hedges:
Increase (decrease) during the year ....................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Adjustments for retirement benefits:
Increase (decrease) during the year ....................................................
Reclassification adjustments ..............................................................
Amount before tax effect ....................................................................
Tax effect ............................................................................................
Subtotal ..............................................................................................
Share of other comprehensive income of associates accounted for using equity method:
Increase (decrease) during the year ...................................................
Total other comprehensive income ..........................................................

¥ 2,995
(1)
2,994
(883)
2,111

¥ (2,026)(7)(2,033)592(1,441)$ 27,053(9)
27,044(7,976)
19,068

54
54
(16)
38

(17)
(17)
5
(12)

488
488
(145)
343

960
283
1,243
(313)
930

(614)
136
(478)
119
(359)

8,671
2,556
11,227(2,827)8,400(6)¥ 3,0734¥ (1,808)(54)$ 27,757

19. Business combination
Business combination by acquisition(1) Overview of business combination① Name and business line of acquiree
Name of acquiree: Toraku Foods Co., Ltd.
Business line: Manufacturing and sales of dairy processed food
② Main reason for the business combination
Toraku Foods Co., Ltd. has a prominent line-up of brands and products including “Kobe Pudding,” one of the most favoured
souvenir items from Kobe, and“Rakuraku Whip,” a ready-whipped cream product boasting top market share. The Company
seeks to further expand its dessert category by adding Toraku Foods to the Group.
③ Date of business combination
1st July 2020
④ Legal form of business combination
Acquisition of shares with cash as consideration36

⑤ Company name after business combination
No change⑥ Voting rights acquired
100%⑦ Main grounds for determining the acquirer
The Company acquired 100% of the voting rights through the acquisition of shares in exchange for cash.
(2) Period during which the business performance of acquiree is included in the consolidated financial statements
1st July 2020, to 31st March 2021
(3) Cost for acquiring the acquiree and breakdown of consideration by typeCash
¥ 1,200 million
Consideration for acquisition:¥ 1,200 million
Acquisition cost(4) Details and amount of major acquisition related expenses
Advisory expenses, etc.
¥41 million ($370 thousand)(5) Amount and cause of gain on bargain purchase① Amount of gain on bargain purchase¥998 million ($9,015 thousand)② CauseAs the market prices of net assets at the time of the business combination exceeded the acquisition cost, the difference wasrecognized as a gain on bargain purchase.
(6) Breakdown and amount of major assets and liabilities assumed on the date of business combination
Millions of yen
Current assets ����������������������������������������������������������������������������������
Noncurrent assets ����������������������������������������������������������������������������
Total assets ��������������������������������������������������������������������������������������
Current liabilities ����������������������������������������������������������������������������
Long-term liabilities ������������������������������������������������������������������������
Total liabilities ��������������������������������������������������������������������������������

37¥ 1,836
3,553
5,389
1,198
1,993
¥ 3,191

Thousands of
U.S. dollars (Note 1)$ 16,584
32,093
48,677
10,821
18,002$ 28,823

(7) Estimated amounts and calculation method used to determine the impact of the business combination on the consolidated
statement of income for the fiscal year ended 31st March 2021 on the assumption that the business combination was completed
as of the beginning of the fiscal year
Millions of yen
Net sales ������������������������������������������������������������������������������������������
Operating loss ���������������������������������������������������������������������������������
Loss attributable to owners of parent ����������������������������������������������

¥ 1,377
(109)
(239)

Thousands of
U.S. dollars (Note 1)$ 12,438(985)(2,159)

Method used to calculate the estimated amounts
The estimated amount of impact is the difference between the net sales and profit and loss information calculated on theassumption that the business combination was completed as of the beginning of the fiscal year and the net sales and profit andloss information in the consolidated statement of income of the acquirer.
This note has not been audited by the Company.

38

Independent auditor’s report
To the Board of Directors of MARUDAI FOOD Co., Ltd.:
OpinionWe have audited the accompanying consolidated financial statements of MARUDAI FOOD Co., Ltd.
(“the Company”) and its consolidated subsidiaries (collectively referred to as “the Group”), which
comprise the consolidated balance sheets as at March 31, 2021 and 2020, the consolidated statements ofincome, comprehensive income, changes in net assets and cash flows for the years then ended, andnotes, comprising a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at March 31, 2021 and 2020, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with accounting principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Appropriateness of the Company’s judgment as to whether an impairment loss should berecognized on fixed assets
The key audit matter

How the matter was addressed in our audit

Property, plant and equipment of ¥60,347 million
and intangible assets of ¥2,780 million wererecognized in the consolidated balance sheet of
Marudai Food Co., Ltd. (the “Company”) and its
consolidated subsidiaries as of March 31, 2021.
Of this, property, plant and equipment andintangible assets in business assets, including

The primary procedures we performed to assess
whether the Company’s judgment with respect tothe recognition of an impairment loss wasappropriate, included the following:(1) Internal control testing
We tested the design and operating effectivenessof certain of the Company’s internal controls

39

corporate assets, amounted to ¥30,549 million and¥2,568 million, respectively, as described in Note
2, “Significant Accounting Estimates, 1)
Impairment loss on fixed assets” to theconsolidated financial statements. These total
amounts represent 24% of the total consolidated
assets for the current fiscal year. The Company
also recognized an impairment loss of ¥300
million on idle assets.
While these assets are depreciated/amortized in asystematic manner, they need to be tested for
impairment whenever there is an impairment
indicator. The impairment test is performed bycomparing the undiscounted future cash flows thatare expected to be generated from the related asset
group with their carrying amounts. If therecognition of an impairment loss is deemednecessary, the carrying amount is reduced to therecoverable amount, and the resulting decrease in
the carrying amount is recognized as an
impairment loss.
The Company has incurred operating losses forthe fourth consecutive fiscal period mainly due tosevere environments such as intensified sales
competition resulting from changes in
consumption structure caused by the decreasing
birthrate and aging population, increasing costs
including personnel expenses and distribution
costs incurred from chronic shortages of
personnel, and the rising cost of ingredients formeat products caused by the impact of epidemics
in Japan and abroad. Accordingly, the Company
assessed whether an impairment loss should berecognized on its business assets, including
corporate assets, in the current fiscal year. The
estimated undiscounted future cash flows used in
the assessment were based on the Company’sbusiness plan prepared by management. In
particular, net sales estimated by taking into
account the status of achievement of the budget
for the current fiscal year and changes in market
environments, prospects of unit prices of raw
materials based on market trends, and costreduction effects of capital investment in the
production division involved a high degree of
uncertainty, and the Company’s determination
thereon had a significant effect on the estimatedfuture cash flows.
We, therefore, determined that our assessment on
the appropriateness of the Company’s judgment as
to whether an impairment loss should be40

relevant to determining impairment losses to berecognized.
(2) Assessment of the reasonableness of theestimated undiscounted future cash flows
In order to assess the reasonableness of the major
assumptions adopted in developing theCompany’s business plan, which served as thebasis for estimating undiscounted future cash
flows, we inquired of the personnel responsible
for each division about the basis of theseassumptions. In addition, we performed thefollowing procedures:To assess the estimated net sales in thebusiness plan, we:

performed trend analysis using pastbusiness plans and actual results, andassessed the reasonableness of the sales
growth rates in the current business
plan; and

assessed whether the estimated net sales
were consistent with statisticalinformation on market trends of hamand sausage published by the Ministryof Internal Affairs and Communications(MIC) and Japan Ham&Sausage
Processors Cooperative Association, andalso assessed its consistency withstatistical information on market trends
of processed foods published by theJapan Ready-made Meal Association.



trend analysis using actual unit prices of raw
materials purchased in the past to assess theestimated unit prices in the business plan,
and assessment on whether the estimated unit
prices were consistent with statisticalinformation on market trends published by
the Agriculture & Livestock Industries
Corporation; and

assessment of the reasonableness of
estimated cost-reduction effects by capital
investment in the business plan by inspecting
administrative data of the cost-reduction
effects by capital investment performed in
the past.

recognized on fixed assets was of the mostsignificance in our audit of the consolidated
financial statements for the current fiscal year, andaccordingly, a key audit matter.

Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express an
opinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are41

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.


Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation,
structure and content of the consolidated financial statements, including the disclosures, andwhether the consolidated financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2021 are presented solely for convenience. Our audit also included the translation of
yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis
described in Note 1 to the consolidated financial statements.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.
Takahide Nakahata
Designated Engagement Partner
Certified Public Accountant
Satoru Komatsuno
Designated Engagement Partner
Certified Public Accountant

42

KPMG AZSA LLC
Osaka Office, Japan
July 30, 2021
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

43

DIRECTORS AND STATUTORY AUDITORS(As of 28th June 2021)
President andRepresentative Director:

Yuji Sato

Director and Chairman:

Tokuo Kudara

Managing Directors:

Shigeki Fukushima

Directors:

Nobuyoshi Katoh
Kouji Mishima
Toshio Tanaka

Outside Directors:

Masahiro Fuchizaki
Keiko Kaneko

Statutory Auditor:

Toru Miyachi

Outside Statutory Auditors:

Takashi Matsuzawa
Motoaki Nishimura

44

OUTLINE OF THE COMPANY(As of 31st March 2021)
Established:

10th June 1958

Major Subsidiaries:
Hokkaido Marudai Food Co., Ltd.

Stated Capital:¥6,716 million

Tohoku Marudai Food Co., Ltd.
Shin-etsu Marudai Food Co., Ltd.

Number of Employees: 2,107

Chubu Marudai Food Co., Ltd.
Chu-Shikoku Marudai Food Co., Ltd.

Head Office:21-3 Midori-cho, Takatsuki-shi,

Kyushu Marudai Food Co., Ltd.

Osaka, Japan

Toda Foods Co., Ltd.
Azumino Food Co., Ltd.

Branch Office:4-7-5 Tsukiji, Chuou-ku,

Marushin Foods Co., Ltd.

Tokyo, Japan

Toraku Foods Co., Ltd.
Pioneer Foods Co., Ltd.

Sales Offices:

The sales headquarters at the

Umeya Co., Ltd.

Company’s head office in Osaka

Yahata Food Co., Ltd.

controls 10 distribution centers andHornmeier Co., Ltd.

6 regional sales departments which

Marudaifood Co., Ltd.

service 23 local outlets.

Marudai Meat Co., Ltd.
Meat Supply Co., Ltd.

Plants:Hokkaido, Iwate,

Marbest Trading Co., Ltd.

Niigata, Kanto,

Marudai Service Co., Ltd.

Ibaraki, Yokosuka, Shonan,

9 Other subsidiaries

Shizuoka, Matsusaka,
Takatsuki, Okayama,

Associated Company:

Hiroshima, Karatsu

Betagro MF Deli Co., Ltd.

45

Head Office: 21-3 Midori-cho, Takatsuki-shi, Osaka, Japan
Telephone: 81-726-61-2518 Fax: 81-726-61-5006